M/s.Chirla Umesh Kumar Reddy (HUF), Bangalore V. Income Tax Officer, Bangalore

ITA 440/BANG/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 7359 (ITAT-BANGALORE)
• Duration Of Justice: 8 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-11-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 12-07-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 23-02-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: PADMA MEENAKSHI
• Keywords: Business income; Depreciation
• Section: 37(1); 32

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI ARUN KUMAR GARODIA, ACCOUNTANT MEMBER ITA NO. 440/BANG/2017 ASSESSMENT YEAR : 200 7 - 08 M/S. CHIRLA UMESH KUMAR REDDY (HUF), NO. 534/A, 7 TH CROSS, 4 TH BLOCK, KORAMANGALA, BANGALORE 560 034. PAN: AABHC 5925M VS. THE INCOME TAX OFFICER, WARD 7(1), BANGALORE. APPELLANT RESPONDENT ASSESSEE BY : NONE REVENUE BY : SMT. PADMAMEENAKSHI, JCIT (DR) DATE OF HEARING : 0 6 . 1 1 .201 7 DATE OF PRONOUNCEMENT : 15 .1 1 .2017 O R D E R PER SHRI A.K. GARODIA, ACCOUNTANT MEMBER THIS IS AN ASSESSEES APPEAL WHICH IS DIRECTED AGAI NST THE ORDER OF LD. CIT(A)-4, BANGALORE DATED 28.10.2016 FOR ASSESSMENT YEAR 2007 -08. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER. 1. FOR THAT THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) IS CONTRARY TO LAW, FACTS AND CIRCUMSTANCES OF THE CAS E. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE DISALLOWANCE OF DEPRECIATION ON CAR U/S 32 OF THE ACT TO THE TUNE OF RS. 1,22,406/- 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE DISALLOWANCE OF EXPENDITURE INCURRED ON VEHICLE MAINTENANCE U/S 37(1) TO THE TUNE OFRS. 39,895/-. 4. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE DISALLOWANCE OF INTEREST EXPENDITURE CLAIMED BY THE APPELLANT TO THE TUNE OF RS.30,440/-. ITA NO. 440/BANG/2017 PAGE 2 OF 4 5. FOR THESE GROUNDS AND SUCH OTHER GROUNDS THAT MA Y BE ADDUCED BEFORE OR DURING THE HEARING OF THE APPEAL, IT IS P RAYED THAT THE HONBLE TRIBUNAL MAY BE PLEASED TO PASS SUCH OTHER ORDERS AS THE HONBLE TRIBUNAL MAY DEEM FIT. 3. THIS APPEAL WAS FIXED FOR HEARING ON 06.11.2017 AND NOTICE OF HEARING WAS SENT TO ASSESSEE BY RPAD WHICH HAS COME BACK UNSERVED WI TH THE REMARKS OF POSTAL DEPARTMENT LEFT. TILL NOW THE, ASSESSEE H AS NOT BROUGHT ON RECORD ANY NEW ADDRESS FOR SERVICE OF NOTICE ON THE ASSESS EE AND THEREFORE, WE HAVE NO OPTION BUT TO DECIDE THE APPEAL OF THE ASSESSEE EX-PARTE QUA THE ASSESSEE. HENCE APPEAL OF THE ASSESSEE WAS HEARD EX-PARTE QUA THE ASSESSEE. THE LD. DR OF REVENUE SUPPORTED THE ORDER OF CIT(A). 4. WE HAVE CONSIDERED THE SUBMISSIONS OF LD. DR OF REVENUE AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. THE ISSUES IN DIS PUTE WERE DECIDED BY CIT(A) AS PER PARA NO. 7 OF HIS ORDER AND THEREFORE, THE P ARA NO. 7 FROM THE ORDER OF CIT(A) IS REPRODUCED HEREINBELOW FOR THE SAKE OF RE ADY REFERENCE. THIS READS AS UNDER:- 7. IN THE COURSE OF THE PRESENT APPEAL-PROCEEDINGS, THE ASSESSEE HAS REITERATED ITS SUBMISSIONS THAT THE IMPUGNED EXPEND ITURES WERE PRIMA- FACIE ALLOWABLE UNDER THE HEAD BUSINESS INCOME. HOW EVER, THERE IS NO SPECIFIC MATERIAL PROOF IN THE FORM OF INVOICES OR BILLS. THERE IS ALSO NO BANK STATEMENT OF ACCOUNT TO SUBSTANTIATE THE ACTUA L INCURRING OF THE SAID ITEMS OF EXPENDITURE. IN THESE FACTS AND CIRCU MSTANCES, THERE IS GROSS ABSENCE OF ADEQUATE AND TANGIBLE PROOF IN SUP PORT OF THE EXPENDITURE CLAIMED AND ALSO THAT OF THE NEXUS WITH THE ASSESSEE'S INCOME, DECLARED UNDER THE BUSINESS HEAD. IN RESPECT OF THE INTEREST PAID, THE ASSESSEE HAS N OT FURNISHED ANY SPECIFIC PROOF OF PAYMENT OR THE UTILIZATION OF THE AMOUNTS, AGAINST WHICH SUCH INTEREST WAS DEBITED. IT IS NOT ESTABLIS HED THEREFORE THAT THE SAME WAS IN ASSESSEE'S NORMAL COURSE OF BUSINESS. T HE DISALLOWANCE OF RS. 30,440/- MADE BY THE AO IS THEREFORE UPHELD. THE ASSESSEE HAS CLAIMED AN AMOUNT OF RS. 39,895/- UNDER THE HEAD VEHICLE MAINTENANCE. THE ASSESSEE HOWEVER, HAS NOT SUBMITTED ANY RELEVANT PROOF OF THE ACTUAL INCURRING OF THE SAID EXPENDITURE BY WAY OF BILLS / INVOICES. AS, ALSO OBSERVED BY THE AO, T HE ASSESSEE HAS NOT SUBSTANTIATED THE ACTUAL BUSINESS USER OF THESE ITE MS OF EXPENDITURE, DURING THE PRESENT APPEAL PROCEEDINGS. IN THESE CIR CUMSTANCES, THE DISALLOWANCE MADE IN THIS RESPECT IS UPHELD. ITA NO. 440/BANG/2017 PAGE 3 OF 4 THE AMOUNTS OF RS. 1,337/- AND RS. 225/- PERTAINS T O LOAN PROCESSING CHARGES AND BANK CHARGES. THE ITEMS ARE NOT ONLY ME AGRE BUT ARE ALSO OF A NATURE THAT ARE EXPECTED TO BE INCURRED BY ANY BUSINESS ESTABLISHMENT IN THE NORMAL COURSE OF ACTIVITY, WHE REIN SOME BANK ACCOUNT WOULD BE OBVIOUSLY HAVE BEEN MAINTAINED. I N THESE CIRCUMSTANCES, I DIRECT THE AO TO DELETE THE AFORES AID DISALLOWANCES. THE ASSESSEE, IN RESPECT OF ITS CLAIM OF DEPRECIATI ON ON CAR AT RS. 1,22,406/- HAS SUBMITTED COPIES OF ANNUAL RETURNS O F INCOME, FILED FOR A.YRS. 2011-12; 2012-13 TO 2014-15, WHEREIN SOME IT EMS OF EXPENDITURE, AGAINST THE HEAD DEPRECIATION HAVE BEE N CLAIMED. HOWEVER, BESIDES THIS, NO OTHER SPECIFIC DOCUMENTAR Y EVIDENCE IN RESPECT OF THE DEPRECIATION CLAIMED ATRS. 1,22,406/ - HAS BEEN FURNISHED BEFORE THE UNDERSIGNED TO CORROBORATE THE ASSESSEE'S CLAIM THAT THE SAID CAR WAS PURCHASED AS WELL AS UTILIZED DURING THE YEAR (A.Y. 2007-08) FOR THE PURPOSE OF ASSESSEES ROUTIN E BUSINESS ACTIVITY. IN THESE CIRCUMSTANCES, THERE APPARENTLY BEING NO S UCH EVIDENCE EVEN BEFORE THE AO, I DO NOT FIND ANY REASON TO DEVIATE FROM THE AOS FINDINGS. IN BACKGROUND OF THE ABOVE DISCUSSION, THE ASSESSEE S APPEAL IS PARTLY ALLOWED. 5. FROM THE ABOVE PARA REPRODUCED FROM THE ORDER OF CIT(A), IT IS SEEN THAT REGARDING THE DISALLOWANCE OF DEPRECIATION ON CAR U /S. 32 OF THE IT ACT TO THE TUNE OF RS. 1,22,406/-, A CATEGORICAL FINDING HAS BEEN GIVEN BY CIT(A) THAT THERE IS NO SPECIFIC DOCUMENTARY EVIDENCE IN RESPEC T OF DEPRECIATION CLAIMED AT RS. 1,22,406/- HAVING BEEN FURNISHED BEFORE THE CIT (A) BUT THE ASSESSEES CLAIM THAT THE SAID CAR WAS PURCHASED AS WELL AS UT ILIZED DURING THE ASSESSMENT YEAR 2007-08 FOR THE PURPOSE OF ASSESSEES ROUTINE BUSINESS ACTIVITY. IN VIEW OF THIS CATEGORICAL FINDING OF CIT(A), WE FIND NO R EASON TO INTERFERE IN THE ORDER OF CIT(A) ON THIS ISSUE. SIMILARLY REGARDING DISAL LOWANCE OF EXPENDITURE INCURRED ON VEHICLE MAINTENANCE U/S. 37(1) TO THE T UNE OF RS. 39,895/- AND DISALLOWANCE OF INTEREST EXPENDITURE CLAIMED BY THE ASSESSEE TO THE TUNE OF RS. 30,440/- ALSO, CATEGORICAL FINDING HAS BEEN GIVEN B Y CIT(A) THAT THE ASSESSEE HAS NOT SUBSTANTIATED THE ACTUAL BUSINESS USER OF T HESE ITEMS OF EXPENDITURE DURING THE APPELLATE PROCEEDINGS AND IN VIEW OF THI S CATEGORICAL FINDING OF CIT(A), WE FIND NO REASON TO INTERFERE IN THE ORDER OF CIT(A) ON THESE ISSUES ALSO. ITA NO. 440/BANG/2017 PAGE 4 OF 4 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE MENT IONED ON THE CAPTION PAGE. SD/- SD/- (SUNIL KUMAR YADAV) (ARUN KUMAR GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE, DATED, THE 15 TH NOVEMBER, 2017. /MS/ COPY TO: 1. APP ELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY, INCOME TAX APPELLATE TRIBUNAL, BANGALORE.