THE ACIT, CIRCLE-2(1)(1), AHMEDABAD vs. FAIRDEAL SUPPLIERS LIMITED, AHMEDABAD
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Income Tax Appellate Tribunal, “B” BENCH, AHMEDABAD
Before: SHRI WASEEM AHMED&
IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, AHMEDABAD BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER & Ms. MADHUMITA ROY, JUDICIAL MEMBER आयकर अपील सं./I.T.A. No. 420/Ahd/2023 (�नधा�रण वष� / Assessment Years : 2018-19)
The ACIT Fairdeal Suppliers बनाम/ Circle-2(1)(1), Ahmedabad Limited Vs. 4th Floor, Shalin Building, Near Nehru Bridge, Ashram Road, Ahmedabad - 380009 �थायी लेखा सं./जीआइआर सं./PAN/GIR No. : AAACF2878C (Appellant) .. (Respondent) Shri Alpesh Parmar, Sr. DR अपीलाथ� ओर से /Appellant by : ��यथ� क� ओर से/Respondent by : Shri P. F. Jain, A.R. Date of Hearing 13/02/2024 Date of Pronouncement 22/03/2024 O R D E R PER Ms. MADHUMITA ROY - JM: The instant appeal filed at the instance of the Revenue is directed against the order dated 29.03.2023 passed by the National Faceless Appeal Centre (NFAC), Delhi, arising out of the order dated 31.05.2021 passed by the NFAC, Delhi under Section 143(3) r.w.s. 144B of the Income Tax Act, 1961 (hereinafter referred as to ‘the Act’) for Assessment Year 2018-19.
ITA No. 420/Ahd/2023 (ACIT vs. Fairdeal Suppliers Limited) A.Y.– 2018-19 - 2 – 2. The deletion of addition made on account of transactions with struck off company of Rs.1,45,43,101/- is the subject matter before us.
We have heard the rival submissions made by the respective parties and we have also perused the relevant materials available on record.
During the course of assessment proceeding, it was found that the assessee repaid the above amount to one M/s. Sonata Solutions Ltd., a company whose registration was cancelled by MCA. The maximum amount outstanding during the year was Rs.2,25,43,101/-, details whereof was directed to be furnished. The assessee on 18.01.2021 furnished the ledger account of the transactions with the said company from 01.04.2014 to 31.03.2018. It was further mentioned that no payment was made during the year and the amount of Rs.1,45,43,101/- is booked as income during the year as amount written back. Further that, no transaction took place with that particular company since 2013. However, in the absence of any evidence to that effect, same was disallowed and added to the total income of the assessee which was, in turn, deleted by the Ld. CIT(A). Hence, the instant appeal before us.
Before the First Appellate Authority, the assessee submitted as follows:
ITA No. 420/Ahd/2023 (ACIT vs. Fairdeal Suppliers Limited) A.Y.– 2018-19 - 3 – “3. WRONGFUL ADDITION OF RS.14543101 PERTAINING TO TRANSACTION WITH STRUCK-OFF COMPANY, THOUGH THE SAME IS ALREADY ADDED BY THE APPELLANT IN ITS ACCOUNTS DURING F.Y.2017-18, RESULTING INTO DUPLICATION OF INCOME TAX DEPART (a) That the Ld. AQ has erred in making the addition of Rs. 14543101 pertaining to amount written back about transaction with struckoff company. This amount was booked in the accounts as income on credit side and accounted as Loans Advances Written Off and showing corresponding debit to respective creditors account. (b) That appellant had already shown income in books of account, however this addition is nullifed due to deduction of same in STI on account of this income inadvertently merging into provision written back. However, due to availability of unabsorbed losses, there will be no impact on income”
Apart from that, the assessee submitted following before the Ld. CIT(A):
“1. Details of transactions done with Sonata Solutions Ltd, whose name has been struck-off by MCA: We are submitting hereunder the extract of our reply dated 18.01.2021 point no. 16 which read as under: “….Copies of leger accounts of transaction with Sonata Solutions Ltd from 01.04.2014 to 31.03.2018 are enclosed herewith as Annexure-P. No Repayment is made during the year, however, Rs. 1,45,43, 101/- is booked as income during the year as amount written back. Further there is no Transaction made with this company since 2013. Further, we were not informed by the company about registration being cancelled of Sonata Solutions Ltd and we were totally unaware about this fact..." We are again attaching herewith of leger accounts of transaction with Sonata Solutions Ltd from 01.04.2014 to 31.03.2018 as Exhibit-l. From this ledger copy, it is clear that amount of Rs. 1,45,43, 101/-is already booked as income. The copy of ledger account showing the above referred amount which is written-back as income as Exhibit-II. The ledger account of Sonata Solutions Ltd shows the corresponding ledger account on the debit side of the party and corresponding ledger account's name very clearly. In Tally software, the corresponding
ITA No. 420/Ahd/2023 (ACIT vs. Fairdeal Suppliers Limited) A.Y.– 2018-19 - 4 – account which his credited is always shown. Nonetheless for your kind consideration, we request you to refer Exhibit-Il which related to income account and it is included in other income of P&L A/c. Further, note that there is no transaction carried out by the company during the year under review. We further submit that the income which is already suo-moto shown by the assesee, the same cannot be duplicated by making further addition of similar amount of similar party of similar facts. We humbly request that on the basis of above referred facts, further addition should not be made of Rs. 1,45,43,101/-.” 7. The Ld. CIT (A) considering the entire aspect of the matter, observed as follows:
“5.7 in this regard the appellant stated that it has already offered the amount to tax under head liability/provision no longer required return back and it submitted ledger extract of loans/advances written off along with extract of other income appearing in the profit and loss account. On perusal of same it is observed that the underlined loan amount is forming part of profit and loss account therefore the addition made by the learned AO for sum of Rs. 1,45,43,101/- is deleted.”
The specific lacuna has not been found to be pointed out qua the details of documents by the Ld. CIT(A) as it appears from the said observation. Hence, the order of deletion is found to be cryptic and, thus, quashed. The order of additions passed by the Ld. AO is, thus, upheld.
The deletion of addition of Rs.3,29,19,270/- on account of repairs to plant & machinery is the subject matter before us. A show cause notice dated 24.04.2021 was issued to the assessee with proposal to capitalize repairs and maintenance of Rs.3,29,19,270/-. After allowing depreciation of Rs.49,37,890/-,
ITA No. 420/Ahd/2023 (ACIT vs. Fairdeal Suppliers Limited) A.Y.– 2018-19 - 5 – the balance of Rs.2,79,81,390/- was proposed to be disallowed. The expenses incurred towards repairs and maintenance, therefore, was furnished by the assessee in the manner as follows:
However, the verification of the ledger extracts/bills/invoices submitted by the assessee created doubts in the mind of the Ld. AO as all the bills have not been furnished for verification by the assessee. The difference of claim in the ledger in compare to the bills produced against the same were verified by the Ld. AO and with the following observations 10% of repairs and maintenance to the tune of Rs.32,91,927/- was disallowed:
ITA No. 420/Ahd/2023 (ACIT vs. Fairdeal Suppliers Limited) A.Y.– 2018-19 - 6 – “8. On verification of the ledger extracts and bills/invoices submitted by the assessee under Exhibits III to VII, it is seen that the assessee had not furnished all the bills for verification. There is difference in what is claimed in the ledger when compared to the bills produced against each ledger extract. b. On random verification of the ledger extracts submitted by the assessee, the assesee has claimed same amount twice (same bill twice submitted). Few instances are submitted below: i) Exhibit V-two bills of same invoice no.007/17-18 for Rs. 11,130/- ii)Exhibit V-two bills o same invoice no.00133 for Rs.8,321/ c.Similarly the assessee has claimed a sum of Rs. 12.00.000/- in the ledger-repairs & maintenance to Windfarm (Exhibit V-E) towards purchase of spare parts from Surabhi Windfarms Technologies But copy of the bill is not produced d. It is seen in another ledger extract that in respect of M/s. Surathi Windflarms Technologies Pvt. Ltd, the assessee had debited a sum of Rs.115619-on 06.05.2017 with Bill No.5-17/18-025 with Vch No. 17/18- 0163. However, in respect of two debits of same amount each of Rs.115619/- (totalling to Rs.231238/-) dated 31.05.2017 with Bill Nos. S-17/18-077 (Vch No. 17/18-0321 and 0322), the assessee could not furnish the bills for verification. Further it can be seen that the assessee had mentioned the Bill Nos. with "??" which shows that the assessee had claimed this amount of Rs.231238/- without proper bills For the reasons cited above, 10% of repairs & maintenance in Rs.32,91,927/- is disallowed and added to the total income. Disallowance: Rs.32,91,927/-“
As the Ld. AO objected the above disputed amount which is appearing in multiple vouchers as if the same was recorded twice instead of one and disallowed 10% of the total repairs and maintenance charges. The Ld. CIT(A) observed the following while deleting addition:
“5.9 The learned AO carried out addition of Rs.32,91,927/- on account of 10% of machinery repair expenses. The learned AO contested that the
ITA No. 420/Ahd/2023 (ACIT vs. Fairdeal Suppliers Limited) A.Y.– 2018-19 - 7 – appellant has submitted ledger extract of repair and maintenance charges along with supporting invoices. The learned AO contested that there are few amounts which are same but appearing in multiple vouchers therefore he suspected that these amounts are recorder twice instead of once and he disallowed 10% of total repairs and maintenance charges.”
The narration is not found to be sufficient enough to justify the deletion of addition made by the Ld. CIT(A). Hence, the same is quashed. The order passed by the Ld. AO is, thus, upheld.
In the result, appeal preferred by the Revenue is allowed.
This Order pronounced on 22/03/2024
Sd/- Sd/- (WASEEM AHMED) (MADHUMITA ROY) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad; Dated 22/03/2024 S. K. SINHA True Copy आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent. 3. संबं�धत आयकर आयु�त / Concerned CIT 4. आयकर आयु�त(अपील) / The CIT(A)- 5. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड� फाईल / Guard file. आदेशानुसार/ BY ORDER,
उप/सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपील�य अ�धकरण, अहमदाबाद / ITAT, Ahmedabad
