ACIT, Kota V. SHIV EDIBLES LTD., Kota

ITA 940/JPR/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 5581 (ITAT-JAIPUR)
• Duration Of Justice: 3 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-02-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 27-10-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRITHVIRAJ MEENA CIT DHK
• Assessee Lawyers: MAHENDRA GAGIEYA
• Keywords: Additional evidence
• Section: 43B

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH DQY HKKJR] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS [KK LNL; DS LE{K BEFORE: SHRI KUL BHARAT, JM & SHRI VIKRAM SINGH YAD AV, AM VK;DJ VIHY LA-@ ITA NO. 940/JP/16 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2012-13 THE ACIT, CIRCLE-1, KOTA CUKE VS. M/S SHIV EDIBLES LIMITED 237-A, TALWANDI, KOTA LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AAICS0274 K VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI MAHENDRA GAGIEYA (CA) JKTLO DH VKSJ LS@ REVENUE BY : SHRI PRITHVIRAJ MEENA (ADDL. CIT ) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 20.02.2017 ?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 21/02/2017. VKNS'K@ ORDER PER SHRI VIKRAM SINGH YADAV, A.M. THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF LD. CIT(A), KOTA DATED 16.08.2016 FOR A.Y. 2012-13. IN ITS APP EAL, THE REVENUE HAS TAKEN FOLLOWING GROUNDS OF APPEAL: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN : (I) RESTRICTING THE DISALLOWANCE OUT OF FUEL EXPENS ES TO RS. 10 LACS. (II) RESTRICTING THE DISALLOWANCE OUT OF HAMMALI EX PENSES TO RS. 1 LAC. ITA NO.940/JP/16 ACIT, CIRCLE-1, KOTA VS. M/S M/S SHIV EDIBLES LIMITED , KOTA 2 (III) DELETING THE ADDITION OF RS. 37,172/- MADE BY DISALLOWING LOADING VEHICLE EXPENSES. (IV) DELETING ADDITION OF RS. 5,64,138/- MADE U/S 3 6(1)(VA) ON ACCOUNT OF LATE PAYMENT OF EMPLOYEES CONTRIBUTION TOWARDS PF. 2. IN RESPECT OF THE FIRST GROUND OF APPEAL, BRIEFL Y THE FACTS OF THE CASE ARE THAT THE AMOUNT OF RS. 7,61,17,236/- UNDER THE HEAD FUEL (COAL AND MUSTARD HUSK), THE ASSESSEE WAS ASKED TO PRODUCE THE RELEVA NT SUPPORTING DOCUMENTATION BY THE AO. THE AO OBSERVED THAT THE A SSESSEE HAS KEPT ONLY A REGISTER IN WHICH RECEIPT OF MUSTARD HUSK IS BEING ENTERED AND THERE ARE NO SIGNATURES OF THE SELLERS ON THE REVENUE STAMP AFFI XED AGAINST THEIR NAMES IN THE PURCHASE REGISTER. THE VOUCHERS MAINTAINED BY T HE ASSESSEE ARE INTERNAL VOUCHERS AND NOT SUPPORTED WITH THE VOUCHERS OF THE SELLERS AND THE PAYMENTS HAVE BEEN MADE IN CASH TO THE LOCAL FARMER S WHO DO NOT HAVE ANY BANK ACCOUNTS. IN ABSENCE OF COMPLETE PARTICULARS OF THE SELLERS AS WELL AS NON-AVAILABILITY OF THE RELEVANT VOUCHERS, EXPENSES DEBITED ARE NOT FULLY VERIFIABLE AND FOLLOWING THE HONBLE ANDHRA PRADESH HIGH COURTS DECISION IN CASE OF TRANSPORT CORPORATION OF INDIA (256 ITR 70 1), 5% OF THE EXPENSES AMOUNTING TO RS.38,05,861/- WERE DISALLOWED BY THE AO HOLDING THE SAME AS UNVERIFIABLE. 2.1 BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTE R IN APPEAL BEFORE THE LD. CIT(A) AND SUBMITTED THAT IT HAS MAINTAINED ALL TH E DETAILS AND VOUCHERS IN RESPECT OF HUSK PURCHASED AND PURCHASE REGISTER OF HUSK HAS BEEN PRODUCED FOR VERIFICATION BEFORE THE AO. FURTHER COMPLETE D ETAILS OF THE LOCAL FARMERS FROM WHOM THE HUSK HAS BEEN PURCHASED IN TERMS OF N AME OF FARMERS, QUANTITY PURCHASED, WEIGHMENT SLIP AND MODE OF PAYM ENT HAS BEEN MAINTAINED AND SUBMITTED TO THE AO. IT WAS SUBMITTE D THAT AO HAS NOT POINTED OUT ANY SPECIFIC DEFECT OR ANY INSTANCE OF IRREGULARITY IN THE PURCHASE ITA NO.940/JP/16 ACIT, CIRCLE-1, KOTA VS. M/S M/S SHIV EDIBLES LIMITED , KOTA 3 OF HUSK. IT WAS FURTHER SUBMITTED THAT THE DECISIO N OF HONBLE AP HIGH COURT IN CASE OF TRANSPORT CORPORATION OF INDIA IS DISTINGUI SHABLE ON FACTS AND NOT APPLICABLE IN THE CASE OF THE ASSESSEE. IN THAT C ASE, THE ASSESSEE HAD CLAIMED DEDUCTION OF SECRET COMMISSION PAID TO UNSPECIFIED EMPLOYEES OF ITS CUSTOMER TO GARNER MORE BUSINESS AND THE COMMISSION PAYMENTS WAS HELD NOT VERIFIABLE IN VIEW OF THE ASSESSEE FAILING TO FURNI SH NAME AND ADDRESS OF THE RECIPIENTS. 2.2 THE LD. CIT(A) AFTER CONSIDERING THE ASSESSEES SUBMISSION AND AOS FINDINGS RESTRICTED THE DISALLOWANCE TO RS. 10 LACS AND HIS OBSERVATIONS ARE AS UNDER: IN THE ASSESSEES OWN CASE FOR THE PRECEDING YEAR IN APPEAL NO. 84/14-15, I HAVE DECIDED THE ISSUE PARTLY IN FAVOUR OF THE ASSE SSEE. FOLLOWING THE SAME LINE OF DECISION, I HOLD THAT THE AOS ESTIMATION F OR THE DISALLOWANCE IS NOT BACKED BY EITHER ANY LOGICAL REASONING OR COMPARABL E CASES. ON THE OTHER HAND, THE ASSESSEE HAS SUBMITTED DETAILS LIKE WEIGHMENT S LIPS OF THE HUSK QUANTITY, DETAILS OF THE FARMERS ETC. HOWEVER, THERE WAS NO DENIAL THAT THE MODE OF PAYMENT WAS CASH AND THAT CERTAIN NUMBER OF VOUCHER S REMAINED UNSIGNED BY THE RECIPIENTS OF THE CASH AMOUNTS. IN THE TOTALIT Y OF FACTS AND CONSIDERING THAT THERE COULD BE A POSSIBILITY OF CERTAIN PURCHASES N OT BEING PROPERLY SUPPORTED WITH THE REQUIRED ADDITIONAL EVIDENCES, THE DISALLO WANCE MADE BY THE AO IS RESTRICTED TO RS. 10 LACS. THE BALANCE DISALLOWANCE OF RS. 28,05,861/- IS ACCORDINGLY DIRECTED TO BE DELETED. 2.3 DURING THE COURSE OF HEARING, THE LD. AR REITER ATED THE SUBMISSIONS MADE BEFORE THE LD. CIT(A) AND SUBMITTED THAT THE ASSESS EE HAS MAINTAINED COMPLETE DETAILS OF THE FUEL CONSUMPTION INCLUDING HUSK AND ALSO THE NAME OF THE FARMERS, QUANTITY PURCHASED, WEIGHMENT SLIP AND MOD E OF PAYMENT WERE DULY ITA NO.940/JP/16 ACIT, CIRCLE-1, KOTA VS. M/S M/S SHIV EDIBLES LIMITED , KOTA 4 SUBMITTED TO THE AO INCLUDING THE QUANTITATIVE PURC HASE REGISTER AND THE FACTS ARE IDENTICAL AS IN A.Y. 2011-12 . IT WAS FURTHER SUBMITTED THAT THE AO HAD MERELY PROCEEDED ON SUSPICION AND COULD NOT POINTED OUT ANY SPECIFIC DEFECT. IT WAS FURTHER SUBMITTED THAT THE PERCENTAGE OF HUS K CONSUMED WITH RESPECT TO TURNOVER IS COMPARABLE TO LAST YEAR WHEREIN HUSK CONSUMED THIS YEAR WAS 2.006% AS AGAINST 2.073% LAST YEAR. 2.4 THE LD. DR IS HEARD WHO HAS RELIED ON THE ORDER OF THE AO. 2.5 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE AO HAS DISALLOWED 5% OF THE EXPENS ES HOLDING THE SAME AS NOT VERIFIABLE. AS PER LD. CIT(A) RIGHTLY HELD THA T THE AO ON ESTIMATION OF 5% DISALLOWANCE IS NOT BACK BY ANY LOGICAL REASONING O R COMPARABLE CASES. THE LD. CIT(A) HAS ALSO GIVEN A FINDINGS THAT THE ASSESSEE HAS MAINTAINED AND SUBMITTED THE DETAILS OF THE HUSK PUYRCHAED DURING THE YEAR IN TERMS OF WEIGHMENT SLIP DETAILS OF FARMERS ETC. AT THE SAME TIME GIVEN THAT CERTAIN PURCHASES ARE NOT BEING PROPERLY SUPPORTED WITH THE REQUIRED ADDITIONAL EVIDENCES HE RESTRICTED THE DISALLOWANCE TO RS. 10, 00,000/- BEING 26% OF THE TOTAL DISALLOWANCE MADE BY THE AO. SIMILAR DISALL OWANCES HAVE BEEN MADE IN THE A.Y. 2011-12 WHERE BY FOLLOWING THE SAME REASO NING, AO HAS DISALLOWED 5% OF THE EXPENSES WHICH WERE RESTRICTED TO RS. 7 L ACS BY THE LD. CIT(A)AND THE REVENUE IS APPARENTLY NOT IN APPEAL AGAINST THE SAI D ORDER OF THE LD. CIT(A) AND THE SAME HAS ATTAINED FINALITY. IN THE FACTS AND C IRCUMSTANCES OF THE CASE GIVEN THAT THE ADDITION HAVE BEEN MADE PURELY ON ADHOC BA SIS. AT THE SAME TIME GIVEN THE FACT THAT SOME OF THE EXPENSES ARE NOT SU PPORTED BY PROPER EVIDENCES. THE LD. CIT(A) HAS RESTRICTED THE DISALL OWANCE TO A REASONABLE LEVEL. WE DO NOT SEE ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A) WHICH IS HEREBY CONFIRMED. IN THE RESULT THE GROUND TAKEN BY THE R EVENUE IS DISMISSED. ITA NO.940/JP/16 ACIT, CIRCLE-1, KOTA VS. M/S M/S SHIV EDIBLES LIMITED , KOTA 5 3. COMING TO THE SECOND GROUND OF APPEAL THE AO HAS DISALLOWED 5% OF THE HAMMALI EXPENSES AMOUNTING TO RS. 3,56,326/- FOLLOW ING THE SAME REASON AS DONE IN CASE OF DISALLOWANCE OF FUEL HUSK EXPENSES AS DISCUSSED ABOVE. THE AO STATED THAT THIS HAMMALI EXPENSES ARE MOSTLY SUPPOR TED WERE INTERNAL VOUCHERS AND THE SAME CANNOT BE CONSIDERED AS EVIDE NCE IN SUPPORT OF SUCH EXPENSES. 3.1 BEING AGGRIEVED THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A) AND SUBMITTED THAT THE ASSESSEE HAS MAINTAIN ED ALL VOUCHERS IN RESPECT OF THE PAYMENT MADE ON ACCOUNT OF HAMMALI EXPENSES. 3.2 THE LD. CIT(A) AFTER CONSIDERING THE ASSESSEES SUBMISSION HAS PARTLY ALLOWED THE ASSESSEES CLAIM AND RESTRICTED THE DIS ALLOWANCE TO RS. 1 LAC OUT OF RS. 3,56,326/- DISALLOWED BY THE A.O. THE RELEVAN T FINDINGS OF THE LD. CIT(A) IS AS UNDER: AS I HAVE POINTED OUT IN DISCUSSION RELATED TO GRO UND NO.1 ABOVE, THE AO HAS RESORTED TO MAKING THE ADDITION BASED ON CASE LAW O F TRANSPORT CORPORATION OF INDIA (256 ITR 701) BUT THE FACTS OF THE ABOVE CITE D CASE ARE NOT APPLICABLE IN THE CASE OF THE ASSESSEE SINCE THE ABOVE CASE LAW DEALS WITH PAYMENT OF SECRET COMMISSION CONSIDERED AS ILLEGAL PAYMENTS IN THAT CASE. IN THE ASSESSEES OWN CASE FOR THE PRECEDING YEAR IN APPE AL NO. 84/14-15, I HAVE DECIDED THE ISSUE PARTLY IN FAVOUR OF THE ASSESSEE. IT IS SEEN THAT NO INDEPENDENT VERIFICATION WAS CARRIED OUT BY THE AO TO JUSTIFY HIS ACTION. HE JUST ARRIVED AT SOME ADHOC CONCLUSION AND BASED HIS DISA LLO3WANCE ON A CASE LAW WITH DISSIMILAR FACTS INVOLVED. IF HE WERE TO FOLL OW THIS LOGIC, WHY HE ACCEPTED 95% OF THE SAID EXPENSES AND DISALLOWED ONLY 5% IS THE QUESTION THAT REMAINS UNANSWERED IN THE ASSESSMENT ORDER. UNDER THE CIR CUMSTANCES, THE AOS ESTIMATION IS NOT BACKED BY EITHER ANY LOGICAL REA SONING OR FACTUAL VERIFICATION. ITA NO.940/JP/16 ACIT, CIRCLE-1, KOTA VS. M/S M/S SHIV EDIBLES LIMITED , KOTA 6 AT THE SAME TIME THE ASSESSEES MAINTENANCE OF EXPE NSE DETAILS WAS ALSO NOT FOUND TO BE FULLY SATISFACTORY. IN A TOTALITY OF FACTS AND CONSIDERING THAT THERE C OULD BE POSSIBILITY OF CERTAIN EXPENSES IN THIS HEAD NOT BEING PROPERLY SUPPORTED WITH THE REQUIRED ADDITIONAL EVIDENCES, THE DISALLOWANCE MADE BY THE AO IS RESTRICTED TO RS. 1 LAC. THE BALANCE AMOUNT OF RS. 2,56,326/- IS DIRECT ED TO BE DELETED. THIS GROUND OF APPEAL IS TREATED AS PARTLY ALLOWED. 3.3 DURING THE COURSE OF HEARING THE LD. AR REITERA TED ITS SUBMISSION MADE BEFORE THE LD. CIT(A) AND SUBMITTED THAT PERCENTAGE OF HAMMALI EXPENSES WITH RESPECT TO THE TURNOVER THIS YEAR IS 0.188% WHICH IS COMPARABLE TO THE PERCENTAGE OF LAST YEAR AT 0.193% IN A.Y. 2011-12. 3.4 THE LD. DR IS HEAR WHO HAS RELIED ON THE ORDER OF THE A.O. 3.5 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE HAVE GONE THROUGH THE ORDER OF THE L D. CIT(A) GIVEN THAT THE ADDITION HAS BEEN MADE AGAINST ON PURELY ADHOC BASI S WITHOUT HIGHLIGHTING AS A SPECIFIC DEFECT IN THE CLAIM OF THE CASE, WE DO N OT SEE ANY INFIRMITY IN THE ORDER OF LD. CIT(A) WHO HAS RESTRICTED A DISALLOWAN CE TO RS. 1 LAC. HENCE WE HEREBY CONFIRMED THE ORDER OF THE LD. CIT(A). 4. IN GROUND NO.3 THE AO HAS DISALLOWED 5% OF THE L OADING VEHICLE EXPENSES AMOUNTING TO RS. 37,172/-. THE LD. CIT(A) HAS DELETED THE SAID ADDITION FOLLOWING HIS ORDER FOR A.Y. 2011-12 WHICH IS NOT IN APPEAL BY THE REVENUE, WE ACCORDINGLY DO NOT SEE ANY INFIRMITY IN THE FINDINGS OF THE LD. CIT(A) WHICH IS REPRODUCED AS UNDER: AS I HAVE POINTED OUT IN DISCUSSION, RELATED TO GRO UND NO.1 ABOVE, THE AO HAS RESORTED TO MAKING ADDITION BASED ON THE CASE LAW OF TRANSPORT CORPORATION OF ITA NO.940/JP/16 ACIT, CIRCLE-1, KOTA VS. M/S M/S SHIV EDIBLES LIMITED , KOTA 7 INDIA BUT THE FACTS OF THE ABOVE SAID CASE ARE NOT APPLICABLE IN THE CASE OF THE ASSESSEE SINCE THE ABOVE CASE LAW DEALS WITH PAYMEN T OF SECRET COMMISSION CONSIDERED AS ILLEGAL PAYMENTS IN THAT CASE. IN THE PRECEDING YEAR, IN THE ASSESSEES OWN CASE IN APPEAL NO. 84/14-15, I HAVE DECIDED THE SAME IN FAVOUR OF THE ASSESSEE. SINCE IT IS SEEN THAT NO I NDEPENDENT VERIFICATION WAS CARRIED OUT BY THE AO TO JUSTIFY HIS ACTION AND HI S ESTIMATION IS NOT BACKED BY EITHER ANY LOGICAL REASONING OR FACTUAL VERIFICATIO NS, THE ADDITION OF THE AMOUNT OF RS. 37,172/- IS ACCORDINGLY DIRECTED TO BE DELET ED. THIS GROUND OF APPEAL IS TREATED AS ALLOWED. 5. REGARDING GROUND NO.4 WHEREIN THE REVENUE HAS CH ALLENGED IN DELETING THE ADDITION OF RS. 5,64,138/- MADE U/S 36(1)(VA) O N ACCOUNT OF LATE PAYMENT OF EMPLOYEES CONTRIBUTION TO P.F. 5.1 THE DECISION OF HONBLE RAJASTHAN HIGH COURT IN THE CASE OF CIT VS. UDAIPUR DUGDH UDPADAK SAHKARI SANGH LTD. (366 ITR 1 63) HAS HELD THAT SINCE THE ASSESSEE HAS PAID EMPLOYEES CONTRIBUTION TOWAR DS PF BEFORE THE DUE DATE OF FILING OF THE RETURN THE SAME IS ALLOWABLE U/S 43B OF THE IT ACT. THE HONBLE HIGH COURT HAS HELD IN ITS DECISION THAT WHETHER EM PLOYEE AND EMPLOYEES CONTRIBUTION ARE PAID BEFORE THE DUE DATE OF FILING OF THE RETURN OF INCOME U/S 133(9) NO DISALLOWANCE CAN BE MADE U/S 43B OR U/S 36(1)(VA). IN THE INSTANT CASE IT IS NOT IN DISPUTE THAT THE SUBJECT PAYMENT S HAVE BEEN MADE BEFORE 30.09.2012 BEING THE DUE DATE OF FILING OF THE RETU RN OF INCOME U/A 139 OF THE ACT. IN THE RESULT RESPECTFULLY FOLLOWING THE DECI SION OF HONBLE RAJASTHAN HIGH COURT WE CONFIRM THE ORDER OF THER LD. CIT(A) AND T HE GROUND TAKEN BY THE REVENUE IS DISMISSED. IN THE RESULT THE APPEAL FILED BY THE REVENUE IS D ISMISSED. ITA NO.940/JP/16 ACIT, CIRCLE-1, KOTA VS. M/S M/S SHIV EDIBLES LIMITED , KOTA 8 ORDER PRONOUNCED IN THE OPEN COURT ON 21/0 2/2017. SD/- SD/- (KUL BHARAT ) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER JAIPUR DATED:- 21/02/2017 VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- THE ACIT, CIRCLE-1, KOTA 2. IZR;FKHZ@ THE RESPONDENT- M/S SHIV EDIBLES LTD. KOTA 3. VK;DJ VK;QDR@ CIT , KOTA 4. VK;DJ VK;QDRVIHY@ THE CIT(A) KOTA 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO. 940/JP/2016) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR.