ANAND AUTOMOTIVE P. LTD ( FORMERLY KNOWN AS ANAND AUTOMOTIVE LTD), MUMBAI V. ASST CIT CIR 2(1)(1), MUMBAI

ITA 7570/MUM/2016

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 5399 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 4 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-05-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2006-2007
• Appeal Filed On: 26-12-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ABDUL HAKEEM M LD
• Assessee Lawyers: PRASAD BAPATLD
• Keywords: Set aside
• Section: 40A(3); 143(3); 2

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI . . , , BEFORE HONBLE SHRI C.N. PRASAD, JM AND HONBLE SHRI MANOJ KUMAR AGGARWAL, AM ./ I.T.A. NO.7570/MUM/2016 ( / ASSESSMENT YEAR: 2006-07) ANAND AUTOMOTIVE P VT. LTD. (FORMERLY KNOWN AS ANAND AUTOMOTIVE LTD; ANAND AUTOMOTIVE SYSTEMS LTD.) 10, PRASAD CHAMBERS OPERA HOUSE, MUMBAI-400 004 / VS. ACIT - CIRCLE - 2(1)(1) MUMBAI ./ ./PAN/GIR NO. AAACA-3384-N ( /APPELLANT ) : ( ! / RESPONDENT ) ASSESSEE BY : SHRI PRASAD BAPAT-LD. AR REVENUE BY : SHRI ABDUL HAKEEM M. - LD. DR # % / DATE OF HEARING : 01/05/2019 # % / DATE OF PRONOUNCEMENT : 16/05/2019 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. AFORESAID APPEAL BY ASSESSEE FOR ASSESSMENT YEAR [AY] 2006-07 CONTEST THE ORDER OF LD. COMMISSIONER OF INCOME-TAX (APPEALS)-4, MUMBAI [CIT(A)], APPEAL NO. CIT(A)-4/IT-63/ACIT-2(1)(1)/2015-16 D ATED 22/09/2016 ON FOLLOWING GROUNDS OF APPEAL: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE LEARNED CIT(APPEALS) ERRED IN CONFIRMING DISALLOWANCE OF IN R 33,908/- U/S 40A(3) STATING THAT THE ASSESSEE HAS VIOLATED PROVISION OF SECTION 40A(3). 2 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE LEARNED CIT(APPEALS) ERRED IN CONFIRMING DISALLOWANCE OF 20 % OF CASH EXPENDITURE I.E. INR 8,17,310 STATING THE HUGE CASH EXPENDITURE IS UNVERIFIABLE AS THE ASSESSEE DOES NOT HAVE ADEQUATELY SUPPORTED BILLS. 2.1 THIS IS SECOND ROUND OF APPEAL BEFORE US SINCE THE MATTER OF DISALLOWANCE OF REPAIRS & MAINTENANCE EXPENSES, IN THE FIRST ROUND, WAS SET ASIDE TO THE FILE OF LD. AO FOR RE-ADJUDICATION BY THIS TRIBUNAL VIDE PARA 10 OF ITA NOS.6694,7265/MUM/2010 ORDER DATED 28/06/201 3 , A COPY OF WHICH HAS BEEN PLACED ON RECORD. ACCORDINGL Y, ASSESSMENT U/S 143(3) R.W.S. 254 HAS BEEN REFRAMED ON 18/03/2015 W HEREIN THE ASSESSEE HAS AGAIN BEEN SADDLED WITH AGGREGATE ADDI TION OF RS.8,51,218/- ON ACCOUNT OF REPAIRS & MAINTENANCE E XPENSES, WHICH UPON CONFIRMATION BY LD. FIRST APPELLATE AUTHORITY VIDE IMPUGNED ORDER DATED 22/09/2016, IS THE SUBJECT MATTER OF PRESENT APPEAL BEFORE US. 2.2 IN THE SET ASIDE PROCEEDINGS, UPON PERUSAL OF D ETAILS OF REPAIRS & MAINTENANCE EXPENSES AS FILED BY THE ASSESSEE, IT T RANSPIRED THAT THE ASSESSEE MADE CERTAIN PAYMENTS IN CASH EXCEEDING RS .20,000/- IN VIOLATION OF SECTION 40A(3) WHICH CALLED FOR DISALL OWANCE TO THE EXTENT OF 20% OF SUCH EXPENDITURE. THE DETAILS OF THESE EXPEN DITURE COULD BE EXTRACTED IN THE FOLLOWING MANNER: - SR. NO. NAME OF THE PARTY AMOUNT (RS.) 1 VISHAL ELECTRICALS 64,395/- 2. CASH 20,138/- 3. S.M.ENTERPRISES (PUNE) 26,062/- 4. K.N.G.WIRES & CABLES 58,945/- TOTAL 1,69,540/ - ACCORDINGLY, AN AMOUNT OF RS.33,908/- HAS BEEN DISA LLOWED AND ADDED BACK TO THE INCOME OF THE ASSESSEE. 3 2.3 ANOTHER ADDITION STEM FROM THE FACT THAT CERTAI N DISCREPANCIES WERE FOUND IN THE VOUCHERS AND SUPPORTING BILLS SUBMITTE D BY THE ASSESSEE WHEREIN THE ASSESSEE HAD MADE CASH PAYMENTS RANGING BETWEEN RS.19,000/- TO RS.20,000/-. THE ASSESSEE HAD ONLY P RODUCED SAMPLE BILLS / VOUCHERS AND THE SAME WERE NOT ADEQUATELY S UPPORTED. RESULTANTLY, AN ADHOC ADDITION OF 20% AGAINST AGGRE GATE CASH EXPENDITURE OF RS.40,86,548/- WAS MADE WHICH RESULT ED INTO AN ADDITION OF RS.8,17,310/- IN THE HANDS OF THE ASSESSEE. 2.4 BOTH THE ADDITIONS, UPON CONFIRMATION BY LD. FI RST APPELLATE AUTHORITY, IS UNDER CHALLENGE BEFORE US. 3. THE LD. AUTHORIZED REPRESENTATIVE FOR ASSESSEE [ AR], SHRI PRASAD BAPAT, ON THE STRENGTH OF DOCUMENTS, PLACED IN THE PAPER-BOOK, ASSAILED THE ADDITIONS WHEREAS LD. DR SUBMITTED THAT THE DIS ALLOWANCE WAS JUSTIFIED, UNDER THE CIRCUMSTANCES. 4.1 WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS. THE ASSESSEE, ON PAGE NOS. 191 TO 193 OF THE PAPER-BOOK, HAS PLACED ON RECORD THE LEDGER EXTRACT OF PARTIES LISTED AT SERIAL NOS. 1,3 & 4. THE PERUSAL OF THE SAME ESTABLISHES THAT ALL THE PAYMENTS TO THE STATE D PARTIES EXCEPT CASH PAYMENT OF RS.12,500/- TO VISHAL ELECTRICALS HAVE BEEN MADE THROUGH CHEQUES. THE CHEQUE NUMBERS HAVE ALREADY BEEN PROVI DED IN THE NARRATIONS. THEREFORE, THE LOWER AUTHORITIES, IN OU R OPINION, ERRED IN NOTING THE PAYMENTS WERE IN CASH, WHICH IS NOT THE CASE HERE. THEREFORE, THE DISALLOWANCE OF RS.33,908/- U/S 40A(3) COULD NO T BE SUSTAINED. WE ORDER SO. THIS GROUND STANDS ALLOWED. 4.2 THE LD. AR HAS SUBMITTED THAT ADHOC DISALLOWANCE OF 20% ON CASH REPAIRS & MAINTENANCE EXPENDITURE HAS BEEN MADE MER ELY ON THE 4 PERUSAL OF PETTY SAMPLE BILLS / VOUCHERS, WHICH WAS NOT JUSTIFIED. THE LD. AR PLEADED FOR REASONABLE ESTIMATION AGAINST THE SA ME. UPON CAREFUL CONSIDERATION, WE FIND THAT THE ASSESSEE IS A CORPO RATE ENTITY AND THE ACCOUNTS ARE SUBJECTED TO AUDIT. NOTHING ON RECORD SUGGEST THAT THE ASSESSEE HAS INCURRED ABNORMAL EXPENDITURE UNDER TH IS HEAD DURING IMPUGNED AY. KEEPING IN VIEW THE SAME, WE RESTRICT THE ADDITIONS TO 5% OF AGGREGATE EXPENDITURE OF RS.40,86,548/-. THE SAM E COMES TO RS.2,04,328/-. THE BALANCE ADDITION STANDS DELETED. THE GROUND STAND PARTLY ALLOWED. 5. THE APPEAL STANDS PARTLY ALLOWED IN TERMS OF OUR ABOVE ORDER. ORDER PRONOUNCED IN THE OPEN COURT ON 16/05/2019. SD/- SD/- (C.N. PRASAD) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 16/05/2019 SR.PS, JAISY VARGHESE / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT CONCERNED 5. ! , ! , / DR, ITAT, MUMBAI 6. #$% / GUARD FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI.