The ACIT, 1 (1), V. Sh Alock Khanna,

ITA 131/IND/2006

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 9486 (ITAT-INDORE)
• Duration Of Justice: 3 year(s) 10 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-01-2010
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 05-01-2010
• Assessment Year: misc
• Appeal Filed On: 24-02-2006
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: APARNA KARAN
• Keywords: Corroborative evidences

Judgement Text

PAGE 1 OF 5 I.T.A.NO. 775/IND/2007 MR.ALOK KHANNA, BHOPAL IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH : INDORE BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI V.K. GUPTA, ACCOUNTANT MEMBER PAN NO. : AGHPK0874K I.T.A.NO.775/IND/2007 A.Y. : 2004-05 ACIT, SHRI ALOK KHANNA, 1(1), VS E-1/130, ARERA COLONY, BHOPAL BHOPAL APPELLANT RESPONDENT APPELLANT BY : NONE RESPONDENT BY : SMT.APARNA KARAN, SR. DR DATE OF HEARING : 10/12/2009 O R D E R PER V.K. GUPTA, A.M. THIS APPEAL FILED BY THE REVENUE ARISES OUT OF ORDE R OF THE LD. CIT(A)-I, BHOPAL, DATED 20.09.2007, FOR THE ASSESSM ENT YEAR 2004-05. 2. WE HAVE HEARD BOTH THE PARTIES AND HAVE ALSO PERUSE D THE MATERIAL AVAILABLE ON RECORD. 3. GROUND NO. 1 READS AS UNDER :- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION ON ACCOUN T OF DISALLOWANCE OF STAFF WELFARE EXPENSES OF RS. 37,89 7/-. PAGE 2 OF 5 I.T.A.NO. 775/IND/2007 MR.ALOK KHANNA, BHOPAL 4. THE FACTS, IN BRIEF, ARE THAT THE A.O. MADE AN AD H OC DISALLOWANCE OF RS. 37,897/- OUT OF STAFF WELFARE E XPENSES OF RS. 1,89,485/- AS MOST OF THESE EXPENSES CONSISTED OF T EA, SNACKS, BREAK FAST ETC. AND A VERY FEW AMOUNT HAD BEEN SPENT ON MEDICI NES AND OTHER NECESSITIES. 5. AGGRIEVED BY THIS, THE ASSESSEE CARRIED THE MATTER INTO APPEAL BEFORE THE LD. CIT(A), WHO DELETED SUCH DISALLOWANC E FOR THE REASON THAT THE A.O. HAD NOT POINTED OUT ANY INCIDENCE OF A BOG US EXPENDITURE CLAIMED BY THE ASSESSEE UNDER THIS HEAD. AGGRIEVED BY THIS, THE REVENUE IS IN APPEAL BEFORE US. 6. THE LD. DR NARRATED THE FACTS AND PLACED RELIANCE O N THE ORDER OF THE AO. THE LD. COUNSEL FOR THE ASSESSEE, ON THE OT HER HAND, PLACED STRONG RELIANCE ON THE ORDER OF THE LD. CIT(A). 7. WE HAVE CONSIDERED THE SUBMISSIONS MADE BY BOTH THE SIDES, MATERIAL ON RECORD AND THE ORDERS OF THE AUTHORITIE S BELOW. 8. IT IS NOTED THAT NO REASON HAS BEEN GIVEN BY THE AS SESSING OFFICER FOR MAKING SUCH DISALLOWANCE, EXCEPT NARRAT ING THE NATURE OF EXPENSES CLAIMED BY THE ASSESSEE UNDER THIS HEAD. T HUS, THERE IS NO BASIS FOR SUCH DISALLOWANCE. HENCE, THE SAME HAS RIGHTLY BEEN DELETED BY THE CIT(A). 9. GROUND NO. 2 READS AS UNDER :- PAGE 3 OF 5 I.T.A.NO. 775/IND/2007 MR.ALOK KHANNA, BHOPAL ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION ON ACCOUN T OF DISALLOWANCE OF TRAVELING EXPENSES OF RS. 11,68,666 /- OUT OF TOTAL EXPENSES CLAIMED AT RS. 58,43,333/- IN VIEW O F THE FAILURE ON THE PART OF ASSESSEE TO JUSTIFY THE REAS ONABILITY OF CLAIMING THESE EXPENSES WITH SUPPORTING EVIDENCES. 10. THE FACTS, IN BRIEF, ARE THAT THE ASSESSEE CLAIMED TRAVELING EXPENSES AT RS. 58,43,333/-, WHICH IS AS PER THE VE RSION OF ASSESSEE HAD BEEN CLAIMED IN RESPECT OF TRAVELING UNDERTAKEN BY THE PROPRIETOR AS WELL AS SALES STAFF OF THE ASSESSEE FOR THE PURPOSE OF I TS BUSINESS. THE A.O. HELD THAT MOST OF THE EXPENSES WERE INCURRED FOR AI R TRAVEL AND THE NATURE AND PURPOSE OF JOURNEY HAD NOT BEEN MENTIONED IN TH E LEDGER ACCOUNT PRODUCED BY THE ASSESSEE. HENCE, HE REQUIRED THE AS SESSEE TO PRODUCE SUPPORTING EVIDENCE. HOWEVER, THE SAME WERE NOT FUR NISHED BY THE ASSESSEE. THE A.O., THEREFORE, DISALLOWED A SUM OF RS. 11,68,666/- OUT OF THIS EXPENDITURE HAVING REGARD TO THE QUANTUM INVOL VED AND NATURE OF BUSINESS OF THE ASSESSEE AND FAILURE ON THE PART OF THE ASSESSEE TO JUSTIFY ABOVE EXPENSES OR PROVE NECESSITY OF ABOVE EXPENSES . AGGRIEVED BY THIS, THE ASSESSEE CARRIED THE MATTER INTO APPEAL BEFORE THE LD. CIT(A), WHEREIN IT WAS CONTENDED THAT LEGITIMACY OF BUSINESS EXPEND ITURE HAD TO BE SEEN FROM THE VIEW POINT OF A PRUDENT BUSINESSMAN AND NO T AS AN A.O. IT WAS PAGE 4 OF 5 I.T.A.NO. 775/IND/2007 MR.ALOK KHANNA, BHOPAL ALSO CONTENDED THAT THE A.O. HAD NO POWER TO SIT IN THE ARM CHAIR OF THE MANAGEMENT IN THE BUSINESS AND THEN TO DECIDE HOW B USINESS HAD TO BE RUN. THE LD. CIT(A) RELYING ON THE DECISION OF HON' BLE CALCUTTA HIGH COURT IN THE CASE OF CIT VS. EDWARD KEVENTER (P) LI MITED, AS REPORTED IN 86 ITR 370, DELETED THIS DISALLOWANCE ALSO. 11. AGGRIEVED BY THIS, THE REVENUE IS IN APPEAL BEFORE US. 12. THE LD. DR NARRATED THE FACTS AND PLACED RELIANCE O N THE ORDER OF THE AO. THE LD. COUNSEL FOR THE ASSESSEE, ON THE OT HER HAND, PLACED STRONG RELIANCE ON THE ORDER OF THE LD. CIT(A). 13. IT IS NOTED THAT THE A.O. HAS DISALLOWED THESE EXPE NSES ON THE GROUND THAT THE ASSESSEE FAILED TO PROVE THE NECESS ITY OF THESE EXPENSES, WHICH, IN OUR OPINION, IS NOT A CONDITION PRESCRIBE D IN LAW TO MAKE ANY DISALLOWANCE. WE FURTHER FIND THAT OTHER OBSERVATIO NS OF THE A.O. ARE VAGUE AND GENERAL IN NATURE. ACCORDINGLY, WE HOLD T HAT THE LD. CIT(A) HAS RIGHTLY MADE THIS DISALLOWANCE ALSO. THUS, THIS GROUND OF THE REVENUE IS ALSO DISMISSED. 14. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS D ISMISSED. PAGE 5 OF 5 I.T.A.NO. 775/IND/2007 MR.ALOK KHANNA, BHOPAL THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 15 TH DECEMBER, 2009. SD/- SD/- (JOGINDER SINGH) (V. K. GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED :15 TH DECEMBER, 2009. CPU*