M/s Basti Wine Co. (Desi), Kanpur V. Income Tax Officer, Ward-1(1), Kanpur

ITA 562/LKW/2017

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 0196 (ITAT-LUCKNOW)
• Duration Of Justice: 1 year(s) 3 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-12-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2013-2014
• Appeal Filed On: 06-09-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: AGAINST D ATED

Judgement Text

I.T.A. NOS.562 TO 564/LKW/2017 ASSESSMENT. YEARS:2013-14 & 14-15 1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH SMC, LUCKNOW BEFORE SHRI T. S. KAPOOR, ACCOUNTANT MEMBER I.T.A. NO.562 & 563/LKW/2017 ASSESSMENT YEAR:2013-14 & 14-15 M/S BASTI WINE CO. (DESI) 24/4, THE MALL, KANPUR. PAN:AAAAB 5674 J VS. INCOME TAX OFFICER, WARD-1(1), KANPUR. (APPELLANT) (RESPONDENT) ITA NO.565/LKW/2017 ASSESSMENT YEAR:2014-15 M/S BASTI WINE CO. (ENGLISH) 24/4, THE MALL, KANPUR. PAN:AAAAB 5674 J VS. A.C.I.T., RANGE-1, KANPUR. (APPELLANT) (RESPONDENT) O R D E R THESE THREE APPEALS ARE FILED BY THE ASSESSEE AGAI NST THE ORDER DATED 31/07/2017, 31/07/2017 AND 18/07/2017 OF LEARNED CI T(A)-I, KANPUR. 2. THE ONLY EFFECTIVE GROUND OF APPEAL TAKEN BY THE ASSESSEE IN ALL THESE APPEALS IS THE ACTION OF LEARNED CIT(A) BY WHICH HE HAS CONFIRMED AD HOC DISALLOWANCES WHICH THE ASSESSING OFFICER HAD MADE OUT OF EXPENSES CLAIMED BY THE ASSESSEE. APPELLANT BY SHRI ASHISH JAISWAL, ADVOCATE RESPONDENT BY SHRI C. K. SINGH, D.R. DATE OF HEARING 03 / 12 /201 8 DATE OF PRONOUNCEMENT 07/12/2018 I.T.A. NOS.562 TO 564/LKW/2017 ASSESSMENT. YEARS:2013-14 & 14-15 2 3. LEARNED A. R., AT THE OUTSET, INVITED OUR ATTENT ION TO THE COPY OF ASSESSMENT ORDER AND SUBMITTED THAT WITHOUT REJECTI ON OF BOOKS OF ACCOUNT THE ASSESSING OFFICER HAS MADE DISALLOWANCE OUT OF EXPENSES CLAIMED WITHOUT POINTING OUT ANY EXPENDITURE WHICH WAS NOT VERIFIABLE OR WHEREIN THERE WAS ANY DISCREPANCY. HE SUBMITTED THAT THE A D HOC DISALLOWANCES, WITHOUT REJECTION OF BOOKS OF ACCOUNT, IS NOT AS PE R THE LAW. IT WAS SUBMITTED THAT THE EXPENDITURE WAS NOT IN THE NATUR E OF CAPITAL OR PERSONAL EXPENDITURE AND THE BOOKS OF ACCOUNT WERE AUDITED A ND WERE CHECKED DURING THE ASSESSMENT PROCEEDINGS. IT WAS SUBMITTE D THAT FOR MAKING ANY DISALLOWANCE THERE MUST BE CONCRETE EVIDENCE THAT S OME BOGUS EXPENDITURE OR UNRELATED EXPENSES HAVE BEEN CLAIMED AND THESE S HOULD BE SPECIFICALLY PIN POINTED AND RELIANCE IN THIS RESPECT WAS PLACED ON THE FOLLOWING CASE LAWS: (I) CIT VS. S.S.P. (P) LTD. [2011] 202 TAXMAN 386 (P&H) (II) INCOME TAX OFFICER VS. KULDEEP SINGH SETHI [2005] ( 6) MTC 479 (TRIB) (III) ACIT VS. GANPATI ENTERPRISES LTD., I.T.A. NO.6112/D EL/2012 (IV) TRIPAT KAUR VS. ACIT, I.T.A. NO.3244/DEL/2012 RELIANCE WAS FURTHER PLACED ON AN ORDER OF HON'BLE SUPREME COURT IN THE CASE OF J. J. ENTERPRISES VS. CIT [2002] 254 ITR 21 6 (SC) FOR THE PROPOSITION THAT WHEN ADDITIONS WERE UNSUSTAINABLE BECAUSE IT W AS MADE ON THE BASIS OF PURE GUESS WORK, THE DELETION OF ADDITION WAS CO RRECT. RELIANCE WAS ALSO PLACED ON A DECISION OF HON'BLE LUCKNOW BENCH OF TH E TRIBUNAL IN THE CASE OF BAJAJ AUTO CENTRE VS. INCOME TAX OFFICER IN I.T. A. NO.722/LKW/2017. 4. LEARNED D. R., ON THE OTHER HAND, SUPPORTED THE ORDERS OF AUTHORITIES BELOW. 5. I HAVE HEARD THE RIVAL PARTIES AND HAVE GONE THR OUGH THE MATERIAL PLACED ON RECORD. I FIND THAT ASSESSING OFFICER HA S MADE AD HOC DISALLOWANCES WITHOUT POINTING OUT ANY DISCREPANCY IN THE BOOKS OF ACCOUNT. I.T.A. NOS.562 TO 564/LKW/2017 ASSESSMENT. YEARS:2013-14 & 14-15 3 HE HAS SIMPLY HELD THAT ASSESSEE COULD NOT ESTABLIS H THAT ALL THESE EXPENSES HAVE BEEN WHOLLY AND EXCLUSIVELY INCURRED FOR THE B USINESS PURPOSE. HE HAS FURTHER HELD THAT ALL THESE EXPENSES WERE MADE IN C ASH FOR WHICH DETAILS OF ACTUAL WORK DONE AND THE PERSON TO WHOM PAYMENTS WE RE MADE WERE NOT VERIFIABLE. THE LEARNED CIT(A) HAS CONFIRMED THE A DDITION BY HOLDING THAT BOOKS OF ACCOUNT AND VOUCHERS WERE NOT PRODUCED BEF ORE HIM. HOWEVER, THE FACT REMAINS THAT BEFORE ASSESSING OFFICER THE BOOKS OF ACCOUNT AND VOUCHERS WERE PRODUCED AND LEARNED CIT(A) WAS REQUI RED TO ADJUDICATE AS TO WHETHER ANY AD HOC DISALLOWANCE WAS PERMITTED OR NOT. LEARNED A. R. HAS RELIED ON A NUMBER OF CASE LAWS FOR THE PROPOSI TION THAT NO AD HOC DISALLOWANCES CANNOT BE MADE WITHOUT REJECTION OF B OOKS OF ACCOUNT OR WITHOUT POINTING OUT ANY DISCREPANCY IN THE BOOKS O F ACCOUNT. THE HON'BLE LUCKNOW BENCH OF THE TRIBUNAL IN THE CASE OF BAJAJ AUTO CENTRE VS. INCOME TAX OFFICER IN I.T.A. NO.722/LKW/2017, AFTER RELYIN G ON A NUMBER OF JUDGMENTS, HAS DECIDED THE ISSUE IN FAVOUR OF THE A SSESSEE BY HOLDING AS UNDER: 6. WE HAVE PERUSED THE CASE RECORD AND HEARD THE R IVAL CONTENTIONS AND CONSIDERED THE JUDICIAL PRONOUNCEME NTS PLACED BEFORE US. ON A PERUSAL OF THE ASSESSMENT ORDER WI TH REGARD TO THE DISALLOWANCES MADE ON GENERAL EXPENSES AND STAF F WELFARE EXPENSES OF RS.10,000/- AND DISALLOWANCES ON ACCOUN T OF SALES PROMOTION EXPENSES AND FREIGHT EXPENSES, BOTH AT RS .10,000/- EACH, ASSESSING OFFICER HIMSELF IN HIS ORDER HAS ME NTIONED THAT THESE ADDITIONS ARE MADE ON ADHOC BASIS AND ADDED T O THE INCOME OF THE ASSESSEE. WITH REGARD TO THE DISALLO WANCES ON ACCOUNT OF TRAVELLING EXPENSES, TELEPHONE, ETC., AS SESSING OFFICER HAS ADDED AN AMOUNT OF RS.83,253/- NOT ON T HE BASIS OF ANY SPECIFIC ENQUIRY CONDUCTED BY HIM OR BY PROVIDI NG ANY EVIDENCE TO THE FACT THAT HOW THESE EXPENSES ARE BO RNE OUT OF PERSONAL USE AND ON THE BASIS OF GUESS WORK HAS ADD ED THIS AMOUNT TO THE INCOME OF THE ASSESSEE. THE LD. CIT( A), ON THE OTHER HAND, HAS CONFIRMED THESE ADDITIONS MADE BY T HE ASSESSING OFFICER SIMPLY ON THE GROUND THAT BOOKS O F ACCOUNT AND VOUCHERS WERE NOT PRODUCED BEFORE HIM. WE HAVE EXAMINED THE CASE RECORDS AND WE FIND, AS COMING OU T FROM I.T.A. NOS.562 TO 564/LKW/2017 ASSESSMENT. YEARS:2013-14 & 14-15 4 ASSESSMENT ORDER ITSELF, THAT FROM TIME TO TIME ASS ESSEE HAS PROVIDED ANSWER TO THE QUESTIONNAIRE ISSUED BY THE ASSESSING OFFICER AND HAS ALSO PRODUCED BOOKS OF ACCOUNT ALON G WITH BILLS AND VOUCHERS, WHICH WERE TEST CHECKED. WHEN ALL TH ESE DOCUMENTS WERE THERE BEFORE THE DEPARTMENT, ASKING FOR FURTHER PRESENTATION OF THESE DOCUMENTS BEFORE THE LD. CIT(A) SEEMS TO BE A MEANINGLESS EXERCISE. THE POWER OF T HE LD. CIT(A) BEING CO-TERMINUS WITH THAT OF THE ASSESSING OFFICER HAS ALSO NOT GONE INTO THE MERITS OF THE CASE REGARDING DISALLOWANCES AND HAS SUMMARILY DISPOSED OF THE APP EAL CONFIRMING THE ADDITIONS MADE BY THE ASSESSING OFFI CER. WE TAKE GUIDANCE FROM THE DECISION OF THE HON'BLE APEX COURT IN THE CASE OF J.J. ENTERPRISES VS. CIT (SUPRA) WHEREI N IT HAS BEEN CATEGORICALLY HELD THAT ADDITION TO THE INCOME OF T HE ASSESSEE MADE ON THE BASIS OF PURE GUESS WORK WAS UNSUSTAINA BLE. SAME VIEW HAS BEEN REITERATED BY THE CO-ORDINATE IT AT ALLAHABAD BENCH IN ITA NO.1419/ALLD/1997 FOR ASSESS MENT YEAR 1994-95 RELYING ON ANOTHER APEX COURT DECISION IN T HE CASE OF J.K. ENTERPRISES, 254 ITR 216. SIMILAR ADHOC DISAL LOWANCES WERE ALSO DELETED BY RESPECTIVE CO-ORDINATE ITAT BE NCHES OF LUCKNOW AND AMRITSAR IN THE RESPECT CASES REFERRED TO HEREINABOVE IN THIS ORDER. IN THE INSTANT CASE, AS WE HAVE EXAMINED, ALL THE DISALLOWANCES WERE MADE ON ADHOC BASIS AND ON THE BASIS OF PURE GUESS WORK, THEREFORE, RELYING ON VARIOUS JUDICIAL PRONOUNCEMENTS ON THE ISSUE, WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND DIRECT DELETION OF THESE ADHOC D ISALLOWANCES THEREBY ALLOWING THE APPEAL OF THE ASSESSEE. 6. RESPECTFULLY FOLLOWING THE ABOVE, I ALLOW ALL TH E APPEALS FILED BY THE ASSESSEE. 7. IN THE RESULT, ALL THE APPEALS OF THE ASSESSEE S TAND ALLOWED. (ORDER PRONOUNCED IN THE OPEN COURT ON 07/12 /2018) SD/. ( T. S. KAPOOR ) ACCOUNTANT MEMBER DATED:07/12/2018 *SINGH I.T.A. NOS.562 TO 564/LKW/2017 ASSESSMENT. YEARS:2013-14 & 14-15 5 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. CONCERNED CIT 4. THE CIT(A) 5. D.R., I.T.A.T., LUCKNOW