U.P Cooperative Sugar Factories Federation Ltd., Lucknow V. DY. Commissioner of Income Tax, Lucknow

ITA 587/LKW/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 1107 (ITAT-LUCKNOW)
• Duration Of Justice: 1 year(s) 5 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-03-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 03-10-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SHYAM LAL

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B , LUCKNOW BEFORE SHRI. T.S. KAPOOR, ACCOUNTANT MEMBER AND SHRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER ITA NO. 587/LKW/2016 ASSESSMENT YEAR: 2013 - 14 U.P. COOPERATIVE SUGAR FACTORIES FEDERATION L TD 9A, RANA PRATAP MARG LUCKNOW V. DY. CIT RANGE II LUCKNOW T AN /PAN : AAAAU0391D (APP ELL ANT) (RESPONDENT) APPELLANT BY: SHRI SHYAM LAL, C.A. RESPONDENT BY: SHRI RAJIV MOHAN, D.R. DATE OF HEARING: 27 02 201 8 DATE OF PRONOUNCEMENT: 05 0 3 201 8 O R D E R PER P ARTHA SARATHI CHAUDHURY, J.M : THIS APPEAL PREFERRED BY THE ASSESSEE EMANATES FROM THE ORDER OF THE LD. CIT(A) - I, LUCKNOW DATED 30/6/2016 ON THE FOLLOWING GROUNDS OF APPEAL: - 1. THE LEARNED COMMISSIONER OF INCOME TAX APPEALS (1) LUCKNOW HAS ER RED ON FACTS AND JAW IN CONF IRMING ADHOC DISALLOWANCE OF RS. 450000.00 OUT OF POWER AND FUEL EXPENSES INCURRED BY APPELLANT AT ITS NANAUTA DISTILLERY, IGNORING THE SUBMISSIONS MADE BY APPELLANT, IN THE PRESENT CASE. 2. THE LEARNED COMMISSIONER OF INCOME T AX (APPEALS) I LUC K NOW HAS E R RED ON FACTS AND IN JAW IN CONFIRMING ADHOC DISA LL OWANCE OF RS.1 50000.00 UNDER REPAIR & MAINTENANCE EXPENSE INCURRED BY APPELLANT AT ITS ANOOP SHAHAR DISTI LL RY, IGNORING THE SUBMISSIONS MADE BY IT IN THE PRESENT CASE. THE ITA NO.587/LKW/2016 PAGE 2 OF 4 APPEL LANT CRAVES LEAVE TO ADD, AMEND, WITHDRAW ANY GROUND OF APPEAL AT THE TIME OR BEFORE DATE OF HEARING. 2 . THE BRIEF FACTS IN THIS CASE ARE THAT THE RETURN WAS E - FILED DECLARING NIL INCOME AFTER SETTING OFF OF CARRIED FORWARD LOSS OF RS.8,22,16,696/ - AND CLAIM ING REFUND OF RS.67,63,010/ - . THE ASSESSEE IS A CO - OPERATIVE SOCIETY REGISTERED UNDER THE U.P. CO - OPERATIVE SOCIETIES ACT, 1964. THE MAIN FUNCTION OF THE ASSESSEE - SOCIETY IS TO ADVISE THE MEMBER CO - OPERATIVE SUGAR FACTORIES AND DISTILLERIES REGARDING RUN NING OF DISTILLERIES AND MARKETING OF SUGAR, ALCOHOL AND MOLASSES ON BEHALF OF THE MEMBER CO - OPERATIVE SUGAR FACTORIES. THE ASSESSEE HAS ITS HEAD OFFICE AT LUCKNOW AND A MARKETING DIVISION AT NEW DELHI. THE A SSESSMENT FOR THE YEAR UNDER CONSIDERATION WAS COMPLETED AT N IL INCOME AFTER SETTING OFF OF CARRIED FORWARD OF LOSS OF RS. 8,22,16,6 96/ - AND CLAIMING REFUND OF RS. 67,63,010/ - . 3 . REGARDING ADHOC DISALLOWANCE OF POWER AND FUEL EXPENSES, THE ASSESSING OFFICER HAD OBSERVED THAT THE ASSESSEE DID NOT EXPLAIN TH E REASON OF SHARP INCREASE OF POWER AND FUEL EXPENSES. THE ASSESSEE EXPLAINED DURING THE APPELLATE PROCEEDINGS THAT THE BOOKS OF ACCOUNT WERE DULY AUDITED AND EXPENDITURE S UNDER THE HEADS POWER AND FUEL AND REPAIR AND MAINTENANCE WERE DULY RECORDED IN THE BOOKS OF ACCOUNT. THE ASSESSEE ALSO STATED THAT SIMILAR ADDITION UNDER THE HEAD POWER AND FUEL WERE MADE IN PRECEDING ASSESSMENT YEAR WHICH WERE DELETED BY THE LD. CIT(A). THE LD. CIT(A) , AFTER CONSIDERING THE WRITTEN SUBMISSION OF THE ASSESSEE AN D THE ASSESSMENT ORDER , OBSERVED AND HELD THAT ASSESSEE DID NOT FURNISH SATISFACTORY EXPLANATION IN RESPECT OF ENTRIES FOR POWER AND FUEL EXPENSES AS COMPARED TO ASSESSMENT YEAR 2012 - 13. THE ASSESSEE HAS NOT FURNISHED RELEVANT DOCUMENTS DURING THE ASSES SMENT PROCEEDINGS AND APPELLATE PROCEEDINGS IN SUPPORT OF ITS ITA NO.587/LKW/2016 PAGE 3 OF 4 VERSION THAT EXPENSES INCURRED UNDER THIS HEAD WERE SUPPORTED BY PROPER BILLS AND VOUCHERS AND THEREFORE THE LD. CIT(A) UPHELD THE DISALLOWANCE MADE BY THE ASSESSING OFFICER. SIMILARLY, FOR DIS ALLOWANCE UNDER THE HEAD REPAIR AND MAINTENANCE, ASSESSEE HAS NOT FURNISHED ANY SATISFACTORY EXPLANATION IN RESPECT OF GENUINENESS OF EXPENSES CLAIMED AND THESE EXPENSES/DISALLOWANCES WERE ALSO UPHELD BY THE LD. CIT(A). 4 . WE HAVE PERUSED THE CASE RECORDS A ND WE FIND THAT THERE IS NO INDEPENDENT ENQUIRY CONDUCTED BY THE LD. CIT(A) IN ARRIVING AT A PARTICULAR DECISION FOR UPHOLDING THE DISALLOWANCES UNDER THE HEADS POWER AND FUEL AND REPAIR AND MAINTENANCE. T HE LD. CIT(A) HAS CONFIRMED THE DISALLOWANCES OF THESE EXPENSES ON THE SOLE GROUND THAT THE ASSESSEE WAS UNABLE TO SATISFACTORILY EXPLAIN THE RISE IN SUCH EXPENSES. WE FIND THAT NEITHER THE ASSESSING OFFICER NOR THE LD. CIT(A) HAS BROUGHT OUT ANY SPECIFIC INSTANCE UNDER WHICH THE EXPENSES WAS NOT VER IFIABLE. THE ENTIRE EXERCISE WAS CONDUCTED ON GUESS WORK AND SURMISES. THE MACHINERY WAS WITH THE ASSESSING OFFICER AS WELL AS THE LD. CIT(A) AND THEY COULD HAVE CONDUCTED INDEPENDENT ENQUIRY AS TO THE RISE OF EXPENSES CLAIMED BY THE ASSESSEE. IN THE AB SENCE OF SUCH EXERCISE, THE DISALLOWANCE MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE LD. CIT(A) ON ADHOC BASIS IS NOT JUSTIFIED . SUCH ADHOC DISALLOWANCES ARE NOT PERMITTED WITHIN THE PARAMETERS OF LAW. 5 . IN THE CASE OF INCOME TAX OFFICER, WARD 1(2), GORAKHPUR VS. DR. MAHENDRA KUMAR AGARWAL, GORAKHPUR IN ITA NO.460/ALLD/2004 AND IN THE CASE OF DR. MAHENDRA KUMAR AGARWAL, GORAKHPUR VS. INCOME TAX OFFICER, WARD 1(2), GORAKHPUR IN ITA NO.455/ALLD/2004 FOR ASSESSMENT YEAR 1999 - 2000, IT WAS HELD BY THE CO - O RDINATE ALLAHABAD BENCH OF ITAT THAT ADHOC DISALLOWANCES MADE MERELY ON CONJECTURES AND SURMISES ITA NO.587/LKW/2016 PAGE 4 OF 4 WITHOUT ANY SPECIFIC FINDING CANNOT BE SUSTAINED. EVEN NO DISALLOWANCE CAN BE MADE JUST ON ADHOC BASIS. WE ACCORDINGLY SET ASIDE THE ORDER OF THE LD. CIT(A) AND DELETE THE ADDITIONS MADE UNDER THE HEADS POWER AND FUEL AND REPAIR AND MAINTENANCE. 6 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 05 / 0 3 / 201 8 . SD/ - SD/ - [ T.S. KAPOOR ] [PARTHA SARATHI CHAUDHURY ] ACCO UNTANT MEMBER JUDICIAL MEMBER DATED: 5 TH MARCH , 201 8 JJ: 2702 COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT(A) 4 . CIT 5 . DR