M/s. Shree Durga Rice Mills, Sambalpur V. DCIT, Circle-1(1), Sambalpur, Sambalpur

ITSSA 1/CTK/2013

• Counselvise Citation: [2017] 122 COUNSELVISE.COM (IT) 3022 (ITAT-CUTTACK)
• Duration Of Justice: 3 year(s) 10 month(s) 25 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 17-02-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 14-02-2017
• Assessment Year: 2002-2003
• Appeal Filed On: 22-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business expenditure

Judgement Text

2 IT(SS)A NO. 1 TO 4 /CTK/2013 ASSESSMENT YEARS:2002 - 03 TO 2005 - 06 2003 - 04, RS.1,50,000/ - IN A.Y. 2004 - 05 AND RS.1 ,00,000/ - IN A.Y. 2005 - 06 UNDER THE HEAD PURCHASE OF GUNNY BAGS. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD. IN THE INSTANT CASE, THE ASSESSEE IS IN THE BUSINESS OF MANUFACTURING OF TRADING IN PADDY AND RICE. THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS CLAIMED PURCHASE OF GUNNY BAGS OF RS.27,38,885/ - IN A.Y. 2002 - 03, RS.24,79,087/ - IN A.Y. 2003 - 04, RS .33,04,477/ - IN A.Y. 2004 - 05 AND RS.17,02,465/ - IN A.Y. 2005 - 06. HE OBSERVED THAT OUT OF ABOVE PURCHASES, THE ASSESSEE HAS PAID IN CASH OF RS.2,69,500/ - IN A.Y. 2002 - 03, RS.2,30,739/ - IN A.Y. 2003 - 04, RS.10,71,950/ - IN A.Y. 2004 - 05 AND RS.3,61,230/ - IN A .Y. 2005 - 06. THE ASSESSING OFFICER OBSERVED THAT THE PRINTED BILLS AND VOUCHERS WERE NOT PRODUCED BEFORE HIM. THEREFORE, HE MADE AN ESTIMATED DISALLOWANCE OF RS.1,00,000/ - IN A.Y. 2002 - 03, RS.1,00,000/ - IN A.Y. 2003 - 04, RS.1,50,000/ - IN A.Y. 2004 - 05 AND RS.1,00,000/ - IN A.Y. 2005 - 06. 4. ON APPEAL BEFORE THE CIT(A), THE ASSESSEE SUBMITTED THAT THE ASSESSING OFFICER FAILED TO POINT OUT EVEN A SINGLE PURCHASE BEING UNVOUCHED AND UNVERIFIABLE IN NATURE WHILE MAKING AN ADHOC DISALLOWANCE OUT OF TOTAL CASH PURC HASES. HE RELIED ON THE DECISION OF JODHPUR BENCH OF THIS TRIBUNAL IN THE CASE OF OP PRAKASAH JOSHI VS ITO, 123 TTJ 246 (JODH) AND SUBMITTED THAT THE DISALLOWANCE WAS NOT WARRANTED AND, THEREFORE, SHOULD BE DELETED. 4 IT(SS)A NO. 1 TO 4 /CTK/2013 ASSESSMENT YEARS:2002 - 03 TO 2005 - 06 NOT GENUINE OR BOGUS OR THE COST OF OLD GUNNY BAGS HAS BEEN INFLATED BY THE ASSESSEE IN ORDER TO REDUCE HIS INCOME. THE DISALLOWANCE HAS BEEN MADE ONLY ON SUSPICION AS THE PAYMENTS FOR THE PURCHASES ARE MADE BY THE ASSESSEE IN CASH. HE SUBMI TTED THAT SUSPICION HOWS OEVER GRAVE CANNOT TAKE PLACE OF PROOF. FURTHER, HE SUBMITTED THAT THE DISALLOWANCES HAVE BEEN MADE ON ADHOC BASIS OUT OF THE TOTAL PURCHASES OF OLD GUNNY BAGS MADE BY THE ASSESSEE. THE ASSESSING OFFICER HAS NOT POINTED OUT FOR WH ICH OF THE SPECIFIC PURCHASES EITHER VOUCHERS ARE NOT MAINTAINED BY THE ASSESSEE OR THE PURCHASE IS NOT VERIFIABLE. WITHOUT DOING SO, NO ADHOC DISALLOWANCE OUT OF GENUINE BUSINESS EXPENDITURE CLAIMED BY THE ASSESSEE CAN BE MADE BY THE ASSESSING OFFICER. H ENCE, HE PRAYED THAT THE DISALLOWANCE MADE SHOULD BE DELETED. 8. ON THE OTHER HAND, LD D.R. SUPPORTED THE ORDERS OF LOWER AUTHORITIES AND SUBMITTED THAT IN ABSENCE OF ANY PRINTING BILLS AND VOUCHERS FOR THE PURCHASE OF OLD GUNNY BAGS MAINTAINED BY THE ASSE SSEE, THE DISALLOWANCE MADE SHOULD BE CONFIRMED. 9. WE FIND THAT THE REVENUE HAS NOT POINTED OUT FOR WHICH OF THE SPECIFIC PURCHASES OF OLD GUNNY BAGS BY THE ASSESSEE, VOUCHERS ARE NOT MAINTAINED BY THE ASSESSEE OR VOUCHERS ARE NOT VERIFIABLE. WE FIND THA T THE DISALLO WANCE HAS BEEN MADE ON ESTIMATE BASIS BY THE ASSESSING OFFICER OUT OF TOTAL PURCHASES OF OLD GUNNY BAGS MADE BY THE ASSESSEE. SUCH A DISALLOWANCE CANNOT BE SUSTAINED IN LAW. FURTHER, IT IS NOT THE CASE OF THE