Satish chandra sharma, Jaipur V. ACIT, Alwar

ITA 191/JPR/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 5462 (ITAT-JAIPUR)
• Duration Of Justice: 2 year(s) 11 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-02-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 02-04-2013
• Assessment Year: 2002-2003
• Appeal Filed On: 28-02-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH VH-VKJ-EHUK] YS[KK LNL; ,OA JH YFYR DQEKJ] U;KF; D LNL; DS LE{K BEFORE: SHRI T.R.MEENA, AM & SHRI LALIET KUMAR, JM VK;DJ VIHY LA-@ ITA NOS. 191, 192, 193 & 194/JP/2013 FU/KZKJ.K O'K Z@ ASSESSMENT YEARS : 2002-03, 03-04, 04-05 & 07-08. SHRI SATISH CHANDRA SHARMA, 1994, KHEJANE WALO KA RASTA, CHANDPOLE BAZAR, JAIPUR. CUKE VS. THE ASSTT. COMMISSIONER OF INCOME - TAX, CENTRAL CIRCLE, ALWAR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO. ALXPS 2005 H VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY S BY : SHRI TARUN MITTAL (C.A.) JKTLO DH VKSJ LS@ REVENUE BY : SHRI D.S. KOTHARI (CIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 09.02.2016. ?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 12/02/2016. VKNS'K@ ORDER PER SHRI LALIET KUMAR, J.M. THESE ARE FOUR APPEALS FILED BY THE ASSESSEE AGAINS T THE ORDER DATED 03.12.2012 OF THE LEARNED C.I.T.(A)(CENTRAL), JAIPUR FOR THE A .YS. 2002-03, 03-04, 04-05 & 07-08. THE GROUNDS TAKEN BY THE ASSESSEE ARE AS UNDER :- A.Y. 2002-03 : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE LD. CIT (A) HAS GROSSLY ERRED IN UPHOLDING THE DISALLOWANCE OF RS. 4461/- (BEING 1/4 TH OF THE ORIGINAL DISALLOWANCE OF RS. 17,846/- MADE B Y THE LD. AO) CLAIMED ON ACCOUNT OF SUNDRY EXPENSES, ARBITRARILY WITHOUT VERIFYING THE GENUINENESS OF THE CLAIM. HENCE THE DISALLOWANCE SO MADE DESERVES TO BE ALLOWED. 2 ITA NOS. 191-194/JP/2013 SHRI SATISH CHANDRA SHARMA VS. ACIT. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LD. CIT (A) HAS GROSSLY ERRED IN UPHOLDING AN AMOUNT OF RS. 18, 073/- ON ACCOUNT OF INTEREST ON NSC WHEN IN FACT THE SAME HAS BEEN DULY OFFERED FOR TAX ON ACCRUED BASIS IN THE RELEVANT YEAR. HENCE THE SAID ADDITION DESERVES TO BE DELETED. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LD. CIT (A) HAS GROSSLY ERRED IN NOT ALLOWING THE TELESCOPING, RECYCLING AND SET OFF OF ONE INCOME FROM THE OTHER AND THE ACTION OF THE LD. CIT (A) IN NOT CONSIDERING SUCH ADJUSTMENTS DESERVES TO BE HOLD IL LEGAL AND SET OFF AS PERMISSIBLE DESERVES TO BE ALLOWED. A.Y. 2003-04 : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE LD. CIT (A) HAS GROSSLY ERRED IN UPHOLDING THE DISALLOWANCE OF RS. 4289/- (BEING 1/4 TH OF THE ORIGINAL DISALLOWANCE OF RS. 17,156/- MADE B Y THE LD. AO) CLAIMED ON ACCOUNT OF SUNDRY EXPENSES, ARBITRARILY WITHOUT VERIFYING THE GENUINENESS OF THE CLAIM. HENCE THE DISALLOWANCE SO MADE DESERVES TO BE ALLOWED. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LD. CIT (A) HAS GROSSLY ERRED IN NOT ALLOWING THE TELESCOPING, RECYCLING AND SET OFF OF ONE INCOME FROM THE OTHER AND THE ACTION OF THE LD. CIT (A) IN NOT CONSIDERING SUCH ADJUSTMENTS DESERVES TO BE HOLD IL LEGAL AND SET OFF AS PERMISSIBLE DESERVES TO BE ALLOWED. A.Y. 2004-05 : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE LD. CIT (A) HAS GROSSLY ERRED IN UPHOLDING THE DISALLOWANCE OF RS. 3107/- (BEING 1/4 TH OF THE ORIGINAL DISALLOWANCE OF RS. 12,428/- MADE B Y THE LD. AO) CLAIMED ON ACCOUNT OF SUNDRY EXPENSES, ARBITRARILY WITHOUT VERIFYING THE GENUINENESS OF THE CLAIM. HENCE THE DISALLOWANCE SO MADE DESERVES TO BE ALLOWED. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE LD. CIT (A) HAS GROSSLY ERRED IN UPHOLDING THE ADDITION OF RS. 10,800/- ON ACCOUNT OF INTEREST RECEIVED FROM NOTIONAL LOANS GIVEN ARBITRA RILY. 3 ITA NOS. 191-194/JP/2013 SHRI SATISH CHANDRA SHARMA VS. ACIT. 2.1. THAT THE LD. CIT (A) HAS FURTHER ERRED IN SUST AINING THE ADDITION WHICH WAS CALCULATED ON IMAGINARY FIGURES AND WHEN IN FACT NO INTEREST HAS BEEN RECEIVED BY THE ASSESSEE, HENCE THE ADDITI ON SO SUSTAINED DESERVES TO BE DELETED IN TOTO. A.Y. 2007-08 : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE LD. CIT (A) HAS GROSSLY ERRED IN UPHOLDING THE DISALLOWANCE OF RS. 4232/- (BEING 1/4 TH OF THE ORIGINAL DISALLOWANCE OF RS. 16,928/- MADE B Y THE LD. AO) CLAIMED ON ACCOUNT OF SUNDRY EXPENSES, ARBITRARILY WITHOUT VERIFYING THE GENUINENESS OF THE CLAIM. HENCE THE DISALLOWANCE SO MADE DESERVES TO BE ALLOWED. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE LD. CIT (A) HAS GROSSLY ERRED IN UPHOLDING THE ADDITION OF RS. 16,280/- ON ACCOUNT OF INTEREST RECEIVED FROM NOTIONAL LOANS GIVEN ARBITRA RILY. 2.1. THAT THE LD. CIT (A) HAS FURTHER ERRED IN SUST AINING THE ADDITION WHICH WAS CALCULATED ON IMAGINARY FIGURES AND WHEN IN FACT NO INTEREST HAS BEEN RECEIVED BY THE ASSESSEE, HENCE THE ADDITI ON SO SUSTAINED DESERVES TO BE DELETED IN TOTO. 2. SINCE THE GROUNDS IN ALL THE APPEALS ARE COMMON, THEREFORE, WE WILL BE DECIDING THE ISSUES BY THE COMMON ORDER. GROUND NO. 1 IN ITA NOS. 191, 192, 193 & 194/JP/20 13 : 3. THE AO HAS DISALLOWED SUNDRY EXPENSES IN RESPECT TO THE ASSESSMENT YEARS REFERRED HEREIN ABOVE ON THE GROUND THAT NATURE O F RECEIPTS DECLARED DOES NOT WARRANT ANY EXPENSES FOR EARNING THE SAME. THE ASSE SSEE HAS FAILED TO JUSTIFY THE CLAIM FOR THE SAME . IN VIEW THEREOF, THE SAME HAS BEEN DISALLOWED. THE YEAR-WISE DISALLOWANCE MADE BY THE AO FOR A.Y. 2002-03 WAS RS . 17846/-, FOR A.Y 2003-04 WAS RS. 17,156/-, FOR A.Y. 04-05 RS. 12,428/- AND FOR A .Y. 07-08 RS. 16,928/-. 4 ITA NOS. 191-194/JP/2013 SHRI SATISH CHANDRA SHARMA VS. ACIT. 4. THE ASSESSEE HAS CHALLENGED THE ORDER PASSED BY THE AO BEFORE LD. CIT (A). THE LD. CIT (A) HAS UPHELD 1/4 TH OF THE DISALLOWANCES. THE REASONING GIVEN BY LD. C IT (A) IS REPRODUCED HEREIN BELOW :- 7.4. I HAVE CAREFULLY CONSIDERED THE SUBMISSION OF THE APPELLANT AS ALSO THE FINDINGS OF THE AO. THE AOS CONTENTION IS THAT THE NATURE OF RECEIPT SHOWN BY THE ASSESSEE DOES NOT WARRANT ANY EXPENSES AND THEREFORE THE AO HAS DISALLOWED ALL SUCH EXPENSES CLAIMED BY THE ASSESSEE UNDER THE HEAD SUNDRY EXPENSES. ON THE OTHER HAND THE APPELLA NTS CASE IS THAT REGULAR INCOME IS BEING SHOWN AND IT CANNOT BE SAID THAT SUCH EXPENDITURE ARE NOT REQUIRED IN SUCH TYPE OF BUSINESS. THE APPE LLANT HAS ALSO CONTENDED THAT IT MAY NOT POSSIBLE FOR A PERSON TO EARN INCOME WITHOUT INCURRING ANY EXPENDITURE AND THAT SUCH CLAIM HAS A LSO BEEN MADE IN EARLIER YEARS AGAINST THE SIMILAR INCOME. ON CAREFU L CONSIDERATION OF RELEVANT FACTS IT MAY BE NOTED THAT UNDISPUTABLY TH E ASSESSEE IS CARRYING OUT ACTIVITIES OF BUSINESS NATURE AND EXPENSES ARE TO BE INCURRED FOR CARRYING OUT SUCH BUSINESS. THEREFORE IT MAY NOT FA IR TO DISALLOW ALL SUCH EXPENSES SIMPLY BY STATING THAT SUCH EXPENSES ARE N OT REQUIRED TO BE INCURRED IN SUCH TYPE OF BUSINESS. HOWEVER, THE FAC T IS ALSO THAT THE ASSESSEE HAS CLAIMED SUCH EXPENSES BUT HE HAS NOT F ULLY JUSTIFIED SUCH EXPENSES BY WAY OF REGULAR BOOKS OF ACCOUNTS AND AU THENTIC BILL ETC. KEEPING IN VIEW THE FACT THAT SUCH EXPENSES HAVE AL SO BEEN INCURRED IN EARLIER A.YS. IT WILL BE FAIR AND REASONABLE TO DIS ALLOW 1/4 TH OF SUCH EXPENSES TO COVER UP ANY POSSIBLE LEAKAGE ON ACCOUN T OF NON-VERIFIABILITY OF SUCH EXPENSES OR PERSONAL ELEMENT IN SUCH EXPENS ES. THEREFORE 1/4 TH OF SUCH EXPENSES IN EACH A.Y. ARE DISALLOWED AS UND ER :- A.Y. AMOUNT OF DISALLOWANCE 1/4 TH OF EXPENSES 2002 - 03 17846 4461 2003 - 04 17156 4289 2004 - 05 12428 3107 2005 - 06 15184 3796 2006 - 07 17650 4412 2007 - 08 16928 4232 2008 - 09 35741 8935 THE ADDITION TO SUCH EXTENT MADE BY THE AO IS CON FIRMED. 5 ITA NOS. 191-194/JP/2013 SHRI SATISH CHANDRA SHARMA VS. ACIT. 5. NOW THE ASSESSEE IS BEFORE US. 5.1. THE LD. A/R FOR THE ASSESSEE HAS SUBMITTED THA T NO REASONING HAS BEEN GIVEN BY LD. CIT (A). THE LD. CIT (A) HAS WHIMSICALLY RESTR ICTED THE DISALLOWANCE TO 25% OF THE EXPENSES. 5.2. ON THE OTHER HAND, THE LD. D/R HAS SUPPORTED T HE ORDER PASSED BY THE LD. CIT (APPEALS). 5.3. WE HAVE GONE THROUGH THE RECORD. IN OUR VIEW T HE EXPENSES CLAIMED BY THE ASSESSEE ARE NOMINAL AND INCURRED UNDER THE HEAD TE LEPHONE, CONVEYANCE REFRESHMENT AND TOURS EXPENSES ETC. SINCE THE ASSESSEE WAS IN THE BUSINESS OF STATUE MAKING AND FOR THAT PURPOSES ALL THESE EXPENSES ARE REQUIRED T O BE INCURRED AND GOING BY THE NATURE OF THESE EXPENSES, IT IS VERY DIFFICULT FOR THE ASSESSEE TO MAINTAIN THE VOUCHERS OF EACH ITEMS OF TEA, COFFEE, REFRESHMENTS, CONVEYANCE ETC. IN VIEW THEREOF, WE DO NOT FIND ANY JUSTIFICATION TO DISALLOW THE EXPENSES. I N THE LIGHT OF THE ABOVE, THE ORDER OF LD. CIT (A) IS SET ASIDE AND ALL THE EXPENSES CLAIMED B Y THE ASSESSEE ARE ALLOWED. THEREFORE, GROUND NO. 1 IN ALL THE APPEALS ARE ALLO WED. 6. IN RESPECT OF GROUND NO. 2, THE AO WHILE DECIDIN G THIS ISSUE AGAINST THE ASSESSEE HAS HELD AS UNDER :- 4. IT HAS BEEN NOTICED FROM THE DETAILS FILED BY THE ASSESSEE THAT DURING THE YEAR THE ASSESSEE HAS ENCASHED NSCS AMOU NTING TO RS. 28,210/-, RS. 20,150/- AND RS. 24,713/-. THE ASSES SEE WAS ASKED TO REPLY VIDE ORDER SHEET ENTRY DATED 18.12.2009 WHY THE INT EREST EARNED FROM THE NSCS HAS NOT BEEN CHARGED TO TAX IN THE INCOME COMP UTED FOR THE YEAR. THE ASSESSEE HAS FAILED TO FILE REPLY TO THE SAME B Y 21.12.2009, THE DATE BY WHICH HE WAS REQUIRED TO FILE THE REPLY. 6 ITA NOS. 191-194/JP/2013 SHRI SATISH CHANDRA SHARMA VS. ACIT. IN VIEW OF THE NON-COMPLIANCE, INTEREST EARNED ON N SCS IS WORKED OUT AS UNDER :- MATURITY VALUE AMOUNT OF INVESTMENT INTEREST EARNED (TENTATIVE) RS. 28,210/- RS. 20000/- RS. 8210/- RS. 20,150/- RS. 15000/- RS. 5150/- RS. 24713/- RS. 20000/- RS. 4713/- TOTAL : RS.18073/- FROM THE ABOVE DETAILS, IT IS EVIDENT THAT THE ASSE SSEE HAS EARNED INTEREST OF RS. 18073/- WHICH HE HAS FAILED TO INCLUDE IN TH E INCOME OF THE YEAR. AS SUCH SAME IS ADDED TO THE INCOME OF THE ASSESSEE. I N VIEW OF THE ABOVE, I AM SATISFIED THAT THE ASSESSEE HAS CONCEALED THE PA RTICULARS OF HIS INCOME TO EVADE THE TAX. THEREFORE IT IS FIT CASE FOR INIT IATING PENALTY U/S 271(1)(C) OF THE I.T. ACT, 1961. 7. THE ASSESSEE BEING AGGRIEVED BY THE ORDER OF THE AO, HAS CARRIED THE MATTER BEFORE LD. CIT (A) AND THE LD. CIT (A) AFTER GOING THROUGH THE RECORD, HAS CONFIRMED THE ORDER PASSED BY THE AO IN THE FOLLOWING MANNER :- 9.4. I HAVE CAREFULLY CONSIDERED THE SUBMISSION O F THE APPELLANT AS ALSO THE FINDINGS OF THE AO. IT MAY BE NOTED THAT DURIN G THE ASSESSMENT PROCEEDING THE ASSESSEE HAS FAILED TO PROVE THAT AC CRUED INTEREST ON SUCH NSCS WAS SHOWN IN THE REGULAR RETURNS. DURING THE A PPELLANT PROCEEDINGS ALSO THOUGH THE APPELLANT HAS FILED SUBMISSION STAT ING THAT ACCRUED INTEREST ON SUCH NSCS WAS DULY SHOWN ON DUE BASIS I N THE YEARS (A.Y. 1988-89 TO 1997-98). HOWEVER SUCH SUBMISSION WAS NO T SUPPORTED BY ANY DOCUMENTARY EVIDENCES. IN OTHER WORDS EVEN DURING T HE APPELLANT PROCEEDINGS, THE APPELLANT HAS FAILED TO PROVE THAT SUCH INTEREST INCOME WAS SHOWN ON DUE BASIS IN RELEVANT A.YS. IN THE AB SENCE OF ANY DOCUMENTARY EVIDENCE WHICH MAY INDICATE THAT SUCH I NCOME HAS GENUINELY BEEN SHOWN, NO FAULT CAN BE ATTRIBUTED TO THE FINDI NG OF THE AO. THEREFORE THE ACTION OF THE AO IS CONFIRMED. THE GROUND OF APPEAL IS DISMISSED. 8. NOW THE ASSESSEE IS BEFORE US. 7 ITA NOS. 191-194/JP/2013 SHRI SATISH CHANDRA SHARMA VS. ACIT. 8.1. THE LD. A/R FOR THE ASSESSEE HAS SUBMITTED THA T THE AMOUNT OF RS. 73,073/- WAS RECEIVED BY THE ASSESSEE IN THE YEAR UNDER CONSIDER ATION. FURTHER, THE MATURITY OF THE NSC WAS LONG OVER DUE BUT FOR SOME REASON THE SAME WAS NOT ENCASHED DURING THE YEAR OF MATURITY. HOWEVER, THE SAME WERE ENCASHED I N THE ASSESSMENT YEAR. IT WAS FURTHER CONTENDED THAT IN THE YEAR OF MATURITY, THE INTEREST ELEMENT WAS OFFERED FOR TAX AND IT WAS LASTLY CONTENDED THAT SINCE THE ASSESSEE HAS OFFERED THE INTEREST INCOME FOR TAX IN THE RELEVANT ASSESSMENT YEAR ON DUE BASIS, T HEREFORE, NO TAX LIABILITY IS PAYABLE AND THE ADDITION OF RS. 18,073/- IS NOT SUSTAINABLE . 8.2. THE LD. D/R RELIED UPON THE ORDER PASSED BY LD . CIT (A). 8.3. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED TH E MATERIAL ON RECORD. WE DO NOT FIND ANY REASON TO DISAGREE WITH THE REASONING GIVE N BY THE LD. CIT (A). THE REASONING GIVEN BY THE LD. CIT (A) IS IN ACCORDANCE WITH LAW. THE NSC ALONG WITH INTEREST ARE REQUIRED TO BE INCLUDED IN THE RETURN OF INCOME IN THE YEAR WHEN IT BECOME MATURED. THAT SHOULD BE THE YEAR WHEN THE INCOME IS REQUIRED TO BE TAKEN INTO CONSIDERATION. SINCE IN THE PRESENT CASE THE NSCS WERE DUE WAY BAC K ON THE DATE OF MATURITY, THEREFORE, THE INTEREST EARNED ON THE SAID NSCS ARE REQUIRED TO BE ADDED TO THE INCOME OF THE ASSESSEE IN THE CURRENT ASSESSMENT YEAR. HOW EVER, THE AMOUNT OF INVESTMENT I.E. RS. 55,000/-, IS NOT REQUIRED TO BE ADDED IN THE YE AR UNDER CONSIDERATION. IN THE LIGHT OF THE ABOVE, THE APPEAL OF THE ASSESSEE IN RESPECT OF GROUND NO 2 FOR A.Y. 2002-03 IS DISMISSED. 9. IN ITA NO. 194/JP/2013, THE ASSESSEE HAS NOT PRE SSED THE GROUND NO. 2. 8 ITA NOS. 191-194/JP/2013 SHRI SATISH CHANDRA SHARMA VS. ACIT. 10. IN RESPECT OF GROUND NO 3, IT WAS SUBMITTED BY THE LD. A/R OF THE ASSESSEE THAT SINCE THE BENEFIT OF SET OFF/TELESCOPING OF VARIOUS ADDITIONS MADE TO THE TOTAL ADDITION MADE BY THE AO HAS BEEN ALLOWED, THEREFORE, THE BEN EFIT OF TELESCOPING AND SET OFF OUT OF THE ADDITIONS IS REQUIRED TO BE GIVEN TO THE ASS ESSEE. 10.1. THE LD. D/R RELIED ON THE ORDERS OF THE AUTHO RITIES BELOW. 10.2. SINCE GROUND NO. 3 IS ONLY CONSEQUENTIAL, THE REFORE, WE DIRECT THE AO TO GIVE THE BENEFIT OF SET OFF /TELESCOPING OF ADDITION. ACCORD INGLY, THIS GROUND IS ALSO DECIDED IN FAVOUR OF THE ASSESSEE. 11. IN THE RESULT, ITA NOS. 191, 192, 193 & 194/JP/ 2013 ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 12/02/20 16. SD/- SD/- VH-VKJ-EHUK YFYR DQEKJ (T.R. MEENA) (LALIET KUMAR) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 12/02/2016. DAS/ VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- SHRI SATISH CHANDRA SHARMA, JAIPUR. 2. IZR;FKHZ@ THE RESPONDENT- THE ACIT, CENTRAL CIRCLE, ALWAR. 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDRVIHY@ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO. 191(4)/JP/2013) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR 9 ITA NOS. 191-194/JP/2013 SHRI SATISH CHANDRA SHARMA VS. ACIT.