Shri Pradeep M.Parikh, Ahmedabad V. The Income tax Officer,Ward-2(4), Baroda

ITA 3108/AHD/2011

• Counselvise Citation: 310820514 RSA 2011
• Duration Of Justice: 2 year(s) 8 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-09-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 20-08-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 08-12-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: NIMESH YADAV
• Assessee Lawyers: M K PATEL
• Keywords: Depreciation

Judgement Text

, , , , C, IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD, C BENCH . .. . . .. . , !' !' !' !', , , , #$ #$ #$ #$ # ## #. .. .# ## #. . . . % % % %, , , , &' ( & ' &' ( & ' &' ( & ' &' ( & ' BEFORE S/SHRI G.C. GUPTA, VICE-PRESIDENT AND N.S. SAINI, ACCOUNTANT MEMBER) ITA NO.3108/AHD/2011 [ASSTT.YEAR : 2006-2007] SHRI PRADEEP M. PARIKH 502, ARUNDEEP COMPLEX OPP: ADARSH GENERAL HOSPITAL R.C. CIRCLE, GOTRI ROAD BARODA. PAN : ADGPP 7841 P /VS. ITO, WARD-2(4) BARODA. ( (( (*+ *+ *+ *+ / APPELLANT) ( (( (,-*+ ,-*+ ,-*+ ,-*+ / RESPONDENT) ./ 0 1 &/ ASSESSEE BY : SHRI M.K. PATEL ( 0 1 &/ REVENUE BY : SHRI NIMESH YADAV, SR.DR 3 0 /4'/ DATE OF HEARING : 20 TH AUGUST, 2014 567 0 /4'/ DATE OF PRONOUNCEMENT : 05/09/2014 &8 / O R D E R PER G.C. GUPTA, VICE-PRESIDENT: THIS APPEAL BY THE ASSESSEE FOR THE ASSESSMENT YEAR 2006-2007 IS DIRECTED AGAINST T HE ORDER OF THE CIT(A). 2. THE GROUND NO.1 OF THE ASSESSEES APPEAL IS AS U NDER: 1.0 THE LD.CIT(A) ERRED IN LAW AND ON FACTS IN CON FIRMING THE DISALLOWANCE OF RS.60,000/- U/S.40A(2)(B) MADE BY T HE LD.AO IN ITA NO.3108/AHD/2011 -2- CONNECTION WITH PAYMENT MADE TO MISS PURVI PARIKH B Y DISALLOWING THE GROUND OF APPEAL. 3. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT THIS ADDITION OF RS.60,000/- UNDER SECTION 40A(2)(B) OF THE ACT WAS SUSTAINED BY THE CIT(A) ON ACCOUNT OF SO-CALLED ADMISSION OF THE ASSESSEE THAT IT HAS NO OBJECTION FOR THE PROPOSED DISALLOWANCE OF RS.60,000/- UNDER SECTION 40A(2)(B) OF THE ACT. HE SUBMITTED THAT THE ISSUE MAY BE RESTORED TO THE FIL E OF THE AO FOR VERIFICATION THAT THE ASSESSEE HAS ADMITTED THE SAID ADDITION OR NOT. THE LEARNED DR HAS OPPOSED THE SUBMISSIONS OF THE LEARNED COUNSEL FOR THE ASSESSEE. HE SUBMITTED THAT THE ADDITION WAS MADE NOT MERELY ON ADMISSION MADE BY THE ASSESSEE, BUT ALSO ON ITS MERITS, AND THE SAME HAVE BEEN DISCUSSE D BY THE AO AS WELL AS THE CIT(A). HE RELIED ON THE ORDERS OF THE AO AND THE CIT(A). 4. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE AO AND THE CIT(A). WE FIND THAT IT IS NOT A CASE WHER E CERTAIN ADDITION/DISALLOWANCE HAS BEEN MADE MERELY ON THE A DMISSION MADE BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT. THE AO H AS DISCUSSED THE MERITS OF THE CASE ALSO, AND HAS RECORDED THAT THE SALARY OF RS.1,20,000/- WAS PAID TO MS.PURVI PARIKH, WHO IS A COMMERCE GRADUATE AND HAP PENED TO BE DAUGHTER OF THE ASSESSEE. HE FURTHER RECORDED IN HIS ASSESSMEN T ORDER THAT BROTHER OF MS. PURVI PARIKH, WHO WAS A ENGINEERING GRADUATE WAS PA ID A SALARY OF RS.60,000/- ONLY. OTHER EMPLOYEES OF THE ASSESSEE WERE PAID LE SS SALARY THAN THE SPECIFIED PERSON, MS. PURVI PARIKH, AND ACCORDINGLY, THE AO H ELD THAT THE ASSESSEE HAS PAID EXCESSIVE SALARY TO MS. PURVI PARIKH AND ALLOW ED A SALARY OF RS.60,000/- AND THE BALANCE WAS DISALLOWED UNDER SECTION 40A(2) (B) OF THE ACT. HE HAS FURTHER RECORDED THAT THE ASSESSEE HAS NOT OBJECTED FOR THE PROPOSED DISALLOWANCE. WE FIND THAT THE CIT(A) HAS ALSO DIS CUSSED THE ISSUE IN DETAIL WHILE CONFIRMING THE ADDITION. HE HAS RECORDED THA T NOTHING HAS BEEN BROUGHT ON RECORD TO SHOW THAT THE ASSESSEE HAS NOT AGREED FOR THIS ADDITION. HE HAS FURTHER RECORDED THAT IT IS NOT THE CASE OF THE ASS ESSEE THAT HIS STATEMENT HAS BEEN WRONGLY RECORDED OR HE MADE IT UNDER A MISTAKEN BEL IEF OF FACT OR LAW ETC. IN ITA NO.3108/AHD/2011 -3- THESE FACTS OF THE CASE, AND IN PARTICULAR SINCE TH E ASSESSEE HAS PAID SALARY OF RS.60,000/- TO THE ENGINEERING GRADUATE, AND EVEN L ESS AMOUNT OF SALARY TO UNRELATED PERSONS, WE ARE OF THE VIEW THAT THE AO H AS TAKEN A REASONABLE VIEW IN ALLOWING RS.60,000/- AS SALARY OUT OF TOTAL OF R S.1,20,000/- PAID TO THIS SPECIFIC PERSON, AND THE BALANCE AMOUNT OF RS.60,00 0/- WAS RIGHTLY DISALLOWED, AND ACCORDINGLY, THE GROUND NO.1 OF THE ASSESSEE IS DISMISSED. 5. THE GROUND NO.2 OF THE ASSESSEES APPEAL IS AS U NDER: 2.0 THE LD.CIT(A) ERRED IN LAW AND ON FACTS IN CON FIRMING THE ADDITION OF RS.7,40,241/- MADE BY THE LD. AO IN CONNECTION W ITH SUPPRESSION OF RECEIPTS. 6. THE LEARNED COUNSEL FOR THE ASSESSEE HAS SUBMITT ED THAT THERE WAS NO SUPPRESSION OF RECEIPT OF RS.7,40,241/-, AND IN FAC T THIS AMOUNT HAS ALREADY BEEN ACCOUNTED FOR IN THE SUCCEEDING ACCOUNTING YEAR, AN D HAS BEEN SUBJECT TO TAX. HE SUBMITTED THAT IN CASE THE ADDITION IS HELD AS R IGHTLY MADE IN THE RELEVANT ASSTT. YEAR 2006-07, THEN A DIRECTION MAY BE GIVEN TO EXCLUDE THE SAME AMOUNT FROM THE INCOME IN THE SUCCEEDING ASSTT. YEAR 2007- 08 TO AVOID DOUBLE TAXATION AFTER DUE VERIFICATION. FOR THIS PROPOSITION, HE R ELY ON THE DECISION IN PERFECT EQUIPMENTS VS. DCIT, 85 ITD 50 (AHD). THE LEARNED DR SUBMITTED THAT THE ASSESSEE WAS FOLLOWING MERCANTILE SYSTEM OF ACCOUNT ING, AND SINCE HE HAS OBTAINED THE CREDIT OF TDS CERTIFICATE FOR THE RELE VANT ASSTT.YEAR 2006-07, THE WHOLE AMOUNT OF RECEIPT WAS TAXABLE IN THIS VERY AS SESSMENT YEAR AND NOT IN THE SUCCEEDING ASSESSMENT YEAR. HE RELIED ON THE ORDER S OF THE AO AND THE CIT(A). 7. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE AO AND THE CIT(A). WE FIND THAT THE ASSESSEE HAS OBTA INED THE BENEFIT OF TDS MADE DURING THE RELEVANT ASSTT.YEAR 2006-07 AND AS PER THE PROVISION OF SECTION 199 OF THE ACT, AS IT STOOD DURING THE RELEVANT ASS ESSMENT YEAR, THE CREDIT OF TDS WAS ALLOWABLE IN THE YEAR IN WHICH THE INCOME WAS S UBJECT TO SUCH TDS AND WAS ASSESSABLE AS SUCH. THEREFORE, WE ARE OF THE VIEW THAT THE ENTIRE AMOUNT OF RECEIPT PERTAINING TO THIS TDS CERTIFICATE WAS ASSE SSABLE IN THE HANDS OF THE ITA NO.3108/AHD/2011 -4- ASSESSEE FOR THE RELEVANT ASSTT.YEAR 2006-07. HOWE VER, THE SAME AMOUNT COULD NOT BE TAXED AGAIN IN THE SUCCEEDING ASSESSMENT YEA R TO AVOID DOUBLE TAXATION, AND ACCORDINGLY, WE DIRECT THE AO TO VERIFY THE FAC TS AND IF THIS AMOUNT OF RS.7,40,241/- HAS ALREADY BEEN SHOWN AS RECEIPT DUR ING THE SUCCEEDING ASSTT.YEAR 2007-08, AND HAS BEEN SUBJECT TO TAX, TH EN THE SAME SHOULD HAVE EXCLUDED FROM THE INCOME IN THE NEXT SUCCEEDING ASS ESSMENT YEAR TO AVOID DOUBLE TAXATION OF THE SAME AMOUNT OF RECEIPT/INCOM E, AND FOR THIS PURPOSE, REASONABLE OPPORTUNITY OF HEARING SHOULD BE ALLOWED TO THE ASSESSEE. WE DIRECT ACCORDINGLY. 8. THE GROUND NOS.3 AND 4 OF THE ASSESSEE ARE AS UN DER: 3.0 THE LD.CIT(A) ERRED IN LAW AND ON FACTS IN CON FIRMING THE DISALLOWANCE UPTO 10% OUT OF DEPRECIATION AND VEHIC LE EXPENSES. 4 .0 THE LD.CIT(A) ERRED IN LAW AND ON FACTS IN CONFI RMING THE DISALLOWANCE UPTO 10% OUT OF DIWALI AND ENTERTAINME NT EXPENSES. 9. THE LEARNED COUNSEL FOR THE ASSESSEE HAS NOT PRE SSED THESE GROUNDS OF THE APPEAL OF THE ASSESSEE, WHICH ARE ACCORDINGLY DISMI SSED. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE. SD/- SD/- ( # ## #. .. .# ## #. . . . % % % % /N.S.SAINI) &' ( &' ( &' ( &' ( /ACCOUNTANT MEMBER ( . .. . . .. . /G.C. GUPTA) !' !' !' !' /VICE-PRESIDENT C OPY OF THE ORDER FORWARDED TO: 1) : APPELLANT 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR, ITAT. BY ORDER DR/AR, ITAT, AHMEDABAD