Shri Sanjay Minotra, New Delhi V. ACIT, New Delhi

ITA 3859/DEL/2016

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 7219 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 6 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-01-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2012-2013
• Appeal Filed On: 01-07-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SARAS KUMAR
• Keywords: Principle of natural justice; TDS

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G, NEW DELHI BEFORE MS. SUSHMA CHOWLA, VICE PRESIDENT DR. B. R. R. KUMAR, ACCOUNTANT MEMBER ITA NO. 3859/DEL/2016 : ASSTT. YEAR : 2012-13 SANJAY MINOTRA, PROP. M/S SYNCOTTS INTERNATIONAL, C/O M/S RRA TAXINDIA, D-28, SOUTH EXTENSION, PART-1, NEW DELHI - 110049 VS ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE-62(1), NEW DELHI (APPELLANT) (RESPONDENT) PAN NO. AHCPM0641G ASSESSEE BY : SH. SOMIL AGGARWAL, ADV. REVENUE BY : SHRI SARAS KUMAR, SR. DR DATE OF HEAR ING: 0 7 . 01 .20 20 DATE OF PRONOUNCEMENT: 28 .01 .20 20 ORDER PER DR. B. R. R. KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE A GAINST THE ORDER OF LD. CIT (A)-20, NEW DELHI DATED 13.06. 2016. 2. FOLLOWING GROUNDS HAVE BEEN RAISED BY THE ASSESS EE: 1. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ACTION OF LD. AO IN MAKING AN ADHOC DISALLOWANCE OF RS. 7,00,000/- ON ACCOUNT OF ALLEGED UNVERIFIABLE PURCHASES AND TH AT TOO WITHOUT OBSERVING THE PRINCIPLES OF NATURAL JUSTICE. 2. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCE S OF THE CASE, THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ACTION OF LD. AO IN MAKING AN ADHOC DISALLOWANCE OF RS. 3,00,000/- ON ACCOUNT OF DIRECT EXPENSES AND THAT TOO WITHOUT OBSERVING THE PRINCIPLES OF NATURAL JUSTICE. ITA NO. 3859/DEL/2016 SANJAY MINOTRA 2 3. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCE S OF THE CASE, THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN SUSTAINING THE DISALLOWANCE TO THE EXTENT OF RS. 1,17,577/- OUT OF TOTAL DISALLOWANCE OF RS. 2,35,154/- UNDER THE HEAD VEHICLE EXPENSES, FESTIVA L EXPENSES, TELEPHONE EXPENSES AND CONVEYANCE EXPENSES. 4. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCE S OF THE CASE, LD. CIT(A) HAS ERRED IN LAW AND ON FAC TS IN CONFIRMING THE ACTION OF LD. AO IN MAKING AN ADHOC DISALLOWANCE OF RS. 3,90,513/- ON ACCOUNT OF TRAVELLING EXPENSES AND THAT TOO WITHOUT OBSERVING THE PRINCIPLES OF NATURAL JUSTICE. 5. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCE S OF THE CASE, LD. CIT(A) HAS ERRED IN LAW AND ON FAC TS IN NOT ADMITTING/CONSIDERING THE ADDITIONAL GROUNDS FILED BY THE ASSESSEE VIDE PETITION DATED 06.06.2016. 3. THE ASSESSING OFFICER HAS DISALLOWED RS. 7 LACS ON ACCOUNT OF UNVERIFIABLE PURCHASES TO PLUG THE LEAKAGE OF REVEN UE. THE TOTAL PURCHASES MADE BY THE ASSESSEE ARE TO THE TUNE OF RS.6.15 CRO RES. THE LD. CIT (A) CONFIRMED THE ADDITION HOLDING THAT PRIMARY ONUS OF PROVIDING EVIDENCES LIES ON THE ASSESSEE TO GET DEDUCTION FOR EXPENDITU RE INCURRED FOR THE PURPOSE OF BUSINESS. 4. BEFORE US, THE LD. AR ARGUED THAT THE ASSESSEE I S ENGAGED IN THE BUSINESS OF INSTALLATION AND MAINTENANCE/RESTORATIO N OF TENNIS COURT AND OTHER SPORT SURFACES SUCH AS BASKET, VOLLEY BALL, B ADMINTON ETC. UNDER THE NAME AND STYLE OF HIS PROPRIETARY CONCERN. IT WAS S UBMITTED THAT THE AD- HOC DISALLOWANCE MADE BY ASSESSING OFFICER IS NOT J USTIFIED AS ACCOUNTS ARE AUDITED UNDER THE I.T. ACT, 1961 AND AUDITORS HAVE NOT MADE ANY ADVERSE OBSERVATIONS IN EITHER OF THE AUDITS FOR THE REASON THAT THERE WERE COMPLETE BOOKS OF ACCOUNTS SUPPORTED BY ADEQUATE VO UCHERS. HAD THE EXPENSES NOT BEEN SUPPORTED BY THE VOUCHERS, THE AU DITORS WOULD HAVE ITA NO. 3859/DEL/2016 SANJAY MINOTRA 3 GIVEN ADVERSE COMMENT. THEREFORE, IN THE ABSENCE OF ANY ADVERSE COMMENT FROM BOTH THE AUDITORS SHOWS THAT ALL THE P URCHASES WERE DULY DOCUMENTED AND VOUCHED. HE ARGUED THAT THE BOOKS OF ACCOUNTS ALONG WITH BILLS, VOUCHERS, MUSTER-ROLLS, WAGES SHEETS WE RE PRODUCED AND WHICH WERE ALSO EXAMINED BY THE ASSESSING OFFICER AS MENT IONED IN THE PAGE NO. 2 OF THE ASSESSMENT ORDER. 5. THE LD. SR. DR RELIED ON THE ORDER OF THE LD. CI T (A). 6. AT THIS JUNCTURE, THE LD. AR FAIRLY AGREED THAT DISALLOWANCE OF RS.1 LAC WOULD SUFFICE THE INTEREST OF JUSTICE. 7. WE FIND THAT THE ASSESSING OFFICER HAS NOT BROUG HT TO FORE AS TO WHAT ARE THE DETAILS FOR WHICH VOUCHERS AND B ILLS ARE MISSING. THE LUMP-SUM DISALLOWANCES WITHOUT POINTIN G OUT EXACT AMOUNT CANNOT BE APPRECIATED. AFTER GOING THROUGH T HE FACTS ON RECORD, SINCE REVENUE HAS NOT DETERMINED THE EXPENS ES FOR WHICH BILLS HAVE BEEN MISSING, WE HEREBY LOWER THE DISALLOWANCE TO RS.1 LAC. 8. SIMILARLY, THE LD. CIT (A) HAS CONFIRMED THE ADD ITION OF RS.1,17,577/- ON ACCOUNT OF VEHICLE EXPENSES, FESTI VAL EXPENSES, TELEPHONE EXPENSES AND CONVEYANCE EXPENSE S. THE TOTAL AMOUNT DISALLOWED BY THE ASSESSING OFFICER WA S RS.2,35,154/- WHICH IS 1/5 TH OF THESE EXPENSES. 9. BEFORE US, IT WAS ARGUED THAT THESE ARE EXPENSES INCURRED WITH THE RUNNING OF THE BUSINESS AND NO PERSONAL EL EMENT CAN BE ATTRIBUTED TO THESE EXPENSES. SINCE, THESE EXPEN SES OF CONVEYANCE AND SMALL REPAIRS THEY HAVE BEEN SELF-VO UCHED, THE ITA NO. 3859/DEL/2016 SANJAY MINOTRA 4 LD. AR SUBMITTED THAT AT THE MOST 5% DISALLOWANCE M AY BE MADE. 10. HAVING HEARD BOTH THE PARTIES, WE HEREBY HOLD T HAT 1/10 TH OF THE TELEPHONE AND VEHICLE EXPENSES MAY BE TREATE D AS PERSONAL EXPENSES BY THE PARTNERS. THE FESTIVAL EXP ENSES ARE INCURRED FOR PERFORMING POOJA AT OFFICE PREMISES AN D DISTRIBUTION OF SWEETS TO THE OFFICE STAFF WHICH IS ALLOWED AS B USINESS EXPENDITURE. HENCE, NO DISALLOWANCE IS CALLED FOR. 11. REGARDING THE DISALLOWANCE @10% ON ACCOUNT OF T RAVELLING EXPENSES, SINCE NO EVIDENCE HAS BEEN BROUGHT ON REC ORD, ANY ELEMENT OF NON-BUSINESS PURPOSE, WE HEREBY DELETE T HE DISALLOWANCE MADE BY THE ASSESSING OFFICER. 12. APROPOS, THE TDS MISMATCH, THE ASSESSING OFFICE R IS DIRECTED TO RECONCILE THE TDS MISMATCH AND DUE CRED IT FOR THE TAXES PAID. 13. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT ON 28/01/2020. SD/- SD/- (SUSHMA CHOWLA) (DR. B. R. R. KUMAR) VICE PRESIDENT ACCOUNTANT MEMBER DATED: 28/01/2020 *SUBODH* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR