Shri Laxmanbhai Rambhai Jalu, Surat V. The ACIT.,Circle-3, Surat

ITA 4044/AHD/2008

• Counselvise Citation: [2011] 119 COUNSELVISE.COM (IT) 6433 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 5 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 25-05-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 15-12-2008
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: P L KUREEL
• Assessee Lawyers: RAJESH M UPADHYAYAR
• Keywords: Unexplained investment; Sale consideration of property below Jantri Value; Gift; Depreciation; Business expenditure; Onus to prove
• Section: 143(3); 50C; 68; 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D BEFORE SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER AND SHRI D.C. AGRAWAL, ACCOUNTANT MEMBER DATE OF HEARING : 25/5/2011 DRAFTED ON: 30/ 5/2011 ITA NO.4044/AHD/2008 ASSESSMENT YEAR : 2005-06 SHRI LAXMANBHAI RAMBHAI JALU 73, KASTURBA MAHILA CO-OP.SOCIETY LTD. B/H.NEW ERA SCHOOL RANDER ROAD, SURAT` VS. THE ASST.CIT CIRCLE-3 SURAT PAN/GIR NO. : ABIPJ 5339 C ( APPELLANT ) .. ( RESPONDENT ) APPELLANT BY : SHRI RAJESH M.UPADHYAY,A.R. RESPONDENT BY: SHRI P.L. KUREEL, SR. D.R. O R D E R PER SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER : THIS IS AN APPEAL AT THE BEHEST OF THE ASSESSEE WH ICH HAS EMANATED FROM THE ORDER OF THE LEARNED CIT(APPEALS) -II, SURAT DATED 24/09/2008 PASSED FOR ASSESSMENT YEAR 2005-06. 2. GROUND NO.1 READS AS UNDER: 1. LR. A.O. HAS ERRED IN LAW AND ON FACTS TO ADD A N AMOUNT OF RS.11,42,100/- AS UNDISCLOSED INVESTMENT IN PLOT O F LAND ON THE BASIS OF STAMP DUTY VALUATION U/S.50C OF I.T. ACT, 1961. SEC.50C IS APPLICABLE ONLY IN CASE OF SALE TRANSACTION BY ASSE SSEE AND NOT IN THE CASE OF PURCHASE OF LAND OR BUILDING. LR. LEAR NED CIT(APPEALS) HAS ALSO ERRED IN CONFIRMING ACTION OF A.O. ITA NO.4044/AHD /2008 SHRI LAXMANBHAI RAMBHAI JALU VS. ASST.CIT ASST.YEAR - 2005-06 - 2 - 2.1. FACTS IN BRIEF AS EMERGED FROM THE CORRESPON DING ASSESSMENT ORDER PASSED U/S. 143(3) OF THE I.T. ACT, 1961 DATED 30 /11/2007 WERE THAT THE ASSESSEE HAS PURCHASED A LAND FOR A SUM OF RS.14,7 8,000/- SITUATED AT SURAT. IT WAS NOTICED BY THE ASSESSING OFFICER THA T FOR THE PURPOSE OF STAMP DUTY THE CONCERNED AUTHORITIES (STAMP VALUATI ON AUTHORITY) HAVE ASSESSED THE DUTY AT RS.20,20,100/-. THE ARGUMENT OF THE ASSESSEE WAS THAT THERE WAS NO EVIDENCE WITH THE REVENUE TO ALLE GE THAT THE ASSESSEE HAD PAID EXTRA CONSIDERATION. IT WAS ALSO ARGUED T HAT THE VALUE DETERMINED BY SVA WAS ONLY FOR THE PURPOSE OF DETER MINING THE STAMP DUTY. HOWEVER, THE ASSESSING OFFICER WAS NOT CONVI NCED AND HELD THAT THE DIFFERENCE BETWEEN THE TWO OF RS.11,42,1000/- W AS UNEXPLAINED INVESTMENT AND ACCORDINGLY TAXED BY INVOKING THE PR OVISIONS OF SECTION 69 OF THE I.T.ACT. WHEN THE MATTER WAS CARRIED BE FORE THE FIRST APPELLATE AUTHORITY, THE ADDITION WAS SUSTAINED. 3. ON HEARING THE SUBMISSIONS OF BOTH THE SIDES, TH E SHORT ISSUE IS THAT WHETHER IN A CASE OF A PURCHASER THE PROVISIONS OF SECTION 50C COULD BE INVOKED TO ASSESS THE DIFFERENCE BETWEEN THE SALE C ONSIDERATION PAID AND THE STAMP DUTY ASSESSED BY SVA, AS AN UNEXPLAINED I NVESTMENT U/S.69 OF THE I.T.ACT. THIS QUESTION HAS BEEN ANSWERED BY NU MBER OF DECISIONS IN FAVOUR OF THE ASSESSEE, NAMELY SHRI BHARTKUMAR N.PA TEL VS. THE ACIT IN ITA NO.1749/AHD/2008 (FOR A.Y. 2005-06) DATED 29/08 /2008, WHEREIN IT WAS HELD THAT THE PROVISIONS OF SECTION 50C OF THE I.T.ACT COULD NOT BE APPLICABLE IN THE CASE OF A PURCHASER. ONCE A VIEW HAS ALREADY BEEN TAKEN BY THE RESPECTED CO-ORDINATE BENCHES THAT THE PROVISIONS OF ITA NO.4044/AHD /2008 SHRI LAXMANBHAI RAMBHAI JALU VS. ASST.CIT ASST.YEAR - 2005-06 - 3 - SECTION 50C ARE TO BE INVOKED IN THE CASE OF A SELL ER AS PRESCRIBED IN THE STATUTE, THEREFORE RESPECTFULLY FOLLOWING THOSE DEC ISION, WE HEREBY REVERSE THE FINDINGS OF THE AUTHORITIES BELOW AND D IRECT TO DELETE THE ADDITION. THIS GROUND OF THE ASSESSEE IS HEREBY AL LOWED. 4. GROUND NO.2 READS AS UNDER: 2. LR. A.O. HAS ERRED IN LAW AND ON FACTS TO ADD A N AMOUNT OF RS.3,50,000/- GIFT RECEIVED FROM R.N.JALU FOR THE R EASON THAT THOUGH, HE WAS SUMMONED, HE DID NOT PERSONALLY ATTE ND. HE WAS PRODUCED THROUGH POST ALL THE NECESSARY EVIDENCES P ROVING BY GENUINENESS OF THE GIFT GIVEN TO THE APPELLANT. LR . LEARNED CIT(APPEALS) HAS ALSO CONFIRM A.O.S ORDER. 4.1. A GIFT OF RS.3,50,000/- WAS RECEIVED FROM ONE SHRI R.N. JALU. FOR VERIFICATION SUMMONS U/S.131 OF THE I.T.ACT WERE IS SUED. SHRI R.N. JALU IS STATED TO BE FATHER OF THE ASSESSEE. AN EXPLANA TION WAS OFFERED THAT THE FATHER BEING OLD ABOVE 70 YEARS AND RESIDING 500KMS FAR FROM SURAT, THEREFORE, UNABLE TO ATTEND PERSONALLY IN COMPLIAN CE OF THE SUMMONS. FURTHER, IT WAS EXPLAINED THAT THE FATHER HAS RECEI VED SOME IMMOVABLE PROPERTY ON SUCCESSION WHICH WAS DISPOSED OF BY HIM AND SALE PROCEEDS WERE GIFTED TO HIS SON. HOWEVER, THE ASSESSING OFF ICER WAS NOT CONVINCED FIRSTLY ON THE GROUND THAT THERE WAS A TI ME GAP BETWEEN THE SALE OF THE PROPERTY AND THE IMPUGNED GIFT MADE TO THE ASSESSEE. THE ASSESSING OFFICER HAS NOTED THAT ONE OF THE PROPERT Y WAS SOLD ON 30/08/2003 AND THE OTHER WAS SOLD ON 30/06/2004, HO WEVER, THE GIFT WAS MADE ON 02/09/2004. IT WAS CONCLUDED THAT THE ASSE SSEE HAS NOT DISCHARGED THE ONUS TO PROVE THE VALIDITY OF THE GI FT AND THE CREDITWORTHINESS OF THE DONOR, HENCE HELD AS NON-GE NUINE GIFT AND ITA NO.4044/AHD /2008 SHRI LAXMANBHAI RAMBHAI JALU VS. ASST.CIT ASST.YEAR - 2005-06 - 4 - ACCORDINGLY TAXED U/S.68 OF THE I.T.ACT. THE MATTER WAS CARRIED BEFORE THE FIRST APPELLATE AUTHORITY WHO HAS AFFIRM ED THE ADDITION. 5. WE HAVE HEARD BOTH THE SIDES. WE HAVE CAREFULLY PERUSED THE EVIDENCES PLACED ON RECORD, I.E. DECLARATION OF THE GIFT MADE B Y SHRI R.N.JALU, COPY OF BANK ACCOUNT OF BANK OF BARODA AN D THE CONFIRMATION FILED BY THE DONOR. VIDE LETTER DATED 30/04/2007 S ENT BY A REGISTERED POST TO THE ASSESSING OFFICER IT WAS CONFIRMED THAT THE FATHER HAD MADE A GIFT OF RS.3,50,000/- BY D.D. OF BANK OF BARODA ON 02/09/2004 AND THE SAID GIFT WAS MADE TO SON BECAUSE HE WAS IN NEED OF MONEY IN HIS CONSTRUCTION BUSINESS. IT WAS ALSO INFORMED THAT THE SAID DONOR DID NOT HAVE TAXABLE INCOME, THEREFORE, INCOME-TAX RETURNS WERE NOT FILED. THE ASSESSEE HAS ALSO FURNISHED SALE AGREEMENT OF THE P ROPERTIES SOLD BY THE SAID DONOR TO DEMONSTRATE THAT BEFORE THE DATE OF G IFT THE DONOR HAD FUNDS IN HIS HAND OUT OF WHICH THE IMPUGNED GIFT WAS MADE . 6. THE BASIC REASON FOR THE SAID DISALLOWANCE WAS T HE TIME GAP BETWEEN THE SALE OF THE PROPERTY AND THE GIFT MADE. AS PER THE COPY OF THE BANK ACCOUNT THERE WERE TWO WITHDRAWALS RESPECT IVELY OF RS.2 LACS AND RS.1.5 LACS ON 20/05/2004 & 02/09/2004. HOWEVE R, THE GIFT WAS MADE ON 02/09/2004. THE AUTHORITIES BELOW WERE OF THE VIEW THAT THE SAID WITHDRAWALS COULD NOT BE LINKED WITH THE DD TH ROUGH WHICH THE GIFT WAS MADE. THE LEARNED CIT(APPEALS) HAS HELD THAT T HERE WAS NO RATIONALE THAT A 70 YEARS OLD PERSON WOULD KEEP A C ASH OF RS.3,50,000/- IN HAND FOR FEW MONTHS AFTER WITHDRAWING FROM THE BANK . WE ARE NOT INCLINED TO ACCEPT A PRESUMPTIVE STORY OF THE REVEN UE DEPARTMENT. ITA NO.4044/AHD /2008 SHRI LAXMANBHAI RAMBHAI JALU VS. ASST.CIT ASST.YEAR - 2005-06 - 5 - THERE WERE FEW QUESTIONS WHICH ARE REQUIRED TO BE P ROPERLY ANSWERED BY THE DONEE AS PRESCRIBED UNDER THE STATUTE. FIRST I S THE IDENTITY OF A PERSON AND IN THIS CASE, THE IDENTITY HAS NOT BEEN DISPUTE D BEING THE DONOR IS THE FATHER OF THE ASSESSEE. NEXT IS THE VERIFICATION O F THE GIFT AND IN THIS REGARDS SUMMONS WERE ISSUED AND THOSE WERE DULY ACK NOWLEDGED BY THE ASSESSEES FATHER AND A REPLY IN HIS BEHALF WAS FUR NISHED TO THE ASSESSING OFFICER. THEREFORE, THE IDENTITY AS ALSO THE EXIS TENCE OF THE DONOR WAS ESTABLISHED BY THE ASSESSEE. NEXT IS THE CAPACITY OR THE CREDITWORTHINESS OF THE DONOR. IN THIS REGARD THE IMMEDIATE SOURCE OF THE GIFTED AMOUNT WAS THE SALES PROCEEDS OF THE PROPERTIES. FROM THE SIDE OF THE ASSESSEE RELEVANT SALE AGREEMENTS WERE PLACED BEFORE THE AUT HORITIES BELOW AND THOSE SALE AGREEMENTS HAVE NOT BEEN DOUBTED BY THE ASSESSING OFFICER. WHICH MEANS THAT PRIOR TO THE DATE OF THE GIFT THE DONOR HAD FUNDS IN HIS HAND. IT IS ALSO PLACED ON RECORD THAT THE PROPERT IES IN QUESTION WERE SOLD IN THE MONTH OF AUGUST-2003 AND JUNE-2004 AND THE MONEY WAS DEPOSITED IN THE BANK (BANK OF BARODA) OUT OF WHICH THE GIFT WAS MADE. THESE EVIDENCES WERE NOT FOUND TO BE INCORRECT, THE REFORE, THE AVAILABILITY OF THE FUNDS WITH THE DONOR HAS ALSO BEEN ESTABLISH ED. IN SUCH TYPE OF CASES, GENERALLY A QUESTION HAS BEEN RAISED THAT WH ETHER THERE WAS ANY RELATIONSHIP BETWEEN THE DONOR AND DONEE. AS FAR A S THE PRESENT CASE IS CONCERNED, THIS QUESTION HAD A STRAIGHT ANSWER THAT YES THAT IN FACT THE RELATIONSHIP BETWEEN THE DONOR AND THE DONEE IS A F ATHER AND A SON RELATIONSHIP. IN SUPPORT OF THESE CONTENTIONS, A DECISION OF HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. SURESH KUMAR KAKA R REPORTED AT [2010] 324 ITR 321(DELHI) HAS BEEN PLACED ON RECORD, WHER EIN THE RELEVANT PORTION IS AS UNDER: ITA NO.4044/AHD /2008 SHRI LAXMANBHAI RAMBHAI JALU VS. ASST.CIT ASST.YEAR - 2005-06 - 6 - HELD, DISMISSING THE APPEAL, THAT IT WAS AN ADMITT ED POSITION THAT THE GIFTS WERE MADE BY THE MOTHER TO THE SON. WITH REGARD TO THE CREDITWORTHINESS, THE ASSESSEE HAD BEEN ABLE TO DIS CHARGE THE ONUS CAST UPON HIM BY FURNISHING THE BANK STATEMENT OF H IS MOTHER (DONOR) AS ALSO THE CONFIRMATION CERTIFICATE FROM T HE MOTHER CONFIRMING THE GIFTS. ONCE THE ASSESSEE HAD DISCHA RGED THE PRIMARY ONUS, WHICH WAS CAST UPON THE ASSESSEE, IT WAS INCUMBENT UPON THE ASSESSING OFFICER TO PROVE ON THE BASIS OF COGENT EVIDENCE THAT THE TRANSACTION WAS NOT GENUINE. THE RE WAS NO SUCH EVIDENCE. THE CONCLUSIONS OF THE ASSESSING OFFICER AND THE COMMISSIONER (APPEALS) WITH REGARD TO THE GENUINENE SS OF THE TRANSACTIONS WERE MERELY CONJECTURAL AND WERE BASED ON SURMISES AND ASSUMPTIONS. SUCH CONJECTURES AND ASSUMPTIONS COULD NOT TAKE THE PLACE OF PROOF, ONCE THE ASSESSEE HAD DISC HARGED THE PRIMARY BURDEN WHICH HAD BEEN CAST UPON HIM. THE T RIBUNAL HAD CORRECTLY CONCLUDED THAT THE AUTHORITIES BELOW AND IGNORED THE FACT THAT THERE WAS A BLOOD RELATIONSHIP (MOTHER-SON) BE TWEEN THE DONOR AND THE DONEE; THAT GIFTS WERE NORMALLY MADE BY PARENTS TO CHILDREN THROUGH LOVE AND AFFECTION AND DID NOT NEC ESSARILY REQUIRE ANY PARTICULAR OCCASION; THAT THE GIFTS IN THE PRES ENT CASE WERE ALL MADE BY CHEQUES AND THROUGH BANKING CHANNELS. THE TRIBUNAL HELD THAT WHEN THE IDENTITY AND THE CAPACITY WERE P ROVED BEYOND DOUBT AND THE SOURCE OF THE GIFTS WAS THE MOTHER, T HERE WAS NO QUESTION OF MAKING THE ADDITION UNDER SECTION 68 OF THE ACT. THE FINDINGS RECORDED BY THE TRIBUNAL DID NOT SUFFER FR OM ANY PERVERSITY. 6.1. IN THE LIGHT OF THE ABOVE DECISION AND UNDER T HE PECULIARITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE WHEN THE DONOR IS FATHER AS ALSO THE EVIDENCES PLACED ON RECORD, WE ARE OF THE VIEW THAT THE ADDITION U/S.68 OF THE I.T.ACT WAS NOT PROPER, HENCE, DIRECT TO DELETE THE ADDITION. THIS GROUND IS, THEREFORE, ALLOWED. 7. GROUND NO.3 READS AS UNDER: ITA NO.4044/AHD /2008 SHRI LAXMANBHAI RAMBHAI JALU VS. ASST.CIT ASST.YEAR - 2005-06 - 7 - 3. LR. A.O. HAS ERRED IN LAW AND ON FACTS TO ADD A N AMOUNT OF RS.77,500/- ESTIMATING EXPENSES OF RS.2,04,000/- AS AGAINST SHOWN BY THE APPELLANT AT RS.1,26,500/-. 7.1. IN RESPECT OF ABOVE GROUND, THE OBSERVATION OF THE ASSESSING OFFICER WAS THAT THE ACTUAL WITHDRAWAL FOR HOUSEHOL D DISCLOSED BY THE ASSESSEE AT RS.1,26,500/- CONSISTING SIX FAMILY MEM BERS, I.E. SELF, WIFE, SON, DAUGHTER-IN-LAW, GRANDDAUGHTER AND GRANDSON. AS PER ASSESSING OFFICER, CONSIDERING THE STANDARD OF LIVING AS ALSO THE COST OF LIVING IN SURAT THE SAID HOUSEHOLD WITHDRAWALS WERE NOT SUFFI CIENT. THE ASSESSING OFFICER HAS ISSUED A SHOW-CAUSE TO ESTIMATE THE HOU SEHOLD AT RS.2,04,000/-. THE ASSESSING OFFICER HAS ESTIMATED RS.3,000/- P.M. PER ADULT AND RS.2,000/- P.M. PER MINOR AND ACCORDINGLY DIFFERENCE OF RS.77,500/- WAS TAXED. 7.2. WHEN THE MATTER WAS DISCUSSED BEFORE THE LE ARNED CIT(APPEALS), THE ACTION OF THE ASSESSING OFFICER WAS SUSTAINED. 8. BEFORE US, AT THE OUTSET, THE LEARNED AUTHORISED REPRESENTATIVE MR.RAJESH M.UPADHYAY HAS VEHEMENTLY CONTESTED THAT THE VERY BASIS FOR ESTIMATION OF HOUSE-HOLD EXPENDITURE WAS FACTUALLY INCORRECT BECAUSE AS PER THE FAMILY CHART PROVIDED TO THE ASSESSING OFFI CER, THE FAMILY OF THE ASSESSEE CONSISTED FOUR MEMBERS ONLY. IN THIS REGA RD, THE LEARNED AUTHORISED REPRESENTATIVE HAS REFERRED PAGE NO.71 O F THE COMPILATION THROUGH WHICH IT WAS INFORMED THAT THE WITHDRAWALS SHOWN WERE ADEQUATE AND SOME OF THE WITHDRAWALS HAVE ALSO BEEN SHOWN IN AN ANOTHER FILE OF A FAMILY MEMBER. ON HEARING THE S UBMISSIONS OF BOTH THE ITA NO.4044/AHD /2008 SHRI LAXMANBHAI RAMBHAI JALU VS. ASST.CIT ASST.YEAR - 2005-06 - 8 - SIDES SINCE A VERIFICATION IN RESPECT OF THE TOTAL NUMBER OF FAMILY MEMBERS HAS NOT CORRECTLY BEEN DONE BY THE ASSESSIN G OFFICER AND AS PER THE ALLEGATION IT WAS WRONGLY MENTIONED, THEREFORE, UNDER THESE CIRCUMSTANCES WE DEEM IT PROPER TO RESTORE THIS GRO UND BACK TO THE STAGE OF THE ASSESSING OFFICER TO VERIFY THE CORRECT FACT UAL POSITION AND ASSESS THE HOUSEHOLD EXPENDITURE ACCORDINGLY. FOR STATIS TICAL PURPOSES, THIS GROUND MAY BE TREATED AS ALLOWED. 9. GROUND NO.4 READS AS UNDER: 4. LR.A.O. DISALLOWED 25% OF EXPENSES OF RS.2,05,7 97/- AS APPEARING IN PARA (6) OF ASSESSMENT ORDER, CONSIDER ING NOT INCOME RETURNED BY THE APPELLANT OF RS.13,84,840/-, AMOUNT PAID OF RS.45,000/- I.E. ON AVERAGE OF RS.3,750/- P.M. M AY NOT BE MORE. REPAIRS AND MAINTENANCE EXPENSES SHOWN AT RS.74,101 /- SUPPORTED BY VOUCHERS AND BILLS MAY NOT BE MORE. E XPENSES OF RS.2,05,797/- BEING SUPPORTED BY BILLS AND VOUCHERS AND CERTIFIED BY AUDITOR AS FOR BUSINESS PURPOSE, ADHOC DISALLOWA NCE OF 25% OF THE SAME IS NOT JUSTIFIED. 9.1. IT WAS OBSERVED BY THE ASSESSING OFFICER THAT THERE WERE CERTAIN EXPENSES, SUCH AS, PETROL EXPENSES, TELEPHONE EXPE NSES, MISCELLANEOUS EXPENSES, OFFICE EXPENSES, ETC. WHICH WERE NOT PROP ERLY VOUCHED OR THE BILLS HAVE NOT BEEN PROPERLY MAINTAINED. 25% OF TH E TOTAL SUM OF RS.2,05,797/- WAS CALCULATED FOR DISALLOWANCE OF RS .51,450/- WHICH WAS HELD AS NON-BUSINESS EXPENDITURE OR EXPENDITURE FOR PERSONAL PURPOSES. THE LEARNED CIT(APPEALS) HAS CONSIDERED THE SUBMISS IONS AND REDUCED THE DISALLOWANCE AS PER THE FOLLOWING PARAGRAPH:- 18. I HAVE CAREFULLY CONSIDERED THE VIEW TAKEN BY THE AO AS ALSO THE SUBMISSIONS MADE BY THE AR. I FIND THAT THE ACCOUNT ING EXPENSES AND ITA NO.4044/AHD /2008 SHRI LAXMANBHAI RAMBHAI JALU VS. ASST.CIT ASST.YEAR - 2005-06 - 9 - THE REPAIRS AND MAINTENANCE EXPENSES WERE OF RS 45, 000 AND RS 74,101, WHICH WERE QUITE SUBSTANTIAL COMPARED TO TH E TOTAL TURNOVER AND ALSO IN COMPARISON WITH THE EXPENDITURE INCURRE D UNDER THE OTHER HEADS IN THE IMMEDIATELY PRECEDING YEAR. THE ACCOUN TING EXPENSES WOULD HAVE BEEN PAID BY CHEQUES AND PROPER EVIDENCE SHOULD HAVE BEEN FURNISHED. UNFORTUNATELY, THE ASSESSEE WAS UNA BLE TO FURNISH ANY EVIDENCE BEFORE THE AO. EVEN THOUGH THE ASSESSEE'S BOOKS OF ACCOUNT MAY HAVE BEEN AUDITED, AND EVEN THOUGH THE EXPENSES MAY HAVE BEEN COMPARABLE TO THE EXPENSES INCURRED IN TH E EARLIER YEAR, YET IT WAS IMPERATIVE FOR THE ASSESSEE TO ESTABLISH, FI RSTLY THAT ALL THE STERNS DEBITED UNDER THE SAID HEADS WERE GENUINE AN D SECONDLY THAT THEY WERE INCURRED WHOLLY AND EXCLUSIVELY FOR THE P URPOSE OF BUSINESS. THIS WAS NOT DONE AND THE AO WAS UNABLE TO VERIFY S UCH EXPENSES. HE WAS THEREFORE, FULLY JUSTIFIED IN DISALLOWING 25% O F THE ACCOUNTING EXPENSES AND REPAIRS EXPENSES. 18.1 AS REGARDS THE MISCELLANEOUS EXPENSES OF RS 6, 010 AND OFFICE EXPENSES OF RS 6,577, IT IS WELL KNOWN THAT THESE E XPENSES ARE USUALLY INCURRED ON VERY SMALL ITEMS ON THE DAY-TO-DAY RUNN ING OF EVERY BUSINESS. THE. PERSONS TO WHOM SUCH AMOUNTS ARE PAI D NEITHER HAVE ANY BANK ACCOUNT NOR THEY ARE IN ANY POSITION TO RA ISE BILLS OR ISSUE ANY RECEIPT. MOST OF SUCH EXPENSES ARE INCURRED IN CASH AND IT IS THE ASSESSEE WHO HAS TO PREPARE SELF-MADE VOUCHERS TO A CCOUNT FOR SUCH EXPENSES. IF SUCH FACTS ARE ACCEPTED THEN IT WILL B E SEEN THAT THERE WAS NO JUSTIFICATION IN DISALLOWING THE MISCELLANEOUS A ND OFFICE EXPENSES. THE ADDITION OF RS 6,010 AND RS 6,577 WOULD STAND D ELETED. 18.2 COMING TO TELEPHONE AND PETROL EXPENSES AS A LSO DEPRECIATION CLAIMED DP MOTOR CAR(S) I HAVE CAREFULLY CONSIDERED BOTH THE P OSITIONS. I AM OF THE VIEW THAT HOWEVER MUCH IT MAY BE CLAIME D THAT ASSETS SUCH AS VEHICLES AND TELEPHONES ARE PROCURED AND UTILIZ ED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS YET, THE EL EMENT OF PERSONAL USE OF SUCH ASSETS CANNOT BE ENTIRELY RULED OUT, ES PECIALLY WHEN NO RECORD OF THEIR USAGE IS MAINTAINED. I THEREFORE H OLD THAT THE AO WAS FULLY JUSTIFIED IN DISALLOWING A PART OF THE EXPENS ES CLAIMED ON TELEPHONES AND VEHICLES, DEPRECIATION CLAIMED ON MO TOR CAR. HOWEVER, THE DISALLOWANCE @ 25% WAS ON THE HIGHER SIDE. IT WOULD MEET THE END OF JUSTICE AND FAIR PLAY IF THE RATE OF DISALLO WANCE IS REDUCED TO 20%. THE AO IS DIRECTED TO TAKE ACTION ACCORDINGL Y. ITA NO.4044/AHD /2008 SHRI LAXMANBHAI RAMBHAI JALU VS. ASST.CIT ASST.YEAR - 2005-06 - 10 - 10. ON HEARING THE SUBMISSIONS OF BOTH THE SIDES, W E FIND NO FALLACY IN THE REASONING GIVEN BY THE LEARNED CIT(APPEALS), TH EREFORE, THE PART RELIEF GRANTED BY HIM IS HEREBY AFFIRMED. THIS GR OUND IS DISMISSED. 11. IN THE RESULT, APPEAL OF THE ASSESSEE IS TREATE D AS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER SIGNED, DATED AND PRONOUNCED IN THE COURT ON 31/ 5 /2011. ( D.C. AGRAWAL) ( MUKUL KR. SH RAWAT ) ACCOUNTANT MEMBER JUDICIAL MEMBE R AHMEDABAD; DATED 31 / 05 /2011 T.C. NAIR, SR. PS COPY OF THE ORDER FORWARDED TO : 1. THE ASSESSEE. 2. THE DEPA RTMENT. 3. THE CIT CONCERNED. 4. THE LD. CIT(A PPEALS)-II, SURAT 5. THE DR, AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT.REGISTRAR), ITAT, AHMEDABAD 1. DATE OF DICTATION..30/5/2011 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 30/5/2011 OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S .. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S 31/5/2011. 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 31/5/2011 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 9. DATE OF DESPATCH OF THE ORDER