ITO, Cuttack V. Bikash Chandra Sahoo, Cuttack

ITA 483/CTK/2012

• Counselvise Citation: 48322114 RSA 2012
• Duration Of Justice: 2 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-12-2012
• Appeal Filed By: Department
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 05-10-2012
• Court: TRIBUNAL
• Department Lawyers: N K NEB
• Assessee Lawyers: P K MOHAPATRA
• Section: 142(1)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK ( ) BEFORE . . , , HONBLE SHRI K.K.GUPTA, ACCOUNTANT MEMBER. /AND . . . , H ONBLE SHRI K.S.S.PRASAD RAO, JUDICIAL MEMBER / I.T.A.NO. 483/CTK/2012 / ASSESSMENT YEAR 2008 - 09 INCOME - TAX OFFICER, WARD 2(3), CUTTACK. - - - VERSUS - BIKASH CHANDRA SAHOO, MANI SAHU CHOWK, CUTTACK. PAN: ACRPS 1263 N ( /APPELLANT ) ( / RESPONDENT ) / FOR THE APPELLANT : / SHRI N.K.NEB, DR / FOR THE RESPONDENT: / SHRI P.K.MOHAPATRA, AR / DATE OF HEARING: 23.11.2012 / DATE OF PRONOU NCEMENT: 14.12.2012 / ORDER . . . , SHRI K.S.S.PRASAD RAO, JUDICIAL MEMBER . THIS APPEAL IS FILED BY THE REVENUE HAVING BEEN AGGRIEVED BY THE ORDER OF THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) DT.24.07.2012 FOR THE ASSESS MENT YEAR 2008 - 09 IN THE CASE OF THE ASSESSEE. 2. THE REVENUE HAS RAISED THE FOLLOWING ISSUES. 01. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. FIRST APPELLATE AUTHORITY IS NOT JUSTIFIED IN DELETING THE ADDITION OF RS.9,16,009/ - AND DUMPER EXPENSES PAYABLE OF RS.10,25,000/ - MADE BY THE AO U/S.41 ON THE GROUND THAT THERE IS NO MATERIAL BEFORE T HE AO - WHEN THE ASSESSEE FAILED TO PRODUCE THE NATURE AND PURPOSE OF SUCH LOAN, NAME AND ADDRESS OF PERSONS, AMOUNT DUE TO THEM AS ASKED BY THE AC DURING ASSE SSMENT PROCEEDING TO SUBSTANTIATE ITS CLAIM. 02. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD.CIT(A) IS NOT JUSTIFIED IN DELETING THE DISALLOWANCE OF RS.2,35,00/( SALARY ACCOUNT), RS.1,05,280(ROAD REPAIRING A/C.) AND RS.52,545 (SALES PROMOTIONS) ON T HE GROUND THAT THERE IS NO ORGANIC LINK I.T.A.NO. 483/CTK/2012 2 BETWEEN THE DISALLOWANCES WITH TURNOVER OF THE BUSINESS. WHEN THE ASSESSEE HAD FAILED TO SUBSTANTIATE THE SAME BEFORE THE AC IN SPITE OF ADEQUATE OPPORTUNITIES OFFERED TO HIM IN TERMS OF STATUTORY NOTICES U/S.142(1 ) AT THE TIME OF THE ASSESSMENT PROCEEDINGS. 3. BOTH THE PARTIES WERE HEARD REGARDING THE ISSUE RAISED BY THE REVENUE AND THEIR LEGAL IMPLICATIONS. 4. ON CAREFUL CONSIDERATION OF THE MATERIAL MADE AVAILABLE TO THE TRIBUNAL, THE UNDISPU TED FACTS RELATING T O THE ISSUE S ARE THAT THE ASSESSEE IS THE PROPRIETOR OF M/S.WORLD MINERALS DEALS IN RAISING AND SELLING OF FIRE CLAY (MINERALS). IT FILED ITS RETURN FOR THE ASSESSMENT YEAR UNDER CONSIDERATION ON 31.10.2008 AT AN INCOME OF RS.2,28,954. THE CASE WAS SELECTE D FOR SCRUTINY AND NOTICES U/S.143(2) AND 142(1) WERE ISSUED TO THE ASSESSEE. THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE DID NOT COMPLY SATISFACTORILY WITH THE REQUIREMENTS OF THE NOTICES AND HENCE, THE ASSESSING OFFICER COMPLETED THE ASSESSMENT U/S. 144 BY MAKING ADDITIONS UNDER VARIOUS HEADS. 5. AGGRIEVED, THE ASSESSEE PREFERRED APPEAL BEFORE THE LEARNED CIT(A), WHO AFTER HEARING THE ASSESSEE AND CONSIDERING THE MATERIAL PLACED BEFORE HIM, PARTLY ALLOWED THE APPEAL INTER ALIA DELETING THE ADDITION O F RS.9,16,009 MADE ON ACCOUNT OF NON - EXISTENT LIABILITIES, RS.10,25,000 MADE U/S.41, RS.2,35,000 UNDER SALARY ACCOUNT, RS.1,05,280 UNDER ROAD REPAIRING EXPENSES AND RS.52,545 UNDER SALES PROMOTION EXPENSES, AGAINST WHICH THE REVENUE IS NOW IN APPEAL BEFORE THE TRIBUNAL. 6. THE LEARNED AR OF THE ASSESSEE REITERATED THE SUBMISSIONS AS WERE MADE BEFORE THE LEARNED CIT(A). THE LEARNED DR, ON THE OTHER HAND, CONTENDED THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ABOVE DELETIONS MADE BY THE LEARNED CIT(A) IS NOT JUSTIFIED. I.T.A.NO. 483/CTK/2012 3 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE IMPUGNED ORDERS OF THE AUTHORITIES BELOW AND ALSO THE MATERIAL MADE AVAILABLE TO THE TRIBUNAL. 