K.Khodidas Patel Specific Family Trust, Ahmedabad V. The DY.CIT., Cent.Circle-10, Ahmedabad

ITA 1521/AHD/2007

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 5944 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 1 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-06-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 15-06-2010
• Assessment Year: 1992-1993
• Appeal Filed On: 17-04-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GAURAV BATHAM
• Keywords: Business expenditure; Set aside

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D AHMEDABAD BEFORE SHRI MAHAVIR SINGH, JUDICIAL MEMBER AND SHRI D.C.AGARWAL, ACCOUNTANT MEMBER ITA NO. 1 521 /AHD/ 2007 ASSESSMENT YEAR 1992-1993 DATE OF HEARING:15.6.10 DRAFTED:15.6.10 K. KHODIDAS PATEL SPECIFIC FAMILY TRUST NIRMA HOUSE, ASHRAM ROAD, AHMEDABAD. V/S . DY. COMMISSIONER OF INCOME TAX, CIRCLE-10, AHMEDABAD. (APPELLANT) .. (RESPONDENT) ASSESSEE BY :- SHRI HIMANSHU SHAH, AR REVENUE BY:- SHRI GAURAV BATHAM, DR O R D E R PER MAHAVIR SINGH, J.M. THIS APPEAL BY THE ASSESSEE IS ARISING OUT OF THE ORDER OF CIT(A)-II, AHMEDABAD IN APPEAL NO. CIT(A)-CENTRAL CIRCLE.1/352 /2006-07 VIDE ORDER DATED 14-02-2007. THE ASSESSING OFFICER PASSED THE ORDER GIVING APPEAL EFFECT TO THE ORDER OF CIT(A) VIDE ORDER DATED 13-0 4-2006. 2. AT THE OUTSET IT IS NOTICED THAT THE ASSESSEE HA S RAISED THE FOLLOWING ISSUES (I) THAT THE CIT(A) HAS ERRED IN CONFIRMING THE DIS ALLOWANCE OF FOLLOWING EXPENSES DEBITED IN THE BOOKS OF ACCOUNTS OF PROPRI ETARY CONCERN OF K.K. PATEL INDUSTRIES. (A) STAMP EXPENSES RS. 5520/- (B) BANK GUARANTEE EXPENSES RS. 30,000/- (C) VAKIL FEES RS. 35,000/- AND FOLLOWING EXPENSES RECORDED IN THE BOOKS OF K. KHODIDAS PATEL SPECIFIC FAMILY TRUST ITA NO.1521/AHD/07 K.K. KHODIDAS PATEL, AHMEDABAD V. DY. CIT, CIR-10 AHMEDABAD. PA GE 2 (D) BANK COMMISSION RS. 20,368/- (E) BANK INTEREST RS. 1,18,209/- II) THAT THE CIT(A) HAS ERRED IN REJECTING GROUND REGARDING CHARGING INTEREST U/S 220(2) OF THE ACT AND WITHDRAWING INTE REST U/S 244(1A) OF THE ACT. 3. AFTER HEARING RIVAL CONTENTIONS, WE FIND THAT A S REGARDS TO THE DISALLOWANCE OF EXPENSES OF STAMP DUTY, BANK GUARANTEE EXPENSES, VAKIL FEE, BANK COMMISSION AND BANK INTEREST, THE ASSESSING OFFICER HAS GIVEN HIS FINDING AS UNDER: FROM THESE FACTS, IT IS VERY CLEAR THAT THE EXPENSE S CLAIMED BY THE ASSESSEE ARE NOT AT ALL ALLOWABLE AGAINST THE INCOM ES SHOWN BY THE ASSESSEE BECAUSE THE EARNING OF THESE KINDS OF INCO MES DOES NOT REQUIRE AT ALL THE EXPENSES CLAIMED BY THE ASSESSEE . THEREFORE, NEITHER AS BUSINESS EXPENSES NOR AS EXPENSES PERTAINING TO INCOME FROM OTHER SOURCES, THESE EXPENSES CAN BE CLAIMED. THE REPRES ENTATIVE OF THE ASSESSEE WAS CONFRONTED WITH THESE FINDINGS AND WAS ASKED TO PROVE THE GENUINENESS OF THESE EXPENSES BUT NO COGENT EXP LANATION OF THE ASSESSEE COULD BE GIVEN BY THE REPRESENTATIVE OF TH E ASSESSEE. THEREFORE, THESE EXPENSES ARE NOT ALLOWED TO THE AS SESSEE AND INCOME IS ASSESSED AS PER ORDER DATED 03.03.05 AT RS.06,05 ,470/-. FURTHER, THE CIT(A) ALSO DISMISSED THE CLAIM OF THE ASSESSEE SUMMARILY WITHOUT GOING INTO THE DETAILS AND BY GIVING FOLLOW ING FINDINGS IN PARA 4 OF HIS APPELLATE ORDER. 4. I HAVE CONSIDERED THE CONTENTIONS OF THE APPELLA NT AS WELL AS THE ASSESSMENT ORDER. THE APPELLANT IS HAVING INCOME I N THE FORM OF INCOME FROM PROPERTY, INTEREST INCOME FROM THE BANK , SHORT TERM CAPITAL GAIN AND CUSTOM DUTY REFUND. THE EXPENSES CLAIMED BY THE APPELLANT ARE NOT ESTABLISHED TO HAVE BEEN INCURRED FOR THE PURPOSE OF EARNING SUCH INCOME. HENCE THE EXPENSES ARE NOT AD MISSIBLE AGAINST PROPERTY INCOME OR AGAINST THE INCOME FROM OTHER SO URCES. THE AR OF ITA NO.1521/AHD/07 K.K. KHODIDAS PATEL, AHMEDABAD V. DY. CIT, CIR-10 AHMEDABAD. PA GE 3 THE APPELLANT WAS ALSO CONFRONTED WITH THESE FINDIN GS AND WAS ASKED TO PROVE THE GENUINENESS OF THESE EXPENSES BUT NO COGE NT EXPLANATION OF THE APPELLANT COULD BE PROVIDED BY THE AR OF THE AP PELLANT, IN SUCH CIRCUMSTANCES, THE DISALLOWANCE MADE BY THE ASSESSI NG OFFICER IS JUSTIFIED. AS A RESULT, THE GROUND NO.2 & 3 RAISED BY THE APPELLANT IS DISMISSED. 4. WE FIND THE ABOVE ORDER OF THE ASSESSING OFFICER GIVING APPEAL EFFECT TO THE ORDER OF CIT(A) AND CONSEQUENT ORDER OF CIT(A) THAT NONE OF THE AUTHORITIES BELOW HAVE DISCUSSED THE NEXUS OF THESE EXPENDITURE INCURRED BY THE ASSESSEE WITH THE INCOME EARNED. THE ORDERS OF THE AUTHORITIES BELOW LACKS THE FACTS AND IN THE ABSENCE OF THE SAME WE A RE UNABLE TO DECIDE TO ISSUE AT THIS STAGE, ACCORDINGLY THESE EXPENSES ARE AGAIN SET ASIDE TO THE FILE OF THE ASSESSING OFFICER TO DECIDE THE NEXUS OF THE SE EXPENSES WITH THAT OF THE INCOME DECLARED BY THE ASSESSEE IN THE RETURN OF IN COME AND DECIDE ACCORDING TO LAW BY A SPEAKING ORDER. 5. THE NEXT ISSUE REGARDING CHARGING OF INTEREST UN DER SECTION 221 OF THE ACT AND WITHDRAWAL OF INTEREST UNDER SECTION 244(1A ) OF THE ACT, THE ORDERS OF THE LOWER AUTHORITIES IS WITHOUT ANY FACTS, ACCORDI NGLY THESE ARE ALSO SET ASIDE TO THE FILE OF THE ASSESSING OFFICER TO DECIDE AFRE SH BY A SPEAKING ORDER. 6. IN THE RESULT, THIS APPEAL OF THE ASSESSEE IS ALLOW ED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON 15/06/2010 SD/- SD/- (D.C. AGARWAL) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD, DATED: 15/06/2010 ANKIT* COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT. ITA NO.1521/AHD/07 K.K. KHODIDAS PATEL, AHMEDABAD V. DY. CIT, CIR-10 AHMEDABAD. PA GE 4 2. THE RESPONDENT. 3. THE CIT(APPEALS)-IV, BARODA 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD