M/s Shree Radhe Industries Ltd, V. Asstt.Comissioner of Income Tax, BILASPUR(CG)

ITA 76/BIL/2012

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 8935 (ITAT-RAIPUR)
• Duration Of Justice: 5 year(s) 6 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-01-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2005-2006
• Appeal Filed On: 14-06-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: R K GHANENIWALA
• Keywords: Additional evidence

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, RAIPUR BENCH, RAIPUR BEFORE S/SHRI N.S SAINI, ACCOUNTANT MEMBER AND PAVAN KUMAR GADALE, JUDICIAL MEMBER ITA NO. 76/RPR/2012 ASSESSMENT YEAR : 2005-2006 M/S.SHREE RADHE INDUSTRIES, POPULAR MARKET, GANDHI BAG, NAGPUR-440001. VS. ACIT, CIRCLE 1(1), BILASPUR. PAN/GIR NO. (APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY : SHRI R.K.GHANENIWALA, AR REVENUE BY : SHRI SANJAY KUMAR, DR DATE OF HEARING : 08/01/ 2018 DATE OF PRONOUNCEMENT : 11 /01/ 2018 O R D E R PER PAVAN KUMAR GADALE, JM THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDE R OF THE CIT(A)- BILASPUR, DATED 26.3.2012 FOR THE ASSESSMENT YEAR 200 5-06. 2. IN THIS APPEAL, THE ASSESSEE HAS RAISED GROUNDS AGAINST CO NFIRMATION OF FOLLOWING ADDITIONS: I) RS.73,50,000/- AS SHARE APPLICATION MONEY. II) RS. 2,00,000/- UNSECURED LOAN III) RS.1,11,442/- POOJA EXPENSES IV) RS. 66,000 TRAVELING EXPENSES 2 ITA NO. 76/RPR/2012 ASSESSMENT YEAR : 2005 -2006 3. AS REGARDS TO FIRST LIMB I.E. CONFIRMATION OF SHARE APPLICATION MONEY OF RS.73,50,000/-, THE RELEVANT FACTS ARE THAT THE ASSESSEE DERIVES INCOME FROM RUNNING A SPONGE IRON PLANT. THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAS RECEIVED SHARE APPLICATION MONEY OF RS.90,00,000/- FROM SEVEN KOLKIATA BASED PARTIES AS UNDER: 1) TECH BUILD IMPEX LTD., : RS.10,50,000/- 2) LUPIN VINIMAY PVT LTD., : RS.10,50,000/- 3) ZIPPER MERCANTILES PVT LTD., : RS.10,50,000/- 4) SUYDAMA TRADING AND INVEST LTD.: RS.10,50,000/- 5) SEGMENT MERCANTILES PVT LTD.,: RS.10,50,000/- 6) SURAJ STONE CORPORATION LTD., RS.10,50,000/- 7) MIDPOINT MARKETING PVT LTD., RS.10,50,000/- RS.90,00,000/- THE ASSESSING OFFICER REQUIRED THE ASSESSEE TO FILE DOCUMEN TARY EVIDENCE TO ESTABLISH THE SHARE APPLICATION RECEIVED FROM THE ABOVE PARTIES. HOWEVER, THE ASSESSEE FAILED TO SUBSTANTIATE AND ESTABLISH THE CAPITA L INVESTMENT MADE BY THE ABOVE PARTIES WITH COPIES OF SHARE APPLICAT ION FORMS, DETAILS OF THEIR INCOME, BALANCE SHEET, CAPITAL ACCOUNT, NAMES, ADDR ESS OF THE DIRECTORS OF THE COMPANIES AND BANK STATEMENT. THEREFOR E, THE ASSESSING OFFICER ADDED THE SAME TO THE INCOME OF THE ASSESSEE. 3 ITA NO. 76/RPR/2012 ASSESSMENT YEAR : 2005 -2006 4. ON APPEAL, BEFORE THE CIT(A), THE ASSESSEE FILED SOM E ADDITIONAL EVIDENCES, TO WHICH, HE CALLED FOR A REMAND REPORT FRO M THE ASSESSING OFFICER. THE ASSESSING OFFICER ENDORSED THE FINDINGS OF THE ASSESSING OFFICER MADE AT THE ASSESSMENT STAGE. BEFORE THE CIT(A), THE A SSESSEE POINTED OUT THAT THERE IS A DISCREPANCY IN THE ASSESSMENT ORDER ON ADDI TION MADE ON THIS ACCOUNT AND SHARE APPLICATION MONEY SHOULD BE RS.73,50,00 0/- INSTEAD OF RS.90,00,000/-. THE EXPLANATION OF THE ASSESSEE WAS FOUN D ACCEPTABLE AND THE CIT(A) REDUCED THE ADDITION TO RS.73,50,000/-. 5. STILL FURTHER AGGRIEVED, THE ASSESSEE IS IN APPEAL BE FORE US. 6. LD A.R. OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE COMPA NY HAS PROVIDED ALL DETAILS INCLUDING PAN, DATE AND NUMBER O F ACCOUNT PAYEE CHEQUES, SHARE APPLICATION FORM, RESOLUTION COPIES OF RESPE CTIVE COMPANIES WITH THEIR NAMES AND ADDRESS, WHICH HAVE NOT BEEN CONSID ERED EITHER BY THE ASSESSING OFFICER OR THE CIT(A). HE, THEREFORE, URGED T O DELETE THE ADDITION BASED ON THE ABOVE DETAILS FURNISHED BY THE ASSESSEE. 7. ON THE OTHER HAND, LD D.R. SUPPORTED THE ORDER OF THE CIT(A). 8. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE OR DERS OF LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD. IN THE INSTANT CASE, WE FIND THE ASSESSEE HAS RECEIVED RS.73,50,000/- AS SHARE APPLICATION MONEY FROM DIFFERENT KOLKATA BASED PARTIES. THE CIT(A) HAS OBSERV ED THAT THE PRIMARY DOCUMENTS LIKE BANK STATEMENT OF THE ASSESSEE COMPANIES, THEIR BALANCE 4 ITA NO. 76/RPR/2012 ASSESSMENT YEAR : 2005 -2006 SHEETS AND CAPITAL ACCOUNTS, ITS OWN BANK STATEMENT ALONGWI TH THE DETAILS OF DEBIT AND CREDIT ENTRIES HAVE NOT BEEN FILED EITHER B EFORE THE ASSESSING OFFICER OR BEFORE HIM. ON PERUSAL OF COPIES OF ALLOTM ENT LETTER OF SHARES, IT IS SEEN THAT THE SIGNATURE OF THE AUTHORIZED SIGNATORY IS MISSING AND NOWHERE THE RESOLUTION PASSED BY THE APPLICANT COMPANIES SUGGEST INVESTMENT OF SHARE APPLICATION IN THE ASSESSEE COMPANY. COPIES OF INCOME TAX RETURNS EXPECT IN THE CASE OF SURAJ STONE CORPORATION LIMITED, WERE NOT FURNISHED. BEFORE US ALSO, THE ASSESSEE COULD NOT PRODUCE ANY EVIDENCE OR SUBSTANTIATE WITH COGENT MATERIALS TO PROVE THE CREDITWORTHINESS AND GENUINENESS OF TRANSACTION BY THE APPLICANT COMPANIES. HENCE, WE CONFIRM THE ADDITION OF RS.73,50,000/- AND DISMISS THE GROUND OF APPEAL OF THE ASSESSEE. 9. AS REGARDS TO SECOND LIMB OF GROUND OF UNSECURED LOAN, THE LD A.R. OF THE ASSESSEE DID NOT PRESS THIS GROUND, THEREFORE, SAME IS D ISMISSED AS NOT PRESSED. 10. AS REGARDS TO THE ADDITION OF RS.,1,11,442/- MADE ON POOJA EXPENSES, THE FACTS ARE THAT THE ASSESSING OFFICER NOTICED THAT THE A SSESSEE HAS CLAIMED RS.1,39,276/- AS POOJA EXPENSES. THE ASSESSING OFFI CER AFTER ALLOWING REBATE OF RS.27,834/- RELATABLE TO DIWALI A ND VISHAKARMA FESTIVAL, DISALLOWED RS.1,11,442/- AND ADDED THE SAME TO THE INCO ME OF THE ASSESSEE. 11. ON APPEAL, THE CIT(A) CONFIRMED THE ACTION OF TH E ASSESSING OFFICER. 5 ITA NO. 76/RPR/2012 ASSESSMENT YEAR : 2005 -2006 12. LD A.R. OF THE ASSESSEE SUBMITTED NO MONITARY LIMIT HAS BEEN ASSIGNED TO CLAIM POOJA EXPENSES WHICH ARE INVARIABLY INCURRED I N THE BUSINESS PREMISES FOR THE PURPOSE OF BUSINESS. THE EXPENSES ARE IN CURRED TO BOOST THE MORALE OF THE EMPLOYEES AND TO MOTIVATE THEM TO DEVOTE THEIR DUTIES FOR THE BEST INTEREST OF THE COMPANY. 13. LD D.R. SUPPORTED THE ORDERS OF LOWER AUTHORITIES. 14. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED TH E MATERIAL AVAILABLE ON RECORD. THE MAIN REASON FOR DISALLOWING THE POOJA EXPENSES BY THE LOWER AUTHORITIES IS THAT THE ASSESSEE COMPANY BEIN G AN ARTIFICIAL JURIDICAL PERSON, THE POOJA EXPENSES IS INADMISSIBLE. BUT THE AL LOWABILITY OF POOJA EXPENSES IS REQUIRED TO BE CONSIDERED FOR SPECIFIC PURPOSE IN ORDER TO BRING PEACE AND HARMONY AMONGST THE LABOUR-ORIENTED FACTORY WHICH INVOLVES VARIOUS SENTIMENTS AND RELIGIOUS FERVOR. BEFORE US, THE LEARNED COUNSEL HAS NOT BEEN ABLE TO SPECIFY THE MAJOR POOJA PERFORMED O N WHICH EXPENDITURE STANDS INCURRED FOR THE PURPOSE OF BUSINESS OF THE ASSESSEE. HOWEVER, THE ASSESSEE INCURRED SOME EXPENSES TO MOTIVATE THE MORALE OF T HE EMPLOYEES TO PERFORM VARIOUS RELIGIOUS ACTIVITIES IN THE FACTORY PREMISES. IN OUR CONSIDERED VIEW, IT WOULD MEET THE ENDS OF JUSTICE, IF W E RESTRICT THE DISALLOWANCE TO 50% OUT OF THE TOTAL EXPENSES INCURRED B Y THE ASSESSEE. 6 ITA NO. 76/RPR/2012 ASSESSMENT YEAR : 2005 -2006 THEREFORE, WE MODIFY THE ORDERS OF LOWER AUTHORITIES AND THE ASSESSEE GETS RELIEF OF RS.55,771/- . THIS LIMB OF THE GROUND IS PA RTLY ALLOWED. 15. AS REGARDS TO DISALLOWANCE OF TRAVELLING EXPENSES OF RS.66,000/-, WE FIND THAT THE ASSESSEE HAD CLAIMED TRAVELING EXPENSES OF R S.20,22,219/-. THE ASSESSING OFFICER DISALLOWED RS.2,00,000/- OUT OF TOTA L EXPENSES CONSIDERING THE FACT THAT THE PERSONAL OF DIRECTORS ARE NOT RULED OUT. ON APPEAL, THE CIT(A) FOLLOWING THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF SAYAJI IRON AND ENGG CO. VS CIT, 253 ITR 7 49(GUJ) RESTRICTED THE DISALLOWANCE TO RS.66,000/-. 16. WE HAVE HEARD THE RIVAL SUBMISSIONS AND MATERIALS AVAILABLE ON RECORD. CONSIDERING THE TURNOVER OF THE ASSESSEE AND ALSO THE FACT THAT THE ASSESSEE COULD NOT SUBSTANTIATE WITH PROPER EVIDENCE , WE DO NOT FIND ANY MERIT IN THE GROUND OF THE ASSESSEE. WE, THEREFORE, CON FIRM THE ORDER OF THE CIT(A) AND DISMISS THIS LIMB OF THE GROUND OF THE ASSESSEE . 17. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS PARTL Y ALLOWED. ORDER PRONOUNCED ON 11/01/2018. SD/- SD/- (N.S SAINI) ( PAVAN KUMAR GADALE) ACCOUNTANT MEMBER JUDICIALMEMBER RAIPUR; DATED 11 /01/2018 7 ITA NO. 76/RPR/2012 ASSESSMENT YEAR : 2005 -2006 B.K.PARIDA, SPS COPY OF THE ORDER FORWARDED TO : BY ORDER, SR.PRIVATE SECRETARY ITAT, RAIPUR 1. THE APPELLANT : M/S.SHREE RADHE INDUSTRIES, POPULAR MARKET, GANDHI BAG, NAGPUR-440001 2. THE RESPONDENT. ACIT, CIRCLE 1(1), BILASPUR 3. THE CIT(A)- BILASPUR 4. PR.CIT- BIULASPUR 5. DR, ITAT, RAIPUR 6. GUARD FILE. //TRUE COPY//