VIJAY SOLVEX LIMITED, Alwar V. ACIT, Alwar

ITA 641/JPR/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 5609 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 3 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-01-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 24-09-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAJ MEHRA JCIT DHK
• Keywords: Business expenditure

Judgement Text

ITA NO.641/JP/14 M/S VIJAY SOLVEX LTD. V. IT, CIRCLE-2, ALWAR 1 VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH VKJ-IH-RKSYKUH] U;KF;D LNL; ,OA JH FOE FLAG ;KN O] YS[KK LNL; DS LE{K BEFORE: SHRI R.P. TOLANI, JM & SHRI VIKRAM SINGH YA DAV, AM VK;DJ VIHY LA-@ ITA NO. 641/JP/14 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2006-07. VKNS'K@ ORDER FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI P.C. PARWAL CA JKTLO DH VKSJ LS@ REVENUE BY : SHRI RAJ MEHRA (JCIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 19/11/2015 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 06 /01/2016 VKNS'K@ ORDER PER SHRI VIKRAM SINGH YADAV, AM THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A), ALWAR DATED 09.07.2014 WHEREIN THE ASSESS EE HAS TAKEN THE FOLLOWING GROUND OF APPEAL : THAT THE LD. ASSESSING OFFICER HAS ERRED IN LAW AS WELL AS ON THE FACTS AND CIRCUMSTANCES OF THE CASE IN IMPOSING PENALTY OF M/S VIJAY SOLVEX LTD. BHAGWATI SADAN,SWAMI DAYANAND MARG, ALWAR CUKE VS. ACIT, CIRCLE - 2, ALWAR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AAACV 6864A ITA NO.641/JP/14 M/S VIJAY SOLVEX LTD. V. IT, CIRCLE-2, ALWAR 2 RS. 33,660/- U/S 271(1)(C) OF THE IT ACT, 1961 AND THE LD. CIT(A) HAS ERRED IN SUSTAINING THE SAME. 2. THE RELEVANT FACTS FOR THE ISSUE UNDER CONSIDERATIO N AS FOLLOWS: DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE H AS CLAIMED RS. 18,57,263/- UNDER THE HEAD OTHER EXPENSES AS AGAI NST RS. 8,04,000/- IN THE PRECEDING YEAR. DURING THE ASSESS MENT PROCEEDINGS AS PER THE AO THE ASSESSEE DID NOT FUR NISH ANY EXPLANATION WITH REGARD TO INCREASE IN THESE EXPENS ES IN COMPARISON TO PRECEDING YEAR AND NO BUSINESS ACHIEVEMENT ON ACCOUNT OF THESE EXPENSES HAVE BEEN EXPLAINED. ACCORDINGLY, THE AO DISALLOWED A LUMPSUM AMOUNT OF RS. 2,00,000/- OUT O F RS.18,57,263/- CLAIMED BY THE ASSESSEE DURING THE Y EAR UNDER CONSIDERATION. THE ASSESSEE CARRIED THE MATTER IN A PPEAL BEFORE THE CIT(A) AND THE COORDINATE BENCH OF THE ITAT WHEREIN THE COORDINATE BENCH IN ITA NO. 557/JP/2011 DATED 20.01 .2012 HAS CONFIRMED THE ORDER OF THE CIT(A) IN RESTRICTING TH E DISALLOWANCE OF RS. 1,00,000/- AS AGAINST RS. 2,00,000/- DISALLOWED BY THE AO. THE AO THEREAFTER IMPOSED PENALTY OF RS. 33,600/- ON TH E SAID DISALLOWANCE OF RS. 1,00,000/-. ITA NO.641/JP/14 M/S VIJAY SOLVEX LTD. V. IT, CIRCLE-2, ALWAR 3 2.1 BEING AGGRIEVED THE ASSESSEE CARRIED THE MATTER IN APPEAL AGAINST THE SAID LEVY OF PENALTY BEFORE THE LD. CIT (A) WHO HAS CONFIRMED THE SAID LEVY OF PENALTY AND HENCE THE M ATTER IS BEFORE US FOR CONSIDERATION. 2.2 DURING THE COURSE OF HEARING, LD. R REITERATED ITS SUMMATION A BEFORE THE LD. CIT(A) AND HAS CITED THE FOLLOWING D ECISIONS IN SUPPORT OF NON-LEVY OF PENALTY WHERE THE DISALLOWAN CE HAVE BEEN MADE AN ADHOC/ESTIMATED BASIS: 1. CIT VS. AJAIB SINGH & CO. (2002)253 ITR 630 (P& H) (HC) 2. CIT VS. NEPANI BIRI COMPANY TRUST (1991) 190 ITR 402 (ALL.)(HC) 3. J.K. JAJOO VS. CIT (1990) 181 ITR 410 (MP) (HC) 4. CIT VS. INDEN BISLERS (1999) 240 ITR 943 (MAD.) 2.3 THE LD. DR HAS RELIED ON THE ORDER OF THE LOW ER AUTHORITIES. 2.4 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IT IS NOTED THAT THE AO HAS MA DE AN ADHOC DISALLOWANCE OF RS. 2,00,000/- WHICH HAS SUBSEQUENT LY BEEN REDUCED TO RS. 1,00,000/- BY THE COORDINATE BENCH OF ITAT. THE SAID DISALLOWANCE IS OUT OF THE TOTAL EXPENSES OF RS. 1 8,57,263/- WHICH BASICALLY MEANS 95% OF THE EXPENSES HAVE BEEN HELD TO HAVE INCURRED FOR THE PURPOSE OF BUSINESS AND ONLY 5% HA VE BEEN HELD FOR ITA NO.641/JP/14 M/S VIJAY SOLVEX LTD. V. IT, CIRCLE-2, ALWAR 4 NON-BUSINESS PURPOSES. THE LD. AO HAS NOT GIVEN ANY FINDING REGARDING SPECIFIC EXPENDITURE/ TRANSACTIONS WHICH HAS RESULTED IN THE SAID DISALLOWANCE. HE HAS MERELY DONE A BROAD COMPARISON OF EXPENSES VIS-A-VIS. LAST YEAR AND HELD THAT SINCE T HE EXPENDITURE DURING THE YEAR IS ON A HIGHER SIDE. A LUMP SUM AM OUNT OF RS. 2,00,000/-IS DISALLOWED. IN OUR VIEW UNLESS AND UN TIL THE AO RECORDS A FINDING OF FACT THAT CERTAIN IDENTIFIABLE EXPENDI TURE OR THE TRANSACTIONS ARE BOGUS OR FOR NON-BUSINESS EXPENSES , THE SAID DISALLOWANCE ON AN ADHOC BASIS IN THE QUANTUM PROC EEDINGS CANNOT BE THE BASIS FOR LEVY OF PENALTY U/S 271(1)(C) OF T HE ACT. HENCE THE GROUND TAKEN BY THE ASSESSEE IS ALLOWED AND PENALTY IS DELETED. IN THE RESULT THE APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 06 /01. 2016 SD/- SD/- (R.P. TOLANI (VIKRA M SINGH YADAV) JUDICIAL MEMBER ACCOUNTA NT MEMBER JAIPUR DATED : 06 /01/2016 ITA NO.641/JP/14 M/S VIJAY SOLVEX LTD. V. IT, CIRCLE-2, ALWAR 5 PILLAI COPY OF THE ORDER FORWARDED TO :- 1.THE APPELLANT, M/S VIJAY SOLVEX LTD. ALWAR 2.THE RESPONDENT, ACIT, CIRCLE-2,A LWAR 3.THE CIT , ALWAR 4.THE CIT(A)-ALWAR 5.THE DEPARTMENTAL REPRESENTATIVE, ITAT, JAIPUR 6.GUARD FILE (ITA NO. 641/JP/14) BY ORDER ASSISTANT REGISTRAR.