S.V.H. Tech (P) Ltd., Delhi V. ITO, Ghaziabad

ITA 845/DEL/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 7529 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 5 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC 3
• Next Hearing Date: 13-07-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 12-02-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A SREENIVASA RAO
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC-3, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER I.T.A. NO. 845/DEL/2015 A.Y. : 2010-11 M/S SVH TECH (P) LTD., C/O KAPIL GOEL, ADVOCATE, F-26/124, SECTOR-7, ROHINI, DELHI 110 085 (PAN: AACCS3102J) VS. ITO, WARD 1(5), GHAZIABAD (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. KAPIL GOEL, ADV. DEPARTMENT BY : SH. A. SREENIVASA RAO, SR. DR DATE OF HEARING : 13-07-2016 DATE OF ORDER : 02-08-2016 ORDER PER H.S. SIDHU : JM ASSESSEE HAS FILED THIS APPEAL AGAINST THE IMPUGNE D ORDER DATED 30.12.2014 PASSED BY THE LD. CIT(A), GHAZIABAD REL EVANT TO ASSESSMENT YEAR 2010-11 ON THE FOLLOWING GROUNDS:- ADDITION OF RS. 750,000: ADHOC DISALLOWANCE OF PROFESSIONAL CHARGES 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, LD. CIT(A) ERRED IN NOT DELETING THE UNLAWF UL ADHOC ADDITION OF RS. 750,000/- MADE BY THE AO ON ACCOUNT OF DISALLOWANCE OF PROFESSIONAL CHARGES PAID TO SNRS & ITA NO.845/DEL/2015 2 ASSOCIATES (CHARTERED ACCOUNTANTS) BEING GENUINE PROFESSIONAL CHARGES. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW, LEARNED CIT-A ERRED IN NOT DELETING THE UNLAWFUL ADHOC ADDITION OF RS 750,000 MADE BY LD AO ON ACCOU NT OF DISALLOWANCE OF PROFESSIONAL CHARGES WITHOUT APPREC IATING THAT: A. THAT PAYMENT IS MADE BY BANKING CHANNEL; B. THAT PAYMENT IS DULY AND CORRECTLY SUBJECT TO TD S; C. THAT PAYMENT IS MADE TO UNRELATED PARTY; D. THAT RECIPIENT FIRM HAS DULY FILED THE RETURN OF INCOME INCLUDING SUBJECT SUM AS RECEIPTS IN ITS HANDS; E. THAT DULY CONFIRMED LEDGER ALC WAS FILED TO LD A O DURING ASSESSMENT PROCEEDINGS; F. THAT SERVICE TAX IS PAID ON SUBJECT SERVICES; G. THAT NO ENQUIRY IS MADE AT ANY STAGE TO DISLODGE ASSESSEE'S CLAIM 3. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW, LEARNED CIT-A ERRED IN NOT DELETING THE UNLAWFUL ADHOC ADDITION OF RS 30,000 ON ALC OF 'POSSIBLE LEA KAGES' IN SELF MADE VOUCHERS WHICH IS CONTRARY TO LAW AND JUS TICE. ITA NO.845/DEL/2015 3 THAT THE APPELLANT CRAVES LEAVE TO ADD, TO, AMEND, MODIFY, RESCIND, SUPPLEMENT OR ALTER ANY OF THE GROUNDS STA TED HEREIN ABOVE, EITHER BEFORE OR AT THE TIME OF HEARING OF T HIS APPEAL. 2. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE HA D FILED THE RETURN DECLARING TOTAL INCOME OF RS. 14,70,334/- ON 11.10. 2011 WHICH WAS LATER SELECTED FOR SCRUTINY. ACCORDINGLY, THE AO ISSUED NOTICES U/S. 143(2) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED AS THE ACT). IN RESPONSE TO THE SAME, ASSESSEES REPRESENTATIVE ATTENDED THE PROCEEDINGS AND PRODUCED THE BOOKS OF ACCOUNTS, BILLS AND VOUCHERS WHICH WERE EXAMINED BY THE AO. DURING THE YEAR ASSESSEE DERIVES INCOME FROM MANUFACTURING AND SALE OF DISH ANTEENA AND ELECTRONICS GOODS. O N EXAMINING THE EXPENSES UNDER THE HEAD ADMINISTRATION, FINANCE AND OTHER, AO NOTED THAT ASSESSEE HAS MADE PAYMENT OF RS. 8 LACS TO M/S SNRS ASSOCIATES, CHARTERED ACCOUNTANTS WHICH WAS AS PER AO APPEARE D TO BE UNREASONABLE AND ACCORDINGLY, THE ASSESSEE WAS ASKE D TO EXPLAIN THE SAME. ASSESSEE REPLIED VIDE HIS LETTER DATED 11.3. 2013 AND ON EXAMINING THE SAME, AO TREATED RS. 50,000/- AS REASONABLE FO R FILING E-TDS RETURNS AND OTHER FINANCIAL MATTES, BUT EXPENDITURE OF RS. 7.50 LACS WAS TREATED AS UNREASONABLE AND ADDED BACK TO THE INCOME OF THE ASSESSEE. AO FURTHER WHILE VERIFYING THE BILLS AND VOUCHERS IN RESPECT OF THE EXPENSES DEBITED TO PROFIT AND LOSS ACCOUNT, NOTICED THAT SO ME OF THE EXPENSES ARE NOT FULLY VERIFIABLE UNDER THE HEAD VEHICLE MAINTEN ANCE, BUSINESS PROMOTION, FESTIVAL EXPENSES AND MISC. EXPENSE AS T HE SAME HAVE BEEN CLAIMED ON SELF MADE VOUCHERS. THE ASSESSEE WAS C ONFRONTED WITH THE ITA NO.845/DEL/2015 4 DISCREPANCY. THEREAFTER, THE AO MADE THE DISALLOWAN CE OF RS. 30,000/- TO COVER UP THE POSSIBLE LEAKAGES AND COMPLETED THE AS SESSMENT U/S. 143(3) OF THE I.T. ACT, 1961 VIDE HIS ORDER DATED 25.3.201 3. 3. AGGRIEVED WITH THE ASSESSMENT ORDER DATED 25.3.2 013, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A), WHO VIDE IMPUGNED ORDER DATED 30.12.2014 HAS DISMISSED THE APPEAL OF THE AS SESSEE AND AFFIRMED THE ADDITIONS. 4. AGAINST THE IMPUGNED ORDER DATED 30.12.2014, A SSESSEE HAS FILED THE APPEAL BEFORE THE TRIBUNAL. 5. AT THE TIME OF HEARING, LD. COUNSEL OF THE ASSES SEE STATED THAT LD. CIT(A) ERRED IN NOT DELETING THE UNLAWFUL ADHOC ADD ITION OF RS 7,50,000 MADE BY AO ON ACCOUNT OF DISALLOWANCE OF PROFESSION AL CHARGES WITHOUT APPRECIATING THAT THE PAYMENT IS MADE BY BANKING C HANNEL; THAT PAYMENT IS DULY AND CORRECTLY SUBJECT TO TDS; THAT PAYMENT IS MADE TO UNRELATED PARTY; THAT RECIPIENT FIRM HAS DULY FILED THE RETURN OF INCOME INCLUDING SUBJECT SUM AS RECEIPTS IN ITS HANDS; THA T DULY CONFIRMED LEDGER ALC WAS FILED TO LD AO DURING ASSESSMENT PROCEEDING S; THAT SERVICE TAX IS PAID ON SUBJECT SERVICES; THAT NO ENQUIRY IS MADE A T ANY STAGE TO DISLODGE ASSESSEE'S CLAIM. IN VIEW OF THE ABOVE, HE REQUES TED THE ADDITION MADE BY THE AO AND CONFIRMED BY THE LD. CIT(A) MAY BE DE LETED. 5.1 LD. COUNSEL OF THE ASSESSEE FURTHER STATED THAT THE ANOTHER ADHOC DISALLOWANCE OF RS. 30,000/- ON ACCOUNT OF POSSIBLE LEAKAGES IN SELF MADE VOUCHERS IS CONTRARY TO LAW AND JUSTICE AND NEEDS TO BE DELETED. ITA NO.845/DEL/2015 5 6. ON THE OTHER HAND, LD. DR RELIED UPON THE ORDERS OF THE AUTHORITIES AND STATED THAT THE ORDERS OF THE AUTHORITIES BELOW MAY BE AFFIRMED AND APPEAL OF THE ASSESSEE MAY BE DISMISSED. 7. I HAVE HEARD BOTH THE PARTIES AND PERUSED THE RE CORDS AVAILABLE WITH ME ESPECIALLY THE ORDERS OF THE REVENUE AUTHOR ITIES. WITH REGARD TO DISALLOWANCE OF RS. 7.50 LACS TOWARDS PROFESSIONAL CHARGES IS CONCERNED, I HAVE SEEN FROM THE RECORDS THAT THE PAYMENT OF RS. 8 LACS HAS BEEN PAID TO M/S SNRS ASSOCIATES, CHARTERED ACCOUNTANTS TOWA RDS PROFESSIONAL FEE/CONSULTANCY CHARGES AS A RETAINER ANNUAL FEE FO R RS. 8 LACS TO PROVIDE THE PROFESSIONAL SERVICES IN THE FIELD OF INCOME TA X, SERVICE TAX, EXCISE DUTY, FACTORY ACT AND FINANCIAL & MANAGEMENT CONSUL TANCY. IT WAS ALSO FIND THAT THE AFORESAID PAYMENT WAS MADE THROUGH A BANKING CHANNEL AND THE SAME WAS DULY SUBJECT TO TDS. THE SAID PAY MENT IS MADE TO UNRELATED PARTY AND THE RECIPIENT FIRM HAS DULY FIL ED THE RETURN OF INCOME INCLUDING SUBJECT SUM AS RECEIPTS IN ITS HANDS WHIC H WAS DULY CONFIRMED IN LEDGER ALC WHICH WAS FILED BEFORE THE AO DURING ASSESSMENT PROCEEDINGS. IT WAS ALSO NOTED THAT SERVICE TAX IS PAID ON SUBJECT SERVICES AND NO ENQUIRY IS MADE AT ANY STAGE TO DISLODGE AS SESSEE'S CLAIM. IN THE BACKGROUND OF THE AFORESAID DISCUSSIONS, THE DISAL LOWANCE MADE BY THE AO AND CONFIRMED BY THE LD. CIT(A) IS DELETED AND THE ISSUE IN DISPUTE RAISED BY THE ASSESSEE IS ALLOWED. 8. WITH REGARD TO ADHOC ADDITION OF RS. 30,000/- O UT OF EXPENSES FOR VEHICLE MAINTENANCE, BUSINESS PROMOTION, FESTIVAL A ND MISCELLANEOUS. I ITA NO.845/DEL/2015 6 FIND THAT AO HAD MADE THE DISALLOWANCE WITHOUT POIN TING OUT ANY SPECIFIC EXPENDITURE WHICH IS OF INADMISSIBLE IN NATURE, WHI CH IS NOT SUSTAINABLE IN THE EYES OF LAW AND AGAINST THE WELL SETTLED LAW. H ENCE, THE SAME IS DELETED AND THE ISSUE IN DISPUTE RAISED BY THE ASS ESSEE IS ALLOWED. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 02/08/2016. SD/- [H.S. SIDHU] JUDICIAL MEMBER DATE 02/8/2016 SRBHATNAGAR COPY FORWARDED TO: - 1. APPELLANT - 2. RESPONDENT - 3. CIT 4. CIT (A) 5. DR, ITAT ASSISTANT REGISTRAR, ITAT, DELHI BENCHES