Praveen Chand Jain, Kanpur V. Inocme Tax Officer-1(3), Kanpur

ITA 322/LKW/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 4846 (ITAT-LUCKNOW)
• Duration Of Justice: 7 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-01-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 04-01-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 20-05-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Business income; Opportunity of being heard

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NOS.321 TO 323/LKW/2015 ASSESSMENT YEARS 2007-08, 2008-09 ITO 1(3), KANPUR- 208 001 PRAVEEN CHAND JAIN, PROP SHIVAM CHEMICALS, 15/11, CIVIL LINES, KANPUR -208 001 PAN AAUPJ 4704 E (RESPONDENT) (APPELLANT) SHRI RAKESH GARG, ADVOCATE APPELLANT BY SHRI AMIT NIGAM, DR RESPONDENT BY 04.01.2016 DATE OF HEARING 07 .01.2016 DATE OF PRONOUNCEMENT O R D E R PER SUNIL KUMAR YADAV, JM. 1. THESE APPEALS ARE PREFERRED BY THE ASSESSEE AGAI NST THE RESPECTIVE ORDERS OF THE CIT(A). SINCE THE APPEALS WERE HEARD TOGETHER AND THESE ARE BEING DISPOSED OF THROUGH THIS CONSOLIDATED ORD ER. 2. ITA NOS. 322 & 323/LKW/2015 ARE FILED BY THE ASS ESSEE AGAINST THE RESPECTIVE ORDERS OF THE CIT(A)-I, KANPUR ADJUDICAT ING THE QUANTUM APPEALS AND OTHER ITA NO. 321/LKW/2015 IS AGAINST T HE ORDER OF CIT(A) DISPOSING OF THE PENALTY APPEAL FOR THE AY 2007-08. 2 3. WE HOWEVER, PREFERRED TO ADJUDICATE THE APPEALS I.E. ITA NOS. 322 & 323/LKW/2015 RELATING TO THE AYS 2007-08 AND 2008 -09. IN THESE APPEALS, THE IMPUGNED ADDITIONS WERE MADE ON ACCOUN T OF DISALLOWANCE OF EXPENSES UNDER THE HEAD CAR EXPENSES, CAR INSURA NCE EXPENSES, TELEPHONE EXPENSES AND TRAVELLING EXPENSES AT 20%, HAVING CONCLUDED THAT THERE IS A POSSIBILITY OF THE PERSONAL USE OF THE CAR AND TELEPHONE ETC. IT IS A CASE OF PROPRIETARY CONCERN, THUS, THERE IS AN EVERY POSSIBILITY OF PERSONAL USE OF THE VEHICLE AND TELEPHONE EXPENSES ETC. THEREFORE, THE SOME DISALLOWANCES ARE BOUND TO BE MADE, BUT IN THE INSTANT CASE, THE ASSESSING OFFICER HAS ESTIMATED AT 20% OF TOTAL CLA IM, WHICH APPEARS TO BE ON HIGHER SIDE. WE THEREFORE, RESTRICT THE SAME TO 10%. ACCORDINGLY, THE DISALLOWANCES ON ACCOUNT OF CAR EXPENSES, OUT O F CAR INSURANCE EXPENSES, TELEPHONE EXPENSES AND TRAVELLING EXPENSE S ARE RESTRICTED TO 10% OF THE TOTAL CLAIM. 4. THE OTHER GROUND IN THESE APPEALS RELATE TO DISA LLOWANCE OF RS.1,11,408/- PAID ON LOANS BORROWED FOR THE PURPOS E OF BUSINESS. IN THIS REGARD, THE REVENUE HAS MADE OUT A CASE THAT THE AS SESSEE HAS BORROWED THE FUNDS FOR HIS PERSONAL PURPOSE AND NOT FOR THE BUSINESS PURPOSE. THEREFORE, THE PAYMENT OF INTEREST CANNOT BE ALLOWE D AGAINST THE BUSINESS INCOME. IN THIS REGARD, WE HAVE CAREFULLY PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND WE FIND THAT THOUGH THE A SSESSEE HAS CONTENDED THAT HE HAS BORROWED THE FUNDS FOR THE BUSINESS PUR POSE BUT IT WAS NOT PROPERLY DEMONSTRATE ON BEHALF OF THE ASSESSEE ON A CCOUNT OF PAUCITY OF TIME. WE THEREFORE, OF THE VIEW THAT ONE MORE OPPOR TUNITY SHOULD BE AFFORDED TO THE ASSESSEE TO DEMONSTRATED THAT LOAN WAS BORROWED FOR THE BUSINESS PURPOSE. ACCORDINGLY, WE SET ASIDE THE ORD ER OF THE CIT(A) IN BOTH THE YEARS AND RESTORE THE MATTER TO THE ASSESS ING OFFICER TO 3 READJUDICATE THE ISSUE AFRESH IN THE LIGHT OF THE A SSESSEE CONTENTIONS AND AFTER AFFORDING OPPORTUNITY OF BEING HEARD TO THE A SSESSEE. 5. IN ITA NO. 323/LKW/2015 ONE MORE GROUND IS RAISE D WITH REGARD TO DISALLOWANCE UNDER THE HEAD OTHER EXPENSES. IN THIS REGARD, IT IS NOTED THAT THE ASSESSEE HAS DEBITED AN AMOUNT OF RS.2,01, 356/- IN ITS PROFIT AND LOSS ACCOUNT UNDER THE HEAD OTHER EXPENSES AND ASSE SSING OFFICER HAS MADE THE DISALLOWANCE TO THE EXTENT OF 10% OF TOTAL CLAIM FOR WANT OF DETAIL AND ITS VERIFICATION. BUT, IN THE ASSESSMENT ORDER, HE HAS NOT POINTED OUT AS TO WHAT DETAILS WAS SOUGHT AND WHAT ARE THE LAPSES ON THE PART OF THE ASSESSEE. IN THE LIGHT OF THESE FACTS, WE ARE OF THE VIEW THAT THE ASSESSING OFFICER HAS WRONGLY DISALLOWED THE CL AIM OF THE ASSESSEE BY MAKING 10% DISALLOWANCE, WHICH WAS LATER ON CONFIRM ED BY THE CIT(A). SINCE DISALLOWANCE WAS MADE ON ADHOC BASIS, WE SET ASIDE THE ORDER OF CIT(A) AND DELETE THE ADDITION. 6. IN THIS APPEAL, ONE MORE GROUND WAS RAISED WITH REGARD TO SERVICE OF NOTICE OF HEARING U/S 143(2) OF THE ACT BUT NO C ONCRETE EVIDENCE ARE PLACED ON RECORD AND IN ABSENCE OF SUCH EVIDENCE, W E FIND NO MERIT IN THE CONTENTION OF THE ASSESSEE. ACCORDINGLY, WE CONFIRM THE ORDER OF THE CIT(A). ITA NO. 321/LKW/2015 7. IN THIS APPEAL, THE ASSESSEE HAS ASSAILED THE OR DER OF CIT(A) CONFIRMING THE PENALTY FOR RS.30,500/- ON ACCOUNT O F CONFIRMATION OF CERTAIN ADDITIONS. IN THE FOREGOING APPEALS, WE HAV E EITHER DELETED OR RESTRICTED THE ADDITIONS AND FOR ADDITION OF RS.1,1 1,418/-, THE ORDER OF CIT(A) WAS SET ASIDE AND MATTER WAS RESTORED TO THE ASSESSING OFFICER FOR READJUDICATION. IN THE LIGHT OF THESE FACTS, THE PE NALTY ORDER U/S 271(1(C) 4 OF THE ACT DOES NOT SURVIVE. ACCORDINGLY, WE SET AS IDE THE ORDER OF CIT(A) AND DELETE THE PENALTY LEVIED U/S 271(1)(C) OF THE ACT. 8. IN THE RESULT, APPEALS OF THE ASSESSEE IN ITA NO S. 322 & 323/LKW/2015 IS PARTLY ALLOWED FOR STATISTICAL PURP OSES AND ITA NO. 321/LKW/2015 IS ALLOWED. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DAT E MENTIONED ON THE CAPTION PAGE) SD/- SD/- (A.K. GARODIA ) (SUNIL KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 07/01/2016 AKS COPY OF THE ORDER FORWARDED TO : 1.THE APPELLANT 2.THE RESPONDENT. 3.CONCERNED CIT 4.THE CIT(A) 5.D.R., I.T.A.T., LUCKNOW ASSTT. REGIST RAR