Sh. Vinay Singhu, New Delhi V. ITO, Ghaziabad

ITA 6667/DEL/2013

• Counselvise Citation: 666720114 RSA 2013
• Duration Of Justice: 1 year(s) 9 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-09-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC 2
• Next Hearing Date: 23-07-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 18-12-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: YATENDRA SINGH
• Keywords: Depreciation; Opportunity of being heard

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC - 2 , NEW DELHI BEFORE SH. N. K. SAINI, AM ITA NO. 6667 /DEL/201 3 : ASSTT. YEAR : 2008 - 09 SHRI VINAY SINDHU, C/O KAPIL GOEL ADV., A - 1/25, SECTOR - 15, ROHINI, DELHI - 110085 VS ITO, WARD - 2(2), NEW DEL HI (APPELLANT) (RESPONDENT) PAN NO. A WTPS7089L ASSESSEE BY : SH . ANKIT GUPTA, ADV. REVENUE BY : SH. YATENDRA SINGH , SR. DR DATE OF HEARING : 23 .0 7 .2015 DATE OF PRONOUNCEMENT : 23 .09 .2015 ORDER THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 02.09.2013 OF LD. CIT (A) , MUZAFFARNAGAR . 2 . FOLLOWING GROUND S HAVE BEEN RAISED IN THIS APPEAL: 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, LEARNED CIT(A) ERRED IN SUMMARILY CONFIRMING ADDITION OF RS. 50,000 BEING PURELY ADHOC DISALLOWANCE HELD OUT RIGHTLY IMPERMISSIBLE BY DELHI HIGH COURT IN FRIENDS CLEARING CASE REPORTED AT 332 ITR 269. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LA W, LEARNED CIT(A) ERRED IN CONFIRMING PATENTLY BAD ADDITION OF RS. 1,09,215 ON A/C OF DISALLOWANCE OF DEPRECIATION ON MERE BASIS THAT ITA NO.6667 /DEL /2013 VINAY SINDHU 2 MACHINERY (FORK LIFT) IS PURCHASED ON CREDIT, WITHOUT APPRECIATING THE NATURE OF ASSESSEE S BUSINESS (BEING LABOUR AND M ATERIAL HANDING CONTRACTOR) AND READY TO USE NATURE OF SAID LIFT. THAT THE APPELLANT CRAVES LEAVE TO ADD, TO, AMEND, MODIFY, RESCIND, SUPPLEMENT OR ALTER ANY OF THE GROUNDS STATED HEREIN ABOVE, EITHER BEFORE OR AT THE TIME OF HEARING OF THIS APPEAL. 3 . FIRST ISSUE IN THIS APPEAL RELATES TO THE SUSTENANCE OF DISALLOWANCE OF RS. 50,000/ - . THE FACTS RELATED TO THIS ISSUE IN BRIEF ARE THAT THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS NOTICED THAT THE ASSESSEE HAS CLAIMED EXPENSES UNDER THE HEAD REPAI R AND MAINTENANCE AT RS. 26,127/ - AND ADMINISTRATIVE, SELLING & GENERAL EXPEN SES AT RS. 1,33,320/ - WHICH WERE NOT FULLY VERIFIABLE AND VOUCHED. HE DISALLOWED A SUM OF RS. 50,000/ - AND MADE THE ADDITION TO THE INCOME OF THE ASSESSEE. 4 . BEING AGGRIEVED THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) AND SUBMITTED THAT ACTION OF THE AO IN MAKING THE ADDITION OF RS. 50,000/ - WAS ILLEGAL, M ISCONCEIVED AND UNJUSTIFIED. HOWEVER, THE LD. CIT(A) CONFIRMED THE ADDITION BY OBSERVING THAT IN THE ABSENCE OF DET A ILS AND EVIDENCES, T HE AO WAS JUSTIFIED IN MAKING THE ADDITION . 5 . NOW THE ASSESSEE IS IN APPEAL. THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND FURTHER SUBMITTED THAT ADHOC DISALLOWANCE HAD BEEN MADE BY THE AO WITHOUT ITA NO.6667 /DEL /2013 VINAY SINDHU 3 ANY BASIS AND THE LD. CIT(A) CONFIRMED THE SAME WITHOUT PROVIDING AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. IT WAS FURTHER STATED THAT ALL THE EXPENSES WERE VOUCHED & VERIFIABLE AND WERE INCURRED FOR THE BUSINESS PURPOSES , THEREFORE, NO DISALLOWANCE WAS CALLED FOR. 6 . IN HIS RIVAL SUBMISSIONS THE LD. DR SUPPORTED THE ORDER OF THE AUTHORITIES BELOW. 7. I HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. IN THE PRESENT CASE, IT IS NOT ICED THAT THE AO DISALLOWED A SUM OF RS. 50,000/ - OUT OF EXPENSES OF RS. 1 ,59,447/ - (RS.26,127/ - + RS.1,33,320/ - ) INCURRED BY THE ASSESSEE. THE LD. CIT(A) ALSO CONFIRMED THE ADDITION BY PASSING THE EX - PARTE ORDER. IN MY OPINION, THE DISALLOWANCE MADE BY THE AO AND SUSTAINED BY THE LD. CIT(A) IS HIGHLY EXCESSIVE. I, THEREFORE, TO MEET THE ENDS OF JUSTICE DEEM IT APPROPRIATE TO REDUCE THE DISALLOWANCE OF RS. 5,000/ - ONLY WHICH WILL BE SUFFICIENT TO COVER UP THE LEAKAGE, IF ANY. 8. NEXT ISSUE VIDE GROUND NO. 2 RELATES TO THE CONFIRMATION OF DISALLOWANCE OF RS. 1,09,215/ - MADE BY THE AO ON ACCOUNT OF DEPRECIATION. THE FACTS RELATED TO THIS ISSUE IN BRIEF ARE THAT THE ASSESSEE CLAIMED THE DEPRECIATION ON MACHINERY AT RS. 1,09,215/ - . THE AO DISALLOWED THE SAME BY OBSERVING THAT THE ASSESSEE WAS NOT THE OWNER OF THE MACHINERY AND THE ENTIRE AMOUNT OF PURCHASE OF MACHINERY HAD BEEN ITA NO.6667 /DEL /2013 VINAY SINDHU 4 SHOWN IN THE BALANCE SHEET AS CREDITORS AGAINST MACHINERY. HE ALSO OBSERVED THAT THE ASSESSEE FAILED TO FURNISH ANY EVIDENCE THAT HE WAS THE OWNER OF MACHINERY AND THE MACHINERY WAS PUT TO USE IN THE PREVIOUS YEAR. 9. BEING AGGRIEVED THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) WHO CONFIRMED THE DISALLOWANCE MADE BY THE AO WHILE PASSING THE EX - PARTE ORDER. 10. NOW THE ASSESSEE IS IN APPEAL. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE MACHINERY WAS USED FOR THE BUSINESS OF THE ASSESSEE. THEREFORE, THE DEPRECIATION WAS RIGHTLY CLAIMED AND THE AO WAS NOT JUSTIFIED IN MAKING THE DISALLOWANCE . IT WAS FURTHER SUBMITTED THAT THE LD. CIT(A) WITHOUT APPRECIATING THE FACT AND ALLOWING OPPORTUNITY OF BEING HEARD TO THE ASSESSEE HAS SUSTAINED THE DISALLOWANCE MADE BY THE AO. 11. I HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. IN THE PRESENT CASE, IT APPEARS THAT THE DISALLOWANCE OF DEPRECIATION WAS MADE BY THE AO ONLY FOR THIS REASON THAT CREDITORS WERE SHOWN AGAINST THE COST OF MACHINERY IN OTHER WORDS, THE MACHINERY WAS PURCHASED ON CREDIT. IN THE PRESENT CASE, IT IS NOT CLEAR AS TO WHETHER THE ASSESSEE WAS THE OWNER OF THE MACHINERY OR NOT AND THAT THE MACHINERY WAS USED FOR THE BUSINESS PURPOSES OR NOT. IN MY OPINION, THIS ISSUE REQUIRES A FRESH ADJUDICATION AT THE LEVEL OF THE ITA NO.6667 /DEL /2013 VINAY SINDHU 5 AO. ACCORDINGLY, THE ISSUE RELATING TO THE DEPRECIATIO N OF THE MACHINERY IS SET ASIDE AND REMANDED BACK TO THE FILE OF THE AO TO BE ADJUDICATED AFRESH AFTER PROVIDING DUE AND REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 12 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTI CAL PURPOSES . ( ORDER PRON OUNCED IN THE COURT ON 23 /09 /2015 ) SD/ - (N. K. SAINI) ACCOUNTANT MEMBER DATED: 23 /09 /2015 *SUBODH* COPY FORWARDED TO: 1. APPELLANT 2. RES PONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR