Sh. Dinesh Kumar Sangar, Distt. Hoshiarpur V. The Income-tax Officer, Dasuya

ITA 608/ASR/2011

• Counselvise Citation: 60820914 RSA 2011
• Duration Of Justice: 1 year(s) 11 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-11-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 19-11-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 13-12-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: AMRIK CHAND

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER AND SH. B.P. JAIN, ACCOUNTANT MEMBER I.T.A. NO. 608(ASR)/2011 ASSESSMENT YEAR: 2006-07 PAN: ACFPS5090K SH. DINESH KUMAR SANGAR, VS. INCOME TAX OFFIC ER, PROP. M/S SANGAR TELECOM, DASUYA. KRISHNA MARKET, TANDA (HOSHIARPUR) (APPELLANT) (RESPONDENT) APPELLANT BY: SH. NIRMAL MAHAJAN, CA RESPONDENT BY: SH. AMRIK CHAND, DR DATE OF HEARING: 19.11.2013 DATE OF PRONOUNCEMENT: 21.11.2013 ORDER PER BENCH 1. THE ASSESSEE HAS FILED THE PRESENT APPEAL AGAINST THE IMPUGNED ORDER DATED 04.10.2011, PASSED BY LEARNED CIT(A), J ALANDHAR, FOR THE ASSESSMENT YEAR 2006-07 ON THE FOLLOWING GROUNDS: I. THE COMMISSIONER OF INCOME TAX (APPEALS) IS WRONG I N HOLDING THE ADDITION OF RS. 2,80,000/- ON ACCOUNT OF COMMIS SIONS PAID TO VARIOUS PARTIES AND ALSO BY NOT CONSIDERING ADDITIO NAL EVIDENCE FILED. II. THE COMMISSIONER OF INCOME TAX(APPEALS) IS WRONG IN HOLDING THE ADDITION OF RS. 6,54,000/- ON ACCOUNT OF INCENT IVES PAID TO PARTIES. 2 I.T.A. NO. 608(ASR)/2011 ASSESSMENT YEAR: 2006-07 III. THE COMMISSIONER OF INCOME TAX(APPEALS) IS WRONG IN HOLDING THE ADDITION OF RS. 72,000/- ON ACCOUNT OF DSE SALE S INCENTIVES PAID TO PARTIES. IV. ANY OTHER GROUND WHICH MAY BE RAISED AT THE TIME OF HEARING. 2. AT THE TIME OR HEARING, SH. NIRMAL MAHAJAN, CA, LEARNED AUTHORIZED REPRESENTATIVE OF THE ASSESSEE M ADE A STATEMENT THAT HE IS NOT PRESSING THE ISSUE INVOLVE D IN GROUND NO. 1 AND HE HAS ALSO ENDORSED THE SAME ON THE ORIG INAL GROUNDS OF APPEAL. NO OBJECTION HAS BEEN RAISED BY LEARNED DR TO THIS REQUEST. THEREFORE, THE ISSUE INVOLVED I N GROUND NO. 1 IS DISMISSED. 3. AS REGARDS TO THE ADDITION OF RS. 6,54,000/- ON ACCOUNT OF INCENTIVE AND THE ADDITION OF RS. 72,000 /- ON ACCOUNT OF DSE SALE INCENTIVE PAID BY THE ASSESSEE TO VARIOUS PARTIES, THE ASSESSING OFFICER IN THE ASSESSMENT OR DER ALSO DISALLOWED VARIOUS SIMILAR EXPENSES AMOUNTING TO RS . 2,80,000/- AS COMMISSION PAID TO VARIOUS PARTIES AN D RS. 17,850/- PAID FOR ADVERTISEMENT EXPENSES AND RS. 66 ,980/- PAID FOR BUSINESS PROMOTION EXPENSES. BUT IN THE AP PEAL, LEARNED FIRST APPELLATE AUTHORITY HAS UPHELD THE AD DITIONS IN DISPUTE I.E. RS. 6,54,000/- AND RS. 72,000/- AS MEN TIONED 3 I.T.A. NO. 608(ASR)/2011 ASSESSMENT YEAR: 2006-07 ABOVE AND ALLOWED 75% OF EXPENDITURE DEBITED ON ACC OUNT OF ADVERTISEMENT AND BUSINESS PROMOTION AS DEDUCTION B UT DISALLOWED 100% OF THE EXPENSES IN DISPUTE. 4. AFTER HEARING BOTH THE PARTIES AND PERUSING THE RELEVANT MATERIALS AVAILABLE ON RECORD, WE ARE OF T HE CONSIDERED OPINION THAT THIS WAS THE FIRST YEAR OF THE ASSESSEES BUSINESS AND IT CAN BE PRESUMED THAT THE ASSESSEE WOULD HAVE NOT BEEN MAINTAINING ANY PROPERTY ACCOUN T AS WELL AS BILLS AND VOUCHERS PROPERLY FOR THE EXPENSES INC URRED BY THE ASSESSEE. SECONDLY, THE ASSESSEE BEING A SMALL BUSI NESSMAN, RUNNING BUSINESS IN UNDEVELOPED AREA I.E. TANDE IN DISTRICT HOSHIARPUR AND HAVING LESS KNOWLEDGE FOR MAINTAININ G PROPER BILLS AND VOUCHERS OF THE EXPENSES; THUS, IN OUR VI EW SHOULD NOT BE DISALLOWED 100% EXPENSES. NO DOUBT, THE ASSE SSEE HAS NOT FILED PROPER EVIDENCE BEFORE THE REVENUE AUTHOR ITY BUT IT IS AN ADMITTED FACT THAT NO ONE CAN RUN THE BUSINES S WITHOUT INCURRING ANY EXPENDITURE. THEREFORE, THE DISALLOWA NCE OF 100% EXPENDITURE IS NOT PROPER. THIS VIEW HAS ALREA DY BEEN TAKEN BY I.T.A.T., PUNE BENCH IN ITS DECISION REPOR TED IN 92 4 I.T.A. NO. 608(ASR)/2011 ASSESSMENT YEAR: 2006-07 TTJ 625. PUNE BENCH HAS UPHELD THE DISALLOWANCE OF 25% OF THE EXPENSES FOR WANT OF PROOF OF EXPENDITURE. 5. AFTER GOING THROUGH THE IMPUGNED ORDER, WE ARE O F THE VIEW THAT LEARNED FIRST APPELLATE AUTHORITY UNDER S IMILAR FACTS AND CIRCUMSTANCES HAS ALLOWED 75% OF EXPENDITURE DE BITED ON ACCOUNT OF ADVERTISEMENT AND BUSINESS PROMOTION AS DEDUCTION BUT DISALLOWED THE 100% EXPENDITURE ON ACCOUNT OF I NCENTIVE AND DSE SALES INCENTIVE PAID TO THE PARTIES. WE ARE OF THE VIEW THAT THE ASSESSEE HAS PRODUCED SOME EVIDENCE F OR SUBSTANTIATING THE CLAIM OF EXPENSES ON ACCOUNT OF ADVERTISEMENT EXPENSES AND BUSINESS PROMOTION EXPEN SES BUT AS REGARDS TO THE INCENTIVE AMOUNTING TO RS. 6,54,0 00/- AND DSE SALES INCENTIVE AMOUNTING TO RS. 72,000/- PAID TO VARIOUS PARTIES, ASSESSEE HAS NOT PRODUCED ANY EVIDENCE BUT IT DOES MEAN THAT THE ENTIRE EXPENSES SHOULD BE DISALLOWED. 6. KEEPING IN VIEW THE FACTS AND CIRCUMSTANCES OF T HE PRESENT CASE, WE ARE OF THE CONSIDERED OPINION THAT THIS WAS THE FIRST YEAR OF THE ASSESSEES BUSINESS; THUS, IT CAN BE PRESUMED THAT THE ASSESSEE WOULD HAVE INCURRED CERT AIN EXPENDITURE ON ACCOUNT OF INCENTIVE AS WELL AS DSE SALES 5 I.T.A. NO. 608(ASR)/2011 ASSESSMENT YEAR: 2006-07 INCENTIVE PAID TO THE PARTIES. THEREFORE, IN THE IN TEREST OF JUSTICE, WE ALLOW 50% OF EXPENDITURE ON ACCOUNT OF THE INCENTIVE AND THE DSE SALES INCENTIVE. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST NOVEMBER, 2013 SD/- SD/- (B.P. JAIN) (H.S. SIDHU) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 21 ST NOVEMBER, 2013 /RK/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE: SH. DINESH KUMAR SANGAR, PROP. M/S S ANGAR TELECOM, KRISHNA MARKET, TANDE, DISTT.(HOSHIARPUR). 2. INCOME TAX OFFICER, DASUYA 3. THE CIT(A), JALANDHAR 4. THE CIT, JALANDHAR 5. THE SR DR, I.T.A.T., ASR TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.