ITO 24(2)(4), MUMBAI V. MILAN J AMAT, MUMBAI

ITA 4260/MUM/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 88465 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 9 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-03-2015
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 03-03-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 25-05-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: VIVEK BATRA
• Keywords: Corroborative evidences
• Section: 68

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B MUMBAI , BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER ITA NO.4260/MUM/2011 (A.Y.2007-08) INCOME TAX OFFICER WARD -24(2)(4) RN 605, 6 TH FLOOR C/13, PRATYAKSHAKAR BHAVAN BANDRA KURLA COMPLEX BANDRA (E) MUMBAI-51. (APPELLANT ) VS. MILAN J. AMAT 306 DHARAMARAJ, VISHAL NAGAR MARVE ROAD, MALAD (W) MUMBAI 400 064. GIR NO./PAN : AGCPA 2285 K (RESPONDENT) APPELLANT BY : SHRI VIVEK BATRA RESPONDENT BY : NONE DATE OF HEARING : 03 /0 3 /2015 DATE OF PRONOUNCEMENT : 03 /0 3 /2015 ORDER PER CHANDRA POOJARI, A.M: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 28.3.2011 PASSED BY THE LD. CIT(A) FOR THE ASSESSME NT YEAR 2007-08. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS.9,82,27 7/- ON ACCOUNT OF UNVERIFIED CREDITORS BY IGNORING THE FACT THAT THE ASSESSEE HA S FAILED TO PROVIDE BASIC 2 ITA NO.4260/M UM/2011 INFORMATION WITH REGARD TO SUNDRY CREDITORS VIZ. AD DRESS, PAN AND CONFIRMATION. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS.2,50,28 6/- ON ACCOUNT OF UNVERIFIED TOUR AND TRAVEL EXPENSES AND TELEPHONE EXPENSES BY IGNORING THE FACT THAT THE ASSESSEE HAS FAILED TO PROVE THE GENUINENESS OF EXP ENSES AND RELATION OF EXPENSES WITH THE BUSINESS. 2. NONE APPEARED FOR THE ASSESSEE. WE TAKE UP THE C ASE TO DECIDE ON MERITS AFTER HEARING THE LD. DR. 3. THE FACTS RELATING TO FIRST GROUND ARE THAT THE AO MADE DISALLOWANCE UNDER SECTION 68 AT 10% OF TOTAL SUNDRY CREDITORS O F RS.98,22,774/- WORKED OUT AT RS.9,82,277/- APPEARING IN THE BALANC E SHEET AS THE ASSESSEE FAILED TO OFFER ANY EXPLANATION ABOUT NATU RE AND SOURCES OF SUNDRY CREDITORS APPEARING IN HIS BOOKS OF ACCOUNT. HOWEVER, ON APPEAL LD. CIT(A) OBSERVED THAT THE AO HAS NOT MADE ANY ENQUIR IES TO FIND OUT ANY OF THE TRADE CREDITORS TO BE NONEXISTENT OR BOGUS, HE COULD HAVE MADE THE ADDITION FOR THE WHOLE AMOUNT OF SUNDRY CREDITORS A ND NOT PREFER TO MADE ADDITIONS OF ONLY 10% TOTAL SUNDRY CREDITORS APPEAR ING IN THE BALANCE SHEET. ACCORDINGLY HE DELETED THE ENTIRE ADDITION M ADE BY AO. AGAINST THIS, THE REVENUE IS IN APPEAL BEFORE US. 4. WE HAVE HEARD THE LD. DR. UNDER SECTION 68 OF TH E ACT, THE AO COULD MAKE ADDITION IN RESPECT OF ANY CREDITS FOUND CREDI TED IN THE BOOKS OF THE ASSESSEE, MAINTAINED FOR ANY PREVIOUS YEAR, IF THE ASSESSEE FAILED TO OFFER AN EXPLANATION, REGARDING THE NATURE AND SOURCE THE REOF, OR EXPLANATION OFFERED BY THE ASSESSEE IS FOUND TO BE UNSATISFACTO RY IN THE OPINION OF AO. BUT IN THE PRESENT CASE THE AO WITHOUT CARRYING ON NECESSARY ENQUIRY 3 ITA NO.4260/M UM/2011 ADDED 10% OF TOTAL SUNDRY CREDITORS APPEARING IN TH E BALANCE SHEET IN AN ADHOC MANNER WHICH IS NOT IN ACCORDANCE WITH THE PR OVISIONS OF THE ACT. IN OUR OPINION, THE AO WITHOUT VERIFYING WHETHER ENTIR E CREDITS WERE EMERGED IN THE ASSESSMENT YEAR UNDER CONSIDERATION OR NOT M ADE ADDITION ON ADHOC BASIS WHICH IS CONTRARY TO THE PROVISIONS OF SECTIO N 68 OF THE ACT. ACCORDINGLY, WE ARE OF THE OPINION THAT DELETION OF ADDITION MADE BY CIT(A) IS JUSTIFIED. THE ORDER OF LD. CIT(A) ON THIS ISSUE IS CONFIRMED. THUS THE FIRST GROUND IS REJECTED. 5. FACTS RELATING TO THE SECOND GROUND ARE AO DISA LLOWED 20% OF TOUR AND TRAVELLING EXPENSES AND TELEPHONE AND MOBILE EX PENSES WORKED OUT AT RS.2,50,286/- ON THE REASON THAT ASSESSEE HAS FAILE D TO PROVE THE GENUINENESS OF THE EXPENSES INCURRED BY THE ASSESSE E. ON APPEAL, LD. CIT(A) DELETED THE ADDITION ON THE REASON THAT THER E WAS NO ADVERSE MATERIAL AVAILABLE ON RECORD THAT COULD WARRANT THE IMPUGNED ADDITION. AGAINST THIS THE REVENUE IS IN APPEAL BEFORE US. 6. WE HAVE HEARD THE LD. DR AND PERUSED THE MATERIA L ON RECORD. IN THIS CASE THE AO DID NOT PINPOINT ANY EXPENDITURE WHICH IS IN THE NATURE OF PERSONAL EXPENSES OR INFLATED AND IN THESE CIRCUMST ANCES ADHOC DISALLOWANCE IS NOT POSSIBLE TO THE EXTENT OF 20%. HOWEVER, ON ACCOUNT OF FAILURE ON PART OF THE ASSESSEE TO FILE NECESSARY D ETAILS OF EXPENDITURE WITH SUPPORTING EVIDENCE, WE ARE OF THE OPINION THAT CER TAIN DISALLOWANCE IS NECESSARY. ACCORDINGLY, WE RESTRICT THE DISALLOWANC E TO 10% OF TOURS AND TRAVELLING EXPENSES, TELEPHONE AND MOBILE EXPENSES INSTEAD OF 20% MADE BY AO. THIS GROUND IS PARTLY ALLOWED. 4 ITA NO.4260/M UM/2011 7. IN THE RESULT, ITA NO.4260/MUM/11 BY THE REVENUE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 03/03/2015 ! ' # $%& 03/03/2015 ' SD/ - SD/ - ( / D. MANMOHAN ) ( / CHANDRA POOJARI ) / VICE PRESIDENT / ACCOUNTANT MEMBER MUMBAI; $% DATED 03/ 03/2015 . % . ./JV, SR. PS ()* ()* ()* ()* +*!) +*!) +*!) +*!) / COPY OF THE ORDER FORWARDED TO : 1. ,- / THE APPELLANT 2. (.,- / THE RESPONDENT. 3. / ( ) / THE CIT(A)- 4. / / CIT 5. *0' ()% , , / DR, ITAT, MUMBAI 6. '12 3 / GUARD FILE. % % % % / BY ORDER, .*) () //TRUE COPY// 4 44 4 / 5 5 5 5 6 6 6 6 (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI