M/s. Grand Force, New Delhi V. ITO, New Delhi

ITA 5281/DEL/2014

• Counselvise Citation: 528120114 RSA 2014
• Duration Of Justice: 10 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-08-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 04-08-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 29-09-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: T VASANTHAN
• Keywords: Principle of natural justice; Additional evidence
• Section: 40A(3); 234B; 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : C , NEW DELHI BEFORE SHRI I.C.SUDHIR, JUDICIAL MEMBER AND SHRI J.SUDHAKAR REDDY, ACCOUNTANT MEMBER I.T.A.NO. 5281 /DEL/20 1 4 A.Y. 20 10 - 11 M/S GRAND FORCE C 37, LAJPAT NAGAR III NEW DELHI PAN: AACFT 2421 Q VS. ITO, WARD 32(4) NEW DELHI (APPELLANT) (RESPONDENT) A PPELLANT BY : SH. VIKAS JAIN, ADV. RESPONDENT BY : SH. T.VASANTHAN, SR. DR ORDER PER J. SUDHAKAR REDDY, ACCOUNTANT MEMBER THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LD.CIT(A) - XXVI, NEW DELHI DATED 01.04.2013 PERTAINING TO THE ASSESSMENT YEAR (A.Y.) 20 10 - 11, ON THE FOLLOWING GROUNDS. 1. THAT, IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE A.O. AND SUBSEQUENTLY CIT(A) HAS ERRED IN LAW AND ON FACTS IN PARTLY UPHOLDING THE ADDITIONS WHICH ARE ILLEGAL, ERRONEOUS, ARBITRARY AND AGAINST THE PRINCIPLE O F NATURAL JUSTICE. 2. THAT, IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE A.O. AND SUBSEQUENTLY CIT(A) HAS ERRED IN LAW AND ON FACTS IN PARTLY UPHOLDING THE DISALLOWANCE OF SECURITY GUARD EXPENSES TO THE TUNE OF RS.1 LAKH BEING UNVERIF IABLE AND UNSIGNED. 3. THAT CIT(A) HAS GROSSLY ERRED IN LAW AND ON FACTS IN HOLDING THAT SECURITY GUARD EXPENSES ARE NOT GENUINE WITHOUT MAKING ANY ENQUIRY AND BRINGING ANY ADVERSE MATERIAL ON RECORD. 4. THAT THE CIT(A) HAS IN VIEW OF THE FACTS AND CIRCUM STANCES OF THE CASE GROSSLY ERRED IN UPHOLDING THE ADDITIONS OF RS.1,14,500/ - U/S 37 OF THE ACT WITHOUT GIVING ANY OPPORTUNITY TO THE APPELLANT. ITA NO. 5281/DEL/2014 A.Y. 2010 - 11 M/S GRAND FORCE, NEW DELHI 2 5. THAT CIT(A) HAS GROSSLY ERRED IN LAW AND ON FACTS IN HOLDING THAT EXPENSES OF RS.1,14,500/ - INCURRED BY THE APPELLANT HAS NO BUSINESS PURPOSE. 6. THAT CIT(A) HAS GROSSLY ERRED IN LAW AND ON FACTS IN UPHOLDING THE DISALLOWANCE OF RS.13,147/ - OUT OF CAR RUNNING AND MAINTENANCE EXPENSES AND TELEPHONE EXPENSES ON THE GROUND THAT APPELLANT DID NOT HAD ANY VEHICLE A ND TELEPHONE IN HIS/HER PERSONAL CAPACITY. 7. THAT THE EXPLANATIONS GIVEN, EVIDENCE PRODUCED AND MATERIAL PLACED AND MADE AVAILABLE ON RECORD HAVE NOT BEEN PROPERLY CONSIDERED AND JUDICIALLY INTERPRETED AND THE SAME DO NOT JUSTIFY THE ADDITION MADE. 8. TH AT THE ADDITIONS/DISALLOWANCE MADE IS BASED ON MERE SURMISES AND CONJECTURES AND THE SAME CANNOT BE JUSTIFIED BY ANY MATERIAL ON RECORD AND IS HIGHLY EXCESSIVE. 9. THAT THE INTEREST U/S 234B AND 234C HAS BEEN WRONGLY AND ILLEGALLY CHARGED AND SAME IS LIAB LE TO BE DELETED. 10. THAT ALL THE ABOVE GROUNDS ARE INDEPENDENT TO EACH OTHER AND MUTUALLY EXCLUSIVE. 11. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER AND/OR DELETE ANY OF THE ABOVE GROUNDS OF APPEAL AT OR BEFORE THE TIME OF HEARING. 2. THE ASSESSEE MOVED AN APPLICATION FOR ADMISSION OF ADDITIONAL EVIDENCE UNDER RULE 29 OF ITAT RULES. 3. AFTER HEARING RIVAL CONTENTIONS, PERUSING THE ORDERS OF LOWER AUTHORITIES, MATERIAL PLACED ON RECORD, WE HOLD AS FOLLOWS. 4. THE ASSESSEE WAS PREVENTED FROM SUFFICIE NT CAUSE FROM ADDUCING THE EVIDENCE BEFORE THE LOWER AUTHORITIES AND THAT THE EVIDENCE IN QUESTION GOES TO THE ROOT OF THE MATTER AND HENCE HAS TO BE ADMITTED. 5. THE AO MADE A DISALLOWANCE U/S 40A(3) OF THE ACT. WHEN THE ASSESSEE CONTESTED THE DISALLOWAN CE BEFORE THE LD.CIT(A), HE ALLOWED THE CLAIM OF THE ASSESSEE, BUT SUSTAINED THE ADDITION U/S 37 OF THE ACT I.E. ON ANOTHER BASIS WITHOUT GIVING AN OPPORTUNITY OR NOTICE TO THE ASSESSEE. ITA NO. 5281/DEL/2014 A.Y. 2010 - 11 M/S GRAND FORCE, NEW DELHI 3 UNDER THE CIRCUMSTANCES WE ALLOW THIS APPLICATION OF THE ASSESSE DA TED 4.8.2009. 6. GROUND NO.1 IS GENERAL IN NATURE. 7. GROUND NO.2 IS AGAINST DISALLOWANCE OF THE EXPENDITURE INCURRED ON SECURITY GUARDS, TO THE EXTENT IS SUSTAINED BY THE FIRST APPELLATE AUTHORITY. THE FIRST APPELLATE AUTHORITY AT PARA 5.1 HELD AS FOLLO WS. 5.1. I HAVE CAREFULLY CONSIDERED THE SUBMISSION OF THE APPEFLLANT AND PERUSED THE RECORD. FROM PERUSAL OF SALARY PAYMENT SHEETS, I FIND THAT SOME OF THE PAYMENT SLIPS/VOUCHERS, ETC. ARE NOT SIGNED BY THE RECIPIENTS. THUS, IN PRINCIPLE, I FIND MERIT IN THE AO S FINDING THAT THE SECURITY EXPENSES, IN ENTIRETY, ARE NOT VERIFIABLE. FURTHER, IN ABSENCE OF PROPER PAYMENT SLIPS/VOUCHERS DULY SIGNED BY THE RECIPIENTS, IT CAN NOT BE RULED OUT THAT THE ENTIRE SECURITY GUARD EXPENSES ARE GENUINE. THIS FACT FI NDING OF THE AO IS NOT REBUTTED BY THE APPELLANT. NOW, THE NEXT QUESTION IS WHAT WILL BE THE QUANTUM OF DISALLOWANCE ON THIS SCORE. KEEPING IN VIEW THE AO S FINDING, THE APPELLANT S SUBMISSION EXTRACTED ABOVE AND NORMAL RATE OF PROFIT IN SIMILAR CASES, I AM OF THE CONSIDERED OPINION THAT THE DISALLOWANCE OF RS.1 LAKH OUT OF SECURITY GUARD EXPENSES WOULD BE SUFFICE. ACCORDINGLY, I ORDER SO. CONSEQUENTIALLY THE DISALLOWANCE OF RS.6,19,670/ - IS DELETED. THE AO SHALL GIVE CONSEQUENTIAL RELIEF. 8. WE FIN D NO REASON TO INTERFERE IN THIS FACTUAL FINDING OF THE FIRST APPELLATE AUTHORITY WHICH COULD NOT BE CONTROVERTED BY THE LD.A.R . THUS, WE DISMISS GROUND NO.2 AND 3 OF THE ASSESSEE. 9. GROUND NO.4 AND 5 ARE SET ASIDE TO THE FILE OF THE AO FOR FRESH ADJU DI C ATION IN ACCORDANCE WITH LAW, IN VIEW OF ADMISSION OF ADDITIONAL EVIDENCE FURNISHE D BY THE ASSESSEE ON THIS ISSUE AND IN VIEW OF OUR DECISION TO ADMIT THE ADDITIONAL EVIDENCE. 10. GROUND NO.6, 7 AND 8 ARE AGAINST THE ADHOC DISALLOWANCE OF RS.13,147 OUT OF CAR RUNNING AND MAINTENANCE EXPENSES, WHICH WAS ITA NO. 5281/DEL/2014 A.Y. 2010 - 11 M/S GRAND FORCE, NEW DELHI 4 SUSTAINED BY THE LD.CIT(A). WE HAVE PERUSED PARA 7.1 OF THE LD.CIT(A) S ORDER. IN OUR VIEW T HE 10% DISALLOWANCE SUSTAINED DOES NOT CALL FOR ANY INTERFERENCE. IN THE RESULT THESE GROUNDS OF THE ASSESSEE ARE DISMISSED. 11. GROUND NO. 9 IS CONSEQUENTIAL IN NATURE. 12. GROUND NOS. 10 AND 11 ARE GENERAL IN NATURE. 13. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED IN PART. ORDER PRONOUNCED IN THE OPEN COURT ON 14 TH AUGUST , 2015. SD/ - SD/ - [ I.C.SUDHIR ] [J. SUDHAKAR REDDY] JUDICIAL MEMBER ACCOUNTANT MEMBER DT. THE 14 TH AUGUST, 2015 MANGA COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES