M/s Bazar Decor India Private Limited, Mohali V. DCIT, Mohali

ITA 53/CHANDI/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 9169 (ITAT-CHANDIGARH)
• Duration Of Justice: 6 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Next Hearing Date: 28-07-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 29-01-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Assessee Lawyers: RAMAN AGGARWAL
• Keywords: Corroborative evidences
• Section: 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH,CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SH. PRASHANT MAHARSHI, ACCOUNTANT MEMBER ITA NO. 53/CHD/2016 ASSESSMENT YEAR: 2008-09 M/S BAZAR DECOR INDIA P.LTD., VS THE DCIT, A-45- INDUSTRIAL AREA, CIRCLE 6(1), PHASE-VIII B, MOHALI MOHALI. PAN: AABCB3512G (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI RAMAN AGGARWAL RESPONDENT BY : SHRI MANJIT SINGH DATE OF HEARING : 08.08.2016 DATE OF PRONOUNCEMENT : 11.08.2016 O R D E R PER BHAVNESH SAINI, JM THIS APPEAL BY ASSESSEE HAS BEEN DIRECTED AGAINST THE ORDER OF LD. CIT(APPEALS)-2, CHANDIGARH DATED 16.11.2015 FOR ASSESSMENT YEAR 2008-09 CHALLENGING THE ADDITION OF 50% OF EXPENSES OF RS. 6,26,149/-. 2. BRIEF FACTS ARE THAT THE ASSESSEE COMPANY IS WHO LLY OWNED SUBSIDIARY OF BAZAR DCOR SARL AND IS ENGAGED INTO EXPORTS OF CARPETS AND HANDICRAFT ITEMS. DURING THE YEAR, ASSESSEE HAS SHOWN SALES OF RS. 8,87,874/- AND INTE REST ON FDR OF RS. 11,614/- AND CLAIMED BUSINESS EXPENSE S 2 UNDER THE HEAD COST OF SALES, ADMINISTRATIVE AND OT HER EXPENSES AND FINANCIAL EXPENSES AT RS. 15,25,906/-. BY SETTING OFF INCOME AGAINST THESE EXPENSES, ASSESSEE HAS SHOWN RETURNED LOSS OF RS. 6,26,419/- WHICH THE ASSESSING OFFICER HAS NOT ALLOWED IT TO CARRY FORWA RD THE SUBSEQUENT YEARS AND BY IGNORING THE LOSS ASSESSMEN T WAS MADE AT NIL INCOME AS THE ASSESSEE COULD NOT PROD UCE THE SUPPORTING BILLS ETC. AS THE SAME WERE STATED TO BE DESTROYED IN FIRE. 3. THE ASSESSEE CHALLENGED THE ORDER OF THE ASSESSI NG OFFICER BEFORE LD. CIT(APPEALS) AND IT WAS SUBMITTE D THAT ASSESSING OFFICER FAILED TO TAKE INTO CONSIDERATION DETAILS OF STOCKS, TDS CERTIFICATES, AUDITED FINANCIAL STAT EMENTS, BOOKS OF ACCOUNT AND LEDGER COPY, BANK STATEMENTS E TC. AS THESE ARE SUPPORTING DOCUMENTS/MATERIALS SUFFICIENT TO ASSESS THE INCOME OF THE ASSESSEE. IT WAS FURTHER SUBMITTED THAT EXPENSES ARE TOTALLY GENUINE AND CAN NOT BE DISALLOWED. IT WAS SUBMITTED THAT SINCE THE RECORD DESTROYED IN FIRE BUT ASSESSEE PRODUCED AUDITED ACC OUNTS AND SUFFICIENT MATERIAL ON RECORD, THEREFORE, NO AD DITION SHOULD BE MADE. THE LD. CIT(APPEALS) NOTED THAT IT IS A FACT BEFORE ASSESSING OFFICER THAT BOOKS OF ACCOUNT OF THE ASSESSEE AND SUPPORTING EVIDENCES WERE DESTROYED IN FIRE AT THE PREMISES OF THE ASSESSEE. IT WAS ALSO OBSER VED THAT IT IS ALSO TRUE THAT BOOKS OF ACCOUNT ARE THE REFLE CTION OF THE BILLS AND VOUCHERS AND IN THE ABSENCE OF THE SA ME, THE CORRECT PROFIT OF THE BUSINESS ENTITY CANNOT BE DET ERMINED. 