Chhote Prasad, Asansol V. I.T.O.-Ward-2(3), Asansol, Asansol

ITA 2390/KOL/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 4799 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 7 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-05-2016
• Appeal Filed By: Assessee
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 23-09-2013
• Court: TRIBUNAL
• Department Lawyers: MD GHAYAS UDDIN ANSARI
• Assessee Lawyers: VISHAL SHAW
• Keywords: Depreciation; Business expenditure
• Section: 143(3); 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: KOL KATA [BEFORE SHRI N. V. VASUDEVAN, JM & SHRI M. BALAGAN ESH, AM] I.T.A NO.2390/KOL/2013 ASSESSMENT YEAR: 2009-10 CHHOTE PRASAD (PAN: AIUPP8016B) VS. INCOME-TAX OFF ICER, WD-2(3), ASANSOL ( APPELLANT ) ( RESPONDENT ) DATE OF HEARING: 09.05.2016 DATE OF PRONOUNCEMENT: 20.05.2016 FOR THE APPELLANT: SHRI VISHAL SHAW, ADVOCATE FOR THE RESPONDENT: MD. GHAYAS UDDIN ANSARI, JCI T, SR. DR ORDER PER SHRI M. BALAGANESH, AM: THIS APPEAL BY ASSESSEE IS ARISING OUT OF ORDER OF CIT(A)-ASANSOL VIDE APPEAL NO. 265/CIT(A)/ASL/W-2(3)/ASL/11-12 DATED 20.08.201 3. ASSESSMENT WAS FRAMED BY ITO, WARD-2(3), ASANSOL U/S. 143(3) OF THE INCOME-T AX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) FOR ASSESSMENT YEAR 2009-10 VIDE H IS ORDER DATED 28.11.2011. 2. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS IN RES PECT OF FIRST ISSUE: 1. THAT THE LD CIT (APPEAL) ERRED IN LAW AND ALSO IN FACTS BY UPHOLDING THE ADDITION OF RS. 1,83,088/- ON ACCOUNT OF UNRECONCILED TRANSACTI ON (PURCHASES) MADE FROM M/S UPLINE TRAVELS PVT. LTD. 2. THE LD CIT (APPEAL) ERRED IN LAW AND ALSO IN FAC TS BY NOT CONSIDERING THE ASSESSEE'S SUBMISSION THAT INFLATED PURCHASES (UNRECONCILED PO RTION) INCLUDED RS 1,15,599/ - FOR OWN CONSUMPTION, WHICH WAS NOT DEBITED TO THE P /L ACCO UNT, HENCE THE ADDITION TO THAT EXTENT IS UNJUSTIFIED. 3. THE LD CIT (APPEAL) ERRED IN LAW AND ALSO IN FAC TS BY NOT CONSIDERING THE ASSESSEE'S SUBMISSION THAT INFLATED PURCHASES (UNRECONCILED PO RTION) WAS ONLY TO THE EXTENT OF RS. 67,489/- AGAINST WHICH GROSS PROFIT @ 9.42 % WHICH WORKS OUT RS. 6,357/- WAS LIABLE TO BE ADDED AND NOT RS. 1,83,088/-. 4. THAT THE LD CIT(A) ERRED IN LAW AND ALSO IN FACT BY HOLDING THAT PROVISION OF SECTION 145(3) WAS NOT REQUIRED TO BE INVOKED, THOUGH THE A DDITION TOWARDS TRADING ACCOUNT HAS BEEN MADE. THIS OBSERVATION OF LD. CIT (A) IS CONTR ARY TO THE HON'BLE SUPREME COURT DECISION IN SARGAM TALKIES V / S CIT (2010) 328 ITR 513 SC AND KOLKATA IT AT DECISION IN THE CASE OF ITO V / S PRANAV PRAKASH DUTTA ITR 1 492/KOL/2011 AY 2007-08. 3. THE FIRST ISSUE TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER ADDITION OF RS.1,83,088/- TOWARDS DIFFERENCE IN BALANCE IN THE ACCOUNT OF UPLINE TRAVELS PVT. LTD. (IN SHORT UTPL) COULD BE MADE IN THE FACTS AND CIRC UMSTANCES OF THE CASE. 2 ITA NO.2390/K/2013 CHHOTE PRASAD. AY 2009-10 4. BRIEF FACTS OF THIS ISSUE ARE THAT THE ASSESSEE RUNS TRAVEL AGENCY UNDER THE NAME AND STYLE OF M/S. SHIVAM TOURS & TRAVELS. DURING T HE COURSE OF HEARING, THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE PRODUCED AUDIT REPOR T IN FORM 3CB AND 3CD DATED 28.09.2009 TOGETHER WITH ITS ANNEXURE AND SUPPORTIN G DOCUMENTS AS REQUISITIONED BY THE LD. AO. THE LD. AO OBTAINED INFORMATION U/S. 133(6) OF THE ACT FROM UTPL FROM WHOM ASSESSEE PURCHASED AIR TICKETS. THE LD. AO FO UND DIFFERENCE IN CLOSING BALANCE AND PURCHASES MADE FROM THE UTPL BY COMPARING THE T RANSACTIONS WITH LEDGER ACCOUNT OF THE SAID PARTY AS PER INFORMATION OBTAINED U/S. 133(6) OF THE ACT. ACCORDING TO AO, THERE IS A DIFFERENCE OF RS.1,83,088/- IN TOTAL TRA NSACTIONS DURING THE YEAR. BUT ACCORDING TO ASSESSEE, THE DIFFERENCE IN CLOSING BALANCE IN T HE SAID PARTY ACCOUNT WAS ONLY RS.4,972/-. THE ASSESSEE FILED VARIOUS EXPLANATION S IN THIS REGARD. THE LD. AO DID NOT AGREE WITH THE EXPLANATION AND PROCEEDED TO ADD RS. 1,83,088/- IN THE ASSESSMENT, WHICH WAS UPHELD BY THE LD. CIT(A). WE FIND THAT THE ASSE SSEE HAS FILED EXPLANATION THAT DIFFERENCE IN BALANCE IS ONLY RS.4,972/-. THE LD. AR ALSO ARGUED THAT DIFFERENCE IN PURCHASE DURING THE YEAR IS ONLY RS.67,489/- AND AP PLYING GP @ 9.42% ON THE SAME, THE ADDITION, IF ANY, WOULD HAVE TO BE RESTRICTED ONLY TO RS.6,358/- (RS.67,489 X 9.42%). IT WAS ARGUED BY THE LD. AR THAT THE LD. AO HAS NOT RE JECTED THE BOOKS OF ACCOUNT PRODUCED BY THE ASSESSEE. IN FACT, THE DIFFERENCE IN CLOSING BALANCE IN THE ACCOUNT OF ASSESSEE VIS--VIS UTPL OCCURRED DUE TO DIFFERENT M ETHOD OF ACCOUNTING APPLIED BY UTPL. THE LD. DR VEHEMENTLY SUPPORTED THE ORDER OF THE AO. WE FEEL THAT , IN THE FACTS AND CIRCUMSTANCES OF THE CASE, TO MEET THE EN DS OF JUSTICE, THIS ISSUE REQUIRES FRESH EXAMINATION BY LD. AO. HENCE, THE ISSUE IS SET ASI DE TO HIS FILE TO DECIDE THE SAME AFRESH IN ACCORDANCE WITH LAW. THE ASSESSEE IS AT LIBERTY TO PRODUCE FRESH EVIDENCE AND RECONCILIATION STATEMENT IN SUPPORT OF HIS CONTENTI ON. GROUND NOS. 1 TO 4 BY THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. 5. THE NEXT ISSUE TO BE DECIDED IN THIS APPEAL IS A S TO WHETHER THE LD. CIT(A) IS JUSTIFIED IN UPHOLDING THE DISALLOWANCE OF RS.24,25 0/- ON CAR INSURANCE AND OF RS.29,660/- ON INTEREST ON CAR LOAN IN THE FACTS AN D CIRCUMSTANCES OF THE CASE. 6. THE LD. AO OBSERVED THAT THE ASSESSEE HAS DEBITE D THE FOLLOWING EXPENSES IN HIS P&L ACCOUNT: (I) CAR INSURANCE RS.24,250/- 3 ITA NO.2390/K/2013 CHHOTE PRASAD. AY 2009-10 (II) INTEREST ON CAR LOAN RS.29,660/- (III) DEPRECIATION RS.26,620/- RS.80,800/- THE LD. AO OBSERVED THAT THE ASSESSEE PURCHASED A N EW SCORPIO CAR ON 02.04.2008 OUT OF VEHICLE LOAN FROM AXIS BANK. THE ASSESSEE DID N OT CLAIM ANY DEPRECIATION IN RESPECT OF THIS NEW CAR. ACCORDINGLY, THE AO CONCLUDED THA T THE SAID CAR WAS NOT USED FOR BUSINESS PURPOSES AND DISALLOWED RS.80,800/- IN THE ASSESSMENT. BEFORE LD. CIT(A), THE ASSESSEE STATED THAT HE HAD BORNE THE FULL EXPE NSES FOR RUNNING THE VEHICLE OUT OF PERSONAL WITHDRAWALS OF HIS WIFE FROM HER AXIS BANK ACCOUNT, ASANSOL. IT WAS ARGUED THAT THE FACT OF NOT DEBITING THE RUNNING EXPENSES IN THE P&L ACCOUNT CANNOT BE BASIS OF DISALLOWANCE OF CAR INSURANCE AND INTEREST ON CAR L OAN. THE LD. CIT(A) OBSERVED THAT ASSESSEE HAD CLAIMED DEPRECIATION ONLY IN RESPECT O F OLD CAR AMOUNTING TO RS.26,620/- AND ACCORDINGLY, GRANTED RELIEF FOR THE SAME AND UP HELD THE ADDITION MADE TOWARDS CAR INSURANCE AND INTEREST ON CAR LOAN. AGGRIEVED, ASS ESSEE IS IN APPEAL BEFORE US ON THE FOLLOWING GROUND NO. 5: 5. THAT LD. CIT(A) ERRED IN LAW AND ALSO IN FACTS BY UPHOLDING THE DISALLOWANCE OF RS.24,250/- S CAR INSURANCE AND RS.29,660/- AS I NTEREST ON CAR LOAN AGAINST THE NEW SCORPIO PURCHASED DURING THE YEAR, WHICH WAS US ED FOR BUSINESS PURPOSES. 7. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE ASSESSEE HAD NOT FURNISHED ANY EVI DENCE TO SUBSTANTIATE THAT NEW SCORPIO CAR WAS INDEED USED ONLY FOR THE BUSINESS P URPOSES OF THE ASSESSEE AND ACCORDINGLY, THE EXPENDITURE INCURRED THEREON TOWAR DS THAT CAR IN THE FORM OF CAR INSURANCE AND INTEREST ON CAR LOAN CANNOT BE ALLOWE D AS BUSINESS EXPENDITURE. HENCE, THE DISALLOWANCE MADE BY THE LD. CIT(A) IS HEREBY C ONFIRMED. GROUND NO. 5 OF ASSESSEES APPEAL IS DISMISSED. 8. IN THE RESULT, APPEAL OF ASSESSEE IS PARTLY ALLO WED FOR STATISTICAL PURPOSES. 9. ORDER IS PRONOUNCED IN THE OPEN COURT ON 20.05.2 016 SD/- SD/- (N. V. VASUDEVAN) (M. BALAGANESH) JUDICIAL MEMBER ACCOUNTAN T MEMBER DATED : 20TH MAY, 2016 4 ITA NO.2390/K/2013 CHHOTE PRASAD. AY 2009-10 JD.(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1 . APPELLANT SHRI CHHOTE PRASAD, SITARAM BHAWAN KAL LA C.H, PIN- 713340, P.O. ASANSOL, DIST. BURDWAN. 2 RESPONDENT ITO, WARD-2(3), ASANSOL 3 . THE CIT(A), ASANSOL 4. 5. CIT , ASANSOL DR, KOLKATA BENCHES, KOLKATA / TRUE COPY, BY ORDER, ASSTT. REGISTRAR .