Smt. Neetaben Kamleshkumar Lal, RAJKOT-GUJARAT V. The Income Tax Officer, Ward-1(3), RAJKOT-GUJARAT

ITA 222/RJT/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 2266 (ITAT-RAJKOT)
• Duration Of Justice: 1 year(s) 11 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-03-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 02-12-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 01-04-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: C S ANJARIA
• Keywords: Gift; Business expenditure
• Section: 143(3); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH , RAJKOT BEFORE: S H RI PRAMOD KUMAR , ACCOUNTANT MEMBER AND SHR I S. S. GODARA , JUDICIAL MEMBER [CONDUCTED THROUGH E - C OURT AT AHMEDABAD] SMT. NEETABEN KAMLESHKUMAR LAL, SHAKTI KRUPA 2, NILKANTH NAGAR, UNIVERSITY ROAD, RAJKOT PAN: ABAPL3800C (APPELLANT) VS THE ITO, WD - 1(3), RAJKOT (RESPONDENT) REVENUE BY : S H RI C.S. ANJARIA , D . R. ASSESSEE BY: S H RI KALPESH DOSHI , A.R. DATE OF HEARING : 03 - 12 - 2 015 DATE OF PRONOUNCEMENT : 01 - 03 - 2 016 / ORDER P ER : S. S. GODARA , JUDICIAL MEMBER : - THI S ASSESSEE S APPEAL FOR A.Y. 20 05 - 06 , AR ISES FROM ORDER O F THE CIT(A) - II, RAJKOT DATED 01 - 01 - 2014 IN APPEAL NO. CIT(A) - II / RJT/T - I T A NO . 222 / RJT /20 14 A SSESSMENT YEAR 20 05 - 06 I.T.A NO. 222 /RJT /20 14 A.Y. 2005 - 06 PAGE NO SMT. NEETABEN KAMLESHKUMAR LAL VS. ITO 2 652 /09 - 10, IN PROCEEDINGS UNDER SECTION 143(3) OF THE INCOME TAX ACT, 19 61; IN SHORT THE ACT . 2. THE ASSESSEE S FIRST SUBSTANTIVE GROUND ASSAILS THE LOWER APPELLATE ORDER UPHOLDING ASSESSING OFFICER S ACTION IN DISALLOWING A SUM OF RS. 1,02,017/ - PAID TO M/S. SIFY LTD. AND CLAIMED AS BUSINESS EXPENDITURE. SHE DERIVES INCO ME FROM SALARY AND INTERNET SERVICES. THE ASSESSEE DEBITED THE IMPUGNED SUM IN HER P & L ACCOUNT AS ANNEXED WITH THE RETURN. SHE HAD TWO CREDIT ENTRIES OF INSTALLATION AND SIFY COMMISSION OF RS. 1,05,545/ - AND RS. 1,01,193/ - AS ADJUSTED AGAINST EXPENDITU RE OF RS. 1,06,645/ - LEAVING BEHIND NET FIGURE OF RS. 1,01,193/ - (NET) AS PROFIT FROM M/S. SHREEJI CABLE NET. THE ASSESSING OFFICER NOTICED THAT ONE SHRI JAYENDRABHAI B. ACHARYA; PROPRIETOR OF M/S. SIFY I - WAYS HAD NOT CREDITED THE VERY TOP UP CHARGES IN H IS RETURN. AND ALSO THAT THE ASSESSEE FAILED TO PROVIDE THE RELEVANT INFORMATION/SUPPORTIVE EVIDENCE. ALL THIS RESULTED IN THE IMPUGNED DISALLOWANCE. 3. THE ASSESSEE APPEARS TO HAVE FILED ADDITIONAL SUBMISSIONS IN THE COURSE OF LOWER APPELLATE PROCEED ING I.E. SIFY S STATEMENT, PROOF OF HAVING MADE THE IMPUGNED PAYMENT THROUGH BANKING CHANNEL AND ALSO THAT HER NETTING OF INCOME EXERCISE HAD RESULTED IN ALMOST 50% OF THE TOTAL RECEIPT AS INCOME (SUPRA). THE CIT(A) SOUGHT A REMAND REPORT. THE ASSESSING OFFICER FILED THE SAME ON 17 - 07 - 2012 THAT THE ASSESSEE HAD NOT SUBMITTED ANY NEW MATERIAL. THE CIT(A) AFFORDED REJOINDER OPPORTUNITY. THE ASSESSEE STRONGLY CONTESTED HER CASE I.T.A NO. 222 /RJT /20 14 A.Y. 2005 - 06 PAGE NO SMT. NEETABEN KAMLESHKUMAR LAL VS. ITO 3 ONCE AGAIN. THE CIT(A) AS THEREAFTER AFFIRMED ASSESSING OFFICER S FINDINGS BY OBSERVING THAT THE AGREEMENT IN QUESTION DOES NOT STIPULATE PAYMENT OF ANY SUCH EXPENDITURE. 4. WE HAVE HEARD RIVAL CONTENTIONS. THE ASSESSEE INTER ALIA ARGUES THE IMPUGNED EXPENDITURE HAS BEEN INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF THE BUS INESS, MODE OF PAYMENT I S BANKING CHANNEL AND THERE IS NO DISPUTE ON GENUINENESS ASPECT. THE REVENUE STRONGLY SUPPORTS THE LOWER APPELLATE ORDER. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION . THE ASSESSEE S CORRESPONDING EVIDENCE DOES NOT LEAVE ANY DOUBT A BOUT THE VERY FACTUM OF THE IMPUGNED PAYMENT TO HAVE BEEN MADE TO M/S. SIFY LTD. SHE HAS EARNED COMMISSION INCOME AND DEBITED THE IMPUGNED EXPENDITURE AGAINST THE SAME. BOTH THE LOWER AUTHORITIES NOWHERE HOLD THAT THEY HAVE SUMMONED THE PAYEES OR THE VER IFICATION IN QUESTION FALSIFY ASSESSEE S CLAIM. NOR IT IS A CASE WHEREIN DOUBLE DEDUCTION OF THE IMPUGNED EXPENDITURE HAS COME TO LIGHT. WE OBSERVE IN THESE FACTS THAT T H E ASSESSEE IS VERY MUCH ENTITLED TO CLAIM THE IMPUGNED SIFY TOP UP EXPENDITURE AGAI NST HIS COMMISSION. THIS FIRST SUBSTANTIVE GROUND ACCORDINGLY SUCCEEDS. 5. THE SECOND SUBS TANT IVE GROUND RAISED AT ASSESSEE S BEHEST CHALLENGES SECTION 68 ADDITION OF RS. 1,34,303/ - ON ACCOUNT OF HER ALLEGED FAILURE IN PROVING GIFT CLAIM. WE FIND THAT T HERE ARE TOTAL SEVEN DONORS HAVING ALLEGEDLY GIFTED VARIOUS SUMS LESS THAN RS. 20,000/ - IN EACH CASE. THE ASSESSING OFFICER SUMMONED ALL OF THEM. POSTAL I.T.A NO. 222 /RJT /20 14 A.Y. 2005 - 06 PAGE NO SMT. NEETABEN KAMLESHKUMAR LAL VS. ITO 4 AUTHORITIES COULD NOT SERVE TWO DONORS. REST FIVE OF THEM DULY APPEARED/FILED CONFIRMATIONS. THE AS SESSING OFFICER OBSERVED IN ASSESSMENT ORDER THAT NONE OF THEM WAS ASSESSED TO TAX. HE DID NOT RAISE ANY DISPUTE THAT ALL DONORS ARE ASSESSEE S RELATIVES WHO CLAIMED TO HAVE GIFTED THE IMPUGNED SUMS FOR LOVE AND AFFECTION. 6 . THE CIT(A) AFFIRMS ASSESSI NG OFFICER ACTION. 7 . WE HAVE HEARD BOTH SIDES. IT EMINATES FROM THE CIT(A) S ORDER THAT ALL THE DONORS HAVE FILED GIFT LETTERS, PAN CARDS/ASSESSMENTS IN SOME CASES FOLLOWED BY THEIR AFFIDAVITS. IT HAS COME ON RECORD THAT ALL OF THEM ARE ASSESSEE S R ELATIVES. WE DEEM IT APPROPRIATE TO OBSERVE THAT THE ASSESSING OFFICER DOES NOT REFER TO ANY MATERIAL ON RECORD FOR COMING TO CONCLUSION THAT THE ABOVE STATED DONORS COULD NOT HAVE POSSESSED THE IMPUGNED SMALL SUMS FOR MAKING GIFTS TO THE ASSESSEE IN QUES TION. WE ACCEPT ASSESSEE S CONTENTIONS IN THESE FACTS AND CIRCUMSTANCES. THIS SECOND SUBSTANTIVE GROUND IS ACCEPTED. 8 . THIS LEAVES US THIRD AND FINAL SUBSTANTIVE GROUND C HALLENGING ADDITION OF RS. 25 ,000/ MADE ON ACCOUNT OF LOW HOUSEHOLD EXPENSES. BOTH THE LOWER AUTHORITIES OBSERVED THAT THE ASSESSEE HAS NOT DEBITED ANY SUCH EXPENDITURE IN HER ACCOUNT. SHE FAILS TO REBUT THIS FACTUAL POSITION. WE DECLINED TO INTERFERE IN THIS ADDITION MADE BY THE LOWER AUTHORITIES FOR WANT OF SUPPORTIVE MATERIAL I N THE CASE FILE. THIS THIRD SUBSTANTIVE GROUND IS DECLINED. I.T.A NO. 222 /RJT /20 14 A.Y. 2005 - 06 PAGE NO SMT. NEETABEN KAMLESHKUMAR LAL VS. ITO 5 9 . THIS ASSESSEE S APPEAL IS PARTLY ALLOWED. ORDER PR ONOUNCED IN THE OPEN C OUR T ON 01 - 03 - 201 6 SD/ - SD/ - (PRAMOD KUMAR ) ( S. S. GODARA ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD : DATED 0 1 /03 /2016 AK / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, RAJKOT