Abhijeet Vasant Shende, Pune V. DCIT, Circle-3, Pune

ITA 2538/PUN/2012

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 9474 (ITAT-PUNE)
• Duration Of Justice: 5 year(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-01-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 10-01-2018
• Assessment Year: 2009-2010
• Appeal Filed On: 24-12-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DR VIVEK AGGARWAL
• Keywords: Gift; Depreciation; Principle of natural justice
• Section: 37(1)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE . , , BEFORE SHRI D.KARUNAKARA RAO, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO.2538/PUN/2012 / ASSESSMENT YEAR : 2009-10 ABHIJEET VASANT SHENDE, C/O. MZSK & ASSOCIATES, LEVEL 3, BUSINESS BAY, PLOT NO.84, WELLESLEY ROAD, NEAR RTO, PUNE 411 001 PAN : ANXPS3100K . /APPELLANT VS. DCIT, CIRCLE-3, PUNE . / RESPONDENT / APPELLANT BY : SHRI NEELESH KHANDELWAL / RESPONDENT BY : DR. VIVEK AGGARWAL, CIT-DR / DATE OF HEARING : 10.01.2018 / DATE OF PRONOUNCEMENT: 12.01.2018 / ORDER PER D. KARUNAKARA RAO, AM : THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A)-II, PUNE DATED 17-09-2012 FOR THE ASSESSMENT YEAR 2009-10. 2. THE ONLY GROUND RAISED BY THE ASSESSEE READS AS UNDER : 1. ON FACTS AND CIRCUMSTANCES PREVAILING IN THE CA SE AND AS PER PROVISIONS AND SCHEME OF THE ACT IT BE HELD THAT, T HE DISALLOWANCE/ADDITION OF RS.8,58,935/- THAT OF RS.4 ,26,843/- THAT OF RS.51,39,600/- MADE BY THE AO AND THAT CONFIRMED BY THE IST APPELLATE AUTHORITY IS UNWARRANTED, UNJUSTIFIED CONTRARY TO T HE PROVISIONS OF THE ACT AND FACTS PREVAILING IN THE CASE. IT FURTHER BE HE LD THAT NO DISALLOWANCE/ADDITION IS WARRANTED IN THE CASE OF T HE APPELLANT. THE APPELLANT/DISALLOWANCE SO MADE AND CONFIRMED BY THE ASSESSING AUTHORITY BELOW BE DELETED. THE APPELLANT BE GRANT ED JUST AND PROPER RELIEF IN THIS RESPECT. ITA NO.2538/PUN/2012 ABIJEET VASANT SHENDE 2 3. ELABORATING THE ABOVE GROUND, LD AR FOR THE ASSESSEE STATED THAT THE ABOVE GROUND CONTRIBUTES A COMPOSITE GROUND INVOLVIN G VARIOUS MINOR ISSUES. THE GROSS EFFECT OF ADDITION WORKS OUT TO RS .51,39,600/-. HE ALSO FILED A CHART DETAILING VARIOUS ISSUES FOR ADJUDICATION BEFORE US FOR THE CONVENIENCE OF THE BENCH. THE ISSUE-WISE ADJUDIC ATION IS GIVEN IN THE FOLLOWING PARAGRAPHS. 4. FIRST ISSUE RELATES TO DEPRECIATION, REPAIRS EXPENSES AN D INSURANCE OF VEHICLES CLAIMED AS DEDUCTION FROM REMUNERATIO N RECEIVED FROM THE FIRM IN WHICH ASSESSEE IS PARTNER WAS DISALLOWED AS NO LOG BOOK WAS MAINTAINED SO AS TO ASCERTAIN THE USE OF VEHICLE FOR BUSINESS PURPOSE. BACKGROUND FACTS WITH REGARD TO THE FIRST ISSUE AS GIVEN IN THE CHART INCLUDES THAT THE ASSESSEE PURCHASED VEHICLES IN T HE NAME OF THE ASSESSEE AND THE GROSS CLAIMS MADE IN THAT REGARD, I.E. DE PRECIATION, REPAIRS, INSURANCE ETC. WORKED OUT TO RS.4,60,486/-. ASSE SSEE CLAIMED THEM AS AN ALLOWABLE DEDUCTION AGAINST THE REMUNERATION RECEIVED FROM THE FIRM. THE ASSESSEE IS A PARTNER IN THE FIRM. AO DISALLOW ED THE SAME AS NO LOG BOOK WAS MAINTAINED TO ASCERTAIN THE USE OF VE HICLE WHOLLY AND EXCLUSIVELY FOR BUSINESS PURPOSE AND NOT FOR PERSONAL USE. IN THIS REGARD, LD. AR FOR THE ASSESSEE SUBMITTED THAT ID ENTICAL CLAIM WAS MADE IN THE CASE OF THE OTHER PARTNER BY NAME SHRI YOGESH RAMESH SHENDE AND THE MATTER TRAVELLED TO THE TRIBUNAL. AN ORDER WAS PASSED VIDE ITA NO.298/PUN/2015 ORDER DATED 20-04-20 17 RESTRICTING THE ADDITION TO ONLY 10% OF SUCH EXPENDITURE. BEFORE US , LD. AR SUBMITTED THAT SIMILAR DIRECTION MAY BE ISSUED BY THE TRIB UNAL IN THE ASSESSEES CASE ALSO CONSIDERING THE SIMILARITY OF THE FAC TS AND COMMONALITY OF THE BUSINESS ACTIVITIES OF PARTNERS OF THE FIRM. ITA NO.2538/PUN/2012 ABIJEET VASANT SHENDE 3 5. ON HEARING BOTH THE SIDES, WE PERUSED THE SAID ORDER OF THE TRIBUNAL IN GENERAL AND CONTENTS OF PARA NO.8 IN PARTICULAR. FOR THE SAKE OF COMPLETENESS OF THIS ORDER, WE PROCEED TO EXTRAC T THE RELEVANT PARA NO.8 AS UNDER : 8. THERE IS NO MERIT IN THE PLEA OF THE ASSESSEE A S THE ELEMENT OF PERSONAL USE OUT OF THE CAR EXPENSES INCURRED CANNOT BE RULED OUT, HOWEVER, THE SAID DISALLOWANCE IS RESTRICTED TO 10% OF THE TOTAL EXPENDITURE UNDER SECTION 37(1) OF THE ACT. 6. NO CONTRARY EVIDENCE IS PLACED BEFORE US THAT THE FACT S ARE NOT IDENTICAL. CONSIDERING THE ABOVE DECISION OF THE TRIBUNAL, W E ARE OF THE OPINION THAT THE AO SHOULD BE DIRECTED TO RESTRICT THE D ISALLOWANCE IN THE LINES OF THE DECISION OF THE TRIBUNAL IN THE CASE OF TH E OTHER PARTNER OF THE FIRM, I.E. SHRI YOGESH RAMESH SHENDE. WE DIRECT ACCO RDINGLY. ACCORDINGLY, THIS ISSUE RAISED BY THE ASSESSEE IS PARTLY ALLOWED. 7. THE SECOND ISSUE RELATES TO CLAIM OF INTEREST PAYMENT PAID TO PARTIES. AO DISALLOWED THE CLAIM FOR WANT OF DIRECT NEXUS OF THE SAME WITH THE BUSINESS ACTIVITY. CIT(A) CONFIRMED THE DISALLOWANCE. BEFORE US, LD. AR FOR THE ASSESSEE SUBMITTED THAT SIMILAR DISALLOWANCE WAS MADE IN THE CASE OF THE OTHER PARTNER S HRI YOGESH RAMESH SHENDE (SUPRA). ACCORDING TO HIM, THE ENTIRE CLAIM WAS ALLOWED BY THE CIT(A). HE FURTHER STATED THAT IN HIS SUBMISSION TH AT THE CIT(A) IN PARA NO.3.7 OF HIS ORDER STATED NEXUS OF INTEREST BEARIN G FUNDS USED FOR PURPOSE OF BUSINESS WAS NOT GIVEN. ACCORDINGLY CHA RT SUBMITTED BEFORE US, IN THE CASE OF SHRI NILESH SHENDE ALSO, THE CIT (A) ALLOWED THE CLAIM OF INTEREST ON THE BASIS OF NEXUS BEING PROVED. THE FUND FLOW STATEMENT WAS PROVIDED TO THE CIT(A) IN THE CASE OF THE ASSESSEE AND HOWEVER, THE SAME SKIPPED ATTENTION OF THE INCOME-TAX A UTHORITIES. IN THIS REGARD, LD. AR FOR THE ASSESSEE DREW OUR ATTENTION TO THE PAGES 13 TO 15 OF THE PAPER BOOK. HE FURTHER SUBMITTED THAT THERE IS NO FINDING OF ITA NO.2538/PUN/2012 ABIJEET VASANT SHENDE 4 FACT WITH REGARD TO THE NEXUS OF FUNDS AND THE BUSINESS USE IN THE PRESENT CASE AND THEREFORE, THIS ISSUE CAN BE REMANDED TO THE FILE OF CIT(A) FOR FRESH ADJUDICATION. 8. ON HEARING BOTH THE SIDES AND CONSIDERING THE ARS S UBMISSIONS, WE ORDER THE CIT(A) TO ADJUDICATE THIS ISSUE AND PASS A SPEAKING ORDER. CIT(A) IS DIRECTED TO EXAMINE OF THE ORDER OF HIS COLLEAGUE I N THE CASES REFERRED TO ABOVE AND THE ORDER OF THE TRIBUNAL IN THE C ASE OF SHRI YOGESH RAMESH SHENDE (SUPRA) WHILE ADJUDICATING THIS ISSUE AFRESH. ACCORDINGLY, THIS ISSUE IS ALLOWED FOR STATISTICAL PURPOSES. 9. THE THIRD ISSUE RELATES TO LOANS TAKEN AGAINST THE DEP OSITS AND INTEREST PAID THEREON WHICH WAS CLAIMED BY THE ASSESSEE AS DEDUCTION U/S.57(1)(III) OUT OF INCOME FROM THE SAID DEPOSITS. THE SAID EXPENDITURE WAS DISALLOWED BY THE AO AS THE ASSESSEE COULD NOT PROV E DIRECT NEXUS BETWEEN INCOME EARNED AND THE EXPENDITURE MADE BY THE ASSESSEE . BEFORE US, LD. AR FOR THE ASSESSEE FAIRLY ADMITTED THAT T HE INTEREST EXPENDITURE INCURRED BY THE ASSESSEE CANNOT BE STRICT LY CALLED WHOLLY AND EXCLUSIVELY FOR EARNING SUCH INTEREST INCOME. THE INTE REST EARNED BY THE ASSESSEE ON THE FIXED DEPOSITS HAS NO CONNECT ION TO THE INTEREST PAID BY THE ASSESSEE. CHRONOLOGICALLY, THE INTEREST EARNE D IS PRIOR AND INTEREST PAID IS LATER IN TIME. THE FACT OF EXISTENCE OF VARIO US DECISIONS IN THIS REGARD WAS ALSO MENTIONED AGAINST THE ASSESSEE. ACCORDINGLY, THIS PART OF THE GROUND IS DECIDED AGAINST THE ASSESSEE. RELYING ON THE ORDER OF THE TRIBUNAL IN THE CASE OF SHRI YOGESH RAMESH SHENDE (SUPRA), LD. AR SUBMITTED IN HIS WRITTEN SUB MISSIONS THAT ALTERNATE CLAIM WAS MADE BEFORE THE AO AND THE CIT (A) FOR PROVIDING THE DEDUCTION UNDER PROFITS AND GAINS FROM BUSIN ESS AND ITA NO.2538/PUN/2012 ABIJEET VASANT SHENDE 5 PROFESSION LOOKED AT THE NEXUS OF FUNDS. HE ALSO DREW OU R ATTENTION TO PAGES 1, 10 AND 13 OF THE PAPER BOOK IN THIS REGARD. CONCEDING TO THE SAME, LD. AR ALTERNATIVELY SUBMITTED TH AT SUCH EXPENDITURE IS ALLOWABLE U/S.28 R.W.S.37 OF THE I.T. ACT. FU RTHER, HE SUBMITTED THAT THIS ASPECT OF CLAIM MAY BE REMANDED TO T HE FILE OF CIT(A) FOR FRESH ADJUDICATION. THE FACT THAT THIS ISSUE WAS RAISED BUT NOT ADJUDICATED BY THE CIT(A) WAS ALSO DEMONSTRATED BY BRINGING OUR ATTENTION TO PARA NO.3.10.1 OF THE ORDER OF CIT(A). 10. ON HEARING BOTH THE SIDES, AS PRAYED BY THE LD. AR F OR THE ASSESSEE, THIS PART OF THE ISSUE IS REMANDED TO THE FILE OF CIT(A) FOR FRESH ADJUDICATION. CIT(A) SHALL GRANT REASONABLE OPPORTUNITY OF B EING HEARD TO THE ASSESSEE IN ACCORDANCE WITH THE SET PRINCIPLES OF NATURAL JUSTICE. ACCORDINGLY, THE ISSUES RAISED (III) AND (IV) BY THE ASSESSEE IN THE CHART ARE ALLOWED FOR STATISTICAL PURPOSES. 11. COMING TO THE LAST ISSUE OF THE CHART RELATING TO UN EXPLAINED CASH DEPOSIT IN BANKS AMOUNTING TO RS.51,39,600/-, LD. AR SUBMITT ED THAT THIS AMOUNT CONSTITUTE PARTLY GIFTS AND PARTLY THE CASH DEPOSITS IN THE BANK ACCOUNTS. IN THE BANK ACCOUNT OF THE ASSESSEE, T HERE ARE BOTH CASH WITHDRAWAL AND CASH DEPOSITS. AO DENIED THE TELESCO PY OF THE CASH WITHDRAWAL AGAINST THE CASH WITHDRAWAL OF BEYOND 7 D AYS OLD. IT IS THE CASE OF THE ASSESSEE THAT THE AO ARTIFICIALLY ALLOWED T HE CASH WITHDRAWALS OF 7 DAYS AND CASH WITHDRAWAL OF BEYOND 7 DAY S WAS ADDED AS UNEXPLAINED CASH DEPOSIT OLD IGNORING THE FACT THAT THE EXISTENCE OF THE TRIBUNAL ORDER IN THE CASE OF ACIT VS. AVISHKAR BUILDER S IN ITA NO.1156/PUN/2008 ORDER DATED 31-10-2012 FOR THE PROPO SITION THAT THE CASH WITHDRAWALS OF 6 MONTHS OLD CAN ALSO BE CONSIDER ED AS THE SOURCE TO EXPLAIN THE CASH DEPOSITS IN THE BANK ACCOUNT S/CAPITAL ITA NO.2538/PUN/2012 ABIJEET VASANT SHENDE 6 ACCOUNT OF THE ASSESSEE WHICH FOUND A WAY INTO THE FIRM OF THE ASSES SEE. FURTHER, HE SUBMITTED THAT THE SAID DECISION OF THE TRIBUN AL DOES NOT EXIST, WHEN THE CIT(A) PASSED THE ORDER ON 17-09-2012. LD. AR SUBMITTED HIS WILLINGNESS TO REVISIT THE CIT(A) FOR FRESH ADJUD ICATION ON THIS LIMITED ISSUE. 12. AFTER HEARING BOTH THE PARTIES AND AS PRAYED BY THE LD. AR FOR THE ASSESSEE, WE ARE OF THE VIEW THAT THIS ISSUE ALSO NEED TO BE REMANDED TO THE FILE OF THE CIT(A) WITH IDENTICAL DIRECTION. CIT(A) SHALL PASS A SPEAKING ORDER IN THE MATTER AFTER HEARING THE ASSESSEE AND AFTER CONSIDERING ALL THE JUDGMENTAL LAW IN THE MATTER. ACCORDING LY, THIS ISSUE RAISED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 13. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWE D FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 12 TH DAY OF JANUARY, 2018. SD/- SD/- (VIKAS AWASTHY) (D. KARUNAKARA RAO) /JUDICIAL MEMBER / ACCOUNTANT MEMBER PUNE; DATED : 12 TH JANUARY, 2018 / COPY OF THE ORDER FORWARDED TO : / BY ORDER, //TRUE COPY// //TRUE COPY// SENIOR PRI VATE SECRETARY , / ITAT, PUNE 1. / THE APPELLANT 2. / THE RESPONDENT 3. THE CIT(A)-II, PUNE 4. CIT-II, PUNE 5. , , B BENCH PUNE; 6. / GUARD FILE.