M/s Assomac Machines Ltd., Ghaziabad V. Addl. CIT, Ghaziabad

ITA 5748/DEL/2015

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 1184 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 5 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-03-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: F
• Assessment Year: 2011-2012
• Appeal Filed On: 14-10-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SURENDER PAL
• Assessee Lawyers: DEEPAK GUPTA
• Keywords: Depreciation; Additional evidence; Set aside
• Section: 40A(3); 244A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES F : DELHI BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI O.P. KANT, ACCOUNTANT MEMBER ITA.NO.5748/DEL./2015 ASSESSMENT YEAR 2011-2012 M/S. ASSOMAC MACHINES LTD., 26/2, SITE-1, SOUTH OF G.T. ROAD, BSR ROAD, INDUSTRIAL AREA, GHAZIABAD-201001 PAN AABCA4266G VS. THE ADDL. CIT, RANGE-1, GHAZIABAD. (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI DEEPAK GUPTA, C.A. FOR REVENUE : SHRI SURENDER PAL, SR.D.R. DATE OF HEARING : 13.03.2019 DATE OF PRONOUNCEMENT : 20.03.2019 ORDER PER BHAVNESH SAINI, J.M. THIS APPEAL BY ASSESSEE HAS BEEN DIRECTED AGAINST THE ORDER OF LEARNED CIT(A), GHAZIABAD, DATED 1ST SEPTEMBER 2015, FOR THE ASSESSMENT YEAR 2011-2012. 1.1. ON GROUND NOS.1 TO 3, ASSESSEE CHALLENGED THE ADDITION OF RS.4,78,555/-. 2 ITA.NO.5748/DEL./2015 M/S. ASSOMAC MACHINES LTD., GHAZIABAD. 2. THE ASSESSING OFFICER NOTED THAT THE BOOKS OF ACCOUNTS, BILLS AND VOUCHERS ETC., MAINTAINED BY THE ASSESSEE COMPANY HAVE BEEN PRODUCED AND THE SAME HAVE BEEN TEST CHECKED. THE ASSESSEE COMPANY IS ENGAGED IN THE MANUFACTURING OF WIRE DRAWING EQUIPMENTS AND THEIR ACCESSORIES. THE ASSESSING OFFICER NOTED THAT ASSESSEE HAS 14 VEHICLES, ON WHICH, ASSESSEE COMPANY HAS CLAIMED RUNNING AND MAINTENANCE EXPENSES, DEPRECIATION ETC. THE ASSESSEE WAS ASKED TO JUSTIFY THE CLAIM OF VEHICLE RUNNING AND MAINTENANCE EXPENSES AND DEPRECIATION, WHICH SEEMS TO BE OF HUGE AMOUNT LOOKING TO THE FACT THAT DIRECTORS ARE CLAIMING EXPENSES ON TOUR AND TRAVEL (FOREIGN & INLAND) SEPARATELY TO THE TUNE OF RS.15,69,384/-. THE ASSESSEE COMPANY EXPLAINED BEFORE ASSESSING OFFICER THAT CARS ARE PROVIDED TO VARIOUS EXECUTIVES OF THE COMPANY, INCLUDING DIRECTORS ACCORDING TO THEIR STATUS IN THE JOB HIERARCHY OF THE COMPANY, THEIR JOB PROFILES AND REQUIREMENTS. SOME CARS ARE KEPT BY THE COMPANY FOR GENERAL USE FOR MOVEMENT OF THE TECHNICAL TEAM OF THE ASSESSEE COMPANY AND OTHER STAFF. IT IS NOT THE CASE THAT ALL THE CARS WERE USED BY ONLY 3 ITA.NO.5748/DEL./2015 M/S. ASSOMAC MACHINES LTD., GHAZIABAD. DIRECTORS. IT WAS SUBMITTED THAT EVEN IF THE CONTENTION OF THE ASSESSING OFFICER REGARDING ELEMENT OF PERSONAL USE OF THESE CARS IS INEVITABLE WERE CORRECT, EVEN THEN NO PORTION OF THE EXPENDITURE FOR VEHICLE RUNNING MAINTENANCE AND DEPRECIATION THEREON CAN BE DISALLOWED IN THE HANDS OF THE COMPANY. THE EXPENSES INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS OR PROFESSION. THE ASSESSING OFFICER, HOWEVER, DID NOT ACCEPT THE CONTENTIONS OF THE ASSESSEE AND NOTED THAT THERE IS A PERSONAL ELEMENT IN USING THE CARS BY THE DIRECTORS. THEREFORE, RS.4,78,555/- WAS DISALLOWED. THE LEARNED CIT(A) CONFIRMED THE ADDITION. 3. AFTER CONSIDERING THE RIVAL SUBMISSIONS, WE ARE OF THE VIEW THAT ADDITION IS WHOLLY UNJUSTIFIED. THE ASSESSEE IS A COMPANY AND AS SUCH IT COULD NOT HAVE ANY PERSONAL USE OF THE CARS IN QUESTION. THE ASSESSEE EXPLAINED THAT THE CARS MAINTAINED BY THE ASSESSEE COMPANY HAVE BEEN USED FOR THE PURPOSE OF BUSINESS BY THE DIRECTORS AND OTHER EXECUTIVES AND THE STAFF. THE ASSESSING OFFICER HAS NOT GIVEN ANY FINDING AS TO WHAT EXTENT THE DIRECTORS HAVE USED THE CARS FOR PERSONAL PURPOSE. THEREFORE, IN THE ABSENCE OF ANY SUCH 4 ITA.NO.5748/DEL./2015 M/S. ASSOMAC MACHINES LTD., GHAZIABAD. FINDING, IT IS DIFFICULT TO BELIEVE THAT THE DIRECTORS HAVE USED THE CARS FOR PERSONAL PURPOSE. FURTHER, IN CASE THE DIRECTORS WERE USING THE CARS FOR PERSONAL PURPOSE, FRINGE BENEFIT TAX COULD HAVE BEEN LEVIED FOR THE SAME. THE DISALLOWANCE OF EXPENSES IS ADHOC IN NATURE, CANNOT BE SUSTAINED. WE, ACCORDINGLY, SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND DELETE THE ADDITION OF RS.4,78,555/- GROUND NOS. 1 TO 3 OF THE APPEAL OF ASSESSEE ARE ALLOWED. 4. ON GROUND NO.4 AND 5, THE ASSESSEE CHALLENGED THE CHARGING OF INTEREST UNDER SECTION 244A OF THE INCOME TAX ACT, 1961. NO ARGUMENTS HAVE BEEN MADE BY THE LEARNED COUNSEL FOR THE ASSESSEE ON THE SAME. THEREFORE, GROUND NOS.4 AND 5 OF THE APPEAL OF ASSESSEE ARE DISMISSED. 5. THE ASSESSEE ALSO MOVED AN APPLICATION FOR ADMISSION OF THE ADDITIONAL GROUND, CHALLENGING THE ORDERS OF THE AUTHORITIES BELOW, IN CONFIRMING DISALLOWANCE AT RS.1,22,500/- UNDER SECTION 40A(3) OF THE INCOME-TAX ACT, 1961. 5 ITA.NO.5748/DEL./2015 M/S. ASSOMAC MACHINES LTD., GHAZIABAD. 6. THE ASSESSING OFFICER NOTED THAT ASSESSEE COMPANY HAD PAID SUM OF RS.1,98,500/- TO 05 PERSONS ON DIFFERENT DATES THROUGH BEARER CHEQUES AGAINST PAYMENT TOWARDS JOB AND WORK. SINCE THE PAYMENTS WERE FOR MORE THAN RS.20,000/- TO THESE PERSONS IN A DAY THROUGH BEARER CHEQUES, THEREFORE, IT IS IN VIOLATION OF SECTION 40A(3) OF THE INCOME TAX ACT, 1961. THE ASSESSING OFFICER, ACCORDINGLY, MADE THE ADDITION OF RS.1,98,500/-. THE ASSESSEE CHALLENGED THE ADDITION THE BEFORE LEARNED CIT(A). THE LEARNED CIT(A), CONSIDERING THE EXPLANATION IN DETAIL, RESTRICTED THE ADDITION TO RS. 1,22,500/-. 7. AFTER CONSIDERING THE RIVAL SUBMISSIONS, WE DO NOT FIND ANY JUSTIFICATION TO ADMIT THE ADDITIONAL GROUND FOR THE PURPOSE OF DISPOSAL OF THE APPEAL. THE ASSESSEE IN THE PAPER BOOK AT SL.NO.7 ON THIS ISSUE, HAS FILED COPIES OF BILLS AND VOUCHERS OF VARIOUS PARTIES, AGAINST WHICH, PAYMENT EXCEEDING RS.20,000/- BY BEARER CHEQUES HAVE BEEN MADE AND AGAINST LAST COLUMN, IT IS MENTIONED THAT THESE ARE ADDITIONAL EVIDENCES. THE ASSESSEE DID NOT MOVE ANY APPLICATION FOR ADMISSION OF THESE ADDITIONAL EVIDENCES. 6 ITA.NO.5748/DEL./2015 M/S. ASSOMAC MACHINES LTD., GHAZIABAD. THEREFORE, THE LEARNED D.R. RIGHTLY CONTENDED THAT THESE ADDITIONAL EVIDENCES FILED ON THE ISSUE AT PAGES 74-81 OF THE PAPER BOOK AT SL.NO.7, CANNOT BE CONSIDERED AND TAKEN INTO CONSIDERATION. EVEN THESE PAPERS SHOULD NOT HAVE BEEN FILED IN THE PAPER BOOK. WE ACCEPT THE CONTENTION OF THE LEARNED D.R. THAT THE DOCUMENTS FILED AT PAGES IS 74-81 OF THE PAPER BOOK AS ADDITIONAL EVIDENCES ON THE ADDITIONAL GROUND, CANNOT BE CONSIDERED. THE LEARNED COUNSEL FOR THE ASSESSEE COULD NOT EXPLAIN ANY JUSTIFICATION AS TO WHY THE ADDITIONAL GROUNDS ABOVE, WAS NOT RAISED BEFORE THE TRIBUNAL IN THE MAIN GROUNDS OF APPEAL. IT WOULD, THEREFORE, SHOW THAT ASSESSEE WAS SATISFIED WITH THE FINDINGS OF THE LEARNED CIT(A), WHO AFTER EXAMINING EACH AND EVERY DETAIL AND RECORD, HAS REDUCED THE ADDITION PARTLY. SINCE THERE IS NO SUPPORTING ADMISSIBLE DOCUMENTARY EVIDENCES ON RECORD IN SUPPORT OF THE ADDITIONAL GROUND OF APPEAL AND THAT THERE WAS NO JUSTIFICATION AS TO WHY THIS GROUND WAS NOT RAISED IN THE MAIN GROUNDS OF APPEAL AND THAT THE ADDITIONAL GROUNDS NEEDS VERIFICATION OF THE FACTS, THEREFORE, IN THE ABSENCE OF ANY MATERIAL AND RECORD IN SUPPORT OF THE SAME, WE ARE NOT 7 ITA.NO.5748/DEL./2015 M/S. ASSOMAC MACHINES LTD., GHAZIABAD. INCLINED TO ADMIT THE ADDITIONAL GROUND OF APPEAL AND SAME IS ACCORDINGLY DISMISSED. 8. IN THE RESULT, APPEAL OF ASSESSEE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (O.P. KANT) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DELHI, DATED 20 TH MARCH, 2019. VBP/- COPY TO 1. THE APPELLANT 2. THE RESPONDENT 3. CIT(A) CONCERNED 4. CIT CONCERNED 5. D.R. ITAT F BENCH, DELHI 6. GUARD FILE. // BY ORDER // ASSISTANT REGISTRAR : ITAT DELHI BENCHES : DELHI.