S.D. Industries, C-243, Seth Bhamashah Krishi Mandi, Kota-324001, Kota V. ACIT, Circle-1, Kota, Circle-1, Kota

ITA 470/JPR/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 9118 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 4 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-08-2020
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Appeal Filed On: 04-04-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: CHANCHAL MEENA CIT DHK
• Keywords: Depreciation

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCH VC A, JAIPUR JH FOT; IKY JKWO] U;KF;D LNL; ,O A JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM VK;DJ VIHY LA-@ ITA NO. 470/JP/2019 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2014-15. S.D. INDUSTRIES, C-243, SETH BHAMASHAH KRISHI MANDI, KOTA. CUKE VS. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE -1, KOTA. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. ABIFS 8422 M VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : NONE JKTLO DH VKSJ LS@ REVENUE BY : MS CHANCHAL MEENA (ADDL.CIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 30.07.2020. ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 04/08/2020. VKNS'K@ ORDER PER VIJAY PAL RAO, JM : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER DATED 28.01.2019 OF LD. CIT (A), KOTA FOR THE ASSESSMENT YEAR 2014-15. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS :- 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN VIEW OF THE DETAILED WRITTEN AND ORAL SUBMISSIONS MADE A ND THE EVIDENCE ALREADY AVAILABLE ON AOS OWN RECORD AND FURTHER EV IDENCES ADDUCED BY THE ASSESSEE THE ORDERS OF THE LEARNED L OWER AUTHORITIES ARE AGAINST THE LAW AND FACTS OF THE CA SE. 2 ITA NO. 470/JP/2019 M/S. S.D. INDUSTRIES, KOTA. 1.1 THE LD. CIT (A) ERRED IN CONFIRMING THE ORDER O F LEARNED ASSESSING OFFICER BY PASSING AN EX-PARTE ORDER WITHOUT GIVING SUFFICIENT OPPORTUNITY OF HEARING TO THE ASSESSEE AND HENCE OR DER OF LD. CIT (A) MAY BE QUASHED. 2. THAT ON THE FACTS, IN THE CIRCUMSTANCES OF THE C ASE, THE LD. ASSESSING OFFICER ERRED IN MAKING DISALLOWANCE OF R S. 2,60,000/- I.E., 20% OF TOTAL EXPENSES OF RS. 13,00,059/- ON PR ESUMPTIONS OF PERSONAL USE, PAYMENTS IN CASH AND NOT SUPPORTED BY PROPER VOUCHERS AND THE LD. CIT (APPEALS), KOTA ALSO ERRED IN CONFIRMING THE SAME TO THE EXTENT OF RS. 1,30,000/- WITHOUT TH ERE BEING ANY BASIS. 3. THE APPELLANT CRAVES LEAVE TO ADD, AMEND OR ALTE R ANY GROUND AT/BEFORE THE TIME OF HEARING OF APPEAL. THE APPELL ANT, THEREFORE, PRAYS THAT THE ORDER KINDLY BE MODIFIED AND THE DEM AND KINDLY BE QUASHED ACCORDINGLY. 2. NONE HAS APPEARED ON BEHALF OF THE ASSESSEE WHEN THIS APPEAL WAS CALLED FOR HEARING THROUGH VIDEO CONFERENCE DESPITE THE NOTICE OF HEARING WAS SENT TO THE ASSESSEE THROUGH E-MAIL ADDRESS OF THE ASSESSEE GIV EN IN FORM NO. 36. ACCORDINGLY, WE PROPOSE TO HEAR AND DISPOSE OFF THE APPEAL EX PARTE . 3. THE ONLY ISSUE RAISED IN THIS APPEAL IS REGARDIN G DISALLOWANCE OF EXPENDITURE OF RS. 1,30,000/- CONFIRMED BY THE LD. CIT (A). THE A SSESSEE IS A PARTNERSHIP FIRM AND ENGAGED IN THE BUSINESS OF WHOLESALE GRAIN MERCHANT AND COMMISSION AGENT. THE ASSESSEE FILED ITS RETURN OF INCOME ON 26 TH SEPTEMBER, 2014 DECLARING TOTAL INCOME OF RS. 11,61,590/-. DURING THE COURSE OF SCRUTINY ASS ESSMENT, THE AO NOTED THAT VARIOUS EXPENSES TOTAL AMOUNTING TO RS. 13,00,059/- WAS CLA IMED BY THE ASSESSEE IN THE PROFIT & LOSS ACCOUNT WHICH WERE NOT PROPERLY VOUCHED AND WERE INCURRED IN CASH. THEREFORE, 3 ITA NO. 470/JP/2019 M/S. S.D. INDUSTRIES, KOTA. THE AO OPINED THAT THESE EXPENSES ARE NOT SUBJECTED TO VERIFICATION AND THE TELEPHONE AND CAR EXPENSES INCURRED BY THE ASSESSEE FIRM CANN OT BE RULED OUT FOR PERSONAL USE OF THE PARTNERS. THE AO ISSUED A SHOW CAUSE NOTICE AS TO WHY THE NECESSARY DISALLOWANCE SHOULD NOT BE MADE OUT OF THE ABOVE EXPENSES. IN T HE ABSENCE OF ANY REPLY OR SATISFACTORY EXPLANATION IN THIS REGARD, THE AO MAD E DISALLOWANCE OF 20% OF THESE EXPENSES WHICH COMES TO RS. 2,60,000/-. THE ASSESS EE CHALLENGED THE ACTION OF THE AO BEFORE THE LD. CIT (A). IN APPEAL, NOBODY HAS ATTE NDED BEFORE THE LD. CIT (A). HOWEVER, THE LD. CIT (A) WHILE PASSING THE IMPUGNED ORDER HAS RESTRICTED THE DISALLOWANCE TO 10% WHICH COMES TO RS. 1,30,000/-. 4. THE LD. D/R HAS SUBMITTED THAT THE AO HAS POINTE D OUT THE DEFECTS IN THE CLAIM OF VARIOUS EXPENSES AS THE SAME WERE NOT SUPPORTED BY PROPER VOUCHERS AND THE EXPENSES WERE INCURRED IN CASH. FURTHER, THE ASSESS EE HAS NOT SUBMITTED ANY SATISFACTORY EXPLANATION IN RESPONSE TO THE SHOW CA USE NOTICE ISSUED BY THE AO. ACCORDINGLY, THE DISALLOWANCE RESTRICTED BY LD. CIT (A) TO 10% IS PROPER. 5. HAVING CONSIDERED THE SUBMISSIONS OF THE LD. D/R AS WELL AS THE IMPUGNED ORDERS OF THE AUTHORITIES BELOW, WE NOTE THAT THE AO WHILE EXAMINING THE ALLOWABILITY OF THE EXPENSES HAS GIVEN THE DETAILED FINDING IN PARA 4 T O 4.2 AS UNDER :- 4. IN THE PROFIT & LOSS ACCOUNT THE ASSESSEE DEBI TED FOLLOWING EXPENSES :- (I) CAR DEPRECIATION RS. 60,708/- (II) PETROL EXPENSES RS. 1,20,044/- 4 ITA NO. 470/JP/2019 M/S. S.D. INDUSTRIES, KOTA. (III) CAR EXPENSES RS. 8,093/- (IV) FREIGHT RS. 31,152/- (V) CAR INSURANCE RS. 10,224/- (VI) SHOP EXPENSES RS. 1,90,891/- (VII) TELEPHONE EXPENSES RS. 35,806/- (VIII) WELFARE EXPENSES RS. 28,600/- (IX) HAMALI RS. 8,14,541/- TOTAL : RS. 13,00,059/- 4.1. ON EXAMINATION, IT IS NOTICED THAT THE ABOVE E XPENSES CLAIMED BY THE ASSESSEE ARE NOT PROPERLY VOUCHED AND THESE EXP ENSES WERE MET THROUGH CASH. THEREFORE, THE SAME ARE NOT SUBJECT T O VERIFICATION. ALSO, USE OF TELEPHONE AND CAR BY THE ASSESSEE FOR PURPOS ES OTHER THAN ASSESSEES BUSINESS CANNOT BE RULED OUT. THEREFORE, THE ASSESSEE WAS ASKED VIDE ORDER SHEET ENTRY DATED 08.12.2016 TO SH OW CAUSE AS TO WHY NECESSARY DISALLOWANCE MAY NOT BE MADE OUT OF THE A BOVE EXPENSES. 4.2. THE ASSESSEE HAS NOT SUBMITTED ANY SATISFACTOR Y EXPLANATION IN THIS REGARD. AS STATED ABOVE, THE EXPENSES CLAIMED AFORE SAID ARE NOT SUBJECT TO VERIFICATION FOR WANT OF PROPER VOUCHERS COUPLED WITH CASH PAYMENTS. FURTHER, USE OF TELEPHONE AND CAR FOR OTHER THAN BU SINESS PURPOSES CANNOT BE RULED OUT. CONSIDERING THESE FACTS, 20% OF THESE EXPENSES, WHICH COMES TO RS. 2,60,000/- IS DISALLOWED AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE FIRM. IT IS EVIDENT FROM THESE DETAILS THAT ALL THESE EXP ENSES ARE IN RESPECT OF VEHICLE/CAR EXPENSES, FREIGHT, SHOP EXPENSES, TELEPHONE EXPENSE S, WELFARE EXPENSES AND HAMALI EXPENSES. THE AO HAS FURTHER OBSERVED THAT THE EXP ENSES ARE NOT VERIFIABLE DUE TO THE REASON THAT THESE ARE NOT PROPERLY VOUCHED AND INCU RRED IN CASH. THEREFORE, ONCE THE 5 ITA NO. 470/JP/2019 M/S. S.D. INDUSTRIES, KOTA. AO HAS ASKED THE ASSESSEE TO SHOW CAUSE AS TO WHY T HE NECESSARY DISALLOWANCE SHOULD NOT BE MADE AND THERE IS NO EXPLANATION ON THE PART OF THE ASSESSEE, THEN QUESTION ARISES WHETHER THESE EXPENSES ARE INCURRED WHOLLY A ND EXCLUSIVELY FOR THE PURPOSES OF BUSINESS OF THE ASSESSEE OR NOT. IN THOSE CIRCUMST ANCES, THE AO WAS RIGHT TO MAKE DISALLOWANCE AT A CERTAIN PERCENTAGE OF THE EXPENSE S INSTEAD OF THE ENTIRE EXPENDITURE. THE LD. CIT (A) WHILE PASSING THE IMPUGNED ORDER HA S RESTRICTED THE DISALLOWANCE TO 10% AS AGAINST 20% DISALLOWED BY THE AO WHICH IN OUR VIEW IS REASONABLE AND JUSTIFIED HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE. THE ASSESSEE HAS NOT SUBMITTED ANY EXPLANATION EVEN BEFORE THE LD. CIT ( A) OR BEFORE US IN SUPPORT OF THE CLAIM, THEREFORE, WE DO NOT FIND ANY ERROR OR ILLEG ALITY IN THE IMPUGNED ORDER OF LD. CIT (A), THE SAME IS UPHELD. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISS ED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 04/08/2 020. SD/- SD/- ( FOE FLAG ;KNO ) ( FOT; IKY JKWO (VIKRAM SINGH YADAV ) (VIJAY PAL RAO) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER JAIPUR DATED:- 04/08/2020. DAS/ VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT- M/S. S.D. INDUSTRIES, KOTA. 2. THE RESPONDENT THE ACIT, CIRCLE-1, KOTA. 3. THE CIT(A). 6 ITA NO. 470/JP/2019 M/S. S.D. INDUSTRIES, KOTA. 4. THE CIT, 5. THE DR, ITAT, JAIPUR 6. GUARD FILE (ITA NO. 470/JP/2019) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR