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Income Tax Appellate Tribunal, “I” BENCH, MUMBAI
Before: SHRI RAJENDRA, AM & SHRI C.N. PRASAD, JM
आदेश / O R D E R
PER C.N. PRASAD, JM:
This appeal is filed by the assessee against the order of CIT(A)-12, Mumbai dated 11.09.2014 for Assessment Year 2000-01 arising out of 2 M/s. Indian Aluminium Co. Ltd. assessment order passed u/s 143(3) r.w.s. 254 of the Income Tax Act, 1961 (in short ‘the Act’).
The only issue in the appeal of assessee is that CIT(A) erred in confirming the disallowance made by Assessing Officer on account of current repairs and replacement of plant & machinery amounting to Rs.82,29,424/-. Briefly stated, the facts are that the issue in appeal came up before the Tribunal for adjudication in & 3352/Kol/2009 and the Tribunal vide order dated 9.2.2011 restored the appeal of assessee to the file of Assessing Officer to examine the issue afresh. The Tribunal observed that there is no material on record to show as to whether this expenditure was incurred to preserve and maintain an already existing asset or the expenditure was incurred to bring a new asset or obtain a new advantage. It was also observed that a mere statement that assessee had incurred current repairs and replacement of plant & machinery is not sufficient to hold that the expenditure is revenue expenditure. With this observation, the Tribunal set aside the matter to the file of Assessing Officer to examine the issue afresh.
In the set aside proceedings, the Assessing Officer required the assessee to submit relevant details to substantiate its claim. The assessee filed written submissions before the Assessing Officer. The Assessing Officer required the assessee-company to produce copies of bills so that the exact nature of expenditure could be identified. The assessee filed reply stating that the bills for purchase of various parts of machinery as required by Assessing Officer is difficult to obtain as the 3 M/s. Indian Aluminium Co. Ltd.
matter is 12 years old. It was submitted that the acquisition of parts of machinery were in various units of the company scattered at many placed in India and it also got merged with M/s. Hindalco Industries Ltd. subsequently. However, the Assessing Officer, not convinced with the reply filed by assessee, once again disallowed the expenditure said to have been incurred by assessee towards current repairs in the absence of details called for not being submitted by assessee. The assessee preferred an appeal before CIT(A) and CIT(A) sustained the disallowance, against which assessee is in appeal before us.
The learned counsel for the assessee submits that detailed submissions were made before lower authorities as to the nature of expenditure incurred by assessee and all the expenditure was incurred only for procurement of parts of machinery and that they are not capable of functioning independently and, therefore, the expenditure was in the nature of current repairs. The learned counsel vehemently submits that the expenditure should be allowed as current repairs.
On the other hand, the ld. DR submits that assessee has never furnished the bills to the Assessing Officer inspite of specific request so that the nature of expenditure can be ascertained and in the absence of bills, vouchers, etc. furnished by the assessee, the Assessing Officer is justified in disallowing the expenditure which was claimed to have been incurred towards current repairs. He strongly supports the orders of the authorities below.
4 M/s. Indian Aluminium Co. Ltd.
We have heard the rival submissions and perused the orders of the authorities below. We find from the assessment order dated 21.11.2012 passed u/s 143(3) r.w.s. 254 of the Act that the Assessing Officer required the assessee to furnish copies of invoices, bills for the expenditure incurred to find out the exact nature of expenditure and to ascertain as to whether such expenditure would fall under current repairs. Instead of copies of vouchers, bills, etc., the assessee seems to have filed only the written submissions making its claim. In the absence of any vouchers, bills, etc. to establish the incurrence of expenditure by the assessee, the Assessing Officer rejected the claim of assessee, which the CIT(A) sustained in his order observing as under :-
“3.4.2 The appellant could not rebut the findings of the A.O. in the present proceedings by producing necessary evidences, except for making written submission and relying upon plethora of judgements which are not squarely applicable to the facts of the instant case. The appellant merely stated that all these expenses fall within the category of 'current repairs' but the facts stated by the original A.O., as reproduced hereinabove, clearly establish that the impugned expenses did not fall within the category of 'current repairs'. If the appellant intends to rebut the findings of the A.O. in the original assessment order in light of the directions of the Hon'ble ITAT, it was its duty to produce the basic particulars / evidences as called for by the A.O. in the impugned proceedings as well as during the 'present appellate proceedings. Here, the basic particulars / evidences are bills and vouchers for purchases as well as incidental expenses but, for which true nature cannot be ascertained. In absence of such bills and vouchers, even genuineness of expenses can reasonably be suspected. The appellant cannot escape from his basic duty to produce such essential and inevitable and primary evidences by just contending that the matter is 12 years' old. In the instant case, the original assessment order was passed on 28.03.2003 wherein the disallowance was made and thereafter the matter has travelled back
5 M/s. Indian Aluminium Co. Ltd. to the A.O. after two appellate stages. As such, the appellant, being aware of continuation of the proceedings for the year under consideration and especially the issue in dispute, it ought to have preserved the relevant material/evidence so as to establish its claim if at all it was a genuine claim. It is a settled proposition of law that an assessee is supposed to preserve its books of account and the relevant documents / material unless and until the proceedings for the concerned year reach to some finality. Here, in the instant case, the appellant was well aware that the proceedings have not reached any finality as yet, so the appellant is now estopped from raising any such plea of "old matter" at this juncture and if such a plea is raised, the adjudicating authority is empowered to draw an adverse inference.”
On a careful reading of the observations of CIT(A), we find that the disallowance was sustained by him as the assessee could not produce the bills and vouchers in respect of the expenditure incurred by assessee. The preliminary evidences of incurring expenditure have not been produced by the assessee. In the absence of such evidences, the lower authorities are justified in rejecting the claim of assessee of incurring expenditure which is said to be in the nature of current repairs. Thus, we do not find any valid reason to interfere with the findings of the lower authorities. The grounds raised by the assessee are rejected.
In the result, the appeal of assessee is dismissed.
Order pronounced in the open court on 20th January, 2017.