Sh. Sidharth Goel, Ajmer V. ACIT, Ajmer

ITA 261/JPR/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 5191 (ITAT-JAIPUR)
• Duration Of Justice: 2 year(s) 3 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-07-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 03-04-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R S DANGUR CIT DHK
• Assessee Lawyers: SHUBHASH PORWAL
• Keywords: Tax effect; Commercial expediency; Onus to prove; Reason to believe
• Section: 143(3)

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH HKKXPAN] YS[KK LNL; ,OA JH YFYR DQEKJ] U;KF;D LN L; DS LE{K BEFORE: SHRI BHAGCHAND, AM & SHRI LALIET KUMAR, JM VK;DJ VIHY LA-@ ITA NO. 261/JP/2014 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2010-11 SIDHARTH GOEL, 429-A/XI, VINOD BHAWAN, KUTCHERY ROAD, AJMER. CUKE VS. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-2, AJMER. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: ABFPG 0284 Q VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT VK;DJ VIHY LA-@ ITA NO. 338/JP/2014 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2010-11 ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-2, AJMER. CUKE VS. SIDHARTH GOEL, 429-A/XI, VINOD BHAWAN, KUTCHERY ROAD, AJMER. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: ABFPG 0284 Q VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI SHUBHASH PORWAL (CA) JKTLO DH VKSJ LS@ REVENUE BY : SHRI R.S. DANGUR (ADDL.CIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 29/06/2016 MN?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 04/07/2016 VKNS'K@ ORDER PER: LALIET KUMAR, J.M. THESE ARE THE CROSS APPEALS, ONE BY THE ASSESSEE AN D ANOTHER BY THE REVENUE ARISE AGAINST THE ORDER DATED 28/02/201 4 PASSED BY THE LD ITA 261 & 338/JP/2014_ SIDHARTH GOEL VS ACIT 2 CIT(A), AJMER FOR THE A.Y. 2010-11, WHEREIN THE EFFE CTIVE GROUNDS OF ASSESSEE AS WELL AS REVENUES APPEALS ARE REPRODUCED AS UNDER:- GROUNDS OF ASSESSEES APPEAL:- THAT UNDER THE FACTS AND THE CIRCUMSTANCES OF THE CASE THE LD CIT(A), AJMER HAS ERRED IN CONFIRMING THE: 1 ADDITION OF RS. 79,444.00 FOR DISALLOWANCES OUT O F POWER EXPENSES. (PARA 6 OF PAGE 5 OF CIT(A)S ORDER). 2 ADDITION OF RS. 22,01,740.00 (BEING 50% AD HOC OF THE AMOUNT ADDED BY A.O. RS. 44,03,479.00) BEING ESTIMATION OF RENT FROM CHITRAKOOT LAND. (PARA 8 OF PAGE 9 OF CIT(A)S ORDER). 3. ADDITION OF RS. 30,863.00 FOR DISALLOWANCE OF FOREIGN TOUR EXPENSES BEING OF PERSONAL NATURE. (PARA 12 TO PAGE 19 OF CIT(A)S ORDER). GROUNDS OF REVENUES APPEAL:- IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A), AJMER HAS ERRED IN : 1. RESTRICTING THE ADDITION TO RS. 22,01,740/- AS AGAINST THE ADDITION OF RS. 44,03,479/- MADE BY THE AO ON A/C OF INCOME FROM CHITRAKOOT & PANCHWATI, WITHOUT APPRECIATING THE FACTS OF THE CASE; 2. DELETING THE ADDITION OF RS. 1,30,412/- MADE BY THE AO ON A/C OF PURCHASES, WITHOUT APPRECIATING THE FACTS OF THE CASE; 3. DELETING THE ADDITION OF RS. 27,000/- MADE BY TH E AO ON A/C OF INTEREST ON ADVANCES, WITHOUT APPRECIATING THE FACTS OF THE CASE; ITA 261 & 338/JP/2014_ SIDHARTH GOEL VS ACIT 3 4. DELETING THE ADDITION OF RS. 2,43,800/- MADE BY THE AO ON A/C OF CAPITAL INTRODUCTION, WITHOUT APPRECIATING THE FACTS OF THE CASE. FIRST WE TAKE ASSESSEES APPEAL 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL AND HIS MAIN SOURCE OF INCOME IS RENTAL INCOME AND HE I S ALSO ENGAGED IN RUNNING RESTAURANT UNDER THE NAME AND STYLE M/S MAN GO MASALA. THE ASSESSEE FILED HIS RETURN FOR THE YEAR UNDER CONSID ERATION ON 26/2/2011 DECLARING TOTAL INCOME OF RS. 19,62,030/-. THE CASE WAS SELECTED FOR SCRUTINY ASSESSMENT AND THEREAFTER NOTICES WERE SERV ED ON THE ASSESSEE. IN RESPONSE TO THE NOTICE, THE LD AR OF THE ASSESSE E WAS APPEARED AND SUBMITTED THE RECORD. THE 1 ST GROUND OF THE ASSESSEES APPEAL IS AGAINST CONFIRMING THE ADDITION OF RS. 79,444.00 FOR DISALL OWANCES OUT OF POWER EXPENSES. THE LD ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS CLAIMED POWER EXPENSES OF RS.6,81,341/- AND AFTER CR EDITING THE AMOUNT RECOVERED FROM THE TENANT TO THE EXTENT OF RS. 4,16 ,525/-. A NET EXPENSES OF RS. 2,64,814/- WAS CLAIMED AS POWER EXPEN SES BY THE ASSESSEE. IT IS THE CASE OF THE ASSESSEE THAT THE E LECTRICITY CONNECTIONS WERE IN THE NAME OF SMT. SUDHA GOYAL (MOTHER OF THE ASSESSEE) AND THE ASSESSEE HIMSELF. THE LD ASSESSING OFFICER HAD MADE DISALLOWANCES TO ITA 261 & 338/JP/2014_ SIDHARTH GOEL VS ACIT 4 THE EXTENT OF 30% ON THE TOTAL EXPENSES CLAIMED BY THE ASSESSEE. THE REASONING OF THE LD ASSESSING OFFICER IS AS UNDER:- FROM THE ABOVE DISCUSSION IT IS CLEAR THAT THE ASS ESSEE IS NOT IN A POSITION TO SOLVE QUERY REGARDING APPORTIONMENT OF ELECTRICITY EXPENSES AND IT SEEMS THAT THERE IS NO BASIS OF DIV ISION OF EXPENSES AMONGST THE ASSOCIATE CONCERNS. IT IS MENT IONED THAT BURDEN OF ONUS TO PROVE THE CLAIMS MADE IN FINAL AC COUNTS AND RETURN OF INCOME LIES ON THE ASSESSEE. HE HAS ALSO NOT DISCLOSED THE NAMES OF ASSOCIATE CONCERNS AND THEIR ASSESSMEN T DETAILS. IN VIEW OF THIS, 30% OF EXPENSES OF RS. 2,64,814/- CLAI MED ARE DISALLOWED IN ABSENCE OF SPECIFIC DETAILS CALLED IN RESPECT OF THESE EXPENSES. EXPENSES OF RS. 79,444/- ARE DISALLOWED AN D ADDED BACK TO THE TOTAL INCOME. 3. BEING AGGRIEVED BY THE ORDER OF THE ASSESSING OF FICER, THE ASSESSEE CARRIED THE MATTER BEFORE THE LD CIT(A), WHO HAD CONFIRMED THE ADDITION BY OBSERVING AS UNDER:- I HAVE CONSIDERED THE CONTENTIONS OF THE APPELLANT AS WELL AS ASSESSMENT ORDER. IT IS SEEN THAT THE ASSESSEE HAS SUBMITTED THE COPY OF POWER EXPENSES ACCOUNT OF MANGO MASALA RESTA URANT AS PER WHICH TOTAL EXPENSES OF RS.6,81,339/- HAVE BEEN SHOWN. OUT OF IT, RS.4,16,525 HAVE BEEN CLAIMED TO HAVE BEEN R ECOVERED FROM THE VARIOUS ASSOCIATE CONCERNS OF THE ASSESSEE AND BALANCE AMOUNT OF RS.2,64,814 HAS BEEN CLAIMED AGAINST THE RECEIPTS OF THE RESTAURANT M/S MANGO MASALA. THE ASSESSEE HAS EX PLAINED THAT THE POWER BILLS ARE IN NAME OF SMT. SUDHA GOEL, MOTHER AND ITA 261 & 338/JP/2014_ SIDHARTH GOEL VS ACIT 5 THAT OF ASSESSEE. THE ASSESSEES CLAIM THAT ONLY A S UM OF RS.4.16,525 WAS RECOVERED FROM THE VARIOUS PROPERTIE S LET OUT BY THE ASSESSEE BASED ON SUBMETER READING IN THESE PRE MISES, IS NOT SUPPORTED BY THE ANY EVIDENCE. HOWEVER, NO SUCH EVID ENCE IN SUPPORT OF THE RECOVERY MADE BY THE APPELLANT IS ON RECORD. FURTHER, NO BASIS HAS BEEN GIVEN FOR ALLOCATING THE POWER EXPENSES AMONGST THE VARIOUS PROPERTIES OWNED BY THE ASSESSEE WHICH HAVE BEEN LET OUT FOR VARIOUS PURPOSES. SO, TH E POWER EXPENSES ALLOCATED AGAINST THE RESTAURANT RECEIPTS ARE NOT VERIFIABLE. IN VIEW OF ABOVE DISCUSSIONS AND SUBMISS IONS OF THE APPELLANT, THE ADDITION MADE BY THE AO OF RS.79,440 IS CONFIRMED. 4. NOW THE ASSESSEE IS IN APPEAL BEFORE US. THE LD AR OF THE ASSESSEE HAS SUBMITTED THAT THE PROPERTIES WHERE THE ELECTRIC METERS WERE INSTALLED AND THE POWER WAS CONSUMED BELONGED TO THE FAMILY OF THE ASSESSEE AND THEIR NAMES ARE APPEARING IN THE B ILLS. IT WAS ALSO THE CASE OF THE ASSESSEE THAT SUB-METERS WERE INSTALLED IN THE PREMISES AND BASED ON THE READING RECORDED IN THE SUB-METERS, TH E COST OF ELECTRICITY WAS RECOVERED FROM TENANTS. IT WAS ALSO ADMITTED THAT THE LD ASSESSING OFFICER HAS ACCEPTED THE RENTAL INCOME OF RS. 24,39 ,000/- IN THE BOOKS OF ACCOUNT OF THE ASSESSEE . HOWEVER, HAD WRONGLY DISALL OWED THE AD HOC DISALLOWANCE TO THE EXTENT OF 30%, THEREFORE, HE PRA YED TO DELETE THE ADDITION CONFIRM BY THE LD CIT(A). ITA 261 & 338/JP/2014_ SIDHARTH GOEL VS ACIT 6 5. AT THE OUTSET, THE LD SR.DR HAS SUPPORTED THE OR DERS PASSED BY THE AUTHORITIES BELOW. 6. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. IN OU R VIEW, ONCE THE ASSESSING OFFICER IS ACCEPTING THE RENTAL INCOME OF THE PROPERTIES IN THE ACCOUNTS OF THE ASSESSEE, THE ELECTRICITY CONSUMED IN SUCH RENTAL PROPERTIES CANNOT BE ATTRIBUTABLE TO THE ASSESSEE A ND IF THE ASSESSEE HAS PAID ANY EXPENSES IN RELATION TO THE RENTAL PROPERT IES, THE SAME ARE REQUIRED TO BE ALLOWED. IN VIEW THEREOF, THE DISALLO WANCES MADE BY THE LD ASSESSING OFFICER AND CONFIRMED BY THE LD CIT(A) ARE DIRECTED TO BE DELETED AND THE ASSESSEE IS HELD TO BE ENTITLED TO THE DEDUCTION FOR THE ELECTRICITY CHARGES. ACCORDINGLY, GROUND NO. 1 OF T HE ASSESSEES APPEAL IS ALLOWED. 7. GROUND NO. 2 OF THE ASSESSEES APPEAL IS AGAINST CONFIRMING THE ADDITION OF RS. 22,01,740/- BEING ESTIMATION OF REN T FROM CHITRA KOOT LAND. AS PER ASSESSMENT ORDER PASSED BY THE LD ASS ESSING OFFICER, THE ASSESSEE HAS OFFERED RENTAL INCOME OF RS. 36,521/- FROM THE PROPERTY OWNED BY THE ASSESSEE IN THE NAME AND STYLE OF CHITR A KOOT AND PANCHWATI PLOT SITUATED AT INDIA MOTORCYCLE CIRCLE A JMER . THE LD ASSESSING OFFICER HAS ASKED THE ASSESSEE TO FILE RE PLY TO THE QUESTIONS , ITA 261 & 338/JP/2014_ SIDHARTH GOEL VS ACIT 7 IN RESPONSE THERETO, THE ASSESSEE HAS PROVIDED SOME INFORMATION AND WHEN THE ASSESSEE AS PER THE ASSESSING OFFICER NOT P ROVIDED COMPLETE INFORMATION, THE LD ASSESSING OFFICER HAS CONCLUDED AS UNDER:- FROM THE ABOVE, SOMEONE CAN INFER THAT ASSESSEE IS NOT INTERESTED TO FURNISH DETAILS REGARDING CHITRAKOOT LAND. THE ASSESSEE HAS FAILED TO SUBMIT THE FOLLOWING DETAILS: - I. SEPARATE PROFIT & LOSS ACCOUNT OF CHITARKOOT LA ND. II. DETAILS, NAME AND ADDRESSES OF THE PARTIES, OF CURRENT YEAR AS WELL AS FOR EARLIER TWO YEARS, TO WHOM LAND WA S GIVEN FOR MARRIAGES, OTHER FUNCTIONS ETC. III. PARTY WISE DETAILS OF AMOUNT RECEIVED DURING TH E CURRENT FINANCIAL YEAR AS WELL AS FOR THE EARLIER TWO YEARS. IV. A COPY OF AGREEMENT OF LAND. V. A SEPARATE SUMMARY OF ELECTRICITY EXPENSES, MUNI CIPAL CORPORATION TAXES AND OTHER EXPENSES. VI. TOTAL PLOT AREA IN SQUARE FEET, AND NUMBER OF RO OMS APPURTENANT THERETO CARPET AREA IN SQUARE FEET. VII. NAME AND ADDRESSES OF THE DECORATORS AND CATER ERS WHO PROVIDE SERVICES TO THE PARTIES IN CHITARKOOT LAND. VIII. NAME OF EMPLOYEES WHO LOOK AFTER ACTIVITIES OF CHITRAKOOT LAND AND TAKE ORDERS FROM THE CUSTOMERS OR OTHER PE RSONS AND BOOK THE ORDERS. ITA 261 & 338/JP/2014_ SIDHARTH GOEL VS ACIT 8 7.1 THE LD ASSESSING OFFICER ON THE BASIS OF LOCAL I NPUTS, AT THE BACK OF THE ASSESSEE, HAS DEPUTED THE INSPECTOR TO FURNISH A REPORT. THE INSPECTOR HAS FURNISHED REPORT ON 18/3/2013 TO THE FOLLOWING EFFECT:- JHEKU~ ESUSA VKIDS FUNSZ'KKUQLKJ JH FL}KFKZ XKS;Y DS DSL ESA BAFM;K EKSVJ LFDZR FLFKR LEKJKSG LFKY FP=DWV O IAPOVH DS VKLIKL DS YKS XKSA LS ,OA OGKWA IJ VK;KSFTR MRLO DS NKSJKU IWNRKN DHA IWNRKSN DS NKSJK U ;G EKYWE GQVK FD LEKJKSG LFKY FP=DWV ,OA IAPOVH NKSUKSA 'KKNH] C; KG] TUEKSRLO] XJCK DK;ZE ,OA VU; O;KIKFJD DK;Z TSLS LSY IZN'KZUH VKFN DS FY;S FDJK;S IJ FN;S TKRS GSA LKFK GH EKYWE GQVK FD FP=DWV LEKJK SG LFKY ESA ,D CM+K GKWY ,OA RHU CMS ,LH DEJS GSA FTUDK ,D FNU DK FDJK;K DJHCU PKYHL&IPKL GTKJ GS RFKK IAPOVH LEKJKSG LFKY FTLESA ,D CMK GKWY GS FTLDK ,D FNU DK FDJK;K DJHCU IUNZG CHL GTKJ :I;S GS A ;G NKSUKSA LEKJKSG LFKY OKZ ESA DJHCU IKWAP N% EGHUS CQD JGRS GSA FJIKSZV IZLRQR GSA 7.2 THE LD ASSESSING OFFICER ON THE BASIS OF THIS RE PORT HAS CONCLUDED THE ASSESSMENT PROCEEDINGS ON 25/3/2013 WITHOUT AFFO RDING ANY OPPORTUNITY AND WITHOUT APPRECIATING THE REPORT OF T HE INSPECTOR. THE CONCLUSION MENTIONED BY THE LD ASSESSING OFFICER IN THE REPORT AS UNDER:- IT IS HEARD FROM THE MARKET THAT CHITRAKOOT LAND IS LOCATED IN A PRIME PLACE OF THE CITY. BEING FAMOUS PLACE PE OPLE LIKE TO HIRE SAID PLOT FOR MARRIAGE PARTIES, BIRTHDAYS, ENGAGEMENTS ETC. INSPECTOR OF THIS OFFICE WAS ASKED TO ITA 261 & 338/JP/2014_ SIDHARTH GOEL VS ACIT 9 MAKE ENQUIRY REGARDING CHARGES AND BOOKING OF PLOT. VIDE REPORT DATED 18.03.2013 HE HAS REPORTED THAT THERE ARE TWO PLOTS, IN THE PREMISES, NAMELY CHITRAKOOT AND PANCH WATI AND BOTH THE PLOTS ARE USED / BOOKED FOR MARRIAGE P ARTIES, BIRTHDAYS, GARBA PROGRAMMES AND ALSO GIVEN PLOTS FO R EXHIBITION OF BUSINESS PRODUCT'S OF THE COMPANIES. HE HAS ALSO REPORTED THAT THERE ARE THREE BIG HALLS/ ROOMS APPURTENANT TO CHITRAKOOT PLOT AND ONE BIG HALL APPURTENANT TO PANCHWATI PLOT WHICH ARE GIVEN ON RENT ALONG WITH BOTH THE PARTY PLOTS. HE HAS ALSO REPORTED THAT ENQUIRY REVEALED THAT RENT IN THE RANGE OF RS. 40,000/- TO RS. 50,000/- IS CHARGED FOR CHITRAKOOT LAND AND THR EE HALLS AND ABOUT RS. 10,000/- FOR PANCHWATI PLOT AND A BIG HALL FOR A DAY. ROOMS ARE AIR CONDITIONED AND WELL FURNISHED. BOTH THE PLOTS ARE GIVEN ON RENT FOR ABOUT 6 MONTHS IN A YEAR. THE LD ASSESSING OFFICER ON THE BASIS OF REPORT OF T HE INSPECTOR HAD MADE ADDITION OF RS. 44,40,000/- AND ADDED BACK IN THE INCOME OF THE ASSESSEE. 8. BEING AGGRIEVED BY THE ORDER OF THE LD ASSESSING OFFICER, THE ASSESSEE CARRIED THE MATTER BEFORE THE LD CIT(A), WHO HAD PARTLY ALLOWED THE APPEAL BY OBSERVING AS UNDER:- 8.3 I HAVE CONSIDERED THE CONTENTIONS OF THE APPEL LANT AS WELL AS ASSESSMENT ORDER. IT IS SEEN THAT THE ASSESSEE H AS SHOWN TOTAL RECEIPTS OF RS.90,100 FROM THE CHITRAKOO T PLOT ITA 261 & 338/JP/2014_ SIDHARTH GOEL VS ACIT 10 IN THE RETURN OF INCOME AS AGAINST WHICH MUNICIPAL T AXES OF RS. 53,579 HAVE BEEN CLAIMED, THEREBY OFFERING THE NET INCOME OF RS.36,521. HOWEVER, THE ASSESSEE HAS NOT B EEN ABLE TO GIVE THE DETAILS OF PERSONS FROM WHOM THE SA ID AMOUNT HAS BEEN RECEIVED ON ACCOUNT OF VARIOUS FUNC TIONS ORGANIZED BY THEM VIZ. MARRIAGES, BIRTHDAY PARTIES, EXHIBITIONS ETC. FURTHER, THE ASSESSEE HAS ALSO NOT BEEN ABLE TO GI VE THE NAMES/ ADDRESSES OF THE PERSONS ENGAGED FOR THE CAT ERING, DECORATIONS ETC. THE ASSESSEE HAS NOT GIVEN THE NAME S OF EMPLOYEES/ STAFF WHO HAVE MAINTAINED THE ABOVE VENUE . FURTHER, THE PLOT AREAS WERE ALSO NOT MENTIONED TO T HE AO. THE AO HAS ALSO POINTED OUT THAT THERE ARE TWO PARTY PLOTS IN NAME OF CHITRAKOOT WITH THREE BIG HALLS AND PANCH AWATI WITH ONE BIG HALL. THESE ARE LOCATED AT THE PRIME PLA CE AND ASSESSEE HAS NOT MENTIONED ANYTHING REGARDING CONSTRUCTED AREA AND PANCHAWATI PLOT BEFORE THE INFORMATION WAS GATHERED BY THE CIRCLE INSPECTOR. DU RING APPEAL, THE ASSESSEE HAS MERELY POINTED OUT THAT IN COME FROM PANCHAWATI PARTY PLOT IS ALSO INCLUDED IN THE I NCOME OFFERED FOR TAX OF RS.36,521. IT IS ALSO NOTED THAT THE ASSESSEE HAS CLAIMED RS. 53,579 AS MUNICIPAL TAXES AGAINST THE CASH RECEIPTS OF RS. 90 ,100 WHICH SHOWS THAT THE RECEIPTS SHOWN ARE ON THE LOWER SIDE. ITA 261 & 338/JP/2014_ SIDHARTH GOEL VS ACIT 11 AS REGARDING THE ASSESSEE'S CONTENTION THAT THERE IS NO REQUIREMENT OF NAMES AND ADDRESSES OF THE PARTIES F ROM WHOM THE RECEIPTS HAVE ACCRUED ON ACCOUNT OF ARRANGI NG VARIOUS FUNCTIONS AT THESE VENUES. HOWEVER, ONUS LI ES ON THE ASSESSEE TO SUPPORT THE ACTUAL RECEIPTS FROM VA RIOUS PERSONS BY WAY OF PROPER DOCUMENTATION WHICH SHOULD B E VERIFIABLE. IN THE COPY OF ACCOUNT SUBMITTED DURING APPEAL, ASSESSEE HAS MERELY MENTIONED THE LUMP SUM AMOUNT O F CASH RECEIPTS ON MONTHLY BASIS. FROM THE SAME IT CA NNOT BE VERIFIED WHETHER IT REPRESENTS THE ACTUAL RECEIPTS A CCRUING TO THE ASSESSEE FROM VARIOUS FUNCTIONS ORGANIZED AT THESE PLACES. AS REGARDING NON SUPPLY OF THE INSPECTORS REPORT TO THE APPELLANT, IT MAY HE MENTIONED THAT THE SAME HAS BE EN OBTAINED BY THE ASSESSEE AFTER THE ASSESSMENT WAS COMPLETED. HOWEVER, EVEN AT APPELLATE STAGE, ONLY EA RLIER CONTENTIONS HAVE BEEN REITERATED AND NO OTHER CLAIM OR EVIDENCE IN SUPPORT OF THE ACTUAL RECEIPTS FROM DIF FERENT CLIENTS HAVE BEEN SUBMITTED. IN VIEW OF ABOVE DISCUSSION, IT IS REASONABLE THAT ONLY OPTION LEFT IN SUCH CASE IS TO ESTIMATE THE INCOME OF THE ASSESSEE FROM ABOVE PARTY PLOTS. IN THIS REGARD, THE AO HAS HELD THAT BOTH THE PARTY PLOTS HAVE BEEN OCCUPIED FOR THREE MONTHS I.E. QUARTER OF THE YEAR WHICH APPEARS TO BE ON THE HIGHER SIDE. IN THIS CONTEXT, ASSESSEE HAS POINTED OUT THAT LAND AREA IS 2000 ITA 261 & 338/JP/2014_ SIDHARTH GOEL VS ACIT 12 SQ. YARDS APPROXIMATELY AND THERE ARE PARKING PROBL EMS AND OTHER LOCATIONAL DISADVANTAGES. SO BIG PARTIES CANNOT HELD AT THIS PLACE AND FURTHER MARRIAGE SEASON IS O NLY FOR LIMITED DAYS IN A YEAR. FURTHER, NO CLAIM OF EXPENS ES FOR DAY TO DAY MAINTENANCE, CLEANING ETC. OF THE SAID P ARTY PLOTS HAS BEEN GIVEN. THE REPORT OF THE CIRCLE INSPE CTOR DOES NOT MENTION THE BASIS OF INFORMATION GATHERED REGARDING THE NUMBER OF DAYS OF BOOKING IN A YEAR A ND RATE OF BOOKING. IN VIEW OF OVERALL FACTS AND CIRCUMSTANCES OF THE C ASE, IT IS CONSIDERED REASONABLE TO RESTRICT THE ADDITION ON A CCOUNT OF INCOME FROM ABOVE TWO PARTY PLOTS TO RS.22,01,740 I. E. 50% OF THE AMOUNT ADDED BY THE AO. THE BALANCE AMOU NT OF ADDITION IS DELETED. 9. NOW THE ASSESSEE IS IN APPEAL BEFORE US. THE LD AR OF THE ASSESSEE HAS SUBMITTED AS UNDER:- (A) THAT THE COMPLETE RECORDS TO INCOME/RECEIPTS/EXP ENSES WERE PRODUCED BEFORE THE A.O. & NO DEFECTS THEREIN F OUND OR POINTED OUT, ON NUMBER OF OCCASIONS THE A.O. HAS CALLED FOR COMPLETE: RECORDS & HAS VERIFIED FROM TIME TO T IME. (B) THAT CHITRAKOOT & PANCHWATI ARE TWO OPEN AREAS ADJOINING TO RESTAURANT BUSINESS OF ASSESSEE & THESE ITA 261 & 338/JP/2014_ SIDHARTH GOEL VS ACIT 13 LANDS WERE ALSO INHERITED BY ASSESSEE. ALONG WITH CONSTRUCTED AREA THEREON. (C) THAT TO PROMOTE THE RESTAURANT BUSINESS, THESE L ANDS ARE GIVEN ON RENT FOR PETTY PARTIES & FUNCTIONS. FOR TH IS THE RECEIPT IS SEPARATELY ISSUED & TOTAL GROSS RECEIPTS FOR THE YEAR IS RS. 90,100.00 AS PER RECORDS & RECEIPTS. TH E MUNICIPAL TAXES AS PAID RS. 53,579.00 ARE NOT FOR O NE YEAR BUT OF MANY YEARS AS CAN BE VERIFIED FROM RECEIPTS ENCLOSED. THE MAJOR INTEREST TO GIVE SUCH PLACES FOR PARTIES, & FUNCTIONS IS TO PROMOTE THE HOTEL & RESTAURANT BUSINESS OF ASSESSEE . THE AREA OF LAND IS 2000 SQ. YARD APPROXIMATELY & DUE TO PARKING PROBLEMS & OTHER VOCATIONAL DISADVANTAGE THE BIG PARTIES CANNOT BE C ELEBRATED THERE. (D) THE A.O. HAS NOT ABLE TO SITE ANY LIVE EXAMPLE TO JUSTIFY HIS ESTIMATION. IF ASSESSEE WAS NOT SUBMITTING THE DETAI LS AT LEAST THE STAFF OF RESTAURANT COULD HAVE BEEN SUMMONED FOR VERIFICA TION, BUT A.O. TO AVOID THE FACTS & TRUTH HAS AVOIDED THIS PROCEDURE & HAS MADE HIS OWN ASSUMPTIONS AND PRESUMPTIONS. (E) EVEN IN PAST THE AOS HAVE ACCEPTED THE ACCOUNTING METHOD & BOOKS & RECORDS OF ASSESSEE U/SEC. 143(3) OF INCOME TAX ACT, 1961 & ITA 261 & 338/JP/2014_ SIDHARTH GOEL VS ACIT 14 NO DEVIATION IN METHOD OF ACCOUNTING NOTICED BY A.O . (REFER ORDER FOR ASSESSMENT YEAR 2009-10). (F) THE A.O. IS ALSO NOT IN POSITION TO JUSTIFY HIS CLAIM OF INCOME