Tapan Kumar Pal, Asansol V. I.T.O Wd -2(3),Asansol, Asansol

ITA 641/KOL/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 92048 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 3 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-07-2015
• Appeal Filed By: Assessee
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 25-03-2013
• Court: TRIBUNAL
• Department Lawyers: RAJENDRA PRASAD
• Assessee Lawyers: R N RAM
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH SMC , KOLKATA [BEFORE HON BLE SHRI MAHAVIR SINGH, JM ] IT A NO.641/KOL/2013 ASSESSMENT YEAR : 2007 - 08 ( A PPELLANT ) (RESPONDENT) TAPAN KUMAR PAUL - VERSUS - I.T.O., WARD - 2(3) ASANSOL ASANSOL (PAN: AEXPP 7106 C) FOR THE APPELLANT: SHRI R.N.RAM, AR FOR THE RESPONDENT: SHRI RAJENDRA PRASAD, JCIT DATE OF HEARING : 14 .07 .2015. DATE OF PRONOUNCEMENT : 14 .07.2015. ORDER THIS APPEAL OF ASSESSEE IS ARISING OUT O F ORDER OF CIT(A) - ASANSOL IN APPEAL NO . 62/C.I.T.(A)/ASL/W - 2(3)/ASL/09 - 10 DATED 24.01.2013 . ASSESSMENT WAS FRAMED BY I.T.O., WARD - 2(3), ASANSOL U/S 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REF ERRED TO AS THE ACT ) FOR A.Y . 2007 - 08 VIDE ITS ORDER DATED 08.12.2009. 2. THE FIRST ISSUE IN THIS APPEAL OF ASSESSEE IS AGAINST ORDER OF CIT(A) IN CONFIRMING THE ADDITION MADE BY AO ON ACCOUNT OF DISALLOWANCE OF MAKING CHARGES PAID TO FOUR KARIGARS . FOR THIS THE ASSESSEE HAS RAISED THE FOLLOWING TWO GROUNDS : - 1.ON THE FACT AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS.2,27,420/ - MADE BY THE ASSESSING OFFICER ON ACCOUNT OF MAKING CHARGES PAID TO 4(FOUR) KARIGARS NAMELY SHRI MATHUR CH.PAUL AMOUNTING TO RS.76,420/ - , SRI BIJAY KUMAR ROY AMOUNTING TO RS.51,460/ - , SRI NARAYAN CH.PAUL AMOUNTING TO RS.45,670/ - AND SRI LALTU DEY AMOUNTING TO RS.53,870/ - WHEREAS THEIR IDENTITY AND DETAILS OF CONFIRMATION INCLUDING THEIR VOTERS I/D CARD, RATION CARD AND ELECTRIC BILLS ALON G WITH CONFIRMATIONS FROM THEM WERE SUBMITTED BEFORE THE CIT(A) IN COURSE OF APPEAL PROCEEDINGS. 2. ON THE FACT AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) RELIED ON THE DEPARTMENTAL INSPECTORS REPORT WHO DID NOT VISIT THEIR RESPECTIVE ADDRESSES AND SUBM ITTED THE REPORT WITHOUT CONCLUSIVE FINDINGS, WHEREAS THE ENTIRE EXPENSES AS MAKING CHARGES WERE INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF APPELLANT S BUSINESS. 3. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MA NUFACTURE AND TRADING OF JEWELLERY. THE ASSESSEE CLAIMED EXPENSES ON ACCOUNT OF ITA NO.641/KOL/2013 TAPAN KUMAR PAUL A.YR. 2007 - 08 2 MAKING CHARGES PAID TO VARIOUS KARIGARS TOTALING TO RS.2,27,420/ - WHICH WAS DISALLOWED BY AO FOR THE REASON THAT ASSESSEE COULD NOT SUBSTANTIAL THE EXPENSES. AO ALSO NOTED THAT THE ASSESSEE HAS NOTED THE EXPENDITURE HEAD WISE AS PER THE KARIGAR REGISTER PRODUCED. HE HAD ALSO SENT THE DEPARTMENTAL INSPECTOR TO VERIFY THE EXISTENCE OF THESE PERSONS BUT ASSESSEE DID NOT CO - OPERATE IN CONDUCTING THE ENQUIRY. IN VIEW OF THIS AO D ISALLOWED THE MAKING EXPENSES AS UNDER : HENCE, ON THE BASIS OF THE ABOVE DISCUSSION THE KARIGAR CHARGES CLAIMED TO BE PAID TO MATHUR CHAND PAUL OF RS.76,420/ - , BIJOY KR.ROY OF RS.51,460/ - , NARAYAN CH.PAUL OF RS.45,670/ - AND LALTU DEY OF RS.53,870/ - , TOTA LING TO RS.2,27,420/ - IS BEING DISALLOWED AND ADDED TO THE INCOME OF THE ASSESSEE. AGGRIEVED ASSESSEE PREFERRED APPEAL BEFORE CIT(A). CIT(A) FIRST OF ALL OBSERVED THAT THE MAKING CHARGES ARE ABOVE THRESHOLD LIMITS THAT ATTRACTS TDS. SECONDLY, NOTICES I SSUED TO THE KARIGARS WERE RETURNED UNSERVED AND THERE IS NO RESPONSE FROM THE KARIGARS TO VERIFY THE EXPENSES. ACCORDINGLY HE CONFIRMED THE DISALLOWANCE. AGGRIEVED, NOW ASSESSEE IS IN SECOND APPEAL BEFORE TRIBUNAL. 4. I HAVE HEARD THE RIVAL CON TENTIONS AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. FIRST OF ALL THE AO HAS NOT MADE DISALLOWANCE U/S 40(A)(IA) OF THE ACT FOR NON DEDUCTION OF TDS NOR CIT(A). THE MAIN PREMISE FOR DISALLOWANCE WAS THAT NOTICES ISSUED TO KARIGARS WERE NOT R ESPONDED. ON QUERY FROM THE BENCH THE LD. COUNSEL FOR THE ASSESSEE FAIRLY AGREED THAT LET THIS ISSUE BE REMITTED TO THE FILE OF AO AND HE IS READY TO PRODUCE THE KARIGARS BEFORE AO FOR VERIFICATION TO PROVE THE CLAIM OF EXPENSES. FURTHER ON QUERY FROM THE BENCH THE LD. SR.DR FAIRLY AGREED TO THIS PROPOSITION. IN VIEW OF THE ABOVE, I SET ASIDE BOTH THE ORDERS OF THE AUTHORITIES BELOW AND REMIT THIS ISSUE BACK TO THE FILE OF AO TO PRODUCE THE KARIGARS BEFORE AO FOR VERIFICATION AND TO PROVE THE GENUINENESS O F THE EXPENSES. ACCORDINGLY THIS ISSUE OF THE ASSESSEE IS REMITTED BACK TO THE FILE OF AO. ITA NO.641/KOL/2013 TAPAN KUMAR PAUL A.YR. 2007 - 08 3 5. THE NEXT ISSUE IN THIS APPEAL OF THE ASSESSEE IS AGAINST ORDER OF CIT(A) IN CONFIRMING THE ADDITION OF LOW DRAWINGS OF RS.43,000/ - . FOR THIS THE ASSESSEE H AS RAISED THE FOLLOWING GROUND NO.3 : 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) ERRED IN ALLOWING RELIEF ON CONDITIONAL BASIS AMOUNTING TO RS.43,000/ - ON ACCOUNT OF LOW DRAWINGS ON THE GROUND THAT HE HAS CONFIRMED THE ADDITION OF RS.2,2 7,420/ - ON ACCOUNT OF KARIGAR CHARGES WHICH COVERS THE PERSONAL EXPENSES WHEREAS THE CIT(A) WAS EXPLAINED THAT THERE HAS BEEN SUBSTANTIAL DRAWINGS OF OTHER FAMILY MEMBERS NAMELY THE WIFE OF THE APPELLANT MRS. PALLAVI PAUL WHERE THE DRAWINGS WAS RS.50,409/ - , HEMANTI PAUL, DAUGHTER OF THE APPELLANT WHERE THE DRAWINGS WAS SHOWN AT RS.,10,000/ - AND SUMAN PAUL, SON OF THE APPELLANT WHERE THE DRAWING WAS SHOWN AT RS.32,000/ - . 6. I HAVE HEARD THE RIVAL CONTENTIONS AND GONE THROUGH THE FACTS AND CIRCUMSTA NCES OF THE CASE. I FIND FROM THE ASSESSMENT ORDER THAT THE AO NOTED THAT THE ASSESSEE HAS SHOWN NO HOUSEHOLD WITHDRAWALS BUT RS.42,000/ - ONLY. HE ALSO NOTED THAT THE ASSESSEE S FAMILY CONSISTS OF MOTHER, WIFE, ELDER DAUGHTER, ELDER SON APART FROM SELF. AC CORDING TO HIM THIS WITHDRAWAL IS VERY LOW AND ACCORDINGLY HE ESTIMATED THE EXPENSES OF THE FAMILY AT RS.84,000/ - THEREBY MAKING ADDITION OF LOW DRAWINGS AT RS.42,000/ - . AGGRIEVED, ASSESEE PREFERRED APPEAL BEFORE CIT(A), WHO ALSO CONFIRMED THE ACTION OF AO WITHOUT ANY BASIS. BEFORE AO AND CIT(A) EVEN NOW BEFORE TRIBUNAL THE ASSESSEE FILED THE DETAILS THAT THERE HAS BEEN SUBSTANTIAL DRAWINGS OF OTHER FAMILY MEMBERS I.E. WIFE MRS. PALLAVI PAUL AT RS;.50,409/ - , DAUGHTER HEMANTI PAUL AT RS.10,000/ - , AND SON SUM AN PAUL AT RS.32,000/ - . ON QUERY FROM THE BENCH THE LD. SR.DR HAS NOT CONTESTED THAT THERE CAN BE WITHDRAWALS OF OTHER FAMILY MEMBERS. IN SUCH CIRCUMSTANCES I AM OF THE VIEW THAT THE AMOUNTS ADDED BY THE AO IS MUCH LOWER THAN THE WITHDRAWAL MADE BY OTHER FAMILY MEMBERS. THE COLLECTIVE WITHDRAWALS IS MORE THAN THE EXPENDITURE ESTIMATED BY AO AT RS.82,000/ - AND HENCE THIS ADDITION CANNOT BE SUSTAINED. ACCORDINGLY I DELETE THE ADDITION. 7. THE NEXT ISSUE IN THIS APPEAL OF THE ASSESSEE IS AGAINST ORDER OF CIT(A) IN CONFIRMING THE DISALLOWANCE OF EXPENSES OF CAR, DIESEL AND MOBILE EXPENSES AND CAR INSURANCE, ROAD TAXES ETC. AT RS.36,304/ - . FOR THIS THE ASSESSEE HAS RAISED THE FOLLOWING GROUND NO.4 : 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) ERRED IN NOT COVERING AND DISCUSSING THE DISALLOWANCE OF RS.36,304/ - ON ACCOUNT OF DISALLOWANCE OF CAR, DIESEL AND MOBIL EXPENSES AND CAR INSURANCE, ROAD TAXES AND CAR REPAIRING AND SERVICING CHARGES ITA NO.641/KOL/2013 TAPAN KUMAR PAUL A.YR. 2007 - 08 4 WHEREAS SPECIFIC GROUNDS OF APPEAL WERE TAKEN AT THE TIME OF APPEAL BEFORE HIM AND DETAILS WERE SUBMITTED IN THE WRITTEN SUBMISSION. ACCORDING TO HIM THESE EXPENSES CANNOT BE INCURRED FOR HIS BUSINESS FOR THE REASON THAT THE ASSESSEE IS A VERY SMALL JEWELLER OF THE TOWN AND HE HIMSELF USED TO PURCHASE GOLD ORNAMENTS FROM THE CUSTOMERS AND USED TO RE MAKE IT AND SELL THEM. THE SALE REGISTER ALSO SUGGESTS THAT THE BULK SALE WAS NOT MADE TO A SINGLE CUSTOMER. ACCORDING TO HIM THIS EXPENDITURE IS WITHOUT ANY BASIS. ACCORDINGLY HE MADE DISALLOWANCE. AGGRIEV ED ASSESSEE PREFERRED APPEAL BEFORE CIT(A), WHO CONFIRMED THE DISALLOWANCE WITHOUT ANY BASIS. THE RELEVANT FINDINGS MADE BY CIT(A) READ AS UNDER : - THE NEXT GROUND IS DISALLOWANCE OF PERSONAL EXPENSES ON ACCOUNT OF TELEPHONE CHARGES AND CAR EXPENSES. IN T HIS CASE THE ASSESSEE HAS NOT FULLY DISCHARGED THE ONUS OF PROVING THAT THE EXPENDITURE IS GENUINE, WHICH VESTS WITH HIM. ON THE OTHER HAND, THE ASSESSING OFFICER HAS NOT PROVED THAT THE EXPENDITURE IS BOGUS. A VIA MEDIA APPROACH IS NEEDED. IT IS NOTED TH AT HE HAS DISALLOWED A SMALL PART OF THE EXPENDITURE. IN THE CIRCUMSTANCES OF THE CASE, I FIND THAT NO INTERFERENCE IS WARRANTED. THE GROUND IS DISMISSED. AGGRIEVED, NOW ASSESSEE IS IN APPEAL BEFORE TRIBUNAL. 8. I FIND FROM THE ABOVE THAT THE ASSES SEE IS ENGAGED IN MANUFACTURE AND TRADING OF JEWELLERY MAY BE ENGAGED IN MAKING OR IN PURCHASING OLD ORNAMENTS OR JEWELLERY. BUT HE HAS ACTUALLY ENGAGED IN THE BUSINESS. HE HAS INCURRED THESE EXPENSES I.E. VERY PETTY EXPENSES ON ACCOUNT OF CAR DIESEL AND M OBIL, EXPENSES AT RS.8,750/ - , CAR INSURANCES AT RS.814/ - , ROAD TAXES AT RS.23,950/ - AND CAR REPAIRING AND SERVICING CHARGES AT RS.2,790/ - . GOING BY THE VERY NATURE AND QUANTUM OF EXPENDITURE IT IS CLEAR THAT THESE ARE VERY NOMINAL EXPENSES FOR A SMALL BUSI NESS AND NO PART OF IT CAN BE DISALLOWED WITHOUT ANY BASIS. ACCORDINGLY I ALLOW THESE EXPENSES. 9. IN THE RESULT THE APPEAL OF THE APPEAL IS PARTLY ALLOWED AS INDICATED ABOVE. O RDER PRONOUNC ED IN TH E COURT . SD/ - [MAHAVIR SINGH] JUDICIAL MEMBER DATE: 14 TH JULY, 2015. R.G.(.P.S.) ITA NO.641/KOL/2013 TAPAN KUMAR PAUL A.YR. 2007 - 08 5 COPY OF THE ORDER FORWARDED TO : 1 . TAPAN KUMAR P AUL, C/O PAUL BROTHERS JEWELLERS, 102, G.T.ROAD, ASANSOL - 7133 01. 2 THE I.T.O., WARD - 2(3), ASANSOL. 3 . THE CIT, 4. THE CIT(A) - ASANSOL. . 5 . DR, KOLKATA BENCHES, KOLKATA TRUE COPY , BY ORDER, DEPUTY /ASST. REGISTRAR , ITAT, KOLKATA BENCHES