M/s A.B. Motors Pvt. Ltd., Patiala v. ACIT, Patiala

ITA 536/CHANDI/2011 | 2004-2005
Pronouncement Date: 26-09-2011 | Result: Allowed

Appeal Details

RSA Number 53621514 RSA 2011
Assessee PAN AABCA5528M
Bench Chandigarh
Appeal Number ITA 536/CHANDI/2011
Duration Of Justice 4 month(s) 8 day(s)
Appellant M/s A.B. Motors Pvt. Ltd., Patiala
Respondent ACIT, Patiala
Appeal Type Income Tax Appeal
Pronouncement Date 26-09-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted A
Tribunal Order Date 26-09-2011
Date Of Final Hearing 26-09-2011
Next Hearing Date 26-09-2011
Assessment Year 2004-2005
Appeal Filed On 18-05-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES A CHANDIGARH BEFORE SHRI H.L.KARWA HON'BLE VICE PRESIDENT AND SHRI MEHAR SINGH ACCOUNTANT MEMBER ITA NO. 536/CHD/2011 ASSESSMENT YEAR: 2004-05 M/S A.B.MOTORS PVT LTD. VS. THE ACIT PATIALA CIRCLE PATIALA PAN NO. AABCA 5528 M (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI I.V.VERMA RESPONDENT BY : SHRI N.K.SAINI DATE OF HEARING : 26.09.2011 DATE OF PRONOUNCEMENT : 26.09.2011 ORDER PER H.L.KARWA VP THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF CIT(A) PATIALA DATED 11.3.2011 RELATING TO ASSESSM ENT YEAR 2004-05. 2. GROUND NO.3 OF THE APPEAL READS AS UNDER:- 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD.CIT(A) HAS ERRED IN SUSTAINING THE ADDITION OF R S. 1 50 000/- OUT OF ADHOC DISALLOWANCE OF RS. 3 50 00 0/- MADE BY THE ASSESSING OFFICER FROM CERTAIN EXPENSES INCLUDING THE EXPENDITURE ON PROVIDING FREE INSURAN CE AND BUSINESS PROMOTION ETC. ON MERE CONJECTURES AND SURMISES. 2 3. THE BRIEF FACTS OF THE CASE ARE THAT ORIGINAL AS SESSMENT IN THIS CASE WAS COMPLETED U/S 143(3) OF THE INCOME TAX ACT 196 1 (IN SHORT THE ACT) ON TOTAL INCOME OF RS. 42 02 280/- AGAINST DECLARED INCOME OF RS. 35 52 280/- BY MAKING AN ADDITION OF RS. 6 50 000/- AFTER EXAMINING THE BOOKS OF ACCOUNT. SUBSEQUENTLY NOTICE U/S 148 OF THE ACT WAS ISSUED TO THE ASSESSEE AND THE RE-ASSESSMENT WAS MADE ON TOTA L INCOME OF RS. 45 52 280/- AFTER MAKING AN ADHOC DISALLOWANCE OF R S. 3 50 000/- OUT OF EXPENSES ALREADY CONSIDERED AND ALLOWED IN THE ORIG INALS ASSESSMENT. IN THE RE-ASSESSMENT PROCEEDINGS THE ASSESSING OFFIC ER MADE ADDITION OF RS. 3 50 000/- OUT OF EXPENSES CLAIMED BY THE ASSES SEE UNDER THE HEAD FREE INSURANCE SCHEME EXPENSES AND BUSINESS PROMOTI ON EXPENSES ON ACCOUNT OF DISCREPANCIES AND FOR THE REASONS GIVEN IN PARAS 3 & 4 OF THE ASSESSMENT ORDER. 4. ON APPEAL THE CIT(A) RESTRICTED THE DISALLOWANC E TO RS. 1 50 000/- AS AGAINST RS. 3 50 000/- MADE BY THE ASSESSING OFF ICER. THE RELEVANT FINDINGS OF THE CIT(A) ON THIS ISSUE ARE AS UNDER:- 5.4 IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND RIVAL SUBMISSIONS OF BOTH THE ASSESSING OFFICER IN HIS REMAND REPORT AND CONTENTIONS OF THE COUNSEL IT IS SEEN THAT THE ASSESSING OFFICER HAS RIGHTLY MADE ADDITION OF VARI OUS INADMISSIBLE EXPENDITURE IN BOTH THE ACCOUNTS MENTI ONED. HOWEVER IT WOULD BE REASONABLE IT THE DISALLOWANCE OF THIS EXPENDITURE IS RESTRICTED TO RS. 1 50 000/- AGAINST RS. 3 50 000/- DONE BY THE ASSESSING OFFICER. THE ASSE SSING OFFICER IS DIRECTED TO GIVE RELIEF ACCORDINGLY. 5. BEFORE US SHRI I.C. VERMA LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE EXPENSES UNDER BOTH THESE HEADS RELATED TO SALES / SERVICES AND 3 ESPECIALLY THOSE INCURRED ON SPECIAL INSURANCE SCHE ME DIRECTLY RELATED TO THE NUMBER OF VEHICLES SOLD. OTHERWISE TOO THESE EXPENSES WHOLLY AND EXCLUSIVELY RELATE TO THE BUSINESS OF THE ASSESSEE AND WERE CORRECTLY CLAIMED / ALLOWED IN ORIGINAL ASSESSMENT. IN VIE W OF THE ABOVE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE CIT(A) WAS NOT JUSTIFIED IN SUSTAINING THE DISALLOWANCE OF RS. 1 50 000/- UNDER THE ABOVE HEADS. 6. SHRI N.K. SAINI LD. DR FOR THE REVENUE STRONGLY SUPPORTED THE ORDER OF CIT(A). 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE ALS O PERUSED THE MATERIALS AVAILABLE ON RECORD. IT IS HELD THAT WHI LE FRAMING THE ORIGINAL ASSESSMENT NO DISALLOWANCE UNDER THE ABOVE HEADS W AS MADE. EVEN IN THE RE-ASSESSMENT ORDER THE ASSESSING OFFICER HAS NOT POINTED OUT ANY SPECIFIC INSTANCE OF INADMISSIBLE EXPENDITURE OR IN FLATION THEREOF WHICH CAN JUSTIFY HIS ACTION IN MAKING A DISALLOWANCE OF RS. 3 50 000/- ON ADHOC BASIS OF THESE TWO TYPE OF EXPENSES. IN OUR VIEW IT WAS INCUMBENT UPON THE ASSESSING OFFICER WHILE FRAMING THE RE-ASSESSME NT IN WHICH SUCH DISALLOWANCE HAS BEEN MADE TO BRING ON RECORD SOME POSITIVE MATERIAL TO SUPPORT HIS CONCLUSION ALONG WITH EXTENT OF DISALLO WANCE REQUIRED. IN FACT HE ASSESSING OFFICER HAS NOT BROUGHT ANY MATERIAL O N RECORD WHILE MAKING THE DISALLOWANCE IN THE RE-ASSESSMENT ORDER. IN OU R VIEW THE CIT(A) SHOULD HAVE DELETED THE ENTIRE DISALLOWANCE OF THIS EXPENDITURE INSTEAD OF RESTRICTING THE SAME TO RS. 1 50 000/-. WE HOLD TH AT LD. CIT(A) HAS NOT GIVEN ANY COGENT REASONS WHILE RESTRICTING THE DISA LLOWANCE TO RS. 1 50 000/-. AS WE HAVE ALREADY NOTED HEREINABOVE T HAT THE DISALLOWANCE MADE BY THE ASSESSING OFFICER WAS ON ADHOC BASIS AN D THERE IS NO MATERIAL ON RECORD TO SUPPORT THE ACTION OF ASSESSING OFFICE R. CONSIDERING THE 4 ENTIRE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE WE DELETE THE DISALLOWANCE OF RS. 1 50 000/- SUSTAINED BY THE CIT (A). THUS GROUND NO.3 OF THE APPEAL STANDS ALLOWED. 8. VIDE GROUND NOS. 1 & 2 OF THE APPEAL THE ASSESS EE HAS CHALLENGED THE VALIDITY OF REOPENING OF ASSESSMENT U/S 147 / 1 48 OF THE ACT. SINCE WE HAVE DELETED THE DISALLOWANCE OF RS. 1 50 000/- ON MERITS AND THEREFORE WE DO NOT THINK IT NECESSARY TO DECIDE GROUND NOS. 1 & 2 OF THE APPEAL BECAUSE NATURE OF THE SAME IS ACADEMIC. 9. GROUND NO.5 OF THE APPEAL RELATES TO CHARGING OF INTEREST U/S 234B 234C AND 234D OF THE ACT. AT THE TIME OF HEARING SHRI I.C. VERMA LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THIS GROUND OF APPEAL IS CONSEQUENTIAL IN NATURE AND WE HOLD ACCORDINGLY. NO OTHER POINT WAS RAISED OR ARGUED BEFORE US. 10. IN THE ABOVE TERMS THE APPEAL IS TREATED TO BE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 26 TH DAY OF SEPTEMBER 2011. SD/- SD/- (MEHAR SINGH) (H.L.KARWA) ACCOUNTANT MEMBER VICE PRESIDENT DATED : SEPTEMBER 2011 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR 5