M/S. SWASTIK GAUR GUM INDUSTRIES ,CHURU vs. ITO, WARD-2, CHURU

, 432 & 433/JODH/2018 (A.Y: 2012-13, 2013-14 & 2014-15) M/s Swastik Gaur Gum Vs. ITO, Ward-2, Industries, Churu. VPO Sahwa, Taranagar Rajasthan. Churu – 331302 Rajasthan. PAN/GIR No. : ABFS0150K Appellant .. Respondent Assessee by : Mr.Shafi Mohammad,Adv.AR Revenue by : Ms. Nidhi Nair, JCIT-DR Date of Hearing 11.08.2023 Date of Pronouncement 14.08.2023 आदेश / O R D E R PER BENCH: The three appeals are filed by the assessee against the separate orders of the Commissioner of Income Tax (Appeals)(CIT(A))-3, Jaipur passed u/s 143(3) and 250 of the Act.

2. That the Ld. Commissioner of Income Tax (Appeals) erred in sustaining the disallowance made by the Ld. Income Tax Officer.

3. That the disallowances so made are purely on estimate basis, the expenses so incurred are related to the business hence are the nature of allowable expenses. The disallowances so made are unjustified as the same were duly supported by the vouchers and the books were audited by the Chartered Accountant.

, 432 & 433/Jodh/2018 M/s. Swastik Gaur Gum Industries, Churu - 3 -

8. That the appellant reserves the right to add, alter and/or delete any ground or grounds 4 The brief facts of the case are that, the assessee is a partnership firm and is engaged in the business of manufacturing and trading of Guwal Gum, Korma and churi. The assessee has filed the return of income for the , 432 & 433/Jodh/2018 M/s. Swastik Gaur Gum Industries, Churu - 4 - A.Y 2012-13 on 29.09.2012 disclosing a total income of Rs. 14,39,420/- and the return of income was processed u/s 143(1) of the Act. Subsequently the case was selected for scrutiny under CASS and notice u/s 143(2) and 142(1) of the Act along with the questionnaire was issued. In compliance to the notice, the Ld. AR of the assessee appeared from time to time and submitted the details and produced the books of accounts, bills / vouchers and bank accounts and other details for examination. On perusal of the audited financial statements, the AO found that the assessee has not maintained day to day quantity in the stock register and the assessee firm has not provided complete supporting vouchers/bills of expenses claimed. (i) Whereas the assessee has claimed in the manufacturing account fire wood expenses of Rs. 10,95,617/- and Rs.7,40,261/- towards loading and unloading charges both aggregating to Rs. 18,35,878/-. since the assessee could not produce the complete details and most of the expenses are in the nature of self generated vouchers, hence the AO has estimated the disallowance @ 20% which worked out to Rs.3,67,176/-. (ii) The second disputed issue, the AO found that the assessee has claimed office expenses of Rs. 42,493/- in the profit and loss account, as the details , 432 & 433/Jodh/2018 M/s. Swastik Gaur Gum Industries, Churu - 5 - submitted are incomplete, the A.O has estimated the disallowance @ 20% i.e Rs. 8,499/-.(iii) the third disputed issue, the AO found that the assessee has debited Rs.15,765/- in respect of miscellaneous expenditure in the profit and loss account, since the assessee could not produce the complete details of vouchers, the AO has estimated the adhoc disallowance @ 20% which worked out to Rs. 3,153/-. (iv) The fourth disputed issue that, the assessee has debited vehicle expenses of Rs. 45,607/- in the profit and loss account and since the assessee has not maintained the log book and the vehicle has been utilized for the business and personal purpose, the AO has estimated disallowance @20% i.e Rs9,121/- and (v) Last disputed issue, the AO has disallowed the claim of depreciation estimating @ 20% which worked out to Rs. 9,190/-.Finally the A.O has assessed the total income of Rs.18,36,560/- and passed the order u/s 143(3) of the Act dated 27.03.2015.

5. Aggrieved by the order, the assessee has filed an appeal before the CIT(A), whereas the CIT(A) has considered the grounds of appeal, submissions of the assessee and findings of the AO and has deleted the disallowance of depreciation of Rs. 9,190/- and(i) granted partial relief in , 432 & 433/Jodh/2018 M/s. Swastik Gaur Gum Industries, Churu - 6 - respect of fire wood, loading and unloading expenses and sustained Rs.1,83,588/- and Further the CIT(A) has sustained the disallowance of (ii) office expenses of Rs. 4,243/- (iii) miscellaneous expenses of Rs.1,577/- and (iv) vehicle expenses of Rs. 4,561/- and partly allowed the assessee appeal. Aggrieved by the CIT(A)order, the assessee has filed an appeal before the Honble Tribunal.

6. At the time of hearing, the Ld. AR submitted that the CIT(A) erred in sustaining the partial disallowances irrespective of the fact that the assessee has cooperated and substantiated with the information / details in the assessment proceedings. Further the Ld. AR emphasized that the assessee is in the manufacturing of gum and is a agriculture product and most of the expenses are supported with the vouchers and the Ld.AR substantiated the submissions with the factual paper book, judicial decisions and prayed for allowing the assessee appeal. Contra, the Ld.DR submitted that the assessee has not produced the complete details of expenses before the lower authorities and the Ld. DR relied on the order of the CIT(A)

7. We heard the rival submissions and perused the material on record. The Ld.AR submitted that the CIT(A) has erred in , 432 & 433/Jodh/2018 M/s. Swastik Gaur Gum Industries, Churu - 7 - sustaining the partial disallowances. Whereas the CIT(A) granted partial relief in respect of fire wood, loading and unloading expenses and sustained Rs.1,83,588/- and further the CIT(A) has sustained the disallowance of (ii) office expenses of Rs. 4,243/- (iii) miscellaneous expenses of Rs.1,577/- and (iv) vehicle expenses of Rs. 4,561/-. On perusal of the facts and information we found that the assessee is engaged in the business of manufacturing the gum and by products and the fact remains that the AO in the assessment proceedings has not doubted the claim of the expenditure and accepted that the expenditure was incurred wholly and exclusively for the purpose of business. The AO has observed that the assessee has maintained proper books of accounts and since the assessee could not substantiated with the complete vouchers, the AO has estimated the disallowances and on further appeal the CIT(A) has granted partial relief. Further the A.O has not disputed the genuineness of the expenditure claimed but due to non production of complete bills and voucher has estimated the disallowances. We considering the overall facts, turnover and nature of business of the assessee and to meet the ends of justice direct the Assessing officer to restrict the disallowance of , 432 & 433/Jodh/2018 M/s. Swastik Gaur Gum Industries, Churu - 8 - above expenditure @ 5% and we partly allow the grounds of appeal of the assessee.

ITA Nos 432 & 433/Jodh/2018 A.Y.2013-14 & 2014-15. 9. As the facts and circumstances in these appeals are identical to for the A.Y 2012-13 (except variance in figures) and the decision rendered in above paragraphs would apply mutatis mutandis for these appeals also. Accordingly, grounds of appeal of the assessee are partly allowed.