Jaspal Singh, New Delhi V. ACIT, New Delhi

ITA 3105/DEL/2013

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 7604 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 5 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-11-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 18-09-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 17-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: KAANAN KAPUR
• Keywords: Business expenditure
• Section: 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: D NEW DELHI BEFORE SMT DIVA SINGH, JUDICIAL MEMBER AND SH. T. S. KAPOOR , ACCOUNTANT MEMBER I.T.A .NO. - 3105 / DEL/201 3 (ASSESSMENT YEAR - 2009 - 10 ) JASPAL SINGH, 59, HEMKUNT COLONY, NEW DELHI - 110048 P AN - AAWPS5082N (APPELLANT) VS ACIT, CIRCLE - 37(1), NEW DELHI (RESPONDENT) APPELLANT BY SH. KAANAN KAPUR, ADV . RESPONDENT BY SH. VIVEK NANGIA, SR. DR ORDER PER DIVA SINGH, JM TH IS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER DATED 22.2.2013 OF THE CIT(A) - XXVIII PERTAINING TO 200 9 - 10 ASSESSMENT YEAR ON THE FOLLOWING GROUNDS: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE AUTHORITIES BELOW HAVE ERRED IN COMPUTING THE TOTAL INCOME AT RS. 83,56,330/ - AGAINST THE DECLARED INCOME OF RS. 76,53,940/ - . 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE BOTH THE AUTHORITIES BELOW HAVE BUSINESS PROMOTION EXPENSES OF RS. 7,02,390/ - 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE BOTH THE AUTHORITIES BELOW HAVE ERRED IN HOLDING THAT BUSINESS PROMOTION EXPENSES OF RS. 7,02,390/ - HAVE NOT BEEN INCURRED WHOLLY AND EXCLUSIVELY FOR BUSINESS PURPOSES. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN THE LAW CONFIRMING THE ORDER OF A O CHARGING INTEREST U/S 234B OF THE INCOME TAX ACT, 1961. 2. THE RELEVANT FACTS OF THE CASE ARE THAT THE ASSESSEE WHO IS AN ADVOCATE EARNING INCOME FROM PROFESSION, PENSION AND OTHER SOURCES RETURNED AN INCOME OF RS. 76,53,940/ - AND CLAIMED BUSINESS EXPE NSES TO THE TUNE OF RS. 7,36,184/ - . THE ASSESSING OFFICER DISALLOWED THE BUSINESS EXPENSES FOR THE FOLLOWING REASONS : - DURING THE YEAR UNDER CONSIDERATION, ASSESSEE HAS INCURRED BUSINESS PROMOTION EXPENSES OF RS. 7,36,184/ - . ASSESSEE HAS PAID RS. 4,77,53 0/ - TO 2 I.T.A .NO. 3105 /DEL/201 3 RHYTHM TO SOUL ENTERTAINMENT PVT. LTD. AND RS. 2,24,860/ - TO DUA F&B OUTDOORS AND EVENT MANAGEMENT PVT. LTD. VIDE ORDER SHEET ENTRY DATED 9.12.2011, COUNSEL WAS ASKED. JUSTIFY THE BUSINESS PROMOTION EXPENSES OF RS. 2,24,860/ - & 4,77,530/ - HAVE BEEN INCURRED WHOLLY & EXCLUSIVELY FOR BUSINESS. SUBMIT COPY OF BILLS, TDS DETAILS WITH CHALLANS. GIVE DETAILS OF CLIENTS WITH NAME, ADDRESS & CONTACT NO. WHO ATTENDED THE MEETING. ASSESSEE SUBMITTED REPLY ON 16.12.2011. REPLY OF THE ASSESSEE HAS BEEN CONSIDE RED. IN THE REPLY ASSESSEE HAS STATED THAT THE ASSESSEE ARRANGED A SOCIAL GET TOGETHER AT THE OFFICIAL BANGLOW OF HON BLE JUSTICE REKHA SHARMA AT 12, COPERNICUS LANE, NEW DELHI. ASSESSEE HAS STATED THIS GET TOGETHER WAS ATTENDED BY MANY SITTING JUSTICE, PO LICE COMMISSIONER, I.A.S OFFICERS AND OTHER BUREAUCRATS. BUT THESE PERSONS ARE NOT THE CLIENTELE OF THE ASSESSEE. DURING THE YEAR PROFESSIONAL FEES HAVE BEEN RECEIVED MOSTLY FROM NON - GOVERNMENT ENTITIES. ASSESSEE HAS NOT BEEN ABLE TO JUSTIFY THAT THESE EXP ENSE ARE WHOLLY & EXCLUSIVELY FOR BUSINESS. THEREFORE THESE EXPENSES OF RS. 7,02,390/ - IS BEING DISALLOWED AND ADDED BACK TO THE INCOME. 2. 1 AS A RESULT OF THIS THE TOTAL INCOME OF THE ASSESSEE WAS COMPUTED AT RS. 83,56,330/ - . 3. AGGRIEVED BY THIS TH E ASSESSEE WENT IN APPEAL BEFORE THE CIT(A) WHO CONFIRMED THE DISALLOWANCE OF EXPENSES HOLDING AS UNDER: - I HAVE CONSIDERED THE GROUNDS RAISED IN APPEAL AND THE SUBMISSIONS OF THE AR OF THE APPELLANT. THE NEXT TWO GROUNDS ARE AGAINST DISALLOWANCE OF BUSI NESS PROMOTION EXPENSES RS. 7,02,390/ - . THE ASSESSING OFFICER HAS DISALLOWED THE EXPENSES HOLDING THAT THE EXPENSES ARE NOT WHOLLY AND EXCLUSIVELY FOR BUSINESS. I HAVE CONSIDERED THE CONTENTIONS RAISED IN APPEAL AND THE CASE LAWS RELIED UPON BY THE AR. AS STATED THE APPELLANT IS AN ADVOCATE HAVING PROFESSIONAL INCOME BESIDES PENSION AND INTEREST INCOME. THE APPELLANT HAS SPENT THE SAID AMOUNT ON SOCIAL GET TOGETHER AND CLAIMED THE SAME AS BUSINESS EXPENDITURE. FROM THE FACTS IT IS UNDERSTOOD THAT THE APPELL ANT HAS FAILED TO JUSTIFY THE EXPENSES FOR BUSINESS PURPOSE. THE CASE LAWS RELIED UPON BY THE APPELLANT ARE NOT APPLICABLE ON THE FACTS OF THE INSTANT CASE HENCE NOT RELEVANT. THE AMOUNT SPENT FOR BUSINESS PROMOTION IS ACTUALLY NOT RELATING TO BUSINESS AS THE SAME IS INCURRED ON PERSONS WHO ARE NOT THE CLIENTS OF THE APPELLANT. IN VIEW OF THIS, I HOLD THAT THE BUSINESS PROMOTION EXPENSES HAVE BEEN RIGHTLY DISALLOWED AS THE SAME IS NOT INCURRED FOR THE BUSINESS OF THE APPELLANT. IN VIEW OF THIS, THE GROUNDS RAISED IN APPEAL IS DISMISSED. (EMPHASIS BY THE BENCH) 4. AGGRIEVED BY THIS THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. T HE LD. AR AT THE TIME OF HEARING SUBMITTED THAT IN THE IMPUGNED ORDER THERE IS NO DISCUSSION ON 3 I.T.A .NO. 3105 /DEL/201 3 FACTS IN THE ARGUMENTS ADVANCED BEFORE THE CIT(A). FOR THE SAID PURPOSE OUR ATTENTION WAS INVITE D TO THE WRITTEN SUBMISSION DATED 22.11.2012 PLACED BEFORE THE CIT(A) ALONGWITH DOCUMENTS IN SUPPORT OF THE CLAIM OF E X PENSES WHEREIN RELIANCE WAS PLACED UPON THE FOLLOWING JUDGMENTS: - A. CIT VS PATEL BROTHERS & CO. LTD., REPORTED AT 106 ITR 424 (GUJ) B. CIT VS MADDI VENKATRAMAN, REPORTED AT 119 ITR 514 C. CIT VS RAMAN AND RAMAN, REPORTED AT (1969) 71 ITR 345 D. CIT VS VIJAYALAKSHMI, REPORTED AT (1970) 77 ITR 1 19 4.1 . REFERRING TO THE IMPUGNED ORDER IT WAS SUBMITTED THAT THE ORDER IS S I LENT ON THE ARGUMENTS ADVANCED B EFORE THE SAID AUTHORITY B Y THE ASSESSEE . IN VIEW OF THE SAME IT WAS HUMBLY REQUESTED THAT THE I SSUE MAY BE RESTORED TO THE C IT (A) WITH A DIRE CTION TO PASS A SPEAKING ORDER. 4 . 2. THE LD. SR. DR SUBMITT ED THAT ON THE LAST OCCASION THE CO - ORDINATE BENCH HAD DIRECTED THE LD. AR TO FILE RELEVANT DOCUMENTS ALONGWITH PAPER BOOK IF NEED BE AND THE SAME HA D NOT BEEN FILED . R ESPONDING TO THE ARGUMENTS ADVANCED ON BEHALF OF THE ASSESSEE BY THE LD. AR WHO HAS ARGUED THAT THE FINDING HAS BEEN ARRIVED AT WITHOUT REFERR ING TO FACTS ON RECORD, IT WAS HIS SUBMISSION THAT IT CANNOT BE OUT RIGHTLY ACCEPTED WITHOUT ENQUIRY WHETHER ANY WRITTEN SUBMISSI ONS WERE BEFORE THE CIT(A) A S WHAT HAS BEEN PLACED ON RECORD AS WRITTEN SUBMISSIONS BEFORE CIT(A) MAY NOT HAVE BEEN FILED AND IN THE CIRCUMSTANCES THE PRAYER OF THE LD. AR THAT THE ISSUE SHOULD BE RESTORED TO THE CIT(A) SHOULD BE CONSIDERED KEEPING THIS FA CT IN MIND. 5. WE HAVE HEARD THE RIVAL SUBMISSION AND PERUSED THE MATERIAL AVAILABLE ON RECORD. ON CONSIDERATION OF THE FINDINGS RECORDED IN THE IMPUGNED ORDER , IT IS SEEN THAT THE CIT(A) MAKES A REFERENCE TO THE CASE LAWS RELIED UPON BY THE ASSESSEE BEFO RE HIM AS WOULD BE EVIDENT FROM THE HIGHLIGHTED PORTION OF THE RELEVANT EXTRACT FROM THE IMPUGNED ORDER. IT IS SEEN THAT ON FACTS WHAT WAS ARGUED BY THE ASSESSEE HAS NOT BEEN ADDRESSED EXCEPT FOR THE BLAND OBSERVATION THAT FROM FACT IT IS UNDERSTOOD THAT THE APPELLANT HAS FAILED TO JUSTIFY THE EXPENSES FOR BUSINESS PURPOSES . IT IS SEEN THAT T HE WRITTEN SUBMISSION BEFORE THE CIT(A) MAKES A REFERENCE TO THE SPECIFIC CASE LAWS 4 I.T.A .NO. 3105 /DEL/201 3 RELIED UPON WHICH ARE FOUND NOT EVEN MENTIONED IN THE IMPUGNED ORDER . CONSIDERI NG THE SUBMISSIONS IN THE BACKDROP OF THE FINDING IN THE IMPUGNED ORDER IT CLEARLY LEADS TO THE CONCLUSION THAT THE WRITTEN SUBMISSIONS WERE BEFORE THE CIT(A). THE PARTIES WERE REQUIRED IN THE CIRCUMSTANCES TO ADDRESS WHETHER IT WOULD BE APPROPRIATE TO RE STORE THE ISSUE TO THE AO OR THE CIT(A) AS THE IMPUGNED ORDER CANNOT BE UPHELD AND FALLS SHORT OF THE STATUTORY MANDATE AS SET OUT IN SECTION 250(6) OF THE INCOME TAX ACT, 1961. THE LD. SR. DR SUBMITTED THAT THE ISSUE SHOULD BE RESTORED TO THE AO WHO CAN ADDRESS ALL RELEVANT FACTS . ON A CONSIDERATION OF THE MATERIAL BEFORE US WE ARE INCLINED TO A GREE WITH THE SUBMISSION OF LD. SR. DR AND REMAND THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER BY SETTING ASIDE THE IMPUGNED ORDER . THE ASSESSEE IS GIVEN LIBERTY TO PLACE ALL RELEVANT FACTS AND EVIDENCES ON RECORD BEFORE THE AO I N SUPPORT OF ITS CLAIM. NEEDLESS TO SAY THAT THE ASSESSING OFFICER SHALL PASS A SPEAKING ORDER IN ACCORDANCE WITH LAW CONSIDERING THE FRESH EVIDENCE FILED IF ANY BEFORE HIM AFTER GIVING THE ASSESSEE A REASONABLE OPPORTUNITY BEING HEARD. 6 . IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES . THE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 1 1 T H OF NOVEMBER 2014. S D / - S D / - ( T. S. KAPOOR ) (DIVA SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 1 1 / 1 1 /2014 SUBODH KUMAR /AMIT KUMAR COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI