Ram Krishna Khandelwal, Bareilly V. Income Tax Officer-2(3), Bareilly

ITA 752/LKW/2017

• Counselvise Citation: [2018] 124 COUNSELVISE.COM (IT) 9769 (ITAT-LUCKNOW)
• Duration Of Justice: 9 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-09-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2013-2014
• Appeal Filed On: 27-11-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JAY NATH VERMA
• Assessee Lawyers: H P SINGH
• Keywords: Corroborative evidences
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH SMC , LUCKNOW BEFORE SHRI. T.S. KAPOOR, ACCOUNTANT MEMBER AND SHRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER ITA NO. 752/LKW/2017 ASSESSMENT YEAR: 2013 - 14 RAM KRISHNA KHANDELWAL PUKKA KATRA AONLA, BAREILLY V. INCOME TAX OFFICER WARD 2(3) BAREILLY T AN /PAN : ALJPK9178R (APP LICA NT) (RESPONDENT) APP LIC ANT BY: SHRI H.P. SINGH, ADVOCATE RESPONDENT BY: SHRI JAY NATH VERMA, D.R. DATE OF HEARING: 07 0 9 201 8 DATE OF PRONOUNCEMENT: 19 0 9 201 8 O R D E R PER P ARTHA SARATHI CHAUDHURY, J.M : THIS APPEAL PREFERRED BY THE ASSESSEE EMANATES FROM THE ORDER OF THE LD. CIT(A), BAREILLY DATED 17/8/2017 AS PER FOLLOWING GROUNDS OF APPEAL: - 1. THE LEARNED COMMISSIONER OF INCOME TAX(APPEAL) HAS ERRED ON FACTS AND LAW IN UPHOLDING THE ADDITION OF RS.3,35,543/ - MADE BY THE ASSESSING OFFICER ON AD - HOC BASIS @ 10% OR 20% OF VARIOUS EXPENSES CLAIMED IN THE PROFIT & LOSS A/C WITHOUT POINTING OUT ANY SPECIFIC DEFECT OR SHORTCOMING IN THE BOOKS OF ACCOUNT. 2. WHILE CONFIRM ING THE ADDITION OF RS.3,36,543 / - THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL) HAS MENTIONED THAT CERTAIN OBSERVATION WERE MADE BY THE ASSESSING OFFICER WHEREAS NO SUCH OBSERVATIONS WERE MADE BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER. ITA NO.752/LKW/2017 PAGE 2 OF 5 3. THE LEAR NED COMMISSIONER OF INCOME TAX (APPEAL) HAS WRONGLY OBSERVED THAT THE APPELLANT HAD NOT RAISED ANY OBJECTION TO THE OTHER TWO ADDITION OF RS.50,000 / - AND RS.3,401 / - IN THE GROUNDS OF APPEAL WHEREAS GROUND NO.3 CLEARLY MENTIONED THAT THE ASSESSING OFFICER H AD MADE 'SEVERAL ADDITION AMOUNTING TO RS.3,99,444 / - WHICH ARE GROSSLY AD - HOC IN NATURE AND SO ALL SUCH ADDITION MAY PLEASE BE DELETED IN TOTAL.' 4. ANY OTHER GROUND WHICH THE APPELLANT MAY TAKE BEFORE THE HON'BLE TRIBUNAL WITH ITS KIND PERMISSION. 2 . THE FAC TS IN BRIEF ARE THAT THE ASSESSEE IS A WHOLESALE DEALER OF LUBRICANTS AND RUNNING PROPRIETORSHIP FIRM UNDER THE NAME AND STYLE OF M/S UNIQUE INDUSTRIAL LUBRICANTS. HE IS DEALING IN LUBRICANTS AND DEALING IN SERVO BRAND OF LUBRICANTS OF INDIAN OIL CORPORATI ON LTD. AS SERVO STOCKISTS INDUSTRIAL . RETURN FOR THE RELEVANT YEAR WAS FILED SHOWING TOTAL INCOME OF RS.5,17,360/ - PLUS AGRICULTURAL INCOME OF RS.22,000/ - . ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) OF THE ACT WITH VARIOUS ADDITIONS/DISALLOWANCES AS APPEARING IN THE ASSESSMENT ORDER WHEREIN ASSESSED INCOME WAS ARRIVED AT RS.9,17,300/ - . 3 . IN THIS CASE, ASSESSING OFFICER OBSERVED THAT CERTAIN EXPENSES WERE CLAIMED IN THE PROFIT & LOSS ACCOUNT BY THE ASSESSEE AND REGARDING THESE EXPENSES , ASSESSING OFFIC ER AFTER CONSIDERING THE REPLIES OF THE ASSESSEE HELD THAT THOSE REPLIES ARE PROPER TO SOME EXTENT, HOWEVER, IN THE CIRCUMSTANCES OF THE CASE , POSSIBILITY OF LEAKAGE AND PHENOMENA FOR PERSONAL USE CANNOT BE TOTALLY DENIED AND , THEREFORE , TO COVER UP POSSIB LE LEAKAGE , EXPENSES WERE DISALLOWED ON PERCENTAGE BASIS AS APPEARING ON RECORD IN THE ASSESSMENT ORDER. THE TOTAL DISALLOWED AMOUNT WAS RS.3,36,543/ - WHICH WAS ADDED TO THE INCOME OF THE ASSESSEE. THE OTHER DISALLOWANCES WERE ON ACCOUNT OF CHARITY AT RS .3,401/ - WHICH ACCORDING TO THE ASSESSING OFFICER WAS IN PERSONAL NATURE AND , THEREFORE , WAS DISALLOWED AND ANOTHER ADDITION WAS ON ITA NO.752/LKW/2017 PAGE 3 OF 5 ACCOUNT OF LOW DRAWING FOR WHICH RS.60,000/ - WAS ADDED IN THE HANDS OF THE ASSESSEE. 4 . THE MATTER TRA VELLED UPTO THE FIRST APP ELLATE STAGE AND THE LD. CIT(A) IN HIS ORDER HAS SUMMARILY DISPOSED OF THE APPEAL OF THE ASSESSEE. LD. CIT(A) HAS ACCEPTED THE VERSION OF THE ASSESSING OFFICER UPHOLDING THE ADDITION O N ALL THE GROUNDS. HOWEVER, HAS FAILED TO SPECIFY THE REASONS FOR ARRI VING AT THE DECISION AND HIS ORDER DO NOT SPEAK OF WHY UNDER VARIOUS ACCOUNTS DISALLOWANCES HAVE TO BE MADE. THERE HAS NOT BEEN ANY ADJUDICATION ON THE ISSUES AND SIMPLY BY ACCEPTING THE VERSION OF THE ASSESSING OFFICER AND WITHOUT ANY SPECIFIC FINDING , T HE APPROACH OF THE LD. CIT(A) BECOMES UNJUSTIFIED WITHIN THE QUASI JUDICIAL FRAMEWORK. 5 . BEING FURTHER AGGRIEVED WITH THE CONFIRMATION OF ADDITIONS/DISALLOWANCES MADE BY THE LD. CIT(A) , ASSESSEE IS IN APPEAL BEFORE US. LD. A.R. OF THE ASSESSEE VEHEMENTLY AR GUED THAT REVENUE AUTHORITIES HAVE MADE DISALLOWANCES ON VARIOUS ACCOUNTS WITHOUT SPECIFYING THE REASONS FOR SUCH DISALLOWANCES AND NO SUPPORTING EVIDENCES WERE PLACED ON RECORD TO JUSTIFY THE ORDERS OF THE REVENUE AUTHORITIES. LD. A.R. OF THE ASSESSEE FU RTHER SUBMITTED THAT THE ASSESSING OFFICER HAS NOT REJECTED THE BOOKS OF ACCOUNT. IN SUCH CIRCUMSTANCES, ALL THE DISALLOWANCES WERE IN THE NATURE OF AD - HOC DISALLOWANCES WHICH ARE NOT PERMITTED WITHIN THE PERIPHERY OF INCOME TAX LAWS. IN SUPPORT OF HIS C ONTENTION, LD. A.R. OF THE ASSESSEE PLACED RELIANCE ON THE FOLLOWING JUDICIAL PRONOUNCEMENTS: - 1 ) MODEL TANNERS (INDIA) PVT. LTD. VS. ACIT IN ITA NO.557 TO 560/LKW/2013 OF ITAT LUCKNOW BENCH. 2 ) DCIT VS. MGS AUTO FAB PVT. LTD. IN ITA NO.927/LKW/2014 OF ITAT LUCK NOW BENCH. ITA NO.752/LKW/2017 PAGE 4 OF 5 3 ) MUKESH KUMAR MAHAWAR VS. ITO IN ITA NO.615/LKW/2014 OF ITAT LUCKNOW BENCH. 6 . THE LD. D.R., ON THE OTHER HAND, RELIED ON THE ORDERS OF AUTHORITIES BELOW. 7 . WE HAVE PERUSED THE CASE RECORD , HEARD THE RIVAL CONTENTIONS AND HAVE EXAMINED THE RATIO OF TH E JUDICIAL PRONOUNCEMENTS PLACED BEFORE US BY THE LD. A.R. OF THE ASSESSEE. WE HAVE EXAMINED THE FACTS IN THIS CASE AND WE FIND THAT THE BOOKS OF ACCOUNT OF THE ASSESSEE WERE NOT REJECTED BY THE ASSESSING OFFICER. DISALLOWANCES MADE IN ALL THE GROUNDS IN THE ASSESSMENT ORDER AND AS UPHELD BY THE LD. CIT(A) WERE MADE ON AD - HOC BASIS WITHOUT SPECIFICALLY MENTIONING THE REASONS FOR SUCH DISALLOWANCES AND WE DO NOT FIND ANY EXERCISE OF ENQUIRY CONDUCTED BY THE REVENUE AUTHORITIES IN THEIR RESPECTIVE ORDERS. IN THE CIRCUMSTANCES, WE ARE INCLINED TO FOLLOW THE RATIO OF THE JUDICIAL PRONOUNCEMENTS PLACED BEFORE US ON RECORD WHEREIN IT HAS BEEN CATEGORICALLY HELD THAT AD - HOC DISALLOWANCES , ON THE GROUND THAT SHORTCOMINGS BY THE ASSESSEE CANNOT BE IGNORED , ARE NOT AT ALL JUSTIFIED WITHIN THE AMBIT OF INCOME TAX LAWS WHICH ARE PRIMARILY WELFARE IN NATURE. IN VIEW OF THE MATTER, WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND ALLOW THE APPEAL OF THE ASSESSEE IN ALL THE GROUNDS OF APPEAL. 8 . IN THE RESULT, APPEAL OF THE AS SESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 19 / 0 9 / 201 8 . SD/ - SD/ - [ T.S. KAPOOR ] [PARTHA SARATHI CHAUDHURY ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 19 TH SEPTEMBER , 201 8 JJ: 1009 ITA NO.752/LKW/2017 PAGE 5 OF 5 COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT(A) 4 . CIT 5 . DR