The Asstt. Commissioner of Income-tax, Jalandhar V. M/s. Vithal Overseas, Jalandhar

ITA 371/ASR/2011

• Counselvise Citation: 37120914 RSA 2011
• Duration Of Justice: 1 year(s) 2 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-09-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 03-09-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 21-06-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: DINESH SARNA
• Keywords: Additional evidence; Reasonable cause
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER AND SH. B.P.JAIN, ACCOUNTANT MEMBER I.T.A. NO.371(ASR)/2011 ASSESSMENT YEAR:2005-06 PAN :AAAFV7638M THE ASSTT. COMMR. OF INCOME-TAX, VS. M/S. VITHAL OV ERSEAS, CIRCLE-III, JALANDHAR, JALANHDAR. (APPELLANT) (RESPONDENT) APPELLANT BY:SH. TARSEM LAL, DR RESPONDENT BY:SH. DINESH SARNA, ADVOCATE DATE OF HEARING:03/09/2012 DATE OF PRONOUNCEMENT:05/09/2012 ORDER PER BENCH ; THE REVENUE HAS FILED THE PRESENT APPEAL AGAINST T HE IMPUGNED ORDER OF THE LD. CIT(A), JALANDHAR, DATED 18.03.2011 ON THE FOLLOWING GROUNDS: 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN RESTRICTING THE DISALLOWANCE TO THE TUNE OF RS.4,18,615/- AGAINST R S.11,30,630/- DISALLOWED BY THE AO ON ACCOUNT OF FOREIGN TRAVELIN G EXPENSES. 1A. WHILE DOING SO, THE LD. CIT(A) HAS FAILED TO AP PRECIATE THAT THE ASSESSEE DID NOT DISCHARGE THE ONUS OF PROVING THAT THE EXPENDITURE WAS INCIDENTAL TO BUSINESS AND COULD NO T PRODUCE BILLS/VOUCHERS BEFORE THE AO TO SUBSTANTIATE THE CL AIM. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING T HE ITA NO.371(ASR)/2011 2 DISALLOWANCE OF RS.2,36,000/- MADE BY THE AO ON ACC OUNT OF SALARY. 2A. WHILE DOING SO, THE LD. CIT(A) HAS FAILED TO AP PRECIATE THAT NO EXTRAORDINARY CIRCUMSTANCES WERE BROUGHT BY THE AS SESSEE ON RECORD FOR THE ABNORMAL INCREASE IN SALARY. 3. IT IS PRAYED THAT THE ORDER OF THE LD. CIT(A) BE SET-ASIDE AND THAT OF THE A.O. BE RESTORED. 2. THE FACTS RELATING TO THE ISSUE IN DISPUTE ARE THAT DURING THE ASSESSMENT PROCEEDINGS, THE AO ASKED THE ASSESSEE T O PRODUCE VOUCHERS FOR EXPENDITURE OF RS.11,30,637/- CLAIMED UNDER THE HEA D TRAVELLING EXPENSES. THE ASSESSEE HAS FILED THE DETAILS AS REQUIRED BY T HE AO IN RESPECT OF TWO TOURS OF SH. SUNIL MALHOTRA, WHO VISITED AUSTRALIA FOR GETTING ORDERS AND FURTHERING BUSINESS INTEREST OF THE ASSESSEE. THE A O MADE ADDITION OF TRAVELING EXPENSES IN DISPUTE ON THE GROUND THAT T HE ASSESSEE HAS NOT FILED COPY OF PASSPORT OF SH.SUNIL MALHOTRA, AS HE WAS NO T IN JALANDHAR. SECONDLY, THE AO HAS ALSO MADE THE ADDITION OF RS.2,36,000/- ON ACCOUNT OF SALARY ON THE GROUND THAT IN THE PAST HISTORY OF THE ASSESSE E, RS.1,98,000/- HAS BEEN INCURRED ON ACCOUNT OF SALARY EXPENSES FOR THE ASST T. YEAR 2004-05 AND FOR THE ASSESSMENT YEAR 2003-04 THERE IS A NIL FIGURE. THE AO DOUBTED THE EXPENSES ON ACCOUNT OF PAYMENT OF SALARY TO THE STA FF AND DISALLOWED RS.2,36,000/- OUT OF RS.3,36,000/- CLAIMED BY THE A SSESSEE. ACCORDINGLY, THE AO COMPLTED THE ASSESSMENT VIDE ORDER DATED10.12.20 07 U/S 143(3) OF THE ACT. ITA NO.371(ASR)/2011 3 3. AGGRIEVED BY THE ASSESSEE, THE ASSESSEE FILED AN APPEAL BEFORE THE LD. CIT(A), WHO VIDE IMPUGNED ORDER DATED 18.03.2011 PA RTLY ALLOWED THE APPEAL OF THE ASSESSEE BY RESTRICTING THE DISALLOWA NCE TO THE EXTENT OF 40% OF EXPENDITURE ON ACCOUNT OF FOREIGN TRAVELING BEING FOR NON-BUSINESS PURPOSES AND DELETED THE ADDITION OF RS.2,36,000/- MADE BY T E AO ON ACCOUNT OF SALARY PAYMENT TO THE STAFF. 4. NOW THE REVENUE IS AGGRIEVED BY THE ORDER OF THE LD. CIT(A) AND IS IN APPEAL BEFORE THIS BENCH. 5. AT THE TIME OF HEARING, THE LD. DR, RELIED UPON THE ORDER PASSED BY THE LD. CIT(A) AND STATED THAT THE LD. FIRST APPEL LATE AUTHORITY HAS NOT PROPERLY APPRECIATED THE FACTS OF THE CASE AND WRON GLY RESTRICTED THE DISALLOWANCE TO THE TUNE OF RS.4,18,615/- AS AGAIN ST RS.11,30,630/- BEING 40% OF THE TOTAL CLAIM MADE BY THE ASSESSEE. HE STA TED THAT THE ASSESSEE HAS NOT PRODUCED COPY OF PASSPORT OF SH. SNIL MALHOTRA AS WELL AS OTHER EVIDENCE SUPPORTING THE CLAIM IN DISPUTE. HE FURTHER STATED THAT THE ASSESSEE HAS FILED VARIOUS DOCUMENTS AS ADDITIONAL EVIDENCE UNDER RULE 46A(1) OF THE I.T. RULES, 1962, SUPPORTING THE ON ACCOUNT OF TRAVELING EXPENDITURE. FURTHER, THE LD. FIRST APPELLATE AUTHORITY HAS REJECTED THE APPL ICATION AND HAS NOT ADMITTED BY HOLDING THAT THERE IS NO REASONABLE CAUSE WITH T HE ASSESSEE FOR NOT BEING ABLE TO PRODUCE THE EVIDENCE CALLED FOR BY THE AO. BUT ON THE CONTRARY, THE LD. CIT(A) HAS INDIRECTLY APPRECIATED THE FACTS AND ALLOWED THE RELIEF TO THE ITA NO.371(ASR)/2011 4 ASSESSEE AND WRONGLY RESTRICTED THE DISALLOWANCE TO THE TUNE OF 40% OF THE TOTAL CLAIM. 6. AS REGARD TO THE ADDITION OF RS.2,36,000/-, THE LD. DR RELIED UPON THE ORDER PASSED BY THE A.O. ON THE CONTRARY, THE LD. C OUNSEL FOR THE ASSESSEE, RELIED UPON THE ORDER PASSED BY THE LD. FIRST APPEL LATE AUTHORITY AND STATED THAT THE ASSESSEE HAS FILED ALL NECESSARY EVIDENCE BEFORE THE AO AS WELL AS BEFORE THE LD. FIRST APPELLATE AUTHORITY TO SUPPORT THE CLAIM OF THE ASSESSEE AND THE LD. FIRST APPELLATE AUTHORITY HAS RIGHTLY A PPRECIATED ALL THE EVIDENCE PRODUCED BY THE ASSESSEE AND HAS GIVEN THE RELIEF T O THE ASSESSEE. HE FURTHER STATED THAT THE ASSESSEE COULD NOT PRODUCE A COPY O F PASSPORT BECAUSE SH. SUNIL MALHOTRA WAS NOT AVAILABLE AT THE TIME WHEN A O CALLED FOR THE COPY OF PASSPORT ALONGWITH NECESSARY EVIDENCE SUPPORTING T HE CLAIM OF FOREIGN TRAVELING EXPENSES BEFORE THE LD. FIRST APPELLATE A UTHORITY, WHICH HAS WRONGLY BEEN REJECTED. BUT LASTLY KEEPING IN VIEW THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) RESTRICTED THE DISALLOWANCE TO THE TUNE OF 40% OF THE EXPENDITURE CLAIMED BY THE ASSESSEE AND THE ASSESSE E HAS NOT FILED ANY APPEAL AGAINST THE IMPUGNED ORDER BEING FULL SATISF IED WITH THE IMPUGNED ORDER. HE FURTHER STATED THAT AS REGARDS TO THE EXP ENDITURE ON ACCOUNT OF SALARY, THE ASSESSEE HAS NOT CLAIMED IN THE ASSESSM ENT YEAR 2003-04 BUT THE ASSESSEE HAS CLAIMED AMOUNT OF RS.1,98,000/- FOR TH E ASSESSMENT YEAR 2004- 05 AND RS.3,36,000/- CLAIMED FOR THE ASSESSMENT YEA R UNDER CONSIDERATION. ITA NO.371(ASR)/2011 5 HE RELIED UPON THE ORDER PASSED BY THE LD. FIRST AP PELLATE AUTHORITY ON THE DELETION OF ADDITION OF RS.2,36,000/-. 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED RECOR D AVAILABLE WITH US. WE ARE OF THE CONSIDERED OPINION THAT THE LD. FIRST APPELLATE AUTHORITY HAS RIGHTLY RESTRICTED THE ADDITION TO RS.4,18,615/- BE ING 40% OF THE TOTAL AMOUNT OF RS.11,30,630/- CLAIMED BY THE ASSESSEE ON THE GR OUND THAT THE AO HAS DISALLOWED THE ENTIRE AMOUNT WITHOUT ANY BASIS. WE ARE OF THE VIEW THAT THE LD. FIRST APPELLATE AUTHORITY HAS PASSED A WELL REA SONED ORDER ON THE BASIS OF FACTS AND CIRCUMSTANCES BY HOLDING THAT WHEN THE AO HAS NOT DOUBTED THE BUSINESS OF EXPORT OF GOODS OF ASSESSEE AND NECES SARY PARTICULARS FOR PURCHASE OF TICKETS AND FOREIGN CURRENCY WHICH THE ASSESSEE HAS SUBMITTED BEFORE HIM. THE LD. FIRST APPELLATE AUTHORITY HAS A LSO HELD THAT THE ENTIRE DISALLOWANCE MADE BY THE AO IS ALSO NOT JUSTIFIED O N ACCOUNT OF TRAVELING OF SH. SUNIL MALHOTRA AN EMPLOYEE OF THE ASSESSEE FIRM . THE EXPENDITURE WAS INCURRED BY THE PARTNERS OF THE FIRM BUT NOT BY AN EMPLOYEE WHO IS RELATED TO THE PARTNERS. IT CANNOT BE SAID THE EXPENDITURE WAS INCURRED BY A PERSON UNRELATED TO THE ASSESSEES BUSINESS. KEEPING IN V IEW THE IMPUGNED ORDER AS WELL AS THE EVIDENCE PRODUCED BY THE ASSESSEE, WE A RE OF THE CONSIDERED OPINION THAT THE LD. FIRST APPELLATE AUTHORITY HAS RIGHTLY RESTRICTED THE DISALLOWANCE TO THE EXTENT OF 40% ON THE BASIS OF V ARIOUS DOCUMENTARY EVIDENCES PRODUCED BY THE ASSESSEE BEFORE THE AO AS WELL AS BEFORE THE LD. ITA NO.371(ASR)/2011 6 FIRST APPELLATE AUTHORITY. THEREFORE, THE ISSUE INV OLVED IN GROUND NO. 1 & 1A RAISED BY THE REVENUE ARE DISMISSED. 8. AS REGARDS THE DELETION OF DISALLOWANCE OF RS.2, 36,000/- MADE BY THE AO ON ACCOUNT OF SALARY PAID TO STAFF, AFTER GOING THROUGH THE ORDERS PASSED REVENUE AUTHORITIES AS WELL AS THE EXPENDITURE FOR THE ASSESSMENT YEARS 2003-04 & 2004-05 AS WELL AS RS.3,36,000/- FOR THE ASSESSMENT YEAR IN DISPUTE, WE ARE OF THE VIEW THAT IT IS VERY MUCH RE ASONABLE EXPENDITURE, KEEPING IN VIEW THE LARGE EXPORT TURNOVER OF MORE T HAN RS.1.51 CRORE, WHICH OBVIOUSLY NEEDED PEOPLE TO DEAL WITH IT AND THE LD. FIRST APPELLATE AUTHORITY HAS RIGHTLY DELETED THE ADDITION IN DISPUTE. HENCE, NO INTERFERENCE IS REQUIRED IN THE WELL REASONED ORDER PASSED BY THE LD. FIRST APPELLATE AUTHORITY. ACCORDINGLY, GROUND NO.2 & 2A OF THE REVENUE ARE DI SMISSED. 9. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 5TH SEPTEMBER, 2012. SD/- SD/- (B.P. JAIN) (H.S. SIDHU) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 5TH SEPT., 2012 /SKR/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE:M/S. VITHAL OVERSEAS, JALANDHAR. 2. THE ACIT, CIR.III, JALANDHAR. 3. THE CIT(A), JALANDHAR. 4. THE CIT, JLR. 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY