DEPUTY COMMISSIONER OF INCOME-TAX vs. M/S. SAI ENTERPRISES, AURANGABAD

आदेश / ORDER

PER VIKAS AWASTHY, JM

These two appeals by the Department are directed against the order of Commissioner of Income Tax (Appeals)-1, Aurangabad.

In ITA No.1338/PUN/2016, the Revenue has assailed the order of Commissioner of Income Tax (Appeals)-1 dated 11.03.2016 for the assessment year 2011-12.

2 ITA Nos.1338 & 1483/PUN/2016 A.Ys. 2011-12 & 2012-13

ITA No.1483/PUN/2016, by the Revenue is directed against the order

of Commissioner of Income Tax (Appeals)-1, Aurangabad dated 12.04.2016

for the assessment year 2012-13.

Since, the issues involved in both these appeals are similar and are

arising from same set of facts, these appeals are taken up together for

adjudication and are disposed of vide this common order.

2011-12 was first sent to the assessee through RPAD on 05.03.2018 for

05.04.2018 on the address mentioned in Form-36. On 05.04.2018, none

appeared on behalf of the assessee; therefore, fresh notice was issued for

05.06.2018. The second notice was sent to the assessee through RPAD on

11.04.2018 for 05.06.2018. The notice of appeal ITA No.1483/PUN/2016 for

assessment year 2012-13 was sent on 22.03.2018 through RPAD for

09.05.2018. Despite service of notice, none appeared on behalf of the

assessee on 09.05.2018. The hearing of appeal was adjourned to

05.06.2018. Again on 05.06.2018, none appeared to represent the assessee

to defend the above mentioned appeals. It appears that the assessee is not

keen to pursue the appeals. Therefore, we are proceeding to decide these

appeals with the assistance of ld. DR and material available on record.

ITA No. 1338/PUN/2016 A.Y. 2011-12

“1. On the facts and in the circumstances of the case, the Ld CIT(A) has erred in deleting the addition of Rs.52,91,248/- out of addition of Rs.78,82,954/- made by the Assessing Officer, on account of difference in the account of sundry creditor and assessee's books of account. The Ld.CIT(A) erred in admitting additional evidence u/r. 46A of the IT.

3 ITA Nos.1338 & 1483/PUN/2016 A.Ys. 2011-12 & 2012-13

Rules, without calling for remand report from the Assessing Officer and by accepting the explanation of the assessee. 2. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in restricting the addition of Rs.23,895/-to Rs.2,867/- made by the Assessing Officer on account of advance given for non business purpose. 3. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in restricting the addition of Rs.6,63,250/-to Rs.3,50,000/-, made by the Assessing Officer on account of disallowance of 15% of specified expenses. 4. The appellant craves to leave to add, alter modify, delete and amend any of the above grounds as per the circumstances of the case.”

Commissioner of Income Tax (Appeals) in First Appellate proceedings has

granted relief to the assessee by admitting additional evidence. The

Commissioner of Income Tax (Appeals) did not call for remand report from

Assessing Officer before granting relief to the assessee on the basis of

additional evidence. The ld. DR prayed for reversing the findings of

Commissioner of Income Tax (Appeals) and restoring the addition made by

the Assessing Officer.

the orders of Authorities below. The assessee is engaged in the business of

trading in scrap and manufacturing of plastic granules. In ground No.1 of

appeal, the Revenue has assailed the order of Commissioner of Income Tax

(Appeals) in deleting the addition of Rs.52,91,248/- out of Rs.78,82,954/-

made by the Assessing Officer on account of difference in sundry creditors.

A perusal of the impugned order shows that the Commissioner of Income

Tax(Appeals) has granted part relief to the assessee on the basis of

confirmations received from Skoda Auto India Pvt. Ltd. and M/s.Unitech

Industry. Examination of assessment order (para-5) shows that

confirmations from sundry creditors were already on record during

4 ITA Nos.1338 & 1483/PUN/2016 A.Ys. 2011-12 & 2012-13

assessment proceedings. The Assessing Officer had issued notice u/s.133(6)

of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) to sundry

creditors and had received copies of legder accounts of assessee in their

books of account. The assessee had also filed reconciliation statement

before Assessing Officer in respect of both sundry creditors. Apart from

above documents, no fresh material was available before the Commissioner

of Income Tax (Appeals). The ld. DR has failed to point out the alleged

additional evidence filed by assessee before First Appellate Authority. Since,

the Revenue has failed to show any document that has been accepted by the

Commissioner of Income Tax (Appeals) as additional evidence, there is no

question of seeking remand report from the Assessing Officer on the

document which were already on record and have been examined by the

Assessing Officer during assessment proceedings. Accordingly, ground No. 1

raised in appeal by Revenue is against the facts and lacks merit. Thus, the

ground No. 1 is dismissed.

Commissioner of Income Tax(Appeals) in restricting disallowance/addition

of Rs.23,895/- to Rs.2,867/-. During assessment proceedings, the

Assessing Officer made addition to Rs.23,895/- on account of diversion of

funds to ITC Limited for non business purpose. It is an undisputed fact that

assessee has failed to give any plausible explanation for advancing

Rs.23,895/- to ITC Limited. The Assessing Officer made addition of the

entire amount. In First Appellate proceedings, the Commissioner of Income

Tax (Appeals) restricted the addition to Rs.2,867/- i.e. proportionate interest

@12% and disallowed the amount u/s. 36(1)(iii) of the Act. We do not find

any infirmity in the order of Commissioner of Income Tax(Appeals) in

5 ITA Nos.1338 & 1483/PUN/2016 A.Ys. 2011-12 & 2012-13

restricting the addition on the basis of proportionate disallowance of

interest. Thus, ground No. 2 raised in appeal by Revenue is dismissed.

hoc disallowance to Rs.3,50,000/- in respect of various expenditure viz.

Freight & Transport, Scrap yard expenses, vehicle running expenses etc.

The Assessing Officer made addition of Rs.6,63,250/- on the ground that

some of the vouchers were not available, some vouchers did not have proper

narration, some vouchers did not contain complete addresses of the

recipients and the payments were mostly made in cash. The Commissioner

of Income Tax(Appeals) restricted ad-hoc disallowance to Rs.3,50,000/- on

the ground that Assessing Officer after identifying such vouchers, should

have made specific disallowance in respect of incomplete and missing

vouchers rather than resorting to ad-hoc disallowance of 15% i.e.

Rs.6,63,250/-. Taking into consideration entire circumstances, the

Commissioner of Income Tax(Appeals) restricted the addition to

Rs.3,50,000/-. The order of Commissioner of Income Tax(Appeals) is quite

reasonable and justified. Accordingly, we are of considered view, the

impugned order does not call for any interference and hence, the same is

upheld. Thus, ground No. 3 raised in appeal by Revenue is dismissed.

ITA No. 1483/PUN/2016 A.Y. 2012-13

“1. On the facts and in the circumstances of the case, the Ld.CIT(A) has erred in deleting the addition of Rs.75,29,990/- out

6 ITA Nos.1338 & 1483/PUN/2016 A.Ys. 2011-12 & 2012-13

of addition of Rs.84,69,564/- made by the Assessing Officer, on account of difference in the account of lender M/s Unitech Inc. And assessee's books of account. The Ld. CIT(A) erred in admitting additional evidence u/r. 46A of the IT. Rules, without calling for remand report from the Assessing Officer and by accepting the explanation of the assessee. 2. On the facts and in the circumstances of the case, the Ld.CIT(A) has erred in not discussing the difference of the amounts reflected in the account of the assessee and that of M/s.Unitech Inc., Mumbai, whereby the amount of Rs.17,00,426/- (Rs.26,40,000/- less Rs.9,39,574) has escaped assessment. 3. The appellant craves to add, alter, modify, delete and amend any of the grounds as per the circumstances of the case.”

(Appeals) primarily on the ground that the Commissioner of Income Tax

(Appeals) admitted additional evidence in violation of Rule 46A of the Income

Tax Rules.

(Appeals) granted relief to the assessee on the basis of documents already

available on record and there is no mention of additional evidence being

filed by assessee during First Appellate proceedings. The ld. DR has also

failed to point out the alleged additional evidence, filed during First

Appellate proceedings by the assessee. Accordingly, we find no merit in the

ground No. 1 raised in appeal by the Revenue and accordingly, the

same is dismissed.

Commissioner of Income Tax (Appeals) on the ground that Rs.17,00,426/-

has escaped assessment, as Commissioner of Income Tax (Appeals) has not

made any discussion of this amount in the impugned order. The ld. DR has

failed to point out as to how the order of Commissioner of Income Tax

7 ITA Nos.1338 & 1483/PUN/2016 A.Ys. 2011-12 & 2012-13

(Appeals) is erroneous and the amount as stated above has escaped assessment. We are of opinion that the order of Commissioner of Income Tax (Appeals) is well reasoned and justified. We find no reason to interfere with the same. Accordingly, ground No. 2 raised in appeal by Revenue is dismissed.

Order pronounced on Wednesday, the 20th day of June, 2018

Sd/- Sd/- (डी. क�णाकरा राव/D. KARUNAKARA RAO) (�वकास अव�थी /VIKAS AWASTHY) लेखा सद�य/ACCOUNTANT MEMBER �या�यक सद�य/JUDICIAL MEMBER

पुणे / Pune; �दनांक / Dated : 20th June, 2018 SB आदेश क� ��त�ल�प अ�े�षत / Copy of the Order forwarded to : अपीलाथ� / The Appellant. 1. ��यथ� / The Respondent. 2. 3. The CIT(Appeals)-1, Aurangabad. 4. The Pr. CIT-1, Aurangabad. 5. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, “बी” ब�च, पुणे / DR, ITAT, “B” Bench, Pune. गाड� फ़ाइल / Guard File. 6.

// True Copy // आदेशानुसार / BY ORDER,

�नजी स�चव / Private Secretary आयकर अपील�य अ�धकरण, पुणे / ITAT, Pune.