M/S ASIAN TIRE FACTORY LIMTED, JALANDHAR V. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-II, JALANDHAR

ITA 677/ASR/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 7075 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 2 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-01-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 10-01-2019
• Assessment Year: 2014-2015
• Appeal Filed On: 23-10-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: PRIYANKA AHUJA
• Section: 143(3)

Judgement Text

PAGE | 1 ITA NO. 677/ASR/2017 A.Y. 2014-15 ASIAN TYRE FACTORY LTD. VS. THE DY. COMMISSIONER OF INCOME TAX IN THE INCOME TAX APPELLATE TRIBUNAL CAMP BENCH AT JALANDHAR BEFORE SHRI N.K. SAINI, VICE PRESIDENT AND SHRI RAVISH SOOD, JUDICIAL MEMBER ITA NO.677/ASR./2017 (ASSESSMENT YEARS: 2014-15) ASIAN TIRE FACTORY LTD. D-37, FOCAL POINT, JALANDHAR VS. THE DY. COMMISSIONER OF INCOME TAX, CIRCLE-II JALANDHAR PAN AAHCA1931C (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI ANIL MIGLANI, A.R. RESPONDENT BY: SMT. PRIYANKA AHUJA, D.R DATE OF HEARING: 10.01.2019 DATE OF PRONOUNCEMENT: 15.01.2019 O R D E R PER RAVISH SOOD, JM THE PRESENT APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A)-1 JALANDHAR, DATED 29.08.2017, WHICH IN TURN ARISES FROM THE ORDER PASSED BY THE A.O UNDER SEC. 143(3) OF THE INCOME TAX ACT, 1961 (FOR SHORT I.T. ACT), DATED 08.11.2016 FOR A.Y. 2014-15. THE ASSESSEE ASSAILING THE ORDER OF THE CIT(A) HAS RAISED BEFORE US THE FOLLOWING GROUNDS OF APPEAL : 1. THAT THE ORDER OF THE LD. CIT(A) IS AGAINST LAW AND FACTS OF THE CASE ON THE FILE. 2. THAT THE LD. CIT(A) HAS GRAVELY ERRED IN SUSTAINING ADDITION OF RS.7,35,000/- ON ACCOUNT OF EXPENDITURE MADE FOR REGISTRATION AND INSURANCE OF CAR ON THE GROUND THAT THERE WAS TIME GAP BETWEEN THE WITHDRAWALS MADE BY THE MANAGING DIRECTOR FROM HIS BANK ACCOUNT AND THE INCURRING OF EXPENDITURE. 2.1 THAT WHILE SUSTAINING THE ABOVE ADDITION THE LD. CIT(A) WRONGLY HELD THAT THE WITHDRAWALS WERE PROBABLY FOR THE PERSONAL USE OF THE MANAGING DIRECTOR IGNORING THE FACT THAT THERE WAS NO SUCH EVIDENCE AND EVEN THE A.O HAS NOT POINTED OUT ANY SUCH PERSONAL USE OF THE AMOUNT WITHDRAWN BY THE MANAGING DIRECTOR AND THE TIME GAP BETWEEN WITHDRAWALS & EXPENDITURE WAS MAXIMUM THREE MONTHS. PAGE | 2 ITA NO. 677/ASR/2017 A.Y. 2014-15 ASIAN TYRE FACTORY LTD. VS. THE DY. COMMISSIONER OF INCOME TAX 2.2 THAT WHILE SUSTAINING THE ABOVE ADDITION THE LD. CIT(A) IGNORED THE JUDGMENTS OF HONBLE HIGH COURTS & ITAT ON SIMILAR ISSUE FURNISHED DURING THE APPEAL PROCEEDINGS. 3. THAT THE APPELLANT BEGS TO ADD OR AMEND ANY GROUND OF APPEAL BEFORE THE APPEAL IS HEARD AND DISPOSED OFF. 2. BRIEFLY STATED, THE ASSESSEE COMPANY WHICH IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF RUBBER TYRES HAD FILED ITS RETURN OF INCOME FOR A.Y. 2014-15 ON 29.09.2014, DECLARING TOTAL INCOME AT RS.64,09,120/-. SUBSEQUENTLY, THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY ASSESSMENT UNDER SEC. 143(2) OF THE I.T. ACT. 3. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS THE A.O WAS IN RECEIPT OF INFORMATION FROM THE DIT (I&CI) THAT THE ASSESSEE HAD AS ON 22.04.2013 PURCHASED A CAR (MAKE : AUDI) FROM M/S ZENICA CAR INDIA (PVT.) LTD., GURGAON ON 22.04.2013 FOR A SUM OF RS.40 LAC. APART THEREFROM, THE A.O WAS INFORMED THAT THE ASSESSEE HAD ALSO SPENT AN AMOUNT OF RS.7.35 LAC ON REGISTRATION AND INSURANCE EXPENSES OF THE CAR. ON THE BASIS OF INFORMATION RECEIVED, IT WAS GATHERED BY THE A.O THAT THE ASSESSEE WAS UNABLE TO EXPLAIN THE SOURCE OF THE AFOREMENTIONED INVESTMENTS MADE BY IT. 4. THE A.O CALLED UPON THE ASSESSEE TO FURNISH THE SOURCE OF INVESTMENT MADE TOWARDS PURCHASE OF CAR, AS WELL AS EXPENSES INCURRED TOWARDS REGISTRATION CHARGES AND INSURANCE EXPENSES OF THE CAR AMOUNTING TO RS.7.35 LACS. INSOFAR, THE INVESTMENT TOWARDS PURCHASE OF CAR WAS CONCERNED, IT WAS SUBMITTED BY THE ASSESSEE THAT THE SAME WAS FINANCED BY HDFC BANK LTD. AS REGARDS THE SOURCE OF THE EXPENDITURE INCURRED TOWARDS REGISTRATION CHARGES AND INSURANCE EXPENSES OF RS.7.35 LACS, IT WAS THE CLAIM OF THE ASSESSEE THAT THE SAME WAS MADE OUT OF CASH WITHDRAWALS FROM THE PERSONAL BANK ACCOUNT OF THE MANAGING DIRECTOR OF THE ASSESSEE COMPANY VIZ. SHRI RAJNISH DHAWAN OUT OF HIS PERSONAL BANK ACCOUNT, AS UNDER: DATE PARTICULARS AMOUNT 05.01.2013 AMOUNT WITHDRAWN FROM BANK ACCOUNT OF SHRI RAJNISH DHAWAN RS.6,00,000/ - PAGE | 3 ITA NO. 677/ASR/2017 A.Y. 2014-15 ASIAN TYRE FACTORY LTD. VS. THE DY. COMMISSIONER OF INCOME TAX 22.03.2013 AMOUNT WITHDRAWN FROM BANK ACCOUNT OF SHRI RAJNISH DHAWAN RS.3,50,000/ HOWEVER, THE A.O DECLINED TO ACCEPT THE AFORESAID EXPLANATION OF THE ASSESSEE FOR THREE REASONS VIZ. (I) THAT THERE WAS SUBSTANTIAL TIME GAP BETWEEN THE WITHDRAWALS MADE FROM THE BANK ACCOUNT AND THE EXPENSES INCURRED BY THE ASSESSEE TOWARDS REGISTRATION CHARGES AND INSURANCE EXPENSES; (II) THE AMOUNTS WITHDRAWN WERE QUITE DIFFERENT FROM THAT SPENT TOWARDS REGISTRATION CHARGES AND INSURANCE EXPENSES; AND (III) THAT THE WITHDRAWALS WERE MADE NOT FROM THE BANK ACCOUNT OF THE ASSESSEE COMPANY, BUT FROM THE PERSONAL ACCOUNT OF ITS MANAGING DIRECTOR VIZ. SHRI RAJNISH DHAWAN. ON THE BASIS OF THE AFORESAID DELIBERATIONS, THE A.O BEING OF THE VIEW THAT THE SUM OF RS.7,35,000/- WAS INCURRED BY THE ASSESSEE TOWARDS REGISTRATION CHARGES AND INSURANCE EXPENSES OF THE CAR OUT OF UNEXPLAINED SOURCES, THUS ADDED THE SAME TO ITS RETURNED INCOME. 5. AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A). THE CIT(A) AFTER DELIBERATING ON THE CONTENTIONS ADVANCED BY THE ASSESSEE WAS HOWEVER NOT PERSUADED TO SUBSCRIBE TO THE SAME AND UPHELD THE ADDITION OF RS.7,35,000/- MADE BY THE A.O. 6. THE ASSESSEE BEING AGGRIEVED WITH THE ORDER OF THE CIT(A) HAS CARRIED THE MATTER IN APPEAL BEFORE US. THE LD. AUTHORIZED REPRESENTATIVE (FOR SHORT A.R) FOR THE ASSESSEE SUBMITTED THAT AS THERE WAS NOT MUCH SUBSTANTIAL TIME GAP BETWEEN THE WITHDRAWALS MADE FROM THE BANK ACCOUNT AND THE INCURRING OF THE REGISTRATION EXPENSES AND INSURANCE EXPENSES BY THE ASSESSEE COMPANY, THEREFORE, THE LOWER AUTHORITIES HAD ERRONEOUSLY DRAWN ADVERSE INFERENCES AS REGARDS THE SOURCE OF THE AFORESAID EXPENDITURE. THE LD. A.R IN ORDER TO DRIVE HOME HIS CONTENTION THAT IN THE ABSENCE OF ANY MATERIAL BEING MADE AVAILABLE ON RECORD BY THE A.O WHICH WOULD PROVE THAT THE AMOUNTS EARLIER WITHDRAWN FROM THE BANK ACCOUNT WERE UTILISED ELSEWHERE, NO ADVERSE INFERENCES AS REGARDS THE UTILISATION OF THE SAME AS CLAIMED BY THE ASSESSEE CAN VALIDLY BE DRAWN, RELIED ON THE ORDER OF THE ITAT, DELHI IN THE CASE OF SMT. SHVETA AGGARWAL VS ITO, WARDL-20(4), DELHI PAGE | 4 ITA NO. 677/ASR/2017 A.Y. 2014-15 ASIAN TYRE FACTORY LTD. VS. THE DY. COMMISSIONER OF INCOME TAX 2016 (II) TMI 1300 (ITAT, DELHI). IT WAS THUS THE CONTENTION OF THE LD. A.R THAT THE CIT(A) HAD WRONGLY UPHELD THE ADDITION OF RS.7,35,000/- MADE BY THE A.O IN RESPECT OF THE DULY EXPLAINED EXPENDITURE THAT WAS INCURRED BY THE ASSESSEE TOWARDS REGISTRATION CHARGES AND INSURANCE EXPENSES OF THE CAR PURCHASED BY THE ASSESSEE COMPANY. THE LD. A.R. ON A SPECIFIC QUERY RAISED BY THE BENCH AS TO HOW THE WITHDRAWALS MADE FROM THE BANK ACCOUNT OF THE MANAGING DIRECTOR VIZ. SHRI. RAJNISH DHAWAN COULD BE RELATED TO AND WOULD EXPLAIN THE EXPENSES INCURRED TOWARDS REGISTRATION CHARGES AND INSURANCE EXPENSES OF THE CAR OWNED BY THE ASSESSEE COMPANY, HOWEVER COULD NOT TENDER ANY EXPLANATION AS REGARDS THE SAME. 7. PER CONTRA, THE LD. DEPARTMENTAL REPRESENTATIVE (FOR SHORT D.R) RELIED ON THE ORDERS OF THE LOWER AUTHORITIES. IT WAS AVERRED BY THE LD. D.R THAT THE CASH WITHDRAWALS MADE FROM THE PERSONAL BANK ACCOUNT OF THE MANAGING DIRECTOR COULD NOT BE RELATED WITH THE EXPENDITURE THAT WAS INCURRED TOWARDS REGISTRATION CHARGES AND INSURANCE EXPENSES OF THE CAR PURCHASED BY THE ASSESSEE COMPANY. ALTERNATIVELY, IT WAS SUBMITTED BY THE LD. D.R THAT KEEPING IN VIEW THE TIME GAP BETWEEN THE AFORESAID CASH WITHDRAWALS AND THE INCURRING OF THE EXPENSES, THE EXPLANATION OF THE ASSESSEE ALSO ON THE SAID COUNT DID NOT INSPIRE ANY CONFIDENCE. 8. WE HAVE HEARD THE AUTHORIZED REPRESENTATIVES FOR BOTH THE PARTIES, PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL AVAILABLE ON RECORD. ADMITTEDLY, THE ASSESSEE COMPANY HAD PURCHASED A CAR (MAKE : AUDI) FROM M/S ZENICA CAR INDIA (P) LTD., GURGAON ON 22.04.2013. INSOFAR, THE SOURCE OF THE EXPENDITURE INCURRED TOWARDS REGISTRATION CHARGES AND INSURANCE EXPENSES PERTAINING TO THE AFORESAID CAR ARE CONCERNED, IT IS THE CLAIM OF THE ASSESSEE THAT THE SOURCE OF THE SAME WAS OUT OF THE CASH WITHDRAWALS MADE ON 05.01.2013 (RS.6 LACS); AND 22.03.2013 (RS.3,50,000/-) FROM THE PERSONAL BANK ACCOUNT OF THE MANAGING DIRECTOR OF THE ASSESSEE COMPANY VIZ. SHRI RAJNISH DHAWAN. WE THOUGH ARE IN AGREEMENT WITH THE CONTENTION ADVANCED BY THE LD. A.R THAT KEEPING IN VIEW THE PROXIMITY OF TIME GAP BETWEEN CASH WITHDRAWALS MADE FROM A BANK PAGE | 5 ITA NO. 677/ASR/2017 A.Y. 2014-15 ASIAN TYRE FACTORY LTD. VS. THE DY. COMMISSIONER OF INCOME TAX ACCOUNT OF AN ASSESSEE AND THE SUBSEQUENT EXPENDITURE INCURRED BY HIM, THE SOURCE OF SUCH EXPENDITURE IN THE ABSENCE OF ANY MATERIAL PROVING THAT THE FUNDS HAD BEEN UTILISED BY THE ASSESSEE ELSEWHERE, CAN SAFELY BE INEXTRICABLY RELATED TO THE FUNDS THAT WOULD BE AVAILABLE WITH THE ASSESSEE OUT OF SUCH CASH WITHDRAWALS. HOWEVER, IN THE CASE BEFORE US, WE CANNOT REMAIN OBLIVIOUS OF THE FACT THAT THE AFORESAID CASH WITHDRAWALS HAD BEEN MADE NOT FROM THE BANK ACCOUNT OF THE ASSESSEE COMPANY, BUT FROM THE PERSONAL BANK ACCOUNT OF THE MANAGING DIRECTOR VIZ. SHRI RAJNISH DHAWAN. WE FIND THAT THE ASSESSEE NEITHER BEFORE THE LOWER AUTHORITIES NOR BEFORE US HAD BEEN ABLE TO TENDER ANY EXPLANATION AS TO HOW THE CASH WITHDRAWALS MADE FROM THE PERSONAL BANK ACCOUNT OF THE MANAGING DIRECTOR VIZ. SHRI. RAJNISH DHAWAN COULD BE RELATED TO AND WOULD EXPLAIN THE SOURCE OF THE REGISTRATION CHARGES AND THE INSURANCE EXPENSES OF THE CAR OWNED BY THE ASSESSEE COMPANY. AS OBSERVED BY US HEREINABOVE, THE LD. A.R HAS FAILED TO EXPLAIN AS TO HOW THE AFORESAID EXPENDITURE HAS BEEN ACCOUNTED FOR IN THE BOOKS OF ACCOUNT OF THE ASSESSEE COMPANY. WE ARE UNABLE TO COMPREHEND AS TO HOW THE CASH WITHDRAWALS MADE FROM THE PERSONAL BANK ACCOUNT OF THE MANAGING DIRECTOR COULD HAVE BEEN UTILISED FOR MEETING OUT THE REGISTRATION CHARGES AND THE INSURANCE EXPENSES OF THE CAR OWNED BY THE ASSESSEE COMPANY. IN OUR CONSIDERED VIEW, THE ASSESSEE COMPANY ON BEING CORNERED AS REGARDS THE SOURCE OF THE EXPENSES INCURRED TOWARDS REGISTRATION CHARGES AND INSURANCE EXPENSES OF RS.7,35,000/- LACS ON THE CAR PURCHASED BY IT, HAD MERELY MADE AN ATTEMPT TO WRIGGLE OUT OF THE SAME BY RELATING THE SOURCE OF THE SAID EXPENSES WITH THE CASH WITHDRAWALS MADE FROM THE PERSONAL BANK ACCOUNT OF THE MANAGING DIRECTOR OF THE ASSESSEE COMPANY VIZ. SHRI RAJNISH DHAWAN. APART THEREFROM, WITHOUT PREJUDICE TO OUR AFORESAID OBSERVATIONS, THE FACT THAT THE CASH WITHDRAWALS HAD BEEN MADE NOT IN A SINGLE GO BUT IN TWO STANCES VIZ. (I). 05.01.2013 (RS. 6,00,000/-); AND (II). 22.03.2013 (RS. 3,50,000/-), ALSO DOES NOT INSPIRE ANY CONFIDENCE AS REGARDS THE VERACITY OF THE EXPLANATION OF THE ASSESSEE THAT THE REGISTRATION CHARGES AND INSURANCE EXPENSES THAT WOULD HAVE BEEN INCURRED SUBSEQUENT TO PURCHASE OF CAR ON 22.04.2013, WERE SOURCED OUT OF THE SAID FUNDS. BE PAGE | 6 ITA NO. 677/ASR/2017 A.Y. 2014-15 ASIAN TYRE FACTORY LTD. VS. THE DY. COMMISSIONER OF INCOME TAX THAT AS IT MAY, NOT BEING ABLE TO PERSUADE OURSELVES TO SUBSCRIBE TO THE CLAIM OF THE ASSESSEE THAT THE SOURCE OF THE AFORESAID EXPENDITURE OF RS. 7.35 LAC (SUPRA) WAS OUT OF THE CASH WITHDRAWALS MADE FROM THE PERSONAL BANK ACCOUNT OF THE MANAGING DIRECTOR OF THE ASSESSEE COMPANY, WE THUS DECLINE TO ACCEPT THE SAME. 9. WE THUS NOT FINDING ANY INFIRMITY IN THE ORDER OF THE CIT(A) WHO HAS RIGHTLY UPHELD THE ADDITION OF RS.7,35,000/- MADE BY THE A.O, UPHOLD HIS ORDER. 10. THE APPEAL OF THE ASSESSEE BEING DEVOID OF ANY MERIT IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 15.01.2019 SD/- SD/- ( N.K. SAINI) (RAVISH SOOD) VICE PRESIDENT JUDICIAL MEMBER PLACE: JALANDHAR; DATE 15.01.2019 PS. ROHIT / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A)- 4. / CIT 5. , / DR, ITAT, CAMP BENCH, JALANDHAR 6. [ / GUARD FILE. //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) /ITAT, CAMP BENCH, JALANDHAR PAGE | 7 ITA NO. 677/ASR/2017 A.Y. 2014-15 ASIAN TYRE FACTORY LTD. VS. THE DY. COMMISSIONER OF INCOME TAX SR.NO. DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR SR.PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR.PS/PS 15.1.19 SR.PS/PS 6 KEPT FOR PRONOUNCEMENT ON 15.1.19 SR.PS/PS 7 FILE SENT TO THE BENCH CLERK 16.1.19 SR.PS/PS 8 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9 DATE ON WHICH FILE GOES TO THE AR 10 DATE OF DISPATCH OF ORDER