Sh. Rakesh Kumar, New Delhi V. DCIT, New Delhi

ITA 6596/DEL/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 7784 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 5 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-05-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 10-05-2016
• Assessment Year: 2004-2005
• Appeal Filed On: 12-12-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: T SAMPATH
• Keywords: Depreciation; Additional evidence
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D , NEW DELHI BEFORE SHRI H.S.SIDHU, JUDICIAL MEMBER AND SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER ITA NO. 65 96 /DEL/20 13 AY: 200 4 - 05 SH.RAKESH KUMAR VS. DY.CIT, CENTRAL CIRCLE 18 9, PARK AREA CENTRAL CIRCLE 18 GANGESHWAR DHAM ROAD NEW DELHI KARONBAGH NEW DELHI 110 005 PAN: AAHPK 7643 Q (APPELLANT) (RESPONDENT) APPELLANT BY : SH.T.SAMPATH & SH. RAJ KUMAR, ADV. RESPONDENT BY : SH. T. JAMES SINGSON, SR. D.R. ORDER PER J.SUDHAKAR REDDY, ACCOUNTANT MEMBER THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. COMMISSIONER OF I NCOME T AX ( A PPEALS) - I X I, NEW DELHI DATED 17.10. 2013 PERTAINING TO THE ASSESSMENT YEAR (HEREINAFTER REFERRED TO AS THE A.Y.) 200 4 - 05 . 2. FACTS OF THE CASE: - THE ASSESSEE IS AN INDIVIDUAL AND IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND TRADING OF GHEE, SKIMMED MILK POWDER AND MILK. HE FILED RETURN OF INCOME FOR THE A.Y. 2004 - 05 DECLARING TOTAL INCOME OF RS.13,59,278/ - . ASSESSMENT U/S 143(3) OF THE INCO ME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT ) WAS COMPLETED DETERMINING THE TOTAL INCOME OF RS.1,34,93,730/ - . THE ASSESSEE FILED APPEAL BEFORE THE ITA NO.6596/DEL/2013 A.Y. 2004 - 05 SH. RAKESH KUMAR VS. DY.CIT, NEW DELHI 2 LD.CIT(A) WHO CONFIRMED THE ADDITIONS. THE ASSESSEE WENT IN APPEAL BEFORE THE ITAT. THE ITAT DELHI F BENCH, NEW DELHI HA D SET ASIDE THE ASSESSMENT AND RESTORED THE MATTER TO THE ASSESS ING O FFICER (A.O.) FOR FRESH ASSESSMENT , AFTER CONSIDERING ALL TH E ADDITIONAL EVIDENCES FILED BY THE ASSESSEE BEFORE THE ITAT. THE AO PASSED FRESH ASSESSMENT ORDER U/S 143(3) /S.254 OF THE ACT DETERMINING THE TOTAL INCOME OF RS.93,75,588/ - . IN THE FRESH ASSESSMENT THE AO MADE THE FOLLOWING ADDITIONS. (I) RS.60,66,071 / - ON ACCOUNT OF ALLEGED PURCHASES OUTSIDE THE BOOKS OF ACCOUNTS; (II) RS.18,45,567/ - ON ACCOUNT OF DISALLOWANCE OF SHORTAGE, (III) RS.94,271/ - ON ACCOUNT OF DISALLOWANCE OUT OF EXPENSES ON TELEPHONE, VEHICLE RUNNING AND MAINTENANCE AND DEPRECIATION ON VE HICLE. 3. AGGRIEVED THE ASSESSEE CARRIED THE MATTER IN APPEAL. THE FIRST APPELLATE AUTHORITY GRANTED PART RELIEF. FURTHER AGGRIEVED THE ASSESSEE IS BEFORE US ON THE FOLLOWING GROUNDS. 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD.CIT(A) ER RED IN CONFIRMING THE ADDITION OF RS.18,45,567/ - MADE BY THE A.O. ON ACCOUNT OF ALLEGED EXCESS WASTAGE ON ESTIMATE BASIS ON PRESUMPTIONS AND ASSUMPTIONS. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD.CIT(A) ERRED IN CONFIRMING THE DISALLOWANC E OF RS.94,271/ - OUT OF EXPENSES ON TELEPHONE, RUNNING AND MAINTENANCE OF VEHICLE AND DEPRECIATION ON VEHICLE ON ESTIMATE BASIS. 3. THE APPELLANT MAY BE ALLOWED TO MODIFY OR ADD ANY OTHER GROUND WHICH MAY BE RELEVANT TO THE APPEAL. 4. WE HAVE HEARD SHRI K. SAMPATH, THE LD.COUNSEL FOR THE ASSESSEE AND SHRI T.JAMES SINGSON, LD.SR.D.R. ON BEHALF OF THE REVENUE. ON A CAREFUL CONSIDERATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE, PERUSAL OF MATERIAL ON RECORD, ORDERS OF LOWER AUTHORITIES, CASE LAWS CITED, WE H OLD AS FOLLOWS . ITA NO.6596/DEL/2013 A.Y. 2004 - 05 SH. RAKESH KUMAR VS. DY.CIT, NEW DELHI 3 5 . THE FIRST ISSUE IS ON THE QUANTUM OF WASTAGE/SHORTAGE OF MILK. THE ISSUE IS BROUGHT OUT AT PARA 6 PAGE 3 OF THE ASSESSMENT ORDER WHICH IS EXTRACTED FOR READY REFERENCE. 6. AS FAR AS THE ADDITION OF RS. 74,01,897/ - MADE IN ORIGINA L ASSESSMENT ON ACCOUNT OF DISALLOWED CLAIM FOR SHORTAGES IS CONCERNED, THE ASSESSEE HAS MADE THIS CLAIM WITH THE FOLLOWING CONTENTIONS: - I. THAT AS PER INDUSTRIES PRACTICE, MILK IS PURCHASED IN KILOGRAM AND SOLD IN LITRES. THEREFORE THERE ARISES SHORTAGE . II. THAT THE ASSESSEE PURCHASES MILK IN BULK WHILE SALE OF MILK IS IN RETAIL. III. THERE ARE WASTAGES DUE TO HANDLING OF MILK IV. THERE IS WASTAGE ON ACCOUNT OF REPLACEMENT OF PERISHABLE MILK. V. THERE IS PILFERAGE OF MILK DURING TRANSPORTATION. IT IS A FACT THAT THERE IS BOUND TO BE SOME WASTAGE IN THIS LINE OF BUSINESS. HOWEVER, IT IS NOTICED THAT THE ASSESSEE HAS CLAIMED WASTAGE @ 4%. THIS RATE IS UNREASONABLE HIGH MORE SO WHEN COMPARE TO THE WASTAGE OF 3.35% AND 3.13% SHOWN BY THE ASSESSEE IN THE NE XT TWO YEARS. TAKING INTO CONSIDERATION ALL THE FACTS OF THE CASE, THE ASSESSEE S CLAIM FOR WASTAGE IS ALLOWED AT A REASONABLE RATE OF 3%. AFTER ALLOWING WASTAGE AT THIS RATE, THERE STILL REMAINS THE EXCESSIVE CLAIM FOR 1% WASTAGE WHICH IS NOT ACCEPTED. AP PLYING THE RATE OF RS. 9 / - PER KG IN RESPECT OF SUCH EXCESSIVE CLAIM, DISALLOWANCE OF RS. 18,45,567/ - IS MADE AND RESULTANT ADDITION OF RS. 18,45,567/ - IS MADE TO THE TOTAL INCOME OF THE ASSESSEE. 6. THE LD.CIT(A) UPHELD THE ORDER OF THE A.O. THAT DETERMINATION OF SHORTAGES ON ACCOUNT OF RECEIPT AT 3% IS REASONABLE INSTEAD OF 4% CLAIMED BY THE ASSESSEE. 7. AFTER HEARING RIVAL SUBMISSIONS WE FIND THAT IN THE IMMEDIATELY SUCCEEDING A.Y. 2005 - 06 THE PERCENTAGE OF WASTAGE CLAIMED BY THE ASSESSEE IS 3. 35% AND IN THE NEXT A.Y. 2006 - 07 THE WASTAGE CLAIMED WAS 3%. THESE ITA NO.6596/DEL/2013 A.Y. 2004 - 05 SH. RAKESH KUMAR VS. DY.CIT, NEW DELHI 4 CLAIMS HAVE NOT BEEN DISTURBED BY THE REVENUE. ON A CONSPECTUS OF THE MATTER , WE ARE OF THE CONSIDERED OPINION THAT ENDS OF JUSTICE WOULD BE MET IF THE SHORTAGES/WASTAGES IN QUESTION AR E FIXED AT 3.35% AS IN A.Y. 2006 - 07. THE A.O. IS DIRECTED ACCORDINGLY. 8. GROUND NO.2 IS AGAINST THE DISALLOWANCE OF EXPENSES ON TELEPHONE/VEHICLE RUNNING , MAINTENANCE AND DEPRECIATION ON VEHICLES. WE UPHOLD THE FINDING OF THE LD.CIT(A) THAT PERSONAL US AGE OF THESE SERVICES CANNOT BE DENIED. THE QUANTUM DISALLOWED IS REASONABLE AND CALLS FOR NO INTERFERENCE. 9. IN THE RESULT THIS APPEAL OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 23 RD MAY, 2016. SD/ - SD/ - (H.S. SIDHU) (J.SUDHAKAR REDDY) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: THE 23 RD M AY, 2016 *MANGA ITA NO.6596/DEL/2013 A.Y. 2004 - 05 SH. RAKESH KUMAR VS. DY.CIT, NEW DELHI 5 COPY OF THE ORDER FORWARDED TO: 1. APPELLANT; 2.RESPONDENT; 3.CIT; 4.CIT(A); 5.DR; 6.GUARD FILE BY ORDER ASST. REGISTRAR