T & D GALIAKOT CONTAINERS P. LTD, MUMBAI V. DCIT 2(3), MUMBAI

ITA 7249/MUM/2010

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 0799 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 8 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-07-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Next Hearing Date: 23-06-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 22-10-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: NEIL PHILP
• Assessee Lawyers: DEEPAK N KAN ABAR
• Keywords: Assessment record

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH E, MUMBAI BEFORE SHRI R.C. SHARMA, ACCOUNTANT MEMBER AND SHRI SANJAY GARG, JUDICIAL MEMBER ITA NO.7249/M/2010 ASSESSMENT YEAR: 2007-08 M/S. T & D GALIAKOT CONTAINERS PVT. LTD., 125 NAGINDAS MASTER ROAD, FORT, MUMBAI - 400001 PAN: AAACT 5835D VS. DY. COMMISSIONER OF INCOME- TAX 2(3), AAYAKAR BHAVAN, RM. NO.555, 5 TH FLR, MAHARSHI KARVE ROAD, MUMBAI - 400020 (APPELLANT) (RESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI DEEPAK N. KANABAR, A.R. REVENUE BY : SHRI NEIL PHILP, D.R. DATE OF HEARING : 06.07.2015 DATE OF PRONOUNCEMENT : 06.07.2015 O R D E R PER SANJAY GARG, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSES SEE AGITATING THE CONFIRMATION OF DISALLOWANCE OF VARIOUS EXPENSES AM OUNTING TO RS.22,28,403/-. 2. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER (HEREINAFTER REFERRED TO AS THE AO) MADE DISALLOWANCES OF THE EX PENSES UNDER VARIOUS HEADS FOR WANT OF PROPER DETAILS AND THEREBY HOLDING THAT THE SAME WERE NOT RELATED TO THE BUSINESS ACTIVITY OF THE ASSESSEE. DURING THE APPELLATE PROCEEDINGS BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) [HEREINAFT ER REFERRED TO AS THE CIT(A)], THE ASSESSEE EXPLAINED THAT THE AO HAD NOT ASKED FOR THE DETAILS IN RESPECT OF EXPENSES UNDER THE HEADS PAYMENTS TO CL UBS', POWER AND FUEL ITA NO.7249/M/2010 M/S. T & D GALIAKOT CONTAINERS PVT. LTD. 2 EXPENSES, SERVICE CHARGES, REPAIR AND MAINTENANCE E XPENSES, TRAVELING AND CONVEYANCE EXPENSES, LEGAL AND PROFESSIONAL EXPENSE S, AUDIT FEE AND SALES PROMOTION EXPENSES. HOWEVER, IN RESPECT OF MISC. EXPENSES THE AR ADMITTED THAT THE DETAILS WERE CALLED FOR. THE AR ALSO SUBMI TTED A CHART INDICATED THE DATES OF NOTICES RECEIVED BY ASSESSEE FROM THE AO A ND THE COMPLIANCE BY THE ASSESSEE TO SUCH NOTICES. THE ASSESSEE SUBMITTED T HAT ITS ACCOUNTS WERE AUDITED AND THE EXPENSES WERE INCURRED WHOLLY AND EXCLUSIVE LY FOR BUSINESS PURPOSES. 3. THE LD. CIT(A), AFTER CONSIDERING THE SUBMISSION S OF THE ASSESSEE, CALLED THE ASSESSMENT RECORDS TO VERIFY THE ABOVE C ONTENTIONS OF THE ASSESSEE. HE NOTED FROM THE ASSESSMENT RECORDS THAT THE DETAI LS IN RESPECT OF THE EXPENSES WERE CALLED, HOWEVER, THE ASSESSEE HAD FAILED TO FU RNISH THE FULL DETAILS RELATING TO EXPENDITURE IN QUESTION BEFORE THE AO. HE THERE FORE UPHELD THE DISALLOWANCES MADE BY THE AO. BEING AGGRIEVED, THE ASSESSEE HAS COME IN APPEAL BEFORE US. 4. THE LD. A.R. OF THE ASSESSEE HAS SUBMITTED THAT THE ASSESSEE HAD PRODUCED FULL SET OF BOOKS OF ACCOUNTS, DETAILS AND INFORMATION WHICH HAVE BEEN ACCEPTED BY THE AO. THE ACCOUNTS OF THE ASSES SEE WERE DULY AUDITED AND DULY SIGNED BY STATUTORY AUDITORS AND TAX AUDIT REP ORT WAS ATTACHED WITH THE RETURN. THERE WAS NO REASON TO INFLATE THE EXPENSES FOR THE ASSESSEE DUE TO BROUGHT FORWARD LOSSES OF RS.5.76 CRORES. THE EXPE NSES DURING THE YEAR WERE ALMOST IDENTICAL FOR THE PREVIOUS ASSESSMENT YEARS AND ALSO IN SUBSEQUENT ASSESSMENT YEARS. THE BOOKS OF ACCOUNTS OF THE ASS ESSEE HAVE NOT BEEN REJECTED BY THE AO. THOUGH, THE ASSESSEE COULD NOT PRODUCE VOUCHERS, INVOICES IN RESPECT OF CERTAIN EXPENDITURE, HOWEVER , THE AO WAS NOT SUPPOSED TO IGNORE THE OTHER EVIDENCES PRODUCED BY THE ASSES SEE IN THIS RESPECT SUCH AS AUDITED ACCOUNTS, AUDIT REPORT ETC. ITA NO.7249/M/2010 M/S. T & D GALIAKOT CONTAINERS PVT. LTD. 3 5. CONSIDERING THE OVERALL FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT THE DISALLOWANCE OF THE ENTIRE EXPENDITURE IN RESPE CT OF PAYMENT TO CLUBS, SERVICE CHARGES, REPAIR AND MAINTENANCE, LEGAL AND PROFESSIONAL, AUDIT FEES, MISCELLANEOUS EXPENDITURE, SALES PROMOTION EXPENDIT URE WAS NOT WARRANTED. THE AO, HOWEVER, DISALLOWED 20% OF THE TRANSPORTATI ON CHARGES, POWER AND FUEL AND TRAVELLING AND CONVEYANCE. THE DISALLOWAN CES MADE BY THE AO, IN OUR VIEW, ARE VERY MUCH EXCESSIVE AND THE SAME ARE REQUIRED TO BE SCALED DOWN. SINCE THE ASSESSEE HAS FAILED TO PRODUCE VOU CHERS, INVOICES ETC. IN RESPECT OF CERTAIN EXPENDITURE, HENCE KEEPING IN VI EW THE SUBMISSIONS OF THE LD. A.R., THE NATURE OF THE EXPENSES CLAIMED AND TH E QUANTUM OF EXPENSES CLAIMED DURING THE EARLIER ASSESSMENT YEARS, WE RES TRICT THE DISALLOWANCE TO THE EXTENT OF 20% OUT OF THE DISALLOWANCE OF EXPENSES M ADE BY THE AO. 6. WITH THE ABOVE OBSERVATIONS, THE APPEAL OF THE A SSESSEE IS HEREBY PARTLY ALLOWED. ORDER WAS PRONOUNCED IN THE OPEN COURT ON 06.07.201 5. SD/- SD/- (R.C. SHARMA) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 20.10.2015 * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.