M/s Naman Developers Pvt. Ltd., Delhi V. ACIT, New Delhi

ITA 2217/DEL/2013

• Counselvise Citation: 221720114 RSA 2013
• Duration Of Justice: 6 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-10-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2009-2010
• Appeal Filed On: 16-04-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MRS REN UKA JAIN GUPTA SENIOR
• Keywords: Corroborative evidences

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH E: NEW DELHI) BEFORE SHRI R.P. TOLANI, JUDICIAL MEMBER AND SHRI B.C. MEENA, ACCOUNTANT MEMBER ITA NO.2217/DEL/ 2013 (ASSESSMENT YEAR: 2009-10) M/S. NAMAN DEVELOPERS PVT. LTD., VS. ACIT, CENTRAL CIRCLE 3, BA 17A, DDA FLATS, NEW DELHI. ASHOK VIHAR, PHASE I, DELHI 110 052. (PAN : AACCN4882A) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SURESH KUMAR GUPTA, CA RESPONDENT BY : MRS. REN UKA JAIN GUPTA, SENIOR DR O R D E R PER B.C. MEENA, ACCOUNTANT MEMBER : THIS APPEAL FILED BY THE ASSESSEE EMANATES FROM TH E ORDER OF THE CIT (APPEALS)-II, NEW DELHI DATED 24.01.2013. 2. THE ASSESSEE IS A COMPANY ENGAGED IN THE BUSINES S OF HOSPITALITY AND RUNNING HOTEL IN THE NAME & STYLE OF NAMAN PAL ACE. THE ASSESSING OFFICER ASKED THE ASSESSEE TO FURNISH DETAILS OF EX PENSES WITH DOCUMENTARY EVIDENCES. THE ASSESSEE FURNISHED ONLY MONTHWISE DETAILS WITHOUT ANY SUPPORTING DOCUMENTS. THE ASSESSING OFF ICER SHOW-CAUSED THE ASSESSEE AND NOT FOUND THE REPLY SATISFACTORY A ND MADE AN ADDITION OF RS.1,71,652/- BEING 10% OF THE FOLLOWING EXPENSES : - ITA NO.2217/DEL/2013 2 KITCHEN EXP. 7,25,342 STAFF WELFARE 1,69,520 MISC. EXP. 54,542 CAR RUNNING & MAIN EXP. 76,092 LAUNDRY EXP. 50,009 HOUSE KEEPING EXP. 6,41,023 TOTAL : 17,16,528 THE CIT (A) HAS CONFIRMED THE ADDITION BY HOLDING A S UNDER :- 5. THE SUBMISSIONS OF THE APPELLANT ARE CONSIDERED . 5.1 IT IS A MATTER OF RECORD AND ALSO AN ADMITTED F ACT THAT DESPITE THE DIRECTION OF THE A.O. THE BOOKS OF ACCO UNTS AND VOUCHERS IN RESPECT OF EXPENSES CLAIMED IN THE RETU RN OF INCOME WERE NOT FURNISHED BY THE APPELLANT BEFORE T HE INCOME TAX AUTHORITIES. INSTEAD OF COMPLYING WITH T HE STATUTORY REQUIREMENTS, AND ALSO THE SPECIFIC SHOW CAUSE NOTICE ISSUED BY THE A.O. ON 16.12.2011, THE APPELL ANT CHOSE TO MAKE A BLAND AND UNSUPPORTED CLAIM THAT ALL THE EXPENSES DIRECTLY RELATED TO ITS BUSINESS AND BECAUSE ITS AC COUNTS WERE AUDITED AND REPORT 3CD FILED, THE BOOK-RESULTS INCL UDING THE EXPENSES OUGHT TO BE ACCEPTED WITHOUT ANY QUESTION. THE REPLY OF THE APPELLANT TO THE SHOW CAUSE NOTICE IS NOT ONLY FALLACIOUS BUT ALSO MISCHIEVOUS BECAUSE BY NOT FURN ISHING THE BOOKS AND THE EVIDENCES, NOT ONLY ITS SUBMISSIO N REMAINED UNCORROBORATED, IT ALSO PREVENTED THE AO F ROM MAKING FURTHER VERIFICATION AND INQUIRIES. THE LONG WINDING GENERALISATIONS IN THE REPLY OF THE APPELLANT TO TH E SHOW CAUSE NOTICE OF THE A.O. SERVED AS A RUSE TO ESCAPE FROM THE RIGOURS OF LAW AND ALSO PREVENTED THE A.O. TO EXAMI NE ITS AFFAIRS THOROUGHLY. 5.2 THAT THE APPELLANT WAS DUTY BOUND TO FURNISH TH E BOOKS OF ACCOUNTS AND THE EVIDENCES DESIRED BY THE AO FLOWS FROM THE PROVISIONS OF THE INCOME TAX ACT, 19 61. IN CASES WHERE ASSESSMENT IS TO BE COMPLETED U/S 143(3 ), THE AO IS WELL WITHIN HIS POWERS TO DIRECT THE APPELLAN T TO FURNISH THE BOOKS OF ACCOUNTS AND VOUCHERS IN SUPPO RT OF THE CLAIMS MADE IN THE RETURN OF INCOME. THIS IS PRECIS ELY THE PURPOSE OF ISSUING NOTICE U/S 143(2) AND 142(1)(II) . UNDER SECTION 142(1)(II) THE AO IS EMPOWERED TO ISSUE A N OTICE TO ITA NO.2217/DEL/2013 3 THE ASSESSEE TO PRODUCE OR CAUSE TO BE PRODUCED, S UCH ACCOUNTS OR DOCUMENTS' AS HE MAY REQUIRE. UNDER SEC TION 143(2) IF THE AO 'CONSIDERS IT NECESSARY OR EXPEDIE NT TO ENSURE THAT THE ASSESSEE HAS NOT UNDER STATED THE I NCOME OR HAS NOT COMPUTED EXCESSIVE LOSS OR HAS OR HAS NOT U NDER PAID THE TAX IN ANY MANNER', HE CAN DIRECT THE APPELLANT 'TO PRODUCE, OR CAUSE TO BE PRODUCED, ANY EVIDENCE ON W HICH THE ASSESSEE MAY RELY IN SUPPORT OF THE RETURN'. THE NO TICE U/S 143(2) IMPOSE A BURDEN ON THE ASSESSEE TO FURNISH A LL SUCH EVIDENCES ON WHICH HE IS RELYING WITH RESPECT TO HI S RETURN OF INCOME. IN THE CASE OF THE APPELLANT BOTH NOTICES U /S 143(2) AND 142(L) HAD BEEN ISSUED, BUT THE APPELLANT FAILE D TO DISCHARGE ITS BURDEN. 5.3 THERE IS NO MERIT IN THE CONTENTION THAT THE AP PELLANT WAS NOT GIVEN ADEQUATE OPPORTUNITY TO REPRESENT ITS CASE AND THERE WAS VIOLATION OF THE PRINCIPLE OF NATURAL JUS TICE. IN ADDITION TO THE NOTICES U/S 143(2) AND 142(1), THE APPELLANT WAS SPECIFICALLY DIRECTED TO FURNISH THE DOCUMENTAR Y EVIDENCES IN SUPPORT OF THE EXPENSES CLAIMED IN ITS RETURN OF INCOME AS PER THE LETTER OF THE AO DATED 17.11.2011 . FINALLY ON 16.12.2011 THE AO SERVED A SHOW CAUSE NOTICE TO THE APPELLANT ON THE MATTER. 5.4 THE RELIANCE OF THE APPELLANT ON VARIOUS CASE L AWS TO ARGUE THAT NO DISALLOWANCE CAN BE MADE IN THE CASE OF CORPORATE ASSESSEES ON THE GROUND OF 'PERSONAL' NAT URE OF EXPENSES IS MISPLACED SINCE THE AO DID NOT MAKE THE DISALLOWANCE ON THIS GROUND. AS EVIDENT FROM THE IM PUGNED ORDER THE DISALLOWANCE WAS MADE BECAUSE THE BOOKS O F ACCOUNTS AND VOUCHERS WERE NOT PRODUCED BEFORE THE AO AND THE CLAIM OF EXPENSES REMAINED UNSUBSTANTIATED. SIN CE DESPITE REPEATED OPPORTUNITIES, THE APPELLANT FAILE D TO COMPLY WITH THE DIRECTION OF THE AO, THE AO WAS JUS TIFIED IN TREATING A PORTION OF THE EXPENSES AS NOT EXPENDED WHOLLY AND EXCLUSIVELY FOR THE PURPOSES OF BUSINESS, AS IS PROVIDED IN SECTION 37(1). THERE IS NO MENTION OF DISALLOWAN CE BEING MADE BY THE AO ON THE GROUND OF 'PERSONAL' NATURE O F EXPENSES. 5.5 IN THE ABSENCE OF THE BOOKS OF ACCOUNTS AND THE VOUCHERS THE AO HAD NO OPTION BUT TO MAKE THE DISALLOWANCE ON A PERCENTAGE BASIS. SINCE THE APPEL LANT HAS ITA NO.2217/DEL/2013 4 NOT COME WITH CLEAN HANDS AND HAS NOT SUBMITTED ITS ELF FOR VERIFICATION BEFORE THE TAX AUTHORITIES, ITS PLEA T HAT THE ACTION OF THE AO WAS ARBITRARY AND NEEDS TO BE SET ASIDE, DESERVES TO BE REJECTED. 3. NOW, THE ASSESSEE IS IN APPEAL BEFORE US BY TAKI NG THE FOLLOWING GROUND OF APPEAL :- THE LD. CIT (A) HAS ERRED BOTH IN LAW AND ON FACTS IN CONFIRMING THE AD HOC DISALLOWANCE OF RS.1,171,652/ - OUT OF VARIOUS EXPENSES DEBITED TO THE P&L ACCOUNT ON THE GROUND THAT THE APPELLANT FAILED TO FURNISH SUPPORTING EVI DENCES IN SUPPORT OF CLAIM OF SUCH EXPENSES. 4. WE HAVE HEARD BOTH THE SIDES ON THE ISSUE. THIS IS AN ADMITTED FACT THAT THE ASSESSEE HAS NOT FILED ANY SUPPORTING EVID ENCES BEFORE THE ASSESSING OFFICER AS WELL AS BEFORE THE CIT (A). IN ABSENCE OF ANY VOUCHERS AND SUPPORTING EVIDENCE, THE 10% OF THE EX PENSES WAS TAKEN AS NOT INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE S OF BUSINESS. BEFORE US ALSO, NO SUPPORTING EVIDENCE WAS FILED, THEREFOR E, IN ABSENCE OF ANY SUPPORTING DOCUMENTS TO JUSTIFY ALL THE EXPENSES IN CURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSES OF BUSINESS, WE FIND N O MERITS IN THE APPEAL OF THE ASSESSEE AND WE DISMISS THE SAME. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DIS MISSED. ORDER PRONOUNCED IN OPEN COURT ON THIS 18 TH DAY OF OCTOBER, 2013. SD/- SD/- (R.P. TOLANI) (B.C. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED THE 18 TH DAY OF OCTOBER, 2013 TS ITA NO.2217/DEL/2013 5 COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-II, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR/ITAT NEW DELHI