Ashoksingh Mahavirsingh Tomar, Ahmedabad V. The Income Tax Officer, Ward - 6(1)(4), Ahmedabad

ITA 32/AHD/2023

AI Insights

The case revolves around the disallowance of motor car expenses and loan interest by the Income Tax Officer, which were deemed personal expenses, leading to an additional tax demand. The assessee, Ashoksingh Mahavirsingh Tomar, contested this decision, arguing that the expenses were business-related. The Commissioner of Income-tax (Appeals) upheld the disallowance, prompting the assessee to appeal to the Income Tax Appellate Tribunal. The Tribunal, after reviewing the evidence and submissions, concluded that the expenses were indeed business-related and reversed the decision of the lower authorities.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 300024 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-06-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 13-06-2023
• Assessment Year: 2017-2018
• Appeal Filed On: 12-01-2023
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business expenditure; Principle of natural justice
• Section: 250; 143(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, AHMEDABAD \ BEFORE Ms. SUCHITRA R. KAMBLE, JUDICIAL MEMBER ITA No. 32/Ahd/2023 Assessment Years : 2017-18 Ashoksingh Mahavirsingh Tomar, 35/36, Kailashdham Society, Nr. Ranchhod Colony, B/h. Ajay Tenament-4, Amraiwadi, Ahmedabad-380026 PAN: ACTPT 3820 G Vs Income Tax Officer, Ward-6(1)(4), Ahmedabad अपीलाथ牸 अपीलाथ牸अपीलाथ牸 अपीलाथ牸/ (Appellant) 灹瀄 灹瀄 灹瀄 灹瀄 यथ牸 यथ牸यथ牸 यथ牸/ (Respondent) Assessee by : Shri S.N. Divatia, Advocate Revenue by : Shri Suraj Bhan Garwal, Sr. DR सुनवाई क琉 तारीख/Date of Hearing : 14/06/2023 घोषणा क琉 तारीख /Date of Pronouncement : 28/06/2023 आदेश आदेशआदेश आदेश/O R D E R This appeal is filed by the assessee against the order dated 18.11.2022 passed by the Commissioner of Income-tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [“CIT(A)” in short] for Assessment Year 2017-18. 2. The Grounds of appeal are as under :- “1.1 The order passed u/s 250 on 18.11.2022 for AY 2017-18 by NFAC, Delhi upholding disallowance of motor car expenses aggregating to Rs.4,63,169/- as personal expenses is wholly illegal, unlawful and against the principles of natural justice. 2.1 The NFAC has grievously erred in law and or on facts in not considering the explanation furnished and the evidence produced by the appellant vide written submission dated 10.09.2020 and uploaded on 27.07.2022 in response to the notice dated 14.07.2022. The NFAC has passed the impugned order disregarding completely the aforesaid submission and ITA No. 32/Ahd/2023 Ashoksingh Mahavirsingh Tomar Vs ITO AY : 2017-18 2 evidence, apart from erroneously observing that no explanation was offered. 2.2 The NFAC has grievously erred in law and or on facts in upholding disallowance of motor car expenses aggregating to Rs.4,63,169/- as personal expenses. 2.3 That in the facts and circumstances of the case as well as in law the NFAC ought not to have upheld disallowance of motor car expenses aggregating to Rs.4,63,169/- as personal expenses. 3.1 Both the lower authorities ought not to have invoke the provisions of Sec. 115BBE to the assessed income and raised the demand of Rs.2,77,884/- thereon. It is therefore prayed that the disallowance of expenses of Rs.4,63,169/- upheld by the ld. NFAC deserves to be deleted.” 3. The assessee filed return of income on 31.05.2018 declaring total income at Rs. NIL. The case of the assessee was selected for limited scrutiny assessment. Notice under Section 143(2) of the Income-tax Act, 1961 [“the Act” in short] was issued on 23.09.2019 and duly served upon the assessee. In response to this statutory notice issued, the assessee submitted details before the Assessing Officer. The Assessing Officer observed that, during the year under consideration, the assessee derived income from business and other sources. The Assessing Officer observed that expenses related to personal expenditure such as Ertiga loan interest, HDFC bank interest, interest paid to HDFC loan, interest paid to HDFC Swift as well as vehicle repairing were reflected in Profit and Loss account as in the column of debit. After taking cognizance of the reply, the Assessing Officer made addition of Rs.4,63,139/- thereby disallowing the expenditure in the nature of personal expenses. ITA No. 32/Ahd/2023 Ashoksingh Mahavirsingh Tomar Vs ITO AY : 2017-18 3 4. Being aggrieved by the assessment order, assessee filed appeal before the CIT(A). The CIT(A) dismissed the appeal of the assessee. 5. The learned AR submitted that the loan interest amount was in respect of the business expenses and cannot be termed as personal expenses. All the records shows that the said loan has been taken and the assessee was paying interest regularly. As regards motor vehicle expenses, the said details were also filed before the CIT(A), but the same was not taken on record. Thus, the learned AR submitted that the addition may be deleted. 6. The learned DR relied upon the assessment order and the order of the CITA). 7. Heard both the parties and perused all the relevant material available on record. It is pertinent to note that the assessee has given documentary evidences in support of his claim; and, in fact the balance-sheet and the Profit & Loss account as well as the details therein has given the motor vehicle expenses as well as the interest paid on loans. The observation of the CIT(A) that the said documents were not there on record related to interest expenses and motor vehicle expenses appears to be incorrect. From the perusal of the submission made before the CIT(A) on 27.07.2022, it reveals that all the records were available before the CIT(A). After going through the records, the assessee has explained the interest paid on loans taken from HDFC bank as well as the loan taken in respect of Ertiga and Swift vehicle for which the interest is paid to the bank as well as the motor vehicle expenses has also been pointed out by the learned AR to the documents attached to the paper-book. Therefore, the CIT(A) ITA No. 32/Ahd/2023 Ashoksingh Mahavirsingh Tomar Vs ITO AY : 2017-18 4 was not correct in confirming the addition. Thus, the appeal of the assessee is allowed. 8. In the result, the appeal of the assessee is allowed. Order pronounced in the open Court on 28/06/2023 at Ahmedabad. Sd/- (SUCHITRA R. KAMBLE) JUDICIAL MEMBER Ahmedabad, Dated 28/06/2023 *Bt आदेश क琉 灹ितिलिप अ灡ेिषत/Copy of the Order forwarded to : 1. अपीलाथ牸 / The Appellant 2. 灹瀄यथ牸 / The Respondent. 3. संबंिधत आयकर आयु猴 / Concerned CIT 4. आयकर आयु猴)अपील (/ The CIT(A)- 5. िवभागीय 灹ितिनिध ,आयकर अपीलीय अिधकरण/DR,ITAT, Ahmedabad, 6. गाड榁 फाईल /Guard file. आदेशानुसार/ BY ORDER, TRUE COPY सहायक पंजीकार (Asstt. Registrar) आयकर अपीलीय अिधकरण ITAT, Ahmedabad 1. Date of dictation- ...27.06.2023...... 2. Date on which the typed draft is placed before the Dictating Member ...27.06.2023......... Other member....27.06.2023 .......... 3. Date on which the approved draft comes to the Sr.P.S./P.S. - ...27.06.2023......... 4. Date on which the fair order is placed before the Dictating Member for Pronouncement ...28.06.2023 5. Date on which the file goes to the Bench Clerk...28.06.2023................ 6. Date on which the file goes to the Head Clerk.................................. 7. The date on which the file goes to the Assistant Registrar for signature on the order......... 8. Date of Despatch of the Order..................