ITO, New Delhi V. M/s. Vivek Vikas, New Delhi

ITA 5619/DEL/2012

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 4929 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 9 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-09-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 24-05-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 06-11-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHRAVAN GOTRU
• Keywords: Unexplained cash credit; Capital asset converted into stock in trade; Gift; Depreciation; Source of fund
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER I.T.A. NO. 5619 /DEL/201 2 A.Y. : 2009-10 INCOME TAX OFFICER, WARD 39(2), C.R. BUILDING, NEW DELHI VS. SH. VIVEK VIKAS, 4467, GALI JATAN, PAHARI DHIRAJ, SADAR BAZAR, DELHI 110 006 (PAN: AACPV5124A) (ASSESSEE) (RESPONDENT) REVENUE BY : SH. SHRAVAN GOTRU, SR. DR ASSESSEE BY : NONE ORDER PER H.S. SIDHU : JM THE REVENUE HAS FILED THIS APPEAL AGAINST THE IMP UGNED ORDER DATED 31.8.2012 OF THE LD. CIT(A)-XXVIII, NEW DELHI R ELEVANT TO ASSESSMENT YEAR 2009-10. 2. THE GROUNDS RAISED IN THIS APPEAL READ AS UNDER: - 1. THE LD CIT (A) ERRED IN DELETING THE ADDITION MADE BY THE AO OF RS.39,70,700/- APPLYING THE GP RATE OF 36.22% AS SHOWN BY ASSEESSEE 2 IN THE PREVIOUS YEAR NOT APPRECIATING THE FACT THAT THE ADDITION WAS MADE BY THE AO AFTER DETECTING VARIOUS DEFECTS AND IRREGULARITIES IN THE PURCHASE BILLS, NON-SUBMISSION OF BOOKS OF ACCOUNTS & ORIGINAL BILLS AND REJECTING THE BOOKS OF ACCOUNT ULS 145(3) LT. ACT,1961 AFTER ISSUING SHOW CAUSE LETTER DATED 19/12/2011. 2. THE LD CIT (A) ERRED IN DELETING THE ADDITION MADE BY THE AO OF RS.17,98,135/- TOWARDS ADDITION OF 'CAPITAL' BY SUMMARILY' ACCEPTING THE ASSESSEE'S VERSION THAT THE NECESSARY DOCUMENTARY EVIDENCES REGARDING RECEIPT OF GIFT FROM HIS MOTHER, MRS. SUMITRA AHLAWAT 'WERE FURNISHED DURING THE COURSE OF ASSESSMENT PROCEEDINGS WHICH IS FACTUALLY INCORRECT AND CONTRARY TO THE FACTS ON RECORDS SINCE THE ASSESSEE FAILED TO FURNISH CONFIRMATION FROM HIS MOTHER AND OTHER NECESSARY DOCUMENTARY EVIDENCES REGARDING RECEIPT OF GIFT FROM HIS MOTHER INSPITE OF VARIOUS OPPORTUNITIES GIVEN TO THE ASSESSEE. FURTHER, THE LD. CIT (A) HAS WRONGLY 3 MENTIONED IN HER ORDER THAT ALL THE DOCUMENTS ARE AVAILABLE ON RECORD VIDE NOTE SHEET ENTRY DT.24/12/2011 BUT OVER LOOKED BY THE AO. WHEREAS FACT TO THE MATTER IS THAT THERE IS NO SUCH NOTE SHEET ENTRY DATED 24/12/2011. 3. THE LD CIT (A) ERRED IN DELETING THE ADDITION MADE BY THE AO OF RS. 14,30,371/- TOWARDS ADDITION IN FIXED ASSETS AS THE ASSESSEE FAILED TO FURNISH THE NECESSARY DOCUMENTARY EVIDENCES INSPITE OF VARIOUS OPPORTUNITIES GIVEN TO THE ASSESSEE. 4. THE LD CIT (A) ERRED IN DELETING THE ADDITION MADE BY THE AO OF RS. 15,05,159/- ON ACCOUNT OF UNEXPLAINED SUNDRY CREDITORS AS THE ASSESSEE 'FAILED TO FURNISH THE NECESSARY DOCUMENTS EVIDENCINQ IDENTITY, CREDITWORTHINESS AND GENUINENESS OF TRANSACTIONS W.R.T SUNDRY CREDITORS INSPITE OF VARIOUS OPPORTUNITIES GIVEN TO THE ASSESSEE. 5. THE LD CIT (A) ERRED IN DELETING THE ADDITION MADE BY THE AO OF RS. 3,20,000/- TOWARDS 4 UNEXPLAINED LOANS AS THE ASSESSEE FAILED TO FURNISH THE NECESSARY DOCUMENTARY EVIDENCES INSPITE OF VARIOUS OPPORTUNITIES GIVEN TO THE ASSESSEE. 6. THE LD CIT (A) ERRED IN DELETING THE ADDITION MADE BY THE AO OF RS. 1,96,085/- TOWARDS UNSUBSTANTIATED SALARY PAYMENTS MADE BY THE ASSESSEE AS THE ASSESSEE FAILED TO FURNISH THE NECESSARY DOCUMENTARY EVIDENCES INSPITE OF VARIOUS OPPORTUNITIES GIVEN TO THE ASSESSEE. 7. THE LD CIT (A) ERRED IN RESTRICTING THE ADDITIONS MADE BY THE AO ON ACCOUNT OF PERSONAL USE OF CONVEYANCE, VEHICLE RUNNING, TELEPHONE, TOUR & TRAVEL ETC AND ALSO OF DIWALI EXPENSES AS THE ASSESSEE FAILED TO FURNISH THE NECESSARY DOCUMENTARY EVIDENCES TO SHOW THAT THE ABOVE EXPENSES WERE INCURRED WHOLLY & EXCLUSIVELY FOR BUSINESS PURPOSE INSPITE OF VARIOUS OPPORTUNITIES GIVEN TO THE ASSESSEE. 8. THAT THE GROUNDS OF APPEAL ARE WITHOUT PREJUDICE TO EACH OTHER. 5 9. THE APPELLANT CRAVES LEAVE TO ADD, AMEND OR MODIFY ANY / ALL THE GROUNDS OF APPEAL BEFORE OR DURING THE COURSE OF THE APPEAL. 2. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE FILED HIS RETURN OF INCOME ON 27.9.2009 DECLARING INCOME OF RS.9,94,880 /-. THE RETURN OF THE ASSESSEE WAS PROCESSED U/S. 143(1) OF THE INCO ME TAX ACT, 1961 (HEREINAFTER REFERRED AS THE ACT) AND THE CASE WAS SELECTED FOR COMPULSORY SCRUTINY. ACCORDINGLY, STATUTORY NOTICES W ERE ISSUED TO THE ASSESSEE AND SERVED UPON THE ASSESSEE. IN RESPON SE TO NOTICES, THE A.R. OF THE ASSESSEE ATTENDED THE PROCEEDINGS FRO M TIME TO TIME AND FILED THE NECESSARY DETAILS. THE ASSESSEE IS ENG AGED IN THE BUSINESS OF EXPORT AND IS ALSO PARTICIPATING IN FOREI GN FAIR & EXHIBITION. THE ASSESSEE HAS SUBMITTED TURNOVER AND PROFIT RATIO FOR THE LAST THREE YEARS, WHICH IS REPRODUCED AS UNDER:- TURNOVER (LACS) GROSS PROFIT% NET PROFIT% AY 427.17 27.57 2.47 AY (PRECEDING - 1) 417.87 36.22 3.78 AY (PRECEDING - 2) 353.34 47.10 8.00 2.1 ON PERUSAL OF THE ABOVE TABLE, THE AO OBSERVED T HAT THERE IS SHARP DECLINE IN THE GROSS PROFIT AS WELL AS NET PROF IT. HE FURTHER OBSERVED THAT THE REASON GIVEN BY THE ASSESSEE IN SUPP ORT OF HIS CLAIM STATED THAT THE INTERNATIONAL BUSINESS ENVIRONMENT HAS BEEN 6 DOWN DURING THE LAST SEVERAL YEARS. BIG MULTINATIONAL C OMPANIES, LEADING BANKS, MAJOR ECONOMICS HAVE SUFFERING HUGE FINANCIAL PROBLEMS RESULTING IN PANIC IN THE MINDS OF CONS UMER WHO ARE BUYING OUR PRODUCTS ON FOREIGN MARKETS. WE ARE EXPO RTING LIFE STYLE PRODUCTS, WHICH ARE NOT NECESSITY ITEMS, HENCE, WERE FORCED TO REDUCE OUR PROFIT MARGIN IN RECESSION PHASE IN THE PRESENT CUT THROAT COMPETITION BETWEEN EXPORTERS FROM INDIA, CHINA A ND OTHER SOUTH EAST ASIAN COMPANIES. HEAD BE NOT REDUCE OUT P ROFIT MARGIN, OUR TURNOVER WOULD NOSE DIVED. THE ABOVE SUBMISSION OF THE ASSESSEE HAS BEEN CONSIDERED BY THE AO, BUT NOT ACCE PTABLE. ON PERUSAL OF PURCHASE BILLS, AO OBSERVED THAT OUT OF TOTAL PURCHASE BILL MANY BILLS ARE TAMPERED, FABRICATED AND THERE IS CUTTING AND OVERWRITING ON THEM, WHICH PUT THE QUESTION MARK ON THE AUTHENTICITY OF PURCHASE BILLS. FURTHER NO BOOKS OF ACCOUNTS, ORIGINAL BILLS HAVE BEEN PRODUCED. IN THE ABSENCE OF WHICH TH E GP AS SHOWN BY THE ASSESSEE REMAINED UNVERIFIABLE AND CREATE DOU BT ABOUT THE COMPLETENESS AND CORRECTNESS OF THE BOOKS OF ACCOUNT O F THE ASSESSEE WERE REJECTED U/S. 145(2) AND ACCORDINGLY T HE AO APPLIED 36.22% GP WHICH WAS DECLARED BY THE ASSESSEE IN PRE VIOUS YEAR AND THE SAME WAS ADDED BACK TO THE TAXABLE INCOME OF THE ASSESSEE. ACCORDINGLY, AN AMOUNT OF RS. 39,70,700/- WAS ADDED BACK TO THE TAXABLE INCOME OF THE ASSESSEE BEING 36.22 % AS 7 REDUCED BY THE GP @27.57 DECLARED BY THE ASSESSEE. BESIDES, ABOVE, THE AO HAS ALSO ADDED BACK VARIOUS ADDITIONS MAINLY ON THE GROUND OF NON-FURNISHING OF INFORMATION/EVIDENCE I .E. ON ACCOUNT OF UNEXPLAINED ADDITION IN CAPITAL AMOUNTING RS. 17,98,1 35/-; ADDITION OF RS. 14,30,371/- ON ACCOUNT OF FIXED ASSETS; ADDITI ON OF RS. 15,05,159/- ON ACCOUNT OF UNEXPLAINED SUNDRY CREDITOR S; ADDITION OF RS. 3,20,000/- TOWARDS UNEXPLAINED LOANS AS THE ASSES SEE; ADDITION OF RS. 1,96,085/- ON ACCOUNT OF UNSUBSTANTIATED SALAR Y PAYMENT MADE BY THE ASSESSEE AND ADDITION OF RS. 1,33,070/- ON ACCOUNT OF CONVEYANCE/TELEPHONE/TRAVELLING AND VEHICLE EXPENSE S. ACCORDINGLY, THE ASSESSED THE INCOME OF THE ASSESSEE AT RS. 1,04,3 4,680/- PASSED U/S. 143(3) OF THE ACT VIDE ORDER DATED 30.12. 2011. AGAINST THE AFORESAID ASSESSMENT ORDER, ASSESSEE APPEALED BE FORE THE LD. CIT(A)-XXVIII, NEW DELHI, WHO VIDE HIS IMPUGNED ORD ER DATED 31.8.2012 HAS PARTLY ALLOWED THE APPEAL OF THE ASSES SEE. AGGRIEVED WITH THE ORDER OF THE LD. CIT(A), THE REVENUE IS IN AP PEAL BEFORE THE TRIBUNAL. 3. LD. DR RELIED UPON THE ORDER OF THE AO AND REITE RATED THE CONTENTIONS RAISED IN THE GROUNDS OF APPEAL. 4. IN THIS CASE, NOTICE OF HEARING TO THE ASSESSEE W AS SENT BY THE REGISTERED AD POST, IN SPITE OF THE SAME, ASSESSEE, NOR HIS 8 AUTHORIZED REPRESENTATIVE APPEARED TO PROSECUTE THE MATTE R IN DISPUTE, NOR FILED ANY APPLICATION FOR ADJOURNMENT. KEEPING IN VIEW THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE AND THE I SSUE INVOLVED IN THE PRESENT APPEAL, WE ARE OF THE VIEW THA T NO USEFUL PURPOSE WOULD BE SERVED TO ISSUE NOTICE AGAIN AND A GAIN TO THE ASSESSEE, THEREFORE, WE ARE DECIDING THE PRESENT AP PEAL EXPARTE QUA ASSESSEE, AFTER HEARING THE LD. DR AND PERUSING THE RECORDS. 5. WE HAVE HEARD THE LD. DR AND PERUSED THE RELEVANT RECORDS, ESPECIALLY THE IMPUGNED ORDER. WITH REGARD TO GROUND NO. 1 RELATING TO DELETION OF ADDITION OF RS. 39,70,700/- BY APPLYI NG THE GP RATE OF 36.22% IS CONCERNED, WE FIND THAT THE METHOD OF ACC OUNTING HAS BEEN ACCEPTED FOR SEVERAL YEARS ON SAME SET OF FACTS. THE ONUS WAS ON REVENUE TO SHOW THAT ACCOUNTS WERE INCOMPLETE OR IN CORRECT AND TRUE PROFITS COULD NOT BE DEDUCED FROM THE BOOKS OF A CCOUNTS MAINTAINED BY THE APPELLANT WHICH WERE ALSO DULY AUDI TED AND NO ADVERSE INFERENCE WAS DRAWN BY THE AUDITOR. IF EXPEN SES CLAIMED REMAINED UNEXPLAINED, A.O COULD HAVE DISALLOWED THE SAME WITHOUT REJECTING THE BOOKS OF ACCOUNTS. THE ASSESSEE HAS NOT BEEN PROVIDED WITH DETAILS OF COMPARABLE CASES. THE ASSES SEE SHOULD HAVE BEEN PROVIDED WITH AN OPPORTUNITY TO REBUT BEFORE R EJECTING THE BOOKS OF ACCOUNTS AND ESTIMATING THE PROFITS. ESTI MATE SHOULD BE BASED ON SOME EVIDENCE AND MATERIAL. BEST JUDGMENT 9 ASSESSMENT TO BE MADE (ESTIMATION SHALL HAVE A RATIONAL NEXUS TO THE AVAILABLE MATERIAL AND THE CIRCUMSTANCES OF THE CAS E. IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE THE ASSESSING OFFICER WAS NOT JUSTIFIED IN REJECTING THE BOOKS OF ACCOUNTS BY A PPLYING SECTION 145(3) OF THE IT ACT AND ESTIMATING GROSS PROFIT @ 36.22 %. THE ADDITION MADE BY THE AO TO THE TUNE OF RS. 39,70,700/- WAS THEREFORE, RIGHTLY DELETED BY THE LD. CIT(A), WHICH DOES NOT NEED ANY INTERFERENCE ON OUR PART, HENCE, WE UPHOLD THE SAM E AND REJECT THE GROUND NO. 1 RAISED BY THE REVENUE. 6. WITH REGARD TO GROUND NO. 2 RELATING TO DELETION O F ADDITION OF RS. 17,98,135/- ON ACCOUNT OF CAPITAL IS CONCERNED, WE FIND THAT DURING THE ASSESSMENT YEAR UNDER CONSIDERATION ASSE SSEE RECEIVED GIFT FROM HIS MOTHER SMT.SUMITRA AHLAWAT WHO IS AN A SSESSEE IN THE SAME WARD39(2) DELHI ON 24.12.2011. FOLLOWING DOCU MENTS WERE FILED IN RESPONSE TO QUERY DATED- 19.12.2011: 1. COPY OF INCOME TAX RETURN OF SUMITRA AHLAWAT 2. COPY OF BANK STATEMENT OF SUMITRA AHLAWAT 3. COPY OF CHEQUES DEPOSITED BY SUMITRA AHLAWAT 4. COPY OF BANK A/ C OF SH. VIVEK VIKAS REFLECTING THE AMOUNT RECEIVED. 10 6.1 ALSO FOLLOWING CONFIRMATION OF GIFT FROM SUMITR A AHLAWAT WERE FILED: (A) IDENTITY OF SMT. SUMITRA AHLAWAT IS PROVED BY ENCL OSING THE PAN NO. AND INCOME TAX RETURN. (B) GENUINENITY IS PROVED BY ENCLOSING THE BANK ST ATEMENT OF BOTH THE PARTIES. (C) SOURCE OF FUNDS PROVED BY ENCLOSING THE COPY OF CHEQUES RECEIVED FROM THE POST OFFICE AGAINST MATURED I.V.P. (D) SMT. SUMITRA AHLAWAT IS A SENIOR CITIZEN AND IS AN ASSESSEE SINCE LAST 25 YEARS. 6.1.1 WE NOTE THAT THE AO LEAVING ASIDE ALL GENUINE AND EXPLAINABLE CREDITS IN THE CAPITAL ACCOUNT ADDED AS RS .17,98,000/-. 6.1.2 IN VIEW OF THE ABOVE FACTS AND EVIDENCES IT CA NNOT BE ESTABLISHED THAT IT IS UNEXPLAINED CASH CREDIT. ALL T HE ABOVE DOCUMENTS ARE AVAILABLE ON RECORD VIDE NOTE SHEET DATE D- 24.12.2011 BUT OVERLOOKED BY THE A.O. HENCE, THE AD DITION OF RS.17,98,135/ - MADE BY THE ASSESSING OFFICER WAS U NCALLED AND UNJUSTIFIED, THEREFORE, WAS RIGHTLY DELETED BY THE LD. CIT(A), WHICH DOES NOT NEED ANY INTERFERENCE ON OUR PART, HENCE, WE UPHOLD THE SAME AND REJECT THE GROUND NO. 2 RAISED BY THE REVEN UE. 11 7. WITH REGARD TO GROUND NO. 3 RELATING TO DELETION O F ADDITION OF RS. 14,30,371/- ON ACCOUNT OF FIXED ASSETS IS CONCER NED, WE FIND THAT A.O HAS MADE AN ADDITION OF RS.14,30,371/- DISCA RDING THE EXPENSES CAPITALIZED TOWARDS MART NO F-447 UNDER THE HEAD FIXED ASSETS. THE ADDITION ON FIXED ASSETS INCLUDES CAPITA LIZATION OF INTEREST ON LOAN RS.4,49,509/ - WHICH IS VERIFIABLE F ROM THE BANK STATEMENT AND CANNOT BE DISALLOWED. FURTHER THE BALANC E AMOUNT INCLUDES EXPENSES FOR WHICH DETAILS WERE PROVIDED A LONG WITH THE PHOTOCOPY OF BILLS. THE A.O PICKED UP THE FIGURE OF RS.14,30,371/- WHICH IS NOT APPEARING IN ANY DETAILS PROVIDED NOR D OES IT MATCH WITH ANY CALCULATION DONE BY THE A.O. DURING THE COURS E OF PROCEEDINGS APPELLANT PROVIDED A SEPARATE SHEET GIVING DETAIL OF ADDITION TO FIXED ASSETS ALONG WITH THE COPY OF BILL S BUT THE A.O IGNORED EACH AND EVERY DOCUMENT AVAILABLE ON RECORD MAKING THE ADDITION. IN VIEW OF THE ABOVE FACTS AND EVIDENCES I T CANNOT BE SAID THAT IT IS UNEXPLAINED. IN OUR CONSIDERED VIEW, THE RELEVANT DOCUMENTS ARE AVAILABLE ON RECORD BUT OVERLOOKED BY TH E A.O. THEREFORE, THE ADDITION OF RS.14,30,371/- MADE BY THE AO WAS RIGHTLY DELETED BY THE LD. CIT(A), WHICH DOES NOT NEE D ANY INTERFERENCE ON OUR PART, HENCE, WE UPHOLD THE SAME AN D REJECT THE GROUND NO. 3 RAISED BY THE REVENUE. 12 8. WITH REGARD TO GROUND NO. 4 RELATING TO DELETION O F ADDITION OF RS. 15,05,159/- ON ACCOUNT OF UNEXPLAINED SUNDRY CR EDITORS IS CONCERNED, WE FIND THAT THE FIGURE OF RS.5,01,943/- CONSIST OF SUNDRY CREDITORS OF RS.4,89,096/- AND RS. 12,8471- AS CREDITORS FROM CREDIT CARD AND TELEPHONE. CONFIRMATION FROM MO HAN LAL DEVENDRA KUMAR SARAF CONFIRMING THE BALANCE OF RS. 1,67,627/- WAS AVAILABLE ON RECORD AND THE CONFIRMATION RECEIVED FROM SACHDEVA FABRICS FOR RS. 1,80,507/- DIRECTLY RECEIVE D. THE AMOUNT OF RS. 7546/- OF SAURAYA SECURITY SERVICES (P ) LTD., IT IS VERY MEAGER AND THE AMOUNT OF RS. 45,432/- BELONG S TO CUSTOM CLEARING AND NO NOTICE WAS ISSUED TO THEM. OUT OF RS. 4,89,096/- TOTAL OF CREDITORS CONFIRMING RS.3,4 8,134/- IS AVAILABLE ON RECORD AND THE REST AMOUNT ARE BELOW RS .10,000/- AND NO NOTICES WERE ISSUED TO THEM BY THE A.O. IN VIEW OF THE ABOVE FACTS AND EVIDENCES, THE ADDITION OF RS.15,05,159/- MA DE BY THE AO WAS RIGHTLY DELETED BY THE LD. CIT(A), WHICH DOES NOT NEED ANY INTERFERENCE ON OUR PART, HENCE, WE UPHOLD THE SAME AN D REJECT THE GROUND NO. 4 RAISED BY THE REVENUE. 9. WITH REGARD TO GROUND NO. 5 RELATING TO DELETION O F ADDITION OF RS. 3,20,000/- ON ACCOUNT OF UNEXPLAINED LOANS IS C ONCERNED, WE FIND THAT ASSESSEE HAS RECEIVED UNSECURED LOAN FROM THE OLD PARTIES AND CONFIRMATIONS ARE AVAILABLE ON RECORD. THESE LOA NS HAVE BEEN 13 RECEIVED FROM OLD LENDERS WHO ARE ASSESSEE SINCE LA ST 10 YEARS IN THE SAME WARD 39(2). DETAIL OF UNSECURED LOAN TAKEN A ND REPAID DURING THE YEAR IS MENTIONED IN THE TAX AUDIT REPORT A LSO RS.25,000/- HAVE BEEN PAID TO ROMITA AHLAWAT DURING THE YEAR AND RS. 2,70,000/- WERE RECEIVED FROM HER. THE LOAN IS CONTINUING FOR MORE THAN 6 YEARS. IN VIEW OF THE ABOVE FACTS AND EV IDENCES IT CANNOT BE SAID THAT IT IS UNVERIFIED, UNSECURED LOAN. RELEVANT DOCUMENTS ARE AVAILABLE ON RECORD BUTT OVERLOOKED BY THE A.O. THE ADDITION OF RS. 3,20,000/ - MADE BY THE AO WAS THERE FORE, UNCALLED FOR AND THEREFORE, THE SAME WAS RIGHTLY DELETED BY THE LD. CIT(A), WHICH DOES NOT NEED ANY INTERFERENCE ON OUR PART, HEN CE, WE UPHOLD THE SAME AND REJECT THE GROUND NO. 5 RAISED BY THE R EVENUE. 10. WITH REGARD TO GROUND NO. 6 RELATING TO DELETION OF ADDITION OF RS. 1,96,085/- ON ACCOUNT OF UNSUBSTANTIATED SALARY PA YMENTS MADE BY THE ASSESSEE IS CONCERNED, WE FIND THAT ASSES SEE HAS CLAIMED IN BALANCE SHEET SALARY PAYABLE AMOUNTING TO RS. 1,96,085/- AND THE AMOUNT OF SALARY PAYABLE HAS A LREADY BEEN CONSIDERED IN P&L A/C. HOWEVER, THE LIST OF EMPLOYEES TO WHOM SALARY WAS PAYABLE ON 31 ST MARCH HAD BEEN PROVIDED TO THE AO AND THE SALARY WAS PAID TO THESE EMPLOYEES IN THE FIRST WE EK OF APRIL. IN VIEW OF THE ABOVE, THE DISALLOWANCE OF RS. 1,96,085/ - MADE BY THE AO WAS UNCALLED FOR AND UNJUSTIFIED, HENCE, THE SAME WAS RIGHTLY 14 DELETED BY THE LD. CIT(A), WHICH DOES NOT NEED ANY INTERFERENCE ON OUR PART, HENCE, WE UPHOLD THE SAME AND REJECT THE GROUND NO. 6 RAISED BY THE REVENUE. 11. WITH REGARD TO GROUND NO. 7 RELATING TO RESTRICTING THE ADDITIONS MADE BY THE AO ON ACCOUNT OF PERSONAL USE OF CONVEYANCE, VEHICLE RUNNING, TOUR AND TRAVEL ETC. A ND ALSO OF DIWALI EXPENSES IS CONCERNED, WE FIND THAT IT IS A FACT THAT ELEMENT OF PERSONAL USE CANNOT BE RULED OUT COMPLETELY. WE FURT HER FIND THAT THE ITAT DELHI 'G' BENCH IN I.T.A NO. 2884/DEL/2010 FOR ASSTT. YEAR 2007-08 IN THE CASE OF SHUKAL CHAND JAIN AS PER ITS O RDER DATED 29.02.2012 HAS HELD AS UNDER: '7 GROUND NO.3 & 4 IS INTER-CONNECTED. IN THESE GROUNDS OF APPEAL, ASSESSEE IS IMPUGNING AD HOC DISALLOWANCE OUT OF CAR EXPENSES, TELEPHONE EXPENSES ETC. THE FINDINGS OF THE LEARNED ASSESSING OFFICER ON THIS ISSUE READ AS UNDER: 'THE ASSESSEE HAS CLAIMED VEHICLE EXPENSES OF RS. 1,11,837/-, INSURANCE AT RS.34,036/- AND CAR DEPRECIATION AT RS. 103,811 TOTALING TO RS. 2,94,694/- OUT OF WHICH 1/6TH WHICH COMES TO RS. 41,615/- IS DISALLOWED BEING THE ELEMENT 15 OF PERSONAL USE OF CAR BY PROP. CAN NOT BE RULED OUT, MOREOVER THE ASSESSEE IS NOT MAINTAINING ANY LOGBOOK SHOWING THE SEPARATE USE OF VEHICLE. THE ASSESSEE HAS CLAIMED TELEPHONE EXPENSES AT RS. 103177/- PERTAINING TO TELEPHONE INSTALLED AT OFFICE AND RESIDENCE OF THE ASSESSEE. SINCE NO CALL REGISTER HAS BEEN MAINTAINED BY THE ASSESSEE THAT HOW MUCH CALLS HAVE BEEN MADE FOR BUSINESS PURPOSES AND HOW MUCH CALLS HAVE BEEN FOR PERSONAL USE. IN THE ABSENCE OF SAME AND CONSIDERING THE FACT THAT THE ELEMENT OF PERSONAL USE OF TELEPHONE CANNOT BE RULED AND A SUM OF RS. 17,196/ - BEING 1/ 6TH OF TELEPHONE EXPENSES ARE DISALLOWED FOR PERSONAL ELEMENTS. 11.1 WE NOTE THAT ASSESSEE HAS NOT SHOWN ANY LOG BOOK IN RESPECT OF CAR BEING RUN FOR THE PURPOSE OF BUSINESS MAINTAI NED. SIMILARLY, WHETHER ASSESSEE HAS MAINTAINED ANY CALL REGISTER DEM ONSTRATING THAT TELEPHONE WAS EXCLUSIVELY USED FOR THE PURPOSE O F BUSINESS. IN THE PRESENT CASE, THE ASSESSING OFFICER HAS DISALLOWE D 16 RS.1 ,33,070/- BEING 1/5TH OF THE TOTAL EXPENSES (I.E . RS. 6,65,354/- UNDER THE HEAD TELEPHONE EXPENSES, VEHICLE MAINTENAN CE AND DEPRECIATION ON CAR AND MOTOR CYCLE. THOUGH THE ELEM ENT PERSONAL USE IS ALWAYS THERE BUT DISALLOWANCE OF 1/5TH OF TOTAL EXPENSES UNDER THIS HEAD SEEMS TO BE ON A HIGHER SIDE. THEREFO RE, THE LD. CIT(A) HAS RIGHTLY HELD THAT IT WOULD BE REASONABLE TO RESTRICT THE DISALLOWANCE TO 1/10TH OF THE TOTAL EXPENSES. ACCOR DINGLY, IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE JUDGMEN T OF DELHI ITAT (SUPRA), LD. CIT(A) WAS OF THE CONSIDERED OPINI ON THAT THE ASSESSING OFFICER IS NOT FULLY JUSTIFIED IN MAKING A DISALLOWANCE OF RS.1 ,33,070/- BEING 1/ 5TH OF THE TOTAL EXPENSE. HENC E, HE RIGHTLY RESTRICT THE DISALLOWANCE TO 1/10TH OF THE TOTAL EXPENSES I. E. RS. 66535 / - AND SUSTAIN THE ORDER OF THE ASSESSING OF FICER TO THIS EXTENT. FURTHER, WITH REGARD TO DISALLOWANCE OF DIWALI EXPENSES ON THE EVE OF VERY IMPORTANT HINDUS FESTIVAL IS CONCERN ED, WE NOTE THAT IN VIEW JUDGMENT OF DELHI ITAT (SUPRA) AS DISCUSSED AND ADJUDICATED ABOVE, WE ARE OF THE CONSIDERED OPINION THAT THE ASS ESSING OFFICER IS NOT FULLY JUSTIFIED IN MAKING A DISALLOWANCE OF R S.51,277/- BEING 1/5 TH OF THE TOTAL EXPENSE, HENCE, LD. CIT(A) HAS RIGHTLY RESTRICTED THE DISALLOWANCE TO 1/10 TH OF THE TOTAL EXPENSES I.E. RS.25638.51 AND SUSTAINED THE ORDER OF THE ASSESSING OFFICER TO THIS EXTENT, 17 WHICH DOES NOT NEED ANY INTERFERENCE ON OUR PART, HEN CE, WE UPHOLD THE SAME AND REJECT THE GROUND NO. 7 RAISED BY THE R EVENUE. 12. IN THE RESULT, THE APPEAL FILED BY THE DEPARTME NT STANDS DISMISSED. ORDER PRO NOUNCED IN THE OPEN COURT ON 01/09/2017. SD/- SD/- [PRASHANT MAHARISHI] [H.S. SIDHU] ACCOUNTANT MEMBER JUDICIAL MEMBER DATE 01/09/2017 SRBHATNAGAR COPY FORWARDED TO: - 1. ASSESSEE - 2. RESPONDENT - 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHE S