VIPUL N AMBANI, MUMBAI V. ACIT CIR 2(3), MUMBAI

ITA 3500/MUM/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 3892 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 9 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-02-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 17-02-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 03-05-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: VIKRAM BATRA
• Keywords: Unexplained expenditure; Business income; Business expenditure; Earning of tax free income
• Section: 14A; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH, MUM BAI BEFORE SHRI JASON P. BOAZ, AM AND SHRI SANDEEP GOSA IN, JM ./ I.T.A. NO. 3500/MUM/2013 ( / ASSESSMENT YEAR: 2009-10) VIPUL N AMBANI 4-A, RIZVI PARK, 5-A, ALTAMOUNT ROAD, MUMBAI-400 026. / VS. ACIT CIRCLE 2(3), AAYAKAR BHAVAN, 6 TH FLOOR, M.K.ROAD, MUMBAI-400 023. ./ ./PAN/GIR NO. AABPA 6889Q ( /APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : NONE / RESPONDENT BY : SHRI VIKRAM BATRA / DATE OF HEARING : 17/02/2016 !'# / DATE OF PRONOUNCEMENT : 19/02/2016 $% / O R D E R PER SANDEEP GOSAIN, J. M.: THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE A GAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) - 6, DATED 21. 02.2013 WHEREBY CIT(A) HAS DISMISSED THE APPEAL FILED BY THE ASSESSEE AGAI NST THE ORDER OF AO DATED 21.12.2011 ON THE GROUNDS OF APPEAL MENTIONED HEREI N BELOW. 2 ITA NO. 3500/MUM/2013 (A.Y. 2009-10) VIPUL N. AMBANI VS. ACIT 1. CREDIT CARD EXPENSES AS AN UNEXPLAINED EXPENDITU RE : 1.1 THE LEARNED ASSESSING OFFICER HAS ERRED IN DISA LLOWING CREDIT CARD EXPENSES. 1.2 THE ASSESSEE HAS INCURRED VARIOUS EXPENSES THR OUGH HIS CREDIT CARD FOR PERSONAL PURPOSES AS WELL AS FOR BUSINESS PURPOSES FOR COMPANIES IN WHICH ASSESSEE IS DIRECTOR. EXPENSES INCURRED FOR PERSONA L PURPOSES ARE ACCOUNTED AS DRAWINGS AND INCURRED FOR COMPANIES ARE REIMBURSED TO THE ASSESSEE BY THE RESPECTIVE COMPANIES. 1.3 HOWEVER, WITHOUT GIVING ANY REASONABLE OPPORTU NITIES TO EXPLAIN THE SAME, THE AO SUO MOTTO DISALLOWS THE WHOLE AMOUNT AS UNEXPLAI NED EXPENDITURE U/S 69C. 1.4 THE APPELLANT SUBMITS THAT CONSIDERING THE FAC TS AND CIRCUMSTANCES OF THE CASE AND THE LAW PREVAILING ON THE SUBJECT, THE LEARNED ASSESSING OFFICER WAS NOT JUSTIFIED TO CONSIDER CREDIT CARD EXPENSES OFRS.L,7 12,880 AS INCOME. 1.5. THE APPELLANT SUBMITS THAT AO BE DIRECTED NOT TO CONSIDER THE CREDIT CARD EXPENSE AS UNEXPLAINED EXPENDITURE. 