Bala Chamundeswari Cotton Company, Guntur V. The Assistant Commissioner of Income Tax, Central Circle, Vijayawada

ITA 70/VIZ/2020

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 5544 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 1 year(s) 2 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-05-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2005-2006
• Appeal Filed On: 12-02-2020
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: K S RAJENDRA KUMAR
• Keywords: Revised return; Set aside
• Section: 143(3); 153A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE SHRI N.K. CHOUDHRY, HONBLE JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH, HON'BLE ACCOUNTANT MEMBER I.T.A. NO. 70 /VIZ/2020 (ASST. YEAR : 200 5 - 0 6 ) M/S. BALA CHAMUNDESWARI COTTON COMPANY, D.NO. 11 - 696, OPP. INDUSTRIAL ESTATE, AMARAVATHI ROAD, GUNTUR. VS. ACIT, CENTRAL CIRCLE, VIJAYAWADA. PAN NO. AAIFS 2875 B (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI G.V.N. HARI, ADVOCATE. DEPARTMENT BY : SHRI K.S. RAJENDRA KUMAR, CIT DR DATE OF HEARING : 27 / 04/2021 . DATE OF PRONOUNCEMENT : 07 / 05/2021 . O R D E R PER D.S. SUNDER SINGH , ACCOUNTANT MEMBER THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGAINST THE ORDER DATED 18 /11/2019 IMPUGNED HEREIN PASSED BY THE LD.COMMISSIONER OF INCOME TAX (APPEALS) - 3 [FOR SHORT , LD.COMMISSIONER] , VISAKHAPATNAM U/SEC. 250(6) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS 'ACT') FOR THE A.Y. 20 05 - 06 . 2 ITA NO. 70 / VIZ /2020 ( M/S. BALA CHAMUNDESWARI COTTON COMPANY ) 2. GROUND NOS. 2 & 4 ARE GENERAL IN NATURE, WHICH DOES NOT REQUIRE ANY SPECIFIC ADJUDICATION. 3 . GROUND NO.2 IS RELATED TO THE ADDITION MADE BY THE AO TOWARDS DISALLOWANCE OF EXPENSES. DURING THE COURSE OF ASSESSMENT PROCEEDINGS , THE AO FOUND THAT THE ASSESSEE HAD DEBITED THE EXPENDITURE OF RS. 4 , 92 , 789/ - UNDER VARIOUS HEADS AS PER THE DETAILS GIVEN BELOW: - 1. DISCOUNT RS. 1,25,466 2. GINNING LABOUR EXPENSES RS. 28 , 1 4,156 3. PRESSING LABOUR CHARGES RS. 11 , 98 , 425 4. CARRYING CHARGES RS. 7,89 , 8 50 TOTAL RS. 4 9 , 27 , 890 SINCE, THE ASSESSEE COULD NOT FURNISH THE DETAILS, THE AO MADE THE DISALLOWANCE OF RS. 4 , 9 2 , 7 89 / - ON ESTIMATION BASIS @10%. AGAINST WHICH, THE ASSESSEE WENT ON APPEAL BEFORE THE LD.COMMISSIONER AND THE LD.COMMISSIONER UPHELD THE ADDITION STATING THAT ESTIMATION MADE BY THE AO IS REASONABLE. 4 . AGAINST THE ORDER OF THE LD.COMMISSIONER, THE ASSESSEE FILED THE PRESENT APPEAL BEFORE THIS TRIBUNAL. DURING THE APPEAL HEARING, LD.AR CONCEDED FOR RESTRICTING THE DISALLOWANCE OF EXPENDITURE TO 5% AGAINST THE ADDITION CONFIRMED BY THE LD.COMMISSIONER @10% . 5. WE HAVE HEARD BOTH THE PARTIES AND OF THE CONSIDERED THE VIEW THAT DISALLOWANCE OF EXPENSES @5% IS REASONABLE, THEREFORE WE SCALE DOWN THE ADDITION TO 5% INSTEAD OF 10% SUSTAINED BY THE 3 ITA NO. 70 / VIZ /2020 ( M/S. BALA CHAMUNDESWARI COTTON COMPANY ) LD.COMMISSIONER. ACCORDINGLY, THIS GROUND OF APPEAL RAISED BY THE ASSESSEE IS PARTLY ALLOWED. 6 . GROUND NO.3 IS RELATED TO THE ADDITION OF RS. 40,89,29 3 / - MADE BY THE AO IN RESPECT OF VARIOUS EXPENSES IN THE ORDER U/SEC. 153A AS PER THE DETAILS GIVEN BELOW: - NATURE OF EXP. AS PER ORIGINAL RETURN OF INCOME AS PER RETURN FILED IN RESPONSE TO NOTICE U/SEC. 153A DIFFERENCE CARRYING CHARGES 789850 830723 40873 GINNING EXPENSES 2814156 4586811 1772655 PRESSING EXPENSES 1198425 3474190 2275765 TOTAL 4089293 DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO HAS OBSERVED THAT THERE WAS AN INCREASING IN THE EXPENDITURE CLAIMED BY THE ASSESSEE IN RESPECT OF THE ABOVE HEADS COMPARED TO THE ORIGINAL RETURN OF INCOME . THEREFORE, THE AO VIEWED THAT THE ASSESSEE HA D INFLATED THE EXPENDITURE, HENCE, MADE THE ADDITIO N. AGAINST WHICH THE ASSESSEE WENT ON APPEAL BEFORE THE LD.COMMISSIONER AND THE LD.COMMISSIONER SCALED DOWN THE DISALLOWANCE TO 5% OF SUCH EXPENDITURE. 7 . AGAINST WHICH THE ASSESSEE FILED THE PRESENT APPEAL BEFORE THIS TRIBUNAL . 8 . WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL PLACED ON RECORD. THE CONTENTION OF THE ASSESSEE IS THAT GINNING CHARGES, PRESSING CHARGES CARRYING CHARGES WERE INCREAS ED DUE TO REASON THAT THE UNACCOUNTED STOCKS WERE ADMITTED IN THE REVISED RETURN FILED IN RESPONSE TO THE NOTICE U/SEC. 153A, THEREFORE THERE 4 ITA NO. 70 / VIZ /2020 ( M/S. BALA CHAMUNDESWARI COTTON COMPANY ) WAS A CHANGE IN THE EXPENSES RELATING TO THE PROFIT & LOSS ACCOUNT ORIGINALLY FILED AND THE REVISED RETURN. WE HAVE GONE THROUGH THE PROFIT & LOSS ACCOUNT FILED IN PAGE NO.3 OF THE PAPER BOOK, WHEREIN THE ASSESSEE HAS DECLARED THE CLOSING STOCK OF 1,32,26,208 / - IN ORIGINAL AND ADMITTED THE CLOSING STOCK OF RS. 2, 11,57,28 6 / - IN THE REVISED RETURN . T HERE WAS A SUBSTANTIAL INCREASE IN THE CLOSING STOCK IN THE REVISED RETURN AND ALL THE TRADING EXPENSES RELATING TO THE CLOSING STOCK NEEDS TO BE TAKEN INTO ACCOUNT TO REVALUE THE STOCK, WHILE FILING THE REVISED RETURN IN RESPONSE TO THE NOTICE ISSUED U/SEC. 153A . H ENCE, THE EXPLANATION OF THE AR OF THE ASSESSEE APPEARS TO BE REASONABLE. FURTHER, THIS IS AN ASSESSMENT MADE U/SEC. 153A R.W.S. 143(3) I.E. FOR THE SEARCH PERIOD AND NO INCRIMINATING MATERIAL /EVIDENCE WAS FOUND BY THE DEPARTMENT TO SUBSTANTIATE THAT TH E ASSESSEE HAS INFLATED THE EXPENDITURE . THEREFORE, WE DO NOT FIND ANY REASON TO SUSTAIN THE DISALLOWANCE MADE BY THE AO AND HENCE, WE SET ASIDE THE ORDER OF THE LD.COMMISSIONER AND DELETE THE ADDITION MADE BY THE AO. 9 . IN THE RESULT, APPEAL FILED BY THE ASSESSEE STANDS PARTLY ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON TH IS 0 7 T H DAY OF MAY , 2021 . S D / - S D / - (N.K. CHOUDHRY) (D.S. SUNDER SINGH) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 0 7 T H MAY , 20 2 1 . VR/ - 5 ITA NO. 70 / VIZ /2020 ( M/S. BALA CHAMUNDESWARI COTTON COMPANY ) COPY TO: 1. THE ASSESSEE - M/S. BALACHAMUNDESWARI COTTON COMPANY, D.NO. 11 - 696, OPP. INDUSTRIAL ESTATE, AMARAVATHI ROAD, GUNTUR. 2. THE REVENUE ACIT, CENTRAL CIRCLE, VIJAYAWADA. 3. THE PR. CIT ( C ENTRAL) , VISAKHAPATNAM. 4. THE CIT(A) - 3 , VISAKHAPATNAM. 5. THE D.R . , VISAKHAPATNAM. 6. GUARD FILE. BY ORDER (VUKKEM RAMBABU) SR. PRIVATE SECRETARY, ITAT, VISAKHAPATNAM.