Vaishali krishi Kendra, Vaishali V. ACIT, Circle-1, Patna

ITA 61/PAT/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 7854 (ITAT-PATNA)
• Duration Of Justice: 1 year(s) 2 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-06-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 10-04-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: MANISH RASTOGI
• Keywords: TDS
• Section: 40(a)(ia); 12

Judgement Text

P A G E 1 | 10 IN THE INCOME TAX APPELLATE TRIBUNAL, PATNA BENCH, PATNA BEFORE SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER AND LAXMI PRASAD SAHU, ACCOUNTANT MEMBER ITA NO S.61 & 176 /PAT/2018 ASSESSMENT YEAR S : 2011 - 12 & 2013 - 14 VAISHALI KRISHI KENDRA, DIGHI KALAN, HAJIPUR, VAISHALI - 844101 VS. ACIT, CIRCLE - 1, PATNA PAN/GIR NO. AAGFV 7138 L (APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY : SHRI MANISH RASTOGI , AR REVENUE BY : SHRI AJAY KUMAR , DR DATE OF HEARING : 1 8 /06/ 2019 DATE OF PRONOUNCEMENT : 18 /06/ 2019 O R D E R PER C.M.GARG, JM THESE ARE APPEAL S FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A) - 1, PATNA DATED 24.11.2017 FOR THE ASSESSMENT YEAR 201 1 - 12 AND DATED 15.5.2018 FOR THE ASSESSMENT YEAR 2013 - 14, RESPECTIVELY. 2. FIRST, WE TAKE UP THE APPEAL FOR THE ASSESSMENT YEAR 2011 - 12. ITA NOS.61 & 176/PAT/2018 ASSESSMENT YEARS : 2011 - 12 & 2013 - 14 P A G E 2 | 10 3. GROUND NOS.1,2 & 6 WERE NOT PRESSED, THEREFORE, SAME ARE DISMISSED AS NOT PRESSED. 4. GROUND NO.3 RELATES TO SUSTENANCE OF ADHOC DISALLOWANCE OF FREE SERVING CAMP AND TRAINING EXPENSES OF RS.36,214/ - . 5. WE HAVE HEARD THE RIVAL SUBMISSION AND PERUSED THE MATERIALS PLACED ON THE RECORD OF THE TRIBUNAL. WE FIND THAT THE ASSESSEE HAS DEBITED RS.3,62,145/. - ON ACCOUNT OF FREE SERVICES CAMP AND TRAINING EXPENSES. BEFORE THE ASSESSING OFFICER, THE ASSESSEE COULD NOT PRODUCE THE NECESSARY BILLS AND VOUCHERS IN SUPPORT OF THE CLAIM EXCEPT SOME INTERNAL VOUCHERS. HENCE, THE ASSESSING OFFICER AFTER CONSIDERING THE CONSPECTUS OF THE EXPENDI TURE, DISALLOWED 10% OF THE TOTAL EXPENDITURE AND ADDED RS.36,214/ - TO THE INCOME OF THE ASSESSEE, WHICH WAS UPHELD IN FIRST APPEAL. 6. BEFORE US, LEARNED A.R. COULD NOT FURNISH ANY SUPPORTING BILLS AND VOUCHERS TO CONTROVERT THE FINDINGS OF THE LOWER AU THORITIES. WE ARE OF THE CONSIDERED VIEW THAT THE LOWER AUTHORITIES WERE FULLY JUSTIFIED IN DISALLOWING 10% OF THE TOTAL EXPENDITURE, WHICH IS HEREBY UPHELD. THIS GROUND OF APPEAL OF THE ASSESSEE IS REJECTED. ITA NOS.61 & 176/PAT/2018 ASSESSMENT YEARS : 2011 - 12 & 2013 - 14 P A G E 3 | 10 7. GROUND NO.4 RELATES TO SUSTENANCE OF ADH OC DISALLOWANCE OF RS.13,387/ - ON ACCOUNT OF BROKERAGE AND COMMISSION. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RECORD OF THE CASE. IN THIS CASE, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS DEBITED RS.8,92,465/ - ON ACCOUNT OF BROKERA GES AND COMMISSION AND ALL THE PAYMENTS HAVE BEEN MADE IN CASH. ON BEING REQUIRED BY THE ASSESSING OFFICER TO SUBMIT THE SUPPORTING BILLS AND VOUCHERS, THE ASSESSEE COULD PRODUCE ONLY INTERNAL VOUCHERS. IT WAS IN THIS BACKDROP THAT THE ASSESSING OFFICER DISALLOWED 15% OF THE TOTAL EXPENSES TREATING THE EXPENSES BEING NOT WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. IN THE FIRST APPEAL, THE DISALLOWANCE WAS RESTRICTED TO 10%. 9. BEFORE US, LEARNED A.R. SUBMITTED THAT SIMILAR DISALLOWANCE HAS BEEN D ELETED BY THE CIT(A) IN THE ASSESSMENT YEAR 2012 - 13, A COPY OF HIS ORDER IS PLACED ON RECORD. LEARNED D.R. COULD NOT CONTROVERT THE ABOVE SUBMISSION OF LEARNED A.R. OF THE ASSESSEE. 10. WE FIND THAT THE ASSESSING OFFICER HAS MADE ADHOC DISALLOWANCE WITHOUT POINTING OUT WHICH OF THE EXPENSES ARE NOT SUPPORTED BY VOUCHERS. ON PERUSAL OF THE ORDER OF THE CIT(A) FOR THE ASSESSMENT YEAR 2012 - 13, WE FIND THAT THE ENTIRE DISALLOWANCE MADE BY THE ASSESSING OFFICER WAS DELETED BY THE CIT(A) ON THE ITA NOS.61 & 176/PAT/2018 ASSESSMENT YEARS : 2011 - 12 & 2013 - 14 P A G E 4 | 10 GROUND THAT THE A SSESSING OFFICER HAS FAILED TO BRING ON RECORD ANY EVIDENCE OR EVEN SUGGESTION TO THE EFFECT THAT EXPENSES ON COMMISSION AND BROKERAGE HAS NOT BEEN INCURRED WHOLLY AND EXCLUSIVELY FOR THE BUSINESS OF THE ASSESSEE. IN VIEW OF ABOVE, WE DELETE THE ADDITION OF RS.13,387/ - AND ALLOW THIS GROUND OF APPEAL OF THE ASSESSEE. 11. GROUND NO.5 RELATES TO SUSTENANCE OF ADHOC DISALLOWANCE OF RS.47,246/ - ON ACCOUNT OF SALES PROMOTION EXPENSES. 12. BEFORE US, LEARNED A.R. OF THE ASSESSEE SIMILAR ADHOC DISALLOWANCE MADE BY THE ASSESSING OFFICER FOR THE ASSESSMENT YEAR 2012 - 13 HAS BEEN DELETED BY THE CIT(A). IN SUPPORT OF THIS, HE PLACED ON RECORD THE ORDER OF THE CIT(A). 13. WE FIND THAT THE ASSESSEE HAS DEBITED RS.4,72,458/ - UNDER THE HEAD SALES PROMOTION EXPENSES. OUT OF TOTAL EXPENSES, IT IS OBSERVED THAT RS.1,30,000/ - AND RS.82,440/ - HAS BEEN PAID BY WAY OF CHEQUE TO SHRI BAIDYANATH JHA AND RRI DILIP KUMAR, BOTH SO CALLED SALESMAN. HOWEVER, AS REGARDS TO BALANCE AMOUNT, THE ASSESSEE COULD ONLY FURNISH HANDMADE VOUCHERS BEFORE THE ASSESSING OFFICER, THE GENUINENESS OF WHICH WAS DOUBTED. WE ALSO FIND THAT THE ASSESSING OFFICER HAS NOT BROUGHT ON RECORD TO CONTROVERT THE SUBMISSIONS OF THE ASSESS EE THAT THE AMOUNTS WERE ITA NOS.61 & 176/PAT/2018 ASSESSMENT YEARS : 2011 - 12 & 2013 - 14 P A G E 5 | 10 NOT INCURRED FOR THE PURPOSE OF BUSINESS OF THE ASSESSEE. WE ALSO FIND THAT IN THE ASSESSMENT YEAR 2012 - 13, SIMILAR DISALLOWANCE HAS BEEN DELETED BY THE CIT(A), WHICH WAS NOT CONTROVERTED BY LEARNED D.R. BEFORE US. IN VIEW OF ABO VE, WE DELETE THE ADHOC DISALLOWANCE OF RS.47,246/ - AND ALLOW THIS GROUND OF APPEAL OF THE ASSESSEE. 14. GROUND NO.7 RELATES TO SUSTENANCE OF ADHOC DISALLOWANCE OF DEMO AND CUSTOMER MEET EXPENSES OF RS.51,525/ - . 15. LEARNED A.R. OF THE ASSESSEE SUBMITTED T HAT THE ASSESSEE HAS INCURRED RS.7,14,250/ - ON ACCOUNT OF DEMO AND CUSTOMERS MEET AND THE LOWER AUTHORITIES WERE NOT JUSTIFIED IN MAKING THE ADHOC DISALLOWANCE. HE PRAYED THAT THE EXPENDITURE MADE BY THE ASSESSEE BE ALLOWED. 16. LEARNED D.R. SUPPORTED THE ORDER OF THE CIT(A). 17. ON CAREFUL CONSIDERATION OF THE SUBMISSIONS OF THE PARTIES, WE FIND THAT THE ASSESSING OFFICER HAS MADE ADHOC DISALLOWANCE OF 15% OF THE TOTAL EXPENDITURE AND THE CIT(A) REDUCED THE SAME TO 5% WITHOUT GIVING ANY VALID REASON . IT I S SETTLED LAW THAT THE DISALLOWANCE ON ACCOUNT OF AD HOC BASIS IS NOT PERMISSIBLE UNDER THE PROVISION OF THE ACT. IF THE AO IS NOT SATISFIED WITH THE SUBMISSION OF ASSESSEE THEN HE HAS TO MAKE THE DISALLOWANCE ITA NOS.61 & 176/PAT/2018 ASSESSMENT YEARS : 2011 - 12 & 2013 - 14 P A G E 6 | 10 AFTER MAKING SPECIFIC REFERENCE TO SUCH DOCUME NTS / VOUCHERS. AO CANNOT JUST MAKE THE DISALLOWANCE ON AD HOC BASIS WITHOUT POINTING OUT ANY DEFECT / ERROR IN THE SUBMISSION OF ASSESSE AND ON SIMILAR BASIS, THE CIT(A) IS ALSO NOT JUSTIFIED IN RESTRICTING THE SAME ON SURMISES AND CONJECTURES. HENCE, WE DELETE THE ADHOC DISALLOWANCE MADE BY THE LOWER AUTHORITIES AND ALLOW THIS GROUND OF APPEAL OF THE ASSESSEE. 18. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. NOW WE TAKE UP THE APPEAL FOR THE ASSESSMENT YEAR 2013 - 14. 19,. GROUND NOS.1 & 5 ARE GENERAL IN NATURE AND HENCE, REQUIRES NO SEPARATION ADJUDICATION BY US.. 20. IN GROUND NO.2 OF APPEAL, THE GRIEVANCE OF THE ASSESSEE IS THAT THE CIT(A) IS NOT JUSTIFIED IN CONFIRMING THE DISALLOWANCE OF RS.3,05,000/ - UNDER THE HEAD ADVERTISEMENT INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. 21. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RECORD OF THE CASE. IN THIS CASE, SINCE THE ASSESSEE HAS NOT DED UCTED TDS ON THE PAYMENT OF RS.3,05,000/ - TOWARDS ADVERTISEMENT, THE ASSESSING OFFICER INVOKED SECTION 40(A)(IA) OF THE ACT AND DISALLOWED THE SAME, WHICH WAS UPHELD IN FIRST APPEAL. ITA NOS.61 & 176/PAT/2018 ASSESSMENT YEARS : 2011 - 12 & 2013 - 14 P A G E 7 | 10 22. BEFORE US, LEARNED A.R. OF THE ASSESSEE FURNISHED A COPY OF LEDGER A CCOUNT FOR THE PERIOD 1.4.2012 TO 31.3.2013 AND SUBMITTED THAT ON 3.5.2012 AN AMOUNT OF RS.30,000/ - HAS BEEN PAID TO HINDUSTAN MEDIA VENTURES LTD., VIDE CHEQUE NO.6244. WE FIND THAT AGAINST PAYMENT OF RS.30,000/ - , TDS HAS NOT BEEN DEDUCTED ON TOTAL OF RS. 50,000/ - , WHICH IS THRESHOLD LIMIT FOR DEDUCTING TAX. HENCE, WE DIRECT THE ASSESSING OFFICER TO ALLOW RS.30,000/ - AND FOR THE BALANCE AMOUNT OF RS.2,75,000/ - , WE SUSTAIN THE DISALLOWANCE MADE BY THE CIT(A). HENCE, THIS GROUND IS PARTLY ALLOWED. 23. GROUND NO.3 RELATES TO SUSTENANCE OF DISALLOWANCE MADE BY THE ASSESSING OFFICER UNDER THE HEAD SALES PROMOTION TO THE EXTENT OF RS.1,49,112/ - . 24. THIS GROUND IS AKIN TO GROUND NO.5 TAKEN IN ASSESSMENT YEAR 2011 - 12. IN LINE WITH OUR DECISION WHILE ADJUD ICATING THE SAID GROUND, WE DELETE THE ADDITION OF RS.1,49,112/ - AND ALLOW THIS GROUND OF APPEAL OF THE ASSESSEE. 25. GROUND NO.4 RELATES TO SUSTENANCE OF DISALLOWANCE OF RS.3,04,212/ - MADE UNDER THE HEAD TRANSPORTATION AND UNLOADING EXPENSES. ITA NOS.61 & 176/PAT/2018 ASSESSMENT YEARS : 2011 - 12 & 2013 - 14 P A G E 8 | 10 26. WE HAV E HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RECORD OF THE CASE. WE FIND THAT THE ASSESSEE HAS DEBITED RS.15,21,060/ - UNDER THE HEAD TRANSPORTATION AND UNLOADING EXPENSES. AS PER THE ASSESSING OFFICER, SINCE THE ASSESSEE HAS FURNISHED INTERNAL VOUCHERS IN SUPPORT OF THE CLAIM, THE ASSESSING OFFICER DOUBTED THE GENUINENESS OF THE SAME AND MADE ADHOC DISALLOWANCE OF 20% OF TOTAL EXPENSES AND ADDED RS.3,04,212/ - TO THE INCOME OF THE ASSESSEE, WHICH WAS UPHELD IN FIRST APPEAL. 27. LD A.R. OF THE ASSESSEE SU BMITTED THAT THE CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE ADHOC DISALLOWANCE OF EXPENSES INCURRED UNDER THE HEAD LOADING AND UNLOADING CHARGES WITHOUT POINTING FOR WHICH OF THE EXPENDITURE INCURRED, COMPLETE DETAILS WERE NOT AVAILABLE. 28. LD DEPARTMEN TAL REPRESENTATIVE SUPPORTED THE ORDERS OF LOWER AUTHORITIES. 29. THE CONTENTION OF LD A.R. OF THE ASSESSEE IS THAT WITHOUT POINTING OUT FOR WHICH OF THE EXPENSES, COMPLETE DETAILS WERE NOT AVAILABLE TO THE ASSESSING OFFICER, THE AO WAS NOT JUSTIFIED IN MA KING ADHOC DISALLOWANCE OF 20% OUT OF THE TOTAL EXPENSES OF RS.15,21,060/ - CLAIMED BY THE ASSESSEE UNDER THE HEAD LOADING ITA NOS.61 & 176/PAT/2018 ASSESSMENT YEARS : 2011 - 12 & 2013 - 14 P A G E 9 | 10 AND UNLOADING CHARGES AND THE CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE SAME. 30. WE FIND THAT MOST OF THE EXPENDITURE HAVE BEEN S ELF MADE VOUCHERS AND PAYMENT MADE BY WAY OF CASH. CONSIDERING THE NATURE OF EXPENDITURE AND THE SELF MADE VOUCHERS SUBMITTED BY THE ASSESSEE BEFORE THE LOWER AUTHORITIES, TO ENDS OF JUSTICE, WE RESTRICT THE DISALLOWANCE TO 10% AS AGAINST 20% MADE BY THE LOWER AUTHORITIES. HENCE, THIS GROUND IS PARTLY ALLOWED. 31. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED ON 18 /06/2019. SD/ - SD/ - (LAXMI PRASAD SAHU) ( CHANDRA MOHAN GARG) ACCOUNTANT MEMBER JUDICIALMEMBER PATNA; DATED 18 /06/209 B.K.PARIDA, SPS COPY OF THE ORDER FORWARDED TO : BY ORDER SR. PVT.SECRETARY ITAT, PATNA 1. THE APPELLANT : VAISHALI KRISHI KENDRA, DIGHI KALAN, HAJIPUR, VAISHALI - 844101 2. THE RESPONDENT: ACIT, CIRCLE - 1, PATNA 3. THE CIT(A) - 1, PATNA 4. PR.CIT - 1 PATNA 5. DR, ITAT, PATNA 6. GUARD FILE. //TRUE COPY// ITA NOS.61 & 176/PAT/2018 ASSESSMENT YEARS : 2011 - 12 & 2013 - 14 P A G E 10 | 10