M/s. T R Chadha & Co., New Delhi V. ITO, New Delhi

ITA 715/DEL/2015

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 4119 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 11 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-01-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Assessment Year: 2011-2012
• Appeal Filed On: 05-02-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SU RENDRA KUMAR
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D, NEW DELHI BEFORE SHRI R. K. PANDA, ACCOUNTANT MEMBER AND SMT. BEENA A. PILLAI, JUDICIAL MEMBER ITA NO.715/DEL/2015 ASSESSMENT YEAR : 2011-12 T. R. CHADHA & CO., B- 30, KUTHIALA BUILDING, CONNAUGHT PLACE, NEW DELHI. VS. ITO, CIRCLE- 61(1), NEW DELHI. PAN : AAAFT1655Q (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SURENDRA KUMAR, CA DEPARTMENT BY : SHRI AMIT JAIN, SR.DR DATE OF HEARING : 11-01-2018 DATE OF PRONOUNCEMENT : 16-01-2018 O R D E R PER R. K. PANDA, AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER DATED 27.11.2014 OF CIT(A)- XX, NEW DELHI RELATING TO ASS ESSMENT YEAR 2011-12. 2. GROUND NO.1 RELATING TO ADDITION OF RS.21,329/- BY THE ASSESSING OFFICER U/S 14A R.W. RULE 8D WAS NOT PRESSED BY THE LD. COU NSEL FOR THE ASSESSEE DUE TO SMALLNESS OF THE AMOUNT FOR WHICH LD. DR HAS NO OBJ ECTION. ACCORDINGLY, THE SAME IS DISMISSED AS NOT PRESSED. 3. IN GROUND NO.2, THE ASSESSEE HAS CHALLENGED THE ORDER OF THE LD. CIT(A) IN UPHOLDING THE AD-HOC DISALLOWANCE OF RS.1,38,527/- BEING 1/10 TH OF TOTAL ENTERTAINMENT EXPENSES. 2 ITA NO.715/DEL/2015 4. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE IS A CHARTERED ACCOUNTANT FIRM AND DERIVES INCOME FROM PROFESSION. IT FILED ITS RETURN OF INCOME ON 28.09.2011 DECLARING TOTAL INCOME AT RS.3,45,97,940 /-. THE ASSESSING OFFICER DURING THE ASSESSMENT PROCEEDINGS OBSERVED THAT THE ASSESSEE HAS CLAIMED AN AMOUNT OF RS.13,85,272/- UNDER THE HEAD ENTERTAINM ENT EXPENSES. HE OBSERVED FROM THE BILLS AND VOUCHERS PRODUCED BEFOR E HIM THAT THESE EXPENSES ARE IN THE NATURE OF BILLS OF VARIOUS RESTAURANTS A ND CLUBS. SINCE ACCORDING TO THE ASSESSING OFFICER PERSONAL ELEMENT OF THESE EXPENSE S CANNOT BE RULED OUT, HE DISALLOWED AN AMOUNT OF RS.1,38,527/- ON AD-HOC BAS IS BEING 10% OF SUCH EXPENDITURE. 5. IN APPEAL, LD. CIT(A) UPHELD THE ACTION OF THE A SSESSING OFFICER. 6. AGGRIEVED WITH SUCH ORDER OF THE LD. CIT(A), THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 7. LD. COUNSEL FOR THE ASSESSEE FILED A COPY OF THE ORDER OF THE LD. CIT(A) FOR ASSESSMENT YEAR 2012-13 AND SUBMITTED THAT UNDER ID ENTICAL CIRCUMSTANCES LD. CIT(A) HAS DELETED THE DISALLOWANCE MADE BY THE ASS ESSING OFFICER ON THE GROUND THAT THE ASSESSING OFFICER HAS NOT GIVEN ANY COGENT REASON ABOUT ANY DISCREPANCY THAT HE HAS FOUND DURING THE ASSESSMENT PROCEEDINGS. FURTHER, HE HAS HELD THAT ENTERTAINMENT EXPENSES IS LEGITIMATE EXPENDITURE IN THE LINE OF PROFESSION. IN THE PRESENT YEAR ALSO, THE ASSESSIN G OFFICER HAS NOT GIVEN ANY COGENT REASON ABOUT ANY DISCREPANCY THAT HE HAS FOU ND DURING THE YEAR. HE SUBMITTED THAT THE ACCOUNTS OF THE ASSESSEE ARE AUD ITED AND VOUCHERS ARE 3 ITA NO.715/DEL/2015 MAINTAINED GIVING FULL DETAILS OF SUCH EXPENSES. T HE EXPENSES INCURRED ARE IN THE NORMAL COURSE OF BUSINESS/PROFESSION. THEREFOR E, NO PART OF THE EXPENDITURE CAN BE DISALLOWED. HE ALSO RELIED ON VARIOUS DECIS IONS FILED ON PAPER BOOK. 8. LD. DR ON THE OTHER HAND HEAVILY RELIED ON THE O RDER OF THE LD. CIT(A). 9. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY B OTH THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE LD. CIT (A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIOUS DECISIONS CITED BEFORE US. WE FIND THE ASSESSING OFFICER DISALLOWE D AN AMOUNT OF RS.1,38,527/- ON AD-HOC BASIS BEING 1/10 TH OF THE TOTAL EXPENSES ON THE GROUND THAT THE ASSESSEE HAS INCURRED SUCH EXPENSES IN VAR IOUS RESTAURANTS AND CLUBS AND PERSONAL ELEMENT CANNOT BE RULED OUT. WE FIND THE LD. CIT(A) UPHELD THE ADDITION MADE BY THE ASSESSING OFFICER. A PERUSAL OF THE ASSESSMENT ORDER SHOWS THAT THE ASSESSING OFFICER HAS NOT POINTED OU T ANY DISCREPANCY THAT HE HAS FOUND DURING THE ASSESSMENT PROCEEDINGS AND THE DIS ALLOWANCE MADE BY HIM IS, IN OUR OPINION, BASED ON SURMISES AND CONJECTURES. HE HAS NOT PINPOINTED A SINGLE BILL AND VOUCHER WHICH IS NOT GENUINE. FURT HER, THE ASSESSEE IS A REPUTED CHARTERED ACCOUNTANT FIRM WITH HUGE PROFESSIONAL RE CEIPTS EXCEEDING MORE THAN RS.10 CRORES PER ANNUM AND THE EXPENDITURE INC URRED TOWARDS ENTERTAINMENT EXPENSES IS VERY MEAGER CONSIDERING T HE VOLUME OF BUSINESS. SINCE THE BOOKS OF ACCOUNTS ARE MAINTAINED WHICH AR E DULY AUDITED AND NO SUCH DISCREPANCY HAVE BEEN POINTED OUT BY THE AUDITORS A ND SINCE THE ASSESSING OFFICER HAS NOT GIVEN ANY SPECIFIC INSTANCE OF ANY EXPENDITURE WHICH IS NOT 4 ITA NO.715/DEL/2015 GENUINE, THEREFORE, NO DISALLOWANCE IN OUR OPINION SHOULD HAVE BEEN MADE UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE. FUR THER, IN THE SUBSEQUENT YEAR, LD. CIT(A) HAS DELETED SUCH DISALLOWANCE MADE BY TH E ASSESSING OFFICER AND A STATEMENT WAS MADE BY THE LD. COUNSEL FOR THE ASSES SEE AT BAR THAT THE REVENUE HAS NOT FILED ANY APPEAL AGAINST THE ORDER OF THE L D. CIT(A). IN VIEW OF THE ABOVE DISCUSSION AND CONSIDERING THE TOTALITY OF TH E FACTS OF THE CASE, WE ARE OF THE CONSIDERED OPINION THAT THE DISALLOWANCE OF 1/1 0 TH OF THE EXPENDITURE BY THE ASSESSING OFFICER AND UPHELD BY THE LD. CIT(A) IS N OT JUSTIFIED. WE, THEREFORE, SET-ASIDE THE ORDER OF THE LD. CIT(A) AND DIRECT TH E ASSESSING OFFICER TO DELETE THE DISALLOWANCE. THE GROUNDS RAISED BY THE ASSESS EE ARE ACCORDINGLY ALLOWED. 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 16 TH JANUARY, 2018. SD/- SD/- (BEENA A. PILLAI) (R. K. PANDA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 16-01-2018. SUJEET COPY OF ORDER TO: - 1) THE APPELLANT 2) THE RESPONDENT 3) THE CIT 4) THE CIT(A) 5) THE DR, I.T.A.T., NEW DELHI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, NEW DELHI