MUKESH RUSTOGI, Jaipur V. ACIT, Jaipur

ITA 662/JPR/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 1969 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 4 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-10-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 15-06-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: P P MEENA JCIT DHK
• Section: 143(3)

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH HKKXPUN] YS[KK LNL; ,OA JH DQY HKKJR] U;KF;D LNL; DS LE{K BEFORE: SHRI BHAGCHAND, AM AND SHRI KUL BHARAT, JM VK;DJ VIHY LA-@ ITA NO. 662/JP/2017 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2011-12. SHRI MUKESH RUSTOGI, 342, GURUJAMBESHWAR NAGAR, LANE-6, VAISHALI NAGAR, JAIPUR. CUKE VS. THE ACIT, CIRCLE-3, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. ACTPR 9169 C VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI SHRAWAN GUPTA (ADVOCATE) JKTLO DH VKSJ LS@ REVENUE BY : SHRI P.P. MEENA (JCIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 23.10.2017. ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 24/10/2017. VKNS'K@ ORDER PER SHRI KUL BHARAT, JM. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LD. CIT (A)-1, JAIPUR DATED 13.04.2016 PERTAINING TO ASSESSMENT YE AR 2011-12. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : 1. THE IMPUGNED ORDER U/S 143(3) DATED 11.12.2013 IS B AD IN LAW AND ON FACTS OF THE CASE, FOR WANT OF JURISDICTION, BAR RED BY LIMITATION AND VARIOUS OTHER REASONS AND HENCE THE SAME MAY KI NDLY BE QUASHED. 2. RS. 5,71,280/- : THE LD. CIT (A) HAS GROSSLY ERRED IN LAW AS WELL AS ON THE FACTS OF THE CASE IN CONFIRMING THE DISALLOW ANCE OF RS. 5,71,280/- U/S 40(A)(IA) MADE BY THE AO ON ACCOUNT OF NON DEDUCTION OF TDS, ON THE AMOUNT WHICH HAS BEEN PAID BEFORE THE END OF YEAR AND TAX HAS BEEN PAID BY THE RECIPIENT. HENCE THE DISALLOWANCE ADDITION SO MADE AND CONFIRMED BY THE CIT (A) IS BEING TOTALLY CONTRARY TO THE PROVISIONS OF LAW AND FACTS. HENCE THE SAME MAY KINDLY BE DELETED IN FULL. 2 ITA NO. 662/JP/2017 SHRI MUKESH RUSTOGI 3. RS. 2,25,281/- : THE LD. CIT (A) HAS GROSSLY ERRED IN LAW AS WELL AS ON THE FACTS OF THE CASE IN PARTLY CONFIRMING THE D ISALLOWANCE OF RS. 2,25,281/- MADE BY THE AO OF RS. 2,78,626/- ON ACCO UNT OF VARIOUS EXPENSES. HENCE THE DISALLOWANCE SO MADE AND PARTLY CONFIRMED BY THE CIT (A) IS BEING TOTALLY CONTRARY TO THE PROVIS IONS OF LAW AND FACTS. HENCE THE SAME MAY KINDLY BE DELETED IN FULL . 4. THE LD. AO ERRED IN LAW AS WELL AS ON THE FACTS OF THE CASE IN CHARGING OF INTEREST U/S 234B, 234C & 234D AS CONSE QUENTIAL IN NATURE. THE APPELLANT TOTALLY DENIES IT LIABILITY O F CHARGING OF ANY SUCH INTEREST. HENCE THE INTEREST SO CHARGED, BEING CONTRARY TO THE PROVISIONS OF LAW AND FACTS, MAY KINDLY BE DELETED IN FULL. 5. THE APPELLANT PRAYS YOUR HONORS INDULGENCE TO ADD, AMEND OR ALTER ALL OR ANY OF THE GROUNDS OF THE APPEAL ON OR BEFOR E THE DATE OF HEARING. 2. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT TH E CASE OF THE ASSESSEE WAS PICKED UP FOR SCRUTINY ASSESSMENT AND THE ASSESSMEN T UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS TH E ACT) WAS FRAMED VIDE ORDER DATED 11.12.2013. WHILE FRAMING THE ASSESSMENT, TH E AO MADE ADDITIONS ON ACCOUNT OF DISALLOWANCE OUT OF INTEREST PAYMENT OF RS. 5,71,280/- BY INVOKING PROVISIONS OF SECTION 40(A)(IA) OF THE ACT, DISALLO WANCE OUT OF VEHICLE RUNNING EXPENSES OF RS. 24,977/-, DISALLOWANCE OUT OF LBUSI NESS PROMOTION OF RS. 28,368/-, DISALLOWANCE OUT OF TELEPHONE EXPENSES OF RS. 87,65 7/- AND DISALLOWANCE OUT OF TRAVELING EXPENSES OF RS. 1,37,624/-. AGGRIEVED, TH E ASSESSEE PREFERRED AN APPEAL BEFORE LD. CIT (A), WHO AFTER CONSIDERING THE SUBMI SSIONS OF THE ASSESSEE PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. NOW THE ASSESS EE IS FURTHER IN APPEAL BEFORE THIS TRIBUNAL. 3 ITA NO. 662/JP/2017 SHRI MUKESH RUSTOGI 3. AT THE TIME OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT HE DOES NOT WISH TO PRESS GROUND NO. 1. THEREFORE, THE SAME IS DISMISSED AS NOT PRESSED. 4. GROUND NO. 2 RELATES TO CONFIRMING THE DISALLOWA NCE OF RS. 5,71,280/- U/S 40(A)(IA) OF THE ACT ON ACCOUNT OF INTEREST EXPENSE S TO PRIVATE PARTIES I.E. NBFC ON WHICH NO TDS WAS DEDUCTED. THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS AS MADE IN THE WRITTEN BRIEF. HE SUBMIT TED THAT THE INCOME TAX DEPARTMENT HAS ISSUED A CERTIFICATE U/S 197(1) TO C HOLAMANDALAM DBS FINANCE FOR NON DEDUCTION OF TDS, A CERTIFICATE ISSUED BY THE M /S. INDIABULLS FINANCIAL SERVICES LTD. WHEREIN THEY HAVE CONFIRMED ABOUT INCLUSION OF INTEREST CHARGED BY THEM FROM V.R. MARKETING DURING THE YEAR 2010-11 IN THEIR TAX ABLE INCOME AND HAVE ACCORDINGLY PAID THE TAX, ALL NBFCS ARE WELL KNOWN NBFD AND SOME OF THEM ARE ALSO LISTED COMPANIES AND THE ACCOUNTS OF ALL ARE SUBJEC T TO STATUTORY AUDIT UNDER THE COMPANIES ACT THEREFORE, THERE REMAINS NO DOUBT OF NON-INCLUSION OF INTEREST CHARGED BY THEM IN THEIR INCOME AND CONSEQUENTLY PA YMENT OF INCOME TAX THEREON. SECTION 40(A)(IA) IS APPLICABLE ONLY TO THE EXPENDI TURE WHICH IS PAYABLE AS ON 31 ST MARCH OF EVERY YEAR AND CANNOT BE APPLIED ON EXPEND ITURE WHICH HAVE ALREADY BEEN PAID DURING THE YEAR, WITHOUT DEDUCTING TAX AT SOUR CE. 4.1. ON THE CONTRARY, THE LD. D/R RELIED ON THE ORD ER OF THE ASSESSING OFFICER. 4.2. WE HAVE HEARD RIVAL CONTENTIONS, PERUSED THE M ATERIAL ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. AFTER CONSIDERING THE TOTALITY OF FACTS AND THE DECISION OF HONBLE DELHI HIGH COURT RENDER ED IN THE CASE OF CIT VS. ANSAL LANDMARK TOWNSHIP (P) LTD. 377 ITR 635 (DELHI), WE RESTORE THE ISSUE TO THE FILE OF 4 ITA NO. 662/JP/2017 SHRI MUKESH RUSTOGI THE ASSESSING OFFICER FOR VERIFICATION WITH REGARD TO THE CERTIFICATE AS FURNISHED BY THE ASSESSEE. THE AO AFTER VERIFYING THE SAME FROM THE RESPECTIVE PARTIES I.E. NBFCS WOULD DELETE THE DISALLOWANCE IN CASE THE CER TIFICATE IS FOUND IN ORDER. THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL P URPOSES. 5. GROUND NO. 3 RELATES TO CONFIRMING THE DISALLOWA NCE OF RS. 2,25,281/- ON ACCOUNT OF VARIOUS EXPENSES. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE AO HAS NOT SPECIFICALLY POINTED OUT ANY DEFECT EXCE PT THAT THE EXPENSES ARE NOT PROPERLY VOUCHED. THE AO DISALLOWED THE EXPENSES ON THE GROUND THAT THE SOME OF THE PAYMENTS WERE MADE IN CASH AND PERSONAL USE ETC . COULD NOT BE RULED OUT. THE LD. COUNSEL SUBMITTED THAT ONLY ON THESE BASIS NO D ISALLOWANCE CAN BE MADE WITHOUT BRINGING ANY COGENT MATERIAL. 5.1. ON THE OTHER HAND, THE LD. D/R SUPPORTED THE O RDERS OF THE AUTHORITIES BELOW. 5.2. WE HAVE HEARD RIVAL CONTENTIONS, PERUSED THE M ATERIAL ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE L D. CIT (A) WHILE CONFIRMING THE DISALLOWANCE HAS OBSERVED IN PARA 3.2.2 OF HIS ORDE R AS UNDER :- 3.2.2. I HAVE DULY CONSIDERED THE SUBMISSIONS OF THE APPELLANT, ASSESSMENT ORDER AND THE MATERIAL PLACED ON RECORD. IT IS NOTED THAT THE AR OF THE APPELLANT AGREED FOR THE ADDITIONS MA DE BY THE AO ON ACCOUNT OF VEHICLE RUNNING EXPENSES (10%), BUSINESS PROMOTION EXPENSES (10%), TELEPHONE EXPENSES (5%) AND TRAVELL ING EXPENSES (10%). IT IS TRITE LAW THAT NO ESTOPPELS LIE AGAINS T STATUTE AND THE AO HAS TO DETERMINE THE CORRECT INCOME OF THE APPELLAN T IN VIEW OF THE PROVISIONS OF THE ACT. IT IS NOTED FROM THE ASSESSM ENT ORDER THAT SPECIFIC DEFECTS WERE POINTED OUT BY THE AO IN RESP ECT OF TELEPHONE 5 ITA NO. 662/JP/2017 SHRI MUKESH RUSTOGI EXPENSES AND TRAVELLING EXPENSES. THE AR OF THE APP ELLANT AGREED FOR THE ADDITIONS (NOW DISPUTED BY THE APPELLANT) AND T HUS THE AR PREVENTED THE AO FOR MAKING FURTHER ENQUIRIES IN RE SPECT OF THE EXPENSES CLAIMED BY THE APPELLANT. DURING APPELLATE PROCEEDINGS, THE APPELLANT WAS NOT ABLE TO CONFRONT THE FINDINGS REC ORDED BY THE AO IN THE ASSESSMENT ORDER IN RESPECT OF TELEPHONE AND TR AVELING EXPENSES. IT IS ALSO NOTED THAT THE AO HAS MADE DISALLOWANCES IN RESPECT OF BUSINESS PROMOTION AND VEHICLE RUNNING EXPENSES WIT HOUT ANY COGENT REASONS AND BRINGING ON RECORD ANY MATERIAL WHICH M AY JUSTIFY THE SAID DISALLOWANCES. (II) THEREFORE, LOOKING TO THE TOTALITY OF FACTS AN D CIRCUMSTANCE OF THE CASE, IT IS HELD THAT THE DISALLOWANCE MADE BY THE AO ON ACCOUNT OF TELEPHONE AND TRAVELLING EXPENSES WAS JUSTIFIED, HE NCE SUSTAINED. FURTHER, THE DISALLOWANCE ON ACCOUNT OF VEHICLE RUN NING AND BUSINESS PROMOTION CANNOT BE SUSTAINED. THUS, OUT OF THE TOT AL DISALLOWANCE OF RS. 2,78,626/- MADE BY THE AO, A SUM OF RS. 2,25,28 1/- (87,657 + 1,37,624) IS HEREBY SUSTAINED AND THUS THE APPELLAN T GETS A RELIEF OF RS. 53,345/- (24,977 + 28,368). IN VIEW OF THE ABOVE FINDING OF THE LD. CIT (A), WE DO NOT FIND REASON TO INTERFERE IN THE ORDER OF LD. CIT (A), THE SAME IS HEREBY AFFIRM ED. THE GROUND OF THE ASSESSEE IS REJECTED. 6. GROUND NO. 4 RELATES TO CHARGING OF INTEREST UND ER SECTION 234B, 234C AND 234D. THE ASSESSEE HAS NOT SUBMITTED ANY DETAILS I N RESPECT OF THIS GROUND. THE GROUND IS CONSEQUENTIAL IN NATURE. THEREFORE, THE A .O. IS DIRECTED TO GIVE APPEAL EFFECT WHILE DECIDING THE ISSUE ACCORDINGLY. 6 ITA NO. 662/JP/2017 SHRI MUKESH RUSTOGI 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED FOR STATISTICAL PURPOSES. ORDER IS PRONOUNCED IN THE OPEN COURT ON 24.10.20 17. SD/- SD/- ( HKKXPUN ( DQY HKKJR ) ( BHAGCHAND) ( KUL BHARAT ) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER JAIPUR DATED:- 24/10/2017. DAS/ VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT- SHRI MUKESH RUSTOGI, JAIPUR. 2. THE RESPONDENT THE ACIT, CIRCLE-3, JAIPUR. 3. THE CIT(A). 4. THE CIT, 5. THE DR, ITAT, JAIPUR 6. GUARD FILE (ITA NO. 662/JP/2017) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR 7 ITA NO. 662/JP/2017 SHRI MUKESH RUSTOGI