ACIT - 17(2), MUMBAI V. SMT. REKHA ANIL ASHAR, MUMBAI

ITA 2569/MUM/2013

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 2007 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 8 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-12-2015
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 31-08-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 04-04-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A K KARDA M
• Assessee Lawyers: REEPAL G TRALSHAWALA
• Keywords: Opportunity of being heard; Additional evidence

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI . . , , BEFORE S/SHRI B.R.BASKARAN, ACCOUNTANT MEMBER AND SHRI SANDEEP GOSAIN, J UDICIAL MEMBER ./ I.T.A. NO. 2212 /MUM/ 2013 ( / ASSESSMENT YEAR : 2009 - 10 ) SMT. REKHA ASHAR, C/S A C JHAVERI AND CO.,(CA) OFF, NO.10 1 ST FLOOR, DEVKARAN NIWAS, 283, SAMUEL STREET, MUMBAI - 400003 / VS. ADDL. COMMISSION ER OF INCOME TAX , RANGE 17(2), PIRAMAL CHAMBERS, LALBAUG, MUMBAI. ./ PAN : ( / APPELLANT ) .. ( / RESPONDENT ) ./ I.T.A. NO. 2569/MUM/2013 ( / ASSESSMENT YEAR : 2009 - 10 ) ADDL. C OMMISSIONER OF INCOME TAX , RANGE 17(2), PIRAMAL CHAMBERS, LALBAUG, MUMBAI. / VS. REKHA ASHAR, C/S A C JHAVERI AND CO.,(CA) OFF, NO.10 1 ST FLOOR, DEVKARAN NIWAS, 283, SAMUEL STREET, MUMBAI - 400003 ./ PAN : ( / APP ELLANT ) .. ( / RESPONDENT ) ./ ./PAN. : ADJPA4702B / ASSESSEE BY : REEPAL G TRALSHAWALA / REVENUE BY : SHRI A K KARDAM / DATE OF HEARING : 15 .12. 2015 / DATE OF PRONOUNCEMENT : 15. 12. 2015 ITA NO. 2212 / MUM/ 2013 AND ITA 2569/M/13 2 O R D E R PER B.R.BASKARAN,AM : THESE CROSS - APPEALS ARE DIRECTED AGAINST THE ORDER DATED 15.1.2013 PASSED BY THE LD. CIT(A) - 29, MUMBAI AND THEY RELATES TO THE ASSESSME NT YEAR 2009 - 10. 2. THE ASSESSEE IS A PROPRIETOR OF M/S ACID INDIA (MUMBAI) , WHICH IS ENGAGED IN THE BUSINESS OF T RADING IN CHEMICALS , INDUSTRIAL INPUT , PHARMACEUTICALS ETC . THE ASSESSMENT WAS COMPLETED BY THE AO BY MAKING VARIOUS ADDITIONS AND HENCE , T HE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD.CIT(A) AND THE SAME WAS ALLOWED PARTLY. AGGRIEVED BY THE ORDER OF LD. CIT(A), BOTH THE PARTIES HAVE FILED THESE APPEALS BEFORE US. 3. WE SHALL NOW TAKE UP THE APP EAL FILED BY THE ASSESSEE FIRST, WHEREIN THE ASSESSEE URGED FOLLOWING TWO ISSUES: A) DISALLOWANCE OF COMMISSION EXPENSES; AND B) ADHOC DISALLOWANCE OF OTHER EXPENSES. 4. THE LD.AR SUBMITTED THAT THE AO HAD MADE AN IDENTICAL DISALLOWANCE OF COMMISSION EXPENSES IN THE ASSESSMENT YEAR 2008 - 09 AND TH E SAME WAS CONFIRMED BY THE LD.CIT(A) IN THAT YEAR . BEFORE THE TRIBUNAL, THE ASSESSEE FILED CERTAIN ADDITIONAL EVIDENCES AND HENCE, THE TRIBUNAL SET ASIDE THE ISSUE RELATING TO COMMISSION TO THE FILE OF THE AO. THE LD. COUNSEL SUBMITTED THAT THE ADDITIONA L EVIDENCE S FILED IN AY - 2008 - 09 HAVE ALSO BEEN FILED AS ADDITIONAL EVIDENCES IN THIS YEAR ALSO. THE LD. COUNSEL SUBMITTED THAT THE SAID EVIDENCES WERE COLLECTED BY THE ASSESSEE AFTER THE DATE OF PASSING OF THE ORDER BY THE LD. CIT(A) AND ACCORDINGLY SUBMI TTED THAT THEY COULD NOT BE FILED BEFORE THE TAX AUTHORITIES. ACCORDINGLY, HE ITA NO. 2212 / MUM/ 2013 AND ITA 2569/M/13 3 PRAYED THAT THE ADDITIONAL EVIDENCES MAY BE ADMITTED AND THE MATTER MAY BE RESTORED BACK TO THE FILE OF THE AO FOR EXAMINING THIS ISSUE AFRESH. 5. THE LD. DR DID NOT OBJECT TO THE SAME. ACCORDINGLY, WE ADMIT THE ADDITIONAL EVIDENCES FILED BY THE ASSESSEE AND RESTORE THE MATTER RELATING TO COMMISSION EXPENSE TO THE FILE OF THE AO WITH A DIRECTION TO EXAMINE THE SAME AFRESH BY DULY CONSIDERING THE ADDITIONAL EVIDENCES. 6. THE NEXT ISSUE URGED BY THE ASSESSEE RELATES TO ADHOC DISALLOWANCE OF 20% MADE ON ACCOUNT OF TELEPHONE, MOTOR CAR AND TRAVELLING EXPENSES ON ACCOUNT OF P ERSONAL EXPENSES. THE LD.CIT(A) RESTRICTED THE SAME TO 10%. STILL AGGRIEVED, THE ASSESSEE IS IN APPEAL BEF ORE US. 7. WE HAVE HEARD THE PARTIES AND PERUSED THE RECORD ON THIS ISSUE. WE ARE OF THE VIEW THAT THE DISALLOWANCE OF 10% MADE OUT OF TELEPHONE, MOTOR CAR AND TRAVELLING EXPENSES IS REASONABLE , SINCE INVOLVEMENT OF PERSONAL ELEMENT THEREIN CANNOT BE ALTO GETHER RULED OUT. A CCORDINGLY WE CONFIRM THE ORDER OF LD.CIT(A) ON THIS ISSUE. 8. WE SHALL NOW TAKE UP THE APPEAL FILED BY THE REVENUE. THE FIRST ISSUE RELATES TO DELETION OF DISALLOWANCE OF UNAPPROVED PURCHASE EXPENSES. THE LD. DR SUBMITTED THAT THE LD . CIT(A) HAS GRANTED RELIEF BY CONSIDERING CERTAIN ADDITIONAL EVIDENCES WITHOUT CONFRONTING THE SAME WITH THE AO AND THE SAID ACTION OF THE LD.CIT(A) IS IN VIOLATION OF RULE 46A OF THE INCOME TAX RULES, 1962 . A CCORDINGLY HE PRAYED THAT THE AO SHOULD BE P ROVIDED AN OPPORTUNITY TO EXAMINE THE ADDITIONAL EVIDENCES FILED BY THE ASSESSEE. 9 . ON THE CONTRARY, THE LD. AR SUBMITTED THAT THE LD.CIT(A) HAS CONSIDERED THE CONFIRMATION LETTERS OBTAINED FROM THE SUPPLIERS AND ITA NO. 2212 / MUM/ 2013 AND ITA 2569/M/13 4 GRANTED RELIEF TO THE ASSESSEE. HE FURTH ER SUBMITTED THAT THE SAID CONFIRMATION LETTERS WERE ALSO FILED BEFORE THE AO BUT THE AO DID NOT CONSIDER AT THE TIME OF FINALIZATION OF THE ASSESSMENT ORDER. WHEN A SPECIFIC QUERY WAS PUT FORTH TO THE AR AS TO WHETHER THE COPY OF COVERING LETTER ENCLOSI NG CONFIRMATION LETTERS ARE AVAILABLE ON RECORD OR WHETHER THERE IS ANY PROOF TO SHOW THAT THEY HAVE BEEN FILED BEFORE THE AO , T HE LD. AR SUBMITTED THAT THESE LETTERS WERE PLACED BEFORE THE AO ACROSS THE TABLE AND HENCE HE DOES NOT POSSESS ANY PROOF THE REOF. IN THE ABSENCE OF PROOF TO SHOW THAT THE CONFIRMATION LETTERS WERE FILED BEFORE THE AO , WE AGREE WITH THE CONTENTION OF THE LD. DR THAT THIS ISSUE REQUIRES EXAMINATION AT THE END OF THE AO. ACCORDINGLY, WE SET ASIDE THE ORDER OF LD. CIT(A) ON THIS ISSUE AND RESTORE THE SAME TO THE FILE OF THE AO FOR FRESH CONSIDERATION BY ALLOWING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 1 0 . THE NEXT ISSUE RELATES TO THE ADHOC DISALLOWANCES MADE OUT OF C ERTAIN EXPENSES. THE AO , HAVING NOTICED THAT THE ASSESSEE HAS INCURRED MOST OF THE EXPENDITURES BY WAY OF CASH , DISALLOWED 20% THE EXPENSES INCURRED ON VARIOUS HEADS ON THE REASONING THAT THE SAID EXPENSES ARE NOT SUPPORTED BY A PROPER BILLS AND EVIDENCES. THE LD. CIT(A) , HOWEVER, DELETED THE SAME BY HOLDING THAT THE AO HAS NOT POINTED OUT ANY SPECIFIC DISCREPANCY FOR MAKING THE DISALLOWANCE. 1 1 . WE HEARD THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD ON THIS ISSUE. IT IS AN ADMITTED POSITION OF LAW THAT THE RESPONSIBILITY TO PROVE IS PLAC ED UPON THE ASSESSEE AND THE SAID RESPONSIBILITY IS FURTHER ENHANCED THAT THE EXPENSES WERE INCURRED BY WAY OF CASH . THE AO HAS POINTED OUT THAT CERTAIN EXPENSES ARE NOT SUPPORTED BY PROPER BILLS AND EVIDENCES. UNDER THESE SET OF FACTS, WE ARE OF THE VIEW THAT THE POSSIBILITY OF DEFICIENCY IN THE EXPENSES CLAIMED BY THE ASSESSEE CANNOT BE RULED OUT. ITA NO. 2212 / MUM/ 2013 AND ITA 2569/M/13 5 ACCORDINGLY, WE ARE OF THE VIEW THAT THE AO WAS JUSTIFIED IN OBSERVING THAT SOME DISALLOWANCE IS CALLED FOR . HOWEVER, DISALLOWANCE MADE BY THE AO IS AT THE RATE OF 20% APPEARS TO BE ON HIGHER SIDE. ACCORDINGLY, WE MODIFY THE ORDER OF LD.CIT(A) AND DIRECT THE AO TO RESTRICT THE DISALLOWANCE TO 10% OF EXPENSES . 1 2 . IN THE RESULT, BOTH THE APPEALS ARE TREATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORD ER PRONOUNCED IN THE OPEN COURT 15 TH , DEC, 2015 . SD SD ( / SANDEEP GOSAIN ) ( . . / B.R.BASKARAN) /JUDICIAL MEMBER /ACCOUNTANT MEMBER MUMBAI ; DATED .. 15TH , DEC,2015 . . ./ SRL , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - CONCERNED 4. / CIT CONCERNED 5. , , / DR, ITAT, M UMBAI CONCERNED 6. / GUARD FILE. / BY ORDER, TRUE COPY (ASSTT. REGISTRAR) , /ITAT, MUMBAI