ORIENT TRANSPORT CO., MUMBAI V. ACIT 12(3), MUMBAI

ITA 981/MUM/2009

• Counselvise Citation: [2010] 119 COUNSELVISE.COM (IT) 6115 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-12-2010
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 23-09-2010
• Assessment Year: 2003-2004
• Appeal Filed On: 12-02-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R S SRIVASTAV
• Assessee Lawyers: D M SHAH
• Section: 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES H : MUMBAI BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI RAJENDRA SINGH, ACCOUNTANT MEMBER ITA. NO. 981/MUM/2009 ASSESSMENT YEAR 2003-2004 M/S. ORIENT TRANSPORT CO. MUMBAI 400 001. PAN AAAFO0741L VS. ACIT 12 (3) MUMBAI 400 020. (APPELLANT) (RESPONDENT) FOR APPELLANT : SHRI D.M. SHAH FOR RESPONDENT : SHRI R.S. SRIVASTAV ORDER PER D. MANMOHAN, V.P. 1. IN THIS APPEAL THE ASSESSEE CONTENDS THAT AN AD DITION OF RS.11,52,391/- REFERABLE TO DISALLOWANCE OF EXPENDI TURE ON THE GROUND THAT IT WAS INCURRED IN CASH AND NOT SUPPORTED BY T HIRD PARTY VOUCHERS, IS ARBITRARY AND EXCESSIVE. 2. FACTS IN SHORT ARE THAT ASSESSEE-FIRM IS A REGI STERED CUSTOMS HOUSE AGENT/CLEARING AND FORWARDING AGENT. IN RESPECT OF THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION ASSESSEE DECLARED TOTAL INCOME OF RS.12,31,706/- ON 28-11-2003 ALONG WITH BALANCE SHEET, PROFIT AND LOSS ACCOUNT A ND TAX AUDIT REPORT UNDER SECTION 44AB OF THE ACT. 3. IT IS NECESSARY TO NOTICE HERE THAT A SURVEY AC TION WAS CONDUCTED UNDER SECTION 133A OF THE I.T. ACT ON THE BUSINESS PREMISES OF THE ASSESSEE ON 10 TH AND 11 TH DECEMBER, 2002 WHEREIN THE ASSESSEE DECLARED ADDITIONAL INCOME OF RS.10 LA KHS FOR THE YEAR UNDER CONSIDERATION MAINLY ON ACCOUNT OF THE DIFFER ENCE IN AGENCY COMMISSION, UNEXPLAINED EXPENSES INCURRED IN CASH E TC., THOUGH HIGHER INCOME WAS DECLARED DURING THE COURSE OF SUR VEY ACTION IN 2 RESPECT OF THE PRECEDING YEARS, IN THE YEAR UNDER C ONSIDERATION ONLY A SUM OF RS.10 LAKHS WAS DECLARED AND EVEN SUCH DECLA RATION WAS NOT FOLLOWED UP BY THE ASSESSEE AT THE TIME OF FILING T HE RETURN OF INCOME. THE ASSESSEE WAS THEREFORE, CALLED UPON TO EXPLAIN THE CORRECTNESS OF THE EXPENDITURE INCURRED IN CASH, DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEEDINGS. IN RESPONSE THERETO, IT WAS SUBMITTED THAT THOUGH THE EXPENDITURE WAS NOT SUPPORTED BY THIRD P ARTY VOUCHERS, THEY WERE GENUINE AND INCURRED WHOLLY AND EXCLUSIVE LY FOR THE PURPOSE OF BUSINESS. 4. THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAD DISCLOSED 4% OF GROSS BILLING IN RESPECT OF INPORTS AND 1% OF GROSS BILLING IN RESPECT OF EXPORTS, AS EXPENSES INCURRED IN CASH AND NOT SUPPORTED BY THIRD PARTY VOUCHERS. DURING THE COURS E OF SURVEY ACTION THE ASSESSEE ACCEPTED THE RATIO OF 55 : 45 VIS--VI S IMPORTS EXPORTS OF THE GROSS BILLING. SINCE THE CASH EXPENDITURE WAS N OT SUPPORTED BY THIRD PARTY VOUCHERS AND BOOKS OF ACCOUNTS, BILLS A ND VOUCHERS COULD NOT BE FURNISHED ON THE GROUND THAT THE SAME WERE D ESTROYED DURING THE FLOODS IN 2006 THE ASSESSING OFFICER PROCEEDED TO ARRIVE AT THE UNEXPLAINED DISALLOWABLE PORTION OF CASH EXPENDITUR E AS UNDER : GROSS AGENCY COMMISSION AS PER P & L ACCOUNT RS.4,35,05,338/- GROSS AGENCY COMMISSION RELATING TO EXPORTS (45% OF RS.43505338) RS.1,95,27,402/- GROSS AGENCY COMMISSION RELATING TO IMPORTS (55% OF RS.43505338) RS. 2,39,27,936/- - EXPORTS RS. 1,95,274/- IMPORTS RS. 9,57,117/- ------------------- RS.11,52,391/- ------------------- THE DISALLOWANCE ON ACCOUNT OF CASH EXPENDITURE NOT SUPPORTED BY THIRD PARTY WHICH COMES TO RS.11,52,391/- WHICH IS ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 3 5. BEFORE THE LEARNED CIT(A) THE ASSESSEE MERELY S UBMITTED THAT THE FACTS AND CIRCUMSTANCES OF THE INSTANT CAS E ARE IDENTICAL TO THE FACTS OF THE ASSESSEES OWN CASE FOR THE EARLIE R ASSESSMENT YEARS. HOWEVER, HE DID NOT FURNISH ANY MATERIAL IN SUPPORT OF HIS CONTENTION THAT THE DISALLOWANCE IS EXCESSIVE OR ARBITRARY. UN DER THESE CIRCUMSTANCES, THE LEARNED CIT(A) OBSERVED THAT THE RELIANCE PLACED ON THE APPELLATE ORDER FOR THE EARLIER YEARS IS MISPLA CED. IN THE ABSENCE OF BOOKS OF ACCOUNTS, BILLS AND VOUCHERS THE ADDITION MADE BY THE ASSESSING OFFICER WAS CONFIRMED BY THE LEARNED CIT( A). 6. FURTHER AGGRIEVED, ASSESSEE IS IN APPEAL BEFO RE US. LEARNED COUNSEL ADMITTED THAT EVEN IN THE EARLIER Y EARS SIMILAR DISALLOWANCE WAS MADE AND WAS SUSTAINED BY THE APPE LLATE TRIBUNAL. HE FURTHER RELIED UPON THE SAID ORDER TO SUBMIT THA T DISALLOWANCE IS EXCESSIVE. 7. ON THE OTHER HAND, LEARNED DR SUBMITTED THAT IN THE EARLIER YEARS A HIGHER DISALLOWANCE MADE BY THE ASS ESSING OFFICER WAS CONFIRMED BY THE APPELLATE TRIBUNAL WHEREAS IN THE INSTANT CASE THE ASSESSEE HAS NOT FURNISHED ANY MATERIAL OR EVEN CIR CUMSTANTIAL EVIDENCE TO SUPPORT ITS CONTENTION THAT THE EXPENDI TURE CLAIMED TO HAVE BEEN INCURRED BY THE ASSESSEE IS REASONABLE WI TH REFERENCE TO THE COMMISSION EARNED BY IT AND THUS THE DISALLOWANCE M ADE BY THE ASSESSING OFFICER DO NOT CALL FOR ANY INTERFERENCE. 8. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS AND PERUSED THE RECORD. IN OUR CONSIDERED OPINION, THE ORDER OF THE LEARNED CIT(A) DOES NOT CALL FOR ANY INTERFERENCE. ADMITTEDLY, DURING THE COURSE OF SURVEY ACTION THE ASSESSEE DECLARED C ERTAIN ADDITIONAL INCOME ADMITTING THEREBY THAT CERTAIN EXPENDITURE I NCURRED IN CASH IS NOT SUPPORTED BY THIRD PARTY VOUCHERS. DURING THE C OURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE PLEADED ITS INA BILITY TO FURNISH BOOKS ON THE GROUND THAT BOOKS OF ACCOUNTS, BILLS A ND VOUCHERS WERE DESTROYED DURING THE FLOODS. UNDER THESE CIRCUMSTAN CES, ATLEAST THE 4 ASSESSEE SHOULD HAVE FURNISHED SOME CIRCUMSTANTIAL EVIDENCE TO HIGHLIGHT THAT THE EXPENDITURE INCURRED BY THE ASSE SSEE WAS REASONABLE WITH REFERENCE TO THE TURNOVER AND THE G ROSS COMMISSION EARNED BY IT. NO MATERIAL WHATSOEVER WAS FURNISHED TO SHOW THAT THE EXPENDITURE/DISALLOWANCE OF CASH EXPENDITURE IS ARB ITRARY OR EXCESSIVE. UNDER THESE CIRCUMSTANCES, WE AFFIRM THE ORDER OF THE LEARNED CIT(A) AND DISMISS THE APPEAL FILED BY THE ASSESSEE. PRONOUNCED ACCORDINGLY IN THE OPEN COURT ON 03-12- 2010. SD/- (RAJENDRA SINGH) ACCOUNTANT MEMBER SD/- (D. MANMOHAN) VICE PRESIDENT DATED : 03 RD DECEMBER, 2010 VBP/- COPY TO : 1. M/S. ORIENT TRANSPORT CO. 7/10, BOTAWALA BLDG., 3 RD FLOOR, HORNIMAN CIRCLE, FORT, MUMBAI 400 001. 2. THE ACIT 12 (3), AAYAKAR BHAVAN, M.K. ROAD, MUMB AI 400020. 3. CIT (A)-XII, MUMBAI 4. CIT-XII, MUMBAI 5. DR H BENCH 6. GUARD FILE. BY ORDER TRUE COPY ASSTT. REGISTRAR, ITAT, MUMBAI