Shri Parasmal Bhuramal Kothari, Ahmedabad V. The Joint CIT, Range-2, Ahmedabad

ITA 1233/AHD/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 8499 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 11 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-04-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 10-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAURABH SINGH
• Assessee Lawyers: TUSHAR H VASA
• Keywords: Depreciation; Earning of tax free income; Non compliance
• Section: 143(3); 234B; 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD SMC BENCH BEFORE: SHR I S. S. GODARA , JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER SHRI PARASMAL BHURAMAL KOTHARI, B/11, NILAMBER COMPLEX, H L COMM. COLLEGE ROAD, NEAR BANK OF BARODA, NAVRANGPURA, AHMEDABAD - 380009 PAN: ABNPK6963A (APPELLANT) VS THE JCIT, RANGE - 2, 1 ST FLOOR, PRATYAKSHA KAR BHAVAN, AMBA WADI, AHMEDABAD - 380015 (RESPONDENT) REVENUE BY : S H RI SAURABH SINGH , SR. D . R. ASSESSEE BY: S H RI TUSHAR H. VAS A , A.R. DATE OF HEARING : 27 - 03 - 2 018 DATE OF P RONOUNCEMENT : 19 - 04 - 2 018 / ORDER P ER : AMARJIT SINGH, ACCOUNTANT MEMBER : - THIS ASSESSEE S APPEAL FOR A.Y. 2011 - 12 , ARIS ES FROM ORDER OF THE CIT(A) - 4 , AHM EDABAD DATED 10 - 03 - 2016 , IN PROCEEDINGS UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . 2. THE AS SESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: - [1] THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - 4, AHMEDABAD DISALLOWING THE APPEAL ON THE GROUND OF NON - COMPLIANCE IS AGAINST FACTS, LAW AND EVIDENCE ON RECORDS AS WELL AS AGAINST NATURAL JUSTIC E AND EQUITY. [2] THAT THE LD. JT. CIT HAS ERRED IN DETERMINING ASSESSABLE INCOME AT RS.28,31,291/ - AS AGAINST THE RETURNED INCOME OF RS.25,88,880/ - BY MAKING FOLLOWING ADDITIONS IS AGAINST FACTS, LAW AND EVIDENCE ON RECORDS : - (A) DISALLOWANCE FOR PERSONAL USE OF CAR AND TELEPHONE RS. 1,61,503/ - I T A NO . 1233 / A HD/20 16 A SSESSMENT YEAR 2011 - 12 I.T.A NO. 1233 /AHD/20 16 A.Y. 2011 - 12 PAGE NO SHRI PARASMAL BHURAMAL KOTHARI VS. JCIT 2 (B) DISALLOWANCE U/S. 14AR.W.R8D RS. 80,908/ - [3] (A) THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - 4, AHMEDABAD DID NOT GIVE REASONABLE OPPORTUNITY TO THE ASSESSEE TO APPEAR AND ARGU E THE MATTER. THE OPPORTUNITIES AT SERIAL NOS.L TO 11 WERE REQUESTED FOR ADJOURNMENT TO LD. CIT (APPEALS) - 10, AHMEDABAD, WHICH WERE GRANTED. THE ASSESSEE ON 05/02/2016 APPEARED BEFORE LD. CIT (APPEALS) - 10, AHMEDABAD BUT AT THE RELEVANT TIME, NEW LD. CIT (A PPEALS) WAS APPOINTED AND HE HAD TO TAKE CHARGE, THEREFORE, LD. CIT (APPEALS) - 4 HOLDING THE ACTING CHARGE OF LD. CIT (APPEALS) - 10 DID NOT TAKE UP THE MATTER. (B) THE ASSESSEE HAD THEN APPEARED ON 24/02/2016 TO LD. CIT (APPEALS) - 10 BUT ON THAT DATE, THE APP EAL WAS TRANSFERRED TO LD. CIT (APPEALS) - 4. THEN LD. CIT (APPEALS) - 4 HAD ISSUED NOTICE FOR HEARING ON 09/03/2016, WHICH WAS RECEIVED LATE BY THE APPELLANT. THEREFORE, IT IS ERRONEOUS TO SAY THAT THERE IS NO COMPLIANCE TO THE NOTICE AND AR OF THE APPELLANT DID NOT APPEAR BEFORE LD. CIT (APPEALS) - 4. [4] THE LD. CIT (APPEALS) - 4 OUGHT TO HAVE CALLED FOR RECORDS AND SHOULD HAVE CONSIDERED SUBMISSION OF THE ASSESSEE MADE BEFORE LD. JOINT CIT (APPEALS) BEFORE DISMISSING THE GROUNDS OF APPEAL CONFIRMING THE A DDITIONS. [5] THE GROUNDS OF APPEAL BEFORE LD. CIT (APPEALS) MAY KINDLY BE CONSIDERED AND GROUNDS OF APPEAL BEFORE LD. IT AT WHICH ARE AS UNDER : - '(3) THE LD. JT. CIT HAS ERRED IN DISALLOWING RS. 1,61,503/ - @20% OF RS.8,07,515/ - BEING TOTAL EXPENSES ON CARS AND TELEPHONE EXPENSES, CONSIDERING AS PERSONAL EXPENSES OF THE PROPRIETOR. (I) THE APPELLANT CONTENDS THAT ALL EXPENSES INCURRED BY THE APPELLANT WERE FOR THE PURPOSE OF BUSINESS AND RS.8,07,515/ - IS NOT TOTAL EXPENDITURE ON CARS AND TELEPH ONE EXPENSES. (II) THE APPELLANT CONTENDS THAT DISALLOWANCE @20% IS EXCESSIVE AND U NREASONABLE @20% OF RS. 1,92,597/ - FOR PETROL EXPENSES AND RS.3,25,239/ - AS TELEPHONE EXPENSES, CONSIDERING THEM AS PERSONAL EXPENSES OF THE PROPRIETOR. (III) TH E APPELLANT CONTENDS THAT INSURANCE EXPENSES ARE ALL BUSINESS REVENUE EXPENSES ON GODOWN INSURANCE AND OTHER VEHICLES HAVE NOT FULLY FOR MOTOR CAR INSURANCE. (4) THE LD. JT. CIT HAS ERRED IN CONSIDERING THAT PROVISIONS OF SECTION 14A READ WITH RULE 8D APPL IED TO THE FACTS OF THE CASE SIMPLY ON THE GROUND THAT THERE WAS EXEMPT INCOME. THE APPELLANT CONTENDS THAT THE APPELLANT HAS MORE THAN SUFFICIENT AMOUNT AS APPELLANT'S CAPITAL AND SECTION 14A READ WITH RULE 8D ARE NOT APPLICABLE TO THE FACTS OF THE CASE. [I] THE LD. JT. CIT HAS ERRED IN CONSIDERING THAT INVESTMENT OF THE APPELLANT WAS RS.13,04,441/ - , INCOME FROM WHICH DOES NOT FORM PART OF THE TOTAL INCOME. THE LD. JT. CIT DID NOT APPRECIATE THAT THERE WAS NO DIRECT OR INDIRECT EXPENDITURE INCURRED FOR EA RNING EXEMPT INCOME AND THEREFORE, SECTION 14 AND RULE 8D WERE NOT APPLICABLE AND HENCE DISALLOWANCE OF RS.80,908/ - IS ERRONEOUSLY CALCULATED AND ADDED AS INCOME. [II] THE APPELLANT CONTENDS THAT THERE IS NO JUSTIFICATION IN MAKING ADDITION OF RS.80,908/ - CONSIDERING SECTION 14A AND RULE 8D APPLICABLE TO THE FACTS OF THE CASE AND THE LD. AO OUGHT TO HAVE BEEN TAKEN FAVOURABLE DECISION TO THE APPELLANT SINCE THERE ARE TWO DIFFERENT VIEWS CONFIRMED BY THE DIFFERENT TRIBUNALS AND COURTS. (5) THAT THE INTEREST CHARGED U/S.234B OF RS.61,630/ - AND U/S.234C OF RS.21,033/ - MAY PLEASE BE CANCELLED OR REDUCED.' [6] IN VIEW OF THE ABOVE AND OTHERS THAT MAY BE URGED AT THE TIME OF HEARING, IT IS PRAYED THAT: (I) THE ADDITIONS /DISALLOWANCES MADE TO THE INCOME OF TH E APPELLANT COMPANY MAY PLEASE BE DELETED AND DEDUCTIONS AND RELIEFS CLAIMED MAY PLEASE BE ALLOWED. (II) THAT THE INTEREST CHARGED U/S. 234B OF THE ACT OF RS.61,630/ - AND U /S.234C OF THE ACT OF RS.21,033/ - MAY PLEASE BE DELETED AND REDUCED. (III)PENALTY PR OCEEDING S INITIATED U/S. 271(1 )(C) MAY PLEASE BE CANCELLED AND NOTICE BE VACATED. (IV)SUCH OTHER RELIEF OR REDUCTION AS THE FACTS AND CIRCUMSTANCES OF THE CASE SO REQUIRE BE GRANTED. I.T.A NO. 1233 /AHD/20 16 A.Y. 2011 - 12 PAGE NO SHRI PARASMAL BHURAMAL KOTHARI VS. JCIT 3 3. BRIEF FACT OF THE CASE IS THAT IN THIS CASE RETURN OF INCOME DECLAR ING INCOME OF RS. 25 , 88 , 880/ - WAS FILED ON 28 TH SEP, 2011. SUBSEQUENTLY, THE CASE WAS SELECTED UNDER SCRUTINY BY ISSUING OF NOTICE U/S. 143(2) OF THE ACT ON 31 ST AUGUST, 2012. DURING THE AS SESSMENT PROCEEDINGS, ASSESSING OFFICER HAS NOTICED THAT ASSESSEE HAD DEBITED RS. 1,46,781/ - ON ACCOUNT OF DEPRECIATION ON CAR, RS. 51 , 636/ - ON INSURANCE , RS . 91 ,262 / - ON VEHICLES EXPENSES , RS. 1 , 92 ,597/ - ON PETROL EXPENSES AND RS. 3 , 2 5,2 39/ - ON TELEPHONE EXPENSES. THE TOTAL OF THESE EXPENSES COME TO RS. 8 , 07 , 515/ - . THE ASSESSING OFFICER HAS DISALLOWED 20% OF THESE EXPENSES TO THE AMOUNT OF RS. 1 , 61 , 503/ - ON THE GROUND THAT PERSONAL USE OF CAR AND TELEPHONE BY THE PARTNERS CANNOT BE RULED OUT. FURTHER ON SCRUTINY, THE ASSESSING OFFICER HAS NOTICED THAT ASSESSEE HAS MADE INVESTMENT OF RS. 13 , 04 , 44 1 / - AND THE INCOME FROM WHICH DOES NOT FORM PART OF TOTAL INCOME. THEREFORE, THE ASSESSING OFFICER HAS MADE DISALLOWANCE U/S. 14A R.W RULE 8D OF THE ACT TO T HE AMOUNT OF RS . 80 , 908/ - . 4. AGGRIEVED ASSESSEE FILED APPEAL BEF ORE THE LD. CIT(A). THE LD. CIT(A) HAS DISMISSED THE APPEAL OF THE ASSESSEE ON THE GROUND THAT ASSESSEE HAS NOT MADE ANY COMPLIANCE TO THE NOTICES ISSUED BY HIM. DURING THE COURSE OF PENALTY PROCEEDINGS BEFORE US, THE LD. COUNSEL HAS FURNISHED PAPER BOOK CONTAINING COMPUTATION OF TOTAL INCOME, COPY OF AUDIT REPORT, DETAIL OF INVESTMENT, DETAIL OF EXEMPTION INCOME AND DETAIL OF EXPENSES CLAIMED ALONG WITH SUPPORTING VOUCHERS DETAILS. E TC. THE LD. COUNSEL HAS ALSO CONTENDED THAT ASSESSEE COULD NOT MAKE CO MPLIANCE TO THE NOTICES ISSUED BY THE LD. CIT(A) AS THE APPEAL OF THE ASSESSEE WAS TRANSFERRED FROM CIT(A) - X , TO CIT(A) - I V AND THE NOTICES ISSUED BY CIT(A) - I V W ERE RECEIVED LATE BY THE ASSESSEE. HE HAS FURTHER CONTENDED THAT LD. CIT(A) SHOULD HAVE CONSIDE RED THE SUBMISSIONS MADE BY THE ASSESSEE BEFORE CONFIRMING THE ADDITION MADE BY THE ASSESSING OFFICER. ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDER OF LD. CIT(A). I.T.A NO. 1233 /AHD/20 16 A.Y. 2011 - 12 PAGE NO SHRI PARASMAL BHURAMAL KOTHARI VS. JCIT 4 5. AFTER HEARING BOTH THE SIDES AND PERUSAL OF THE MATERIAL ON RECORD WE OBSERVE IT APPEAR THERE WAS BONA - FIDE REASON FOR NON COMPLIANCE DURING THE APPELLATE PROCEEDINGS BEFORE THE LD.CIT(A) BY THE ASSESSEE THEREFORE WE CONSIDER THAT IN THE INTEREST OF JUSTICE IT WILL BE APPROPRIATE TO RESTORE THIS CASE TO THE FI LE OF THE LD. CIT(A) TO DECIDE THE CASE ON MERIT AFTER ADEQUATE OPPORTUNITY TO THE ASSESSEE. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PR ONOUNCED IN THE OPEN C OURT ON 19 - 04 - 201 8 SD/ - SD/ - ( S.S. GODARA ) ( AMARJIT SINGH ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD : DATED 19 /04 /2018 / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,