Kamal Kumar Agarwalla, Bhubaneswar V. DCIT, Circle-4(1), Bhubaneswar

ITA 373/CTK/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 4770 (ITAT-CUTTACK)
• Duration Of Justice: 10 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-08-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2013-2014
• Appeal Filed On: 27-09-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SUVENDU DATTA
• Assessee Lawyers: S K AGARWA L LA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK BEFORE S/SHRI N.S SAINI, ACCOUNTANT MEMBER AND PAVAN KUMAR GADALE, JUDICIAL MEMBER ITA NO. 373 /CTK/2017 ASSESSMENT YEAR : 201 3 - 2014 KAMAL KUMAR AGARWALLA , PLOT NO.87, KHARVEL NAGAR, UNIT - III, BHUBANESWAR. VS. DCIT, CIRCLE - 4(1), 2 ND FLOOR, AAYAKAR BHAVAN, RAJASWA VIHAR, BHUBANESWAR. PAN/GIR NO. AAOPA 1367 L (APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY : SHRI S.K.AGARWALLA, A R REVENUE BY : SHRI SUVENDU DATTA , DR DATE OF HEARING : 0 8 /0 8 / 2018 DATE OF PRONOUNCEMENT : 8 /0 8 / 2018 O R D E R PER N.S.SAINI, AM THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A) - 2, BHUBANESWAR DATED 30.6.2017 FOR THE ASSESSMENT YEAR 2013 - 2014. 2. THE SOLE ISSUE INVOLVED IN THIS APPEAL IS THAT THE CIT(A) ERRED IN SUSTAINING THE ADHOC DISALLOWANCE AT RS.4,79,646/ - AS AGAINST RS.5,48,267/ - MADE BY THE ASSESSING OFFICER. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS CLAIMED RS.1,79,805/ - AS REPAIR AND MAINTENANCE, RS.5,36,725/ - AS SHOP EXPENSES, RS.3,65,094/ - AS TELEPHONE EXPENSES AND RS.2,90,798/ - AS TRAVELLING & CONVEYANCE EXPE NSES TOTALLING TO 2 ITA NO.373/CTK/2017 ASSESSMENT YEAR : 2013 - 2014 R S.13,72,422/ - . DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE FAILED TO FURNISH ANY DOCUMENTARY EVIDENCES IN SUPPORT OF ABOVE EXPENSES CLAIMED. THEREFORE, THE ASSESSING OFFICER WAS OF THE VIEW THAT THE GENUINENESS OF THE EXP ENSES CANNOT BE RELIED UPON. HOWEVER, HE OPINED THAT THE ASSESSEE MIGHT HAVE INCURRED EXPENDITURE UNDER THESE HEADS IN THE COURSE OF BUSINESS ACTIVITIES. ACCORDINGLY, CONSIDERING THE VOLUME OF BUSINESS, HE DISALLOWED 15% OF THE TOTAL EXPENSES OF RS.13,72, 422/ - , WHICH WORKED OUT TO RS.2,05,863/ - AND ADDED THE SAME TO THE INCOME OF THE ASSESSEE. 4. SIMILARLY, THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS CLAIMED EXPENSES OF RS.32,85,234/ - AS DELIVERY EXPENSES AND RS.1,37,170/ - AS COMPUTER RUNNING EXPE NSES TOTALLING TO RS.34,22,404/ - . SINCE THE ASSESSEE FAILED TO FURNISH ANY DOCUMENTARY EVIDENCES IN SUPPORT OF THE EXPENSES, THE ASSESSING OFFICER DISALLOWED 10% OF THESE EXPENSES OF RS.34,22,404/ - , WHICH COMES TO RS.3,42,240/ - AND ADDED THE SAME TO THE I NCOME OF THE ASSESSEE. ACCORDINGLY, TOTAL DISALLOWANCE OF RS.5,48,103/ - (RS.2.05,863 + RS.3,42,240/ - ) WAS MADE TO THE TOTAL INCOME OF THE ASSESSEE. 5. BEFORE THE CIT(A), THE ASSESSEE STATED THAT THESE EXPENSES WERE INCURRED IN THE NORMAL COURSE OF RUNNIN G THE BUSINESS AND THEREFORE, SAME SHOULD BE ALLOWED. THE CIT(A) OBSERVED THAT THE VERY NATURE OF THESE EXPENSES IS SUCH THAT THIRD PARTY BILLS AND VOUCHERS ARE DIFFICULT TO MAINTAIN . CONSIDERING THE SAME, THE CIT(A) RESTRICTED THE DISALLOWANCE TO 3 ITA NO.373/CTK/2017 ASSESSMENT YEAR : 2013 - 2014 10% AS AGAINST 15% MADE BY THE ASSESSING OFFICER. HOWEVER, WITH REGARD TO ADHOC DISALLOWANCE OF 10% ON ACCOUNT OF DELIVERY EXPENSES AND COMPUTER RUNNING EXPENSES, THE CIT(A) CONFIRMED THE ACTION OF THE ASSESSING OFFICER. IN THIS MANNER, THE ASSESSEE GETS RELIEF OF RS.68,621/ - . 6. BEING AGGRIEVED BY THE SAID ORDER OF THE CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US. 7. BEFORE US, LD A.R. OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS INCURRED THE EXPENSES ON NORMAL COURSE OF BUSINESS OF THE ASSESSEE. LD A.R. SUBMITTED THAT IN THE ASSESSMENT YEAR 2014 - 15 IN AN ASSESSMENT U/S.143(3) OF THE ACT, THE ASSESSING OFFICER HAS NOT DISALLOWED THE CLAIM OF EXPENSES BY THE ASSESSEE UNDER THE ABOVE HEADS. THEREFORE, HE PRAYED FOR ALLOWING THE APPEAL OF THE ASSES SEE. 8. LD D.R. SUPPORTED THE ORDER OF THE CIT(A). 9. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD. IN THE INSTANT CASE, WE FIND THAT AS THE ASSESSEE FAILED TO FURNISH ANY DOCUMENTARY EVIDE NCES IN SUPPORT OF THE EXPENSES INCURRED UNDER THE HEAD REPAIR AND MAINTENANCE, SHOP EXPENSES, TELEPHONE EXPENSES, TRAVELLING & CONVEYANCE EXPENSES TOTALLING TO RS.13,72,422/ - , THE ASSESSING OFFICER DISALLOWED 15% OF THE CLAIMED OF THE ASSESSEE. SIMILARLY, THE ASSESSING OFFICER DISALLOWED 10% OF THE EXPENSES INCURRED ON DELIVERY EXPENSES AND COMPUTER RUNNING EXPENSES. 4 ITA NO.373/CTK/2017 ASSESSMENT YEAR : 2013 - 2014 10. ON APPEAL, THE CIT(A) RESTRICTED THE DISALLOWANCE TO 10% AS AGAINST 15% MADE BY THE ASSESSING OFFICER AND ALSO SUSTAINED THE DISALLOWANCE OF 10% MADE BY THE ASSESSING OFFICER . 11. WE FIND THAT THE CIT(A) HAS OBSERVED THAT THE VERY NATURE OF EXPENSES IS SUCH THAT THIRD PARTY BILLS AND VOUCHERS ARE DIFFICULT TO MAINTAIN. IT HAS ALSO BEEN ARGUED AND SUBMITTED BY LD A.R. THAT THE GENUINENESS OF THE EXPENDITURE IS NOT DOUBTED AND IT IS NOT THE CASE OF THE REVENUE THAT THE ASSESSEE HAS CLAIMED BOGUS EXPENDITURE TO REDUCE ITS INCOME . WE ALSO FIND THAT IN AN ASSESSMENT U/S.143(3) OF THE ACT, THE ASSESSING OFFICER HAS NOT DISALLOWED SUCH EXPENSES CLAIMED BY THE ASSESSEE. ON PERUSAL O F THE ASSESSMENT ORDER AT PARA 2, IT IS OBSERVED THAT THE ASSESSEE HAS APPEARED AND PRODUCED DETAILS BEFORE THE ASSESSING OFFICER BUT IT IS NOT CLEAR WHICH DETAILS HAVE BEEN FURNISHED BY THE ASSESSEE. CONSIDERING THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE CONSIDERED OPINION THAT IT WOULD MEET THE ENDS OF JUSTICE, IF THE EXPENSES IS ESTIMATED AT 5% OF THE TOTAL CLAIM OF THE ASSESSEE . WE ORDER ACCORDINGLY. THIS GROUND IS PARTLY ALLOWED . 12. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED ON 8 /0 8 /2018. S D/ SD/ - ( PAVAN KUMAR GADALE) ( N.S SAINI) JUDICIALMEMBER A CCOUNTANT MEMBER CUTTACK; DATED 8 /0 8 /2018 B.K.PARIDA, SPS 5 ITA NO.373/CTK/2017 ASSESSMENT YEAR : 2013 - 2014 COPY OF THE ORDER FORWARDED TO : BY ORDER, SR.PRIVATE SECRETARY ITAT, CUTTACK 1. THE APPELLANT : KAMAL KUMAR AGARWALLA, PLOT NO.87, KHARVEL NAGAR, UNIT - III, BHUBANESWAR. 2. THE RESPONDENT. DCIT, CIRCLE - 4(1), 2 ND FLOOR, AAYAKAR BHAVAN, RAJASWA VIHAR, BHUBANESWAR 3. THE CIT(A) - 2, BHUBANESWAR 4. PR.CIT - 2, BHUBANESWAR 5. DR, ITAT, CUTTACK 6. GUARD FILE. //TRUE COPY//