R.Manoj Kumar, CHENNAI V. ACIT, CHENNAI

ITA 1310/CHNY/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 7856 (ITAT-CHENNAI)
• Duration Of Justice: 8 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2017
• Appeal Filed By: Assessee
• Bench Allotted: C
• Next Hearing Date: 05-01-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 11-05-2016
• Court: TRIBUNAL
• Department Lawyers: B SAHADEVAN
• Assessee Lawyers: HARI BABU

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: CHENNAI . . . , !'. . # $ % , ' () BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI D.S.SUNDER SINGH, ACCOUNTANT MEMBER ./ ITA NO.1310/MDS/2016 * +* /ASSESSMENT YEAR: 2008-09 SHRI R. MANOJ KUMAR, B-3, LEFTWING RC LITTLE WINGS, ALEX NAGAR I MAIN ROAD, MADHAVARAM, CHENNAI-600 051. [PAN: AFGPM 5901 F] VS. THE ASST. COMMISSIONER OF INCOME TAX, B. CIRCLE-XI, CHENNAI-6 ( ,- /APPELLANT) ( ./,- /RESPONDENT) ,- 0 1 / APPELLANT BY : MR.HARI BABU, CA ./,- 0 1 /RESPONDENT BY : MR.B. SAHADEVAN, JCIT # 0 2' /DATE OF HEARING : 05.01.2017 34+ 0 2' /DATE OF PRONOUNCEMENT : 31.01.2017 / O R D E R PER D.S.SUNDER SINGH , ACCOUNTANT MEMBER : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER DATED 24.02.2016 OF COMMISSIONER OF INCOME TAX (APPEALS) -5, CHENNAI, IN ITA NO.141/CIT(A)-5/13-14 FOR THE AY 2008-09. 2.0 ALL THE GROUNDS OF THE APPEAL ARE RELATED TO THE D ISALLOWANCE OF RS.2,12,600/- BEING THE DIFFERENCE IN THE NET PROFI T AS PER THE P&L ACCOUNT ITA NO.1310/MDS/2016 :- 2 -: AND THE INCOME ADMITTED. DURING THE ASSESSMENT PRO CEEDINGS, THE ASSESSING OFFICER (HEREINAFTER REFERRED TO AS AO) FOUND THAT NET PROFIT AS PER P&L ACCOUNT WAS RS.7,39,610/- AND THE ASSESSEE HAD ADMITTED ONLY A SUM OF RS.5,27,010/- AS INCOME. THE ASSESSEE HAS C LAIMED THE EXPENSES OF RS.2,12,600/- FROM THE P&L ADJUSTMENT ACCOUNT. THE AO DISALLOWED THE EXPENSES HOLDING THAT THE EXPENSES WERE NOT WHO LLY AND EXCLUSIVELY LAID OUT FOR THE PURPOSE OF BUSINESS. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE WENT ON APPEAL BEFORE THE LEARNED COMM ISSIONER OF INCOME TAX(APPEALS) (HEREINAFTER REFERRED TO AS LD.CIT(A) ). DURING THE FIRST APPELLATE STAGE, THE LD.CIT(A) CALLED FOR THE COPY OF THE AGREEMENT WITH SHELL INDIA AND THE ASSESSEE COULD NOT PRODUCE TH E AGREEMENT, THEREFORE THE LD.CIT(A) CONFIRMED THE ADDITION AND DISMISSED THE APPEAL. 3.0 AGGRIEVED BY THE LD.CIT(A)S ORDER, THE ASSESSEE F ILED AN APPEAL BEFORE THIS TRIBUNAL. DURING THE APPEAL, THE LD.AR SUBMITTED THAT THE AS SESSEE WAS IN THE BUSINESS OF RUNNING FUEL OUTLET ON BEHALF OF M/S.SH ELL INDIA MARKETING PVT. LTD. AND A SMALL DEPARTMENTAL STORE ATTACHED TO TH E FUEL STATION. THE ASSESSING OFFICER DISALLOWED THE EXPENDITURE DEBITE D TO THE P&L ADJUSTMENT ACCOUNT WITHOUT VERIFYING THE FACTS AND THE ENTIRE EXPENDITURE WAS SUPPORTED BY BILLS AND VOUCHERS, THE SAME WERE SPENT FOR THE PURPOSE OF BUSINESS TO MEET THE HOTEL EXPENSES OF MANAGERS OF SHELL COMPANY AND THE VEHICLE EXPENSES. THE ASSESSEE USED TO DRAW EVERY MONTH TOWARDS HIS TARGETED EARNINGS AND OUT OF THIS HE SP ENT AMOUNTS TOWARDS ITA NO.1310/MDS/2016 :- 3 -: EXPENSES WHICH ARE SHOWN IN THE PROFIT AND LOSS ADJ USTMENT ACCOUNT. THE A.R ARGUED THAT THE AO DISALLOWED THE EXPENDITURE WITHOUT CALLING FOR THE DETAILS AND NO OPPORTUNITY WAS GIVEN TO THE ASSESSE E TO SUBSTANTIATE HIS CASE. THE LD.CIT(A) ALSO DID NOT GIVE ANY OPPORTUN ITY TO SUBMIT THE COPY OF THE AGREEMENT OR TO PRODUCE THE BILLS EVIDENCING THE GENUINENESS OF THE PAYMENT. THEREFORE, THE LEARNED A.R ARGUED THAT AN OPPORTUNITY TO BE GIVEN TO THE ASSESSEE TO PROVE ITS CASE REGARDING G ENUINENESS OF THE EXPENDITURE. ON THE OTHER HAND, THE LD.DR RELIED ON THE LOWER AUTHORITIES ORDERS. 4.0 WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MAT ERIAL PLACED ON RECORD. ON CLOSE VERIFICATION OF THE ASSESSMENT ORDER, IT REVEALS THAT THE AO HAS NOT CALLED FOR THE DETAILS AND DISALLOWED THE E XPENDITURE WITHOUT EXAMINATION OR VERIFICATION OF EXPENSES, MERELY BEC AUSE THE AMOUNT WAS CLAIMED FROM THE P&L ADJUSTMENT ACCOUNT. THE LD.CI T(A) HAS CALLED FOR THE AGREEMENT, WHEN THE ASSESSEE HAS EXPRESSED HIS INABILITY TO PRODUCE THE AGREEMENT, THE LD.CIT(A) LANDED IN A CONCLUSION THAT THE EXPENDITURE WAS NOT GENUINE AND HENCE CONFIRMED THE ADDITION. T HE ASSESSEE STATED THAT THE EXPENSES WERE INCURRED FOR THE PURPOSE OF BUSINESS AND SUPPORTED BY THE VOUCHERS AND BILLS. SO LONG AS TH E EXPENDITURE IS INCURRED FOR THE PURPOSE OF CARRYING ON THE BUSINES S AND SUPPORTED BY BILLS AND VOUCHERS, NOMENCLATURE OF THE ACCOUNT DOES NOT VITIATE THE CLAIM OF THE EXPENDITURE AND THE AO HAS NO OPTION EXCEPT TO ALLOW THE EXPENDITURE ITA NO.1310/MDS/2016 :- 4 -: UNLESS IT IS PROVED OTHERWISE. IN THE INSTANT CASE , THE AO DISALLOWED THE EXPENSES WITHOUT VERIFYING THE DETAILS AND THE ASSE SSEES AR ARGUED THAT IF THE OPPORTUNITY IS GIVEN, THE ASSESSEE IS IN A POSI TION TO PROVE THE EXPENDITURE AND REQUESTED FOR ONE MORE OPPORTUNITY FOR SUBMISSION OF THE NECESSARY DETAILS AND INFORMATION BEFORE THE AO. T HEREFORE, WE ARE OF THE CONSIDERED VIEW THAT ONE MORE OPPORTUNITY SHOULD BE GIVEN TO THE ASSESSEE FOR PRODUCTION OF DETAILS. ACCORDINGLY, WE SET ASIDE THE ORDER OF LOWER AUTHORITIES AND REMIT THE MATTER BACK TO THE FILE OF AO FOR VERIFICATION AND TO DECIDE THE ISSUE AFRESH ON MERI TS. 5.0 IN THE RESULT, THE APPEAL OF THE ASSESSEE ALLOWED FOR STATISTICAL PURPOSES . ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST JANUARY, 2017, AT CHENNAI. SD/- SD/- ( . . . ) (N.R.S. GANESAN) /JUDICIAL MEMBER ( !' . . # $ % ) (D.S.SUNDER SINGH) ' /ACCOUNTANT MEMBER /CHENNAI, 5 /DATED: 31 ST JANUARY, 2017. TLN 0 .2$6 76+2 /COPY TO: 1. ,- /APPELLANT 4. # 82 /CIT 2. ./,- /RESPONDENT 5. 69 .2 /DR 3. # 82 ( ) /CIT(A) 6. '* < /GF