Ms/ Karan Apartments & Complexes Pvt. Ltd., Chandigarh V. DCIT, Chandigarh

ITA 702/CHANDI/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 63898 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 26-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N K SAINI
• Keywords: Business income; Opportunity of being heard; Additional evidence

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES A CHANDIGARH BEFORE SHRI H.L.KARWA, HON'BLE, VICE PRESIDENT AND SHRI T.R.SOOD, ACCOUNTANT MEMBER ITA NO. 702/CHD/2012 ASSESSMENT YEAR: 2007-08 M/S KARAN APARTMENTS & COMPLEXES VS THE DCIT, PVT. LTD., CHANDIGARH CIRCLE 1(1), CHANDIGARH PAN NO. AACCK3922A (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI VINEET KRISHAN RESPONDENT BY : SHRI N.K. SAINI DATE OF HEARING : 30.08.2012 DATE OF PRONOUNCEMENT : 31.08.2012 ORDER PER H.L.KARWA, VP THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF CIT(A), CHANDIGARH DATED 24.4.2012 RELATING TO ASSE SSMENT YEAR 2007-08. 2. IT IS OBSERVED THAT THERE IS A DELAY OF ONE DAY IN FILING THE APPEAL. THE ASSESSEE HAS SUBMITTED AN APPLICATION FOR CONDONATI ON OF DELAY IN FILING THE APPEAL. IT IS STATED THAT DUE TO MISTAKE ON THE P ART OF ASSESSEES COUNSEL THE LAST DATE FOR FILING OF APPEAL WAS WRONGLY CALCULAT ED WHICH RESULTED IN DELAY OF ONE DAY. WE ARE SATISFIED THAT THERE WAS A REAS ONABLE CAUSE WHICH 2 PREVENTED THE ASSESSEE FROM FILING THE APPEAL IN TI ME, AND HENCE, WE CONDONE THE DELAY AND ADMIT THE APPEAL FOR DECIDING THE SAM E ON MERIT. 3. GROUND NOS. 1, 3, 4 AND 5 OF THE APPEAL ARE GENE RAL IN NATURE AND HENCE NO COMMENTS ARE BEING GIVEN. 4. THE ONLY EFFECTIVE GROUND RAISED BY THE ASSESSEE IN THIS APPEAL IS GROUND NO.2, WHICH READS AS UNDER:- 2. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) GRAVELLY ERRED IN UPHOLDING THE DISALLOWANCE OF RS. 5,23,100/- OUT OF THE TOTAL DISALLOWANCE OF RS. 11,48,069/- MADE BY THE LD. ASSESSING OFFICER ON AC COUNT OF FOREIGN TRAVELLING EXPENSES . 5. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE SE IS A INDUSTRIAL CONSULTANT AND HAS SHOWN BUSINESS INCOME AT RS. 87, 65,420/- AND INCOME FROM CAPITAL GAIN AT RS. 1,49,71,250/-. THE ASSES SING OFFICER DISALLOWED A SUM OF RS. 11,48,069/- CLAIMED BY THE ASSESSEE ON A CCOUNT OF FOREIGN TRAVEL EXPENSES FOR THE REASONS GIVEN IN PARA 3.1 OF THE A SSESSMENT ORDER DATED 23.12.2009. 6. ON APPEAL, THE CIT(A) SUSTAINED THE DISALLOWANCE OF RS. 5,23,100/- OUT OF TOTAL IS OF RS. 11,48,069/- MADE BY THE ASSESSIN G OFFICER ON ACCOUNT OF FOREIGN TRAVEL EXPENSES. THE RELEVANT FINDINGS OF T HE CIT(A) ARE AS UNDER:- 3.3 I HAVE CONSIDERED THE SUBMISSION OF THE LD. C OUNSEL FOR THE APPELLANT. THE ENTIRE AMOUNT WAS DISALLOWED BY THE ASSESSING OFFICER, BECAUSE THE APPELLANT COULD NOT FILE THE DETAILS OF BUSINESS PROCURED FROM FOREIGN COUNTRIES ON 3 ACCOUNT OF SUCH VISITS, BUT WHOLE OF THE AMOUNT DID NOT PERTAIN TO FOREIGN TRAVELLING EXPENSES. THE APPELLA NT HAS TRIED TO EXPLAIN THAT THE JOB OF THE APPELLANT IS T O PROCURE BUSINESS FOR VARIOUS COMPANIES AND IN LIAISON ACTIV ITIES, THE APPELLANT COMPANY FUNCTIONS AS COMMUNICATION CHANNEL BETWEEN THE REALTORS AND THE PARTIES IN IND IA AND ABROAD, BUT THE APPELLANT HAD CHOSEN NOT TO FURNISH ANY DETAILS OF FOREIGN TRAVELLING EXPENSES BEFORE THE A SSESSING OFFICER. IN ANY CASE, THE DETAILS FURNISHED NOW ARE IN THE FORM OF ADDITIONAL EVIDENCES AND NO REASON HAS BEEN GIVEN FOR NOT FILING THE SAME BEFORE THE ASSESSING OFFICER AND SO THESE DOCUMENTS CANNOT BE ADMITTED UNDER RUL E 46A, MOREOVER, THE APPELLANT HAD NOT EXPLAINED AS T O HOW THE VISITS OF DIRECTORS WERE HELPFUL IN EXPANDING T HE BUSINESS OF THE APPELLANT COMPANY. HENCE, OUT OF TO TAL DISALLOWANCE MADE OF RS. 11,48,069/-, THE EXPENDITU RE MADE ON ACCOUNT OF FOREIGN TRAVELLING OF RS. 5,23,1 00 - IS CONFIRMED. THE REST OF THE AMOUNT PERTAINING TO IN LAND TRAVELLING OF RS. 6,24,969/- (RS. 11,48,069 - 5,23 ,100 ) IS DELETED. GROUND OF APPEAL NO. 2 IS PARTLY ALLOWED . 7. WE HAVE HEARD THE RIVAL SUBMISSIONS. IN THIS CA SE, THE ASSESSING OFFICER HAS TREATED THE ENTIRE EXPENSES OF RS. 11,4 8,069/- SPENT ON FOREIGN TOUR, WHICH WAS NOT CORRECT. HOWEVER, THE ASSESS EE HAS INCURRED EXPENDITURE OF RS. 5,23,100/- ON ACCOUNT OF FOREIGN TRAVELLING AND THE BALANCE AMOUNT OF RS. 6,24,969/- PERTAIN TO INLAND TRAVELLI NG. WHILE DECIDING THE APPEAL, THE CIT(A) HAS DELETED THE ADDITION OF RS. 6,24,969/- PERTAINING TO THE INLAND TRAVELLING. IN THIS CASE, THE ISSUE BEF ORE US RELATES TO DISALLOWANCE OF RS. 5,23,100/- CONFIRMED BY THE CIT(A) ON ACCOU NT OF FOREIGN TRAVELLING EXPENSES. SHRI VINEET KRISHAN, LD. COUNSEL FOR THE ASSESSEE INVITED OUR ATTENTION TO PARA 3.3 OF THE CIT(A)S ORDER WHEREIN THE CIT(A) HAS OBSERVED THAT THE DETAILS FURNISHED NOW ARE IN THE FORM OF A DDITIONAL EVIDENCE AND NO REASONS HAS BEEN GIVEN FOR NOT FILING THE SAME BEFO RE THE ASSESSING OFFICER, SO THESE DOCUMENTS CANNOT BE ADMITTED UNDER RULE 46 A. ACCORDING TO SHRI VINEET KRISHAN, LD. COUNSEL FOR THE ASSESSEE THESE OBSERVATIONS ARE FACTUALLY INCORRECT BECAUSE NO NEW DOCUMENTS WERE SUBMITTED B EFORE THE CIT(A). 4 HOWEVER, ONLY THOSE DOCUMENTS WERE FILED BEFORE THE CIT(A) WHICH WERE FILED DURING THE COURSE OF ASSESSMENT PROCEEDINGS B EFORE THE ASSESSING OFFICER. IT APPEARS THAT WITHOUT EXAMINING THE DOC UMENTS, THE CIT(A) REACHED AT A CONCLUSION THAT DOCUMENTS FILED BY THE ASSESSEE WERE IN THE FORM OF ADDITIONAL EVIDENCE. FROM THE ABOVE, IT IS CRYS TAL CLEAR THAT BOTH THE AUTHORITIES BELOW HAVE NOT CORRECTLY APPRECIATED TH E FACTS OF THE PRESENT CASE VIS A VIS DOCUMENTARY EVIDENCE FILED BY THE ASSESSE E BEFORE THEM. AS WE HAVE ALREADY OBSERVED HEREINABOVE THAT THE ASSESSING OFF ICER HAS WRONGLY TREATED THE EXPENDITURE OF RS. 11,48,069/- INCURRED BY THE ASSESSEE ENTIRELY ON ACCOUNT OF FOREIGN TRAVELLING. IN FACT, THE ASSESS EE HAS CLAIMED RS. 5,23,100/- ONLY ON ACCOUNT OF FOREIGN TRAVELLING EX PENSES. WE HAVE ALSO OBSERVED HEREINABOVE THAT WHILE DECIDING THE APPEAL OF THE ASSESSEE, THE CIT(A) WITHOUT EXAMINING THE DOCUMENTS SUBMITTED BY THE ASSESSEE HASTILY REACHED AT A CONCLUSION THAT THE DOCUMENTS SUBMITTE D BY THE ASSESSEE ARE IN THE FORM OF ADDITIONAL EVIDENCE BEFORE HIM. AS CL AIMED BY THE LD. COUNSEL FOR THE ASSESSEE NO ADDITIONAL EVIDENCE WAS FILED B EFORE THE CIT(A). IN FACT, THE DOCUMENTS FILED BEFORE THE CIT(A) WERE SAME WHI CH WERE FILED BEFORE THE ASSESSING OFFICER. CONSIDERING THE ENTIRE FACT S AND CIRCUMSTANCES OF THE PRESENT CASE, WE THINK IT APPROPRIATE TO SET ASIDE THE ORDER OF CIT(A) ON THIS ISSUE AND REMAND THE MATTER TO THE FILE OF THE ASSE SSING OFFICER WITH A DIRECTION TO DECIDE THE LIMITED ISSUE RELATING TO T HE EXPENDITURE AMOUNTING TO RS. 5,23,100/- CLAIMED BY THE ASSESSEE ON ACCOUNT O F FOREIGN TOUR AFRESH IN ACCORDANCE WITH LAW AFTER AFFORDING DUE AND REASONA BLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. FOR STATISTICAL PURPOSES, THE APPEAL IS ALLOWED. 5 8. IN THE RESULT, THE APPEAL IS ALLOWED FOR STATIST ICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 31 ST DAY OF AUGUST, 2012 SD/- SD/- (T. R. SOOD) (H.L.KARWA) ACCOUNTANT MEMBER VICE PRESIDENT DATED : 31 ST AUGUST, 2012 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR TRUE COPY BY ORDER ASSISTANT REGISTRAR