Arvind Sharma, Kanpur V. Dy. Commissioner of Income Tax-2, Kanpur

ITA 573/LKW/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 0173 (ITAT-LUCKNOW)
• Duration Of Justice: 1 year(s) 9 month(s) 14 day(s)
• Appeal Type: Income Tax (Transfer Pricing) Appeal
• Pronouncement Date: 27-06-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Appeal Filed On: 13-09-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard

Judgement Text

I.T.A. NO.573/LKW/2017 ASSESSMENT YEAR:2014-15 1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH SMC, LUCKNOW BEFORE SHRI T. S. KAPOOR, ACCOUNTANT MEMBER ITA NO.573/LKW/2017 ASSESSMENT YEAR:2014-15 SHRI ARVIND SHARMA, F-61, SITE-5, UDYOG KUNG, PANKI, KANPUR. PAN:AGIPS 6015 M VS. DY.C.I.T.-2, KANPUR. (APPELLANT) (RESPONDENT) O R D E R THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF LEARNED CIT(A)-I, KANPUR DATED 09/05/2017 PERTAININ G TO ASSESSMENT YEAR 2014-15. IN THIS APPEAL THE ASSESSEE HAS RAISED TH E FOLLOWING GROUNDS: 1. THAT THE LD.CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS.3,73,215/- U/S 41(1) OF IT ACT, 1961. 2. THAT THE LD.CIT(A) HAS ERRED IN CONFIRMING THE A D-HOC DISALLOWANCE OF RS.40,796/- OUT OF VARIOUS EXPENSES . 3. THAT THE LD.CIT(A) HAS ERRED IN CONFIRMING THE A D-HOC DISALLOWANCE OF RS.15,638/- ON ACCOUNT OF FREIGHT O UTWARD EXPENSES. 4. THAT THE ADHOC DISALLOWANCE MADE BY THE AO AND CONFIRMED BY THE LD.CIT(A) ARE HIGHLY EXCESSIVE. APPELLANT BY SHRI ASHISH JAISWAL, ADVOCATE RESPONDENT BY S HRI C. K. SINGH, D.R. DATE OF HEARING 02/05/2019 DATE OF PRONOUNCEMENT 17/05/2019 I.T.A. NO.573/LKW/2017 ASSESSMENT YEAR:2014-15 2 5. THAT THE LD.CIT(A) HAS ERRED IN NOT PROVIDING PR OPER AND ADEQUATE OPPORTUNITY TO THE APPELLANT. 2. AT THE OUTSET, LEARNED A. R. SUBMITTED THAT DURI NG THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS REQUIRED T O FILE CONFIRMED COPY OF ACCOUNT OF CREDITORS, WHICH HE HAD FILED. HOWEV ER, THE ASSESSING OFFICER OBSERVED THAT CREDITOR AMOUNTING TO RS.3,73,215/-, IN THE FORM OF 30 CREDITORS, WERE NOT CONFIRMED BY THE CREDITORS AND THEREFORE, THE ASSESSING OFFICER TREATED THE SAME AS BOGUS LIABILITY AND MAD E THE ADDITION. IN THIS RESPECT, LEARNED A. R. SUBMITTED THAT ALL THE CREDI TORS WERE RUNNING CREDITORS AND IN THIS RESPECT INVITED OUR ATTENTION TO PAGES 50 TO 79 OF THE PAPER BOOK WHERE THE COPY OF ACCOUNTS OF SUCH CREDI TORS WERE PLACED AND WHERE THERE WERE TRANSACTIONS IN MANY OF THE ACCOUN TS DURING THE CURRENT YEAR ALSO. IT WAS SUBMITTED THAT THE ASSESSING OFF ICER, WITHOUT ANY BASIS, MADE THE ADDITION U/S 41(1) OF THE ACT, WHICH IS NO T JUSTIFIED SPECIFICALLY IN VIEW OF THE FACT THAT COPY OF ACCOUNT OF CREDITORS WERE FILED AND THE PAYMENTS TO THESE CREDITORS WERE MADE IN THE SUCCEE DING YEARS ALSO AND IN THIS RESPECT, LEARNED A. R. FILED A CHART SHOWING T HE NAMES OF SUCH CREDITORS AND PAYMENTS MADE TO THEM IN SUCCEEDING YEAR AND TH EREFORE, IT WAS PRAYED THAT THE ADDITION SUSTAINED BY LEARNED CIT(A ) WAS NOT JUSTIFIED. 2.1 ARGUING THE OTHER GROUNDS, LEARNED A. R. SUBMI TTED THAT THE ASSESSING OFFICER HAD MADE ADDITIONS ON ACCOUNT OF AD HOC DISALLOWANCE WITHOUT REJECTION OF BOOKS OF ACCOUNT, WHICH IS NOT JUSTIFIED IN VIEW OF VARIOUS DECISIONS OF TRIBUNAL. SPECIFIC RELIANCE W AS PLACED ON THE ORDER OF LUCKNOW BENCH OF THE TRIBUNAL IN THE CASE OF BAJAJ AUTO CENTRE IN I.T.A. NO.722/LKW/2017, WHERE VIDE ORDER DATED 19/09/2018, THE TRIBUNAL HAD DELETED THE AD HOC DISALLOWANCE. THEREFORE, IT WAS PRAYED THAT THE DISALLOWANCE SUSTAINED BY LEARNED CIT(A) BE DELETED . I.T.A. NO.573/LKW/2017 ASSESSMENT YEAR:2014-15 3 3. LEARNED D. R., ON THE OTHER HAND, RELIED ON THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT THE FIRST ADDI TION WAS CONFIRMED BY LEARNED CIT(A) AS THE ASSESSEE HAD NOT PRESSED THIS GROUND OF APPEAL BEFORE HIM. AS REGARDS THE SECOND ADDITION, LEARNE D D. R. SUBMITTED THAT THE ASSESSEE WAS ASKED TO PRODUCE BOOKS OF ACCOUNT AND VOUCHERS FOR VERIFICATION BY LEARNED CIT(A) WHICH THE ASSESSEE D ID NOT SUBMIT AND THEREFORE, THE LEARNED CIT(A) HAS DISMISSED THIS GR OUND ALSO AS NOT PRESSED. THEREFORE, IT WAS ARGUED THAT AT THIS STAGE THE ASS ESSEE CANNOT ARGUE THESE GROUNDS. 4. WE HAVE HEARD THE RIVAL PARTIES AND HAVE GONE T HROUGH THE MATERIAL PLACED ON RECORD. WE FIND THAT AS REGARDS THE FIRS T ISSUE, THE ASSESSING OFFICER HAS MADE THE ADDITION U/S 41(1) OF THE ACT WITHOUT CONSIDERING THE CREDITORS ACCOUNTS, PLACED AT PAGES 50 TO 79 OF THE PAPER BOOK. THE ANALYSIS OF THE CREDITORS ACCOUNTS DEMONSTRATE THAT IN MAJORITY OF THE ACCOUNTS, THE TRANSACTIONS WERE DONE DURING THE YEA R THOUGH THEY WERE OPENING BALANCE ALSO. LEARNED A. R. ALSO FILED A C HART SHOWING THAT THE PAYMENTS TO THESE CREDITORS WERE MADE IN THE SUCCEE DING YEAR. THEREFORE, WE DEEM IT APPROPRIATE TO REMIT THIS ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER WHO SHOULD DECIDE THE ISSUE AFRESH AFTER KE EPING IN VIEW THE PAYMENTS MADE BY THE ASSESSEE TO THESE CREDITORS IN THE SUCCEEDING YEARS. 4.1 AS REGARDS THE ISSUE OF AD HOC DISALLOWANCE, I FIND THAT THOUGH THE ASSESSING OFFICER CANNOT MAKE SUCH AD HOC ADDITION WITHOUT REJECTING THE BOOKS OF ACCOUNT OR WITHOUT PIN POINTING ANY SPECIF IC DEFECT IN THE BOOKS OF ACCOUNT OR VOUCHERS, BUT IN VIEW OF SPECIFIC FINDIN GS OF LEARNED CIT(A) THAT ASSESSEE HAD NOT FILED BOOKS OF ACCOUNT OR VOUCHERS FOR VERIFICATION, I DEEM IT APPROPRIATE TO REMIT THIS ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER, WHO SHOULD DECIDE THE ISSUE OF DISALLOWANCE OF EXPE NSES KEEPING IN VIEW I.T.A. NO.573/LKW/2017 ASSESSMENT YEAR:2014-15 4 THE FACTS AND CIRCUMSTANCES AND THE JUDICIAL PRECED ENTS IN THIS RESPECT. NEEDLESS TO SAY, THE ASSESSEE WILL BE PROVIDED PROP ER AND SUFFICIENT OPPORTUNITY OF BEING HEARD. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS ALLOWED FOR STATISTICAL PURPOSES. (ORDER PRONOUNCED IN THE OPEN COURT ON 17/05 /2019) SD/. ( T. S. KAPOOR ) ACCOUNTANT MEMBER DATED:17/05/2019 *SINGH 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