ASHOK KUMAR JAIN, Jaipur V. ITO, TONK

ITA 1018/JPR/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 47940 (ITAT-JAIPUR)
• Duration Of Justice: 9 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-06-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 12-08-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: DAVENDRA KUMAR
• Keywords: Reasonable cause; Valuation report; Non compliance
• Section: 273B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCH, A, JAIPUR (BEFOERE SHRI R.K.GUPTA AND SHRI N.L.KALRA) ITA NO.1018/JP/10 ASSESSMENT YEAR : 2005-06 ASHOK KUMAR JAIN P/O M/S. VS. THE INCOME TAX OFFI CER, MEHANDVASYA SERVICE STATION, TONK. VPO DIGGI, THE MALPUR DISTT.TONK. (APPELLANT) (RESPONDENT) APPELLANT BY : SH.DAVENDRA KUMAR & DINESH K UMAR RESPONDENT BY: SH. SANJAY KUMAR O R D E R SHRI.N.L.KALRA, A.M. THE ASSESSEE HAS FILED AN APPEAL AGAINST ORDER OF LD.CIT(A), AJMER DATED 04.05.2010. 2. THE ASSESSEE HAS RAISED 12 GROUNDS OF APPEAL AND AT THE TIME OF HEARING THE LD.A/R HAS PRESSED THE GROUNDS OF APPEAL NO.3, 4 AN D 6. HENCE OTHER GROUNDS OF APPEAL ARE DISMISSED AS NOT PRESSED. 3. THE THIRD GROUND OF APPEAL IS AGAINST THE ADDITI ON OF RS.1,50,000/- CONFIRMED BY LD.CIT(A). 4. THE ASSESSEE HAS SHOWN RECEIPTS OF RS.3,75,265/- FROM TANKER RUNNING AND CLAIMED EXPENSES OF RS.4,60,481/- AND THUS CLAIMED LOSS OF RS.85,217/-. A.O. ASKED THE ASSESSEE TO PRODUCE VOUCHERS BUT VOUCHERS WERE NOT PRODUCED EXCEPT FEW BILLS OF DISEAL. THE A.O. REJECTED THE LOSS AND MADE ADDITION OF RS. 1,50,000/- UNDER THE HEAD TANKER RUNNING. 5. BEFORE THE LD.CIT(A), THE ASSESSEE SUBMITTED AS UNDER :- - 2 - THE A.O. HAS DISALLOWED RS.1,50,000/- OUT OF EXPEN SES OF RS.4,60,481/- SHOWN BY THE ASSESSEE REGARDING TANKER. THE DISALLO WANCE HAS BEEN WITH- OUT ANY BASIS. THE APPELLANT HAS PRODUCED THE VOUCH ERS FOR MEASURE EXPENSES REGARDING DIESEL AND PARTICULARS REGARDING WAGES PAID TO DRIVER AND KHALASI. THE INCOME TAX OFFICER, HAS NOT POINTE D OUT ANY THING AGAINST THESE EXPENSES. THE OTHER EXPENSES ARE REGARDING OI LING, SERVICING, TYRE RETAREADING ETC. WHICH ARE PETTY IN NATURE AND THE SERVICES ARE OBTAINED BY THE DRIVERS AT THE SPOT WHILE TRANSPORTATION. THE V OUCHERS FOR THE SAME ARE NOT AVAILABLE IN THE NORMAL COURSE. HOWEVER THESE A RE NECESSARY FOR RUNNING OF THE TANKER. THE A.O. HAS NOT MADE ANY SP ECIFIC MENTION OF ANY PARTICULAR EXPENSE TO BE UNREASONAB LE. THE DISALLO WANCE OF RS.1,50,000/- OUT OF THE EXPENSES IS MERELY ON WHIMS OF THE A.O. AND WITHOUT ANY BASIS. HE HAS EVEN DISALLOWED THE MEASURE PART OF EXPENSES OF DIESEL WHICH IS SUPPORTED BY VOUCHERS AND WAGES OF DRIVER AND KHALA SI. THE DISALLOWANCE OF EXPENSES THEREFORE DESERVES TO BE DELETED. 6. THE LD.CIT(A) AFTER CONSIDERING THE SUBMISSIONS CONFIRMED THE ACTION OF A.O. AFTER OBSERVING AS UNDER :- ARGUMENT OF THE APPELLANT HAS BEEN CONSIDERED BUT THE SAME IS NOT ACCEPTABLE. APPELLANT HIMSELF HAS ADMITTED THAT VOU CHERS FOR EXPENSES LIKE OILING, SERVICING, TYRE RETREADING ETC. ARE NOT AV AILABLE WITH HIM. HE HAS ARGUED THAT THESE EXPENSES ARE PETTY IN NATURE, BU T THE FACT REMAINS THAT TOTAL EXPENSES CLAIM BY HIM ARE RS.4,60,481/- WHER EAS TOTAL RECEIPTS FROM HIRE OF TANKER ARE ONLY RS.3,75,265/-. THIS I S QUITE ABNORMAL. NO BUSINESSMAN WILL RUN A TANKER TO INCUR LOSSES. IN S UCH A SITUATION IT WAS OBLIGATORY ON THE PART OF APPELLANT TO PROVE GENUI NENESS OF EXPENSES BY FILING COPIES OF VOUCHERS. IN THE ABSENCE OF VOUCHE RS. AO HAS RIGHTLY ESTIMATED INCOME FROM TANKER RUNNING BUSINESS AT RS .1,50,000/-. THE ADDITION IS CONFIRMED. GROUND NO.2 OF THE APPEAL IS THUS DISMISSED. 7. WE HAVE HEARD BOTH THE PARTIES. DETAILS OF TANKE R RUNNING EXPENSES ARE AVAILABLE AT PAGE 7 OF THE PAPER BOOK OF THE ASSESSEE. THE A/ C IS AS UNDER :- DISEAL 2,98,921 TDS 8422 WAGES 92,400 HIRE CHARGES 2,66,843 TYRES 25,100 LOSS 85,217/- REPAIRING 19,888 INSURANCE 14,457 TAX 8,550 MEASUREMENT CALCULATION 1,165 ------------- ------------- 4,60,481 4,60,421 ------------- ------------- - 3 - 8. DISEAL EXPENSES ARE MORE THAN HIRE CHARGES AND O NUS WAS ON ASSESSEE TO EXPLAIN AS TO HOW DISEAL EXPENSES ARE MORE THAN HIRE CHARGE S. THE A.O. HAS ESTIMATED THE INCOME AT RS.1,50,000/-. WE FEEL THAT IN A CASE WHERE ALL THE VOUCHERS ARE NOT AVAILABLE THEN INCOME BE COMPUTED AT THE AMOUNT AS GIVEN IN SECTIO N 44AE I.E. AT RS. 3,500/- PER MONTH. IN CASE TANKER HAS NOT RUN FOR A MONTH THEN NO INCO ME FOR THAT MONTH BE TAKEN. THE A.O. WILL RECOMPUTE THE INCOME FROM THE TANKER AS ACCOUN T OF TANKER RUNNING IS NOT VERIFIABLE AND IS IN COMPLETE.. 9. THE FOURTH GROUND IS THAT LD.CIT(A) HAS CONFIRME D THE ADDITION OF RS.1,23,370/- IN RESPECT OF INTEREST U/S 40(A)(IA). 10. BEFORE THE A.O. IT WAS SUBMITTED THAT TDS WAS N OT MADE AS THE PARTIES FILED FORM NO. 159. ACCORDING TO A.O., THERE IS NO ENTRY OF RE CEIPT OF FORM NO. 15 G IN THE OFFICE & HENCE THE A.O. DISALLOWED RS.1,23,370/- U/S 40(A)(I A). 11. BEFORE THE LD.CIT(A), THE ASSESSEE SUBMITTED AS UNDER : INCOME TAX OFFICER, HAS DISALLOWED INTEREST PAID T O SMT.BABITA JAIN RS.26,592/-, SMT.SUMAN RS.47,070/- AND SMT.SA NTRA DEVI RS.49,708/- TOTALING TO RS.1,23,370/- ON THE GROUND THAT INTEREST PAID TO EACH ONE THEM IS ABOVE RS.5,000/- AND TDS HAS NOT B EEN DEDUCTED AND THEREFORE THE EXPENSES ARE NOT ALLOWABLE UNDER SECT ION 40(IA) OF INCOME TAX ACT, 1961. EACH ONE OF THE ABOVE PERSONS GIVEN A DECLARATION I N FORM 15G AND THEREFORE THE DEDUCTION WAS NOT MADE BY THE APPELLA NT APPELLANT SUBMITTED THAT COPY OF THE DECLARATION WAS FILED WI TH THE INCOME TAX OFFICER. INCOME TAX OFFICER, HAS NOT RELIED UPON TH E ACKNOWLEDGEMENT FOR THE REASON THAT ON THE ACKNOWLEDGEMENT THERE IS NO SIGNATURE OF THE PERSON RECEIVING THE SAME IN THE OFFICE AND FURTHER THAT THE DECLARATION SHOULD HAVE BEEN FILED WITH THE COMMISSIONER OF INC OME TAX. REGARDING THE FIRST OBJECTION HUMBLE APPELLANT SUBMITS THAT I N NORMAL PRACTICE THE PERSON RECEIVING THE DAK ONLY PLACES THE SEAL OF TH E OFFICE WHICH CONTAIN THE DATE AND NO SIGNATURES ARE MADE. THE ACKNOWLEDG EMENT HAVE BEEN OBTAILNED IN DUE COURSE AND SHOULD NOT HAVE BEEN DO UBTED. COPIES OF FEW - 4 - ACKNOWLEDGEMENT EVEN OF APPEALS ARE SUBMITTED HEREW ITH FROM WHICH THE CONTENTION OF APPELLANT IS FULLY PROVED. ANOTHER REASON WHICH HAS BEEN MENTIONED BY A.O. IS THAT COPY OF DECLARATION HAS NOT BEEN SUBMITTED WITH THE COMMISS IONER OF INCOME TAX. IT IS, SUBMITTED THAT FOR NON COMPLIANCE OF THE PRO VISIONS OF SECTION 197A(2) THE RELEVANT PROVISION APPLICABLE ARE SECTI ON 272A(F) READ WITH 273B OF THE ACT. THE PROVISION OF SECTION 40(IA) WA S INSERTED FROM THE ASSESSMENT YEAR 2006-07 ONLY. THE A.O. HAS CONSIDER ING REASONABLE CAUSE HAS NOT INITIATED THE PENALTY PROCEEDINGS. IT IS, RESPECTFULLY SUBMITTED THAT MERELY BECAUSE O F NON SUBMISSION OF DECLARATION WITH THE COMMISSIONER THE CONSEQUENCES OF SECTION 40(IA) ARE NOT ATTRACTED AND THE DISALLOWANCE OF INTEREST PAID NOT JUSTIFIED. THE PROVISION IS ATTRACTED ONLY WHEN THERE IS LIABILITY TO DEDUCT TAX AND TAX IS NOT DEDUCTED. WHERE THE RECEIPTANT OF INTEREST HAS GIVEN DECLARATION IN 15G THERE IS NO LIABILITY TO DEDUCT TAX FROM THE IN TEREST PAYMENT AND IN THAT CASE THE PROVISIONS OF SECTION 40(IA) ARE NOT ATTRACTED. AS IN THE PRESENT CASE THE PERSONS WHO RECEIVED INT EREST HAS GIVEN DECLARATION 15G THERE WAS NO REQUIREMENT OF TDS AND THEREFORE THE A.O. WAS NOT JUSTIFIED IN NOT ALLOWING THE EXPENSES OF I NTEREST PAID. 12. THE LD.CIT(A) CONFIRMED THE ACTION OF THE A.O. AFTER OBSERVING AS UNDER :- ARGUMENT OF THE APPELLANT IS NOT ACCEPTABLE. AS ME NTIONED BY AO IN THE ASSESSMENT ORDER, THERE IS NO ENTRY OF RECE IPT OF FORM NO. 15G IN HIS OFFICE AS CLAIMED BY APPELLANT. MOREOVER THE AP PELLANT WAS REQUIRED TO FILE FORM NO.15G IN THE OFFICE OF CIT, KOTA. IN THI S CASE NEITHER FORM NO.15G WERE FILED IN THE OFFICE OF CIT, KOTA NOR IN THE OFFICE OF AO. IN SUCH A SITUATION THE DISALLOWANCE OF RS.1,23,370/- MADE BY AO U/S 40(A)(IA) IS JUSTIFIED AND THE SAME IS CONFIRMED. 13. WE HAVE HEARD BOTH THE PARTIES. SECTION 194A R EQUIRES THE ASSESSEE TO DEDUCT TAX AT SOURCE FROM INTEREST PAID OR CREDITED. TDS IN RE SPECT OF INTEREST IS NOT TO BE MADE IN VIEW OF SECTION 197A(1A) IN CASE THE PERSON TO WHOM INTEREST IS BEING PAID OR CREDITED FURNISHES A DECLARATION TO THE PERSON RESPONSIBLE F OR PAYING OR CREDITING THE TAX. FAILURE TO FURNISH FORMS TO THE AUTHORITIES MAY BE A DEFAULT B UT FOR THAT DEFAULT 40(A)(IA) CAN NOT INVOKED. HENCE THE ADDITION OF RS.1,23,370/- IS DEL ETED AS THE ASSESSEE HAS COMPLIED WITH SECTION 197(1A). - 5 - 14. WITH SECTION 197(1A) THE SIXTH GROUND OF APPEAL IS THAT LD.CIT(A) HAS CONFIRMED THE DISALLOWANCE OF INTEREST OF RS.1,34,165/- U/S 2 4(B) OF I.T.ACT. 15. THE A.O. OBSERVED THAT CONSTRUCTION OF HOUSE IS NOT COMPLETE AND THEREFORE DEDUCTION U/S 24(B) IS NOT ALLOWABLE. 16. BEFORE THE LD.CIT(A), THE ASSESSEE SUBMITTED AS UNDER :- THE A.O. HAS DISALLOWED INTEREST ON HOUSING LOAN R S.1,34,165/- UNDER SECTION 24(B) OF I.T. ACT, 1961, ON THE GROUND THAT THE RESIDENTIAL HOUSE WAS UNDER CONSTRUCTION AND INCOMPLETE DURING THE YE AR UNDER CONSIDERATION. LEARNED A.O. HAS FAILED TO PROPERLY CONSIDER THE VA LUATION REPORT SUBMITTED BEFORE HIM. VALUATION REPORT IS DATED 18. 12.2004 I.E. BEFORE THE END OF PREVIOUS YEAR. THEREFORE, THE ASSERTION OF A .O. THAT FROM THE REPORT IT DOES NOT APPEAR THAT WHEN THE CONSTRUCTION WAS C OMPLETED IS AGAINST FACTS. WHEN THE REPORT IS DATED 18.12.2004, IT IS, APPARENT THAT STATE OF FACTS MENTIONED IN THE REPORT IS OF PRIOR TO THAT D ATE I.E. FOR THE PREVIOUS YEAR RELATED TO THE ASSESSMENT YEAR. IN THE VALUATI ON REPORT IT HAS BEEN SPECIFIED THAT ONLY 1 ST AND SECOND FLOOR ARE UNFINISHED BUT BASEMENT AND GROUND FLOOR ARE COMPLETE. FURTHER IT HAS ALSO BEEN MENTIONED THAT THE HOUSE IS SELF OCCUPIED BY THE OWNER. COPY OF VALUAT ION REPORT IS SUBMITTED HEREWITH. ANOTHER REASON WHICH HAS BEEN MENTIONED BY A.O. IS THAT RATION CARD AND TELEPHONE BILL ARE IN THE NAME OF SHRI PAWAN AGARWA L. IT IS, RESPECTFULLY SUBMITTED THAT MERELY BECAUSE THE ADDRESS HAS NOT B EEN GOT CHANGED BY SHRI PAWAN AGARWAL NO INFERENCE CAN BE DRAWN AGAINS T APPELLANT. AS THE APPELLANT OCCUPIED THE HOUSE DURING THE PREV IOUS YEAR APPELLANT IS ENTITLE TO DEDUCTION OF INTEREST PAID ON MONEY BORR OWED. 17. THE LD.CIT(A) CONFIRMED THE ACTION OF A.O. AFTE R OBSERVING AS UNDER :- ARGUMENT OF THE APPELLANT IS WITHOUT ANY FORCE. IN THE VALUATION REPORT IT IS CLEARLY MENTIONED THAT FIRST FLOOR AND SECOND FL OOR ARE UNFINISHED. MOREOVER AS MENTIONED BY AO IN THE ASSESSMENT ORDER , RATION CARD AND TELEPHONE BILL ARE ALSO IN THE NAME OF PREVIOUS OWN ER AND NOT THE APPELLANT. THE VALUATION REPORT MENTIONS THAT THE H OUSE IS SELF OCCUPIED BY OWNER. IT MERELY INDICATES THAT THE HOUSE IS NOT OC CUPIED BY A TENANT. THE APPELLANT FAILED TO BRING ANY MATERIAL ON RECORD TO PROVE THAT HE OCCUPIED THE HOUSE DURING THE YEAR. AO IS THEREFORE JUSTIFIE D IN MAKING - 6 DISALLOWANCE OF RS.1,34,165/- CLAIMED BY APPELLANT U/S 24(B). THE ADDITION IS CONFIRMED. GROUND NO.5 IS THUS DISMISSED. 18. WE HAVE HEARD BOTH THE PARTIES. BEFORE US THE L D.A/R SUBMITTED THAT VALUATION REPORT IS DATED 18.12.2004 I.E. BEFORE THE END OF T HE PREVIOUS YEAR. BASEMENT & GROUND FLOOR WERE COMPLETE. THE ASSESSEE HAS OCCUPIED THE HOUSE DURING THE YEAR. TELEPHONE BILL IS IN THE NAME OF PAWAN AGGARWAL, WHO IS NEPHEW OF ASSESSEE. THE ASSESSEE HAS STATED THAT HE HAS SHIFTED IN OCTOBER, 2004. IT IS SEEN TH AT THE ASSESSEE HAS RAISED LOAN FOR CONSTRUCTION. HENCE THE PORTION WHICH WAS OCCUPIED BY ASSESSEE IN OCTOBER, 2004 IS TO BE ASCERTAINED AND INVESTMENT IN SUCH PORTION OUT OF B ANK LOAN UPTO OCTOBER, 2004 IS TO BE ASCERTAINED. INTEREST UPTO OCTOBER, 2004 WILL BE AP PORTIONED IN 5 ASSESSMENT YEARS FROM A.Y. 05-06 ONWARD. INTEREST ON BANK LOAN IN RESPECT OF PORTION OCCUPIED FROM OCTOBER, 2004 TO MARCH, 2005 WILL BE ALLOWABLE U/S 24(B). TH E A.O. WILL RECOMPUTE THE INTEREST ALLOWABLE. 19. IN THE RESULT THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. 20. THE ORDER IS PRONOUNCED IN OPEN COURT ON 10.06. 2011. SD/- SD/- (R.K.GUPTA) (N.L.KALRA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 10/06/2011 COPY FORWARDED TO :- 1. ASHOK KUMAR JAIN, VPO DIGGI, THE MALPUR, DISTT.T ONK. 2. THE I.T.O., TONK. 3. THE CIT 4. THE CIT(A) 5. THE D/R, I.T.A.T., JAIPUR. 6. THE GUARD FILE IN ITA NO.1018/JP/120 BY ORDER A.R.I.T.A.T., JAIPUR