The ACIT, Circle-2(2),, Baroda v. Shri Ravindra M. Shah, Baroda

ITA 2256/AHD/2007 | 2003-2004
Pronouncement Date: 21-05-2010 | Result: Dismissed

Appeal Details

RSA Number 225620514 RSA 2007
Assessee PAN ALUPS6135M
Bench Ahmedabad
Appeal Number ITA 2256/AHD/2007
Duration Of Justice 2 year(s) 11 month(s) 23 day(s)
Appellant The ACIT, Circle-2(2),, Baroda
Respondent Shri Ravindra M. Shah, Baroda
Appeal Type Income Tax Appeal
Pronouncement Date 21-05-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 21-05-2010
Date Of Final Hearing 17-05-2010
Next Hearing Date 17-05-2010
Assessment Year 2003-2004
Appeal Filed On 29-05-2007
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH A BEFORE SHRI G.D.AGRAWAL VICE-PRESIDENT (AZ) AND SHRI MUKUL SHRAWAT JUDICIAL MEMBER AND DATE OF HEARING :18/05/2010 DRAFTED ON: 18/ 05/2010 1. ITA NO.2254/AHD/2007- A.Y. 2003-04 2. ITA NO.2256/AHD/2007 - A.Y.2003-04 1. SHRI RAVINDRA M.SHAH PROP.SHAH BULK CARRIERS CHHANI BARODA VS. 1. THE ASSTT.CIT CIRCLE-2 BARODA PAN/GIR NO. : ALUPS 6135 M 2. THE ASSTT.CIT CIRCLE-2(2) BARODA VS. 2. SHRI RAVINDRA M.SHAH PROP.SHAH BULK CARRIERS CHHANI BARODA ( APPELLANTS ) ( RESPONDENTS ) ASSESSEE BY: SHRI DHIREN SHAH C.A. REVENUE BY: DR. JAYANT JAVERI SR. D.R. O R D E R PER SHRI MUKUL SHRAWAT JUDICIAL MEMBER : THESE TWO APPEALS ARE THE CROSS-APPEALS RESPECTI VELY FILED BY THE ASSESSEE AND THE REVENUE ARISING FROM THE ORDER OF THE LEARNED CIT(APPEALS)-II BARODA DATED 16/03/2007. 2. GROUND NO.1 IN ASSESSEES APPEAL AND THE ONLY GR OUND OF THE REVENUE ARE IN RESPECT OF DISALLOWANCE OUT OF CLAIM OF CARTING EXPENSES. BOTH THE SIDES HAVE OBJECTED THE PART R ELIEF GRANTED BY THE FIRST APPELLATE AUTHORITY. THE ASSESSING OFFICER H AS MADE THE ITA NO.2254/AHD/2007 (BY ASSESSEE) & ITA NO.2256/AHD/2007 (BY REVENUE) SHRI RAVINDRA M.SHAH VS. ASST.CIT ASST.YEAR 2003-04 - 2 - DISALLOWANCE AT THE RATE OF 2.5% HOWEVER THE LEAR NED CIT(APPEALS) HAS RESTRICTED THE SAME TO 1% OF THE TOTAL EXPENSES CLA IMED UNDER THE SAID HEAD. 3. FACTS IN BRIEF AS EMERGED FROM THE CORRESPONDING ASSESSMENT ORDER PASSED U/S.143(1) OF THE I.T. ACT 1961 DATED 31/0 1/2006 WERE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF TRANSPORTATI ON OF CHEMICAL. IT WAS NOTICED BY THE ASSESSING OFFICER THAT FOR THE PURPO SE OF TRANSPORTATION OF LIQUID CHEMICALS THE ASSESSEE DEPLOYED HIS OWN TAN KERS AS WELL AS HE HAS DEPLOYED THE TANKERS BELONGING TO SISTER-CONCERNS O F THE SAME GROUP. IT HAS ALSO BEEN NOTED THAT THE TANKERS HAVE ALSO BEEN PROCURED FROM OTHER TRANSPORTERS. HOWEVER THE BASIC OBJECTION OF THE ASSESSING OFFICER WAS THAT THE CARTING EXPENSES WAS TOWARDS HIGHER SIDE FOR THE YEAR UNDER CONSIDERATION. IT MAY NOT BE OUT OF PLACE TO MENTI ON THAT THE SAID PRELIMINARY OBJECTION OF THE ASSESSING OFFICER APPE ARED TO BE INCORRECT BECAUSE ADMITTEDLY FOR ASSESSMENT YEAR 2002-03 THE RATIO WAS 90% HOWEVER FOR THE YEAR UNDER CONSIDERATION I.E. ASS ESSMENT YEAR 2003-04 THE PERCENTAGE OF EXPENDITURE AS CALCULATED BY THE ASSESSING OFFICER HIMSELF WAS 89.61% AS IS EVIDENT FROM THE CHART RE PRODUCED BELOW:- PARTICULARS ASSESSMENT YEAR 2002-03 ASSESSMENT YEAR 2003-04 CONTRACT/CARTING RECEIPT RS.10 56 32 501/- RS.10 76 14 875/- CARTING EXPENSES RS.9 50 70 055/- RS.9 64 32 781/- RATIO 90.00% 89.61% 3.1. UNDER THE IMPUGNED HEAD AN ADDITION OF RS.9 9 2 566/- WAS MADE VIDE FOLLOWING CALCULATION:- ITA NO.2254/AHD/2007 (BY ASSESSEE) & ITA NO.2256/AHD/2007 (BY REVENUE) SHRI RAVINDRA M.SHAH VS. ASST.CIT ASST.YEAR 2003-04 - 3 - .IN THE ABOVE CIRCUMSTANCES THE AMOUNT TO THE EXT ENT OF 2.5% OF THE 50% OF THE CARTING PAYMENTS MADE TO OUTSIDERS/O THER TRANSPORTER (OTHER THAN FAMILY GROUP) IS DISALLOWED (79405281 / 2 = 39702640 X 2.5% = 992566/-). THE DISALLOWANCE I N THIS POINT WORKS OUT TO RS.9 92 566/-. PENALTY PROCEEDINGS U /S.271(1)(C) ARE SEPARATELY INITIATED FOR FURNISHING OF INACCURATE P ARTICULARS OF INCOME. 3.2. BEING AGGRIEVED THE ISSUE WAS CARRIED BEFORE THE FIRST APPELLATE AUTHORITY. 3.3. AFTER DETAILED DISCUSSION AND CONSIDERING THE PAST HISTORY OF THE CASE THE LEARNED CIT(APPEALS) HAS ARRIVED AT THE C ONCLUSION THAT SINCE IN ASSESSEES OWN CASE FOR ASSESSMENT YEARS 2000-01 AND 2001-02 RELIEF WAS GRANTED THEREFORE FOLLOWING THE SAME RECOURSE HE HAS DIRECTED THE ASSESSING OFFICER TO RESTRICT THE DISALLOWANCE OF 1 % AS AGAINST THE DISALLOWANCE OF 2.5% MADE BY THE ASSESSING OFFICER. 3.4. ON ONE HAND THE LEARNED AUTHORISED REPRESENTA TIVE OF THE ASSESSEE HAS VEHEMENTLY ARGUED THAT NO ADDITION SH OULD HAVE BEEN MADE IN THE ABSENCE OF ANY OBJECTIONABLE EVIDENCE MENTIO NED FROM THE SIDE OF THE REVENUE. HOWEVER ON THE OTHER HAND THE REV ENUE DEPARTMENT HAS PLEADED THAT THE DISALLOWANCE AS MADE BY THE ASSESS ING OFFICER AT 2.5% DESERVES TO BE SUSTAINED. 3.5. BEFORE US LEARNED AUTHORISED REPRESENTATIVE O F THE ASSESSEE MR. DHIREN SHAH HAS PLACED AN ORDER OF ITAT AHMEDABAD B ENCH B IN ASSESSEES OWN CASE (IN ITA NOS.2768 & 2769/AHD/200 2 FOR ASSESSMENT ITA NO.2254/AHD/2007 (BY ASSESSEE) & ITA NO.2256/AHD/2007 (BY REVENUE) SHRI RAVINDRA M.SHAH VS. ASST.CIT ASST.YEAR 2003-04 - 4 - YEARS 1998-99 AND 1999-2000) DATED 08/08/2008 AND AN ANOTHER ORDER OF THIS TRIBUNAL DECIDED IN THE CASE OF SHRI HASMU KHBHAI MOHANLAL SHAH (IN ITA NOS.2770-2771/AHD/2002 FOR A.YS.1998-99 & 1 999-2000) DATED 30/05/2008 WERE REFERRED TO WHEREIN THE REVENUES APPEALS WERE DISMISSED AND THE RELIEF GRANTED BY THE LEARNED CIT (APPEALS) WAS AFFIRMED. FIRST HEREINBELOW REPRODUCED PARAGRAPH NO.7 OF THE ORDER OF THE TRIBUNAL DATED 30/05/2008:- 7. FROM THE ABOVE FACTS AND CIRCUMSTANCES IT IS CLEAR THAT THE MAIN REASON FOR INCREASE IN CARTING PAID IS INCREAS E IN DIESEL RATES WHICH IS SUPPORTED BY THE BILLS AND VOUCHERS. IT IS THE CASE OF THE ASSESSEE THAT SINGLE OPERATOR PAYMENTS ARE ONLY TO THE EXTENT OF RS.3 60 032/- FOR WHOLE OF THE YEAR WHICH COMES TO 1.2% OF TOTAL CARTING PAID AND WHICH IS APPARENT FROM THE BIFURCA TION GIVEN BY THE ASSESSING OFFICER IN HIS ASSESSMENT ORDER. THE ASSESSEES ACCOUNTS ARE AUDITED AND COMPLETE VOUCHERS ARE MAIN TAINED. THE ASSESSING OFFICER HAS NOT POINTED OUT ANY INFLATION IN FIGURES IN THE BOOKS OF ACCOUNT AND IN THE ABSENCE OF THE SAME THE BOOK RESULT CANNOT BE DISTURBED. ACCORDINGLY WE DO NOT WANT T O INTERFERE IN THE ORDER OF CIT(A) AND WE UPHOLD THE SAME. 3.6. NEXT IT IS APPROPRIATE TO REPRODUCE THE ORDER OF THE TRIBUNAL DATED 08/08/2008 PRONOUNCED IN ASSESSEES OWN CASE DISMIS SING THE REVENUES APPEAL AS PER THE FOLLOWING PARAGRAPH:- THE LEARNED DR DID NOT DISPUTE THE FACTS THAT THE BASIS OF MAKING DISALLOWANCE ON ACCOUNT OF ALLEGED INFLATED CARTING EXPENSES IN THE CASE OF SHRI HASMUKHBHAI MOHANLAL SHAH (SUPRA) IS A LSO THE BASIS FOR MAKING SIMILAR ADDITION IN THE CASE OF PRESENT ASSESSEE AND THUS THE FACTS ARE VERY MUCH SIMILAR TO THAT IN THE CASE OF SHRI HASMUKHBHAI. THE LEARNED DR ALSO COULD NOT CONTROV ERT THE FINDINGS RECORDED BY THE LEARNED CIT(A) IN THE PRES ENT CASE NOTED EARLIER. THEREFORE CONSIDERING THE FACTS AND CIR CUMSTANCES OF THE ITA NO.2254/AHD/2007 (BY ASSESSEE) & ITA NO.2256/AHD/2007 (BY REVENUE) SHRI RAVINDRA M.SHAH VS. ASST.CIT ASST.YEAR 2003-04 - 5 - CASE AND CONSISTENT WITH THE VIEW TAKEN BY THE TRIB UNAL IN THE CASE OF SHRI HASMUKHBHAI MOHANLAL SHAH (SUPRA) WE DISMI SS THE GROUND OF THE REVENUE AND UPHOLD THE ORDER OF THE C IT(A) IN DELETING THE IMPUGNED ADDITION OF RS.5 70 076 MADE ON THE ALLEGED INFLATED CARTING EXPENSES. 