METAL IMPEX,MUMBAI vs. ITO 19(2)(3)(NEW) ITO 15(1)(4) (ERSTWHILE), MUMBAI

आयकर अपीलीय अधिकरण “एक-सदस्य मामला” न्यायपीठ म ुंबई में। IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, MUMBAI माननीय श्री शक्तिजीत दे, न्याययक सदस्य एवुं माननीय श्री मनोज कुमार अग्रवाल ,लेखा सदस्य के समक्ष। BEFORE HON’BLE SHRI SAKTIJIT DEY, JM AND HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM (Hearing Through Video Conferencing Mode) आयकरअपील सं./ (धििाारण वर्ा / Assessment Year: 2010-11) Metal Impex ITO-19(2)(3), Mumbai-(Present) C/o. D.C. Bothra & Co.LLP (CA) ITO-15(1)(4), Mumbai-(Erstwhile) बिाम/ 2nd Floor, Matru Mandir, Tardeo Road 297, Tardeo Road Wille Mansion, 1st Floor Mumbai – 400 007. Vs. Opp. Bank of India, Nana Chowk Mumbai – 400 007. स्थायीलेखासं./जीआइआरसं./PAN/GIR No. AAHFM-5317-M (अपीलाथी/Appellant) (प्रत्यथी / Respondent) : Assessee by : Shri Raj Kumar Singh-Ld. AR Revenue by : Ms. Smita Verma – Ld. Sr. DR सुनवाई की तारीख/ : 22/03/2021 Date of Hearing घोषणा की तारीख / 05/04/2021 : Date of Pronouncement आदेश / O R D E R Per Manoj Kumar Aggarwal (Accountant Member)

1. That the Id, C.I.T. (Appeals) has erred in law in confirming the disallowance made by the Id. A.O. of entire business expenses debited under the head Office Expenses & Maintenance, Packing Charges and Petrol Expenses aggregating to Rs. 63,120/- without properly appreciating the facts that these recurring expenses were incurred exclusively and in the regular course of day to day business activities carried on by the appellant.

2. That the Id. C.I.T. (Appeals) has legally erred without properly appreciating the facts of the case in confirming the disallowance made by the Id. A.O at Rs.8,41,277/- being the differences in account of creditor M/s. Bansal Wire Industries which had aroused in earlier years more than a year ago and not in the assessment year under appeal. As evident, the assessee is aggrieved by confirmation of certain adhoc expense disallowance as well as addition on account of reconciliation difference in the account of M/s Bansal Wire Industries.

2. We have carefully heard the rival arguments and perused relevant material on record. Our adjudication to the subject matter of appeal would be as given in succeeding paragraphs.

3. The material facts are that the assessee being resident firm stated to the engaged in trading of metals was assessed us 143(3) on 30/03/2013 wherein certain disallowances / additions were made in the hands of the assessee which are the subject matter of appeal before us.

4. Disallowance of Expenditure 4.1 The assessee claimed expenses of Rs.29,000 on account of office & maintenance, Rs.22,840/- as packing charges and Rs.11,280/- as petrol expenses. Since the assessee failed to submit any cogent explanation, these expenses were disallowed. The addition, upon confirmation by Ld. CIT(A), is under challenge before us. 4.2 Upon perusal of assessee’s submissions, we find that all the three expenditure are petty expenditure and are of recurring in nature. The assessee incurred similar expenses in earlier assessment year also. Therefore, though the assessee failed to furnish satisfactory explanation, however, keeping in view the fact that the expenditure was recurring in nature, we direct Ld.AO to restrict the disallowance to the extent of 25% of total expenditure of Rs.63,120/-. The same comes to Rs.15,780/-. The ground stand partly allowed.

5. Addition on account of Reconciliation difference 5.1 It transpired that the assessee had opening balance difference of Rs.8.41 Lacs in the account of one sundry creditor namely M/s Bansal Wire Industries. The assessee reflected opening balance of Rs.28.76 Lacs as against Rs.27.92 Lacs confirmed by the creditor. Accordingly, Ld. AO added the differential of Rs.8.41 Lacs to the income of the assessee treating the same to be bogus / incorrect liability. 5.2 Upon perusal of ledger of M/s Bansal Wire Industries from financial years 2008-09 to 2012-13, we find that the assessee has continuous regular dealing with the said creditor. It is admitted position that the difference of Rs.8.41 Lacs as added to the income of the assessee pertains to opening balance difference only. Therefore, it would not be correct to say that the differential amount was bogus / incorrect liability which has ceased to exist during the year. The closing balance for the year has been carried forward to the subsequent years and the creditor’s account is a running account. There could be various reasons for mismatch in the opening balance and the same is matter of reconciliation. However, it could not be concluded that the liability was bogus or an incorrect liability. Moreover, the difference has arisen in the earlier years and taxing the same in this year without making out a case of cessation of liability, would not be sustainable. Therefore, on the facts and circumstances of the case, we are inclined to delete the impugned addition. The ground raised, in this regard, stands allowed.

Conclusion 6. The appeal stands partly allowed in terms of our above order.

Order pronounced on 5th April, 2021.

Sd/- Sd/- (Saktijit Dey) (Manoj Kumar Aggarwal) न्याययक सदस्य / Judicial Member लेखा सदस्य / Accountant Member मुंबई Mumbai; यदनांक Dated : 05/04/2021 Sr.PS, Jaisy Varghese आदेशकीप्रधिधलधपअग्रेधर्ि/Copy of the Order forwarded to : 1. अपीलाथी/ The Appellant 2. प्रत्यथी/ The Respondent 3. आयकरआयुि(अपील) / The CIT(A) 4. आयकरआयुि/ CIT– concerned 5. यवभागीयप्रयतयनयध, आयकरअपीलीयअयधकरण, मुंबई/ DR, ITAT, Mumbai 6. गार्डफाईल / Guard File आदेशाि सार/ BY ORDER,