T. Abdul Wahid & Co., CHENNAI V. ITO, CHENNAI

ITA 2983/CHNY/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 4799 (ITAT-CHENNAI)
• Duration Of Justice: 6 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-04-2017
• Appeal Filed By: Assessee
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 20-10-2016
• Court: TRIBUNAL
• Department Lawyers: SHIVA SRINIVAS
• Assessee Lawyers: G BASKAR
• Keywords: Business income; Agreed addition; Revised return
• Section: 234B

Judgement Text

, , IN THE INCOME - TAX APPELLATE TRIBUNAL A BENCH, CHENNAI , . , BEFORE SHRI CHANDRA POOJARI , ACCOUNTANT MEMBER & SHRI DUVVURU RL REDDY , JUDICIAL MEMBER ./ I.T.A.NO. 2 98 3/ MDS/2016 / ASSESSMENT YEAR :20 0 8 - 0 9 T. ABDUL WAHID & CO., 26/53, MASHKUR HOUSE, VEPERY HIGH ROAD, CHENNAI 600 003. [PAN: A AA FT0482B ] VS. THE INCOME TAX OFFICER , NON CO RPORATE WARD 5 ( 2 ) CHENNAI . ( / APPELLANT ) ( / RESPONDENT ) / APPELLANT BY : SHRI G. BASKAR, ADVOCATE / RESPONDENT BY : S HRI S HIVA SRINIVAS , J CIT / DATE OF HEARING : 0 7 . 0 2 .201 7 / DATE OF P RONOUNCEMENT : 21 . 0 4 .201 7 / O R D E R PER DUVVURU RL REDDY , JUDICIAL MEMBER : TH I S APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMIS SIONER OF INCOME TAX (APPEALS) 5 , C HENNAI DATED 1 9 . 0 8 .201 6 RELEVANT TO THE ASSESSMENT YEAR 20 0 8 - 0 9 . THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: 1. THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING THE ADDITION OF RS.2,06,730 ON ACCOUNT OF PROFIT ON SALE OF ASSET IGNORING THE LOSS SUFFERED BY THE APPELLANT ON SALE OF CAR AMOUNTING TO RS.1,17,987. I.T.A. NO . 2 983 / M/ 1 6 2 2. THE COMMISSIONER OF INCOME TAX (APPEALS) IS NOT JUSTIFIED IN CONFIRMING THE DISALLOWANCE OF TRAVELLING EXPENSES AMOUNTING TO RS.92,669/ - OBSERVING THAT THE APPELLANT COULD NOT PRODUCE VOUCHERS FOR INCURRING SUCH EXPE NSES. 3. THE COMMISSIONER OF INCOME TAX (APPEALS) IS NOT JUSTIFIED IN CONFIRMING THE DISALLOWANCE OF 10% OF THE RO PLANT MAINTENANCE CHARGES AND EFFLUENT CHARGES AMOUNTING TO RS.3,32,252 IGNORING THE FACT THAT MOST OF THE EXPENDITURES WERE PAID TO THE G OVERNMENT AGENCIES AND CONTRACTORS. 4. THE COMMISSIONER OF INCOME TAX (APPEALS) WAS NOT JUSTIFIED IN CONFIRMING THE DISALLOWANCE OF 10% OF THE TOTAL EXPENDITURE TOWARDS GUEST HOUSE AMOUNTING TO RS.41,432 IGNORING THE FACT THAT THESE EXPENSES ARE COVERED BY FRINGE BENEFIT TAX AND HAS ALREADY SUFFERED TAX. 5. THE COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO HAVE CANCELLED THE LEVY OF INTEREST U/S.234B OF THE INCOME - TAX ACT, AS THE PREPAID TAXES IS MORE THAN THE TAX DEMAND. 2. WITH REGARD TO THE FIR ST GROUND RAISED IN THE APPEAL OF THE ASSESSEE IS THAT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF .2,06,730/ - ON ACCOUNT OF PROFIT ON SALE OF ASSET IGNORING THE LOSS SUFFERED BY THE ASSESSEE ON THE SALE OF CAR AMOUNT TO .1,17,987/ - , THE FACTS ARE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER HAS NOTICED THAT THE ASSESSEE HAS MADE A PROFIT OF .2,06,730/ - ON THE SALE OF AN ASSET, BUT THE SAME WAS NOT OFFERED TO TAX. WHEN THIS FACT WAS POINTED OUT, THE AR OF THE ASSESSEE HAS REPLIED BEFORE THE ASSESSING OFFICER THAT THE SAID INCOME WAS INADVERTENTLY MISSED OUT TO BE ADDED TO TH E BUSINESS INCOME WHILE FILING THE RETURN OF INCOME AND ALSO ACCEPTED TO ADD THE SAME TO THE ASSESSEE S TOTAL INCOME. ACCORDINGLY, THE SAME WAS BROUGHT TO TAX. ON APPEAL, THE LD. CIT(A) HAS CONFIRMED THE DISALLOWANCE BASED ON THE ACCEPTANCE OF THE AR OF TH E ASSESSEE OF PROFITS EARNED ON SALE OF ASSETS, WHICH WAS NOT INCLUDED I.T.A. NO . 2 983 / M/ 1 6 3 AS BUSINESS INCOME OF THE ASSESSEE WHILE FILING THE RETURN OF INCOME IN VIEW OF VARIOUS DECISIONS, WHEREIN VARIOUS COURTS, INCLUDING HON BLE JURISDICTIONAL HIGH COURT, HAVE HELD THAT NO APPEAL LIES AGAINST AGREED ADDITION . 3. AFTER CONSIDERING THE RIVAL SUBMISSIONS, WE ARE OF THE CONSIDERED OPINION THAT WHEN THE ASSESSEE HAS FAILED TO INCLUDE THE PROFIT EARNED ON SALE OF ASSET IN THE RETURN FILED BY THE ASSESSEE, WHICH WAS AGREED BY T HE AR OF THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND AGREED FOR TAXATION, THE ASSESSEE CANNOT CLAIM LOSS OF UNDISCLOSED INCOME. IT IS AN ADMITTED FACT THAT THE ASSESSEE HAS NOT DISCLOSED THE PROFIT EARNED ON SALE OF ASSET IN THE RETURN OF INCOME. WHEN THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAS EARNED PROFIT ON SALE OF ASSETS AND THE ASSESSEE WAS REQUIRED TO GIVE EXPLANATION, THE AR OF THE ASSESSEE HAS SUBMITTED THAT IT WAS INADVERTENTLY MISSED OUT TO BE ADDED TO THE BUSINESS INCOME W HILE FILING THE RETURN OF INCOME AND SUBSEQUENTLY AGREED TO ADD THE SAME TO THE ASSESSEE S TOTAL INCOME. ADMITTEDLY, THE RETURN OF INCOME WAS FILED ON 30.09.2008 AND THE SAME WAS PROCESSED UNDER SECTION 143(1) OF THE INCOME TAX ACT, 1961 [ ACT IN SHORT] O N 29.01.2010. THEREAFTER, THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY AND NOTICE UNDER SECTION 143(2) OF THE ACT WAS ISSUED AND SERVED ON THE ASSESSEE ON 19.08.2009. IT IS NOT THE CASE OF THE ASSESSEE THAT THE ASSESSEE HAS FILED ANY REVISED RETURN B EFORE CONCLUSION OF THE ASSESSMENT DISCLOSING PROFIT ON SALE OF ASSET AND CLAIMING I.T.A. NO . 2 983 / M/ 1 6 4 ANY BUSINESS LOSS. ONCE ADDITION WAS AGREED BY THE AR OF THE ASSESSEE, IT IS NOT ONLY BINDING ON THE ASSESSEE, BUT ALSO NO FURTHER ENQUIRY IS NECESSARY. THEREFORE, BASED ON THE ACCEPTANCE FOR NON - DISCLOSURE OF PROFIT ON SALE OF ASSETS IN THE RETURN OF INCOME, THE ADDITION MADE BY THE ASSESSING OFFICER WAS RIGHTLY CONFIRMED BY THE LD. CIT(A) AND WE FIND NO REASON TO INTERFERE WITH THE ORDERS OF THE LD. CIT(A) ON THIS ISSUE. AC CORDINGLY, THE GROUND RAISED BY THE ASSESSEE IS DISMISSED. 4. THE NEXT GROUND RAISED IN THE APPEAL OF THE ASSESSEE IS WITH REGARD TO DISALLOWANCE OF TRAVELLING EXPENSES. IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER HAS OBSERVED THAT THE AR OF THE ASSE SSEE HAS FAILED TO PRODUCE THE BILLS/VOUCHERS IN SUPPORT OF THE MAJOR PORTION OF THE EXPENDITURE CLAIMED. THEREFORE, THE ASSESSING OFFICER HAS MADE DISALLOWANCE OF TRAVELLING EXPENSES TO THE EXTENT OF .92,669/ - , WHICH WAS CONFIRMED BY THE LD. CIT(A). 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. BEFORE THE TRIBUNAL, THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT ONLY LOCAL CONVEYANCES AND AUTO EXPENSES WERE NOT SUPPORTED BY BILLS EXCEPT SELF - DECLARATION AND THE DISALLOWANCE IS TOTALLY UNWARRANTED. W E FIND FORCE IN THE ARGUMENT OF THE LD. COUNSEL. NO BILLS/VOUCHERS COULD BE MADE AVAILABLE FOR AUTO EXPENSES/LOCAL CONVEYANCES AND WE ARE OF THE OPINION THAT SELF - DECLARATION IS ENOUGH TO ADMIT THE CLAIM OF THE ASSESSEE. THUS, WE DELETE THE DISALLOWANCE MA DE ON THIS ACCOUNT. I.T.A. NO . 2 983 / M/ 1 6 5 6 . THE NEXT GROUND S RAISED ARE CONFIRMATION OF DISALLOWANCE OF 10% OF THE RO PLANT MAINTENANCE CHARGES AND EFFLUENT CHARGES AMOUNT ING TO .3,32,252/ - AND GUEST HOUSE EXPENSES OF .41,432/ - . S INCE THE ASSESSEE HAS NOT FURNISHED PROPER B ILLS AND VOUCHERS , THE ASSESSING OFFICER MADE THE DISALLOWANCES . IT WAS THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT WITH REGARD TO RO PLANT MAINTENANCE CHARGES AND EFFLUENT CHARGES, MOST OF THE EXPENDITURES WERE PAID TO THE GOVERNMENT AGENCIES AND CONTRACTORS. IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER HAS OBSERVED THAT IN SUPPORT OF ASSESSEE S CLAIM MANY BILLS WERE SELF MADE AND MANY OF THE VOUCHERS WERE NOT VOUCHED PROPERLY AND THEREFORE, HE MADE THE DISALLOWANCE OF 10% OF TOTAL E XPENSES ON ESTIMATED BASIS. SIMILAR DISALLOWANCE WAS ALSO MADE BY THE ASSESSING OFFICER ON ACCOUNT OF GUEST HOUSE EXPENSES. 7. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, WE FIND THAT THE ASSESSING OFFICER MADE THE DISALLOWANCE SS ON ESTIMATED BASI S OF 10% OF TOTAL EXPENSES CLAIMED BY THE ASSESSEE WITH REGARD TO RO PLANT MAINTENANCE & EFFLUENT CHARGES AS WELL AS GUEST HOUSE EXPENSES AND THE SAME WERE CONFIRMED BY THE LD. CIT(A). SINCE THE ASSESSING OFFICER DISALLOWED THE EXPENSES ON ESTIMATED BASIS, THE LD. COUNSEL FOR THE ASSESSEE AND PRAYED FOR SOME RELIEF TOWARDS BOTH THE DISALLOWANCES SINCE THE ENTIRE EXPENSES WERE NOT RULED OUT. IN VIEW OF THE ABOVE, WE DIRECT THE ASSESSING OFFICER TO RESTRICT AND DISALLOW TO THE EXTENT OF 5% EACH OF TOTAL I.T.A. NO . 2 983 / M/ 1 6 6 EXPEN SES INCURRED TOWARDS RO PLANT MAINTENANCE & EFFLUENT CHARGES AS WELL AS GUEST HOUSE EXPENSES. ACCORDINGLY, BOTH THE GROUNDS RAISED IN GROUND NO. 3 & 4 ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. 8 . WITH REGARD TO NEXT ISSUE OF LEVY OF INTEREST UNDER SEC TION 234B OF THE ACT, IF AN ASSESSEE, WHO IS LIABLE TO PAY ADVANCE TAX UNDER SECTION 208 OF THE ACT HAS FAILED TO PAY SUCH TAX OR, WHERE THE ADVANCE TAX PAID BY SUCH ASSESSEE UNDER THE PROVISIONS OF SECTION 210 OF THE ACT IS LESS THAN NINETY PER CENTS OF T HE ASSESSED TAX, THE ASSESSEE IS LIABLE TO PAY INTEREST UNDER SECTION 234B OF THE ACT. CONSEQUENT TO THE ORDER OF THE TRIBUNAL, THE ASSESSING OFFICER IS REQUIRED TO REASSESS THE TOTAL TAX PAYABLE BY THE ASSESSEE AND ACCORDINGLY, INTEREST UNDER SECTION 234B OF THE ACT WILL BE LEVIED AS PER THE PROVISIONS, WHICH IS MANDATORY. AS SUCH, LEVY OF INTEREST UNDER SECTION 234B OF THE ACT CANNOT BE CANCELLED. 9 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES . ORDER PRON OUNCED ON THE 21 ST APRIL , 201 7 AT CHENNAI. SD/ - SD/ - (CHANDRA POOJARI) ACCOUNTANT MEMBER ( DUVVURU RL REDDY ) JUDICIAL MEMBER CHENNAI, DATED, THE 21 . 0 4 .201 7 VM/ - I.T.A. NO . 2 983 / M/ 1 6 7 / COPY TO: 1. / APPELLANT , 2. / RESPONDENT , 3. ( ) / CIT(A) , 4. / CIT , 5. / DR & 6. / GF.