Mohit Agarwal (Prop.), Kanpur V. Income Tax Officer, Kanpur

ITA 435/LKW/2014

• Counselvise Citation: 43523714 RSA 2014
• Duration Of Justice: 2 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-08-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 23-05-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: P K KAPOOR
• Keywords: Depreciation; Principle of natural justice

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.435/LKW/2014 ASSESSMENT YEAR:2006 - 2007 SHRI MOHIT AGARWAL, (PROP.) M/S SATRUN ENTERPRISES, 501, ANAND PALACE, 10/499, KHALASI LINES, KANPUR. PAN:AALPA8171E VS. INCOME TAX OFFICER, WARD - 3(2), KANPUR. (APPELLANT) (RESPONDENT) APPELLANT BY SHRI P. K. KAPOOR, C.A. RESPONDENT BY SHRI AMIT NIGAM, D.R. DATE OF HEARING 24/07/2014 DATE OF PRONOUNCEMENT 07 /08/2014 O R D E R PER A. K. GARODIA, A.M. THIS IS AN ASSESSEES APPEAL DIRECTED AGAINST THE ORDER PASSED BY LEARNED CIT(A) - II, KANPUR DATED 24/02/2014 FOR THE ASSESSMENT YEAR 2006 - 07. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER: 1. BECAUSE THERE BEING 'DIVERGENCE' BETWEEN 'INCOME TAX AUTHORITY' INITIATING THE PROCEEDINGS UNDER SECTION 143(2) AND THE 'INCOME TAX AUTHORITY COMPLETING THE ASSESSMENT VIDE ASSESSMENT ORDER DATED 22.10.2008, THE ASSESSMENT WAS LIABLE TO BE HEL D AS NULL AND VOID. 2. BECAUSE IN THE ABSENCE OF ANY ORDER UNDER SECTION 127 HAVING BEEN PASSED THE INCOME TAX OFFICER - 3(2) , KANPUR COULD NOT HAVE ASSUMED THE JURISDICTION OF THE 'ASSESSING OFFICER' SO AS TO PASS THE ASSESSMENT ORDER DATED 22.10.2008 IN T HE CASE OF THE 'APPELLANT' AND ACCORDINGLY 2 THE SAID ORDER WAS INVALID/ WHOLLY UNSUSTAINABLE IN THE EYES OF LAW. WITHOUT PREJUDICE TO THE AFORESAID 3. BECAUSE THE AUTHORITIES BELOW HAVE ERRED IN LAW AND ON FACTS IN MAKING/UPHOLDING AD HOC DISALLOWANCES UNDER VARIOUS HEADS OF EXPENDITURE, BEING SI. NO. HEAD OF EXPENDITURE EXPENSES CLAIMED (RS.) EXPENSES DISALLOWED (RS.) (I) VEHICLE RUNNING EXPENSES 1,25,420 25,084 ( II) TRAVELLING AND CONVEYANCE EXPENSES 67,729 5,000 (III) TELEPHONE EXPENSES 96,648 19,330 (IV) DEPRECIATION ON CAR 85,545 17,109 ON THE GROUND OF NON - BUSINESS/PERSONAL USER. 4. BECAUSE THE EXPENDITURE CLAIMED UNDER THE AFORESAID HEADS (SO ALSO OTHER EXPENDITURE CHARGED TO THE PROFIT AND LOSS ACCOUNT) HAD BEEN LAID OUT AND INCURRED WHOLLY FOR THE PURPOSES OF BUSINESS CARRIED ON BY THE 'APPELLANT' AND NO PART OF THE SAME COULD HAVE BEEN DISALLOWED AND IN ANY CASE THE DISALLOWANCES SO MADE/SUSTAINED BY THE AUTHORITIES BELOW ARE MUCH TOO HIGH AND EXCESSIVE. 5. B ECAUSE THE 'CIT(A)' HAS ERRED IN LAW AND ON FACTS IN UPHOLDING THE DISALLOWANCE OF A SUM OF RS.5,700/ - OUT OF INTEREST PAID @18% PER ANNUM ON UNSECURED LOAN AS HAD BEEN MADE IN THE ASSESSMENT ON THE GROUND THAT INTEREST COULD HAVE BEEN PAID @ 15% ONLY. 6. BECAUSE IN RELATION TO THE LOAN TAKEN IN THE EARLIER YEAR, INTEREST HAD BEEN PAID ON THE SAME RATE OF INTEREST ON WHICH IT WAS PAID IN THE IMMEDIATELY PRECEDING YEAR (WHERE THE SAME HAD BEEN ALLOWED ALSO) AND NO DISALLOWANCE WAS CALLED FOR EITHER ON FACTS OR IN LAW. 7. BECAUSE THE ORDER APPEALED AGAINST IS CONTRARY TO THE FACTS, LA W AND PRINCIPLES O F NATURAL JUSTICE. 3 3. LEARNED A.R. OF THE ASSESSEE REITERATED THE SAME CONTENTIONS WHICH WERE RAISED BEFORE CIT(A). 4. LEARNED D.R. OF THE REVENUE SUPPORTED THE ORDER OF CIT(A). 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. THE ISSUE WAS DECIDED BY CIT(A) AS PER PARA 5 OF HIS ORDER, WHICH IS REPRODUCED BELOW FOR THE SAKE OF READY REFERENCE: 5. I H A VE CONSIDERED THE SUBMISSIONS A ND THE ARGU MENTS PLACED BY THE A.R. OF THE ASSESSEE AND THE CONTENTS OF THE ASSESSMENT ORDER AND THE REMAND REPORT DATED 29 - 01 - 2013. NOTICE U/S. 1 43(2) DATED 03 - 10 - 2007 HAS ALREADY BEEN SERVED TO THE ASSESSEE ON 12 - 10 - 2007, THEREBY, THE REQUIREMENT OF LAW OF A UDI A LTE RAM PARTEM HAS BEEN FULFILLED , THEREBY, THE GROUNDS TAKEN BY THE A. R . OF THE ASSESSEE ARE BASELESS AND THEREBY ADDITIONA L GROUND NO. 8, 9 , 10 & 11 ARE REJECTED. WITH REFERENCE TO GROUND NO. 1 TO 7, THE CONTENTS OF THE ASSESSMENT ORDER ARE PERUSED AND FOUND CORRECT. THE DISALLOWANCE OF EXPENDITURE HAVE NOT BEEN PROVED FOR THE PURPOSE OF THE BUSINESS. THEREBY, THE SAME ARE TREATED AS NON - BUSINESS E XPENDITURE A ND ACCORDINGLY THE DISALLOWANCES MADE BY THE AO ARE HEREBY CONFIRMED. 5.1 FROM THE ABOVE PARA FROM THE ORDER OF CIT(A), IT IS SEEN THAT IT IS REPORTED BY THE ASSESSING OFFICER IN THE REMAND REPORT THAT NOTICE DATED 03/10/2007 HAS ALREADY BEEN SERVED ON THE ASSESSEE ON 12/10/2007. THE RETURN OF INCOME WAS FILED BY THE ASSESSEE ON 30/10/2006 AND HENCE, THE NOTICE U/S 143(2) WAS SERVED BY THE ASSESSING OFFICER DURING THE PRESCRIBED TIME AND THEREFORE, THERE IS NO MERIT REGARDING THE CLAIM OF NON SERVICE OF NOTICE U/S 143(2) OF THE ACT. 5.2 REGARDING VARIOUS DISALLOWANCES MADE BY THE ASSESSING OFFICER, WE FIND THAT THE ASSESSEE IS AN INDIVIDUAL AND THEREFORE, IT CANNOT BE RULED OUT THAT THE EXPENSES CLAIMED BY THE ASSESSEE IN RESPECT OF VEHICLE RUNNING AND MAINTENANCE, TRAVELLING AND CONVEYANCE, TELEPHONE EXPENSES, CAR 4 DEPRECIATION ETC. ALSO INCLUDED SOME PERSONAL EXPENSES. THE ASSESSEE HAS NOT BROUGHT ON RECORD TO SHOW THAT THE ASSESSEE WAS HAVING A PERSONAL TELEPHONE AND PERSONAL VEHICLE IN AD DITION TO THE VEHICLE AND TELEPHONE ON WHICH THE EXPENSES HAVE BEEN CLAIMED. THIS IS ALSO NOT BROUGHT ON RECORD THAT OUT OF THE TOTAL EXPENSES INCURRED BY THE ASSESSEE, SOME EXPENSES WERE NOT CLAIMED BY THE ASSESSEE AND SAME ARE CONSIDERED AS DRAWING. CO NSIDERING THESE FACTS , ON MERIT OF DISALLOWANCES ALSO, WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF CIT(A) BECAUSE THE DISALLOWANCES MADE BY ASSESSING OFFICER TO THE EXTENT OF 20% OF SUCH EXPENSES ARE REASONABLE IN THE FACTS OF THE PRESENT CASE . 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS DISMISSED. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD/. SD/. (SUNIL KUMAR YADAV) ( A. K. GARODIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 07 /08/2014. *C.L.SINGH COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. CONCERNED CIT 4. THE CIT(A) 5. D.R., I.T.A.T., LUCKNOW ASSTT. REGISTRAR