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Income Tax Appellate Tribunal, RAJKOT BENCH, RAJKOT
Before: MS. SUCHITRA KAMBLE & SHRI WASEEM AHMED
IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT BEFORE MS. SUCHITRA KAMBLE, JUDICIAL MEMBER & SHRI WASEEM AHMED, ACCOUNTANT MEMBER I.T.A. No. 78/Rjt/2016 (Assessment Year: 2012-13) DCIT Vs. M/s. Eagle Motors Pvt. Ltd. Circle-1(2), “Eagle House”, Near Moti Tanki Rajkot Chowk, Rajkot [PAN No.AABCCE4777C] (Appellant) .. (Respondent) Appellant by : Shri Shramdeep Sinha, CIT D.R. Respondent by : None Date of Hearing 08.09.2022 Date of Pronouncement 12.10.2022 O R D E R PER Ms. SUCHITRA KAMBLE - JM:
This appeal is filed by the Revenue against the order dated 21.12.2015 passed by the Ld. CIT-(Appeals)-1, Rajkot for A.Y. 2012-13.
The grounds of appeal raised by the Revenue read as under: “1. The Ld. CITA) has erred on facts and in law in entertaining new evidences without calling for remand report and thus violated the principals of natural justice available to the Revenue. 2. The LD. CIT(A) has erred on facts and in law in deleting the disallowances made u/s. 43B out of VAT and Entry Tax on the ground that in the revised return the assesse has added back the same. However, the ld. CIT(A) failed to appreciate that, the items covered u/s. 43B totaled to Rs. 3,68,54,079/- and income as per the original return was Rs. 32,05,900/- and therefore, the revised return should have been Rs.4,00,59,797/-, against which the revised return is only Rs. 3,12,26,463/- and therefore there is no explanation of the remaining sum of Rs. 88,33,516/-. Therefore, even if cognizance of revised return is taken, there is still unexplained difference of Rs.88,33,516/- which is required to be disallowed u/s.43B.
ITA No.78/Rjt/2016 DCIT vs. M/s. Eagle Motors Pvt. Ltd. Asst.Year –2012-13 - 2 - 3. The LD. CIT(A) has erred on facts and in law in deleting the disallowances made of Rs.32,19,912/- being short term provisions appearing in the balance sheet on the basis of fresh evidence. 4. The LD. CIT(A) has erred on facts and in law in deleting the disallowances of Rs. 18,10,343/- made out of spare part expenditure, which was claimed for the first time, without appreciating the facts that, the onus to prove the genuineness of claim of expenditure is upon the assesse which it failed to do so. 5. The LD. CIT(A) has erred on facts and in law in deleting the disallowances of Rs.50,63,022/- out of interest as the assesse had paid huge interest whereas it had not charged any interest on advances made by it. The LD. CIT(A) has erred in holding that the AO has made notional addition of interest income, whereas, the language Of the assessment order is that, there is disallowance out of interest expenditure. 6. The LD. CIT(A) has erred on facts and in law in deleting the disallowances of Rs. 19,82,629/- made u/s. 40(a) due to qualification made by the auditor in the audit report, on the ground that TDS has been deducted. 7. The LD. CIT(A) has erred to appreciate that, no evidence in this regard was given to the AO and no proof of the same is filed during the appellate stage even the appellate is not taking the plea that it had deducted and paid TDS (as can be seen from the submission of the assesse reproduced in the appellate order). 8. It is, therefore, prayed that that order of the Ld. CIT (A) may be set aside and that of the Assessing Officer be restored.”
The assessee company is engaged in the business of dealership of Ford Brand Passenger Cars and running authorised service station. During the assessment proceedings, the Assessing Officer observed that as per the balance sheet, the assessee has not paid VAT amounting to Rs.2,99,83,250/- (Rajkot) and Rs. 68,70,829/- (Jamnagar) totalling to Rs. 3,68,54,079. In absence of proof of payment, the amount of Rs. 3,68,54,079/- was disallowed and added to the total income of the assessee under Section 43B. Further, the Assessing Officer observed that
ITA No.78/Rjt/2016 DCIT vs. M/s. Eagle Motors Pvt. Ltd. Asst.Year –2012-13 - 3 - Rs. 32,19,912/- was shown as short term provision and the same was disallowed. Further, the Assessing Officer made addition of Rs. 18,343/- in respect of discount on spare parts for the first time. The Assessing Officer further observed that the assessee had shown advances given to various individuals, totalling to Rs. 4,21,91,805/-. Since no interest was charged on the advances, interest receivable @ 12% on the loans was computed at Rs. 50,63,022/- and the same was disallowed. The Assessing Officer also disallowed Rs. 19,82,629/- u/s 40(A) of the Act as well as Rs. 5,000/- under Section 14A of the Act.
At the time of hearing none appeared on behalf of the assessee despite giving notice at the address given in Form No. 36 of the appeal memo. No new address was intimated to the registry by the Assessee. Hence, we are proceeding on the basis of the submissions of the assessee reproduced by the CIT(A) in the order as submissions before us.
The Ld. DR submitted that the CIT(A) has admitted the new evidences without calling for remand report and thus, the Assessing Officer has not verified the evidences produced during the appellate proceedings. As regards to Ground No. 2, the Ld. DR submitted that the CIT(A) erred in deleting the disallowances made under Section 43B out of VAT and Entry Tax on the ground that in the revised return the assessee has added back the same. However, the CIT(A) failed to appreciate that the items covered under Section 43B totalled to Rs. 3,68,54,079/- and income as per the original return was Rs. 32,05,900/- and therefore, the revised return should have been Rs. 4,00,59,59,797/-,
ITA No.78/Rjt/2016 DCIT vs. M/s. Eagle Motors Pvt. Ltd. Asst.Year –2012-13 - 4 - against which the revised return is only Rs. 3,12,26,463/- and therefore there is no explanation of the remaining sum of Rs. 88,33,516/-. Therefore, the assessee has not given proper explanation related to said amount of Revised return. As regards to Ground No. 3, the Ld. DR submitted that the CIT(A) erred in deleting the disallowance made of Rs. 32,19,912/- being short term provisions appearing in the balance sheet on the basis of fresh evidence. As regards to Ground No. 4, the Ld. DR submitted that the CIT(A) erred in deleting the disallowance of Rs. 18,10343/- made out of spare part expenditure, which was claimed for the first time without appreciating the fact that the onus to prove the genuineness of claim of expenditure is upon the assessee which it failed to do so. As regards to Ground No. 5, the Ld. DR submitted that the CIT(A) erred in deleting the disallowance of Rs. 50,63,022/- out of interest as the assessee had paid huge interest whereas it had not charged any interest on advances made by it. The CIT(A) erred in holding that the Assessing Officer has made notional addition of interest income, whereas, the language of the assessment order is that, there is disallowance out of interest expenditure. As regards to Ground Nos. 6 and 7, the Ld. DR submitted that the CIT(A) erred in deleting the disallowance of Rs. 19,82,629/- made under Section 40(a) due to qualification made by the auditor in the audit report, on the ground that TDS has been deducted without any evidence given by the Assessee during the assessment proceedings and no proof of the same was filed during the appellate stage though the assessee never took the plea that it had deducted and paid TDS.
ITA No.78/Rjt/2016 DCIT vs. M/s. Eagle Motors Pvt. Ltd. Asst.Year –2012-13 - 5 - 6. We have heard the Ld. DR and perused all the relevant material available on record. As regards to Ground No. 1, it can be seen that from the submissions of the assessee reproduced by the CIT(A), there is no mention of additional evidence filed by the assessee before the CIT(A) and therefore calling for remand report is not justifiable. In fact, the assessee had filed the details at the time of assessment proceedings which is incorporated in para 2 and 3 of the assessment order. Ground No. 1 is dismissed. As regards to Ground No. 2, the observation made by the CIT(A) that the Assessing Officer ignored the details of revised return and in fact the revised return includes the disallowed amount of entry tax and VAT. The Assessing Officer totally ignored the fact that when the said amount was already disallowed there cannot be disallowance of the same because the revised return had replaced the original return prior to assessment and even prior to issue of notice under Section 143(2) of the Act. Thus, there is no need to interfere with the finding of the CIT(A). Ground No. 2 is dismissed. As regards to Ground No. 3, the CIT(A) had observed that if the Assessing Officer had looked at the further details of the balance sheet it would have revealed that the said provision amount comprises of unpaid interest, provision for expenses and warranty which was also reflected in books of accounts available before the Assessing Officer. Therefore, there is no need to interfere with the findings of the CIT(A). Ground No. 3 is dismissed. As regards to Ground No. 4, the CIT(A) has given a categorical finding that the assessee is an authorized dealer of Ford Vehicles having gross revenue of nearly Rs. 100 crores. Discount on vehicles and purchases were duly entered in the books of
ITA No.78/Rjt/2016 DCIT vs. M/s. Eagle Motors Pvt. Ltd. Asst.Year –2012-13 - 6 -
account by the Assessee. We agree with the finding of the CIT(A) that merely on the ground that first time discount expenses on spare part cannot be a valid reason for disallowing the same. Ground No. 4 is dismissed. As regards to Ground No. 5, the addition was on notional income and the Assessing Officer could not point out that the assesses was entitled to receive such interest. There is no need to interfere with the finding of the CIT(A). Ground No. 5 is dismissed. As regards to Ground No. 6 and 7, the assessee submitted before the CIT(A) that due TDS has been deducted and paid subsequently on such amounts. In fact, the assessee has given the copy of ledger account as well during the assessment proceedings. Therefore, the CIT(A) has rightly deleted this addition. Ground Nos. 6 and 7 are dismissed.
In result, appeal of the Revenue is dismissed. This Order pronounced in Open Court on 12/10/2022
Sd/- Sd/- (WASEEM AHMED) (Ms. SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad; Dated 12/10/2022 TRUE COPY TANMAY, Sr. PS 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, राजोकट / ITAT, Rajkot