DCIT, Kanpur v. M/s. Yog International Pvt. Ltd., Kanpur

ITA 696/LKW/2010 | 2003-2004
Pronouncement Date: 23-03-2011 | Result: Dismissed

Appeal Details

RSA Number 69623714 RSA 2010
Bench Lucknow
Appeal Number ITA 696/LKW/2010
Duration Of Justice 3 month(s) 27 day(s)
Appellant DCIT, Kanpur
Respondent M/s. Yog International Pvt. Ltd., Kanpur
Appeal Type Income Tax Appeal
Pronouncement Date 23-03-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 23-03-2011
Date Of Final Hearing 21-03-2011
Next Hearing Date 21-03-2011
Assessment Year 2003-2004
Appeal Filed On 26-11-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B : LUCKNOW BEFORE SHRI H. L. KARWA HONBLE VICE PRESIDENT AND SHRI N. K. SAINI ACCOUNTANT MEMBER I.T.A. NO.696/LKW/10 ASSESSMENT YEAR: 2003-2004 DY. C.I.T. VS. M/S YOG INTERNATIONAL PVT. LTD CENTRAL CIRCLE-1 123/1-F KALPI ROAD KANPUR. KANPUR. PAN:AAACY0486D (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI VIVEK MISHRA CIT D. R. RESPONDENT BY: S/SHRI ASHWNI KUMAR & SUDHINDRA JAIN C.A. ORDER PER N. K. SAINI: THIS APPEAL HAS BEEN FILED BY THE DEPARTMENT AGAIN ST THE ORDER DATED 01/09/2010 OF CIT(A)-I KANPUR RELATING TO AS SESSMENT YEAR 2003- 2004. IN THIS APPEAL THE DEPARTMENT HAS RAISED THE FOLLOWING GROUNDS: 1. THE CIT (A) ERRED IN DELETING THE ADDITION OF ` 7 LAKHS BEING THE ADDITION ON ACCOUNT OF UNEXPLAINED LOAN O N A WRONG APPRECIATION OF LAW AND WITHOUT ANY BASIS SUBSTITUTING HIS OWN SATISFACTION IN PLACE OF AO'S SATISFACTION THAT ASSESSEE HAS NOT DISCHARGED HIS O NUS AS PROVIDED U/S 68 OF THE I.T. ACT. THE CIT (A) HAS NOT POINTED OUT ANY FACT WHICH COULD INDICATE THAT AO'S SATISFACTION WAS BASED ON ANY WRONG APPRECIATION OF FACTS. 2 2. CIT (A) ALSO ERRED IN ALLOWING RELIEF TO THE EXT ENT OF 75% OF ADDITION MADE BY AO ON AD HOC BASIS ON ACCOUNT O F TRAVELING EXPENSES BROKERAGE AND COMMISSION TANKE R RUNNING EXPENSES PROFESSIONAL CHARGES AND TELEPHON E EXPENSES TOTALING TO ` 2 38 014/- ON A WRONG APPRECIATION OF FACT AND WITHOUT ANY REASONABLE BAS IS BY INTERFERING WITH THE DECISION / DISCRETION OF THE A O WHICH HE HAD EXERCISED AS THE ASSESSEE WAS NOT ABLE TO ESTABLISH THE GENUINENESS OF THESE EXPENSES. 3. THAT THE ORDER OF THE LD. CIT (A) BEING ERRONEOU S IN LAW AND ON FACTS BE VACATED AND THE ORDER OF THE AO BE RESTORED. 4. THAT THE APPELLANT CRAVES LEAVE TO AMEND ANYONE OR MORE OF THE GROUNDS OF THE APPEAL AS STATED ABOVE AS AND WHEN NEED FOR DOING SO MAY ARISE. 2. FIRST ISSUE VIDE GROUND NO. 1 RELATES TO THE DELETI ON OF ADDITION OF ` 7 00 000/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNEXPLAINED LOAN. 3. THE FACTS RELATED TO THIS ISSUE IN BRIEF ARE T HAT A SEARCH & SEIZURE OPERATION U/S 132(1) OF THE I.T. ACT 1961 (IN SHOR T THE I.T. ACT) WAS CONDUCTED ON 01/12/2004 AT THE BUSINESS AND RESIDEN TIAL PREMISES OF SHRI AMAR NATH GUPTA GROUP OF CASES TO WHICH THE ASSESS EE BELONGS. DURING THE COURSE OF SEARCH LOOSE PAPERS RELATING TO ASSE SSEE WERE FOUND. ACCORDINGLY NOTICE DATED 16/10/2006 U/S 153C OF I. T. ACT WAS ISSUED AND SERVED UPON THE ASSESSEE TO FILE ITS RETURN OF TOTA L INCOME FOR THE 3 ASSESSMENT YEAR UNDER CONSIDERATION. IN RESPONSE T O THAT THE ASSESSEE STATED THAT THE REGULAR RETURN FILED U/S 139 OF THE I.T. ACT MAY BE TREATED AS FILED IN COMPLIANCE TO NOTICE U/S 153C OF THE I.T. ACT. THE REGULAR RETURN WAS FILED BY THE ASSESSEE ON 28/11/2003 DISCLOSING TOTAL INCOME OF ` 9 26 100/-. THE ASSESSING OFFICER HOWEVER COMPLET ED THE ASSESSMENT AT AN INCOME OF ` 23 62 470/- BY MAKING CERTAIN ADDITIONS. THE ASSES SING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDING S NOTICED THAT THE ASSESSEE HAD ACCEPTED THE LOANS AS UNDER: S.NO. NAME OF LENDER AMOUNT( ` ) 1. M/S PETRO CHEMICALS & CHEMICALS 2 00 000 2. VIMAL KUMAR SHARMA 5 00 000 3. M/S SHIVAM INDUSTRIES 1 65 000 TOTAL 8 65 000 3.1 THE ASSESSING OFFICER REQUIRED THE ASSESSEE TO FILE CONFIRMATIONS IN RESPECT OF THE LOANS RECEIVED WITH FULL DETAILS REG ARDING POSTAL ADDRESS AND ASSESSMENT DETAILS. THE ASSESSEE WAS ALSO REQUIRED TO PROVE THE CREDITWORTHINESS OF THE PARTIES FROM WHOM LOANS HAD BEEN TAKEN. ACCORDING TO THE ASSESSING OFFICER THE ASSESSEE DI D NOT FURNISH ANY DOCUMENTARY EVIDENCE TO PROVE THE ALLEGED LOANS. H E THEREFORE MADE THE ADDITION OF ` 8 65 000/- TREATING THE SAME AS UNEXPLAINED/UNPROVE D CASH CREDIT. 4 4. BEING AGGRIEVED THE ASSESSEE CARRIED THE MATTER TO THE LEARNED CIT (A) AND DID NOT PRESS FOR ADDITION OF ` 1 65 000/- RELATING TO THE LOAN FROM M/S SHIVAM INDUSTRIES. WITH RESPECT TO OTHER CREDI TORS THE ASSESSEE EXPLAINED AS UNDER: THE CONFIRMATION OF M/S PETROCHEMICALS & CHEMICALS ` 2 00 000/- AND SHRI VIMAL KUMAR SHARMA ` 5 00 000/- WERE SUBMITTED AS ADDITIONAL EVIDENCES VIDE SEPARATE APP LICATION FILED UNDER RULE 46A OF THE I.T. ACT 1961 DATED 2 3/11/2007. BOTH THESE PERSONS ARE REGULAR INCOME TAX PAYERS. 4.1 THE LEARNED CIT (A) ASKED THE REMAND REPORT ON THE SUBMISSIONS OF THE ASSESSEE FROM THE ASSESSING OFFICER WHO VIDE R EPORT DATED 24/10/2010 CONFIRMED THAT THE CREDIT ENTRIES WITH R ESPECT TO ` 5 00 000/- AND ` 2 00 000/- WERE VERIFIABLE. 4.2 THE LEARNED CIT(A) AFTER CONSIDERING THE SUBMI SSIONS OF THE ASSESSEE AND THE REMAND REPORT OF THE ASSESSING OF FICER OBSERVED THAT THE DOCUMENTS FILED BY THE ASSESSEE ON THE ISSUE OF UNSECURED LOANS OF ` 7 00 000/- REVEALED THAT THE LENDERS WERE ASSESSED TO TAX HAD FILED CONFIRMATION AND TRANSACTION WAS THROUGH BANK ACCOU NT. THEREFORE THERE WAS NO BASIS FOR NOT ACCEPTING THE TRANSACTION. HE ACCORDINGLY DELETED THE ADDITION OF ` 7 00 000/-. NOW THE DEPARTMENT IS IN APPEAL. 5 5. THE LEARNED D. R. SUPPORTED THE ORDER OF THE ASS ESSING OFFICER AND SUBMITTED THAT ALTHOUGH IDENTITY OF THE CREDITORS A ND THE GENUINENESS OF THE TRANSACTION WAS PROVED BUT CREDITWORTHINESS REMAINE D UNPROVED THEREFORE THE LEARNED CIT (A) WAS NOT JUSTIFIED IN DELETING T HE ADDITION MADE BY THE ASSESSING OFFICER. 6. IN HIS RIVAL SUBMISSIONS THE LEARNED COUNSEL FO R THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORIT IES BELOW AND FURTHER SUBMITTED THAT THE ASSESSING OFFICER CONDUCTED THE ENQUIRIES WITH RESPECT TO THE CREDITORS UNDER CONSIDERATION AND VERIFIED F ROM THE CONFIRMATORY LETTER COPY OF ACCOUNT BANK ACCOUNT AND COPIES OF INCOME TAX RETURNS THAT THE PARTIES HAD MADE THE TRANSACTION THROUGH C HEQUE AND THAT THE DOCUMENTS WERE VERIFIABLE THEREFORE THE ASSESSING OFFICER AFTER BEING FULLY SATISFIED STATED IN HIS REMAND REPORT THAT T HE CREDIT ENTRIES WITH RESPECT TO ` 5 00 000/- AND ` 2 00 000/- WERE VERIFIABLE. ONLY THEREAFTER THE LEARNED CIT (A) DELETED THE ADDITION BECAUSE THE AS SESSING OFFICER WAS FULLY SATISFIED. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND CAR EFULLY GONE THROUGH THE MATERIAL AVAILABLE ON THE RECORD. IN TH E PRESENT CASE IT APPEARS THAT THE ASSESSING OFFICER IN HIS REMAND R EPORT CATEGORICALLY 6 STATED THAT THE IMPUGNED AMOUNT RECEIVED BY THE ASS ESSEE AS LOANS WERE VERIFIABLE. THE LEARNED CIT (A) CATEGORICALLY STAT ED THAT THE LENDERS WERE ASSESSED TO TAX HAD FILED CONFIRMATION AND TRANSAC TIONS WERE THROUGH BANKING CHANNEL. WHEN THE ASSESSING OFFICER HIMSEL F WAS SATISFIED THERE WAS NO OCCASION TO MAKE THE ADDITION THEREFORE TH E ADDITION WAS WITHOUT ANY BASIS AND THE LEARNED CIT (A) WAS FULLY JUSTIFI ED IN DELETING THE SAME. WE DO NOT SEE ANY INFIRMITY IN THE ORDER OF THE LEA RNED CIT (A) ON THIS ISSUE. 8. THE NEXT ISSUE VIDE GROUND NO. 2 RELATES TO TH E PART RELIEF ALLOWED BY THE LEARNED CIT (A) OUT OF AD HOC DISALLOWANCE M ADE BY THE ASSESSING OFFICER OUT OF EXPENSES. 9. THE FACTS RELATED TO THIS ISSUE IN BRIEF ARE T HAT THE ASSESSING OFFICER DURING THE ASSESSMENT PROCEEDINGS NOTICED THAT THE ASSESSEE INCURRED A SUM OF ` 10 73 520/- ON ACCOUNT OF TELEPHONE EXPENSES. HE DISALLOWED 10% CONSIDERING THE SAME FOR NON BUSINES S PURPOSES. ACCORDINGLY DISALLOWANCE OF ` 1 07 352/- WAS MADE. THE ASSESSING OFFICER ALSO DISALLOWED A SUM OF ` 2 10 000/- ON ESTIMATE BASIS OUT OF THE FOLLOWING EXPENSES: 7 S.NO. HEAD OF EXPENDITURE TOTAL CLAIM ( ` ) DISALLOWANCE MADE ( ` ) 1. TRAVELLING 8 46 866 50 000 2. BROKERAGE & COMMISSION 5 49 629 50 000 3. TANKER RUNNING EXPENSES 14 44 042 1 00 000 4. PROFESSIONAL CHARGES 2 51 708 10 000 TOTAL 2 10 000 9.1 ACCORDINGLY DISALLOWANCE OF ` 3 17 352/- ( ` 1 07 352 + ` 2 10 000) WAS MADE ON ESTIMATE BASIS OUT OF VARIOUS EXPENSES CLAIMED BY THE ASSESSEE. 10. THE ASSESSEE CARRIED THE MATTER TO LEARNED CIT( A) AND SUBMITTED THAT NO AD HOC OR ESTIMATED DISALLOWANCES WERE SUST AINABLE. 11. THE LEARNED CIT(A) AFTER CONSIDERING THE SUBMI SSIONS OF THE ASSESSEE OBSERVED THAT THE VARIOUS DISALLOWANCE MA DE BY THE ASSESSING OFFICER WERE BASED ON ESTIMATE AND NO DISCUSSION WA S APPEARING IN THE ASSESSMENT ORDER EXCEPT IN COMPUTATION. ACCORDING TO THE LEARNED CIT (A) THE ESTIMATED AD HOC DISALLOWANCE WAS ON HIGHE R SIDE AND NOT SUPPORTED BY SPECIFIC INSTANCE OF ENTRIES IN THE BO OKS OF ACCOUNT. HE THEREFORE RESTRICTED THE DISALLOWANCE TO 25% OF TH E DISALLOWANCE MADE BY THE ASSESSING OFFICER. NOW THE DEPARTMENT IS IN AP PEAL. 8 12. THE LEARNED D. R. SUPPORTED THE ORDER OF THE AS SESSING OFFICER WHILE THE LEARNED COUNSEL FOR THE ASSESSEE RELIED ON THE IMPUGNED ORDER PASSED BY THE LEARNED CIT (A) ON THIS ISSUE. 13. AFTER CONSIDERING THE SUBMISSIONS OF BOTH THE P ARTIES AND THE MATERIAL ON RECORD IT APPEARS THAT THE ASSESSING O FFICER HAD NOT MADE ANY DISCUSSION WHILE MAKING THE DISALLOWANCE. HE SIMPL Y DISALLOWED THE EXPENSES ON ESTIMATE BASIS. HE HAD NOT POINTED OUT ANY SPECIFIC INSTANCE TO SUBSTANTIATE THAT THE EXPENSES WERE NOT PROPERLY UTILIZED FOR THE BUSINESS PURPOSES. AT THE SAME TIME THE EXPENSES W ERE NOT FULLY VOUCHED AND/OR SUPPORTED WITH THE ORIGINAL EXPENSES VOUCHER S. THEREFORE THE ACTION OF THE LEARNED CIT (A) IN RESTRICTING THE DI SALLOWANCE TO ` 79 338/- I.E. 25% OF THE DISALLOWANCE OF ` 3 17 352/- MADE BY THE ASSESSING OFFICER APPEARS TO BE FAIR AND REASONABLE. WE DO NOT SEE A NY VALID GROUND TO INTERFERE WITH THE FINDINGS OF THE LEARNED CIT (A) ON THIS ISSUE. 14. GROUND NO. 3 & 4 OF THE APPEAL ARE GENERAL IN N ATURE SO DO NOT REQUIRE ANY SPECIFIC COMMENT ON OUR PART. 15. IN THE RESULT THE APPEAL IS DISMISSED. (THE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 23/0 3/2011) SD/. SD/. ( H. L. KARWA ) (N. K. SAINI) VICE PRESIDENT ACCOUNTANT MEMBER DATED: 23/03/2011 *SINGH 9 COPY FORWARDED TO THE: 1. APPELLANT. 2. RESPONDENT. 3. CIT (A) 4. CIT 5. DR. ASSISTANT REGISTRAR