Shri Harilal Lakhamshi Soni HUF, Adipur-Kutch V. The Income Tax Officer, Ward-2, GANDHIDHAM

ITA 1017/RJT/2009

• Counselvise Citation: 101724914 RSA 2009
• Duration Of Justice: 1 year(s) 7 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-05-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2006-2007
• Appeal Filed On: 08-10-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AVINASH KUMAR

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT BEFORE SHRI A.L. GEHLOT (AM) AND SHRI N.R.S. GANESA N (JM) I.T.A. NO.1017/RJT/2009 (ASSESSMENT YEARS 2006-07) SHRI HARILAL LAKHAMSHI SONI,HUF VS THE ITO, WD.2 HARIBHAI SONI BLDG GANDHIDHAM-KUTCH L.B. SHASTRI ROAD ANJAR-KUTCH PAN : AADHS2863J (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SUMIT SHINGALA RESPONDENT BY: SHRI AVINASH KUMAR O R D E R PER N.R.S. GANESAN, JM THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF CIT(A)-II, RAJKOT DATED 04-08-2009 AND PERTAINS TO ASSESSMENT YEAR 2006-07. THE ONLY ISSUE FOR CONSIDERATION IS DISALLOWANCE OF RS.60,00 0 TOWARDS SALARY EXPENSES. 2. SHRI SUMIT SHINGALA, THE LD REPRESENTATIVE FOR T HE ASSESSEE SUBMITTED THAT DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE PA ID SALARY OF RS.30,000 EACH TO SHRI HEMAL SONI & SHRI ANKIT SONI, SONS OF THE K ARTA OF THE ASSESSEE HUF. HOWEVER, THE ASSESSING OFFICER DISALLOWED THE CLAIM OF THE ASSESSEE ON THE GROUND THAT THE INVOLVEMENT OF SHRI HEMAL SONI AND SHRI ANKIT SONI IN THE BUSINESS WAS NOT SUBSTANTIAL BY ANY MATERIAL EVIDEN CE. IN THE ABSENCE OF ANY MATERIAL TO SHOW THAT BOTH THE ABOVE PERSONS RENDER ED SERVICE THE PAYMENT MADE BY THE ASSESSEE CANNOT BE CONSIDERED TO BE BUS INESS EXPENDITURE. ON APPEAL BY THE ASSESSEE, THE CIT(A) CONFIRMED THE DI SALLOWANCE MADE BY THE ASSESSING OFFICER. THE LD.REPRESENTATIVE FURTHER S UBMITTED THAT THE ASSESSEE HAS FILED CONFIRMATIONS FROM SHRI HEMAL SONI AND SHRI A NKIT SONI, COPIES OF WHICH ARE AVAILABLE AT PAGES 11 & 12 OF THE PAPER BOOK TO SHO W THAT THEY HAVE ACTIVELY PARTICIPATED IN THE BUSINESS OF THE ASSESSEE HUF. HOWEVER, THE CIT(A) WITHOUT ITA NO.1017/RJT/2009 2 ADMITTING THE EVIDENCE IN THE FORM OF CONFIRMATION FILED BY THE ASSESSEE CONFIRMED THE ADDITION. 3. ACCORDING TO THE LD.REPRESENTATIVE OF THE ASSESS EE THE ASSESSEE HAS SUBSTANTIALLY INVOLVED THE ABOVENAMED TWO PERSONS I N THE BUSINESS AND THEREFORE, THE DISALLOWANCE IS NOT CALLED FOR. ON THE CONTRARY, SHRI AVINASH KUMAR, THE LD.DR SUBMITTED THAT BOTH SHRI HEMAL SON I AND SHRI ANKIT SONI WERE STUDENTS AT THE RELEVANT POINT OF TIME. MOREOVER, BOTH OF THEM ARE SONS OF THE KARTA OF ASSESSEE HUF. THEREFORE, THEY COULD NOT H AVE RENDERED ANY SERVICE AT THE RELEVANT POINT OF TIME. HENCE, THE ASSESSING O FFICER HAS RIGHTLY DISALLOWED THE CLAIM OF THE ASSESSEE AND THE SAME WAS RIGHTLY CONF IRMED BY CIT(A). 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND HAVE ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. FOR THE PURPOSE OF ALLOWING THE CLAIM OF THE ASSESSEE IT HAS TO BE NECESSARILY SUBSTANTIA TED BY PRODUCING NECESSARY MATERIAL TO SHOW THAT SHRI HEMAL SONI AND SHRI ANKU R SONI RENDERED THEIR SERVICES FOR THE PURPOSE OF CARRYING ON THE ASSESSE ES BUSINESS. THE ASSESSEE FILED CONFIRMATION LETTERS BEFORE THE CIT(A) FROM T HE ABOVENAMED TWO PERSONS. BOTH OF THEM CLAIM THAT THEY WERE HANDLING THE ADMI NISTRATIVE TASK OF THE BUSINESS. WHEN THE RECIPIENTS OF THE MONEY CLAIM T HAT THEY PARTICIPATED IN THE BUSINESS AND HANDLED THE ADMINISTRATIVE TASK OF THE BUSINESS IT IS NECESSARY TO EXAMINE WHETHER THEY HAVE IN FACT PARTICIPATED IN T HE BUSINESS OR NOT. WITHOUT EXAMINING THE MATERIAL EVIDENCE AND THE CLAIM OF TH E ASSESSEE IT CANNOT BE DISALLOWED MERELY BECAUSE BOTH OF THEM HAPPENED TO BE THE SONS OF THE KARTA OF THE ASSESSEE HUF. SINCE THE LOWER AUTHORITY HAS NO T EXAMINED THE CONFIRMATION LETTERS FILED BY THE RESPECTIVE PERSONS, IN OUR OPI NION, THE MATTER NEEDS TO BE RE- EXAMINED BY THE ASSESSING OFFICER. IT IS ALSO NECE SSARY TO FIND OUT WHAT IS THE ACTUAL ADMINISTRATIVE TASK HANDLED BY THE ABOVENAME D TWO PERSONS. ACCORDINGLY WE SET ASIDE THE ORDER OF THE LOWER AUTHORITY AND R EMAND BACK THE MATTER TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSING OFFIC ER SHALL RE-EXAMINE THE MATTER AND THEREAFTER DECIDE THE ISSUE IN ACCORDANCE WITH LAW AFTER PROVIDING OPPORTUNITY ITA NO.1017/RJT/2009 3 OF HEARING TO THE ASSESSEE. THE ASSESSING OFFICER SHALL BRING ON RECORD HOW THE ABOVENAMED TWO PERSONS, VIZ. SHRI HEMAL SONBI & SHR I ANKIT SONI INVOLVED THEMSELVES IN THE BUSINESS OF THE ASSESSEE HUF. 5. WITH THE ABOVE OBSERVATION, APPEAL OF THE ASSESS EE IS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 13-05-2011. SD/- SD/- (A.L. GEHLOT) (N.R.S. GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER RAJKOT, DT : 13 TH MAY, 2011 PK/- COPY TO: 1. ASSESSEE 2. REVENUE 3. THE CIT(A)-II, RAJKOT 4. THE CIT-I, RAJKOT 5. THE DR, I.T.A.T., RAJKOT (TRUE COPY) BY ORDER ASSTT.REGISTRAR, ITAT, RAJKOT