BHIMRAJ D JAIN, MUMBAI V. ITO 24(1)(3), MUMBAI

ITA 4851/MUM/2012

• Counselvise Citation: 485119914 RSA 2012
• Duration Of Justice: 1 year(s) 6 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-02-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 06-02-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 24-07-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: M C PERUMAL
• Keywords: Business expenditure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'B' BENCH, MUMBAI BEFORE SHRI B.R. MITTAL, JUDICIAL MEMBER AND SHRI RAJENDRA, ACCOUNTANT MEMBER ITA NO. 4851/MUM/2012 (ASSESSMENT YEAR: 2007-08) SHRI BHIMRAJ D. JAIN INCOME TAX OFFICER 24(1)(3) 2, JAGIRDAR MANZIL C-13, 5 TH FLOOR, PRATYAKSHAR DAFTARY ROAD, MALAD (E) VS. BHAVAN, BANDRA KURLA COMPLEX MUMBAI 400097 MUMBAI 400051 PAN ACEPJ1175H APPELLANT RESPONDENT APPELLANT BY: NONE RESPONDENT BY: SHRI M.C. PERUMAL DATE OF HEARING: 06.02.2014 DATE OF PRONOUNCEMENT: 12.02.2014 O R D E R PER B.R. MITTAL J.M. THE ASSESSEE HAS FIELD THIS APPEAL FOR A.Y. 2007-08 AGAINST THE ORDER OF THE CIT(A) DATED 30.05.2012 ON THE FOLLOWING GROUND S: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LEARNED CIT(A) ERRED IN ALLOWING THE DISALLOWANCE M ADE BY THE ASSESSING OFFICER OF PURCHASE OF RS.1,29,056/- DUE TO NON FURNISHING OF AUTHENTIC VOUCHERS AND PAYMENTS. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED CIT(A) ERRED IN ALLOWING THE DISALLOWANCE M ADE BY THE ASSESSING OFFICER OF INTEREST ON UNSECURED LOAN OF RS.2,54,880/- AS NON BUSINESS EXPENDITURE. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED CIT(A) ERRED IN ALLOWING THE ADDITION MADE BY THE ASSESSING OFFICER OF PAYMENT OF MVAT & SALES TAX OF RS.15,448/- DUE TO NON SUBMISSION OF DOCUMENTARY EVIDENCE OF PA YMENT. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED CIT(A) ERRED IN ALLOWING THE ADDITION MADE BY THE ASSESSING OFFICER OF RS.57600/- ON ACCOUNT OF LOW W ITHDRAWALS FOR HOUSEHOLD EXPENSES. ITA NO. 4851/MUM/2012 SHRI BHIMRAJ D. JAIN 2 2. THE APPEAL CAME UP FOR HEARING BEFORE THE TRIBUNAL ON 4 TH SEPTEMBER, 2013 AND THE SAME WAS ADJOURNED TO 6 TH FEBRUARY, 2014 AT THE REQUEST OF ASSESSEES COUNSEL VIDE LETTER DATED 3 RD SEPTEMBER, 2013. HOWEVER, ON THE DATE FIXED FOR HEARING NO ONE APPEARED ON BEHALF OF THE ASSESSEE NOR THERE IS ANY APPLICATION FOR ADJOURNMENT. HOWEVER, THE LEARN ED D.R. SUBMITTED THAT THERE IS NO MERIT IN THE APPEAL OF THE ASSESSEE AS THERE IS NO DOCUMENT PLACED BEFORE THE TRIBUNAL TO CONTROVERT THE DISALL OWANCE CONFIRMED BY THE LEARNED CIT(A). HE SUBMITTED THAT THE ORDER OF THE LEARNED CIT(A) MAY BE CONFIRMED. 3. WE HAVE DECIDED TO PROCEED EXPARTE, QUA ASSESSEE, A ND TO DISPOSE OF THE APPEAL CONSIDERING THE ORDERS OF THE AUTHORITIE S BELOW AND THE SUBMISSIONS OF THE LEARNED D.R. WE OBSERVED THAT TH E ASSESSEE IS A PROPRIETOR OF M/S. MAHAVIR JEWELLERS AND ENGAGED IN THE BUSINESS OF MANUFACTURING AND TRADING OF GOLD AND SILVER ORNAME NTS. DURING THE YEAR UNDER CONSIDERATION, ASSESSEE DECLARED NET PROFIT O F ` 2,31,094/- ON TOTAL SALE OF ` 18,71,465/-. THE AO ASKED THE ASSESSEE TO FURNISH S TOCK DETAILS, PURCHASE DETAILS AND SALES DETAILS, SUPPORTING EXPE NSE VOUCHERS, LOAN CONFIRMATION, ETC. THE ASSESSEE STATED THAT THE NAT URE OF BUSINESS IS COVERED UNDER SECTION 44AF OF THE INCOME TAX ACT AND, THERE FORE, ASSESSEE IS NOT REQUIRED EITHER TO MAINTAIN BOOKS OF ACCOUNT UNDER SECTION 44AA OR TO GET THE ACCOUNTS AUDITED UNDER SECTION 44AB OF THE ACT. IT WAS ALSO STATED THAT THE NET PROFIT DECLARED IS MORE THAN 5% AND HENCE T HE DETAILS ASKED FOR BY THE AO WILL BE PROVIDED. 4. THE AO STATED THAT IN THE RETURN FILED BY THE ASSES SEE, THE ASSESSEE DOES NOT CLAIM THE BENEFIT UNDER SECTION 44AF AND W RITES NIL PROFIT IN COLUMN 33 SUB CLAUSE (III). IN VIEW OF THE ABOVE TH E AO, IN THE TRADING ACCOUNT OF THE ASSESSEE, HAS OBSERVED THAT THE ASSE SSEE HAS CLAIMED PURCHASE OF ` 12,90,563/- IN RESPECT OF WHICH NO AUTHENTIC VOUCHE RS ARE FURNISHED AND ITS PAYMENTS ARE ALSO NOT SUBSTANTIAT ED. THE AO DISALLOWED 10% OF THE TOTAL PURCHASE, WHICH COMES TO ` 1,29,056/- AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. THE LEARNED CIT(A) AL SO CONFIRMED THE SAID ACTION OF THE AO. HENCE THE ASSESSEE IS IN APPEAL B EFORE US IN GROUND NO. 1 OF THE APPEAL. ITA NO. 4851/MUM/2012 SHRI BHIMRAJ D. JAIN 3 5. SINCE THE ASSESSEE HAS NOT CLAIMED THE BENEFIT OF S ECTION 44AF IN THE RETURN FILED AND ALSO COULD NOT FURNISH THE REQUISI TE VOUCHERS TO AUTHENTICATE THE PURCHASES CLAIMED BY THE ASSESSEE, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDERS OF THE AUTHORIT IES BELOW IN MAKING ADHOC DISALLOWANCE OF 10% TOWARDS PURCHASES. THEREFORE, G ROUND NO. 1 OF THE APPEAL TAKEN BY THE ASSESSEE IS REJECTED. 6. IN RESPECT OF GROUND NO. 2 OF THE APPEAL OF DISALLO WANCE OF INTEREST ON UNSECURED LOAN OF ` 2,54,880/- AS NON-BUSINESS EXPENDITURE THE AO HAS STATED IN PARA 6 OF HIS ORDER AS UNDER: - 6. THE ASSESSEE BORROWS UNSECURED LOAN AND CLAIMS INTEREST @12% WHICH IS RS.5,03,839/- AS BUSINESS EXPENDITURE. HOW EVER, THESE UNSECURED LOANS ARE USED BY THE ASSESSEE FOR ACQUIR ING PLOT (AT MALWANI) ` 2,13,670/-, PROPERTY PREMISES (MALWANI) RS.3,04,060 /-, FLAT PREMISES ` 12,56,270/-, HOME PREMISES (RAJNAGAR) ` 3,50,000/-. TOTAL OF THESE NON BUSINESS INVESTMENTS COME TO RS.21,24, 000/-, INTEREST @12@ ON RS.21,24,000/- COMES TO RS.2,54,880/- WHICH IS CONSIDERED AS NON BUSINESS EXPENDITURE AND HENCE DISALLOWED. P ENALTY PROCEEDINGS U/S 271(1)(C) OF THE I.T. ACT, 1961 ARE INITIATE SEPARATELY. 7. THE LEARNED CIT(A) HAS STATED THAT THE ASSESSEE HAS NOT PRODUCED ANY EVIDENCE TOWARDS PURCHASE OF PLOT OF LAND, FLAT AND RESIDENTIAL PREMISES. NO DETAILS IN RESPECT OF THE SOURCES AS TO HOW THEY WE RE UTILISED FOR PURCHASE OF THE ABOVE ASSETS WERE FURNISHED BEFORE HIM TO SHOW THAT THE INVESTMENTS ON THE ABOVE ASSETS WERE MADE IN THE EARLIER YEARS AND ONLY ` 5,17,530/- WAS INCURRED FOR MAKING THE ABOVE INVESTMENTS IN THE AS SESSMENT YEAR UNDER CONSIDERATION. THEREFORE, THE LEARNED CIT(A) HAS ST ATED THAT IN THE ABSENCE OF ANY EVIDENCE FILED, THE ADDITION MADE BY THE AO IS SUSTAINED. 8. SINCE NO EVIDENCE ARE ALSO FILED BEFORE US TO CONTR OVERT THE FACTS AS STATED BY THE LEARNED CIT(A) (SUPRA), WE DO NOT FIN D ANY REASON TO INTERFERE WITH THE ORDER OF THE LEARNED CIT(A). HENCE GROUND NO. 2 OF THE APPEAL TAKEN BY THE ASSESSEE IS REJECTED. 9. IN RESPECT OF GROUND NO. 3 OF THE APPEAL THE AO HAS STATED THAT AS PER THE BALANCE SHEET AS ON 31 ST MARCH, 2007, ON THE LIABILITIES SIDE THE ASSESSEE HAS SHOWN M. VAT AND SALES TAX AT ` 564/- AND ` 14,924/- RESPECTIVELY. THE ASSESSEE WAS ASKED TO FURNISH CHA LLANS OF SALE TAX AND M. VAT PAYMENT BUT THE ASSESSEE FAILED TO FURNISH THE SAME. IN VIEW OF THE ITA NO. 4851/MUM/2012 SHRI BHIMRAJ D. JAIN 4 ABOVE THE AO ADDED THE AGGREGATE AMOUNT OF ` 15,488/- TO THE INCOME OF THE ASSESSEE. THE LEARNED CIT(A) ALSO CONFIRMED THE ACT ION OF THE AO AS THE ASSESSEE COULD NOT FURNISH THE REQUISITE EVIDENCE I N RESPECT OF THE ABOVE PAYMENT. 10. IN THE APPEAL BEFORE US ALSO NO DETAILS HAVE BEEN F ILED BY THE ASSESSEE TOWARDS PAYMENT OF M. VAT AND SALE TAXES AGGREGATIN G TO ` 15,488/-. THEREFORE, WE UPHOLD THE ORDER OF THE LEARNED CIT(A ) AFTER REJECTING GROUND NO. 3 OF THE APPEAL TAKEN BY THE ASSESSEE. 11. IN RESPECT OF GROUND NO. 4 OF THE APPEAL THE AO HAS STATED THAT THE ASSESSEE HAS SHOWN HOUSEHOLD EXPENSES AT ` 62,400/- BUT CONSIDERING THE SIZE OF ASSESSEES FAMILY AND STANDARD OF LIVING, T HE AO ESTIMATED THE EXPENSES AT ` 10,000/- PER MONTH AND ACCORDINGLY ADDED ` 57,600/- UNDER THE HEAD ON ACCOUNT OF LOW WITHDRAWALS FOR HOUSEHOL D EXPENSES. IN THE APPEAL BEFORE THE FIRST APPELLATE AUTHORITY IT WAS CONTENDED THAT BESIDES THE TOTAL WITHDRAWALS OF THE ASSESSEE OF ` 62,400/-, THERE WERE WITHDRAWALS FROM HIS WIFE OF ` 36,000/- AND FROM HIS SON OF ` 54,000/-. THUS THE TOTAL AMOUNT OF WITHDRAWALS TOWARDS FOOD EXPENSES WAS ` 1,52,400/-, I.E. ` 12,700/- PER MONTH, HIGHER THAN THE ESTIMATE OF THE AO. THE LEAR NED CIT(A) REJECTED THE CONTENTION OF THE ASSESSEE ON THE GROUND THAT THE A SSESSEE HAS NOT PRODUCED COPIES OF THE BANK ACCOUNT, EVIDENCE FOR T HE SOURCE OF INCOME AND EXPENDITURE INCURRED AS PROOF TO SUBSTANTIATE THE W ITHDRAWALS MADE BY HIM. HENCE THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL . 12. WE OBSERVED THAT THE TOTAL WITHDRAWALS OF THE ASSES SEE FOR THE YEAR UNDER CONSIDERATION IS STATED TO BE ` 1,83,039/- OUT OF WHICH ` 62,400/- IN CASH FOR FOOD EXPENSES. THE LEARNED CIT(A) HAS REJE CTED THE CLAIM OF THE ASSESSEE OF WITHDRAWALS OF HIS WIFE AND HIS SON OF ` 36,000/- AND ` 54,000/- RESPECTIVELY MERELY BECAUSE THE ASSESSEE HAD NOT PR ODUCED COPIES OF THE BANK ACCOUNT, EVIDENCE OF SOURCE OF INCOME AND EXPE NDITURE INCURRED, ETC. CONSIDERING THE SUBMISSIONS OF THE ASSESSEE BEFORE THE AUTHORITIES BELOW AND THE FACT THAT THE ASSESSEE HAS SHOWN TOTAL WITH DRAWALS OF ` 1,83,000/- AND WITHOUT GIVING FURTHER BRAKE UP BY THE AUTHORIT IES BELOW, WE HOLD THAT THE SAID ADDITION OF ` 57,600/- ON ACCOUNT OF LOW WITHDRAWALS FOR HOUSEHOL D ITA NO. 4851/MUM/2012 SHRI BHIMRAJ D. JAIN 5 EXPENSES IS NOT JUSTIFIED AS THE SAME IS NOT SUPPOR TED BY FACTS BY THE AUTHORITIES BELOW. HENCE WE DELETE THE SAID ADDITIO N OF ` 57,600/- BY ALLOWING GROUND NO. 4 OF THE APPEAL TAKEN BY THE AS SESSEE. 13. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWE D IN PART. ORDER PRONOUNCED IN THE OPEN COURT ON 12 TH FEBRUARY, 2014. SD/- SD/- RAJENDRA (B.R. MITTAL) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 12 TH FEBRUARY, 2014 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 34, MUMBAI 4. THE CIT 24, MUMBAI CITY 5. THE DR, B BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.