ISHVATHAM,KOLKATA V. I.T.O., WARD - 28(1), KOLKATA.

ITA 1120/KOL/2025

AI Insights

The case involves Ishvatham, a firm engaged in the business of buying and selling paintings, which appealed against the disallowance of expenses claimed for the Assessment Year 2013-14. The Assessing Officer had disallowed the expenses on the grounds that the assessee did not furnish any bills and vouchers to support the claim that the expenses were incurred for the business purpose. The Tribunal found that the assessee had indeed engaged in business activities in previous years and had earned commission from sales, thus rejecting the Assessing Officer's claim that the assessee was not carrying on any business. The Tribunal acknowledged the lack of proper documentation for some expenses but deemed that a complete disallowance was excessive, hence the decision to allow a partial disallowance of 20%.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 775707 (ITAT-KOLKATA)
• Duration Of Justice: 3 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-09-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2013-2014
• Appeal Filed On: 23-05-2025
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SHANKAR NASKAR
• Assessee Lawyers: MIRAJ D SHAH
• Keywords: Set aside; Business expenditure

Judgement Text

" P a g e 1 | 4 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA ‘ SMC’ BENCH, KOLKATA BEFORE SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA No.1120/Kol/2025 Assessment Year : 2013-14 Ishvatham, 21A, Ground floor, Charu Chandra Avenue, Tollygunge, West Bengal Vs ITO, Ward 28(1), Kolkata PAN/GIR No.AACFI 6997 E (Appellant) .. ( Respondent) Assessee by : Shri Miraj D Shah, AR Revenue by : Shri Shankar Naskar, Sr DR Date of Hearing : 11 /09/2025 Date of Pronouncement : 12/09 /2025 O R D E R This is an appeal filed by the assessee against the order of ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NAFC), New Delhi NFAC), Delhi dated 24.3.2025 in Appeal No.CIT(A),Kolkata-8/10264/2015-16 passed for Assessment Year 2013-14. 2. In Ground Nos.1 to 5 of appeal, the assessee has challenged the order of the ld CIT(A) in confirming the disallowance of entire expenses made under various heads made by the Assessing officer. Printed from counselvise.com ITA No.1120/Kol/2025 Assessment Year : 2013-14 P a g e 2 | 4 3. Briefly stated the facts are that the assessee firm is engaged in the business of purchase and sale of painting and is carrying on the business from the earlier years. During the year under consideration, the assessee has not effected any sale, however, expenses were incurred under various heads namely, business expenses of Rs.2,60,003/-, foreign travel expenses of Rs.7,79,968/-, club facility and subscription charges of Rs.72,864/-, travel expenses of Rs.1,63,594/- and motor car expenses of Rs.14,88,543/-. The assessee has during the year earned commission on sale of painting amounting to Rs.1,23,125/-. 4. In the appellate proceedings, ld CIT(A) confirmed the order of the Assessing officer. 5. After considering the rival submissions and perusing the materials available on record, I find that the assessee is engaged in the business of painting and during the year, the assessee has received commission of Rs.1,23,125/-. The assesse has also incurred various expenses under various heads and, accordingly, claimed the same in the profit and loss account, which were disallowed in entirety by the Assessing officer on the ground that the assessee has not furnished any bills and vouchers in support of the claim that the expenses incurred for the purpose of business of the assessee. However, on the contrary, from the assessment order for the assessment year 2012-13 placed before me, I note that the assessee had purchased six paintings amounting to Rs.21,85,000/- from six individuals and also sold the Printed from counselvise.com ITA No.1120/Kol/2025 Assessment Year : 2013-14 P a g e 3 | 4 paintings to seven individuals/entities. Therefore, the claim of the Assessing officer that the assessee is not carrying on any business is wrong. In my opinion, the expenses cannot be disallowed in entirety on the ground that during the assessee has not made any sale of paintings because the assessee has establishment to do all these activities, nevertheless, during the year, no sale/purchase of paintings were recorded. I have also examined the nature of these expenses and found that these types of expenses are required to be incurred in any kind of business. Besides, in income tax law, the tax authority can disallow expenses claimed by a business entity, if they are considered excessive or unreasonable. This is particularly relevant for expenses paid to related parties or for which proper documentation is lacking. The onus is on the taxpayer to prove that the expenses were incurred wholly and exclusively for business purposes. In the assessment order, the Assessing Officer is of the view that the assessee has failed to produce any evidential documents. In these circumstances, I am of the view that a reasonable disallowance could be made. Accordingly, I set aside the order of the ld CIT(A) and direct the AO to disallow the expenses under various heads to the tune of 20% of the total expenses. Ground Nos.1 to 5 of appeal stand partly allowed. 6. Ground Nos. 6 to 18 are not pressed; therefore, they are not being adjudicated upon. Printed from counselvise.com ITA No.1120/Kol/2025 Assessment Year : 2013-14 P a g e 4 | 4 7. In the result, appeal of the assessee is partly allowed. Order dictated and pronounced in the open court on 12/9/2025. Sd/- (RAJESH KUMAR) Accountant Member Kolkata: Dated 12 /09/2025 B.K.Parida, Sr. PS (OS) Copy of the Order forwarded to : By order Asst.Registrar, Itat, Kolkata 1. The Appellant : Ishvatham, 21A, Ground floor, Charu Chandra Avenue, Tollygunge, West Bengal 2. The respondent: ITO, Ward 28(1), Kolkata 3. The CIT(A)-,NFAC, Delhi 4. Pr.CIT, Kolkata 5. DR, ITAT, Kolkata 6. Guard file. //True Copy// Printed from counselvise.com "