SINCE NO PARALLEL ASSETS / INVESTMENTS FOUND OR DETECTED BY A.O. (G) FURTHER THE A.O. HAS ALSO TAKEN PLEA THAT ON RE CEIPTS AS ISSUED FOR LAND RENT NO PROPER ADDRESS OR IDENTIFY OF PARTY IS THERE. IT WAS INTIMATED TO A.O. THAT THERE IS NO SUCH PROVISION I N LAW & SINCE THE MONEY IS RECEIVED IN ADVANCE THUS WE DO NOT REQUIRE ANY IDENTIFY, ADDRESS OF SAID PARTY, ON DUE DATE & ON PRODUCTION OF COUNTERPART THE PLACE CAN BE UTILIZED. (H) THE INSPECTORS REPORT DATED 18.03.2013. ON WHICH THE A.O. HAS RELIED FOR HIS ESTIMATION. NO COPY DURING ASSESSMEN T PROCEEDINGS PROVIDED NOR ANY CONFRONTATION MADE & SIMPLY ON OWN ASSUMPTIONS ADDITIONS MADE. THE COPY OF SAID REPORT WAS RECEIVED ONLY AFTER THE ORDER U/SEC. 143(3) WAS RECEIVED & ASSESSEE ASKED TH E COPY. COPIES OF REQUEST LETTERS DATED 28.03.13/10.04.13/22.04.13 AR E ENCLOSED ALONG WITH DENIAL LETTER OF A.O. THE INSPECTORS REPORT IS OF 4 LINES WHICH SIMPLY SAYS THAT ON QUERY MADE , NO SPECIFIC NAME FROM WHOM ENQUIRY MADE, WHAT ITA 261 & 338/JP/2014_ SIDHARTH GOEL VS ACIT 15 IS THERE RELEVANCY TO ENQUIRY, HOW THEY ARE CONNECTED WITH ASSESSEE & WHAT WAS THE AUTHENTICITY WITH THEM E.G. SOME RECEIPTS, WHETHER THEY HAVE OPTED SOME FUNCTION THERE & PAID MONEY & OTHER NECESSARY EVIDENCES TO HOLD A REPORT AUTHENTICATE AND BELIEVABLE. EVEN NO WITNESSES ARE THERE OH REPORT. THE INSPECTOR HAS NOT MENTIONED THE DESIGNATION TO WHOM ADDRESSED, WHEN HE WAS AUTHOR IZED BY A.O. & OWN DESIGNATION OF IA ALL ARE MISSING IN SAID REPORT . IT IS OPEN TO A.O. TO COLLECT MATERIALS TO FACILITA TE ASSESSMENT EVEN BY PRIVATE ENQUIRY BUT IF HE DESIRES TO USE THE MATERI AL SO COLLECTED, THE ASSESSEE MUST BE INFORMED OF THE MATERIAL AND MUST BE GIVEN AN ADEQUATE OPPORTUNITY OF EXPLAINING IT. HE RELIED ON THE FOLLOWING CASE LAWS:- (1) C. VASANTLAL & CO. V/S CIT (1962) 45ITR 206 (SC) (2) DHAKESHWARI COTTON MILLS LTD. V/S CIT (1955) 27I TR 126 (SC) THUS IN CASE IF A.O. BELIEVES THAT PROPER AREA OF LA ND NOT GRANTED, FACILITIES AVAILABLE NOT PROVIDED ETC & THUS HE HAD REASON TO BELIEVE HIS OWN BEST JUDGMENT BUT BEFORE MAKING HIS OWN ASSUMPTIO NS, IT SHOULD BE IN AOS MIND THAT IN PAST UNDER SIMILAR CIRCUMSTANC ES THE ASSESSMENT OF ITA 261 & 338/JP/2014_ SIDHARTH GOEL VS ACIT 16 ASSESSEE HAS BEEN COMPLETED U/SEC. 143(3) & BOOKS O F ACCOUNT ACCEPTED. ALL THE DESIRED INFORMATION WERE WITH A.O. AS PER PAST RECORDS & THIS VERY FACT WAS REMINDED TO ASSESSING OFFICER. THEREFORE, HE PRAYED TO DELETE THE ADDITION CONFIRMED BY THE LD CIT(A). 10. AT THE OUTSET, THE LD SR.DR HAS STRONGLY RELIED ON THE ORDERS PASSED BY THE LD LOWER AUTHORITIES. 11. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. IN OU R VIEW, THE SOLE BASIS OF MAKING ADDITION BY THE LD ASSESSING OFFICER FOR THE AMOUNT OF RS. 44.40 LACS WAS ON ACCOUNT OF REPORT OF INSPECTOR DAT ED 18/3/2013. BEFORE DIRECTING THE INSPECTOR TO CONDUCT THE INSPE CTION, NO NOTICE HAS BEEN GIVEN TO THE ASSESSEE AND THE ENTIRE REPORT WAS ONLY ON THE BASIS OF HEARSAY INQUIRY CONDUCTED BY THE INSPECTOR. NEIT HER THE NAME NOR THE ADDRESSES, NOR THE ALLOCATION NOR ANY SUCH ENTITY A BOUT THE PROPERTY WAS GATHERED BY THE INSPECTOR. FROM PERUSAL OF THE EARL IER ORDER, WHICH IS REPRODUCED HEREINABOVE, THE LD ASSESSING OFFICER HA D BASED HIS FINDING ON THE MISLEADING OF THE REPORT OF THE INSPECTOR. I F HE CLOSELY READ THE REPORT, IN THE REPORT, THE INSPECTOR HAS GIVEN THE DESCRIPTION OF RENT AS UNDER:- ITA 261 & 338/JP/2014_ SIDHARTH GOEL VS ACIT 17 HE HAS ALSO REPORTED THAT ENQUIRY REVEALED THAT RE NT IN THE RANGE OF RS. 40,000/- TO RS. 50,000/- IS CHARGED FOR CHITRAKOOT LAND AND THREE HALLS AND RS. 10,000/- FOR PANCHWATI PLOT AND A BIG HALL F OR A DAY. ROOMS ARE AIR CONDITIONED AND WELL FURNISHED. THE WHOLE CASE BEFORE US, WHICH WAS DECIDED BY THE LD ASSESSING OFFICER AS WELL AS THE LD CIT(A) WAS TO FIND OUT THE RATE OF RENT ON WHICH THE PLOTS WERE GIVEN BY THE ASSESSEE ON RENT BASIS. IN F ACT THE INSPECTOR HAS GIVEN RATE OF RENT IN RESPECT OF PLOTS AS WELL AS FO R THE PARTY HALLS/ AIR CONDITIONED ROOMS. THUS, IN OUR VIEW, THE REPORT CAN NOT TO BE RELIED UPON FOR ANY PURPOSES. THE LD ASSESSING OFFICER HAS RELIED UPON THE REPORT AND HAS CONCLUDED THAT BOTH THE PLOTS HAVE B EEN OCCUPIED FOR THREE MONTHS. THE LD CIT HAS ALSO MENTIONED THE SIZ E OF THE LAND AND HAS ALSO SUGGESTED THAT THERE ARE PARKING PROBLEMS AND LOCATIONAL DISADVANTAGES TO THE ASSESSEE AND THEREFORE, THE BI G PARTIES CANNOT ADJUST IN THESE PREMISES. IN OUR VIEW THE ORDER OF THE LD CIT(A) UPHOLDING THE ADDITION OF RS. 22,01,740/- WAS WITHOUT ANY BASIS AS THE VERY BASIS OF MAKING THE ADDITION I.E. THE INSPECTO RS REPORT WAS IN RESPECT OF BUILT UP AIR CONDITIONED AREA AND THE L AND APPURTENANT THERETO CANNOT BE RELIED UPON F. THEREFORE, NO CLEAR CUT CONCLUSION WAS REQUIRED TO BE PLACED ON RECORD AS TO THE RENT WHICH WAS RECOVERED BY ITA 261 & 338/JP/2014_ SIDHARTH GOEL VS ACIT 18 THE ASSESSEE BY LETTING IT OUT FOR FUNCTIONS AND GA RBA FESTIVALS. IN OUR VIEW THE ESTIMATION MADE BY THE LD CIT(A) IS A HIGHE R SIDE AND REQUIRED TO BE MODIFIED IN THE LIGHT OF WHAT IS STATED HEREIN ABOVE. WE, THEREFORE, REDUCE IT TO RS. 5.00 LACS. ACCORDINGLY, THIS GROUN D OF THE ASSESSEES APPEAL IS PARTLY ALLOWED. 12. THE 3 RD GROUND OF THE ASSESSEES APPEAL IS AGAINST CONFIRM ING THE ADDITION OF RS. 30,863/- FOR DISALLOWANCES OF FOREIG N TOUR EXPENSES BEING PERSONAL IN NATURE. THE LD ASSESSING OFFICER CLAIMED EXPENSES OF RS. 48,464/- ON ACCOUNT OF TRAVELLING TO P&L ACCOUNT. TH E ASSESSEE WAS ASKED TO FURNISH DETAILS BUT HE FAILED TO COMPLY TH E SAME FOR VERIFICATION OF GENUINENESS OF TRAVELING EXPENSES. THEREFORE, THE LD ASSESSING OFFICER DISALLOWED RS. 30,853/- AND ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE. 13. BEING AGGRIEVED BY THE ORDER OF THE LD ASSESSIN G OFFICER, THE ASSESSEE CARRIED THE MATTER BEFORE THE LD CIT(A), WHO HAD CONFIRMED THE ADDITION BY OBSERVING THAT THE ASSESSEE HAS NOT SHOWN THAT ABOVE EXPENSES INCURRED ON THE FOREIGN WERE INCIDENTAL TO THE BUSINESS OF THE ASSESSEE. NO DETAILS AND EVIDENCES AND DETAILS OF P LACES VISITED AND BUSINESS PROCURED HAVE BEEN SUBMITTED. THEREFORE HE UPHELD THE ORDER OF THE LD ASSESSING OFFICER. ITA 261 & 338/JP/2014_ SIDHARTH GOEL VS ACIT 19 14. NOW THE ASSESSEE IS IN APPEAL BEFORE US. THE LD A R OF THE ASSESSEE HAS SUBMITTED THAT THE A.O. HAD DISALLOWED A SUM OF RS. 30,863.00 BEING TRAVELLING BY SPICE JET AND OF TOTA L TRAVELLING EXPENSES CLAIMED OF RS. 48,464.00 ON THE PRETEXT THAT NO DET AILS FILED RESPECT TO SUCH EXPENSES WHEREAS THE ASSESSEE HAS SUBMITTED COM PLETE DETAILS FOR EXPENSES INCURRED ON TRAVELLING EXPENSES. FURTHER T HE ASSESSEE HAS ALSO SUBMITTED THAT SUCH EXPENSES ARE INCURRED EXCLUSIVE LY & WHOLLY FOR THE PURPOSES OF BUSINESS AND IS OF REVENUE NATURE AND N OT FOR PERSONAL PURPOSES. THE NATURE OF BUSINESS OF ASSESSEE ' RESTAURENT IS SUCH THAT IF THE NEW INNOVATION AND PRESENTATIONS NOT IN TRODUCED THE BUSINESS CANNOT BE PROMOTED AND THUS IT IS NECESSARY TO ATTE ND VARIOUS PLACES INCLUDING VARIOUS FOREIGN TRIPS TO INNOVATE THE IDE AS NEW DEVELOPMENTS AND PRESENTATION TO KEEP PHASE IN THE BUSINESS AND THUS ALL SUCH EXPENSES AS INCURRED ARE IN BUSINESS EXPEDIENCY . HE RELIED ON THE FOLLOWING DECISION:- (I) CIT V/S INDIAN MOLASSES CO. P LTD (1970) 78ITR 4 74 (SC) (II) CIT V/S J.K. COTON MANUFACTROR LTD. (1975) 101 ITR 221 (SC) (III) CIT V/S SEASSOON J. DAVID W. P. LTD (1979) 11 8 ITR 261 (SC) HE FURTHER SUBMITTED THAT THE LD. CIT(A) HAS ALSO R EITERATED THE SAME VIEW OF A.O. THAT WHETHER SUCH FOREIGN EXPENSES WERE I NCIDENTAL TO THE ITA 261 & 338/JP/2014_ SIDHARTH GOEL VS ACIT 20 BUSINESS OF ASSESSEE & SINCE NO DETAILS OF PLACE VI SITED AND BUSINESS PROCURED FILED HENCE DISALLOWED THE EXPENSES. WHEREA S THE LEDGER COPY & BILLS & VOUCHER ITSELF JUSTIFY THE PLACE VISITED. THERE IS NOT NECESSITY THAT TO CLAIM ON EXPENDITURE IN BUSINESS EXPEDIENCY ; IMMEDIATE RETURNS / BUSINESS SHOULD HAVE BEEN RECEIVED. THE PURPOSE OF E XPENDITURE MUST BE TO KEEP THE TRADE GOING AND MAKING IT PAY FOR WHI CH HE RELIED ON THE DECISION IN THE CASE OF HAJI AZIZ & ABDUL SHAKOR BR OS. V/S CIT(1961) 41 ITR 350 (SC). FURTHER IT HAS ALSO BEEN HELD THAT THE PURPOSE OF EXPENDITURE NEED NOT TO INCREASE PROFITS OR TO DIRE CTLY BENEFIT THE BUSINESS SO LONG AS IT HELPS INDIRECTLY ALSO FOR GA RNERING REVENUE. THEREFORE, HE PRAYED TO DELETE THE ADDITION. 15. AT THE OUTSET, THE LD SR.DR HAS VEHEMENTLY SUPP ORTED THE ORDER OF THE LD CIT(A). 16. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. IT IS NOT RELIABLE TO THE BUSINESS OF THE ASSESSEE AND THERE IS NO COMMERCIAL EXPEDIENCY. IT IS NOT THE CASE OF THE ASSESSEE THAT THE FOREIGN TRAVE LERS ARE COMING TO THE PREMISES OF THE ASSESSEE FOR THE PURPOSES EATING AN D STAYING. THE ASSESSEE HAS NOT PLACED ON RECORD ANY DOCUMENTS TO SHOW THE MARKETING WAS DONE BY HIM OVERSEAS ON ACCOUNT OF FOR EIGN TRAVELLINGS, ITA 261 & 338/JP/2014_ SIDHARTH GOEL VS ACIT 21 THEREFORE, ALL THESE FOREIGN TRAVELS EXPENSES HAVE NOT RENDERED TO THE ADVANCEMENT TO THE BUSINESS OF THE ASSESSEE. THEREFO RE, ALL THESE EXPENSES ARE REQUIRED TO BE CONFIRMED. ACCORDINGLY, WE UPHOLD THE ORDER OF THE LD CIT(A). ON THIS GROUND THE APPEAL OF THE A SSESSEE IS DISMISSED. NOW WE TAKE REVENUES APPEAL 17. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. IT IS OBSERVED THAT THE DEMAND/ TAX EFFECT IN THE REVENUE IN QUESTION IS BELOW TEN LACS RUPEES. UNDER THE POWER S VESTED BY SEC. 268A(1) OF THE I T ACT, CBDT HAS RECENTLY ISSUED CIR CULARNO.21 OF 2015 DATED 10.12.2015(F NO. 279/MISC. 142/2007-ITJ( PT) INSTRUCTING THE AUTHORITIES BELOW DEPARTMENTAL APPE AL SHOULD NOT BE FILED BEFORE ITAT WHERE THE DEMAND/TAX EFFEC T DOES NOT EXCEED LESS THAN RS.10 LACS. THE CIRCULAR IS SPE CIFICALLY MENTIONED TO BE APPLICABLE FOR ALL PENDING APPEALS. 18. SUBJECT TO SOME EXCEPTIONS, IT IS FURTHER DIRE CTED BY CBDT THAT ALL THE DEPARTMENTAL APPEALS PENDING BEFORE ITAT WHERE TH E DEMAND/TAX EFFECT IS LESS THAN 10 LACS SHOULD BE EITHER WITHDRA WN OR NOT PRESSED BY THE DEPARTMENTAL REPRESENTATIVES. 19. THE PRESENT APPEAL IS NOT COVERED BY ANY EXCEPTI ONS MENTIONED IN THE SAID CBDT CIRCULAR. SINCE THE TAX DEMAND IN DISP UTE IN THIS ITA 261 & 338/JP/2014_ SIDHARTH GOEL VS ACIT 22 DEPARTMENTAL APPEAL IS BELOW THE LIMIT SET OUT BY CB DT FOR THE APPEAL THE SAME IS NOT MAINTAINABLE IN VIEW OF FORE GOINGS. ACCORDINGLY THE APPEAL OF THE DEPARTMENT IS DISMISSED AS NOT PRESSE D/WITHDRAWN. 20. IN THE RESULT, APPEAL OF ASSESSEE IS PARTLY ALL OWED AND THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 04/07/2016. SD/- SD/- HKKXPAN YFYR DQEKJ (BHAGCHAND) (LALIET KUMAR) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 04 TH JULY, 2016 *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- SHRI SIDHARTH GOEL, AJMER. 2. IZR;FKHZ @ THE RESPONDENT- THE ACIT, CIRCLE-2, AJMER. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 261 & 338/JP/2014) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR