KRISHNA PETROLIUM, MUMBAI V. ITO -WD- 2 (2), KALYAB

ITA 5437/MUM/2018

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 4663 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-10-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2013-2014
• Appeal Filed On: 21-09-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAMASTHA MULLAMADI
• Assessee Lawyers: MAIRA K SACHDEV
• Keywords: Business expenditure; Principle of natural justice

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC, MUMBAI BEFORE SHRI SHAMIM YAHYA (AM) & SHRI PAWAN SINGH (JM) ITA NO. 5437/MUM/2018(ASSESSMENT YEAR : 2013-14) KRISHNA PETROLEUM SURVEY NO.220, VILLAGE KHATI PAN : AAHFK6098B VS ITO, WD.2(2), MUMBAI APPELLANT RESPONDEDNT A PP ELLANT BY SHRI MAIRA K SACHDEV RESPONDENT BY MS. SAMASTHA MULLAMADI DATE OF HEARING 14-10-2019 DATE OF PRONOUNCEMENT 14-10-2019 O R D E R PER PAWAN SINGH, JM : 1. THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF LD. CIT(A)-3, MUMBAI DATED 15.06.2016 FOR ASSESSMENT YE AR 2013-14. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF AP PEAL: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)[(CIT(A)] IS BA D BOTH IN THE EYE OF LAW AND ON FACTS. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN CONFIRMING THE ACTION O F THE AO IN MAKING ADDITION OF RS. 14,24,871/- ON ACCOUNT OF VARIOUS E XPENSES CLAIMED UNDER PROFIT AND LOSS ACCOUNTS. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN CONFIRMING THE ACTION O F THE AO IN MAKING ADDITION OF RS.90,000/- ON ACCOUNT OF DELAY CHARGES PAID TO DEALER CLAIMED UNDER THE HEAD ADMINISTRATIVE EXPENSE OF PROFIT AND LOSS ACCOUNTS 4. THE LEARNED CIT(A) ERRED IN FAILING TO APPRECIA TE THAT ALL EXPENSES HAVE BEEN DULY VOUCHED AND VERIFIED AND AUDITED BY STATU TORY AUDITORS AS IS 2 ITA 5437/MUM/2018 KRISHNA PETROLEUM EVIDENT FROM AUDITED BALANCE SHEET AND PROFIT AND L OSS ACCOUNT FILED WITH THE RETURN OF INCOME. HENCE, THE LD. CIT(A) HELD THAT D ISALLOWANCE MADE WAS ENTIRELY PRESUMPTUOUS AND ADHOC. HENCE, THESEADHOC ADDITION MADE FOR RS. 14,24,871/- IS LIABLE TO BE DELETED. 5. THE LEARNED CIT(A) HAS MADE ADDITION OF RS. 14,2 4,871 (AS PER 6 IN ASSESSMENT ORDER) AND RS. 90,000 (PARA 7 OF ASSESSM ENT ORDER) /- ON ACCOUNT OF BUSINESS EXPENSES CLAIMED BY THE ASSESSEE, ALLEG ING THAT NO DOCUMENTARY EVIDENCES WERE FILED BY THE ASSESSEE IN SUPPORT OF THE THESE EXPENSES BEFORE HIM. IN THIS REGARD, WE SUBMIT THAT IT IS A SETTLED L AW THAT IN THE ABSENCE OF ANY SPECIFIC FINDING, THE ADHOC ADDITIONS MADE BY THE A O CANNOT BE SUSTAINED. RELIANCE IN THIS REGARD IS PLACED-ON THE JUDGMENT O F THIS HON'BLE IT AT IN THE CASE OFDCIT VS. NORMA INDICJ LTD. IN IT A NO. 4 562/DEL/2010 DATED 04.12.2015. 6. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) HAS GROSSLY ERRED IN TOTALLY IGNORING THE ASSESSMEN T ORDERS IN THE CASE OF THE APPELLANT FOR THE EARLIER YEAR(S) WHICH HAD SAME BU SINESS AND SIMILAR RESULTS AND FURTHER ERRED IN PROCEEDING TO MAKE THE ADDITIO NS IN AN ARBITRARY AND BIASED MANNER. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AU THORISED DEALER OF HINDUSTAN PETROLEUM CORPORATION LIMITED (HPCL) AND ENGAGED IN THE BUSINESS OF RESELLER OF PETROLEUM PRODUCT, FILE D RETURN OF INCOME FOR AY 2013-14 ON 12-11-2013 DECLARING TOTAL INCOME AT RS.6,98,400/-. THE RETURN OF INCOME WAS TAKEN UP FO R SCRUTINY FOR THE LOW NET PROFIT. DURING THE ASSESSMENT PROCEEDI NGS THE ASSESSING OFFICER ASKED THE ASSESSEE TO PRODUCE DOCUMENTARY E VIDENCE IN RESPECT OF EXPENSES CLAIMED. THE ASSESSING OFFICER NOTED THAT THE 3 ITA 5437/MUM/2018 KRISHNA PETROLEUM ASSESSEE FAILED TO PRODUCE DOCUMENTARY EVIDENCE IN RESPECT OF FOLLOWING EXPENSES:- S.NO. HEAD OF EXPENDITURE AMOUNT OF EXPENDITURE CLAIMED (RS.) 1 POWER AND FUEL 1,17,640 2 SALARY AND WAGES 19,13,480 3 OTHER INSURANCE 22,217 4 WORKMAN AND STAFF WELFARE EXPENSES 4,85,262 5 SALES PROMOTION 3,75,800 6 CONVEYANCE EXPENSES 5,33250 7 OTHER EXPENSES 13,01,970 TOTAL 47,49,569 3. THE ASSESSEE WAS ASKED TO SUBSTANTIATE THE EXPENSES BY PRODUCING THE EVIDENCE. AS THE ASSESSEE COULD NOT PRODUCE TH E EVIDENCE FOR INCURRING OF THESE EXPENSES, THE AO DISALLOWED 30% OF EACH EXPENSES CLAIMED AS POWER AND FUEL, SALARY AND WAGE S, OTHER INSURANCE, WORKMAN AND STAFF WELFARE EXPENSES, SALE S PROMOTION, CONVEYANCE EXPENSES AND OTHER EXPENSES TOTALLING T O RS.14,24,871. THE ASSESSING OFFICER ALSO DISALLOWED RS.90,000/- CLAIMED ON ACCOUNT OF PENALTIES CLAIMED IN THE P&L ACCOUNT. 4. ON APPEAL BEFORE THE LD. CIT(A), THE ACTION OF ASSE SSING OFFICER WAS SUSTAINED AS NOBODY APPEARED BEFORE THE CIT(A) TO PRESENT THE CASE OF THE ASSESSEE DESPITE SEVERAL OPPORTUNITIES. FURTHER AGGRIEVED BY THE ORDER OF LD. CIT(A), THE ASSESSEE HAS FILED THE PRESENT APPEAL BEFORE US. 4 ITA 5437/MUM/2018 KRISHNA PETROLEUM 5. WE HAVE HEARD THE SUBMISSION OF LD. AUTHORIZED REPR ESENTATIVE (AR) OF THE ASSESSEE AND LD. DEPARTMENTAL REPRESENT ATIVE (DR) FOR THE REVENUE AND PERUSED THE MATERIAL AVAILABLE ON R ECORD. THE LD. AR OF THE ASSESSEE SUBMITS THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN UPHOLDING THE ADDITIONS MADE BY THE AO. HE SUBMITT ED THAT THE LD. CIT(A) CONFIRMED THE ADDITIONS, AS THE ASSESSEE COU LD NOT APPEAR BEFORE THE LD.CIT(A). THE LD.AR OF THE ASSESSEE SU BMITS THAT THE ASSESSEE HAS ALL THE EVIDENCES IN SUPPORT OF ITS CL AIM OF EXPENDITURE AND COULD BE PRODUCED BEFORE THE LD.CIT(A), PROVIDE D ANOTHER OPPORTUNITY OF HEARING IS GIVEN TO THE ASSESSEE BEF ORE THE CIT(A). 6. ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESENTAT IVE (DR) FOR THE REVENUE SUPPORTED THE ORDER OF LOWER AUTHORITIES. T HE LD. DR SUBMITS THAT THE ASSESSEE HAVE NOT PRODUCED ANY EVI DENCES TO SUBSTANTIATE THE EXPENSES BEFORE THE LOWER AUTHORIT IES. 7. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND ALSO P ERUSED THE MATERIAL AVAILABLE ON RECORD. WE NOTICE THAT THE L D.CIT(A) DISMISSED THE APPEAL OF THE ASSESSEE AS NOBODY APPE ARED BEFORE HIM TO EXPLAIN THE CASE OF THE ASSESSEE. HOWEVER, NOW THE LD.AR OF THE ASSESSEE BEFORE US PLEADS THAT THE ASSESSEE MAY BE GIVEN ANOTHER OPPORTUNITY OF HEARING BEFORE THE LD. CIT(A) AS THE ASSESSEE IS IN 5 ITA 5437/MUM/2018 KRISHNA PETROLEUM POSSESSION OF ALL THE EVIDENCES IN RESPECT OF EXPEN SES CLAIMED BY IT. CONSIDERING THE SUBMISSIONS OF THE LD AR FOR THE AS SESSEE AND KEEPING IN VIEW THE PRINCIPLE OF NATURAL JUSTICE AN D THE FACT THAT THE LD CIT(A) HAS NOT DISCUSSED THE ISSUE ON MERIT, WE RESTORE THE MATTER TO THE FILE OF THE CIT(A) TO DECIDE ALL THE ISSUES RAISED IN THE APPEAL AFRESH, AFTER PROVIDING OPPORTUNITY OF HEA RING TO THE ASSESSEE AND DECIDE IN ACCORDANCE WITH LAW. THE ASS ESSEE IS DIRECTED TO PRODUCE ALL THE EVIDENCES THAT MAY BE S OUGHT FOR AND NOT TO SEEK ADJOURNMENT WITHOUT ANY VALID REASONS. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS TREATED AS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 14 -10-2019. SD/- SD/- (SHAMIM YAHYA) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIALMEMBER MUMBAI, DT : 14 TH OCTOBER, 2019 PK/- COPY TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR /TRUE COPY/ BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI