Sh. Anil Arora, Amritsar. V. The Joint Commissioner of Income Tax, Amritsar.

ITA 406/ASR/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 5595 (ITAT-AMRITSAR)
• Duration Of Justice: 9 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-05-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 21-04-2017
• Assessment Year: 2013-2014
• Appeal Filed On: 29-07-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R AHUL DHAWANDR
• Keywords: Depreciation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR (SMC) BEFORE SMT. DIVA SINGH, JUDICIAL MEMBER I.T.A NO.406 (ASR)/2016 ASSESSMENT YEAR :2013-14 SHRI ANIL ARORA, VS. THE JCIT, 1151/2, GALI GUJJRAN, RANGE-II, KATRA BHAI SANT SINGH, AMRITSAR. AMRITSAR. PAN NO. AAWPA2685D (APPELLANT) (RESPONDENT) APPELLANT BY : NONE RESPONDENT BY : SHRI R AHUL DHAWAN,DR DATE OF HEARING : 21.04.2017 DATE OF PRONOUNCEMENT : 16.05.2017 ORDER THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE ASSAILING THE CORRECTNESS OF THE ORDER DATED 20.06.2016 OF CIT (A PPEALS)-I AMRITSAR PERTAINING TO 2013-14 ASSESSMENT YEAR ON VARIOUS GROUNDS. HO WEVER, AT THE TIME OF HEARING, NO-ONE WAS PRESENT ON BEHALF OF THE ASSESS EE AS THE OFFICE ASSOCIATE OF THE LD. AR DID NOT HAVE AUTHORITY TO ARGUE, ACCORDI NGLY, THE APPEAL IS BEING DECIDED AFTER HEARING THE LD. SR.DR, SPECIFICALLY O N GROUND NOS. 3 AND 4 WHICH READ AS UNDER : 3.THAT THE LD CIT(A) HAS GROSSLY ERRED IN CONF IRMING THE ADDITION OF RS.60000/- ON A/C OF SALARY PAYABLE. IN THIS CONNEC TION IT MAY BE POINTED OUT THIS AMOUNT REPRESENTED TO THE EXPENDIT URE OF THIS YEAR AND WAS CLEARLY ALLOWABLE AS THE SAME WAS PAID IN THE S UBSEQUENT YEAR. AS SUCH, THE WORTHY CIT(A) WAS NOT JUSTIFIED IN CONFIR MING THE ADDITION OF RS.60000/- AND THE ADDITION CONFIRMED IS NOT CALLED FOR AND THE SAME MAY BE DELETED. 4. THAT AGAIN THE LD CIT(A) HAS GROSSLY ERRED IN CO NFIRMING THE DISALLOWANCE OF EXPENSES @ 25% I.E. RS.94374/- OUT OF TOTAL CLAIM OF RS.359286/- ON A/C OF VARIOUS EXPENSES WHICH COMPRI SES OF DIWALI EXPENSES, MISC.EXPENSES, STAFF WELFARE, TELEPHONE, CAR EXPENSES, CAR DEPRECIATION AND CAR LOAN INTEREST. THE AUTHORITIES BELOW DID NOT APPRECIATE THAT ALL THESE EXPENSES RELATED TO BUSIN ESS. FURTHERMORE NO SPECIFIC INSTANCE OF ANY DISALLOWANCE HAS BEEN POIN TED OUT BY THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT P ROCEEDINGS AS IT WAS AN AUDIT CASE. AS SUCH THESE EXPENSES AS CLAIMED SHOUL D HAVE BEEN ALLOWED IN TOTO. ALTERNATIVELY, CONFIRMATION OF DISALLOWANCE @ 25% IS VERY HIGH & EXCESSIVE. FURTHER, THE LD CIT(A) DID NOT APPRECIAT E THAT IN MISC. EXPENSES THE DISALLOWANCE WAS MADE AT RS.9105/- AGAINST CLAIM OF RS.18210/-. EVEN ACCORDING TO THE AO THE DISALLOWANCE WORKS OUT TO R S.4550/- AND NOT RS.9105/-. THUS, THE ADDITION SUSTAINED IS VERY HIG H & EXCESSIVE LOOKING TO THE MAGNITUDE OF BUSINESS. 2 2. THE RELEVANT FACTS OF THE CASE ARE THAT THE ASSE SSEE IN THE YEAR UNDER CONSIDERATION DECLARED AN INCOME OF RS. 3,75,970/-. THE SAID RETURN WAS PICKED UP FOR SCRUTINY. THE ADDITION RELATABLE TO GROUND NO. 3 WAS MADE ON ACCOUNT OF THE FACT THAT THE ASSESSEE COULD NOT PLACE A PROPER EXPLANATION AS TO WHY RS. 60,000/- FROM THE SALARY PAYABLE SHOULD NOT BE DISA LLOWED. SIMILARLY, QUA THE ISSUE RELATABLE TO GROUND NO. 4 AS PER THE ASSESSME NT ORDER IS, IT IS NOTICED ADDITION HAS BEEN MADE ON THE GROUND THAT THE ASSES SEE WAS REQUIRED TO EXPLAIN WHY 25% OF CONVEYANCE EXPENSES, DIWALI EXPENSES, MI SCELLANEOUS EXPENSES, STAFF WELFARE EXPENSES AND CAR EXPENSES SHOULD NOT BE ADDED BACK AND 50% OF THE TELEPHONE EXPENSES CLAIMED. SINCE DESPITE OPPO RTUNITY, NO EXPLANATION WAS OFFERED, ADHOC DISALLOWANCE OF RS. 94,374/- WAS MAD E IN THE HANDS OF THE ASSESSEE. 3. THE ISSUE TRAVELED IN APPEAL BEFORE THE CIT (APP EALS) QUA THESE ADDITIONS. THE ASSESSEE AS PER RECORD HAS SUBMITTED AS UNDER : AS FAR AS THE ADDITION OF RS.60,000/- IS CONCERNED, THIS IS SALARY PAYABLE AT THE END OF THE YEAR TO THE EMPLOYEE WHICH WAS PAID SUBSEQUENTL Y. IT MAY BE SUBMITTED THAT THE SALARY PAID WAS ALSO ALLOWED SUBSEQUENTLY AND T HIS SALARY PAID IS RELATED TO BUSINESS AND THIS WAS PAID AS HE WAS WORKING AS SAL ESMAN AS SUCH THE SAME MAY BE ALLOWED. AS FAR AS THE DISALLOWANCES OF EXPENSES ARE CO NCERNED WHICH INCLUDES DIWALI EXPENSES, MISC. EXPENSES, STAFF WELFARE, TELEPHONE, CAR EXPENSES, CAR DEPRECIATION AND INTEREST ON CAR LOAN, THE DISALLOW ANCE HAS BEEN MADE ON ADHOC BASIS @ 25%. THIS DISALLOWANCE IS NOT CALLED FOR ES PECIALLY WHEN THE EXPENSES ARE FULLY VOUCHED AND THE BOOKS OF ACCOUNTS ARE AUDITED . BEFORE DISALLOWING THESE EXPENSES NO OPPORTUNITY WAS ALLOWED AND NO SPECIFIC INSTANCE OF DISALLOWANCE WAS EVER POINTED OUT BY THE A.O. THUS THE ADDITIONS ARE MADE PURELY ON THE BASIS OF SURMISES AND THE SAME IS NOT CALLED AND TH E SAME MAY BE DELETED. ALTERNATIVELY LOOKING TO THE NATURE OF THE BUSINESS NO DISALLOWANCE IS CALLED FOR AND ALTERNATIVELY IT IS PRAYED THAT DISALLOWANCE IS VERY HIGH & EXCESSIVE (EMPHASIS PROVIDED) 4. THE ASSESSEE AS PER RECORD HAD SPECIFICALLY RAIS ED GROUND NOS. 9 AND 11 BEFORE THE CIT (APPEALS) WHICH READ AS UNDER : 9. AGAIN THE A.O. HAS GROSSLY ERRED IN MAKING ADD ITION OF RS. 60,000/- ON ACCOUNT OF CASH SALARY PAYABLE, AS SUCH THUS ADDITION IS AL SO NOT AT ALL CALLED FOR AND THE SAME MAY BE DELETED. 11. AGAIN THE A.O. HAS GROSSLY ERRED IN MAKING THE ADHOC ADDITION OF RS. 94374/- OUT OF VARIOUS EXPENSES @25%. THE A.O DID NOT APPRECIATE THAT ALL THESE EXPENSES RELATED TO BUSINESS AND THE SAME ARE GENUINE, & AS SUCH THE SE EXPENSES SHOULD HAVE BEEN ALLOWED IN TOTO. A.O. HAS NOT POINTED OUT ANY REASO N FOR NOT ALLOWING THE SAME. ALTERNATIVELY THESE DISALLOWANCE OF EXPENSES ARE VE RY HIGH AND EXCESSIVE. 5. IT IS SEEN THAT THE CIT (APPEALS) DECIDED THESE ISSUES IN THE FOLLOWING MANNER : GROUND NO. 9: THE APPELLANT HAS FAILED TO EVEN PROVE THE AMOUNT O F SALARY PAYABLE. DETAILS OF PERSON TO WHOM SALARY IS PAYABLE AND WHEN WAS THE S AME PAID HAS NOT BEEN PRODUCED EVEN AT THIS STAGE. THUS THE ADDITION IS CONFIRMED. 3 GROUND NO. 11: THE DISALLOWANCE PF EXPENSES @ 25% IS REASONABLE AS THE ELEMENT OF PERSONAL USE CANNOT BE RULED OUT. THUS THE GROUND IS DISMISSED. 6. ON PERUSAL OF THE AFORESAID FINDING OF THE CIT (APP EALS), I AM OF THE VIEW THAT A NON-SPEAKING ORDER HAS BEEN PASSED. IT IS SEEN TH AT QUA THE SECOND ISSUE, THE ASSESSEE, AS PER ASSERTIONS MADE BEFORE THE CIT (AP PEALS), IS FOUND TO HAVE SUBMITTED THAT NO OPPORTUNITY WAS ALLOWED BY THE AS SESSING OFFICER BEFORE MAKING THE DISALLOWANCE. IT IS NOTED THAT THE SAID SUBMIS SION IS CONTRARY TO THE FINDING OF THE ASSESSING OFFICER, WHO IT IS NOTED, HAS HELD THAT N O EXPLANATION WAS OFFERED BY THE ASSESSEE. THUS, IN THE FACE OF THESE DIVERGENTLY O PPOSITE VIEW POINTS, THERE WAS A DEBATE WHICH NECESSARILY HAD TO BE ADDRESSED. IN T HE CIRCUMSTANCES, IT WAS INCUMBENT UPON THE LD. COMMISSIONER TO GIVE A CATEG ORICAL FINDING AND SETTLE THE CONTRADICTORY STAND. SINCE THE ISSUE IS BEING REST ORED BACK, AS EVEN OTHERWISE, THE IMPUGNED ORDER IS A NON-SPEAKING ORDER, IT IS DEEME D APPROPRIATE TO DIRECT THE LD. CIT (APPEALS) TO VERIFY THE CORRECTNESS OF THE ASSE SSEE'S CLAIM THAT THE SALARY PAYABLE WAS ULTIMATELY PAID OR NOT AND EVEN IF THE EXPENSES ARE TO BE DISALLOWED, THEN REASONABLE AND RATIONAL BASIS FOR ARRIVING AT AN ESTIMATE AS PER SETTLED LEGAL STANDARDS, SHOULD HAVE BEEN RESORTED TO. IT IS SEE N THAT NEITHER THE PAST HISTORY ON THE ISSUE IS FOUND DISCUSSED NOR, IT APPEARS ANY SP ECIFIC DEFECT HAS BEEN POINTED OUT BY THE ASSESSING OFFICER BEFORE MAKING THE DISA LLOWANCE. IT IS SEEN THAT THE ASSESSEE'S ACCOUNTS ARE AUDITED, HOWEVER, SINCE THE ISSUE IS BEING RESTORED TO THE FILE OF CIT (APPEALS), IT IS NOT APPROPRIATE TO GIV E ANY OBSERVATION AT THIS STAGE. THE ISSUES ARE LEFT OPEN. THE CIT (APPEALS) HAVING CO- TERMINUS POWERS AS THE ASSESSING OFFICER, CAN CALL FOR THE RECORDS AND DEC IDE THE SAME IN ACCORDANCE WITH LAW. THE SAID ORDER WAS PRONOUNCED IN THE OPEN COU RT ON THE DATE OF HEARING ITSELF. 7. IN THE RESULT, GROUND NOS. 3 AND 4 ARE RESTORED WITH THE AFORESAID OBSERVATIONS AND APPEAL OF THE ASSESSEE IS PARTLY A LLOWED. SD/- ( DIVA SINGH) JUDICIAL MEMBER DATED 16 TH MAY, 2017. POONAM/CHD COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR ASSTT. REGISTRAR ITAT, AMRITSAR. FIT FOR PUBLICATION SD/- (DIVA SINGH) JUDICIAL MEMBER