DCIT RG 22(1), NAVI MUMBAI V. MOHAMED SALIM HALIM SHAIKH, NAVI MUMBAI

ITA 3548/MUM/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 62594 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-07-2012
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 04-05-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: P C MOURYA
• Assessee Lawyers: R C JAIN
• Section: 37(1)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI . . , ! , ' # BEFORE SHRI B.R. MITTAL, JUDICIAL MEMBER, AND SHRI RAJENDRA, ACCOUNTANT MEMBER . / ITA NO. 3548/MUM./2011 ( $ % &% / ASSESSMENT YEAR : 200708 ) ASSTT. COMMISSIONER OF INCOME TAX RANGE22(1), 4 TH FLOOR, TOWER6 VASHI RAILWAY STATION BUILDING LBS MARG, GHATKOPAR (W) MUMBAI 400 086 .. '( / APPELLANT $ V/S MOHAMED SALIM HALIM SHAIKH SHOP NO.3, BUILDING NO.6A DAMODAR PARK, LBS MARG GHATKOPAR (W), MUMBAI 400 086 .... )*'( / RESPONDENT ' ' ./ + ./ PAN/GIR NO.AANOS966B , - / REVENUE BY : MR. P.C. MOURYA $ %./ , - / ASSESSEE BY : MR. R.C. JAIN $ , /' / DATE OF HEARING 21.06.2012 0 12& , /' / DATE OF ORDER 04.07.2012 0 / ORDER PER B.R. MITTAL, J.M. THE PRESENT APPEAL PREFERRED BY THE REVENUE, IS DIR ECTED AGAINST THE IMPUGNED ORDER 25 TH FEBRUARY 2011, PASSED BY THE COMMISSIONER (APPEALS ) MOHAMED SALIM HALIM SHAIKH 2 XXXIII, MUMBAI, FOR ASSESSMENT YEAR 200708, IN GIV ING RELIEF AGGREGATING TO ` 17,37,870, IN THE ABSENCE OF DOCUMENTARY EVIDENCE. 2. THE RELEVANT FACTS GIVING RAISE TO THIS APPEAL ARE THAT THE ASSESSEE IS A PROPRIETOR OF M/S. GOLDEN ROADLINES, ENGAGED IN TRA NSPORTATION BUSINESS. THE ASSESSEE FILED ITS RETURN OF INCOME SHOWING GROSS F REIGHT INCOME RECEIVED OF ` 3,43,40,887, DECLARING NET PROFIT OF ` 13,53,246. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER OBSER VED THAT THE ASSESSEE HAS DEBITED FOLLOWING EXPENSES TO TRADING ACCOUNT A ND PROFIT & LOSS ACCOUNT: TRANSPORT CHARGES ` 1,63,61,545 PETROL, DIESEL & OIL ` 66,08,754 TYRE REPLACEMENT ` 14,58,660 VEHICLE REPAIR & MAINTENANCE ` 21,98,958 WAGES ` 23,84,320 CONVEYANCE ` 1,19,216 SALARIES ` 9,38,235 POSTAGE & TELEPHONE ` 1,28,691 OFFICE MAINTENANCE ` 49,560 TOTAL: ` 3,02,47,939 3. HE HAS STATED THAT THE ASSESSEE WAS REQUESTED TO F URNISH PARTYWISE AND MONTHWISE DETAILS OF EXPENSES DEBITED TO TRADI NG ACCOUNT AND PROFIT & LOSS ACCOUNT INDICATING NAME AND COMPLETE ADDRESS. THE ASSESSEE DID NOT FILE ANY DETAILS TO PROVE THE GENUINENESS OF THE EX PENDITURE CLAIMED. THE ASSESSING OFFICER HAS STATED THAT IN THE ABSENCE OF BASIC DETAILS SUCH AS NAME AND ADDRESS OF THE PARTIES, ETC., IT IS NOT PO SSIBLE TO CONDUCT ANY SORT OF ENQUIRY TO VERIFY THE GENUINENESS OF THE EXPENDI TURE. HE HAS STATED THAT SUCH HUGE EXPENDITURE AS LISTED ABOVE SEEMS TO BE O N HIGHER SIDE AND NEEDS VERIFICATION ESPECIALLY IN VIEW OF THE FACT THAT HU GE SUNDRY CREDITORS OF ` 1,28,94,455, SHOWN IN THE BALANCE SHEET. THE ASSESS ING OFFICER HAS STATED THAT MERE DEBITING THE EXPENDITURE IN THE PROFIT & LOSS ACCOUNT BY ITSELF WOULD NOT ENTITLE THE ASSESSEE TO DEDUCTION OF A PA RTICULAR EXPENDITURE UNLESS MOHAMED SALIM HALIM SHAIKH 3 THE SAME IS PROVED TO BE GENUINE. HE HAS STATED THA T THE ASSESSEE FAILED TO ESTABLISH THE FACTS NECESSARY TO SUPPORT HIS CLAIM FOR DEDUCTION UNDER SECTION 37(1) OF THE ACT. THE ASSESSING OFFICER, ON AN ADH OC BASIS, DISALLOWED 12% OF THE CLAIM OF THE ASSESSEE WHICH WORKS OUT TO ` 36,29,753, AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. BEING AGGRIEVED, THE ASSESSEE FILED APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. 4. THE ASSESSEE FILED DETAILS / DOCUMENTS INCLUDING LE DGER OF ALL THE EXPENSES AS WELL AS XEROX COPY OF THE BILLS FOR FRE IGHT CHARGES PAID. HE HAS STATED THAT ON GOING THROUGH THE BILLS RAISED ON TH E ASSESSEE BY THE PARTIES TO WHOM TRANSPORTATION CHARGES WERE PAID WERE GIVEN SOME AMOUNT AS CASH BEFORE THE JOB COMMENCED AND THEN BALANCE AMOUNT HA VE BEEN PAID IN MAJORITY OF THE CASES BY CHEQUE AFTER DEDUCTION 1% TAX ON THE AMOUNT. THE LEARNED COMMISSIONER (APPEALS) HAS STATED THAT THE DETAILS WERE NOT FURNISHED BY THE ASSESSEE BEFORE THE ASSESSING OFFI CER, HE SOUGHT REMAND REPORT AND THE ASSESSING OFFICER FURNISHED THE REMA ND REPORT VIDE LETTER NO.ACIT22(1).REMAND REPORT/201011 DATED 2 ND FEBRUARY 2011. THE LEARNED COMMISSIONER (APPEALS) HAS STATED THAT A CO PY OF THE SAID REMAND REPORT WAS GIVEN TO THE ASSESSEE WHO IN TURN GAVE H IS COMMENTS. THE ASSESSEE HAS ADMITTED THE FACT THAT FOR CASH PAYMEN T MADE OF ` 1,34,49,488 AND HE COULD NOT PRODUCE ANY MATERIAL / EVIDENCE. T HE EXPENSES HAVE BEEN DEBITED UNDER THE HEADS TRANSPORTATION CHARGES , PETROL, DIESEL & OIL CHARGES AND VEHICLE REPAIRING & MAINTENANCE CHARGES . THE LEARNED COMMISSIONER (APPEALS) HAS FURTHER STATED THAT THE ASSESSING OFFICER, IN HIS REMAND REPORT FOR THE TRANSPORTATION CHARGES, HAS S TATED AS UNDER: 4.1 TRANSPORT CHARGES : ` 1,63,61,545 DURING THE COURSE OF REMAND PROCEEDINGS THE ASSESSE E COULD PRODUCE BILLS RELATING TO TRANSPORT CHARGES PAID OF ` 66,25,633 ONLY OUT OF THE TOTAL EXPENSES DEBITED OF ` 1,63,61,545 WHICH HAVE BEEN VERIFIED. AS REGARDS THE BALANCE BILLS, THE ASSESSEE CLAIMS THAT THEY HAVE BEEN DESTROYED BY WHITE ANTS. FROM THE BILLS PRODUCED IT IS SEEN THAT 60 TO 70% OF THE BILLS IS PAID IN CASH AT THE TIME OF LOA DING THE TRUCK AND ONLY THE BALANCE IS PAID BY CHEQUE. AS NEITHER THE LEDGER ACCOUNTS, BILLS, NOR DETAILS OF THE BALANCE PARTIES WERE PROD UCED, THE SAME COULD NOT BE VERIFIED. 5. THE LEARNED COMMISSIONER (APPEALS) HAS STATED THAT FOR THE EXPENSES UNDER THE HEAD TRANSPORT CHARGES OF ` 1,63,61,545, ` 70,32,042, WAS PAID MOHAMED SALIM HALIM SHAIKH 4 IN CASH AND ` 70,32,042, WAS PAID IN CASH AND ` 30,85,020, BY CHEQUE AND EVIDENCE IN FACT BEING AVAILABLE ONLY FOR ` 62,44,475, WHICH WERE PRODUCED BEFORE THE ASSESSING OFFICER. THE LEARNED COMMISSIO NER (APPEALS) HAS STATED THAT THE ASSESSING OFFICER, IN HIS REMAND REPORT, H AS STATED THAT BILLS AND VOUCHERS FOR ONLY ` 66,25,633, WERE PRODUCED BEFORE HIM. THEREFORE, TH E ASSESSEE HAS NOT BEEN ABLE TO PRODUCE EVIDENCE FOR THE BALANCE AS THEY HAVE BEEN DESTROYED BY WHITE ANTS. THE LEARNED COMMISSIO NER (APPEALS) HAS SUSTAINED THIS DISALLOWANCE OF 10% OF ` 1,01,17,070 WHICH COMES TO ` 10,11,707, UNDER THE HEAD TRANSPORTATION CHARGES . THE LEARNED COMMISSIONER (APPEALS) FURTHER STATED THAT OUT OF P ETROL, DIESEL AND OIL OF ` 66,08,750, ONLY 1/5 TH OF THE BILLS AND VOUCHERS WERE PRODUCED BY THE ASSESSEE AS REPORTED BY THE ASSESSING OFFICER. THE ASSESSEE FURNISHED DETAILS OF THE EXPENSES AS PAID BY CHEQUE AND CASH OF ` 43,58,754. THE ENTIRE AMOUNT HAS BEEN PAID BY CHEQUE TOTALING ` 22,50,000, FOR PETROL, OIL AND DIESEL CHARGES TO A SINGLE PARTY NAMELY S.V. FILLIN G STATION. THE PAYMENTS HAVE BEEN MADE IN ROUND FIGURE OF ` 50,000 EVERY TIME EXCEPT ON ONLY TWO OCCASIONS. THE LEARNED COMMISSIONER (APPEALS), AFTE R CONSIDERING THE FACTS AND THE CONTENTS OF THE REMAND REPORT, HAS STATED T HAT THE POSSIBILITY OF PERSONAL USE CANNOT BE RULED OUT AND ACCORDINGLY, D ISALLOWED 10% OF THE EXPENDITURE OUT OF PETROL, DIESEL AND OIL THAT TOO MADE IN CASH FOR ` 43,58,754, WHICH COMES TO ` 4,35,875. THE LEARNED COMMISSIONER (APPEALS) HAS ALSO SUSTAINED 10% OF THE CASH PAYMENT OF ` 9,21,224, IN RESPECT OF TYRE REPLACEMENT CHARGES CLAIMED BY THE ASSESSEE WHICH C OMES TO ` 92,122. THE LEARNED COMMISSIONER (APPEALS) HAS FURTHER STATED T HAT IN RESPECT OF VEHICLE REPAIR AND MAINTENANCE CHARGES, THE ASSESSING OFFIC ER HAS REPORTED IN THE REMAND REPORT THAT THE ASSESSEE PRODUCED BILLS ONLY FOR 1/3 RD OF THE AMOUNT CLAIMED. FURTHER, THE ASSESSEE ALSO ADMITTED THAT O UT OF ` 21,98,958, THE EXPENDITURE CLAIMING CHEQUE PAYMENTS ARE ` 2,54,153, AND THIRD PARTIES BILLS ARE ` 8,07,336, AND HE BALANCE AMOUNT OF ` 11,37,468, WERE CASH. THEREFORE, THE LEARNED COMMISSIONER (APPEALS) DISAL LOWED 10% OF THE CASH PAYMENT WHICH COMES TO ` 1,13,747. SIMILARLY, FOR THE EXPENDITURE DEBITED UNDER THE HEAD WAGES AND SALARY OF ` 23,84,320 AND ` 9,38,235 RESPECTIVELY, THE LEARNED COMMISSIONER (APPEALS) HA S STATED THAT THE ASSESSEE HAS MADE PAYMENTS FOR WAGES IN CASH FOR WH ICH NO DETAILS HAVE MOHAMED SALIM HALIM SHAIKH 5 BEEN PRODUCED. IN RESPECT OF SALARY PAYMENT, IT IS STATED THAT THE ASSESSEE HAS NOT BEEN ABLE TO SUBSTANTIATE THE CLAIM. HOWEVE R, THE LEARNED COMMISSIONER (APPEALS) HAS RESTRICTED THE DISALLOWA NCE OF 10% OF ` 23,84,320. SIMILARLY, THE LEARNED COMMISSIONER (APP EALS) HAS STATED THAT NO DISALLOWANCE IS TO BE MADE IN RESPECT OF THE EXPEND ITURE CLAIMED UNDER THE HEAD POSTAGE & TELEGRAM AND OFFICE MAINTENANCE . THE LEARNED COMMISSIONER (APPEALS) HAS RESTRICTED THE DISALLOWA NCE OF ` 18,91,883, AS AGAINST TOTAL DISALLOWANCE OF ` 36,29,753, MADE BY THE ASSESSING OFFICER. HENCE, THE DEPARTMENT IS IN APPEAL BEFORE THE TRIBU NAL. 6. DURING THE COURSE OF HEARING, THE LEARNED DEPARTMEN TAL REPRESENTATIVE SUBMITTED THAT THE ASSESSING OFFICER WAS JUSTIFIED TO DISALLOW 12% OF THE ENTIRE EXPENDITURE CLAIMED BY THE ASSESSEE UNDER VA RIOUS HEADS AND THE DETAILS GIVEN IN PARA3/PAGE3 OF THE ASSESSMENT OR DER WHICH WE HAVE ALSO REPRODUCED HEREIN ABOVE IN PARA2. HE SUBMITTED THA T NO DETAILS WERE FILED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER. HE SU BMITTED THAT THE MATTER COULD BE RESTORED TO THE FILE OF ASSESSING OFFICER WITH DIRECTION TO THE ASSESSEE TO FILE DETAILS OF THE EXPENDITURE CLAIMED . 7. ON THE OTHER HAND, THE LEARNED COUNSEL FOR THE ASSE SSEE RELIED ON THE ORDER OF THE LEARNED COMMISSIONER (APPEALS). HE FUR THER FILED A CHART STATING THAT THE NET PROFIT SHOWN BY THE ASSESSEE IS 3.94% AND AFTER CONSIDERING THE DISALLOWANCE SUSTAINED BY THE LEARNED COMMISSIONER (APPEALS), THE NET PROFIT WORKS OUT TO 6.19% WHICH IS MORE THAN THE PRECEDING ASSESSMENT YEAR AS WELL AS SUCCEEDING ASSESSMENT YEAR. HE SUBMITTED TH AT THE ORDER OF THE LEARNED COMMISSIONER (APPEALS) BE CONFIRMED. 8. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE LEARNED REPRESENTATIVE OF THE PARTIES AND THE ORDERS OF THE AUTHORITIES BELOW. WE OBSERVE THAT THE ASSESSEE FILED THE DETAILS BEFORE THE LEARNED COMMISSIONER (APPEALS) AND THE LEARNED COMMISSIONER (APPEALS) CA LLED FOR THE REMAND REPORT FROM THE ASSESSING OFFICER. IT IS A FACT THA T THE ASSESSEE COULD NOT FURNISH THE ENTIRE DETAILS OF THE EXPENSES CLAIMED UNDER VARIOUS HEADS AGGREGATING TO ` 3,02,47,939. WE ARE OF THE CONSIDERED VIEW THAT TH E LEARNED COMMISSIONER (APPEALS) IS JUSTIFIED IN SUST AINING THE DISALLOWANCE OF MOHAMED SALIM HALIM SHAIKH 6 10% OF ` 1,01,70,070, OUT OF THE EXPENDITURE CLAIMED UNDER THE HEAD TRANSPORTATION CHARGES , FOR WHICH THE ASSESSEE COULD NOT PRODUCE EVIDENCE. FURTHER, THE LEARNED COMMISSIONER (APPEAL S) IS ALSO JUSTIFIED AND RESONABLE TO RESTRICT THE 10% OF THE DISALLOWANCE O F THE EXPENDITURE CLAIMED UNDER THE HEAD PETROL, DIESEL AND OIL CHARGES WHICH WERE MADE IN CASH OF ` 43,58,754. SIMILARLY, WE ARE OF THE CONSIDERED VIE W THAT THE LEARNED COMMISSIONER (APPEALS) WAS JUSTIFIED IN RESTRICTING THE DISALLOWANCE TO 10% OF THE CASH PAYMENT OF ` 9,21,224, IN RESPECT OF THE EXPENDITURE CLAIMED UNDER THE HEAD TYRE REPLACEMENT CHARGES . FURTHER, THE LEARNED COMMISSIONER (APPEALS) HAS ALSO CONSIDERED THE EXPE NDITURE IN RESPECT OF THE CLAIM UNDER THE HEAD VEHICLE REPAIR & MAINTENANCE CHARGES THAT THE ASSESSEE FURNISHED BILLS ONLY 1/3 RD OF THE AMOUNT CLAIMED AND FOR THE REMAINING HE COULD NOT PRODUCE THE BILLS. THE LEARN ED COMMISSIONER (APPEALS) HAS RESTRICTED THE DISALLOWANCE OF 10% OF THE CASH PAYMENT MADE FOR THE EXPENDITURE CLAIMED UNDER THE ABOVE HEAD. W E ARE OF THE CONSIDERED VIEW THAT HE IS JUSTIFIED AND NO INTERFERENCE IS CA LLED FOR. 9. FURTHER, IN RESPECT OF DISALLOWANCE OF 10% OF THE W AGES CLAIMED, THE LEARNED COMMISSIONER (APPEALS) HAS STATED THAT NO D ETAILS HAVE BEEN PRODUCED AND THE ENTIRE PAYMENT HAS BEEN MADE IN CA SH. THE LEARNED COMMISSIONER (APPEALS) HAS ALSO STATED THAT FOR THE SALARY PAYMENT, THE ASSESSEE HAS NOT BEEN ABLE TO SUBSTANTIATE THE CLAI M OF THE SAID AMOUNT OF ` 23,84,320 UNDER THE HEAD WAGES, AND ` 9,38,235, UNDER THE HEAD SALARY. CONSIDERING THE FACTS OF THE CASE, WE ARE OF THE C ONSIDERED VIEW THAT THE DISALLOWANCE, AS MADE BY THE ASSESSING OFF ICER @ 12% SHOULD BE SUSTAINED UNDER THE HEAD WAGES CLAIMED & SALARY CLAIMED AGGREGATING TO ` 33,22,555, WHICH COMES TO ` 3,98,707, AS AGAINST ` 2,38,432, MADE BY THE LEARNED COMMISSIONER (APPEALS). HENCE, WE MAKE FURT HER DISALLOWANCE OF ` 1,60,275. 10. IN RESPECT OF CLAIM OF PETROL, TELEPHONE AND OTHER MAINTENANCE CHARGES, THE LEARNED COMMISSIONER (APPEALS) HAS STA TED THAT NO DISALLOWANCE ARE SUSTAINED BUT NO REASONS HAVE BEEN GIVEN BY HIM. THE ASSESSING OFFICER MADE DISALLOWANCE OF 12% OF THE T OTAL CLAIM OF ` 1,78,251, WHICH COMES TO ` 21,390. HENCE, WE MAKE DISALLOWANC E OF ` 21,390, AS MOHAMED SALIM HALIM SHAIKH 7 MADE BY THE ASSESSING OFFICER. ACCORDINGLY, WE ENHA NCE THE DISALLOWANCE OF ` 1,81,665, OVER AND ABOVE ` 18,91,883, SUSTAINED B Y THE LEARNED COMMISSIONER (APPEALS). HENCE, WE CONFIRM THE TOTAL DISALLOWANCE OF ` 20,73,548, BY ALLOWING THE GROUND OF APPEAL TAKEN B Y THE DEPARTMENT IN PART. 11. . /3 , 0 / 4 , / 56 7 10. IN THE RESULT, REVENUES APPEAL IS PARTLY ALLOWED. 0 , 2& ' 8 9$3 4 TH JULY 2012 2 , : 7 ORDER PRONOUNCED IN THE OPEN COURT ON 4 TH JULY 2012 SD/- ! ' RAJENDRA ACCOUNTANT MEMBER SD/- . . B.R. MITTAL JUDICIAL MEMBER MUMBAI, DATED: 4 TH JULY 2012 COPY TO : (1) THE ASSESSEE; (2) THE RESPONDENT; (3) THE CIT(A), MUMBAI, CONCERNED; (4) THE CIT, MUMBAI CITY CONCERNED; (5) THE DR, B BENCH, ITAT, MUMBAI. TRUE COPY BY ORDER PRADEEP J. CHOWDHURY ASSISTANT REGISTRAR SR. PRIVATE SECRETARY ITAT, MUMBAI BENCHES, MUMBAI