Madhukar Murlidhar Kale, Nashik V. Deputy Commissioner of Income-tax, Circle - 1, Nashik

ITA 1068/PUN/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 4091 (ITAT-PUNE)
• Duration Of Justice: 7 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-02-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2013-2014
• Appeal Filed On: 13-06-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: M K VERMA
• Section: 147; 148

Judgement Text

- IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, P UNE BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI PARTHA SARATHI CHAUDHURY, JM / ITA NO.1068/PUN/2018 / ASSESSMENT YEAR : 2013-14 SHRI MADHUKAR MURLIDHAR KALE, PROP. KRISHNA CONSTRUCTION, 765, OLD AGRA ROAD, A/P, GHOTI, TAL.IGATPURI, NASHIK-422 402 PAN : AAFHM0645E .... / APPELLANT ! / V/S. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-1, NASHIK. / RESPONDENT ASSESSEE BY : SHRI SANKET JOSHI REVENUE BY : SHRI M.K. VERMA / DATE OF HEARING : 06.02.2019 / DATE OF PRONOUNCEMENT : 07.02.2019 ' / ORDER PER PARTHA SARATHI CHAUDHURY, JM : THIS APPEAL PREFERRED BY THE ASSESSEE EMANATES FROM TH E ORDER OF THE LD. CIT(APPEAL)-1, NASHIK DATED 15.05.2018 FOR THE ASSESSME NT YEAR 2013-14 AS PER FOLLOWING GROUNDS OF APPEAL ON RECORD: ON FACTS AND IN LAW, 1) THE ASSESSEE SUBMITS THAT THE NOTICE U/S. 148 ISSUED IN THE INSTANT CASE IS BAD IN LAW AND HENCE, THE REASST. ORDER PAS SED U/S. 147 R.W.S.143(3) MAY BE DECLARED AS NULL AND VOID. 2) THE LEARNED CIT(A) ERRED IN CONFIRMING THE AD-HOC D ISALLOWANCE OF EXPENSES OF RS.2,27,424/- OUT OF THE TOTAL DISALLOW ANCE OF 2 ITA NO. 1068/PUN/2018 A.Y.2013-14 RS.4,54,848/- MADE BY THE A.O. WITHOUT APPRECIATING THAT THE SAID DISALLOWANCE MADE PURELY ON AD-HOC BASIS WAS NOT WA RRANTED ON FACTS OF THE CASE. 3) THE LEARNED CIT(A) FAILED TO APPRECIATE THAT CONSID ERING THE NATURE OF BUSINESS AND TURNOVER OF THE ASSESSEE AND FURTHER C ONSIDERING THE NATURE OF EXPENDITURE, THE ASSESSEE COULD NOT HAVE BEEN EXPECTED TO MAINTAIN THIRD PARTY BILLS IN RESPECT OF THE IMPUGN ED EXPENSES AND HENCE, THERE WAS NO REASON TO MAKE ANY AD-HOC DISAL LOWANCE IN RESPECT OF THE SAID EXPENDITURE MERELY BECAUSE THE SAME WERE SUPPORTED BY SELF-MADE VOUCHERS. 4) THE APPELLANT CRAVES, LEAVE TO ADD, ALTER, AMEND AN D DELETE ANY OF THE ABOVE GROUNDS OF APPEAL. 2. AT THE TIME OF HEARING, THE LD. AR OF THE ASSESSEE SUB MITTED THAT HE IS NOT PRESSING GROUND NO.1. THEREFORE, GROUND NO.1 IS DISMISSE D AS NOT PRESSED . 3. GROUND NO.4 IS GENERAL IN NATURE AND HENCE, REQUIRES NO ADJUDICA TION. 4. GROUNDS NO. 2 AND 3 RELATES TO THE AD-HOC DISALLOWANC E WHICH IS THE SUBJECT MATTER FOR ADJUDICATION. GROUNDS NO. 2 AND 3 RELA TES TO THE AD-HOC DISALLOWANCE OF EXPENSES UPHELD BY THE LD. CIT(APPEAL) OF RS.2 ,27,424/- OUT OF THE TOTAL DISALLOWANCE OF RS.4,54,848/- MADE BY THE ASSESSING OFFICER. 5. THE BRIEF FACTS RELATING TO THESE GROUNDS ARE THAT THE ASSESSEE CLAIMED TOTAL DIRECT EXPENSES OF RS.42,64,121/- AND INDIRECT EXPENS ES OF RS.9,60,972/-, BOTH AGGREGATING TO RS.52,25,093/-. OUT OF THE TOTAL EXPENDITURE CLAIMED, EXPENSES ONLY TO THE EXTENT OF RS.6 ,13,597/- ARE INCURRED IN CASH. OUT OF THE SAID CASH EXPENDITURE OF RS.6,13,597/-, EXPE NSES TO THE TUNE OF RS.5,68,560/- IS SUPPORTED BY SELF MADE VOU CHERS. THE ASSESSEE FURTHER SUBMITTED THAT RS.10,00,000/- WAS OFFERE D DURING THE COURSE OF SURVEY PROCEEDINGS BY THE MEMBER OF THE HUF WHO HAPPENS TO BE THE SON OF THE ASSESSEE. THE ASSESSEE HAS FURTHER SUBMITTED THE BREAKUP OF VARIOUS EXPENSES DEBITED BY WAY OF SELF MADE VOUCHERS, BILLS AND BY WAY BANK ENTRIES. THE STATEMENT WAS MADE BY MEMBER OF THE 3 ITA NO. 1068/PUN/2018 A.Y.2013-14 HUF, THE ASSESSEE AND THE SAME HAS NOT BEEN DISPUTE D. FURTHER, ON VERIFICATION OF THE ASSESSEE'S SUBMISSION, IT IS FO UND THAT TO A CERTAIN EXTENT THE ASSESSEE'S CONTENTION ARE CORRECT THAT T HE EXPENSES INCURRED THROUGH SELF MADE VOUCHERS TOTAL TO RS.5,68,560/-. THE ASSESSING OFFICER LOOKING INTO THE NATURE OF EXPENSES AND VERY FACT T HAT THREE CONCERNS ARE RUN FROM THE SAME PREMISES, WHICH LEAV E OPEN THE CHANCES OF MULTIPLE DEBITS OF THE SAME EXPENDITURE, THE ASS ESSEE'S CLAIM OF THE TOTAL AMOUNT BEING PROPER AND REPRESENTING THE CURR ENT DEBIT WAS NOT ACCEPTABLE TO THE ASSESSING OFFICER. THE ASSESSING OFFICER, THEREAFTER, ALLOWED 20% OF THE CASH EXPENDITURE INCURRED THROUG H SELF MADE VOUCHERS OF TOTAL AMOUNT OF RS.5,68,560/- I.E. RS.1,13,712/- . HOWEVER, THE ASSESSING OFFICER ADDED 80% OF THE IMPUGNED EXPENSE S OF RS.5,68,560/- I.E. RS.4,54,848/- TO THE TOTAL INCOME OF THE ASSES SEE. 6. THE LD. CIT(APPEAL) AS PER REASONS APPEARING IN HIS ORDER WHICH IS ON RECORD RESTRICTED THE DISALLOWANCE TO 40% OF THE IMPUGNED EXPENDITURE OF RS.5,68,560/- AND THEREFORE, BEFORE US, THE DISP UTED ADDITION IS RS.2,27,424/-. 7. WE HAVE PERUSED THE CASE RECORDS AND GIVEN THOUG HTFUL CONSIDERATION TO THE SUBMISSIONS OF THE PARTIES HER EIN AND ANALYZED THE FACTS AND CIRCUMSTANCES. THE ASSESSING OFFICER ADDE D 80% OF THE IMPUGNED EXPENSES OF RS.5,68,560/- I.E. AMOUNTING T O RS.4,54,848/- ON THE GROUND THAT THERE WAS THREE CONCERNS RUN FROM T HE SAME PREMISES AND THERE MAY BE POSSIBILITY OF MULTIPLE DEBITS OF THE SAME EXPENDITURE. 8. THE LD. CIT(APPEAL) REDUCED THE ADDITION TO 40% AND THE PRESENT ADDITION IS OF RS.2,27,424/- OF THE IMPUGNED EXPEND ITURE OF RS.5,68,560/-. WE DO NOT FIND ANY SPECIFIC REASONS BY THE REVENUE 4 ITA NO. 1068/PUN/2018 A.Y.2013-14 AUTHORITY NEITHER ANY INDEPENDENT ENQUIRY THROUGH W HICH THIS ADDITION HAS BEEN MADE. HOWEVER, LOOKING ON THE NATURE OF BU SINESS OF THE ASSESSEE WHO IS BUILDER AND LAND DEVELOPER AND ALSO BECAUSE OF THE FACT THAT FROM SELF MADE VOUCHERS, WE CANNOT UNDERSTAND WHETHER THOSE EXPENSES ARE 100% GENUINE OR NOT. THEREFORE, TAKING TOTALITY OF FACTS AND CIRCUMSTANCES INTO CONSIDERATION AND BONA-FIDE INTE NTION OF THE ASSESSEE IN THIS CASE, WE FIND 40% ADDITION IS ON THE HIGHER SIDE AND THEREFORE, WE RESTRICT THE ADDITION TO 20% OF THE SAID IMPUGNED E XPENDITURE AND DIRECT THE ASSESSING OFFICER TO PROVIDE APPEAL EFFECT ACCO RDINGLY. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED ON 07 TH DAY OF FEBRUARY, 2019. SD/- SD/- D. KARUNAKARA RAO PARTHA SARATHI CHAUDHURY ACCOUNTANT MEMBER JUDICIAL MEMBER / PUNE; / DATED : 07 TH FEBRUARY, 2019. SB '#$%&'(' % / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT(APPEAL)-1, NASHIK. 4. THE PR. CIT-1, NASHIK. 5. '#$ %%&' , ( &' , - )*+ , / DR, ITAT, SMC BENCH, PUNE. 6. $,- ./ / GUARD FILE. // TRUE COPY // (0 / BY ORDER, %1 &+ / PRIVATE SECRETARY ( &' , / ITAT, PUNE. 5 ITA NO. 1068/PUN/2018 A.Y.2013-14 DATE 1 DRAFT DICTATED ON 0 6 .0 2 .2019 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 0 7 .0 2 .201 9 SR.PS/PS 3 DRAFT PROPOSED AND PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/JM 5 APPROVED DRAFT COMES TO THE SR. PS/PS SR.PS/PS 6 KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7 DATE OF UPLOADING OF ORDER SR.PS/PS 8 FILE SENT TO BENCH CLERK SR.PS/PS 9 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 10 DATE ON WHICH FILE GOES TO THE A.R 11 DATE OF DISPATCH OF ORDER