SHRI SAJAD PARVEZ SOODAN, SRINAGAR V. INCOME TAX OFFICER WARD-3(3), SRINAGAR

ITA 24/ASR/2018

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 4952 (ITAT-AMRITSAR)
• Duration Of Justice: 4 year(s) 7 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-09-2022
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2013-2014
• Appeal Filed On: 21-01-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: GHANSHAM SHARMA
• Keywords: Gift; Business expenditure; Corroborative evidences
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR BEFORE DR. M. L. MEENA, ACCOUNTANT MEMBER AND SH. ANIKESH BANERJEE, JUDICIAL MEMBER I.T.A. No. 24/Asr/2018 Assessment Year: 2013-14 Sh. Sajad Parvez Soodan, Prop. M/s Jehlum Service Station, 54, Industrial Estate Barzulla, Srinagar [PAN: BESPS 6361B] Vs. Income Tax Officer, Ward-3(3), Srinagar (Appellant) (Respondent) Appellant by : None Respondent by: Sh. Ghansham Sharma, Sr. DR Date of Hearing: 15.09.2022 Date of Pronouncement: 21.09.2022 ORDER Per Dr. M. L. Meena, AM: This appeal has been filed by the assessee against the order dated 27.10.2017 passed by the Ld. Commissioner of Income Tax (Appeals)-2, Jalandhar, in respect of the Assessment Year 2013-14. 2. The assessee has raised the following grounds of appeal: ITA No. 24/Asr/2018 Sajad Parvez Soodan v. ITO 2 “1. The ld. CIT(A) has erred in law and facts by confirming addition of Rs.1,62,728/-(10% of 16,27,279/-) made by the ld. Assessing Officer on account of some expenses. The addition is bad in law and liable to be deleted. 2. The ld. CIT(A) has erred in law and facts by confirming addition of Rs.3,50,000/- made by the ld. Assessing Officer on account of Agriculture Income. The addition is bad in law and liable to be deleted. 3. The appellant reserves the right to amend, alter, add, any grounds of appeal.” 3. None appeared for the assessee. The adjournment application filed by the assessee is rejected for insufficient reasons given by the appellant that he was in the process of collection of information and details which is contrary to the facts on record. It is an old appeal pertains to assessment year 2014-15 and pending for adjudication since Jan., 2018 before the Bench. After hearing the ld. DR, on the issues challenged by appellant being adhoc disallowances of business expenses and agricultural income, we have decided to hear the case and dispose of the appeal in the interest of the justice. 4. The learned CIT appeal has confirmed the ad hoc addition by observing vide paragraph 5.3 to 5.5 as under: “5.3. I have gone through the assessment order passed by the AO, submissions filed by the appellant and find that a disallowance of Rs. 5,19,822 has been made by the AO on account of various expenses claimed in die profit and loss account. The disallowance has been made ITA No. 24/Asr/2018 Sajad Parvez Soodan v. ITO 3 by the AO on the ground that business expediency of those expenses could not be explained with evidence and some of the expenses are found to be not supported with vouchers. The business promotion expenses claimed by the appellant have been disallowed in full on the ground that no expenses are required to be incurred under this head. 5.4. The appellant has submitted that AO was not justified in making a disallowance of expenses without bringing on record any adverse material or evidence. It is submitted that the expenses are incurred for the purposes of the business. The disallowance made by the AO is stated to be based on estimate basis and is accordingly not called for. 5.5. I have carefully considered the submissions made in this regard and find force in the contentions of the of the AO with regard to the disallowance made on the ground of lack of supporting vouchers for the expenses claimed. I find that appellant has not been able to completely controvert the findings given by the AO on this issue. Accordingly, I hold that it would be just and fair to restrict the disallowance of all the expenses to the extent of 10% of the expenses claimed and debited in the P&L account except for the disallowance of Rs.18,308/- made by the AO out of bank interest and charges which is confirmed in full.” 5. The Ld. Addl. CIT(DR) stands by the impugned order. 6. Having heard the learned additional CIT DR, perused the material on record, we find that the AO made disallowances on account of various expenses claimed in the profit and loss account, on the ground of business expediency of those expenses could not be explained with evidence and some of the expenses are not supported with vouchers. The ld. CIT (A) merely stated that appellant has not been able to completely controvert the findings given by the AO on this issue and accordingly, he holds that it ITA No. 24/Asr/2018 Sajad Parvez Soodan v. ITO 4 would be just and fair to restrict the disallowance of all the expenses to the extent of 10% of the expenses claimed and debited in the P&L account. 6.1 It is evident from the record that the A.O. has worked out the disallowance referring the previous history of the case without pin pointing any specific instances of expenditure to disallow them on the basis of self- made vouchers or gifts etc. The appellant rightly contended before the Ld. CIT(A) that that AO was not justified in making a disallowance of expenses without bringing on record any adverse material or evidence. In our view, the disallowance made by the AO, on estimate basis without pin pointing any specific instances of expenditure to disallow them on the basis of self made and being purely on ad hoc basis is not tenable in the eyes of the law. Similar view is held by Delhi Tribunal in the appellant's own case vide order dated 28.11.2008 in ITA No. 4393/Del/2007, in case of CIT Vs. M/s SSP Pvt. Ltd., Faridabad, assessment year 2004-05 on identical facts in para 5 has deleted such disallowance by following its own order dated 31.5.2007 in ITA No. 2051/Del/05 for the assessment year 2001-02. The decision of Tribunal is affirmed by Hon’ble Panjab and Haryana High Court in ITA No. 535 of 2010 vide its Judgement dated 20.07.2011 ITA No. 24/Asr/2018 Sajad Parvez Soodan v. ITO 5 6.2 Accordingly, the addition of Rs.1,62,728/- (10% of 16,27,279/-) of some expenses, confirmed by the Ld. CIT(A) is perverse to the facts of the case and same is deleted. 7. Next issue pertains to confirming addition of Rs.3,50,000/- made by the ld. Assessing Officer on account of Agriculture Income. 7.1 The learned CIT appeal has confirmed the addition on account of Agriculture Income by observing vide paragraph 6.2 to 6.5 as under: “6.2. The appellant has submitted as under: The ld. Assessing Officer has erred in law and facts by treating agriculture income of Rs. 6.50,000/- as non agriculture income. The appellant is a land lord regularly deriving agriculture income out of the land which he owns and the produce he produces for their own consumption and sale like Rice and wood. The assessee for the assessment year 2014-15 has also reflected agriculture income in his return of income but has been allowed by the Assessing Officer without casting any doubt. The addition is bad in law and therefore liable to be deleted. 6.3. I have gone through the assessment order passed by the. AO, submissions filed by the appellant and find that AO has treated the agricultural income of Rs. 6,50,000 declared by the appellant as income from other sources. During the course of assessment proceedings, it was found by the AO that agricultural income of Rs. 6,50,000 has been declared in the return of income. The appellant was asked to produce supporting evidence in the form of ownership of land, contract for cultivation, yield certificate of land etc. In the absence of any evidence being filed by the appellant, the agricultural income declared was stated as income from other sources. ITA No. 24/Asr/2018 Sajad Parvez Soodan v. ITO 6 6.4. The appellant has submitted in the course of present proceedings that agricultural income has been regularly declared and has also been accepted by the AO. The appellant has filed a copy of the order, wherein the agricultural income declared has been accepted by the AO. 6.5. I have carefully considered the material placed on record and find force in the contentions of the appellant as agricultural income of Rs. 3,50,000 has been declared and duly accepted by the AO. I have gone through a copy of the order passed u/s 143(3) of the IT Act by the AO for A.Y 2014-15, dated 31.12.2016 and find that agricultural income of Rs. 3,50,000 has been accepted in this year. Accordingly, I hold that it would be just and fair to treat the agricultural income at Rs. 3 lakh for the year under consideration and balance amount of Rs. 3,50,000 will be treated as income from other sources. Therefore, addition of Rs. 3,50,000 out of the total addition of Rs. 650,000 made by the AO on account of income from other sources is confirmed.” 7.2 Having heard the learned DR on the issue of agricultural income, we find that AO has treated the agricultural income of Rs. 6,50,000 declared by the appellant as income from other sources as declared in the return of income. The appellant was required to produce supporting evidence in the form of ownership of land, contract for cultivation, yield certificate of land etc., however, in the absence of any evidence being filed by the appellant, the AO has treated the agricultural income declared as income from other sources. The appellant has submitted before the learned CIT appeal that agricultural income has been regularly declared and has also been accepted by the AO with the support of a copy of the assessment order for assessment year 2014 – 15, wherein the agricultural income declared at ITA No. 24/Asr/2018 Sajad Parvez Soodan v. ITO 7 Rs. 3,50,000/- has been accepted by the AO. The learned CIT appeal, after going through the assessment order passed under section 143(3) of the act in respect of succeeding assessment of 2014-15 dated 31.12.2016 and find that agricultural income of Rs. 3,50,000 has been accepted in that year, held that it would be just and fair to treat the agricultural income at Rs. 3 lakh for the year under consideration and balance amount of Rs. 3,50,000 would be treated as income from other sources. Accordingly, addition of Rs. 3,50,000 made out of the total addition of unexplained agricultural income of Rs. 6,50,000 made by the AO on account of income from other sources was confirmed. Since the assessee has not filed any documentary evidence in compliance to the queries raised by the AO in support of the agricultural income claimed during the assessment year under consideration. The appellant assessee has failed to furnish any documentary evidence in support of its claim of agriculture income by way of ownership document of size of agricultural land holding, details of expenses incurred on carrying out cultivation activities, nature of agriculture activities, contract of agricultural lands given on lease if any and bills of agriculture produce either before the learned CIT appeal or before us. Therefore, we find no infirmity or perversity on the facts, in the observation and finding of the learned CIT appeal in treating the Rs.3,50,000/- as ITA No. 24/Asr/2018 Sajad Parvez Soodan v. ITO 8 unexplained agricultural income under the head income from other sources. 7.3 In view of the above discussion, we find no merit and substance in the contention of the appellant assessee regarding addition of Rs. 3,50,000/- on account of unexplained agricultural income under the head income from other sources. Accordingly, the order of the CIT appeal confirming the addition of Rupees Rs.3,50,000 on account of income from other sources is hereby sustained. 8. In the backdrop of the aforesaid discussion, the appeal of the assessee is disposed of in the terms indicated as above. Order pronounced in the open court on 21.09.2022 Sd/- Sd/- (Anikesh Banerjee) (Dr. M. L. Meena) Judicial Member Accountant Member *GP/Sr/PS* Copy of the order forwarded to: (1) The Appellant: (2) The Respondent: (3) The CIT(Appeals) (4) The CIT concerned (5) The Sr. DR, I.T.A.T True Copy By Order