M/s Agrawal Extrusion(P) Ltd, Varanasi V. DCIT, Varanasi

ITA 546/ALLD/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 89818 (ITAT-ALLAHABAD)
• Duration Of Justice: 6 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-04-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 20-10-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: UMESH PATHAK
• Assessee Lawyers: ARVIND SHUKLA
• Section: 115JB; 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, ALLAHABAD BENCH, ALLAHABAD BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AN D SHRI C. N. PRASAD, JUDICIAL MEMBER ITA NO.546/ALLD/2014 ASSESSMENT YEARS: 2009-10 M/S. AGRAWAL EXTRUSIONS PVT. LTD. B-8, BADSHAH BAGH COLONY, MALDAHIYA VARANASI PAN:AABCA 8941 Q VS. DCIT CIRCLE-1 VARANASI (APPELLANT) (RESPO NDENT) ASSESSEE BY : SHRI ARVIND SHUKLA REVENUE BY : SHRI UMESH PATHAK DATE OF HEARING : 21.04.2015 DA TE OF PRONOUNCEMENT : 22 .04.2015 O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL BY THE ASSESSEE AGAINST THE ABOVE OF T HE LD. CIT(A) DATED 19.08.2014 FOR THE A.Y. 2009-10. GROUNDS READ AS UN DER:- 1. BECAUSE THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN LAW AS WELL AS ON FACTS IN NOT APPRECIATING THE FAC TS AND CIRCUMSTANCES OF THE CASE IN THE CORRECT LEGAL PERSPECTIVE AND IN DISMIS SING MOST OF THE GROUNDS. 2. BECAUSE THE LEARNED COMMISSIONER OF INCOME-TAX ( APPEALS) HAS ERRED IN LAW AS WELL AS ON FACTS IN CONFIRMING THE DISALLOWA NCES OUT OF VARIOUS EXPENSES CLAIMED IN AD HOC MANNER WITHOUT POINTING OUT A SINGLE SPECIFIC ITEM OF INADMISSIBLE NATURE IN THE AUDITED ACCOUNTS BY E XPRESSLY FLOUTING THE ORDERS OF HONBLE HIGH COURT AS WELL AS ITAT ALLAHA BAD. 3. BECAUSE THE LEARNED COMMISSIONER OF INCOME-TAX ( APPEALS) HAS ERRED IN LAW AS WELL AS ON FACTS IN CONFIRMING THE DISALLOWA NCE OF RS.20,000/- UNDER THE HEAD TRUCK RUNNING EXPENSES. RS.12,571/- UNDER THE HEAD BUILDING AND RS.15,268/- OUT OF COMMISSION EXPENSES, ALL BEING 1 0% OF TOTAL CLAIM IN AD ITA NO.546/ALLD/2014 ASSESSMENT YEARS: 2009-10 2 HOC MANNER SIMPLY ON CONJECTURE AND SURMISES AND WI THOUT APPRECIATING THAT NO AD HOC DISALLOWANCES CAN LEGALLY BE MADE IN CASE OF AUDITED ACCOUNTS. 4. BECAUSE THE LEARNED COMMISSIONER OF INCOME-TAX ( APPEALS) HAS ERRED IN LAW AS WELL AS ON FACTS IN CONFIRMING DISALLOWANCE OUT OF ADDITION TO FIXED ASSETS WITHOUT APPRECIATING THAT THE AMOUNT HAD NO REVENUE IMPLI8CATION AND THE DISALLOWANCE COULD NOT HAVE BEEN LEGALLY MADE. 5. BECAUSE THE LEARNED COMMISSIONER OF INCOME-TAX ( APPEALS) HAS ERRED IN LAW AS WELL AS ON FACTS IN NOT APPRECIATIN G THAT THE ASSESSEE WAS ENTITLED TO FULL TAX HOLIDAY U/S S.80IC AS WELL AS 115JB AND HE COULD NOT HAVE SET ASIDE THE ISSUE FOR READJUDICATING THE APPLICAB ILITY OF SECTION 80IC. 6. BECAUSE THE LEARNED COMMISSIONER OF INCOME-TAX ( APPEALS) HAS ERRED IN LAW AS WELL AS ON FACTS IN SETTING ASIDE T HE ISSUE OF DISALLOWANCE U/S 40(A)(IA) FOR RECONSIDERATION WITHOUT APPRECIATING THAT HE HAD NO POWER TO SET ASIDE A ISSUE AND ALSO THAT THERE WAS NO LIABIL ITY OF TDS ON THE SAID PAYMENT MAKING THE ENTIRE DISALLOWANCE BAD IN LAW. FROM THE ABOVE IT IS EVIDENT GROUND NO. 1 ARE GENER AL IN NATURE AND THEREFORE, THE SAME IS DISMISSED AS SUCH. 2. REGARDING GROUND NOS. 2 3 AND 4, LD. COUNSEL SUB MITTED THAT THE AO MADE AD HOC DISALLOWANCES APPLYING THE FLAT RATE OF 10% IN RESPECT OF CERTAIN CLAIMS MADE OUT OF VARIOUS ACCOUNTS MENTIONED IN GROUNDS. IN THIS R EGARD, LEARNED COUNSEL FOR THE ASSESSEE MENTIONED THAT THE AO RESORTED TO ADHOCISM WITHOUT SPECIFYING THE DEFECTS IN THE CLAIMS OF THE ASSESSEE. DURING THE FIRST APP ELLATE PROCEEDINGS, THE LD. CIT(A) DISCUSSED THE SAME IN PARA 4 TO 6 OF THE IMPUGNED O RDER AND CONFIRMED THE SAME STATING THAT THE ASSESSEE FAILED TO PRODUCE BILLS A ND VOUCHERS AND ASSESSEE MERELY SUBMITTED THE SELF MADE VOUCHERS. THE FACT OF THE L D. CIT(A) RELYING ON THE VARIOUS DECISIONS IN SUPPORT OF RESORTING TO ESTIMATIONS WA S ALSO BROUGHT TO OUR NOTICE. LEARNED COUNSEL VEHEMENTLY ARGUED BY STATING THAT A DHOCISM BASED ADDITIONS IN THE CASES, WHERE AUDIT IS DONE IN U/S 44 AB OF THE ACT, ARE UNWARRANTED. 3. ON THE OTHER HAND, LD. DR FOR THE REVENUE DUTIFU L RELIED ON THE ORDERS OF THE AO AND THE LD. CIT(A). LD. DR SUBMITTED THAT THE AS SESSEE FAILED TO PRODUCE THIRD PARTY EVIDENCES IN SUPPORT OF THE SAID CLAIMS. ITA NO.546/ALLD/2014 ASSESSMENT YEARS: 2009-10 3 4. WE HAVE HEARD BOTH THE PARTIES AND FIND THAT THE SAID DISALLOWANCES WAS RESORTED BY THE AO FOR HIS FAILURE TO MAINTAIN VERI FIABLE THIRD PARTY VOUCHERS. SELF MADE VOUCHERS WERE RELIED IN SUPPORT OF THE CLAIMS. CONSIDERING THE SAME DESPITE THE FACTS THE CASES IS AUDITED BY THE AUDITORS, WE FIND THERE IS NEED FOR SOME DISALLOWANCES FOR THE REASONS OF FAILURE TO DISCHAR GING THE ONUS BY THE ASSESSEE. HOWEVER, WE FIND THAT THERE IS NO JUSTIFICATION FOR RESORTING TO 10% BY THE AO. THEREFORE, IN OUR OPINION AT DISALLOWING THE SUM AM OUNT OF RS.25,000/- AND ALL THESE ACCOUNTS WOULD BE SUFFICIENT ACCORDINGLY, WE RESTRI CT THE DISALLOWANCE TO SUM OF RS.25,000/- FOR THE YEAR UNDER CONSIDERATIO N. IN ANY CASE, IT WOULD NOT BE A PRECEDENT FOR THE SUBSEQUENT YEARS OF ASSESSMENT IF ANY. ACCORDINGLY, THE GROUND NOS. 2, 3, AND 4 ARE PARTLY ALLOWED. 5. GROUND NO. 5 RELATES TO THE DIRECTION GIVEN BY T HE LD. CIT(A) TO CONDUCT CERTAIN VERIFICATIONS BEFORE ALLOWING THE CLAIM OF THE ASSESSEE. PARA 7 IS RELEVANT IN THIS REGARD. IT IS BROUGHT TO OUR NOTICE THAT SUCH DIRECTION HAS NOT BEEN CARRIED OUT TILL DATE. LEARNED COUNSEL REQUESTS US TO GIVE A DI RECTION TO THE AO TO SPEED UP AND COMPLETE THE PROCEEDINGS AT THE EARLIEST. 6. AFTER HEARING BOTH THE PARTIES, WE DIRECT THE AO TO COMPLETE THE PROCEEDINGS IN A TIME BOUND MANNER AND DECIDE ISSUE AT THE EARL IEST AFTER HEARING THE ASSESSEE. ACCORDINGLY, GROUND NO. 5 IS ALLOWED. 7. GROUND NO. 6 RELATES TO ADDITION OF RS.1,31,900/ - U/S 40(A)(IA) OF THE ACT. DURING THE PROCEEDINGS BEFORE US, LEARNED COUNSEL F OR THE ASSESSEE BROUGHT TO OUR NOTICE THE PAYMENTS IN QUESTION AND SUBMITTED THAT THE SAID PAYMENT DO NOT ATTRACT THE PROVISIONS OF SECTION 40(A)(IA) READ WITH FIRST PROVISO TO SECTION 194C (5) OF THE ACT. ON PERUSAL OF THE SAME WE FIND THAT THE PAYMEN T IN QUESTION ARE BELOW LIMITS SPECIFIED IN THE SUBSECTION 5 AS WELL THE PROVISO T O SECTION 5 OF SECTION 194C OF THE ACT. 8. AFTER HEARING BOTH THE PARTIES, WE FIND THAT THE ASSESSEE SHOULD SUCCEED ON THIS ISSUE. ACCORDINGLY, GROUND NO. 6 IS ALLOWED. ITA NO.546/ALLD/2014 ASSESSMENT YEARS: 2009-10 4 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 22 ND DAY OF APRIL, 2015. SD/- SD/- (C. N. PRASAD) (D. KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER ALLAHABAD, DATED: 22.04.2015 *SRIVASTAVA COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, ALLAHABAD THE CIT(A) CONCERNED, ALLAHABAD THE DR BENCH //TRUE COPY// BY ORDER DY/ASSTT. REGISTRAR, ITAT, ALLAHABAD.