M/S. Premier Car Sales Limited, Lucknow V. Assistant Commissioner of Income-Tax, Range-V, Lucknow

ITA 449/LKW/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 7569 (ITAT-LUCKNOW)
• Duration Of Justice: 11 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 21-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIJAY PRAKASH AGARWAL S MT
• Assessee Lawyers: SUBMITTED THAT WITHOUT
• Section: 80G

Judgement Text

I.T.A. NO.449 & 450/LKW/2018 ASSESSMENT YEAR:2012-13 & 13-14 1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A, LUCKNOW BEFORE SHRI A. D. JAIN, VICE PRESIDENT AND SHRI T. S. KAPOOR, ACCOUNTANT MEMBER ITA NO.449 & 450/LKW/2018 ASSESSMENT YEAR:2012-13 & 2013-14 M/S PREMIER CAR SALES LTD., 9, SHAHNAJAF ROAD, LUCKNOW. PAN:AABCP 5806 H VS. A.C.I.T., RANGE-5, LUCKNOW. (APPELLANT) (RESPONDENT) O R D E R PER BENCH: THESE TWO APPEALS ARE FILED BY THE ASSESSEE AGAINS T THE SEPARATE ORDERS OF LEARNED CIT(A)-2, LUCKNOW BOTH DATED 19/1 2/2017. BOTH THE APPEALS CONTAIN SIMILAR GROUNDS AND THESE APPEALS W ERE HEARD TOGETHER THEREFORE, FOR THE SAKE OF CONVENIENCE, A COMMON AN D CONSOLIDATED ORDER IS BEING PASSED. 2. LEARNED A. R., AT THE OUTSET, POINTED OUT THAT T HE COMMON ISSUE INVOLVED IN THESE APPEALS IS DISALLOWANCE OF CERTAI N EXPENSES ON AD HOC BASIS WITHOUT REJECTION OF BOOKS OF ACCOUNT. LEARN ED A. R. IN THIS RESPECT INVITED OUR ATTENTION TO THE ASSESSMENT ORDERS AND SUBMITTED THAT WITHOUT APPELLANT BY SHRI VIJAY PRAKASH AGARWAL, ADVOCATE RESPONDENT BY S MT. ALKA SINGH, D.R. DATE OF HEARING 22/04/2019 DATE OF PRONOUNCEMENT 26 / 04 /201 9 I.T.A. NO.449 & 450/LKW/2018 ASSESSMENT YEAR:2012-13 & 13-14 2 REJECTION OF BOOKS OF ACCOUNT OR WITHOUT PIN POINTI NG ANY ERROR IN THE BOOKS OF ACCOUNT, THE ASSESSING OFFICER HAS MADE THE ADDI TION WHICH THE LEARNED CIT(A) HAS WRONGLY UPHELD. LEARNED A. R. SUBMITTED THAT THE AUTHORITIES BELOW WERE NOT JUSTIFIED IN MAKING AND UPHOLDING TH E DISALLOWANCE AND IN THIS RESPECT RELIANCE WAS PLACED ON THE ORDER OF LU CKNOW BENCH OF THE TRIBUNAL IN I.T.A. NO.615/LKW/2014 AND 41/LKW/2017 WHEREIN THE HON'BLE TRIBUNAL VIDE ORDER DATED 16/09/2015 AND 22/02/2018 HAD DELETED THE AD HOC DISALLOWANCE. 2.1 AS REGARDS THE OTHER ISSUE IN I.T.A. NO.450, L EARNED A. R. SUBMITTED THAT THE ASSESSEE HAD MADE A DONATION OF RS.2,50,00 0/- TO AN ORGANIZATION WHICH WAS ELIGIBLE FOR DEDUCTION U/S 35AC OF THE AC T AND WHICH WAS DENIED BY THE ASSESSING OFFICER BY HOLDING THAT THE ASSESS EE HAD NOT CLAIMED ANY DEDUCTION U/S 80G OF THE ACT. LEARNED A. R. SUBMIT TED THAT THE ASSESSEE NEVER CLAIMED DEDUCTION U/S 80G AND RATHER IT WAS A DEDUCTION U/S 35AC OF THE ACT AND IN THIS RESPECT INVITED OUR ATTENTION T O THE COPY OF RECEIPT AS ALSO COPY OF FORM NO. 58A WHICH WAS FILED WITH THE ASSESSING OFFICER DURING THE ASSESSMENT PROCEEDINGS. LEARNED A. R. SUBMITTE D THAT THE ASSESSEE HAD OBTAINED THE CERTIFIED COPIES FROM THE RECORD O F THE ASSESSING OFFICER WHICH PROVES THAT THESE WERE INDEED FILED BY THE AS SESSEE DURING THE ASSESSMENT PROCEEDINGS. LEARNED A. R. ALSO INVITED OUR ATTENTION TO THE NOTIFICATION WHEREBY VIE NOTIFICATION DATED 12/07/2 010, THE INSTITUTION TO WHICH DONATION WAS MADE, WAS HELD TO BE APPROVED U/ S 35AC OF THE ACT. LEARNED A. R. SUBMITTED THAT IT IS WRONG ON THE PAR T OF LEARNED CIT(A) TO HOLD THAT THE ASSESSEE HAD NOT ENCLOSED ANY EVIDENC E OF SUCH PAYMENT ALONG WITH THE RETURN OF INCOME. LEARNED A. R. SUB MITTED THAT RULE 12(2) OF THE I.T. RULES STRICTLY PROHIBITED THAT THE RETURN SHALL NOT BE ACCOMPANIED BY ANY REPORT OR RECEIPT UNDER ANY PROVISION OF THE AC T AND THAT IS WHY THE I.T.A. NO.449 & 450/LKW/2018 ASSESSMENT YEAR:2012-13 & 13-14 3 ASSESSEE DID NOT ENCLOSE SUCH CERTIFICATES ALONG WI TH THE RETURN OF INCOME HOWEVER, THIS WAS SUBMITTED DURING THE ASSESSMENT P ROCEEDINGS. 3. LEARNED D. R., ON THE OTHER HAND, HEAVILY SUPPOR TED THE ORDERS OF THE AUTHORITIES BELOW. 4. WE HAVE HEARD THE RIVAL PARTIES AND HAVE GONE T HROUGH THE MATERIAL PLACED ON RECORD. WE FIND THAT AS REGARDS THE DISA LLOWANCE ON ACCOUNT OF AD HOC ADDITION, THE ASSESSMENT WAS COMPLETED U/S 1 43(3) OF THE ACT. THE ASSESSING OFFICER NOWHERE HAS REJECTED THE BOOKS OF ACCOUNT. HE SIMPLY HELD THAT MOST OF THE PAYMENTS WERE IN CASH AND ASS ESSEE HAD SUBMITTED SELF-MADE VOUCHERS THEREFORE, HE DISALLOWED CERTAIN AMOUNTS OUT OF THE TOTAL EXPENDITURE. THE ASSESSING OFFICER HAS NOT POINTED OUT ANY VOUCHERS OR EXPENDITURE ON WHICH HE HAD ANY DOUBT. THE AD HOC DISALLOWANCE, WITHOUT PIN POINTING ANY ERROR IN THE BOOKS OF ACCOUNT, IS NOT JUSTIFIED SPECIFICALLY KEEPING IN VIEW THE DECISION OF LUCKNOW BENCH OF TH E TRIBUNAL, AS RELIED ON BY LEARNED A. R. HON'BLE TRIBUNAL IN I.T.A. NO.41 VIDE ORDER DATED 22/02/2018 WITH REGARD TO AD HOC DISALLOWANCE OF EX PENSES HAS HELD AS UNDER: 4.2 AS REGARDS THE OTHER DISALLOWANCES, IT IS NOTI CED THAT ASSESSING OFFICER HAD MADE AD HOC DISALLOWANCE WITH OUT POINTING OUT ANY SPECIFIC DEFECT IN THE VOUCHERS OR POINTING OUT ANY SPECIFIC INSTANCE. IT WAS SUBMITTED THAT THE A SSESSING OFFICER HAS MERELY ACTED ON PRESUMPTION. AS REGARD S THE EXPENSES ON VEHICLE MAINTENANCE, LEARNED A. R. SUBM ITTED THAT THE ENTIRE EXPENSES WERE INCURRED FOR REPAIR A ND MAINTENANCE AND WERE FULLY VOUCHED AND THEREFORE, T HE DISALLOWANCE WAS NOT WARRANTED. SIMILARLY, IN RESP ECT OF AD HOC ADDITION OF RS.30,000/- OUT OF STAFF WELFARE, M ISC. EXPENSES AND TRAVELLING EXPENSES, LEARNED A. R. SUB MITTED THAT THE ENTIRE EXPENDITURE WAS OPEN TO VERIFICATIO N AND ASSESSING OFFICER HAS MERELY ACTED ON PRESUMPTION. IN OUR OPINION, THE ASSESSING OFFICER CANNOT MAKE AD HOC I.T.A. NO.449 & 450/LKW/2018 ASSESSMENT YEAR:2012-13 & 13-14 4 DISALLOWANCE SPECIFICALLY IN VIEW OF THE CASE LAWS RELIED ON BY LEARNED A. R. HON'BLE CALCUTTA HIGH COURT IN THE C ASE OF ASHOK SURANA VS. CIT [2016] 384 ITR 267 (CAL) HAS H ELD AS UNDER: THE ASSESSEE WAS AN INDIVIDUAL ENGAGED IN THE BUSINESS OF PRODUCING TELEVISION SERIALS AND HAD OF FICES AT CALCUTTA, BANGALORE, DELHI AND MUMBAI. FOR THE ASSESSMENT YEAR 2001-02, THE ASSESSEE HAD SHOWN TO HAVE INCURRED EXPENSES ON ACCOUNT OF TELEPHONE. THE ASSESSING OFFICER DISALLOWED 20 PER CENT. OF THE EXPENDITURE ON THE GROUND THAT THE ASSESSEE FAILED TO MAINTAIN A CALL BOOK FOR MONITORING CALLS AND THAT A PART OF SUCH CALLS WERE FOR PERSONAL AND NON-BUSINESS US E. THE ASSESSEE ALSO CLAIMED EXPENSES OF THE MUMBAI OFFICE, PART OF WHICH WERE SUPPORTED BY INTERNAL DE BIT VOUCHERS AND CLAIMED GENERAL EXPENSES AND EXPENSES TOWARDS TEA AND TIFFIN, SUPPORTED BY DEBIT VOUCHERS . THE ASSESSING OFFICER, DISALLOWED 20 PER CENT. OF EXPEN SES ON THE GROUND THAT THEY WERE NOT VERIFIABLE. THE COMMISSIONER (APPEALS) CONFIRMED THIS. THE TRIBUNAL RESTRICTED THE DISALLOWANCE. ON APPEAL: HELD, THAT IT WAS NOT THE CASE OF THE ASSESSING OFFICER THAT THE ASSESSEE WAS UNABLE TO ADDUCE SATISFACTORY EVIDENCE THAT THE EXPENDITURE WAS INCURRED FOR THE PURPOSE OF HIS BUSINESS. WHEN APPROPRIATE EVIDENCE WAS ADDUCED, IT WAS NOT IN THE POWER OF THE ASSESSING OFFICER TO ARBITRARILY DISALLOW ANY ITEM OF EXPENDITURE ON THE GROUND THAT THE SUMS WERE NOT VERIFIABLE. THERE WAS NO INDICATION AS TO WHAT STEP WAS TAKEN BY THE ASSESSING OFFICER TO HAVE THOSE EXPENSES VERIFIED. IF THE ASSESSING OFFICER HAD NOT TAKEN PAINS TO HAVE THE EXPENSES VERIFIED, HE COULD NOT DISALLOW ANY PORTION OF THE EXPENDITURE ON THE GROUND THAT IT WAS NOT VERIFIABLE. THE EXPENSES WERE TO BE ALLOWED. SIMILAR FINDINGS HAVE BEEN MADE IN OTHER CASE LAWS RELIED ON BY LEARNED A. R. I.T.A. NO.449 & 450/LKW/2018 ASSESSMENT YEAR:2012-13 & 13-14 5 4.3 IN VIEW OF THE ABOVE, THE DISALLOWANCES SUSTAIN ED BY LEARNED CIT(A) ARE NOT IN ORDER AND THEREFORE, WE D ELETE THE AD HOC DISALLOWANCE CONFIRMED BY LEARNED CIT(A). 4.1 IN VIEW OF THE ABOVE, THE ISSUE OF DISALLOWANCE ON AD HOC BASIS OUT OF EXPENSES IS DECIDED IN FAVOUR OF THE ASSESSEE. 5. NOW COMING TO THE ISSUE OF DEDUCTION U/S 35AC IN ASSESSMENT YEAR 2013-14, WE FIND THAT THE ASSESSING OFFICER DISALLO WED THE CLAIM OF THE ASSESSEE BY HOLDING THAT THE ASSESSEE HAD DEBITED T HE AMOUNT UNDER THE HEAD CHARITY AND DONATION AND HAD NOT CLAIMED ANY D EDUCTION U/S 80G OF THE ACT WHEREAS THE FACT REMAINS THAT THE ASSESSEE HAD DONATED THE AMOUNT OF RS.2,50,000/- TO AN INSTITUTION WHICH WAS ELIGIB LE FOR DEDUCTION U/S 35AC OF THE ACT. THE ASSESSEE HAD FILED CERTIFIED COPIE S OF RECEIPT CERTIFIED BY THE ASSESSING OFFICER. SIMILARLY, THE ASSESSEE HAD FIL ED COPY OF FORM-58A CERTIFIED BY THE ASSESSING OFFICER WHICH IS IN THE PRESCRIBED FORM DECLARING THEREIN THE AMOUNT OF TOTAL DONATION RECEIVED INCLU DING RECEIPT FROM THE ASSESSEE. WE FURTHER FIND THAT VIDE NOTIFICATION N O. S.O. 1649(E), DATED 12 TH JULY, 2010, THE INSTITUTION TO WHOM DONATION WAS M ADE WAS APPROVED BY NATIONAL COMMITTEE FOR DEDUCTION U/S 35AC OF THE ACT. THE CERTIFICATION BY THE ASSESSING OFFICER OF THESE DOCUMENTS CLEARLY DEMONSTRATES THAT THESE DOCUMENTS WERE FILED BEFORE THE ASSESSING OFFICER. AS REGARDS THE OBSERVATION OF LEARNED CIT(A) THAT THESE EVIDENCES WERE NOT ENCLOSED ALONG WITH THE RETURN OF INCOME, WE FIND THAT RULE 12(2) OF I.T. RULES, PROHIBITED THE ASSESSEE TO FILE ANY REPORT OR RECEIPT UNDER AN Y PROVISION OF THE ACT ALONG WITH THE RETURN OF INCOME. RULE 12(2) OF THE I.T. RULES WAS SUBSTITUTED WITH EFFECT FROM 01/04/2010 AND THE SAI D RULE READS AS UNDER: (2) THE RETURN OF INCOME REQUIRED TO BE FURNISHED I N FORM SAHAJ (ITR-1) OR FORM NO. ITR-2 OR FORM NO. ITR-3 O R FORM SUGAM (ITR-4S) OR FORM NO. ITR-4 OR FORM NO. ITR-5 OR FORM NO. ITR-6 [OR FORM NO. ITR-7] SHALL NOT BE ACC OMPANIED I.T.A. NO.449 & 450/LKW/2018 ASSESSMENT YEAR:2012-13 & 13-14 6 BY A STATEMENT SHOWING THE COMPUTATION OF THE TAX P AYABLE ON THE BASIS OF THE RETURN, OR PROOF OF THE TAX, IF ANY, CLAIMED TO HAVE BEEN DEDUCTED OR COLLECTED AT SOURCE OR THE ADVANCE TAX OR TAX ON SELF-ASSESSMENT, IF ANY, CLAIMED TO H AVE BEEN PAID OR ANY DOCUMENT OR COPY OF ANY ACCOUNT OR FORM OR REPORT OF AUDIT REQUIRED TO BE ATTACHED WITH THE RE TURN OF INCOME UNDER ANY OF THE PROVISIONS OF THE ACT: 5.1 IN VIEW OF ABOVE, THE SECOND ISSUE IN I.T.A. NO .450 IS ALSO DECIDED IN FAVOUR OF THE ASSESSEE. 6. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE STAND ALLOWED. (ORDER PRONOUNCED IN THE OPEN COURT ON 26/04/2019) SD/. SD/. ( A. D. JAIN ) ( T. S. KAPOOR ) VICE PRESIDENT ACCOUNTANT MEMBER DATED:26/04/2019 *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