Sh. Laxmi Narain Khetan, Noida v. JCIT, Noida

ITA 4083/DEL/2009 | 2005-2006
Pronouncement Date: 04-02-2010 | Result: Allowed

Appeal Details

RSA Number 408320114 RSA 2009
Bench Delhi
Appeal Number ITA 4083/DEL/2009
Duration Of Justice 3 month(s) 27 day(s)
Appellant Sh. Laxmi Narain Khetan, Noida
Respondent JCIT, Noida
Appeal Type Income Tax Appeal
Pronouncement Date 04-02-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted D
Tribunal Order Date 04-02-2010
Date Of Final Hearing 04-02-2010
Next Hearing Date 04-02-2010
Assessment Year 2005-2006
Appeal Filed On 08-10-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D: NEW DELHI BEFORE SHRI C.L. SETHI JUDICIAL MEMBER & SHRI SHAMIM YAHYA ACCOUNTANT MEMBER ITA NO. 4083/DEL/2009 ASSESSMENT YEAR : 2005-06 SHRI LAXMI NARAIN KHETAN A-41 42 SECTOR-2 NOIDA-201201. VS. JCIT NOIDA RANGE NOIDA. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI DINESH GU PTA FCA RESPONDENT BY : MS. GARIMA BHAGAT SR. D.R. O R D E R PER: C.L. SETHI J.M. THE ASSESSEE IS IN APPEAL AGAINST THE ORDER DATED 25.08.2009 PASSED BY THE LD. CIT(A) IN THE MATTER OF AN ASSESSMENT MADE BY T HE A.O. U/S 143(3) OF THE INCOME TAX ACT 1961 (THE ACT) FOR THE ASSESSMENT YEAR 2005-06. 2. THE ONLY ISSUE RAISED BY THE ASSESSEE IN THIS AP PEAL IS AS UNDER:- 1. THE LD. CIT(A) GROSSLY ERRED ON FACTS IN LAW IN SUSTAINING THE ADDITION OF RS. 5 36 200/- MADE BY THE ASSESSING OF FICER OUT OF EXPENDITURE OF RS. 86 27 968/- CLAIMED BY THE APPEL LANT TOWARDS FINISHED GOODS CONVERSION CHARGES. 3. WE HAVE HEARD BOTH THE PARTIES AND HAVE CAREFULL Y GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. 4. IN THE COURSE OF ASSESSMENT PROCEEDINGS IT WAS NOTICED BY THE AO THAT THE ASSESSEE HAS CLAIMED FINISHED GOODS CONVERSION EXPE NSES AT RS. 86 27 968/- AS ITA NO. 4083/DEL/2009 2 AGAINST RS. 1 22 60 350/- CLAIMED IN THE LAST YEAR. THE A.O. ALSO NOTICED THAT ASSESSEE HAS DISCLOSED SALES OF RS. 4 62 24 344/- I N THE CURRENT YEAR IS AGAINST RS. 7 00 39 854/- SHOWN IN THE LAST YEAR. IN THE TERMS OF PERCENTAGE THE FINISHED GOODS CONVERSION EXPENSES WERE WORKED OUT TO BE 18. 66% IN THE CURRENT YEAR AS AGAINST 17.50 OF THE LAST YEAR. IT WAS NOTICED BY THE A.O. THAT AFORESAID EXPENSES INCLUDED DYEING AND PRINTING EXPENSES OF RS. 26.10 LAKHS AND REST OF THE EXPENSES WERE PAID IN CASH. THE A.O. FURTHER POINT OUT THAT DURING THE YEAR UNDER CONSIDERATION THE FINISHED GOODS CONVERSION EXPENS ES INCURRED BY THE ASSESSEE HAVE BEEN INCREASED BY 1.16% AS COMPARING TO THE LA ST YEAR. THE A.O. THEREFORE DISALLOWED THE FINISHED GOODS CONVERSION EXPENSES T O THE EXTENT OF 1.16% OF THE TOTAL SALES SHOWN DURING THE YEAR. HE THEREFORE DISALLOWED THE SUM OF RS. 5 36 200/- AND ADDED THE SAME TO THE ASSESSEES TOT AL INCOME. 5. ON AN APPEAL THE LD. CIT(A) CONFIRMED THE ADDIT ION BY SAYING THAT THE A.O. HAS RIGHTLY DISALLOWED THE EXPENSES AS THE FIN ISHED GOODS CONVERSION EXPENSES HAS INCREASED BY 1.16% AS COMPARED TO THE LAST YEAR AND BY OBSERVING THAT MOST OF THE EXPENSES WERE INCURRED IN CASH AND WERE NOT VERIFIABLE. 6. HENCE THE ASSESSEE IS IN APPEAL BEFORE US. 7. IN THE PRESENT CASE THE ASSESSEE FILED ITS RETU RN OF INCOME ACCOMPANIED BY TAX AUDIT REPORT U/S 44AB OF THE ACT. DURING THE C OURSE OF THE ASSESSMENT PROCEEDINGS THE ASSESSEES COUNSEL APPEARED BEFORE THE A.O. FROM TIME TO TIME AND FURNISHED REPLIES/ DETAILS AS CALLED FOR BY THE A.O. THE A.O. THEN DISCUSSED ITA NO. 4083/DEL/2009 3 THE ISSUE WITH THE ASSESSEES AUTHORIZED REPRESENTA TIVE AND THEN COMPLETED THE ASSESSMENT. IN THE ASSESSMENT THE A.O. HAS NOWHER E POINTED OUT ANY DEFECT OR LACUNA IN THE BOOKS OF ACCOUNT REGULARLY MAINTAINED BY THE ASSESSEE. THE A.O. HAS DISALLOWED THE EXPENSES MERELY BECAUSE OF THE F ACT THAT THE EXPENSES INCURRED DURING THIS YEAR ARE INCREASED BY 1.16% AS COMPARED TO THE EXPENSES CLAIMED IN THE LAST YEAR WITH REFERENCE TO THE TOTAL SALES. TH E A.O. HAS NOT EXAMINED THE DETAILS OF THE EXPENSES AND THEN POINTED OUT ANY OF THE ITEM OF EXPENSES WHICH WERE EITHER SHAME OR BOGUS OR WERE NOT INCURRED FOR THE PURPOSE OF BUSINESS. THE PAYMENTS OF VARIOUS EXPENSES MADE IN CASH ARE NOT I N CONTRAVENTION TO THE PROVISIONS OF SECTION 40A(3) OF THE ACT. THE A.O. HAS NO DOUBTED THE PAYMENT OF EXPENSES MADE IN CASH. IN OTHER WORDS THE A.O. HAS NOT DOUBTED THE FACTS THAT THE PAYMENT PAID TO THE VARIOUS PERSONS TOWARDS EXP ENSES WERE INCURRED BY THE ASSESSEE. THE DISALLOWANCE OF THE EXPENSES HAS BEE N MADE BY THE A.O. PURELY ON HIS ASSUMPTION WHICH IN OUR CONSIDERED OPINION I S IMPROPER AND NOT BASED ON ANY ADEQUATE AND SUFFICIENT MATERIAL. WE THEREFOR E DELETE THE ADDITION AND DIRECT THE A.O. TO MODIFY THE ASSESSMENT ORDER ACCO RDINGLY. RESULTANTLY THE ADDITION OF RS. 5 36 200/- ON ACCOUNT OF DISALLOWAN CE OF EXPENSES MADE BY THE A.O. STANDS DELETED. 8. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ITA NO. 4083/DEL/2009 4 9. THIS DECISION WAS PRONOUNCED IN THE OPEN COURT I MMEDIATELY AFTER THE HEARING WAS OVER ON 4 TH FEBRUARY 2010. SD/- SD/- (SHAMIM YAHYA) ACCOUNTANT MEMBER (C.L. SETHI) JUDICIAL MEMBER DATED: 4 TH FEBRUARY 2010. MAMTA COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ITAT NEW DELHI. BY ORDER DEPUTY REGISTRAR