Sh. AAS Mohamad, Ghaziabad V. ITO, Ghaziabad

ITA 5235/DEL/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 91317 (ITAT-DELHI)
• Duration Of Justice: 9 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-07-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC 2
• Next Hearing Date: 13-07-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 25-09-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MANOJ KR CHOPRA
• Assessee Lawyers: L M AGARWAL

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC - II , NEW DELHI BEFORE SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER ITA NO. 5235 /DEL/2014 ASSESSMENT YEAR : 2008 - 09 APPELLANT BY : SH. L.M. AGARWAL, CA RESPONDENT BY : SH. MANOJ KR. CHOPRA, SR. DR DATE OF HEARING : 13.07.2015 DATE OF PRONOUNCEMENT : 17 .07.2015 ORDER THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER DATED 04.10.2013 OF LD.CIT(A), MUZAFFARNAGAR PERTAINING TO THE ASSESSMENT YEAR 2008 - 09 ON THE FOLLOWING GROUND WHICH READS AS UNDER: - 1. THAT THE LEARNED CIT (A) ERRED IN LAW AS WELL AS ON FACT BY REJECT THE APPELLANT GROUND NO 1 THAT THE LEARNED ITO ERRED IN LAW AS WELL AS FACT TO MAKE ADDITION OF RS. 2,00,000/ - CONSIDERING THAT THE EXPENSES VOUCHER SELF MADE AND NOT SUPPORTED WITH BILL, PAYMENT IN CASH ARE NOT FULLY VE RIFIABLE. WHILE ALL THE EXPENSES VOUCHER SUPPORTED WITH EVIDENCE AND DULY AUDITED'. 2. THAT THE LEARNED CIT(A) ERRED IN LAW AS WELL AS ON FACT BY REJECT THE APPELLANT GROUND NO 2 THAT IN ANY CASE ADHOC DISALLOWANCE OF RS. 2,00,00O/ - OUT OF EXPENSES INCUR RED IN FREIGHT INWARDS, LABOUR WELFARE, REPAIR & MAINTENANCE, PRINTING & STATIONARY, BUSINESS PROMOTION, SALARY, TRAVELING & CONVEYANCE AND MADE THE ADDITION TO THE INCOME OF THE ASSESSEE ON SUSPICION ONLY AND NO CATEGORICAL FINDING IS GIVEN BY THE A.O. SO THERE WAS NO JUSTIFICATION FOR MAKING ADHOC DISALLOWANCE. CASE REPORT TO ACIT VS ARTHUR ANDERSON AND COMPANY IN 94 TTJ 736 (MUMBAI), M/S INTERVENTIONAL TECHNOLOGIES (P) LTD VS THE ADDL. OT MUMBAI INCOME TAX ACT NO. 6182/MUM/2008' 3. THAT IN ANY CASE REF ECTION OF ASSESSEE APPEAL BY CIT (A) WAS WRONG AND ILLEGAL. AAS MOHAMAD, C/O L.M. AGARWAL & CO. CHARTERED ACCOUNTANT, KA - 32, KAVI NAGAR, GHAZIABAD PAN:ANZPM6668A VS. ITO, WARD - 1(1), GHAZIABAD (APPELLANT) (RESPONDENT) PAGE 2 OF 3 2. FACTS OF THE CASE ARE AS UNDER: - 2. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF PREPARATION OF WOODEN PACKING MATERIAL IN THE NAME AND STYLE OF M/S. STAR INDUSTRIES AT D - 26, MEERUT ROAD INDUSTR IAL AREA, GHAZIABAD. THE BALANCE SHEET TALLIES AT RS. 2955691/ - . SALES OF RS.5874090/ - HAVE BEEN SHOWN ON WHICH GP RS.293874/ - RESULTING RATE 5% AND NP RS.132789/ - RESULTING RATE 2.26% HAS BEEN SHOWN. LAST YEAR, THE GP WAS RS.127913/ - RESULTING RATE 5.01% AND NP RS.95256/ - RESULTING RATE 3.73%. THE ASSESSEE VIDE POINT NO.5 OF THE QUESTIONNAIRE WAS REQUIRED TO FURNISH INVENTORY RELATED TO CLOSING STOCK AND VALUE AS ADOPTED SINCE GP AS SHOWN IS DIRECTLY CONNECTED WITH VALUE OF CLOSING STOCK. NO INVENTORY HAS BEEN FURNISHED. FURTHER, THE AUDIT REPORT ALSO MENTIONS THAT NO STOCK REGISTER IS MAINTAINED. THEREFORE, THE ACTUAL QUANTITY AND VALUE OF STOCK CANNOT BE ASCERTAINED. FURTHER, HUGE AMOUNT OF WAGES EXPENDITURE HAS BEEN INCURRED BY THE ASSESSEE AND FREIGHT I NWARDS, LABOUR WELFARE, REPAIR AND MAINTENANCE, PRINTING AND STATIONERY, BUSINESS PROMOTION, SALARY, TRAVELLING AND CONVEYANCE, ETC. HAVE BEEN INCURRED IN CASH FOR WHICH VOUCHERS WERE NOT FOUND TO BE PROPERLY MAINTAINED. VOUCHERS PRODUCED WERE FOUND TO BE SELF - MADE AND DID NOT CONTAIN THE SIGNATURES OF THE RECIPIENTS AND MANY OF THE VOUCHED EXPENSES WERE NOT SUPPORTED WITH BILLS. CONSIDERING THE EXPENSES MADE IN CASH WHICH ARE NOT FULLY VERIFIABLE AS DISCUSSED ABOVE, AN AD HOC ADDITION OF RS. 200000/ - IS MA DE TO THE INCOME OF THE ASSESSEE TO COVER UP ALL THE POSSIBILITIES ADOPTED BY THE ASSESSEE TO DECLARE THE SURPLUS OF INCOME OVER EXPENDITURE. (ADDITION OF RS.200000/ - ). 3. ON APPEAL THE FIRST APPELLATE AUTHORITY CONFIRMED THE ORDER OF THE ASSESSING OFFICER . AGGRIEVED THE ASSESSEE IS BEFORE US. 4. AFTER HEARING THE RIVAL CONTENTIONS I AM OF THE CONSIDERED OPINION THAT KEEPING IN VIEW THE TURNOVER OF THE ASSESSEE , THE EXPENSES CLAIMED AND THE OBSERVATIONS OF THE AO AS WELL AS OF THE LD CIT(A) ON THE ISSUE OF PRODUCTION OF EVIDENCES ETC, A DISALLOWANCE OF RS.50,000/ - WOULD MEET ENDS OF JUSTICE. THIS DECISION IS TAKEN AFTER HEARING BOTH THE PARTIES IN THE OPEN COURT. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED IN PART. 5. IN THE RESULT THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 1 7 T H JULY, 2015 . - S D / - ( J. SUDHAKAR REDDY ) ACCOUNTANT MEMBER DATED: 1 7 T H JULY, 2015 AKK COPY FORWARDED TO: - 1. APPELLANT PAGE 3 OF 3 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR