SHREE FISCAL SERVICES P.LTD, MUMBAI V. ITO 2(3)(2), MUMBAI

ITA 6234/MUM/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 0880 (ITAT-MUMBAI)
• Duration Of Justice: 6 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-04-2017
• Appeal Filed By: Assessee
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 21-10-2016
• Court: TRIBUNAL
• Department Lawyers: MRS BEENA SANTOSH
• Keywords: Reassessment proceedings
• Section: 142(1); 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER ITA NO. 6234/M/2016 (AY 2010 - 2011 ) SHREE FISCAL SERVICES PVT LTD., 203, 2 ND FLOOR, ACCORD CLASSIC, ABOVE ANUPAM STATIONERY, AAREY ROAD, NEAR STATION, GOREGAON (E), MUMBAI 063. / VS. ITO - 2(3)(2), MUMBAI. ./ PAN : AAFCS2531N ( / APPELLANT) .. ( / RESPONDENT ) / APPELLANT BY : SHRI RAJIV KHANDELWAL / RESPONDENT BY : MRS. BEENA SANTOSH, DR / DATE OF HEARING : 13.04 .2017 / DATE OF PRONOUNCEMENT : 26 .04.2017 / O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE ASSESSEE ON 21.10.2016 IS AGAINST THE ORDER OF THE CIT (A) - 6, MUMBAI DATED 21.7.2016 FOR THE ASSESSMENT YEAR 2010 - 2011. 2. IN THIS APPEAL, ASSESSEE RAISED THE SIX GROUNDS IN TOTO. THE ONLY ISSUE RAISED IN THIS APPEAL RELATES TO THE VALIDITY OF THE RE - ASSESSMENT / EXPARTE ORDER OF THE AO. FURTHER, THE ASSESSEE ALSO QUESTIONED THE AD - HOC ADDITION IE 75% OF THE BUSINESS DEVELOP MENT EXPENSES AND 50% OF THE TRAVELLING EXPENSES ACCOUNT AND DENYING OF BUSINESS LOSS BY WAY OF THE LEGAL EXPENSES. EXPLAINING THE FACTS, LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSING OFFICER ISSUED NOTICE U/S 148 READ WITH SECTION 142(1) OF TH E ACT AND CALLED FOR THE RETURN OF INCOME. ASSESSEE IS ENGAGED IN THE BUSINESS OF SHARE BROKING. ASSESSEE FILED THE RETURN OF INCOME EVENTUALLY DECLARING THE RETURN LOSS OF RS. 3,98,070/ - AND DETERMINED THE ASSESSED INCOME AT RS. 28,13,500/ - . 3. REFERR ING TO THE WAY THE ASSESSING OFFICER RESORTED TO ADHOCISM, LD AR SUBMITTED THAT THE SAID EXPENSES WERE ESSENTIALLY DISALLOWED SUSPECTING THAT THE 2 SAID EXPENSES ARE REQUIRED TO BE DISALLOWED AS THEY WERE SPEND TOWARDS TRAVELLING EXPENSES. FURTHER, REGARDIN G THE JUDGMENT OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF SAYAJI IRON & ENGG. CO. CIT [2002] 121 TAXMAN 43 (GUJARAT), LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT THERE CAN BE AN Y TRAVEL EXPENSES IN A CASE WHERE THE EXPENSES ARE INCURRED BY A COMPANY W HOSE ACCOUNTS ARE THOROUGHLY AUDITED AND EVERY EXPENDITURE IS DONE WITH THE HELP OF RESOLUTIONS OF THE BOARD OF DIRECTORS. FURTHER, LD AR SUBMITTED THAT IF THEY MAY DISALLOW A NOMINAL SUM OF RS. 1 LAKH FOR WANT OF VOUCHERS AND OTHER DEFICIENCY, IF ANY. 4. ON HEARING BOTH THE PARTIES, I FIND, THIS IS A CASE OF EXPARTE ASSESSMENT AND THERE IS NO POINT IN REMANDING THE ISSUES TO THE FILE OF THE AO CONSIDERING THE SMALLNESS OF THE ISSUES IN THESE DAYS. AS SUCH, THE WAY THE DISALLOWANCE MADE BY THE AO AND CO NFIRMED BY THE CIT (A)ARE NOT SUSTAINABLE AS THEY ARE MERELY A CASE OF ADHOC ADDITIONS. THERE IS NO EVIDENCE GATHERED BY THE OFFICERS FOR SUPPORTING THE FIGURE OF 75% OR 50% AS THE CASE MAY BE OR ANY MATERIAL IS GATHERED TO SUPPORT THE SAID DISALLOWANCE. CONSIDERING THE SAME, I AM OF THE OPINION, THIS IS A CASE WHERE THE ASSESSEE IS A COMPANY AND THE SAID JUDGMENT OF GUJARAT HIGH COURT (SUPRA) IS RELEVANT HERE. THEREFORE, I AM OF THE VIEW RESTRICTING THE ADDITION TO THE SAID AMOUNT OF RS. 1 LAKH SHOULD ME ET THE ENDS OF JUSTICE. ACCORDINGLY, GROUNDS ON MERITS RAI SED BY THE ASSESSEE ARE ALLOWED. A S ADVOCATED , THE GROUNDS RAISED RELATING TO THE EX - PARTE / REASSESSMENT PROCEEDINGS AND ITS VALIDITY STAND DISMISSED AS NOT PRESSED. 5. IN THE RESULT, APPEAL OF T HE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOU NCED IN THE OPEN COURT ON 2 6 T H APRIL, 2017. S D / - (D. KARUNAKARA RAO) ACCOUNTANT MEMBER MUMBAI ; 26.4.2017 . . ./ OKK , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 3 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI