×Latest Case Laws on Income Tax by various Income Tax Appellate Tribunals in India
These are the latest case laws decided by various Income Tax Appellate Tribunals (ITAT) of India on Income Tax which have been published recently. The case laws are open for discussion and we invite expert comments from our members on its applicability and effect on relevant issues.
16-04-2019, Ajanta Earthmovers, Section 40(a)(ia), 43B, 14A, Tribunal Pune
This appeal preferred by the assessee emanates from the order of the Ld. CIT(Appeals)-4, Pune dated 28.02.2017 for the assessment year 2011-12 as per grounds of appeal on record which are argumentative in nature.
2. When the matter was called up for hearing today, no one has appeared on behalf of the assessee. It appears from the record that on earlier dates of hearing also, neither the assessee not his Authorized Representative was present to represent the case. The notice of hearing sent to the assessee has not been returned un-served. In these circumstances, it appears that the assessee is not interested in prosecuting the appeal. We have recorded the presence of the Ld. DR. In these facts and circumstances, we proceed to decide the appeal with the assistance of the Ld. DR and materials/ documentary evidences available on record.
3. The brief facts in this case are that the assessee company is engaged in the business of excavation of land and works related to earthmoving and excavation with earthmoving/excavator machineries and rock breakers. The assessee company used its Dooshan Breaker Machines and Catter Piller Machines, JCB in its business. The assessee filed its e-return of income on 10.09.2011 declaring total income at Rs Nil. The said return was processed u/s.143(1) of the Income Tax Act, 1961 (hereinafter referred to as 'the Act'). Thereafter, notice u/s. 148 of the IT Act was issued on 19/02/2015 and was duly served on the assessee company. The assessee was expected to respond to the notice within 30 days from the service of the said notice. In response to the notice, the assessee company has neither filed any reply nor any written submissions to explain its say on the opening of the case by issuing a notice u/s 148 of the Act. Several reminders were sent and also copy of reasons for opening of the case was also sent and duly served upon the assessee. However, the assessee has not given reply or nor given any submissions in response to the notice. First notice U/s 143(2) of the I.T. Act, 1961 dated 04/09/2015 was issued and duly served on the assessee. Subsequently, notice u/s.142(1) were issued on 25/06/2015, 21/08/2015, 04/09/2015, 06/10/2015, 27/10/2015, 23/11/2015 and 02/12/2015 and duly served upon the assessee, calling for computation of income tax, tax audit report, statements of accounts etc. The first and that too partial submission of the assessee was received on 19/11/2015 submitting the return of income, financial statements, a case law but no audit report. During further hearing Shri. Dhanajay A. Shengate, C.A., duly authorized by the assessee attended and submitted a letter stating that the depreciation is allowable as claimed by the company and the same may be allowed. Further, a letter dated 07/01/2016 was written and duly served on the assessee on 13/01/2016 rejecting his objection raised by the assessee on issuance of notice u/s 148 of the Act and the assessee was also given one more and final opportunity to submit the complete information and all documents called for. Thereafter, the assessment proceedings u/s.143(3) r.w.s.147 of the Act was completed by the Assessing Officer assessing total income of the assessee at Rs.26,45,564/- after making following disallowances :
i) Disallowance of Excess Depreciation Claimed Rs.3,95,132/-
ii) Disallowance of expenses on machineries Rs.2,06,651/-
iii) Disallowance of interest u/s.40(a)(ia) of the Act Rs.6,36,018/-
iv) Disallowance of Expenditure in respect of exempt income u/s.14A Rs.4,87,464/-
v) Addition on account of Profit earned on Sale of property Rs.17,29,884/-
4. Aggrieved with the assessment order, the assessee filed appeal before the Ld. CIT(Appeals) who has granted partial relief to the assessee. Now, the assessee filed appeal before us by raising mainly three grounds which have been confirmed by the Ld. CIT(Appeals) for adjudication which are as follows:
1. Disallowance of 5% of the diesel costs i.e.2,06,651/-
2. Disallowance of interest u/s.40(a)(ia) of Rs.6,36,018/-
3. Disallowance of expenditure on exempt income Rs.4,87,464/- Now, we shall proceed for ground-wise adjudication.
5. Ground No.1 is with regard to the disallowance of 5% of the diesel costs incurred on machines for want of log book.
6. During the course of assessment proceedings from the financial statements and other documents submitted by the assessee, the Assessing Officer found that an amount of Rs.41,33,021/- was debited to profit and loss account as expenses on machinery. The Ld. AR was asked to produce various documents and also submit details of expenses on machinery which were not submitted by the Ld. AR nor any reply was given to the notice even after giving one more opportunity. In absence of log books, necessary documents and records, considering the fact, amount of 5% out of the total expenses of Rs.41,33,021/- claimed as ‘expenses on machineries’ incurred was disallowed which comes to Rs.2,06,661/-
7. During First Appellate proceedings, the assessee has reiterated the submissions more or less made the Assessing Officer. However, the Assessee could not produce any necessary evidences in this regard. The Ld. CIT(Appeals) observed as is evident from the assessment order that the assessee was asked to produce log books, oil, diesel consumption books, running hour book and mileage register for each of the machineries, vouchers and bills etc. However, the assessee could not produce/file any of such details asked by the Assessing Officer. The Ld. CIT(Appeals) after considering the submissions of the assessee, assessment order held that reasonable disallowance of only 5% of the entire claim made by the Assessing Officer was justified.