M/s Avnit Hire Purchase & General Finance (P) Ltd., Meerut v. ACIT, Meerut

CO 358/DEL/2010 | 2007-2008
Pronouncement Date: 04-11-2011 | Result: Dismissed

Appeal Details

RSA Number 35820123 RSA 2010
Assessee PAN AABCA1787G
Bench Delhi
Appeal Number CO 358/DEL/2010
Duration Of Justice 1 year(s) 7 day(s)
Appellant M/s Avnit Hire Purchase & General Finance (P) Ltd., Meerut
Respondent ACIT, Meerut
Appeal Type Cross Objection
Pronouncement Date 04-11-2011
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 04-11-2011
Date Of Final Hearing 03-11-2011
Next Hearing Date 03-11-2011
Assessment Year 2007-2008
Appeal Filed On 27-10-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: A NEW DELHI BEFORE SHRI RAJPAL YADAV JUDICIAL MEMBER AND SHRI SHAMIM YAHYA ACCOUNTANT MEMBER I.T.A NO. 4506/DEL/10 ASSTT. YEAR 2007-08 ASSTT. COMMISSIONER OF INCOME TAX CIRCLE-2 MEERUT. VS. M/S. AVNIT HIRE PURCHASE & GENERAL FINANCE (P) LTD. 15 SHASTRI CHOWK BEGUM PUL MEERUT AABCA1787G (APPELLANT) (RESPONDENT) AND CO NO. 358/DEI/2010 IN ITA NO. 4506/DEL/2010 ASSTT. YEAR 2007-08 M/S. AVNIT HIRE PURCHASE & GENERAL FINANCE (P) LTD. 15 SHASTRI CHOWK BEGUM PUL MEERUT AABCA1787G VS. ACIT CIRCLE-2 MEERUT. (APPELLANT) (RESPONDENT) APPELLANT BY: MRS. SRUJANI MOHANTY SR. DR RESPONDENT BY: SHRI O.P. SAPRA ADVOCATE ITA NO. 4506/DEL/10 ASSTT. YEAR 2007-08 & CO NO. 358/DEL/2010 ASSTT. YEAR 2007-08 2 ORDER PER RAJPAL YADAV JM: THE REVENUE IS IN APPEAL BEFORE US AGAINST THE ORD ER OF LD. CIT(A) DATED 4 TH AUGUST 2010 PASSED FOR ASSTT. YEAR 2007-08. ON RECEIPT OF NOTICE IN THE REVENUES APPEAL ASSESS EE HAS FILED THE CROSS OBJECTION BEARING NO. 358/D/10. 2. IN GROUND NO. 1 REVENUE HAS PLEADED THAT LD. CI T(A) HAS ERRED IN LAW IN REDUCING THE ADDITION TO ` 1 97 376 /- FROM ` 18 24 497/- MADE BY THE AO. THIS GROUND OF APPEAL I S INTERCONNECTED WITH THE SOLITARY GROUND OF APPEAL T AKEN BY THE ASSESSEE IN THE CROSS OBJECTION. IN OTHER WORDS AO HAS MADE AN ADDITION OF `18 24 497/-. LD. CIT(A) CONFIRMED T HE ADDITION OF ` 1 97 376/- AND DELETED THE AMOUNT OF ` 16 27 081/ -. THE REVENUE IS IMPUGNING DELETION OF THE ADDITION AND A SSESSEE IS IMPUGNING PARTLY CONFIRMATION OF THE ADDITION. THER EFORE WE TAKE BOTH THESE GROUNDS TOGETHER. 3. THE BRIEF FACTS ARE THAT ASSESSEE COMPANY AT THE RELEVANT TIME WAS ENGAGED IN THE BUSINESS OF FINANCE AND SEL LING OF WINE. IT HAS FILED ITS RETURN OF INCOME ON 15.11.20 07 DECLARING ITA NO. 4506/DEL/10 ASSTT. YEAR 2007-08 & CO NO. 358/DEL/2010 ASSTT. YEAR 2007-08 3 NIL INCOME. ON SCRUTINY OF THE ACCOUNTS IT REVEALE D TO THE AO THAT ASSESSEE HAS SHOWN PURCHASES OF ` 1 24 74 928/ -. IN THE TCS CERTIFICATE PURCHASES WERE SHOWN AT ` 1 06 50 431/-. THERE WAS DIFFERENCE BETWEEN THE PURCHASES SHOWN IN THE A SSESSEES BOOKS OF ACCOUNTS AND AVAILABLE IN THE TCS CERTIFIC ATE. THE AO ADDED THE DIFFERENCE AT `18 24 497/-. 