GOPAL RAM JAKHAD, MUMBAI V. ITO 24(1)-4, MUMBAI

ITA 2020/MUM/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 55539 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-10-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: G
• Next Hearing Date: 03-10-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 12-03-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A K NAYAK
• Keywords: Gift; Source of fund

Judgement Text

IN THE INCOME TAX APPELLATE TRIB UNAL MUMBAI BENCHES G, MUMBAI BEFORE SHRI N.V.VASUDEVAN, JM AND SHRI J.SUDHAKAR R EDDY, AM ITA NO.2020/MUM/2010 : ASST.YEAR 2006-2007 SHRI GOPAL RAM JAKHAD 501 SHREE BALABH APARTMENT OPP : DHIRAJ POOJA, CHINCHOLI ROAD MALAD (WEST), MUMBAI 400 064. PAN : AADPJ0493M. THE INCOME TAX OFFICER WARD 24(1)-4 MUMBAI. (APPELLANT) VS. (RESPONDENT) APPELLANT BY : --- NONE --- RESPONDENT BY : SHRI A.K.NAYAK DATE OF HEARING : 03.10.2011 DATE OF PRONOUNCEMENT : 14.10.2011 O R D E R PER J.SUDHAKAR REDDY, AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) DATED 15.01.20 10 FOR THE ASSESSMENT YEAR 2006-2007. NONE APPEARED ON BEHALF OF THE ASSESSEE DESPITE ISSUANCE OF NOTICE. ON AN EARLIER OCCASION THE ASSESSEES COUNSEL FILED A PAPER BOOK AND WRITTEN SUBMISSION, BUT HAS SOUGHT ADJOURNMENTS. TODAY, NON APPEARED NOR HAS ANY PERSON REQUESTED FOR ADJOURNMENT. UNDER THESE CIRCUMSTANCE S WE ARE OF THE CONSIDERED OPINION THAT NO USEFUL PURPOSE WOULD BE SERVED BY A DJOURNING THE MATTER. WE, THEREFORE, DISPOSE OFF THE APPEAL QUA THE ASSESSEE, AFTER HEARING THE LEARNED DEPARTMENTAL REPRESENTATIVE. 2. HEARD THE LEARNED DEPARTMENTAL REPRESENTATIVE SH RI A.K.NAYAK. 3. FACTS IN BRIEF ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF CARPENTRY AND ACCEPTS CONTRACTS FOR ACTIVITIES DURING CONSTRU CTION OF BUILDING ETC. SUCH CONTRACTS INCLUDE GLASS PARTITION, DOOR FRAMING AND FIXING, LAMINATION WORK ETC. THE ISSUES THAT ARISE IN THE ASSESSEES APPEAL ARE THE CONFIRMATION OF DISALLOWANCE OF 25% OUT OF BUSINESS PROMOTION EXPENSES, CONFIRMING OF DISALLOWANCE OF TELEPHONE ITA NO.2020/MUM/2010 SHRI GOPAL RAM JAKHAD. 2 EXPENSES TO THE TUNE OF RS.50,000, CONFIRMING OF DI SALLOWANCE OF MOTOR CAR EXPENSES TO THE EXTENT OF RS.25,000 AND ADDITION OF RS.2,50,000 BEING GIFT RECEIVED BY THE ASSESSEE FROM HIS WIFE AND FROM HUF. WE DEAL WITH THE ISSUES IN SERIATIM. THE EXPENDITURE CLAIMED BY THE ASSESSEE ARE AS FOLL OWS:- (A) BUSINESS PROMOTION EXPENSES RS.1,33,725 (B) TELEPHONE EXPENSES RS.1,24,956 (C) MOTOR CAR EXPENSES RS. 98,854 4. THE ASSESSING OFFICER DISALLOWED RS.1 LAKH FROM OUT OF BUSINESS PROMOTION EXPENSES, RS.50,000 FROM OUT OF TELEPHONE EXPENSES AND RS.25,000 FROM OUT OF MOTOR CAR EXPENSES ON ADHOC BASIS. THE FIRST APPELL ATE AUTHORITY RESTRICTED THE DISALLOWANCE OF BUSINESS PROMOTION EXPENSES TO RS.2 5,000 AND CONFIRMED THE OTHER TWO ADHOC DISALLOWANCES. THE ASSESSEE IN HIS LENGTH Y WRITTEN SUBMISSION ARGUES THAT HE INCURRED THE ENTIRE EXPENSES FOR RECEIVING THE WORK AND CONTRACTS PROVIDING HOSPITALITY ETC. HE SUBMITS THAT HE HAS DEALT WITH 10 PARTIES AND INCURRED AN AMOUNT OF RS.1,33,725 WHICH COMES TO AN AVERAGE OF RS.13,4 00 PER CONTRACT. MONTHWISE DETAILS ARE ANNEXED AND NOTE GIVING NATURE OF EXPEN DITURE IS ALSO GIVEN. 5. AFTER CONSIDERING THE SAME, WE ARE OF THE CONSID ERED OPINION THAT THE ENDS OF JUSTICE WOULD BE MET IF THE DISALLOWANCE IS RESTRIC TED TO 10% OF THE BUSINESS PROMOTION EXPENSES CLAIMED. THUS, WE RESTRICT THE D ISALLOWANCE TO RS.13,372. THE ASSESSEE GETS PART RELIEF. THE SECOND DISALLOWANCE IS ON TELEPHONE EXPENSES. THE ASSESSEE COMPARES THE TELEPHONE EXPENSES WITH THE C ONTRACTUAL RECEIPTS DURING THE YEAR AND SUBMITS THAT THE EXPENDITURE IS JUSTIFIED. AFTER PERUSING THE CASE LAWS AND THE SUBMISSIONS, WE ARE OF THE CONSIDERED OPINION T HAT THE PERSONAL ELEMENT CANNOT BE RULED OUT IN THIS CASE AND THAT THE ENDS OF JUST ICE WOULD BE MET IF THE DISALLOWANCE IS RESTRICTED TO 15,000. THUS, THE ASS ESSEE GETS RELIEF OF RS.35,000. IN THE RESULT, THESE GROUNDS ARE ALLOWED IN PART. ITA NO.2020/MUM/2010 SHRI GOPAL RAM JAKHAD. 3 6. ON THE DISALLOWANCE OF MOTOR CAR EXPENSES, WE AR E OF THE CONSIDERED OPINION THAT THERE BOUND TO BE CERTAIN PERSONAL ELEMENTS IN THE SAME. THE ASSESSEE HAS INCURRED AN EXPENDITURE OF RS.98,854 FROM OUT OF WH ICH AN AMOUNT OF RS.25,000 HAS BEEN DISALLOWED. WE RESTRICT THE DISALLOWANCE T O RS.15,000. THE ASSESSEE GETS RELIEF OF RS.10,000. THIS GROUND IS ALSO ALLOWED IN PART. 7. COMING TO THE LAST ISSUE OF ADDITION OUT OF RS.2 ,50,000 BEING GIFT RECEIVED, WE FIND THAT THE ASSESSEE HAS SUBMITTED THAT HE HAS RECEIVED A GIFT OF RS.1,50,000 FROM HIS WIFE AND AN AMOUNT OF RS. 1 LAKH FROM THE KARTA OF HUF. BOTH, WIFE AS WELL AS THE KARTA OF HUF HAVE FILED AFFIDAVITS IN S UPPORT OF THE FACT THAT THEY HAVE GIVEN GIFT TO THE ASSESSEE. THE ASSESSEE HAS ALSO F URNISHED THE PERMANENT ACCOUNT NUMBERS OF THE ASSESSEES WIFE SMT.BHANWARI DEVI JA KHAD AS WELL AS THE KARTA OF HUF OF GOPALRAM JAKHAD. BOTH THE WIFE AS WELL AS TH E HUF ARE RELATIVES OF THE ASSESSEE. THE ENTIRE ADDITION IS BEING MADE ON THE GROUND THAT THE SOURCES OF FUNDS OF THE DONORS ARE NOT ADEQUATE. THE ASSESSEE SUPPOR TS THE SOURCE OF FUNDS BY SUBMITTING THAT THE WIFE OF THE ASSESSEE HAS MADE G IFT OUT OF HER STREEDHAN AND KARTA OF HUF HAS MADE THE GIFT OUT OF CAPITAL ACCOU NT OF THE HUF. SUPPORTING DOCUMENTS HAVE BEEN FILED. ON THE FACTUAL MATRIX, W E ARE OF THE CONSIDERED OPINION THAT THE ADDITION IS BAD IN LAW. THE ASSESSING OFFI CER AS WELL AS THE CIT(A) HAVE NOT DISPUTED THE FACT THAT THE ASSESSEE HAS RECEIVE D GIFTS FROM THE WIFE AS WELL AS THE KARTA OF HUF. IF THE CASE OF THE REVENUE IS THA T THE DONORS DO NOT HAVE ADEQUATE SOURCE OF FUNDS, THEN IT IS FOR THEM TO MA KE AN ADDITION IN DONORS CASE AND NOT IN THE CASE OF THE ASSESSEE. BOTH THE DONORS AR E INCOME TAX ASSESSEES HAVING PERMANENT ACCOUNT NUMBER. THEY HAVE DECLARED THEIR SOURCE OF GIFT. IN VIEW OF THE ABOVE DISCUSSION, WE DELETE THE ADDITION OF RS. 2,50,000 AND ALLOW GROUND NO.4 OF THE ASSESSEES APPEAL. ITA NO.2020/MUM/2010 SHRI GOPAL RAM JAKHAD. 4 8. IN THE RESULT, THE APPEAL IS ALLOWED IN PART. ORDER PRONOUNCED ON THIS 14 TH DAY OF OCTOBER, 2011. SD/- SD/- (N.V.VASUDEVAN) (J.SUDHAKAR REDDY) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI : 14 TH OCTOBER, 2011. DEVDAS* COPY TO : 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT CONCERNED 4. THE CIT(A) -XIII, MUMBAI. 5. THE DR/ITAT, MUMBAI. 6. GUARD FILE. TRUE COPY. BY ORDER ASSISTANT REGISTRAR, ITAT, MUMBAI.