SMT. GUMAN KHANDELWAL, Jaipur V. ACIT, Jaipur

ITA 1332/JPR/2010

• Counselvise Citation: 133223114 RSA 2010
• Duration Of Justice: 9 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-08-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 15-11-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: K L MOOLCHANDAN I; R K KHUNTETA
• Keywords: Depreciation; Block assessment
• Section: 153A

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH A JAIPUR (BEFORE SHRI R.K.GUPTA AND SHRI N.L.KALRA) ITA NO.1332/ JP/2010 ASSESSMENT YEAR 2007-08 PAN: ADRPK 6455 F SMT GUMAN KHANDELWAL VS. THE ACIT A-2, RANA PRATAP NAGAR CENTRAL CIRCLE- 1 JHOTWARA, JAIPUR JAIPUR (APPELLANT ) (RESPONDENT) ITA NO.1384/ JP/2010 ASSESSMENT YEAR 2007-08 PAN: ADRPK 6455 F THE ACIT VS SMT GUMAN KHANDELWAL CENTRAL CIRCLE- 1 A-2, RANA PRATAP NAGAR JAIPUR JHOTWARA, JAIPUR (APPELLANT ) (RESPONDENT) ASSESSEE BY : SHRI K.L. MOOLCHANDANI & SHRI R .K. KHUNTETA DEPARTMENT BY : SHRI SUNIL MATHUR DATE OF HEARING: 02-08-2011 DATE OF PRONOUNCEMENT: 26-08-2011 2 ORDER PER N.L. KALRA, AM:- THE ASSESSEE AS WELL AS REVENUE HAVE FILED APPEAL S AGAINST THE ORDER OF THE LD. CIT(A), CENTRAL JAIPUR DATED 29-09-2010 FOR THE ASSESSMENT YEAR 2007-08. 2.1 THE FIRST GROUND OF THE ASSESSEE IS THAT THE LD . CIT(A) HAS ERRED IN CONFIRMING THE DISALLOWANCE OUT OF TAXI EXPENSES TO THE EXTENT OF 20% AS AGAINST DISALLOWANCE OF 1/3 OF TAXI EXPENSES MADE B Y THE AO. 2.2 THE SECOND GROUND OF THE ASSESSEE IS THAT THE L D. CIT(A) HAS ERRED IN RESTRICTING THE CLAIM OF DEPRECIATION ON TAXIES TO THE EXTENT OF THE POSITIVE INCOME FROM TAXIES. 2.3 THE FIRST GROUND OF THE REVENUE IS THAT THE LD . CIT(A) HAS ERRED IN DIRECTING THE AO TO ASSESS THE TAXI INCOME AFTER AL LOWING DEPRECIATION AT RS. 2.00 LACS AS AGAINST AOS ASSESSED INCOME OF RS.4.0 0 LACS. 2.4 WE HAVE HEARD BOTH THE PARTIES. THE GROUND OF A PPEAL RAISED BY THE REVENUE IS NOT AT ALL RELEVANT. PERHAPS THE GROUND OF APPEAL IN RESPECT OF TAXI BUSINESS RAISED BY THE REVENUE FOR THE ASSESSMENT Y EAR 2007-08 IS RELEVANT FOR ASSESSMENT YEAR 2008-08 WHILE THE GROUND OF APP EAL RAISED BY THE REVENUE FOR THE ASSESSMENT YEAR 2008-09 IS RELEVANT FOR ASSESSMENT YEAR 2007-08. 3 2.5 BEFORE US, NO REQUEST WAS MADE FOR AMENDMENT OF GROUNDS OF APPEAL. HENCE THE GROUND NO. 1 OF THE REVENUE IS DISMISSED. 2.6 WE HAVE NOTICED THAT DURING THE YEAR THE ASSESS EE WAS HAVING THREE TAXIES. IT IS UNDISPUTED FACT THAT THE EXPENSES AND RECEIPTS ARE BOTH ESTIMATED. THE PRESENT ASSESSMENT HAS BEEN MADE U/S 153A OF TH E ACT. THE ASSESSMENT U/S 153A IS DIFFERENT FROM THE BLOCK ASSESSMENT U/S 158BC OF THE ACT. THE BLOCK ASSESSMENT WAS BEING MADE FOR MAKING THE ASSE SSMENT OF UNDISCLOSED INCOME AS PER THE MATERIAL FOUND DURING THE COURSE OF SEARCH OR ANY MATERIAL WHICH IS CONNECTED WITH THE MATERIAL FOUND DURING T HE COURSE OF SEARCH AND NOTICED AFTER THE SEARCH. THE BLOCK ASSESSMENT WAS SEPARATE AND DISTINCT FROM THE REGULAR ASSESSMENT. HOWEVER, THE ASSESSMEN T U/S 153A IS TO BE MADE AND THE REGULAR ASSESSMENT IF ANY PENDING STAN DS ABATED. HENCE, WHEN THE INCOME IS BEING ASSESSED IN A REGULAR WAY THEN THE ASSESSEE IS ENTITLED FOR DEPRECIATION. HENCE, THE DECISION OF JODHPUR TRIBUN AL IN THE CASE OF SUNCITY ALLOYS (P) LTD. VS. ACIT, CENTRAL CIRCLE- 1 IN ITA NOS.586 TO 588/JU/2008 ON WHICH AO HAS PLACED RELIANCE IS NOT APPLICABLE I N THE INSTANT CASE. WE THEREFORE, FEEL THAT THE LD. CIT(A) WAS JUSTIFIED I N DIRECTING THE AO TO TAKE NIL INCOME AFTER ALLOWING DEPRECIATION AS AGAINST R ETURNED LOSS OF RS. 5,55,536/-. HENCE GROUND NOS. 1 AND 2 OF THE ASSESS EE ARE DISMISSED 4 3.1 THE THIRD GROUND OF THE ASSESSEE IS THAT THE LD . CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS. 5,65,453/- AND RS. 5 ,75,296/- TOTALING TO RS. 11,40,749/- BY CONFIRMING THE DISALLOWANCE OUT OF W IP AND CONSTRUCTION EXPENSES RESPECTIVELY TO THE EXTENT OF 20% AS AGAIN ST ADDITION OF RS. 19,01248/- MADE BY THE AO BY DISALLOWING 1/3 RD OF WIP AND CONSTRUCTION EXPENSES . 3.2 THIS ISSUE IS SIMILAR TO THE ISSUE RAISED IN TH E CASE OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2008-09. FOLLOWING OUR FINDING FOR THE ASSESSMENT YEAR 2008-09, WE HOLD THAT THE LD. CIT(A) WAS NOT JUSTIF IED IN CONFIRMING THE ADDITION OF RS. 11,40,749/-. THUS GROUND NO. 3 OF T HE ASSESSEE IS ALLOWED. 4.1 GROUND NO. 2, 3 AND 4 OF THE REVENUE ARE AGAINS T ARE AGAINST REDUCING THE ADDITION FROM WIP AND INTEREST EXPENSES. THE GR OUNDS OF APPEAL ARE THAT THE LD. CIT(A) HAS REDUCED THE DISALLOWANCE OUT OF CONSTRUCTION EXPENSES TO 20% AS AGAINST 50% MADE BY AO AND REDUCING THE DISA LLOWANCE TO 20% AS AGAINST 100% MADE BY AO. THESE GROUNDS OF APPEAL AR E RELEVANT FOR ASSESSMENT YEAR 2008-09. WHILE IN THE GROUNDS OF AP PEAL FOR ASSESSMENT YEAR 2008-09, THE GRIEVANCE OF THE REVENUE IS THAT THE LD. CIT(A) HAS REDUCED THE DISALLOWANCE TO 20% AS AGAINST 33.33%. SUCH GRI EVANCE IS RELEVANT FOR ASSESSMENT YEAR 2007-08. HENCE, WE CONSIDER THE GRO UNDS OF APPEAL FOR ASSESSMENT YEAR 2008-09 APPLICABLE TO ASSESSMENT YEAR 2007-08. 5 4.2 WE HAVE HEARD BOTH THE PARTIES. SINCE WE HAVE D ELETED THE ENTIRE ADDITION BY FOLLOWING OUR FINDINGS FOR THE ASSESSME NT YEAR 2008-09, THEREFORE, GROUND NO. 3 AND 4 OF THE REVENUE ARE DI SMISSED. 5.1 THE FIFTH GROUND OF THE ASSESSEE IS THAT THE LD . CIT(A) HAS ERRED IN NOT ANNULLING THE ASSESSMENT ORDER. 5.2 WE HAVE HEARD BOTH THE PARTIES. THIS ISSUE HAS BEEN DECIDED BY US IN THE CASE OF SHANKAR LAL KHANDELWAL IN ITA NO.155/JP /2010 DATED 12-08- 2011. FOLLOWING THAT ORDER, WE HOLD THAT THE LD. CI T(A) WAS JUSTIFIED IN NOT ANNULLING THE ASSESSMENT ORDER. THUS GROUND NO. 5TH OF THE ASSESSEE IS DISMISSED. 6.1 THE FOURTH GROUND OF THE ASSESSEE IS THAT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE DISALLOWANCE TO THE EXTENT OF 20% OU T OF THE EXPENSES UNDER THE HEAD WIP AND FURNITURE MAKING AS AGAINST ADDITI ON OF RS. 5,27,784/- MADE BY THE AO BY DISALLOWING 1/3 RD OF EXPENSES. 6.2 THE AO IN THE ASSESSMENT ORDER AT PAGE 4 HAS GI VEN THE DETAILS OF THE EXPENSES DEBITED IN THE CONCERN M/S. SUNIL FURNITUR E. THE AO HAS DISALLOWED 1/3D OF THE EXPENSES. THE TOTAL CLAIM OF THE EXPENSES IS TO THE EXTENT OF RS. 15,83,353/-. 6.3 THE LD. CIT(A) HAS REDUCED THE EXPENSES TO THE EXTENT OF 20%. 6 6.4 THE REVENUE IS AGGRIEVED AGAINST REDUCING THE D ISALLOWANCE TO 20% AS AGAINST 33.33% MADE BY THE AO. THIS IS APPARENT FRO M GROUND OF APPEAL NO. 3 FOR ASSESSMENT YEAR 2008-09 AS THE SAME IS RELEVA NT FOR ASSESSMENT YEAR 2007-08. 6.5 WE HAVE HEARD BOTH THE PARTIES. DURING THE COUR SE OF SEARCH, A PROVISIONAL TRADING ACCOUNT WAS FOUND. THIS SHOWS THE EXPENSES OF RS. 15,83,353/-. THE ASSESSEE WHILE FILING THE AUDITED ACCOUNTS CLAIMED THE EXPENSES TO THE EXTENT OF RS. 13,88,296/-. THE LD. CIT(A) HAS DISALLOWED 20% OF THE EXPENSES AS PER AUDITED ACCOUNTS. THE D ETAILS OF EXPENSES WHICH CAN REASONABLY BE CONSIDERED FOR DISALLOWANCE AS PE R AUDITED STATEMENT ARE AS UNDER:- TELEPHONE EXPENSES RS. 26,547/- SALES SERVICES EXPENSES RS. 1,54,785/- PETROL & CONVEYANCE RS. 61,654/- OFFICE EXPENSES RS. 36,447/- 6.6 LOOKING TO THE NATURE OF THE EXPENSES, IT IS CL EAR THAT THE DISALLOWANCE CONFIRMED BY THE LD. CIT(A) IS EXCESSIVE. WE THEREF ORE, FEEL THAT IT WILL BE FAIR AND REASONABLE TO RESTRICT THE DISALLOWANCE T O RS. 30,000/-. AND GROUND OF APPEAL OF THE REVENUE IS DISMISSED 7 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE PARTLY ALLOWED AND THAT OF THE REVENUE IS DISMISSED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 26-08 -2011. SD/- SD/- (R.K. GUPTA) (N.L. KALRA) JUDICIAL MEMBER ACCOUNTANT MEMBER JAIPUR DATED; 26 /08/2011 *MISHRA COPY FORWARDED TO :- 1. SMT GUMAN KHANDELWAL, JAIPUR 2. THE ACIT, CENTRAL CIRCLE- 1, JAIPUR 3. THE LD. CIT BY ORDER 4. THE LD. CIT(A) 5. THE LD.DR 6. THE GUARD FILE (ITA NO.1332/JP /10) A.R, ITAT, JAIPUR 8 9 10