Sh. Sri Gopal Gupta, New Delhi V. DCIT, New Delhi

ITA 5265/DEL/2013

• Counselvise Citation: 526520114 RSA 2013
• Duration Of Justice: 1 year(s) 6 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-04-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 15-04-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 19-09-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: B R R KUMAR
• Assessee Lawyers: SANJAY KUMAR ACCOUNTANT
• Keywords: Depreciation
• Section: 143(3); 142(1)

Judgement Text

ITA NO. 5265/DEL/2013 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G , NEW DELHI BEFORE SHRI S.V. MEHROTRA, ACCOUNTANT MEMBER AND SHRI H.S. SIDHU, JUDICIAL MEMBER I.T.A.NO. 5265 /DEL/201 3 A.Y. : 20 10 - 11 SRI GOPAL GUPTA, 339, F.I.E., PATPARGANJ, NEW DELHI (PAN: AAAPG7111J) VS. DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE - 2, NEW DELHI (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. SANJAY KUMAR, ACCOUNTANT DEPARTMENT BY : SH. B.R.R. KUMAR, SR. DR DATE OF HEARING : 15 - 4 - 2015 DATE OF ORDER : 1 7 - 4 - 2015 ORDER PER H.S. SIDHU : JM THE ASSESSEE HAS FILED THE PRESENT APPEAL AGAINST THE IMPUGNED ORDER DATED 5 / 9 /201 3 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) - III , NEW DELHI PERTAINING TO THE ASSESSMENT YEAR 20 10 - 11 . 2. THE FOLLOWING GROUNDS HAVE BEEN RAISED IN THE ASSESSEE S APPEAL. ITA NO. 5265/DEL/2013 2 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE APPELLANT S CASE, THE LD. CIT(A) ERRED BOTH IN FACT AND IN LAW IN PARTIALLY CONFIRM ING ADHOC ESTIMATED DISALLOWANCE OF CAR RUNNING EXPENSE @10% AS AGAINST @20% MADE BY AO, ONLY ON CONJECTURE AND SURMISES THAT PERSONAL USE OF CAR CANNOT BE RULED OUT, WHEN BOTH AO AS WELL AS CIT(A) HAVE ACKNOWLEDGED FURNISHING OF LOG BOOK OF CAR, WHICH CO NTAINS ENTRIES OF BUSINESS TRIPS ONLY. 2. THAT THE APPELLANT CRAVES LEAVE TO ADD, AMEND OR ALTER ANY OF THE GROUNDS OF APPEAL. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE RETURN OF INCOME DECLARING INCOME OF RS. 9,76,86,192/ - WAS FILED BY THE ASS ESSEE ON 15.10.2010. THE SAME WAS PROCESSED U/S. 143(1) OF THE I.T. ACT, 1961 AT THE RETURNED INCOME. THE CASE WAS SELECTED FOR COMPULSORY SCRUTINY. NOTICE U/S. 143(2) OF THE I.T. ACT, 1961 WAS ISSUED TO THE ASSESSEE ON 12.9.2011, WHICH WAS DULY SE RVED UPON THE ASSESSEE THROUGH SPEED POST. NOTICE U/S. 142(1) OF THE I.T. ACT, 1961 ALONG WITH QUESTIONNAIRE WAS ISSUED TO THE ASSESSEE ON 10.1.2012. DUE TO CHANGE OF INCUMBENCY, NOTICE U/S. 143(2) WAS ISSUED ON 31.7.2012. IN RESPONSE THERETO, ASSESSEE S COUNSEL ATTENDED THE ASSESSMENT PROCEEDINGS FROM TIME TO TIME AND FURNISHED THE DETAILS. DURING THE YEAR UNDER CONSIDERATION, THE ITA NO. 5265/DEL/2013 3 ASSESSE EARNED INCOME FROM BUSINESS OR PROFESSION, SHARE OF PROFIT FROM PARTNERSHIP FIRMS, HOUSE PROPERTY AND OTHER SOURCE S. COPY OF PROFIT AND LOSS ACCOUNT, BALANCE SHEET AND AUDIT REPORT U/S. 44AB OF THE ACT, FOR THE YEAR UNDER CONSIDERATION, WAS SUBMITTED BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THE ASSESSING OFFICER DURING THE ASSESSMENT PROCEEDINGS NO TED THAT THE ASSESSEE IS ALSO PROPRIETOR OF M/S SRIMATRIX. M/S SRIMATRIX IS ENGAGED IN PROVIDING TECHNICAL KNOWHOW TO THE GROUP CONCERN. THIS IS ONE KIND OF ROYALTY WHICH IS CHARGED BY SH. SRIGOPAL GUPTA ON ACCOUNT OF KNOWLEDGE OF PROCESS OF JARDA / GUTKA/ PAN MASALA GIVEN TO SISTER CONCERN. THE ASSESSING OFFICER FURTHER NOTED THAT DURING THE YEAR THE ASSESSEE HAS RECEIVED TOTAL FEES OF RS. 780.99 LACS AND AGAINST THE SAME EXPENSES OF RS. 77.73 LACS WERE DEBITED. THE MAJOR EXPENSE IS ON ACCOUNT O F SALARY AND VEHICLE EXPENSES. DURING THE YEAR THE ASSESSEE HAS PURCHASED AN IMPORTED CAR BENTLEY AND CLAIMED DEPRECIATION OF RS. 27.51 LACS ALONGWITH INTEREST ON CAR LOAN OF RS. 14.44 LACS AS WELL AS CAR EXPENSES INCLUDING PETROL AND MAINTENANCE OF RS. 3,11,064/ - . ON GOING THROUGH THE WEALTH TAX RECORD IT HAS BEEN NOTICED THAT THIS IS THE ONLY CAR ASSESSEE HAVING IN INDIVIDUAL CAPACITY. THEREFORE, PERSONAL USE OF CAR CANNOT BE DENIED. HENCE, OUT OF THE ABOVE SAID EXPENSES FOR PERSONAL USE O F A CAR SUM OF 1/5 TH IS DISALLOWED WHICH COMES TO RS. (RS. 45,06,064/5)= RS. 9,01,210/ - AND ASSESSED INCOME ITA NO. 5265/DEL/2013 4 AT RS. 9,85,87,400/ - VIDE HIS ORDER DATED 28.1.2013 PASSED U/S. 143(3) OF THE I.T. ACT, 1961. 