M/S SHREE RADHE INDUSTRIES LTD vs. ASSTT.COMISSIONER OF INCOME TAX, BILASPUR(CG)

IN THE INCOME TAX APPELLATE TRIBUNAL, RAIPUR BENCH, RAIPUR

BEFORE S/SHRI N.S SAINI, ACCOUNTANT MEMBER AND PAVAN KUMAR GADALE, JUDICIAL MEMBER

ITA No. 76/Rpr/2012 Assessment Year : 2005-2006

M/s.Shree Radhe Industries, Vs. ACIT, Circle 1(1), Bilaspur. Popular Market, Gandhi Bag, Nagpur-440001. PAN/GIR No. (Appellant) .. ( Respondent)

Assessee by : Shri R.K.Ghaneniwala, AR Revenue by : Shri Sanjay Kumar, DR

Date of Hearing : 08/01/ 2018 Date of Pronouncement : 11 /01/ 2018

O R D E R Per Pavan Kumar Gadale, JM This is an appeal filed by the assessee against the order of the CIT(A)-

Bilaspur, dated 26.3.2012 for the assessment year 2005-06.

following additions:

i) Rs.73,50,000/- as share application money. ii) Rs. 2,00,000/- unsecured loan iii) Rs.1,11,442/- pooja expenses iv) Rs. 66,000 traveling expenses

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Rs.73,50,000/-, the relevant facts are that the assessee derives income from

running a sponge iron plant. The Assessing Officer found that the assessee

has received share application money of Rs.90,00,000/- from seven kolkiata

based parties as under:

1) Tech Build Impex Ltd., : Rs.10,50,000/-

2) Lupin Vinimay Pvt Ltd., : Rs.10,50,000/-

3) Zipper Mercantiles Pvt Ltd., : Rs.10,50,000/-

4) Suydama Trading and Invest ltd.: Rs.10,50,000/-

5) Segment Mercantiles Pvt Ltd.,: Rs.10,50,000/-

6) Suraj stone Corporation Ltd., Rs.10,50,000/-

7) Midpoint Marketing Pvt Ltd., Rs.10,50,000/-

Rs.90,00,000/-

The Assessing Officer required the assessee to file documentary evidence to

establish the share application received from the above parties. However,

the assessee failed to substantiate and establish the capital investment

made by the above parties with copies of share application forms, details of

their income, balance sheet, capital account, names, address of the

directors of the companies and bank statement. Therefore, the Assessing

Officer added the same to the income of the assessee.

3 ITA No. 76/Rpr/2012 Assessment Year : 2005-2006

evidences, to which, he called for a remand report from the Assessing

Officer. The Assessing Officer endorsed the findings of the Assessing Officer

made at the assessment stage. Before the CIT(A), the assessee pointed out

that there is a discrepancy in the assessment order on addition made on this

account and share application money should be Rs.73,50,000/- instead of

Rs.90,00,000/-. The explanation of the assessee was found acceptable and

the CIT(A) reduced the addition to Rs.73,50,000/-.

provided all details including PAN, date and number of account payee

cheques, share application form, resolution copies of respective companies

with their names and address, which have not been considered either by the

Assessing Officer or the CIT(A). He, therefore, urged to delete the addition

based on the above details furnished by the assessee.

authorities and materials available on record. In the instant case, we find

the assessee has received Rs.73,50,000/- as share application money from

different Kolkata based parties. The CIT(A) has observed that the primary

documents like bank statement of the assessee companies, their balance

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sheets and capital accounts, its own bank statement alongwith the details of

debit and credit entries have not been filed either before the Assessing

Officer or before him. On perusal of copies of allotment letter of shares, it is

seen that the signature of the authorized signatory is missing and nowhere

the resolution passed by the applicant companies suggest investment of

share application in the assessee company. Copies of income tax returns

expect in the case of Suraj Stone Corporation Limited, were not furnished.

Before us also, the assessee could not produce any evidence or substantiate

with cogent materials to prove the creditworthiness and genuineness of

transaction by the applicant companies. Hence, we confirm the addition of

Rs.73,50,000/- and dismiss the ground of appeal of the assessee.

the assessee did not press this ground, therefore, same is dismissed as not

pressed.

the facts are that the Assessing Officer noticed that the assessee has

claimed Rs.1,39,276/- as pooja expenses. The Assessing Officer after

allowing rebate of Rs.27,834/- relatable to Diwali and Vishakarma festival,

disallowed Rs.1,11,442/- and added the same to the income of the assessee.

5 ITA No. 76/Rpr/2012 Assessment Year : 2005-2006

to claim pooja expenses which are invariably incurred in the business

premises for the purpose of business. The expenses are incurred to boost

the morale of the employees and to motivate them to devote their duties for

the best interest of the company.

available on record. The main reason for disallowing the pooja expenses by

the lower authorities is that the assessee company being an artificial juridical

person, the pooja expenses is inadmissible. But the allowability of pooja

expenses is required to be considered for specific purpose in order to bring

peace and harmony amongst the labour-oriented factory which involves

various sentiments and religious fervor. Before us, the learned Counsel has

not been able to specify the major pooja performed on which expenditure

stands incurred for the purpose of business of the assessee. However, the

assessee incurred some expenses to motivate the morale of the employees

to perform various religious activities in the factory premises. In our

considered view, it would meet the ends of justice, if we restrict the

disallowance to 50% out of the total expenses incurred by the assessee.

6 ITA No. 76/Rpr/2012 Assessment Year : 2005-2006

Therefore, we modify the orders of lower authorities and the assessee gets

relief of Rs.55,771/- . This limb of the ground is partly allowed.

find that the assessee had claimed traveling expenses of Rs.20,22,219/-.

The Assessing Officer disallowed Rs.2,00,000/- out of total expenses

considering the fact that the personal of Directors are not ruled out. On

appeal, the CIT(A) following the decision of Hon’ble Gujarat High Court in

the case of Sayaji Iron and Engg Co. vs CIT, 253 ITR 749(Guj) restricted the

disallowance to Rs.66,000/-.

record. Considering the turnover of the assessee and also the fact that the

assessee could not substantiate with proper evidence , we do not find any

merit in the ground of the assessee. We, therefore, confirm the order of the

CIT(A) and dismiss this limb of the ground of the assessee.

Order pronounced on 11/01/2018. Sd/- sd/- (N.S Saini) (Pavan Kumar Gadale) ACCOUNTANT MEMBER JUDICIALMEMBER Raipur; Dated 11 /01/2018

7 ITA No. 76/Rpr/2012 Assessment Year : 2005-2006

B.K.Parida, SPS Copy of the Order forwarded to : 1. The Appellant : M/s.Shree Radhe Industries, Popular Market, Gandhi Bag, Nagpur-440001 2. The Respondent. ACIT, Circle 1(1), Bilaspur 3. The CIT(A)- Bilaspur 4. Pr.CIT- Biulaspur 5. DR, ITAT, Raipur 6. Guard file. //True Copy//

BY ORDER,

SR.PRIVATE SECRETARY ITAT, Raipur