8 . AS REGARDS DELETION OF THE ADDITION OF RS.9,16,000 AND RS.10,25,000, IT WAS SUBMITTED BE FORE THE LEARNED CIT(A) THAT IT A LIABILITY IN EXISTENCE FOR MORE THAN 8 YEARS. THE ASSESSEE HAD NOT PAID THE SAME AND THE AMOUNTS WERE OWED TO THE RESPECTIVE PARTIES AND THEREFORE, THE ASSESSING OFFICER WAS NOT JUSTIFIED TO DECLARE THE LIABILITY AS NON - E XISTENT. IT IS TO BE NOTICED HERE THAT THESE ADDITIONS WERE MADE IN THE ASSESSMENT COMPLETED U/S.144 AND THE IMPUGNED ADDITIONS HAVE BEEN MADE U/S.41. THE ASSESSING OFFICER HAS NOT BROUGHT ANY MATERIAL ON RECORD TO SHOW THAT ACTUALLY THOSE AMOUNTS WERE ACT UALLY PAID AND THUS, BOGUS LIABILITY. THEREFORE, WE DO NOT FIND ANY INFIRMITY IN THE IMPUGNED ORDER OF THE LEARNED CIT(A) IN DELETING THESE TWO ADDITIONS MADE MERELY ON SUSPICION AND SURMISES IN HIS BEST JUDGMENT ASSESSMENT MADE U/S.144. WE UPHOLD THE ORDE R OF THE LEARNED CIT(A) AND DISMISS THE ISSUE NO.1 RAISED BY THE REVENUE. 9. AS REGARDS THE DELETION OF ADDITION OF RS.2,35,000 UNDER SALARY ACCOUNT, RS.1,05,280 UNDER ROAD REPAIRING EXPENSES AND RS.52,545 UNDER SALES PROMOTION EXPENSES, IT IS FOUND THAT T HE ASSESSING OFFICER ON COMPARISON OF EXPENSES UNDER SIMILAR HEADS IN EARLIER THREE YEARS, HAS DISALLOWED THE CLAIM AS IN EXCESS OF THAT CLAIMED IN THE EARLIER YEARS. THE LEARNED AR OF THE ASSESSEE SUBMITTED BEFORE US THAT THE SALARY IS FIXED NATURE EXPEND ITURE. ROAD REPAIRING EXPENSES DEPEND ON CLIMATE AND AREA (VOLUME) OF OPERATION. SALES PROMOTION IS A PROMOTIONAL EXPENDITURE, WHICH HAS AN EFFECT IN FUTURE BUSINESS. THE TURNOVER HAS NO ROLE AGAINST SUCH EXPENDITURE. HE CONTENDED THAT THE LEARNED CIT(A) I S RIGHT IN OBSERVING THAT THE TURNOVER HAS NO ROLE AGAINST SUCH EXPENDITURE. FROM THE IMPUGNED ORDER OF THE ASSESSING OFFICER, WE FIND THAT HE HAS MADE THE DISALLOWANCES OF THE I.T.A.NO. 483/CTK/2012 4 AMOUNT HE FOUND EXCESS OF THAT CLAIMED IN THE EARLIER YEAR AND FOR THE REASON T HAT THE ASSESSEE HAS NOT COMPLIED TO HIS SHOW CAUSE NOTICE. HOWEVER, HE BROUGHT NO MATERIAL ON RECORD JUSTIFYING SUCH DISALLOWANCE BUT HE MADE THE DISALLOWANCE MERELY ON SURMISE AND CONJECTURES AND AS SUCH, THE SAID DISALLOWANCES CANNOT BE SUSTAINED FOR LE GAL SCRUTINY. IN THIS VIEW OF THE MATTER, WE DO NOT FIND ANY INFIRMITY IN THE IMPUGNED ORDER OF THE LEARNED CIT(A) IN DELETING THE IMPUGNED ADDITIONS MADE OUT OF EXPENSES ON SALARY, ROAD REPAIR AND SALES PROMOTION. WE UPHOLD THE SAME AND DISMISS THE ISSUE NO.2 RAISED BY THE REVENUE. 10. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. S D/ - S D/ - ( . . ) , , (K.K.GUPTA), ACCOUNTANT MEMBER. ( . . . ) , (K.S.S.PRASAD RAO), JUDICIAL MEMBER ( ) DAT E: 14.12.2012 - COPY OF THE ORDER FORWARDED TO: 1 . / THE APPELLANT : INCOME - TAX OFFICER, WARD 2(3), CUTTACK. 2 / THE RESPONDENT: BIKASH CHANDRA SAHOO, MANI SAHU CHOWK, CUTTACK. 3 . / THE CIT, 4 . ( )/ THE CIT(A), 5 . / DR, CUTTACK BENCH 6 . GUARD FILE . / TRUE COPY, / BY ORDER, APPENDIX XVII SEAL TO BE AFFIXED ON THE ORDER SHEET BY THE SR. P.S./P.S. AFTER DICTATION IS GIVEN 1. DATE OF DICTATION 05 .12.2012 . 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 07.12.2012 OTHER MEMBER . 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S. 4. DATE ON WHICH THE FAIR ORDER IS PLACED B EFORE THE DICTATING MEMBER FOR PRONOUNCEMENT.... 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S . 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 14.12.2012 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK .. 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER ................ 9. DATE OF DESPATCH OF THE ORDER .. ( ), (H.K.PADHEE), SENIOR.PRIVATE SECRETARY.