Manisha Gupta, V. ITO, Ward I (4),

ITA 2195/DEL/2007

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 65732 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 5 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-10-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 08-10-2012
• Assessment Year: 2003-2004
• Appeal Filed On: 03-05-2007
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: Y S KAKKAR
• Assessee Lawyers: V K GALL
• Keywords: Depreciation; Corroborative evidences
• Section: 37(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI I&SMC BENCH BEFORE SHRI I.C. SUDHIR , JM & SHRI A.N. PAHUJA, AM ITA NO.2195/DEL/2007 ASSESSMENT YEAR: 2003-04 SMT. MANISHA GUPTA PROP. M/S KAMNA TRADERS F-120, GANGA PLAZA, BEGUM BRIDGE ROAD, MEERUT V/ S . INCOME-TAX OFFICER, WARD 1(4),AAYAKAR BHAWAN,BHAINSALI GROUND, MEERUT [PAN : ADUPG9238P] (APPELLANT) (RESPONDENT) ASSESSEE BY SHRI V.K. GALL, AR REVENUE BY MS. Y.S. KAKKAR, DR DATE OF HEARING 08-10-2012 DATE OF PRONOUNCEMENT 19-10-2012 O R D E R A.N.PAHUJA:- THIS APPEAL FILED ON 03.05.2007 BY THE ASSESSEE AG AINST AN ORDER DATED 28.12.2006 OF THE LD. CIT(A)-MEERUT FOR THE A Y 2003-04, RAISES THE FOLLOWING GROUNDS:- 1. THAT THE AUTHORITIES BELOW HAVE ERRED IN LAW AS WELL AS ON THE FACTS OF THE CASE BY MAKING AND UPHOLDING THE DISALLOWANCE/A DDITION OF ` `1,38,756/- AS THE DETAILS GIVEN HEREUNDER AND THE DISALLOWANCE/ 2. ADDITION SO MADE ARE UNJUST, UNWARRANTED, UNLAWF UL AND DEVOID OF ANY SUPPORTING MATERIAL ON RECORD:- VEHICLE RUNNING & MAINTENANCE EXPS. (14,860+17,000/-) ` 31.960/- TRAVELLING & CONVEYANCE EXPS. ` 7,500/- TELEPHONE EXPS. ` 8,111/- HOUSE HOLD EXPS. ` 36,000/- VARIOUS EXPS. ` 55,185/- ` 138,756/- ITA NO.2195/DEL./2007 2 3. THAT THE AUTHORITIES BELOW HAVE ERRED IN LAW AS WELL AS ON THE FACTS OF THE CASE BY REJECTING THE SUBMISSIONS MADE BY THE A SSESSEE AND THE SAME HAS NOT BEEN CONSIDERED BY THE AUTHORITIES BEL OW IN RIGHT PROSPECTIVE AND /THE CONCLUSIONS DRAWN BY THE AUTHO RITIES BELOW ARE ARBITRARY, ILLEGAL, HYPOTHETICAL AND DEVOID OF ANY SUPPORTING MATERIAL ON RECORD AND THEREFORE THE ADDITIONS AS ABOVE DESERVE S TO BE DELETED. 4. THAT THE APPELLANT CRAVES LEAVE TO ADD, MODIFY A ND/OR DELETE ANY OF THE GROUNDS OF APPEAL. 2. THIS APPEAL EARLIER DISPOSED OF VIDE ORDER DAT ED 14 TH NOVEMBER, 2007, WAS RECALLED IN M.A. NO.324/DEL./2011 VIDE ORDER DA TED 17 TH JULY, 2012. 3. FACTS, IN BRIEF, AS PER RELEVANT ORDERS ARE THA T RETURN DECLARING INCOME OF ` ` 92,900/- FILED ON 1 ST DECEMBER, 2003 BY THE ASSESSEE, ENGAGED IN PURCHASE AND SALE OF HOME APPLIANCES, WAS TAKEN UP FOR SCRUTINY WITH THE SERVICE OF A NOTICE U/S 143(2) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) ISSUED ON 17.12.2004. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER (A.O. IN SHORT) NOTICED THAT THE ASSESSEE DEBITED AN AMOUNT OF ` ` 47,824/- UNDER THE HEAD VEHICLE RUNNING & MAINTENA NCE EXPENSES. TO A QUERY BY THE AO, THE ASSESSEE SUBMITTED THE FOLLOWI NG DETAILS OF THESE EXPENSES:- A) EXPENSES ON DECK & FITTING OF SPEAKER ETC. (`11400+3460) ` ` 14,860/- B) EXPENSES ON CENTRAL LOCKING SYSTEM OF THE CAR. ` 4,850/- C) EXPENSES ON SEAT COVERS ETC. ` 6,950/- D) COST OF AIR-CONDITIONER FOR THE CAR & INSTALLATION CHARGES (`14900+2200) ` 17,100/- TOTAL ` 43,760/- 3.1 SINCE THE AFORESAID EXPENSES WERE NOT ON ACCOU NT OF CURRENT REPAIRS AND MAINTENANCE OF THE CAR, THE AO DISALLOW ED THE CLAIM, TREATING THE AMOUNT CAPITAL IN NATURE. ITA NO.2195/DEL./2007 3 3.2 FURTHER, ON PERUSAL OF DETAILS OF TRAVELING A ND CONVEYANCE EXPENSES OF ` 49,550/-, THE AO NOTICED THAT THESE EXPENSES INCLU DED RICKSHAW CHARGES AND COST OF GAS CYLINDERS AMOUNTING TO ` ` 8,590/- BESIDE ` ` 30,000/- ON ACCOUNT OF RUNNING OF CAR. TO A QUERY BY THE AO, S EEKING PRODUCTION OF LOG BOOK OF THE CAR, THE ASSESSEE SUBMITTED THAT NO LOG BOOK WAS MAINTAINED NOR THE ASSESSEE CLAIMED THAT SHE OR HER FAMILY MEMBERS OWN ED SEPARATE CAR FOR PERSONAL PURPOSES. IN THESE CIRCUMSTANCES, THE AO DISALLOWED 1/4 TH OF THE EXPENSES AMOUNTING TO ` ` 7,500/- FOR PERSONAL USE OF CAR BESIDE DISALLOWANCE OF 25% OF DEPRECIATION ON CAR, RESULTING IN ADDITION O F ` 18,694[7500+11,194]. 3.3.LIKEWISE,THE AO DISALLOWED 25% OF THE EXPENDITU RE ON PERSONAL USE OF PHONES INSTALLED AT THE RESIDENCE AND SHOP IN THE N AME OF MANOJ GUPTA AND KAMNA TRADERS BESIDE EXPENSES FOR THE MOBILE PHONE PROVIDED TO THE MANAGER . 3.4 THE AO ALSO NOTICED THAT THE ASSESSEE REFLECTE D HOUSEHOLD EXPENSES OF ONLY ` `24,000/-I.E. SAME AS IN THE PRECEDING AY 2002-03. TO A QUERY BY THE AO, SEEKING DETAILS OF THE FAMILY AND HOUSE HOLD EXPENSES, THE ASSESSEE SUBMITTED THAT SHE HAD ONE KID. THE ASSES SEE DID NOT SUBMIT ANY BREAK UP OF HOUSEHOLD EXPENSES NOR CLAIMED THAT HER HUSBAND CONTRIBUTED TOWARDS THE HOUSEHOLD EXPENSES. ACCORDINGLY, THE AO ESTIMATED HOUSEHOLD EXPENSES AT ` ` 60,000/- RESULTING IN ADDITION OF ` `36,000/-. 3.5 THE AO FURTHER ASKED THE ASSESSEE TO PRODUCE B ILLS AND VOUCHERS IN SUPPORT OF VARIOUS EXPENSES DEBITED IN THE BOOKS OF ACCOUNT S ALONG WITH RELEVANT BOOKS. AFTER SEEKING ADJOURNMENTS ON 16 TH JANUARY, 17 TH FEBRUARY, 17 TH JUNE, 4 TH JULY, 24 TH JULY, 26 TH AUGUST, 12 TH SEPTEMBER, AND 19 TH SEPTEMBER, THE ASSESSEE PRODUCED ONLY CASH BOOK AND LEDGER WITHOUT ANY BILL S AND VOUCHERS IN SUPPORT OF STAFF WELFARE, OFFICE MAINTENANCE, JOB WORK MAINTEN ANCE, MISC. ,ADVERTISEMENT AND DEEPAWALI EXPENSES. IN RESPONSE TO ANOTHER OPP ORTUNITY, THE ASSESSEE PRODUCED BILLS AND VOUCHERS AS DETAILED IN THE ASSE SSMENT ORDER FOR EXPENSES OF ITA NO.2195/DEL./2007 4 ` `70,371/- WHILE THE EXPENSES UNDER VARIOUS HEADS WE RE CLAIMED TO THE EXTENT OF FOLLOWING :- A) STAFF WELFARE ` ` 38,730/- B) OFFICE MAINTENANCE ` ` 12,480/- C) JOB WORK EXPENSES ` ` 40,000/- D) MAINTENANCE EXPENSES ` ` 3,960/- E) MISC. EXPENSES ` ` 7,200/- F) ADVERTISEMENT EXPENSES ` ` 65,870/- G) DEEPAWALI EXPENSES ` ` 5,230/- ` ` 1,81,470/- 3.51 SINCE THE ASSESSEE PRODUCED EVIDENCE WITH REG ARD TO ADVERTISEMENT EXPENSES FOR ` `65611/- & DIWALI EXPENSES WERE REASONABLE WHILE OUT OF REMAINING EXPENSES OF ` ` 1,10,370/-, BILLS FOR AN AMOUNT OF ` ` 5,780/- ALONE WERE PRODUCED, CONSIDERING THE FACT THAT NET PROFIT WAS ONLY 10.29% IN THE YEAR UNDER CONSIDERATION AS AGAINST 30.19% IN THE PRECED ING YEAR, THE AO DISALLOWED 50% OF THE EXPENSES OF ` ` 1,10,370/-, BEING NOT SUPPORTED BY BILLS AND VOUCHE RS, RESULTING IN DISALLOWANCE OF ` `55,185/-. 4. ON APPEAL, THE LD. CIT(A) DEALT WITH THE AFORES AID DISALLOWANCES IN THE FOLLOWING TERMS:- A.VEHICLE RUNNING AND MAINTENANCE 4.I.2 I HAVE CONSIDERED THE SUBMISSIONS OF THE ID. AR. EXPENSES ON ACCOUNT OF SEAT COVERS AND CENTRAL LOCKING SYSTEM A RE APPEARED TO BE COVERED UNDER CURRENT REPAIRS AND ACCORDINGLY ALLOWED. THE EXPENSES ON DECK AND FITTINGS OF SPEAKER AND AIR CONDITIONERS ARE CAPITA L IN NATURE AND ACCORDINGLY RIGHTLY CAPITALIZED. (B) TRAVELING CONVEYANCE EXPENSES ( ` ` ` ` .7,500/-) 4.2 REGARDING TRAVELING AND CONVEYANCE EXPENSES, THE ASSESSING OFFICER NOTED THAT THE EXPENSES INCLUDE EXPENSES ON THE RUNNING OF THE CAR TO THE TUNE OF ` ` 30,000/-. NO LOG BOOK FOR THE RUNNING OF THE CAR W AS MAINTAINED NOR IT WAS EXPLAINED THAT THE APPELLANT OR HIS FAMILY MEMB ERS OWNED SEPARATE CAR FOR PERSONAL PURPOSES. ITA NO.2195/DEL./2007 5 4.2.1 DURING THE APPELLATE PROCEEDINGS ALSO, THE A PPELLANT WAS ASKED TO PRODUCE THE WORKING OF THE BASIS OF WHICH SUCH CLAI MS WERE MADE. EXCEPT FOR A GENERAL REPLY, NO DETAILS IN THIS REGARD WERE PRODU CED ON THE BASIS OF WHICH SUCH EXPENSES WERE CLAIMED. THE ADDITION ON THIS ACCOUNT IS SUSTAINED. (C) DEPRECIATION ON CAR (` ` ` ` ` 11,194/-) 4.3 REGARDING DEPRECIATION ON CAR, AN AMOUNT OF ` `11,194/- WAS DISALLOWED FOR THE USE OTHER THAN BUSINESS PURPOSES OF THE APPELLANT, I HOLD THAT THIS IS A STATUTORY DISALLOW ANCE AND HAS TO BE ALLOWED FULL AS PER PRESCRIBED RULES EVEN THE ASSET HAS BEEN USED FOR A DAY. A DISALLOWANCE ON ACCOUNT OF PERSONAL U SE OR OTHER THAN THE BUSINESS CANNOT BE MADE. THE DISALLOWANCE ON A CCOUNT OF DEPRECIATION ON CAR IS DELETED. (D) TELEPHONE EXPENSES (` ` ` ` ` 8,111/-) 4.4 AN AMOUNT OF ` `8,111/- BEING 1/4 TH OF THE TELEPHONE EXPENSES WERE DISALLOWED BY THE ASSESSING OFFICER ON THE GROUND T HAT PHONES FOR PERSONAL PURPOSES CANNOT BE RULED OUT. 4.4.1 THE APPELLANT WAS ASKED TO FILE THE WORKING I N THIS REGARD ON THE BASIS OF WHICH THE ENTIRE TELEPHONE EXPENSES WERE C LAIMED. NO WORKING HAS BEEN SUBMITTED AND THE ENTIRE EXPENSES OF ALL THE THREE TELEPHONE INSTALLED AT THE RESIDENCE AND THE SHOPS ALONG WITH THE MOBILE PHONE HAS BEEN CLAIMED. THE APPELLANT H AS TO WORK OUT THE BASIS TO CLAIM SUCH EXPENSES, MAY BE ON ESTIMAT E BASIS ALSO. IN THE ABSENCE OF SUCH WORKING, THE ADDITION IS SUS TAINED AS BEING NOT EXCLUSIVELY FOR THE PURPOSES OF THE APPELLANT. (E) HOUSEHOLD EXPENSES( ` ` ` ` 36000) 4.5 THE ADDITION OF ` ` 36,000/- WAS MADE BY THE ASSESSING OFFICER ON ACCOUNT OF HOUSEHOLD EXPENSES SINCE THE WITHDRAWAL OF ` `24,000/- WAS CONSIDERED LOW IN VIEW OF THE COMPOSITION AND S TATUS OF THE APPELLANT FAMILY AND THE DETAILS OF WITHDRAWALS BY SHRI MANOJ KUMAR GUPTA, HUSBAND OF THE APPELLANT BEING NOT AVAILABLE IN HIS I.T. RETURN FOR ASSESSMENT YEAR 2003-04. 4.5.1 DURING THE APPELLATE PROCEEDINGS, THE LEARNED AR OF THE APPELLANT SUBMITTED THE FOLLOWING DETAILS OF WITHDRAWALS BY H ER HUSBAND AND OTHER FAMILY MEMBERS STAYING TOGETHER: ITA NO.2195/DEL./2007 6 NAME RELATION AMOUNT SOURCE . MANISHA GUPTA APPELLANT SELF 24,000/- BUSINESS INC OME MANOJ GUPTA HUSBAND OF APPELLANT 6,000/- SALARY & RENTAL INCOME POORAN CHAND FATHER-IN-LAW OF THE GUPTA APPELLANT 24,000/- AGRICU LTURAL INCOME SMT.VIMLA GUPTA MOTHER-IN-LAW OF THE APPELLANT 6,000/- RENTAL INCOME TOTAL: 60,000/- 4.5.2 HOWEVER, THE WITHDRAWALS HAVE NOT SUBSTANTIAT ED WITH SUPPORTING EVIDENCE AND DETAILS, THE ADDITION OF ` .,36,000/- IS SUSTAINED. {E) VARIOUS EXPENSES. ( ` ` ` ` .55,185/-} 4.6.1 DURING THE COURSE OF APPELLATE PROCEEDINGS, THE AR OF THE APPELLANT SUBMITTED THAT THE PRINTED BILLS ALONG WITH VOUCHER S WERE SUBMITTED DURING THE COURSE OF ASSESSMENT PROCEEDINGS BUT THE SAME WERE NOT CONSIDERED BY THE AO. 4.6.2 I HAVE CONSIDERED THE FACTS OF THE CASE AN D SUBMISSIONS OF THE LEARNED AR IN THIS REGARD THE AO HAS GONE IN DE PTH TO ANALYZE THE BILLS AND VOUCHERS WITH RESPECT TO THE VARIOUS ABOV E-MENTIONED EXPENSES UNDER DIFFERENT HEADS AND AFTER DUE OPPORTUNITY TO THE APPELLANT TO EXPLAIN THE SAME, DISALLOWED THE AMOUNT OF ` .55,185/- ON A FAIR AND REASONABLE BASIS IN THE ABSENCE OF PROPER DETAILS. THE BASIS A ND ADDITION BY THE AO APPEARS TO BE REASONABLE AND THE ADDITION OF ` .55,185/- IS CONFIRMED. 5. THE ASSESSEE IS NOW IN APPEAL BEFORE US AGAINST THE AFORESAID FINDINGS OF THE LD. CIT(A),UPHOLDING VARIOUS DISALL OWANCES .THE LD. AR ON BEHALF OF THE ASSESSEE WHILE CARRYING US THROUGH THE IMPUG NED ORDER CONTENDED THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN UPHOLDING THE DISAL LOWANCES WITHOUT REJECTING THE BOOKS OF ACCOUNT. IN THIS CONNECTION, THE LD. AR R ELIED UPON THE DECISION OF HONBLE APEX COURT IN STATE OF ORISSA VS. MAHARAJA SHRI V.P. SINGH DEV (1970) 76 ITR 690(SC). HOWEVER, THE LD. AR DID NOT MAKE A NY SUBMISSIONS ON HOUSEHOLD EXPENSES ADDED BY THE AO. TO A QUERY BY THE BENCH, THE LD. AR POINTED OUT THAT ASSESSEES TURNOVER WAS ` `22,76,200/-. ITA NO.2195/DEL./2007 7 6. ON THE OTHER HAND, THE LD. DR SUPPORTED THE FIN DINGS OF THE LD. CIT(A) AND ARGUED THAT SINCE THE AO MADE DISALLOWAN CES OF VARIOUS EXPENSES FOR WANT OF BILLS AND VOUCHERS IN TERMS OF THE PR OVISIONS OF SECTION 37(1) OF THE ACT, THE BOOKS OF ACCOUNT WERE NOT REQUIRED TO BE R EJECTED. THE DISALLOWANCES ON ACCOUNT OF PERSONAL USE OF CAR AND TELEPHONES WERE ON ACCOUNT OF THEIR PERSONAL USE WHILE HOUSEHOLD EXPENSES WERE NOT SUBS TANTIATED WITH ANY EVIDENCE WHATSOEVER, THE LD. DR ADDED. 7. WE HAVE HEARD BOTH THE PARTIES AND AND GONE THR OUGH THE FACTS OF THE CASE. AT THE OUTSET, WE MAY POINT THAT DECISION RELIED UPON BY THE LD. AR IN MAHARAJA SHRI V.P. SINGH DEV (SUPRA) LAYS DOWN THAT THE POWER TO LEVY ASSESSMENT ON THE BASIS OF BEST JUDGMENT IS NOT AN ARBITRARY POWER; IT IS AN ASSESSMENT ON THE BASIS OF BEST JUDGMENT. IN OTHER WORDS, THAT ASSESSMENT MUST BE BASED ON SOME RELEVANT MATERIAL. THERE IS NO DIS PUTE ON THIS LEGAL PROPOSITION.IN THE INSTANT CASE, THE LD. AR DID NOT MAKE EVEN A WHISPER BEFORE US AS TO HOW THIS DECISION IS APPLICABLE IN THE FACTS AND CIRCUMSTANCES OF THE CASE, ESPECIALLY WHEN THE ASSESSEE DID NOT PRODUCE THE RE LEVANT BILLS AND VOUCHERS BEFORE THE AO OR THE LD. CIT(A) NOR COULD JUSTIFY T HE EXPENSES WITH ANY OTHER MATERIAL. THE LD. AR DID NOT DENY BEFORE US THAT EX PENDITURE ON DECK AND FITTINGS OF SPEAKER AND AIR CONDITIONERS IN CAR IS CAPITAL I N NATURE. MOREOVER, SINCE PERSONAL USE OF CARS AND TELEPHONES BY THE ASSESS EE AND HER FAMILY MEMBERS OR STAFF HAS NOT BEEN DENIED NOR IT WAS CLAIMED TH AT THE ASSESSEE OR HER FAMILY MEMBERS HAD ANY INDEPENDENT VEHICLES OR TELEPHONES FOR PERSONAL USE, IN OUR OPINION DISALLOWANCE OF 1/4 TH OF THE EXPENSES ON RUNNING AND MAINTENANCE OF VEHICLES AS ALSO EXPENSES ON TELEPHONES/MOBILES , IN THE LIGHT OF PROVISIONS OF SEC. 38(2) OF THE ACT, IS REASONABLE. MOREOVER, SIN CE THE ESTIMATE OF EXPENDITURE OF ` 5,000/- PM TOWARDS HOUSE HOLD EXPENSES HAS BEEN MADE BY THE AO, CONSIDERING STATUS OF THE ASSESSEE AND TOTALITY OF FACTS AND CIRCUMSTANCES AND THE SAID ESTIMATE HAS NOT BEEN FOUND ITA NO.2195/DEL./2007 8 UNREASONABLE BY THE LD. CIT(A) WHILE NOT AN IOTA OF EVIDENCE IS BEFORE US REGARDING SOURCES OF MEETING HOUSEHOLD EX PENSES NOR EVEN BREAK UP OF EXPENSES UNDER BROAD HEADS HAS BEE N BROUGHT TO OUR NOTICE , WE ARE OF THE OPINION THAT ADDITION MA DE BY THE AO & UPHELD BY THE LD. CIT(A), IS JUSTIFIED. REGARDING D ISALLOWANCE OF EXPENSES FOR WANT OF RELEVANT BILLS AND VOUCHERS, WE ARE OF THE OPINION THAT BOOKS OF ACCOUNT WERE NOT REQUIRED TO BE REJECTED SINCE TR ADING RESULTS HAVE NOWHERE BEEN DISPUTED BY THE AO OR THE LD. CIT(A).ESTIMATED DISALLOWANCE MADE BY THE AO HAS BEEN FOUND BY THE LD. CIT(A) FAIR AND REASO NABLE. SINCE THE LD. AR DID NOT PLACE BEFORE US ANY MATERIAL ,CONTROVERTING THE FINDINGS OF THE LD. CIT(A) SO AS TO ENABLE US TO TAKE A DIFFERENT VIEW IN THE MATTER , WE ARE NOT INCLINED TO INTERFERE. THEREFORE, GROUNDS. RAISED BY THE ASSESSEE IN HER A PPEAL, ARE DISMISSED. 8. NO ADDITIONAL GROUND HAVING BEEN RAISED IN TERM S OF RESIDUARY GROUND IN THE APPEAL, ACCORDINGLY, THIS GROUND IS D ISMISSED. 9. NO OTHER PLEA OR ARGUMENT WAS MADE BEFORE US. 10. IN THE RESULT, APPEAL IS DISMISSED. SD/- SD/- ( I.C. SUDHIR ) (A.N. PAHUJA ) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) NS COPY OF THE ORDER FORWARDED TO :- 1. ASSESSEE 2. INCOME-TAX OFFICER,WARD 1(4),MEERUT 3. CIT CONCERNED. 4. CIT(A), MEERUT. 5. DR, ITAT, I BENCH, NEW DELHI 6. GUARD FILE. BY ORDER, DEPUTY / ASSTT.REGISTRAR ITAT, DELHI ORDER PRONOUNCED IN OPEN COURT