Shri. Dwarakanath Abakari, Bangalore V. ITO, Bangalore

ITA 266/BANG/2009

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 9422 (ITAT-BANGALORE)
• Duration Of Justice: 4 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-08-2009
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 06-08-2009
• Assessment Year: 2005-2006
• Appeal Filed On: 31-03-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V S SREELEKHA
• Assessee Lawyers: V SRINIVASAN
• Keywords: Depreciation; Opportunity of being heard

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH B BEFORE SHRI N.L.KALRA, ACCOUNTANT MEMBER AND SHRI GEORGE GEORGE, K, JUDICIAL MEMBER ITA NO.266(BANG)/2009 (ASSESSMENT YEAR: 2005-06) SHRI DWARAKANATH ABAKARI, NO.907-B, MITTAL TOWERS, MG ROAD, BANGALORE. .... APPELLANT VS. INCOME-TAX OFFICER, WARD 5(1), BANGALORE. .... RESPONDENT APPELLANT BY : SHRI V.SRINIVASAN. RESPONDENT BY : SMT. V.S.SREELEKHA. O R D E R PER GEORGE GEORGE K, JM : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE LD. CIT(A)-II, BANGALORE, DATED 12-1-2009. THE ASSESSMENT YEAR CONCERNED IS 2005-06. 2. BRIEF FACTS OF THE CASE ARE AS FOLLOWS: THE ASS ESSEE IS AN ADVOCATE. FOR THE CONCERNED ASSESSMENT YEAR, HE FI LED RETURN OF INCOME ON 26-7-2005 DECLARING TOTAL INCOME OF RS.14 ,360/-. THE CASE WAS SELECTED FOR SCRUTINY BY THE AO AND BEST J UDGMENT ASSESSMENT WAS COMPLETED DETERMINING THE ASSESSEES TOTAL INCOME AT RS.3,12,830/-. THE AO, WHILE COMPLETING THE ASSESSMENT, DISALLOWED THE FOLLOWING EXPENSES: I) DISALLOWANCE OF VEHICLE MAINTENANCE & DEPRECIATION @ 20% RS.14,375/- II) BUSINESS PROMOTION RS. 6,933/- III) ADVERTISEMENT RS. 5,000/- IV) PENALTY PAYMENT RS.17,680/- V) DONATION & CHARITY RS. 3,000/- ITA 266/B/2009 PAGE 2 OF 4 THE AO ALSO MADE AN ADDITION OF RS.1,29,084/- ON AC COUNT OF EXCESS ASSETS AND ADDITION OF RS.60,000/- ON ACCOUN T OF LOW DRAWINGS. AGGRIEVED BY THE ORDER OF ASSESSMENT, AS SESSEE FILED APPEAL BEFORE THE LD. CIT(A). 3. THE LD. CIT(A), WITH REFERENCE TO THE EXPENDITU RE DISALLOWED, DIRECTED THE AO TO ALLOW EXPENDITURE WI TH REFERENCE TO BUSINESS PROMOTION AMOUNTING TO RS.6,933/- AND ADVE RTISEMENT EXPENSES OF RS.5000/-. WITH REFERENCE TO OTHER EXP ENDITURE SUCH AS DISALLOWANCE OF VEHICLE MAINTENANCE AND DEPRECIA TION, PENALTY PAYMENT, DONATION AND CHARITY, THE LD. CIT(A) CONFI RMED THE ACTION OF THE AO. (HERE IT IS IMPORTANT TO NOTE TH AT WITH REFERENCE TO PENALTY PAYMENT OF RS.17,680/-, ASSESSEE HAD NOT PRESSED AGAINST THE DISALLOWANCE OF THE SUM AND HENCE THE L D. CIT(A) HAD CONFIRMED THE ACTION OF THE AO). THE LD. CIT(A) AL SO UPHELD THE ADDITION OF RS.1,29,084/- AND RS.60,000/-. AGGRIEV ED BY THE ORDER OF THE LD. CIT(A), ASSESSEE IS IN APPEAL BEFO RE US RAISING THE FOLLOWING GROUNDS: 1) THE LEARNED ASSESSING OFFICER HAS ERRED IN CONCLUD ING THE ASSESSMENT ON BEST JUDGMENT BASIS WITHOUT INDICATING THE SAME THROUGH A NOTICE AND WITHOUT PROVIDING ADEQUATE OPPORTUNITY IN THIS REGARD. 2) THE AUTHORITIES BELOW HAVE ERRED IN DISALLOWING EXPENSES INCURRED WHOLLY, EXCLUSIVELY AND NECESSARI LY FOR THE PURPOSE OF BUSINESS, ON THE GROUND THAT CER TAIN PERSONAL ELEMENT IS INVOLVED IN THE EXPENSES. 3) THE AUTHORITIES BELOW HAVE ERRED IN ADDING A SUM OF RS.1,29,084/- ON THE GROUND THAT THERE IS AN EXCESS OF ASSET OVER LIABILITY THOUGH NO SUCH ASSET IS FOUND WHICH ITA 266/B/2009 PAGE 3 OF 4 IS NOT IN THE BOOKS OF APPELLANT. THE LEARNED COMMISSIONER HAS HELD THAT INTEREST ON BORROWED CAPITAL CANNOT BE ALLOWED AS THE PROOF FOR HAVING COMPLETED THE HOUSE IS NOT PRODUCED. THE LEARNED CI T FAILED TO APPRECIATE THAT THE MUNICIPAL AUTHORITIES DO NOT PROVIDE ANY OCCUPANCY CERTIFICATE OR COMPLETION CERTIFICATE FOR INDIVIDUAL HOUSES, AS IT IS A SELF DECLARATION. THUS, THE AUTHORITIES BELOW HAVE ERRED IN DISALLOWING THE INTEREST WITHOUT A COGENT REASON THOUGH, THE APPELLANT DECLARED THAT THE HOUSE WAS COMPLETED DURING THE YEAR AND OCCUPIED. THE LEARNE D ASSESSING OFFICER ERRED IN ADDING A SUM OF RS.60,00 0/- ON THE GROUND THAT THE DRAWINGS IS INADEQUATE. 4. LEARNED AR SUBMITTED, THE ASSESSMENT WAS COMPLET ED EX-PARTE SINCE ASSESSEES ACCOUNTANT, WHO IS AUTHOR IZED TO APPEAR BEFORE THE AO, HAD IMPRESSED UPON THE ASSESS EE THAT NECESSARY DETAILS WERE BEING PROVIDED TO THE AO FRO M TIME TO TIME. HOWEVER, IT WAS REALIZED LATER THAT THE ACCO UNTANT AUTHORIZED HAD NOT APPEARED BEFORE THE AO AND ON AC COUNT OF HIS NON-REPRESENTATION; ASSESSMENT WAS COMPLETED ON A B EST JUDGMENT BASIS. IT WAS FURTHER SUBMITTED BY THE LE ARNED AR, EVEN BEFORE THE FIRST APPELLATE AUTHORITY NO PROPER OPPORTUNITY WAS AVAILABLE. WITH REFERENCE TO PROOF OF OCCUPYIN G RESIDENTIAL HOUSE WITHIN THE CONCERNED ACCOUNTING YEAR, IT WAS SUBMITTED, ASSESSEE WAS NOT PUT ON NOTICE. SAME WAS THE CASE, HE SUBMITTED, WITH REFERENCE TO ADDITION OF RS.60,000/ -. ON THE OTHER HAND, LEARNED DR SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 5. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED MATE RIAL ON RECORD. WE FIND, AS RIGHTLY POINTED OUT BY THE L EARNED AR, ITA 266/B/2009 PAGE 4 OF 4 THERE HAS BEEN NO PROPER OPPORTUNITY TO PRODUCE NEC ESSARY MATERIAL EITHER BEFORE THE AO OR BEFORE THE LD. CIT (A). IT IS NOW ADMITTED THAT COMPLETION CERTIFICATE WITH REFERENCE TO HOUSE AND PROOF WITH REFERENCE TO INCOME OF HIS WIFE IS AVAIL ABLE AND NECESSARILY THE MATTER CAN BE RE-CONSIDERED BY THE AUTHORITIES BELOW. IN THE INTERESTS OF JUSTICE AND TAKING INTO ACCOUNT TOTALITY OF CIRCUMSTANCES OF THE CASE, WE ARE OF THE OPINION ; THE MATTER NEEDS RE-EXAMINATION BY THE AO. THE ASSESSEE IS AT LIBERTY TO PLACE ALL NECESSARY MATERIALS FOR PROPER COMPLETION OF THE ASSESSMENT. THE ASSESSMENT SHALL BE COMPLETED AFTER AFFORDING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESS EE. 6. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS A LLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 13TH AUGUST, 2009. SD/- SD/- (N.L.KALRA) (GEORGE GEORGE K) ACCOUNTANT MEMBER JUDICIAL MEMBER BANGALORE: D A T E D : 13TH AUGUST,2009. EKS* COPY TO : 1 APPELLANT 2 RESPONDENT 3 CIT 4 CIT(A)-II, BANGALORE. 5 DR, ITAT, BANGALORE. 6 GUARD FILE (1+1) BY ORDER ASSISTANT REGISTRA R, ITAT, BANGALORE .