Raj Surendera And Associates, New Delhi V. ACIT, New Delhi

ITA 429/DEL/2011

• Counselvise Citation: 42920114 RSA 2011
• Duration Of Justice: 1 year(s) 10 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-12-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 19-11-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 25-01-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRISEILLA SINGEIT
• Assessee Lawyers: ASHWANI TANEJA
• Keywords: Period of limitation
• Section: 37(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : F NEW DELHI BEFORE SHRI RP TOLANI, JM AND SHRI J.SUDHAKAR REDDY, AM ITA NO. 429/DEL/2011 ASSESSMENT YEAR : 2006-07 RAJ SURENDRA AND ASSOCIATES VS. ACIT, CIRCLE 37(1) CHARTERED ACCOUNTANTS NEW DELHI 124, WORLD TRADE CENTRE, C.P. NEW DELHI 110 001 PAN: AAEFR 7955 B (APPELLANT) (RESPONDENT) APPELLANT BY:- SH.ASHWANI TANEJA, FCA RESPONDENT BY:- MS.PRISEILLA SINGEIT, SR.D.R. O R D E R PER J.SUDHAKAR REDDY, AM THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-XXVIII, NEW DE LHI DT. 01.10.2010 PERTAINING TO THE ASSESSMENT YEAR 2006-07 ON THE FO LLOWING EFFECTIVE GROUND. 1. THAT UNDER THE FACTS AND CIRCUMSTANCES, THERE I S NO LEGALITY AND JUSTIFICATION FOR MAKING AND SUSTAINING THE FOLLOWING DISALLOWANCES O UT OF FOLLOWING EXPENSES CLAIMED. HEAD CLAIMED BEFORE ASSESSING OFFICER IN RS. DISALLOWED BY ASSESSING OFFICER % IN RS. DISALLOWANCE SUSTAINED BY COMMISSIONER OF INCOME TAX (APPEALS) IN RS. STAFF SALARY 38,78,028 60 23,26,816 23 ,26,816 SERVICE TAX 3,51,387 100 3,51,387 3,51,387 ITA 429/DEL/11 PAGE 2 OF 5 ASSESSMENT YEAR 2006-07 RAJ SURENDRA & ASSOCIATES NEW DELHI 2. FACTS IN BRIEF:- THE ASSESSEE IS A FIRM OF CAS AND IT FILED ITS RETU RN OF INCOME ON 30.10.2006 DECLARING AN INCOME OF RS.1 2,07,010/-. THE DISALLOWANCES IN DISPUTE BEFORE US ARE:- 60% OF STA FF SALARY CLAIMED AS AN EXPENSE AND 100% OF SERVICE TAX PAID. 3. THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS DEBITED 58% OF THE TOTAL RECEIPTS AS EXPENDITURE INCURRED ON ST AFF. HE FURTHER RECORDED THAT A SALARY OF RS.50,000/- PM WAS PAID T O M/S MEENU GARG WHO IS THE WIFE OF ONE OF THE PARTNERS OF THE ASSES SEE FIRM. THE ASSESSING OFFICER FURTHER OBSERVED THAT CERTAIN OTHER EMPLOY EES OF THE FIRM, WHO HAVE SIMILAR QUALIFICATION AS SMT.MEENU GARG ARE D RAWING LESSER SALARY I.E. RS.10,500/- PER MONTH OR RS.17,000/- PER MONTH AND HENCE THE PAYMENT TO MEENU GARG IS EXCESSIVE. IT WAS FURTHER RECORDED THAT MS MEENU GARG IS ALSO DRAWING SALARY OF RS.1,80,000/- FROM M/S NKG INFRASTRUCTURE LTD. INSTEAD OF INVOKING S.40A(2)(B ), THE ASSESSING OFFICER MADE AN ADHOC DISALLOWANCE OF 60% OF ALL SALARY CLA IMED. SIMILARLY SERVICE TAX PAID WAS DISALLOWED ON THE GROUND THAT NO EVIDENCE IS PRODUCED. THE CIT(A) CONFIRMED DISALLOWANCES FOR T HE DETAILED REASONS GIVEN IN THIS ORDER. AGGRIEVED THE ASSESSEE IS IN APPEAL BEFORE US. 4. WE HAVE HEARD MR.ASHWANI TANEJA, FCA THE LD.COUN SEL FOR THE ASSESSEE AND MS.PRISCILLA SINGEIT, LD.SR.D.R. ON BE HALF OF THE REVENUE. ITA 429/DEL/11 PAGE 3 OF 5 ASSESSMENT YEAR 2006-07 RAJ SURENDRA & ASSOCIATES NEW DELHI 5. ON A PERUSAL OF THE ORDERS OF THE AUTHORITIES BE LOW, AND AFTER CONSIDERING RIVAL CONTENTIONS, WE HOLD AS FOLLOWS. 6. SUMMONS WAS SERVED BY THE ASSESSING OFFICER ON T HE EMPLOYEES OF THE ASSESSEE FIRM AT THE LAST MOMENT I.E. JUST BEFO RE THE PERIOD OF LIMITATION FOR COMPLETION OF ASSESSMENT. BEFORE T HE COMMISSIONER OF INCOME TAX (APPEALS), THE ASSESSEE, FOR PROVING THE GENUINENESS OF THE SALARY, SUBMITTED A LIST OF EMPLOYEES, AND ALSO PR ODUCED FOUR EMPLOYEES IN REMAND PROCEEDINGS, ON THE DIRECTIONS OF THE ASS ESSING OFFICER . AFFIDAVITS OF THESE EMPLOYEES WERE FILED AND THEY W ERE ALSO EXAMINED BY THE ASSESSING OFFICER IN REMAND PROCEEDINGS. MS.M EENU GARG IS A QUALIFIED LAWYER AND SHE HAS FILED THE RETURN, WHER EIN SHE IS BEING TAXED AT THE MAXIMUM RATE. AS ALREADY STATED S.40A(2)(B) HAS NOT BEEN INVOKED EITHER BY THE ASSESSING OFFICER OR BY THE C OMMISSIONER OF INCOME TAX (APPEALS). ON THESE FACTS AND CIRCUMSTANCES, W E ARE OF THE CONSIDERED OPINION THAT THE ADHOC DISALLOWANCE WAS UNCALLED FOR. THE OBSERVATIONS OF THE ASSESSING OFFICER IN THE REMAND REPORT ON THE WORK PLACE FOR THE 38 EMPLOYEES, STAFF WELFARE AND CONV EYANCE EXPENSES ETC. NOT BEING SUFFICIENT, WE OBSERVE THAT IT IS COMMON KNOWLEDGE THAT IN A CAS OFFICE THE EMPLOYEES ARE REQUIRED TO WORK IN T HE CLIENTS OFFICE FOR AUDITS ETC. AND THE CLIENTS TAKE CARE OF WORK PLA CE AND EXPENDITURE. BE IT AS IT MAY, WE ARE OF THE CONSIDERED OPINION THAT THE ASSESSEE HAS PRODUCED SUFFICIENT EVIDENCE BEFORE THE LOWER AUTHO RITIES IN SUPPORT OF ITA 429/DEL/11 PAGE 4 OF 5 ASSESSMENT YEAR 2006-07 RAJ SURENDRA & ASSOCIATES NEW DELHI HIS CLAIM OF INCURRING EXPENDITURE ON STAFF SALARI ES. THE DISALLOWANCE IS MADE ON SURMISES AND IN A AD-HOC MANNER. THUS WE A LLOW THIS GROUND OF THE ASSESSEE. 7. COMING TO THE ISSUE OF SERVICE TAX, THE ASSESSEE HAS PRODUCED COPIES OF CHALLANS, EVIDENCING PAYMENT OF SERVICE T AX. THE ASSESSING OFFICER, WITHOUT ANY VERIFICATION, ENQUIRY OR INVE STIGATION, REJECTED THE CLAIM OF THE ASSESSEE. THE COMMISSIONER OF INCOME TAX (APPEALS) ALSO, HAS IN OUR OPINION, WRONGLY REJECTED THE CLAIM OF T HE ASSESSEE. AS THIS IS A PAYMENT OF TAXES AND AS IT IS EVIDENCED BY CHALLA NS PAID TO GOVERNMENT, THE VERIFICATION IS VERY EASY. IN OUR VIEW, THE SAME SHOULD BE ALLOWED. IN THE RESULT THIS GROUND OF THE ASSES SEE IS ALLOWED. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 7 TH DECEMBER,2012. SD/- SD/- (R.P.TOLANI) (J.SUDHA KAR REDDY) JUDICIAL MEMBER ACCOUNTANT MEMBE R DATED: THE 7 TH DECEMBER, 2012 *MANGA ITA 429/DEL/11 PAGE 5 OF 5 ASSESSMENT YEAR 2006-07 RAJ SURENDRA & ASSOCIATES NEW DELHI COPY OF THE ORDER FORWARDED TO: 1. APPELLANT; 2.RESPONDENT; 3.CIT; 4.CIT (A); 5.DR; 6.GUARD FILE BY ORDER DY. REGISTRAR 1. DATE OF DICTATION: 2. DRAFT PLACED BEFORE THE AUTHOR ON: 3. DRAFT PROPOSED AND PLACED BEFORE SECOND MEMBER ON: 4. DRAFT DISCUSSED/APPROVED BY THE SECOND MEMBER ON: 5. APPROVED DRAFT CAME TO SR.P.S. ON: 6. DATE OF PRONOUNCEMENT : 7. FILE SENT TO BENCH CLERK ON : 8. DATE ON WHICH FILE GIVEN TO HEAD CLERK ON: 9. DATE OF DISPATCHING THE ORDER ON :