M/s Matrix Inc., New Delhi V. ITO, New Delhi

ITA 54/DEL/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 3623 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 5 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-06-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 21-06-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 07-01-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G S SAHOTA
• Assessee Lawyers: R C KAPOOR
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH `E: NEW DELHI BEFORE SHRI C.L.SETHI, JM & SHRI R.C. SHARMA, AM I.T. A. NO.54/DEL OF 2009 ASSESSMENT YEAR: 2005-06 M/S MATRIX INC. INCOME-TAX OFFICER, C-95, NDSE-II, VS WARD 32(4), NEW DELHI. NEW DELHI. PAN AAIFM0356K APPELLANT RESPONDENT APPELLANT BY: SHRI R.C. KAPOOR RESPONDENT BY: SHRI G.S. SAHOTA, SR. DR ORDER ER C.L. SETHI, JM: THE ASSESSEE IS IN APPEAL AGAINST THE ORDER OF CIT( A) DATED 19.12.2008 IN THE MATTER OF ASSESSMENT MADE BY THE AO U/S 143(3) OF THE INCOME-TAX ACT, 1961 (THE ACT) FOR ASSTT. YEAR 2005 -06. 2. VARIOUS GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE DIRECTED AGAINST CIT(A)S ORDER IN DISALLOWING OF EXPENSES OF RS.4,3 2,076/-, BEING 1/3 RD OF THE TOTAL EXPENSES OF RS.12,96,230/- INCURRED BY TH E ASSESSEE ON FOLLOWING ACCOUNTS: 2 (I) ESTABLISHMENT RS.9,22,400/- (II) REPAIRS & MAINTENANCE RS. 84,450/- (III) STAFF WELFARE RS. 75,476/- (IV) TELEPHONE RS. 74,429/- (V) TOURS & TRAVELLING RS. 75,930/- (VI) VEHICLE RUNNING RS. 63,545/- RS.12,96,230/- 3. WE HAVE HEARD BOTH THE PARTIES AND HAVE CAREFULL Y GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. 4. THE AO HAS DISALLOWED 1/3 RD OF THE VARIOUS EXPENSES CLAIMED IN PROFIT AND LOSS ACCOUNT ON THE GROUND THAT ASSESSEE FAILED TO PRODUCED BILLS AND VOUCHERS IN SUPPORT OF THE EXPENSES FOR HIS VERIFIC ATION. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE SUBMITTED BEFO RE THE AO THAT SUPPORTING VOUCHERS OF THE EXPENSES WERE NOT READIL Y AVAILABLE WITH THE ASSESSEE AS THEY WERE MISSING FROM THE ASSESSEES P REMISES. FOR SIMILAR REASONS, THE LEARNED CIT(A) CONFIRMED THE AOS ACTI ON. 5. HENCE, THE ASSESSEE IS IN APPEAL BEFORE US. 6. IN THE PRESENT CASE, THE ASSESSEE IS A PARTNERSH IP FIRM. THE ASSESSEE FILED ITS RETURN OF INCOME DECLARING TOTAL INCOME O F RS.90,320/-. THE ASSESSEES CASE WAS SELECTED FOR SCRUTINY. THE ASS ESSEE IS ENGAGED IN THE PROFESSION OF MANAGEMENT CONSULTANCY PROVIDING KEYM AN INSURANCE TO 3 CORPORATE ORGANIZATIONS AND ALLIED INSURANCE. THE A SSESSEE FIRM WAS ALSO DOING THE LIAISION WORK OF FOREIGN COMPANIES. IN T HE COURSE OF ASSESSMENT PROCEEDINGS, THE DETAILS OF THE EXPENSES INCURRED O N ESTABLISHMENT AMOUNTING TO RS.9,22,400/- WERE FURNISHED WHEREIN T HE NAME OF THE PERSON TO WHOM SALARY AND CONVEYANCE CHARGES WERE PAID HAS BEEN PROVIDED. THE ASSESSEE ALSO FURNISHED DETAILS OF TOURS AND TRAVEL ING AMOUNTING TO RS.75,390/- AND VEHICLE RUNNING AND MAINTENANCE OF RS.63,545/-. THE DETAILS OF TELEPHONE EXPENSES, STAFF WELFARE WAS AL SO FURNISHED. THE DETAILS OF REPAIR AND MAINTENANCE WAS FURNISHED WITH THE NA ME OF THE PERSON TO WHOM THE CHARGES WERE PAID ON ACCOUNT OF COST OF MA TERIAL, LABOUR CHARGES AND OTHER MISCELLANEOUS ITEMS. THE EXTRACT FROM TH E LEDGER ACCOUNTS OF STAFF WELFARE ETC WERE ALSO SUBMITTED. IN THE STAFF WELF ARE, THE FOOD ALLOWANCES GIVEN TO VARIOUS EMPLOYEES PER MONTH HAVE BEEN DETA ILED OUT. ALL TELEPHONE EXPENSES HAVE BEEN PAID BY CHEQUES TO MTNL, BHARATI CELLULAR LTD. ETC. SIMILARLY, DETAILS OF CONVEYANCE EXPENSES HAD ALSO BEEN GIVEN. WHEREVER PAYMENT IS MADE BY CASH, THE NAME OF THE PERSON CON CERNED TO WHOM THE PAYMENT HAS BEEN MADE IN CASH TOWARDS VARIOUS EXPEN SES ARE MENTIONED. THE AO HAS NOT MADE ANY SORT OF ENQUIRY OR CROSS VE RIFICATION FROM THE RESPECTIVE PERSON TO ASCERTAIN THE GENUINENESS OF T HE EXPENSES. WHEN THE ASSESSEE DID NOT PRODUCE SUPPORTING VOUCHERS BUT DE TAILS OF PAYMENT WERE 4 DULY FURNISHED, THE AO SHOULD HAVE EXAMINED AND VER IFIED THE EXPENSES BY MAKING NECESSARY ENQUIRY, AND IF ON ENQUIRY, THE EX PENSES WERE FOUND TO BE NOT GENUINE, THE AO COULD HAVE PROCEEDED TO DISALLO W THE EXPENSES TO CERTAIN PERCENTAGE BUT THAT EXERCISE HAS NOT BEEN D ONE BY THE AO DESPITE THE VARIOUS DETAILS OF EXPENSES WERE FURNISHED BY THE A SSESSEE. THEREFORE, IN THIS BACKGROUND, THE AD HOC DISALLOWANCE OF 1/3 RD OF ALL THE EXPENSES IS NOT CALLED FOR. WE, THEREFORE, DELETE THE SAME. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. 8. THIS DECISION WAS PRONOUNCED IN THE OPEN COURT O N 25 TH JUNE, 2010. (R.C. SHARMA) (C.L. SETHI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 25 TH JUNE, 2010 VIJAY COPY TO: 1. APPELLANT. 2. RESPONDENT. 3. CIT 4. CIT(A)-XXVI, NEW DELHI 5. DR ASSISTANT REGISTRAR