Satpal Manchanda, Chandigarh v. The Asstt Commissioner of Income Tax, Chandigarh

ITA 852/CHANDI/2016 | 2008-2009
Pronouncement Date: 03-10-2016 | Result: Dismissed

Appeal Details

RSA Number 85221514 RSA 2016
Assessee PAN AAYPM5319E
Bench Chandigarh
Appeal Number ITA 852/CHANDI/2016
Duration Of Justice 2 month(s) 20 day(s)
Appellant Satpal Manchanda, Chandigarh
Respondent The Asstt Commissioner of Income Tax, Chandigarh
Appeal Type Income Tax Appeal
Pronouncement Date 03-10-2016
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted SMC
Tribunal Order Date 03-10-2016
Assessment Year 2008-2009
Appeal Filed On 13-07-2016
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH CHANDIGARH BEFORE SHRI BHAVNESH SAINI JUDICIAL MEMBER ITA NO. 852/CHD/2016 ASSESSMENT YEAR : 2008-09 SHRI SATPAL MANCHANDA VS THE ACIT PROP. CEE AAR INDUSTRIAL CORP. CIRCLE 2(1) # 249 INDUSTRIAL AREA CHANDIGARH. PHASE 1 CHANDIGARH. PAN : AAYPM5319E (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI AMITOZ SINGH K AMBOJ RESPONDENT BY : SHRI MANJIT SINGH DR DATE OF HEARING : 27.09.2016 DATE OF PRONOUNCEMENT : 03.10.2016 O R D E R THIS APPEAL BY ASSESSEE HAS BEEN DIRECTED AGAINST THE ORDER OF LD. CIT(APPEALS)-I CHANDIGARH DATED 13.05.2016 FOR ASSESSMENT YEARS 2008-09 2. I HAVE HEARD LD. REPRESENTATIVES OF BOTH THE PAR TIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. 3. ON GROUND NO. 1.1 ASSESSEE CHALLENGED THE ADDIT ION OF RS. 4 74 500/-. BRIEF FACTS OF THE CASE ON THIS ISSUE ARE THAT THE COMPANY M/S CEE AAR METALS PVT. LTD. H AS BEEN SHOWN AS CREDITOR IN THE BOOKS OF ACCOUNT OF T HE ASSESSEE SHOWING A BALANCE OF RS. 4 74 500/- AS ON 31.03.2008. IT WAS FOUND FROM THE STATEMENT OF 2 SUPERVISOR SHRI VIPIN SHARMA RECORDED DURING THE CO URSE OF SURVEY THAT THIS FIRM WAS IN EXISTENCE BEFORE 20 04 AND LATER HAS BEEN CONVERTED TO M/S CEE AAAR INDUSTRIAL CORPORATION THE FIRM OF THE ASSESSEE. THE ASSESSI NG OFFICER HELD THAT THE ASSESSEE CANNOT BE CREDITOR O F ITS OWN SELF. THE CREDIT ENTRY WAS THEREFORE TREATED AS UNEXPLAINED AND ADDED TO THE INCOME OF THE ASSESSEE . 4. THE ADDITION WAS CHALLENGED BEFORE LD. CIT(APPEA LS) AND IT WAS SUBMITTED THAT ADDITION IS UNCALLED FOR BECAUSE PRIVATE LIMITED COMPANY CANNOT BE MERGED WI TH PROPRIETORSHIP FIRM AS PER LAW. THE FIRM OF THE AS SESSEE IS A PROPRIETORSHIP CONCERN WHEREAS M/S CEE AAR MET ALS PVT. LTD. IS A COMPANY AND SEPARATELY ASSESSED. TH E SAID COMPANY IS A SISTER CONCERN OF THE ASSESSEE'S FIRM. THE ASSESSING OFFICER THEREFORE ERRED IN MAKING THE A DDITION AS THE SAID COMPANY IS SISTER CONCERN OF THE ASSESS EE FIRM AND ASSESSEE IS ONE OF THE DIRECTORS IN THE SAID CO MPANY. WHENEVER AMOUNT IS REQUIRED IT IS TRANSFERRED THRO UGH BANK. THE COPY OF THE ACCOUNT OF THE ASSESSEE IN T HE BOOKS OF THE COMPANY FOR PRESENT YEAR AS WELL AS FO R PRECEDING YEAR HAVE BEEN FILED TO SHOW THAT COMPANY HAS RUNNING ACCOUNT. IT WAS THEREFORE PRAYED THAT AD DITION MAY BE DELETED. 5. THE LD. CIT(APPEALS) NOTED THAT ADDITION IS MADE ON THE BASIS OF STATEMENT OF SUPERVISOR OF THE ASSESSE E'S FIRM SHRI VIPIN SHARMA RECORDED DURING THE COURSE OF SUR VEY 3 IN WHICH HE HAS EXPLAINED THAT THE COMPANY M/S CEE AAR METALS PVT. LTD. WAS IN EXISTENCE BEFORE 2004. THE LD. CIT(APPEALS) AGREED WITH THE SUBMISSION OF THE ASSE SSEE THAT PRIVATE LIMITED COMPANY CANNOT BE CONVERTED IN TO PROPRIETORSHIP CONCERN. HOWEVER THE ASSESSEE HAS NOT REBUTTED THE STATEMENT MADE BY THE SUPERVISOR OF TH E ASSESSEE FIRM WHO HAS STATED THAT THE COMPANY CEASE D TO EXIST AFTER 2004. THE ASSESSEE WAS PROVIDED SEVERA L OPPORTUNITIES TO PROVE IT WAS EXISTING COMPANY BUT ASSESSEE FAILED TO PRODUCE ANY EVIDENCE ON RECORD I N SUPPORT OF THE CLAIM. THE PRINT OUTS OF THE LEDGER ACCOUNT OF THE ASSESSEE FIRM IN THE BOOKS OF THE COMPANY FI LED DURING THE APPELLATE PROCEEDINGS WERE CONSIDERED O NLY SELF SERVING STATEMENT. IN THE ABSENCE OF ANY SUPP ORTING EVIDENCE ADDITION WAS THEREFORE CONFIRMED. 6. AFTER CONSIDERING RIVAL CONTENTIONS I AM NOT IN CLINED TO INTERFERE WITH THE ORDERS OF AUTHORITIES BELOW. IT IS NOT IN DISPUTE THAT STATEMENT OF SHRI VIPIN SHARMA SUPERVISOR OF THE ASSESSEE FIRM WAS RECORDED DURING THE COURSE OF SURVEY IN WHICH HE HAS SPECIFICALLY EXPLA INED THAT M/S CEE AAR METALS PVT. LTD. WAS IN EXISTENCE BEFORE 2004. THE STATEMENT OF THE SUPERVISOR OF THE ASSES SEE HAS NOT BEEN REBUTTED BY ASSESSEE IN ANY MANNER. T HE ASSESSEE HAS FILED COPY OF THE LEDGER ACCOUNT AT PA GE 21-23 OF THE PAPER BOOK TO SHOW THAT ONLY RS. 25 00 0/- WAS TAKEN CREDIT BY ASSESSEE FROM M/S CEE AAR METAL S PVT. LTD. IN ASSESSMENT YEAR UNDER APPEAL AND REST 4 AMOUNT WAS OPENING BALANCE. HOWEVER LD. COUNSEL F OR THE ASSESSEE COULD NOT GIVE ANY DATE AS TO WHEN THE BALANCE AMOUNT WAS RECEIVED AS CREDIT IN THE ACCOUN TS OF THE ASSESSEE. THE LD. COUNSEL FOR THE ASSESSEE ALS O ADMITTED THAT NO CONFIRMATION FROM M/S CEE AAR META LS PVT. LTD. HAVE BEEN FILED BEFORE THE AUTHORITIES BE LOW. THE ASSESSEE IS ONE OF THE DIRECTORS OF THE SAID CO MPANY THEREFORE WHEN ASSESSEE COULD NOT PRODUCE CONFIRMA TION FROM THE COMPANY TO EXPLAIN THE CREDIT IN THE MATTE R THE COPY OF THE LEDGER ACCOUNT FILED IN THE PAPER BOOK CANNOT BE RELIED UPON. THE ADDRESS OF THE ASSESSEE AND CO MPANY FROM WHOM CREDIT IS TAKEN ARE SAME IN THOSE LEDGER ACCOUNTS. SO NON FURNISHING OF DETAILS CREDITS DOU BT IN EXPLANATIONS OF THE ASSESSEE. 6(I) THE LD. COUNSEL FOR THE ASSESSEE ALSO MADE A REQUEST FOR ADMISSION OF ADDITIONAL EVIDENCE WHICH IS FINAN CIAL STATEMENT AND BALANCE SHEET OF M/S CEE AAR METALS P VT. LTD. FILED WITH THE REGISTRAR OF COMPANIES. HE HAS REFERRED TO THE HEAD SUNDRY DEBTORS TO SHOW THAT THE ASSESSEE FIRM M/S CEE AAR INDUSTRIAL CORPORATION IS A DEBTOR IN A SUM OF RS. 4 74 500/-. THESE DOCUMENTS HAVE NOT BEEN FILED BEFORE THE AUTHORITIES BELOW. THESE PAPERS ARE STATED TO BE PROCURED FROM AUDITORS OF THE COMP ANY. IT IS INTERESTING TO NOTE AGAIN THAT WHEN ASSESSEE IS ONE OF THE DIRECTORS OF THE SAID COMPANY AND HAVE SAME ADD RESS OF BOTH CONCERNS WHY ASSESSEE COULD NOT OBTAIN ANY CONFIRMATION AND ANY SUPPORTING DOCUMENT FROM THE 5 COMPANY AND WHY FINANCIAL STATEMENT AND BALANCE SHE ET HAVE BEEN OBTAINED FROM THE AUDITOR OF THE COMPANY. THE GENUINENESS OF THESE DOCUMENTS ARE THEREFORE DOUB TFUL AND FURTHER WHEN COMPANY STATED TO BE ASSESSED SEPARATELY TO INCOME TAX WHY THE DETAILS SUBMITTED TO INCOME TAX DEPARTMENT HAVE NOT BEEN BROUGHT ON RECO RD. HON'BLE CALCUTTA HIGH COURT IN THE CASE OF BHARTI P VT. LTD. 111 ITR 951 AND UNITED COMMERCIAL AND INDUSTRI AL COMPANY PVT. LTD. 187 ITR 596 HELD THAT MERE CONFIRMATIONS ARE NOT ENOUGH TO PROVE GENUINENESS O F THE CREDITORS. HOWEVER IN THE PRESENT CASE THE ASSE SSEE DESPITE ONE OF THE DIRECTORS OF THE COMPANY FROM WH OM CREDITS HAVE BEEN TAKEN HAVE NOT BEEN ABLE TO FILE ANY CONFIRMATION FROM THE COMPANY OR ANY OTHER SUPPORTI NG DOCUMENT TO PROVE THAT GENUINE CREDITS HAVE BEEN TA KEN FROM THE COMPANY. EVEN NO EVIDENCE HAS BEEN FILED WHETHER THE SUBSTANTIAL AMOUNT WAS OPENING BALANCE COMING UP FROM THE EARLIER YEARS. THE SUPERVISOR O F THE ASSESSEE FIRM HAS MADE A STATEMENT AGAINST THE ASSE SSEE ITSELF WHICH HAVE NOT BEEN REBUTTED BY THE ASSESSEE . THEREFORE EXISTENCE OF THE COMPANY ITSELF IS IN DO UBT THEREFORE NO ADDITIONAL EVIDENCE COULD BE ADMITTED IN THE FACTS AND CIRCUMSTANCES OF THE CASE. THE REQUEST O F THE ASSESSEE FOR ADMISSION OF THESE ADDITIONAL EVIDENCE S ARE REJECTED. 7. IN THE ABSENCE OF ANY RELEVANT AND COGENT EVIDEN CE ON RECORD I AM NOT INCLINED TO INTERFERE WITH THE ORDERS OF 6 AUTHORITIES BELOW THE ADDITION IS CONFIRMED AND TH IS GROUND OF APPEAL OF THE ASSESSEE IS DISMISSED. 8. ON GROUND NO. 1.2 ASSESSEE CHALLENGED THE DISALLOWANCE OF ELECTRICITY EXPENSES IN A SUM OF RS . 1 57 972/-. THE ASSESSEE HAD DEBITED AN AMOUNT OF RS. 10 53 707/- UNDER THE HEAD ELECTRICITY EXPENSES. ON INQUIRY IT WAS FOUND THAT ANOTHER SISTER CONCERN M /S SIGMA KITCHEN & DOORS IS OPERATING FROM THE SAME PREMISES OF THE ASSESSEE. THE ASSESSING OFFICER AL SO GATHERED THAT M/S SIGMA KITCHEN & DOORS HAS NOT DEB ITED ANY ELECTRICITY EXPENSES IN ITS ACCOUNTS. IN VIEW OF THE SAME ELECTRICITY BILL WAS APPORTIONED IN THE RATIO OF SALES OF THESE TWO CONCERNS AND IMPUGNED AMOUNT WAS DISALLOWED. THE ASSESSEE SUBMITTED BEFORE LD. CIT(APPEALS) THAT IN THE BUSINESS OF THE ASSESSEE W HICH IS MANUFACTURING THE ELECTRICITY IS MAINLY USED FOR R UNNING OF THE MACHINES. HOWEVER IN THE CASE OF M/S SIGMA KITCHEN & DOORS THE MACHINERIES ARE NOT USED AS IS USED IN THE BUSINESS OF THE ASSESSEE. THE ADDITION WAS MADE MERELY BECAUSE RUBBER STAMPS OF OTHER SISTER CONCER NS WERE FOUND DURING THE COURSE OF SURVEY. IT WAS TH EREFORE SUBMITTED THAT ADDITION MAY BE DELETED. 8(I) THE LD. CIT(APPEALS) NOTED THAT ASSESSEE HIMSE LF REPLIED VIDE LETTER DATED 13.12.2010 THAT SMT. RAJN I MANCHANDA STARTED THE NEW BUSINESS IN THE NAME AND STYLE OF M/S SIGMA KITCHEN & DOORS WHICH WAS STARTE D IN JUNE 2006 FROM THE BUSINESS PREMISES OF THE ASSESS EE. 7 THE ASSESSING OFFICER OBTAINED INFORMATION THAT M/S SIGMA KITCHEN & DOORS HAVE NOT DEBITED ANY ELECTRIC ITY EXPENSES. IN THE ABSENCE OF ANY EVIDENCE WITH REGA RD TO THE FACT THAT SISTER CONCERN IS IN A DIFFERENT LINE OF BUSINESS AND HAS NOT USED ANY ELECTRICITY LD. CIT(APPEALS) CONFIRMED THE ADDITION AND DISMISSED T HIS GROUND OF APPEAL OF THE ASSESSEE. 9. ON CONSIDERATION OF THE RIVAL SUBMISSIONS I AM NOT INCLINED TO INTERFERE WITH THE ORDERS OF AUTHORITIE S BELOW. THERE ARE SUFFICIENT EVIDENCES ON RECORD TO PROVE T HAT M/S SIGMA KITCHEN & DOORS SISTER CONCERN OF THE ASSESS EE WAS OPERATING FROM THE BUSINESS PREMISES OF THE ASS ESSEE AND HAVE NOT DEBITED ANY ELECTRICITY EXPENSES. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT CONSIDERING THE LOW PROFIT OF M/S SIGMA KITCHEN & DOORS ADDITION M AY BE MODIFIED. THE ASSESSING OFFICER HOWEVER APPORTIO NED THE ELECTRICITY BILLS AS PER RATIO OF THE SALES OF THESE TWO CONCERNS IN WHICH NO INFIRMITY HAVE BEEN POINTED OU T BY THE LD. COUNSEL FOR THE ASSESSEE. SINCE ASSESSEE A DMITTED THAT ANOTHER SISTER CONCERN IS OPERATING FROM THE B USINESS PREMISES OF THE ASSESSEE THEREFORE ENTIRE ELECTRI CITY EXPENSES DEBITED TO THE PROFIT & LOSS ACCOUNT OF TH E ASSESSEE HAVE NOT BEEN INCURRED WHOLLY AND EXCLUSI VELY FOR THE PURPOSE OF BUSINESS OF THE ASSESSEE. THE L D. COUNSEL FOR THE ASSESSEE ALSO FILED CERTAIN PHOTOGR APHS OF M/S SIGMA KITCHEN & DOORS TO SHOW THAT THEY PREPARE THEIR MATERIAL MANUALLY HOWEVER SUCH PHOTOGRAPHS 8 CANNOT BE ADMITTED AS ADDITIONAL EVIDENCE IN THE AB SENCE OF GENUINENESS OF THE SAME. OTHER COMPANY M/S CEE AAR METAL PVT. LTD. HAS ALSO SHOWN ADDRESS OF ASSESSEE MUST HAVE CONSUMED ELECTRICITY. THESE ADDITIONAL EVIDENC ES ARE THEREFORE REJECTED. THE AUTHORITIES BELOW WE RE THEREFORE JUSTIFIED IN MAKING/APPORTIONING DISALLO WANCE OUT OF ELECTRICITY EXPENSES. THIS GROUND OF APPEAL OF THE ASSESSEE FAILS AND IS DISMISSED. 10. IN THE RESULT APPEAL OF THE ASSESSEE IS DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- (BHAVNESH SAINI) JUDICIAL MEMBER DATED : 3 RD OCTOBER 2016. POONAM COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT DR ASSISTANT REGISTRAR ITAT/CHD