DCIT, Rewari V. M/s. M.P. Goyal Industries, Rewari

ITA 5418/DEL/2015

AI Insights

The case involves an appeal by the Deputy Commissioner of Income Tax against M/s M.P. Goyal Industries concerning several additions made by the Assessing Officer for the Assessment Year 2011-12. The additions pertained to the return of share application money, fictitious enhancement of the written down value (WDV) of fixed assets, and unsubstantiated claims of payments among others. The CIT(A) had deleted these additions, which the Revenue challenged in the Tribunal. The Tribunal, after reviewing the submissions and evidence, upheld the CIT(A)'s decisions, finding that the additions were not justified based on the provided evidence and legal provisions.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 300816 (ITAT-DELHI)
• Duration Of Justice: 17 year(s) 11 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-12-2022
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 04-12-2022
• Assessment Year: misc
• Appeal Filed On: 03-01-2005
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation; Corroborative evidences

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI ‘A’ BENCH, NEW DELHI BEFORE SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER, AND SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER ITA No. 5418/DEL/2015 [A.Y 2011-12] The Dy. C.I.T Vs. M/s M.P. Goyal Industries Circle 44, Nai Anaj Mandi Rewari Rewari PAN: AAECM 7610 B (Applicant) (Respondent) Assessee By : Shri Tarandeep Singh, Adv Department By : Shri Kanv Bali, Sr. DR Date of Hearing : 05.12.2022 Date of Pronouncement : 07.12.2022 ORDER PER N.K. BILLAIYA, ACCOUNTANT MEMBER:- This appeal by the Revenue is preferred against the order of the ld. CIT(A), Rohtak dated 26.06.2015 pertaining to A.Y. 2011-12. 2 2. The grievances of the Revenue read as under: “1. CIT(A) has erred in law in deleting the addition of Rs. One crore made by the A.O. on account of return of share application money to Smt. Kanta Goyal by stating that it was the share application money relevant to A.Y. 2010-11. However, this is contrary to details on record(Para-2 of assessment order). 2. CIT(A) has erred in law in deleting the addition of Rs. 11,88,447/- made by the A.O. on asset account of fictitious enhancement of WDV of the fixed assets. The decision of CIT(A) is not based on verification of schedule 5 of balance sheet and P&L account. It was noticed that there was clear difference between closing stock as on 31.03.2010 and opening balance of 01.04.2010. 3. CIT(A) has erred in law in deleting the addition of Rs. 54,00,000/- account of no proof of payment. 4. CIT(A) has erred in deleting an addition of Rs. 1,00,537/- on account of (being 1/10 th of expenses) which is not an employee or director & of personal non verifiable nature. 5. That the appellant craves for the permission to add, delete or amend the ground of appeal before or at the time of hearing of Appeal.” 3. The underlying facts relating to the grievance raised vide Ground No. 1 are that during the course of scrutiny assessment proceedings and on perusal of balance sheet, the Assessing Officer found that share 3 application money of Rs. 1 crore was shown in the name of Smt. Kanta Goyal. The assessee was asked to explain the share application money with evidences. 4. The assessee filed detailed reply explaining that share application money is the outstanding balance as on 31.03.2010 as it was taken in the immediately preceding F.Y. and during the year under consideration, the assessee has refunded the share application money. Necessary details with supporting evidences were furnished. 5. Dismissing the claim of the assessee and evidences, the Assessing Officer was of the opinion that Smt. Kanta Goyal had no source to explain the share application money of Rs. 1 crore and, accordingly, made the addition. 6. When the matter was agitated before the ld. CIT(A), the ld. CIT(A) deleted the addition on finding that the amount was never taken during the year under consideration. 7. Before us, the ld. DR strongly supported the findings of the Assessing Officer but could not deny the fact that the money was never taken during the year under consideration. 4 8. On this peculiar fact that share application money of Rs. 1 crore pertained to the immediately preceding F.Y., no addition can be made during the year under consideration. Hence, the finding of the ld. CIT(A) cannot be faulted with. Ground No. 1 is dismissed. 9. The underlying facts in Ground No. 2 are that while scrutinizing the depreciation chart, the Assessing Officer found that the value of fixed assets have not been shown correctly as different figures have been quoted and the opening balance has been taken on enhanced value. 10. The assessee filed detailed chart explaining the cause for difference but the same was dismissed by the Assessing Officer, who proceeded by making addition of Rs. 11,88,447/-. 11. Before the ld. CIT(A), the assessee once again explaining the depreciation chart, pointed out that the depreciation chart prepared as per provisions of Companies Act always differ from depreciation chart prepared as per provisions of I.T. Act. It was further pointed out that addition of Rs. 11,88,447/- is the amount of depreciation upto 31.03.2010. Therefore, the said addition is uncalled for. 5 12. After considering the facts and submissions, the ld. CIT(A) found force in the contention of the ld. counsel for the assessee. Depreciation has been prepared as per Companies Act and as per I.T. Act and addition made by the Assessing Officer is the cumulative depreciation upto 31.03.2010 and after considering the reconciliation, addition was deleted. 13. Before us, when the bench pointed out to the depreciation chart, exhibited at page 3 of the assessment order, the ld. DR also found that Rs. 11,88,447/- is the cumulative depreciation upto 31.03.2010 and there is no difference between the written down value as alleged by the Assessing Officer. 14. Considering the facts in totality, we do not find any reason to interfere with the findings of the ld. CIT(A). Ground No. 2 is dismissed. 15. Ground No. 3 relates to the deletion of addition of Rs. 54 lakhs. 16. The underlying facts in issue are that the assessee claimed to have made payment to HUDA Rs. 54 lakhs as fee for getting change in land use. The Assessing Officer was of the opinion that the assessee 6 has not furnished any proof of payment nor has established the business use of the expenses and made addition of Rs. 54 lakhs. 17. When the matter was agitated before the ld. CIT(A), the ld. CIT(A) found that HUDA land was purchased for factory purpose and to change the land use, the assessee paid Rs. 54 lakhs through two demand drafts and the said sum has been duly added in the HUDA land as per the fixed assets chart and finding substantial supporting evidences, directed the Assessing Officer to delete the addition. 18. The ld. DR strongly relied upon the findings of the Assessing Officer. 19. Per contra, the ld. counsel for the assessee reiterated what has been stated before the ld. CIT(A). 20. On careful perusal of the assessment order, we find that the Assessing Officer has made addition without considering the documentary evidences brought on record and ignoring the fact that the payments have been made through demand drafts for change in land use to the Government of Haryana and as the said transaction is 7 duly recorded in the books of account verified and accepted by the ld. CIT(A), no interference is called for. Ground No. 3 is dismissed. 21. Ground No. 4 relates to the deletion of addition of Rs.1,00,537/-. 22. The Assessing Officer was of the opinion that these expenses are purely of personal in nature and disallowed 1/10 th of travelling expenses. 23. In our considered opinion, there cannot be any personal element in the case of a limited liability company. Therefore, any disallowance on the alleged ground that it is of personal in nature does not hold any water. The ld. CIT(A) has rightly deleted the said disallowance, which calls for no interference. Accordingly, Ground No. 4 is dismissed. 24. In the result, the appeal of the Revenue in ITA No. 5418/DEL/2015 is dismissed. The order is pronounced in the open court on 07.12.2022. Sd/- Sd/- [C.M. GARG] [N.K. BILLAIYA] JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 07 th December, 2022. 8 VL/ Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, New Delhi Date of dictation Date on which the typed draft is placed before the dictating Member Date on which the typed draft is placed before the Other Member Date on which the approved draft comes to the Sr.PS/PS Date on which the fair order is placed before the Dictating Member for pronouncement Date on which the fair order comes back to the Sr.PS/PS Date on which the final order is uploaded on the website of ITAT Date on which the file goes to the Bench Clerk Date on which the file goes to the Head Clerk The date on which the file goes to the Assistant Registrar for signature on the order Date of dispatch of the Order