4. ON APPEAL LD. CIT(A) PARTLY DELETED THE ADDITION MADE BY THE AO. HE HAS REPRODUCED THE SUBMISSIONS MADE BY T HE ASSESSEE ON PAGE NO. 5 AND 6 OF THE IMPUGNED ORDER. HIS FINDING ON PAGE 8 ON THIS ISSUE READ AS UNDER :- APPELLANTS CASE: DURING APPEAL PROCEEDINGS THE APPELLANT CLAIMED TO HAVE FOUND MISPLACED PURCHASE FILE AND HE SUBMITTED TOTAL PARTY-WISE PURCHASES DURING THE YEAR UNDER REFERENC E SHOWING THE PURCHASES AS PER LEDGER AND PURCHASES A S PER THE BILLS AVAILABLE IN THE BILL FILES DIFFERENCE T HEREIN AND PURCHASES AS PER TCS CERTIFICATES AND THE REASON FO R DIFFERENCE. OUT OF THE TOTAL 39 SUPPLIERS THE PURCH ASES AS PER ACCOUNT BOOKS IN THE CASE OF SUPPLIERS TALLIED WITS THE PURCHASES AS PER THE BILLS. IN THE CASES OF 4 PARTI ES WHERE DIFFERENCES WERE THERE IT IS SUBMITTED BY THE APPE LLANT THAT PURCHASE BILLS OF 3 PARTIES TOTALING TO RS. 18 770/- WERE MISSING BUT THE PAYMENTS TO ALL OF THEM WERE MADE THROUGH CHEQUES. IN THE CASE OF ONE PARTY IT IS CLA IMED THAT THE DIFFERENCE OF RS. 1 97 376/- IS ON ACCOUNT OF DOUBLE ENTRIES OF CERTAIN BILLS IN THE ACCOUNT OF T HE SAID PARTY ONCE EXCLUSIVE OF TCS CERTIFICATES AND AGAIN INCLUSIVE OF THE TCS. IT IS FURTHER CLAIMED BY THE APPELLANT ITA NO. 4506/DEL/10 ASSTT. YEAR 2007-08 & CO NO. 358/DEL/2010 ASSTT. YEAR 2007-08 4 THAT THE DIFFERENCE HAS BEEN EMBEZZLED BY THE EMPLO YEES OF THE APPELLANT AND IS ALLOWABLE BUSINESS EXPENDIT URE. AS THE APPELLANT DID FILE THE DETAILS OF PURCHASES FOR THE FIRST TIME DURING APPELLATE PROCEEDINGS AND ALS O CLAIMED TO HAVE FOUND THE MISSING BILLS FILE THE SUBMISSIONS OF THE APPELLANT WERE SENT TO THE AO FO R HER COMMENTS AND REMAND REPORT VIDE THIS OFFICE LETTER DATED 21.5.2010. NO REMAND REPORT WAS RECEIVED. THEREFORE A REMINDER DATED 13.7.2010 WAS SENT. THE AO DID NOT FURNISH THE REMAND REPORT/HER COMMENTS BY 20.7.2010 AS REQUIRED. IN VIEW OF CBDTS ACTION PLAN FOR DISPOSA L OF HIGH DEMAND APPEALS ON PRIORITY BASIS EXERCISING MY POW ERS TO STEP INTO THE SHOES OF THE AO THE APPELLANT WAS DIR ECTED TO PRODUCE THE COMPLETE BOOKS OF ACCOUNT ALONGWITH THE PURCHASE BILL FILES IN SUPPORT OF ITS CLAIM. ON THE GIVEN DATE BILL FILES AND OTHER RELEVANT RECORDS WERE PRODUCED AND TEST CHECKED BY ME AND AFTER CONSIDERING THE MATERI AL ON RECORD I HOLD THAT THE DIFFERENCE IN THE PURCHASES AS PER THE PURCHASE BILLS AND TCS CERTIFICATES IS FULLY EX PLAINED EXCEPT THE DIFFERENCE OF RS. 1 97 376/- WHICH IS C LAIMED BY THE APPELLANT BEING THE AMOUNT EMBEZZLED BY THE EMPLOYEES OF THE APPELLANT. THERE BEING NO FORCE IN SUCH CONTENTION I HEREBY CONFIRM THE ADDITION OF RS. 1 97 376/- AND DELETE THE BALANCE ADDITION AMOUNTING TO RS. 16 27 081/- (CONFIRM RS. 1 97 376/-) (RELIEF RS. 16 27 081/-) 5. BEFORE US LD. DR SUBMITTED THAT LD. CIT(A) HAS ENTERTAINED ADDITIONAL EVIDENCE IN THE SHAPE OF BILLS AND VOUCH ERS AS WELL AS LEDGER ACCOUNT. LD. CIT(A) PROVIDED JUST TWO MONTHS TIME TO THE AO FOR SUBMISSION OF HIS REMAND REPORT. THEREFORE THERE WAS NO PROPER OPPORTUNITY PROVIDED TO THE AO. THE ADDIT IONAL ITA NO. 4506/DEL/10 ASSTT. YEAR 2007-08 & CO NO. 358/DEL/2010 ASSTT. YEAR 2007-08 5 EVIDENCE HAS BEEN ENTERTAINED BY THE LD. CIT(A) IN VIOLATION TO RULE 46A. SHE PREYED THAT ISSUE BE REMITTED BACK TO THE FILE OF AO. ON THE OTHER HAND LD. COUNSEL FOR THE ASSESSEE RELIED UPON THE ORDER OF LD. CIT(A). 6. WE HAVE DULY CONSIDERED THE RIVAL CONTENTION AND GONE THROUGH THE RECORD CAREFULLY. FROM THE PERUSAL OF T HE LD. CIT(A)S FINDING IT REVEALS THAT LD. CIT(A) HAS FI RST GIVEN AN OPPORTUNITY OF HEARING TO THE AO FOR SENDING HIS CO MMENTS ON THE ALLEGED ADDITIONAL EVIDENCE SUBMITTED BY THE AS SESSEE. HOWEVER WHEN AO FAILED TO SUBMIT ANY COMMENTS THEN HE CONSTRUED THIS EVIDENCE AS SUBMITTED UNDER SUB RULE 4 OF RULE 46A. SUB RULE 3 OF RULE 46 A PROVIDE THAT FIRST APP ELLATE AUTHORITY SHALL NOT TAKE INTO ACCOUNT ANY EVIDENCE PRODUCED UNDER SUB RULE 1 UNLESS AO HAS BEEN ALLOWED A REASO NABLE OPPORTUNITY TO EXAMINE THE EVIDENCE OR TO ADDUCE EV IDENCE IN REBUTTAL. THE LD. CIT(A) HAS NOT ENTERTAINED THE EV IDENCE UNDER SUB RULE 1 OF RULE 46A RATHER ENTERTAINED IT UNDER SUB RULE 4 IF THE EVIDENCE IS TAKEN UNDER SUB RULE 4 THEN SUCH EV IDENCE WAS TAKEN BY EXERCISING THE POWERS OF AO. LD. FIRST APP ELLATE AUTHORITY HAS DULY OBSERVED THAT HE DIRECTED THE AS SESSEE TO ITA NO. 4506/DEL/10 ASSTT. YEAR 2007-08 & CO NO. 358/DEL/2010 ASSTT. YEAR 2007-08 6 PRODUCE THE COMPLETE BOOKS OF ACCOUNTS ALONGWITH TH E PURCHASE BILLS IN SUPPORT OF ITS CLAIM AND HE EXAMI NED THOSE DETAILS AS IF THE AO HAD EXAMINED. IN SUCH SITUATIO N IT CANNOT BE SAID THAT NO OPPORTUNITY OF HEARING WAS GIVEN TO TH E AO. LD. FIRST APPELLATE AUTHORITY HAS EXERCISED HIS CO-TERM INUS POWERS OF AO. AFTER EXAMINING THE RECORD LD. CIT(A) HAS R ECORDED THE FINDING OF FACT THAT ASSESSEE IS ABLE TO ESTABLISH THE RECONCILIATION BETWEEN THE ALLEGED ISSUES. THE LD. DR WAS UNABLE TO POINT OUT AS TO HOW THIS FACTUAL FINDING IS INCORRECT. REVENUE HAS NOT PLACED ANY MATERIAL ON THE RECORD O R ANY PAPER BOOK DEMONSTRATING THE FACT THAT MATERIAL CON SIDERED BY THE LD. CIT(A) HAS GOADED HIM ON WRONG CONCLUSION. THUS WE DO NOT FIND ANY MERIT IN THE FIRST GROUND RAISED BY TH E REVENUE IN THIS APPEAL. AS FAR AS THE GROUND RAISED IN THE CRO SS OBJECTION IS CONCERNED LD. COUNSEL FOR THE ASSESSEE SUBMITTED TH AT THIS AMOUNT WAS EMBEZZLED BY ITS EMPLOYEES AND THEREFORE IT SHOULD BE ALLOWED AS DEDUCTION. WE HAVE CONFRONTED THE LD. COUNSEL FOR THE ASESEE TO SHOW US THE MATERIAL EXHI BITING THE EMBEZZLEMENT. WE HAVE ALSO INVITED HIS COMMENTS WHE THER ANY FIR WAS LODGED BY THE ASSESSEE AGAINST THOSE EM PLOYEES. ITA NO. 4506/DEL/10 ASSTT. YEAR 2007-08 & CO NO. 358/DEL/2010 ASSTT. YEAR 2007-08 7 HE WAS UNABLE TO PUT ANY EXPLANATION ON THOSE ISSUE S. THUS TAKING INTO CONSIDERATION THE FINDING OF LD. CIT(A) ON THIS ISUSE ALSO WE DO NOT FIND ANY MERIT IN THE CROSS OBJECTI ON FILED BY THE ASSESSEE. IN THE RESULT GROUND NO. 1 OF THE REVENU ES APPEAL AND THE SOLITARY GROUND OF CROSS OBJECTION ARE REJE CTED. 7. THE NEXT GROUND IN THE REVENUES APPEAL RELATES TO ALLOWABILITY OF BAD DEBTS. IT REVEAL FROM THE RECOR D THAT ASSESSEE HAS CLAIMED A BAD DEBT OF `6 31 108/- AND AO HAS DISALLOWED THE CLAIM ON THE GROUND THAT ASSESSEE FA ILED TO BRING EVIDENCE IN SUPPORT OF ITS CONTENTION THAT DEBT HAS ACTUALLY BECOME BAD. LD. CIT(A) HAS DELETED THE DISALLOWANCE ON THE GROUND THAT SECTION 36(1)(VII) HAS BEEN AMENDED W.E .F. 1.4.89. AFTER THIS AMENDMENT IT IS NOT INCUMBENT UPON THE ASSESSEE TO PRODUCE DEMONSTRATIVE EVIDENCE ON THE RECORD THAT D EBT HAS ACTUALLY BECOME BAD. IF THE ASSESSEE HAS WRITTEN OF F THE AMOUNTS IN THE BOOKS IT IS SUFFICIENT COMPLIANCE. LD. CIT(A) HAS MADE REFERENCE TO THE DECISION OF HONBLE SUPREME C OURT IN THE CASE OF TRF LTD. VS. CIT REPORTED IN 230 CTR PAGE 14. ON DUE CONSIDERATION OF THE FINDING OF LD. CIT(A) WE DO N OT FIND ANY MERIT IN THIS GROUND OF APPEAL IT IS REJECTED. ITA NO. 4506/DEL/10 ASSTT. YEAR 2007-08 & CO NO. 358/DEL/2010 ASSTT. YEAR 2007-08 8 8. IN THE NEXT GROUND OF APPEAL GRIEVANCE OF REVEN UE IS THAT LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF `4 0 284/-. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE HAS DEBIT ED A SUM OF `2 01 422/- ON ACCOUNT OF EXPENSES ON SALARIES ENT ERTAINMENT MISCELLANEOUS EXPENSES AND OFFICE EXPENSES. THE AO HAS DISALLOWED 20% OF SUCH EXPENSES ON THE GROUND THAT SOME OF THE VOUCHERS ARE SELF MADE VOUCHERS. BEFORE LD. CIT (A) IT WAS CONTENDED THAT FOR PETTY EXPENSES IT IS PRACTICALL Y IMPOSSIBLE TO PROCURE PUCCA BILLS / VOUCHERS. THE SELF MADE VO UCHERS SIGNED BY THE STAFF HAVE PRODUCED BY THE ASSESSEE B EFORE THE AO AND IT IS SUFFICIENT COMPLIANCE. LD. CIT(A) ON A N ANALYSIS OF THE DETAILS FOUND THAT THERE IS NO JUSTIFICATION IN THE FINDING OF THE AO FOR MAKING DISALLOWANCE. AO HAS NOT REJECTED THE BOOKS OF ASSESSEE. IT HAS SUBMITTED VARIOUS DETAILS AND S OME OF THE VOUCHERS WERE SELF MADE VOUCHERS KEEPING IN VIEW T HE NATURE OF EXPENSES. LD. FIRST APPELLATE AUTHORITY HAS DELE TED THE DISALLOWANCE. ON DUE CONSIDERATION OF ALL THESE FAC TS AND CIRCUMSTANCES COUPLED WITH VIEW TAKEN BY LD. CIT(A) WE DO NOT FIND ANY MERIT IN THIS GROUND. ITA NO. 4506/DEL/10 ASSTT. YEAR 2007-08 & CO NO. 358/DEL/2010 ASSTT. YEAR 2007-08 9 9. IN THE RESULT APPEAL AS WELL AS CROSS OBJECTION ARE REJECTED. ORDER PRONOUNCED IN THE OPEN COURT ON 4 TH NOVEMBER 2011. - SD/- SD/- [SHAMIM YAHYA] [RAJPAL YADAV] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 4.11.2011 VEENA COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR ITAT TRUE COPY BY ORDER DEPUTY REGISTRAR ITAT