The Income Tax Officer, Amritsar. V. M/s Wazir Singh Enterprises, Amritsar.

ITA 626/ASR/2016

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 3276 (ITAT-AMRITSAR)
• Duration Of Justice: 2 year(s) 2 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-02-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 13-02-2019
• Assessment Year: 2013-2014
• Appeal Filed On: 09-12-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BHAWANI SHANKAR
• Keywords: Proportionate interest; TDS
• Section: 37(1)

Judgement Text

IN THE INCOME TAX APPELLATE T RIBUNAL AMRITSAR BENCH, AMR ITSAR BEFORE SH. N.S.SAINI, ACCOUNTANT MEMBER AND SH. N.K.CHOUDHRY, JUDICIAL MEMBER ITA NO.626(ASR)/2016 ASSESSMENT YEAR:2013- 14 INCOME TAX OFFICER, WARD-5(4), AMRITSAR. VS. M/S. WAZIR SINGH ENTERPRISES, 68-A, WHITE AVENUE, AMRITSAR. [PAN:AAAFW 4668A] (APPELLANT) (RESPONDENT) CROSS OBJECTION NO.20(ASR)/2017 (ARISING OUT OF ITA NO.626(ASR)/2016) ASSESSMENT YEAR:2013-1 4 M/S. WAZIR SINGH ENTERPRISES, 68-A, WHITE AVENUE,AMRITSAR. [PAN:AAAFW 4668A] VS. INCOME TAX OFFICER, WARD-5(4), AMRITSAR. (CROSS OBJECTOR) (RESPONDENT) APPELLANT BY: SH. NAVENDU KHANNA (LD. CA) RESPONDENT BY: SH. BHAWAN I SHANKAR (LD. DR) DATE OF HEARING : 13.02.2019 DATE OF PRONOUNCEMENT : 14.02.201 9 ORDER PER N.K.CHOUDHRY, JM: THE REVENUE DEPARTMENT HAS CHALLENGED THE ORDER DATE D 30.09.2016 IMPUGNED HEREIN PASSED BY THE LD. CIT(A)-2, AMRITSAR, U/S 250(6) OF THE I.T. ACT, 1961 (HEREINAFTER CALLED AS THE ACT), WHERE AS THE ASSESSEE HAS ITA NO.626/ASR/2016 (A.Y.2013-14) C.O. NO.20 (ASR)/2017 ITO VS. WAZIR SINGH ENTERPRISES, ASR. 2 ALSO FILED THE C.O.NO.20(ASR)/2017 IN CHALLENGE AS WEL L AS IN SUPPORT OF THE ORDER IMPUGNED HEREIN. 2. THE ASSESSEE ALTHOUGH FILED THE ADJOURNMENT APPLICATION, HOWEVER AS THE APPEAL AND CROSS OBJECTION UNDER CONSIDERATION PERTA INS TO YEAR 2016 & 2017 AND THEREFORE CONSIDERING THE PENDENCY SINCE LONG, WE ARE NOT INCLINED TO GRANT THE ADJOURNMENT AND HENCE PROCEEDED WITH THE CASE. 3. FIRST WILL DECIDE THE APPEAL OF THE REVENUE DEPARTME NT. THE REVENUE DEPARTMENT HAS RAISED THE FOLLOWING GROUN DS OF APPEAL. 1. THE LD. CIT(A)-2 HAS ERRED IN DELETING THE ADDI TION OF RS.40,72,448/- MADE BY THE AO ON A/C OF DISALLOWANCE OF PROPORTION ATE INTEREST U/S 36(I)(III) OF THE INCOME TAX ACT, 1961, WHICH HAVE BEEN AT THE RATE 12% ON THE AMOUNT ADVANCED BY THE ASSESSEE TO VARIOUS PERSONS/PARTIES AND HAS CORRECTLY BEEN MADE AS THERE IS NO PROOF OF BUSINESS EXPEDIEN CY OR BUSINESS PURPOSE INVOLVED IN GIVING THE ADVANCES TO THESE PARTIES AS THE ASSESSEE IS ENGAGED IN THE BUSINESS OF COMMISSION AGENT, TRADING OF FIB RE, CHEMICALS, PILLOWS, SALT, CEMENT AND FABRIC ETC. 2. THE LD. CIT(A)-2 HAS ERRED IN DELETING THE ADDIT ION OF RS. 1,22,213.- WHICH HAVE ALSO BEEN MADE BY MAKING DISALLOWANCE @ 20% OF THE EXPENSES U/S 37(1) OF THE INCOME TAX ACT,1961. THE LD. CIT(A )-2, AMRITSAR WHILE DELETING THE ADDITIONS HAS NOT KEPT THE FACT OF SOM E PERCENTAGE OF LEAKAGE INVOLVED IN MAKING THE DAY TO EXPENDITURE FOR RUNNI NG OF BUSINESS. SECONDLY THE APPELLANT HAS ALSO NOT MADE ANY ARGUMENT AGAINS T THE DISALLOWANCE. 3. THE LD. CIT(A)-2 HAS ERRED IN DELETING THE A DDITION OF RS.1,50,000/- WHICH HAVE ALSO BEEN MADE BY MAKING PROPORTIONATE D ISALLOWANCE OF THE EXPENSES U/S 37(1) OF THE INCOME TAX ACT, 1961 ON A CCOUNT OF UNVERIFIABLE TRAVELLING EXPENSES. THE LD. CIT(A)-2, AMRITSAR WHI LE DELETING THE ADDITIONS HAS NOT KEPT THE FACT OF SOME PERCENTAGE OF LEAKAGE INVOLVED AS THERE IS ALSO INVOLVEMENT OF PERSONAL EXPENDITURE MADE BY THE PAR TNERS DURING THE BUSINESS TOURS. 4. THE REVENUE DEPARTMENT IS AGGRIEVED AGAINST THE DEL ETION OF VARIOUS ADDITIONS INCLUDING THE ADDITION OF RS.40,72,448/- M ADE BY THE AO ON ACCOUNT OF DISALLOWANCE OF PROPORTIONATE INTEREST U/S 36( I)(III) OF THE I.T. ACT, 1961 WHICH WAS ADVANCED @ 12% INTEREST BY THE ASSESSEE TO VARIOUS ITA NO.626/ASR/2016 (A.Y.2013-14) C.O. NO.20 (ASR)/2017 ITO VS. WAZIR SINGH ENTERPRISES, ASR. 3 PERSONS/PARTIES. IT THE CASE OF THE REVENUE THAT THERE WAS NO PROOF OF BUSINESS EXPEDIENCY OR PURPOSE IN GIVING THE ADVANCES TO THE PARTIES CONCERNED AS THE ASSESSEE ENGAGED IN THE BUSINESS OF COMMISSIO N AGENT, TRADING OF FIBRE, CHEMICALS, PILLOWS, SALT, CEMENT AND FABRIC ETC. WE OBSERVE THAT THE ASSESSING OFFICER WHILE MAKING ADDITION U/S 3 6(I)(III) OF THE ACT RELIED UPON THE JUDGMENT PASSED BY THE JURISDICTIONAL HI GH COURT IN THE CASE OF CIT VS. ABHISHEK INDUSTRIES [2006] 286 ITR 1 (P&H), WHEREAS THE LD. CIT(A) DELETED THE SAID ADDITION, WHILE RELYING UPON THE JUDGMENT PASSED BY THE HONBLE APEX COURT IN THE CASE OF HERO CYCLES PVT. LT D. VS. CIT (CENTRAL), LUDHIANA (SC) [2015] 379 ITR 347 IN WHICH, CIT VS. AB HISHEK INDUSTRIES LTD. (SUPRA) WAS OVER RULED AND IN THE CASE OF S.A. BUILDERS LTD. VS. CIT (APPEALS) [2007] 288 ITR 1/158 TAXMAN 74 & MADHAV PR ASAD JATIAS CASE [1979] 118 ITR 200. EVEN WE DO NOT FIND ANY CONTRARY MATERIAL EITHER ON RECORD OR OTHERWISE TO CONTROVERT THE FINDING OF THE L D. CIT(A) ON THIS ISSUE, THEREFORE WE NOT INTERFERING, HENCE THE GROUND NO.1 RAISED BY THE REVENUE DEPARTMENT STANDS DISMISSED. 5. NOW COMING TO THE SECOND ISSUE WHEREBY THE LD. CIT(A) D ELETED THE ADDITION OF RS.1,22,213/- U/S 37(1) OF THE ACT, AGAINS T WHICH THE REVENUE DEPARTMENT AGITATED THAT THE LD. CIT(A) WHILE DELET ING THE ADDITION HAS NOT KEPT THE FACT OF SOME PERCENTAGE OF LEAKAGE INVOLVED I N MAKING THE DAY TO DAY EXPENDITURE FOR RUNNING OF BUSINESS. SECONDLY THE APPELLANT HAS ALSO NOT MADE ANY ARGUMENT AGAINST THE DISALLOWANCE. WE HAVE PERUSED THE DECISION ON THIS ISSUE, THE LD. CIT(A) WHILE OBSERVING T HAT THE AO HAS NOT POINTED OUT EVEN A SINGLE VOUCHER WHICH WAS OF UNVERIFI ABLE NATURE BEING AN INTERNAL VOUCHER AND THEREFORE, HELD THAT AO WAS NO T JUSTIFIED IN MAKING DISALLOWANCE OF 20% OF THE TOTAL EXPENDITURE CLAIMED U NDER THE HEADS OF GENERAL EXPENSES, REPAIR AND MAINTENANCE, SALE PROMOTIO N AND STAFF WELFARE ITA NO.626/ASR/2016 (A.Y.2013-14) C.O. NO.20 (ASR)/2017 ITO VS. WAZIR SINGH ENTERPRISES, ASR. 4 EXPENSES BEING 20% OF RS. 6,11,065/- OR RS.1,22,213/-. IN OUR CONSIDERED OPINION, THE LD. CIT(A) HAS GIVEN A LOGICAL REASONING FOR DELETION OF THE SAID DISALLOWANCE AND THEREFORE WAS FULLY JUSTIFIED IN ITS ACT ION, HENCE THE GROUND NO.2 RAISED BY THE REVENUE DEPARTMENT STANDS DISMISSED. 6. THIRD GROUND RAISED BY THE REVENUE DEPARTMENT RELAT ES TO DELETION OF ADDITION OF RS.1,50,000/- WHICH WAS MADE BY MAKING PRO PORTIONATE DISALLOWANCE OF EXPENSES U/S 37(1) OF THE ACT ON ACCOUNT OF UNVERIFIABLE TRAVELING EXPENSES BY THE A.O. . IT WAS CLAIMED BY TH E REVENUE DEPARTMENT THAT WHILE DELETING THE SAID ADDITION THE LD. CIT(A) HAS NOT KEPT THE FACT OF SOME PERCENTAGE OF LEAKAGE INVOLVED AS THERE IS ALSO INV OLVEMENT OF PERSONAL EXPENDITURE MADE BY THE PARTNERS DURING THE BUSINESS TOURS . AGAIN THE LD. CIT(A) WHILE DELETING THE SAID DISALLOWANCE GI VEN A LOGICAL AND WELL FOUNDED REASON THAT THE ASSESSING OFFICER HAS NOT POINTED OUT EVEN A SINGLE VOUCHER WHICH WAS OF UNVERIFIABLE NATURE BEING AN INTE RNAL VOUCHER OR PERSONAL NATURE AND IT IS ALSO NOT THE CASE OF THE AO TH AT THE SOURCE OF PAYMENT THROUGH CREDIT CARD REMAINED UNEXPLAINED AND THEREFORE DELETED THE SAID DISALLOWANCE. WE HAVE GIVEN THOUGHTFUL CONSIDER ATION TO THE REASONING OF THE LD. CIT(A) AND ARE OF THE CONSIDERED VIEW THAT THE LD. CIT(A) HAS DECIDED THE ISSUE IN ITS RIGHT PERSPECTIVE HEN CE THE GROUND NO.3 RAISED BY THE REVENUE DEPARTMENT ALSO STANDS DISMISSED. 7. NOW COMING TO THE CROSS OBJECTIONS FILED BY THE ASSESSEE . GROUNDS RAISED IN THE C.O ARE MORE OR LESS IN FAVOUR OF THE IMPUGNED ORDER, HOWEVER, THE ASSESSEE RAISED FOUR GROUNDS AGAINST THE ACTION OF THE LD. CIT(A). 8. FIRST GROUND RELATES TO THE CONFIRMATION OF THE ADDIT ION OF RS.3,67,233/- ON ACCOUNT OF INTEREST INCOME SHOWN IN 26AS OF THE ASSESSEE ITA NO.626/ASR/2016 (A.Y.2013-14) C.O. NO.20 (ASR)/2017 ITO VS. WAZIR SINGH ENTERPRISES, ASR. 5 BUT NOT SHOWN IN THE RETURN OF INCOME IGNORING THE FA CTS ON RECORD. THE LD. CIT(A) WHILE SUSTAINING THE ADDITION OBSERVED THAT THE APPELLANT COULD HAVE REQUESTED THE COMPANY M/S JINDAL COTEX LTD. TO RECTIFY ITS TDS RETURN TO REMOVE THE INTEREST OF RS.3,65,223/- SHOWN CREDITED T O THE APPELLANT IF IT DID NOT PERTAIN TO THE APPELLANT AND LATER THE AO COULD RECTIFY THE ASSESSMENT ORDER AND DELETED THE ADDITION, THEREFORE, AT THE A SSESSMENT STAGE, THE AO WAS JUSTIFIED IN ADDING BACK THE AMOUNT OF INTEREST OF RS.3,67,233/- FROM M/S. JINDAL COTEX LTD. APPEARING IN FORM 26AS OF THE APPELLANT DURING THE YEAR UNDER CONSIDERATION BUT THE SAME HAS NOT BEEN SHOWN IN THE RETURN OF THE INCOME. WE OBSERVE THAT THE CLAIM OF THE ASSESSEE IS TH AT THE COPY OF THE LEDGER ACCOUNT OF M/S. JINDAL COTEX LTD. WAS FURNISH ED BEFORE THE AO DURING THE ASSESSMENT PROCEEDINGS BUT THE AO ON ITS BACK D ID NOT MAKE ANY VERIFICATION DIRECTLY FROM THE CONCERN COMPANY AND MEREL Y RELIED UPON THE ITS DETAILS DOWNLOADED FROM SYSTEM WHICH IS INCORRECT INFO RMATION AND DOES NOT PERTAIN TO THE APPELLANT. WE HAVE GIVEN OUR THO UGHTFUL CONSIDERATION TO THE ISSUE IN HAND, AS THE ONUS WAS UPON THE ASSESSE TO ESTABL ISH THE FACTS IN ITS SUPPORT, WHICH THE ASSESSEE HAS FAILED TO DISCHARGE ON T HIS ISSUE. THE REASONS CITED BY LD. CIT(A) WHILE CONFIRMING THE ADDITI ON SEEMS TO BE LOGICAL, WISE AND REASONABLE, THEREFORE DOES NOT REQUIR E ANY INTERFERENCE AND HENCE THE GROUND NO.1 RAISED BY THE ASSESSEE STANDS DISMISSE D. 9. SECOND GROUND RELATES TO THE ADDITION OF RS.99,794/- ON ACCOUNT OF DIFFERENCE BETWEEN COMMISSION INCOME SHOWN IN 26AS OF TH E ASSESSEE AND COMMISSION INCOME SHOWN IN THE RETURN OF INCOME WHICH WAS E XPLAINED BY THE ASSESSEE BY SUBMITTING THAT THE AO HAD ADDED THE SAM E DUE TO DIFFERENCE IN COMMISSION CREDITED IN P & L ACCOUNT SIMPLY O N THE BASIS OF ITS DETAILS DOWNLOADED FROM THE SYSTEM AND FORM 26AS. IT W AS FURTHER CLAIMED THAT THE DIFFERENCE IS DUE TO CREDIT NOTE OF RS.99,794/ - TOWARDS COMMISSION ITA NO.626/ASR/2016 (A.Y.2013-14) C.O. NO.20 (ASR)/2017 ITO VS. WAZIR SINGH ENTERPRISES, ASR. 6 RECEIVED FROM RELIANCE INDUSTRIES LTD. AFTER FILING THE RETURN OF INCOME BY THE ASSESSEE AND THE SAME HAS BEEN ACCOUNTED FOR AND OFFERED TO TAX IN THE SUBSEQUENT YEAR. HOWEVER, THE LD. CIT(A) WHILE JUSTIFYI NG THE ADDITION OPINED THAT SINCE THE SAID CREDIT NOTE OF RS.99,794/- FR OM RELIANCE INDUSTRIES LTD. PERTAINS TO THE YEAR UNDER CONSIDERATION AND THE APPELLANT FOLLOWS MERCANTILE SYSTEM OF ACCOUNTING, THEREFORE THE AO WAS JUSTIFIED IN MAKING THE SAID ADDITION. WE HAVE GIVEN OUR THOUGHTF UL CONSIDERATION TO THE ISSUE UNDER CONSIDERATION AND ARE OF THE CONSIDERED VIEW THAT THE LD. CIT(A) WHILE SUSTAINING THE ADDITION HAS GIVEN LOGICAL REASON, THEREFORE WE DO NOT FIND ANY PERVERSITY IN ITS ACTION, HENCE GROUND NO.2 RA ISED BY THE ASSESSEE STANDS DISMISSED. 10. GROUND NO.3 & 4 SEEMS TO BE INTER-CONNECTED RELATED TO THE VARIOUS EXPENSES SHOWN IN THE P&L ACCOUNT, WHICH WERE DISALLOWED O N THE PRETEXT THAT THE USE OF CAR AND TELEPHONE FOR PERSONAL USE BY THE PARTNERS AND FAMILY MEMBERS OF THE APPELLANT CANNOT BE RULED OUT A ND QUA CAR EXPENSES NO LOG BOOK IS MAINTAINED INDICATING THE PURPOSE TO VI SIT ETC. EVEN THE ASSESSEE HAS NOT MAINTAINED ANY RECORD QUA TELEPHONE EXPE NSES. WE HAVE PERUSED THE ORDERS PASSED BY THE AUTHORITIES BEL OW AND REALIZED THAT ASSESSING OFFICER MADE A DISALLOWANCE @ 20 % ON ACCOUNT OF VARIOUS HEADS INCLUDING CAR AND TELEPHONE EXPENSES, WHER EAS THE LD. CIT(A) REDUCED THE SAME @ 10% WHILE OBSERVING THAT DISALLOWAN CE AS DETERMINED BY THE ASSESSING OFFICER CONSIDERED AS EXCESSIVE AND THEREFORE GIVEN RELIEF TO THE ASSESSEE. THE ASSESSING OFFICER WHILE MAKING DISALLOWANCE POINTED OUT THAT SOME OF THE PAYMENTS UNDER THE HEADS INCLUDING CAR EXPENSES ARE MADE IN CASH ON INTERNAL SELF-MADE VOUCHERS WHICH ARE NOT SUBJECT TO COMPLETE VERIFICATION, HOWEVER IN REALITY NOT A SINGLE DEFECT WAS EVER POINTED ITA NO.626/ASR/2016 (A.Y.2013-14) C.O. NO.20 (ASR)/2017 ITO VS. WAZIR SINGH ENTERPRISES, ASR. 7 OUT BY THE ASSESSING OFFICER. THE OBSERVATION OF LD. CIT( A) TO THE EFFECT THAT USE OF CAR FOR PERSONAL USE BY THE PARTNERS OR FAMILY ME MBERS CAN BE RULED OUT, ALSO SEEMS TO BE CASUAL OBSERVATION WITHOUT ANY SUBSTA NCE AND MATERIAL, THEREFORE ON AFORESAID REASONS, WE ARE INCLI NED TO DELETE THE ADDITION AFFIRMED BY THE LD. CIT(A) QUA ISSUE IN HAND . 8. IN THE RESULT, THE APPEAL FILED BY THE REVENUE DEPA RTMENT STANDS DISMISSED AND CROSS OBJECTION FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 14.02.2019. SD/- SD/- (N.S.SAINI) (N.K.CHOUDHRY) ACCOUNTANT MEMBER JUDI CIAL MEMBER DATED:14.02.2019 /PK/ PS. COPY OF THE ORDER FORWARDED TO: (1) M/S. WAZIR SINGH ENTERPRISES, 68-A, WHITE AVENUE, AMRITSAR. (2) THE INCOME TAX OFFICER, WARD-5(4), AMRITSAR . (3) THE CIT(A)-2, AMRITSAR (4) THE CIT CONCERNED (5) THE SR DR, I.T.A.T., AMRITSAR TRUE COPY BY ORDER FILENAME: WAZIR SINGH ENTERPRISES, 626 -16 & C.O 20 -17 DIRECTORY: G: TEMPLATE: C:\USERS\ETC PARMOD\APPDATA\ROAMING\MICROSOFT\TEMPLATES\NORMAL.D OT TITLE: IN THE INCOME TAX APPELLATE TRIBU NAL SUBJECT: AUTHOR: RAHUL PRABHAKAR KEYWORDS: COMMENTS: CREATION DATE: 2/13/2019 2:55:00 PM CHANGE NUMBER: 152 LAST SAVED ON: 2/26/2019 11:59:00 AM LAST SAVED BY: ETC PARMOD TOTAL EDITING TIME: 191 MINUTES LAST PRINTED ON: 2/26/2019 11:59:00 AM AS OF LAST COMPLETE PRINTING NUMBER OF PAGES: 8 NUMBER OF WORDS: 1,935 (APPROX.) NUMBER OF CHARACTERS: 11,035 (APPROX.)