Venkat Ram Reddy Damannagari, Secunderabad V. ITO, Ward-10(5), Hyderabad

ITA 154/Hyd/2023

AI Insights

The case involves Venkata Ram Reddy Damannagari, an authorized dealer of BPCL and proprietor of Srilaxmi Filing Station, who appealed against the order of the Commissioner of Income Tax (Appeals) - National Faceless Appeal Centre, Delhi. The appeal was related to the disallowance of certain expenses claimed in the income tax return for the assessment year 2017-18. The Assessing Officer had disallowed 30% of salary expenses and 20% of other expenses due to lack of original bills or vouchers, which was contested in the appeal. The Tribunal found that the disallowances were excessive and modified them to a uniform 15% across all questioned expenses.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 133372 (ITAT-HYDERABAD)
• Duration Of Justice: 1 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-04-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: SMC
• Next Hearing Date: 16-04-2023
• Assessment Year: 2017-2018
• Appeal Filed On: 16-03-2023
• Result in Favour of: Assessee
• Court: TRIBUNAL

Judgement Text

आयकर अपीलीय अधिकरण, हैदराबाद पीठ में IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES “SMC”, HYDERABAD BEFORE SHRI K. NARASIMHA CHARY, JUDICIAL MEMBER आ.अपी.सं / ITA No. 154/Hyd/2023 (निर्धारण वर्ा / Assessment Year: 2017-18) Venkata Ram Reddy Damannagari Secunderabad [PAN No. AGTPD5590M] Vs. Income Tax Officer, Ward-10(5), Hyderabad अपीलधर्थी / Appellant प्रत्‍यर्थी / Respondent निर्धाररती द्वधरध/Assessee by: Shri T. Chaitanya Kumar, AR रधजस्‍व द्वधरध/Revenue by: Shri SPG Mudaliar, DR सुिवधई की तधरीख/Date of hearing: 17/04/2023 घोर्णध की तधरीख/Pronouncement on: 28/04/2023 आदेश / ORDER Aggrieved by the order dated 06/02/2023 passed by the learned Commissioner of Income Tax (Appeals)- National Faceless Appeal Centre (NFAC), Delhi (“Ld. CIT(A)”), in the case of Venkat Ram Reddy Damannagari (“the assessee”) for the assessment year 2017-18, assessee preferred this appeal. 2. Brief facts of the case are that the assessee is an authorized dealer of BPCL for retail trading of petrol, diesel and lubricants and running proprietary business under Srilaxmi Filing Station, Bachpally. He filed his return of income for the assessment year 2017-18 on 26/10/2017 declaring an income of Rs. 13,92,790/-. Learned Assessing Officer recorded that when the assessee was asked to submit original bills/vouchers for the ITA No. 154/Hyd/2023 Page 2 of 4 expenses on various counts, where the expenditure is more than Rs. 1 lakh, the assessee submitted the ledger account of the expenditure and on verification of the same, the learned Assessing Officer found discrepancies and further found that except the expenditure of Rs. 8,05,819/- towards bank interest all other expenditure was made by way of cash and no original bills or vouchers are available or noted. In these circumstances, learned Assessing Officer disallowed such an expenditure to the extent of 30% insofar as the salary expenditure is concerned and @20% insofar as the other expenses are concerned. 3. Assessee preferred appeal. The first appellate authority’s order reads that the assessee did not enter appearance in spite of several notices and, therefore, he proceeded ex parte and dismissed the appeal for non- prosecution. 4. Assessee is, therefore, before me in this appeal, contending that no proper opportunity was provided to him by the first appellate authority and the first appellate authority did not refer to the merits of the case at all. 5. Learned AR submitted that having regard to the smallness of the addition, the assessee does not pray for remanding the matter to the file of learned Assessing Officer, but prayed that having regard to the line of business of the assessee and the nature of expenses, a view may be taken to disallow 10% of the expenses. 6. Learned DR submitted that the impugned order clearly shows that in spite of assessee being granted opportunities, he failed to avail the same and, therefore, the assessee cannot find fault with the first appellate authority. On the aspect of disallowance, learned DR submitted that the disallowance at 30% in respect of salary and 20% in respect of other expenses is reasonable and at the least, it could be at 25% uniformly on all the counts. ITA No. 154/Hyd/2023 Page 3 of 4 7. I have gone through the record in the light of the submissions made on either side. There is no dispute that the assessee has been in the business of retail trading of petrol, diesel and lubricants. Learned Assessing Officer perused the ledger account in respect of the expenses, where the expenditure is more than Rs. 1 lakh under any count. When I look at the nature of expense, such expense involves the amounts spent towards cleaning the driveway and toilets, garden cutting and cleaning maintenance, daily batta, tank cleaning and canopy cleaning, purchase of rice etc. 8. Looking at the nature of these expenses, I am of the considered opinion that disallowance at 30% on the salaries and 20% in respect of other expenses appears to be on high side. Since the total expense does not exceed Rs. 12.25 lakhs, I do not think it proper to restore the issue to the file of learned Assessing Officer to have regard to the nature of expenses and to take a view. In these circumstances, I take a plausible view and that disallowance at 15% uniformly on the total expenditure, which according to me meet the ends of justice. I, therefore, direct the learned Assessing Officer to restrict the disallowance on all the expenses in question at 15%. 9. In the result, appeal of the assessee is treated as allowed in part. Order pronounced in the open court on this the 28 th day of April, 2023. Sd/- (K. NARASIMHA CHARY) JUDICIAL MEMBER Hyderabad, Dated: 28/04/2023 TNMM ITA No. 154/Hyd/2023 Page 4 of 4 Copy forwarded to: 1. Venkat Ram Reddy Damannagari, C/o. T. Chaitanya Kumar, Advocate, Flat No. 102, Gowri Apts., Urdu Hall Lane, Himayathnagar, Hyderabad. 2. Income Tax Officer, Ward-10(5), Hyderabad. 3. DR, ITAT, Hyderabad. 4. GUARD FILE. TRUE COPY ASSISTANT REGISTRAR ITAT, HYDERABAD