DCIT, New Delhi V. Mrs. Anita Singal, New Delhi

ITA 5101/DEL/2012

• Counselvise Citation: 510120114 RSA 2012
• Duration Of Justice: 1 year(s) 5 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-03-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 25-03-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 01-10-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GAGAN SOOD
• Keywords: Depreciation; Business expenditure; Corroborative evidences
• Section: 68

Judgement Text

ITA NO. 5101/D/2012 & CO NO.469/D/12 ASSTT.. YEAR: 2009-10 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH `A NEW DELHI BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT AND SHRI R.P. TOLANI, JUDICIAL MEMBER I.T.A.NO.5101/DEL/2012 ASSESSMENT YEAR : 2009-10 DY.COMMISSIONER OF INCOME TAX, VS ANITA SIN GAL, CIRCLE 30(1), ROOM NO. 106, PR OP. M/S PAAWAN FILLING STATION, DRUM SHAPED BUILDING, E-2/16, 3 RD FLOOR, ANSARI ROAD, I.P. ESTATE, NEW DELHI-110002 NEW DELHI-110002 (PAN:AANPS5501R) C.O. NO.469/DEL/2012 (IN I.T.A.NO.5101/DEL/2012) ASSESSMENT YEAR : 2009-10 ANITA SINGAL, VS DCIT, NEW DELHI. NEW DELHI (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI GAGAN SOOD, SR. DR RESPONDENT BY : SHRI VED JAIN & RANO JAIN O R D E R PER R.P. TOLANI, J.M. IN THE APPEAL FILED BY THE REVENUE, THE FOLLOWING GROUNDS OF APPEAL HAVE BEEN PREFERRED:- 1. WHETHER THE LD. CIT(A) IS JUSTIFIED IN DELETIN G ADDITION OF RS.6,49,284/- OUT OF THE ADDITION OF R S. 6,99,284/- MADE BY THE AO ON A/C OF DISALLOWANCE UN DER THE HEAD DIWALI, CONVEYANCE & TRAVELLING EXPENSES WITHOUT GIVING BASIS FOR CONFIRMING DISALLOWANCE OF ONLY RS.50,000/-. ITA NO. 5101/D/2012 & CO NO.469/D/12 ASSTT.. YEAR: 2009-10 2 2. WHETHER THE LD. CIT(A) IS JUSTIFIED IN DELETIN G ADDITION OF RS. 2,78,072/- OUT OF THE ADDITION OF R S. 3,28.072/- MADE BY THE AO ON A/C OF DISALLOWANCE UN DER THE HEAD REPAIR & MAINTENANCE, CAR DEPRECIATION, INSURANCE & TELEPHONE EXPENSES WITHOUT GIVING BASIS FOR CONFIRMING DISALLOWANCE OF ONLY RS. 50,000/-'. 3. WHETHER THE LD. CIT(A) IS JUSTIFIED IN DELETING ADDITION OF RS. 1,16,798/- OUT OF THE ADDITION OF R S. 1,66,798/- MADE BY THE AO ON A/C OF AD HOC DISALLOW ANCE OUT OF EXPENSES ON THE GROUND OF PERSONAL USE WITHO UT GIVING BASIS FOR CONFIRMING DISALLOWANCE OF ONLY RS . 50,000/-'. 4. WHETHER THE LD. CIT(A) IS JUSTIFIED IN DELETING THE ADDITION OF RS. 43,000/- MADE BY THE AO ON A/C OF DISALLOWANCE OF MISC. EXPO PAID FOR MOBILE PURCHASE D FOR STAFF BY ENTERTAINING A NEW GROUND THAT SMALL MOBIL E SETS BELOW RS. 5,000/- WERE PURCHASED FOR THE STAFF WITH OUT CALLING FOR THE REMAND REPORT FROM THE AO OR WITHOU T RECORDING HIS SATISFACTION FOR ENTERTAINING SUCH NE W GROUND AS WARRANTED BY THE RATIO DECIDENDI OF THE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE O F JUTE CORP. OF INDIA LTD. VS. CIT (1991) 187 ITR 688 (SC)'. 5. 'WHETHER THE LD. CIT(A) IS JUSTIFIED IN DELETIN G THE ADDITION OF RS. 49,587/- MADE BY THE AO U/S 68 OF T HE IT ACT, 1961 OUT OF THE SUSPENSE A/C OF RS. 49,287/- B Y ENTERTAINING ENTIRELY NEW GROUND RAISED BY THE ASSE SSEE BEFORE HIM WITHOUT RECORDING HIS SATISFACTION AS WARRANTED BY THE RATIO DECIDENDI OF THE JUDGMENT OF THE HON'BLE SUPREME COURT OF INDIA IN THE CASE OF' JUTE CORP. OF INDIA LTD. V S. CIT (1991) 187 ITR 688 (SC)'. 2. THE ASSESSEES C.O. CHALLENGES FOLLOWING ADDITIO NS SUSTAINED BY THE COMMISSIONER OF INCOME TAX(A):- ITA NO. 5101/D/2012 & CO NO.469/D/12 ASSTT.. YEAR: 2009-10 3 I) RS.50,000/- OUT OF EXPENSES ON ANNUAL DAY CELEBRATI ON II) RS.50,000/- OUT OF DIWALI EXPENSES III) RS.50,000/- OUT OF REPAIR AND MAINTENANCE, CAR DEPRECIATION, INSURANCE AND TELEPHONE EXPENSES. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS RUNNING A PETROL PUMP UNDER THE NAME AND STYLE OF M/S PAAWAN FILLING STAT ION AT DELHI MATHURA ROAD, FARIDABAD. THE ASSESSMENT WAS FRAMED U/S 143 (2) WITH THE OBSERVATIONS MADE BY THE ASSESSING OFFICER THAT THE ASSESSEE ATTENDED PROCEEDINGS FROM TIME AND TIME AND FILED THE DETAIL S ASKED FOR AND THE ASSESSMENT WAS FRAMED AFTER DISCUSSION. HOWEVER, I N THE BODY OF THE ASSESSMENT ORDER, LD. ASSESSING OFFICER HAS MENTION ED THAT THE ASSESSEE FAILED TO PRODUCE ANY CONCLUSIVE EVIDENCE REGARDING DIWALI EXPENSES AND CONVEYANCE & TRAVELLING EXPENSES. BESIDES PERSONA L ELEMENT IN RELATION TO CAR DEPRECIATION, CAR RUNNING, MAINTENANCE AND TELE PHONE EXPENSES CANNOT BE RULED OUT. THEREFORE, THE RELEVANT DISALLOWANCES W ERE MADE. 4. THE ASSESSING OFFICER FURTHER FOUND THAT THE ASS ESSEE HAS SHOWN SUSPENSE ACCOUNT ON THE CREDIT SIDE WHICH IS EXPLAI NED BY THE ASSESSEE AND THE SAME WAS ALSO ADDED. THE AGGRIEVED ASSESSEE PR EFERRED FIRST APPEAL AND MADE VARIOUS PLEADINGS INCLUDING THE WRITTEN SUBMIS SIONS ON THE FOLLOWING LINES:- ITA NO. 5101/D/2012 & CO NO.469/D/12 ASSTT.. YEAR: 2009-10 4 (VI) DETAILS OF FOLLOWING EXPENSES CONVEYANCE & TRAVELLING DIWALI EXPENSES ELECTRICITY AND WATER MISCELLANEOUS EXPENSES REPAIRS AND MAINTENANCE SALARY TO MANAGER SALARY TO STAFF TELEPHONE EXPENSES 5. IN RESPONSE THERETO, THE ASSESSEE FILED VARIOUS DETAILS ALONG WITH SUPPORTING EVIDENCE VIDE LETTERS DATED 31.10.11, 4. 11.2011 AND 18.11.2011. THE COPIES OF THESE REPLIES WERE FILED BEFORE THE C OMMISSIONER OF INCOME TAX(A) ALSO. 6. LD. ASSESSING OFFICER WITHOUT VERIFYING OR LOOKI NG INTO THE DETAILS FILED BY THE ASSESSEE AND WITHOUT ASKING ANY FURTHE R INFORMATION ADDED THE AMOUNT OF RS.13,26,443/-. HE MADE THE FOLLOWING DI SALLOWANCES:- I) DISALLOWANCE OF 75% OF DIWALI EXPENSES 6,99,28 3.50/- AND CONVEYANCE AND TRAVELLING II) DISALLOWANCE OF MISC. EXPENSES 2,09,798/- III) DISALLOWANCE OF 50% OF REPAIR MAINTENANCE, 3,28,072/- CAR DEPRECIATION, CAR INSURANCE AND MOBILE/TELEPHON E EXPENSES ON ACCOUNT OF PERSONAL ELEMENT IV) ADDITION ON ACCOUNT OF CREDIT BALANCE IN THE 49,287/- SUSPENSE ACCOUNT ITA NO. 5101/D/2012 & CO NO.469/D/12 ASSTT.. YEAR: 2009-10 5 7. IT WAS PLEADED THAT THERE IS NO JUSTIFICATION IN ASSESSING OFFICERS AD HOC DISALLOWANCES WITHOUT GIVING ANY COGENT REASON AS TO HOW THE ASSESSEE HAS FAILED TO FILE THE DETAILS OR EXPLAIN THE NATUR E OF EXPENDITURE. THUS, THE ADDITIONS WERE CHALLENGED TO BE BASED ON GUESS WORK , SURMISES AND CONJECTURES AND WITHOUT ANY JUSTIFICATION AT ALL. LD. COMMISSIONER OF INCOME TAX(A) AFTER CONSIDERING THE SUBMISSIONS MAD E BY THE ASSESSEE GAVE RELIEF BY MAKING FOLLOWING OBSERVATIONS:- DIWALI, CONVEYANCE AND TRAVELING EXPENSE C(I) I HAVE CONSIDERED THE ORDER OF THE ASSESSING O FFICER AND SUBMISSIONS OF THE ASSESSEE AND I FIND CONSIDERABLE MERIT IN TH E SUBMISSION OF THE ASSESSEE THAT THERE IS NO PROPER JUSTIFICATION FOR MAKING SUCH HIGH AD HOC DISALLOWANCES WITHOUT ANY BASIS AND ACCORDINGLY THE ADDITION TO THE EXTENT OF RS.50,000/- IS CONFIRMED ON THE GROUND OF NON-BUSIN ESS EXPENDITURE AND THE BALANCE ADDITION OF RS.6,49,284/- (RS.6,99,284/- (- ) RS.50,000/-) IS DELETED. RS.3,28,072/- UNDER THE HEAD REPAIR & MAINTENANCE, CAR DEPRECIATION, INSURANCE & TELEPHONE EXPENSES C(II) I HAVE CONSIDERED THE ORDER OF THE AO AND TH E SUBMISSIONS OF THE ASSESSEE AND I FIND CONSIDERABLE MERIT IN THE SUBMI SSION OF THE ASSESSEE THAT THERE IS NO PROPER JUSTIFICATION FOR MAKING SUCH HI GH AD-HOC DISALLOWANCES AND ACCORDINGLY THE ADDITION TO THE EXTENT OF RS.50 ,000/- IS CONFIRMED ON THE ITA NO. 5101/D/2012 & CO NO.469/D/12 ASSTT.. YEAR: 2009-10 6 GROUND OF PERSONAL USE AND THE BALANCE ADDITION OF RS 2,18,072/- (RS 3,28,072/- (-) RS 50,000/-) IS DELETED. RS. 1,66,798/- UNDER THE HEAD ANNUAL DAY CELEBRATIO N C(III) I HAVE CONSIDERED THE ORDER OF THE AO AND T HE SUBMISSIONS OF THE ASSESSEE AND I FIND CONSIDERABLE MERIT IN THE SUBMI SSION OF THE ASSESSEE THAT THERE IS NO PROPER JUSTIFICATION FOR MAKING SUCH HI GH AD HOC DISALLOWANCES AND ACCORDINGLY THE ADDITION TO THE EXTENT OF RS 50 ,000/- IS CONFIRMED ON THE GROUND OF NON-BUSINESS EXPENDITURE AND THE BALANCE ADDITION OF RS 1,16,798/- (RS 1,66,798/- (-) RS 50,000/-) IS DELET ED. RS 43,000/- UNDER THE HEAD MOBILE PURCHASES FOR STA FF C(IV) I HAVE CONSIDERED THE ORDER OF THE AO AND TH E SUBMISSIONS OF THE ASSESSEE AND I FIND CONSIDERABLE MERIT IN THE SUBMI SSION OF THE ASSESSEE THAT THERE IS NO PROPER JUSTIFICATION FOR MAKING SUCH DI SALLOWANCES AS THE EXPENSES ARE FOR THE PURPOSE OF BUSINESS AND ACCORD INGLY THE ADDITION MADE BY THE AO IS DELETED. DISALLOWANCE OF RS.49,287/- U/S 68 C(V) I HAVE CONSIDERED THE ORDER OF THE AO AND THE SUBMISSIONS OF THE ASSESSEE AND I FIND CONSIDERABLE MERIT IN THE SUBMI SSION OF THE ASSESSEE THAT THERE IS NO PROPER JUSTIFICATION FOR MAKING SUCH AD DITION WITHOUT ANY SPECIFIC REASON OR WITHOUT ANY SPECIFIC DEFECTS IN THE BOOKS OF ACCOUNTS. AFTER ITA NO. 5101/D/2012 & CO NO.469/D/12 ASSTT.. YEAR: 2009-10 7 CONSIDERING ALL THE CASE FACTS AND CIRCUMSTANCES OF THE CASE, I AM OF THE VIEW THAT THERE IS NO PROPER JUSTIFICATION FOR MAKING SU CH ADDITION AND ACCORDINGLY, THE ADDITION MADE BY THE ASSESSING OFF ICER IS DELETED. 8. LD DR RELIED ON THE ORDER OF ASSESSING OFFICER A ND CONTENDED THAT THE COMMISSIONER OF INCOME TAX(A) HAS NOT GIVEN A CLEAR FINDING ABOUT THE NON-COMPLIANCE MENTIONED BY THE ASSESSING OFFICER I N HIS ORDER. IT IS PRAYED THAT THIS ORDER MAY BE RESTORED AND COMMISSI ONER OF INCOME TAX(A)S ORDER MAY BE REVERSED INASMUCH AS THE ORDE R DOES NOT GIVE COGENT REASON FOR THE RELIEF. LD. COUNSEL FOR THE ASSESSE E VEHEMENTLY ARGUED THAT FROM THE PAPER BOOK, IT IS CLEARLY DEMONSTRATED THA T ALL THE RELEVANT DETAILS ASKED FOR BY THE ASSESSING OFFICER WERE DULY PRODUC ED BEFORE THE ASSESSMENT. IT IS UNJUSTIFIED ON THE PART OF ASSES SING OFFICER THAT CONCLUSIVE EVIDENCE OR COMPLETE EVIDENCE WAS NOT PRODUCED. TH E ASSESSING OFFICER IS OBLIGED TO GIVE THE NATURE OF NON-COMPLIANCE MADE B Y THE ASSESSEE VIS-A-VIS WHAT IS FILED BY THE ASSESSEE. A SWEEPING STATEMEN T CANNOT BE GIVEN THAT THE ASSESSEE FAILED TO FILE CONCLUSIVE EVIDENCE OR PROP ER EVIDENCE AS SUCH OBSERVATION BECOMES NON-SPECIFIC HAVING NO OBJECTIV E BASIS. IN THIS EVENTUALITY, LD. COMMISSIONER OF INCOME TAX(A) OBSE RVED THAT THE ASSESSEE HAS MADE DUE COMPLIANCE BEFORE THE ASSESSING OFFICE R. WHEN THE COMPLIANCE IS MADE AND IS NOT CONSIDERED BY THE ASS ESSING OFFICER, IT CANNOT ITA NO. 5101/D/2012 & CO NO.469/D/12 ASSTT.. YEAR: 2009-10 8 BE HELD AS FAULT ON THE PART OF THE ASSESSEE. THER EFORE, THE COMMISSIONER OF INCOME TAX(A) RIGHTLY APPRECIATED THE SITUATION AND GRANTED PARTIAL RELIEF. 9. APROPOS ASSESSEES CO, LD. COUNSEL FOR THE AS SESSEE CONTENDS THAT ONCE THE COMMISSIONER OF INCOME TAX(A) IS SATISFIED WITH THE MERITS AND SUBMISSIONS OF THE ASSESSEE AND HOLDS THAT THERE IS NO JUSTIFICATION FOR MAKING SUCH HIGH AD HOC DISALLOWANCE WITHOUT ANY BA SIS, IT IS ALSO NOT JUSTIFIED ON THE PART OF COMMISSIONER OF INCOME TAX (A) TO RETAIN PART OF THE DISALLOWANCES WITHOUT ASCRIBING ANY REASON FOR RETA INING THE BALANCE AD HOC DISALLOWANCE. THUS, WHILE THE COMMISSIONER OF INCO ME TAX(A) HAS JUSTIFIED GIVING SUBSTANTIAL RELIEF, AT THE SAME TI ME, PART OF AD HOC DISALLOWANCE IS RETAINED WITHOUT GIVING ANY IOTA OF REASONING AS TO WHY THE BALANCE ADDITION SHOULD BE RETAINED. QUA THE ASSES SEES CO, LD. DR RELIED ON THE ORDER OF THE COMMISSIONER OF INCOME TAX(A). 10. WE HAVE HEARD RIVAL SUBMISSIONS AND CAREFULLY P ERUSED THE MATERIAL PLACED ON RECORD. WE OBSERVE THAT THE BASIS FOR AD DITION MADE BY THE ASSESSING OFFICER IS BACKED BY ADVERSE INFERENCE DR AWN BY THE ASSESSING OFFICER OF THE FACT THAT THE ASSESSEE HAS NOT MADE PROPER AND CONCLUSIVE COMPLIANCE OF HIS QUERIES. FROM THE MATERIAL AVAIL ABLE ON RECORD AND WRITTEN SUBMISSIONS FILED BEFORE THE COMMISSIONER OF INCOME TAX(A), WHICH ARE NOT DISPUTED, IT CLEARLY EMERGES THAT THE ADVERSE INFER ENCE DRAWN BY THE ITA NO. 5101/D/2012 & CO NO.469/D/12 ASSTT.. YEAR: 2009-10 9 ASSESSING OFFICER HAS NO JUSTIFICATION. THE ASSESS EE HAD MADE FULL COMPLIANCE AND ASSESSING OFFICER HAS MERELY MADE SW EEPING OBSERVATION THAT CONCLUSIVE AND COMPLETE EVIDENCE HAS NOT BEEN PRODUCED. THEREFORE, ADDITIONS ARE BEING MADE. IN OUR CONSIDERED VIEW, THE ASSESSING OFFICER HAS FAILED TO ACT IN A JUDICIOUS AND OBJECTIVE MANNER T O POINT OUT THE EXACT NATURE OF NON-COMPLIANCE AND ITS EFFECT ON EXPENDITURE. A T THE END, HE HAS SUBSTANTIALLY DISALLOWED THE EXPENDITURE ON AD HOC BASIS. THEREFORE, THERE IS NO JUSTIFICATION IN SUCH DISALLOWANCE. IN OUR CONS IDERED VIEW, THE LD. COMMISSIONER OF INCOME TAX(A) HAS PRINCIPALLY AGREE D WITH THE SUBMISSIONS OF THE ASSESSEE. THIS BEING SO, THERE IS NO JUSTIFICATION IN AGAIN RETAINING SMALL DISALLOWANCE ON AD HOC BASIS WITHOU T GIVING ANY REASON. IN VIEW THEREOF, WE HOLD THAT THERE IS NO JUSTIFICATIO N TO RETAIN ANY DISALLOWANCE OF EXPENDITURE MADE BY THE ASSESSEE WITHOUT ANY OBJ ECTIVE FINDING ABOUT THE DISALLOWABILITY. THE ASSESSEES BOOKS OF ACCOUNTS ARE AUDITED AND NOT REJECTED. BESIDES, THE ASSESSING OFFICER IN THE FI RST PART OF THE ORDER HAS MENTIONED ABOUT THE ASSESSEES PROVISION OF ALL NEC ESSARY DETAILS. IN VIEW OF FOREGOING DISCUSSION, WE DISMISS THE REVENUES APPE AL AND AS WE DELETE THE DISALLOWANCE RETAINED BY THE COMMISSIONER OF INCOME TAX(A), THE ASSESSEES C.O. IS ALLOWED. ITA NO. 5101/D/2012 & CO NO.469/D/12 ASSTT.. YEAR: 2009-10 10 ORDER PRONOUNCED IN THE OPEN COURT ON 28.3.2014. SD/- SD/- (G.D. AGRAWAL) (R.P. TOLANI) VICE PRESIDENT JUDICIAL MEMBER DT. 28 TH MARCH 2014 GS COPY FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR BY ORDER ASSTT. REGISTRAR