ACIT 19(2), MUMBAI V. MEENA D. GUPTA, MUMBAI

ITA 4520/MUM/2009

• Counselvise Citation: 452019914 RSA 2009
• Duration Of Justice: 2 year(s) 11 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-07-2012
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 19-03-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 31-07-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: P K B MENON
• Keywords: Corroborative evidences

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH B BENCH BEFORE SHRI B.R. MITTAL (JUDICIAL MEMBER) AND SHRI RAJENDRA (ACCOUNTANT MEMBER) ITA NO.4520/M/2009: ASSESSMENT YEAR: 2005 -06 A.C.I.T.-19(2), ROOM NO. 315, 3 RD FLOOR, PIRAMAL CHAMBERS, LALBAUG, PAREL, MUMBAI-400 012. VS. MR. MEENA D. GUPTA 3-CYNTHIA MAIN AVENUE, S.V. ROAD, SANTACRUZ (W), MUMBAI 400 054. PAN NO : AAEPG 3383 L (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI P. K. B. MENON RESPONDENT BY : SHRI K. GOPAL DATE OF HEARING: 06.07.2012 DATE OF PRONOUNCEMENT: 11.07.2012 ORDER PER RAJENDRA, A.M. : FOLLOWING GROUNDS OF APPEAL WERE FILED AGAINST ORDE R DATED 19.05.2009 OF CIT(A)- XIX, MUMBAI FOR THE ASSESSMENT YEAR 2005-06 : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN RESTRICTING THE DISALLOWANCE TO RS.77,599/- BEING 5% OF RS.15,51,973/.. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LEARNED CIT(A) FAILED TO APPRECIATE THAT THE APPELLANT FAIL ED TO SUBSTANTIATE THAT THE PAYMENTS MERE FOR THE PURPOSE OF BUSINESS OF THE AS SESSEE. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LEARNED CIT(A) FAILED TO APPRECIATE THAT THE ASSESSEE COULD NOT ESTABLISH DURING THE ASSESSMENT PROCEEDINGS THAT ALL THE CLAIM OF DRIVER S AND CLEANERS SALARY PERTAINS TO THE VEHICLE OF THE ASSESSEE. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LEARNED 2 I.T.A NO: 4520/UM/2009 MR. MEENA D. GUPTA CIT(A) FAILED TO APPRECIATE THAT THE ADDITION WAS M ADE ON AGREED BASIS. AND THE ASSESSEE HAD PAID THE TAX LIABILITY ON THE SAID ADDITION. 5. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A ) ON THE ABOVE GROUND BE SET ASIDE AND THAT OF THE AO BE RESTORED. 6. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER AN Y GROUND OR ADD A NEW GROUND WHICH MAY BE NECESSARY. 2. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT THE A SSESSEE WAS ENGAGED IN THE BUSINESS OF HIRING OF BUSES. THE RETURN OF INCOME WAS FILED ON 28.10.2005 DISCLOSING THEREIN THE TOTAL INCOME OF RS.72,20,946/-.SUBSEQUENTLY, A REVI SED RETURN WAS FILED WHEREIN THE TOTAL INCOME OF RS.70, 10,126/- WAS SHOWN. THE ASSESSEE IS AN INDIVIDUAL AND PROPRIETOR OF M/S. AMITKUMAR AJAYKUMAR & BROS.(MUMBAI) AND M/S. AMITKU MAR AJAYKUMAR & BROS(GOA). 3. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OF FICER (AO) FOUND THAT UNDER RUNNING AND MAINTENANCE EXPENSES A VARIETY OF EXPEN SES WERE CLAIMED. WHEN HE VERIFIED THE BOOKS OF ACCOUNT AND SUPPORTING VOUCHERS, HE FO UND THAT THE EXPENSES IN THIS CATEGORY WERE NOT BACKED BY PROPER VOUCHERS. SOME VOUCHERS WERE NOT BACKED BY THIRD PARTY EVIDENCE AND IN CERTAIN CASES THE EXPENSES WERE EVI DENCED BY ONLY SELF MADE VOUCHERS. THE A.O. ISSUED A SHOW CAUSE NOTICE IN THIS REGARD AND THE ASSESSEE FILED A LETTER DATED 26.12.2007 ALONG WITH A REVISED COMPUTATION ON THE SAME DATE. THE ASSESSEE COMMUNICATED TO THE AO THAT SHE HAD NO OBJECTION, I F 25% OF THE EXPENSES WERE DISALLOWED OUT OF VARIOUS HEADS OF EXPENSES IN GOA AND BOMBAY DIVISION. AFTER CONSIDERING THE REPLY OF THE ASSESSEE, THE A.O. MADE DISALLOWANCE AMOUNTI NG TO RS.16.69 LAKHS TO THE TOTAL INCOME OF THE ASSESSEE. 4. THE ASSESSEE PREFERRED AN APPEAL BEFORE THE FIRS T APPELLATE AUTHORITY (FAA). HE CALLED FOR A REMAND REPORT FROM THE A.O. AFTER CONS IDERING THE SUBMISSION OF THE ASSESSEE AND THE ASSESSMENT ORDER, HE FOUND THAT DISALLOWANC ES WERE MADE ON ACCOUNT OF NON PRODUCING OF SUPPORTING VOUCHERS. HE HELD THAT PAYM ENTS WERE MADE BY CHEQUE BY BOTH BOMBAY AND GOA DIVISION ON RUNNING AND MAINTENANCE EXPENSES AMOUNTING TO RS.30.69 LAKHS (I.E. TOLL CHARGES-RS.8,28,437/-, RTO TAXES A ND EXPENSES RS.13,66,223/-, RUNNING EXPENSES RS.22,259/-, REPAIRS & MAINTENANCE-RS.3, 21,253/-, OIL A/C.-RS.1,57,021/- & 3 I.T.A NO: 4520/UM/2009 MR. MEENA D. GUPTA SPARE PARTS-RS.3,74,350/-) DID NOT MERIT ANY DISALL OWANCE. SIMILARLY, HE WAS OF THE OPINION THAT SALARY OF DRIVER/CLEANER WAS FULLY JUS TIFIABLE AND NO DISALLOWANCE WAS CALLED FOR IN THIS REGARD. IN HIS OPINION, THE PERCENTAGE OF DISALLOWANCE ON RUNNING AND MAINTENANCE EXPENSES THAT COULD BE MADE WAS OF RS.1 5.51 LAKHS. HE FINALLY HELD THAT THE DISALLOWANCE TOWARDS RUNNING AND MAINTENANCE EXPENS ES SHOULD BE RESTRICTED TO 5% OF TOTAL CALCULATED EXPENSES OF RS.15.51 LAKHS. THUS, HE REDUCED THE ADDITION MADE BY THE A.O. TO RS.77,599/-. 5. BEFORE US, THE DEPARTMENTAL REPRESENTATIVE (DR) SUB MITTED THAT THE ADDITION MADE BY THE AO WAS AS PER THE CONSENT GIVEN BY THE ASSES SEE. HE REFERRED THE PAGES 499 AND 500 OF THE PAPER BOOK SUBMITTED BY THE ASSESSEE. HE FUR THER STATED THAT THE AO HAD NOT INITIATED PENALTY PROCEEDING U/S. 271(1)(C) BECAUSE THE ASSES SEE HAD AGREED FOR THE ADDITIONS, THAT ASSESSEE HAD ALREADY PAID TAX ON THE AGREED AMOUNT. 6. THE AUTHORISED REPRESENTATIVE (AR) SUBMITTED THAT T HE ASSESSEE HAD COMMITTED A MISTAKE AND AGREEING TO THE ADDITIONS MADE BY THE A .O. THAT NO ADDITION COULD BE MADE FOR THE CHEQUE PAYMENTS, THAT CIT(A) HAD RIGHTLY RESTRI CTED THE DISALLOWANCE MADE BY THE AO. HE RELIED UPON THE ORDER DELIVERED BY THE B BENCH OF THE ITAT, MUMBAI (SMT. MEENA D. GUPTA IN ITA NO. 5379/MUM/2009 DATED 08.07.2011 AY 2006-07).IN THAT YEAR ALSO SAME QUESTION HAD ARISEN BEFORE THE TRIBUNAL. SALARY PAI D TO THE DRIVERS AND CLEANERS IN THAT YEAR WAS HELD TO BE JUSTIFIED. ABOUT THE BALANCE AMOUNT OF RS.16.11 LAKHS, INCURRED UNDER THE SAME HEAD, IT WAS 20% OF CASH EXPENSES SHOULD BE DI SALLOWED. FOLLOWING ARE THE OBSERVATIONS OF THE TRIBUNAL .. IN OUR CONSIDERED OPINION IT WOULD BE JUST AND FAIR IF DISALLOWANCE OF EXPENSES IS SUSTAINED AT 20% OF THE OTHER CASH EXPENSES AMOUNTING TO RS.16,11,188/- FOR WANT OF SUPPORTING EVIDENCE AGAI NST THE CASH EXPENSES. RESPECTFULLY FOLLOWING THE ORDER OF THE CO-ORDINATE BENCH, WE HOLD THAT DISALLOWANCE OF EXPENSES @ 20% OF THE CASH EXPENSES (SALARIES PAID TO DRIVERS/CLEANERS NOT TO BE INCLUDED) HAS TO BE DISALLOWED FOR THE YEAR UNDER CONSIDERATI ON. IN OTHER WORDS, DISALLOWANCE TOWARDS RUNNING AND MAINTENANCE EXPENSES (CASH PAYM ENTS) IS TO BE RESTRICTED TO 20% OF TOTAL CASH EXPENSES OF RS.15.51 LAKHS. 4 I.T.A NO: 4520/UM/2009 MR. MEENA D. GUPTA 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S PARTLY ALLOWED. PRONOUNCED IN THE OPEN COURT ON 11 TH JULY , 2012 SD/- (B.R. MITTAL) JUDICIAL MEMBER SD/- (RAJENDRA) ACCOUNTANT MEMBER MUMBAI, DATED : 11 TH JULY, 2012 ROSHANI COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. COMMISSIONER OF INCOME TAX (APPEALS),XIV, MUMBA I 4. COMMISSIONER OF INCOME TAX, 14 , MUMBAI 5. DEPARTMENTAL REPRESENTATIVE, BENCH J MUMBAI //TRUE COPY// BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI