M/s Geomin Industries Private Limited, Jabalpur V. Assistant Commissioner of Income Tax Circle-1(1), Jabalpur

ITA 31/JAB/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 7121 (ITAT-JABALPUR)
• Duration Of Justice: 1 year(s) 4 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-09-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2015-2016
• Appeal Filed On: 30-04-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: I.B. KHANDEL
• Keywords: Search and seizure; Salary income
• Section: 143(3); 37(1); 191

Judgement Text

I.T.A. NO.31/JAB/2019 1 GEOMIN INDUSTRIES (P.) LTD. V. ASST. CIT (AY 2015-1 6) IN THE INCOME TAX APPELLATE TRIBUNAL JABALPUR BENCH, JABALPUR BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI SANJAY ARORA, ACCOUNTANT MEMBER I.T.A. NO.31/JAB/2019 ASSESSMENT YEAR: 2015-16 GEOMIN INDUSTRIES PRIVATE LIMITED, 547/1,547/2,550/1,551 & 552 KHINNI ROAD, DHARAMPURA TEHSIL SIHORA, GOSALPUR, JABALPUR (MP) (PAN: AADCG 8749E) VS. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 1(1), CENTRAL REVENUE BUILDING, NAPIER TOWN, JABALPUR (MP) 482 001 (APPELLANT ) (RESPONDENT) APPELLANT BY SHRI DHIRAJ GHAI, C.A. RESPONDENT BY SHRI I.B. KHANDEL, DR DATE OF HEARING 12/08/2020 DATE OF PRONOUNCEMENT 07/09/2020 ORDER PER SANJAY ARORA, AM: THIS IS AN APPEAL BY THE ASSESSEE DIRECTED AGAINST THE ORDER BY THE COMMISSIONER OF INCOME TAX (APPEALS)-1, JABALPUR ( CIT(A) FOR SHORT) DATED 07/03/2019, PARTLY ALLOWING THE ASSESSEES APPEAL C ONTESTING ITS ASSESSMENT UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 ( THE ACT HEREINAFTER) DATED 28/09/2017 FOR ASSESSMENT YEAR (AY) 2015-16. THE AP PEAL RAISES TWO ISSUES, WHICH WE SHALL TAKE UP IN SERIATIM. 2. THE FIRST ISSUE CONCERNS THE DISALLOWANCE IN THE SUM OF RS.1,59,100, BEING TEN PERCENT OF THE CLAIM IN RESPECT OF TRAVEL EXPEN DITURE (I.E., RS.15.91 LACS) U/S. 37(1) OF THE ACT. BOTH THE DISALLOWANCE AS WELL AS ITS CONFIRMATION IN FIRST I.T.A. NO.31/JAB/2019 2 GEOMIN INDUSTRIES (P.) LTD. V. ASST. CIT (AY 2015-1 6) APPEAL HAS BEEN ON THE BASIS THAT THE EXPENDITURE I S NOT FULLY SUPPORTED BY PROPER BILLS AND VOUCHERS AND, BESIDES, TRAVEL FOR PERSONAL PURPOSES (OF THE DIRECTORS, ETC.) COULD NOT BE RULED OUT, SO THAT A DISALLOWANCE, ACCORDINGLY, AT 10% OF THE CLAIMED SUM STANDS MADE. 3. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD. THE ASSESSEES CASE IS THAT THE REVENUES CHARGE OF THE EXPENDITURE INCURRED AND CLAIMED BEING NOT DULY SUPPORTED BY BI LLS AND VOUCHERS IS FACTUALLY INCORRECT, AND TOWARD WHICH ITS LEARNED COUNSEL, S HRI GHAI, WOULD TAKE US THROUGH THE LEDGER ACCOUNT OF THE SAID EXPENSE (PB PGS.21-43) TO SHOW THAT FULL TRAVEL PARTICULARS OF EACH AND EVERY EXPENSE ITEM I S ENTERED THEREIN (BOOKS OF ACCOUNT). HOW COULD, HE AVERRED, THESE DETAILS BE S PECIFIED IN THE ABSENCE OF SUPPORTING BILLS AND VOUCHERS, WHICH WERE ALSO PROD UCED IN THE ASSESSMENT PROCEEDINGS AND TEST CHECKED. NOT A SINGLE INSTANCE OF EITHER ABSENCE OF VOUCHER, OR OF IT BEING FOR PERSONAL (NON-BUSINESS) PURPOSE HAS BEEN STATED. AD HOC DISALLOWANCE ON PRESUMPTIVE BASIS COULD NOT HOLD I N LAW. WE COULD NOT AGREE MORE. NO DOUBT, THE PRIMARY BURD EN TO PROVE ITS RETURN OF INCOME AND THE CLAIMS PREFERRED THEREBY I S ON THE ASSESSEE ( CIT V. CALCUTTA AGENCY LTD. [1951] 19 ITR 191 (SC); CIT V. R. VENKATASWAMY NAIDU [1956] 29 ITR 529 (SC)). HOWEVER, NEITHER THE ASSES SMENT NOR THE APPELLATE ORDER REFLECTS ANY INQUIRY INTO FACTS AND, RESULTAN TLY, A SUBSTANTIATION OF THE CHARGE WHICH COULD ONLY BE BASED ON A FINDING/S O F FACTS ON THE BASIS OF WHICH THE DISALLOWANCE STANDS MADE AND CONFIRMED. A GAIN, A CLAIM QUA PERSONAL PURPOSE (OF THE PERSON TRAVELLING) OF TRAV EL, HAS TO HAVE ITS BASIS IN FACT/S, AND CANNOT BE A MATTER OF PRESUMPTION, WITH WE OBSERVING, AS AFORE- STATED, NO INQUIRY INTO FACTS. THE PRESUMPTION, RAT HER, WOULD BE TO THE CONTRARY, PARTICULARLY CONSIDERING THAT THE ACCOUNTS ARE AUDI TED, AS WHY WOULD A COMPANY BEAR THE PERSONAL EXPENDITURE OF ANY PERSON? THE PR IMARY BURDEN ON THE ASSESSEE AFORE-STATED IS FOR THE REASON THAT ONLY I T IS IN THE KNOWLEDGE OF THE FACTS I.T.A. NO.31/JAB/2019 3 GEOMIN INDUSTRIES (P.) LTD. V. ASST. CIT (AY 2015-1 6) OF ITS CASE, AND COULD THEREFORE SUBSTANTIATE/EXPL AIN THE SAME. BUT THAT DOES NOT EMPOWER THE REVENUE TO IMPUTE, WITHOUT ANY FACTUAL BASIS, EITHER ABSENCE OF SUPPORTING BILLS/VOUCHERS OR A NON-BUSINESS PURPOSE . IT IS ONLY WHEN CALLED UPON TO DEMONSTRATE THE BUSINESS PURPOSE OF A TRAVEL THA T IT COULD BE SAID THAT THE ASSESSEE HAS, OR HAS NOT, BEEN ABLE TO PROVE THE SA ME, WHICH WOULD, IN THAT CASE, BE A MATTER OF THE EVIDENCE/S LED AND EXPLANATION/S FURNISHED. NEEDLESS TO SAY, NO SUCH EXERCISE HAS BEEN CARRIED OUT IN THE INSTAN T CASE, AND THE REVENUES CHARGE IS, WE ARE AFRAID, NO MORE THAN A BALD CLAIM . WHY, THERE IS IN FACT EVEN NO CLAIM OF THE EXPENDITURE INCURRED BEING AT A DISPRO PORTIONATE OR SUBSTANTIAL INCREASE OVER THAT INCURRED UNDER THE SAME HEAD IN THE PAST. NO WONDER THE LD. DEPARTMENTAL REPRESENTATIVE (DR) WAS UNABLE TO ANSW ER ANY OF THE QUERIES RAISED BY THE BENCH IN THIS REGARD DURING HEARING. WE, THEREFORE, HAVE NO HESITATION IN DIRECTING THE DELETION OF THE IMPUGNE D DISALLOWANCE, AND THE ASSESSEE SUCCEEDS. WE DECIDE ACCORDINGLY. 4. THE NEXT ISSUE IS, SIMILARLY, QUA A DISALLOWANCE FOR RS.50,000 OUT OF EXPENDITURE CLAIMED TOWARD VEHICLE REPAIR & RUNNING , I.E., RS.12.98 LACS (LEDGER ACCOUNT AT PB PGS. 44133). THE SUBMISSIONS BY THE LEARNED COUNSEL, SHRI GHAI, WERE ESSENTIALLY THE SAME, I.E., AS FOR THE DISALLO WANCE OF TRAVEL EXPENDITURE. THE LD. DR WOULD, HOWEVER, SUBMIT THAT THERE IS NOT HING ON RECORD TO REBUT THE CHARGE OF SOME EXPENDITURE ON VEHICLE REPAIR AND MA INTENANCE BEING NECESSARILY INCURRED FOR THE PERSONAL PURPOSES OF THE DIRECTORS , ETC., TO WHICH SHRI GHAI WOULD RESPOND BY STATING THAT THE DIRECTORS HAD THE IR PERSONAL CARS, EXPENDITURE ON WHICH STANDS INCURRED BY THEM PERSONALLY. HE WOU LD THOUGH ADMIT, ON QUERY, THAT NO SUCH CLAIM STANDS MADE AT ANY STAGE, MUCH L ESS SUBSTANTIATED. 5. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD. COMMUTATION IS A FACT OF EVERYDAY LIFE, PARTICULARL Y URBAN, NECESSITATING INCURRING EXPENDITURE THEREON. WHY, EVEN EXPENDITUR E ON TRAVEL FROM HOME TO I.T.A. NO.31/JAB/2019 4 GEOMIN INDUSTRIES (P.) LTD. V. ASST. CIT (AY 2015-1 6) OFFICE AND BACK, UNLESS COVERED BY THE TERMS OF THE EMPLOYMENT, WOULD BE A PERSONAL EXPENSE OF THE PERSON CONCERNED. THE REVEN UE IS THEREFORE JUSTIFIED TO SAY THAT SOME EXPENDITURE ON THE PERSONAL USE OF TH E VEHICLES BY THE DIRECTORS OR OTHER EMPLOYEES OF THE ASSESSEE-COMPANY CANNOT BE R ULED OUT. NO CASE TO THE CONTRARY HAS BEEN STATED, MUCH LESS MADE OUT. IT I S ONLY WHERE THE DIRECTORS OR OTHER STAFF TO WHOM THE COMPANY VEHICLES HAVE BEEN PROVIDED ARE SHOWN TO HAVE, AS STATED, PERSONAL VEHICLES FOR THEIR OWN US E, AND OF HAVING INCURRED EXPENDITURE ON THEIR RUNNING AND MAINTENANCE, THAT IT COULD BE SAID, WITH SOME DEGREE OF OBJECTIVITY, THAT NO PERSONAL PURPOSE COU LD BE IMPUTED. SURE, AS SH. GHAI WOULD ALSO POINT OUT, THERE COULD BE NO PERSO NAL EXPENSE IN THE CASE OF A COMPANY, A CORPORATE ENTITY. HOWEVER, WHAT IS MEAN T THEREBY IS FOR THE PERSONAL PURPOSES OF THE PERSON CONCERNED, SO THAT IT BECOMES AN OTHER THAN BUSINESS, OR NON-BUSINESS EXPENSE IN THE HANDS OF T HE COMPANY CLAIMING THE SAME, DISALLOWABLE U/S. 37(1) OF THE ACT. IT IS ON LY WHERE THE SAME IS CONTRACTUALLY PROVIDED BY THE COMPANY, AND TAKEN IN TO ACCOUNT IN COMPUTING SALARY INCOME, I.E., AT THE PERQUISITE VALUE THEREO F, OF THE PERSON/S CONCERNED, THAT NO DISALLOWANCE ON THIS COUNT, I.E., EUPHEMIST ICALLY CALLED PERSONAL EXPENDITURE, COULD BE MADE IN THE HANDS OF THE EMPL OYER-COMPANY. THE REVENUE IS, THUS, JUSTIFIED IN MAKING A DISALLOWANC E TOWARD ESTIMATED EXPENDITURE FOR SUCH NON-BUSINESS PURPOSE, WHICH, A T LESS THAN 4% OF THE TOTAL EXPENDITURE, SEEMS FAIRLY REASONABLE, BEING EVEN OT HERWISE AROUND RS.4,000 PER MONTH ONLY. NO CLAIM OF AN EXCESS DISALLOWANCE HAS IN ANY CASE BEEN MADE. THE DISALLOWANCE IS, ACCORDINGLY, UPHELD, AND THE ASSES SEE FAILS. WE DECIDE ACCORDINGLY. I.T.A. NO.31/JAB/2019 5 GEOMIN INDUSTRIES (P.) LTD. V. ASST. CIT (AY 2015-1 6) 6. IN THE RESULT, THE ASSESSEES APPEAL IS PARTLY A LLOWED. ORDER PRONOUNCED ON SEPTEMBER 07, 2020 UNDER RULE 3 4(4) OF THE INCOME TAX (APPELLATE TRIBUNAL) RULES, 1963 SD/- SD/ - (N.R.S. GANESAN) (SANJAY ARORA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 07/09/2020 *SINGH