Shri Vipul Y.Mehta, Ahmedabad V. The Income tax Officer(OSD)Range-10, Ahmedabad

ITA 2578/AHD/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 89445 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 6 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-05-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Assessment Year: 2008-2009
• Appeal Filed On: 18-10-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SONIA KUMAR
• Assessee Lawyers: M K PATEL
• Keywords: Onus to prove
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD (BEFORE SHRI ANIL CHATURVEDI, A.M. & SHRI KUL BHARA T, J.M.) I.T. A. NO. 2578/AHD/2011 (ASSESS MENT YEAR: 2008-09) VIPUL Y. MEHTA 1, ANAND SHOPPING CENTRE CG ROAD, NAVRANGPURA, AHMEDABAD V/S INCOME TAX OFFICER (OSD), RANGE-10, AHMEDABAD (APPELLANT) (RESPONDENT) PAN: ACGPM2757C APPELLANT BY : SHRI M.K. PATEL, A.R. RESPONDENT BY : SMT.SONIA KUMAR, SR. D.R. ( )/ ORDER DATE OF HEARING : 07-05-2015 DATE OF PRONOUNCEMENT : 15 -05-2015 PER SHRI ANIL CHATURVEDI,A.M. 1. THIS APPEAL FILED BY THE ASSESSEE IS AGAINST THE OR DER OF CIT(A)-XVI, AHMEDABAD DATED 15.09.2011 FOR A.Y. 2008-09. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON RECORD ARE AS UNDER. 3. ASSESSEE IS AN INDIVIDUAL STATED TO BE ENGAGED IN T HE BUSINESS OF MANUFACTURING & TRADING OF GOLD & DIAMOND ORNAMENTS . ASSESSEE FILED HIS RETURN OF INCOME FOR A.Y. 2008-09 ON 10.10.2008 DECLARING TOTAL INCOME OF RS. 6,42,570/-. SUBSEQUENTLY THE RETURN OF INCOM E WAS REVISED ON ITA NO 2578 /AHD/2011 . A.Y. 2008-0 9 2 04.05.2009 AND THE TOTAL INCOME WAS REVISED TO RS. 2,62,050/-. THE CASE WAS SELECTED FOR SCRUTINY AND THEREAFTER THE ASSESSMENT WAS FRAMED UNDER SECTION 143(3) VIDE ORDER DATED 27.12.2010 AND THE TOTAL IN COME WAS DETERMINED AT RS. 7,27,870/-. AGGRIEVED BY THE ORDER OF A.O., AS SESSEE CARRIED THE MATTER BEFORE LD. CIT(A) WHO VIDE ORDER DATED 15.09.2011 G RANTED PARTIAL RELIEF TO THE ASSESSEE. AGGRIEVED BY THE AFORESAID ORDER OF L D. CIT(A), ASSESSEE IS NOW IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWIN G GROUND;- 1. THE LD. CIT(A) ERRED IN LAW AND ON FACTS TO UPHOLD THE DISALLOWANCE OF RS. 2,88,327/- BEING 20% OF COLD DRINK EXP., CONVEYANCE EXP., PETR OL EXP., SHOP EXP., STAFF WELFARE EXP., AND TRAVELLING EXPENSES. 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, A.O NO TICED THAT ASSESSEE HAS INCURRED VARIOUS EXPENSES LIKE STAFF WELFARE, TELEP HONE, TRAVELLING ETC, AGGREGATING TO RS. 14,14,642/-, THE DETAILS OF WHIC H ARE LISTED AT PAGE 2 OF THE ASSESSMENT ORDER . HE WAS OF THE VIEW THAT THE EXPE NSES HAVE CERTAIN ELEMENTS OF PERSONAL EXPENDITURE AND ON ACCOUNT OF FAILURE OF THE ASSESSEE TO SUBMIT THE NECESSARY BILLS AND VOUCHERS, A.O CON SIDERED 20% OF SUCH EXPENSES AMOUNTING TO RS. 2,88,327/- TO BE A PERSON AL IN NATURE AND DISALLOWED THE SAME. AGGRIEVED BY THE ORDER OF A.O. , ASSESSEE CARRIED THE MATTER BEFORE LD. CIT(A) WHO AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE DISMISSED THE GROUND BY HOLDING AS UNDER:- 3.1 I HAVE CAREFULLY CONSIDERED THE SUBMISSION OF T HE APPELLANT AND THE FACTS OF THE CASE. IT WAS THE CLAIM OF THE LD. COUNSEL THAT THE APPELL ANT HAD KEPT COMPLETE RECORD OF THE EXPENSES ALONGWITH VOUCHERS. THE ACCOUNTS OF THE AP PELLANT ARE AUDITED AND THE ASSESSING OFFICER HAD NOT FOUND ANY DEFICIENCY IN T HE BOOKS OF ACCOUNTS; THERE IS NO PROVISION IN THE ACT WHICH SUGGEST THAT NO DISALLOW ANCE CAN BE MADE IN CASE OF AUDITED ACCOUNTS. THE AUDIT OF ACCOUNTS IS NOT THE BLANKET ASSURANCE THAT NO DISALLOWANCE CAN BE MADE DURING ASSESSMENT PROCEEDINGS. IT IS SETTLED L AW THAT IF THE ASSESSEE CLAIMS DEDUCTION OF ANY EXPENSES, THE BURDEN OF PROOF IS O N HIM TO ESTABLISH THAT SUCH EXPENDITURE WAS INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF HIS BUSINESS. RELIANCE IS PLACED ON THE THREE DECISIONS OF THE SUPREME COU RT IN THE CASE OF CIT VS. CALCUTTA AGENCY LTD. 19 ITR 191 (SC), LAKSHMIRATAN COTTON MI LLS CO. LTD. VS. CIT 73 ITR 634 ITA NO 2578 /AHD/2011 . A.Y. 2008-0 9 3 (SC) AND L.H. SUGAR FACTORY & OIL MILLS (P) LTD. VS . CIT 125 ITR 293 (SC). FURTHER, THE HON'BLE SUPREME COURT IN THE CASE OF L.H. SUGAR FAC TORY & OIL MILLS (P.) LTD. V. CIT 125 ITR 293 (SC) HAS HELD THAT WHERE AN ASSESSEE CL AIMS A DEDUCTION THE ONUS IS ON HIM TO BRING ALL MATERIAL FACTS ON RECORD TO SUBSTANTIA TE HIS CLAIM. WHETHER THE APPELLANT HAD KEPT COMPLETE RECORD OF THE EXPENSES ALONGWITH VOUC HERS OR NOT IS NOT THE QUESTION TO BE DECIDED HERE. THE DISALLOWANCE WAS MADE ONLY ON THE GROUND THAT THE BILLS AND VOUCHERS WERE NOT PRODUCED BEFORE THE ASSESSING OFFICER INSP ITE OF SPECIFIC REQUEST. THE LD. COUNSEL COULD NOT ABLE TO EXPLAIN THE REASONS OF NO T PRODUCING THE BILLS AND VOUCHERS BEFORE THE ASSESSING OFFICER. IN ABSENCE OF THE PRO DUCTION OF BILLS AND VOUCHERS, THE CLAIM OF THE EXPENSES WAS NOT SUBJECT TO VERIFICATION BY THE ASSESSING OFFICER. THE ASSESSING OFFICER WAS THUS JUSTIFIED IN DISALLOWING PART OF T HE EXPENSES CLAIMED BECAUSE HE HAD NO OTHER OPTION WHEN THE ASSESSEE WAS NOT RESPONDING T O THE SPECIFIC REQUEST OF PRODUCTION OF BILLS AND VOUCHERS. THE DISALLOWANCE SO MADE FOR RS. 2,88,327/- WAS IN ORDER AND THE SAME IS HEREBY CONFIRMED. THE SECOND GROUND OF APPE AL IS ACCORDINGLY DISMISSED. 5. AGGRIEVED BY THE AFORESAID ORDER OF LD. CIT(A), ASS ESSEE IS NOW IN APPEAL BEFORE US. 6. BEFORE US, LD. A.R. REITERATED THE SUBMISSIONS MADE BEFORE A.O AND LD. CIT(A) AND FURTHER SUBMITTED THAT ASSESSEES BOOKS OF ACCOUNTS ARE AUDITED AND NO DEFICIENCY HAS BEEN FOUND IN THE BOOKS OF AC COUNTS. HE THEREFORE SUBMITTED THAT NO DISALLOWANCE BE MADE IN THE PRESE NT CASE. IN THE ALTERNATE, HE SUBMITTED THAT THE DISALLOWANCE OF 20% MADE BY T HE A.O IS ON A HIGHER SIDE AND PRAYED THAT A REASONABLE DISALLOWANCE, AS DEEMED FIT BY THE TRIBUNAL, BE MADE. LD. D.R. ON THE OTHER HAND SUPPO RTED THE ORDER OF A.O AND LD. CIT(A). 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT A.O WAS OF THE VIEW THAT OF THE VARIOUS E XPENSES INCURRED BY THE ASSESSEE, THERE WAS CERTAIN ELEMENTS OF PERSONAL EX PENDITURE AND THEREFORE DISALLOWED 20% OF THE EXPENSES. IT IS ALSO A FACT T HAT A.O HAS NOTED THAT THE DETAILS OF THE EXPENSES WERE NOT SUBMITTED BY THE A SSESSEE AND THE A.O ON AN ADHOC BASIS DISALLOWED 20% OF EXPENSES BUT AT TH E SAME TIME IT IS ALSO A ITA NO 2578 /AHD/2011 . A.Y. 2008-0 9 4 FACT THAT THE BOOKS OF ACCOUNTS OF THE ASSESSEE ARE AUDITED BY CHARTERED ACCOUNTANT AND NO DEFICIENCY IN THE BOOKS OF ACCOUN TS HAS BEEN FOUND BY THE A.O. CONSIDERING THE TOTALITY OF THE FACTS INCL UDING THE NATURE OF BUSINESS OF THE ASSESSEE, WE ARE OF THE VIEW THAT THE END OF JUSTICE SHALL BE MET IF DISALLOWANCE IF RESTRICTED AT 10% OF EXPENSES AS AG AINST 20% MADE BY A.O. WE THUS DIRECT ACCORDINGLY. IN THE RESULT, THIS GRO UND OF ASSESSEE IS PARTLY ALLOWED. 8. IN THE RESULT, THE APPEAL OF ASSESSEE IS PARTLY ALL OWED. ORDER PRONOUNCED IN OPEN COURT ON 15 - 05 - 2015. SD/- SD/- (KUL BHARAT) (ANIL CHATURVEDI) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD. TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHMEDABAD