Spinks India, Delhi V. JCIT, New Delhi

ITA 647/DEL/2013

• Counselvise Citation: 64720114 RSA 2013
• Duration Of Justice: 1 year(s) 8 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-10-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: G
• Next Hearing Date: 15-10-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 04-02-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: B R R KUMAR SENIOR
• Assessee Lawyers: M K BHATT
• Keywords: Tax effect

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH G : NEW DELHI) BEFORE SHRI I.C. SUDHIR, JUDICIAL MEMBER AND SHRI B.C. MEENA, ACCOUNTANT MEMBER ITA NO.647/DEL./2013 (ASSESSMENT YEAR : 2009-10) SPINKS INDIA, VS. JCIT, RANGE 39, 19, RANI JHANSI, NEW DELHI. MOTIA KHAN, NEW DELHI 110 055. (PAN : AABFS0535R) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI M.K. BHATT, CA REVENUE BY : SHRI B.R.R. KUMAR, SENIOR DR ORDER PER B.C. MEENA, ACCOUNTANT MEMBER : THIS APPEAL FILED BY THE ASSESSEE EMANATES FROM THE ORDER OF THE CIT(APPEALS)-XXVIII, NEW DELHI DATED 03.12.2012 FOR THE ASSESSMENT YEAR 2009-10. 2. THE ASSESSEE IS A PARTNERSHIP CONCERN CARRYING O N THE BUSINESS OF SALE, PURCHASE OF INKS. PRINTING MACHINE ETC. ON WH OLESALE AND RETAIL BASIS AND ALSO MANUFACTURING PRINTING PADS, PLATES AND OT HER ALLIED ACTIVITIES. THE RETURN OF INCOME WAS FILED ON 27.09.2009 DECLAR ING INCOME OF RS.69,76,557/-. THE GROUNDS OF APPEAL TAKEN BY THE ASSESSEE READ AS UNDER :- ITA NO.647/DEL/2013 2 1. THE IMPUGNED ORDER PASSED BY THE LEARNED CIT (APPEALS) CONFIRMING THE ORDER OF THE LEARNED ASSES SING OFFICER IS IN MECHANICAL MANNER, WITHOUT EVEN CONSI DERING THE SUBMISSION MADE BEFORE HER DURING THE COURSE OF APP EAL BY THE APPELLANT AND IS TOTALLY BAD IN LAW AND WRONG ON FA CTS. THE CIT (APPEALS) HAS ONLY GONE BY SURMISES, CONJUNCTURE AN D GUESS WORK IN DRAWING INFERENCE AND IN RECORDING HER CONC LUSION. IN THE ABSENCE OF ANY COGENT MATERIAL TO SUPPORT HER F INDINGS, THE SAME BEING BASED ON CONJUNCTURE AND SURMISES CANNOT BE UPHELD. 2. THE CIT (APPEALS) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE DISALLOWING OF RS.100000/- ON ESTIMA TION BASIS WITHOUT ANY ADVERSE FINDINGS FROM THE EXPENSES CLAI MED UNDER THE HEAD BUSINESS PROMOTION, TELEPHONE, TOUR & TRAV ELLING EXPENSES AND RUNNING & MAINTENANCE EXPENSES. DESPIT E BEING PAID FBT ON SUCH ABOVE EXPENSES, THE ADDITION SO MADE IS AGAINST THE SPIRIT OF THE ACT. 3. THE CIT (APPEALS) HAS ERRED IN LAW AND WRONG ON THE CIRCUMSTANCES OF THE CASE TO CONFIRM THE DISALLOWAN CE THE AMOUNT OF THE COMMISSION RS. 108311/- JUST BECAUSE OF THE NON FURNISHING THE PAN PARTICULARS, DESPITE SUBMITT ING THE CONFIRMATION, ADDRESSES OF ALL PERSONS TO WHOM COMM ISSION WAS PAID ALONG WITH THE OTHER PARTICULARS. IN ALL S UCH CASES THE PAYMENT WAS MADE THROUGH THE BANKING CHANNEL AND TA X HAS DEDUCTED ON SOURCE ON SUCH AMOUNT WHERE EVER APPLIC ABLE. 4. THE CIT (APPEALS) HAS ONCE AGAIN CONFIRMED THE DISALLOWANCE OF THE 5% OF GENSET RUNNING EXPENSES W HICH IS COMPLETELY WRONG ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN HYPOTHETICAL MANNER AND WITHOUT RECORDING ANY SP ECIFIC ADVERSE FINDING. 5. THE CIT (APPEALS) HAS ERRED IN CONFIRMING THE DISALLOWANCE 5% OF JOB WORK AND LABOUR CHARGES IGNO RING THE SUBMISSION OF THE APPELLANT THAT BASIS OF COMPARISO N MADE BY THE LEARNED ASSESSING OFFICE WAS ABSOLUTELY WRONG O N THE FACT. 6. THE CIT (APPEALS) WRONGLY CONFIRMED THE DISALLOWANCE AMOUNTING TO RS.7,777.00 OF EMPLOYEE CONTRIBUTION TOWARDS EPF JUST BECAUSE THE ASSESSEE HAD NOT DEPOSITED SUCH AN AMOUNT ON OR BEFORE THE DUE DATE AS PER THE ITA NO.647/DEL/2013 3 RELEVANT ACT, IGNORING THE RECENTLY AMENDMENT MADE BY THE FINANCE ACT 2003 TO ALLOW THE EMPLOYEE CONTRIBUTION TOWARDS EPF IS ALSO ALLOWABLE IF IT IS DEPOSITED ON OR BEFO RE THE DUE DATE OF THE FILLING OF RETURN OF INCOME OR DATE OF FILLING THE RETURN OF INCOME WHICHEVER IS EARLIER. 7. THE CIT (APPEALS) HAS ERRED IN ADDING THE DIFFER ENCE OF THE AMOUNT OF THE TURNOVER RECORDED IN FINANCIAL STATEMENT AND VAT RETURN AMOUNTING TO RS. 3488.00 IGNORING TH E SUBMISSION OF THE AR OF THE ASSESSEE BEING A CLERIC AL MISTAKE. 3. GROUND NO.1 IS GENERAL IN NATURE AND DOES NOT RE QUIRE ANY ADJUDICATION. 4. IN THE GROUND NO.2, THE ISSUE INVOLVED IS AGAINS T THE CONFIRMATION OF ADDITION OF RS.1,00,000/-. 5. THE ASSESSEE HAS CLAIMED EXPENSES OF RS.15,14,49 8/- ON BUSINESS PROMOTION, RS.12,56,207/- ON TELEPHONE, RS.14,98,90 1/- ON TOURS & TRAVELLING, RS.1,95,816/- ON RUNNING & MAINTENANCE. THE ASSESSING OFFICER HELD THAT IT IS A MATTER OF COMMON KNOWLEDG E THAT ALL THESE EXPENSES ARE ELEMENT OF PERSONAL NATURE. MOREOVER, THE AUDITOR IN ITS AUDIT REPORT FILED U/S 44AB OF THE INCOME-TAX ACT, 1961 HAS REPORTED THAT THESE EXPENSES MAY INCLUDE SOME UNASCERTAINABLE AMO UNT OF PERSONAL EXPENSES BY PARTNERS. THE LD. AR SUBMITTED THAT TH E ASSESSEE HAS PAID FBT ON THESE EXPENSES. THEREFORE, THIS AMOUNT SHOU LD NOT BE ADDED TO THE INCOME OF THE ASSESSEE. THE CIT (A) HAS CONFIR MED THIS DISALLOWANCE CONSIDERING THE ASPECT OF UNASCERTAINABLE PERSONAL EXPENSES MADE BY THE PARTNERS AND HELD THAT THE DISALLOWANCE IS REASONAB LE. ITA NO.647/DEL/2013 4 6. WE HAVE HEARD BOTH THE SIDES ON THE ISSUE. WE F IND THAT THE ASSESSING OFFICER HAS MADE THIS ADDITION WITHOUT PO INTING OUT ANY SPECIFIC INSTANCES. THE GROUND OF COMMON KNOWLEDGE IS APPEARED TO BE QUITE VAGUE FOR MAKING ANY ADDITION, THEREFORE, IN OUR CONSIDERED VIEW, WITHOUT ANY SPECIFIC FINDING FOR DEBITING ANY PERSO NAL EXPENSES OF THE PARTNERS, NO ADDITION CAN BE SUSTAINED OR CONFIRMED ONLY ON THE BASIS OF GUESSWORK. ACCORDINGLY, THE SAME IS DELETED. 7. GROUND NO.3 IS AGAINST CONFIRMING THE DISALLOWAN CE OF COMMISSION EXPENSES OF RS.1,08,311/- FOR NOT FURNISHING PAN NU MBERS TO WHOM THE COMMISSION WAS PAID. OUT OF THIS COMMISSION OF RS. 1,08,311/-, RS.18,000/- WAS DISALLOWANCE ON ACCOUNT OF NON-DEDU CTION OF TAX AT SOURCE BY INVOKING THE PROVISIONS OF SECTION 40(A)( IA) OF THE ACT. AFTER HEARING BOTH THE SIDES, WE FIND THAT DEDUCTION FOR SUCH CLAIM IS MADE ON THE BASIS OF TAXES SO DEDUCTED AND PAID IN THE ASSE SSMENT YEAR, THEREFORE, FOR THIS AMOUNT, WE FIND NO MERITS IN THE APPEAL OF THE ASSESSEE. 7.1 FOR REMAINING AMOUNT, WE FIND THAT TWO AMOUNTS WERE LESS THAN RS.5,000/-, THEREFORE, BEING THE PETTY AMOUNT, WE F IND NO MERITS IN SUSTAINING THE SAME. 7.2 HOWEVER, WITH REGARD TO THE OTHER FOUR AMOUNTS, I.E. RS.6,247/- TO MR. AJAY, RS.24,026 TO MR. J.P. SINGH, RS.4,320/- T O MR. JAGDISH, RS.32,171/- TO MR. J. SINGH, RS.21,240/- TO MR. SUR ESH CHANDER, WE FIND IT APPROPRIATE TO REMIT THE ISSUE TO THE FILE OF TH E ASSESSING OFFICER TO BE ITA NO.647/DEL/2013 5 DECIDED DE NOVO AFTER GIVING AN OPPORTUNITY OF BEIN G HEARD TO THE ASSESSEE. ACCORDINGLY, THIS GROUND IS PARTLY ALLO WED FOR STATISTICAL PURPOSES. 8. IN THE GROUND NOS.4 & 5, THE ISSUE INVOLVED IS D ISALLOWANCE OF 5% OF THE EXPENSES DEBITED FOR RUNNING GENSET AND JOBW ORK AND LABOUR CHARGES. THE ASSESSING OFFICER FOUND THAT ASSESSEE HAS INCURRED EXPENSES OF RS.34,11,532/- ON ACCOUNT OF JOBWORK AN D LABOUR CHARGES. THE ASSESSING OFFICER ALSO NOTED THAT IN THE PRECED ING YEAR, THE DEBIT UNDER THIS HEAD WAS ONLY RS.17,55,523/- AND KEEPING IN VIEW THE FACT THAT THE EXPENDITURE HAS DOUBLED, HOWEVER, THE TURNOVER HAS DECREASED, THE ASSESSING OFFICER MADE DISALLOWANCE OF 5% ON THIS A MOUNT BEING RS.1,70,577/-. SIMILAR ADDITION OF RS.35,774/- WAS MADE OUT OF TOTAL EXPENDITURE OF RS.7,15,480/- ON ACCOUNT OF GENSET R UNNING EXPENSES. 9. WE HAVE HEARD BOTH THE SIDES ON THIS ISSUE. WE FIND THAT THE ASSESSEE HAS SUBMITTED THE LIST OF JOB CHARGES AND LABOUR CHARGES ALONG WITH THE NAMES AND ADDRESSES OF THE PERSONS TO WHOM THE JOB CHARGES AND LABOUR CHARGES WERE MADE, PAN NUMBERS WERE ALSO PRO VIDED TO THE ASSESSING OFFICER AND AMOUNT OF TDS DEDUCTED AND DE TAILS OF NET AMOUNT PAID WERE ALSO FILED. LD. AR ALSO DRAW OUR ATTENTI ON THAT ONLY RS.600/- HAS BEEN PAID IN CASH OTHERWISE, ALL THE JOB CHARGE S AND LABOUR CHARGES WERE PAID THROUGH BANKING CHANNELS ONLY. IT WAS AL SO SUBMITTED BEFORE US THAT LD. ASSESSING OFFICERS COMPARISON THAT JOB WORK AND LABOUR ITA NO.647/DEL/2013 6 CHARGES HAS DOUBLED AND THE TURNOVER HAS DECREASED, IS FACTUALLY INCORRECT. IN THE ASSESSMENT YEAR 2008-09, THESE EXPENSES WERE DEBITED UNDER TWO HEADS, I.E JOBWORK CHARGES RS.28,63,953/- DEBITED I N THE TRADING ACCOUNT AND RS.17,55,523 ON ACCOUNT OF LABOUR CHARGES DEBIT ED IN THE PROFIT & LOSS ACCOUNT, THEREFORE, THE ACTUAL EXPENDITURE DEB ITED UNDER THIS HEAD FOR THE ASSESSMENT YEAR 2008-09 WERE OF RS.46,09,475/-. HOWEVER, IN THE ASSESSMENT YEAR UNDER CONSIDERATION, THIS AMOUNT WA S ONLY RS.34,11,532/-. ON THIS COMPARATIVE ACCOUNT ALSO, WE FIND FORCE IN THE ASSESSEES ARGUMENT. CONSIDERING ALL THESE ASPECTS , WE DELETE THIS ADDITION MADE BY THE ASSESSING OFFICER AND ALLOWED THIS GROUND OF ASSESSEES APPEAL. 10. IN THE GROUND NO.6, THE ISSUE INVOLVED IS SUSTA INING THE ADDITION OF RS.7,777/- ON ACCOUNT OF EMPLOYEES CONTRIBUTION TOW ARDS EPF AS THE SAME WERE NOT PAID ON OR BEFORE THE DUE DATE AS PER THE RELEVANT ACT. LD. AR SUBMITTED THAT THIS ADDITION WAS SUSTAINED EVEN BY IGNORING THE AMENDMENT MADE BY THE FINANCE ACT, 2003. AS PER TH IS AMENDMENT, THE EMPLOYEES CONTRIBUTION TOWARDS THE EPF IS ALLOWABLE WHERE SUCH CONTRIBUTIONS TOWARDS THE EPF ARE DEPOSITED ON OR B EFORE THE DUE DATE OF FILING THE RETURN OR DATE OF FILING THE RETURN OF I NCOME, WHICHEVER IS EARLIER. AFTER HEARING BOTH THE SIDES, WE FIND THA T ASSESSEES CONTENTION HAS FORCE AND IN VIEW OF VARIOUS DECISIONS INCLUDIN G CIT VS. VINAY CEMENT LTD. 213 CTR (SC) 268, CIT VS. DHARMENDRA SHARMA 213 ITA NO.647/DEL/2013 7 CTR (DELHI) 609 AND CIT VS. P.M. ELECTRONICS LTD. 220 CTR (DELHI) 635, WE FIND NO MERITS IN THE ADDITION AND WE DIREC T TO DELETE THE SAME. 11. IN THE GROUND NO.7, THE ISSUE INVOLVED IS SUSTA INING THE ADDITION OF RS.3,488/- MADE ON ACCOUNT OF THE VARIATION IN THE TURNOVER RECORDED IN THE FINANCIAL STATEMENT AND VAT RETURN. WE HAVE HEA RD BOTH THE SIDES ON THE ISSUE. AFTER HEARING, WE FIND THAT THERE WAS A DIFFERENCE IN THE SALES RECORDED IN THE VAT RETURN AND SALES SHOWN BY THE A SSESSEE AND THIS ADDITION OF RS.3,488/- WAS MADE. LD. AR ACCEPTS TH AT THE TAX EFFECT IS VERY SMALL AND HE HAS NO SUBMISSIONS ON THE MERITS OF THE ADDITION. CONSIDERING THESE FACTS, WE FIND NO FAULT IN THE OR DER OF THE CIT (A). THEREFORE, THIS GROUND OF ASSESSEES APPEAL IS DISM ISSED. 12. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS P ARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON THIS 21 ST DAY OF OCTOBER, 2014. SD/- SD/- (I.C. SUDHIR) (B.C. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED THE 21 ST DAY OF OCTOBER, 2014 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-XXVIII, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR/ITAT