RAJ ANSH AUTO WHEELS,AJMER vs. ITO, WARD-2(1), AJMER, AJMER
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Income Tax Appellate Tribunal, JAIPUR BENCHES, “SMC” JAIPUR
Before: SH. SANDEP GOSAIN & DR. M. L. MEENA
Per Dr. M. L. Meena, AM:
The captioned appeal has been filed by the assessee against the
order of the ld. CIT(A) National Faceless Appeal Centre (NFAC), Delhi dated 29.10.2023 in respect of Assessment Year: 2017-18.
2 ITA No. 813/JPR/2023 Raj Ansh Auto Wheels v. ITO
The assessee has raised the following grounds of appeal:
“1. The Ld. CIT(A), NFAC has erred on facts and in law in confirming the addition to the extent of Rs.3,71,107/- out of the addition of Rs.6,67,641/- made by AO u/s 69A of the Act ignoring that it represent the service charges receipt duly credited to the P&L A/c and thus confirming the addition has resulted into double addition. 2. The Ld. CIT(A), NFAC has erred on facts and in law in confirming the addition of Rs.15,17,621/-by treating the sundry creditors as unexplained on the ground that confirmation from sundry creditors is not furnished ignoring that these are trade creditors otherwise verifiable from the purchase bills and the customer statement report available on record. 3. The Ld. CIT(A), NFAC has erred on facts and in law in treating the purchase of furniture of Rs.12,41,740/- as bogus without properly appreciating the facts and making addition thereof ignoring that assessee has not claimed any expenditure in the P&L A/c in respect of purchase of furniture. 4. The Ld. CIT(A), NFAC has erred on facts and in law in confirming the disallowance of claim of depreciation of Rs.1,24,174/- on the purchase of furniture alleged to be bogus. 5. The appellant craves to alter, amend and modify any ground of appeal. 6. Necessary cost be awarded to the assessee.”
Briefly the facts of the case are that the assessee is a partnership
firm which has filed its return of income for assessment year 2017-18
declared an income of Rs.88,780/-. The assessee has been engaged in the
business of sale of passenger cars being authorized dealer of Tata Motors.
The AO being not satisfied with the reply of the assessee has made
3 ITA No. 813/JPR/2023 Raj Ansh Auto Wheels v. ITO addition on multiple issues by making an addition amounting of
Rs.41,06,901/-.
Aggrieved, the assessee went an appeal before the ld. CIT(A) who
has allowed part relief to the assessee.
Ground No. 1 pertains to the confirmation of addition amounting to
Rs.3,71,107/- out of addition of Rs.6,67,641/- made by the AO u/s 69A of
the Act on account unexplained service charges receipt claimed by the
appellant in the profit & loss account.
5.1 The ld. Counsel for the assessee submitted that the ld. CIT(A) was
not justified in treating the service charges of Rs.3,71,107/- received in the
months of August, 2016 as unexplained u/s 69A of the Act. The counsel
submitted that the assessee started the service of Tata Vehicles in July,
2016 and the assessee vide its letter dated 18.12.2019 (APB pg. no. 6) has
explained that in terms of agreement executed with Tata Motors in March,
2016 it had completed the showrooms in service centre on 09.06.2016 and
started service of Tata Vehicles in July, 2016. However, in the month of
July and August, 2016 which provided only labour service and spare parts
were provided by the customers. In the month of July, 2016, service
charges at Rs.49,876/- and in the months of August, 2016, it was
4 ITA No. 813/JPR/2023 Raj Ansh Auto Wheels v. ITO Rs.3,71,107/- . The ledger account and the service charges (APB pg. nos.
9 to 11) in the supporting receipts voucher is at page no. 12 to 19. He
contended that the service charges has been credited to P&L A/c and
offered for tax. He argued that the ld. CIT(A) has himself accepted the
service charges of Rs.49,876/- as explained and therefore, there is no
reason to treat the similar service charges of Rs.3,71,107/- as unexplained.
5.2 The ld. DR supported the impugned order.
Having heard, both the sides and perusal of record in the impugned
order. We find that the assessee has no stock of spare parts during the
relevant period, he claimed the receipt from the service charges, i.e. in the
month of July, 2016 to August, 2017. The finding of the ld. CIT(A) that the
service charges generated amounting to Rs.3,71,107/- cannot be
considered as income and the Assessing Officer justified in treating above
some as unexplained cash deposit, since there were no stock or purchase
of spare parts on the beginning of the showroom. However, in the second
observation of the ld. CIT(A) that he has accepted the service charges
receipts without spare parts in the month of July, 2016 amounting to
Rs.49,876/- as income is self contradictory to its earlier observations of not
treating the service charges of Rs.3,71,107/- as income of the assessee,
5 ITA No. 813/JPR/2023 Raj Ansh Auto Wheels v. ITO under the identical facts of the absence of purchase of spare parts. Further,
the appellant assessee itself has admitted that the assessee started
service of Tata Vehicles in July, 2016 in terms of agreement executed with
Tata Motors in March, 2016 and he has credited the income from services
charges amounting to Rs.3,71,107/- in its profits and loss account, with
support of copy of agreement executed with Tata Motors, on record to
substantiate its claim. In view of that matter, we find no reason to treat
similar service charges of Rs.3,71,107/- as unexplained. Accordingly, the
addition of Rs.3,71,107/- confirmed by the CIT(A) is deleted and thus,
ground no. 1, is allowed.
Ground no. 2 pertains to the confirmation of the addition of
Rs.15,17,621/- by treating the sundry creditors as unexplained on the
ground that confirmation from sundry creditors is not furnished ignoring that
these are trade creditors otherwise verifiable from the purchase bills and
the customer statement report available on record.
The ld. Counsel for the assessee submitted that both the lower
authorities have not appreciated the facts in correct perspective as all these
alleged 5 creditors are trade creditors and not cash creditors. The
assessee has furnished the confirmed copy of account and other evidences
6 ITA No. 813/JPR/2023 Raj Ansh Auto Wheels v. ITO in support of the genuineness of creditors. The counsel argued that the
observation of the ld. CIT(A) that the appellant did not submit copy of the
confirmation of creditors and that the confirmation letter of all suppliers
were provided in the covering letter as furnished before the AO, are
factually incorrect. The ld. Counsel has filed the confirmation and statement
of the account in respect of the alleged five trade creditors (ABP pg. no. 20-
21 and 32-33).
It is seen that the appellant has filed confirmation in the form of copy
of account and customers statement report of Tata Motors, copy of ledger
account and relevant invoices (APB pg. no. 20 to 33) before the authorities
below. In our view, the trade creditors stand verified in absence of rebuttal
by the revenue authorities to the documentary evidences being produced
below then by the appellant as per record. Accordingly, addition of
Rs.15,17,621/- is deleted. Ground no. 2, is allowed.
Ground no. 3 and 4 pertains to treatment of purchase of furniture of
Rs.12,41,740/- as bogus, and disallowance of claim of depreciation of
Rs.1,24,174/-.
The AR submitted that the assessee has not debited and expenditure
of Rs.12,41,740/- in its P&L A/c but capitalized. It is seen that paper book
7 ITA No. 813/JPR/2023 Raj Ansh Auto Wheels v. ITO page no. 37 which is a debit note issued by Shiva Enterprises to the
assessee pertaining to purchase of furniture for Tata Show-room being
claimed by the assessee as capital expenditure and claimed depreciation
on the furniture as well. Since this document at page no. 37 has been filed on 1st July with a oral request to be admitted as an additional evidences as
per rule 29 of ITAT Rules. Considering the principles of natural justice, this
document has been deemed to be admitted as it goes to the root to the
matter in respect of the expenditure claimed regarding the furniture and
depreciation of the same. The ld. Counsel contended that the part of the of
documentary evidences were available before the authorities below which
have been ignored to be considered on merits of the case and, therefore,
we consider it deem fit to remand back the issue of the disputed
expenditure on purchase of furniture and claim of depreciation on furniture
to the file of the Assessing Officer to examine and verify veracity of the
documentary evidence filed on record (APB pg. no. 37) and to be filed in
the course of the assessment proceedings, and decide the issue as per law
after granting sufficient opportunity of being heard. Accordingly, these two
issues of furniture expenses and claim depreciation are remanded back to
the Assessing Officer for afresh adjudication as per law.
8 ITA No. 813/JPR/2023 Raj Ansh Auto Wheels v. ITO 12. In the result, the appeal filed by the assessee is partly allowed.
Order pronounced in the open court on 08.02.2024
Sd/- Sd/- (Sandeep Gosain) (Dr. M. L. Meena) Judicial Member Accountant Member *GP/Sr.PS* Copy of the order forwarded to: (1) The Appellant: (2) The Respondent: (3) The ld. CIT (4) The ld. CIT(A) (5) The DR, I.T.A.T., Jaipur (6) Guard File By Order,
Asstt. Registrar
