SHRI MILIND WASUDEO DESHKAR, Nagpur V. INCOME TAX OFFICER WARD-1(1), Nagpur

ITA 489/NAG/2014

• Counselvise Citation: [2014] 117 COUNSELVISE.COM (IT) 8862 (ITAT-NAGPUR)
• Appeal Type: Income Tax (Transfer Pricing) Appeal
• Pronouncement Date: 23-10-2014
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 05-04-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 27-11-2014
• Court: TRIBUNAL
• Department Lawyers: A R NINAWE
• Keywords: Business expenditure
• Section: 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL NAGPUR BENCH, NAGPUR BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER AND SHRI RAM LAL NEGI, JUDICIAL MEMBER ITA NO.489/NAG./2014 (ASSESSMENT YEAR : 200910 ) MILIND WASUDEO DESHKAR C/O MANOJ G. MORAYANI, ADVOCATE, 1 ST FLOOR, SUDAMA BHAWAN NAGPUR PIN 440002. PAN ABJPD5171F . APPELLANT V/S INCOME TAX OFFICER, WARD NO-I,NAGPUR. . RESPONDENT REVENUE BY : SHRI A.R. NINAWE ASSESSEE BY : SHRI MANOJ G.MORYANI, ADVOCATE DATE OF HEARING 27.03.2017 DATE OF ORDER 30.03 .2017 O R D E R PER RAM LAL NEGI, J.M. THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGAI NST ORDER DATED 22.9.2004 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS)-I, NAGPUR (HEREINAFTER REFERRED TO AS CIT (A), PERTAINING TO THE ASSESSMENT YEAR 2009- 10, WHEREBY THE LD. CIT (A) PARTLY ALLOWED THE APPE AL FILED BY THE ASSESSEE AGAINST ASSESSMENT ORDER PASSED UNDER SECTION 144 O F THE INCOME TAX ACT 1961,(HEREINAFTER REFERRED TO AS THE ACT) 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE EN GAGED IN THE BUSINESS OF PLYING TAXIES AND TRAVEL AGENT AND OPERATOR AND ALS O DERIVING INCOME FROM PROPRIETARY CONCERN NAMELY, M/S MAHESH TRAVELS, FIL ED HIS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2009-10 DECLARING THE TOTAL INCOME OF RS.7,83,086/- THE RETURN WAS PROCESSED AND AFTER SCRUTINY ASSESSM ENT ORDER WAS PASSED U/S 144 OF THE ACT, DETERMINING THE TOTAL INCOME OF THE ASSESSEE AT RS. 47,25,962/-. THE ADDITION OF RS.47,25,962/- WAS MAD E BY THE AO HOLDING 2 MILIND WASUDEO DESHKAR THAT THE ASSESSEE HAS FAILED TO PRODUCE THE VOUCHER S TO ESTABLISH THE EXPENSES CLAIMED AND AMOUNT WITHDRAWN FROM THE BANK ACCOUNT. THE ASSESSMENT ORDER WAS CHALLENGED IN APPEAL BEFORE TH E LD. CIT(A). THE LD. CIT(A) DELETED RS. 39,00,000/- OUT OF THE TOTAL AD DITION MADE BY THE ASSESSEE AND CONFIRMED THE REMAINING AMOUNT OF RS. 7,87,660/-. STILL AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE THE TRI BUNAL BY RAISING THE FOLLOWING GROUNDS OF APPEAL: 1. THE ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-I IS ILLEGAL, INVALID AND BAD IN LAW. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) -I, ERRED IN RESTRICTING 5% OF EXPENDITURE AS AGAINST 30% MADE B Y THE ASSESSING OFFICER, THEREFORE ORDER PASSED IS UNJUSTIFIED, UNW ARRANTED AND EXCESSIVE. 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) -I, ERRED IN CONFIRMING ADDITION OF RS.7, 87,660/-, THEREFORE OR DER PASSED IS UNJUSTIFIED, UNWARRANTED AND EXCESSIVE. 3. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE SUBM ITTED THAT AO HAS WRONGLY DISALLOWED 30% OF THE EXPENSES CLAIMED BY T HE ASSESSEE BY EXERCISING POWERS U/S 145(3) OF THE ACT. THE ASSESS EE HAS SUBMITTED VOUCHERS TO SUBSTANTIATE THE EXPENDITURE. SIMILARLY , THE AO WRONGLY DISALLOWED 30% OF THE AMOUNT OF RS. 20,86,282/-WITH DRAWN FROM THE ACCOUNT OF KOTAK MAHINDRA BANK REJECTING THE CONTEN TION OF THE ASSESSEE THAT THE AMOUNT WAS RECEIVED FROM CUSTOMERS FOR BOO KING AIR TICKETS. IN VIEW OF THE AFORESAID FACTS THE LD. CIT(A) RESTRICT ED THE DISALLOWANCE TO 5% AS AGAINST 30% MADE BY AO. THE LD. COUNSEL FURTHER SUBMITTED THAT SINCE ALL THE EXPENSES WERE MADE EXCLUSIVELY FOR THE PURP OSES OF THE BUSINESS AND THE SAME ARE VERIFIABLE THE LD. CIT(A) OUGHT TO HAV E DELETED THE ENTIRE DISALLOWANCE MADE BY THE AO. 4. ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESEN TATIVE RELYING ON THE ORDER PASSED BY THE LD. CIT(A) SUBMITTED THAT SINCE , THE LD. CIT(A) HAS 3 MILIND WASUDEO DESHKAR ALREADY RESTRICTED THE DISALLOWANCE TO 5% THERE IS NO SCOPE FOR FURTHER REDUCING OR DELETING THE SAME. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ONLY ISSUE URGED BY THE ASSESSEE IS THA T THE LD. CIT(A) HAS WRONGLY CONFIRMED THE DISALLOWANCE OF 5% OF THE TOT AL BUSINESS EXPENSES CLAIMED BY THE ASSESSEE AND ON WITHDRAWAL OF AMOUNT IN QUESTION FROM THE BANK ACCOUNT. THE LD. CIT(A) HAS RESTRICTED THE DIS ALLOWANCE TO 5% ON THE GROUND THAT NO PROPER RECORDS ARE MAINTAINED IN RES PECT OF THE EXPENDITURE SUCH AS REPAIR AND MAINTENANCE, FUEL CHARGES, DRIVE RS DAILY ALLOWANCES, ROUTINE EN-ROUTE EXPENDITURE AND CROSS BORDER EXPE NDITURE. WE NOTICE THAT THAT THE AUTHORITIES BELOW HAVE DETERMINED THE DISA LLOWANCE WITHOUT VERIFYING THE VOUCHERS PRODUCED BY THE ASSESSEE. TH E LD. CIT(A) HAS CONFIRMED DISALLOWANCE OF 5% AMOUNTING TO RS.7,87,6 60/- ON ESTIMATION BASIS WITHOUT POINTING OUT THE HEAD/HEADS OF EXPEND ITURE UNDER WHICH THE ASSESSEE HAS CLAIMED EXCESS EXPENDITURE AND HOW THE ASSESSEE HAS CLAIMED EXCESS EXPENDITURE. MOREOVER, IT IS NOT THE CASE OF REVENUE THAT THE EXPENSES CLAIMED BY THE ASSESSEE ARE NOT RELATED TO THE BUSINESS OF THE ASSESSEE. 6. REGARDING WITHDRAWAL OF RS. 20,86,282/- FROM KOT AK MAHINDRA BANK, THE LD. CIT(A) HAS NOT POINTED OUT ANY COGENT EVIDE NCE TO DISCARD THE CONTENTION OF THE ASSESSEE THAT THE AMOUNT WAS RECE IVED FROM THE CUSTOMERS FOR BOOKING AIR TICKETS. THE AUTHORITIES BELOW HAVE NOT REJECTED THE CONTENTION OF THE ASSESSEE THAT IN THE SAID BUS INESS THE NORMAL NET PROFIT VARIES BETWEEN 5 TO 8% DEPENDING ON VARIOUS FACTORS . 7. KEEPING IN VIEW THE AFORESAID FACTS IN THE LIGHT OF THE SUBMISSIONS MADE BY THE COUNSEL FOR THE ASSESSEE, WE ARE OF THE CONSIDERED VIEW THAT TOTAL DISALLOWANCE OF RS. 5,00,000/- WOULD MEET TH E ENDS OF JUSTICE. WE, THEREFORE, MODIFY THE ORDER OF THE LD. CIT(A) AND C ONFIRM DISALLOWANCE OF RS. 5,00,000/-. 4 MILIND WASUDEO DESHKAR IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS PART LY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 30.03.2017 SD/- SHAMIM YAHYA ACCOUNTANT MEMBER SD/- RAM LAL NEGI JUDICIAL MEMBER NAGPUR, DATED: 30.03.2017 COPY OF THE ORDER FORWARDED TO : (1) THE ASSESSEE; (2) THE REVENUE; (3) THE CIT(A); (4) THE CIT, NAGPUR CITY CONCERNED; (5) THE DR, ITAT, NAGPUR; (6) GUARD FILE. TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY (DY./ASSTT. REGISTRAR) ITAT, NAGPUR