Appeal details
Counselvise Citation
[2016] 121 COUNSELVISE.COM (IT) 4435 (ITAT-INDORE)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
1 month(s) 17 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
29-09-2016
Appeal Filed By
Assessee
Order Result
Partly Allowed
Bench Allotted
SMC
Assessment Year
2011-2012
Appeal Filed On
11-08-2016
Judgement Text
, , IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE .., .., % BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER AND SHRI O.P. MEENA, ACCOUNTANT MEMBER M/S.MIDLAND INDUSTRIES & INFRASTRUCTURE PVT.LTD., BHOPAL .. ./ PAN: AAECM9239M VS. ACIT, 2(1), BHOPAL / APPELLANT / RESPONDENT / APPELLANT BY SHRI ANIL KHABYA, CA / RESPONDENT BY SHRI MOHD. JAVED, DR DATE OF HEARING 29.09.2016 DATE OF PRONOUNCEMENT 29.09.2016 / O R D E R PER O.P. MEENA, ACCOUTANT MEMEBR. THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE OR DER OF LD. COMMISSIONER OF INCOME-TAX (APPEALS)-I, BHOPAL .. . / I.T.A. NO. 850/IND/2016 %' ' / ASSESSMENT YEAR : 2011-12 I.T.A.NO. 850/IND/2016-A.Y.11-12/ M/S. MIDLAND INDU STRIES & INFRASTRUCTURE P.LTD., BHOPAL PAGE 2 OF 6 [HEREINAFTER REFERRED TO AS THE CIT(A)] DATED 30.06 .2016 AND PERTAINS TO ASSESSMENT YEAR 2011-12 AS AGAINST APPE AL DECIDED IN ASSESSMENT ORDER PASSED U/S 143(3) OF T HE ACT DATED 31.03.2014 OF ACIT, 2(1), BHOPAL [HEREINAFTER REFERRED TO AS THE AO]. 2. GROUND NO. 1 RELATES TO CONFIRMING ADDITION OF RS. 10,56,778/- ON ACCOUNT OF DISALLOWANCE OF 25% OF WAGE EXPENSES U/S 37 OF THE ACT. 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSEE HAS DEBITED AN EXPENSE OF RS. 42,27,113/- UNDER THE HEAD SALARY AND WAGES. HOWEVER, THE ASSESSEE HAS FAILED TO PRODUCE THE WAGES REGISTER ALONG WITH THE PAYMENT VOU CHERS FOR VERIFICATION ON THE GROUND THAT HE ASSESSEE COM PANY HAS SOLD THE FACTORY TO THE NEW OWNERS AND THE OLD FACTOR Y RECORDS INCLUDING THE LABOUR RECORDS HAVE BEEN RETAINED BY THE NEW OWNER. HOWEVER, THIS ARGUMENT DOES NOT GO WELL WITH THE AO AND HENCE HE MADE DISALLOWANCE @ 25% ,OF THE TOTAL E XPENSES, WHICH CAME TO BE AT RS. 10,56,778/-. THE LD. CIT(A) ALSO UPHELD THE SAME BY OBSERVING THAT EXPLANATION OFFER ED BY THE I.T.A.NO. 850/IND/2016-A.Y.11-12/ M/S. MIDLAND INDU STRIES & INFRASTRUCTURE P.LTD., BHOPAL PAGE 3 OF 6 ASSESSEE SEEMS TO BE UNFOUNDED AND UNREALISTIC, AS THE SAME IS NOT BACKED BY THE LETTER FROM THE BANK AUTHORIT IES AND NEW FACTORY OWNER. 4. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE ARGUED THAT THE ASSESSEE WAS UNABLE TO PRODUCE WAGE REGISTER AND VOUCHERS FOR VERIFICATION OF THE AO AS THE SAME HAS BEEN SEIZED BY THE BANK AUTHORITIES. HOWEVER, THE LD. AUTHORI ZED REPRESENTATIVE OF THE ASSESSEE IS ALSO UNABLE TO PR ODUCE THE NECESSARY EVIDENCE IN SUPPORT OF HIS CONTENTION. 5. WE HAVE CONSIDERED THE FACTS AND MATERIALS AVAILABL E ON RECORD. WE FIND THAT SINCE THE ASSESSEE HAS FAIL ED TO PRODUCE THE WAGES REGISTER AND NECESSARY VOUCHERS FO R VERIFICATION OF WAGES, THEREFORE, THE DISALLOWANCE @ 25% OF THE EXPENDITURE CLAIMED BY THE ASSESSEE APPEARS TO BE R EASONABLE, HENCE, THE SAME IS UPHELD. THIS GROUND OF APPEAL IS DISMISSED. 6. GROUND NO. 2 RELATES TO CONFIRMING THE ADDITION OF RS. 15,14,500/- ON ACCOUNT OF 100% DISALLOWANCE OF PROFE SSIONAL CHARGES U/S 37 OF THE ACT. I.T.A.NO. 850/IND/2016-A.Y.11-12/ M/S. MIDLAND INDU STRIES & INFRASTRUCTURE P.LTD., BHOPAL PAGE 4 OF 6 7. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSEE HAS DEBITED AN AMOUNT OF RS. 15,14,500/- U NDER THE HEAD PROFESSIONAL CHARGES, WHICH WERE CLAIMED TO HA VE BEEN PAID TO SHRI N. M. SHUKLA AND SMT. PRAKRATI SHUKLA, AS PROFESSIONAL CHARGES. IT WAS FURTHER SUBMITTED THAT SUCH PAYMENTS WERE ALLOWED BY THE AO IN THE ASSESSMENT Y EAR 2010-11. HOWEVER, THE AO DISALLOWED THE SAME ON THE GROUND THAT THE ASSESSEE HAS FAILED TO FURNISH THE DETAILS AS FOR WHAT PURPOSE THE PROFESSIONAL CHARGES WERE PAID AND EXPLA IN THE PROFESSIONAL SERVICES RENDERED BY THE AFORESAID PE RSONS. ACCORDINGLY, THE AO MADE DISALLOWANCE OF THE SAME. 8. BEFORE THE CIT(A), THE SUBMISSIONS MADE BEFORE THE AO WERE REITERATED NOR ANY CORROBORATED OR JUSTIFIED E XPLANATION WAS OFFERED WITH REGARD TO EXACT WORK DONE BY THE PROFESSIONALS. THE LD. CIT(A) ALSO OBSERVED THAT TH E PRINCIPLES OF RES JUDICATA DO NOT APPLY TO THE INCOME TAX PROC EEDINGS, SINCE EACH YEAR IS AN INDEPENDENT YEAR. THEREFORE, THE FINDINGS IF ANY RECORDED IN ONE YEAR WOULD NOT NECESSARILY BE APPLICABLE/BINDING IN THE SUBSEQUENT YEARS. ACCORDI NGLY, THE I.T.A.NO. 850/IND/2016-A.Y.11-12/ M/S. MIDLAND INDU STRIES & INFRASTRUCTURE P.LTD., BHOPAL PAGE 5 OF 6 PAYMENT AMOUNTING TO RS. 9 LAKHS TO SHRI N. M. SHUK LA AND RS. 6 LAKHS TO SMT. PRAKRITI SHUKLA WAS CONFIRMED. 9. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE CONTEND ED THAT SHRI N.M. SHUKLA HAS RENDERED PROFESSIONAL SER VICES TO THE ASSESSEE TO WHOM PROFESSIONAL CHARGES WERE PAID ON MONTHLY BASIS ON WHICH TDS WAS ALSO DEDUCTED. IT WAS F URTHER SUBMITTED THAT SUCH PROFESSIONAL CHARGES WERE ALLOWE D BY THE AO DURING THE ASSESSMENT YEAR 2010-11, WHICH WERE AT RS. 18,34,000/-. THEREFORE, THE AO AND CIT(A) WERE NOT JUSTIFIED IN DISALLOWING THE 100 % OF PROFESSIONAL CHARGES. THERE FORE, IT WAS URGED THAT A REASONABLE VIEW MAY BE TAKEN CONSIDE RING THE CIRCUMSTANCES OF THE CASE 10. WE HAVE CONSIDERED THE FACTS AND MATERIALS AVAILABL E ON RECORD. WE FIND THAT THE ASSESSEE IS NOT ABLE T O PRODUCE THE NECESSARY EXPLANATION TO JUSTIFY THE CLAIM OF P ROFESSIONAL CHARGES PAID TO SHRI N.M. SHUKLA AND SMT. PRAKRITI SHUKLA. HOWEVER, IT IS TRUE THAT THEY DID RENDER PROFESSIO NAL SERVICES AND WERE ON THE PAY ROLL FROM THE PRECEDING YEARS A LSO. THE PAYMENTS WERE CREDITED IN THE SALARY/PROFESSIONAL A CCOUNT ON I.T.A.NO. 850/IND/2016-A.Y.11-12/ M/S. MIDLAND INDU STRIES & INFRASTRUCTURE P.LTD., BHOPAL PAGE 6 OF 6 MONTHLY BASIS AND TDS THEREON WERE ALSO DEDUCTED. CONSIDERING THESE FACTS AND CIRCUMSTANCES, WE ARE O F THE CONSIDERED OPINION THAT THE DISALLOWANCES SHOULD BE RESTRICTED TO RS. 10 LAKHS AS AGAINST 15,14,500/- DISALLOWED B Y THE AO. ACCORDINGLY, THIS GROUND OF APPEAL IS PARTLY ALLOWE D. 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. THE ORDER HAS BEEN PRONOUNCED IN OPEN COURT ON THE 29 TH SEPTEMBER, 2016. SD/- (..) (D.T.GARASIA) JUDICIAL MEMBER SD/- (..) (O.P.MEENA) ACCOUNTANT MEMBER * / DATED : 29 TH SEPTEMBER, 2016. CPU*
