Punit Chowdhary, New Delhi V. ACIT, Circle- 54(1), New Delhi

ITA 371/DEL/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 6799 (ITAT-DELHI)
• Duration Of Justice: 6 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-07-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2013-2014
• Appeal Filed On: 11-01-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S L ANURAGI
• Assessee Lawyers: B L GUPTA F

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES SMC : DELHI BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER ITA.NO.371/DEL./2018 ASSESSMENT YEAR 2013-2014 SHRI PUNIT CHOWDHARY, D-292, 2 ND FLOOR, DEFENCE COLONY, NEW DELHI 110024. PAN AAPPC1897A VS. THE ACIT, CIRCLE - 54(1), ROOM NO.1502, 15 TH FLOOR, E-2 BLOCK, CIVIC CENTRE, NEW DELHI 110 002. (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI B.L. GUPTA, F.C.A. FOR REVENUE : SHRI S.L. ANURAGI, SR. D.R. DATE OF HEARING : 12 .0 7 .2018 DATE OF PRONOUNCEMENT : 12 .0 7 .2018 ORDER THIS APPEAL BY ASSESSEE HAS BEEN DIRECTED AGAINST THE ORDER OF THE LD. CIT(A)-18, NEW DELHI, DATED 14 .12.2017, FOR THE A.Y. 2013-2014. 2. I HAVE HEARD THE LEARNED REPRESENTATIVES OF BOT H THE PARTIES AND PERUSED THE FINDINGS OF THE AUTHORITIES BELOW. 3. GROUND NOS. 1 AND 4 ARE GENERAL IN NATURE AND N EED NO ADJUDICATION. 2 ITA.NO.371/DEL./2018 SHRI PUNIT CHOWDHARY, NEW DELHI. 4. IN GROUND NO.2, THE ASSESSEE CHALLENGED THE ADD ITION OF RS.2,23,415/-. THE A.O. NOTED IN THE ASSESSMENT ORDER THAT ASSESSEE HAD DEBITED EXPENSES OF RS.22,34,153/- ON ACCOUNT OF TELEPHONE EXPENSES, TRAVELLING AND CONVEYANCE, VEHI CLE EXPENSES AND REPAIR AND MAINTENANCE. THE A.O. NOTED THAT NO AMOUNT ON ACCOUNT OF USE OF THE ASSETS/FACILITIES B Y THE ASSESSEE AND THEIR FAMILY MEMBERS HAVE BEEN ADDED B ACK BY THE ASSESSEE. ALSO THE ISSUE OF NON-BUSINESS USE OF THESE EXPENSES CANNOT BE RULED-OUT COMPLETELY. THE A.O. D ISALLOWED 1/10 TH OF THE EXPENDITURE AND MADE THE ADDITION. THE ASSE SSEE SUBMITTED BEFORE LD. CIT(A) THAT ADDITION IS HIGHLY UNREASONABLE. THE LD. CIT(A), HOWEVER, CONFIRMED TH E ADDITION. 5. AFTER CONSIDERING THE RIVAL SUBMISSIONS, I AM O F THE VIEW THAT ADDITION IS WHOLLY UNJUSTIFIED. THE A.O. HAS NOT POINTED OUT AS TO WHICH IS PERSONAL EXPENDITURE INC URRED BY THE ASSESSEE. MERELY BECAUSE NO AMOUNT HAVE BEEN ADDED BACK BY THE ASSESSEE FOR PERSONAL USE IS NO GROUND TO MAKE ADHOC ADDITION. IF THE A.O. WANTED TO DISBELIEVE THE EXPL ANATION OF 3 ITA.NO.371/DEL./2018 SHRI PUNIT CHOWDHARY, NEW DELHI. ASSESSEE, HE SHOULD BRING SOME FINDING OF FACT AGAI NST THE ASSESSEE ON RECORD. OTHERWISE, ON MERE PRESUMPTION ADHOC ADDITION IS NOT JUSTIFIED. I, ACCORDINGLY, SET ASID E THE ORDERS OF THE AUTHORITIES BELOW AND DELETE THE ADDITION OF RS .2,23,415/-. GROUND NO.2 IS ALLOWED. 6. ON GROUND NO.3, ASSESSEE CHALLENGED THE DISALLOWANCE OF RS.8,15,312/- ON ACCOUNT OF BUSINES S PROMOTION EXPENSES. THE A.O. NOTED THAT ASSESSEE HA D DEBITED EXPENSES OF RS.16,30,624/- IN THE P & L A/C ON ACCO UNT OF BUSINESS PROMOTION. THE ASSESSEE SUBMITTED BEFORE A .O. THAT BUSINESS PROMOTION EXPENSES RELATES TO TEA, COFFEE AND OTHER ENTERTAINMENT EXPENSES INCURRED FOR CUSTOMERS AND T HERE ARE NO VOUCHERS AVAILABLE FOR THIS KIND OF EXPENSES. TH E A.O, THEREFORE, DISALLOWED 50% OF THE EXPENSE AND MADE A DDITION OF RS.8,15,312/-. THE LD. CIT(A) NOTED THAT ASSESSEE H AS FAILED TO DISCHARGE HIS PRIMARY ONUS TO JUSTIFY AND SUBSTANTI ATE THE CLAIM OF EXPENSES. THIS GROUND OF THE ASSESSEE WAS DISMIS SED. 4 ITA.NO.371/DEL./2018 SHRI PUNIT CHOWDHARY, NEW DELHI. 7. AFTER CONSIDERING THE RIVAL SUBMISSIONS, I AM O F THE VIEW THAT ADDITION IS EXCESSIVE IN NATURE. LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT TURNOVER OF THE ASSESSE E IS RS.9.21 CRORES AND THE BUSINESS PROMOTION EXPENSES COMES TO 1.76% ONLY OF THE TURNOVER. SINCE THE NATURE OF THE EXPEN DITURE ITSELF SHOWS THAT NO PROPER VOUCHERS WOULD BE AVAILABLE WI TH THE ASSESSEE OF SMALL EXPENDITURE, THEREFORE, CONSIDERI NG THE TURNOVER OF THE ASSESSEE AND INCOME DECLARED BY ASS ESSEE OF RS.22,24,502/- IN THE RETURN OF INCOME, I AM OF THE VIEW THAT THE ADDITION ON ACCOUNT OF DISALLOWANCE OF BUSINESS PROMOTION IS EXCESSIVE IN NATURE. THE A.O. DID NOT DISPUTE TH AT BUSINESS PROMOTION EXPENSES HAVE BEEN INCURRED WHOLLY AND EX CLUSIVELY FOR THE PURPOSE OF BUSINESS BECAUSE A.O. HAS ALLOWE D 50% OF THE DEDUCTION OF SUCH EXPENSES. IN THIS VIEW OF THE MATTER, I MODIFY THE ORDERS OF THE AUTHORITIES BELOW AND DIRE CT THE A.O. TO DISALLOW 10% OF THE EXPENSES INSTEAD OF 50% ON ACCO UNT OF BUSINESS PROMOTION EXPENSES. THIS GROUND IS PARTLY ALLOWED. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 5 ITA.NO.371/DEL./2018 SHRI PUNIT CHOWDHARY, NEW DELHI. ORDER PRONOUNCED IN THE OPEN COURT. SD/- (BHAVNESH SAINI) JUDICIAL MEMBER DELHI, DATED 12 TH JULY, 2018 VBP/- COPY TO 1. THE APP ELLANT 2. THE RESPONDENT 3. CIT(A) CONCERNED 4. CIT CONCERNED 5. D.R. ITAT SMC BENCH, DELHI 6. GUARD FILE. // BY ORDER // ASSISTANT REGISTRAR : ITAT DELHI BENCHES : DELHI.