Shri Balaji Udyog, Jalna V. Income-tax Officer,

ITA 789/PUN/2016

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 7660 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 11 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-04-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 21-04-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Section: 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, PUN E . , , ! , ' # BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI VIKAS AW ASTHY, JM . / ITA NO. 789/PUN/2016 '% & '& / ASSESSMENT YEAR : 2011-12 SHRI BALAJI UDYOG C/O. GIRISH TRADING COMPANY, NEW MONDHA ROAD, MAMA CHOWK JALNA-431 203. PAN : AAJFP5934F ....... / APPELLANT (% / V/S. THE INCOME TAX OFFICER, WARD-1, JALNA. / RESPONDENT ASSESSEE BY : NONE REVENUE BY : SHRI AJAY MODI / DATE OF HEARING : 16.04.2018 / DATE OF PRONOUNCEMENT : 18.04.2018 ) / ORDER PER VIKAS AWASTHY, JM THIS APPEAL BY ASSESSEE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-1, AURANGABAD DATED 08.02.2016 FOR THE ASSESSMENT YEAR 2011-12. 2 ITA NO.789 /PUN/2016 A.Y. 2011-12 2. A PERUSAL OF THE CASE FILE SHOWS THAT NOTICE OF APPEAL W AS SENT TO THE ASSESSEE ON 08.03.2018 THROUGH RPAD FOR 16.04.2018. ACKN OWLEDGMENT CARD IN THE FILE INDICATES THAT THE NOTICE OF APPEAL WAS DU LY SERVED ON THE ASSESSEE. DESPITE SERVICE OF NOTICE; NEITHER ANY PARTNER OF THE ASSESSEE-FIRM NOR ANY AUTHORIZED REPRESENTATIVE OF ASSESSEE IS PRESEN T IN THE COURT. IT APPEARS THAT THE ASSESSEE IS NOT INTERESTED IN PURSUIN G ITS APPEAL. IN SUCH CIRCUMSTANCES, WE PROCEED TO DECIDE THE APPEAL WITH THE ASSISTANCE OF LD. DR AND THE MATERIAL AVAILABLE ON RECORD. 3. THE BRIEF FACTS OF THE CASE AS EMANATING FROM RECORDS ARE: THE ASSESSEE-FIRM FILED ITS RETURN OF INCOME ON 30.09.2011 DECLARIN G TOTAL INCOME AS RS. NIL. THE CASE WAS SELECTED FOR SCRUTINY, ACCORDINGLY, S TATUTORY NOTICE U/S.143(2) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) WAS ISSUED TO THE ASSESSEE ON 27.09.2012 WHIC H WAS DULY SERVED. DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEEDINGS, TH E ASSESSING OFFICER INTER ALIA MADE FOLLOWING ADDITIONS/DISALLOWANCES: I) AD-HOC DISALLOWANCE OF 20% ON PURCHASE OF BARDANA RS.4,91,571/- II) DISALLOWANCE OF INTEREST EXPENDITURE RS.10,54,539/- 4. AGGRIEVED BY THE ASSESSMENT ORDER DATED 14.03.2014, THE ASSESSEE FILED APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). T HE COMMISSIONER OF INCOME TAX (APPEALS) CONFIRMED BOTH THE ADD ITIONS. NOW, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL AGAINST THE ADDITIONS CONFIRMED BY COMMISSIONER OF INCOME TAX (APPEALS). 5. SHRI AJAY MODI REPRESENTING THE DEPARTMENT SUBMITTED THAT ASSESSING OFFICER HAS GIVEN A SPECIFIC FINDING THAT THE ASSESS EE HAS CLAIMED 3 ITA NO.789 /PUN/2016 A.Y. 2011-12 BARDANA EXPENDITURE AGAINST SELF MADE VOUCHERS. THE SAID VOUCHERS DO NOT CONTAIN THE ADDRESSES OF THE RECIPIENT, AMOUNT AND QUANT ITY OF BARDANA PURCHASED. THE COMMISSIONER OF INCOME TAX (APPEALS) HAS AFFIR MED THE FINDINGS OF ASSESSING OFFICER. THE ASSESSEE HAS FAILED TO SUBST ANTIATE ITS CLAIM BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). 5.1 IN RESPECT OF DISALLOWANCE OF INTEREST, THE LD. DR SUBM ITTED THAT ASSESSEE HAS ADVANCED INTEREST BEARING FUNDS FOR NON BU SINESS PURPOSE TO ITS SISTER CONCERNS NAMELY, (I) J.J. OIL INDUSTRIES PRIVATE LIM ITED (II) MONA OIL MILL (III) NILESH OIL INDUSTRIES (IV) SANJAY COTTON SEEDS AND (V) S HREE GANESH REFINERY. IN FIRST APPELLATE PROCEEDINGS, THE ASSESS EE CLAIMED THAT IT HAS RECEIVED INTEREST FREE ADVANCES FROM SISTER CONCE RNS NAMELY M/S. GIRISH TRADING COMPANY, SHANTI UDYOG, MONA OIL INDUSTRIES & TIRUPATI OIL MILLS. THE ASSESSEE HAS CATEGORIZED THESE COMPANIES AS SU NDRY CREDITORS. THE DOCUMENTS ON RECORD FURTHER REVEAL THAT ASSESSEE HAS PURCHASED COTTON SEED OIL, PALM OIL, SOYA BEAN SEEDS, SOYA REFINED OIL, S UNFLOWER REFINED OIL AND COTTON REFINED OIL ETC. FROM THE ABOVE SAID C OMPANIES. THE ASSESSEE HAS NOT FURNISHED LEDGER EXTRACTS OF THE SISTER CONCERNS OR BANK STATEMENT OR PRIMARY DETAILS OF THE AMOUNT ADVANCED, REC EIVED AS LOAN TO/FROM SISTER CONCERNS. 6. WE HAVE HEARD THE SUBMISSIONS MADE BY THE LD. DR AND HAVE PERUSED THE IMPUGNED ORDER. THE ASSESSEE IN GROUNDS OF APPEAL HAS PRIMARILY ASSAILED DISALLOWANCE MADE ON ACCOUNT OF PURCHASE OF BARDANA AND DISALLOWANCE OF INTEREST IN RESPECT OF INTEREST FREE ADV ANCES TO SISTER CONCERNS FROM INTEREST BEARING FUNDS. 4 ITA NO.789 /PUN/2016 A.Y. 2011-12 6.1 IN RESPECT OF DISALLOWANCE OF PURCHASE OF BARDANA, THE COMMISSION ER OF INCOME TAX (APPEALS) HAS REJECTED ASSESSEES PLEA BY OBSERVING AS UNDER: 9.. IN THESE FACTS AND CIRCUMSTANCES, THE AO HAS RIGHT Y DISALLOWED 20% OF SUCH EXPENDITURE ON ESTIMATE AS T HE POSSIBILITY OF INFLATING THESE EXPENSES CANNOT BE RULED OUT. MOREO VER THE CONSUMPTION RECORDS ARE ALSO NOT AVAILABLE WITH THE APPELLANT FIRM. FURTHER THE COUNSEL OF THE APPELLANT HAS ALSO FAILE D TO SUBMIT ANY RECORDS OR SUPPORTING FOR EXPENSES OF RS.24,57,855/ - SO AS TO PROVE THE VERACITY OF THESE EXPENSES. IT IS A SETTLED LAW THAT THE ONUS IS TOTALLY ON THE ASSESSEE TO PROVE THE GENUINENESS OF ANY EXPENDITURE CLAIMED BY IT AND MERE EXPLANATION IS NOT SUFFICIEN T. IT HAS TO BE BACKED UP BY DOCUMENTARY EVIDENCES. THIS PREPOSITIO N WAS LAID DOWN BY HON'BLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. C HANDRAVILAS HOTEL (164 ITR 102) AND HON'BLE DELHI HIGH COURT IN THE CASE OF GOODYEAR INDIA LTD. VS. CIT (246 ITR 116). IT IS AN UNDISPUTED FACT THAT THE ASSESSEE IN THE PRESENT CASE HAS FAILED TO DISCHARGE THE BURDEN THAT LAY ON IT. IN THE CASE OF ADDI INDUSTRI ES VS ITO (002 ITR TRIB. 236), IT WAS HELD BY HON'BLE DELHI TRIBUNAL T HAT SINCE VOUCHERS WERE NOT PRODUCED, THE CIT(A) WAS JUSTIFIED IN DISA LLOWING BUSINESS PROMOTION EXPENSES ON ESTIMATE BASIS. SIMILARLY IT W AS HELD BY HON'BLE MUMBAI TRIBUNAL IN THE CASE OF INDIAN PLYWO OD MANUFACTURING COMPANY LTD. VS. ACIT (52 DTR 315) THAT CLAIM OF EXPENSES ON THE BASIS OF SELF MADE VOUCHERS WAS NO T JUSTIFIED. IN THE PRESENT CASE, EVEN THE VOUCHERS HAVE NOT BEEN FURNISHED. MOREOVER IT WAS HELD BY HON'BLE DELHI HIGH COURT IN THE CASE OF GOODYEAR INDIA LTD. VS CIT (SUPRA) THAT MERELY BECAUSE AN AUDIT REPORT IS AVAILABLE, THERE IS NO FETTER ON THE POWERS OF THE INCOME-TAX OFFICE R TO REQUIRE THE ASSESSEE TO JUSTIFY ITS CLAIM WITH REFERENCE TO THE RECORDS, MATERIALS AND EVIDENCE. SUCH A POWER IS INHERENT WITH THE ASS ESSING OFFICER IN THE SCHEME OF THE ACT. THEREFORE DISALLOWANCE WA S REQUIRED TO BE MADE OUT OF THE ALLEGED EXPENSES. THE AO HAS ALS O RECORDED A FINDING IN THE ASSESSMENT ORDER THAT THE SELF MADE VOUCHERS DID NOT CONTAIN THE COMPLETE ADDRESSES OF THE RECIPIENT S. IT IS ALSO NOT MENTIONED ON THE VOUCHERS AS TO WHAT QUANTITY OF BA RDANA WAS PURCHASED BY THE APPELLANT FIRM. THERE IS NO EVIDEN CE BROUGHT ON RECORD BY THE APPELLANT WHICH COULD HAVE COMPELLED THE UNDERSIGNED TO REDUCE THE ADDITION/DISALLOWANCE MAD E BY THE AO. IN THESE FACTS AND CIRCUMSTANCES, THE ADDITION .OF RS.4,91,571/- MADE BY THE AO IS SUSTAINED. THIS GROUND OF APPEAL IS DISMISSED. WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF COMMISSIONER O F INCOME TAX (APPEALS) IN CONFIRMING DISALLOWANCE OF 20% OF TOTAL PURCHAS ES. ACCORDINGLY, GROUND NO. 1 RAISED IN APPEAL BY ASSESSEE IS DISMIS SED. 6.2 IN GROUND NO. 2 OF APPEAL, ASSESSEE HAS ASSAILED DISALLOW ANCE OF INTEREST EXPENDITURE RS.10,54,539/-. THE COMMISSIONER OF INC OME TAX (APPEALS) HAS GIVEN FINDING THAT ASSESSEE HAS ADVANCED INTE REST FREE LOANS 5 ITA NO.789 /PUN/2016 A.Y. 2011-12 AND HAS ALSO RECEIVED LOANS FROM ITS SISTER CONCERNS. THE ASSESSEE HAS PURCHASED COTTON SEED OIL, PALM OIL, SOYA BEAN SEEDS, SOYA REFINED OIL, SUNFLOWER REFINED OIL AND COTTON REFINED OIL ETC. FROM ITS SIST ER CONCERNS. THERE ARE SEVERAL TRANSACTIONS OF SALE/PURCHASE, ADVANC ES RECEIVED/GIVEN, AND THEREFORE, IT IS DIFFICULT TO SEGREGATE THE TRANSACTIONS. THE ASSESSEE HAS ALSO FAILED TO FURNISH LEDGER EXTRACTS AND BANK STATEMENT. MERELY FOR THE REASON THAT THERE ARE MULTIPLE TRANSACTIONS OF SALE/PURCH ASE AND ADVANCING OF LOANS BY/TO SISTER CONCERNS, ADDITIONS CANNOT BE SUSTAINED. THUS, WE DEEM IT APPROPRIATE TO REMIT THE ISSUE BACK TO THE FILE OF ASSE SSING OFFICER TO DECIDE THIS ISSUE DE-NOVO. THE ASSESSEE IS DIRECT ED TO FURNISH COMPLETE DETAILS OF TRADING & LOAN TRANSACTIONS ALONG WITH SUPPORTING LEDGER EXTRACTS INDICATING LOAN TRANSACTIONS AND TRADING T RANSACTIONS SEPARATELY. THE ASSESSING OFFICER AFTER TAKING INTO CONSIDER ATION THE DOCUMENTS FURNISHED BY ASSESSEE SHALL DECIDE THIS ISSUE AFR ESH. THE ASSESSING OFFICER SHALL GRANT REASONABLE OPPORTUNITY OF HEAR ING TO THE ASSESSEE BEFORE RE-ADJUDICATING THE ISSUE, IN ACCORDANCE WITH LAW. ACCORDINGLY, GROUND NO. 2 AND 3 RAISED IN APPEAL BY ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES . 7. THE GROUND NO. 4 RAISED IN APPEAL BY ASSESSEE IS GENE RAL IN NATURE AND HENCE, REQUIRES NO ADJUDICATION. 8. THE GROUND NO. 5 RAISED IN APPEAL BY ASSESSEE RELATES TO CHARGING OF INTEREST U/S. 234B OF THE ACT. CHARGING OF INTEREST U/S.234 B OF THE ACT IS MANDATORY AND CONSEQUENTIAL; HENCE, THE GROUND NO. 5 IS DISMISSED . 6 ITA NO.789 /PUN/2016 A.Y. 2011-12 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES IN THE TERMS INDICATED ABOVE. ORDER PRONOUNCED ON WEDNESDAY, THE 18 TH DAY OF APRIL, 2018 SD/- SD/- ( . / D. KARUNAKARA RAO ) ( ! /VIKAS AWASTHY) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE; !' / DATED : 18 TH APRIL, 2018 SB ) * +',- . ', / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT(APPEALS)-1, AURANGABAD. 4. THE PR. CIT-1, AURANGABAD. 5. %&' () , * () , +,- , / DR, ITAT, A BENCH, PUNE. 6. './ 01 / GUARD FILE. // TRUE COPY // *2 / BY ORDER, 3 (- / PRIVATE SECRETARY * () , / ITAT, PUNE.