Mayank K. Barjatya, Pune V. Deputy Commissioner of Income-tax, Circle - 5, Pune

ITA 399/PUN/2019

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 6293 (ITAT-PUNE)
• Duration Of Justice: 6 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-10-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 07-06-2019
• Assessment Year: 2008-2009
• Appeal Filed On: 11-03-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: VISHWAS MUNDHE
• Assessee Lawyers: HARISH CHOPADA
• Keywords: Business income; Principle of natural justice; Services rendered outside India
• Section: 143(3)

Judgement Text

] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH SMC, PUNE BEFORE SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER . / ITA NO.399/PUN/2019 / ASSESSMENT YEAR : 2008-09 MAYANK K. BARJATYA, 25, SAMRAT CO-OPERATIVE HOUSING SOCIETY, KALYANI NAGAR, YERWADA, PUNE 411006. PAN : AESPB4733K. . / APPELLANT V/S THE DY.COMMISSIONER OF INCOME TAX , CIRCLE 5, PUNE. . / RESPONDENT ASSESSEE BY : SHRI HARISH CHOPADA. REVENUE BY : SHRI VISHWAS MUNDHE. / ORDER PER ANIL CHATURVEDI, AM : 1. THIS APPEAL FILED BY ASSESSEE IS EMANATING OUT OF THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) 9, PUNE DATED 15.11 .2018 FOR A.Y. 2008-09. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON RE CORD ARE AS UNDER :- ASSESSEE IS AN INDIVIDUAL AND PROPRIETOR OF M/S. VASTU ENVIRONMENTAL SERVICES. ASSESSEE FILED HIS RETURN OF INCO ME FOR A.Y. / DATE OF HEARING : 06.08.2019 / DATE OF PRONOUNCEMENT: 09.10.2019 2 2008-09 ON 30.09.2008 DECLARING TOTAL INCOME AT RS.46,43,58 0/-. THE CASE WAS SELECTED FOR SCRUTINY AND THEREAFTER ASSES SMENT WAS FRAMED U/S 143(3) OF THE ACT VIDE ORDER DATED 30.12.2010 AND THE TOTAL INCOME WAS DETERMINED AT RS.48,99,480/-. AGGRIEVED B Y THE ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE LD.CIT(A) , WHO VIDE EX- PARTE ORDER DATED 15.11.2018 DISMISSED THE APPEAL OF ASSE SSEE. AGGRIEVED BY THE ORDER OF LD.CIT(A), ASSESSEE IS NOW IN APP EAL AND HAS RAISED THE FOLLOWING GROUNDS : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE LOWER AUTHORITIES HAVE ERRED IN ADDING 31.56% OF TR AVELLING EXPENSES TO INCOME MERELY ON PRESUMPTION THAT IT APPEARS THAT A PPELLANT INCURRED PERSONAL TRAVEL, IS NOT SUPPORTED BY ANY COGENT EVI DENCE AND THEREFORE SUCH PRESUMPTION WHICH IS BASED ON MERE SURMISES AN D GUESSWORK IS ILLEGAL, AND THEREFORE ENTIRE PROCEEDINGS NEEDS TO BE QUASHED. 2. THE TOTAL TRAVELLING EXPENSE (RS. 7.12 LACS) WHI CH CONSTITUTES 4.86% OF TOTAL RECEIPTS OF PROFESSION AND SALES INCLUDING EX PORTS OF RS. 146.32 LACS WHICH ARE RECEIVED FROM SERVICES RENDERED IN I NDONESIA, FRANCE AND UAE. THE REVENUE FROM EXPORT OF SERVICE WAS RS. 23.22 LACS. FROM ABOVE EXPENSES OF RS.7.12 LACS ONLY RS.O.17 LACS(2. 38%) WAS IN CASH FOR PURCHASE OF FUEL FOR VEHICLE AND REST A LL WERE FROM ACCOUNT PAYEE CHEQUE AND CREDIT CARD (97.62%). THUS CONTENT ION OF AO THAT THE TRAVELLING EXPENSES ARE MOSTLY PAID IN CASH IS NOT VALID. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE LOWER AUTHORITIES HAVE ERRED IN NOT GIVING REASONAB LE OPPORTUNITY TO ASSESSEE AS WELL AS ALL THE NOTICES BY CIT (A) WERE RETURNED AND NOT DELIVERED TO ASSESSEE. THE NOTICES WERE NOT SEND BY EMAIL. THUS ASSESSEE WAS DEPRIVED FOR REPRESENTING BEFORE LOWER AUTHORIZES. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LOWER AUTHORITIES HAVE ERRED IN CONFIRMING THE ADDI TION OF RS.2,25,000/- AS PERSONAL EXPENSES ELEMENT IN TRAVELLING, BY DISR EGARDING THE: NATURE OF WORK CONDUCTED BY THE ASSESSEE AND SOURCES OF RE CEIPT OF BUSINESS INCOME WHICH NECESSITATES EXTENSIVE TRAVELLING FOR ASSESSEE AS WELL AS HIS EMPLOYEES, APPELLANT PRAYS FOR COMPLETE RELI EF AS THE ENTIRE ADDITION IS BASED ON SURMISES AND GUESSWORK AND PRE SUMPTION WHICH IS NOT SUPPORTED BY ANY CORROBORATIVE EVIDENCE, AND THEREFORE ADDITION NEEDS TO BE DELETED IN ITS ENTIRETY. 3. BEFORE ME, AT THE OUTSET, LD.A.R. SUBMITTED THAT HE WO ULD LIKE TO PRESS GROUND NO.1 ONLY AND THE OTHER GROUNDS I.E., 2 TO 4 MAY BE 3 TREATED AS NOT PRESSED. I THEREFORE PROCEED TO DECIDE GROUND NO.1 AND DISMISS GROUND NOS.2 TO 4 AS NOT PRESSED. 4. AO ON PERUSING THE PROFIT AND LOSS ACCOUNT, NOTICED T HAT ASSESSEE HAD DEBITED RS.7,12,857/- TOWARDS TRAVELLING EXPE NSES. AO NOTED THAT THE EXPENSES HAVE BEEN INCURRED IN CASH AS WELL AS BY CHEQUE. HE WAS OF THE VIEW THAT GENUINENESS OF ALL THE PA YMENTS TOWARDS TRAVELLING COULD NOT BE VERIFIED AND THE PERSONAL T RAVELLING OF THE ASSESSEE COULD NOT BE DENIED. HE ACCORDINGLY MADE ADHOC DISALLOWANCE OF RS.2,25,000/-. AGGRIEVED BY THE ORDER OF AO , ASSESSEE CARRIED THE MATTER BEFORE LD.CIT(A), WHO DISMISSED THE APP EAL OF THE ASSESSEE. AGGRIEVED BY THE ORDER OF LD.CIT(A), ASSESSEE IS NOW IN APPEAL. 5. BEFORE ME, LD.A.R. SUBMITTED THAT AO HAS MADE AN ADHOC DISALLOWANCE AND THAT LD.CIT(A) HAS PASSED AN EX-PARTE OR DER AND HAS NOT DECIDED THE ISSUE ON MERITS. LD.A.R. FURTHER SUBMITTE D THAT ASSESSEE WAS NOT GIVEN AN OPPORTUNITY OF HEARING BEFORE THE LD.CIT(A) AND THAT IF GIVEN A CHANCE, ASSESSEE UNDERTAKES TO APPE AR BEFORE LOWER AUTHORITIES AND FURNISH ALL THE REQUIRED DETAILS TO SUBSTANT IATE HIS CASE. HE THEREFORE SUBMITTED THAT ASSESSEE BE GRANTED ONE MORE OPPORTUNITY TO EXPLAIN HIS CASE. LD.D.R. ON THE OTHER HAN D SUPPORTED THE ORDER OF AO AND LD.CIT(A) AND OBJECTED TO LD.A.R.S PR AYER FOR 2 ND INNINGS. 6. I HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE M ATERIAL ON RECORD. THE ISSUE IN THE PRESENT CASE IS WITH RESPECT TO ADDITION OF RS.2,25,000/- ON ACCOUNT OF TRAVELLING EXPENSES. THE PERU SAL OF ORDER 4 OF LD.CIT(A) REVEALS THAT LD.CIT(A) HAS PASSED AN EX-PARTE ORDER WITHOUT DECIDING THE ISSUE ON MERITS. I N VIEW OF THE WELL SETTLED PRINCIPLE OF NATURAL JUSTICE THAT SUFFICIENT OPPORTUNITY OF HE ARING SHOULD BE AFFORDED TO THE PARTIES AND NO PARTY SHOULD BE CONDEMNED UNHEARD, I AM OF THE VIEW THAT ONE MORE OPPORTUNITY BE GRANTED TO THE ASSESSEE TO PRESENT HIS CASE BEFORE THE LOWER AUTHORITIE S. I THEREFORE RESTORE THE MATTER BACK TO THE FILE OF LD.CIT(A) TO DECIDE THE ISSUE ON MERITS IN ACCORDANCE WITH LAW. NEEDLESS TO STATE THAT LD .CIT(A) SHALL GRANT ADEQUATE OPPORTUNITY OF HEARING TO BOTH THE PART IES. ASSESSEE IS ALSO DIRECTED TO PROMPTLY FURNISH ALL THE DETAILS CALLED FOR BY THE AUTHORITIES. IN VIEW OF MY DECISION TO RESTORE THE ISSUE TO LD.CIT(A), I AM NOT ADJUDICATING ON MERITS THE GROUNDS OF THE APPEA L RAISED BY THE ASSESSEE. THUS, THE GROUND OF ASSESSEE IS ALLOWED FOR STATIS TICAL PURPOSES. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 9 TH DAY OF OCTOBER, 2019. SD /- ( ANIL CHATURVEDI ) ' / ACCOUNTANT MEMBER PUNE; DATED : 9 TH OCTOBER, 2019. YAMINI 5 #$%&'(' % / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. 4. 5 6. CIT(A)-9, PUNE. PR. CIT-7, PUNE. '#$ %%&',) &', *+ / DR, ITAT, SMC PUNE; $-.// GUARD FILE. / BY ORDER // TRUE COPY // 012%3&4 / SR. PRIVATE SECRETARY ) &', / ITAT, PUNE.