4. AGGRIEVED BY THE AFORESAID ASSESSMENT ORDER, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A), WHO VIDE IMPUGNED ORDER DATED 5 . 9 .201 3 HAS PARTLY ALLOWED THE APPEAL OF THE ASSESSEE BY RESTRICTING THE ADDITION FROM 20% TO 10% WHICH COMES TO RS. 4 ,50,605/ - . 5 . AGAINST THE ORDER DATED 05 . 9 .201 3 OF THE LD. CIT(A) ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 6. DURING THE HEARING BEFORE US, SH. SANJAY KUMAR, ACCOUNTANT/AUTHORISED SIGNATORY FROM THE APPELLANT HAS FILED AN APPLICATION DATED 15.4.201 5 FOR ADJOURNMENT OF HEARING ON THE GROUND THAT APPELLANT IS OUT OF TOWN. IN OUR CONSIDERED OPINION, THE GROUND FOR NON - APPEARANCE OF THE APPELLANT SEEMS NOT TO BE GENUINE, HENCE, WE REJECT THIS ADJOURNMENT APPLICATION AND PROCEED FURTHER TO ADJUDICA TE THE ISSUE IN DISPUTE ON MERITS. HOWEVER, SH. SANJAY KUMAR, ACCOUNTANT OF THE APPELLANT WAS PRESENT DURING THE HEARING. 7. LD. DR HAS RELIED UPON THE ORDER OF THE LD. CIT(A) AND STATED THAT LD. CIT(A) IN THE INTEREST OF JUSTICE HAS PASSED A WELL RE ASONED ORDER AND THE SAME MAY BE UPHELD. ITA NO. 5265/DEL/2013 5 8. WE HAVE HEARD BOTH PARTIES AND PERUSED THE RELEVANT RECORD AVAILABLE WITH US ES PECIALLY THE ORDERS OF THE REVENUE AUTHORITIES. WE FIND THAT THE MAJOR EXPENSE IS ON ACCOUNT OF SALARY AND VEHICLE EXPENSES. DURING THE YEAR THE ASSESSEE HAS PURCHASED AN IMPORTED CAR BENTLEY AND CLAIMED DEPRECIATION OF RS. 27.51 LACS ALONGWITH INTEREST ON CAR LOAN OF RS. 14.44 LACS AS WELL AS CAR EXPENSES INCLUDING PETROL AND MAINTENANCE OF RS. 3,11,064/ - . WE ALSO FIND TH AT THE ASSESSING OFFICER ON GOING THROUGH THE WEALTH TAX RECORD HAS NOTICED THAT THIS IS THE ONLY CAR ASSESSEE HAVING IN INDIVIDUAL CAPACITY. THEREFORE, PERSONAL USE OF CAR CANNOT BE DENIED. HENCE, OUT OF THE ABOVE SAID EXPENSES FOR PERSONAL USE OF A CAR SUM OF 1/5 TH WAS DISALLOWED WHICH COMES TO RS. (RS. 45,06,064/5)= RS. 9,01,210/ - . WE FURTHER FIND THAT THE LD. CIT(A) IN THE INSTANCE CASE HAS OBSERVED THAT THERE IS NO DOUBT THAT LOG BOOK IS MAINTAINED BUT CONSIDERING THE FACT THAT THE ASSESSEE IS RUNNING A SOLE PROPRIETARY BUSINESS AND OWNS A HIGH END LUXURY CAR (BENTLEY), THEREFORE, DEFINITELY THE USE OF CAR FOR PERSONAL PURPOSE CANNOT BE RULED OUT. THEREFORE, LD. CIT(A) HAS RIGHTLY HELD THAT IN THE INTEREST OF JUSTICE, A DISALLOWANCE OF 10% OF E XPENSES IS MADE ON ESTIMATED BASIS AS AGAINST 20% AS MADE BY THE ASSESSING OFFICER, WHICH COMES TO DISALLOWANCE OF RS. 4,50,605/ - . IN THE BACKGROUND OF THE AFORESAID DISCUSSIONS, WE FIND FORCE IN THE FINDING OF THE LD. CIT(A) IN PARTIALLY CONFIRMING THE A DDITION FROM 20% TO 10% I.E. RS. 4,50,605/ - . HENCE, ITA NO. 5265/DEL/2013 6 WE DO NOT SEE ANY REASON TO INTERFERE IN THE WELL REASONED FINDING GIVEN BY THE LD. CIT(A) ON THE ISSUE IN DISPUTE, THEREFORE, WE UPHOLD THE FINDING OF THE LD. CIT(A) ON THE ISSUE AND REJECT THE GROUN D RAISED BY THE ASSESSEE. 9 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 1 7 / 4 /2015. S D / - S D / - [ S.V. MEHROTRA ] [H.S. SIDHU] ACCOUNTANT MEMBER JUDICIAL MEMBER DATE 1 7 / 4 /2015 SRBHATNAGAR COPY FORWARDED TO: - 1. ASSESSEE - 2. RESPONDENT - 3. CIT 4. CIT (A) 5. DR, ITAT T RUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES