SHALOK HARI NAGPAL, MUMBAI V. ACIT - CIRCLE- 19 (3), MUMBAI

ITA 5466/MUM/2018

• Counselvise Citation: [2019] 114 COUNSELVISE.COM (IT) 6142 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-10-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 25-09-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: AKHTAR HANSARI
• Assessee Lawyers: RAKESH SIRSALEWALA
• Keywords: Business income
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC, BENC H MUMBAI BEFORE SHRI MAHAVIR SINGH, JUDICIAL MEMBE R & SHRI G. MANJUNATHA, ACCOUNTANT MEMBE R ITA NO.5466/MUM/2018 ( ASSESSMENT YEAR :2012-13 ) SHALOK HARI NAGPAL 8/B, DEV ASHISH PEDDAR ROAD OPP. JASLOK HOSPITAL MUMBAI-400 026 VS. ACIT-19(3) ROOM NO.354, 3 RD FLOOR AAYKAR BHAWAN MUMBAI-400 020 PAN/GIR NO. AABP N3142R APPELLANT ) .. RESPONDENT ) REVENUE BY AKHTAR H. ANSARI ASSESSEE BY RAKESH SIRSALEWALA DATE OF HEARING 15/10/2019 DATE OF PRONOUNCEME NT 15 /10/2019 / O R D E R PER BENCH : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST, THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS)3, MUMBAI, DATED 22/06/2018 AND IT PERTAINS TO ASSESSMENT YEAR 2012- 13. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1. GROUND NO. 1 - AD-HOC DISALLOWANCE OF TEMPO_ E XPENSES ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, AND IN LAW, THE HON'BLE CIT(A) HAS ERRED IN UPHOLDING THE ADHOC DISALLOWANC E OF RS. 1,06,205 BEING 20% OF TEMPO EXPENSES INCURRED WITHOUT APPREC IATING THE FACTS AND EVIDENCES BROUGHT ON RECORD. THE APPELLANT THEREFORE, PRAYS THAT THE ADHOC DISAL LOWANCE OF RS. 1,06,205 BE DELETED. ITA NO.5466/MUM/2018 SHALOK HARI NAGPAL 2 2. GROUND NO.2 - AD-HOC DISALLOWANCE OF CONVEYANC E CHARGES ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, AND IN LAW. THE HONBLE CIT(A) HAS ERRED IN UPHOLDING THE ADHOC DISALLOWANC E OF RS. 42,689 BEING 20% OF CONVEYANCE CHARGES INCURRED WITHOUT AP PRECIATING THE FACTS AND EVIDENCES BROUGHT ON RECORD. THE APPELLANT THEREFORE, PRAYS THAT THE ADHOC DISAL LOWANCE OF RS. 42,689 HE DELETED. 3. GROUND NO. 3 - AD-HOC DISALLOWANCE OF TRAVEL ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, AND IN LAW. THE HON'BLE CIT(A) HAS ERRED IN UPHOLDING THE ADHOC DIS ALLOWANCE OF RS. 69,370 BEING 20% OF TRAVELLING EXPENSES INCURRED WI THOUT APPRECIATING THE FACTS AND EVIDENCES BROUGHT ON RECORD. THE APPELLANT THEREFORE, PRAYS THAT THE ADHOC DISAL LOWANCE OF RS. 69,370 BE DELETED, 4. GROUND NO.4 - AD-HOC DISALLOWANCE OF SUNDRY EX PENSES ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, AND IN LAW, THE HON'BLE CIT(A) HAS ERRED IN UPHOLDING THE ADHOC DISALLOWANC E OF RS. 28,223 BEING 20% OF SUNDRY EXPENSES INCURRED WITHOUT APPRE CIATING THE FACTS AND EVIDENCES BROUGHT ON RECORD. THE APPELLANT THEREFORE, PRAYS THAT THE ADHOC DISAL LOWANCE OF RS. 28,223 BE DELETED. 5. GROUND NO.5- AD-HOC DISALLOWANCE OF PETROL EX PENSES ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, AND IN LAW, THE HON BLE OF PETROL EXPENSES INCURRED WITHOUT APPRECIATING TH E FACTS AND EVIDENCES BROUGHT ON RECORD. THE APPELLANT THEREFORE, PRAYS THAT THE ADHOC DISAL LOWANCE OF RS. 20,687 BE DELETED. 6. GROUND NO. 5 - DISALLOWANCE OF PETROL EXPENSES ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE : AND IN LAW, THE HONBLE CIT(A)HAS ERRED IN DISALLOWING THE PETROL EXPENSES OF RS. 82,790 WITHOUT APPRECIATING THE FACTS AND EVIDENCES BROUGHT ON REC ORD THE APPELLANT THEREFORE, PRAYS THAT THE DISALLOWANC E OF RS. 82,790 BE DELETED. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS AN INDIVIDUAL, FILED ITS RETURN OF INCOME FOR AY 2012- 13 ON 28/09/2012, DECLARING TOTAL INCOME OF RS. 46,89,137/-. THE CASE WAS SELECTED FOR SCRUTINY AND THE ASSESSMENT HAS BEEN COMPLETED U/S 143(3) OF THE I.T.ACT, 1961 ON 18/02/2015, DETERMINING THE TOTAL INCOME AT RS. 49,27,260/-, BY MAKING ADDITIONS TOWARDS OF ADHOC D ISALLOWANCE OF CERTAIN EXPENSES, ON THE GROUND THAT THE ASSESEE HA S FAILED TO FILE NECESSARY SUPPORTING BILLS AND VOUCHERS TO JUSTIFY CLAIM OF EXPENSES AGAINST BUSINESS INCOME. ITA NO.5466/MUM/2018 SHALOK HARI NAGPAL 3 4. AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESEE P REFERRED AN APPEAL BEFORE THE LD.CIT(A). BEFORE THE LD.CIT(A), THE ASSESEE HAS FILED BILLS AND VOUCHERS, IN RESPECT OF PETROL EXP ENSES, INCLUDING LEDGER EXTRACTS TO PROVE THAT ALL EXPENSES ARE SUPP ORTED BY NECESSARY EVIDENCES. THE LD.CIT(A) FOR THE DETAILED REASONS RECORDED IN ITS APPELLATE ORDER CONFIRMED ADDITIONS MADE BY THE AO TOWARDS ADHOC DISALLOWANCES OF VARIOUS EXPENSES, IN CLUDING TEMPO CHARGES, CONVEYANCE EXPENSES, TRAVELLING EXPENSES A ND SUNDRY EXPENSES. THE LD.CIT(A), FURTHER ENHANCED ADDITION S MADE BY THE AO TOWARDS PETROL EXPENSES AMOUNTING TO RS. 98,280/ -. AGGRIEVED BY THE LD.CIT(A) ORDER, THE ASSESEE IS IN APPEAL BE FORE US. 5. THE LD. AR FOR THE ASSESSEE, AT THE TIME OF HEAR ING, SUBMITTED THAT THE LD.CIT(A) HAS CONFIRMED DISALLOWANCES OF V ARIOUS EXPENSES @ 20% AND ALSO, ENHANCED ASSESSMENT, IN RESPECT OF DISALLOWANCES OF PETROL EXPENSES WITHOUT APPRECIATING THE FACT TH AT THE ASSESEE HAS FILED NECESSARY BILLS AND VOUCHERS TO JUSTIFY OF CL AIM OF EXPENSES AGAINST BUSINESS INCOME. THE LD. AR, FURTHER SUBMIT TED THAT IT IS TRUE THAT SOME EXPENSES ARE SUPPORTED BY SELF MADE VOUCH ERS. BUT, FACT REMAINS THAT FOR THOSE EXPENSES, IT IS DIFFICULT TO MAINTAIN BILLS ISSUED BY SERVICE PROVIDERS, BECAUSE IN CASE OF TRAVEL EXP ENSES, IF YOU ASK BILL FROM A TAXI DRIVER OR AUTO DRIVER, IT IS DIFFI CULT TO GET BILLS. THEREFORE, THE ASSESEE NEEDS TO MAINTAIN SELF MADE VOUCHERS, AND HENCE, IT CANNOT BE SAID THAT EXPENDITURE MAINTAINE D UNDER VARIOUS HEADS ARE NOT SUPPORTED BY BILLS AND VOUCHERS. 6. THE LD. DR, ON THE OTHER HAND, STRONGLY SUPPORT ED ORDERS OF THE LD.CIT(A). ITA NO.5466/MUM/2018 SHALOK HARI NAGPAL 4 7. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATE RIAL AVAILABLE ON RECORD AND GONE THROUGH ORDERS OF THE AUTHORITIE S BELOW. THE LD. AO WHILE MAKING 20% ADHOC DISALLOWANCES OF CERTAIN EXPENSES NOT MADE ANY OBSERVATIONS, EXCEPT STATED THAT CERTAIN E XPENSES ARE SUPPORTED BY SELF MADE VOUCHERS. WE, FURTHER NOTED THAT THE ASSESSEE HAS FILED SUPPORTING BILLS AND VOUCHERS, I N RESPECT OF ALL EXPENSES DEBITED TO THE PROFIT AND LOSS ACCOUNT. TH E ALLEGATIONS OF THE AO ARE ONLY WITH REGARD TO SELF MADE VOUCHERS. IT IS THE CLAIM OF THE ASSESEE THAT FOR CERTAIN EXPENDITURES, IT IS DI FFICULT TO GET SUPPORTING BILLS FROM SERVICE PROVIDERS, AND FOR TH IS, THE ASSESEE HAS CITED EXAMPLES OF TRAVELLING EXPENSES BEING AUTO CH ARGES/TAXI CHARGES. WE, FURTHER NOTED THAT THE LD.CIT(A) HAD A CCEPTED FACT THAT THE ASSESSE HAD FILED VOUCHERS, HOWEVER REJECTED AR GUMENTS OF THE ASSESSEE, ON THE GROUND THAT CERTAIN EXPENSES ARE N OT SUPPORTED BY PRIMARY EVIDENCES WITHOUT SPECIFYING, WHICH EXPEN DITURE IS NOT SUPPORTED BY EVIDENCES. SIMILARLY, IN RESPECT OF EN HANCEMENT OF PETROL EXPENSES NO PROPER REASONS HAS BEEN GIVEN TO ENHANCE PETROL EXPENSES, INSPITE OF THE ASSESSEE HAS FURNIS HED BILLS AND VOUCHERS. THEREFORE, CONSIDERING THE FACTS AND CIRC UMSTANCES OF THIS CASE AND ALSO, REASONS GIVEN BY THE LOWER AUTHORITI ES TO MAKE ADHOC DISALLOWANCE OF EXPENSES, WE ARE OF THE CONSIDERED VIEW THAT THE DISALLOWANCE MADE BY THE AO, IN RESPECT OF VARIOUS EXPENSES, IT SEEMS TO BE AT HIGHER SIDE AND ACCORDINGLY, DIRECT THE AO TO RESTRICT DISALLOWANCE OF EXPENSES UNDER THE HEAD TEMPO EXPEN SES, CONVEYANCE CHARGES, TRAVEL EXPENSES, SUNDRY EXPENSE S AND PETROL EXPENSES TO 10% OF SAID EXPENSES. 7. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS P ARTLY ALLOWED. ITA NO.5466/MUM/2018 SHALOK HARI NAGPAL 5 ORDER PRONOUNCED IN THE OPEN COURT ON THIS 15 /10 /2019 SD/- (MAHAVIR SINGH) SD/- (G. MANJUNATHA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 15/10/2019 THIRUMALESH SR.PS COPY OF THE ORDER FORWARDED TO : BY ORDER, (ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//