2020 (12) TMI 1036

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....year 2007-08 are reproduced as under: 1. Ld. CIT(A) has erred on facts and in law in deleting addition of Rs. 10,61,30,515/- on a/c of purchases from related parties; restricting disallowance out of operating expenses from 30% (Rs. 8,72,60,100/- to 10% (Rs. 2,90,86,700/-); deleting addition of Rs. 2,45,00,000/- out of unverified expenses in 'fixed assets'; and Rs. 36,75,000/- out of depreciation.' The assessee failed to produce books of accounts and also supporting bills/vouchers in support of its claims. 2. The appellant craves leave for reserving the right to amend, modify, alter, add or forego any ground(s) of appeal at any time before or during the hearing of this appeal. 3. Briefly stated facts of the case are that during the year under consideration, the assessee was engaged in the business of manufacturing and trading of aerated and non-aerated beverages products. For the year under consideration, the assessee filed return of income on 27/10/2007 declaring loss of Rs. 14,92,79,440/-. The return of income filed by the assessee was selected for a scrutiny and statutory notices under Income-tax Act, 1961 (in short 'the Act') were issued and complied with. ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... to the manufacturing units, which could not be produced due to Telangana agitation. Invoices and details relating to purchases etc. were produced. The issue would be whether and what documents and papers in respect of the purchases were produced before the Assessing Officer as held by the Commissioner of Income Tax (Appeals) or the findings and observations of the Assessing Officer were justified. 15. Keeping in view the aforesaid position and as the issue and the contention raised by the appellant-assessee has not been specifically dealt with and examined by the Tribunal, we set aside the impugned direction of remit on the third/fourth aspect to the Assessing Officer and would require the Tribunal to examine the said contention afresh. While examining the said question, the papers and documents produced on record by the appellant-assessee before the Assessing Officer would be examined and considered. We make it clear that in case the Tribunal feels and concludes that they cannot decide the question and issue in absence of details and particulars, an order of remand may be passed. Our aforesaid decision would equally apply to the question of claim of depreciation on bottl....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....fore him deleted the disallowance for unverified fixed assets and depreciation thereon. According to the Ld. CIT(A), the assessee has provided specific list of the additions made to the fixed assets that duly signed by the Tax Auditor along with sample copy of the invoices and name and address of the parties from whom assets above Rs. 10 lakhs were purchased. The Ld. CIT(A) is of the view that exhaustive and detailed list of the individual asset added during the year under consideration were submitted before the Assessing Officer, however, no specific assets had been identified and characterised as unexplained investment by the Assessing Officer and therefore addition being on ad hoc manner, he deleted the same. 5. Before us, both the parties appeared through videoconferencing facility. The assessee filed a paper-book and another documents electronically. 6. First of all, the learned counsel of the assessee referred to the assessment order dated 17/06/2019, available on page 38 and 39 of the paper-book, which is passed by the Assessing Officer under section 254/143(3) of the Act in compliance to the direction of the Tribunal in order dated 05/06/2017. He submitted that the As....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....as been found. Hence, assessed accordingly." 9.1 In the facts of the case, it is undisputed that books of accounts and bills/vouchers were not produced before either the Assessing Officer or the Ld. CIT(A). The assessee has only produced Tax Auditor Report in Form No. 3CD which contains a list of the items of fixed asset added during the year alongwith the amount, that too in respect of Visicoolers and bolltes only. Before us, also the assessee has only referred to few sample copies of the invoices for purchase of the fixed assets and no complete invoices have been produced. In absence of bills/invoices or vouchers for the purchase of the fixed assets, purchase of those assets cannot be verified. For proper verification, it is required that each entry of fixed assets added need to be seen along with the relevant bill/invoice of purchase, installation, delivery note etc. In absence of any such details produced before us, we are not in position to verify purchase of the fixed assets as directed by the Hon'ble High Court. In the circumstances, we feel it appropriate to restore this issue to the file of the Assessing Officer for examining and verifying in view of our observation abo....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... accounts were produced before the Assessing Officer. In view of the above, the Ld. Counsel of the assessee submitted that no disallowance should be sustained on ad hoc basis in the instant assessment year. 14. We have heard both the parties through Videoconferencing facility and perused the relevant material on record. We find that the Assessing Officer in the year under consideration has verified the books of accounts particularly in respect of operating expenses. The relevant part of the assessment order is reproduced as under: "3. During the course of assessment proceedings assessee was specifically asked to explain why should not "Bottles and Shells" be treated as plant & machinery, in which block of assets "Crates" were shown in the depreciation chart, rate of depreciation claimed thereon alongwith justification thereof. Also assessee was required to produce bills of operating expenses alongwith ledger copies for verification. Assessee was further required to produce complete books of account, bills and vouchers for verification vide order sheet entry dated 21.02.2014. Books of account in respect of operating expenses were produced on 26.02.2014 and were examined.....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....owance to 10% of the operating expenses. Accordingly, addition to that extent is upheld and the appellant partly succeeds in this ground." Such disallowances have also been confirmed in A.Y. 2008-09 and 2009-10 by the CIT(A)-V. During this year also, the expenses per case is Rs. 52.23 per case which is excessive and unreasonable, therefore, I see no reason to deviate from the findings given by CIT(A) in A.Y. 2007-08, 2008-09 and 2009-10 and accordingly, the disallowance of 10% of operating expenses is confirmed as same are unreasonable and excessive." 16. While deciding the appeal having ITA No. 2340/Del./2011 for assessment year 2007-08, we have already observed that no books of accounts and vouchers were produced before the Assessing Officer and in those facts and circumstances the Tribunal restored this issue back to the file of the Assessing Officer. Whereas in the present assessment year, the Assessing Officer has duly examined the books of accounts produced and particularly examined the operating expenses (which is the issuein- dispute before us). After verification of operating expenses, he has not pointed out any discrepancy in the expenses claimed or in the vou....