Arvind Kumar, Delhi V. ITO, Ward-1, Rewari

ITA 5315/DEL/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 4368 (ITAT-DELHI)
• Duration Of Justice: 6 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-02-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Appeal Filed On: 08-08-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S L ANURAGI
• Section: 44AD; 143(3); 2

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: SMC, NEW DELHI BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER ITA NO. 5315/DEL/2018 ASSESSMENT YEAR: 2014-15 ARVIND KUMAR, VS. ITO, WARD-1, C/O KAPIL GOEL, ADVOCATE, REWARI F-26/124, SECTOR-7, ROHINI, DELHI 110 085 (PAN: ALNPK8589L) (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. KAPIL GOEL, ADV. REVENUE BY : SH. SL ANURAGI, SR. DR. ORDER THE ASSESSEE HAS FILED THE APPEAL AGAINST THE ORDE R DATED 05.06.2018 OF THE LD. CIT(A), ROHTAK PERTAINING TO ASSESSMENT YEAR 2014-15 ON THE FOLLOWING GROUNDS:- I) THAT ADDITION AMOUNTING TO RS. 14,62,636/- MADE ON ACCOUNT OF ALLEGED SUPPRESSION OF CLOSING STOCK BY AO AS SUSTAINED BY LD. CIT(A) WITHOUT CITING ANY STATUTORY PROVISION AND WITHOUT PROVING ANY CLANDESTINE TRANSACTION, JUST RELYING ON STRAY AND ISOLATED FIGURES WHICH STOOD RECONCILED, ADDITION I S 2 MADE WHICH IS EX FACIE INCORRECT AND MADE MECHANICALLY. II) THAT ASSESSEES ALTERNATE CLAIM TO ALLOW AUTOMATIC DEDUCTION U/S. 80JJA ON AFORESAID ADDITION OF RS. 14,62,636/- HAS BEEN DENIED ON INVALID REASONS AND AGAINST THE BINDING AND CITED CBDT CIRCULAR NO. 37/2016. III) THAT ADDITION SUSTAINED BY LD. CIT(A) TO THE EXTENT OF RS. 470,000 IS INCORRECT AND ALTERNATIVELY ENHANCED DEDUCTION BENEFIT U/S. 80JJA MUST BE GIVEN TO THE ASSESSEE AS CLAIMED. HUMBLE PRAYER:- (I) TO DELETE THE ADDITION OF RS. 14,62,636/- ON ACCOUNT OF ALLEGED NON DISCLOSURE OF CLOSING STOCK; ALTERNATIVELY DEDUCTION AND BENEFIT U/S. 80JJA; (II) TO DELETE THE ADDITION OF RS. 470,000 AND ALTERNATIVELY ALLOW BENEFIT U/S. 80JJA. TO RESTORE RETURNED INCOME. (III) ANY OTHER APPROPRIATE RELIEF. 2. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE F ILED HIS RETURN OF INCOME ON 29.11.2014, DECLARING INCOME OF RS. 1,39, 450/-. THE ASSESSEE IS RUNNING AN INDUSTRY OF MANUFACTURING OF BIO-FUEL BRIQUETTES. THE CASE OF 3 THE ASSESSEE WAS PICKED UP FOR COMPLETE SCRUTINY UN DER CASS. STATUTORY NOTICES AND QUESTIONNAIRES WERE ISSUED. THE AR OF T HE ASSESSEE ATTENDED THE PROCEEDINGS FROM TIME TO TIME AND FILED THE WRI TTEN REPLIES DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THE AO OBSERVED T HAT THE ASSESSEE HAS NOT DECLARED HIS PROFIT U/S. 44AD OF THE INCOME TAX ACT, 1961 (IN SHORT ACT). NO WHERE THE ASSESSEE INDICATED THAT HE IS DECLARING INCOME U/S. 44AD OF THE ACT. FURTHER GROSS TURNOVER OF TH E ASSESSEE FROM BUSINESS ALREADY EXCEEDS THE LIMIT NECESSARY FOR GE TTING THE ACCOUNTS AUDITED. HENCE, PROVISIONS OF SECTION 44AD OF THE ACT ARE NOT APPLICABLE. AO OBSERVED THAT IT IS ONLY AN AFTERTHOUGHT WHICH C AME IN TO THE STORY ONLY WHEN IT IS NOTICED BY THE AO AND TRADING ACCOU NT OF HINDUSTAN SANITARY PLAZA WAS CALLED FOR. THE ASSESSEE HAS NO T DECLARED ASSETS OF RS. 14,62,636/-. EXCESS OF ASSETS OF RS. 14,62,636 /- OVER THE LIABILITIES IN THE SHAPE OF CLOSING STOCK IS THE PROFIT OF THE ASSESSEE WHICH HE HAS NOT DECLARED IN HIS RETURN OF INCOME WAS ADDED TO THE I NCOME OF THE ASSESSEE BY AO. FURTHER, THE AO HAS DISALLOWED 25% OF EXPE NSES CLAIMED UNDER THE HEADS CONSUMABLES, POWER/ FUEL, PACKING, FREIGH T, MISCELLANEOUS, TELEPHONE, CONVEYANCE, TRAVELLING ETC. AS NO VOUCHE RS WERE PRODUCED FOR EXPENDITURE CLAIMED AS RS. 47 LACS (AS PER THE TABL E GIVEN AT PAGE NO. 5 OF THE ASSESSMENT ORDER) AND ADDED THE EXPENSES ARE NOT CONSIDERED AS GENUINE AND ADDITION OF RS. 11,75,190/- WAS MADE TO THE INCOME OF THE ASSESSEE. ACCORDINGLY, THE INCOME OF THE ASSESSEE W AS ASSESSED AT RS. 27,77,280/- U/S. 143(3) OF THE ACT VIDE ORDER DATED 22.08.2016. AGAINST THE ASSESSMENT ORDER, ASSESSEE APPEALED BEFORE THE LD. CIT(A), WHO VIDE 4 HIS IMPUGNED ORDER DATED 05.6.2017 HAS PARTLY ALL OWED THE APPEAL OF THE ASSESSEE. AGGRIEVED WITH THE IMPUGNED ORDER, AS SESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 3. DURING THE HEARING, LD. COUNSEL FOR THE ASSESSEE HAS STATED THAT THE ADDITION AMOUNTING TO RS. 14,62,636/- MADE ON ACCOUNT OF ALLEGED SUPPRESSION OF CLOSING STOCK BY AO AS SUSTAINED BY LD. CIT(A) IS WITHOUT CITING ANY STATUTORY PROVISION AND WITHOUT PROVING ANY CLANDESTINE TRANSACTION, JUST RELYING ON STRAY AND ISOLATED FIG URES WHICH STOOD RECONCILED AND ADDITION WAS MADE WHICH IS EX FACIE INCORRECT AND MADE MECHANICALLY. HE FURTHER SUBMITTED THAT THE ASSESS EES ALTERNATE CLAIM TO ALLOW AUTOMATIC DEDUCTION U/S. 80JJA ON AFORESAID A DDITION OF RS. 14,62,636/- HAS BEEN DENIED ON INVALID REASONS AND AGAINST THE BINDING AND CITED CBDT CIRCULAR NO. 37/2016. IT WAS FURTHER SUBMITTED THAT THE ADDITION SUSTAINED BY LD. CIT(A) TO THE EX TENT OF RS. 470,000 IS INCORRECT AND ALTERNATIVELY ENHANCED DEDUCTION BENE FIT U/S. 80JJA MUST BE GIVEN TO THE ASSESSEE AS CLAIMED. HENCE, HE REQUES TED TO DELETE THE ADDITION OF RS. 14,62,636/- ON ACCOUNT OF ALLEGED N ON DISCLOSURE OF CLOSING STOCK; ALTERNATIVELY DEDUCTION AND BENEFIT U/S. 80J JA AND ALSO DELETE THE ADDITION OF RS. 470,000/- AND ALTERNATIVELY ALLOW BENEFIT U/S. 80JJA BY ALLOWING THE APPEAL OF THE ASSESSEE. 4. ON THE OTHER HAND, LD. DR RELIED UPON THE ORDER OF THE LD. CIT(A) AND STATED THAT HE HAS PASSED A WELL REASONED ORDER DATED 26.6.2018 WHICH DOES NOT NEED ANY INTERFERENCE. 5 5. I HAVE HEARD BOTH THE PARTIES AND PERUSED THE RE CORDS ESPECIALLY THE IMPUGNED ORDER. AS REGARDS SUSTAINING OF ADDITION OF RS. 14,62,636/- ON ACCOUNT OF ALLEGED SUPPRESSION OF CLOSING STOCK IS CONCERNED, I NOTE THAT THE AO HAS MADE ADDITION ON ACCOUNT OF NON-DISCLOSU RE OF CLOSING STOCK OF RS. 14,62,636/- AS IT WAS NOT SHOWN IN COLUMN 4 OF PART A, P&L IN THE INCOME TAX RETURN. THIS HAS RESULTED IN LESS PROFI T AND SUPPRESSION OF INCOME. I FURTHER FIND THAT AO OBSERVED THAT EXCESS OF ASSETS IN THE SHAPE OF CLOSING STOCK IS HIS PROFIT, WHICH IS NOT DECLAR ED AS INCOME BY THE ASSESSEE. THE ASSESSEES CLAIM THAT HE SHOULD GET BENEFIT OF PROVISION OF DEDUCTION U/S. 80JJA OF THE ACT IS NOT TENABLE BECA USE THE ADDITION HAS BEEN MADE ON ACCOUNT OF UNDISCLOSED CLOSING STOCK O F HINDUSTAN SANITARY PLAZA, AND THIS CONCERN DEALING IN SANITARY ITEMS. AS THIS INCOME IS NOT DERIVED FROM THE ACTIVITY OF MANUFACTURING WHICH I S COVERED U/S. 80JJA, NO DEDUCTION IS ALLOWABLE. HENCE, THE ADDITION OF RS. 14,62,636/- WAS RIGHTLY CONFIRMED BY THE LD. CIT(A), WHICH DOES NOT NEED ANY INTERFERENCE ON MY PART, THEREFORE, I UPHOLD THE ORDER OF THE LD. CIT(A) ON THIS ISSUE AND REJECT THE GROUNDS RAISED BY THE ASSESSEE. 5.1 AS REGARDS SUSTAINING OF ADDITION OF RS. 470,00 0/- IS CONCERNED, I NOTE THAT AO HAS DISALLOWED 25% OF EXPENSES CLAIMED UNDER THE HEADS CONSUMABLES, POWER/ FUEL, PACKING, FREIGHT, MISCELL ANEOUS, TELEPHONE, CONVEYANCE, TRAVELLING ETC. AS NO VOUCHERS WERE PRO DUCED FOR EXPENDITURE CLAIMED AS RS. 47 LACS (AS PER THE TABLE GIVEN AT P AGE NO. 5 OF THE ASSESSMENT ORDER). I FURTHER NOTE THAT THE AO HAS N OT MADE DISALLOWANCE ON ADHOC BASIS BUT AFTER GIVING FULL OPPORTUNITY TO THE ASSESSEE WHO COULD 6 ONLY SUBMIT EVIDENCE OF EXPENDITURE OF ABOUT RS. 8 LACS OUT OF HIS CLAIM OF RS. 54.92 LACS. IN VIEW OF THE FACTS OF THE CASE, T HE DISALLOWANCE MADE BY THE AO WAS UPHELD. HOWEVER, IT WAS RESTRICTED TO 1 /10 TH OF THE EXPENDITURE NOT SUBSTANTIATED BY THE ASSESSEE I.E. RS. 4,70,000/- WHICH WAS DISALLOWED AND THEREFORE, THE AO WAS DIRECTED T O COMPUTE THE INCOME ACCORDINGLY, WHICH DOES NOT NEED ANY INTERFERENC E ON MY PART, THEREFORE, I UPHOLD THE ORDER OF THE LD. CIT(A) ON THIS ISSUE AND REJECT THE GROUND RAISED BY THE ASSESSEE. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED ON 12-02-2019. SD/- [H.S. SIDHU] JUDICIAL MEMBER DATE:12/02/2019 SRBHATNAGAR COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4.CIT (A) 5. D R, ITAT BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES