M/S. SHEPHALI AJAYKANT RUIA, MUMBAI V. THE ACIT CIR 3(1), MUMBAI

ITA 534/MUM/2008

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 8234 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 1 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-03-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: J
• Next Hearing Date: 28-02-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 23-01-2008
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SUM EET KUMAR
• Assessee Lawyers: PANKAJ TOPRANI
• Keywords: Business expenditure; Additional evidence

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI J BENCH BEFORE SHRI T.R.SOOD, ACCOUNTANT MEMBER & SHRI R.S.PADVEKAR, JUDICIAL MEMBER I.T.A.NO.534/MUM/2008 A.Y 2004-05 MRS. SHEPHALI AJAYKANT RUIA, 901, MAKER CHAMBER V, NARIMAN POINT, MUMBAI 400 021. PAN: AAAPR 5863 L VS. ASST. COMMISSIONER OF I.T., CIRCLE 3(1), MUMBAI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI PANKAJ TOPRANI. RESPONDENT BY : SHRI SUMEET KUMAR, SR. DR O R D E R PER T.R.SOOD, AM: IN THIS APPEAL THE ASSESSEE HAS RAISED VARIOUS GRO UNDS OUT OF WHICH GROUND NO.1 IS OF GENERAL NATURE AND GROUND N O.3 WAS NOT PRESSED BEFORE US, THEREFORE, THESE GROUNDS ARE DIS MISSED AS NOT PRESSED. THE OTHER GROUND NO.2 IS AS UNDER: 2. THE ASSESSING OFFICER HAS ERRED IN NOT ALLOWING THE REVENUE EXPENSES CLAIMED TO THE EXTENT OF ` `` ` .1,36,544/- BY ALLEGING THAT ASSESSEE HAS NOT BROUGHT ANY EVIDENCE TO SUBSTANTIATE THE CL AIM OF THE EXPENSES DEBITED TO PROFIT & LOSS ACCOUNT. IT IS HOWEVER SUB MITTED THAT EXPENSES SHOULD BE ALLOWED IN FULL. THE CIT[A] HAS ALSO ERRE D IN CONFIRMING THE ORDER OF THE ASSESSING OFFICER. 2. AFTER HEARING BOTH THE PARTIES, WE FIND THAT DUR ING ASSESSMENT PROCEEDINGS AO NOTICED THAT ASSESSEE HAS CLAIMED CE RTAIN BUSINESS LOSS AND, THEREFORE, ASSESSEE WAS REQUIRED TO FILE DETAI LS OF EXPENSES SHOWN IN THE PROFIT & LOSS ACCOUNT. NO DETAILS WERE FILED . THE AO NOTICED THAT ASSESSEE HAD RECEIVED CERTAIN CONSULTANCY REMUNERAT ION FROM THE 2 BUSINESS IN THE NAME OF ESSAR CORPORATION WHICH WAS BEING RUN BY THE MOTHER-IN-LAW OF THE ASSESSEE AS A PROPRIETARY CONC ERN. THE AO NOTED THAT, IN FACT, NO SUCH BUSINESS WAS BEING RUN AND A SSESSEES MOTHER-IN- LAW HAS GIVEN CERTAIN PREMISES ON RENT. MOREOVER, A SSESSEE WAS NOT RUNNING ANY PROFESSIONAL SERVICES AND SINCE NO DETA ILS HAVE BEEN FILED FOR THE EXPENSES CLAIMED AGAINST THESE PROFESSIONAL SERVICES, THE EXPENDITURE WAS DISALLOWED. 3. BEFORE THE LD. CIT[A], IT WAS MAINLY SUBMITTED T HAT THE ASSESSEE HAD RECEIVED CONSULTANCY FEES IN EARLIER YEARS ALSO AND BUSINESS EXPENSES HAVE BEEN DULY REFLECTED IN THE PROFIT & L OSS ACCOUNT AS SUCH EXPENSES WERE INCURRED FOR THE PURPOSE OF BUSINESS. THE LD. CIT[A] DID NOT FIND FORCE IN THE SUBMISSIONS AND CONFIRMED THE ACTION OF THE AO VIDE PARA 2.4 WHICH ARE AS UNDER: 2.4 I HAVE CAREFULLY CONSIDERED THE REPLY GIVEN BY THE APPELLANT AND PERUSED THE ASSESSMENT ORDER. THE APPELLANT HAS NOT PRODUCED ANY VOUCHERS FOR EXPENSES DURING THE ASSESSMENT PROCEED INGS. FROM THE DETAILS FILED DURING THE APPELLATE PROCEEDINGS, IT IS SEEN THAT THERE IS NO AGREEMENT BETWEEN M/S ESSAR CORPORATION AND THE APP ELLANT REGARDING NATURE OF SERVICES RENDERED AS PROFESSIONAL SERVICE S. THEREFORE THE APPELLANT HAS FAILED TO ESTABLISH THE NATURE OF SER VICES RENDERED. AS REGARDS EXPENSES CLAIMED AGAINST THESE PROFESSIONAL RECEIPTS THEY ARE NOT CORRELATED TO THE SERVICES RENDERED BY THE APPE LLANT. THE APPELLANT IS NOT MAINTAINING ANY OFFICE FOR THE PURPOSE OF RU NNING HER BUSINESS AND ENTIRE SO CALLED PROFESSIONAL SERVICE IS RENDER ED THROUGH ITS RESIDENCE ONLY. THEREFORE THE EXPENDITURE INCURRED ON TELEPHONE, STAFF WELFARE, TRAVELING ETC IS NOTHING BUT PERSONAL EXPE NSES OF THE APPELLANT. THE APPELLANT HAS DEBITED ` `` ` .39,000/- UNDER THE HEAD SALARY PAID TO OFFICE BOY AND OFFICE ASSISTANT. BUT NO DETAILS OF SERVICE RENDERED BY THE PERSONS EMPLOYED HAS BEEN FILED SO FAR. IN VIEW OF THIS FACT, SINCE THE APPELLANT IS FAILED TO ESTABLISHED ANY EXPENDIT URE INCURRED FOR THE PURPOSE OF BUSINESS THEREFORE THE ASSESSING OFFICER IS JUSTIFIED IN DISALLOWING BUSINESS EXPENDITURE OF ` `` ` .1,36,544/-. THE ACTION OF THE ASSESSING OFFICER IS CONFIRMED. 3 4. BEFORE US, LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT IN THE CASE OF MOTHER-IN-LAW SMT. SATYAVATI RUIA THE ISSUE WHETHER ANY BUSINESS WAS BEING RUN BY ESSAR CORPORATION CAME UP FOR CONSIDERATION OF THE TRIBUNAL IN I.T.A.NO.998/MUM/2009 AND THE TR IBUNAL VIDE PARA- 18 OF ITS ORDER HAD RESTORED THE ISSUE TO THE FILE OF THE AO. THEREFORE, THIS ISSUE MAY ALSO BE RESTORED TO FIND OUT WHETHER ANY BUSINESS WAS RUN. IT WAS NOTICED BY THE BENCH THAT IN THE CASE O F SMT. SATYAVATI RUIA CERTAIN ADDITIONAL EVIDENCES WERE FILED BEFORE THE TRIBUNAL AND THAT IS WHY THE ISSUE WAS RESTORED, WHEREAS NO ADDI TIONAL EVIDENCE HAS BEEN FILED BEFORE US AND, THEREFORE, THERE IS NO QU ESTION OF REMANDING THE MATTER BACK TO THE FILE OF THE AO. WHEN LD. COU NSEL OF THE ASSESSEE WAS CONFRONTED WITH THIS SITUATION, HE SUB MITTED THAT IN ANY CASE THE ASSESSEE HAD INCURRED THE EXPENSES FOR THE PURPOSE OF BUSINESS AND IN THIS REGARD HE REFERRED TO PAGE 11 OF THE PAPER BOOK WHICH IS A COPY OF THE PROFIT & LOSS ACCOUNT. 5. ON THE OTHER HAND, LD. DR SUBMITTED THAT NO EVID ENCE AT ALL WAS FILED TO SUPPORT THE EXPENSES AND, THEREFORE, SUCH EXPENDITURE COULD NOT HAVE BEEN ALLOWED. HE FURTHER SUBMITTED THAT IN ANY CASE THE EXPENDITURE CLAIMED BY THE ASSESSEE HAS NO RELATION WITH THE NATURE OF PROFESSIONAL SERVICES. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFUL LY AND DO NOT FIND ANY FORCE IN THE CONTENTIONS OF THE LD. COUNSE L OF THE ASSESSEE. PROFESSIONAL FEES WERE CLAIMED TO HAVE BEEN RECEIVE D IN CONNECTION WITH RENDERING OF BUSINESS CENTER SERVICE, IF THAT IS THE CASE WE FAIL TO 4 UNDERSTAND, AS FOR WHAT BANK INTEREST HAS BEEN CLAI MED AS EXPENDITURE AT ` `` ` .20,349/-. SIMILARLY, THERE IS NO LOGIC FOR CLAIM O F BANK CHARGES OF ` `` ` .7498/- BECAUSE ASSESSEE WAS RECEIVING MONTHLY PAYM ENT OF ` `` ` .8,000/-. SAME IS THE SITUATION WITH OTHER EXPENSES . MOREOVER, NO DETAILS WERE FILED BEFORE THE AO FOR THESE EXPENSES AND, THEREFORE, WE ARE OF THE VIEW THAT THE LD. CIT[A] HAS CORRECTLY R EJECTED THE CLAIM FOR EXPENSES. IN THESE CIRCUMSTANCES, WE CONFIRM THE OR DER OF THE LD. CIT[A]. 7. IN THE RESULT, ASSESSEES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 11/3/2011. SD/- SD/- (R.S.PADVEKAR) (T.R.SOOD) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI: 11/3/2011. P/-*