Craft Foil Printers, V. DCIT, Central Circle,

ITA 5007/DEL/2003

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 8466 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 8 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-07-2009
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Next Hearing Date: 13-07-2009
• Assessment Year: 1994-1995
• Appeal Filed On: 14-11-2003
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: M K GAUTAM CIR
• Assessee Lawyers: VIRENDRA TALWAR
• Keywords: Gift
• Section: 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : E : NEW DELHI BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER AND SHRI B.R. KAUSHIK, ACCOUNTANT MEMBER ITA NOS. 5007/DEL/2003 ASSESSMENT YEAR : 1994-95 KRAFT FOIL PRINTERS, 20/6, MATHURA ROAD, FARIDABAD 121 006. VS. DCIT, CENTRAL CIRCLE, FARIDABAD 121 001. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI VIRENDRA TALWAR, CA REVENUE BY : SHRI M.K. GAUTAM, CIR, DR O R D E R PER I.P. BANSAL, JUDICIAL MEMBER: THIS IS AN APPEAL FILED BY THE ASSESSEE. IT IS DI RECTED AGAINST ORDER OF THE CIT (A) DATED 15 TH SEPTEMBER, 2003 FOR ASSESSMENT YEARS 1994-95. GROU NDS OF APPEAL READ AS UNDER:- 1. THE LD. CIT (A) HAS ERRED IN LAW AND FACTS IN U PHOLDING DISALLOWANCE OF RS.6,24,239/- BEING EXPENSES INCURR ED FOR PROCURING FDRS, EVEN WHEN THE SAME ARE ALLOWABLE EXPENSES. 2. IT IS PRAYED THAT DISALLOWANCE OF RS.6,24,239/- MAY BE DELETED. 3. THE ASSESSEE CRAVES LEAVE TO ADD, DELETE OR AME ND ANY OR ALL THE GROUNDS OF APPEAL BEFORE OR DURING THE TIME OF HEARING OF THE APPEAL. 2. THE IMPUGNED ASSESSMENT IS A RE-ASSESSMENT. EAR LIER THE INCOME OF THE ASSESSEE WAS PROCESSED U/S 143 (1) (A). LATER ON, DURING THE COURSE OF ITA NO.5007/DEL/2003 2 ASSESSMENT PROCEEDINGS FOR ASSESSMENT YEAR 1995-96 IT WAS NOTICED BY THE ASSESSING OFFICER THAT PAYMENT OF RS.6,24,239/- OUT OF EXPENSES OF RS.6,67,640/- DEBITED AGAINST THE INCOME OF RS.7,67,305/- WERE NO T GENUINE. THE PAYMENT OF RS.6,24,239/- MADE TO M/S BHATIA GIFT GALLERY, M/S SEWAK PRINTERS & TRADERS, M/S DELIGHT PRESS, M/S CHANDNI TAXI SERVICES, M/S J ENUS PRINTING PRESS WERE EITHER MADE IN CASH OR THROUGH BEARER CHEQUES. THE ASSESSING OFFICER MADE INQUIRIES WHICH REVEALED THAT NONE OF THE ABOVE CON CERNS EXISTED AT THE GIVEN ADDRESSES. THEREFORE, NOTICE U/S 148 WAS ISSUED FO R THE YEAR UNDER CONSIDERATION. COPY OF REASONS RECORDED WAS ALSO S UPPLIED TO THE ASSESSEE. IT WAS CLAIMED BY THE ASSESSEE THAT EXPENSES INCURRED BY IT WERE GENUINE AND WERE FOR THE PURPOSE OF BUSINESS. IT WAS SUBMITTED THAT INSPECTOR MAY HAVE VISITED A WRONG PLACE. HOWEVER, THE ASSESSING OFFI CER DID NOT ACCEPT SUCH CONTENTION OF THE ASSESSEE ON THE GROUND THAT INSPE CTOR HAD MADE THE INQUIRIES AT THE ADDRESSES GIVEN IN THE PHOTO COPY OF BILLS I SSUED BY THOSE CONCERNS TO THE ASSESSEE AND IT WAS FOUND THAT NO SUCH CONCERNS WE RE EXISTING AT THE GIVEN ADDRESSES. THE ASSESSING OFFICER HAS MENTIONED THA T PARTICULARS OF M/S JENUS PRINTING PRESS AS PER PHOTO COPY OF BILLS WAS B-83, SANJAY COLONY, SECTOR 23, FARIDABAD AND IT WAS FOUND ON INQUIRY THAT THE SAME WAS A PLOT AND, THEREFORE, THERE WAS NO QUESTION OF ANY PRINTING PRESS BEING T HERE. SIMILARLY, IT WAS FOUND THAT ADDRESS OF M/S CHANDNI TAXI SERVICES AS PER P HOTO COPY OF BILLS FILED BY THE ASSESSEE WAS SECTOR 16, FARIDABAD AND AS PER INQUIR IES MADE BY THE ASSESSING OFFICER, THOUGH THERE WERE SEVERAL TAXI STANDS, BUT THERE WAS NO CONCERN IN THE NAME OF M/S CHANDNI TAXI SERVICES. WITH REGARD TO ADDRESS OF M/S BHATIA GIFT GALLERY, THE SAME AS PER PHOTO COPY OF BILL WAS MAR KET NO.1 NIT, FARIDABAD AND AS PER INQUIRY CONDUCTED BY INSPECTOR, NO SUCH CONC ERN WAS EXISTING AT THE GIVEN ADDRESS. THEREFORE, THE ASSESSEE WAS ASKED TO FURN ISH EVIDENCE TO SUPPORT ITS CONTENTION THAT PAYMENTS WERE MADE TO GENUINE CONCE RNS. IT WAS SUBMITTED BY THE ASSESSEE THAT THE RECORD BEING OLD THE EVIDENCE WAS NOT TRACEABLE. REFERRING TO THE ASSESSMENT PROCEEDINGS FOR ASSESSMENT YEAR 1 995-96 THE ASSESSING OFFICER OBSERVED THAT IT WAS FOUND THEREIN THAT THE SAME PERSON HAD ISSUED THE BILLS OF SAID EXPENSES ON THE LETTER PADS OF DIFFER ENT CONCERNS. IN THIS MANNER, THE ITA NO.5007/DEL/2003 3 DISALLOWANCE OF ENTIRE EXPENSES OF RS.6,24,239/- WA S MADE. THE DISALLOWANCE WAS AGITATED IN AN APPEAL FILED BEFORE THE LD. CIT (A) WHO HAS REFERRED TO THE ORDER OF HIS PREDECESSOR CIT (A) IN ASSESSMENT YEAR 1993-94 WHEREIN SIMILAR ADDITION WAS DEALT WITH. FOR ASSESSMENT YEAR 1993- 94 THE ASSESSEE HAD RELIED BEFORE THE LD. CIT (A) ON THE DECISION OF LD. CIT ( A) IN THE CASE OF RAPKA LABORATORIES (SISTER CONCERN) TO CONTEND THAT AT LE AST 50% OF EXPENSES SHOULD BE ALLOWED AS HAS BEEN ALLOWED IN THAT CASE. HOWEVER, THE LD. CIT (A) DID NOT ACCEPT SUCH CONTENTION OF THE ASSESSEE AND HAS HELD THAT THE ASSESSING OFFICER WAS CORRECT IN HOLDING THAT EXPENSES WERE BOGUS. T HEREFORE, DISALLOWANCE IN ITS ENTIRETY WAS CONFIRMED FOLLOWING THE SAID ORDER FOR ASSESSMENT YEAR 1993-94. IT MAY BE MENTIONED THAT THE ORDER OF THE LD. CIT (A) FOR ASSESSMENT YEAR 1993-94 HAS BEEN CONFIRMED BY THIS TRIBUNAL VIDE ORDER DATE D 10 TH JUNE, 2004 IN ITA NO.247/DEL/03 BY SMC-III, DELHI. THE ASSESSEE IS A GGRIEVED, HENCE, IN APPEAL. 3. IT WAS SUBMITTED BY LD. AR THAT THOUGH THE ASSES SEE WAS NOT IN A POSITION TO FILE PROPER EVIDENCE OF HAVING INCURRED EXPENDIT URE, BUT INCOME COULD NOT BE EARNED WITHOUT INCURRING ANY EXPENDITURE, AND, THE REFORE, THE ASSESSING OFFICER AS WELL AS THE LD. CIT (A) BOTH WERE WRONG IN UPHOL DING THE DISALLOWANCE IN ITS ENTIRETY. IT WAS PLEADED THAT IN THE CASES OF SIST ER CONCERN OF THE ASSESSEE SIMILAR ISSUE WAS CONSIDERED AND THERE ARE TWO ORDE RS OF THE TRIBUNAL ONE IS IN THE CASE OF PRECISION INDUSTRIAL MOULDERS WHICH IS DECIDED BY THIS TRIBUNAL VIDE ITS ORDER DATED 8 TH MARCH, 2004 A COPY OF WHICH IS PLACED AT PAGE 30 A ND 31 OF THE PAPER BOOK WHEREIN SIMILAR EXPENDITURE WERE CLA IMED IN RESPECT OF PRINTING AND STATIONERY, CONVEYANCE EXPENSES, ADVERTISEMENT EXPENSES. THESE ADDITIONS WERE CONFIRMED BY LD. CIT (A) AND THE TRI BUNAL HAS DELETED THE ENTIRE ADDITION ON THE GROUND THAT GROSS AMOUNT OF INCOME COULD NOT BE CONSIDERED AS INCOME EARNED BY THE ASSESSEE WITHOUT INCURRING ANY EXPENDITURE AND IT WAS THE DUTY OF THE ASSESSING AUTHORITY TO ASSESS EXPENDITU RE BY BEST JUDGEMENT ASSESSMENT IN A CASE WHERE ASSESSEE HAS FAILED TO P RODUCE COGENT EVIDENCE IN SUPPORT OF HIS CLAIM. IN THE CASE OF ANOTHER SISTE R CONCERN, NAMELY, RAPKA LABORATORIES , SIMILAR EXPENDITURE WERE CLAIMED AND RELYING ON THE DECISION OF ITA NO.5007/DEL/2003 4 HONBLE KERALA HIGH COURT IN THE CASE OF CIT VS. S. P. NAYAK 235 ITR 94, THE LD. CIT (A) WAS HELD RIGHT IN MAKING DISALLOWANCE ON TH E BASIS OF BEST JUDGEMENT TO ALLOW THE ASSESSEE 50% EXPENDITURE. IT WAS SUBMITT ED THAT THOUGH IN THE CASE OF THE ASSESSEE FOR PRECEDING YEAR I.E., FOR ASSESSMEN T YEAR 1993-94 THE ISSUE HAS BEEN DECIDED AGAINST THE ASSESSEE, BUT AS PER ORDER OF DIVISION BENCH, WHICH IS THE LATEST ORDER I.E., ORDER DATED 20 TH JANUARY, 2005 SHOULD BE GIVEN PREFERENCE OVER THE ORDER IN THE CASE OF THE ASSESSEE FOR ASSE SSMENT YEAR 1993-94 WHICH IS ALSO AN SMC ORDER. IT WAS SUBMITTED THAT IF ON AN ISSUE WHERE TWO VIEWS ARE POSSIBLE THE VIEW FAVOURABLE TO THE ASSESSEE SHOUL D BE ADOPTED. 4. ON THE OTHER HAND, RELYING ON THE ORDER OF THE A SSESSING OFFICER AND LD. CIT (A) AND THE ORDER OF ITAT IN THE CASE OF THE A SSESSEE ITSELF FOR ASSESSMENT YEAR 1993-94, IT WAS PLEADED BY LD. DR THAT THE APP EAL FILED BY THE ASSESSEE DESERVES TO BE DISMISSED. 5. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIO NS IN THE LIGHT OF THE MATERIAL PLACED BEFORE US. THE TRIBUNAL, IN THEIR O RDER SITTING AS A DIVISION BENCH, IN THE CASE OF SISTER CONCERN OF THE ASSESSEE I.E. M/S RAPKA LABORATORIES, A COPY OF WHICH HAS BEEN FILED AT PAGES 27-29 OF THE PAPER BOOK, HAS TAKEN A VIEW THAT WHERE THE ASSESSEE IS UNABLE TO SUBSTANTIATE THE EX PENDITURE, THE ASSESSING OFFICER COULD ADOPT BEST JUDGEMENT TO ALLOW THE SAM E AS GROSS INCOME COULD NOT BE ASSESSED IN A CASE WHERE ASSESSEE HAS INCURRED T HE EXPENSES. FOR HOLDING SO, RELIANCE HAS BEEN PLACED ON THE DECISION OF HON BLE CALCUTTA HIGH COURT IN THE CASE OF CIT VS. S.P. NAYAK (SUPRA). IN THE CAS E OF THE ASSESSEE ITSELF THE DISALLOWANCE OF ENTIRE EXPENDITURE HAS BEEN UPHELD BY SMC BENCH ON THE GROUND THAT IF REVENUE HAS DOUBTED THE GENUINENESS OF THE EXPENDITURE AND UNLESS AND UNTIL THE GENUINENESS OF THE EXPENDITURE IS PROVED, THE REASONABLENESS OF THE CLAIM OF THE ASSESSEE CANNOT BE EXAMINED AND IT WAS INCUMBENT ON THE ASSESSEE TO PLACE CONFIRMATIONS FR OM THE PAYEES OR ANY OTHER EVIDENCE TO PROVE THE GENUINENESS. IN THE INSTANT CASE IT HAS BEEN NOTED IN THE SUBMISSIONS MADE BEFORE THE LD. CIT (A) VIDE LETTER DATED 15 TH SEPTEMBER, 2003 ITA NO.5007/DEL/2003 5 A COPY OF WHICH HAS BEEN PLACED ON OUR RECORD, THAT THE ASSESSEE HAS PROCURED FDR OF RS.77.95 LAC FOR NUCHEM LTD. AND NUFARM CHEM ICALS AND INCOME EARNED FOR COLLECTING THOSE FDRS THESE EXPENDITURES HAVE B EEN SHOWN TO HAVE INCURRED. THE INCOME SHOWN AS PER ASSESSMENT ORDER IS RS.7,67 ,305/-. IF ASSESSEE IS UNABLE TO PRODUCE EVIDENCE TO SUBSTANTIATE THE INCU RRENCE OF EXPENDITURE, THEN, ACCORDING TO THE DECISION OF THE TRIBUNAL (BY DIVIS ION BENCH) IN THE CASE OF RAPKA LABORATORIES WILL BE APPLICABLE TO HOLD THAT THE EXPENDITURE HAVE TO BE JUDGED ON THE BASIS OF BEST JUDGEMENT. IN THAT CAS E 50% OF EXPENDITURE CLAIMED WERE HELD ALLOWABLE BY THE LD. CIT (A) AND WHICH OR DER OF THE LD. CIT (A) WAS UPHELD. IN OUR OPINION, SAID VIEW WILL BE THE JUST IFIED VIEW WHICH SHOULD HAVE BEEN TAKEN IN THE CASE OF THE ASSESSEE INSTEAD OF D ISALLOWING THE EXPENSES IN THEIR ENTIRETY. THEREFORE, RESPECTFULLY FOLLOWING THE ORDER OF THE DIVISION BENCH IN THE CASE OF RAPKA LABORATORIES (SISTER CONCERN OF THE ASSESSEE) WE DELETE THE ADDITION TO THE EXTENT OF 50%. THE ASSESSING OFFIC ER WILL COMPUTE THE INCOME OF THE ASSESSEE ACCORDINGLY. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. . 7. THE ORDER PRONOUNCED IN THE OPEN COURT ON 16.07. 2009. [B.R. KAUSHIK] [I.P. BANSAL] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED, 16.07.2009. DK ITA NO.5007/DEL/2003 6 COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT, DELHI BENCHES