VISHWAJIT C. CHINDARKAR, MUMBAI V. DCIT RG 22(2), MUMBAI

ITA 2762/MUM/2012

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 9564 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 4 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-09-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: F
• Next Hearing Date: 23-07-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 24-04-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: POOJA SWAROOP
• Keywords: Income from undisclosed sources; Principle of natural justice
• Section: 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL F , BENCH MUMBAI BEFORE SHRI R.C.SHARMA, AM & SHRI SANDEEP GOSAIN , JM ITA NO. 2762 / MUM/20 1 2 ( ASSESSMENT YEAR : 2008 - 09 ) SHRI VISHWAJIT C CHINDARKAR SHOP NO.5, GROUND FLOOR, NEELKANTH SHOPPING ARCADE, CHEMBUR, MUMBAI 400 071 VS. DCIT RG 22(2), MUMBAI PAN/GIR NO. ACXPC8042M APPELLANT ) .. RESPONDENT ) ASSESSEE BY SHRI JAYANT R BHATT REVENUE BY SHRI POOJA SWAROOP DATE OF HEARING 02 / 08 /201 7 DATE OF PRONOUNCEME NT 13 / 09 / 201 7 / O R D E R PER R.C.SHARMA (A.M) : THIS I S AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) - 33, MUMBAI DATED 30/01/2012 FOR A.Y. 2008 - 09 IN THE MATTER OF ORDER PASSED U/S.143(3) OF THE IT ACT. 2. FOLLOWING GROUNDS HAVE BEEN TAKEN BY THE ASSESSEE: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT (A) ERRED IN CONFIRMING THE DISALLOWANCES OF RS. 87,96,070/ - BEING EXPENSES ON ACCOUNT OF HIRE CHARGES U/S 40(A)(IA) FOR NON DEDUCTION OF TDS U/S 194C BY CONSIDERING THE SAME IS ATTRACTING TDS PROVISION. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT (A) ERRED IN CONFIRMING THE ADDITIONS OF RS. 49,54,600/ - ON ACCOUNT OF CASH DEPOSITED IN THE SHAMRAO VITTHAL CO. OP. BANK A S UNACCOUNTED INCOME OF THE APPELLANT. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT (A) ERRED IN CONFIRMING THE ADDITIONS OF RS. 4,82,I 50 / - TREATING THE SAME AS BOGUS EXPENSES BEING 10% OF TOTAL EXPENSES OF RS. 48,21,5 03/ - . 4. THE ORDER PASSED BY THE LEARNED CIT (A) IS ILLEGAL, BAD IN LAW, ULTRA VIRUS AND CONTRARY TO THE PROVISIONS OF THE LAW AND FACTS AND IS PASSED WITHOUT APPLICATION OF MIND AND IN VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE ON VARIOUS ISSUES AS STATED HEREINABOVE. ITA NO. 2762/MUM/2012 SHRI VISHWAJIT C CHINDARKAR 2 5. THE APPELLANT CRAVES LEAVE TO ADD, TO ALTER OR TO AMEND ANY OF THE GROUND OF APPEAL MENTIONED HEREINABOVE. 6. EACH ONE OF THE ABOVE GROUNDS OF APPEAL IS INDEPENDENT AND WITHOUT PREJUDICE TO EACH OTHER. 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. 4. FACTS IN BRIEF ARE THAT THE ASSESSEE IS ENGAGED AS A CONTRACTOR WORKING FOR BMC AND UNDERTAKES JOB WORKS FOR WASTE DISPOSAL AND OTHER RELATED ACTIVITIES. THE ASSESSEE HAD FILED ITS RETURN OF INCOME ON 30 TH SEPTEMBER, 2008 DECLARING TOTAL INCOME OF RS.10,72,550/ - . 5. DURING THE COURSE OF SCRUTINY ASSESSMENT, AO OBSERVED THAT THE ASSESSEE HAS DEBITED VEHICLES HIRE CHARGES PAID, TO PROFIT & LOSS A/C AND CLAIMED AS AN EXPENSE. THE AMOUNT PAID BY WAY OF VEHICLE HIRE CHARGES TO T HE OWNER OF VEHICLE WAS NOT SUBJECT ED TO TDS AS THEY DO NOT OWN VEHICLES IN EXCESS OF 2 NOS . H OWEVER, THE AO DISALLOWED THE SAME U/S.40(A)(IA) BY OBSERVING THAT NO TAX HAS BEEN DEDUCTED AT SOURCE. 6. BY THE IMPUGNED ORDER CIT(A) CONFIRMED THE ACTION OF TH E AO. 7. WE HAVE CONSIDERED RIVAL CONTENTIONS AND CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FOUND FROM RECORD THAT THE ASSESSEE HAS DEBITED VEHICLE HIRE CHARGES PAID, TO PROFIT & LOSS A/C AND CLAIMED AS AN EXPENSE. THE AMOUNT SO PAID B Y WAY OF VEHICLE HIRE CHARGES TO THE OWNER OF VEHICLE IS NOT SUBJECT ED TO TDS AS THEY DO NOT OWN VEHICLES IN EXCESS OF 2 NOS. WE FOUND THAT ASSESSEE HAS FILED AFFIDAVIT FROM THE RECIPIENT OF INCOME ACCORDING TO WHICH THEY WERE NOT OWING VEHICLE IN EXCESS O F 2 NOS. THE PROVISO OF SECTION 194C IS DIRECTED IN RESPECT OF ITA NO. 2762/MUM/2012 SHRI VISHWAJIT C CHINDARKAR 3 PAYMENT MADE TO THE TRANSPORTER, WHEN TRANSPORTER IS OWING MORE THAN TWO VEHICLES. PROVISO OF SECTION 194C READS AS UNDER: - (1) - ANY PERSON RESPONSIBLE FOR PAYING ANY SUM TO ANY RESIDENT (HEREAF TER IN THIS SECTION REFERRED TO 39 - THE CONTRACTOR) FOR CARRYING OUT ANY WORK (INCLUDING SUPPLY OF LABOUR FOR CARRYING OUT ANY WORK) IN PURSUANCE OF A CONTRACT BETWEEN THE CONTRACTOR AND (A) THE CENTRAL GOVERNMENT OR ANY STATE GOVERNMENT; OR ANY LOCAL AUT HORITY; OR (B) ANY CORPORATION ESTABLISHED BY OR UNDER A CENTRAL, STATE OR PROVINCIAL ACT; OR ANY COMPANY. ANY CO - OPERATIVE [SOCIETY; OR]] (C) ANY AUTHORITY, CONSTITUTED IN INDIA BY OR UNDER ANY LAW, ENGAGED EITHER FOR THE PURPOSE OF DEALING WITH AND SATISFYING THE NEED FOR HOUSING ACCOMMODATION OR FOR THE PURPOSE OF PLANNING, DEVELOPMENT OR IMPROVEMENT OF CITIES, TOWNS AND VILLAGES, OR FOR BOTH; OR ANY SOCIETY REGISTERED UNDER THE SOCIETIES REGISTRATION ACT, 1860 (21 OF 1860) OR UNDER ANY LA W CORRESPONDING TO THAT ACT IN FORCE IN ANY PART OF INDIA; OR ANY TRUST; OR (D) A NY UNIVERSITY ESTABLISHED OR INCORPORATED BY OR UNDER A CENTRAL, STATE OR PROVINCIAL ACT AND AN INSTITUTION DECLARED TO BE A UNIVERSITY UNDER SECTION 3 OF THE UNIVERSITY GRAN TS COMMISSION ACT, ANY FIRM,] SHALL, AT THE TIME OF CREDIT OF SUCH SUM TO THE ACCOUNT OF THE CONTRACTOR OR AT THE TIME OF PAYMENT THEREOF IN CASH OR BY ISSUE OF A CHEQUE OR DRAFT OR BY ANY OTHER MODE, WHICHEVER IS EARLIER, [DEDUCT AN AMOUNT EQUAL TO (/) ONE PER CENT IN CASE OF ADVERTISING, (//) IN ANY OTHER CASE TWO PER CENT, . OF SUCH SUM AS INCOME - TAX ON INCOME COMPRISED THEREIN.] (2) ANY PERSON (BEING A CONTRACTOR AND NOT BEING AN INDIVIDUAL OR A HINDU UNDIVIDED FAMILY) RESPONSIBLE FOR PAYING ANY SUM T C ANY RESIDENT (HEREAFTER IN THIS SECTION REFERRED TO AS THE SUB - CONTRACTOR) IN PURSUANCE OF A CONTRACT WITH THE SUB - CONTRACTOR FOR CARRYING OUT, OR FOR THE SUPPLY OF LABOUR FOR CARRYING OUT, THE WHOLE OR ANY PART OF THE WORK UNDERTAKEN FAY THE CONTRACTOR OR FOR SUPPLYING WHETHER WHOLLY OR PARTLY ANY LABOUR WHICH THE CONTRACTOR HAS UNDERTAKEN TO SUPPLY SHALL, AT THE TIME OF CREDIT OF SUCH SUM TO THE ACCOUNT OF THE SUB CONTRACTOR OR AT THE TIME OF PAYMENT THEREOF IN CASH OR BY ISSUE OF A CHEQUE OR DRAFT OR B Y ANY OTHER MODE, WHICHEVER IS EARLIER, DEDUCT AN AMOUNT EQUAL TO ONE PER CENT OF SUCH SUM AS INCOME - TAX ON INCOME COMPRISED THEREIN: PROVIDED THAT AN INDIVIDUAL OR A HINDU UNDIVIDED FAMILY, WHOSE TOTAL SALES, GROSS RECEIPTS OR TURNOVER FROM THE BUSINESS O R PROFESSION CARRIED ON BY HIM EXCEED THE MONETARY LIMITS SPECIFIED UNDER CLAUSE (A) OR CLAUSE .(K) OF SECTION 44AB DURING THE FINANCIAL YEAR IMMEDIATELY ITA NO. 2762/MUM/2012 SHRI VISHWAJIT C CHINDARKAR 4 PRECEDING THE FINANCIAL YEAR IN WHICH SUCH SUM IS CREDITED OR PAID TO THE ACCOUNT OF THE SUB - CONTRACTO R, SHALL BE LIABLE TO DEDUCT INCOME - TAX UNDER THIS SUB SECTION.] [EXPLANATION /. FOR THE PURPOSES OF SUB - SECTION (2), THE EXPRESSION 'CONTRACTOR' SHALL ALSO INCLUDE A CONTRACTOR WHO IS CARRYING OUT ANY WORK (INCLUDING SUPPLY OF LABOUR FOR CARRYING OUT ANY WORK) IN PURSUANCE OF CONTACT BETWEEN THE CONTRACTOR AND THE GOVERNMENT OF A FOREIGN STATE OR A FOREIGN ENTERPRISE OR ANY ASSOCIATION OR BODY ESTABLISHED OUTSIDE INDIA.] [EXPLANATION //). FOR THE PURPOSES OF THIS SECTION, WHERE ANY SUM REFERRED TO IN SUB - SECTION (1) OR SUB SECTION (2) IS CREDITED TO ANY ACCOUNT, WHETHER CALLED 'SUSPENSE ACCOUNT' OR BY ANY OTHER NAME, IN THE BOOKS OF ACCOUNT OF THE PERSON LIABLE TO PAY SUCH INCOME, SUCH CREDITING SHALL BE DEEMED TO BE CREDIT OF SUCH INCOME TO THE ACCOUNT O F THE PAYEE AND THE PROVISIONS OF THIS SECTION SHALL APPLY ACCORDINGLY.] EXPLANATION III. FOR THE PURPOSES OF THIS SECTION, THE EXPRESSION 'WORK' SHALL ALSO INCLUDE (A) ADVERTISING; (B) BROADCASTING AND TELECASTING INCLUDING PRODUCTION OF PROGRAMMES FOR SUCH BROADCASTING OR TELECASTING; (C) CARRIAGE OF GOODS AND PASSENGERS BY ANY MODE OF TRANSPORT OTHER THAN BY RAILWAYS; (D) CATERING.] (3) NO DEDUCTION SHALL BE MADE UNDER SUB - SECTION (1) OR SUB - SECTION (2) FROM. . (I) THE AMOUNT OF AN Y SUM CREDITED OR PAID OR LIKELY TO BE CREDITED OR PAID TO THE ACCOUNT OF, OR TO, THE CONTRACTOR OR SUB - CONTRACTOR, IF SUCH SUM DOES NOT EXCEED TWENTY THOUSAND RUPEES: PROVIDED THAT WHERE THE AGGREGATE OF THE AMOUNTS OF SUCH SUMS CREDITED OR PAID OR LIKELY TO BE CREDITED OR PAID DURING THE FINANCIAL YEAR EXCEEDS FIFTY THOUSAND RUPEES, THE PERSON RESPONSIBLE FOR PAYING SUCH SUMS REFERRED TO IN SUB - SECTION (1) OR, AS THE CASE MAY BE, SUB - SECTION (2) SHALL BE LIABLE TO DEDUCT INCOME - TAX [UNDER THIS SECTION:] [PROVIDED FURTHER THAT NO DEDUCTION SHALL BE MADE UNDER SUB - SECTION (2), FROM THE AMOUNT OF ANY SUM CREDITED OR PAID OR LIKELY TO BE CREDITED OR PAID DURING THE PREVIOUS YEAR TO THE ACCOUNT OF THE SUB CONTRACTOR DURING THE COURSE OF BUSINESS OF PLYING, HI RING OR LEASING GOODS CARRIAGES, ON PRODUCTION OF A DECLARATION TO THE PERSON CONCERNED PAYING OR CREDITING SUCH SUM, IN THE PRESCRIBED FORM AND VERIFIED IN THE PRESCRIBED MANNER AND WITHIN SUCH TIME AS MAY BE PRESCRIBED, IF SUCH SUB - CONTRACTOR IS AN INDIV IDUAL WHO HAS NOT OWNED MORE THAN TWO GOODS CARRIAGES AT ANY TIME DURING THE PREVIOUS YEAR: ITA NO. 2762/MUM/2012 SHRI VISHWAJIT C CHINDARKAR 5 PROVIDED ALSO THAT THE PERSON RESPONSIBLE FOR PAYING ANY SUM AS AFORESAID TO THE SUB CONTRACTOR REFERRED TO IN THE SECOND PROVISO SHALL FURNISH TO THE PRESCRIBED IN COME - TAX AUTHORITY OR THE PERSON AUTHORISED BY IT SUCH PARTICULARS AS MAY BE PRESCRIBED IN SUCH FORM AND WITHIN SUCH TIME AS MAY BE PRESCRIBED; OR} . RULE 29 - D IN THIS REGARD READS AS UNDER: - FORM OF DECLARATION UNDER SECOND PROVISO / THIRD PROVISO TO S ECTION 194C (3)(I)* 29D. (1) THE DECLARATION UNDER THE SECOND PROVISO TO CLAUSE (/) OF SUB - SECTION (3) OF 194C BY A SUB - CONTRACTOR SHALL BE IN FORM NO. 15 - 1 AND SHALL BE VERIFIED IN THE MANNER INDICATED THEREIN BY SUCH SUB - CONTRACTOR. (2) THE DECLARATION REFERRED TO IN SUB - RULE (1) MAY BE FURNISHED TO THE CONTRACTOR RESPONSIBLE OR CREDITING ANY SUM TO THE ACCOUNT OF THE SUB - CONTRACTOR BEFORE THE EVENT OF BEING CREDITED OR PAID TO SUCH SUB - CONTRACTOR. (3) THE PARTICULARS UNDER THE THIRD PROVISO TO CLAUSE (I ) OF SUB - SECTION (3) OF SECTION 194C TO BE FURNISHED BY A CONTRACTOR RESPONSIBLE FOR PAYING ANY SUM TO SUCH SUB - CONTRACTOR SHALL BE (4) THE PARTICULARS REFERRED TO IN SUB - RULE (3) SHALL BE IN FROM NO. 15J. (4) THE PARTICULARS REFERRED TO IN SUB - RULE (3), SHALL BE FURNISHED. (/) TO THE COMMISSIONER OF INCOME - TAX, SO DESIGNATED BY THE CHIEF COMMISSIONER OF INCOME - TAX, WITHIN WHOSE AREA OF JURISDICTION, THE OFFICE OF THE CONTRACTOR REFERRED TO IN SUB - RULE (3) IS SITUATED; (II) ON OR BEFORE THE 30TH JUNE FOL LOWING THE FINANCIAL YEAR.] FORM THE ABOVE IT CAN BE OBSERVED FROM THE ABOVE THAT SUB - SECTION (2) OF SECTION 194C OF THE INCOME - TAX ACT, 1961 LAYS DOWN THAT WHEN A CONTRACTOR MAKES PAYMENT OF ANY SUM TO A RESIDENT SUB - CONTRACTOR IN PURSUANCE OF A CONT RACT MADE WITH HIM FOR CARRYING OUT THE WHOLE OR ANY PART OF THE WORK UNDERTAKEN BY HID CONTRACTOR, OR, FOR SUPPLYING ANY LABOUR, THE CONTRACTOR SHALL DEDUCT TDS AS INCOME - TAX ON THE INCOME COMPRISED THEREIN, 8. IN THE INSTANT CASE BEFORE US THE AS SESSEE HAS NOT DEDUCTED THE TDS BY VIRTUE OF THE PROVISO AS STATED HEREINABOVE ON THE PAYMENTS MADE TO ITA NO. 2762/MUM/2012 SHRI VISHWAJIT C CHINDARKAR 6 VARIOUS TRUCK OWNERS FOR PLYING, HIRING OR LEASING GOODS CARRIAGES SINCE THE SUB - CONTRACTOR S WERE INDIVIDUAL WHO HA VE NOT OWNED MORE THAN TWO GOODS CARRIAGES AT ANY TIME DURING THE PREVIOUS YEAR. THERE IS NO DISPUTE TO THE FACT THAT THE ASSESSEE HAS TO OBTAIN NO.15 - 1 FROM THE SUB - CONTRACTORS WHILE MAKING T HE PAYMENT TO THEM . IN THE PR ESENT CASE OTHER CONDITIONS LIKE PAYMENT ABOVE RS.50,000 IS NOT DISPUTED AS ASSE SSEE HAS ADMITTED THAT PAYMENT TO EACH SUB - CONTRACTOR EXCEEDED THE SUM IN ONE FULL YEAR. BUT SINCE THE ASSESSEE HAS OBTAINED FORM NO. 15 - 1 THEN SECOND PROVISO WOULD BE APPLICABLE, THEREFORE IT IS NOT REQUIRED TO DEDUCT TAX. THE SHORT QUESTION ARISES IS IN A CASE LIKE THIS IS WHETHER WHERE AN ASSESSEE HAS OBTAINED FORM NO.15 - 1 , THE ASSESSEE IS STILL LIABLE TO DEDUCT TAX UNDER SECTION 194C. IN OUR CONSIDERED VIEW ONCE ASSESSEE HAS OBTAINED FORM NO.15 - 1 FROM THE SUB - CONTRACTORS WHOSE CONTENTS ARE NOT DISPUTED OR WHOSE GENUINENESS IS NOT DOUBTED THEN ASSESSEE IS NOT LIABLE TO DEDUCT TAX FROM THE PAYMENTS MADE TO SUB - CONTRACTORS. ONCE ASSESSEE IS NOT LIABLE TO DEDUCT TAX U/S 194C THEN DISALLOWANCE U/S 40(A)(IA) CANNOT BE MADE . WE ALSO FOUND THAT THE ASSESSEE HAS ALSO BROUGHT TO THE NOTICE OF AO VIDE LETTER DATED 06/12/2010 THAT RECIPIENT OF HIGHER CHARGES DO NOT OWN MORE THAN TWO VEHICLES. AFFIDAVITS TO THIS EFFECT IN SUPPORT OF ITS CONTENTION WAS ALSO FILED BEFORE THE CIT(A). THE ISSUE UNDER CONSIDERATION IS DIRE CTLY COVERED BY THE DECISION OF THE HONBLE AHMEDABAD TRIBUNAL IN THE CASE OF VALIBHAI KHANBHAI MANKAD VS. DCIT (ITAT) DATED 29 TH APRIL 2011. ACCORDINGLY, WE DIRECT THE AO TO DELETE DISALLOWANCE MADE U/S.40(A)(IA). ITA NO. 2762/MUM/2012 SHRI VISHWAJIT C CHINDARKAR 7 9 . AO HAS ALSO MADE ADDITION IN RESPECT O F THE AMOUNT DEPOSITED IN THE BANK ACCOUNT. ADDITION WAS MADE ON THE PLEA THAT DURING THE FINANCIAL YEAR RELEVANT TO A.Y.2008 - 09 AS PER ITS INFORMATION, THE ASSESSEE HAS DEPOSITED CASH OF RS.49,54,600/ - IN THE SHAMRAO VITHAL CO - OPERATIVE BANK LTD., 121/484 5, CHEMBUR ON 31/03/2008. IT WAS EXPLAINED BEFORE THE AO VIDE LETTER DATED 22/12/2010 THAT AN AMOUNT OF RS.1,50,46,125/ - WAS WITHDRAWN FROM BHARAT CO - OPERATIVE BANK LTD., AND DEPOSITED THE AMOUNT OF RS.54,11,500/ - IN BHARAT CO - OPERATIVE BANK LTD., AND RS.4 9,54,600/ - IN SHAMRAO VITHAL CO - OPERATIVE BANK LTD., MUMBAI. HOWEVER, AO DID NOT ACCEPT ASSESSEES CONTENTION AND ADDED THE AMOUNT DEPOSITED IN SHAMRAO VITHAL CO - OPERATIVE BANK LTD., AMOUNTING TO RS.49,54,600/ - . BY THE IMPUGNED ORDER, CIT(A) CONFIRMED THE ACTION OF THE AO AND THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 1 0 . WE HAVE CONSIDERED RIVAL CONTENTIONS AND FOUND FROM RECORD THAT BEFORE THE LOWER AUTHORITIES, THE ASSESSEE HAS SUBMITTED COPIES OF THE BANK STATEMENT OF BHARAT CO OP BANK LIMITED & SHAMR AO VITTHAL CO OP BANK. ALL THE CASH DEPOSITED IN SHAMRAO VITTHAL CO OP BANK, AS STATED IN AIR, ARE FORMING PART OF THE CASH FLOW OF THE ASSESSEE AND HAS SHOWN IN 'THE CASH FLOW STATEMENT SO SUBMITTED. MOST OF THE DEPOSITS ARE OUT OF CASH WITHDRAWN FROM BH ARAT CO OP BANK LIMITED. DURING THE YEAR UNDER REVIEW TOTAL WITHDRAWAL FROM BANK & DEPOSITED IN BANKS ARE AS UNDER - CASH WITHDRAWALS FROM BANKS: - ITA NO. 2762/MUM/2012 SHRI VISHWAJIT C CHINDARKAR 8 BHARAT CO OP BANK LIMITED 15046125.00 SHAMRAO VITTHAL CO OP BANK 51500.00 CASH DEPOSITED INTO BANKS: - BHARAT CO OP BANK LIMITED 5411500.00 SHAMRAO VITTHAL CO OP BANK 4954600.00 1 1 . THE AFORESAID BOTH ACCOUNTS ARE DULY DISCLOSED IN THE BALANCE SHEET. FORM THE ABOVE DETAILS IT IS CLEAR THAT CASH DEPOSITED IN THE SHAMRAO VITTHAL CO OP BANK IS OUT OF THE CASH BALANCE AVAILABLE WITH THE ASSESSEE AND ARE DULY DISCLOSED IN THE BOOKS OF ACCOUNTS. ACCORDINGLY AO IS DIRECTED TO DELETE THE ADDITION SO MADE. 12 . AO HAS ALSO DISALLOWED 10% OF THE EXPENDITURE DEBITED TO P & L ACCOUNT. BY THE IMPUGNED ORDER CIT (A) CONFIRMED THE ACTION OF THE AO. IT WAS ARGUED BY LEARNED AR THAT ALL THE EXPENSES ARE DULY SUPPORTED AND RECORDED IN AUDITED BOOKS OF ACCOUNTS AND DETAILS OF THE SAME WERE ALSO SUPPLIED TO THE LOWER AUTHORIT IES. HE FURTHER CONTENDED THAT ESTIMATIO N MUS T BE HONEST AND FAIR AND CASE WORK SHOULD NOT BE CAPRICIOUS AND SHOULD HAVE A REASONABLE NEXUS TO THE AVAILABLE MATERIAL. 13 . WE HAVE CONSIDERED RIVAL CONTENTIONS AND FOUND FROM RECORD THAT TOTAL EXPENDITURE OF RS.48,21,503/ - WAS DEBITED BY THE ASSESSEE IN ITS PROFIT AND LOSS ACCOUNT. THE AO HAS DETAILED THIS EXPENDITURE IN PARA 7 OF HIS ORDER AND AFTER OBSERVING THAT ASSESSEE HAS FAILED TO SUBMIT DETAILS OF EXPENSES AND BILLS / INVOICES ETC., HE MADE AN ESTIMATED DISALLOWANCE OF 10% OF THESE EXPENSES . HOWE VER, LOOKING THE QUANTUM OF INCOME EARNED ITA NO. 2762/MUM/2012 SHRI VISHWAJIT C CHINDARKAR 9 BY ASSESSEE VIS - - VIS NATURE AND AMOUNT OF EXPENDITURE INCURRED TO EARN THE SAME, WE DEEM IT APPROPRIATE, CONSIDERING THE TOTALITY OF FACTS A ND CIRCUMSTANCES OF THE CASE TO REDUCE THE DISALLOWANCE FROM 10% TO 5%. A CCORDINGLY, WE CONFIRM THE DISALLOWANCE SO MADE BY THE AO TO THE EXTENT OF 5% . 16. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED IN PART. O RDER PRONOUNCED IN THE OPEN COURT ON THIS 13 / 09 /2017 S D/ - ( SANDEEP GOSAIN ) S D/ - ( R.C.SHARMA ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 13 / 09 /201 7 KARUNA SR. PS COPY OF THE ORDER FORWARDED TO : BY ORDER, ( ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5 . DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//