Guptajee & Co., Delhi V. ACIT, Circle- 47(1), New Delhi

ITA 6911/DEL/2017

• Counselvise Citation: [2021] 104 COUNSELVISE.COM (IT) 8418 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 11 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-11-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2013-2014
• Appeal Filed On: 16-11-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: RAJ KUMAR GUPA
• Keywords: TDS
• Section: 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI ‘C’ BENCH, NEW DELHI (THROUGH VIDEO CONFERENCING] BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER, AND SHRI KULDIP SINGH, JUDICIAL MEMBER ITA No. 6911/DEL/2017 [A.Y 2013-14] M/s Guptajee & Co. Vs. The A.C.I.T 1831, Bhagirath Palace Circle 47(1) Chandni Chowk, New Delhi New Delhi PAN: AAEFG 1846 Q (Applicant) (Respondent) Assessee By : Shri Raj Kumar Gupa, CA Shri Sachin Jain, CA Department By : Shri Pradeep Kumar Meel, CIT- DR Date of Hearing : 09.11.2021 Date of Pronouncement : 16.11.2021 ORDER PER N.K. BILLAIYA, ACCOUNTANT MEMBER:- This appeal by the assessee is preferred against the order of the Commissioner of Income Tax [Appeals] - 16, New Delhi dated 30.10.2017 pertaining to assessment year 2013-14. 2 2. The substantive grievances of the assessee read as under: 1. That on the facts and in the circumstances of the case and the legal position, the ld CIT (As) has erred in confirming the disallowance of packing expenses to the extent of Rs. 8,00,000/- on adhoc basis. 2. That on the facts and in the circumstances of the case and legal position, the learned CIT(Appeals) has erred in confirming the disallowance of loading and unloading, cartage outward , general expenses, staff welfare, business promotion and printing and stationery to the extent of Rs. 2,00,000/- on adhoc basis. 3. That on the facts and in the circumstances of the case and the legal position, the learned CIT (Appeals) has erred in confirming the disallowance of 1/10 th of telephone expenses and conveyance expenses amounting to Rs. 97,048/- for alleged personal use 3. Ground Nos. 1 and 2 relate to the adhoc disallowance relating to packing expenses and loading and unloading, cartage outward, general expenses and staff welfare expenses. 4. During the course of scrutiny assessment proceedings, the Assessing Officer noticed that the assessee has debited and claimed packing expenses of Rs. 1,26,74,322/- in the profit and loss account. The assessee was asked to explain the nature of such expenses and to explain as to why the cash payment was made for such expenses. 5. In its reply, the assessee stated that the packing expenses are in the nature of wooden boxes, patti and labour paid for packing of 3 material. It was explained that the same are petty in nature and not liable for TDS. 6. The reply of the assessee did not find any favour with the Assessing Officer who was of the firm belief that the wooden boxes, grass patti and other materials supplied by the assessee to persons/parties is in the nature of job contract which clearly attracts the provisions of section 194C of the Act and since no tax was deducted at source, addition of Rs.1,26,74,322/- was made. 7. Proceeding further, the Assessing Officer noticed that the assessee has claimed certain expenses in the nature of loading and unloading cartage outward, general expenses, staff welfare, business promotion and printing and stationery totaling to Rs. 2,18,19,181/-. 8. The assessee was asked to explain the expenses in light of provisions of section 194C of the Act. 4 9. In its reply, the assessee stated that these expenses have been paid to petty labourers on which no TDS is liable to be deducted u/s 194C of the Act. 10. The explanation of the assessee did not satisfy the Assessing Officer who made an adhoc disallowance of 10% and made addition of Rs. 2,18,19,181/-. The Assessing Officer further found that the assessee has claimed telephone expenses of Rs. 6,26,387/- and conveyance expenses of Rs. 3,44,093/- and was of the opinion that these expenses also involve personal element and disallowed 10% and made addition of Rs.97,048/-. 11. The assessee strongly agitated the assessment order before the ld. CIT(A). 12. In so far as the addition on account of packing material is concerned, the CIT(A), following the order of Assessment Year 2011–12, did not find any merit in invoking the provisions of section 194C of the Act. However, he restricted the disallowance to Rs.8 lakhs and in so far 5 as adhoc disallowance in respect of other expenses is concerned, the ld. CIT(A) restricted the disallowance to Rs. 2 lakhs and 1/10 disallowance out of telephone and conveyance is concerned, the same was confirmed by the ld. CIT(A). 13. Before us, the learned counsel for the assessee vehemently stated that the assessee is maintaining regular books of accounts which were subject to audit and no adverse inference has been drawn by the auditors. Entire additions have been made on adhoc basis and, therefore, the same should be deleted. 14. Per contra, the ld. DR supported the findings of the lower authorities. 15. We have carefully considered the orders of the authorities below. There is no dispute that the additions confirmed by the ld. CIT(A) are on adhoc basis. It was incumbent upon the Assessing Officer/ld. CIT(A) to point out particular expenses which were not verifiable or which were not 6 supported by bills and vouchers, which he has failed. Further, there is no dispute that the books of accounts are duly audited and no adverse remarks have been made by the auditors. The books of account have been accepted by the Assessing Officer. Therefore, in our considered opinion, adhoc disallowances confirmed by the ld. CIT(A) are without merits and deserve to be deleted. We direct the Assessing Officer to delete the additions so made. Ground Nos. 2, 3 and 4 taken together are allowed. 16. In the result, the appeal filed by the assessee in ITA No. 6911/DEL/2017 is allowed. The order is pronounced in the open court on 16.11.2021. Sd/- Sd/- [KULDIP SINGH] [N.K. BILLAIYA] JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 16 th November, 2021 VL/ 7 Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, New Delhi Date of dictation Date on which the typed draft is placed before the dictating Member Date on which the typed draft is placed before the Other Member Date on which the approved draft comes to the Sr.PS/PS Date on which the fair order is placed before the Dictating Member for pronouncement Date on which the fair order comes back to the Sr.PS/PS Date on which the final order is uploaded on the website of ITAT Date on which the file goes to the Bench Clerk Date on which the file goes to the Head Clerk The date on which the file goes to the Assistant Registrar for signature on the order Date of dispatch of the Order