ACIT, Jaipur V. KUNDANMAL MUKUNDMAL TRADERS PVT. LTD., Jaipur

ITA 753/JPR/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 5383 (ITAT-JAIPUR)
• Duration Of Justice: 2 year(s) 5 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-03-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 01-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: O P BHATEJA
• Assessee Lawyers: G G MUNDRA
• Keywords: Opportunity of being heard
• Section: 143(3)

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH VKJ-IH-RKSYKUH] U;KF;D LNL; ,OA JH VH-VKJ-EHUK] YS[KK LNL; DS LE{K BEFORE: SHRI R.P. TOLANI, JM & SHRI T.R. MEENA, AM VK;DJ VIHY LA- @ ITA NOS. 892 & 753/JP/2013 FU/KZKJ.K O'K Z @ ASSESSMENT YEARS : 2009-10 & 2010-11 ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-4, JAIPUR. CUKE VS. M/S KUNDANMAL MUKUNDMAL TRADERS PVT. LTD., JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ L A-@ PAN/GIR NO.: AACCK 0420 F VIHYKFKHZ @ APPELLANT IZR;FKHZ @ RESPONDENT JKTLO DH VKSJ LS @ REVENUE BY : SHRI O.P. BHATEJA ( ADDL.CIT) FU/KZKFJRH DH VKSJ LS @ ASSESSEE BY : SHRI G.G. MUNDRA (CA) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 19/02/2016 MN?KKS'K .KK DH RKJH[ K @ DATE OF PRONOUNCEMENT : 04/03/2016 VKNS'K @ ORDER PER: T.R. MEENA, A.M. THE PRESENT APPEALS FILED BY THE REVENUE ARE AGAINS T THE ORDERS DATED 02/09/2013 AND 31/07/2013 PASSED BY THE LEARN ED CIT (A)-II, JAIPUR FOR A.YS. 2009-10 AND 2010-11. THE EFFECTIV E GROUNDS OF APPEAL FOR A.Y. 2009-10 ARE AS UNDER:- I) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW THE LD CIT(A) HAS ERRED IN DELETING DISALLOWANCE OF RS. 2,09,432/- MADE BY THE A.O. OUT OF OFFICE EXPENSES. ITA 892 & 753/JP/2013_ ACIT VS M/S KUNDANMAL MUKUNDMAL TRADERS 2 II) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW THE LD CIT(A) HAS ERRED IN DELETING DISALLOWANCE OF RS. 4,23,761/- MADE BY THE A.O. OUT OF VEHICLE RUNNING AND REPAIR EXPENSES. III) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD CIT(A) HAS ERRED IN DELETING DISALLOWANCE OF RS. 67,93,348/- MADE BY THE A.O. OUT OF RASTA EXPENSES. THE COMMON IDENTICAL GROUNDS HAVE ALSO BEEN TAKEN BY THE REVENUE IN THE APPEAL OF A.Y. 2010-11. 2. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF TRANSP ORTATION. IT FILED RETURN OF INCOME FOR A.Y. 2009-10 ON 30/09/2009 DEC LARING TOTAL INCOME OF RS. 21,43,130/- AND FOR A.Y. 2010-11, IT FILED O N 28/09/2010 DECLARING TOTAL INCOME OF RS. 2,04,23,480/-. IN BOT H THE ASSESSMENT YEARS, SCRUTINY ASSESSMENT U/S 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) WERE MADE BY THE ASSESSING OFFICER. A LL THE GROUNDS OF BOTH THE APPEALS ARE AGAINST DELETING THE DISALLOWAN CE OUT OF OFFICE EXPENSES, VEHICLE RUNNING AND REPAIR EXPENSES AND R ASTA EXPENSES. THE LD ASSESSING OFFICER OBSERVED THAT IN BOTH THE Y EARS THE ASSESSEE HAD DEBITED OFFICE EXPENSES IN A.Y. 2009-10 AT RS. 10,47,162 AND IN A.Y. 2010-11 AT RS. 14,06,099/- IN THE P&L ACCOUNT. THE ASSESSING OFFICER GAVE REASONABLE OPPORTUNITY OF BEING HEARD FOR DISALLOWANCE ON ORDERSHEET @ 20%. THE ASSESSEE REPLIED TO THE QUERY R AISED BY THE ITA 892 & 753/JP/2013_ ACIT VS M/S KUNDANMAL MUKUNDMAL TRADERS 3 ASSESSING OFFICER IN BOTH THE YEARS. IT IS CLEAR TH AT THE EXPENDITURE WERE INCURRED ON TEA, COFFEE, COLD DRINKS AND BREAKFAST ETC. PROVIDED TO THE EMPLOYEES DURING OFFICE HOURS BY THE ASSESSEE COMPA NY AND LOOKING TO THE LARGE STRENGTH OF EMPLOYEES THE QUANTUM OF EXPE NDITURE IS REASONABLE AND NO DISALLOWANCE @ 20% SHOULD BE MADE A S PROPOSED BY THE ASSESSING OFFICER. HOWEVER, THE LD ASSESSING OFFICER HAS HELD THAT THE ASSESSEE HAD CLAIMED THESE EXPENSES ON SEL F MADE VOUCHERS AND SOME OF THE VOUCHERS ARE MISSING, WHICH ARE NOT SUBJECT TO VERIFICATION. THUS, HE DISALLOWED 20% OUT OF TOTAL EX PENSES AT RS. 2,09,432/- IN A.Y. 2009-10 AND RS. 2,81,220/- IN A. Y. 2010-11. 2.1 THE ASSESSEE ALSO DEBITED RS. 14,83,397/- UNDER THE HEAD VEHICLE RUNNING AND REPAIRING EXPENSES IN A.Y. 2009-10 AND RS. 29,55,944/- IN A.Y. 2010-11. THE LD ASSESSING OFFICER PROPOSED DIS ALLOWANCE @ 10% OUT OF TOTAL EXPENSES CLAIMED UNDER THIS HEAD HAVIN G AN ELEMENT OF PERSONAL USE. THE ASSESSEE CLAIMED BEFORE THE ASSES SING OFFICER THAT THERE IS NO PERSONAL ELEMENT, THEREFORE, NO DISALLO WANCE CAN BE MADE. THE LD ASSESSING OFFICER HELD THAT NO LOG BOOK OR AN Y SUCH RECORD HAD BEEN PRODUCED BEFORE HIM FROM WHICH HE HAD ASCERTAIN ED THAT VEHICLES WERE EXCLUSIVELY USED FOR BUSINESS PURPOSES OF THE C OMPANY. THEREFORE, ITA 892 & 753/JP/2013_ ACIT VS M/S KUNDANMAL MUKUNDMAL TRADERS 4 HE DISALLOWED 20% OUT OF THESE EXPENSES AT RS. 4,23, 761/- FOR A.Y. 2009-10 AND RS. 2,95,594/- FOR A.Y. 2010-11. 2.2 THE ASSESSEE HAS ALSO CLAIMED RS. 6,79,33,485/- UNDER THE HEAD RASTA EXPENSES IN A.Y. 2009-10 AND RS. 9,20,94,763/ - IN A.Y. 2010-11, WHICH HAS BEEN CLAIMED BY THE ASSESSEE ON SELF MADE VOUCHERS OF THE DRIVERS. THE LD ASSESSING OFFICER HELD THAT EVEN THO UGH THE NATURE OF EXPENDITURE IS BONAFIDE, THE QUANTUM SHOWN LACKS AN AUTHENTICITY IF IT IS COMPARED TO THE OTHER DEBITS WHERE THIRD PARTY VO UCHERS ARE AVAILABLE. THEREFORE, THE ASSESSING OFFICER PROPOSED TO DISALLOW 10% OUT OF THESE EXPENSES IN BOTH THE YEARS. THE ASSESSE E SUBMITTED THAT THESE EXPENSES INCLUDED DA OF THE DRIVERS AND HELPE RS, TOLL TAX, PARKING, OCTROI/ENTRY TAX, TRANSIT PASS, POLLUTION CONTROL C ERTIFICATE EXPENSES AND INCENTIVES ETC. IT IS SUBMITTED THAT IN PAST, NO DI SALLOWANCE HAS BEEN MADE UNDER THIS HEAD BY THE ASSESSING OFFICER. AFTE R CONSIDERING THE ASSESSEES REPLY, THE LD ASSESSING OFFICER HELD THA T THE ASSESSEE HAD CLAIMED THESE EXPENSES ON SELF MADE VOUCHERS WHICH A RE NOT VERIFIABLE. THEREFORE, HE DISALLOWED RS. 67,93,348/- IN A.Y. 2009 -10 AND RS. 92,09,476/- IN A.Y. 2010-11. 3. BEING AGGRIEVED BY THE ORDER OF THE ASSESSING OF FICER, THE ASSESSEE CARRIED THE MATTER BEFORE THE LD CIT(A), WH O HAD ALLOWED THE ITA 892 & 753/JP/2013_ ACIT VS M/S KUNDANMAL MUKUNDMAL TRADERS 5 APPEAL BY OBSERVING THAT SIMILAR ADDITIONS WERE IN A .Y. 2007-08 UNDER ALL THREE HEADS, WHICH HAS BEEN DELETED BY THE LD C IT(A) ON THE BASIS THAT VEHICLE RUNNING EXPENSES, OFFICE EXPENSES AND RASTA EXPENSES WITHOUT POINTING OUT ANY SPECIFIC INSTANCES OF DEFEC TS. THE ASSESSING OFFICER MADE THESE DISALLOWANCES ON THE SUPERFICIAL GROUND SINCE IT WAS NOT PROVED THAT ANY VOUCHERS WERE FABRICATED OR FALS E. FURTHER HE RELIED ON THE DECISION OF HONBLE ITAT, JAIPUR BENCH IN ASS ESSEES OWN CASE FOR A.Y. 2006-07 IN ITA NO. 34/JP/2011 DATED 02/02/ 2012. THE LD CIT(A) HAS HELD THAT THERE IS NO MATERIAL CHANGE IN THE FACTS AND CIRCUMSTANCES IN THE YEAR UNDER REFERENCE. ON CONTR ARY, THE APPELLANT HAS DECLARED NET PROFIT BETTER THAN THE NET PROFIT RATE DISCLOSED IN THE PRECEDING YEAR. CONSIDERING THESE FACTS, THE ASSESS ING OFFICER WAS NOT JUSTIFIED IN MAKING DISALLOWANCE ON AD HOC BASIS. THE ASSESSEE HAS ARGUED THAT ALL BOOKS OF ACCOUNT WERE MAINTAINED AND ALL EXPENSES WERE COMPLETELY VOUCHED AND INCURRED FOR BUSINESS PU RPOSES. HE FURTHER RELIED ON THE DECISION OF HONBLE MUMBAI IT AT IN THE CASE OF ARTHUR & ANDERSON & CO. VS. ADDL.CIT (2010-TIOL-416-I TAT). THEREFORE, HE DELETED THE ADDITION MADE BY THE ASSES SING OFFICER IN BOTH THE YEARS. ITA 892 & 753/JP/2013_ ACIT VS M/S KUNDANMAL MUKUNDMAL TRADERS 6 4. NOW THE REVENUE ARE IN APPEALS BEFORE US. THE LD DR HAS VEHEMENTLY SUPPORTED THE ORDER OF THE ASSESSING OFF ICER. AT THE OUTSET, THE LD AR OF THE ASSESSEE HAS REITERATED THE ARGUME NTS MADE BEFORE THE LD CIT(A) IN BOTH THE YEARS. HE HAS DRAWN OUR ATTENTI ON ON ASSESSEES CASE FOR A.Y. 2006-07 AND 2007-08 WHERE SIMILAR ADDI TIONS HAVE BEEN DELETED BY THE HONBLE ITAT. IT IS FURTHER SUBMITTED THAT THESE EXPENSES WERE BOOKED UNDER THE HEADS WAGES AND GENERAL EXPENSE S. IT IS FURTHER SUBMITTED THAT OFFICE EXPENSES WERE INCURRED AT THOS E VARIOUS LOCATIONS BY DIFFERENT PERSONS EMPLOYED/WORKING THERE. IT IS N OT POSSIBLE TO GET PUCCA BILL WHICH CAN BE VERIFIED FROM THE THIRD PERS ON BUT THESE EXPENSES HAVE BEEN CLAIMED ON THE AUTHENTICATION OF THE EMPLOYEE, THESE ARE THE PETTY EXPENSES. THE TRAVELLING EXPENS ES WERE ALSO INCURRED BY THE EMPLOYEES/WORKMEN AND EVEN DIRECTORS INCURRED TRAVELLING EXPENSES FOR BUSINESS PURPOSES. THE RASTA EXPENSES WERE GENERAL IN NATURE, WHICH INCLUDES DA OF THE DRIVERS AND HELPERS, TOLL TAX, PARKING, OCTROI/ENTRY TAX, TRANSIT PASS, POLLUTION CONTROL CERTIFICATE EXPENSES AND INCENTIVES ETC., WHICH ARE SUPPORTED BY THE PROPER VOUCHERS. HE FURTHER RELIED ON THE DECISION OF HON BLE MUMBAI ITAT IN THE CASE OF ARTHUR & ANDERSON & CO. VS. ADDL.CIT (SU PRA). THEREFORE, HE PRAYED TO CONFIRM THE ORDER OF THE LD CIT(A). ITA 892 & 753/JP/2013_ ACIT VS M/S KUNDANMAL MUKUNDMAL TRADERS 7 5. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. THE ID ENTICAL ISSUE HAS BEEN CONSIDERED BY THE COORDINATE BENCH IN A.Y. 200 6-07 AND 2007-08 IN ASSESSEES OWN CASE. THE ASSESSEE HAS MAINTAINED V OUCHES AS POSSIBLE AS AND SOME OF THE EXPENSES CLAIMED ON SEL F MADE VOUCHERS BUT IT IS NOT POSSIBLE TO GET VOUCHERS LIKE, TEA, C OFFEE, RICKSHAW, LOCAL TRANSPORT ETC., THEREFORE, SAME WERE CLAIMED ON SELF MADE VOUCHERS. THE LD ASSESSING OFFICER HAS NOT POINTED OUT ANY SIN GLE VOUCHER THAT THE ASSESSEE HAS CLAIMED BOGUS EXPENSES ON IT. THE COORD INATE BENCH HAS DECIDED IDENTICAL ISSUE IN ITA NO. 550/JP/2012 A.Y. 2007-08 IN ASSESSEES OWN CASE WHERE SIMILAR DISALLOWANCES HAVE B EEN MADE BY THE ASSESSING OFFICER, WHICH WAS DELETED BY THE LD CI T(A). THE COORDINATE BENCH HAS UPHELD THE ORDER OF THE LD CIT( A). OPERATIVE PORTION OF THE ORDER OF THE COORDINATE BENCH IS REP RODUCED AS UNDER:- 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD AND FIND MERIT IN THE ARGUMENT O F THE LEARNED COUNSEL FOR THE ASSESSEE. THE LEARNED CIT(A) WHILE GIVING THE RELIEF HAS RELIED ON EARLIER TWO YEARS OR DER OF THE TRIBUNAL WHICH ARE IN FAVOR OF THE ASSESSEE HOLDING T HAT SUCH AD HOC DISALLOWANCES CANNOT BE MADE. BESIDES TH E ASSESSEE NET PROFIT IS MORE THAN AS COMPARED TO TWO EARLIER YEARS. THE EXPENDITURE DEPICTED IN SELF MADE VOUCHER S ITA 892 & 753/JP/2013_ ACIT VS M/S KUNDANMAL MUKUNDMAL TRADERS 8 CANNOT BE DISALLOWED ON AD HOC BASIS ONLY ON THE FAC T OF ITS BEING SUPPORTED BY SELF MADE VOUCHERS. IN VIEW THERE OF, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE LEARNED CIT(A), WHICH IS UPHELD. BY RESPECTFULLY FOLLOWING THE DECISION OF THE COORDI NATE BENCH, WE UPHELD THE ORDER OF THE LD CIT(A) IN BOTH THE YEARS. 6. IN THE RESULTS, BOTH THE APPEALS FILED BY THE RE VENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 04/03/2016. SD/- SD/- VKJ-IH-RKSYKUH VH-VKJ-EHUK (R.P.TOLANI) (T.R. MEENA) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ @ JAIPUR FNUKAD @ DATED:- 04 TH MARCH, 2016 *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- THE ACIT, CIRCLE-4, JAIPUR. 2. IZR;FKHZ @ THE RESPONDENT- M/S KUNDANMAL MUKUNDMAL TRADERS PVT. LTD., JAIPUR. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 892 & 753/JP/2013) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR