Bala Chamundeswari Cotton Company, Guntur v. The Assistant Commissioner of Income Tax, Central Circle,, Vijayawada

ITA 70/VIZ/2020 | 2005-2006
Pronouncement Date: 07-05-2021 | Result: Partly Allowed

Appeal Details

RSA Number 7025314 RSA 2020
Assessee PAN AAIFS2875B
Bench Visakhapatnam
Appeal Number ITA 70/VIZ/2020
Duration Of Justice 1 year(s) 2 month(s) 25 day(s)
Appellant Bala Chamundeswari Cotton Company, Guntur
Respondent The Assistant Commissioner of Income Tax, Central Circle,, Vijayawada
Appeal Type Income Tax Appeal
Pronouncement Date 07-05-2021
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted DB
Tribunal Order Date 07-05-2021
Last Hearing Date 03-08-2020
First Hearing Date 03-08-2020
Assessment Year 2005-2006
Appeal Filed On 12-02-2020
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH VISAKHAPATNAM BEFORE SHRI N.K. CHOUDHRY HONBLE JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH HON'BLE ACCOUNTANT MEMBER I.T.A. NO. 70 /VIZ/2020 (ASST. YEAR : 200 5 - 0 6 ) M/S. BALA CHAMUNDESWARI COTTON COMPANY D.NO. 11 - 696 OPP. INDUSTRIAL ESTATE AMARAVATHI ROAD GUNTUR. VS. ACIT CENTRAL CIRCLE VIJAYAWADA. PAN NO. AAIFS 2875 B (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI G.V.N. HARI ADVOCATE. DEPARTMENT BY : SHRI K.S. RAJENDRA KUMAR CIT DR DATE OF HEARING : 27 / 04/2021 . DATE OF PRONOUNCEMENT : 07 / 05/2021 . O R D E R PER D.S. SUNDER SINGH ACCOUNTANT MEMBER THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGAINST THE ORDER DATED 18 /11/2019 IMPUGNED HEREIN PASSED BY THE LD.COMMISSIONER OF INCOME TAX (APPEALS) - 3 [FOR SHORT LD.COMMISSIONER] VISAKHAPATNAM U/SEC. 250(6) OF THE INCOME TAX ACT 1961 (HEREINAFTER REFERRED TO AS 'ACT') FOR THE A.Y. 20 05 - 06 . 2 ITA NO. 70 / VIZ /2020 ( M/S. BALA CHAMUNDESWARI COTTON COMPANY ) 2. GROUND NOS. 2 & 4 ARE GENERAL IN NATURE WHICH DOES NOT REQUIRE ANY SPECIFIC ADJUDICATION. 3 . GROUND NO.2 IS RELATED TO THE ADDITION MADE BY THE AO TOWARDS DISALLOWANCE OF EXPENSES. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO FOUND THAT THE ASSESSEE HAD DEBITED THE EXPENDITURE OF RS. 4 92 789/ - UNDER VARIOUS HEADS AS PER THE DETAILS GIVEN BELOW: - 1. DISCOUNT RS. 1 25 466 2. GINNING LABOUR EXPENSES RS. 28 1 4 156 3. PRESSING LABOUR CHARGES RS. 11 98 425 4. CARRYING CHARGES RS. 7 89 8 50 TOTAL RS. 4 9 27 890 SINCE THE ASSESSEE COULD NOT FURNISH THE DETAILS THE AO MADE THE DISALLOWANCE OF RS. 4 9 2 7 89 / - ON ESTIMATION BASIS @10%. AGAINST WHICH THE ASSESSEE WENT ON APPEAL BEFORE THE LD.COMMISSIONER AND THE LD.COMMISSIONER UPHELD THE ADDITION STATING THAT ESTIMATION MADE BY THE AO IS REASONABLE. 4 . AGAINST THE ORDER OF THE LD.COMMISSIONER THE ASSESSEE FILED THE PRESENT APPEAL BEFORE THIS TRIBUNAL. DURING THE APPEAL HEARING LD.AR CONCEDED FOR RESTRICTING THE DISALLOWANCE OF EXPENDITURE TO 5% AGAINST THE ADDITION CONFIRMED BY THE LD.COMMISSIONER @10% . 5. WE HAVE HEARD BOTH THE PARTIES AND OF THE CONSIDERED THE VIEW THAT DISALLOWANCE OF EXPENSES @5% IS REASONABLE THEREFORE WE SCALE DOWN THE ADDITION TO 5% INSTEAD OF 10% SUSTAINED BY THE 3 ITA NO. 70 / VIZ /2020 ( M/S. BALA CHAMUNDESWARI COTTON COMPANY ) LD.COMMISSIONER. ACCORDINGLY THIS GROUND OF APPEAL RAISED BY THE ASSESSEE IS PARTLY ALLOWED. 6 . GROUND NO.3 IS RELATED TO THE ADDITION OF RS. 40 89 29 3 / - MADE BY THE AO IN RESPECT OF VARIOUS EXPENSES IN THE ORDER U/SEC. 153A AS PER THE DETAILS GIVEN BELOW: - NATURE OF EXP. AS PER ORIGINAL RETURN OF INCOME AS PER RETURN FILED IN RESPONSE TO NOTICE U/SEC. 153A DIFFERENCE CARRYING CHARGES 789850 830723 40873 GINNING EXPENSES 2814156 4586811 1772655 PRESSING EXPENSES 1198425 3474190 2275765 TOTAL 4089293 DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO HAS OBSERVED THAT THERE WAS AN INCREASING IN THE EXPENDITURE CLAIMED BY THE ASSESSEE IN RESPECT OF THE ABOVE HEADS COMPARED TO THE ORIGINAL RETURN OF INCOME . THEREFORE THE AO VIEWED THAT THE ASSESSEE HA D INFLATED THE EXPENDITURE HENCE MADE THE ADDITIO N. AGAINST WHICH THE ASSESSEE WENT ON APPEAL BEFORE THE LD.COMMISSIONER AND THE LD.COMMISSIONER SCALED DOWN THE DISALLOWANCE TO 5% OF SUCH EXPENDITURE. 7 . AGAINST WHICH THE ASSESSEE FILED THE PRESENT APPEAL BEFORE THIS TRIBUNAL . 8 . WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL PLACED ON RECORD. THE CONTENTION OF THE ASSESSEE IS THAT GINNING CHARGES PRESSING CHARGES CARRYING CHARGES WERE INCREAS ED DUE TO REASON THAT THE UNACCOUNTED STOCKS WERE ADMITTED IN THE REVISED RETURN FILED IN RESPONSE TO THE NOTICE U/SEC. 153A THEREFORE THERE 4 ITA NO. 70 / VIZ /2020 ( M/S. BALA CHAMUNDESWARI COTTON COMPANY ) WAS A CHANGE IN THE EXPENSES RELATING TO THE PROFIT & LOSS ACCOUNT ORIGINALLY FILED AND THE REVISED RETURN. WE HAVE GONE THROUGH THE PROFIT & LOSS ACCOUNT FILED IN PAGE NO.3 OF THE PAPER BOOK WHEREIN THE ASSESSEE HAS DECLARED THE CLOSING STOCK OF 1 32 26 208 / - IN ORIGINAL AND ADMITTED THE CLOSING STOCK OF RS. 2 11 57 28 6 / - IN THE REVISED RETURN . T HERE WAS A SUBSTANTIAL INCREASE IN THE CLOSING STOCK IN THE REVISED RETURN AND ALL THE TRADING EXPENSES RELATING TO THE CLOSING STOCK NEEDS TO BE TAKEN INTO ACCOUNT TO REVALUE THE STOCK WHILE FILING THE REVISED RETURN IN RESPONSE TO THE NOTICE ISSUED U/SEC. 153A . H ENCE THE EXPLANATION OF THE AR OF THE ASSESSEE APPEARS TO BE REASONABLE. FURTHER THIS IS AN ASSESSMENT MADE U/SEC. 153A R.W.S. 143(3) I.E. FOR THE SEARCH PERIOD AND NO INCRIMINATING MATERIAL /EVIDENCE WAS FOUND BY THE DEPARTMENT TO SUBSTANTIATE THAT TH E ASSESSEE HAS INFLATED THE EXPENDITURE . THEREFORE WE DO NOT FIND ANY REASON TO SUSTAIN THE DISALLOWANCE MADE BY THE AO AND HENCE WE SET ASIDE THE ORDER OF THE LD.COMMISSIONER AND DELETE THE ADDITION MADE BY THE AO. 9 . IN THE RESULT APPEAL FILED BY THE ASSESSEE STANDS PARTLY ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON TH IS 0 7 T H DAY OF MAY 2021 . S D / - S D / - (N.K. CHOUDHRY) (D.S. SUNDER SINGH) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 0 7 T H MAY 20 2 1 . VR/ - 5 ITA NO. 70 / VIZ /2020 ( M/S. BALA CHAMUNDESWARI COTTON COMPANY ) COPY TO: 1. THE ASSESSEE - M/S. BALACHAMUNDESWARI COTTON COMPANY D.NO. 11 - 696 OPP. INDUSTRIAL ESTATE AMARAVATHI ROAD GUNTUR. 2. THE REVENUE ACIT CENTRAL CIRCLE VIJAYAWADA. 3. THE PR. CIT ( C ENTRAL) VISAKHAPATNAM. 4. THE CIT(A) - 3 VISAKHAPATNAM. 5. THE D.R . VISAKHAPATNAM. 6. GUARD FILE. BY ORDER (VUKKEM RAMBABU) SR. PRIVATE SECRETARY ITAT VISAKHAPATNAM.