Sh. Surendra Singh, Muzaffarnagar V. ITO, Muzaffarnagar

ITA 1048/DEL/2015

• Counselvise Citation: 104820114 RSA 2015
• Duration Of Justice: 5 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-08-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC 2
• Next Hearing Date: 20-07-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 20-02-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: PARWINDER KAUR

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC - 2 , NEW DELHI BEFORE SH. N. K. SAINI, AM ITA NO. 1048 /DEL/201 5 : ASSTT. YEAR : 2010 - 11 SH. SURENDRA SINGH, 1267, RADHA SATSANG COLONY, MUZAFFARNAGAR VS ITO WARD - 1(1), MUZAFFARNAGA R (APPELLANT) (RESPONDENT) PAN NO. AIDPS7125H ASSESSEE BY : SH. ANKIT GUPTA , ADV. REVENUE BY : SMT. PARWINDER KAUR , SR. DR DATE OF HEARING : 20 .0 7 .2015 DATE OF PRONOUNCEMENT : 05 .08 .2015 ORDER PER N. K. SAINI, AM: THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 29.12.2014 OF LD. CIT (A), MUZAFFARNAGAR . 2 . THE GRIEVANCE OF THE ASSESSEE VIDE GROUND NO. 2 RELATES TO THE SUSTENANCE OF ADDITION OF RS. 20,000/ - MADE BY THE AO ON ACCOUNT OF ESTIMATED DISALLOWANCE OUT OF THE EXPENSES. 3 . THE FACTS RELATED TO THIS ISSUE IN BRIEF ARE THAT THE ASSESSEE HAS CLAIMED FOLLOWING EXPENSES IN THE PROFITS AND LOSS ACCOUNT: PRINTING/STATIONARY RS. 13,622/ - MISC. EXPENSES RS. 1,962/ - ADVERTISING EXPENSES RS. 61,800/ - ITA NO.1048 /DEL /2015 SURENDRA SINGH 2 WATCH AND WORD EXPENSE RS. 13,883/ - RS. 91,276/ - THE AO DISALLOWED RS. 20,000/ - OUT OF THE AFORESAID EXPENSES ON ADHOC BASIS FOR WANT OF VERIFIABILITY . W HEN THE MATTE R WAS TAKEN TO THE LD. CIT(A), T HE SAID DISALLOWANCE WAS CONFIRMED BY OBSERVING THAT T HE EXPENSES WERE NOT SUBJECTED TO CROSS VERIFICATION AND THE ASSESSEE HAD NOT BEEN ABLE TO CONTROVERT THE FINDINGS MADE BY THE AO. 4 . BEING AGGRIEVED THE ASSESSEE IS IN APPEAL. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE AO MADE THE ADHOC DISALLOW ANCE WITHOUT ANY BASIS AND THE LD. CIT(A) WRONGLY CONFIRMED THE SAME. IN HER RIVAL SUBMISSIONS THE LD. DR SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 5 . AFTER CONSIDERING THE SUBMISSIONS OF BOTH THE PARTIES AND MATERIAL ON RECORD, IT IS NOTICED THAT TH E AO MADE THE IMPUGNED DISALLOWANCE WITHOUT ANY BASIS AND WITHOUT POINTING OUT ANY INSTANCE WHERE THE EXPENSES WERE NOT RELATED TO THE BUSINESS OF THE ASSESSEE. AT THE SAME TIME THE ASSESSEE HAD NOT PRODUCED THE REQUISITE DETAILS SOUGHT BY THE ASSESSEE, TH EREFORE, SOME DISALLOWANCE IS CALLED FOR. HOWEVER, THE DISALLOWANCE MADE BY THE AO APPEARS TO BE EXCESSIVE. I, THEREFORE, TO MEET THE ENDS OF JUSTICE , RESTRICT THE DISALLOWANCE TO RS. 2,000/ - WHICH WILL TAKE CARE OF THE LEAKAGE, IF ANY . ITA NO.1048 /DEL /2015 SURENDRA SINGH 3 6 . THE NEXT ISSUE VIDE GROUND NOS. 3 & 4 RELATES TO THE SUSTENANCE OF ADDITION ON ACCOUNT OF ADHOC DISALLOWANCE OF RS. 35,473/ - O UT OF TELEPHONE AND VEHICLE RUNNING/MAINTENANCE EXPENSES. 7 . THE FACTS RELATED TO THIS ISSUE IN BRIEF ARE THAT THE AO DURING THE COURSE OF ASSES SMENT PROCEEDINGS NOTICED THAT THE ASSESSEE HAD SHOWN TELEPHONE EXPENSES AT RS. 94,420/ - , VEHICLE RUNNING/MAINTENANCE AT RS. 20,823/ - AND HIMSELF DISALLOWED 20% OF THE SAID EXPENSES. HOWEVER, THE AO MADE THE DISALLOWANCE @ 50% ON ACCOUNT OF PERSONAL USE OF TELEPHONE AND UN - VERIFIABILITY OF EXPENSES. 8 . BEING AGGRIEVED, T HE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) WHO CONFIRMED THE ADDITION BY OBSERVING THAT THE ASSESSEE HAD NOT BEEN ABLE TO FURNISH ANY DETAILS AND EVIDENCES TO THE EFFECT THAT SUCH EXP ENSES WERE WHOLLY AND EXCLUSIVELY INCURRED TOWARDS BUSINESS PURPOSES. 9 . NOW THE ASSESSEE IS IN APPEAL. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE AO MADE THE DISALLOWANCE WITHOUT ANY BASIS AND THAT THE ASSESSEE HIMSELF DISALLOWED 20% OF THE EXPE NSES ON ACCOUNT OF PERSONAL USE AND FOR OTHER THAN BUSINESS PURPOSES. IT WAS FURTHER SUBMITTED THAT THE LD. CIT(A) WITHOUT ASSIGNING ANY COGENT REASON WAS NOT JUSTIFIED IN CONFIRMING THE ADDITION MADE BY THE AO. IN HER RIVAL SUBMISSIONS THE LD. DR SUPPORTE D THE ORDERS OF THE AUTHORITIES BELOW. ITA NO.1048 /DEL /2015 SURENDRA SINGH 4 10 . I HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON THE RECORD. IN THE PRESENT CASE, IT IS AN ADMITTED FACT THAT THE ASSESSEE HIMSELF DISALLOWED 20% OF THE E XPENSES ON ACCOUNT OF PERSONAL USE AND THE AO WHILE INCREASING DISALLOWANCE TO THE EXTENT OF 50% OF EXPENSES HAD NOT ASSIGNED ANY COGENT REASON, THE LD. CIT(A) ALSO CONFIRMED THE DISALLOWANCE MADE BY THE AO WITHOUT ANY REASON. I, THEREFORE, BY CONSIDERING TH E TOTALITY OF THE FACT, DELETE THE ADDITION MADE BY THE AO AND SUSTAINED BY THE LD. CIT(A) PARTICULARLY BY KEEPING IN VIEW THIS VITAL FACT THAT THE AO HAD NOT POINTED OUT ANY SPECIFIC INSTANCE WHERE THE EXPENSES UNDER THE HEAD VEHICLE REPAIRS & MAINTENAN CE AND TELEPHONE WERE NOT RELATED TO THE BUSINESS PURPOSES . A T THE SAME TIME , THE ASSESSEE AGREED THAT SOME OF THE EXPENSES WERE OF PERSONAL NATURE AND SUO MOTU DISALLOWED 20% OF THE EXPENSES, THE DISALLOWANCE MADE BY THE ASSESSEE APPEARS TO BE REASONABLE, THEREFORE, THE ADDITION OF RS. 35,473/ - MADE BY THE AO AND SUSTAINED BY THE LD. CIT(A) IS DELETED. 11 . THE NEXT ISSUE VIDE GROUND NO. 5 RELATES TO THE SUSTENANCE OF ADDITION OF RS. 60,000/ - MADE BY THE AO ON ACCOUNT OF JOB WORKS , ON ADHOC ESTIMATED BASIS . 12 . THE FACTS RELATED TO THIS ISSUE IN BRIEF ARE THAT THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS NOTICED THAT THE ASSESSEE HAD SHOWN AN INCOME OF RS. 1,20,000/ - FROM CONSULTATION S RELATING TO JOB WORKS BUT NO ITA NO.1048 /DEL /2015 SURENDRA SINGH 5 DETAILS OF THE PARTIES HAD BEEN FURN ISHED . THE AO POINTED OUT THAT THE INCOME SHOWN BY THE A SSESSEE WAS ON ESTIMATE BASIS, H OWEVER, HE ESTIMATED THE INCOME AT RS. 1,80,000/ - I.E. @ RS. 15,000/ - PER MONTH INSTEAD OF RS. 1,20,000/ - SHOWN BY THE ASSESSEE @ RS. 10,000/ - PER MONTH. A CCORDINGLY , T HE AO MADE THE ADDITION OF RS. 60,000/ - . 1 3 . BEING AGGRIEVED THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) AND SUBMITTED THAT THE ESTIMATED INCOME AT RS. 1,80,000/ - BY THE AO WAS WITHOUT ANY BASIS. THE LD. CIT(A) ON THE OTHER HAND OBSERVED THAT THE AS SESSEE HAD NOT FURNISHED ANY DETAILS AND EVIDENCES IN RESPECT OF INCOME EARNED FROM THE JOB WORKS. HE, THEREFORE HELD THAT THE AO WAS JUSTIFIED TO MAKE THE ADDITION OF RS. 60,000/ - . 14 . NOW THE ASSESSEE IS IN APPEAL. THE LD. COUNSEL FOR THE ASSESSEE REITE RATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND FURTHER SUBMITTED THAT NEITHER THE AO NOR THE LD. CIT(A) HAS GIVEN ANY REASON WHILE ESTIMATING THE INCOME OF THE ASSESSEE FROM JOB WORKS. 15 . IN HIS RIVAL SUBMISSIONS THE LD. DR SUPPORTED THE ORD ER OF THE AUTHORITIES BELOW. 16 . I HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON THE RECORD. IN THE PRESENT CASE, IT IS AN ADMITTED FACT THAT THE ASSESSEE HAD NOT MAINTAINED ANY DETAIL OR EVIDENCE S IN RESPECT OF INCOME EARNED FROM JOB WORKS. IT, THEREFORE, ITA NO.1048 /DEL /2015 SURENDRA SINGH 6 APPEARS THAT THE INCOME SHOWN AT RS. 1,20,000/ - WAS ON ESTIMATE BASIS . A T THE SAME TIME , THE AO ALSO ESTIMATED THE INCOME AT RS. 1,80,000/ - WITHOUT ANY BASIS AND THE LD. CIT(A) CONFIRMED THE ADDI TION MADE BY THE AO IN SLIPSHOD MANNER. IN MY OPINION THE ADDITION MADE BY THE AO AND SUSTAINED BY THE LD. CIT(A) IS EXCESSIVE. I, THEREFORE, TO MEET THE ENDS OF JUSTICE, DEEM IT APPROPRIATE TO SUSTAIN THE ADDITION OF R. 10,000/ - ON ACCOUNT OF JOB WORKS. 8 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED . ( ORDER PRON OUNCED IN THE COURT ON 05 /0 8 /2015 ) SD/ - (N. K. SAINI) ACCOUNTANT MEMBER DATED: 05 /0 8 /2015 *SUBODH* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR