M/s. Durgapur Flour Mill, Durgapur V. ITO, Ward - 1(2), Asansol, Asansol

ITA 862/KOL/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 9328 (ITAT-KOLKATA)
• Duration Of Justice: 9 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-02-2011
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 03-02-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 30-04-2010
• Court: TRIBUNAL
• Department Lawyers: P C NAYAK
• Assessee Lawyers: ARVIND AGARWAL
• Keywords: Business income; Corroborative evidences

Judgement Text

1 , B , , IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH- B , KO LKATA [ . . . . . . . . , ,, , . .. . . .. . , , , , !' ] BEFORE SHRI B.R.MITTAL, JUDICIAL MEMBER & SRI C.D. RAO, ACCOUNTANT MEMBER # # # # / ITA NO. 862 (KOL) OF 2010 $%& '( / ASSESSMENT YEAR 2006-07 M/S. DURGAPUR FLOUR MILLS, ASANSOL. (PAN-AACFD3853A) INCOME-TAX OFFICER, WARD-1(2). ASANSOL. (+, / APPELLANT ) - % - - VERSUS -. (/0+,/ RESPONDENT ) +, 1 2 !/ FOR THE APPELLANT: / SRI ARVIND AGARWAL /0+, 1 2 ! / FOR THE RESPONDENT: / SRI P.C. NAYAK !3 / ORDER ( . .. . . .. . ), !' (C.D. RAO), ACCOUNTANT MEMBER : THE ASSESSEE HAS FILED THIS APPEAL AGAINST THE OR DER DATED 25.02.2010 OF LD. C.I.T.(A), ASANSOL PERTAINING TO ASSESSMENT YEAR 20 06-07. 2. THE FIRST DISPUTE IN THE ASSESSEES APPEAL IS A GAINST SUSTENANCE OF DISALLOWANCE BY THE LD. C.I.T.(A) TO THE EXTENT OF 50% OF RS.4,29,2 99/- OUT OF DISCOUNT AND CARRIAGE OUTWARDS EXPENSES, WHICH AMOUNTED TO RS.2,14,649/-. HOWEVER, WHILE CONCLUDING THE ISSUE, THE LD. C.I.T.(A) HAS MISTAKENLY MENTIONED T HAT THE ASSESSEE WILL GET RELIEF OF RS.21,464/-, INSTEAD OF RS. 2,14,649/-. WE THUS TA KE THE CORRECT FIGURE OF RS.2,14,649/- FOR ADJUDICATION. THE ASSESSEE-FIRM RAN A FLOUR MIL L. AS PER ACCOUNTS OF THE ASSESSEE FOR THE ASSESSMENT YEAR UNDER CONSIDERATION, IT HAD SHO WN TOTAL SALES OF RS.23.18 CRORES. THE NET PROFIT HAD BEEN DISCLOSED @ 1.61% OF THE TU RNOVER AS AGAINST 1.43% ACCEPTED IN THE IMMEDIATELY PRECEDING YEAR. IN THE P/L ACCOUNT , THE ASSESSEE HAD DEBITED A SUM OF RS.42,92,990/- FROM THE TOTAL SALES AS DISCOUNT AND CARRIAGE OUTWARDS. THE A.O. STATED THAT THE ASSESSEE COULD ONLY PRODUCE LEDGER COPIES OF DISCOUNT AND CARRIAGE OUTWARDS EXPENSES WITHOUT FURNISHING ANY EVIDENCE OF SUCH PA YMENTS. IN VIEW OF THE ABOVE, FOR LACK OF VERIFICATION OF THE CORRECTNESS OF THE EXPE NSES, THE A.O. DISALLOWED ON ESTIMATE BASIS 10% OF SUCH EXPENDITURE, WHICH CAME TO RS.4,2 9,299/-. 2 3. THE ASSESSEE CAME IN APPEAL BEFORE THE LD. C.I. T.(A). ACCORDING TO THE LD. C.I.T.(A), THE ASSESSEE FAILED TO PRODUCE RELEVANT VOUCHERS/BILLS IN RESPECT OF THE AFORESAID EXPENSES BEFORE HIM ALSO. HE, THEREFORE, HELD THAT THE A.O. HAD RIGHTLY RESORTED TO ESTIMATED DISALLOWANCE. HE, HOWEVER, CO NSIDERING THAT THE ESTIMATED DISALLOWANCE WAS ON THE HIGHER SIDE RESTRICTED THE DISALLOWANCE @ 50% OUT OF DISCOUNT AND CARRIAGE OUTWARDS EXPENSES TO RS.2,14,649/-. 4. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE EXPENDITURE ON ACCOUNT OF DISCOUNT AND CARRIAGE OUTWARD WAS ONLY 1.85% OF THE TOTAL TURNOVER, WHICH WAS VERY REASONABLE. HE FURTHER POINTED OUT THAT THE ASSESS EES BOOKS ARE DULY AUDITED AND NO DEFECT COULD BE POINTED OUT BY THE AUTHORITIES BELO W. HE HAS ALSO FILED A STATEMENT SHOWING COMPARATIVE FIGURES OF SALES, PURCHASES AND EXPENSES FOR THE PRECEDING AS WELL AS SUBSEQUENT YEARS AND SUBMITTED THAT NO DISALLOWA NCE ON THIS ACCOUNT HAS BEEN MADE BY THE DEPARTMENT IN THOSE YEARS. HE, THEREFORE, S UBMITTED THAT THE DISALLOWANCE UPHELD BY THE LD. C.I.T.(A) SHOULD BE DELETED. THE LD. DE PARTMENTAL REPRESENTATIVE, ON THE OTHER HAND, RELIED ON THE ORDERS OF THE AUTHORITIES BELOW. 5. WE HAVE HEARD THE PARTIES AND PERUSED THE MATER IAL PLACED ON RECORD. WE FIND THAT THE AUTHORITIES BELOW HAVE DISALLOWED THE DISC OUNT AND CARRIAGE OUTWARDS EXPENSES ON ESTIMATED BASIS FOR LACK OF SUPPORTING BILLS/VOU CHERS. AT THE SAME TIME, THEY HAVE NOT POINTED OUT ANY SPECIFIC ITEM OF EXPENDITURE WH ICH ACCORDING TO THEM WAS BEYOND VERIFICATION. HOWEVER, CONSIDERING THE EXPENDITURE IN IMMEDIATELY PRECEDING AS WELL AS SUBSEQUENT YEARS IN COMPARISON TO TOTAL TURNOVER, A S REFLECTED IN THE COMPARATIVE CHART FILED BEFORE US ON PAGE-2 OF THE PAPER BOOK AND THE FACT THAT THE ASSESSEE COULD NOT PRODUCE ENTIRE SUPPORTING EVIDENCE IN SUPPORT OF SU CH EXPENDITURE, WE ARE OF THE CONSIDERED OPINION THAT IT WILL MEET THE ENDS OF JU STICE IF THE DISALLOWANCE OF EXPENDITURE ON ACCOUNT OF DISCOUNT AND CARRIAGE OUT WARDS IS RESTRICTED TO RS.50,000/-. WE, THEREFORE, MODIFY THE ORDER OF LD. C.I.T.(A) TO THE ABOVE EXTENT AND UPHOLD THE DISALLOWANCE OF RS.50,000/-. THE ASSESSEE WILL THUS GET FURTHER RELIEF OF RS. 1,64,649/- [RS.2,14,649 RS.50,000]. WE DIRECT ACCORDINGLY. 3 6. THE ONLY OTHER GROUND RAISED IN THIS APPEAL BY THE ASSESSEE RELATES TO DISALLOWANCE OF RS.3,23,544/- SUSTAINED BY THE LD. C.I.T.(A) OUT OF THE FOLLOWING HEADS OF EXPENDITURE :- I) CARRIAGE INWARD RS.26,57,580 II) REPAIRS & MAINTENANCE RS. 1,57,237 III) STORES & SPARES RS. 87,484 IV) FUEL EXPENSES (GENERATOR) RS.29,49,375 V) TRAVELLING EXPENSES RS. 90,003 VI) SALARIES RS. 4,32,000 VII) FUEL FOR CAR RS. 97,197 RS.64,70,886/- 7. THE A.O. STATED THAT THE ASSESSEE COULD ONLY PR ODUCE THE LEDGER COPIES IN SUPPORT OF THE AFORESAID ITEMS OF EXPENDITURE, BUT NO DETAI LS INCLUDING THE NAMES AND ADDRESSES OF THE PARTIES TO WHOM THE PAYMENTS WERE MADE IN RE SPECT OF THE EXPENSES COULD BE FILED BY THE ASSESSEE. HE, THEREFORE, DISALLOWED ON ESTIM ATE BASIS RS.6,47,089/- BEING 10% OF THE EXPENSES OF RS.64,70,886/-. 8. ON APPEAL, THE LD. C.I.T.(A) HELD THAT IN ABSEN CE OF FULL DETAILS AND SUPPORTING EVIDENCES IN RESPECT OF THE AFORESAID EXPENDITURE, THE A.O. WAS JUSTIFIED TO DISALLOW THE AFORESAID EXPENSES ON ESTIMATE BASIS. HOWEVER, KEEP ING IN VIEW THAT THE ESTIMATED DISALLOWANCE WAS ON THE HIGHER SIDE, THE LD. C.I.T. (A) RESTRICTED THE DISALLOWANCE TO 50% OUT OF THE AGGREGATE DISALLOWANCE OF RS.6,47,089/- MADE BY THE A.O., WHICH CAME TO RS.3,23,544/- AND GAVE RELIEF OF RS.3,23,545/- TO T HE ASSESSEE [RS.6,47,089 RS.3,23,544]. 9. HERE ALSO WE OBSERVE THAT THE ASSESSEE COULD NO T PRODUCE FULL DETAILS AND SUPPORTING EVIDENCES OF THE EXPENDITURE, AS REQUIRE D BY THE AUTHORITIES BELOW. IN VIEW OF THE ABOVE, SOME DISALLOWANCE IS CALLED FOR. HOW EVER, TAKING INTO CONSIDERATION THE PAST AND SUBSEQUENT YEARS DATA IN RESPECT OF THE A FORESAID EXPENSES IN COMPARISON TO TOTAL TURNOVER OF THE ASSESSEE FOR THOSE YEARS, WHI CH HAVE BEEN ACCEPTED BY THE DEPARTMENT IN SCRUTINY ASSESSMENTS, WE ARE OF THE C ONSIDERED VIEW THAT IT WILL MEET THE ENDS OF JUSTICE IF THE ESTIMATED DISALLOWANCE OF RS .3,23,544/- SUSTAINED BY THE LD. 4 C.I.T.(A) IS RESTRICTED TO RS.1 LAKH. WE, THEREFOR E, MODIFY THE APPELLATE ORDER OF LD. C.I.T.(A) ON THIS ISSUE TO THE ABOVE EXTENT AND ADD ITION IS SUSTAINED AT RS.1 LAKH. THE ASSESSEE WILL THUS GET FURTHER RELIEF OF RS.2,23,54 4/- [RS.3,23,544 RS.1,00,000]. WE DIRECT ACCORDINGLY. 10. IN THE RESULT, THE ASSESSEES APPEAL IS PARTLY ALLOWED. 4 !3 '5! 6 5% 7 48 THIS ORDER IS PRONOUNCED IN OPEN COURT ON 11.02.2011. SD/- SD/- [B.R. MITTAL] [C.D. RAO] JUDICIAL MEMBER ACCOUNTANT MEMBE R ( (( ( ' ' ' ') )) ) DATE: 11-02-2011 !3 1 /$$9 :!9';- COPY OF THE ORDER FORWARDED TO : 1. +, / THE APPELLANT : M/S.DURGAPUR FLOUR MILL, SAHID BAGHA JATIN SARANI, SECTOR-2, BIDHAN NAGAR, DURGAPUR-713 304. 2 /0+, / THE RESPONDENT : I.T.O., WARD-1(2), ASANSOL. 3. $3% () : THE CIT(A), ASANSOL. 4. $3%/ THE CIT, ASANSOL. 5 . ?$7 /$% / D.R., ITAT, KOLKATA BENCHES, KOLKATA 6 . GUARD FILE . 09 /$/ TRUE COPY, !3%5/ BY ORDER, (DKP) @ A / DY/ASSTT. REGISTRAR .