SURENDRA KUMAR CHADHA, MUMBAI V. ITO 19(3(4), MUMBAI

ITA 285/MUM/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 0133 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 7 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-08-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Assessment Year: 2007-2008
• Appeal Filed On: 10-01-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: AGAINST DATED PASSED
• Keywords: Depreciation; Salary income

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE SHRI R.C. SHARMA , AM AND SHRI AMARJIT SINGH , JM / I .T.A. NO. 285 / M/ 20 1 4 ( / ASSESSMENT YEAR: 2007 - 08 ) SURENDRA KUMAR CHADHA FLAT NO.401, VINTAGE PEARL, 29 TH FLOOR RD. BANDRA (W) MUMBAI PIN:400050 / VS. THE INCOME TAX OFFICER 19(3)(4 ) PIRAMAL CHAMBERS, LALBAUG MUMBAI - 400020 ./ ./ PAN/GIR NO. : ABKPC 4430 H ( / APPELLANT ) .. ( / RESPONDENT ) / DATE OF HEARING : 05.07 .2017 / DATE OF PRONOUNCEMENT : 29 . 08 .2017 / O R D E R PER AMARJIT SINGH, JM: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER DATED 13 .11.201 3 PASSED BY THE COMMIS SIONER OF INCOME TAX (APPEALS) - 18 , MUMBAI [HEREINAFTER REFERRED TO AS THE CIT(A)] RELEVANT TO THE ASSESSMENT YEAR 200 7 - 08 . 2 . THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: - 1. THE GROUNDS MENTIONED HEREUNDER ARE WITHOUT PREJUDICE TO ONE ANOTHER. 2. THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW INNOT ALLOWING THE GODOWN CHARGES PAYABLE IN THE SUM OF RS.62400/ - . ASSESSEE BY: SHRI M SUBRAMANIAN DEPARTMENT BY: SHRI RAM TIWARI (SR. AR) SURENDRA KUMAR CHADHA 2 3. THE LD. CIT(A) HAS ERRED IN NOT ALLOWING THE RESIDUAL EXPENSES ON ACCOUNT OF STAFF WELFARE EXPENSES OF RS.7760/ - . 4. THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF DELHI OFFICE EXPENSES OF RS.214357/ - U/S 41(1) WITHOUT UNDERSTANDING THE BASIC NATURE OF OUTSTANDING. 5. THE LD. CIT(A) HAS ERRED IN CONF IRMING THE DISALLOWANCE/ADDITION OF THE PROFESSIONAL CHARGES OF RS.122286/ - 6. THE LD. CIT(A) HAS ERRED IN NOT ALLOWING THE EXHIBITION EXPENSES PAYABLE OF RS.42657/ - . 7. THE LD. CIT(A) HAS ERRED IN NOT ALLOWING THE REPAIR CHARGES OF RS.192341/ - (SHOULD BE RS.193241/ - ) COMPLETE DETAILS FOR WHICH WERE SUBMITTED ON WRONG ASSUMPTIONS. 8. THE LD. CIT(A) HAS ERRED IN NOT ALLOWING THE EXPENSES OF ELECTRICITY/ WATER CHARGES OF RS.47680/ - IN ENTIRELY, WITHOUT APPRECIATING THE CIRCUMSTANCES, NECESSITY AND PURPOSE. 9. THE LD. CIT(A) HAS ERRED IN NOT ALLOWING THE DEPRECIATION ON FOLLOWING ASSETS FOR WHICH COMPLETE EXPLANATION WAS BEEN GIVEN TO AO AND CIT(A) A. AIR CONDITIONERS B. COMPUTERS C. FURNITURE & FIXTURES D. DVD E. INTERCOM F. GAS RANGE CHIMNEY 10. T HE LD. CIT( A) HAS ERRED IN CONFORMING THE ADHOC/ ESTIMATED ADDITION OF RS.1,00,000/ - . 11. THE APPELLANT CRAVES LIBERTY TO ADD, WITHDRAW AND OR AMEND ANY OF THE GROUNDS OF APPEAL BEFORE FINAL ADJUDICATION HERE OF. 3 . THE BRIEF FACTS OF THE CASE ARE THAT TH E ASSESSEE FILED THE RETUR N OF INCOME ON 24 .1 0 .2007 FOR THE A.Y.2007 - 08 DECLARING TOTAL INCOME TO THE TUNE OF RS.6,22,989/ - . THE RETURN WAS PROCESSED U/S 143(1) OF THE I.T. ACT, 1961 ACCEPTING THE INCOME RETURNED. TH EREAFTER, THE CASE WAS SELECTED FOR SCRUTINY AND ACCORDINGLY NOT ICE U/S 143(2) OF THE ACT DATED 29.09.2008 WAS ISSUED AND SERVED THE ASSESSEE ON 30.09.2008. SURENDRA KUMAR CHADHA 3 THE ASSESSEE DECLARED HIS INCOME FROM SALARY , BUSINESS AND OTHER SOURCES. DURING THE PREVIOUS YEAR , THE ASSESSEE DECLARED HIS INCOME FROM SALARY OTHER SO URCES. THE ASSESSEE IS ENGAGED IN THE TRADING OF HYDROLIC PUMPS AND TOTAL TURNOVER OF THE YEAR WAS SHOWN TO THE TUNE OF RS. 1.13 CRORES AND NET PROFIT FROM BUSINESS WAS SHOWN TO THE TUNE OF RS.6.01 LACS A S PER THE P & L ACCOUNT FOR THE YEAR. THE ASSESSEES ACCOUNTS WAS SUBJECT TO THE AUDIT U/S 44AB OF THE ACT. DURING THE COURSE OF ASSESSMENT YEAR PROCEEDING, THE ASSESSEE WAS ASKED TO FURNISH THE REPORT U/S 44AB I N THE REQUISITE FORMAT . THE ASSESSEE FAILE D TO FURNISH THE SAID REPORT. T HE ASSESSEE CLAIM ED VARIOUS EXPENSES PAID WHICH HAS BEEN DISALLOWED BY THE ASSESSING OFFICER AND ASSESSED THE INCOME TO THE TUNE OF RS. 21,57,020/ - . THE ASSESSEE FILED AN APPEAL AGAINST THE ASSESSMENT ORDER DATED 16.11.2009 WH ICH WAS PARTLY ALLOWED BY THE CIT(A) - 10 M UMBAI, BUT THE ASSESSEE WAS NOT SATISFIED THEREFORE, THE ASSESSEE FILED THE PRESENT APPEAL BEFORE US . ISSUE NO.1: - 4 . ISSUE NO. 1 IS GENERAL IN NATURE WHICH NOWHERE REQUIRE ANY ADJUDICATION. ISSUE NO.2 & 6 : - 5 . UNDER THESE ISSUE S THE ASSESSEE HAS CHALLENGED THE CONFIRMATION OF G ODOWN CHARGES PAYABLE IN THE SUM OF RS.62,400/ - AND CONFIRMATION OF THE DISALLOWANCE OF WELFARE EXPENSES TO THE TUNE OF SURENDRA KUMAR CHADHA 4 RS . 77 , 6 0/ - AND CONFIRMATION OF THE DISALLOWANCE OF DELHI OFFICE EXPEN SES TO THE TUNE OF RS. 2,14,357/ - AND CONFIRMATION OF THE DISALLOWANCE OF PROFESSIONAL CHARGES TO THE TUNE OF RS.1,22,286/ - AND CONFIRMATION OF DISALLOWANCE OF EXHIBITION EXPENSES PAYABLE TO THE TUNE OF RS.42,657/ - . 6 . ON APPRAISAL OF THE ORDER OF THE ORDER PASSED BY CIT(A), W E OBSERVED THAT THE ASSESSEE FAILED TO FILE THE DETAIL/EVIDENCES IN SUPPORT OF HIS CLAIM . T HE SAME HAS BEEN SHOWN TO BE PAYABLE BUT THERE IS NOTHING ON RECORD WHETHER THE SAID AMOUNT WAS PAID OR NOT . S O FA R AS THE EXPENSES ARE CON CERNED, T HERE IS NO EVIDENCE OF ANY KIND ON RECORD TO CONFIRM THE ASSERTION OF THE ASSESSEE. THE EXPENSES WHICH HAS BEEN SHOWN PAYABLE AS ALLEGED IN ISSUE NO.2 TO 6 NOWHERE SUPPORTED WITH ANY OTHER DOCUMENT. THE PRESENT ASSESSMENT YEAR IS THE YEAR OF 2007 - 08. NO DOUBT, IN THE SUBSEQUENT YEAR THE ASSESSEE CAN SHOW THE PAYMENT TO THE CONCERN PARTIES WHETHER THESE AMOUNT WERE ACTUALLY PAID OR NOT. THE ASSESSEE CAN ALSO FURNISH EVIDENCE IN SUPPORT OF HIS WHETHER THE EXPENSES INCURRED WERE PAID OR NOT . THE ASSES SEE HAS TOOK THE PLEA THAT AN AMOUNT HAS BEEN PAID. BUT CERTIFICATION IS NOT ON FILE. I N VIEW OF THE SAID CIRCUMSTANCES WE ARE OF THE VIEW THAT THE CASE IS LIABLE TO BE REMANDED BEFORE THE AO TO VERIFY THE CLAIM OF THE ASSESSEE WHETHER THESE AMOUNT WERE PA ID TO THE CONCERN OR NOT , THEREFORE, IN THE SAID CIRCUMSTANCES WE SET ASIDE THE FINDING OF THE CIT(A) ON THE SAID ISSUES AND DIRECT THE AO TO VERIFY THE CLAIM OF THE SURENDRA KUMAR CHADHA 5 ASSESSEE I N CONNECTION WITH THE EXPENSES/THE AMOUNT PAYABLE HAS BEEN PAID OR NOT IN ACCORDANCE WITH LAW. ACCORDINGLY, THESE ISSUES HAVE DECIDED IN FAVOUR OF THE ASSESSEE. ISSUE NO.7 TO 9 : - 7 . UNDER THESE ISSUE S THE ASSESSEE HAS CHALLENGED THE DISALLOWANCE OF REPAIR CHARGES TO THE TUNE OF RS. 1,92,341/ - AN D DISALLOWANCE OF ELECTRICITY AND WATER CHARGES TO THE TUNE OF RS. 47,680/ - AND THE DISALLOWANCE THE CLAIM OF THE DEPRECIATION OF ASSETS . T HE CONTENT ION OF THE ASSESSEE IS THAT THE RESIDENTIAL HOUSE WAS USE D FOR BUSINESS PURPOSE. SINCE, THE OFFICE WAS ACTUALLY THE RESIDENTIAL PREMISES USED THEREFORE, THE ASSESSING OFFICER DEC LINED THE CLAIM OF THE ASSESSEE. THERE IS NO DOUBT THAT THE ASSESSEE WAS USING HIS PREMISES FOR HIS OFFICE USE . I N VIEW OF THE SAID CIRC UMSTANCES WE ARE OF THE VIEW THAT THE IT WOULD BE JUST AND FAIR TO RESTRICT TH E EXPENSES TO THE EXTENT OF 50% CLAIMED. WE ALLOWED THE CLAIM OF THE ASSESSEE ACCORDINGLY AND DECIDED THESE ISSUES IN FAVOUR OF THE ASSESSEE. ISSUE NO. 10: - 8 . UNDER THIS ISSUE T HE ASSESSEE HAS CHALLENGED THE ADH OC DISALLOWANCE TO THE TUNE OF RS.1,00,000/ - . THE AO OBSERVED THAT THE ASSESSEE HAS CLAIMED SEVERAL EXPENSES IN THE PROFIT AND LOSS ACCOUNT UNDER VARIOUS HEADS SUCH AS SALARIES, STAFF WELFARE, AUDIT ACCOUNTING CHARGES, MIS CELLANEOUS CHARGES , VEHICLE MAINTENANCE AND PETROL , SURENDRA KUMAR CHADHA 6 BOOKS AND PERIODICALS ETC. DETAILS WERE CALLED BUT THE ASSESSEE FAILED TO SATISFY THE AO, THEREFORE, THE ASSESSING OFFICER MADE THE DISALLOWANCE OF RS. 1,00,000/ - ON AD HOC BASIS CIT(A) HAS CONFIRMED THE S AME . B OOK ACCOUNT HAS NOT BEEN REJECTED. T HE ENTRY OF EXPENSES HAS BEEN MENTIONED IN THE BOOKS OF ACCOUNT WITHOUT REJECTING THE BOOKS OF ACCOUNT , THE AD HOC DISALLOWANCE DOES NOT SEEMS JUSTIFIABLE THEREFORE, WE SET ASIDE THE AD HOC DISALLOWANCE TO THE TUNE OF RS. 1,00,000/ - AND ALLOWED THE CLAIM OF ASSESSEE. ACCORDINGLY, WE DECIDE THE ISSUE IN FAVOUR OF THE ASSESSEE AGAINST THE REVENUE. 9 . IN THE RESULT , THE APPEAL OF THE ASSESSEE IS HEREBY PARTLY ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 29.08. 2017 SD/ - SD/ - ( R.C. SHARMA ) (AMARJIT SINGH) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI; DATED : 29 . 08.2 01 7 V.P. SINGH SURENDRA KUMAR CHADHA 7 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. / BY ORDER, //TRUE COPY// / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI