ACIT, Jaipur V. M/S KUNDAN MAL MUKANDMAL TRADERS P. LTD., Jaipur

ITA 550/JPR/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 82859 (ITAT-JAIPUR)
• Duration Of Justice: 2 year(s) 6 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-12-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 05-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS NEENA JEPH
• Assessee Lawyers: G G MUNDRA

Judgement Text

IN THE INCOMETAX APPELLATE TRIBUNAL JAIPUR BENCH: JAIPUR (BEFORE SHRI R.P. TOLANI AND SHRI T.R. MEENA) I.T.A. NO. 550/JP/2012 ASSTT. YEAR- 2007-08 PAN NO. AACCK 0420 F THE A.C.I.T., M/S KUNDAN MAL MUKANDMAL TRADERS CIRCLE-4, JAIPUR. VRS. PVT. LTD., D-80, CHANDPOLE ANAJ MANDI, JAIPUR. (APPELLANT) (RESPONDENT) DEPARTMENT BY :- MRS. NEENA JEPH. ASSESSEE BY :- SHRI G.G. MUNDRA. DATE OF HEARING : 30/10/2014 DATE OF PRONOUNCEMENT : 12/12/2014 O R D E R PER: R.P. TOLANI, J.M. THIS IS AN REVENUES APPEAL AGAINST THE ORDER DATE D 22/03/2012 PASSED BY THE LEARNED C.I.T. (A)-II, JAIPUR. EFFECTIVE GR OUND OF APPEAL IS AS UNDER:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED CIT(APPEALS) HAS ERRED IN: (I) DELETING DISALLOWANCE OF RS. 1,69,742/- MADE BY THE A.O. OUT OF OFFICE EXPENSES, RS. 82,719/- OUT OF VEHICLE S RUNNING AND REPAIR EXPENSES AND RS. 44,32,643/- OUT OF RAST A EXPENSES HOLDING THAT NO SPECIFIC DEFICIENCY IN VOU CHERS WAS POINTED OUT BY THE A.O. WITHOUT APPRECIATING TH E FACTS AND CIRCUMSTANCES OF THE CASE. ITA 550/JP/2012 ACIT VS. M/S KUNDAN MAL MUKANDMAL 2 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE WO RKS AS A TRANSPORTER OF NEW CARS FOR VARIOUS MANUFACTURERS FROM THEIR PLANT S TO THE DEALERS STATIONS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AS SESSING OFFICER DISALLOWED SOME EXPENDITURE OUT OF OFFICE EXPENSES, VEHICLE RU NNING AND REPAIR EXPENSES AND SUBSTANTIAL AMOUNT OF EXPENSES INCURRED BY THE ASSESSEE TERMED AS ROAD TRAVELLING OF THE TRAILER DRIVERS. THESE WERE EXPEN SES WHICH ARE INCURRED BY THE DRIVERS LIKE TOLLS, FOOD, DIESEL ETC. 3. AGGRIEVED, THE ASSESSEE PREFERRED FIRST APPEAL W HERE THE LEARNED CIT(A) RELIED ON THE JUDGMENT OF THE HONBLE ITAT IN ASSES SEES OWN CASE IN ITA NO. 34/JP/2011 DATED 02/02/2012 FOR A.Y. 2006-07, WHIC H DELETED THE SIMILAR TYPE OF DISALLOWANCE OF EXPENDITURE BY FOLLOWING OBSERVA TIONS:- THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF TRANSPORTATION. DURING THE ASSESSMENT PROCEEDINGS, THE A.O. OBSERVE D THAT ASSESSEE HAS DECLARED TOTAL RECEIPTS OF RS. 45,49,12,320/- A ND NET PROFIT HAS BEEN AT RS. 4,01,30,676/- GIVING NP RATE OF 8.82% AGAINS T N.P. RATE OF 8.46% DECLARED IN THE LAST YEAR. THE A.O. AFTER GOING THR OUGH VARIOUS DETAILS OF EXPENDITURE CLAIMED IN THE PROFIT AND LOSS ACCOUNT FOUND THAT EXPENSES ON TRAVELING, TELEPHONE, VEHICLE, MISCELLANEOUS EXP ENSES ARE NOT FULLY VOUCHED. THEREFORE, HE DISALLOWED 10% OF THESE EXPE NSES TOTALING TO RS. 6,76,863/-. AFTER CONSIDERING THE SUBMISSION, T HE LEARNED CIT(A) DELETED THIS ADDITION BY OBSERVING THAT NP RATE SH OWN BY ASSESSEE IS PROGRESSIVE AND THEREFORE, FURTHER DISALLOWANCE MAD E BY A.O. WAS NOT JUSTIFIED. ACCORDINGLY, HE DELETED THE DISALLOWANCE . AFTER CONSIDERING THE ORDERS OF THE A.O. AND LEARNED CIT(A), WE FIND NO I NFIRMITY IN THE FINDING OF LEARNED CIT(A). THE QUANTUM OF RECEIPTS OF ASSE SSEE ARE VOLUMINOUS ITA 550/JP/2012 ACIT VS. M/S KUNDAN MAL MUKANDMAL 3 I.E. RS. 45.49 CRORES AND NP RATE SHOWN BY ASSESSEE ON THESE RECEIPTS ARE ALSO BETTER AS COMPARED TO EARLIER YEAR I.E. 8. 82% AGAINST 8.46%. TURNOVER OF THE ASSESSEE HAS BEEN INCREASED AS COMP ARED TO EARLIER YEAR. THEREFORE, WE FELL THAT THERE WAS NO NECESSIT Y TO MAKE DISALLOWANCE ON AD HOC BASIS. ACCORDINGLY, WE HOLD THAT LEARNED CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION. ACCORDINGLY , WE CONFIRM HIS ORDER. AFTER RELYING ON THE ITATS ORDER, THE LEARNED CIT( A) DELETED THE ADDITION BY HOLDING THAT: (I) THE ASSESSEE HAS DECLARED N.P. RATE OF 11.64%, WHICH IS MUCH ABOVE THAN THE EARLIER YEARS N.P. RATE I.E. 8.82% A ND 8.46%. THE ASSESSING OFFICER FAILED TO POINT OUT ANY DEFIC IENCY IN THE BOOKS OF ACCOUNT OR THE VOUCHERS SUBMITTED. THE ASS ESSING OFFICER MADE HUGE DISALLOWANCE ONLY BY HOLDING THAT THE SELF MADE VOUCHERS GIVEN BY THE DRIVERS WERE NOT RELIABL E. (II) NO PARTICULAR INFORMATION WAS CALLED BY THE AS SESSING OFFICER NOR ANY DEFICIENCY IN THE DETAILS FURNISHED BY THE ASSE SSEE HAS BEEN POINTED OUT, THUS THE ADDITIONS MADE WERE AD HOC IN NATURE. RELIANCE WAS PLACED ON THE FOLLOWING DECISIONS FOR THE PROPOSITION THAT SUCH AD HOC DISALLOWANCES WERE TO BE NOT SUSTAINABLE: (I) ARTHUR & ANDERSON & CO. VS. ADDL. CIT (2010 TI OL 416) (ITAT MUM.) (II) FRIENDS CLEARING AGENCY PVT. LTD. VS. CIT 332 ITR 269 (DEL.) (HC). ITA 550/JP/2012 ACIT VS. M/S KUNDAN MAL MUKANDMAL 4 4. AGGRIEVED REVENUE IS IN APPEAL. THE LEARNED THE LEARNED D.R. RELIED ON THE ORDER OF THE ASSESSING OFFICER. 5. LEARNED COUNSEL FOR THE ASSESSEE, ON THE OTHER H AND, CONTENDS THAT THE EXPENSES IN THIS YEAR ALSO HAVE BEEN DISALLOWED ON ADHOC BASIS; FACTS, CIRCUMSTANCES AND ISSUES ARE SIMILAR AS COMPARED TO EARLIER YEARS IN A.Y. 2005- 06. THE LEARNED DR HAS NOT DISPUTED THIS FACT. LEAR NED CIT(A) HAS GIVEN APPROPRIATE RELIEF RELYING ON THE EARLIER TWO YEARS OF THE ASSESSEE WHICH IS IN CONFORMITY WITH JUDGMENTS CITED SUPRA. IN THE CASE OF DEPLOYMENT OF FLEET OF TRAILERS AND TRUCKS TO TRANSPORT MOTOR CARS, THE DR IVERS INVARIABLY INCURRED MISCELLANEOUS TYPE OF EXPENSES DURING THEIR ROAD TR AVELLING, WHICH IS A RECOGNIZED FACT IN THIS TYPE OF TRADE. THE RELIEF B EING BASED ON EARLIER YEARS AND IN CONFORMITY WITH ABOVE JUDICIAL PRECEDENTS ON AD HOC DISALLOWANCES, THE LEARNED CIT(A)S ORDER IS JUST AND REASONABLE, WHIC H SHOULD BE UPHELD. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD AND FIND MERIT IN THE ARGUMENT OF THE LEARNED COUNS EL FOR THE ASSESSEE. THE LEARNED CIT(A) WHILE GIVING THE RELIEF HAS RELIED O N EARLIER TWO YEARS ORDER OF THE TRIBUNAL WHICH ARE IN FAVOR OF THE ASSESSEE HOL DING THAT SUCH AD HOC DISALLOWANCES CANNOT BE MADE. BESIDES THE ASSESSEE NET PROFIT IS MORE THAN AS COMPARED TO TWO EARLIER YEARS. THE EXPENDITURE DEPI CTED IN SELF MADE VOUCHERS CANNOT BE DISALLOWED ON AD HOC BASIS ONLY ON THE FA CT OF ITS BEING SUPPORTED BY ITA 550/JP/2012 ACIT VS. M/S KUNDAN MAL MUKANDMAL 5 SELF MADE VOUCHERS. IN VIEW THEREOF, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE LEARNED CIT(A), WHICH IS UPHE LD. 8. IN THE RESULT REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 12-12-2014 SD/- SD/- (T.R. MEENA) (R.P. TOLANI) ACCOUNTANT MEMBER JUDICIAL MEMBER JAIPUR, DATED : 12 TH DECEMBER, 2014 * RANJAN COPY FORWARDED TO :- 1. THE ACIT, CIRCLE-4, JAIPUR. 2. M/S KUNDAN MAL MUKANDMAL TRADERS PVT. LTD., JAIPU R. 3. THE CIT (A) 4. THE CIT 5. THE D/R GUARD FILE (I.T.A. NO. 550/JP/2012) BY ORDER, AR ITAT JAIPUR.