M/S ARAN OIL INDUSTRIES, BHARATPUR V. INCOME TAX OFFICER, WARD-A, BHARATPUR

ITA 774/JPR/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 2237 (ITAT-JAIPUR)
• Duration Of Justice: 2 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-01-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2013-2014
• Appeal Filed On: 16-10-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R N JHA CIT DHK
• Keywords: Depreciation
• Section: 40A(3); 37

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES (SMC), JAIPUR JH HKKXPAN] YS[KK LNL; ] DS LE{K BEFORE: SHRI BHAGCHAND, ACCOUNTANT MEMBER VK;DJ VIHY LA-@ ITA NO. 774/JP/2017 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2013-14 M/S ARAN OIL INDUSTRIES, MATHURA ROAD, BHARATUPUR- 321001 (RAJ). CUKE VS. INCOME TAX OFFICER, WARD-1, BHARATPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AAQFA 0081 M VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI RAJENDRA AGARWAL JKTLO DH VKSJ LS@ REVENUE BY : SHRI R.N JHA (ADDL.CIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 02/01/2018 MN?KKS'K.KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 02/01/2018 VKNS'K@ ORDER PER: BHAGCHAND, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE EMANATES FR OM THE ORDER OF THE LD. CIT(A), ALWAR DATED 28/08/2017 FOR THE A.Y. 2 013-14. 2. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFA CTURING OF EDIBLE OIL AND OIL CAKE. THE RETURN OF INCOME WAS ELECTRONIC ALLY FILED ON 25/09/2013 DECLARING TOTAL INCOME AT RS. NIL. THE A SSESSING OFFICER MADE VARIOUS DISALLOWANCES AND AGAINST WHICH, THE ASSESSEE WENT IN APPEAL ITA 774/JP/2017_ M/S ARAN OIL INDUSTRIES VS ITO 2 BEFORE THE LD. CIT(A). THE LD. CIT(A) HAS CONFIRMED THE ADDITION AND DISMISS THE APPEAL OF THE ASSESSEE. 3. NOW THE ASSESSEE IS IN APPEAL BEFORE THE ITAT BY T AKING FOLLOWING GROUNDS OF APPEAL: ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN CONFIRMING: 1. THE DISALLOWANCE OF VARIOUS EXPENSES SHOWN IN P &L ACCOUNT RS. 42,910/-. 2. MAKING DISALLOWANCE U/S 40A(3) RS. 36,500/- (COR RECT AMOUNT IS RS. 29,910/-) 4. IN THE GROUND NO. 1 OF THE APPEAL, THE ASSESSEE HAS CHALLENGED THE DISALLOWANCES OF RS. 42,910/- MADE BY THE ASSESSING OFFICER OUT OF THE TOTAL EXPENSES OF RS. 4,29,102/- UNDER VARIOUS HEAD S OF EXPENSES LIKE TRAVELLING EXPENSES, GENERAL EXPENSES, CAR EXPENSES , DEPRECIATION ON CAR, BUILDING REPAIR EXPENSES AND TRACTOR EXPENSES. THUS THE ASSESSING OFFICER DISALLOWED 10% OF THESE EXPENSES. THIS DISALLOWANCE WAS MADE AFTER EXAMINATION OF VARIOUS VOUCHERS WHEREIN THE ASSESSIN G OFFICER NOTICED THAT SOME OF THE EXPENSES WERE NOT FULLY SUPPORTED WITH TH E VOUCHERS AND SOME OF THE EXPENSES WERE CLAIMED ON THE BASIS OF SE LF MADE VOUCHERS WITHOUT SUPPORTING BILLS/RECEIPTS. IN THIS SITUATION , THE ASSESSING OFFICER DISALLOWANCE LUMP SUM 10%. 5. THE LD. CIT(A) HAS CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICER BY HOLDING AS UNDER: ITA 774/JP/2017_ M/S ARAN OIL INDUSTRIES VS ITO 3 4.3 I HAVE GONE THROUGH THE ASSESSMENT ORDER AS WE LL AS SUBMISSIONS MADE BY THE APPELLANT AND FIND THAT THE DISALLOWANCES HAVE BEEN MADE BASICALLY ON THE ISSUE OF NON-PRODUCTION OF ALL BILLS/VOUCHER S IN SUPPORT OF THE CLAIM OF THE EXPENDITURES AND THE FACT THAT SUCH EXPENSES HAVE BEEN INCURRED MOSTLY IN CASH WHICH REMAIN UNVERIFIED. 4.4 ANY EXPENDITURE OF THE NATURE MENTIONED ABOVE I S CLAIMED UNDER SECTION 37 OF THE ACT. IN ORDER TO GET THE DEDUCTION UNDER SECTION 37 OF THE ACT, PRIMARY ONUS LIES ON THE ASSESSEE TO PROVE THAT SUC H EXPENDITURES ARE INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS OR PROFESSION. 4.5 IN THE INSTANT CASE, THE ASSESSEE HAS FAILED TO PROVIDE SUPPORTING DOCUMENTS TO PROVE THAT SUCH EXPENDITURES ARE INCUR RED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS OR PROFESSI ON. THEREFORE, THE A.O IS JUSTIFIED IN DISALLOWING AN AMOUNT OF RS. 42,910/- TO COVER DISCREPANCIES. ACCORDINGLY, THE ADDITION OF RS. 42,910/- IS SUSTAI NED AND THE APPELLANTS GROUND OF APPEAL ON THE ISSUE IS DISMISSED. 6. THE LD AR RELIED ON THE SUBMISSIONS MADE BEFORE T HE AUTHORITIES BELOW AND SUBMITTED THAT THIS WAS THE AD HOC DISALLOWA NCE AND IT WAS A LUMP SUM, ARBITRARY BASED ON SIMPLE GUESS WORK, PRES UMPTION, SUSPICION CONJECTURE AND SURMISES. 7. ON THE OTHER HAND, THE LD SR.DR HAS RELIED ON TH E ORDERS OF THE AUTHORITIES BELOW. 8. BOTH THE SIDES WERE HEARD AND ALSO CONSIDERED THE RELEVANT RECORDS AVAILABLE AND CASE LAWS RELIED UPON. IT WAS PLEADED T HAT THE ASSESSING ITA 774/JP/2017_ M/S ARAN OIL INDUSTRIES VS ITO 4 OFFICER HAS NOT SPECIFIED ANY SPECIFIC INSTANCE OF DISCREPANCY, HOWEVER, IT IS A FACT THAT CERTAIN EXPENSES DEBITED IN THE P&L ACCOUNT ONLY ON THE BASIS OF SELF MADE VOUCHERS, THEREFORE, CONSIDERING THE V ARIOUS CASE LAWS RELIED UPON BY BOTH THE SIDES AND ALSO THE FACTUAL ASPECT OF THE CASE, THE BENCH IS OF THE VIEW THAT 5% OF THESE EXPENSES SHALL BE RE ASONABLE TO PLUG THE LEAKAGE OF REVENUE ON ACCOUNT OF EXPENSES CLAIMED O N THE BASIS OF SELF MADE VOUCHERS. HENCE, THE DISALLOWANCE OF RS. 21,455 /- IS SUSTAINED ON THIS ISSUE AND BALANCE IS DELETED. THIS GROUND OF AP PEAL IS PARTLY ALLOWED. 9. IN THE GROUND NO. 2 OF THE APPEAL, THE ASSESSEE HAS CHALLENGED THE SUSTAINING OF DISALLOWANCE OF RS. 36,500/- U/S 40A(3 ) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAS MADE CASH PAYMENT OF RS. 29743/- TO ROYAL SUNDE RAM ALLIANZE CO. LTD. ON 26/2/2013 AND IT WAS IN CONTRAVENTION OF PRO VISIONS OF SECTION 40A(3) OF THE ACT. THE LD AR OF THE ASSESSEE HAS SUB MITTED THAT THIS PAYMENT WAS TOWARDS THE INSURANCE PREMIUM PAID TO ROY AL SUNDERAM ALLIANZE CO. LTD. AT JAIPUR TO PURCHASE THE INSURAN CE COVERAGE FOR THE NEW CAR PURCHASED BY THE ASSESSEE. THE ASSESSEE WAS NOT H AVING ANY BANK ACCOUNT AT JAIPUR AND INSURER REFUSED TO ACCEPT THE CHEQUE PAYABLE AT BHARATPUR, IN THESE CIRCUMSTANCES, THIS PAYMENT WAS MADE. THE LD. CIT(A) HAS CONFIRMED THE ADDITION FOR THE REASON THAT THE ASSESSEE HAS NOT COME ITA 774/JP/2017_ M/S ARAN OIL INDUSTRIES VS ITO 5 OUT WITH COGENT REASON OR EVIDENCE TO SEEK THE REDRE SSAL UNDER THE PROVISIONS OF RULE 6DD(J) OF THE INCOME TAX RULES, 1 962 AND THE LD. CIT(A) HAS SUSTAINED THE ADDITION. 10. AFTER HEARING BOTH THE SIDES, THE BENCH HOLD TH AT THE PAYMENT WAS MADE ON THE BANK WORKING DAY. FURTHER NOW A DAYS, THE CHEQUES ARE PAYABLE AT PAR ALL OVER INDIA. THE ASSESSEES INITIA L EXPLANATION THAT ON 26/2/2013 THERE WAS A HOLIDAY, IS NOT FACTUALLY CORR ECT. FURTHER, WHENEVER, A CAR IS PURCHASED, THE INSURANCE IS DONE BY THE AG ENCY ITSELF. IN VIEW OF THESE FACTS, THE REFUSAL TO ACCEPT CHEQUE BY INSURE R IS NOT ESTABLISHED. CONSIDERING ALL THESE FACTS, THE BENCH FIND THAT TH E ASSESSEE HAS FAILED TO GIVE ANY COGENT REASON AND SUFFICIENT EVIDENCE TO S EEK THE REDRESSAL UNDER RULE 6DD(J) OF THE RULES, THEREFORE, THE BENCH SUST AIN THE ADDITION CONFIRMED BY THE LD. CIT(A). HENCE, THIS GROUND OF A SSESSEES APPEAL IS DISMISSED. 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 02/01/2018. SD/- HKKXPAN (BHAGCHAND) YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 02 ND JANUARY, 2018 ITA 774/JP/2017_ M/S ARAN OIL INDUSTRIES VS ITO 6 *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- M/S ARAN OIL INDUSTRIES, BHARATPUR. 2. IZR;FKHZ @ THE RESPONDENT- THE ITO, WARD-1, BHARATPUR. 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. 774/JP/2017) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR