KALINGA JUTE PRODUCTS PVT. LTD.,DHENKANAL vs. ITO, WARD-1(3), BHUBANESWAR

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ITA 357/CTK/2016Status: DisposedITAT Cuttack18 January 2017AY 2012-135 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal found that while some expenses were not properly vouched, the disallowances made by the lower authorities were excessive. The disallowance for general expenses was reduced from 10% to 5%, and for packing material expenses from 1% to 0.5%.

What were the facts?

The assessee claimed general expenses and packing material expenses, but failed to produce adequate bills and vouchers for verification. The Assessing Officer and CIT(A) made disallowances on these expenses.

What were the issues?

Whether the disallowance of expenses due to lack of proper vouchers was justified and if the quantum of disallowance was excessive.

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, CUTTACK ‘SMC’ BENCH,

Before: SHRI N.S SAINI

For Appellant: Shri M.Udayapuria/Binod Agarwal, AR
For Respondent: Shri D.K.Pradhan, DR
Pronounced: 18/01

This is an appeal filed by the assessee against the order of CIT(A)-1,

Bhubaneswar, dated 4.7.2016, for the assessment year 2012-13.

2.

In Ground No.1 of the appeal, the grievance of the assessee is that the

CIT(A) is wholly unjustified to confirm the disallowance of 10% of expenses

under seven different heads.

3.

I have heard the rival submissions and perused the orders of lower

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

2 ITA No.357 /CT K/20 16 Asse ssme nt Ye ar :2012-13

Assessing Officer observed that during the year under consideration, the

assessee company has debited an amount of Rs.90,111/- under the head

“general expenses” in the profit and loss account under the major head

“administrative expenses”. The assessee could not produce bills and

vouchers and also could not furnish details of the expenses. He observed that

some of the expenses are not properly vouched and some of the vouchers are

self-made, for which, there was no satisfactory explanation by the assessee.

Therefore, the Assessing Officer disallowed 10% out of total expenses of

Rs.90,911/- and added Rs.9091/- to the income of the assessee.

4.

On appeal, ld CIT(A) confirmed the action of the Assessing Officer

observing that no material evidence was filed before him in support of the

contention that the entire amount of expenses claimed as general expenses

under the major head “administrate expenses” should have been allowed in

full as the entire amount of expenses were properly vouched and verifiable,

duly supported by bills and vouchers and incurred wholly and exclusively for

the purpose of business only and not for any other purposes.

5.

Before me, the submission of ld A.R. of the assessee is that disallowance

out of general expenses is excessive.

6.

On the other hand, ld D.R. supported the orders of lower authorities.

3 ITA No.357 /CT K/20 16 Asse ssme nt Ye ar :2012-13

7.

I find that the disallowance out of general expenses claimed of

Rs.90,911/- has been made by the Assessing Officer @ 10% on the ground

that supporting bills and vouchers were not produced by the assessee. Before

me, though ld A.R. of the assessee reiterated the submissions made before

the Assessing Officer and ld CIT(A) but has not denied that in some of the

cases, bills and vouchers are not available for the expenses claimed under the

head “general expenses” of Rs.90,911/-. I find that it would meet the ends

of justice if the disallowance is sustained at 5% out of the total expenses

claimed by the assessee. I, therefore, modify the order of ld CIT(A) and

restrict the disallowance to 5% out of total expenses claimed by the assessee

and the assessee gets relief of Rs.4545/-. Thus, this ground of apepal is partly

allowed.

8.

In Ground No.2 of the appeal, the grievance of the assessee is that the

ld CIT(A) was wholly unjustified to confirm partial disallowance of Rs.26,872/-

on adhoc basis being 1% of total expenses of Rs.26,87,126/- claimed under

the head “packing material expenses”.

9.

I have heard the rival submissions and perused the orders of lower

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

Assessing Officer observed that in the profit and loss account, the assessee

has debited Rs.26,87,126/- under the head “packing material expenses”.

During the course of assessment proceedings, ld A.R. of the assessee was

4 ITA No.357 /CT K/20 16 Asse ssme nt Ye ar :2012-13

asked to produce the ledger copies and bills/vouchers in support of the

expenses. Ld A.R. of the assessee could not produce the bills and vouchers

nor could he furnish details for such expenses. Therefore, the Assessing

Officer made an estimated disallowance of 2% out of the total expenses of

Rs.26,87,126/- and added Rs.53,743/- to the income of the assessee.

10.

On appeal, ld CIT(A) restricted the disallowance to 1% out of total

expenses of Rs.26,87,126/- claimed by the assessee.

11.

Before me, ld A.R. of the assessee submitted that the disallowance of

expenses under the head “packing materials” claimed by the assessee is

excessive.

12.

On the other hand, ld D.R. supported the order of ld CIT(A).

13.

I find that ld A.R. has not brought any material to controvert the findings

of lower authorities that some of the bills are not produced by the assessee

for verification. However, I also find that there is no mention in the orders of

lower authorities that which of the bills and vouchers are not produced.

Hence, to meet the ends of justice, I set aside the order of ld CIT(A) and

restrict the disallowance under the head “packing expenses” to 0.5% of the

total expenses of Rs.26,87,126/- claimed by the assessee. The order of ld

CIT(A) is modified accordingly. Thus, this ground of appeal is partly allowed.

5 ITA No.357 /CT K/20 16 Asse ssme nt Ye ar :2012-13

14.

In the result, the appeal filed by the assessee is partly allowed. Order pronounced in the open court on 18/01/2017 in the presence of parties. Sd/- (N.S Saini) ACCOUNTANT MEMBER Cuttack; Dated 18/01 /2017 B.K.Parida, SPS Copy of the Order forwarded to : 1. The Appellant : Kalinga Jute Products (P) Ltd., Anand Bazar, Dhenkanal. 2. The Respondent. ITO, Ward -1(3), Bhubaneswar. 3. The CIT(A)-1, Bhubaneswar. 4. Pr.CIT-1, Bhubaneswar. 5. DR, ITAT, Cuttack 6. Guard file. //True Copy// BY ORDER,

ASST.REGISTRAR, ITAT, Cuttack

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