2. DISALLOWANCE OF TRAVELLING & BUSINESS PROMOTION EXPENSES: 2.1 THE LEARNED ASSESSING OFFICER HAS ERRED IN DIS ALLOWING TRAVELLING & BUSINESS PROMOTION EXPENSES. 2.2 THE ASSESSEE INCURRED TRAVELLING AND BUSINESS PROMOTION EXPENSES AMOUNTING TO RS.563,210 & RS.46,820 RESPECTIVELY TO EARN THE BUSINESS INCOME. 2.3 THE ASSESSEE PROMISED TO SUBMIT THE EVIDENCE T O EXPLAIN THAT THESE PAYMENTS ARE MADE FOR THE BUSINESS PURPOSES. 2.4 THE APPELLANT SUBMITS THAT CONSIDERING THE FAC TS AND CIRCUMSTANCES OF THE CASE AND THE LAW PREVAILING ON THE SUBJECT, THE LEARNED ASSESSING OFFICER WAS NOT JUSTIFIED TO DISALLOW OF TRAVELLING & BUSINESS PROM OTION EXPENSES OF RS.563,21 0 & RS.46,820 RESPECTIVELY. 2.5 THE APPELLANT SUBMITS THAT AO BE DIRECTED TO C ONSIDER THE EXPENSE AS BUSINESS EXPENSES. 3 ITA NO. 3500/MUM/2013 (A.Y. 2009-10) VIPUL N. AMBANI VS. ACIT 3. DISALLOWANCE OF SOCIETY MAINTENANCE EXPENSES: 3.1 THE LEARNED ASSESSING OFFICER HAS ERRED IN DIS ALLOWING SOCIETY MAINTENANCE EXPENSES. 3.2 THE APPELLANT SUBMITS THAT CONSIDERING THE FAC TS AND CIRCUMSTANCES OF THE CASE AND THE LAW PREVAILING ON THE SUBJECT, THE LEARNED ASSESSING OFFICER WAS NOT JUSTIFIED TO DISALLOW OF SOCIETY MAINTENANCE EXPENS ES OFRS.128,000. 3.3. THE APPELLANT SUBMITS THAT AO BE DIRECTED TO CONSIDER THE EXPENSE AS BUSINESS EXPENSES. 4. DISALLOWANCE U/S 14A: A. THE LEARNED AO HAS ERRED IN ADDING BACK RS. 333 ,920 EXPENSES TO EARN TAX FREE INCOME OFRS.225,016 AS DIVIDEND. B. THE LEARNED AO HAS ERRED IN DISALLOWING RS. 333 ,9201- U/S.14A OF THE INCOME TAX ACT ON THE BASIS OF RULE8D AS FOLLOWS: RS. 1. THE AMOUNT OF EXPENDITURE AS PER RULE 8D (2)(I) NIL 2. AMOUNT AS PER FORMULA GIVEN IN RULE 8D (2)(II) A AMOUNT OF INTEREST RS. 8,767 B AVERAGE VALUE OF ASSETS RS. 66,034,978 C AVERAGE VALUE OF TOTAL ASSETS RS. 154,581,309 THEREFORE, A *B/C 3,745 3 AMOUNT EQUAL TO ONE HALF % OF B 330,175 TOTAL 333,920/- HOWEVER, THE AO ERRED IN FOLLOWING THE RULE 8D, AS THE SAME SHOULD BE CALCULATED AS FOLLOWS: 4 ITA NO. 3500/MUM/2013 (A.Y. 2009-10) VIPUL N. AMBANI VS. ACIT RS. 3. THE AMOUNT OF EXPENDITURE AS PER RULE 8D (2)(I) NIL 4. AMOUNT AS PER FORMULA GIVEN IN RULE 8D (2)(II) A AMOUNT OF INTEREST B AVERAGE VALUE OF INVESTMENTS PERTAINING TO EXEMPT INCOME RS. 53,275,878 C AVERAGE VALUE OF TOTAL ASSETS RS.154,581,309 THEREFORE, A *B/C NIL 4 AMOUNT EQUAL TO ONE HALF% OF B NIL TOTAL NIL THEREFORE THE AO SHOULD BE DIRECTED TO DELETE THE D ISALLOWANCE AMOUNTING TO RS. 333,920. C. IF BORROWED AMOUNT NOT USED TO EARN EXEMPT INCO ME, NO DISALLOWANCE CAN BE MADE VIS. 14A- ACIT VS. MI5 RELIANCE LAND PVT. LTD. (ITAT MUMBAI). 5. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND, SUBSTITUTE AND/OR MODIFY IN ANY MANNER WHATSOEVER ALL OR ANY OF THE FOREGOING G ROUNDS OF APPEAL AT OR BEFORE THE HEARING OF THE APPEAL. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E FILED ITS RETURN OF INCOME ON 30.09.2009 DECLARING TOTAL INCOME OF RS.46,73,581/- . THE SAME WAS DULY PROCESSED U/S 143(1) OF THE INCOME TAX ACT. THE CASE WAS SELE CTED FOR SCRUTINY AND STATUTORY NOTICES WERE ISSUED AND SERVED UPON THE ASSESSEE. A SSESSING OFFICER AFTER CONSIDERING THE CASE OF THE ASSESSEE HAS PASSED THE ORDER OF ASSESSMENT THEREBY 5 ITA NO. 3500/MUM/2013 (A.Y. 2009-10) VIPUL N. AMBANI VS. ACIT MAKING DISALLOWANCE IN RESPECT OF CREDIT CARD EXPEN SES, TRAVELLING EXPENSES AND BUSINESS PROMOTION EXPENSES, SOCIETY MAINTENANCE EX PENSES, DERIVATIVE LOSS AND DISALLOWANCE U/S 14A. 3. AGGRIEVED BY THE ORDER OF THE AO, ASSESSEE FILED AN APPEAL BEFORE THE CIT(A) AND THE CIT(A) AFTER CONSIDERING THE CASE OF THE ASSESSEE, DISMISSED THE SAME VIDE ORDER DATED 21.02.2013. 3.1 AGGRIEVED BY THE ORDER OF THE CIT(A), THE ASSES SEE FILED THE PRESENT APPEAL BEFORE US ON THE GROUNDS MENTIONED HEREIN ABOVE. 4. AT THE VERY OUTSET, IT IS SUBMITTED THAT THE CAS E OF THE ASSESSEE WAS FIXED FOR ARGUMENTS BUT NONE HAS APPEARED ON BEHALF OF THE AS SESSEE AND ON PERUSAL OF THE ORDER SHEET. WE HAVE FURTHER NOTICED THAT EVEN ON P REVIOUS DATES NOBODY HAD APPEARED, ALTHOUGH NOTICES OF RPAD WAS ALSO ISSUED AND SERVED ON ASSESSEE. IT WAS ALSO NOTICED THAT EVEN ON THE IMPUGNED ORDER PASSED BY THE CIT(A) IT IS MENTIONED THAT NONE APPEARED ON BEHALF OF THE ASSESSEE AND TH IS FACT HAS BEEN CATEGORICALLY MENTIONED THAT VARIOUS NOTICES WERE ALSO ISSUED BY THE AO BUT NONE APPEARED AND THEREFORE THE AO HAD MADE BEST JUDGEMENT ASSESSMENT IN ACCORDANCE WITH THE 6 ITA NO. 3500/MUM/2013 (A.Y. 2009-10) VIPUL N. AMBANI VS. ACIT PROVISIONS OF SECTION 144 OF THE INCOME-TAX ACT. AN D EVEN CIT(A) HAS ALSO PASSED EX-PARTE ORDERS. SAME IS THE SITUATION BEFORE US. 5. ON THE OTHER HAND, LD. DR REPRESENTING THE REVEN UE IS READY WITH THE ARGUMENTS AND THEREFORE WE HAVE DECIDED TO HEAR THE APPEAL IN THE ABSENCE OF THE ASSESSE. 6. ALL THE GROUNDS RAISED BY THE ASSESSEE ARE INTER -CONNECTED AND INTER-RELATED THEREFORE WE THOUGHT IT FIT TO DISPOSE OFF THE SAME BY THE COMMON ORDER. 7. WE HAVE CONSIDERED THE DETAILED ORDER PASSED BY THE AO AND THE OPERATIVE PORTION OF THE SAME IS REPRODUCED AS UNDER: NOTICE U/S.143(2) WAS, THEREFORE, ISSUED ON 23.08. 2010 AND DULY SERVED ON THE ASSESSEE. SUBSEQUENTLY, NOTICE U/S.142(1) DA TED 17.06.2011 WAS ISSUED TO THE ASSESSEE ALONG WITH AIR INFORMATION. FURTHER, NOTICES U/S.142(1)OF THE IT ACT WERE ISSUED FROM TIME TO TI ME. IN RESPONSE THERETO AND SUBSEQUENT NOTICES U/S.142(1), SHRI VIKAS MEHTA , CA FROM M/S.REAJEN DAMANI & ASSOCIATES, CAS ATTENDED FROM T IME TO TIME AND FILED DETAILS. IT IS SEEN THAT THE ASSESSEE THOUGH ATTENDED TIME T O TIME, BUT DID NOT FURNISH THE DETAILS. HE ALWAYS FURNISHED ONLY PART DETAILS AND SOUGHT ADJOURNMENT FOR BALANCE DETAILS. IT CLEARLY SHOWS T HAT THE ASSESSEE HAS BEEN EVADING THE SUBMISSION OF PROPER DETAILS FOR T HE REASONS KNOWN TO HIM. I, THEREFORE, COMPLETE THE ASSESSMENT ON THE B ASIS OF INFORMATION AVAILABLE ON RECORD. THE ASSESSMENT IS COMPLETED EX -PARTE U/S.144 OF THE IT ACT, 1961. 7 ITA NO. 3500/MUM/2013 (A.Y. 2009-10) VIPUL N. AMBANI VS. ACIT 3. CREDIT CARD EXPENSES: 3.1 AS PER THE AIR INFORMATION, THE ASSESSEE HAD IN CURRED CERTAIN EXPENSES THROUGH HIS AMERICAN EXPRESS CREDIT CARD. THE ASSESSEE WAS ASKED TO FURNISH THE DETAILS AS TO HOW THE PAYMENTS WERE MADE AND THE PURPOSE OF THE EXPENSES. 3.2 THE ASSESSEE VIDE LETTER DATED 20.12.2011 GAVE MONTH WISE DETAILS OF CREDIT CARD PAYMENTS OF RS.17,12,880/-. THE ASSESSE E ALSO SUBMITTED MONTH WISE STATEMENT IT CARD PAYMENTS. HOWEVER, THE ASSESSEE DID NOT EXPLAIN THE SOURCE OF PAYMENT OF THESE EXPENSES. TH E ONUS WAS ON THE ASSESSEE TO EXPLAIN WITH EVIDENCES THE SOURCE FORM WHERE THESE PAYMENTS WERE MADE. 3.3 THE ASSESSEE ORALLY CONTENDED THAT PAYMENTS WER E MADE BY THE COMPANY IN WHICH THE ASSESSEE IS DIRECTOR. HOWEVER, THE ASSESSEE DID NOT BRING ANY EVIDENCE TO EXPLAIN THE SAME. MOREOVER, T HE ASSESSEE WAS REQUIRED TO EXPLAIN THE PAYMENTS MADE BY THE COMPAN Y WERE FOR THE BUSINESS OF THE COMPANY AND NOT OTHERWISE. IF THE P AYMENTS WERE NOT FOR THE BUSINESS OF THE COMPANY, THE SAME WOULD BE PERQ UISITE IN THE HANDS OF THE ASSESSEE. CONSIDERING THE FACT THAT THE ASSE SSEE IS A DIRECTOR IN A PRIVATE LIMITED COMPANY, WHEREIN THE REAL PERSON BE HIND ALL THE TRANSACTIONS REMAINS THE ASSESSEE ONLY, THE SOURCE OF SUCH CREDIT CARD PAYMENTS BY SUCH COMPANY WAS MORE ESSENTIALLY REQUI RED TO BE INVESTIGATED TO ASCERTAIN THE REAL BENEFICIARIES. 3.4 UNDER THE CIRCUMSTANCES, CREDIT CARD PAYMENT OF RS.17, 12,8801 - IS ADDED TO THE TOTAL INCOME AS UNEXPLAINED EXPENDITUR E U/S.69C. PENALTY PROCEEDINGS U/S.271 (1)(C) HAS BEEN INITIATED SEPAR ATELY FOR CONCEALMENT OF INCOME. 4. TRAVELLING EXPENSES & BUSINESS PROMOTION EXPENSE S: 4.1 THE ASSESSEE DEBITED TRAVELLING EXPENSES OF RS. 5,63,210/-. THE ASSESSEE DID NOT FURNISH ANY DETAILS OF THE EXPENSE S. NOR DID THE ASSESSEE EXPLAIN THE PURPOSE OF THESE EXPENSES. THE ASSESSEE WAS REQUIRED TO FURNISH THE DETAILS OF THE PLACES HE VISITED AND TH E PERSONS WHO ACCOMPANIED HIM. FURTHER, HE WAS REQUIRED TO EXPLAI N THE PERSONS HE MET AND THE PURPOSE OF SUCH MEETING WITH CORRESPOND ING EVIDENCES. HOWEVER, THE ASSESSEE DID NOT FURNISH ANY DETAILS. 8 ITA NO. 3500/MUM/2013 (A.Y. 2009-10) VIPUL N. AMBANI VS. ACIT THE ONUS WAS ON THE. ASSESSEE TO ESTABLISH WITH EVI DENCES THAT THE EXPENSES WERE FOR THE PURPOSE OF BUSINESS ONLY. IN THE ABSENCE OF ANY DETAILS, THE SAME IS DISALLOWED AND ADDED TO THE TO TAL INCOME OF THE ASSESSEE. PENALTY PROCEEDINGS U/S.271 (1)(C) HAS BE EN INITIATED SEPARATELY FOR FURNISHING INACCURATE PARTICULARS OF INCOME. 5. SOCIETY MAINTENANCE EXPENSES: 5.1 THE ASSESSEE DEBITED SOCIETY MAINTENANCE OF RS. 1,38,880/-. THE ASSESSEE EXPLAINED THAT THE EXPENSES WERE IN RESPEC T OF THE PREMISES IN WHICH HE IS STAYING. SINCE, RESIDENCE IS MORE USED FOR THE PURPOSE OF PERSONAL USE BY THE ASSESSEE, HIS SPOUSE AND CHILDR EN, THE QUESTION OF DEBITING SOCIETY EXPENSES OF THE RESIDENCE IN THE P ROFIT AND LOSS ACCOUNT DOES NOT ARISE. 4.2 SIMILAR IS THE CASE WITH BUSINESS PROMOTION EX PENSES OF RS.46,820/ - AND THE SAME IS DISALLOWED. PENALTY PR OCEEDINGS U/S.271 (1)(C) HAS BEEN INITIATED SEPARATELY FOR FURNISHING INACCURATE PARTICULARS OF INCOME. THE ASSESSEE MAY ARGUE THAT HE HAD BEEN CARRYING OU T THE BUSINESS ACTIVITIES FROM THE RESIDENCE, BUT IT DOES NOT MEAN THAT THE RESIDENCE WAS WHOLLY AND EXCLUSIVELY USED FOR THE PURPOSE OF BUSI NESS. THE USE OF RESIDENCE FOR THE PURPOSE OF BUSINESS MAY BE INCIDE NTAL AND NOT EXCLUSIVE. UNDER THE CIRCUMSTANCES, THE SOCIETY MAI NTENANCE CHARGES CANNOT BE ALLOWED AS DEDUCTION IN FULL. SINCE, THE MAIN USE OF THE RESIDENCE IS PERSONAL USE AN AMOUNT OF RS.1,28,000/ - IS ESTIMATED TOWARDS PERSONAL USE AND BALANCE OF RS.10,880/ IS TOWARDS BUSINESS OF THE ASSESSEE. THEREFORE, AN AMOUNT OF RS.1 ,28,000/ - IS DISALLOWED AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. PENALTY PROCEEDINGS U/S.271 (1) (C) HAS BEEN INITIATED SEPARATELY FOR FURNISHIN G INACCURATE PARTICULARS OF INCOME. 6. THE ASSESSEE HAS DEBITED DERIVATIVE LOSS OF RS.1 ,84,0201 FOR WHICH NO DETAILS HAVE BEEN FURNISHED. THE ASSESSEE DID NO T BRING ANY EVIDENCE ON RECORD TO ESTABLISH THE NATURE OF SUCH DERIVATIV E LOSS AND ITS ALLOWABILITY. THE DERIVATIVE LOSS WOULD BE ALLOWABL E IF THE TRANSACTIONS ARE DONE THROUGH RECOGNIZED STOCK EXCHANGE. SINCE, THERE IS NO EVIDENCE TO THIS EFFECT, THE DERIVATIVE LOSS OF RS.1 ,84,020 1 - IS DISALLOWED. 7. DISALLOWANCES U/S. 14A: 9 ITA NO. 3500/MUM/2013 (A.Y. 2009-10) VIPUL N. AMBANI VS. ACIT 7.1 DURING THE YEAR THE ASSESSEE HAS EARNED EXEMPT INCOME OF RS.2,25,016/-. HOWEVER, THE ASSESSEE DID NOT DISALL OW ANY AMOUNT U/S. 14A OF THE IT ACT, 1961. FURTHER, THE ASSESSEE DID NOT SUBMIT ANY EXPLANATION FOR THE DISALLOWANCE U/S. 14A OF THE IT ACT, 1961. 7.2 SINCE, THE ASSESSEE DID NOT JUSTIFY HIS CLAIM T HAT IT DID NOT INCUR ANY EXPENDITURE ON EXEMPT INCOME, I INVOKE THE PROVISIO N OF SECTION 14A R.W RULE 80. IN VIEW OF THE ABOVE, DISALLOWANCE U/S. 14 A IS WORKED AS UNDER: OPENING BALANCE CLOSING BALANCE (I) THE AMOUNT OF EXPENDITURE DIRECTLY RELATING TO INCOME WHICH DOES NOT FORM PART OF TOTAL INCOME (II) IN CASE WHERE THE ASSESSEE HAS INCURRED EXPENDITURE BY WAY OF INTEREST DURING THE PREVIOUS YEAR WHICH IS NOT DIRECTLY ATTRIBUTABLE TO ANY PARTICULAR INCOME OR RECEIPT, AN AMOUNT COMPUTED IN ACCORDANCE WITH THE FOLLOWING FORMULA A AMOUNT OF EXPENDITURE BY WAY OF INTEREST OTHER THAN THE AMOUNT OF INTEREST INCLUDED IN CLAUSE (I) INCURRED DURING THE PREVIOUS YEAR 8,767 B THE AVERAGE VALUE OF INVESTMENT, INCOME FROM WHICH DOES NOT OR SHALL NOT FORM PART OF THE TOTAL INCOME, AS APPEARING IN THE BALANCE SHEET OF THE ASSESSEE, ON THE FIRST DAY AND THE LAST DAY OF 66874994 65194961 66,034,978 10 ITA NO. 3500/MUM/2013 (A.Y. 2009-10) VIPUL N. AMBANI VS. ACIT THE PREVIOUS Y EAR C THE AVERAGE OF TOTAL ASSETS AS APPEARING IN THE BALANCE SHEET OF THE ASSESSEE, ON THE FIRST DAY AND THE LAST DAY OF THE PREVIOUS YEAR 155561220 153601398 154,581,309 A X B / C 3,745 (III) 0.5% OF THE AVERAGE OF THE VALUE OF INVESTMENT, INCOME FROM WHICH DOES NOT OR SHALL NOT FORM PART OF THE TOTAL INCOME, AS APPEARING IN THE BALANCE SHEET OF THE ASSESSEE, ON THE FIRST DAY AND THE LAST DAY OF THE PREVIOUS YEAR 330,175 DISALLOWANCE U/S.14A (I) + (II) + (III) 333,920 7.3. THE ASSESSEE MAY ARGUE THAT THE DISALLOWANCE U /S 14A HAD BEEN MORE THAN THE EXEMPT INCOME AND THEREFORE IT SHOULD BE RESTRICTED TO EXEMPT INCOME. THE SAME ARGUMENT CAN NOT BE ACCEPTE D. WHAT IS REQUIRED TO BE DISALLOWED IS EXPENSES ATTRIBUTABLET O EXEMPT INCOME. SUCH EXPENSES MAY BE MORE OR MAY BE LESS. SOME INVE STMENT MAY YIELD LESS RETURN WHEREAS OTHER INVESTMENT MAY YIELD HIGH ER RETURN. THEREFORE DISALLOWANCE OF EXPENSES AGAINST THE EXEMPT MAY BE LESS OR MORE THAN THE EXEMPT INCOME. THE QUANTUM CAN NOT BE CRITERIA FOR RESTRICTING THE DISALLOWANCE. WHAT IS REQUIRED TO BE COMPUTED IS TR UE AND CORRECT TAXABLE INCOME. IN THE PROCESS, THE QUANTUM OF DISA LLOWANCE ULS 14A MAY BE HIGHER THAN THE EXEMPT INCOME. 7.4 A REFERENCE MAY BE MADE TO THE HON'BLE SUPREME COURT'S DECISION IN THE CASE OF CIT V IS RAJENDRA PRASAD MOODY 115 ITR 519 WHEREIN IT WAS HELD THAT INTEREST PAID ON MONEY BORROWED FOR INVES TMENT IN SHARES WHICH HAD NOT YIELDED ANY DIVIDEND, WAS ADMISSIBLE DEDUCTION. IT WAS THE CASE WHEN THE DIVIDEND WAS TAXABLE. IT IS CLEAR THAT THE DEDUCTION OF EXPENSES WAS NEVER RELATED WITH THE INCOME. 7.5 NOW THE SITUATION IS OTHER WISE. THE DIVIDEND I S EXEMPT FROM TAX. THE QUESTION ARISES WHETHER THERE CAN BE DISALLOWANCE O F EXPENSES MORE 11 ITA NO. 3500/MUM/2013 (A.Y. 2009-10) VIPUL N. AMBANI VS. ACIT THAN THE EXEMPT INCOME. THE QUESTION IS OBVIOUSLY Y ES AS LAID DOWN BY THE HON'BLE SUPREME COURT IN THE ABOVE REFERRED CAS E. HENCE THE DISALLOWANCE OF EXPENSES U/S 14A IS OF EXPENSES ATT RIBUTABLE OF EXEMPT INCOME AND SUCH DISALLOWANCE MAY BE MORE OR LESS TH AN THE EXEMPT INCOME. 7.6 HENCE, AN AMOUNT OF RS.3,33, 9201 - IS DISALLOW ED U/S. 14A OF THE IT ACT, 1961. 8. THE ASSESSEE'S TOTAL INCOME IS COMPUTED AS UNDER : PARTICULARS AMOUNT (RS.) TOTAL INCOME AS PER COMPUTATION OF INCOME 46,73,582 ADD: DISALLOWANCE AS DISCUSSED ABOVE CREDIT CARD EXPENSES - PARA 3 17,12,880 TRAVELLING EXPNESES-PARA 4.1 5,63,210 BUSINESS PROMOTION EXPENSES-PARA 4.2 46,820 SOCIETY MAINTENANCE EXPENSES - PARA 5 1,28,000 DERIVATIVE LOSS - PARA 6 1,84,020 DISALLOWANCE U/S.14A - PARA 7 3,33,920 29.68.850 ASSESSED TOTAL INCOME 76.42.430 4. ASSESSED ACCORDINGLY. GIVE CREDIT FOR TAXES PAID AFTER DUE VERIFICATION. CHARGE INTEREST U/S.234B AND 2340 OF THE IT ACT, 19 61. THE INTEREST AND TAX WORKING IS AS PER ITNS 150A, WHICH IS PART OF T HIS ORDER. ISSUE DN/RO CHALLAN ACCORDINGLY. PENALTY PROCEEDINGS U/S. 271 (1)(C) HAS BEEN INITIATED SEPARATELY. IN APPEAL BEFORE CIT(A), NOBODY APPEARED ON BEHALF OF ASSESSEE THEREFORE, CIT(A) AFTER CONSIDERING THE ORDER PASSED BY THE AO HAD FOUND THE SAME VALID AND HENCE CONFIRMED. 12 ITA NO. 3500/MUM/2013 (A.Y. 2009-10) VIPUL N. AMBANI VS. ACIT 8. FROM THE AFORESAID DETAILED ORDER PASSED BY THE AO WE FOUND THAT ASSESSEE HAS NEITHER FURNISHED THE REQUIRED DETAILS AND IN A DDITION THE ASSESSEE HAD NOT GIVEN PROPER DETAILS FOR THE REASONS KNOWN TO HIM. THE AO MADE THE BEST JUDGEMENT IN ACCORDANCE WITH PROVISIONS OF SECTION 144 OF THE AC T AND EVEN BEFORE THE CIT(A) NO BODY APPEARED TO COUNTER OR REBUT THE FINDING RE CORDED BY THE LD. AO. THEREFORE, THE CIT(A) HAD NO OTHER OPTION EXCEPT TO DISMISS THE APPEAL AND BEFORE US ALSO THE POSITION IS SAME AS NOBODY APPEARED TO REBUT OR COUNTER THE FINDING RECORDED BY THE CIT(A) AND THE AO. WE FOUND THAT TH E AO HAS VALID REASONS FOR MAKING DISALLOWANCE OF EXPENSES AND THEREFORE THE O RDER OF THE AO AS WELL AS THE CIT(A) DO NOT NEED ANY INTERFERENCE AS NO MATERIAL OR CIRCUMSTANCES HAVE BEEN BROUGHT BEFORE US TO SHOW THAT THE ORDER PASSED BY THE CIT(A) IS PERVERSE. THEREFORE, CONSIDERING THE TOTALITY OF THE FACTS AN D CIRCUMSTANCES OF THE CASE AND AFTER GOING THROUGH THE ORDERS PASSED BY THE REVENU E AUTHORITIES WE HOLD THAT THE ORDERS PASSED BY THE AO AS WELL AS THE CIT(A) ARE B ASED ON VALID REASONS AND THUS NO INTERFERENCE IS REQUIRED BY US. THEREFORE, WE UP HOLD THE ORDERS PASSED BY CIT(A) AND DISMISS THE APPEAL OF THE ASSESSEE. 9. IN THE RESULT, THE ASSESSEES APPEAL IS DISMISSE D. 13 ITA NO. 3500/MUM/2013 (A.Y. 2009-10) VIPUL N. AMBANI VS. ACIT ORDER PRONOUNCED IN THE OPEN COURT ON 19 TH FEBRUARY, 2016 SD/- SD/- (JASON P. BOAZ) (SANDEEP GOSAIN) $ / ACCOUNTANT MEMBER &' $ / JUDICIAL MEMBER ( ) MUMBAI; *$ DATED :19.02.2016 PS. ASHWINI / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. + ( ) / THE CIT(A) 4. + / CIT - CONCERNED 5. ./0 ''12 , 12# , ( ) / DR, ITAT, MUMBAI 6. 045 6 / GUARD FILE / BY ORDER, / !'# (DY./ASSTT. REGISTRAR) #$ %, ( ) / ITAT, MUMBAI