3.7. IN THE LIGHT OF ABOVE FACTUAL BACKGROUND AS WE LL AS THE PRINCIPLE LAID DOWN BY THE RESPECTED CO-ORDINATE BENCH WHER EIN REVENUES APPEALS WERE DISMISSED THEREFORE WE HEREBY FOLL OW THE SAID VIEW AND DIRECT THE ASSESSING OFFICER TO ALLOW THE CLAIM AS PER LAW. 3.8. IN THE RESULT REVENUES GROUND IS HEREBY DI SMISSED WHEREAS ASSESSEES GROUND NO.1 IS ALLOWED. 4. NEXT GROUND AS RAISED BY THE ASSESSEE IS IN RESP ECT OF DISALLOWANCE OF SHORTAGE OF RS.8 000/- AS UPHELD BY THE LEARNED CIT(APPEALS) IN RESPECT OF TRANSPORTATION OF GOODS. 4.1. IT WAS NOTED BY THE ASSESSING OFFICER THAT A S UM OF RS.1 05 47 749/- WAS DEBITED ON ACCOUNT OF LOSS INC URRED ON EVAPORATION OF CHEMICALS TRANSPORTED BY THE ASSESSEE. IT WAS EXPLAINED THAT THE ASSESSEES INCOME EARNED AS CARTAGE WAS DEDUCTED BY THE COMPANIES WHEN IT WAS FOUND THAT THE MATERIAL WAS SHORT SUPPL IED. THE REASON OF SHORT SUPPLY WAS LEAKAGE EVAPORATION ETC. IN T HAT RESPECT IT WAS FOUND BY THE ASSESSING OFFICER THAT THE ASSESSEE HAD PAID RS.34 537/- TO OTHER PARTIES ON ACCOUNT OF SHORTAGE. IN RESPECT OF THE SAID CLAIM THE DETAILS WERE NOT FURNISHED. ACCORDING TO ASSESSING OFFICER PARTY-WISE AMOUNT AND THE SUPPORTING EVIDENCE WAS NOT PRODUCED. WIT H THE RESULT AN ADDITION OF RS.34 537/- WAS MADE. ITA NO.2254/AHD/2007 (BY ASSESSEE) & ITA NO.2256/AHD/2007 (BY REVENUE) SHRI RAVINDRA M.SHAH VS. ASST.CIT ASST.YEAR 2003-04 - 6 - 4.2. WHEN THE ISSUE REACHED TO THE LEARNED CIT(APPE ALS) IT WAS AGAIN DEMANDED TO SUBSTANTIATE THE CLAIM. IT WAS ALSO N OTICED THAT IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2000-01 ON ACCOUNT OF UNVERIFIABLE SHORTAGE A DISALLOWANCE OF RS.8 000/- WAS CONSIDERED REASONABLE. FOLLOWING THAT DECISION; FOR THIS YE AR AS WELL THE LEARNED CIT(APPEALS) HAS DIRECTED TO RESTRICT THE DISALLOW ANCE AT RS.8 000/-. 4. 3. AS FAR AS THE ASSESSEES APPEAL FOR ASSESSMEN T YEAR 2000-01 WAS CONCERNED ONLY THE REVENUE DEPARTMENT WAS BEFORE THE TRIBUNAL AND VIDE ITA NO.1919/AHD/2004 FOR ASSESSMENT YEAR 2000- 01 AS PER ORDER DATED 09/01/2008 IT WAS DISMISSED IN LIMINE BECUASE THE TAX EFFECT WAS LESS THAN THE PRESCRIBED LIMIT MEANING THEREBY; T HERE WAS NO DISCUSSION ON MERITS. WHILE MENTIONING THE PAST HISTORY ABOU T THE DISALLOWANCE ON ACCOUNT OF SHORTAGE FROM THE SIDE OF THE REVENUE I T HAS ALSO BEEN BROUGHT TO OUR NOTICE THAT FOR ASSESSMENT YEARS 199 8-99 AND 1999-2000 IN ASSESSEES OWN CASE AN APPEAL WAS FILED BY THE R EVENUE WHICH WAS DECIDED VIDE ORDER DATED 08/08/2008 BEARING ITA NOS .2768 & 2769 WHEREIN THE RESPECTED TRIBUNAL HAS UPHELD THE VIEW TAKEN BY THE LEARNED CIT(APPEALS) THROUGH WHICH THE SAID DISALLOWANCE WA S RESTRICTED TO RS.30 000/- AND RS.15 000/- RESPECTIVELY FOR ASSESS MENT YEAR 1998-99 AND 1999-2000. 4. 4. ON HEARING THE RIVAL SUBMISSION WE ARE OF TH E CONSIDERED VIEW THAT THE REVENUE AUTHORITIES HAVE ADOPTED A VERY RE ASONABLE APPROACH OF DISALLOWANCE OF A PALTRY SUM OF RS.8 000/- SPECIALL Y WHEN THE CORROBORATIVE EVIDENCES WERE LACKING ON THE PART OF THE ASSESSEE. SINCE ITA NO.2254/AHD/2007 (BY ASSESSEE) & ITA NO.2256/AHD/2007 (BY REVENUE) SHRI RAVINDRA M.SHAH VS. ASST.CIT ASST.YEAR 2003-04 - 7 - BEFORE US THE ASSESSEE WAS ALSO UNABLE TO IMPROVE HIS CASE THEREFORE FOLLOWING THE PAST HISTORY WE HEREBY AFFIRM THE FI NDING OF THE LEARNED CIT(APPEALS). THEREFORE THIS GROUND IS DISMISSE D. 5. THE NEXT GROUND OF THE ASSESSEE IS IN RESPECT OF DISALLOWANCE OF ACCIDENT EXPENSES. 5.1. ON VERIFICATION OF THE ANNUAL ACCOUNTS IT WAS NOTICED THAT A SUM OF RS.46 408/- WAS DEBITED TOWARDS ACCIDENT EXPENSES. ON ENQUIRY IT WAS FOUND THAT OUT OF THE SAID TOTAL CLAIM; A CLAIM WAS MADE IN RESPECT OF ONE TRUCK AMOUNTING TO RS.5 890/- WHICH WAS NOT OWNED B Y THE ASSESSEE. THE ASSESSING OFFICER HAS MENTIONED THAT THE APPELL ANT HAD ALREADY PAID THE CARTING CHARGES THEREFORE THERE WAS NO LOGIC OR REASONABLE CAUSE FOR DEBITING THE SAID SUM IN THE PROFIT & LOSS ACCOUNT. WHEN THIS MATTER WAS REACHED BEFORE THE FIRST APPELLATE AUTHORITY H E HAS MENTIONED THAT THE IDENTICAL ISSUE HAD COME UP IN ASSESSMENT YEAR 2000 -01 WHEREIN IT WAS DECIDED AGAINST THE ASSESSEE. HE HAS ALSO NOTED T HAT THE APPELLANT HAD FAILED TO SUBSTANTIATE THAT WHY A LIABILITY OF A T HIRD PARTY WAS CLAIMED BY THE ASSESSEE. IN THE ABSENCE OF EXPLANATION AND FO LLOWING THE PAST HISTORY THE SAID DISALLOWANCE WAS CONFIRMED. BEFO RE US LD. COUNSEL FOR THE ASSESSEE HAS NOT CONTESTED THIS CLAIM SERIO USLY SPECIALLY CONSIDERING THE PAST HISTORY OF THE CASE WHICH HE H IMSELF HAS RELIED UPON THEREFORE IN THE ABSENCE OF ANY SUPPORTING EVIDEN CE WE HEREBY AFFIRM THE FINDINGS OF THE AUTHORITIES BELOW AND DISMISS T HIS GROUND. ITA NO.2254/AHD/2007 (BY ASSESSEE) & ITA NO.2256/AHD/2007 (BY REVENUE) SHRI RAVINDRA M.SHAH VS. ASST.CIT ASST.YEAR 2003-04 - 8 - 6. NEXT GROUND IN RESPECT OF VEHICLE EXPENSES AND D EPRECIATION WHICH WAS DISALLOWED AT THE RATE OF 10% AND TELEPHO NE EXPENSES WHICH WAS DISALLOWED AT 1/10 TH OF THE TOTAL CLAIM. 6.1. REGARDING VEHICLE EXPENSES AND DEPRECIATION I T WAS NOTED BY THE ASSESSING OFFICER THAT A CAR WAS AT THE DISPOSAL ON LY OF THE ASSESSEE THEREFORE THE PERSONAL USE OF THE SAID CAR COULD N OT BE AVOIDED. THE ASSESSING OFFICER HAS ALSO NOTED THAT NO LOG-SHEET ABOUT THE USAGE OF THE CAR WAS MAINTAINED BY THE ASSESSEE. HE HAS ALSO NO TED THAT THERE WAS NO OTHER VEHICLE AT THE DISPOSAL OF THE ASSESSEE. ON ACCOUNT OF THOSE FACTS AND AN ADHOC DISALLOWANCE AT THE RATE OF 10% OUT OF THE TOTAL EXPENDITURE CLAIMED WAS MADE. LIKEWISE THE ASSESSING OFFICE R HAS NOTED THAT A SUM OF RS.2 35 562/- WAS DEBITED TOWARDS TELEPHONE BILLS. OUT OF THE TOTAL EXPENDITURE THE ASSESSING OFFICER HAS DISALL OWED 10% BEING EXPENDITURE PERSONAL IN NATURE. 6.2. THE FIRST APPELLATE AUTHORITY HAS AFFIRMED THA T THE PERSONAL USAGE IN RESPECT OF VEHICLE AS WELL AS TELEPHONE COULD NOT B E DENIED. HE HAS ALSO NOTED THAT IN THE PAST THE DISALLOWANCE AT THE RAT E OF 10% WAS FOUND REASONABLE BY HIS PREDECESSORS WHILE DISPOSING OF A SSESSEES APPEAL FOR ASSESSMENT YEAR 2001-02. WITH THE RESULT THE ACTI ON OF THE ASSESSING OFFICER AFFIRMED. 6.3. ON HEARING THE SUBMISSIONS OF BOTH THE SIDES A ND CONSIDERING THE DISALLOWANCES BEING TRIFLE IN NATURE HENCE NOT SERI OUSLY CONTESTED BY THE LD. COUNSEL FOR THE ASSESSEE WE HEREBY FOLLOW THE PAST HISTORY OF THE CASE AND AFFIRM THE VIEW TAKEN BY THE REVENUE AUTHORITIE S. THIS IS NOT THE ITA NO.2254/AHD/2007 (BY ASSESSEE) & ITA NO.2256/AHD/2007 (BY REVENUE) SHRI RAVINDRA M.SHAH VS. ASST.CIT ASST.YEAR 2003-04 - 9 - CASE OF A CORPORATE BODY BUT AN ASSESSMENT OF AN I NDIVIDUAL HENCE THE USE OF VEHICLE OR TELEPHONE FOR PERSONAL PURPOSES S HOULD NOT ALTOGEHER BE OVERRULED SPECIALLY WHEN A TAXPAYER IS NOT IN A POS ITION TO SUBSTANTIATE THAT WHOLLY AND EXCLUSIVELY IT WAS INCURRED FOR THE PURPOSE OF BUSINESS AND NO PART OF IT WAS EVER SPENT FOR PERSONAL PURPO SE. IN A SITUATION LIKE THIS THE REVENUE DEPARTMENT HAS LEFT WITH NO OPTIO N BUT TO MAKE AN ADHOC DISALLOWANCE AS IT WAS DONE IN THE PRESENT CA SE. WE HEREBY AFFIRM THE ADDITION IN THE ABSENCE OF ANY CONTRARY EVIDENC E BEING PROVIDED BY THE ASSESSEE IN HIS SUPPORT. GROUNDS ARE DISMISSED . 7. IN THE RESULT ASSESSEES APPEAL IS PARTLY ALLOW ED AND REVENUES APPEAL IS DISMISSED. ORDER SIGNED DATED AND PRONOUNCED IN THE COURT ON 21 ST MAY /2010. SD/- SD/- ( G.D.AGRAWAL ) ( MUKUL SHRAWAT ) VICE PRESIDENT (AZ) JUDICIAL MEMBER AHMEDABAD; DATED 21 / 05 /2010 T.C. NAIR SR. PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANTS. 2. THE RESP ONDENTS. 3. THE CIT CONCERNED. 4. THE LD. CIT(A PPEALS)-II BARODA 5. THE DR AHMEDABAD BENCH. 6. THE GUARD FILE. BY ORDER //TRUE COPY// (DY./ASSTT.REGISTRAR) ITAT AHMEDABAD