Sh. Vinod Kumar Mahajan, Pathankot V. The Assistant Commissioner of Income Tax, Pathankot

ITA 264/ASR/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 9665 (ITAT-AMRITSAR)
• Duration Of Justice: 2 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2011-2012
• Appeal Filed On: 04-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: P N ARORA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. A.D. JAIN, JUDICIAL MEMBER AND SH. T.S. KAPOOR, ACCOUNTANT MEMBER ITA NO.264(ASR)/2016 ASSESSMENT YEAR:2011-12 PAN: ADJPM7618N SH. VINOD KUMAR MAHAJAN VS. ASSTT. COMMR. OF INCOME TAX, MAIN BAZAR, PATHANKOT. CIRCLE-IV, PATHANKOT. (APPELLANT) (RESPONDENT) APPELLANT BY: SH. P.N. ARORA, ADV. RESPONDENT BY: SH. RAHUL DHAWAN, DR DATE OF HEARING: 25/07/2016 DATE OF PRONOUNCEMENT: 01/08/2016 ORDER PER A.D. JAIN,JM: THIS IS THE ASSESSEES APPEAL FOR THE ASSESSMENT Y EAR 2011-12, AGAINST THE ORDER, DATED 02.03.2016, PASSED BY THE LD. CIT(A)-2, AMRITSAR. THE ASSESSEE HAS RAISED THE FOLLOWING GR OUNDS OF APPEAL: 1. THAT THE ASSESSMENT ORDER AND THE ORDER PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) IS BOTH AGAIN ST THE FACTS OF THE CASE AND IS UNTENABLE UNDER THE LAW. 2. THAT THE LD. CIT(A) HAS GROSSLY ERRED IN CONFIR MING THE ORDER OF THE AO WITHOUT APPRECIATING THE FACTS ' AND MATE RIAL AVAILABLE ON RECORD. THUS THE ORDER OF THE CIT(A) I S BAD IN LAW AND THE SAME IS LIABLE TO BE CANCELLED. 3. THAT THE LD CIT(A) HAS GROSSLY ERRED IN CONFIRMI NG THE ADDITION OF RS.43,96,500/- IN THE NAME OF SHRI RAME SH KISHAN IN THE LIST AT SERIAL NO.59/61. IT WAS DULY PROVED THAT SHRI RA MESH KISHAN JAMMU EXPIRED ON 06.03.2003 AND A COPY OF THE DEATH CERTIFICATE WAS DULY FILED BEFORE THE AUTHORITIES BELOW. AS SUCH THE CIT(A) HAS ERRED IN CONFIRMING ITA NO.264(ASR)/2016 A.Y. 2007-08 2 THE ADDITION OF RS.43,96,500/- MADE BY THE AO AND T HE ADDITION , CONFIRMED BY THE LD CIT(A) MAY BE DELETE D. IT MAY BE FURTHER SUBMITTED THAT THE AUTHORITIES BELOW HAV E NOT BEEN ABLE TO PLACE ANY MATERIAL, REASON OR BASIS ON THE RECORD FOR JUSTIFYING THE ADDITION. AS SUCH, THE AD DITION MADE IS PURELY ON THE BASIS OF CONJECTURES, SURMISES AND SUPPOSITIONS AND AS SUCH THE ADDITION MADE IS UNJUS TIFIED, UNCALLED FOR AND UNWARRANTED AND THE SAME MAY BE DE LETED. 4. THAT THE CIT(A) DID NOT APPRECIATE THAT WHEN THE PERSON ALREADY EXPIRED IN 2003 THE AO SHOULD NOT HAVE TREA TED THE AMOUNT AS INCOME OF THE ASSESSEE AND THE ADDITION CONFIRMED BY THE CIT(A) IS NOT CALLED FOR AND THE S AME MAY BE DELETED. 5. THAT AGAIN THE CIT(A) HAS GROSSLY ERRED IN CONFI RMING THE ADDITION OF RS.28,199/- AS CST PAYABLE SHOWN IN THE BALANCE-SHEET OF THE ASSESSEE. THE PAYMENT WAS IN T HE SUBSEQUENT YEAR AND AS SUCH THERE WAS NO REASON FOR MAKING THE ADDITION AND THE ADDITION CONFIRMED BY T HE LD. CIT(A) MAY BE DELETED. 6. THAT THE AO HAS GROSSLY ERRED IN DISALLOWING THE LOSS ON SALE OF CAR AT RS.16,223/-. SIMILARLY, THE LD. CIT(A) HA S GROSSLY ERRED IN CONFIRMING THE SAME. AS SUCH, THE LOSS AT RS.16,223/- SHOULD HAVE BEEN ALLOWED. 7. THAT AGAIN THE LD. CIT(A) HAS ERRED IN CONFIRMI NG THE DISALLOWANCE OF RS.38,008/- @ 10% ON ADHOC BASIS ON ACCOUNT OF CAR AND TELEPHONE EXPENSES AGAINST 20% DISALLOWED BY THE AO. ALL THESE EXPENSES ARE RELAT ED TO BUSINESS AND SHOULD HAVE ALLOWED IN TOTO BY CIT(A) . THIS IS A TAX AUDIT CASE AND ALL THE EXPENSES ARE RELATED T O BUSINESS. AS SUCH THE DISALLOWANCE @ 10% SUSTAINED BY THE WOR THY CIT(A) IS NOT AT ALL CALLED FOR. ALTERNATIVELY THE DISALLOWANCE SUSTAINED BY THE LD. CIT(A) @ 10% IS VERY HIGH & EX CESSIVE. 2. GROUND NOS. 1 & 2 ARE GENERAL AND DO NOT REQUIRE ANY ADJUDICATION. ITA NO.264(ASR)/2016 A.Y. 2007-08 3 3. GROUND NOS. 3 & 4 CHALLENGE THE CONFIRMATION OF ADDITION OF RS.43,96,500/-. GROUND NO.5 IS AGAINST UPHOLDING T HE ADDITION OF RS.28,199/-. GROUND NO.6, CHALLENGES THE CONFIRMATI ON OF DISALLOWANCE OF RS.16,223/- AND GROUND NO.7 HAS BEEN RAISED AGAINST THE CONFIRMATION OF DISALLOWANCE OF RS.38,008/-. 4. APROPOS GROUND NOS. 3 & 4, THE FACTS ARE THAT A SURVEY WAS CONDUCTED AT THE BUSINESS PREMISES OF THE ASSESSEE. THE ASSESSEE SURRENDERED RS.60,00,000/-. DURING THE SURVEY, A LI ST OF SUNDRY DEBTORS WAS FOUND IN THE ASSESSEES COMPUTER. ON THE BASIS OF THIS LIST, VARIOUS ADDITIONS WERE MADE . ONE SUCH ADDITION, IS THAT OF RS.43,96,500/-, IN THE NAME OF SH. RAMESH KISHAN, JAMMU, SL. NO. 59/61 (NEW/OLD). THIS ADDITION WAS CONFIRMED BY THE LD. CIT(A). 5. BEFORE THE LD. CIT(A), THE ASSESSEE STATED THAT SH. RAMESH KISHAN HAD EXPIRED ON 06.03.2003. A COPY OF HIS DEATH CERT IFICATE WAS FILED. THE LD. CIT(A) REMANDED THE ISSUE TO THE A.O. IN HIS RE MAND REPORT (RELEVANT PORTION AT APB 171), THE AO COMMENTED THAT THE NAME AS PER THE LIST WAS THAT OF SHRI RAM KISHAN JAMMU (WRONGLY NOTED B Y THE CIT(A) TO BE RAMESH KRISHAN, JAMMU IN PARA-F, PAGE 15), WHEREAS AS PER DEATH CERTIFICATE, THE NAME IS OF SH. ROMESH CHANDRA LUTH RA. 6. IN THE REJOINDER TO THE REMAND REPORT (RELEVANT PORTION AT APB 165), THE ASSESSEE STATED THAT SHRI RAMESH KISHAN, JAMMU DIED ON 06.03.2003. THIS NAME IS APPEARING AT SL. NO.59/61 (NEW/OLD) FOR RS.43,96,500/-. THIS IS A CLERICAL MISTAKE. ITA NO.264(ASR)/2016 A.Y. 2007-08 4 7. THE LD. CIT(A) CONFIRMED THE ADDITION BY HOLDING AS FOLLOWS: THE FACT AS STATED BY THE AO THAT THE NAME AS PER T HE LIST AT SR. NO.59/61 (NEW/OLD) IS OF SHRI RAMESH KRISHAN, J AMMU WHEREAS AS PER THE DEATH CERTIFICATE THE NAME IS OF SHRI ROMESH CHANDRA LUTHRA AND IN THIS REGARD THE ARGUME NT OF THE APPELLANT THAT THIS MISTAKE IN THE NAMES ON THE LIST AND IN THE DEATH CERTIFICATE IS ONLY A CLERICAL MISTAKE I S DISMISSED AS SUCH CLERICAL MISTAKE DO NOT OCCUR ON THE DEATH CER TIFICATES. MOREOVER, THE NAMES OF THE TWO PERSONS ARE TOTALLY DIFFERENT AS ONE IS SHRI RAMESH KRISHAN, JAMMU WHEREAS AS PER THE DEATH CERTIFICATE THE NAME IS OF SHRI ROMESH CHANDR A LUTHRA. ACCORDINGLY, THE ADDITION OF RS.43,96,500/- IN THE NAME OF SHRI RAMESH KISHAN IS THE LIST AT SL. NO.59/61 (NE W/OLD) IS CONFIRMED. 8. BEFORE US, ON BEHALF OF THE ASSESSEE, IT HAS BEE N CONTENDED BY WAY OF WRITTEN SUBMISSIONS (APB 173 TO 175), WHICH CON TENTIONS HAVE BEEN REITERATED BY THE LD. COUNSEL FOR THE ASSESSEE, AS FOLLOWS: THUS, IT IS CLEAR FROM THE ABOVE THAT THE LD. CIT( A) HAS MISINTERPRETED THE WHOLE DISCUSSION MADE BY THE ASS ESSEE. IT WAS ONLY POINTED OUT THAT IT WAS A CLERICAL MISTAKE MADE BY US WHILE PREPARING THE LIST AND WE NEVER OBJECTED T O DEATH CERTIFICATE FURNISHED BY US AND IT WAS NEVER POINTE D OUT THAT THERE IS A CLERICAL MISTAKE IN THE DEATH CERTIFICAT E. IT WAS A CLERICAL MISTAKE ON THE PART OF THE ASSESSEE WHILE PREPARING THE LIST. THUS, THE LD. CIT(A) HAS MISUNDERSTOOD TH E WHOLE POSITION. THUS, IT WAS MADE VERY CLEAR BEFORE THE AUTHORITIES BELOW THAT SHRI RAMESH KUMAR JAMMU DIED ON 06/03/2003 AND IT W AS ALSO POINTED OUT THAT THIS WAS ONLY A CLERICAL MIST AKE. THE LD. CIT(A) HAS DISCUSSED THIS ISSUE ON PAGE NO. 15 & 16 OF HIS ORDER. THE LD. CIT(A) HAS OBSERVED THAT THE NAME ON THE LIST AND THE DEATH CERTIFICATE ARE TOTALLY DIFFERENT. IT WAS POINTED OUT THAT MISTAKE IN THE NAME ON THE LIST AND DEATH CERTIFICATE IS ONLY CLERICAL MISTAKE. FROM THE PERUSAL OF THE REMAND REPORT AS WELL AS REJOINDER IT IS CLEAR THAT THE AS SESSEE HAS DULY POINTED OUT THAT THIS WAS ONLY A CLERICAL MIST AKE WHILE PREPARING THE LIST OF THE PARTIES OF DUE AMOUNT. IS THE WRONG PRESUMPTION OF THE CIT(A) AND THIS PRESUMPTION DOES NOT EXIST IN THIS CASE. WHEN IT WAS SPECIFICALLY POINTED OUT THAT THERE WAS ONLY A CLERICAL MISTAKE IN THE LIST PREPARED BY THE ASSESSEE AND SH. RAMESH KISHAN JAMMU IS THE SAME PE RSON ITA NO.264(ASR)/2016 A.Y. 2007-08 5 AS SH. ROMESH CHANDER LUTHRA. WHEN ALL THE OTHER 70 PARTIES IN THE LIST AVAILABLE AT PAGES 95 TO 97 OF THE PAPE R BOOK HAS BEEN ACCEPTED AS GENUINE THERE WAS NO EARTHLY REASO NS FOR THE CIT(A) NOT TO ALLOW THIS AMOUNT OF RS.43,96,500 /- AND AS SUCH THE ADDITION SUSTAINED BY THE CIT(A) MAY BE DE LETED AS THE ADDITION HAS BEEN CONFIRMED ON HYPOTHETICAL BAS IS AND WITHOUT ANY JUSTIFICATION. 9. THUS, AS PER THE ASSESSEE, WHEREAS THE LD. CIT(A ) REJECTED THE DEATH CERTIFICATE PRODUCED, OBSERVING THAT IT WAS N OT OF THE PERSON NAMED IN THE LIST, ACTUALLY A CLERICAL MISTAKE HAD BEEN COMMITTED BY THE ASSESSEE HIMSELF, WHILE PREPARING THE LIST AND INS TEAD OF THE CORRECT NAME OF SH. ROMESH CHANDRA LUTHRA, THE INCORRECT NA ME OF RAMESH KISHAN HAD INADVERTENTLY BEEN MENTIONED; THAT IT WA S NEVER THE ASSESSEES CONTENTION THAT THERE WAS A MISTAKE IN THE DEATH CERTIFICATE; THAT ROMESH CHANDRA LUTHRA AND RAMESH KISHAN, JAM MU, WERE, IN FACT, ONE AND THE SAME PERSON AND THAT THE LD. CIT( A) HAS MISUNDERSTOOD THE ASSESSEES CONTENTION. 10. THE LD. DR, ON THE OTHER HAND, HAS PLACED STRON G RELIANCE ON THE IMPUGNED ORDER, CONTENDING THAT THERE IS NO REBUTTA L TO THE OBSERVATION MADE BY THE LD. CIT(A), THAT SUCH GLARING MISTAKES NEVER OCCUR ON DEATH CERTIFICATES; AND THAT THE ARGUMENT RAISED BY THE ASSESSEE IS MERELY A PLOY TO AVOID PAYMENT OF DUE TAX. 11. HAVING HEARD THE RIVAL CONTENTIONS IN THE LIGHT OF THE MATERIAL AVAILABLE ON RECORD, WE FIND THAT IN THE REJOINDER (APB-165 TO THE AOS REMAND REPORT), THE ASSESSEE HAS CONTENDED AS FOLLO WS: IN THIS CONNECTION, IT MAY BE POINTED OUT THAT SHRI RAMESH KISHAN, JAMMU DIED ON 06/03/2003. THIS NAME IS APPEARING AT SR. NO. ITA NO.264(ASR)/2016 A.Y. 2007-08 6 59/61 (NEW/OLD) FOR RS.43,96,500/-. THIS IS ONLY A CLERICAL MISTAKE. 12. THE LD. CIT(A), ON THE OTHER HAND, HAS OBSERVED THAT: THE NAME AS PER THE LIST IS RAMESH KISHAN JAMMU WH EN AS PER THE DEATH CERTIFICATE IT IS ROMESH CHANDER LUTHRA 13. A PERUSAL OF THE ASSESSEES REJOINDER TO THE AO S REMAND REPORT AND THE LD. CIT(A)S OBSERVATION SHOWS THE ASSESSEESS GRIEVANCE TO BE JUSTIFIED. THE ASSESSEE DID NOT STAKE THE DEATH CER TIFICATE TO HAVE BEEN ISSUED IN A WRONG NAME. THERE IS INDEED NO REBUTTAL TO THE LD. CIT(A)S OBSERVATION THAT SUCH CLERICAL MISTAKE DID NOT OCCU R ON DEATH CERTIFICATE. RATHER, THE ASSESSEES OBJECTION IS THAT IN THE LIS T ITSELF, AN INADVERTENT CLERICAL MISTAKE HAD OCCURRED AND THE NAME HAD WRON GLY BEEN MENTIONED. THE LD. CIT(A), ON THE ONE HAND, HAS NOT DECIDED THE ARGUMENT TAKEN BY THE ASSESSEE, WHEREAS ON THE OTHE R HAND, THE ONE RAISED HAS BEEN ADJUDICATED AGAINST THE ASSESSEE. THIS IS CLEARLY A RESULT OF A MISREADING OF THE ASSESSEES CONTENTION AS NOT ED HEREINABOVE. 14. IN VIEW OF THE ABOVE, WE DEEM IT APPROPRIATE TO REMIT THIS MATTER TO THE FILE OF THE ASSESSING OFFICER TO BE DECIDED AF RESH IN ACCORDANCE WITH LAW AFTER AFFORDING DUE AND ADEQUATE OPPORTUNITY OF HEARING TO THE ASSESSEE. THE ASSESSEE, NO DOUBT, SHALL COOPERATE I N THE FRESH PROCEEDINGS BEFORE THE A.O. 15. ACCORDINGLY, FOR STATISTICAL PURPOSES, GROUND N OS. 3 & 4 RAISED BY THE ASSESSEE ARE TREATED AS ACCEPTED. ITA NO.264(ASR)/2016 A.Y. 2007-08 7 16. SO FAR AS REGARDS GROUND NOS. 5, 6 & 7, THE SAM E HAVE BEEN CONFIRMED BY THE LD. CIT(A), WHILE PASSING THE IMPU GNED ORDER. 17. AS REGARDS GROUND NO.5, THE LD. CIT(A) CONFIRM ED THE ADDITION OF RS.28,199/-, AS CST PAYABLE SHOWN IN THE BALANCE SH EET OF THE ASSESSEE. 18. IT IS SEEN THAT NO EVIDENCE OF CST PAID WAS FUR NISHED BY THE ASSESSEE. NO SUCH EVIDENCE HAS BEEN FURNISHED BEFOR E US. ACCORDINGLY, THE ORDER OF THE LD. CIT(A) IS CONFIRMED AND GROUN D NO.5 IS REJECTED. 19. AS REGARDS GROUND NO.6, THE LD. CIT(A) CONFIRME D THE DISALLOWANCE OF LOSS ON SALE OF CAR AT RS. 16,223/-. HERE, THE LD. CIT(A) HAS CORRECTLY OBSERVED THAT THIS LOSS IS NOT A REVENUE EXPENDITUR E AND IS NOT ALLOWABLE AS A DEDUCTION IN THE PROFIT & LOSS ACCOUNT AND AGA INST SUCH OBSERVATION THERE IS NO EFFECTIVE REBUTTAL ON BEHALF OF THE ASS ESSEE. THEREFORE, THIS DISALLOWANCE, AS CONFIRMED BY THE LD. CIT(A), IS UP HELD. 20. GROUND NO.7 PERTAINS TO CONFIRMATION OF DISALLO WANCE OF RS.38,008/- @ 10% ON AD-HOC BASIS ON ACCOUNT OF CAR AND TELEPHONE EXPENSES. THE AO MADE DISALLOWANCE @ 20%, WHICH WA S REDUCED TO 10% BY THE LD. CIT(A), NOT RULING OUT PERSONAL EXP ENSES IN THE ABSENCE OF THE REQUISITE RECORD. BEFORE US, NO SUCH RECORD/LO G BOOK OF THE CAR HAS BEEN PRODUCED AND NO RECORD REGARDING SEPARATE USE OF THE TELEPHONE HAS BEEN FURNISHED. THEREFORE, THE LD. CIT(A), IN O UR CONSIDERED OPINION, ITA NO.264(ASR)/2016 A.Y. 2007-08 8 IS VERY JUSTIFIED IN REDUCING THE DISALLOWANCE BY 1 0%, WHICH IS HEREBY ACCEPTED. THUS, THE ACTION OF THE LD. CIT(A) IS UP HELD. 21. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 01/08/ 2016. SD/- SD/- (T.S. KAPOOR) (A.D. JAIN) ACCOUNTANT MEMBER JUDICIAL MEMBER /SKR/ DATED: 01/08/2016 COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE:SH. VINOD KUMAR MAHAJAN, PATHANKOT 2. THE ACIT, CIRCLE, PATHANKOT. 3. THE CIT(A), ASR 4. THE CIT, ASR. 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.