M/S ANDHI MARBLES P LTD., Jaipur V. ASSISTANT COMMISSIONER OF INCOME TAX, Jaipur

ITA 546/JPR/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 8696 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 2 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-07-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Appeal Filed On: 24-04-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ROSHANTA MEENA JCIT DHK
• Assessee Lawyers: PRERNA
• Section: 143(3)

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES (SMC), JAIPUR JH JES'K LH 'KEKZ] YS[KK LNL; DS LE{K BEFORE: SHRI RAMESH C SHARMA , ACCOUNTANT MEMBER VK;DJ VIHY LA -@ ITA NO. 546/JP/2018 FU/KZKJ.K O'KZ@ ASSESSMENT YEAR : 2014-15 M/S ANDHI MARBLE PVT. LTD., RAM BHAWAN, RAMGAD MOD, AMER ROAD, JAIPUR/ CUKE VS. A.C.I.T., CIRCLE-5, JAIPUR. LFKK;H YS[KK LA -@THVKBZVKJ LA-@ PAN/GIR NO.: AABCA 5673 P VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS @ ASSESSEE BY : SMT. PRERNA (CA) JKTLO DH VKSJ LS @ REVENUE BY : SMT. ROSHANTA MEENA (JCIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 16/04/2019 MN?KKS 'K.KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 11/07/2019 VKNS'K@ ORDER PER: R.C. SHARMA, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LD.CIT(A)-2 JAIPUR DATED 12/03/2018 FOR THE A.Y. 2014-15 IN THE MATTER OF ORDER PASSED U/S 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT, THE ACT), WHEREIN THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS GROSSLY ERRED IN CONFIRMING THE LUMP SUM DISALLOWANCE OF RS. 80,000/- OUT OF TELEPHONE AND TRAVELLING EXPENSES ON ACCOUNT OF INVOLVEMENT OF PERSONAL USE WITHOUT APPRECIATING THE GENUINENESS OF THE CLAIM AND FURTHER BY GROSSLY IGNORING THE FACT THAT ASSESSEE IS A PRIVATE LIMITED COMPANY, I.E. SEPARATE LEGAL ENTITY AND NO DISALLOWANCE OF EXPENSES COULD BE MADE ON ITA 546/JP/2018 M/S ANDHI MARBLE PVT. LTD. VS ACIT 2 ACCOUNT OF PERSONAL ELEMENT, THUS THE DISALLOWANCE SO MADE DESERVES TO BE DELETED. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS GROSSLY ERRED IN CONFIRMING THE DISALLOWANCE OF RS. 2,00,000/- VEHICLE RUNNING & MAINTENANCE EXPENSES AND SALES PROMOTION EXPENSES BY SOLELY RELYING UPON OBSERVATIONS OF ID. AO IN ASSESSMENT PROCEEDINGS. 2.1 THAT, THE LD. CIT(A) HAS FURTHER ERRED IN CONFIRMING THE DISALLOWANCE MADE BY ID.AO WITHOUT POINTING OUT ANY DEFECT / SHORTCOMING WITH THE DETAILS AND EVIDENCES MAINTAINED BY THE ASSESSEE WITH RESPECT TO THE SAID EXPENSES, ALL OF WHICH WERE SUBMITTED BEFORE THE LD. AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THUS, THE DISALLOWANCE OF RS. 2,00,000/- DESERVES TO BE DELETED. 3. THAT THE APPELLANT CRAVES THE RIGHT TO ADD, DELETE, AMEND OR ABANDON THE GROUND OF THIS APPEAL AT THE TIME OR BEFORE THE ACTUAL HEARING OF THE CASE. 2. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. THE FACTS IN BRIEF ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MINING OF MARBLE BLOCKS. DURING THE COURSE OF SCRUTINY ASSESSMENT, THE A.O. FOUND THAT THE ASSESSEE HAS DEBITED FOLLOWING EXPENDITURE IN ITS P&L ACCOUNT S. NO. PARTICULARS AMOUNT 1. TELEPHONE EXP. 7,97,235.00 2. TRAVELLING EXP. 59,817.00 3. VEHICLE REPAIRS & MAINTENANCE EXP. 14,29,805.00 4. SALES PROMOTIONS EXPENSES 6,20,216.00 BY OBSERVING THAT THE EXPENSES ON TELEPHONE AND TRAVELLING FACILITIES ARE PROVED TO BE USED FOR OTHER THAN BUSINESS PURPOSES, THE A.O. DISALLOWED A LUMP SUM AMOUNT OF RS. 80,000/- OUT OF THE SAME. WITH RESPECT TO ITA 546/JP/2018 M/S ANDHI MARBLE PVT. LTD. VS ACIT 3 EXPENDITURE ON VEHICLE RUNNING AND SALES PROMOTION, THE A.O. OBSERVED THAT SOME OF THESE EXPENSES WERE NOT FULLY SUPPORTED BY PROPER BILLS/EVIDENCES DUE TO WHICH THESE EXPENSES COULD NOT BE VERIFIED COMPLETELY, ACCORDINGLY, HE MADE A LUMP SUM DISALLOWANCE OF RS. 2.00 LACS. BY THE IMPUGNED ORDER, THE LD. CIT(A) CONFIRMED THE ACTION OF THE A.O., AGAINST WHICH THE ASSESSEE IS IN FURTHER APPEAL BEFORE THE ITAT. 3. IT WAS ARGUED BY THE LD AR OF THE ASSESSEE THAT THE ASSESSEE BEING A PRIVATE LIMITED COMPANY, SUCH DISALLOWANCES FOR PERSONAL USE OR FOR NON-BUSINESS PURPOSES CANNOT BE MADE. SHE FURTHER CONTENDED THAT THE EXPENDITURE ON VEHICLE RUNNING, TELEPHONE ETC. WAS INCURRED WHOLLY AND EXCLUSIVELY FOR BUSINESS PURPOSES, THEREFORE, NO DISALLOWANCE SHOULD BE MADE. 4. ON THE OTHER HAND, THE LD DR HAS RELIED ON THE ORDERS OF THE AUTHORITIES BELOW. 5. I HAVE CONSIDERED THE RIVAL CONTENTIONS AND CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FOUND THAT THE A.O. HAS BASICALLY MADE DISALLOWANCE ON AD HOC BASIS AND PRIMARILY ON THE PLEA THAT THE EXPENSES WERE NOT SUPPORTED BY PROPER BILLS AND VOUCHERS, THEREFORE, THE SAME CANNOT BE VERIFIED COMPLETELY. I FOUND THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, COMPLETE BOOKS OF ACCOUNT AND VOUCHERS WERE ITA 546/JP/2018 M/S ANDHI MARBLE PVT. LTD. VS ACIT 4 PRODUCED BEFORE THE A.O. WHO HAVING EXAMINED THEM FAILED TO POINT OUT ANY SPECIFIC VOUCHER OF EXPENSE WHICH WAS NOT GENUINE OR HAD BEEN INFLATED AND THE A.O. HAS MADE GENERAL OBSERVATIONS IN THE ASSESSMENT ORDER THAT THE GENUINENESS OF EXPENSES IS QUESTIONABLE. KEEPING IN VIEW THE NATURE OF ASSESSEES BUSINESS AND TOTALITY OF FACTS AND CIRCUMSTANCES OF THE CASE, I DIRECT THE A.O. TO RESTRICT THE DISALLOWANCE @ 5% OF ABOVE EXPENSES. I DIRECT ACCORDINGLY. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED IN PART. ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH JULY, 2019 SD/- JES'K LH 'KEKZ ( RAMESH C SHARMA ) YS[KK LNL; @ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 11 TH JULY, 2019 *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANTS- M/S ANDHI MARBLE PVT. LTD., JAIPUR. 2. IZR;FKHZ @ THE RESPONDENT- THE A.C.I.T., CIRCLE-5, JAIPUR. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 546/JP/2018) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR