Shri Manish Nagar, Indore V. THE DCIT 5(1), Indore

ITA 416/IND/2016

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 5825 (ITAT-INDORE)
• Duration Of Justice: 2 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-07-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 25-04-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R P MOURYA
• Assessee Lawyers: S N AGRAWAL
• Keywords: Depreciation; Opportunity of being heard; Bad and doubtful debts

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE (SINGLE MEMBER CASE) BEFORE SHRI N.S. SAINI, HONBLE ACCOUNTANT MEMBER ITA NO. 416/IND/2016 (ASST. YEAR : 2011-12) SHRI MANISH NAGAR, 63, BAIKUNTH DHAM COLONY, INDORE. VS. DY. CIT, 5(1), INDORE. PAN NO. AANPN4709J (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI S.N.AGRAWAL, C.A. DEPARTMENT BY : SHRI R.P.MOURYA, - DR DATE OF HEARING : 04/07/2016. DATE OF PRONOUNCEMENT : 04/07/2016. O R D E R THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-II, INDORE, DA TED 30.11.2015. 2. IN GROUND NO.1 OF THE APPEAL, THE GRIEVANCE OF T HE ASSESSEE IS THAT THE LD. CIT(A) ERRED IN CONFIRMING THE DISALLO WANCE OF BAD DEBTS CLAIMED BY THE ASSESSEE AT RS. 19,45,171/-. 3. I HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE PERU SED THE ORDERS OF THE LOWER AUTHORITIES AND MATERIAL AVAILABLE ON REC ORD. IN THE INSTANT CASE, THE ASSESSEE CLAIMED BAD DEBT OF RS. 19,45,17 1/-. ACCORDING TO THE AO, THE ASSESSEE WAS HAVING TRANSACTIONS WITH T HE PARTIES WHOSE 2 SHRI MANISH NAGAR, INDORE VS. DY. CIT, 5(1), INDROE I.T.A.NO. 416/IND/2016 A.Y. 2011-12 DEBTS HAS BEEN CLAIMED AS BAD DEBT. THEREFORE, THE AO DISALLOWED THE DEDUCTION FOR BAD DEBT TO THE ASSESSEE, WHICH WAS C ONFIRMED IN APPEAL BY THE LD. CIT(A) . 4. BEFORE ME, THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE SUBMITTED THAT THOUGH THE ASSESSEE WAS HAVING TRANS ACTIONS WITH THE PARTIES WHOSE AMOUNTS HAVE BEEN CLAIMED AS BAD DEBT , BUT THESE AMOUNTS PERTAINED TO BILLS WHERE SMALL AMOUNTS REMA INED TO BE UNPAID AND WERE CLAIMED AS DEDUCTION UNDER THE HEAD BAD DE BT AS THEY WERE NO LONGER RECOVERABLE. 5. DURING THE COURSE OF HEARING OF THE APPEAL, WHEN THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE WAS ASKED TO SUBMIT THE DETAILS OF THE BILLS WHOSE AMOUNTS WERE NOT REALIZE D BY THE ASSESSEE AND CLAIMED AS BAD DEBT, THE LD. AUTHORIZED REPRESE NTATIVE OF THE ASSESSEE SUBMITTED THAT THE ISSUE MAY BE REMANDED B ACK TO THE FILE ,OF AO AND HE SHALL BE IN A POSITION TO SUBMIT THE DETA ILS BEFORE HIM AND HE SHALL AFTER CONSIDERING THE SAME DECIDE THE ISSUE A FRESH. 6. THE LD. DEPARTMENTAL REPRESENTATIVE HAD NO OBJEC TION TO THIS SUBMISSION OF THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE. I, THEREFORE, SET-ASIDE THE ORDERS OF THE LOWER AUTHOR ITIES AND REMAND THE MATTER BACK TO THE FILE OF AO FOR ADJUDICATION OF T HE ISSUE AFRESH AFTER ALLOWING REASONABLE AND PROPER OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 7. GROUND NOS. 2 AND 3 OF THE APPEAL ARE DIRECTED A GAINST THE ORDER OF CIT(A) CONFIRMING THE ADDITION MADE ON ACCOUNT O F DISALLOWANCE OF 3 SHRI MANISH NAGAR, INDORE VS. DY. CIT, 5(1), INDROE I.T.A.NO. 416/IND/2016 A.Y. 2011-12 COMMISSION PAYMENT OF RS. 3 LAKHS TO SHRI V.D.NAGAR AND RS. 2 LAKHS TO SMT. VARSHA NAGAR. 8. I HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE PERU SED THE ORDERS OF THE LOWER AUTHORITIES AND MATERIAL AVAILABLE ON REC ORD. 9. BRIEF FACTS OF THE CASE ARE THAT THE AO OBSERVED THAT THE ASSESSEE NEITHER FILED DETAIL NOR GIVEN JUSTIFICATION FOR MA KING PAYMENT OF COMMISSION. THE ASSESSEE FAILED TO FILE THE JUSTIFI CATION AND MODE OF PAYMENT AND ALSO THE SERVICES RENDERED BY THE TWO PERSONS, WHO WERE RELATIVES OF THE ASSESSEE. THEREFORE, HE DISALLOWED THE DEDUCTION TO THE ASSESSEE. 10. ON APPEAL, THE LD. CIT(A) OBSERVED THAT THE ASS ESSEE FAILED TO FILE COMPLETE JUSTIFICATION AND NATURE OF SERVICES RENDE RED BY THESE TWO PERSONS TO THE ASSESSEE. THEREFORE, HE CONFIRMED TH E ORDER OF THE AO. 11. BEFORE ME ALSO, THE LD. AUTHORIZED REPRESENTATI VE OF THE ASSESSEE REITERATING THE SUBMISSION MADE BEFORE THE LOWER AU THORITIES COULD NOT FILE ANY DETAILS SHOWING THE SERVICES RENDERED BY T HE TWO PERSONS TO WHOM THE COMMISSION WAS PAID. 12. IN ABSENCE OF THE SAME, I FIND NO GOOD REASON T O INTERFERE WITH THE ORDERS OF THE LOWER AUTHORITIES, WHICH ARE HERE BY CONFIRMED AND GROUNDS OF THE ASSESSEE ARE DISMISSED. 13. IN GROUND NO. 4 OF THE APPEAL, THE GRIEVANCE OF THE ASSESSEE IS THAT THE LD. CIT(A) ERRED IN CONFIRMING THE DISALLO WANCE OF RS. 24,325/- OUT OF VEHICLE RUNNING AND MAINTENANCE EXPENSES, RS . 10,000/- OUT OF 4 SHRI MANISH NAGAR, INDORE VS. DY. CIT, 5(1), INDROE I.T.A.NO. 416/IND/2016 A.Y. 2011-12 TRAVELLING EXPENSES AND OFFICE EXPENSES AND RS. 5,0 00/- OUT OF TELEPHONE EXPENSES TOTALLING TO RS. 39,325/-. 14. I HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE PER USED THE MATERIAL AVAILABLE ON RECORD. 15. BRIEF FACTS OF THE CASE ARE THAT THE AO MADE DI SALLOWANCE OF RS. 48,325/- ON ACCOUNT OF VEHICLE RUNNING AND MAINTENA NCE, PETROL AND DEPRECIATION FOR PERSONAL ELEMENTS INVOLVED. FURTHE R, THE DISALLOWANCE WAS MADE BY THE AO AT 20% OF THE TOTAL EXPENSES. TH E LD. CIT(A) RESTRICTED THE DISALLOWANCE TO 10% OF THE TOTAL EXP ENSES. 16. BEFORE ME, THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE SUBMITTED THAT AD HOC DISALLOWANCE OF EXPENDITURE W AS NOT JUSTIFIED. I FIND THAT WHILE MAKING THE DISALLOWANCE UNDER THE H EAD VEHICLE REPAIR AND RUNNING EXPENSES AND TELEPHONE EXPENSES, THE AO AS WELL AS CIT(A) HAS NOT POINTED OUT WHICH OF THE SPECIFIC EX PENDITURE WERE INCURRED BY THE ASSESSEE FOR PERSONAL USE AND NOT I NCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS OF THE ASSE SSEE. IN ABSENCE OF THE SAME, AD HOC DISALLOWANCE OF EXPENDITURE IN THI S MANNER CANNOT BE SUSTAINED IN LAW. I, THEREFORE, SET-ASIDE THE ORDER S OF THE LOWER AUTHORITIES AND VACATE THE DISALLOWANCE OF RS. 39,3 25/-. 17. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED FOR STATISTICAL PURPOSES. 5 SHRI MANISH NAGAR, INDORE VS. DY. CIT, 5(1), INDROE I.T.A.NO. 416/IND/2016 A.Y. 2011-12 ORDER PRONOUNCED IN THE COURT AT THE CLOSE OF THE H EARING ON MONDAY, THE 4 TH DAY OF JULY, 2016 AT INDORE. SD/- (N.S.SAINI) ACCOUNTANT MEMBER DATED : 4TH JULY, 2016. CPU COPY TO: 1. THE ASSESSEE. 2. THE REVENUE. 3. THE CIT 4. THE CIT(A) 5. THE D.R. 6. GUARD FILE. BY ORDER ASSISTANT REGISTRAR I.T.A.T., INDORE 6 SHRI MANISH NAGAR, INDORE VS. DY. CIT, 5(1), INDROE I.T.A.NO. 416/IND/2016 A.Y. 2011-12