M/s Raj Ratan Castings Pvt. Ltd, Kanpur V. The Asstt. Commissioner of Income Tax, Kanpur

ITA 590/LKW/2013

• Counselvise Citation: 59023714 RSA 2013
• Duration Of Justice: 1 year(s) 3 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-11-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 15-10-2014
• Assessment Year: 2005-2006
• Appeal Filed On: 25-07-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: O N PATHAK
• Keywords: Principle of natural justice; Corroborative evidences

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI. A. K. GARODIA, ACCOUNTANT MEMBER ITA NO.590/LKW/2013 ASSESSMENT YEAR:2005-06 M/S RAJ RATAN CASTIINGS PVT. LTD. 113/70, SWAROOP NAGAR KANPUR V. ACIT CENTRAL CIRCLE III KANPUR PAN/PAN:AAACR6493B (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI. RAKESH GARG, ADVOCATE RESPONDENT BY: SHRI. O. N. PATHAK, D.R. DATE OF HEARING: 15 10 2014 DATE OF PRONOUNCEMENT: 05 11 2014 O R D E R PER SUNIL KUMAR YADAV: THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT(A) ON VARIOUS GROUNDS, WHICH ARE AS UNDER:- 1. THAT THE LEARNED COMMISSIONER OF INCOME TAX (A)-I, KANPUR HAS BEEN WRONG IN LAW AND ON FACTS IN CONFIRMING THE FOLLOWING ADDITIONS/DISALLOWANCES: RS.112815/- OUT OF FREIGHT & CARTAGE EXPENSES. RS.57912/- OUT OF PACKING EXPENSES. RS.70636/- OUT OF EXPENSES RELATING TO EARLIER YEAR. 2. THAT THE ADDITION OF RS.112815/- MADE BY THE ASSESSING OFFICER OUT OF FREIGHT & CARTAGE EXPENSES AND CONFIRMED BY THE LEARNED COMMISSIONER OF INCOME TAX (A)-I, KANPUR IS WITHOUT CONSIDERING THE FACTS OF THE CASE AND IS UNJUSTIFIED AND ARBITRARY. :- 2 -: 3. THAT THE ADDITION OF RS.57912/- MADE BY THE ASSESSING OFFICER OUT OF PACKING EXPENSES AND CONFIRMED BY THE LEARNED COMMISSIONER OF INCOME TAX (A)-I, KANPUR IS WITHOUT CONSIDERING THE FACTS OF THE CASE AND IS UNJUSTIFIED AND ARBITRARY. 4. THAT THE ADDITION OF- RS.70636/- MADE BY THE ASSESSING OFFICER OUT OF EXPENSES RELATING TO EARLIER YEAR AND CONFIRMED BY THE LEARNED COMMISSIONER OF INCOME TAX (A)-I, KANPUR IS WITHOUT CONSIDERING THE FACTS OF THE CASE AND IS UNJUSTIFIED AND ARBITRARY. 5. THAT THE ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (A)-I, KANPUR IS BAD IN LAW, ON FACTS AND AGAINST THE PRINCIPLES OF NATURAL JUSTICE. 2. DURING THE COURSE OF HEARING OF THE APPEAL, THE LD. COUNSEL FOR THE ASSESSEE HAS INVITED OUR ATTENTION THAT THE MAIN ADDITIONS OF RS.1,12,815/- OUT OF FREIGHT & CARTAGE EXPENSES; RS.57,912/- OUT OF PACKING EXPENSES AND RS.70,636/- OUT OF EXPENSES RELATING TO EARLIER YEAR WERE MADE BY THE ASSESSING OFFICER ON AD HOC BASIS WHICH WERE LATER ON CONFIRMED BY THE LD. CIT(A). 3. WITH REGARD TO THE DISALLOWANCE OF RS.1,12,815/- OUT OF FREIGHT & CARTAGE EXPENSES, THE LD. COUNSEL FOR THE ASSESSEE HAS INVITED OUR ATTENTION TO THE ASSESSMENT ORDER WITH THE SUBMISSION THAT THE ASSESSING OFFICER HAS MADE DISALLOWANCE AT 5% OF THE TOTAL EXPENSES CLAIMED AT RS.22,56,308/- UNDER THIS HEAD ONLY FOR THE SIMPLE REASON THAT THERE ALWAYS REMAINS LOOPHOLES AND SCOPE OF INFLATION OF EXPENSES INCURRED IN CASH THROUGH SELF VOUCHERS WITHOUT ANY SUPPORTING EVIDENCE. THE LD. COUNSEL FOR THE ASSESSEE HAS CONTENDED THAT BEFORE MAKING THE DISALLOWANCE OF CERTAIN :- 3 -: EXPENSES, THE ASSESSING OFFICER IS REQUIRED TO POINT OUT SPECIFIC DEFECT IN THE VOUCHERS MAINTAINED WITH RESPECT TO THAT PARTICULAR EXPENDITURE. BUT IN THIS CASE, THE ASSESSING OFFICER HAS MADE AD HOC ADDITION ON THE BASIS OF ASSUMPTION, WHICH IS NOT PERMISSIBLE UNDER THE LAW. 4. THE LD. D.R. HAS SIMPLY PLACED RELIANCE UPON THE ORDERS OF THE LOWER AUTHORITIES. 5. HAVING CAREFULLY EXAMINED THE ORDERS OF THE AUTHORITIES BELOW IN THIS REGARD, WE FIND THAT THE ASSESSING OFFICER HAS MADE DISALLOWANCE OF 5% OF THE TOTAL CLAIM OF THE EXPENSES ONLY ON AD HOC BASIS HAVING ASSUMED THAT THERE ALWAYS REMAINS LOOPHOLES AND SCOPE OF INFLATION OF EXPENSES INCURRED IN CASH THROUGH SELF VOUCHERS. THE ADDITION MADE ON THE BASIS OF ASSUMPTION IS NOT PERMISSIBLE UNDER THE LAW. IF THE ASSESSING OFFICER IS NOT CONVINCED OR SATISFIED WITH THE DETAILS OF VOUCHERS MAINTAINED BY THE ASSESSEE, HE COULD HAVE POINTED OUT SPECIFIC VOUCHER AND MADE DISALLOWANCE OF THE ENTIRE EXPENDITURE INSTEAD OF DISALLOWING 5% OF THE TOTAL EXPENSES. WE, THEREFORE, FIND NO MERIT IN THIS ADDITION AND WE ACCORDINGLY SET ASIDE THE ORDER OF THE LD. CIT(A) IN THIS REGARD AND DELETE THE ADDITION. 6. SIMILAR IS THE POSITION WITH REGARD TO THE ADDITION OF RS.57,912/- MADE OUT OF PACKING EXPENSES. THIS ADDITION WAS ALSO MADE BY THE ASSESSING OFFICER WITHOUT POINTING OUT ANY DEFECT OR ASSIGNING ANY REASON FOR THE DISALLOWANCE. SINCE THE ADDITION WAS MADE ON THE BASIS OF ASSUMPTION, WE FIND NO MERIT IN THIS ADDITION AND WE ACCORDINGLY DELETE THE SAME AFTER SETTING ASIDE THE ORDER OF THE LD. CIT(A) ON THIS ISSUE. 7. WITH REGARD TO THE OTHER ADDITION OF RS.70,636/-, IT IS NOTICED FROM THE ORDERS OF THE LOWER AUTHORITIES THAT THE ASSESSING OFFICER HAS MADE AN ADDITION OF RS.70,636/- OUT OF EXPENSES RELATING TO EARLIER YEARS. THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A) WITH THE SUBMISSION THAT :- 4 -: THIS ADDITION WAS MADE WITHOUT AFFORDING ANY SPECIFIC OPPORTUNITY TO THE ASSESSEE. THE ASSESSEE HAD FILED WRITTEN SUBMISSION BEFORE THE LD. CIT(A) AND THE LD. CIT(A) HAS REPRODUCED THE SAME IN HIS ORDER AND SINCE THE ASSESSEE COULD NOT FURNISH THE REASON AS TO WHY THE EARLIER YEAR EXPENDITURE CAN BE ALLOWED IN THIS YEAR, THE LD. CIT(A) HAS CONFIRMED THE DISALLOWANCE. SIMILAR IS THE POSITION BEFORE US AND THEREFORE WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A). ACCORDINGLY, WE CONFIRM THE ORDER OF THE LD. CIT(A) IN THIS REGARD. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE. SD/- SD/- [A. K. GARODIA] [SUNIL KUMAR YADAV] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED:5 TH NOVEMBER, 2014 JJ:1510 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR ASSISTANT REGISTRAR