VINAY KUMAR AGARWAL, MUMBAI V. ACIT 18 (3), MUMBAI

ITA 2669/MUM/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 5805 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-09-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: F
• Assessment Year: 2013-2014
• Appeal Filed On: 30-04-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SAMANTHA MULLAMUDI LD
• Assessee Lawyers: SHANKARLAL JAIN LD
• Keywords: Depreciation
• Section: 143(3)

Judgement Text

ITA NO.2669 & 2670MUM/2019 SHRI VINAY KUMAR AGARWAL ASSESSMENT YEARS :2013-14 & 2014-15 1 IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH, MUMBAI , , BEFORE HONBLE SHRI MAHAVIR SINGH, VP AND HONBLE SHRI MANOJ KUMAR AGGARWAL, AM (HEARING THROUGH VIDEO CONFERENCING MODE) ./ I.T.A. NO.2669/MUM/2019 ( / ASSESSMENT YEAR : 2013-14 ) & ./ I.T.A. NO.2670/MUM/2019 ( / ASSESSMENT YEAR : 2014-15 ) SHRI VINAY KUMAR AGARWAL C/O M/S. SHANKARLAL JAIN & ASSOCIATES LLP (CHARTERED ACCOUNTANTS) 12, ENGINEER BUILDING, 265, PRINCESS STREET MUMBAI-400 002. / VS. A CIT - 1 8(3) 1 ST FLOOR, AAYKAR BHAVAN, QUEENS ROAD MUMBAI-400 020. PAN : AAIPA 3078 L ( &' /APPELLANT ) : ( ()&' / RESPONDENT ) ASSESSEE BY : SHRI SHANKAR LAL JAIN-LD. AR REVENUE BY : MS. SAMANTHA MULLAMUDI -LD. SR.DR / DATE OF HEARING : 29/09/2020 / DATE OF PRONOUNCEMENT : 29/09/2020 / O R D E R MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER): - 1. THE GRIEVANCE OF THE ASSESSEE IN THE AFORESAID A PPEALS FOR ASSESSMENT YEARS 2013-14 AND 2014-15 IS COMMON AND THEREFORE, THE APPEALS WERE HEARD TOGETHER AND ARE NOW BEING DISPO SED OF BY WAY OF THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE AND BREVITY. FIRST WE ITA NO.2669 & 2670MUM/2019 SHRI VINAY KUMAR AGARWAL ASSESSMENT YEARS :2013-14 & 2014-15 2 TAKE UP APPEAL FOR AY 2013-14 WHICH CONTEST THE ORD ER OF LD. COMMISSIONER OF INCOME-TAX (APPEALS)-53, MUMBAI, [I N SHORT REFERRED TO AS CIT(A)], ON FOLLOWING GROUNDS: - 1. LD. CIT(A) ERRED IN CONFIRMING DISALLOWING OF R S.10 LAKHS, OUT OF CAR EXPENSES OF RS.8,11,593/- AND DEPRECIATION OF RS.20 ,64,927/- BASED ON SURVEY PROCEEDINGS CONDUCTED ON 31/08/2015 MERELY O N THE PLEA THAT APPELLANT IS NOT IN A POSITION TO SUBSTANTIATE THE CLAIM OF VEHICLE USED EXCLUSIVELY FOR PURPOSE OF BUSINESS AS NO LOG BOOK IS MAINTAINED WITHOUT PROPERLY APPRECIATING THE FACTS OF THE CASE AND LAW APPLICABLE. 2. LD. AO ERRED IN UPHOLDING A DISALLOWANCE OF RS.1 ,60,000/- OUT OF CERTAIN EXPENSES OF RS.7,98,030/- ON ADHOC BASIS IN SPITE O F THE FACT THAT ALL REQUISITE EVIDENCES WERE SUBMITTED WITH RELATION TO EXPENSES INCURRED, MERELY OBSERVING THAT DISALLOWANCE IS REASONABLE WITHOUT P ROPERLY APPRECIATING THE FACTS OF THE CASE AND LAW APPLICABLE THERETO. 3. LD. CIT(A) ERRED IN NOT CONSIDERING THE FACT THA T NO DISALLOWANCE IS BEING MADE IN THE HANDS OF APPELLANT IN A.Y. 2012-13 AS W ELL AS IN A.Y. 2015-16 AND THERE WAS NO SPECIFIC REASON FOR MAKING DISALLO WANCE IN CURRENT YEAR. 4. APPELLANT PRAY THAT DISALLOWANCE MADE BE DELETED . AS EVIDENT, THE ASSESSEE IS PRIMARILY AGGRIEVED BY DISALLOWANCES OF CERTAIN EXPENSES. THE LD. AR, SHRI SHANKAR LAL JAIN , FILED SUPPORTING DOCUMENTS AND ADVANCED ARGUMENTS ASSAILING THE ADHO C DISALLOWANCES MADE BY LOWER AUTHORITIES. THE LD. SR. DR, MS. SAMA THA MULLAMUDI, DRAWING ATTENTION TO THE ORDERS OF LOWER AUTHORITIE S, JUSTIFIED THE DISALLOWANCES. WE HAVE DULY CONSIDERED THE SAME. 2.1 THE MATERIAL ON RECORD WOULD SHOW THAT AN ASSES SMENT WAS FRAMED AGAINST THE ASSESSEE U/S. 143(3) ON 30/03/20 16 WHEREIN THE ASSESSEE WAS SADDLED WITH ADHOC DISALLOWANCE OF MOT OR CAR EXPENSES OF RS.10 LACS AND UNVERIFIABLE CASH EXPENSES OF RS. 1,60,000/-. BOTH THE DISALLOWANCES ARE SUBJECT MATTER OF APPEAL BEFORE U S. THE SAID DISALLOWANCE STEM FROM A SURVEY ACTION CONDUCTED BY INVESTIGATION WING OF INCOME TAX DEPARTMENT ON THE ASSESSEES LOCATION ON 31/08/2015. THE ASSESSEE BEING RESIDENT INDIVIDUAL IS STATED TO BE ENGAGED IN THE ITA NO.2669 & 2670MUM/2019 SHRI VINAY KUMAR AGARWAL ASSESSMENT YEARS :2013-14 & 2014-15 3 BUSINESS OF MANUFACTURING OF PLASTIC ITEMS IN THE N AME AND STYLE OF M/S. CREATIVE TECHNOPLAST. 2.2 DURING SURVEY OPERATIONS, IT TRANSPIRED THAT TH E ASSESSEE HAD 7 MOTOR CAR IN DAMAN UNIT OF M/S CREATIVE TECHNOPLAST . THESE CARS WERE PURCHASED ON DIFFERENT DATES. AGAINST THE SAME, THE ASSESSEE CLAIMED DEPRECIATION OF RS.20.64 LACS AND VEHICLE EXPENSES OF RS.8.11 LACS DURING THE YEAR. IN THE SWORN STATEMENT DURING SURV EY OPERATIONS, THE ASSESSEE ADMITTED THAT THE CARS WERE NOT USED FOR A NY SPECIFIC CONCERN / UNIT AND USED FOR BUSINESS INTERESTS OF THE GROUP. FURTHER THE CARS WERE USED BY THE MEMBERS OF THE FAMILY AND FOR ACTIVITIE S OF OTHER GROUP CONCERNS. IN THE SAID BACKGROUND, SINCE NO COMPONEN T OF PERSONAL EXPENDITURE WAS DISALLOWED BY THE ASSESSEE, LD.AO P ROCEEDED TO MAKE ADHOC DISALLOWANCE TO ACCOUNT FOR PERSONAL ELEMENT IN USAGE OF CARS AS WELL AS IN VIEW OF THE FACT THAT THE CARS WERE BEIN G USED BY THE OTHER GROUP CONCERNS. DURING ASSESSMENT PROCEEDINGS, THE ASSESSEE, INTER- ALIA, SUBMITTED THAT THE CARS WERE BEING USED BY TH E STAFF FOR MARKETING PURPOSES. HOWEVER, NOT CONVINCED, LD. AO ESTIMATED AN ADDITION OF RS.10 LACS AGAINST THE SAME. HOWEVER, LD. AO PROVID ED DEDUCTION U/S 80-IB AGAINST THE SAME @25%. IN NUTSHELL, THE ASSES SEE WAS SADDLED WITH EFFECTIVE DISALLOWANCE OF RS.7.50 LACS. 2.3 SIMILARLY, DISCREPANCIES WERE FOUND IN RESPECT OF ACTUAL CASH FOUND AT THE PREMISES AND CASH AS PER BOOKS OF ACCOUNTS. UPON PERUSAL OF EXPENDITURE DETAILS, IT TRANSPIRED THAT THE ASSESSE E INCURRED AGGREGATE EXPENDITURE OF RS.7.98 LACS ON ACCOUNT OF LABOR-WEL FARE EXPENSES AND CONVEYANCE EXPENSES. THE SAID EXPENDITURE WAS CLAIM ED AGAINST SELF- ITA NO.2669 & 2670MUM/2019 SHRI VINAY KUMAR AGARWAL ASSESSMENT YEARS :2013-14 & 2014-15 4 MADE VOUCHERS. LD. AO ESTIMATED DISALLOWANCE OF RS. 1.60 LACS AGAINST THE SAME. HOWEVER, THE RELIEF OF 25% U/S 80-IB WAS PROVIDED AGAINST THIS DISALLOWANCE ALSO. IN NUTSHELL, EFFECTIVE DISALLOWA NCE OF RS.1.20 LACS WAS MADE IN THE HANDS OF THE ASSESSEE. 2.4 UPON FURTHER APPEAL, LD. CIT(A) DISMISSED ASSES SEES APPEAL FINDING NO INFIRMITY IN ADHOC ESTIMATION. AGGRIEVED , THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 3. BEFORE US, LD. AR OPPOSED ADHOC DISALLOWANCES, I NTER-ALIA, BY SUBMITTING THAT SUCH DISALLOWANCES WERE NOT MADE IN OTHER YEARS AND FURTHER NO SPECIFIC DEFECT WAS POINTED OUT BY LD. A O IN THE EVIDENCES PRODUCED BY THE ASSESSEE. UPON CAREFUL CONSIDERATIO N OF FACTUAL MATRIX AS ENUMERATED IN PRECEDING PARAGRAPHS, WE FIND THAT KEEPING IN VIEW THE FACTS AS EMERGING DURING SURVEY PROCEEDINGS INCLUDI NG SWORN STATEMENTS MADE BY ASSESSEE THEREIN, PERSONAL ELEMENT IN USAGE OF MOTOR CARS COULD NOT BE RULED OUT. NO DISALLOWANCE WAS OFFERED BY THE ASSESSEE IN RESPECT OF THE SAME WHILE FILING THE RETURN OF INCO ME. SIMILARLY, THE LABOR- WELFARE EXPENSES AND CONVEYANCE EXPENSES WERE CLAIM ED ON THE BASIS OF SELF-MADE VOUCHERS AND THE ASSESSEE COULD NOT PR ODUCE SATISFACTORY EVIDENCES IN SUPPORT OF THE SAME. THEREFORE, SOME A DHOC DISALLOWANCE IS JUSTIFIED ON THE FACTS AND CIRCUMSTANCES. KEEPIN G IN VIEW THE ASSESSEES TURNOVER, PROFITS REFLECTED DURING THE Y EAR, WE RESTRICT THE MOTOR CAR DISALLOWANCE TO 20% OF RS.28,76,520/-. TH E SAME COMES TO RS.5,75,304. THE ADHOC DISALLOWANCE AGAINST UNVERIF IABLE EXPENSES IS ESTIMATED @ 5% WHICH COMES TO RS.39,901/-. THE ASSESSEE WOULD B E ENTITLED FOR RELIEF OF 25% U/S 80-IB AGAINST BOTH T HE ITEMS. THE LD.AO IS ITA NO.2669 & 2670MUM/2019 SHRI VINAY KUMAR AGARWAL ASSESSMENT YEARS :2013-14 & 2014-15 5 DIRECTED TO RECOMPUTE THE INCOME OF THE ASSESSEE IN TERMS OF OUR ABOVE ADJUDICATION. THE APPEAL STANDS PARTLY ALLOWED. ITA NO.2670/MUM/2019 (AY 2014-15) 4. FACTS ARE PARI-MATERIA THE SAME IN AY 2014-15. T HE ASSESSEE WAS SADDLED WITH ADHOC DISALLOWANCE OF RS.10 LACS AGAIN ST MOTOR CAR AND ANOTHER ADHOC DISALLOWANCE OF 10% AMOUNTING TO RS.5 .08 LACS ON ACCOUNT OF CONVEYANCE AND STAFF WELFARE EXPENSES. S INCE FACTS ARE IDENTICAL, APPLYING THE ADJUDICATION OF AY 2013-14, THE MOTOR CAR EXPENDITURE DISALLOWANCE IS RESTRICTED TO 20% OF RS .26,41,702/- WHICH COMES TO RS.5,28,340/-. THE DISALLOWANCE ON ACCOUN T OF CONVEYANCE EXPENSES & STAFF WELFARE EXPENSES IS ESTIMATED @5% WHICH COMES TO RS.2,54,243/-. FROM ASSESSMENT ORDER, IT APPEARS TH AT THE ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION U/S 80-IB IN THIS YEAR. THEREFORE, NO FURTHER RELIEF WOULD BE AVAILABLE TO THE ASSESSEE. THE LD.A O IS DIRECTED TO RECOMPUTE THE INCOME OF THE ASSESSEE IN TERMS OF OU R ABOVE ADJUDICATION. THE APPEAL STANDS PARTLY ALLOWED. CONCLUSION 5. BOTH THE APPEAL STANDS PARTLY ALLOWED IN TERMS O F OUR ORDER. ORDER PRONOUNCED ON 29 TH SEPTEMBER, 2020. SD/- SD/- (MAHAVIR SINGH) (MANOJ KUMAR AGGARWAL) / VICE PRESIDENT / ACCOUNTANT MEMBER MUMBAI; DATED : 29/09/2020 SR.PS, JAISY VARGHESE ITA NO.2669 & 2670MUM/2019 SHRI VINAY KUMAR AGARWAL ASSESSMENT YEARS :2013-14 & 2014-15 6 !'! / COPY OF THE ORDER FORWARDED TO : 1. &' / THE APPELLANT 2. ()&' / THE RESPONDENT 3. 0 ( ) / THE CIT(A) 4. 0 / CIT CONCERNED 5. 12(+3 , 3 , / DR, ITAT, MUMBAI 6. 2456 / GUARD FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI.