M/s R.B. Ram Nath Lambah & Sons, Amritsar. V. Dy. Commissioner of Income Tax, Amritsar.

ITA 560/ASR/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 5552 (ITAT-AMRITSAR)
• Duration Of Justice: 8 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-07-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 26-07-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 09-11-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DHARAM SINGH
• Assessee Lawyers: K R JAIN

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. T. S. KAPOOR, ACCOUNTANT MEMBER AND SH. N.K. CHOUDHRY, JUDICIAL MEMBER I.T.A NO.560/(ASR)/2016 ASSESSMENT YEAR: 2011-12 PAN: AABFR2676L M/S R. B. RAM NATH LAMBAH & SONS, BAZAR GUJJRAN, MAJITH MANDI, AMRITSAR VS. THE DY. CIT, CIRCLE II AMRITSAR (APPELLANT) (RESPONDENT) APPELLANT BY: SH. K. R. JAIN (AD V.) RESPONDENT BY: SH. DHARAM SINGH (D.R.) DATE OF HEARING: 26.07.2017 DATE OF PRONOUNCEMENT: 27.07.201 7 ORDER PER T. S. KAPOOR (AM): THIS IS AN APPEAL FILED BY ASSESSEE AGAINST THE ORD ER OF LD. CIT(A), AMRITSAR DATED 02.08.2016 FOR ASST. YEAR: 2011-12. 2. THE ASSESSEE HAS TAKEN FOUR GROUNDS OF APPEAL, H OWEVER, THE GRIEVANCE OF THE ASSESSEE IS THE ACTION OF LD. CIT( A), BY WHICH HE HAS CONFIRMED AN ADDITION OF RS.4,00,000/- WHICH THE AS SESSING OFFICER HAD MADE. 3. AT THE OUTSET, THE LD. AR SUBMITTED THAT THE ASS ESSEE IS A CUSTOM HOUSE CLEARING & FORWARDING AGENTS FOR IMPORT AND E XPORTS. DURING ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER DISAL LOWED AN AMOUNT OF ITA NO. 560(ASR)/2016 ASSESSMENT YEAR: 2011-12 2 RS.4,00,000/- HOLDING THAT THE ASSESSEE WAS NOT ABL E TO PROVE THE GENUINENESS OF THE ABOVE EXPENSES. 4. THE LD. AR, SUBMITTED THAT THE ASSESSEE DID NOT CLAIM ANY EXPENSES IN THE PROFIT AND LOSS ACCOUNT AND ONLY IN CURRED EXPENSES ON ACCOUNT OF HIS CLIENTS AND WHICH WERE LATER ON REIM BURSED BY THEM. IN THIS RESPECT OUR ATTENTION WAS INVITED TO PARA 4 OF THE ASSESSMENT ORDER WHEREIN THE ASSESSING OFFICER HIMSELF HAD NOTED THA T THE ASSESSEE HAD INCURRED SUCH EXPENSES ON BEHALF OF PARTIES. THE LD . AR SUBMITTED THAT IF THE ASSESSEE HAD NOT CLAIMED ANY EXPENSES IN THE PR OFIT AND LOSS ACCOUNT, NO DISALLOWANCE COULD HAVE BEEN MADE. THE LD. AR, FURTHER SUBMITTED THAT LD. CIT(A) ALSO DID NOT CONSIDER THE FACTS OF THE CASE AND HAD CONFIRMED THE ADDITION HOLDING THAT PAYMENTS MA DE TO THE LABOUR WERE SIGNED BY THE ACCOUNTANT OF ASSESSEE AND WERE NOT SIGNED BY THE RECEIVERS. 5. THE LD. DR, ON THE OTHER HAND, SUBMITTED THAT AS SESSEE WAS NOT ABLE TO PROVE THE GENUINENESS OF THE EXPENSES AS TH E VOUCHERS WERE SELF GENERATED AND WERE NOT SIGNED BY THE RECEIVER AND T HEREFORE, LD. CIT(A) HAS RIGHTLY UPHELD THE ADDITION. 6. WE HAVE HEARD THE RIVAL PARTIES AND HAVE GONE THOUGH THE MATERIAL PLACED ON RECORD. WE FIND THAT IT IS A FACT THAT AS SESSEE HAD INCURRED THE EXPENDITURE ON BEHALF OF PARTIES AS THIS HAS BEEN N OTED BY THE ASSESSING OFFICER HIMSELF AT PARA 4. FOR THE SAKE OF CONVENIE NCE, THE PARA 4 OF ASSESSING OFFICER IS REPRODUCED BELOW: ITA NO. 560(ASR)/2016 ASSESSMENT YEAR: 2011-12 3 4.0 A PERUSAL OF DEBIT NOTES SHOWS THAT HE HAD GE NERATED DEBIT NOTES OF EXPENSES TO BE PAID BY THE PARTIES WHICH WERE AC TUALLY PAID BY THE ASSESSEE ON THEIR BEHALF. WHILE GOING THROUGH THE D EBIT NOTES AND LEDGER, THE ASSESSEE HAS BEEN ASKED TO EXPLAIN THE NATURE O F EXPENSES PAID BY HIM ON BEHALF OF THE PARTIES AND THE MODE OF PAYMEN TS. THE ASSESSEE PRODUCED THE COMPLETE LEDGER ACCOUNT OF ALL THE EXP ENSES DEBITED BY HIM TO THE PARTIES FOR REIMBURSEMENT. THE ASSESSEE WAS ASK ED TO FURNISH THE PROOF OF PAYMENTS BEING ACTUALLY MADE BY HIM, WHICH WERE LATER ON CLAIMED BY HIM FROM THE PARTIES. THE ASSESSEE PRODU CED SELF-MADE DEBIT VOUCHERS ON ACCOUNT OF EXPENSES MADE TO THE LABOURE RS WHICH BEAR THE SIGNATURE OF ACCOUNTANT AND THE AUTHORIZED SIGNATOR Y AND WERE NOT SIGNED BY THE RECEIVER. WHEN ASKED ABOUT THE SIGNATURE OF RECEIVER, THE ASSESSEE SUBMITTED THAT THIS AMOUNT IS PAID TO THE LABOURER WHO CAME FROM THE NEARBY VILLAGES AND MOST OF THESE ARE ILLITERATE. T HE LABOURERS ARE NOT OUR REGULAR EMPLOYEES AND ENGAGED ON REQUIREMENT BASIS. HE IS NOT MAINTAINING ANY MUSTER ROLLS AND ALSO NOT KEEPING A NY RECORD AND NAMES AND IDENTIFY OF THE LABOURERS. PAYMENT IS BEING MAD E ON THE SPOT AND AS PER REQUIREMENT OF CONSIGNMENT, WHICH IS ACTUALLY T HE LIABILITY OF THE PARTIES AND PAYMENTS ARE MADE BY HIM AND CHARGED TH ROUGH DEBIT NOTES. ALMOST ALL THE ABOVE PAYMENTS ARE BEING MADE IN CAS H. THIS VERSION OF THE ASSESSEE IS NOT ACCEPTED. THE ASSESSEE IS A CUSTOMS CLEARING AGENT AND MAKES PAYMENTS ON BEHALF OF THE PARTIES ON REGULAR BASIS. THE ASSESSEE IS REQUIRED TO PRODUCE SOME DOCUMENTARY EVIDENCE OF PA YMENT OF THE EXPENSES ON BEHALF OF THE PARTIES WHO ENGAGE HIM, W HICH THE ASSESSEE FAILED TO PRODUCE DURING THE COURSE OF ASSESSMENT P ROCEEDINGS. THEREFORE, THE ASSESSEE HAS NOT FULFILLED HIS ONUS OF JUSTIFYI NG THE GENUINENESS OF THE ABOVE EXPENSE, BEYOND DOUBT. KEEPING IN VIEW THE NA TURE OF ACTIONS BEING REIMBURSED TO THE ASSESSEE BY THE PARTIES AND ASSES SEE IS FAILED TO PRODUCE PROPER RECORD OF THESE PAYMENT, A DISALLOWA NCE OF SUM OF RS. 4,00,000/- OUT OF THE ABOVE EXPENSES IS MADE AND AD DED TO THE RETURNED INCOME OF THE ASSESSEE ON ACCOUNT OF NON-VERIFICATI ON OF THE ABOVE EXPENSES AND TO PLUG THE LEAKAGE OF REVENUE IN THIS REGARD. IN VIEW OF THE ABOVE, FACTS AND CIRCUMSTANCES AND FINDINGS WE HOLD THAT SINCE THE ASSESSEE HAD NOT BOOKED AND CLAIMED ANY EXPENDITURE AND HAD INCURRED THE EXPENDITURE ON BEHALF OF OTHER PAR TIES FROM WHOM IT HAD RECEIVED BACK AS REIMBURSEMENT, THERE WAS NO BA SIS FOR MAKING AND UPHOLDING SUCH DISALLOWANCE AS THESE WERE NOT THE E XPENSES OF ASSESSEE. 8. IN VIEW OF THE ABOVE, THE FINDINGS OF LD. CIT(A ) ARE REVERSED AND THE APPEAL FILED BY ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 27.07.2017. ITA NO. 560(ASR)/2016 ASSESSMENT YEAR: 2011-12 4 SD/- SD/- (N.K. CHOUDHRY) (T. S. KAPOOR) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 27.07.2017. /GP/SR. PS . COPY OF THE ORDER FORWARDED TO: (1) THE ASSESSEE: (2) THE (3) THE CIT(A), (4) THE CIT, (5) THE SR DR, I.T.A.T., TRUE COPY BY ORDER