NS PAPERS LTD.,MUZAFFARNAGAR vs. ACIT, CIRCLE-2, MUZAFFARNAGAR

Since common grievance is involved in both the appeals they were heard together and are disposed of by this common order for the sake of convenience and brevity. Though the quantum involved may differ. For the sake of our convenience the grounds of appeal in both the appeals read as under :- 2816/Del/2018 A.Y. 2012-13

Having heard the DR we have carefully perused the orders of the authorities below.

Ground No.1 and 2 are of general in nature, therefore, need separate adjudication.

Ground No.3 relates to the addition of Rs.41,03,600/- made by the AO by treating the agricultural income as income from other sources. Facts on record show that the assessee has shown agricultural income of Rs.41,03,600/-. The AO required the assessee to furnish necessary details in respect of such income by furnishing copies of Khasra, Khatoni details of produce, their sales expenses incurred for cultivation, supporting with necessary evidences. The assessee furnished some details on perusal of which the AO found that the entire produce have been sold in cash and the entire expenses have been incurred in cash and, therefore, were not fully verifiable. The AO further found that the assessee had taken the land for cultivation at a lease rent of Rs.1.41 lacs. The AO treated the entire agricultural income as income from other sources and made the addition of Rs.77,85,200/-.

The assessee challenged the action of the AO before the CIT(A). It was claimed that the gross agricultural income of Rs.77,85,200/- was from sale of poplar trees and sugarcane. Expenses of Rs.3681300/- were incurred which resulted into net agricultural income of Rs.41,03,600/-.

The CIT(A) was of the opinion that fixation of lease rent @ 1000 per bigha cannot justify alleged yield of Rs.51.73 lacs. The CIT(A) was of the firm belief that the onus was upon the assessee to justify its claim of agricultural income which it has grossly failed.

We are of the considered view that the CIT(A) has returned a finding on appreciation of the facts which calls no interference addition of Rs.4103600/- is accordingly sustained. Ground No.3 is dismissed.

Ground No.4 relates to the addition of Rs.25,80,79000/- on account of share application money. During the Course of scrutiny assessment proceedings the AO noticed that the assessee has allotted shares as under :-

The assessee was asked to furnish necessary details in support of its claim of share capital alongwith share premium received during the year. The assessee furnished certain details. On field enquiry made by the AO it was found that no such company in the name QNS Casting Private Limited was found at the given address. The assessee was asked to produce Principal Officer of share applicant company the AO also issued letters u/s. 133 (6) of the Act but all such notices were returned back un- served with remarks “No such concern at the given address”. The AO was of the opinion that the assessee has grossly failed in discharging the initial burden cast upon it by the provisions of section 68 of the Act and made the addition which was confirmed by the CIT(A).

We have carefully perused the findings of the CIT(A) while confirming the impugned addition. We find that the CIT(A) has confirmed the addition by returning a finding on proper appreciation of the facts which calls for no interference in the light of the decision of the Hon’ble Jurisdictional High Court of Delhi in the case of NR Portfolio Private Limited 87 DIR 0162 which was confirmed by the Hon’ble Supreme Court. Ground No.4 and 5 are accordingly dismissed.

Ground No.6 relates to the addition of Rs.286846/- on account of penal interest debited to P & L account.

While scrutinizing the return of income the AO noticed that the assessee has claimed expenditure of Rs.655413/- which expenses were penal in nature. The AO found that these expenses were interest on late payment of CST, Entry tax, Excise duty, Service Tax, VAT and sales tax. The AO accordingly made the addition of Rs.655413/-. The CIT(A) was convinced with the claim of expenditure as being not of penal in nature but found interest on income tax of Rs.286846/- not allowable and confirmed the addition of the same.

We are of the opinion that since income tax is not an allowable expenditure, therefore, interest on late payment of income tax cannot be allowed as expenditure. Therefore, no error is found in the findings of the CIT(A). Ground No.6 is dismissed.

Coming to the appeal for A.Y. 2013-14 ground No.1 and 2 are of general in nature and need no separate adjudication.

Ground No.3 relates to the addition on account of share application money u/s. 68 of the Act.

A similar addition has been confirmed by us in A.Y.2012-13 (supra) while ground No.4 of that appeal for the reasons therein. This addition is confirmed. Ground No. 5 and 6 relates to the addition/ disallowances on account of commission of Rs.204462/- and Rs.160958/-.

We have carefully perused the orders of the authorities below. The disallowances made by the AO have been confirmed by the CIT(A) by returning a finding on proper appreciation of the facts, therefore, no interference is called for. These grounds are accordingly dismissed.

In the result, both the appeals filed by the assessee are dismissed.

Decision announced in the open court on 18.10.2022.