Neha Godhwani, New Delhi V. ITO, New Delhi

ITA 374/DEL/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 6254 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 2 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-03-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Next Hearing Date: 07-01-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 21-01-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: P DAM KANUNJA
• Keywords: Capital asset; Depreciation; Opportunity of being heard; Principle of natural justice

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E NEW DELHI BEFORE SHRI J.S. REDDY, ACCOUNTANT MEMBER AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER ITA NO. 374/DEL/2014 AY: 20 09-10 NEHA GODHWANI, VS INCOME TAX OFFICER, PROP. M/S REGALE INN, WARD-33(4), NEW DELHI. 17/6, OLD RAJINDER NAGAR, NEW DELHI-110005 (PAN: AFMPG2166E) (APPELLANT) (RESPONDENT ) APPELLANT BY : SHRI VED JAIN, CA RESPONDENT BY : SHRI P. DAMKANUNJA, SR. DR DATE OF HEARING: 07.01.2016 DATE OF PRONOUNCEMENT: 30.03.2016 ORDER PER SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER THE PRESENT APPEAL FILED BY THE ASSESSEE ARISES OU T OF THE ORDER DATED 22.11.2013 PASSED BY THE LD. CIT(A)-XXV I, NEW DELHI FOR ASSESSMENT YEAR 2009-10. 2. THE ASSESSEE RUNS A HOTEL IN THE NAME AND STYLE OF M/S REGALE INN. THE RETURNED INCOME FOR THE YEAR WAS RS . 15,96,040/-. DURING THE ASSESSMENT PROCEEDINGS, TH E ASSESSEE DID NOT PRODUCE EVIDENCES IN RESPECT OF PURCHASE OF NEW ASSETS. THE ASSESSING OFFICER PROCEEDED TO HOLD THAT SINCE THESE ASSETS WERE NOT USED FOR BUSINESS PURPOSES, DEPRECIATION W AS NOT I.T.A. NO. 374/D/2014 ASSESSMENT YEAR: 2009-10 2 ALLOWABLE AND ACCORDINGLY, A SUM OF RS. 1,56,465/- W AS ADDED BACK ON ACCOUNT OF DEPRECIATION. FURTHER, THE ASSE SSING OFFICER RESTRICTED THE DEPRECIATION ON SOLAR EQUIPMENT @80% AS PRESCRIBED AND AS AGAINST THE CLAIM @100%. THE ASS ESSING OFFICER ALSO MADE THE FOLLOWING DISALLOWANCES:- I) RS. 40,002/- BEING 1/6 TH OF CAR RUNNING, CAR INSURANCE AND CAR DEPRECIATION EXPENSES ON ACCOUNT OF PERSONAL USE. II) RS. 30,550/- BEING 1/10 TH OF TELEPHONE EXPENSES ON ACCOUNT OF PERSONAL USE. III) RS. 1,58,654/- BEING 1/10 TH OF BUILDING REPAIR AND MAINTENANCE EXPENSES IN ABSENCE OF SUPPORTING BILLS AND VOUCHERS. IV) RS. 1,07,791/- BEING 1/5 TH OF BUSINESS PROMOTION EXPENSES, DIWALI EXPENSES AND STAFF WELFARE EXPENSE S IN ABSENCE OF SUPPORTING BILLS AND VOUCHERS. 3. ON APPEAL BEFORE THE FIRST APPELLATE AUTHORITY, THE APPEAL WAS DECIDED EX PARTE ON MERITS AND NOW THE ASSESSEE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL AND HAS R AISED THE FOLLOWING GROUNDS:- I.T.A. NO. 374/D/2014 ASSESSMENT YEAR: 2009-10 3 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, TH E ORDER PASSED THE LEARNED COMMISSIONER OF INCOME TAX (APPE ALS) [CIT(A)] IS BAD BOTH IN THE EYE OF LAW AND ON FACTS . 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED, BOTH ON FACTS AND IN LAW, IN PASS ING THE ORDER WITHOUT GIVING ASSESSEE A PROPER AND ADEQUATE OPPORTUNITY OF BEING HEARD IN CLEAR VIOLATION OF PR INCIPLE OF NATURAL JUSTICE. 3(I) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, TH E LEARNED CIT(A) HAS ERRED, BOTH ON FACTS AND IN LAW, IN CONFIRMING THE ACTION OF THE AO IN DISALLOWING AN AMOUNT OF RS.1,56,465/- ON ACCOUNT OF DEPRECIATION ON VARIOUS ASSETS. (II) THAT THE SAID DISALLOWANCE HAS BEEN CONFIRMED DESPITE THE FACT THAT THE ASSESSEE HAS CLAIMED PROP ER DEPRECIATION ON VARIOUS ASSETS ALLOWABLE AS PER LAW . 4(I) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, TH E LEARNED CIT(A) HAS ERRED, BOTH ON FACTS AND IN LAW, IN CONFIRMING DISALLOWANCE OF AN AMOUNT OF RS.2,61,800/- ON ACCOUNT OF DEPRECIATION ON SOLAR EQUIPMENTS. (II) THAT THE ABOVE DISALLOWANCE HAS BEEN CONFIRMED DESPITE THE FACT THAT THE SOLAR EQUIPMENTS ARE ELIG IBLE FOR 100% DEPRECIATION AS PER LAW. 5(I) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, TH E LEARNED CIT(A) HAS ERRED, BOTH ON FACTS AND IN LAW, IN CONFIRMING DISALLOWANCE OF AN AMOUNT OF RS.40,002/- ON ACCOUNT OF CAR REPAIRS, MAINTENANCE, INSURANCE AND DEPRECIATION ON CAR. (II) THAT THE ABOVE DISALLOWANCE HAS BEEN CONFIRMED IGNORING THE FACT THAT THE SAME WAS MADE ARBITRARIL Y AT THE RATE OF 1/6 TH WITHOUT THERE BEING ANY BASIS FOR THE SAME. I.T.A. NO. 374/D/2014 ASSESSMENT YEAR: 2009-10 4 6(I) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, TH E LEARNED CIT(A) HAS ERRED, BOTH ON FACTS AND IN LAW, IN CONFIRMING DISALLOWANCE OF AN AMOUNT OF RS.30,550/- ON ACCOUNT OF TELEPHONE EXPENSES. (II) THAT THE ABOVE DISALLOWANCE HAS BEEN CONFIR MED IGNORING THE FACT THAT THE SAME WAS MADE ARBITRARIL Y AT THE RATE OF 10% WITHOUT THERE BEING ANY BASIS FOR THE S AME. 7(I) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, T HE LEARNED CIT(A) HAS ERRED, BOTH ON FACTS AND IN LAW, IN CONF IRMING DISALLOWANCE OF AN AMOUNT OF RS.1,58,654/- ON ACCOU NT OF VARIOUS EXPENSES. (II) THAT THE ABOVE DISALLOWANCE HAS BEEN CONFIRME D IGNORING THE FACT THAT THE SAME WAS MADE ARBITRARIL Y AT THE RATE OF 10% WITHOUT THERE BEING ANY BASIS FOR THE S AME. 8(I) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, T HE LEARNED CIT(A) HAS ERRED, BOTH ON FACTS AND IN LAW, IN CONF IRMING DISALLOWANCE OF AN AMOUNT OF RS. 1,07,791/- ON ACCO UNT OF EXPENSES ON BUILDING REPAIR AND MAINTENANCE. (II) THAT THE ABOVE DISALLOWANCE HAS BEEN CONFIRMED IGNORING THE FACT THAT THE SAME WAS MADE ARBITRARIL Y AT THE RATE OF 5% WITHOUT THERE BEING ANY BASIS FOR THE SA ME. 9. THAT THE APPELLANT CRAVES LEAVE TO ADD, AMEND O R ALTER ANY OF THE GROUNDS OF APPEAL. 4. AT THE OUTSET, THE LD. AR SUBMITTED THAT GROUND NO. 2 REGARDING VIOLATION OF PRINCIPLE OF NATURAL JUSTICE AND GROUND NO. 4 REGARDING THE ISSUE OF DEPRECIATION ON SOLAR EQUI PMENT WERE NOT BEING PRESSED. 5. REGARDING THE ISSUE OF DEPRECIATION DISALLOWED T O THE EXTENT OF RS. 1,56,465/-, THE LD. AR SUBMITTED THAT ALTHOU GH THE BOOKS I.T.A. NO. 374/D/2014 ASSESSMENT YEAR: 2009-10 5 OF ACCOUNT WERE DULY AUDITED, THE CLAIM OF DEPRECIA TION ON THE ASSETS PURCHASED DURING THE YEAR HAS NOT BEEN ACCEP TED. AS REGARDS OTHER DISALLOWANCES, IT WAS SUBMITTED THAT THE SAME HAVE BEEN MADE ON AN ESTIMATION WITHOUT ANY EVIDENCE. I T WAS SUBMITTED THAT ALL THE ADDITIONS DESERVE TO BE DELE TED. 6. THE LD. DR PLACED RELIANCE ON THE IMPUGNED ORDER AND SUBMITTED THAT THE LD. CIT(A) HAD RIGHTLY UPHELD TH E DISALLOWANCE. 7. WE HAVE HEARD THE SUBMISSIONS OF BOTH THE PARTIE S AND ALSO PERUSED THE ORDERS OF THE LOWER AUTHORITIES. AS RE GARDS THE ISSUE OF DEPRECIATION ON PURCHASE OF CAPITAL ASSETS DURIN G THE YEAR, IT MIGHT BE TRUE THAT PRESENCE OF AN AUDITED BALANCE S HEET ADDS WEIGHT TO THE CLAIM OF THE ASSESSEE IN QUITE A NUMB ER OF CASES. HOWEVER, THE AVAILABILITY OF AN AUDITED FINANCIAL S TATEMENT DOES NOT ABSOLVE THE ASSESSEE FROM ITS PRIMARY RESPONSIB ILITY OF PRODUCING THE RELEVANT VOUCHERS/SUPPORTING BILLS WH EN REQUIRED TO DO SO. MOREOVER, THE COPY OF THE AUDITED FINANC IAL STATEMENTS HAS NOT BEEN FILED BEFORE US. HOWEVER, LOOKING INT O THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN THE INTEREST OF JU STICE, WE REMIT THE MATTER TO THE FILE OF THE ASSESSING OFFICER TO VERIFY THE I.T.A. NO. 374/D/2014 ASSESSMENT YEAR: 2009-10 6 ADDITIONS TO THE BLOCK OF ASSETS AND ALLOW DEPRECIA TION TO THE ASSESSEE IN ACCORDANCE WITH LAW AFTER GIVING THE AS SESSEE DUE OPPORTUNITY TO SUBMIT ALL THE RELEVANT BILLS/VOUCHE RS AND SUPPORTING DOCUMENTS. 8. AS REGARDS THE OTHER DISALLOWANCES AMOUNTING TO RS.3,36,997/-, IT IS SEEN THAT THE ADDITIONS HAVE A LSO BEEN MADE FOR THE REASON THAT THE ASSESSEE FAILED TO PRODUCE THE BILLS/VOUCHERS. HOWEVER, IN THE INTEREST OF JUSTIC E, WE REMIT THESE ISSUES ALSO TO THE FILE OF THE ASSESSING OFFICER FO R PROPER VERIFICATION AND ALLOWANCE AFTER AFFORDING PROPER O PPORTUNITY TO THE ASSESSEE. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH OF MARCH, 2016. SD/- SD/- (J.S. REDDY) (SUDHANSHU SRIVASTAVA) ACCOUNTANT MEMBER JUDICI AL MEMBER DATED: THE 30 TH OF MARCH, 2016 GS I.T.A. NO. 374/D/2014 ASSESSMENT YEAR: 2009-10 7 COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT BY ORDER ASSTT. REGISTRAR