Vijay Kumar Ahuja, New Delhi V. ACIT, New Delhi

ITA 5856/DEL/2012

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 69218 (ITAT-DELHI)
• Duration Of Justice: 9 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-08-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: H
• Next Hearing Date: 18-06-2013
• Assessment Year: 2009-2010
• Appeal Filed On: 21-11-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: TARUN SEEM
• Assessee Lawyers: V MOHAN; VED JAIN CA SMT RANO JAIN
• Keywords: Depreciation; Rule of consistency
• Section: 68; 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : H : NEW DELHI BEFORE SHRI A.D. JAIN, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER ITA NO.5856/DEL/2012 ASSESSMENT YEAR : 2009-10 VIJAY KUMAR AHUJA, PROP. DELHI BOOK STORE, 19, ANSARI ROAD,DARYAGANJ, NEW DELHI. PAN : AAFPA6918M VS. ACIT, CIRCLE-29(1), NEW DELHI. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI VED JAIN, CA, SMT. RANO JAIN, CA & SHRI V. MOHAN, ADVOCATE. REVENUE BY : SHRI TARUN SEEM, SR.DR ORDER PER A.D. JAIN, JUDICIAL MEMBER THIS IS ASSESSEES APPEAL FOR AY 2009-10. THE FOLLOWING GROUNDS HAVE BEEN TAKEN:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ORDE R PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS) [CIT(A)] IS BAD, BOTH IN THE EYE OF LAW AND ON FACTS. 2 (I) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN CONFIRM ING THE ADDITION OF RS. 20,21,684/- MADE BY AO ON ACCOUNT OF TRADE CREDITORS, NAMELY STUDENT BOOK DEPOT, RANCHI AND UNICA TE PUB. & DIST. (II) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEA RNED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN CONFIRM ING THE ADDITION AS INCOME OF THE ASSESSEE IN YEAR UNDER CONS IDERATION DESPITE THE AO STATING IN THE ORDER ITSELF THAT THESE CREDI TORS HAVE STATIC BALANCE FOR THE THREE YEARS. 3 (I) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN CONFIRM ING THE ITA NO.5856/DEL/2012 2 ADDITION OF RS.13,79,077/ - ON ACCOUNT OF TRADE CREDITO RS, NAMELY RESEARCHCO BOOKS & SCIENTIFIC INTERNATIONAL. (II) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEA RNED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN CONFIRM ING THE ADDITION IN THE INCOME OF THE ASSESSEE IN YEAR UNDER CONSIDERATION DESPITE STATING IN THE ORDER ITSELF THAT THE SE CREDITORS HAVE STATIC BALANCE FOR THE THREE YEARS. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEAR NED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN CONFIRM ING THE ADDITION IGNORING THE FACT THAT THE ADDITION HAS BEEN MAD E RELYING UPON THE INFORMATION COLLECTED UNDER SECTION 13 6 WITHOUT GIVING OPPORTUNITY TO THE ASSESSEE OF CROSS EXAMI NATION AND REBUTTING THE SAME. 5 (I) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN CONFIRM ING THE DISALLOWANCE OF AN AMOUNT OF RS.6,34,421/- BEING 1/1 0 TH OF THE EXPENSES INCURRED BY THE ASSESSEE ON CAR AND TELEPHON E. S. NO. PARTICULARS AMOUNT (DISALLOWED) RS. 1. 1/10 OF CAR MAINTENANCE EXPENSES OF 7,10,692/- 71,069/- 2. 1/ 10 OF TELEPHONE EXPENSES OF RS. 4,10,154/ - 41,015/- 3. 1/10 OF TRAVELLING EXPENSES OF RS.44,45,307/- 1,00,000/- 4. CAR DEPRECIATION EXPENSES (A) 1/10 OF CAR AUDI DEPRECIATION OF RS.4,72,144/- 4,7214/- (B) 1/10 OF CAR LANCER DEPRECIATION OF RS.20,284/- 2,028/- (C) 1/10 OF CAR MERCEDES DEPRECIATION OF RS.1,49,087/- 14,908/- (D) 1/10 OF CAR HONDA DEPRECIATION OF RS.1,09,782/- 10,978/- (E) 1/10 OF CAR HONDA CITY DEPRECIATION OF RS.81,475/- 8,147/- (F) 1/10 OF CAR MERCEDES DEPRECIATION OF RS.4,17,226/- 41,722/- (G) 1 / 10 OF CAR MARUTI DEPRECIATION OF RS. 7, 421/ - 742/- (H) 1/10 OF CAR SAFARI DEPRECIATION OF RS.95,759/- 9,575/- T OTAL 6,34,421/- ITA NO.5856/DEL/2012 3 (II) THAT THIS DISALLOWANCE HAS BEEN MADE ON AN ADHOC BASIS INDULGING IN SURMISES WITHOUT APPRECIATING THE FACT THAT TH E SAME HAVE BEEN INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSES OF BUSINESS ONLY. 6(I) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LE ARNED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN CONFIRM ING THE DISALLOWANCE OF RS.L, 00,000/- ON ACCOUNT OF TRAVELLI NG EXPENSE. (II) THAT THE DISALLOWANCE HAD BEEN MADE DESPITE THE SA ME BEING INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOS E OF BUSINESS. 2. GROUND NO.1 IS GENERAL. 3. GROUND NOS.2 TO 4 RELATE TO THE ACTION OF THE LD. CIT (A) IN CONFIRMING THE ADDITION OF ` 20,21,684/-MADE BY THE AO ON ACCOUNT OF TRADE CREDITORS. 4. THE AO MADE ADDITION ON ACCOUNT OF FOLLOWING CRE DITORS APPEARING IN THE ASSESSEES BOOKS FOR THE LAST THREE YEA RS:- (I) RESEARCHCO BOOKS 6,77,124 (II) STUDENT BOOK DEPOT, RANCHI 13,36,013 (III) UNICATE PUB. & DIST. 6,85,671 (IIV) SCIENTIFIC INTERNATIONAL 7,01,953 5. THE AO U/S 133 (6) OF THE IT ACT, CALLED FOR INFO RMATION FROM THE PARTIES IN ALL THE FOUR CASES. IN THE CASES OF STUDENTS BOOK DEPOT, RANCHI AND UNICATE PUBLISHERS AND DISTRIBUTORS, PUNE, T HE CREDITORS DENIED HAVING DONE ANY BUSINESS WITH THE ASSESSEE DURING T HE YEAR. IN THE OTHER TWO CASES, THE PARTIES DID NOT FURNISH ANY R EPLY BEFORE THE AO. THE ASSESSEE WAS ASKED TO FURNISH CONFIRMATIONS OF ST UDENTS BOOK DEPOT AND UNICATE PUBLISHERS AND DISTRIBUTORS. THIS WAS NOT DONE. THE AO ASKED THE ASSESSEE TO SHOW CAUSE AS TO WHY BOTH THESE CREDITORS BE NOT TREATED AS BOGUS AND THE BALANCE BE NOT ADDED TO THE ITA NO.5856/DEL/2012 4 ASSESSEES TOTAL INCOME. AS PER THE ASSESSMENT ORDER, THE ASSE SSEE DID NOT OFFER ANY EXPLANATION. IT WAS THEREFORE, TH AT AN AMOUNT OF ` 20,21,684/- WAS ADDED BY THE AO TO THE INCOME OF THE ASSESSEE. THE LD. CIT (A) CONFIRMED THIS ADDITION. 6. IN RESPECT OF THE OTHER TWO CREDITORS, I.E., RESEAR CHCO BOOKS AND SCIENTIFIC INTERNATIONAL, THESE PARTIES DID NOT FILE ANY REPLY BEFORE THE AO. THE AO, AS SUCH, ADDED THE BALANCE OF ` 13,79,0 77/- OUTSTANDING IN THE ASSESSEES BOOKS IN THE NAME OF THESE TWO PARTIES, T O THE TOTAL INCOME OF THE ASSESSEE. THE LD. CIT (A) CONFIRMED THIS ADDITION ALSO. 7. THE LD. COUNSEL FOR THE ASSESSEE HAS CONTENDED BEFORE US THAT THE LD. CIT (A) HAS ERRED IN CONFIRMING THESE ADDITIO NS, DESPITE OBSERVING IN THE IMPUGNED ORDER ITSELF THAT THESE CRED ITORS HAD STATIC BALANCE FOR THE THREE YEARS; THAT WHILE ILLEGALLY CO NFIRMING THE ADDITIONS, THE LD. CIT (A) HAS ERRED IN FAILING TO CO NSIDER THE FACT THAT THE FIRST ADDITION WAS MADE RELYING ON INFORMATION CO LLECTED U/S 133 (6) OF THE ACT, WITHOUT AFFORDING ANY OPPORTUNITY OF CR OSS-EXAMINATION AND REBUTTAL TO THE ASSESSEE. IT HAS BEEN CONTENDED, AS BEF ORE THE LD. CIT (A), THAT THE ADDITIONS ARE NOT JUSTIFIED, AS THE SUN DRY CREDITORS ARE STILL OUTSTANDING; THAT THE TRADE CREDITORS ARE OLD CREDIT ORS AND THEY DO NOT RELATE TO THE YEAR UNDER CONSIDERATION; THAT DURING THE YEAR UNDER CONSIDERATION, THERE WAS NO TRANSACTION OF THE ASSESSEE W ITH THE PARTIES IN QUESTION AND DUE TO THIS VERY FACT, IT CANN OT BE HELD THAT THE OLD SUNDRY CREDITORS HAS BECOME BOGUS; THAT THERE WERE GENUINE PURCHASES FROM THE PARTIES AND THIS HAS NOT BEEN DISPUTED BY THE AO; THAT IN AY 2007-08, THE YEAR TO WHICH THE SUNDRY CRE DITORS RELATE, THERE WERE SCRUTINY ASSESSMENTS, IN WHICH, NO DEFECTS WERE FOUND . 8. THE LD. DR, ON THE OTHER HAND, HAS STRONGLY STOOD BY THE IMPUGNED ORDER IN THIS REGARD. IT HAS BEEN CONTENDED THAT AS RIGHTLY FOUND BY THE LD. CIT (A), THE ASSESSEE FAILED TO PROVE THE GENUINENESS ITA NO.5856/DEL/2012 5 OF THE SUNDRY CREDITORS. EVEN NO CONFIRMATION FROM T HE PARTIES WERE FURNISHED. UNDISPUTEDLY, NONE OF THE FOUR TRADE CRED ITORS OF THE ASSESSEE HAD DEMANDED ANY MONEY FROM THE ASSESSEE FOR A LON G PERIOD OF TIME, THEREBY ESTABLISHING THAT THEY HAD EI THER SQUARED OFF OR WRITTEN OFF THE BALANCES IN THE NAME OF THE ASSESSEE AND THAT IF SO, THERE WAS A REMISSION OR CESSATION OF THE LIABILITY OF T HE ASSESSEE, CLEARLY ATTRACTING THE PROVISIONS OF SECTION 41 OF TH E ACT. 9. HAVING CONSIDERED THE RIVAL CONTENTIONS IN THE LIG HT OF THE MATERIAL ON RECORD REGARDING THIS ISSUE, IT IS OBSERVED THAT THE AMOUNTS IN QUESTION WERE OUTSTANDING FOR THE LAST THREE YEARS. THIS IS ALSO AVAILABLE FROM THE LEDGER ACCOUNTS OF THE TRADE CRE DITORS OF THE ASSESSEE IN THE ASSESSEES BOOKS OF ACCOUNT (APB 44-57). THE ASSESSEE, VIDE ITS LETTER DATED 08.11.2011 (APB 28-29), FILED BEFORE THE AO, SUBMITTED THE DETAILS OF THE SUNDRY CREDITORS HAVI NG BALANCES OVER ` 5 LAC AS ON 31.03.2007, 31.03.2008 AND 31.03.2009 ALONG WITH THEIR ADDRESSES. THE ASSESSEES REPLIES DATED 23.11.2011, 30.11. 2011 AND 16.12.2011 TO THE AO (APB 30 TO 32) SHOW THAT THE BO OKS OF ACCOUNT OF THE ASSESSEE WERE ALSO PRODUCED FOR VERIFICATION BY THE AO. 10. FURTHER, VIDE REPLY DATED 16.12.2011 (SUPRA) (AP B 32), THE ASSESSEE FURNISHED BEFORE THE AO, PARTYWISE DETAILS OF THE IMPORT OF BOOKS. ALONG WITH ITS REPLY DATED 28.12.2011 (WRONGL Y MENTIONED AS 19.12.2011 IN THE INDEX TO THE APB), THE ASSESSEE, INTE R ALIA, FILED A LIST OF ITS CREDITORS AS ON 31.03.2009 (I.E., FOR THE YEAR UNDER CONSIDERATION) (APB 35-41). THE DETAILS OF THE FOUR PARTIES IN QUEST ION ARE TO BE FOUND AT APB 39 & 40. A LIST OF THE ASSESSEES SUNDRY CREDITOR S AS ON 31.03.2008 (AY 2008-09) AS FILED BEFORE THE AO, IS AT APB 65-76. THE FACT THAT THE SAME BALANCES QUA THE PARTIES IN QUESTION ARE CONTINUING IS EVIDENT FROM A PERUSAL OF APB 73-76. THE SAME IS TH E POSITION WITH REGARD TO THE SUNDRY CREDITORS AS ON 31.03.2007 (APB 82-92), FOR AY 2007-08. IT HAS BEEN CONTENDED THAT AS CORRECTLY AND CONCURRENTLY BY ITA NO.5856/DEL/2012 6 BOTH THE TAXING AUTHORITIES, THE ASSESSEE MISERABLY FAILE D TO PROVE THE GENUINENESS OF THE SUNDRY CREDITORS INASMUCH AS, EVEN TH E CONFIRMATION FROM ANY OTHER PARTIES WAS NOT FILED; TH AT STUDENTS BOOK DEPOT, RANCHI AND UNICATE PUBLISHERS AND DISTRIBUTORS, PUNE, HAD SPECIFICALLY STATED IN THEIR RESPECTIVE REPLIES THAT DU RING THE YEAR, THEY DID NOT HAVE ANY TRANSACTION WITH THE ASSESSEE; RESEAR CHCO BOOKS AND SCIENTIFIC INTERNATIONAL DID NOT EVEN FILED REPLIES BEFORE THE AO, INDICATING THAT THEY HAD NOTHING TO OFFER IN RESPONSE TO THE NOTICE ISSUED TO THEM U/S 133 (6) OF THE ACT; THAT THEREFORE, THE LD. CIT (A) HAS RIGHTLY CONFIRMED THE ADDITION MADE AND THAT THERE BEING NO MERIT WHATSOEVER IN THE GRIEVANCE OF THE ASSESSEE IN THIS REGAR D, THE SAME BE REJECTED, UPHOLDING THE CIT (A)S ORDER ON THIS ISSU E. 11. WITH REGARD TO THIS ISSUE, HAVING HEARD THE RIVAL CONTENTIONS AND HAVING PERUSED THE RELEVANT MATERIAL PLACED ON RECOR D, WE FIND THAT UNDISPUTEDLY, THE AMOUNTS IN QUESTION ARE OUTSTANDING AS SUNDRY CREDITORS FOR THE LAST THREE YEARS. THIS IS EVIDENT FRO M THE LEDGER ACCOUNTS OF THE CREDITORS, AS PLACED IN THE PAPER BOOK AT PAGES 44-57. AS SUCH, THERE IS NO INFIRMITY IN THE STAND TAKEN BY ST UDENTS BOOK DEPOT, RANCHI AND UNICATE PUBLISHERS & DISTRIBUTORS, PU NE, THAT THEY DID NOT HAVE ANY TRANSACTION WITH THE ASSESSEE DURING TH E YEAR. NO CREDIT HAVING GIVEN IN THE BOOKS OF THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION, THE PROVISIONS OF SECTION 68 OF THE ACT ARE OBVIOUSLY NOT ATTRACTED. THEN, IT IS ONLY BY WAY OF SURMISE THAT T HE LD. CIT (A) HAS OBSERVED THAT: ..THE ABOVE FOUR TRADE CREDITORS HAS NOT DEMANDED ANY MONEY FROM THE ASSESSEE FOR A LONG TIME AND IT IS ALSO APPARENT THAT THE ABOVE FOUR PARTIES WOULD HAVE SQUARED OFF OR W RITTEN OFF THE BALANCES IN THE NAME OF THE ASSESSEE AND, AS SUCH, THERE IS A REMISSION OR CESSATION OF THE LIABILITY OF THE ASSES SEE.. 12. HOWEVER, SINCE UNDISPUTEDLY, THE AMOUNTS ARE STILL OUTSTANDING, IT CANNOT BE SAID THAT THEY HAVE BEEN EITHER WRITTEN OFF OR SQUARED OFF ITA NO.5856/DEL/2012 7 OR THAT ANY BENEFIT HAS BEEN DERIVED BY THE ASSESSEE. F OR DOING SO, THE PROVISIONS OF SECTION 41 (1) OF THE ACT ARE ALSO NOT ATTRACTED AND NO ADDITION THEREIN IS ENVISAGABLE. THEN, THE AMOUNTS IN QUESTION PERTAINED TO SUNDRY CREDITORS OF THE ASSESSEE, THEY BE ING ON ACCOUNT OF PURCHASES OF THE ASSESSEE. AS SUCH ALSO, NO ADDITION IS CAL LED FOR, SINCE THE PURCHASES OR THE SALES HAVE NOT BEEN DISPUTED BY THE ASSESSING OFFICER. THUS, IN KEEPING WITH CIT VS. PANCHAM DAS JAIN, 205 CTR (ALL) 444, NO ADDITION IS CALLED FOR. THEN, IN THE BOOKS O F ACCOUNT OF THE ASSESSEE, NO MISTAKE OR DEFECT, WHATSOEVER WAS POINTED OUT BY THE ASSESSING OFFICER. THEREFORE, JUST BECAUSE CONFIRMATIONS WERE NOT FILED, ACCORDING TO YFC PROJECTS (P) LTD. VS. DCIT, 134 TTJ 167 (DEL), NO ADDITION CAN BE MADE. FURTHER, TO SUPPORT THE PROPO SITION THAT AMOUNTS REPRESENTING PURCHASES MADE ON CREDIT DO NOT AT TRACT THE PROVISIONS OF SECTION 68 OF THE ACT, ACIT VS. HAN SI NGER GUTKHA (P) LTD., 9 DTR (LUC) (TRIB.) 604 HAS RIGHTLY BEEN RELI ED ON. THEN, AS OBSERVED, SINCE THE PURCHASES HAVE BEEN ACCEPTED AS GENU INE, BALANCES REMAINING OUTSTANDING AT THE END OF THE YEAR AGAINST SUCH PURCHASE CANNOT BE TREATED AS A BOGUS LIABILITY AND A DDITION MADE ON THAT BASIS CANNOT BE SUSTAINED AS HELD IN JCIT VS. MATHU RA DASS ASHOK KUMAR, 101 TTJ (ALL) 810. IN CIT VS. SMT. P.K. NO ORJEHAN, 237 ITR 570 (SC), IT HAS BEEN HELD THAT AS PER THE PROVISIONS OF SE CTION 68 OF THE ACT, IT IS NOT MANDATORY THAT IN CASE THE ASSESSEE FAILS T O SATISFY THE ASSESSING OFFICER ABOUT THE OUTSTANDING CREDITS, THE SAME ARE MANDATORILY REQUIRED TO BE ADDED AS INCOME OF THE ASSE SSEE AND THAT SECTION 68 OF THE ACT GIVES A DISCRETION OF THE ASSESSIN G OFFICER IN THIS REGARD; AND THAT THE ASSESSING OFFICER HAS TO TAKE INTO ACCOUNT THE OVERALL FACTS. IN THE PRESENT CASE, AS DISCUSSED, ON CON SIDERING THE FACTS OF THE CASE, THE PROVISIONS OF SECTION 68 OF THE ACT ARE NOT ATTRACTED AND CONSIDERING THE OVERALL FACTS, NO ADDIT ION IS CALLED FOR UNDER THE SECTION. ITA NO.5856/DEL/2012 8 13. FURTHER, AS CONSIDERED IN THE ORDER DATED 30.09.2 011 PASSED BY THIS BENCH (AUTHORED BY THE JM) IN THE CASE OF M/S DI VINE INTERNATIONAL FOR ASSESSMENT YEAR 2001-02, IN THE CASE OF THE ASSESSEE THE SE CREDITORS REPRESENT THE OUTSTANDING AMOUNT ON ACCOUNT OF THE PURCHASES. THERE CAN BE THREE ALTERNATIVE ALLEGATION S AGAINST THE ASSESSEE. ONE CAN BE THAT THESE CREDITS REPRESENT THE CR EDIT FOR EARLIER YEARS. IF THAT BE THE CASE, NO ADDITION CAN BE MADE IN THIS YEAR UNDER SECTION 68 OF THE ACT. THE SECOND ALLEGATION CAN BE THAT THESE CREDITS REPRESENT THE PURCHASES FOR WHICH PAYMENTS HAVE BEEN MADE BY THE ASSESSEE DURING THE YEAR ITSELF. IF THIS IS SO, TH E ONUS WILL BE ON THE DEPARTMENT TO ESTABLISH THAT ASSESSEE HAS MADE PAYME NT TO THESE CREDITORS. THIS IS NOT EVEN THE ALLEGATION OF THE ASSE SSING OFFICER, MUCH LESS HIS CASE AGAINST THE ASSESSEE. THE THIRD ALLEGATION CAN BE THAT THESE CREDITS DO NOT REPRESENT THE PURCHASES WHICH HAVE BEEN MADE BY THE ASSESSEE. THE IMPLICATION OF THIS WILL BE THAT T HE PURCHASES DEBITED IN THE TRADING ACCOUNT ARE NOT GENUINE TO T HAT EXTENT AND ACCORDINGLY, THAT THE TRADING ACCOUNT IS NOT CORRECT . HOWEVER, AS DISCUSSED, THE TRADING RESULTS OF THE ASSESSEE HAVE BEEN AC CEPTED AND CONSIDERING THE OVERALL FACTS OF THE CASE, AS DWELT UP ON, NO ADDITION U/S 68 OF THE ACT IS CALLED FOR. 14. FURTHER, EVEN ON THE PRINCIPLE OF CONSISTENCY, NO ADDITION IS CALLED FOR AND THE CLAIM IS TO BE ALLOWED, AS HELD IN RADHA SOAMI SATSANG VS. CIT, 193 ITR 321 (SC), CIT VS. NEO POLY PACK (P) LTD., 245 ITR 492 (DEL) AND CIT VS. DALMIA PROMOTERS DEVELOPER S (P) LTD., 281 ITR 346 (DEL). 15. STILL FURTHER, EVIDENTLY, IT WAS NOT SCRUTINY ASSE SSMENTS FOR ASSESSMENT YEARS 2007-08 AND 2008-09, THAT U/S 143 (3) OF THE ACT, THESE CREDITORS WERE ACCEPTED BY THE DEPARTMENT. THE REFORE, THE FACTS AND CIRCUMSTANCES FOR THE YEAR UNDER CONSIDERATION REM AINING ENTIRELY ITA NO.5856/DEL/2012 9 UNCHANGED, CONSISTENCY IS REQUIRED TO BE MAINTAINED F OR THE YEAR UNDER CONSIDERATION ALSO. 16. FOR THE ABOVE DISCUSSION, FINDING THE GRIEVANCE SOU GHT TO BE RAISED BY THE ASSESSEE IN THIS REGARD TO BE JUSTIFIED, WE ACCEPT THE SAME. ACCORDINGLY, THE ORDER OF THE LD. CIT (A) ON THIS ISSUE IS CANCELLED AN THE ASSESSING OFFICER IS DIRECTED TO ALLOW THE CLAIM OF THE ASSESSEE. 17. THE ONLY OTHER CONTROVERSY INVOLVED HEREIN IS AGA INST THE ACTION OF THE LD. CIT (A) IN CONFIRMING THE DISALLOWANCE OF AN AMOUNT OF ` 6,34,421/- BEING 1/10 OF THE EXPENDITURE INCURRED B Y THE ASSESSEE ON CAR AND TELEPHONE. THE DETAILS OF SUCH EXPENDITURE A RE AS FOLLOWS, AS GIVEN IN GROUND NO.5 (I):- S. NO. PARTICULARS AMOUNT (DISALLOWED) RS. 1. 1/10 OF CAR MAINTENANCE EXPENSES OF 7,10,692/- 71,069/- 2. 1/ 10 OF TELEPHONE EXPENSES OF RS. 4,10,154/ - 41,015/- 3. 1/10 OF TRAVELLING EXPENSES OF RS.44,45,307/- 1,00,000/- 4. CAR DEPRECIATION EXPENSES (A) 1/10 OF CAR AUDI DEPRECIATION OF RS.4,72,144/- 4,7214/- (B) 1/10 OF CAR LANCER DEPRECIATION OF RS.20,284/- 2,028/- (C) 1/10 OF CAR MERCEDES DEPRECIATION OF RS.1,49,087/- 14,908/- (D) 1/10 OF CAR HONDA DEPRECIATION OF RS.1,09,782/- 10,978/- (E) 1/10 OF CAR HONDA CITY DEPRECIATION OF RS.81,475/- 8,147/- (F) 1/10 OF CAR MERCEDES DEPRECIATION OF RS.4,17,226/- 41,722/- (G) 1 / 10 OF CAR MARUTI DEPRECIATION OF RS. 7, 421/ - 742/- (H) 1/10 OF CAR SAFARI DEPRECIATION OF RS.95,759/- 9,575/- T OTAL 6,34,421/- ITA NO.5856/DEL/2012 10 18. THE DISALLOWANCE WAS MADE BY THE ASSESSING OFFICER, T REATING THE USER OF THE CAR AND THE TELEPHONE BY THE ASSESSEE T O BE OF A PERSONAL NATURE. THE LD. CIT (A) CONFIRMED THE DISAL LOWANCE. 19. THE LD. COUNSEL FOR THE ASSESSEE HAS CONTENDED THAT A LL THE EXPENSES HAVE BEEN INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS ONLY AND THAT THE AUTHORITIES DID NOT POINT OU T EXACTLY WHICH EXPENSES HAD BEEN INCURRED FOR PERSONAL PURPOSES AND THA T SO, NO AD HOC ADDITION CAN BE MADE. RELIANCE HAS BEEN PLACED ON THE FOLLOWING CASE LAWS:- 1. MANIKA GEMS & ORS. VS. ACIT, 237 ITR 570 (SC); 2. COCO COLA (INDIA) LTD. VS. JCIT 104 TTJ 254 (PUNE) ; 3. LAVRIDS KHUDSEN MASKIN FABRIC (I) LTD. VS, ACIT, 102 TTJ 882 (PUNE); AND 4. SAYAJI IRON & ENGG. CO., 172 CTR 339 20. THE LD. DR, ON THE OTHER HAND, HAS PLACED STRONG RELIANCE ON THE IMPUGNED ORDER IN THIS REGARD, CONTENDING THAT THE A SSESSEE HAS NOT PROVED THE EXPENSES IN THEIR ENTIRETY TO HAVE BEEN I NCURRED FOR ITS BUSINESS PURPOSE AND THAT THEREFORE, THE DISALLOWANCE M ADE IS PROPER. 21. IN THIS REGARD, UNDENIABLY, THE ELEMENT OF PERSON AL USER HAS NOT BEEN DISPELLED BY THE ASSESSEE. HOWEVER, THAT THE ADDIT ION IS AN AD- HOC ADDITION ALSO REMAINS UNDISPUTED. FINDING, IN TH ESE CIRCUMSTANCES, THAT THE ADDITION MADE, AMOUNTING TO ` 6,34,421/- I S ON THE HIGHER SIDE, IN OUR CONSIDERED OPINION, IT WOULD SERVE THE EN DS OF JUSTICE, IF THIS ADDITION IS SCALED DOWN TO ` 6 LAC. THIS GRIEVANC E OF THE ASSESSEE IS, AS SUCH, PARTLY ACCEPTED. ITA NO.5856/DEL/2012 11 22. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED, AS INDICATED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 26.08.20 13. SD/- SD/- [SHAMIM YAHYA] [A.D. JAIN] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED, 26.08.2013. DK COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT, DELHI BENCHES