Kamal kant, BATALA V. The Income Tax Officer, BATALA

ITA 638/ASR/2016

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 9195 (ITAT-AMRITSAR)
• Duration Of Justice: 2 year(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-12-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 17-10-2018
• Assessment Year: 2012-2013
• Appeal Filed On: 19-12-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: AMIT BAJOTRA LD; B B VIG ITP

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR BEFORE SH. SANJAY ARORA, ACCOUNTANT MEMBER AND SH. N.K.CHOUDHRY, JUDICIAL MEMBER ITA NO.638(ASR)/2016 ASSESSMENT YEAR:2 012-13 KAMAL KANT, 103, DHARAM PURA COLONY, BATALA [PAN:AATPK 0366L] VS. INCOME TAX OFFICER, WARD-1, BATALA (APPELLANT) (RESPONDENT) APPELLANT BY: SH. B.B.VIG, (ITP) & SH. AMIT BAJOTRA (LD. ADV.) RESPONDENT BY: SH. CHARAN D ASS (LD. DR) DATE OF HEARING: 17.10.2018 DATE OF PRONOUNCEMENT: 19.12.2018 ORDER PER N.K.CHOUDHRY, JM: THE INSTANT APPEAL HAS BEEN PREFERRED BY THE ASSESSEE/AP PELLANT AGAINST THE ORDER DATED 30.09.2016, PASSED BY THE LD. CIT(A)-1, AMRITSAR, U/S. 250(6) OF THE I.T. ACT, 1961 (HEREINAFTER CALLED AS THE ACT), FOR ASST. YEAR:2012-13. 2 . THE FOLLOWING GROUNDS OF APPEAL HAVE BEEN RAISED BY THE ASSESSEE. 1. THE LD. CIT(APPEALS)-1, AMRITSAR HAS UNJUSTIFIA BLY UPHELD THE DISALLOWANCE OF RS.1,31,300/- MADE BY THE ITO, WARD -1, BATALA WITHOUT CONSIDERING THE ARGUMENTS OF THE APPELLANT AND WITH OUT APPRECIATING THE MATERIAL/EVIDENCE ON RECORD. THE ADDITION IS IN THE NATURE OF DISALLOWANCE OF CLAIM OF CUPOLA EXPENSES WHICH WERE GENUINE, TRU E AND CORRECT AND ABSOLUTELY IN ORDER AS THE SAME WERE EXCLUSIVELY NE CESSARY AND INCIDENTAL TO THE CHARGING OF CUPOLA FOR PRODUCTION OF MANUFAC TURED GOODS I.E. C.I. CASTING. ITA NO.638/ASR/2016 (A.Y.2012-13) KAMAL KANT, BATALA V. ITO 2 2. THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-1, AMRITSAR HAS UNJUSTIFIABLY UPHELD THE ENHANCEMENT OF SHORT TERM CAPITAL GAIN BY RS.4,40,000/- BY CONFIRMING THE DISALLOWANCE OF CLA IM OF EXPENSES INCURRED ON IMPROVEMENT OF PROPERTY, WITHOUT CONSID ERING THE ARGUMENTS OF THE APPELLANT AND WITHOUT APPRECIATING THE MATERIAL /EVIDENCE ON RECORD. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HAS CHALLEN GED THE TWO DISALLOWANCES MADE BY THE AO AND AFFIRMED BY THE L D. CIT(A)-1, RELATES TO RS.1,31,300/- QUA CLAIM OF CUPOLA EXPENSES WHICH WAS DISALLOWED BY THE ASSESSING OFFICER ON THE PREMISES THAT THE VOUCHERS PRODUCED BY THE ASSESSEE ARE NOT THE DOCUMENTS WHICH CAN BE RELIED UPON TO PROVE THE CORRECTNESS OF ASSESSEES CLAIM OF EXPENDITURE OF RS.1,31,300/ -. THESE VOUCHERS ARE PREPARED IN SINGLE SITTING, IN THE SAME INK AND HANDWRITING AND SIGNATURES ARE OPEN TO SUSPICION. THE SAID DISALLOWANCE WAS AFFIRMED BY THE LD. CIT(A) ON THE GROUNDS THAT THE SAID CUPOLA EXPENSE S ARE NOT SUPPORTED BY BILLS AND VOUCHERS ARE IN SAME HANDWRITING, WITH SAME LINE AND SEEMS TO BE MADE AT A SINGLE SITTING. NO RECEIPTS/SLIPS OR CONFI RMATIONS FROM THE LABOUR OR STAFF HAVE BEEN PROVIDED EVEN AT APPELLATE STAGE. THUS, THE AO HAS RIGHTLY ADDED THE AMOUNT OF RS.1,31,300/- TO THE INCO ME OF THE ASSESSEE BEING UNVOUCHED EXPENSES WHICH ARE WITHOUT ANY DOCUMENTA RY EVIDENCES. 4. DURING THE COURSE OF ARGUMENT BEFORE US, THE LD. AR H AS SUBMITTED THAT THE CUPOLA EXPENSES ARE NECESSARY FOR PRODUCTION OF MANUFACTURING OF GOODS I.E. C.I. CASTING AS NO BUSINESS COULD BE RUN WITHO UT INCURRING THESE EXPENSES. THE APPELLANT PURCHASES PIG IRON WHICH IS MAIN SOURCE OF USE AS RAW MATERIAL AND THE PIG IRON IS MELTED IN THE CUPOL A BY CHARGING THE SAME WITH THE HARD COKE. THEREAFTER, THE MELTED IRON SO OB TAINED IS PUT INTO THE MOULDS TO SECURE THE PRODUCTS MANUFACTURED THROUGH THIS P ROCESS, THEREFORE, THE CUPOLA EXPENSES ARE NECESSARY, GENUINE AND INCIDENTAL TO THE BUSINESS OF MANUFACTURING OF GOODS I.E. C.I. CASTING. IT WAS FUR THER SUBMITTED THAT THE ASSESSEE/APPELLANT HAS EFFECTED SALES TO THE TUNE OF RS.97,0 9,701/- OF THE GOODS SO MANUFACTURED. THE CUPOLA WAS OPERATED ON 12 OCCASIONS IN THE ITA NO.638/ASR/2016 (A.Y.2012-13) KAMAL KANT, BATALA V. ITO 3 PREVIOUS YEAR AND THE EXPENSES PAID TO THE LABOUR ENGA GED FOR THE PURPOSE HAS BEEN CLAIMED AS CUPOLA CHARGES AND THERE ARE SOME TECH NICAL SPECIALISTS CALLED CONTRACTORS IN THE BATALA MARKET WHO ARE ASSIGNED THE JOB OF OPERATIONS OF CUPOLA, WHENEVER THE NEED ARISES, WHO PE RFORM THE JOB WITH THEIR OWN LABOURERS AND EVEN IN THE YEAR PRECEDING TH E PREVIOUS YEAR, THE APPELLANT HAD CLAIMED SIMILAR EXPENSES AMOUNTING TO R S.1,58,450/- ON SALES OF RS.15,84,7100/- AND IT SEEMS THAT THE ASSESSING OFFICER COULD NOT UNDERSTAND THE NATURE OF THESE EXPENSES AND THE OBSERVAT ION OF THE AUTHORITIES BELOW THAT THE VOUCHERS WERE PREPARED IN A SINGLE SITTING IN THE SAME INK AND HANDWRITING AND QUITE STRANGE AND UNFO UNDED. THE LD. AR ALSO DRAWN OUR ATTENTION TO THE VOUCHERS PREPARED ON D IFFERENT DATES WHICH WERE SUBMITTED BEFORE THE AUTHORITIES BELOW. 5. ON THE CONTRARY, THE LD. DR REBUTTED THE CLAIM OF TH E ASSESSEE. 6. HAVING HEARD THE PARTIES AND CONSIDERING THE PECULIAR FA CTS AND CIRCUMSTANCES AND ALSO THE TECHNICAL SPECIFICATIONS AS DEMONSTRA TED BY THE ASSESSEE. THE APPELLANT IS ENGAGED IN THE MANUFACTURING A ND SALES OF C.I. CASTING SANITARY PIPE AND PIPE FITTINGS. FURTHER THE P IG IRON WHICH IS MAIN SOURCE FOR USE AS A RAW MATERIAL MELTED IN THE CUPOLA B Y CHARGING THE SAME WITH THE HARD COKE AND THEREFORE, THE MELTED IRON IS PUT INTO THE MOULDS TO SECURE THE PRODUCTS MANUFACTURED THROUGH THIS PROCESS, THER EFORE, IT SEEMS THAT THESE ARE NECESSARY AND INCIDENTAL TO THE BUSINESS O F THE MANUFACTURING OF C.I. CASTING. EVEN OTHERWISE, THE ASSESSEE HAD ALSO CLAIM ED THE SIMILAR EXPENSES WHICH HAVE BEEN ALLOWED BY THE ASSESSING OFFICER I N THE PRECEDING ASST. YEAR. THE AUTHORITIES BELOW DOUBTED THE VOUCHERS SI MPLY ON THE REASONING THAT THE SAME APPEARS TO BE IN THE SAME HANDW RITING AND IN A SINGLE SITTING, WITHOUT UNDERSTANDING THE NATURE OF EX PENSES AND THE VOLUME, BECAUSE THE ASSESSEE HAD CLEARLY SHOWN IN ITS ACCOUNT LEDGER , THE EXPENSES OF RS.1,31,300/- ON ACCOUNT OF CUPOLA EXPENSES AS IT REFL ECTS FROM THE ITA NO.638/ASR/2016 (A.Y.2012-13) KAMAL KANT, BATALA V. ITO 4 ANNEXURE-D PAGE NO.41 OF THE PAPER BOOK FILED BY TH E ASSESSEE. THE ASSESSEE HAS EFFECTED SALES TO THE TUNE OF RS.97,09,701/- WH EREAS THE CUPOLA EXPENSES INCURRED AT RS.1,31,300/- ONLY WHICH SEE MS TO BE QUITE MEAGER, GENUINE AND LOGICAL AND INCIDENTAL TO THE BUS INESS OF THE ASSESEE, THEREFORE, WE FEEL IT APPROPRIATE TO DELETE THE SAID EXPENSES. 7. NOW COMING TO THE DISALLOWANCE TO THE TUNE OF RS.4,40, 000/- WHICH WAS INCURRED ON IMPROVEMENT OF PROPERTY. THE AUTHORIT IES BELOW DISALLOWED THE SAID EXPENSES ON THE GROUND THAT THE REPAIR DEBITE D AS COSTS OF IMPROVEMENT IS WITHOUT ANY DOCUMENTARY EVIDENCE AND T HERE IS NOT EVEN A SINGLE BILL. ALTHOUGH THE ASSESSEE HAS PLEADED THAT THE CO NTRACTOR WAS HIRED, HOWEVER, NONE OF THE CONTRACTORS PAYMENT EXCEEDED RS.75, 000/-. IT WAS FURTHER OBSERVED BY THE AUTHORITIES BELOW THAT ALTHOU GH THE VOUCHERS HAVE BEEN MADE AND ALL THE CONTRACTORS ISSUED THE BILL FOR T HE WORK DONE & PAYMENTS RECEIVED, HOWEVER, IT IS APPARENT THAT THE EN TIRE AMOUNT IS DEBITED WITH A VIEW TO REDUCE THE TAX LIABILITY. DURING THE COURSE OF ARGUMENT, IT WAS SUBMITTED BY THE LD. COUNSEL OF THE ASSESSEE THAT VOUCHERS WERE PREPARED AND ENTRIES WERE DULY MADE IN THE BOOKS OF ACCOUNT WRI TTEN IN THE NORMAL COURSE OF BUSINESS WHICH HAVE BEEN ACCEPTED BY THE AO. ON ONE SIDE THE ASSESSING OFFICER ACCEPTED THE BOOK RESULTS, BUT AT THE SAME TIME DOUBTED THE VOUCHERS. 8. ON THE CONTRARY, THE LD. DR RELIED UPON THE ORDER O F AUTHORITIES BLEW. 9. WE HAVE PERUSED THE DOCUMENTS FILED BY THE ASSESSEE FROM WHICH IT APPEARS THAT THE ASSESSEE HAD MADE THE VOUCHERS FOR REPAI RING OF INDUSTRIAL BUILDING THROUGH SOME BUILDERS AND IN ALL THE VOUCHER S, THE SIGNATURE OF DIFFERENT RECIPIENTS ARE THEREON ON DIFFERENT DATES. T HE SAID EXPENSES ARE ALSO REFLECTED IN THE BOOKS OF ACCOUNT. HENCE, WE DO NOT FIND ANY JUSTIFICATION IN DISALLOWING THE SAID EXPENSES, THEREFORE, WE FEEL I T APPROPRIATE TO ALLOW THE SAID EXPENSES AND HENCE, THE ADDITION OF RS.4,40,000 /- STANDS DELETED. ITA NO.638/ASR/2016 (A.Y.2012-13) KAMAL KANT, BATALA V. ITO 5 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STANDS AL LOWED AND ORDER IMPUGNED HEREIN PASSED BY THE LD. CIT(A) IS SET A SIDE AND QUASHED. ORDER PRONOUNCED IN THE OPEN COURT ON 19.12.2018. SD/- SD/- (SANJAY ARORA) (N.K.CHOUDHRY) ACCOUNTANT MEMBER JUDI CIAL MEMBER DATED:19.12.2018 /PK/ PS. COPY OF THE ORDER FORWARDED TO: (1) KAMAL KANT, 103, DHARAM PURA COLONY, BATAL A (2) INCOME TAX OFFICER, WARD-1, BATALA (3) THE CIT(A)-1, AMRITSAR (4) THE CIT CONCERNED (5) THE SR DR, I.T.A.T., AMRITSAR TRUE COPY BY ORDER FILENAME: KAMAL KANT, 638 ASR 2016 DIRECTORY: D:\DOCUMENT\NKC ORDERS 2018 TEMPLATE: C:\USERS\ETC PARMOD\APPDATA\ROAMING\MICROSOFT\TEMPLATES\NORMAL.D OT TITLE: IN THE INCOME TAX APPELLATE TRIBU NAL SUBJECT: AUTHOR: RAHUL PRABHAKAR KEYWORDS: COMMENTS: CREATION DATE: 12/7/2018 2:36:00 PM CHANGE NUMBER: 155 LAST SAVED ON: 12/21/2018 12:47:00 PM LAST SAVED BY: ETC PARMOD TOTAL EDITING TIME: 214 MINUTES LAST PRINTED ON: 12/21/2018 12:47:00 PM AS OF LAST COMPLETE PRINTING NUMBER OF PAGES: 6 (APPROX.) NUMBER OF WORDS: 1,368 (APPROX.) NUMBER OF CHARACTERS: 7,803 (APPROX.)