The DCIT, Circle-6, Surat V. Shri Vasrambhai M.bagadia, Surat

ITA 3503/AHD/2010

• Counselvise Citation: 350320514 RSA 2010
• Duration Of Justice: 10 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-11-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 21-10-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 31-12-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: P D SHAH
• Section: 32

Judgement Text

, , . .. . . .. . , , , , ! !! ! . .. .'# !'# '# !'# '# !'# '# !'# , $ $ $ $ % % % % IN THE INCOME TAX APPELLATE TRIBUNAL : B BENCH : AHMEDABAD BEFORE HONBLE SHRI D.K.TYAGI, J.M. & HONBLE SHRI A.MOHAN ALANKAMONY, A.M.) ! ! ! !. ITA NO. 3503/AHD./2010 : # &'- 2006-2007 D.C.I.T., CIRCLE-6, SURAT VS- SHRI VASRAMBHAI M. BAGADIA, SURAT (PAN : ABQPB 9316F) (*+ /APPELLANT) ( ,*+ /RESPONDENT ) *+ - . / APPELLANT BY : SHRI SAMIR TEKRIWAL, SR.D.R. ,*+ - . / RESPONDENT BY : SHRI P.D.SHAH, A.R. /# 0 - 1$ / DATE OF HEARING : 21/10/2011 2'& - 1$ / DATE OF PRONOUNCEMENT : 18/11/2011 3 3 3 3 / ORDER PER SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER : THIS APPEAL IS FILED BY THE REVENUE, AGGRIEVED BY THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS)-IV, SURAT IN AP PEAL NO.CAS-IV/92/2008-09 DATED 29.09.2010 FOR THE ASSESSMENT YEAR 2006-2007 PASSED UNDER SECTION 250 R.W.S.143(3) OF THE I.T. ACT, 1961. 2. THE REVENUE HAS RAISED, IN ITS GROUNDS OF APPEAL , THREE GROUNDS, IN WHICH GROUND NOS.2 AND 3 BEING GENERAL IN NATURE AND NO S PECIFIC ISSUES INVOLVED, THEY DO NOT REQUIRE ADJUDICATION. THE REMAINING GROUND REA DS AS UNDER: THE LD. CIT (A) HAD ERRED IN DELETING THE ADDITION OF RS.8,81,897/- ON ACCOUNT OF ELECTRICITY EXPENSES. 3. THE FACTS OF THE ISSUE, IN BRIEF, ARE THAT THE A SSESSEE, AN INDIVIDUAL, WAS ENGAGED IN THE BUSINESS OF CUTTING AND POLISHING OF DIAMOND S ON JOB WORK BASIS. ACCORDING TO THE IMPUGNED ASSESSMENT ORDER, THE LD. AO HAS MADE AN ANALYSIS OF THE EXPENSES CLAIMED BY THE ASSESSEE ON THE BASIS OF ELECTRICITY BILLS FURNISHED BY THE ASSESSEE. ITA NO. 3503-AHD-10 2 AFTER ANALYZING THE DETAILS FURNISHED BY THE ASSESS EE, THE LD. AO WAS OF THE VIEW THAT THE ELECTRICITY BILLS WERE STANDING IN VARIOUS NAME S AND THAT THE TOTAL AMOUNTS OF CERTAIN BILLS DID NOT MACH WITH THE FIGURES ATTRIBU TED BY THE APPELLANT IN HIS P & L ACCOUNT. IT WAS ALSO THE STAND OF THE LD. AO THAT THE BILLS RELATE TO THE PREMISES WHICH WERE NOT COVERED IN THE ASSESSEES REPLY WHILE PROV IDING THE ADDRESSES OF PREMISES, GO- DOWNS ETC. THERE WAS ALSO DIFFERENCE IN THE TOTAL A MOUNTS IN THE BILLS AND ALSO THE CLAIM MADE BY THE ASSESSEE. SIMULTANEOUSLY, THE LD. AO HAS SOUNDED HIS COUNTERPART AT AHMEDABAD - DDIT, UNIT 1(1) - BY ISSUANCE OF COMMIS SION TO MAKE INQUIRIES WHICH FOUND OUT TO BE SOME OF THE PREMISES WERE NOT BEING USED BY THE ASSESSEE AT THE TIME OF SUCH AN INQUIRY. TAKING ALL ASPECTS INTO ACCOUN T, THE LD. AO WAS OF THE VIEW THAT THE OCCUPATION OF THE PREMISES BY THE ASSESSEE DURING T HE PERIOD UNDER CONSIDERATION COULD NOT BE CONFIRMED. IN THE MEANWHILE, IN COMPLIANCE T O THE QUERIES MADE, THE ASSESSEE SUBMITTED THAT ALL THE PAYMENTS MADE TO TORRENT POW ER COMPANY WERE ACCOUNT PAYEE CHEQUES AND RELEVANT COPIES OF ELECTRICITY BILLS WE RE ALSO FURNISHED. IT WAS ALSO CONTENDED BY THE ASSESSEE THAT, DURING THE PERIOD U NDER CONSIDERATION, HE HAD TAKEN PREMISES ON RENT, THE DETAILS OF WHICH WERE PROVIDE D ALONG WITH THE RENT AGREEMENT(S). IT WAS ALSO CLARIFIED THAT THE ELECTRICITY BILLS WE RE EITHER IN THE NAME OF THE ASSESSEE OR IN THE NAME(S) OF THE OWNER(S) OF THE PREMISES FROM WHOM THE PREMISES HAVE BEEN TAKEN ON RENT FOR BUSINESS PURPOSES. 3.1. BRUSHING ASIDE THE ASSESSEES CONTENTIONS BY T ERMING THE SAME AS GENERAL AND VAGUE IN NATURE AND FOR THE DETAILED REASONS RECORD ED IN HIS IMPUGNED ORDER, THE AO HAD CONCLUDED THAT THE EXPENSES HAD NOT SHOWN TO HA VE BEEN INCURRED WHOLLY OR EXCLUSIVELY FOR THE PURPOSES OF BUSINESS, ALTHOUGH HE HAD AGREED THAT EXPENSES COVERED UNDER SECTIONS 32 TO 36 WERE OF REVENUE IN NATURE A ND NOT OF PERSONAL AND, THUS, DISALLOWED 25% OF THE TOTAL ELECTRICITY BILL AMOUNT S CLAIMED BY THE ASSESSEE. 4. THE MATTER WAS CARRIED BY THE ASSESSEE BEFORE TH E FIRST APPELLATE AUTHORITY. AFTER ANALYZING THE COPIES OF FULL SET OF ELECTRICITY BIL LS AND RENT AGREEMENTS FURNISHED BY THE ASSESSEE DURING THE COURSE OF APPELLATE PROCEEDINGS , THE LD. CIT (A) DELETED THE ADDITION MADE BY THE AO BY OBSERVING AS UNDER: ITA NO. 3503-AHD-10 3 4A CHART SHOWING ELECTRIC EXPENSES CONSUMPTION PR EMISE-WISE, GIVING MONTHLY UNIT AND BILL AMOUNT WAS ALSO SUBMITTED. F ROM THIS, IT IS SEEN THAT THE TOTAL BILL AMOUNT WAS RS.35,27,587/- AS CLAIMED IN THE P & L ACCOUNT. THE DIFFERENCE IN TOTAL AS MENTIONED BY THE AO WAS EXPL AINED AS BEING ON ACCOUNT OF WRONG BILL AMOUNT TAKEN IN RESPECT OF FEW BILLS. THE AR TOOK ME THROUGH THE BILLS WRONGLY CONSIDERED BY THE AO AND THE CLAIM OF THE APPELLANT WAS FOUND TO BE CORRECT. THE A R ALSO SUBMITTED IN DETAIL THE L ABOUR PROCESSES CARRIED OUT BY THE APPELLANT AND ITS RELATION ON CONSUMPTION OF EL ECTRICITY. SHE ALSO SUBMITTED THE DETAILED CONSUMPTION OF ELECTRICITY CHART PREMI SE-WISE FOR THE IMMEDIATELY PRECEDING PREVIOUS YEAR WHICH SHOWS THAT THE PREMIS ES, OCCUPATION OF WHICH HAS BEEN QUESTIONED BY THE AO WERE UTILIZED IN THE PREVIOUS YEAR ALSO. THIS YEAR, TWO OTHER PREMISES YOGI PALACE ASSOCIATION AND YOGI PALACE CHAIRMAN HAVE GOT ADDED. THE CONCLUSION OF THE AO THAT THE REPLY OF THE APPELLANT WAS VAGUE AND GENERAL AND THAT THE PREMISES HAD BEEN TA KEN ON RENT WAS NOT SUPPORTED BY RELEVANT EVIDENCE IS NOT CORRECT. REN T AGREEMENTS WERE PROVIDED TO THE AO. ONCE IT IS ESTABLISHED THAT THE PREMISE S WERE OCCUPIED FOR BUSINESS PURPOSES AND THERE WAS NO EXPENDITURE OF PERSONAL N ATURE AS ACCEPTED BY THE AO, NO DISALLOWANCE CAN BE MADE. THE ADDITION MADE IS, THEREFORE, DELETED. 5. AGITATED WITH THE DELETION BY THE LD. CIT (A), T HE REVENUE HAS COME UP BEFORE THIS BENCH WITH THE PRESENT APPEAL. 6. DURING THE COURSE OF HEARING, THE LD. D.R. SUBMI TTED THAT THE ADDITION OF RS.8,81,897/- WAS MADE ON ACCOUNT OF ELECTRICITY EX PENSES, CONSIDERING THESE EXPENSES AS NOT RELATED TO THE BUSINESS OF THE ASSESSEE AND, THEREFORE, PLEADED THAT THE ORDER OF THE LD. A.O. BE SUSTAINED. 7. ON THE OTHER HAND, THE LD. AR SUBMITTED THAT ALL THE RELEVANT DETAILS WERE FURNISHED DURING THE ASSESSMENT PROCEEDINGS BEFORE THE AO. THE LD. AR SUBMITTED THAT THE ELECTRICITY EXPENSES CLAIM WAS FOR LESSER AMOU NT THAN OF ACTUAL AMOUNT INCURRED. THE LD. A.R. FURTHER SUBMITTED THAT THE INVESTIGATI ON WING OF AHMEDABAD UNIT VISITED THE PREMISES OF THE ASSESSEE DURING HIS ABSENCE, WH ICH DEPRIVED THEM OF ASCERTAINING THE ACTUAL POSITION. THE LD. A.R. FURTHER SUBMITTED THAT WHEN THE LD. AO HIMSELF CONCEDED THAT THE ASSESSEE HAS RUN THE BUSINESS DUR ING THE YEAR AND IS SHOWING THE INCOME EARNED OUT OF THE SAID BUSINESS, IT CANNOT B E CONCLUDED THAT THE ASSESSEE HAS NOT INCURRED THE EXPENSES AT ALL AND THEREBY RESORTING TO MAKE ESTIMATED OR AD-HOC ADDITION. THE LD. A.R., THEREFORE , FERVENTLY SUBMITTED THAT THE FINDING OF THE LD. CIT (A) DESERVES TO BE UPHELD. ITA NO. 3503-AHD-10 4 8. WE HAVE HEARD RIVAL SUBMISSIONS AND CAREFULLY PE RUSED THE MATERIALS FROM THE RECORD. AT THE OUT-SET, IT IS OBSERVED THAT ALL THE RELEVANT PARTICULARS SUCH AS COPIES OF ELECTRICITY BILLS AND ALSO RENT AGREEMENTS HAVE BEE N FURNISHED ALONG WITH THE ELECTRICITY EXPENSES LEDGER ACCOUNT FOR THE PERUSAL OF THE LD. AO. MOREOVER, THE ELECTRICITY BILL AMOUNTS, ACCORDING TO THE ASSESSEE, HAVE BEEN PAID THROUGH ACCOUNT PAYEE CHEQUES. WHEN ALL THOSE RELEVANT PARTICULARS WERE PLACED BEF ORE THE REVENUE FOR REVIEW, THE LD. AO, INSTEAD OF SCRUTINIZING THE SAME, RESORTED TO COMMENT ON THE ASSESSEES REPLY AS VERY VAGUE AND GENERAL IN NATURE AND SAME SQUARELY FAILS TO OFFER ANY SATISFACTORY EXPLANATION AND SO ON AND SO FORTH. THE LD. AO COU LD HAVE EASILY INQUIRED INTO THE CONTENTS OF THE RENT AGREEMENTS AND VERACITY OF THE ASSESSEES CLAIM ETC. THE LD. AOS REASONING THAT THE ELECTRICITY BILLS WERE IN THE NAMES OF EITHER THE PREVIOUS OWNER OR THE PERSON FROM WHOM THE PREMISES WAS TAKEN ON RENT IS NOT ACCEPTABLE ETC., IS RATHER STRANGE AND ABSURD. IT IS A NORMAL PRACTICE THAT T HE ELECTRICITY AND WATER BILLS WILL BE ISSUED BY THE RESPECTIVE BOARDS ONLY IN THE NAME OF THE OWNER OF THE PROPERTY AND NOT IN THE NAME OF THE OCCUPANT OF SUCH PREMISE WHO HAP PENS TO BE A TENANT A TEMPORARY PHENOMENON. THIS CANNOT BE A VALID REASON TO PENA LIZE A LEGITIMATE CLAIMER, THE ASSESSEE, FOR SUCH EXPENSES BACKED WITH RELEVANT BI LLS. WHEN THE LD. AO HIMSELF HAD CONCEDED UNABASHEDLY THAT 6.11 HOWEVER, THE FACT THAT THE ASSESSEE HAS RUN THE BUSINESS DURING THE YEAR AND IS SHOWING THE INCOME EARNED OUT OF THE SAID BUSINESS, IT CANNOT BE CONCLUDED THAT THE ASSESSEE HAS NOT INCUR RED THE EXPENSES AT ALL .. HE SHOULD NOT HAVE ATTEMPTED TO DISALLOW 25% OF THE EL ECTRICITY BILL EXPENSES UNDER THE GUISE OF EITHER ESTIMATION OR AN AD-HOC BASIS. T HEREFORE, WE ARE IN TOTAL AGREEMENT WITH THE FINDINGS OF THE LD. CIT (A) WHICH, IN OUR CONSIDERED VIEW, SUFFERS NO INFIRMITY AND HENCE DOES NOT REQUIRE ANY INTERVENTION. 9. IN THE RESULT, THE REVENUES APPEAL IS DISMISSE D. 4 3 - 2'& 5#!' 18 / 11 /2011 ' 6 - 0 7 THIS ORDER PRONOUNCED IN COURT ON 18/11/2011. SD/- SD/- (D.K.TYAGI) (A.MOHAN ALANKAMON Y) JUDICIAL MEMBER ACCOUNTANT M EMBER DATED : 18/11/2011 ITA NO. 3503-AHD-10 5 3 3 3 3 - -- - ,18 ,18 ,18 ,18 98&1' 98&1' 98&1' 98&1'- -- - 1. *+ 2. ,*+ 3. !! 1 /= 4. /=- - 5. 8@ ,1# , , 7 6. B4 3 , C/ !E , 7 TALUKDAR/ SR. P.S.