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Income Tax Appellate Tribunal, RAIPUR BENCH, RAIPUR
Before: S/SHRI N.S SAINI & PAVAN KUMAR GADALE
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.
In this appeal, the assessee has raised grounds against confirmation of
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
2 ITA No. 76/Rpr/2012 Assessment Year : 2005-2006
As regards to first limb i.e. confirmation of share application money of
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
On appeal, before the CIT(A), the assessee filed some additional
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/-.
Still further aggrieved, the assessee is in appeal before us.
Ld A.R. of the assessee submitted that the assessee company has
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.
On the other hand, ld D.R. supported the order of the CIT(A).
We have heard the rival submissions, perused the orders of lower
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
4 ITA No. 76/Rpr/2012 Assessment Year : 2005-2006
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.
As regards to second limb of ground of unsecured loan, the ld A.R. of
the assessee did not press this ground, therefore, same is dismissed as not
pressed.
As regards to the addition of Rs.,1,11,442/- made on pooja expenses,
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.
On appeal, the CIT(A) confirmed the action of the Assessing Officer.
5 ITA No. 76/Rpr/2012 Assessment Year : 2005-2006
Ld A.R. of the assessee submitted no monitary limit has been assigned
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.
Ld D.R. supported the orders of lower authorities.
We have heard the rival contentions and perused the material
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.
As regards to disallowance of travelling expenses of Rs.66,000/-, we
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/-.
We have heard the rival submissions and materials available on
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.
In the result, appeal filed by the assessee is partly allowed.
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