M/s Benara Bearing & Pistons Ltd., V. Asstt. Commissioner of Income Tax, Kanpur

ITA 684/LKW/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 100409 (ITAT-LUCKNOW)
• Duration Of Justice: 1 year(s) 1 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-10-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 02-09-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 26-08-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: NIDHI SINGH VERMA
• Keywords: Depreciation

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B, LUCKNOW BEFORE SHRI A.K. GARODIA, ACCOUNTANT MEMBER AND SHRI SUDHANSHU SRIVASTAVA , JUDICIAL MEMBER ITA NO.684/LKW/2014 ASSESSMENT YEAR:2004 - 05 M/S BENARA BEARING & PISTONS LTD. A - 3&4, SITE - B, INDL. AREA, SIKANDRA, AGRA. PAN:AABCB7583K VS. A.C.I.T., CENTRAL CIRCLE - II, KANPUR. (APPELLANT) (RESPONDENT) APPELLANT BY SHRI ASHISH JAISWAL, ADVOCATE RESPONDENT BY SMT. NIDHI SINGH VERMA, D. R. DATE OF HEARING 02/09/2015 DATE OF PRONOUNCEMENT 0 7 / 1 0 /2015 O R D E R PER A. K. GARODIA, A.M. THIS IS ASSESSEES APPEAL DIRECTED AGAINST THE ORDER OF LEARNED CIT(A) - I, KANPUR DATED 03/06/2014 FOR THE ASSESSMENT YEAR 2004 - 05. 2. GROUND NO. 1 & 2 ARE AS UNDER: 1. BECAUSE ON FACTS AND IN CIRCUMSTANCES OF THE CASE, LD. CIT(A) HAS ERRED IN CONFIRMING ADDITION ON ACCOUNT OF GROSS PROFIT ON SUPPRESSION OF SALES AT RS.19909.00. 2. BECAUSE ON FACTS AND IN CIRCUMSTANCES OF THE CASE, LD. CIT(A) HAS ERRED IN CONFIRMING ADDITION ON ACCOUNT OF INVESTMENT IN STOCK FOR SUPPRESSED SALES AT RS.12,539.00. 3. IT WAS SUBMITTED BY LEARNED A.R. OF THE ASSESSEE THAT THE ISSUE INVOLVED AS PER THESE TWO GROUNDS ARE COVERED IN FAVOUR OF THE ASSESSEE BY THE TRIBUNAL DECISION IN THE CASE OF ACIT V S. A. K. ALLOYS (P.) LTD. AS REPORTED IN 17 ITR (T) 434 (CHANDIGARH), COPY ON PAGES 1 TO 5 OF THE PAPER BOOK AND 2 ALSO BY A JUDGMENT OF HONBLE PUNJAB & HARYANA HIGH COURT RENDERED IN THE CASE OF CIT VS. ARORA ALLOYS LTD. 370 ITR 732 (P&H). 4. LEARNED D. R . OF THE REVENUE SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT IT IS NOTED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS VIDE LETTER DATED 13/ 11/2006, THE ASSESSEE COMPANY WAS SPECIFICALLY REQUIRED TO EXPLAIN AS TO WHY VALUE OF GOODS CLEARED CLANDESTINELY TOTALING RS.40,515/ - MAY NOT BE TREATED AS SALES OUTSIDE THE BOOKS AND MAY NOT BE TREATED AS UNEXPLAINED INCOME IN THE PRESENT YEAR. THE ASS ESSEE HAS SUBMITTED REPLY AND IT IS OBSERVED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER THAT SUCH REPLY IS THE COPY OF REPLY SUBMITTED BY THE ASSESSEE COMPANY BEFORE CENTRAL EXCISE AUTHORITIES AGAINST THEIR SHOW CAUSE NOTICE AND THE REPLY IS DATED 12 /04/2005. HE HAS FURTHER OBSERVED THAT IT WAS CON TENDED IN THE REPLY THAT NO ADDITION MAY BE MADE BECAUSE ON THE ISSUE OF UNDISCLOSED SALES, THE ISSUE IS SUB - JUDICE BEFORE THE APPROPRIATE EXCISE AUTHORITY AT NEW DELHI AND THE FINAL HEARING IS FIXED ON 10/ 03/2008. THERE WAS ONE MORE SUBMISSION BEFORE THE ASSESSING OFFICER THAT SINCE THE PROCEEDINGS AT DELHI BEFORE EXCISE AUTHORITIES ARE PENDING, THE ASSESSMENT ORDER SHOULD BE KEPT IN ABEYANCE . HENCE, IT IS SEEN THAT IN ADDITION TO SUBMITTING ON TECHNICAL ASPECT, THERE IS NO REPLY SUBMITTED BY THE ASSESSEE AS TO WHY THE ADDITION IS NOT CALLED FOR. IN PARA 5.2.8 OF HIS ORDER, IT IS NOTED BY LEARNED CIT(A) THAT CENTRAL EXCISE AUTHORITIES HAVE DETECTED SUPPRESSION/CLANDESTINE REMOVAL O F STORE OF RS.40,515/ - AND THIS WAS THE BASIS OF MOVING THE APPLICATION TO SETTLEMENT COMMISSION AND THIS ADDITION HAS BEEN SUSTAINED IN EXCISE APPEAL AND THE ASSESSEE HAS MADE NO SUBMISSION TO REBUT THIS ADDITION. ON ACCOUNT OF THIS SUPPRESSION OF SALES OF RS.40,515/ - , THE ASSESSING OFFICER HAS ESTIMATED AN INCOME OF RS.19,909/ - ON ACCOUNT OF INVESTMENT IN THE STOCK AND RS.12,539/ - ON ACCOUNT OF GROSS PROFIT 3 ON SUCH SUPPRESSED SALES. HENCE, IT IS SEEN THAT IN APPEAL IN CENTRAL EXCISE PROCEEDINGS, THE ADD ITION HAS BEEN SUSTAINED. NOW IN THE LIGHT OF THESE FACTS, WE EXAMINE THE APPLICABILITY OF JUDICIAL PRONOUNCEMENT S CITED BY LEARNED A.R. OF THE ASSESSEE. 6. RELIANCE HAS BEEN PLACED BY LEARNED A.R. OF THE ASSESSEE ON A TRIBUNAL DECISION IN THE CASE OF A. K. ALLOYS (P.) LTD. (SUPRA). IN THIS CASE, IT IS NOTED BY TRIBUNAL IN PARA 11 THAT IT WAS HELD BY CESTAT (CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL) THAT THERE WAS NO COGENT EVIDENCE TO SHOW EITHER SUPPRESSION OF PURCHASE OF INPUT OR REMOVAL OF GOODS. IN THE LIGHT OF THIS FACT, IT WAS HELD BY THE TRIBUNAL IN THAT CASE THAT IN VIEW OF THIS FINDING OF CESTAT IN ASSESSEES OWN CASE, THERE IS NO MERIT IN MAKING ANY ADDITION O N ACCOUNT OF ALLEGED SUPPRESSION IN PRODUCTION AND ALLEGED INVESTMENT IN PU RCHASE OF RAW MATERIAL. BUT IN THE PRESENT CASE, THIS IS THE FINDING OF CIT(A) THAT THE ADDITION HAS BEEN SUSTAINED IN APPEAL IN EXCISE PROCEEDINGS AND NOTHING HAS BEEN BROUGHT ON RECORD BEFORE US THAT IN THE PRESENT CASE ALSO, THE CESTAT HAS GRANTED RELI EF TO THE ASSESSEE. THEREFORE, THIS TRIBUNAL DECISION IS NOT APPLICABLE BECAUSE OF THIS DIFFERENCE IN FACTS. 7. THE SECOND JUDGMENT ON WHICH RELIANCE HAS BEEN PLACED BY LEARNED A.R. OF THE ASSESSEE IS A JUDGMENT OF HON'BLE PUNJAB & HARYANA HIGH COURT REN DERED IN THE CASE OF ARORA ALLOYS LTD. (SUPRA). IN THAT CASE ALSO , IN PARA 8 OF THE JUDGMENT, IT WAS NOTED BY HON'BLE PUNJAB & HARYANA HIGH COURT THAT THE TRIBUNAL IN THAT CASE HAS ACCEPTED THAT THERE WAS NO UNEXPLAINED INCOME ON ACCOUNT OF EITHER SALES O R PURCHASE. IT IS ALSO NOTED IN THE SAME PARA THAT IT WAS NOT DISPUTED BY LEARNED COUNSEL OF THE REVENUE THAT THE CENTRAL EXCISE DEPARTMENT HAD DELETED THE ADDITION. HENCE, IT IS SEEN THAT IN THAT CASE ALSO, THE ADDITION MADE BY CENTRAL EXCISE DEPARTMENT WAS DELETED BY THE CESTAT WHEREAS IN THE PRESENT CASE, THE ADDITION MADE BY EXCISE DEPARTMENT HAS BEEN UPHELD IN APPELLATE PROCEEDINGS IN EXCISE MATTER AS NOTED BY LEARNED CIT(A) IN PARA 5.2.8 OF HIS ORDER AND NOTHING HAS BEEN BROUGHT ON RECORD TO 4 SHOW TH AT THE ADDITION MADE BY CENTRAL EXCISE WAS DELETED BY CESTAT . HENCE, THIS JUDGMENT IS ALSO NOT APPLICABLE BECAUSE FACTS ARE DIFFERENT. 8. AS PER ABOVE DISCUSSION, WE HAVE SEEN THAT NONE OF THE JUDGMENTS CITED BY LEARNED A.R. OF THE ASSESSEE IS RENDERING ANY HELP TO THE ASSESSEE IN THE PRESENT CASE. MOREOVER, A CLEAR FINDING HAS BEEN GIVEN BY CIT(A) THAT THE ADDITION MADE BY CENTRAL EXCISE AUTHORITIES HAS BEEN UPHELD IN APPEAL AND NOTHING HAS BEEN BROUGHT ON RECORD TO SHOW THAT SUCH ADDITION BY CENTRAL EX CISE AUTHORITIES HAS BEEN DELETED BY CESTAT. THERE IS NO SU BMISSION MADE BY THE ASSESSEE BEFORE THE AUTHORITIES BELOW OR BEFORE US AS TO HOW IN SPITE OF ADDITION HA VING BEEN MADE BY CENTRAL EXCISE AUTHORITIES, WHICH HAS BEEN UPHELD IN APPELLATE PROCEEDING S ALSO , ADDITION MADE BY THE ASSESSING OFFICER IS NOT VALID. THEREFORE, ON THIS ISSUE , WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF CIT(A). ACCORDINGLY, GROUND NO. 1 & 2 ARE REJECTED . 9. GROUND NO. 3 & 4 ARE AS UNDER: 3. BECAUSE ON FACTS AND IN CIRCUMSTANCES OF THE CASE, LD. CIT(A) HAS ERRED IN CONFIRMING DISALLOWANCE OF RS.50,000.00 OUT OF COMMUNICATION EXPENSES. 4. BECAUSE ON FACTS AND IN CIRCUMSTANCES OF THE CASE, LD. CIT(A) HAS ERRED IN CONFIRMING DISALLOWANCE OF RS.57,961.00 OUT OF V EHICLE RUNNING & DEPRECIATION. 10. IT WAS SUBMITTED BY LEARNED A.R. OF THE ASSESSEE THAT THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE JUDGMENT OF HON'BLE GUJARAT HIGH COURT RENDERED IN THE CASE OF SAYAJI IRON AND ENGG. CO. VS. CIT [2002] 253 IT R 749 (GUJ). 11. LEARNED D. R. OF THE REVENUE SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 12. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT THE ASSESSING OFFICER HAS MADE TWO ADDITIONS BEING RS.50,000/ - OUT OF COMMUNICATION 5 EXPENSES AND RS. 57,961/ - OUT OF VEHICLE RUNNING AND MAINTENANCE EXPENSE S ALONG WITH THE DEPRECIATION ON VEHICLES. THESE ADDITIONS WERE MADE ON THE BASIS THAT PERSONAL USE OF TELEPHONE AND MOBILES AND VEHICLES BY THE DIRECTORS AND STAFF OF THE COMPANY CANNOT BE RULED OUT. IN THE LIGHT OF THESE FACTS, WE NOW EXAMINE THE APPLICABILITY OF THIS JUDGMENT OF HON 'BLE GUJARAT HIGH COURT RENDERED IN THE CASE OF SAYAJI IRON AND ENGG. CO. (SUPRA). IN THIS CASE, IT WAS HELD BY HON'BLE GUJARAT HIGH COURT THAT EVEN IF THE VEHICLES ARE USED FOR PERSONAL PURPOSES BY THE DIRECTORS OR EMPLOYEES OF THE ASSESSEE COMPANY, THER E CAN BE ADDITION AS PERQUISITES IN THE HANDS OF THE DIRECTORS OR EMPLOYEES BUT NO DISALLOWANCE CAN BE MADE IN THE HANDS OF THE ASSESSEE COMPANY ON ACCOUNT OF PERSONAL USE OF CAR BY THE DIRECTORS AND EMPLOYEES. RESPECTFULLY FOLLOWING THIS JUDGMENT OF HON' BLE GUJARAT HIGH COURT, WE HOLD THAT IN THE PRESENT CASE ALSO, THE DISALLOWANCE MADE BY THE ASSESSING OFFICER OUT OF TELEPHONE EXPENSES TERMED AS COMMUNICATION EXPENSES AND VEHICLE EXPENSES ETC. ON THE BASIS OF THIS ALLEGATION THAT PERSONAL USE BY THE DIRE CTORS AND STAFF CANNOT BE RULED OUT, IS NOT JUSTIFIED. WE, THEREFORE, DELETE THE SAME. GROUND NO. 4 & 5 ARE ALLOWED. 13. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS ALLOWED PARTLY. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD/. SD/. ( SUDHANSHU SRIVASTAVA ) ( A. K. GARODIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 0 7 / 1 0 /2015 * SINGH COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. CONCERNED CIT 4. THE CIT(A) 5. D.R., I.T.A.T., LUCKNOW ASSTT. REGISTRAR