Sh. Bant Singh Chandale, Bilaspur V. ITO, Bilaspur

ITA 1244/CHANDI/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 6748 (ITAT-CHANDIGARH)
• Duration Of Justice: 10 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-10-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 03-01-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 01-12-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S K MITTAL
• Assessee Lawyers: R R THAKUR
• Keywords: Business income; Depreciation; Income from undisclosed sources
• Section: 40A(3)

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES, SMC, CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER ITA NO. 1244/CHD/2016 ASSESSMENT YEAR: 2009-10 SH. BANT SINGH CHANDALE, VS. THE ITO, PROP M/S PUKHRAJ HOTEL & RESTAURANT, BILASPUR (H.P .) BILASPUR (H.P.) PAN NO. ABLPS4908Q (APPELLANT) (RESPONDENT) APPELLANT BY : SH. R.R.THAKUR RESPONDENT BY : SH. S.K. MITTAL DATE OF HEARING : 03.01.2017 DATE OF PRONOUNCEMENT ` : 05.01.2017 ORDER THIS APPEAL BY THE ASSESSEE HAS BEEN DIRECTED AGAI NST THE ORDER OF LD. CIT(A), PALAMPUR DATED 22.09.2016 FOR ASSESSMENT YE AR 2009-10. 2. I HAVE HEARD LD. REPRESENTATIVES OF BOTH THE PAR TIES AND PERUSED THE MATERIAL ON RECORD. GROUND NO.1 IS GENERAL AND NEE D NO ADJUDICATION. 3. ON GROUND NO.2, THE ASSESSEE HAS CHALLENGED THE ADDITION OF RS. 92,497/- PAID AS TRACTOR CHARGES WITHOUT DEDUCTING TDS. 4. BRIEF FACTS ARE THAT DURING THE COURSE OF ASSESS MENT PROCEEDINGS, IT WAS NOTICED THAT ASSESSEE HAD PAID TRACTOR HIRE CHA RGES OF RS. 92,497/- TO 2 ONE PERSON SH. SUKH RAM. AS THE AMOUNT PAID TO ONE PERSON EXCEED RS. 50,000/- DURING THE YEAR, THE ASSESSEE WAS REQUIRED TO DEDUCT TAX AT SOURCE ON THIS PAYMENT U/S 194C(2) OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT'), AS AMOUNT WAS PAID FOR TRANSPORTATION OF LOO SE CEMENT OUTSIDE THE FACTORY. THE ASSESSING OFFICER NOTED THAT SINCE NO TDS HAS BEEN DEDUCTED ON THE TRACTOR HIRE CHARGES, THEREFORE, THE AMOUNT WAS LIABLE TO BE DISALLOWED U/S 40(A)(IA) OF THE ACT. IT WAS ALSO NOTED THAT THERE IS NO RELAXATION IN SECTION 40(A)(IA) FOR ALLOWING SUCH E XPENDITURE IN CASE OF LACK OF KNOWLEDGE ON THE PART OF THE ASSESSEE. THE ASSES SEE CONTENDED BEFORE LD. CIT(A) THAT AMOUNT WAS PAID TO SHRI SUKH RAM AS TRACTOR CHARGES ON DIFFERENT DATES WHICH WAS BELOW TAXABLE LIMIT AND T HE SAME HAD BEEN SHOWN BY THE CONCERNED PARTY IN ITS RETURN OF INCOME. THE LD. CIT(A) FURTHER NOTED THAT NO EVIDENCE IN SUPPORT OF SAME CONTENTIO N HAVE BEEN FILED BEFORE THE ASSESSING OFFICER OR BEFORE THE APPELLAT E PROCEEDINGS. THE LD. CIT(A), THEREFORE, NOTED THAT ASSESSEE HAD VIOLATE D THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT AND REJECTED THIS GROU ND OF APPEAL OF THE ASSESSEE. 5. THE LD. COUNSEL FOR THE ASSESSEE CONTENDED THAT ASSESSEE IS ASSESSED IN THE STATUS OF INDIVIDUAL AND NO TDS WAS REQUIRED TO DEDUCTED U/S 194C(4) OF THE ACT. LD. DR, HOWEVER, RELIED ON THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED PLEA OF THE ASSESSE E WAS NOT DECIDED BY THE AUTHORITIES BELOW. 6. THE SUBMISSIONS OF THE LD. COUNSEL FOR THE ASSES SEE HAVE NOT BEEN CONSIDERED AND DEALT BY THE AUTHORITIES BELOW. I AM OF THE VIEW THAT THIS 3 ISSUE, THEREFORE, REQUIRES RECONSIDERATION AT THE L EVEL OF THE ASSESSING OFFICER. I ACCORDINGLY SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND RESTORE THIS ISSUE TO THE EXTENT, WHETHER IN THE CA SE OF INDIVIDUAL; NO TDS WAS LIABLE TO BE DEDUCTED? THE ASSESSING OFFICER SH ALL EXAMINE THIS ISSUE AS PER THE RELEVANT PROVISIONS OF LAW AND SHALL DEC IDE THE ISSUE IN ACCORDANCE WITH LAW AFTER GIVING REASONABLE OPPORTU NITY OF BEING HEARD TO THE ASSESSEE. THIS GROUND OF APPEAL IS ACCORDINGLY ALLOWED FOR STATISTICAL PURPOSES. 7. ON GROUND NO.3, THE ASSESSEE HAS CHALLENGED THE ADDITION OF RS. 30,000/- ON ACCOUNT OF SALARY. THE ASSESSING OFFICE R ON EXAMINATION OF THE ACCOUNTING CHARGES NOTED THAT PAYMENT OF RS. 30,000 /- WAS MADE IN CASH ON 12.4.2008 IN RESPECT OF ACCOUNTING CHARGES OF RS. 3 0,000/- SHOWN AS PAYABLE AS ON 1.4.2008. AS THE PAYMENT EXCEEDING R S. 20,000/- WAS MADE IN CASH IN CONTRAVENTION OF PROVISIONS OF SECTION 4 0A(3) OF THE ACT, THE SAME WAS NOT ALLOWABLE EXPENDITURE.. THE ASSESSEE S UBMITTED THAT THIS HAS HAPPENED DUE TO MISUNDERSTANDING OF THE RELEVANT PR OVISIONS AS THE PAYMENT WAS IN RESPECT OF EXPENDITURE INCURRED IN T HE PRECEDING YEAR. THE LIABILITY WAS DISCHARGED BY MAKING PAYMENT IN CASH IN ASSESSMENT YEAR UNDER APPEAL. THE ASSESSING OFFICER, HOWEVER, FOUND THAT THIS PAYMENT IS MADE IN CASH IN VIOLATION OF PROVISIONS OF SECTION 40A(3) OF THE ACT AND ACCORDINGLY THE AMOUNT WAS ADDED. THE LD. CIT(A) DI SMISSED THIS GROUND OF APPEAL OF THE ASSESSEE. 8. AFTER CONSIDERING THE RIVAL SUBMISSIONS, I DO NO T FIND ANY MERIT IN THIS GROUND OF APPEAL OF THE ASSESSEE. LD. COUNSEL FOR THE ASSESSEE REFERRED 4 TO CERTIFICATE OF RINKU KUMAR FILED AT PAGE 3 OF TH E PAPER BOOK TO SHOW THAT IT IS NOT ACCOUNTING CHARGES BUT SALARY PAID. THIS EXPLANATION WAS NOT GIVEN BEFORE THE AUTHORITIES BELOW AND NO SUCH CERT IFICATE HAS BEEN FILED. THE ASSESSEE HAS THEREFORE, MADE THIS AFTERTHOUGHT SUBMISSION AND CANNOT BE CONSIDERED FAVORABLE. THE ASSESSEE HAS SUBMITTED BEFORE THE ASSESSING OFFICER THAT PAYMENT IS MADE DUE TO MISUNDERSTANDIN G OF THE RELEVANT PROVISIONS OF LAW. THIS BY ITSELF IS NO GROUND TO D ISOBEY THE PROVISIONS OF LAW. THIS GROUND HAS NO MERIT AND ACCORDINGLY DISMI SSED. 9. ON GROUND NO.4, THE ASSESSEE HAS CHALLENGED THE ADDITION OF RS. 41,164/- ON ACCOUNT OF DEPRECIATION CLAIMED ON HOTE L BUILDING BY THE ASSESSEE. THE ASSESSING OFFICER NOTED THAT ASSESSEE HAS SHOWN RENTAL INCOME OF RS. 14,572/-. THE ASSESSEE SUBMITTED THAT BUILDING OF HOTEL PUKHRAJ WITH 12 ROOMS SET ETC. WAS GIVEN ON RENT T O THE FIRM M/S BANT AND VIKAS ENTERPRISES IN WHICH HE WAS ONE OF THE PARTNE RS AND THIS BUILDING WAS HEAD OFFICE OF THE FIRM. THE ASSESSING OFFICER ON THE BASIS OF MATERIAL ON RECORD NOTED THAT ASSESSEE WAS NOT RUNNING HOTEL AND HAD GIVEN THE BUILDING ON RENT, THEREFORE, ASSESSEE WAS ENTITLED FOR DEDUCTION U/S 24 OF THE ACT FROM THE GROSS RENT WHICH ASSESSEE HAD CLAI MED. BUT THE ASSESSEE HAD ALSO CLAIMED DEPRECIATION OF RS. 41,464/- ON TH E FIXED ASSETS OF THE HOTEL INCLUDING BUILDING, FURNITURE ETC. WHICH WAS NOT ALLOWABLE. THE ASSESSEE SUBMITTED THAT RENTAL WAS SHOWN IN RESPECT OF ONE PORTION OF THE BUILDING AND DEPRECIATION WAS CLAIMED ON OTHER PORT ION OF THE BUILDING. THE ASSESSING OFFICER, HOWEVER, NOTED THAT IN THE F IRST SUBMISSION THE ASSESSEE HAS SUBMITTED THAT COMPLETE BUILDING WAS G IVEN ON RENT AND NOW CLAIMED THAT ONLY ONE PORTION WAS GIVEN ON RENT. TH IS PLEA ON THE 5 DEPRECIATION CLAIMED, WAS AN AFTERTHOUGHT. NO EVID ENCE HAS BEEN FURNISHED IN SUPPORT OF THE SAME. THE ASSESSEE HAS ALSO NOT F URNISHED ANY RENT AGREEMENT, THEREFORE, IT WAS HELD THAT ASSESSEE WAS NOT RUNNING THE HOTEL AND RESTAURANT DURING THE YEAR, THEREFORE, DEPRECIA TION CLAIMED WAS DISALLOWED. THE LD. CIT(A) ON THIS SAME REASONING C ONFIRMED THE ADDITION. 10. AFTER CONSIDERING THE RIVAL SUBMISSIONS, I AM NOT INCLINED TO INTERFERE WITH THE ORDER OF THE AUTHORITIES BELOW I N THE ABSENCE OF ANY EVIDENCE THAT THE ASSESSEE WAS RUNNING THE HOTEL AN D RESTAURANT AND NO DEPRECIATION CAN BE ALLOWED TO THE ASSESSEE PARTICU LARLY WHEN THE BUILDING WAS GIVEN ON RENT. THE RENT AGREEMENT WAS ALSO NOT FILED TO EXPLAIN THAT PART HOTEL PREMISES WERE LET OUT ON RENT. IN THE AB SENCE OF ANY EVIDENCE ON RECORD, NO INTERFERENCE IS CALLED FOR. THIS GROUND IS ACCORDINGLY DISMISSED. 11. ON GROUND NO.5 THE ASSESSEE CHALLENGED THE ADDI TION OF RS. 50,000/- UNDER THE HOUSE HOLD EXPENSES. THE ASSESSING OFFICE R NOTED THAT AS PER THE DETAILS FURNISHED BY THE ASSESSEE THE ASSESSEE WAS HAVING ADULT MEMBERS IN THE FAMILY. HE IS REPUTED PERSONALITY IN THE AREA A ND IS MAINTAINING GOOD STANDARD OF LIVING, THE ASSESSEE HAS INVESTED MORE THAN RS. 1 LAKH IN LIC, THEREFORE, TOTAL WITHDRAWALS OF RS. 1,05000/- WERE FOUND INSUFFICIENT. THE ASSESSING OFFICER NOTED THAT THERE WERE TOTAL SIX M EMBERS IN THE FAMILY AND ASSESSEES DAUGHTER WAS IN 2ND YEAR OF BDS IN PRIVA TE COLLEGE. THE ASSESSING OFFICER, THEREFORE, FOUND THAT HOUSEHOLD WITHDRAWALS ARE VERY LESS ESPECIALLY IN VIEW OF THE FACT THAT ASSESSEE H AD CLAIMED ALL THE EXPENSES ON CAR AND TELEPHONE FROM THE BUSINESS. TH E ASSESSING OFFICER, 6 THEREFORE, MADE ADDITION OF RS. 50,000/- ON ACCOUNT OF LOW WITHDRAWALS. CIT(A) ALSO CONFIRMED ADDITION. 12. AFTER CONSIDERING THE RIVAL SUBMISSIONS, I AM N OT INCLINED TO INTERFERE WITH THE ORDERS OF THE AUTHORITIES BELOW. THE LD. C OUNSEL FOR THE ASSESSEE SUBMITTED THAT SON OF THE ASSESSEE IS EARNING AND H E HAD ALSO CONTRIBUTED SEPARATELY. HOWEVER, NO EVIDENCE IN SUPPORT OF THE SAME HAS BEEN FILED. THE ESTIMATION MADE BY THE AUTHORITIES BELOW OF HOU SEHOLD EXPENSES IS REASONABLE AND CORRECT. THE ASSESSMENT YEAR IN APPE AL IS 2009-10 AND IN THIS YEAR HOUSEHOLD WITHDRAWALS OF RS. 1,05,000/- W OULD BE VERY LOW FOR THE ENTIRE FAMILY OF THE ASSESSEE. THE AUTHORITIES BELOW WERE REASONABLE IN MAKING ONLY THE ADDITION OF RS. 50,000/- ON ACCOUNT OF LOW WITHDRAWALS. IN THE ABSENCE OF ANY EVIDENCE IN SUPPORT OF EXPLANATI ON OF THE ASSESSEE, THIS GROUND IS DISMISSED. 13. ON GROUND NO.6, THE ASSESSEE HAS CHALLENGED THE ADDITION OF RS. 80,000/- ON ACCOUNT OF UNDISCLOSED INCOME. THE ASSE SSEE CLAIMED AGRICULTURAL INCOME OF RS. 3,20,000/- AND THE SAME WAS CREDITED IN THE CAPITAL ACCOUNT OF THE ASSESSEE. THE ASSESSEE FURNI SHED EVIDENCE REGARDING LAND HOLDING AND COPIES OF THE RECEIPTS IN SUPPORT OF THE SALE OF AGRICULTURAL PRODUCE. THE ASSESSING OFFICER NOTED T HAT AS PER THE RECEIPTS FOR SALE OF AGRICULTURAL PRODUCE TOTAL SALES WERE O F RS. 3,20,000/- WHICH THE ASSESSEE HAS SHOWN AS AGRICULTURAL INCOME. NO EXPEN SES HAVE BEEN REDUCED FROM THE GROSS INCOME AND ASSESSEE FAILED TO FURNIS H ANY EVIDENCE OF THE EXPENSES INCURRED FOR EARNING AGRICULTURAL INCOME. THE ASSESSING OFFICER AFTER CONSIDERING THE ISSUE IN DETAIL DISALLOWED 25 % OF THE AGRICULTURAL 7 INCOME IN A SUM OF RS. 80,000/- TREATING THE SAME A S INCOME FROM UNDISCLOSED SOURCES. THE LD. CIT(A) CONFIRMED THE A DDITION BECAUSE ASSESSEE COULD NOT JUSTIFY THE EXPENDITURE INCURRED ON EARNING THE AGRICULTURAL INCOME. 14. AFTER CONSIDERING THE RIVAL SUBMISSIONS, I DO N OT FIND ANY MERIT IN THIS GROUND OF APPEAL OF THE ASSESSEE. THE ASSESSEE HAS SHOWN GROSS INCOME ON ACCOUNT OF AGRICULTURAL INCOME BUT NO DETAILS OF EXPENSES HAVE BEEN FURNISHED FOR EARNING OF AGRICULTURAL INCOME. THE A SSESSEE WAS REQUIRED TO INCUR EXPENDITURE, HOWEVER, NO DETAILS OF THE EXPEN DITURE HAVE BEEN PRODUCED. THE ASSESSING OFFICER CORRECTLY DISALLOWE D 25% OF THE AGRICULTURAL INCOME AND RIGHTLY TREATED THE SAME AS UNDISCLOSED INCOME OF THE ASSESSEE. NO INTERFERENCE IS REQUIRED ON THIS G ROUND; THE SAME IS, THEREFORE, DISMISSED. 15. IN THE RESULT APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT. SD/- (BHAVNESH SAINI) JUDICIAL MEMBER DATED : 5 TH JANUARY, 2017 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR