Chita Ranjan Swain, Bhubaneswar V. ACIT, Bhubaneswar

ITA 239/CTK/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 52379 (ITAT-CUTTACK)
• Duration Of Justice: 3 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-08-2011
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 27-04-2011
• Court: TRIBUNAL
• Department Lawyers: S C MOHANTY

Judgement Text

IN THE INCME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK BEFORE : HONBLE SHRI K.K.GUPTA, ACCOUNTANT MEMBER, AND HONBLE SHRI K.S.S.PRASAD RAO, JUDICIAL MEMBER. ITA NO. 239/CTK/2011 (ASSESSMENT YEAR 2007 - 08) CHITA RANJAN SWAIN, 128, DHARMA VIHAR, BHUBANESWAR PAN: ABXPS 1579 G VERSUS ASST.COMMISSIONER OF INCOME - TAX, CIRCLE 2(1), BHUBANESWAR. (APPELLANT) (RESPONDENT) FOR THE APPELLANT: SHRI SUNIL MISHRA, AR FOR THE RESPONDENT SHRI S.C.MOHANTY, DR ORDER SHRI K.K.GUPTA, ACCOUNTANT MEMBER : THIS APPEAL BY THE ASSESSEE AGITATES THE ORDER OF THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) IN CONFIRMING THE DISALLOWANCE OF EXPENSES ON ADHOC BASIS @15% OF THE CLAIM AMOUNTING TO 4,71,420. 2. THE LEARNED COUNSEL FOR THE ASSESSEE INITIATING HIS ARGUM ENTS SUBMITTED THAT THE ASSESSEE FILED ITS RETURN FOR THE IMPUGNED ASSESSMENT YEAR AT A INCOME OF 25,25,955 WHICH WAS TAKEN UP FOR SCRUTINY U/S.143(3) WHE REI N IT WAS FOUND THAT SOME OF THE BILLS AND VOUCHERS UNDER THE EXPENDITURE HEADS WERE HANDMADE AND N OT PROPERLY DETAILED. THE ASSESSING OFFICER HELD THIS AS LACKING RELIABILITY AND MADE THE DISALLOWANCE OF 15% ON ACCOUNT OF REPAIRS AND MAINTENANCE, TRANSPORTATION CHARGE, CONSUMABLES, SITE EXPENSES, MISC. EXPENSES TOTALING 31,42,811. AGGRIEVED, THE ASSES SEE APPEALED BEFORE THE FIRST APPELLATE AUTHORITY INDICATING THAT NO SPECIFIC ITEM OF HANDMADE VOUCHERS OR VOUCHERS LACKING DETAILS WAS POINTED OUT BY THE ASSESSING OFFICER. THE ASSESSEE MAINTAINS PROPER BOOKS OF ACCOUNT AND KEEPS THE DETAILS IN THE COMPUT ER WHICH COULD BE CONSIDERED AS PER LEDGER COPY OF THE RESPECTIVE EXPENDITURES HEADS SUBMITTED THAT INDICATE THAT THE COMPUTER HAS ALL THE DETAILS OF INDIVIDUAL PAYMENTS AND THEY ARE NOT HANDWRITTEN. HE PRAYED THAT THE BASIS OF CONFIRMATION OF THE DISALLO WANCE BY THE LEARNED CIT(A) WAS ONLY BECAUSE IT WAS NOT POSSIBLE TO REVISIT THE ASSESSMENT AT THE APPELLATE STATE AS NOTED BY HIM IN HIS ORDER. 3. THE LEARNED DR SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 4. WE HAVE HEARD THE RIVAL CONTENTIONS . ALSO WE HAVE PERUSED THE DETAILS SUBMITTED AS AVAILABLE TO THE ASSESSEE WHEREIN THE ASSESSING OFFICER OUGHT TO HAVE INCORPORATE D THE BASIS FOR ADOPTING 15% ADHOC DISALLOWANCE RATE. WE FIND THAT THE EXPENSES HAVE BEEN CLAIMED UNDER THE PROVISIONS OF THE I.T.ACT I TA NO.239/CTK/2011 2 AN D ALL THE EXPENSES RELATE TO DIRECT EXPENSES INCURRED FOR THE PURPOSE OF BUSINESS. THE LEARNED COUNSEL FOR THE ASSESSEE ALSO RELIED ON THE VARIOUS DECISIONS OF THE TRIBUNAL WHEN THE ISSUE OF ADHOC DISALLOWANCE HAS BEEN CONSIDERED AS LACKING BASIS FOR DISAL LOWANCE INSOFAR AS WHEN THE REMAINING PORTION OF THE EXPENSES AS DIRECT EXPENSES ARE ALLOWABLE THERE IS NO BASIS FOR ADOPTING A PARTICULAR RATE FOR DISALLOWANCE. THE LEARNED COUNSEL FOR THE ASSESSEE HAS AGREED THAT PAYMENT OF INCOME TAX IS ON INCOME AND NO T ON CLAIMING REIMBURSEMENT OF EXPENSES INCURRED FROM THE CONTRACTEES WHO ARE MORE FIRM IN REIMBURSING ONLY THOSE EXPENSES WHICH HA VE ACTUALLY BEEN INCURRED. THEREFORE, IT WAS NEVER THE CASE OF THE ASSESSEE TO CLAIM EXPENSES WHICH CAN BE DISALLOWED. FURTHE RMORE, THE LAW PROVIDES FOR ACCEPTING INCOME AT 8% OF THE GROSS RECEIPTS THEREBY ALLOWING EXPENSES TO THE EXTENT OF 92%. IN THIS VIEW OF THE MATTER, WE ARE OF THE CONSIDERED VIEW THAT ADHOC DISALLOWANCE OF 15% IS UNREASONABLE WHICH WE RESTRICT TO 5%. THE D ISALLOWANCE OF EXPENSES THEREFORE IS RESTRICTED TO 5% AND THE A.O. IS DIRECTED TO RECOMPUTE THE INCOME ACCORDINGLY. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. PRONOUNCED IN OPEN COURT ON DT. 5 TH AUGUST, 2011 S D/ - S D/ - (K.S.S.PRASAD RAO) JUDICIAL M EMBER (K.K.GUPTA) ACCOUNTANT MEMBER DATE: 5 TH AUGUST, 2011 H.K.PADHEE, SENIOR PRIVATE SECRETARY. COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT: CHITA RANJAN SWAIN, 128, DHARMA VIHAR,BHUBANESWAR 2. THE RESPONDEN T: ASST.COMMISSIONER OF INCOME - TAX, CIRCLE 2(1), BHUBANESWAR. 3. THE CIT, 4. THE CIT(A), 5. THE DR, CUTTACK 6. GUARD FILE (IN DUPLICATE) TRUE COPY, BY ORDER, SENIOR PRIVATE SECRETARY.