KETUR M BHAVSAR, MUMBAI V. ITO WD 16(3)(3), MUMBAI

ITA 2364/MUM/2014

• Counselvise Citation: 236419914 RSA 2014
• Duration Of Justice: 3 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-08-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 03-07-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 09-04-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: M SUBRAMANIAN
• Keywords: Unexplained cash credit; Peak credit; Additional evidence; Corroborative evidences
• Section: 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'SMC' BENCH, MUMBAI BEFORE SHRI D. MANMOHAN, VICE PRESIDENT ITA NO. 2364/MUM/2014 (ASSESSMENT YEAR: 2006-07) SHRI KETUR M. BHAVSAR VS. INCOME TAX OFFICER - 16(3)(3) 1902/B, PURAV HEIGHTS MUKBHAT LANE, TG PATH GIRGOAN, MUMBAI 400004 MATRU MANDIR, GRAND ROAD MUMBAI 400007 PAN - AEZPB3498J APPELLANT RESPONDENT APPELLANT BY: SHRI M. SUBRAMANIAN RESPONDENT BY: MS. AMRITA SINGH DATE OF HEARING: 06.08.2014 DATE OF PRONOUNCEMENT: 08.08.2014 O R D E R PER D. MANMOHAN, V.P. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A)-5, MUMBAI AND IT PERTAINS TO A.Y. 2006-07. 2. ASSESSEE IS A DEALER IN PRECIOUS AND SEMI-PRECIOUS STONES. FOR THE YEAR UNDER CONSIDERATION IT DECLARED A TOTAL INCOME OF ` 43,308/- WHEREAS THE AO MADE ASSESSMENT ON A TOTAL INCOME OF ` 3,06,382/- BY DISALLOWING CERTAIN CLAIMS. THE FIRST ADDITION IS WITH REGARD TO THE AM OUNT REFLECTED IN THE BANK ACCOUNT WHICH HAS NOT BEEN SHOWN IN THE BALANCE SHE ET AND THEREFORE THE PEAK BALANCE IN THE BANK ACCOUNT WAS ADDED BY THE A O. ASSESSEE HAS ALSO INCURRED CERTAIN EXPENDITURE IN CASH TOWARDS CONVEY ANCE AND OFFICE EXPENSES BUT COULD NOT PRODUCE VOUCHERS. SINCE THE GENUINENESS OF THE EXPENDITURE COULD NOT BE VERIFIED AND ASCERTAINED, THE AO DISALLOWED 20% OF THE EXPENDITURE BY TREATING THE SAME AS NOT BEING U SED FOR THE PURPOSE OF BUSINESS. 3. SIMILARLY, ASSESSEE CLAIMED SALARY AND BONUS EXPEND ITURE BUT DID NOT MAINTAIN SALARY REGISTER, DUTY ATTENDANCE REGISTER, ETC. IN THE ABSENCE OF PROPER BILLS AND DOCUMENTS 20% OF THE SAID EXPENDIT URE WAS DISALLOWED BY ITA NO. 2364/MUM/2014 SHRI KETUR M. BHAVSAR 2 THE AO. AS REGARDS TELEPHONE EXPENDITURE ALSO NO LO GBOOK WAS MAINTAINED FOR THE USE OF TELEPHONE AND MOBILE PHONES. SINCE PERSO NAL USE OF TELEPHONES WAS NOT DENIED, 20% OF THE TELEPHONE EXPENDITURE WA S DISALLOWED BY THE AO. 4. IN THE P & L ACCOUNT THE ASSESSEE HAS DEBITED TRAVE LLING EXPENSES OF ` 1,04,555/- WHICH WAS STATED TO BE REFERABLE TO ASSE SSEES TRAVEL TO HONG KONG FOR BUSINESS PURPOSE OF SOURCING SUPPLIERS OF DIFFERENT COLOUR STONE MANUFACTURER. EXCEPT COPIES OF THE BILLS OF BLUE ST AR AIR TRAVEL SERVICES (I) P. LTD. ASSESSEE DID NOT FURNISH ANY DOCUMENTARY EVIDE NCE TO PROVE THAT THE FOREIGN VISIT WAS, IN FACT, FOR THE PURPOSE OF BUSI NESS. ASSESSEE WAS ASKED TO FILE SPECIFIC DETAILS WITH SUPPORTING EVIDENCES AND ALSO COPY OF PASSPORT. ASSESSEE FAILED TO FURNISH THE DETAILS. THEREFORE T HE AO CONCLUDED THAT THE TRIP WAS FOR NON-BUSINESS PURPOSE AND HENCE THE ENT IRE CLAIM WAS DISALLOWED. 5. ON AN APPEAL FILED BY THE ASSESSEE THE LEARNED CIT( A) RESTRICTED THE ADHOC DISALLOWANCE TO 10% AND WITH REGARD TO SPECIF IC DISALLOWANCES MADE TOWARDS UNEXPLAINED CASH CREDIT AND FOREIGN TRAVEL EXPENSES THE LEARNED CIT(A) CONFIRMED THE ADDITIONS. 6. FURTHER AGGRIEVED, ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. THOUGH SIX GROUNDS WERE URGED BEFORE THE TRIBUNAL, AT THE TIME OF HEARING IT WAS SUBMITTED THAT GROUND NO. 1, REFERABLE TO CASH CRED IT OF ` 1,28,621/-, IS NOT PRESSED BY THE ASSESSEE AND GROUND NO. 6 IS GENERAL IN NATURE. ACCORDINGLY GROUND NO. 1 AND 6 ARE REJECTED. 7. VIDE GROUND NO. 2 ASSESSEE CONTENDS THAT THE ADHOC DISALLOWANCE OF CONVEYANCE EXPENSES AND OFFICE EXPENSES IS EXCESSIV E SINCE THE EXPENDITURE WAS INCURRED FOR THE PURPOSE OF BUSINESS ONLY. THOU GH THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ENTIRE EXPENDIT URE WAS INCURRED FOR THE PURPOSE OF BUSINESS NO EVIDENCE, WHATSOEVER, WAS FU RNISHED TO SUPPORT REASONABLENESS OF THE CLAIM. EVEN BEFORE THE TAX AU THORITIES THE ASSESSEE HAS NOT FURNISHED ANY EVIDENCE TO PROVE THAT THE EX PENDITURE WAS ACTUALLY INCURRED FOR THE PURPOSE OF BUSINESS. UNDER THESE C IRCUMSTANCES I AM OF THE VIEW THAT THE ADDITION REFERABLE TO 10% OF THE EXPE NDITURE IS REASONABLE AND ACCORDINGLY AFFIRM THE ACTION OF THE CIT(A). ITA NO. 2364/MUM/2014 SHRI KETUR M. BHAVSAR 3 8. SIMILARLY, WITH REGARD TO GROUND NO. 3 & 4 REFERABL E TO SALARY EXPENSES AND TELEPHONE EXPENSES NO EVIDENCE WAS PRODUCED EVE N AT THIS STAGE TO PROVE THE REASONABLENESS OF THE EXPENDITURE VIS--V IS THE TOTAL BUSINESS CARRIED ON BY THE ASSESSEE AND OTHER SUCH MATERIAL. UNDER THESE CIRCUMSTANCES I AM OF THE VIEW THAT THE LEARNED CIT (A) WAS VERY REASONABLE IN CONFIRMING THE DISALLOWANCE OF 10% OF THE TOTAL EXPENDITURE. I THEREFORE REJECT GROUND NO. 3 & 4 OF THE ASSESSEE. 9. VIDE GROUND NO. 5 ASSESSEE CONTENDS THAT FOREIGN TR AVEL EXPENSES OF ` 1,04,555/- WAS FOR THE PURPOSE OF BUSINESS. IT IS N OT IN DISPUTE THAT THE ASSESSEE HAD TRAVELLED TO HONG KONG AND IN ORDER TO CLAIM DEDUCTION OF SUCH EXPENDITURE THE PRIMARY ONUS IS UPON THE ASSES SEE TO PROVE THAT THE EXPENDITURE WAS INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. WHEN THE ASSESSEE WAS CALLED UPON TO FURN ISH THE DETAILS ALONGWITH SUPPORTING DOCUMENTARY EVIDENCE, EITHER B EFORE THE AO OR BEFORE THE CIT(A), THE ASSESSEE COULD FURNISH NO EVIDENCE EXCEPT MERELY STATING THAT THE TOUR WAS CONDUCTED TO EXPLORE VARIOUS BUSI NESS OPTION OF IMPORTING GOODS AT CHEAPER RATES FROM ALTERNATE SUP PLIER. MOREOVER, EVEN BEFORE THE CIT(A) NO DOCUMENTARY EVIDENCE WAS FURNI SHED TO PROVE THAT THE ASSESSEE HAD IMPORTED GOODS FROM HONG KONG. IN OTHE R WORDS, BUSINESS EXPEDIENCY COULD NOT BE PROVED. THEREFORE THE LEARN ED CIT(A) CONFIRMED THE ACTION OF THE AO. 10. THE LEARNED COUNSEL FOR THE ASSESSEE ADVERTED MY AT TENTION TO PAGES 19 TO 21 OF THE PAPER BOOK (ADDITIONAL EVIDENCE) TO SUBMIT THAT THE ASSESSEE VISITED THE STALLS IN EXHIBITION AT HONG KONG TO MA KE HIMSELF AWARE OF THE LATEST RANGE OF PRODUCTS AND THEREFORE THE EXPENDIT URE HAS TO BE CONSIDERED AS WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINE SS. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT NEITHER THE AO NOR THE CIT(A) SPECIFICALLY CALLED FOR ANY EVIDENCE EXCEPT FOR THE PASSPORT AND HENCE THERE WAS NO OCCASION FOR FILING ADDITIONAL EVIDENCE. HE THEREFO RE REQUESTED THE TRIBUNAL TO ADMIT THE ADDITIONAL EVIDENCE AND TO RESTORE THE MATTER TO THE FILE OF THE AO FOR EXAMINATION OF THE ADDITIONAL EVIDENCE IN TH E INTEREST OF JUSTICE. ITA NO. 2364/MUM/2014 SHRI KETUR M. BHAVSAR 4 11. ON THE OTHER HAND, THE LEARNED D.R. SUBMITTED THAT BOTH THE AO AS WELL AS THE CIT(A) CALLED UPON THE ASSESSEE TO FURN ISH SOME DOCUMENTARY EVIDENCE TO PROVE THAT THE TOUR WAS FOR BUSINESS PU RPOSE BUT AT NO STAGE THE ASSESSEE HAD STATED THAT HE HAS ATTENDED THE EXHIBI TION. EVEN IF IT IS SO THE LETTER APPEARS TO HAVE BEEN OBTAINED IN 2005, DESPI TE SPECIFIC REQUESTS BY THE AO AS WELL AS THE CIT(A), THE ASSESSEE DID NOT FURNISH THE EVIDENCE FOR THE REASONS BEST KNOWN TO HIM AND THUS IT CANNOT BE ADMITTED AT THIS STAGE SINCE AFTER A GAP OF ALMOST A DECADE IT MAY NOT BE POSSIBLE FOR THE REVENUE TO CROSS VERIFY THE CORRECTNESS OF THE CLAIM. IT WA S THEREFORE SUBMITTED THAT THE ADDITIONAL EVIDENCE DESERVES TO BE REJECTED. 12. I HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS A ND PERUSED THE RECORD. AS COULD NE NOTICED FROM THE ASSESSMENT ORD ER THE ASSESSEE WAS ASKED TO FILE SPECIFIC DETAILS WITH SUPPORTING EVID ENCE TO PROVE THAT FOREIGN VISIT WAS, IN FACT, FOR ASSESSEES BUSINESS PURPOSE ONLY. THE CASE WAS TAKEN UP FOR SCRUTINY AND SEVERAL OPPORTUNITIES WERE GIVE N TO THE ASSESSEE BOTH AT THE STAGE OF ASSESSMENT AS WELL AS AT THE FIRST APP ELLATE STAGE BUT THE ASSESSEE NEVER RAISED THE PLEA THAT HE HAS VISITED EXHIBITION STALLS IN HONG KONG. AT ANY RATE, THE ASSESSEE COULD NOT FURNISH S ATISFACTORY REASONS AS TO WHY THE EVIDENCE, WHICH WAS READY WITH ASSESSEE EVE N FROM 2005, COULD NOT BE FURNISHED EITHER BEFORE THE AO OR BEFORE THE CIT (A). UNDER THESE CIRCUMSTANCES I REJECT ADMISSION OF ADDITIONAL EVID ENCES. SINCE THE ASSESSEE HAS NOT FURNISHED ANY EVIDENCE TO PROVE THAT THE TO UR WAS FOR BUSINESS PURPOSE, THE LEARNED CIT(A) WAS JUSTIFIED IN HOLDIN G THAT THE TOUR EXPENDITURE IS NOT ALLOWABLE AS DEDUCTION UNDER SEC TION 37 OF THE ACT. I THEREFORE AFFIRM THE ACTION OF THE LEARNED CIT(A). 13. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 8 TH AUGUST, 2014. SD/- (D. MANMOHAN) VICE PRESIDENT MUMBAI, DATED: 8 TH AUGUST, 2014 ITA NO. 2364/MUM/2014 SHRI KETUR M. BHAVSAR 5 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 5, MUMBAI 4. THE CIT 16, MUMBAI CITY 5. THE DR, SMC BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.