Raj Kumar Jain, New Delhi V. ITO, Ward-38(2), New Delhi

ITA 649/DEL/2019

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 9145 (ITAT-DELHI)
• Duration Of Justice: 5 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-07-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2015-2016
• Appeal Filed On: 30-01-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Corroborative evidences; Set aside
• Section: 40A(3); 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: SMC NEW DELHI BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO. 649/DEL/2019 ASSESSMENT YEAR: 2015-16 RAJ KUMAR JAIN C-13/74, GROUND FLOOR, SECTOR-3, ROHINI, NEW DELHI. PAN NO. AAHPJ8735E VS ITO WARD 38(2) NEW DELHI. APPELLANT RESPONDENT ASSESSEE BY SHRI GAUTAM JAIN, ADV. SHRI LALIT MOHAN, CA REVENUE BY SHRI S.L. ANURAGI, SR. DR ORDER THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER DATED 26.12.2018 OF THE LD. CIT(APPEALS)-13, NEW DE LHI RELATING TO AY 2015-16. 2. THE ASSESSEE IN HIS ONLY EFFECTIVE GROUND OF APP EAL HAS CHALLENGED THE ORDER OF LD. CIT(A) IN SUSTAINING TH E DISALLOWANCE OF RS. 2,26,160/- OUT OF THE ADDITION OF RS. 3,55,139/ - MADE BY THE AO. 3. FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSEE IS AN INDIVIDUAL AND IS ENGAGED IN THE BUSINESS OF WHOLES ALE TRADING OF DATE OF HEARING 04.07.2019 DATE OF PRONOUNCEMENT 09.07.2019 2 ITA NO . 649/DEL/2019 WHEAT AND CATTLE FEED UNDER THE NAME AND STYLE OF M /S SHREE MAHAVIRA ENTERPRISES. HE FILED HIS RETURN OF INCOM E ON 28.09.2015 DECLARING TOTAL INCOME OF RS. 4,87,000/- . THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS NOTED T HAT ASSESSEE HAS DEBITED VARIOUS EXPENSES UNDER DIFFERENT HEADS OUT OF WHICH SOME OF THE EXPENSES ARE AS UNDER: - S.NO. HEADS OF EXPENSES AMOUNT 1. SALARY 8,10,000 2. LABOUR EXPENSES 1,47,725 3. ELECTRICITY 53,000 4. GENERAL EXPENSES 15,748 5. CAR PETROL EXPENSES 15,500 6. FREIGHT OUTWARD 1,41,825 TOTAL 11,83,798 4. ALTHOUGH THE ASSESSEE FURNISHED THE LEDGER ACCOU NT AND SOME VOUCHERS/BILLS TO SUBSTANTIATE ITS CLAIM, THE AO NOTED THAT ALL THE PAYMENTS WERE MADE IN CASH ONLY. HE, THERE FORE, DISALLOWED AN AMOUNT OF RS. 3,55,139/- BEING 30% OU T OF THE TOTAL EXPENSES CLAIMED ON ESTIMATE BASIS. 5. IN APPEAL THE LD. CIT(A) RESTRICTED SUCH DISALLO WANCE TO 20% AS AGAINST 30% MADE BY THE AO AND THEREBY SUSTAINED AN ADDITION OF RS. 2,26,160/-. 6. AGGRIEVED WITH SUCH ORDER OF THE LD. CIT(A), THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 7. THE LD. COUNSEL FOR THE ASSESSEE RELYING ON VARI OUS DECISIONS SUBMITTED THAT THE DISALLOWANCE MADE BY THE AO AND PARTLY SUSTAINED BY THE CIT(A) IS UNCALLED FOR WHICH WAS M ADE ON AD HOC BASIS. HE SUBMITTED THAT NO DEFECTS WERE FOUND IN THE BOOKS OF 3 ITA NO . 649/DEL/2019 ACCOUNTS AND ASSESSEE HAS FURNISHED ALL THE DETAILS INCLUDING SUPPORTING EVIDENCES. MERELY BECAUSE THE PAYMENTS WERE MADE IN CASH, THE SAME CANNOT BE DISALLOWED ESPECIALLY WHEN NONE OF THE PAYMENT IS ABOVE 20% IN CASH IN VIOLATION OF PROVIS IONS OF SECTION 48(3) OF THE ACT. REFERRING TO THE COPY OF THE ASS ESSMENT ORDER FOR AY 2014-15 HE SUBMITTED THAT THE AO IN THE SAID ORD ER HAS MADE DISALLOWANCE OF RS. 50,000/- ONLY ON AD HOC BASIS, WHEREAS FOR THE IMPUGNED ASSESSMENT ORDER HE ESTIMATED THE DISALLOW ANCE @ 30% WHICH WAS REDUCED ONLY TO 20% BY THE LD. CIT(A). HE, ACCORDINGLY, SUBMITTED THAT THE DISALLOWANCE SUSTAI NED BY THE CIT(A) BEING VERY EXCESSIVE AND ON THE HIGHER SIDE, THE SAME SHOULD BE DELETED. 8. THE LD. DR ON THE OTHER HAND, HEAVILY RELIED UPO N THE ORDER OF THE CIT(A). 9. I HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BO TH THE SIDES AND PERUSED THE ORDERS OF THE AUTHORITIES BELOW. I HAVE ALSO CONSIDERED THE VARIOUS DECISIONS CITED BEFORE ME. I FIND THE AO MADE DISALLOWANCE OF RS. 3,55,139/- BEING 30% OF TH E EXPENSES OF RS. 11,83,798/- ON AD HOC BASIS ON THE GROUND THAT ALL THE PAYMENTS WERE MADE IN CASH. I FIND THE CIT(A) REST RICTED SUCH DISALLOWANCE TO 20% OF THE EXPENSES. I FIND FROM T HE ASSESSMENT ORDER FOR AY 2014-15, COPY OF WHICH IS PLACED AT PA GES 99 TO 104 OF THE PAPER BOOK THAT THE AO IN THE ASSESSMENT ORDER PASSED U/S 143(3) HAS DISALLOWED AN AMOUNT OF RS. 50,000/- ONL Y ON AD HOC BASIS. FURTHER, FOR THE IMPUGNED ASSESSMENT YEAR T HE AO HAS NOT 4 ITA NO . 649/DEL/2019 REJECTED THE BOOKS OF ACCOUNT OR POINTED OUT ANY DE FECTS IN THE BILLS AND VOUCHERS EXCEPT STATING THAT THE PAYMENTS HAVE BEEN MADE IN CASH. THERE IS NO VIOLATION OF PROVISIONS OF SECTI ON 40A(3) OF THE ACT. SINCE, NO OTHER DEFECTS WERE POINTED OUT EITHER IN THE BOOKS OF ACCOUNTS OR IN THE BILLS AND VOUCHERS, THEREFORE, M ERELY BECAUSE THE PAYMENT HAS BEEN MADE IN CASH CANNOT BE A GROUND FO R DISALLOWANCE. FURTHER, THE DISALLOWANCE SO SUSTAIN ED BY THE CIT(A) APPEARS TO BE ON HIGHER SIDE WHEN COMPARED WITH THE DISALLOWANCE MADE BY THE AO IN SCRUTINY ASSESSMENT FOR AY 2014-1 5, WHERE SUCH DISALLOWANCE HAS BEEN MADE AT RS. 50,000/- ON AD HOC BASIS. CONSIDERING THE TOTALITY OF THE FACTS OF THE CASE, I AM OF THE CONSIDERED OPINION THAT DISALLOWANCE OF RS. 50,000/ - ON AD HOC BASIS WILL MEET THE ENDS OF JUSTICE. I, THEREFORE, SET ASIDE THE ORDER OF THE LD. CIT(A) AND DIRECT THE AO TO RESTRICT THE DISALLOWANCE TO RS. 50,000/- ONLY. THE GROUNDS RAISED BY THE ASSES SEE ARE ACCORDINGLY PARTLY ALLOWED. 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 09/07/2019 SD/- (R.K. PANDA) ACCOUNTANT MEMBER DATED: 09/07/2019 *KAVITA ARORA 5 ITA NO . 649/DEL/2019 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT TRUE COPY ASSISTANT REGISTRAR ITAT NEW DELHI DATE OF DICTATION 04.07.2019/ 09.07.2019 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 05.07.2019/ 09.07.2019 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER 09.07.2019 DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P S/PS 09.07.2019 DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 09.07.2019 DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/PS 09.07.2019 DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WE BSITE OF ITAT 09.07.2019 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 09.0 7.2019 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER 6 ITA NO . 649/DEL/2019