The ACIT, Circle-4, Baroda V. M/s. Vision Organics Pvt.Ltd., Baroda

ITA 734/AHD/2009

• Counselvise Citation: 73420514 RSA 2009
• Duration Of Justice: 2 year(s) 6 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-09-2011
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 15-09-2011
• Assessment Year: 2003-2004
• Appeal Filed On: 05-03-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: Y C SURTI

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH AHMEDABAD (BEFORE S/SHRI BHAVNESH SAINI, JM AND A. MOHAN ALAN KAMONY, AM) ITA NO.734/AHD/2009 AY: 2003-04 THE A. C. I. T., CIRCLE4, 4 TH FLOOR, AAYAKAR BHAVAN, RACE COURSE CIRCLE, BARODA 390 007 VS M/S. VISION ORGANICS PVT. LTD., A/2, SWAGAT, B/H OVERSEAS AVENUES, NATUBHAI CENTRE, RACE COURSE CIRCLE, BARODA PA NO. AAACV 7903 L (APPELLANT) (RESPONDENT) APPELLANT BY SHRI Y. C. SURTI, DR RESPONDENT BY NONE DATE OF HEARING: 15-09-2011 DATE OF PRONOUNCEMENT: 23-09-2011 O R D E R PER BHAVNESH SAINI: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LEARNED CIT(A)-II I, BARODA DATED 17 TH DECEMBER, 2008, FOR ASSESSMENT YEAR 2003-04. 2. WE HAVE HEARD THE LEARNED DR AND PERUSED THE FIN DINGS OF THE AUTHORITIES BELOW. HOWEVER, NONE APPEARED ON BEHALF OF THE ASSESSEE DESPITE SERVICE OF NOTICE. SERVICE REPORT IS AVAILABLE ON RECORD. THE ASSESSEE IS, THEREFORE, PROCEEDED EX-PA RTE. 3. ON GROUND NO.1, THE REVENUE CHALLENGED THE DELET ION OF ADDITION ON ACCOUNT OF DISALLOWANCE OF INTEREST EXP ENSES OF RS.12,13,290/-. THE AO NOTED THAT THE ASSESSEE PAID THE AMOUNT OF ITA NO734/AHD/2009 ACIT, CIRCLE-4 BARODA VS M/S. VISION ORGANICS PVT. LTD. 2 RS.12,13,290/- BUT NO DOCUMENTARY EVIDENCE HAS BEEN PRODUCED BEFORE HIM. IN THE ABSENCE OF ANY DETAILS THE INTER EST WAS DISALLOWED. IT WAS SUBMITTED BEFORE THE LEARNED CIT(A) THAT IN SCHEDULE 14 TO THE BALANCE SHEET IT WAS MENTIONED THAT THE ASSESSEE C OMPANY HAS PAID RS.12.13 LACS AS INTEREST TO OTHERS. LEDGER WAS PRO DUCED. THE LEARNED CIT(A) NOTED THAT IN THE REMAND REPORT THE AO SUBMITTED THAT NO DOCUMENTARY EVIDENCE OF PAYMENT OF INTEREST HAS BEEN SUBMITTED AT THE ASSESSMENT STAGE, THEREFORE, ORDER MAY BE CO NFIRMED. THE LEARNED CIT(A) HOWEVER, FOUND THAT THE BALANCE SHEE T OF THE ASSESSEE IS SHOWING UNSECURED LOAN OF RS.1.85 CRORE S WHICH WERE BORROWED IN THE EARLIER YEARS ON WHICH INTEREST WAS PAID, THE SAME IS, THEREFORE, PRIMA FACIE ALLOWABLE UNLESS THE LOAN IS CONSIDERED BOGUS OR NON-GENUINE. THE ASSESSEE HAS NOT CLAIMED INTERE ST ON SECURED LOAN OF RS.56.33 CRORES SINCE THE SAME WAS NOT PAID . ADDITION WAS ACCORDINGLY DELETED. 4. CONSIDERING THE SUBMISSION OF THE LEARNED DR WE DO NOT FIND ANY MERIT IN THIS GROUND OF APPEAL OF THE REVENUE. THE LEARNED CIT(A) FOUND FROM THE B/S PRODUCED AT THE APPELLATE STAGE ON WHICH REMAND REPORT WAS CALLED FOR THAT THE AMOUNTS WERE BORROWE D IN EARLIER YEARS ON WHICH INTEREST HAS BEEN PAID. SINCE TAKING OF TH E LOAN HAS COME FROM EARLIER YEARS AND NOTHING IS BROUGHT ON RECORD AS TO IF ANY ADVERSE VIEW IS TAKEN IN EARLIER YEARS, WE DO NOT F IND ANY JUSTIFICATION TO INTERFERE WITH THE ORDER OF THE LEARNED CIT(A). IN THE ABSENCE OF ANY REBUTTAL TO THE FINDINGS OF THE LEARNED CIT(A), THI S GROUND OF APPEAL OF THE REVENUE IS DISMISSED. ITA NO734/AHD/2009 ACIT, CIRCLE-4 BARODA VS M/S. VISION ORGANICS PVT. LTD. 3 5. ON GROUND NO.2, THE REVENUE CHALLENGED THE ORDER OF THE LEARNED CIT(A) IN SCALING DOWN THE DISALLOWANCE OF ADMINISTRATIVE EXPENSES FROM RS.26,82,139/- TO RS.20,00,000/- OVER LOOKING THE FACT THAT NO DOCUMENTARY PROOF OF ACTUAL PAYMENT WAS SUB MITTED AT THE ASSESSMENT STAGE AS WELL AS AT THE APPELLATE STAGE. THE ASSESSEE CLAIMED DEDUCTION OF ADMINISTRATIVE EXPENSES OF RS. 26,82,139/-. THE AO ASKED FOR THE DOCUMENTARY EVIDENCES FOR THE SAME , BUT NO DETAILS REGARDING THESE EXPENSES WERE FILED. THE AO ACCORDI NGLY RESTRICTED THE CLAIM OF THE ASSESSEE TO RS.82,139/- AND DISALL OWED RS.26,00,000/-. IT WAS CONTENDED BEFORE THE LEARNED CIT(A) THAT DETAILS SUBMITTED IN THE BALANCE SHEET HAVE BEEN OV ERLOOKED. IT WAS SUBMITTED THAT ADDITION OF RS.26,00,000/- IS ILLEGA L AND DESERVES TO BE SET ASIDE. THE LEARNED CIT(A) NOTED THAT THE AO IN THE REMAND REPORT MENTIONED THAT DISALLOWANCE IS JUSTIFIED ON ACCOUNT OF CLOSURE OF THE BUSINESS AND IN THE ABSENCE OF DOCUMENTARY PROOF. T HE LEARNED CIT(A) HOWEVER, CONSIDERING THE HEAD OF ACCOUNT OF EXPENSES AS PER THE AUDIT REPORT FOUND THAT CERTAIN EXPENSES SUCH A S LISTING FEES, LEGAL EXPENSES, ELECTRICITY, AUDIT FEES, TRAVELING ETC. W OULD BE NEEDED TO SOME EXTENT EVEN IN THE CASE OF CLOSED BUSINESS. TH E LEARNED CIT(A) ALSO NOTED THAT SINCE THE ASSESSEE HAS NOT SUBMITTE D THE EVIDENCE AND DETAILS OF THE EXPENSES AND THE BUSINESS IS CLO SED, THEREFORE, ENTIRE CLAIM OF EXPENSES CANNOT BE ALLOWED. THE LEA RNED CIT(A) DESPITE THIS FINDING HAS RESTRICTED DISALLOWANCE TO RS.20,00,000/- AS AGAINST RS.26,00,000/-. 6. ON CONSIDERATION OF THE ABOVE FACTS AND SUBMISSI ONS OF THE LEARNED DR, WE ARE OF THE VIEW LEARNED CIT(A) WAS N OT JUSTIFIED IN ITA NO734/AHD/2009 ACIT, CIRCLE-4 BARODA VS M/S. VISION ORGANICS PVT. LTD. 4 DELETING EVEN THE PART ADDITION ON THIS GROUND. THE FINDINGS OF THE AO AND THE LEARNED CIT(A) CLEARLY SUPPORT THE STANDS OF THE REVENUE DEPARTMENT THAT THE ASSESSEE HAS NOT SUBMITTED ANY EVIDENCE AND DETAILS OF THESE EXPENSES. IT IS SETTLED LAW THAT I F THE DEDUCTION OF THE EXPENDITURE IS CLAIMED BY THE ASSESSEE OUT OF INCOM E, ONUS IS UPON THE ASSESSEE TO PROVE THAT EXPENSES HAVE BEEN INCUR RED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS AND THAT EV IDENCE IN SUPPORT OF THE SAME IS FILED BEFORE THE AUTHORITIES BELOW. THE ASSESSEE HAS HOWEVER, DID NOT FILE ANY EVIDENCE OR DETAILS BEFOR E THE AO AS WELL AS BEFORE THE LEARNED CIT(A). THEREFORE, PART ADDITION WAS WRONGLY DELETED BY THE LEARNED CIT(A). THE LEARNED CIT(A) M ERELY GOING THROUGH THE HEAD OF THE EXPENSES DELETED PART OF TH E ADDITION, THEREFORE, SUCH FINDING CANNOT BE SUSTAINED IN LAW. THE ONUS UPON THE ASSESSEE IS NOT DISCHARGED THROUGH ANY EVIDENCE OR MATERIAL ON RECORD. THE FINDINGS OF THE LEARNED CIT(A) ARE NOT BASED ON ANY EVIDENCE OR MATERIAL ON RECORD AND IS, THEREFORE, P ERVERSE. WE ACCORDINGLY, SET ASIDE THE ORDER OF THE LEARNED CIT (A) IN DELETING THE PART ADDITION AND RESTORE THE ORDER OF THE AO. IN T HE RESULT, GROUND NO.2 OF THE APPEAL OF THE REVENUE IS ALLOWED. 7. NO OTHER POINT IS ARGUED OR PRESSED. ITA NO734/AHD/2009 ACIT, CIRCLE-4 BARODA VS M/S. VISION ORGANICS PVT. LTD. 5 8. IN THE RESULT, THE DEPARTMENTAL APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (A. MOHAN ALANKAMONY) ACCOUNTANT MEMBER (BHAVNESH SAINI) JUDICIAL MEMBER LAKSHMIKANT/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER D Y. REGISTRAR, ITAT, AHMEDABAD