3 THE LD. CIT(APPEALS) NOTED THAT ASSESSEE CLAIMED TO TAL EXPENSES OF RS. 15,25,906/- WHICH CANNOT BE TOTALLY HELD TO BE GENUINE IN THE ABSENCE OF SUPPORTING BILLS, H OWEVER, ASSESSEE HAS BROUGHT BEFORE ASSESSING OFFICER AUDIT ED FINANCIAL STATEMENTS, BANK STATEMENTS AND CONFIRMAT ION ETC. THAT EXPENSES HAVE BEEN INCURRED. SUCH EXPENS ES HAVE ALSO BEEN MADE IN THE PRECEDING YEAR. THE LD. CIT(APPEALS), THEREFORE, FIND IT APPROPRIATE TO ALL OW 50% OF ALL THESE EXPENSES AND ALLOWED APPEAL OF THE ASSESS EE PARTLY. 4. AFTER CONSIDERING RIVAL SUBMISSIONS, WE ARE OF T HE VIEW THAT 50% DISALLOWANCE MADE BY LD. CIT(APPEALS) IS NOT JUSTIFIED. THE LD. CIT(APPEALS) ACCEPTED THE CONTENTION OF THE ASSESSEE THAT BOOKS OF ACCOUNT AN D SUPPORTING DOCUMENTS HAVE BEEN DESTROYED IN FIRE IN THE PREMISES OF THE ASSESSEE. THE ASSESSEE SUBMITTED B EFORE LD. CIT(APPEALS) THAT ASSESSING OFFICER FAILED TO T AKE INTO CONSIDERATION DETAILS OF STOCK, TDS CERTIFICATES, A UDITED FINANCIAL STATEMENTS, BOOKS OF ACCOUNT AND LEDGER C OPY AND BANK STATEMENTS ETC. LD. COUNSEL FOR THE ASSESS EE STATED THAT A.O. WAS INTIMATED THAT DIGITAL RECORD OF ASSESSEE HAS BEEN RECOVERED BY IT TEAM AND BOOKS OF ACCOUNT ARE AVAILABLE FOR VERIFICATION BUT NO VERIF ICATION HAS BEEN DONE BY A.O. LD. CIT(APPEALS) ON THE BASIS OF EVIDENCE PRODUCED ON RECORD ACCEPTED THAT EXPENSES HAVE BEEN INCURRED BY ASSESSEE. SUCH EXPENSES ARE ALSO MADE IN EARLIER YEAR. IT WOULD MEAN THAT ASSESSEE PRODUC ED 4 SUFFICIENT MATERIAL BEFORE THE ASSESSING OFFICER/CI T(A) TO SUPPORT THE CONTENTION THAT ASSESSEE DECLARED THE L OSS GENUINELY IN THE RETURN OF INCOME. ONCE LD. CIT(AP PEALS) WAS SATISFIED WITH THE EXPLANATION OF THE ASSESSEE, THAT ASSESSEE INCURRED EXPENSES IN ASSESSMENT YEAR IN AP PEAL AND PRECEDING YEAR, THEREFORE, 50% DISALLOWANCE SHO ULD NOT BE RESTRICTED. THE EVIDENCES PRODUCED BY THE A SSESSEE BEFORE AUTHORITIES BELOW HAVE NOT BEEN ADVERSELY COMMENDED UPON IN ANY MANNER TO MAKE ANY DISALLOWAN CE AGAINST THE ASSESSEE. 5. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE C ASE IN THE LIGHT OF FINDINGS OF LD. CIT(APPEALS), WE SE T ASIDE THE ORDERS OF AUTHORITIES BELOW AND DELETE THE ENTI RE ADDITION. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (PRASHANT MAHARSHI) (BHA VNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 11 TH AUGUST,2016. POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT, DR ASSISTANT REGISTRAR, ITAT/CHD