ACIT 19(2), MUMBAI V. MEENA D. GUPTA, MUMBAI

ITA 5379/MUM/2009

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 49398 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-07-2011
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 04-07-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 24-09-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: P C MAURYA
• Keywords: Corroborative evidences

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B, MUMBAI BEFORE SHRI R.S.SYAL, AM AND SHRI V.DURGA RAO, JM ITA NO.5379/MUM/2009 : ASST.YEAR 2006-2007 THE ASSTT.COMMISSIONER OF INCOME-TAX CIRCLE 19(2) MUMBAI. VS. SMT.MEENA D.GUPTA 3-CYNTHIA MAIN AVENUE, S.V.ROAD SANTACRUZ (WEST) MUMBAI 400 054. PAN : AAEPG3383L. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI P.C.MAURYA RESPONDENT BY : SHRI K.GOPAL O R D E R PER R.S.SYAL, AM : THIS APPEAL BY THE REVENUE IS DIRECT ED AGAINST THE ORDER PASSED BY THE COMMISSIONER OF INCOME-TAX (APPEALS) ON 28 TH JULY, 2009 IN RELATION TO THE ASSESSMENT YEAR 2006-2007. 2. THE ONLY ISSUE RAISED IN THIS APP EAL THROUGH VARIOUS GROUNDS IS AGAINST RESTRICTING THE DISALLOWANCE OF EXPENSES TO RS.74,331. BRIE FLY STATED THE FACTS OF THE CASE ARE THAT THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF HI RING OF BUSES. ON PERUSAL OF THE DETAILS THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAD DEBITED EXPENSES UNDER THE HEAD RUNNING AND MAINTENANCE EXPENSES IN HER TWO PROPRIETORSHIP CONCERNS VIZ. ONE AS MUMBAI DIVISION AND THE OTHER AS GOA DIVISION. SUCH DETAILS OF THE EXPENS ES TOTALING RS.97,30,737 HAVE BEEN TABULATED ON PAGES 7 AND 8 OF THE ASSESSMENT ORDER. ON BEIN G CALLED UPON TO JUSTIFY THE DEDUCTION OF SUCH EXPENSES BY PRODUCIN G RELEVANT BILLS AND VOUCHE RS, THE ASSESSEE SUBMITTED THAT MOST OF THE PAYMENTS WERE MADE THR OUGH CHEQUES. AS REGARDS CASH EXPENSES, IT WAS SUBMITTED THAT SOME OF THEM WERE BACKED BY EXTERNAL EVIDENCE AND OTHERS BY INTERNAL EVIDENCE. THE ASSESSIN G OFFICER BIFURCATED THE TOTAL EXPENSES OF RS.97.30 LAKHS INTO PARTS, VIZ., THOSE PAID BY CASH AND BY CHEQUES. INSO FAR AS THE PAYMENTS BY CHEQUES ARE CONCERNED, THE ASSESSING OFFICER ACCEPTED THE GENUINENESS OF THE ITA NO.5379/MUM/2009 SMT.MEENA D.GUPTA. 2 SAME. HOWEVER, IT WAS NOTED TH AT THE ASSESSEE PAID EXPENSES IN CASH TO THE TUNE OF RS.51.76 LAKHS, WHICH HAVE BEEN TABULATED ON PAGES 9 AND 10 OF THE ASSESSMENT ORDER. AS THE ASSESSEE WAS NOT IN A POS ITION TO FURNISH VOUCHERS / SUPPORTING EVIDENCE OF THE AFORE-MENTIONED EXPENSES CL AIMED TO HAVE BEEN INCURRED IN CASH, THE ASSESSING OFFICER DISALLOWED 25% OF SU CH EXPENSES BY RELYING ON SIMILAR DISALLOWANCE MADE IN ASSESSMENT YEAR 2005- 2006. WHEN THE MATTER CAME UP BEFORE THE LEARNED CIT(A), HE HELD THAT THE EXPENS ES ON SALARY TO DRIVER S AND CLEANERS WERE DEDUCTIBLE IN FULL, WHICH CAME AT RS.35, 65,188. AS REGARDS THE OTHER EXPENSES OF RS.16,11,188, THE LEARNED CIT(A) RESTRICTED THE DISALLOWANCE TO 5%. THE REVENUE IS AGGRIEVED AGAINST THE SUSTENAN CE OF ADDITION AT THIS LEVEL. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RE LEVANT MATERIAL ON RECORD. THE LEARNED A.R., AT THE VERY OUTSET SUBMITTED THAT THE REFERENCE TO THE VIEW TAKEN IN ASSESSMENT YEAR 2005-2006 BOTH IN THE ASSESSMENT ORDER AND IMPUGNED ORDER IS NOT RELEVANT INSO FAR AS THE FACTS OF THE Y EAR UNDER CONSIDERATION ARE CONCERNED FOR THE REASON THAT IN THAT YEAR THE ASSESSEE VOLUNTARILY AGREED FOR THE DISALLOWANCE AT THE ASSESSMENT STAGE IN IGNORANCE OF FACTUAL AND LEGAL POSITION, HOWEVER, THE SAME WAS LATER ON RETRACTED. IT WAS ADMITTED THAT ALBEIT THE APPEAL FOR THE A.Y. 2005-06 IS PENDING FOR THE TRIBUNAL, BUT IT WAS REQUESTED THAT THE INSTANT APPEAL BE DISPOSED OFF DE HORS THE FINAL DECISION IN ASSESSMENT YEAR 2005-2006, BECAUSE OF THE CHANGE IN THE FACTUAL POSITION AS STATED ABOVE. THE LEARNED DEPARTMENTAL REPRESENTATIVE ALSO CONCED ED THAT THE PRESENT APPEAL MAY BE DISPOSED OF INDEPENDENT OF THE APPEAL FOR TH E EARLIER YEAR. UNDER THESE CIRCUMSTANCES, WE, ARE PROCEEDING TO DIS POSE OFF THE INSTANT A PPEAL ACCORDINGLY ON MERITS. 4. IT IS SEEN THAT THE TOTAL CASH EXPENSES IN CURRED BY THE ASSESSEE AMOUNTED TO RS.51.76 LAKHS. IT IS SIMPLE AN D PLAIN THAT SALARY IS RE QUIRED TO BE PAID TO DRIVERS AND CLEANERS FOR EACH BUS. IT IS NOTICED THAT ALL THE 38 BUSES WERE USED FOR THE HIRING BUSINESS IN THE INSTANT YEAR. EVEN IF THE AVERAGE SA LARY OF DRIVER IS TAKEN AT ITA NO.5379/MUM/2009 SMT.MEENA D.GUPTA. 3 RS.5,500 PER MONTH AND THAT OF CLEANER AT RS.2,500 PER MONTH, THE TOTAL EXPENSES ON SALARY TO DRIVERS AND CLEANERS FOR 38 BUSES WOULD COME TO RS.36.48 LAKHS AS CONTENDED BY THE ASSESSEE BEFORE THE LEARNE D CIT(A). AS AGAINST THIS, THE ASSESSEE HAD SHOWN EXPENSES ON SALARY TO DRIVERS AND CLEANERS AT RS.35,65,188 WHICH IS LESS THAN SUCH CALCULATION. IN OUR CONSIDERED OPINION THE LEARNED CIT(A) WAS JUSTIFIED IN ALLOWING SUCH EXPENSES IN FULL AND T HUS TAKING OUT A SU M OF RS.35.68 LAKHS BEING SALARY TO DRIVERS AND CL EANERS OUT OF THE PAYMENT OF TOTAL CASH EXPENSES FOR THE PURPOSE OF DISALLOWANCE. AFTER EXCLUSI ON OF THIS AMOUNT, WE ARE LEFT WITH THE DIFFERENTIAL AMOUNT OF RS.16,11,188. IT IS NO TICED FROM THE ASSESS MENT ORDER THAT THE ASSESSING OFFICER GAVE AMPLE OPPORTUNITY TO THE ASSESSEE FOR PRODUCING VOUCHERS AND BILLS ETC. IN SUPPORT OF THE EXPENSES WHICH THE ASSESSEE FAILE D DO SO. IN SUCH A SITUATION ALL THE EXPENSES CANNOT BE AL LOWED AS DEDUCTION. NOW IT BECOMES THE QUESTION OF MAKING THE ESTIMATE OF E XPENSES, WHICH COULD BE DISALLOWED. CONSIDERING THE FACT THAT THE ASSESSING OFFICER MADE DISALLOWAN CE AT 25% OF THE TOTAL EXPENSES INCLUDING SALAR Y TO DRIVERS AND CLEANERS WHICH HAS BEEN REDUCED BY THE LEARNED CIT(A) TO 5% OF EXPENSES EXCLUDING THE SALARY OF DRIVERS AND CLEANERS, IN OUR CONSIDERED OPINION, IT WOULD BE JUST AND FAIR IF DISALLOWANCE OF EXPENSES IS SUSTAINED AT 20% OF THE OTHER CASH EXPE NSES AMOUNTING TO RS.16,11,188 FOR WANT OF SUPPORTING EVIDENCE AGAINST THE CASH EXPE NSES. WE ORDER ACCORDINGLY. IT WOULD AMOUNT TO CONFIRMATION OF FURTHE R DISALLOWANCE AT RS.2,47,906. 5. IN THE RESULT, THE AP PEAL IS PARTLY ALLOWED. ORDER PRONOUNCED ON THIS 8 TH DAY OF JULY, 2011. SD/- SD/- ( V.DURGA RAO ) ( R.S.SYAL ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI : 8 TH JULY, 2011. DEVDAS*` ITA NO.5379/MUM/2009 SMT.MEENA D.GUPTA. 4 COPY TO : 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT CONCERNED 4. THE CIT(A) - XIX, MUMBAI. 5. THE DR/ITAT, MUMBAI. 6. GUARD FILE. TRUE COPY. BY ORDER ASSISTANT REGISTRAR, ITAT, MUMBAI.