ACIT,, Ludhiana v. M/s Waryam Steel Castings Ltd.,, Ludhiana

ITA 253/CHANDI/2010 | 2006-2007
Pronouncement Date: 30-11-2011 | Result: Dismissed

Appeal Details

RSA Number 25321514 RSA 2010
Bench Chandigarh
Appeal Number ITA 253/CHANDI/2010
Duration Of Justice 1 year(s) 8 month(s) 19 day(s)
Appellant ACIT,, Ludhiana
Respondent M/s Waryam Steel Castings Ltd.,, Ludhiana
Appeal Type Income Tax Appeal
Pronouncement Date 30-11-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 30-11-2011
Date Of Final Hearing 30-11-2011
Next Hearing Date 30-11-2011
Assessment Year 2006-2007
Appeal Filed On 11-03-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL:A BENCH: CHA NDIGARH BEFORE SHRI D K SRIVASTAVA AM AND MS. SUSHMA CHOWL A JM ITA NO. 253/CHD/2010 ASSESSMENT YEAR: 2006-07 ACIT C-V V M/S WARYAM STEEL CASTINGS LTD. LUDHIANA. KANGANWAL ROAD VIL. JUGIANA LUDHIANA. PAN: AAACW-1494P APPELLANT BY: SMT. JYOTI KUMARI RESPONDENT BY: NONE DATE OF HEARING : 30.11.2011 DATE OF PRONOUNCEMENT : 30.11.2011 ORDER D K SRIVASTAVA: THE APPEAL FILED BY THE DEPARTMENT IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A) ON 09.12.200 9 DELETING THE DISALLOWANCE OF RS.6 15 000/- MADE BY THE AO. THE DEPARTMENT HAS TAKEN THE FOLLOWING GROUNDS OF APPEAL: 1. THAT THE LD. CIT(A)-II HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.6 15 000/- MADE BY THE AO U/S 40A(2)(B) OF THE INCOME-TAX ACT 1961 IN RESPECT OF SALARY PAID TO DIRECTORS OF THE COMPANY IN THE FORM OF REMUNERATION AND CONSULTATION CHARGES ALTHOUGH THE ASSESSEE FAILED TO FURNISH ANY JUSTIFICATION FOR TH E SAME. 2. THAT THE ORDER OF THE CIT(A)-II BE SET ASIDE AND THAT OF THE AO BE RESTORED. 2. THOUGH NOTICE FOR HEARING WAS SENT NOBODY HAS E NTERED APPEARANCE ON BEHALF OF THE ASSESSEE. 3. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUF ACTURING AND TRADING OF NON-ALLOYS STEEL INGOTS AND TRADING OF C OMMODITIES. IT FILED ITS RETURN OF INCOME ON 27.11.2006 RETURNING TOTAL INCO ME AT RS.8 95 495/-. AFTER PROCESSING THE RETURN WAS TAKEN UP FOR SCRUT INY. ASSESSMENT U/S 143(3) WAS COMPLETED ON 24.12.2008 ASSESSING THE TO TAL INCOME AT RS.15 11 100/- AFTER DISALLOWING A SUM OF RS.6 15 6 00/- WITH THE FOLLOWING OBSERVATIONS : THE ASSESSEE DERIVES INCOME FROM MFG. AND TRADING OF NON- ALLOYS STEEL INGOTS AND TRADING OF COMMODITIES. AS PER ANNEXURE-D TO REPORT U/S 44AB IT IS REPORTED THAT THE ASSESSEE ALSO PAID DIRECTORS REMUNERATION OF RS.3 15 600/- TO SMT.RAGINI GUPTA AND CONSULTANCY CHARGES OF RS.3 00 000/- TO ITA 253 /CHD/2010 M/S WARYAM STEEL CASTINGS LDH 2 SHRI ATUL GUPTA BEING PERSONS SPECIFIED U/S 40A(3)( B). VIDE QUESTIONNAIRE DATED 15.12.2008 THE ASSESSEE WAS SPE CIFICALLY ASKED TO EXPLAIN WHY PAYMENTS MADE TO BOTH OF THEM BE NOT DISALLOWED AND ADDED BACK BEING INADMISSIBLE AS UNSUBSTANTIATED. IN RESPONSE THE ASSESSEE ONLY FI LED COPIES OF RELEVANT RETURNS OF INCOME OF SMT.RAGINI GUPTA AND SHRI ATUL GUPTA BUT NEITHER FURNISHED ANY EXPLANATION NOR EVI DENCE TO THIS EFFECT. SIMPLY INCOME HAS BEEN SHOWN BY THEM D OES NOT ABSOLVE THE ASSESSEE TO HAVE DISCHARGED THE ONUS TH AT LAY UPON IT TO PROVE THE GENUINENESS OF TRANSACTIONS. THUS C ONSIDERING BOTH THE CLAIMS AMOUNTING TO RS.6 15 000/- (315600+ 300000) ARE TREATED AS UNEXPLAINED AND INGENUINE AND AS SUC H DISALLOWANCE OF THE LIKE AMOUNT OF RS.6 15 600/- IS HEREBY MADE AND ADDED BACK TO ITS TOTAL INCOME ALSO TREATI NG THE ASSESSEE TO HAVE FURNISHED INACCURATE PARTICULARS T HEREOF TO THIS EXTENT. 4. ON APPEAL THE LD. CIT(A) HAS DELETED THE IMPUGN ED DISALLOWANCE WITH THE FOLLOWING OBSERVATIONS : I HAVE CAREFULLY CONSIDERED THE CONTENTION OF THE LD. COUNSEL FOR THE APPELLANT AND PERUSED THE RELEVANT RECORD. THOUGH BOTH THE PERSONS I.E. SMT.RAGINI GUPTA AND SHRI ATU L GUPTA ARE THE PERSONS AS SPECIFIED U/S 40A(2)(B) OF THE ACT THE DISALLOWANCE AS PER BOTH THESE GROUNDS OF APPEAL HA S NOT BEEN MADE UNDER THE PROVISIONS OF THAT SECTION. THE AO H AS MADE THIS DISALLOWANCE CONSIDERING THAT THE GENUINENESS OF THE TRANSACTIONS HAS NOT BEEN PROVED BY THE APPELLANT. HOWEVER I AM INCLINED TO AGREE WITH THE LD. COUNSEL THAT THE ACTION OF THE AO IN DISALLOWING THESE EXPENSES CANNOT BE HELD TO BE JUSTIFIED. SHOWING THESE AMOUNTS IN THE RESPECTIVE RETURNS OF INCOME BY BOTH THE ABOVE MENTIONED PERSONS IN MY OPINION IS QUITE AN IMPORTANT EVIDENCE IN SUPPORT OF THE CLAIM OF THE A PPELLANT. THE AO HAS SOMEHOW DISMISSED THE SAME NOT ON VERY V ALID GROUNDS. FURTHER AS BROUGHT OUT IN THE WRITTEN SUBM ISSIONS OF THE LD. COUNSEL SMT.RAGINI GUPTA HAS BEEN PAID THE SALARY AS DIRECTOR FOR VARIOUS SERVICES BROUGHT OUT IN THE WR ITTEN SUBMISSIONS. FURTHER SHRI ATUL GUPTA IS ALSO SHOWN TO HAVE BEEN PAID THE CONSULTANCY CHARGES ON ACCOUNT OF HIS EXPERIENCE AND KNOWLEDGE ABOUT THE QUALITY OF RAW MATERIAL. AM OUNTS PAID BY THE APPELLANT TO BOTH THESE PERSONS CONSIDERING THE LEVEL OF SALARIES ETC. BEING PAID PRESENTLY BY VARIOUS COMPA NIES DO NOT ITA 253 /CHD/2010 M/S WARYAM STEEL CASTINGS LDH 3 APPEAR TO BE EXCESSIVE OR UNREASONABLE. TAKING INTO ACCOUNT THAT FACT AND FURTHER CONSIDERING THAT BOTH THESE P ERSONS HAVE DULY PAID THEIR TAXES ON THESE AMOUNTS IN THEIR RES PECTIVE HANDS I DO NOT THINK IF THE ADDITION MADE BY THE A O WAS JUSTIFIED AT ALL. THE ADDITION OF RS.615000/- MADE BY THE AO IS THEREFORE DELETED AND THESE GROUNDS OF APPEAL OF T HE APPELLANT ARE THEREFORE ALLOWED. 5. IN THIS VIEW OF THE MATTER THE APPEAL FILED BY THE DEPARTMENT IS BEING DISPOSED OF ON MERITS EX-PARTE QUA THE ASSESS EE. 6. WE HAVE HEARD LD. DR AND ALSO PERUSED THE MATERI ALS AVAILABLE ON RECORD. THE LD. CIT(A) HAS CORRECTED EVALUATED THE FACTS AND CIRCUMSTANCES OF THE CASE WHILE DELETING THE IMPUGN ED ADDITION. THE DEPARTMENT HAS NOT BEEN ABLE TO REBUT THE FINDINGS GIVEN AND THE REASONS RECORDED BY THE CIT(A) FOR DELETING THE IMP UGNED ADDITION. IN THIS VIEW OF THE MATTER APPEAL FILED BY THE DEPART MENT IS DISMISSED. 7. APPEAL FILED BY THE DEPARTMENT IS DISMISSED. ORDER PRONOUNCED ON 30 TH NOV. 2011. SD/- SD/- (SUSHMA CHOWLA) (D K SRI VASTAVA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 30 TH NOV. 2011 POONAM COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT 5. THE D.R INCOME-TAX DEPARTMENT CHANDIGARH ASSISTANT REGISTRAR ITAT CHANDIGARH