Dineshkumar Hemantkumar Bombaywale, PUNE V. ITO, Ward-2(1), PUNE`

ITA 1949/PUN/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 7179 (ITAT-PUNE)
• Duration Of Justice: 1 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-02-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 10-12-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: ARISES OUT OF PASSED

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH SMC, PUNE BEFORE SHRI R.S. SYAL, VICE PRESIDENT . / ITA NO.1949/PUN/2019 / ASSESSMENT YEAR : 2011-12 DINESHKUMAR HEMANTKUMAR BOMBAYWALE, GALA NO.164 & 69, SHRI CHHATRAPATI SHIVAJI MARKET YARD, GULTEKDI, PUNE 411 037 PAN : AAFFD4169G VS. ITO, WARD-2(1), PUNE (APPELLANT) (RESPONDENT) / ORDER PER R.S.SYAL, VP : THIS APPEAL BY THE ASSESSEE ARISES OUT OF THE ORDER PASSE D BY THE CIT(A)-2, PUNE ON 13-09-2019 IN RELATION TO THE ASSESSMENT YEAR 2011-12. 2. FIRST ISSUE RAISED IN THIS APPEAL IS AGAINST THE CONFIRMATIO N OF DISALLOWANCE OF UNPAID SALARY AMOUNTING TO RS.3,96,000/- . APPELLANT BY SHRI PRAKASH OSWAL RESPONDENT BY SMT. ELSY MATHEW DATE OF HEARING 03-02-2020 DATE OF PRONOUNCEMENT 04-02-2020 ITA NO.1949/PUN/2019 DINESHKUMAR HEMANTKUMAR BOMBAYWALE 2 3. FACTS APROPOS THIS ISSUE ARE THAT THE ASSESSEE IS ENGAG ED IN THE BUSINESS OF ONION, POTATO, GARLIC AND OTHER AGRICULTURAL PRODUCTS AND ALSO COMMISSION AGENT. A SUM OF RS.8.77 LAK H WAS DEBITED UNDER THE HEAD SALARIES AND BONUS. ON PER USAL OF DETAILS, IT WAS OBSERVED THAT A SUM OF RS.1.32 LAKH EACH WAS PAID TO SHRI SUDHAKAR B. JANGAM, SHRI SHANTARAM SHANKAR JUNGHARE AND SMT. PRIYA SHAH. THE ASSESSING OFFICER (AO ) OBSERVED THAT SUCH SUM OF RS.3.96 LAKH WAS SHOWN AS PA YABLE. CONSIDERING THE FACT THAT SALARY OF RS.11,000/- PER MONTH W AS CREDITED FROM APRIL, 2020 TO MARCH, 2011 IN EACH OF THE ACCOUNTS, THE AO HELD THAT IT WAS NOT POSSIBLE THAT A PERSON WORKING ON SUCH A MEAGRE SALARY WOULD NOT DRAW ANY AMOU NT FOR WHOLE OF THE YEAR. HE, THEREFORE, TREATED THE EXPEN DITURE OF RS.3.96 LAKH AS FICTITIOUS AND MADE THE ADDITION. THE LD. CIT(A) CONFIRMED THE ADDITION. 4. HAVING HEARD BOTH THE SIDES AND GONE THROUGH THE RELEVANT MATERIAL ON RECORD, IT IS OBSERVED FROM THE EXPLANATIO N TENDERED BEFORE THE LD. CIT(A) THAT THE ABOVE NAMED 3 EMPLOYEES RENDERED SERVICES NOT ONLY TO THE ASSESSEE BUT ALSO TO ITS 3 OTHER RELATED CONCERNS AND THE SALARY PAID TO THEM WAS ITA NO.1949/PUN/2019 DINESHKUMAR HEMANTKUMAR BOMBAYWALE 3 DIVIDED AMONGST THE 4 CONCERNS. SALARY TO SUCH EMPLOYEES WAS WITHDRAWN BY THEM FROM THE OTHER 3 CONCERNS SIDE BY S IDE AND THE AMOUNT IN QUESTION WAS ACTUALLY PAID THROUGH CHEQUE ON 02-12-2011. THIS POSITION HAS NOT BEEN CONTROVERTED BY THE AUTHORITIES. ONCE THE ASSESSEE TENDERED AN EXPLANATION ABOU T THE NON-PAYMENT OF SALARY TO THE ABOVE PERSONS FOR THE RE ASONS STATED, IT WAS OBLIGATORY ON THE PART OF THE AO TO EXAMINE SU CH PERSONS AND DISPROVE THE ASSESSEES CONTENTION BEFORE NO T ACCEPTING THE SAME. HERE IS A CASE IN WHICH THE AO HAS SIMPLY BRUSHED ASIDE THE ASSESSEES EXPLANATION WITHOUT EXAMINING THE PERSONS AS TO THE VERSION GIVE BY THE ASSESSE E BEFORE HIM. SIMILAR POSITION CONTINUED DURING THE FIRST APPELLATE PROCEEDINGS AS WELL. CONSIDERING THE FACTS IN TOTALITY, I AM SATISFIED THAT THE AUTHORITIES BELOW WERE NOT JUSTIFIED IN MAKING THIS ADDITION BY DISALLOWING THE AMOUNT OF SALARY TO 3 PERSONS WHO ARE UNRELATED TO THE ASSESSEE AN D TO WHOM SALARY HAS ALSO BEEN PAID BY THE OTHER 3 CONCERNS AND MORE SO WHEN THE AMOUNT IN QUESTION HAS ALSO BEEN PAID THROUGH CHEQUE ON 02-12-2011. I, THEREFORE, ORDER TO DELETE THE ADDITION. THIS GROUND IS ALLOWED. ITA NO.1949/PUN/2019 DINESHKUMAR HEMANTKUMAR BOMBAYWALE 4 5. THE NEXT GROUND IS AGAINST THE CONFIRMATION OF DISALLOWANCE OF CERTAIN EXPENSES. 6. THE FACTS OF THIS GROUND ARE THAT THE ASSESSEE RECORDE D EXPENSES OF RS.15,72,514/- UNDER THE HEAD BUSINESS PROMOTION, PACKING EXPENSES, SHOP EXPENSES, TRAVELLING EXPENSES AND CAR EXPENSES. THE AO OBSERVED THAT MOST OF THE EXPENSES WERE COVERED BY SELF-MADE VOUCHERS AND W ERE NOT FULLY SUPPORTED BY EXTERNAL EVIDENCE. A MAJOR PART OF THE EXPENSES WAS ALSO FOUND TO HAVE BEEN INCURRED IN CASH. CONSIDERING THESE FACTS, THE AO MADE DISALLOWANCE AT 25% OF THE EXPENSES, WHICH GOT SUSTAINED IN THE FIRST APPEAL. 7. HAVING HEARD BOTH THE SIDES AND GONE THROUGH THE RELEVANT MATERIAL ON RECORD, IT IS AN ADMITTED POSITION THAT SOME OF THE EXPENSES WERE ADMITTEDLY NOT PROPERLY BACKED BY EVIDENCE. TAKING A HOLISTIC VIEW OF THE MATTER, I AM OF THE CONSIDERED OPINION THAT IT WOULD BE JUST AND FAIR IF THE DISALLOWANCE IS REDUCED FROM 25% TO 10% OF THE EXPENSES . I ORDER ACCORDINGLY. ITA NO.1949/PUN/2019 DINESHKUMAR HEMANTKUMAR BOMBAYWALE 5 8. THE LAST GROUND REGARDING IMPOSITION OF COST ON THE REVENUE TO THE TUNE OF RS.1.00 LAKH IS UNFOUNDED AND W ITHOUT ANY FORCE. THE SAME IS, ERGO, DISMISSED. 9. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 04 TH FEBRUARY, 2020. SD/- (R.S.SYAL) / VICE PRESIDENT PUNE; DATED : 04 TH FEBRUARY, 2020 / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. ( ) / THE CIT (APPEALS)-2, PUNE 4. THE PR. CIT-2, PUNE 5. , , SMC / DR SMC, ITAT, PUNE; 6. / GUARD FILE. // TRUE COPY // / BY ORDER, // TRUE COPY // SENIOR PRIVATE SECRETARY , / ITAT, PUNE ITA NO.1949/PUN/2019 DINESHKUMAR HEMANTKUMAR BOMBAYWALE 6 DATE 1. DRAFT DICTATED ON 03-02-2020 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 03-02-2020 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER -- JM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. -- JM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS 7. DATE OF UPLOADING ORDER SR.PS 8. FILE SENT TO THE BENCH CLERK SR.PS 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK 10. DATE ON WHICH FILE GOES TO THE A.R. 11. DATE OF DISPATCH OF ORDER. *