Shri Alpesh Girishbhai Patel, Nadiad V. The ACIT, Kheda Circle, Nadiad

ITA 3446/AHD/2016

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 6582 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 7 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-08-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 21-12-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S K DEV
• Assessee Lawyers: S N DIVATIA
• Keywords: Business income; Depreciation; Business expenditure
• Section: 271(1)(c)

Judgement Text

, SMC IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER & SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER ./ I.T.A. NO. 3446/AHD/2016 ( ASSESSMENT YEAR : 2010-11) ALPESH GIRISHBHAI PATEL 11, GOPI NAGAR, COLLEGE ROAD, NADIAD - 387001 / VS. THE ACIT KHEDA CIRCLE, NADIAD ./ ./ PAN/GIR NO. : AHUPP1695F ( APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI S. N. DIVATIA, A.R. / RESPONDENT BY : SHRI S. K. DEV, SR.D.R. DATE OF HEARING 31/07/2019 !'# / DATE OF PRONOUNCEMENT 02/08/2019 / O R D E R PER PRADIP KUMAR KEDIA - AM: THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTANCE OF THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-2, VADODARA (CIT(A) IN SHORT), DATED 20.09.2016 ARIS ING IN THE PENALTY ORDER DATED 23.03.2015 PASSED BY THE ASSESSING OFFICER (A O) UNDER S. 271(1)(C) OF THE INCOME TAX ACT, 1961 (THE ACT) CONCERNING AY 2010-11. 2. AS PER GROUNDS OF APPEAL, THE ASSESSEE HAS CHALL ENGED THE IMPOSITION OF PENALTY UNDER S. 271(1)(C) OF THE ACT IN RESPECT OF ADDITIONS TO THE EXTENT ITA NO.3446/AHD/16 [ALPESH G. PATEL VS. ACIT] A.Y. 2010-11 - 2 - OF RS.6,58,616/- TOWARDS CLAIM OF VARIOUS EXPENSES, SUCH AS, CAR LOAN INTEREST, PETROL EXPENSES, SALARY EXPENSES, TELEPHO NE BILL ETC. 3. WHEN THE MATTER WAS CALLED FOR HEARING, THE LEAR NED AR FOR THE ASSESSEE ASSAILED THE ORDER OF THE AO AND THE CIT(A ) AND SUBMITTED THAT THE ASSESSEE HAS INTER ALIA HAD CLAIMED CERTAIN EXPENSES OF RS.6,58,616/- FROM INCOME REFLECTED UNDER THE HEAD INCOME FROM OTHER SOURCES. THE AO FRAMED ASSESSMENT BY DISALLOWING EXPENSES AND MADE ADDITIONS ON ESTIMATED BASIS. IT WAS SUBMITTED THAT ALL THE MAT ERIAL FACTS RELEVANT FOR ASSESSMENT WERE PLACED ON RECORD. THE LEARNED AR S UBMITTED THAT WHILE THE DISPUTED DISALLOWANCES MIGHT HAVE BEEN SUSTAINE D IN THE QUANTUM PROCEEDINGS BY APPELLATE AUTHORITY INCLUDING ITAT, THIS BY ITSELF, IS NOT SUFFICIENT TO WARRANT IMPOSITION OF PENALTY UNDER S . 271(1)(C) OF THE ACT WHICH IS ALTOGETHER A DIFFERENT AND INDEPENDENT PRO CEEDINGS. IT WAS SUBMITTED THAT EXPENSES HAVE BEEN INCURRED TO EARN BUSINESS INCOME AND ARE THEREFORE DEDUCTIBLE FROM BUSINESS INCOME ALTHOUGH INCORRECTLY CLAIMED UNDER THE HEAD INCOME FROM OTHER SOURCES. AS REG ARDS DISALLOWANCE OF CAR EXPENSES AND CAR DEPRECIATION, IT WAS CONTENDED THAT THE OBSERVATION OF THE LOWER AUTHORITIES THAT NO EVIDENCE REGARDING OW NERSHIP OF VEHICLE HAS BEEN SUBMITTED IS INCORRECT. THE LEARNED AR FOR THE ASSESSEE REFERRED TO THE BALANCE SHEET OF THE ASSESSEE CONCERNING AY 2007-08 , 2008-09 AND 2009-10 TO SUBMIT THAT THE VEHICLES HAVE BEEN DULY REFLECTE D IN THE BALANCE SHEET. THE REGISTRATION OF VEHICLE IN THE NAME OF ASSESSEE IS NOT NECESSARY. THE ASSESSE HAS PURCHASED TWO VEHICLES AND IS REFLECTED IN THE BALANCE SHEET. THE LEARNED AR FOR THE ASSESSEE SUBMITTED THAT THE DISALLOWANCE IN THE QUANTUM PROCEEDINGS FOR INADEQUACY OF EVIDENCES SHO ULD NOT LEAD TO IMPOSITION OF ONEROUS PENALTY. 4. THE LEARNED DR, ON THE OTHER HAND, POINTED OUT T HAT THE DISALLOWANCE OF EXPENSES HAVE BEEN CONFIRMED BY THE CO-ORDINATE BENCH OF ITAT IN ITA NO. 1243/AHD/2014 CONCERNING AY 2010-11 WHERE THE I TAT HAS CLEARLY OBSERVED LACK OF ANY EVIDENCE AS WELL AS UTILIZATIO N OF SUCH EXPENSES FOR THE PURPOSE OF BUSINESS OF VARIOUS FIRMS WHERE ASSE SSEE IS A PARTNER, THE ITA NO.3446/AHD/16 [ALPESH G. PATEL VS. ACIT] A.Y. 2010-11 - 3 - INCOME OF WHICH RECEIVED BY WAY OF SALARY INTEREST IS ASSESSED AS BUSINESS INCOME. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. THE I MPOSITION OF PENALTY UNDER S. 271(1)(C) OF THE ACT ON DISALLOWANCE OF BU SINESS EXPENSES CLAIMED IS IN CONTROVERSY. WHILE REJECTING THE CLAIM OF EX PENSES OF ASSESSEE IN QUANTUM PROCEEDINGS THE CO-ORDINATE BENCH OF ITAT I N ITA NO. 1243/AHD/2014 ORDER DATED 06.01.2017 HAS RECORDED ITS FINDINGS AS UNDER: 4. WE NOW COME TO ASSESSEES LATTER SUBSTANTIVE GR OUND THAT THE CIT(A) AS WELL AS THE ASSESSING OFFICER HAVE ERRED IN DISALLOWING BUSINESS EXPENSES OF RS.6,44,023/-. WE FIRST COME TO ASSESS EES TABULATION IN PAGE 5 OF THE CIT(A)S ORDER AND NOTICE THAT THE ABOVE D ISALLOWANCE FIGURE COMPRISED OF CAR LOAN INTEREST, CAR DEPRECIATION, B ANK COMMISSION, PETROL EXPENSES, CAR EXPENSES, SALARY & TELEPHONE EXPENSES OF RS.78,702/-, RS.4,38,257/-, RS.2985/-, RS.6400/-, RS.65,356/-, R S.51,000/- & RS.1323/-; RESPECTIVELY. THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAD NOT FURNISHED ANY EVIDENCE REGARDING OWNERSHIP OF THE V EHICLES IN QUESTION FOLLOWED BY THEIR UTILIZATION FOR THE PURPOSES OF T HE BUSINESS OF SEVEN FIRMS WHEREIN HE IS A PARTNER. HE FURTHER NOTICED THAT THERE WAS NO PROOF BY WAY OF VOUCHERS AND BILLS ETC. REGARDING OTHER C LAIMS OF EXPENDITURE. 5. WE NOW COME TO THE CIT(A)S ORDER WHEREIN HE OBS ERVED THAT THE ASSESSEE HAS NOT BEEN ABLE TO DEMONSTRATE IN ANY MA NNER AS TO HOW THE ABOVE EXPENSES SHOWN IN THE COMPUTATION OF INCOME A RE INCURRED FOR THE PURPOSE OF BUSINESS AND EARNING OF THE BUSINESS INC OME IN QUESTION. THIS LEAVES THE ASSESSEE AGGRIEVED. 6. WE HAVE HEARD BOTH THE PARTIES. RELEVANT FINDIN GS IN BOTH THE LOWER AUTHORITIES ORDERS STAND PERUSED. THE ASSES SEE HAS NOT BEEN ABLE TO FILE ANY EVIDENCE IN THE INSTANT APPEAL SO AS TO SUBSTANTIATE HIS CLAIM OF HAVING INCURRED ALL HEADS OF THE ABOVE EXPENSES BY WAY OF CAR LOAN INTEREST, DEPRECIATION, BANK COMMISSION, PETROL EXP ENSES, CAR EXPENSES, SALARY AND TELEPHONE CHARGES. WE MAKE IT CLEAR THA T THERE IS NOT EVEN A SINGLE PIECE OF PAPER IN THE NATURE OF A SELF-ATTES TED VOUCHER TO FORTIFY ANY OF THE ABOVE CLAIM OF EXPENDITURE MUCH LESS THAN TH E SUBSTANTIVE EVIDENCE OF OWNERSHIP OF THE CORRESPONDING VEHICLES AND THEI R NEXUS WITH ASSESSEES BUSINESS INCOME. WE THUS FIND NO REASON TO AGREE WITH ASSESSEES EXPENDITURE CLAIM IN QUESTION AMOUNTING TO RS.6,44,023/-. WE THUS CONFIRM THE SAME. THE ASSESSEE LOSSES IN ITS LATTER SUBSTANTIVE GROUND AS WELL. 6. A BARE READING OF THE QUANTUM ORDER SHOWS THAT T HE ASSESSEE COULD NOT SUBSTANTIATE THE CLAIM OF EXPENSES CLAIMED BY H IM BY ANY DOCUMENTARY EVIDENCE IN THE QUANTUM PROCEEDINGS. EVEN IN THE P ENALTY PROCEEDINGS, THE ASSESSEE HAS FAILED TO SUBSTANTIATE THE EXPENSES EX CEPT FOR MAKING GENERALIZED OBSERVATIONS TOWARDS EXISTENCE OF CAR I N THE BALANCE SHEET AND ITA NO.3446/AHD/16 [ALPESH G. PATEL VS. ACIT] A.Y. 2010-11 - 4 - INCURRING OTHER EXPENSES. THE ENTRY SHOWN IN AN UN AUDITED BALANCE SHEET DOES NOT INSPIRE CONFIDENCE IN THE ABSENCE OF ANY T ANGIBLE DOCUMENTARY EVIDENCE ADDUCED. THE CLAIM OF THE EXPENDITURE ALLE GEDLY INCURRED IN RELATION TO EARNING OF INCOME BY WAY OF INTEREST AN D REMUNERATION FROM PARTNERSHIP FIRM IS ALSO TOTALLY UNPROVED IN THE QU ANTUM PROCEEDINGS. THE EXPLANATION OFFERED BY THE ASSESSEE, THUS, CANNOT B E ASSUMED TO BE BONAFIDE. IN THE ABSENCE OF RELEVANT FACTS RELATIN G TO EXPENSES CLAIMED, THE OBSERVATIONS OF THE CO-ORDINATE BENCH IN QUANTUM PR OCEEDINGS WOULD SQUARELY APPLY. WE ALSO NOTE THAT THE CIT(A) HAS C ATEGORICALLY OBSERVED THE CLAIM OF THE ASSESSEE TO BE FALSE AND WITHOUT A NY EVIDENCE. THE PLEA OF THE ASSESSEE SOUNDS HOLLOW ON THE FACE OF SUCH REAS ONINGS. WE THUS FIND NO INFIRMITY IN THE CONCLUSION DRAWN BY THE CIT(A) AND THUS DECLINE TO INTERFERE THEREWITH. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DIS MISSED. SD/- SD/- (RAJPAL YADAV) (PRADIP K UMAR KEDIA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: DATED 02/08/2019 TRUE COPY S. K. SINHA !'#' / COPY OF ORDER FORWARDED TO:- &. / REVENUE 2. / ASSESSEE (. )*+ , / CONCERNED CIT 4. ,- / CIT (A) /. 012 33*+4 *+#4 56) / DR, ITAT, AHMEDABAD 7. 289 : / GUARD FILE. BY ORDER / 4 /5 *+#4 56) THIS ORDER PRONOUNCED IN OPEN COURT ON 02/08/20 19