Sri Kanhaiyalal Gangwal, Ranchi V. DCIT,

ITA 185/RAN/2014

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 0373 (ITAT-RANCHI)
• Duration Of Justice: 1 year(s) 5 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-11-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 20-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A RAKSHIT
• Keywords: Depreciation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RANCHI CIRCUIT BENCH, RANCHI BEFORE SHRI N.S. SAINI, HONBLE ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, HONBLE JUDICIAL MEMBER ITA NO. 185 TO 187/RAN/2014 (ASST. YEAR : 2007-08 TO 2009-10) SHRI KANHAIYALAL GANGWAL, PROP. M/S. R.R. INDUSTRIAL CORP., C/O SRI MOTI LAL JAIN, RADHEY SHYAM GARAGE LANE, LAKE SIDE, RANCHI. VS. DCIT, CIRCLE-II, RANCHI. PAN NO. ADSPG 8471 E (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI S.K. PODDAR WITH SHRI DEVESH PODDAR - ADV. DEPARTMENT BY : SHRI A. RAKSHIT - DR DATE OF HEARING : 04/11/2015. DATE OF PRONOUNCEMENT : 04/11/2015. O R D E R PER N.S. SAINI, ACCOUNTANT MEMBER THESE ARE THE APPEALS FILED BY THE ASSESSEE AGAINS T THE SEPARATE ORDERS OF COMMISSIONER OF INCOME TAX (APPEALS), RAN CHI, PASSED IN ASSESSMENT YEAR 2007-08, DATED 24/02/2014; ASSESSME NT YEAR 2008- 09, DATED 26/02/2014 & ASSESSMENT YEAR 2009-10, DAT ED 26/03/2014. 2. IN ALL THE YEARS, THE COMMON GROUND OF APPEAL IS T HAT THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFI RMING THE DISALLOWANCE MADE BY THE ASSESSING OFFICER OF 1/7 TH & 1/5 TH UNDER THE FOLLOWING HEADS:- 2 ITA NOS. 185-187/RAN/2014 SL. NO HEAD OF EXPENSES 2007-08 DISALLOWANCE 2008-09 DISALLOWANCE 2009-10 DISALLOWANCE AMOUNT (RS.) % AMOUNT (RS.) % AMOUNT (RS.) % 1 STAFF WELFARE EXP. 8,656 1/7 NIL - 8,371 1/5 2 OFFICE EXP. 42,287 1/7 38,608 1/5 49,764 1/5 3 TELEPHONE & TELEFAX 15,545 1/7 43,610 1/5 41,512 1/5 4 PRINTING & STATIONERY 6,570 1/7 NIL - NIL - 5 TRAVELLING EXP. 79,712 1/7 1,24,759 1/5 1,40,666 1/5 6 VEHICLE EXP. 17,218 1/7 32,917 1/5 31,056 1/5 7 DEPRECIATION ON CAR 27,194 1/7 32,361 1/5 28,465 1/5 3 . WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE O RDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABLE ON RE CORD. THE ASSESSING OFFICER OBSERVED DURING THE COURSE OF ASSESSMENT PR OCEEDINGS, THE ASSESSEE WAS REQUIRED TO FURNISH BILLS, VOUCHERS RE GARDING EXPENSES INCURRED ON ACCOUNT OF STAFF WELFARE EXPENSES, OFFI CE EXPENSES, TELEPHONE & TELEFAX EXPENSES, PRINTING & STATIONERY EXPENSES, TRAVELLING EXPENSES, VEHICLE EXPENSES. THE ASSESSI NG OFFICER OBSERVED THAT ASSESSEE COULD NOT PRODUCE SOME OF THE BILLS A ND VOUCHERS FOR THE ABOVE EXPENSES. HE ALSO OBSERVED THAT THE BILLS AN D VOUCHERS ARE NOT PROPERLY MAINTAINED AND SOME OF THE VOUCHERS ARE FO UND TO BE SELF-MADE AND NOT SUPPORTED BY THIRD PARTY VOUCHERS . SOME OF THE EXPENSES ARE FOUND TO BE MADE IN CASH. PERSONAL US E OF SOME OF THE EXPENSES CANNOT BE DENIED. THEREFORE, HE DISALLOWE D 1/7 TH OF THE ABOVE EXPENSES IN ASSESSMENT YEAR 2007-08 AND 1/5 TH OF THE EXPENSES IN ASSESSMENT YEARS 2008-09 & 2009-10. 4. ON APPEAL, COMMISSIONER OF INCOME TAX (APPEALS) OB SERVED THAT THE ASSESSING OFFICER MADE DISALLOWANCE AFTER FINDI NG THAT THE ASSESSEE HAD CLAIMED EXCESS EXPENSES WHICH WERE NOT SUPPORTE D BY PROPER BILLS. ACCORDINGLY, THE STAND TAKEN BY THE ASSESSING OFFIC ER IN PARTLY DISALLOWING THE EXPENSES CLAIMED BY THE ASSESSEE DU RING THE COURSE OF ASSESSMENT PROCEEDINGS IS, HELD TO BE CORRECT. HE NOTED THAT THE DISALLOWANCE HAS TO BE ON A REASONABLE BASIS KEEPIN G IN MIND THE FACTS 3 ITA NOS. 185-187/RAN/2014 AND CIRCUMSTANCES OF THE CASE. ACCORDINGLY, HE CON FIRMED THE DISALLOWANCE AT 10% OF THE TOTAL EXPENSES AND RESTR ICTED THE DISALLOWANCE TO RS. 1,45,028/- AND DELETED THE BALA NCE AMOUNT OF DISALLOWANCE OF RS. 62,154/- IN THE ASSESSMENT YEAR 2007-08. SIMILARLY, IN THE ASSESSMENT YEAR 2008-09, COMMISSI ONER OF INCOME TAX (APPEALS) RESTRICTED THE DISALLOWANCE TO 10% OF THE TOTAL EXPENSES AT RS. 1,36,128/- AND DELETED THE BALANCE AMOUNT OF DISALLOWANCE OF RS.1,36,127/-. SIMILARLY, IN ASSESSMENT YEAR 2009-1 0, THE COMMISSIONER OF INCOME TAX (APPEALS) RESTRICTED THE DISALLOWANCE AT 10% OF THE TOTAL EXPENSES TO RS. 14,232/- AND THE D ELETED THE BALANCE OF DISALLOWANCE OF RS.1,42,328/-. 5. BEING AGGRIEVED BY THE ORDER OF THE COMMISSIONER O F INCOME TAX (APPEALS), THE ASSESSEE IS IN APPEAL BEFORE US. 6 . AUTHORIZED REPRESENTATIVE OF THE ASSESSEE SUBMITT ED THAT THE DISALLOWANCE OF EXPENSES HAS BEEN MADE ON ADHOC BASIS WHICH CANNOT BE SUSTAINED IN LAW AND PRAYED THAT THE DISALLOWANC E SUSTAINED BY THE COMMISSIONER OF INCOME TAX (APPEALS) FROM OUT OF TH E EXPENSES CLAIMED BY THE ASSESSEE SHOULD BE DELETED. 7 . ON THE OTHER HAND, DEPARTMENTAL REPRESENTATIVE SU PPORTED THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS). 8 . WE FIND THAT THE ASSESSING OFFICER HAS MADE DISAL LOWANCE OUT OF THE EXPENSES CLAIMED UNDER THE HEADS STAFF WELFARE EXPENSES, OFFICE EXPENSES, TELEPHONE & TELEFAX EXPENSES, PRINTING & STATIONERY EXPENSES, TRAVELLING EXPENSES, VEHICLE EXPENSES AND DEPRECIATION ON CAR ON ADHOC BASIS AT 1/7 TH OF THE TOTAL EXPENSES IN THE ASSESSMENT YEAR 2007-08 AND 1/5 TH OF THE TOTAL EXPENSES IN ASSESSMENT YEARS 2008-09 & 2009-10 BY OBSERVING THAT ALL THE VOUCHERS AND BILL S ARE NOT MAINTAINED BY THE ASSESSEE AND THAT THE EXPENSES ARE SUPPORTED BY INTERNAL 4 ITA NOS. 185-187/RAN/2014 VOUCHERS AND THAT THE EXPENSES HAVE BEEN MADE IN CA SH. WE FIND THAT BOTH THE LOWER AUTHORITIES HAVE NOT POINTED OUT FOR WHICH OF THE EXPENSES, THE ASSESSEE HAS NOT MAINTAINED PROPER VO UCHERS. IN ABSENCE OF THE SAME, THE DISALLOWANCE MADE ON ADHOC BASIS BY THE ASSESSING OFFICER AND CONFIRMED BY THE COMMISSIONER OF INCOME TAX (APPEALS) CANNOT BE SUSTAINED IN LAW. WE, THEREFOR E, SET ASIDE THE ORDERS OF THE LOWER AUTHORITIES AND DELETE THE DISA LLOWANCE OF EXPENSES SUSTAINED BY THE COMMISSIONER OF INCOME TAX (APPEAL S) IN ALL THE YEARS UNDER CONSIDERATION AND THE GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED. 9. IN THE RESULT, ALL THE APPEALS OF THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE COURT AT THE CLOSE OF THE H EARING ON WEDNESDAY, THE 4 TH DAY OF NOVEMBER, 2015 AT RANCHI. SD/- SD/- (GEORGE MATHAN) (N.S.SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 04 TH NOVEMBER, 2015. VR/- COPY TO: 1. THE ASSESSEE. 2. THE REVENUE. 3. THE CIT 4. THE CIT(A) 5. THE D.R. 6. GUARD FILE. BY ORDER ASSISTANT REGISTRAR I.T.A.T., RANCHI 5 ITA NOS. 185-187/RAN/2014 DATE INITIAL ORIGINAL DICTATION PAD & DRAFT ARE ENCLOSED IN THE FILE 1. DRAFT DICTATED ON 04/11/2015 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 05/11/2015 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 05/11/2015 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER 05/11/2015 JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 05/11/2015 SR.PS 6. DATE OF PRONOUNCEMENT 04/11/2015 SR.PS 7. FILE SENT TO THE BENCH CLERK 05/11/2015 SR.PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER