Mohinder Kumar Jain, New Delhi V. ACIT, Circle-32(1), New Delhi

ITA 7158/DEL/2017

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 8024 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 8 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-08-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2013-2014
• Appeal Filed On: 29-11-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: AGAINST DATED PASSED
• Keywords: Business expenditure
• Section: 143(3)

Judgement Text

1 ITA NO. 7158/DEL/2017 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: E NEW DELHI BEFORE MS SUCHITRA KAMBLE, JUDICIAL ME MBER AND SH. PRASHANT MAHARISHI, ACCOUN TANT MEMBER I.T.A. NO. 7158/DEL/20 17 (A.Y 2013-14) (THROUGH VIDEO CON FERENCING) MOHINDER KUMAR JAIN, FARMHOUSE NO. B-2, PUSHPANJALI FARMS, KAPASHERA ROAD, NEW DELHI AAGPJ1935P (APPELLANT) VS ACIT CIRCLE-32(1) NEW DELHI (RESPONDENT) ORDER PER SUCHITRA KAMBLE, JM THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE O RDER DATED 27/09/2017 PASSED BY CIT(A)-11, NEW DELHI FOR ASSESSMENT YEAR 2013-14. 2. THE GROUNDS OF APPEAL ARE AS UNDER:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE ID. CIT(A) HAS GROSSLY ERRED IN CONFIRMING THE ADDITION OF RS. 6,0 8,753 TO THE RETURNED INCOME MADE BY THE A.O. ON ESTIMATED BASIS BY DISAL LOWING THE FOLLOWING EXPENSES:- PARTICULARS TOTAL AMOUNT 10% OF THE AMOUNT BUSINESS PROMOTION 8,29,406 82,941 CONVEYANCE 7,24,041 72,404 FESTIVAL EXPENSE 4,13,804 41,380 TELEPHONE & INTERNET 19,27,552 1,92,755 APPELLANT BY SH. SATISH KR. BHARATI, CA AND SH. SACHIN KUMAR SHARMA, CA RESPONDENT BY SH. GAURAV PUNDIR, SR. DR DATE OF HEARING 27.07.2021 DATE OF PRONOUNCEMENT 25.08.2021 2 ITA NO. 7158/DEL/2017 VEHICLE RUNNING AND MAINTENANCE 21,59,193 2,15,919 CHALLAN AND PENALTY 3,354 TOTAL 6,08,753 2. THAT THE ASSESSEE HAS SUOMOTO DISALLOWED A SUM O F RS. 4,20,232 OUT OF VEHICLE MAINTENANCE AND A SUM OF RS. 81,626 OUT OF TELEPHONE EXPENSES, WHICH IS EVIDENT FROM THE DETAIL OF DRAWINGS (ATTAC HED TO THE PERSONAL BALANCE SHEET AS ON 31.03.2013 ON RECORD) AND NO FURTHER DI SALLOWANCE IS CALLED FOR FROM ANY OF THE SIX EXPENDITURES IN DISPUTE. 3. THAT IT IS DENIED THAT THE AR OF THE A ADMITTE D THAT THOUGH THESE EXPENDITURE RELATED TO BUSINESS PURPOSES BUT ELEMEN T OF PERSONAL NATURE OUT OF THESE EXPENSES CANNOT BE RULED OUT. 4. THAT THE FIRST APPELLATE AUTHORITY HAS FAILED IN HIS DUTY TO APPLY JUST AND EQUITABLE MIND, WHILE DISMISSING THE APPEAL BY THE A. 5. THAT THE ORDER IS BASED ON SURMISES AND CONJECTU RES AND NOTHING POSITIVE OR CONCRETE EVIDENCE HAS BEEN PLACED ON RECORD, WHI CH IS THE REQUIREMENT OF THE LAW. 6. THE ASSESSEE PRAY THAT ENTIRE ADDITION OF RS. 6, 08,753 BE DELETED IN FULL ON MERITS TO MEET BOTH ENDS OF JUSTICE AND ON THE BASI S OF EQUITY ALSO. 3. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUF ACTURING AND EXPORTS OF READYMADE GARMENTS UNDER THE NAME AND STYLE OF M/S CHELSEA MILLS AS A PROPRIETOR. DURING THE YEAR UNDER CONSIDERATION, TH E ASSESSEE HAS EXPORT TURNOVER OF RS. 51,74,29,006/- AND FILED RETURN DEC LARING INCOME AT RS. 1,66,46,545. DURING ASSESSMENT PROCEEDINGS U/S 143( 2), THE ASSESSING OFFICER ON ESTIMATE BASIS, DISALLOWED 10% OF THE FOLLOWING EXPENSES DEBITED TO PROFIT AND LOSS ACCOUNT VIDE ORDERS U/S 143(3) DATED 21.03 .2016. PARTICULARS TOTAL AMOUNT 10% OF THE AMOUNT BUSINESS PROMOTION 8,29,406 82,941 CONVEYANCE 7,24,041 72,404 FESTIVAL EXPENSE 4,13,804 41,380 TELEPHONE & INTERNET 19,27,552 1,92,755 VEHICLE RUNNING AND MAINTENANCE 21,59,193 2,15,919 CHALLAN AND PENALTY 3,354 TOTAL 6,08,753 3 ITA NO. 7158/DEL/2017 4. BEING AGGRIEVED BY THE ASSESSMENT ORDER, TH E ASSESSEE FILED APPEAL BEFORE THE CIT(A). THE CIT(A) DISMISSED THE APPE AL OF THE ASSESSEE. 5. THE LD. AR SUBMITTED THAT THE ASSESSEE AC TUALLY INCURRED THESE EXPENDITURES AND THESE ARE VERY MUCH RELEVANT AND N ECESSARY FOR CARRYING OUT THE EXPORT BUSINESS. THE ASSESSING OFFICER FAILED T O POINT OUT ANY SPECIFIC MISTAKE OR CREATE ANY SPECIFIC EVIDENCE FROM THE BO OKS OF ACCOUNTS PRODUCED. THE PENALTY OF RS. 3354/- IS IN THE NATURE OF DEMUR RAGE FOR LATE PERFORMANCE AND NOT PENALTY FOR INFRINGEMENT OF LAW. THE LD. AR FURTHER SUBMITTED THAT IT IS ALSO DENIED THAT THE AR HAS ADMITTED THAT THOUGH T HESE EXPENSES RELATE TO BUSINESS PURPOSE, BUT ELEMENT OF PERSONAL NATURE OU T OF THIS EXPENSES CANNOT BE RULED OUT. IT IS NOT POSSIBLE TO MAINTAIN LOG BO OKS FOR SUCH A NUMBER OF CARS/VEHICLES BECAUSE THE ASSESSEE IS A PRIVATE ENT ERPRISE HAVING LIMITED RESOURCES AND ALWAYS ON TOES FOR MAKING EXPORT SHIP MENTS. THE LD. AR FURTHER SUBMITTED THAT THE PERSONAL BALANCE SHEET AND THE D RAWINGS FROM THE BANK ACCOUNT OF THE ASSESSEE WAS ALSO NOT CONSIDERED BY THE ASSESSING OFFICER. THE ASSESSEE HAS SUO MOTO DISALLOWED AND DEBITED TO DRA WING ACCOUNT A SUM OF RS. 5,01,858 ON ACCOUNT OF POSSIBLE PERSONAL ELEMENT. 6. THE LD. DR RELIED UPON THE ASSESSMENT ORDER AND THE ORDER OF THE CIT(A). 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED TH E MATERIAL AVAILABLE ON RECORD. DURING THE COURSE OF HEARING, THE LD. AR DEMONSTRATED BEFORE US THAT THESE ARE PURELY BUSINESS EXPENSES. BY DISALLOWING 10% OF ALL THESE EXPENSES WITHOUT ANY BASIS OR ANY FINDING BY THE ASSESSING O FFICER AS WELL AS CIT(A) IS CONTRARY TO THE PROVISIONS OF LAW. IN FACT, THE AS SESSING OFFICER AS WELL AS THE CIT(A) IGNORED THE EVIDENCES BROUGHT ON RECORD BY T HE ASSESSEE DURING THE ASSESSMENT PROCEEDING SUCH AS PERSONAL BALANCE SHEE T AND DRAWINGS FROM THE BANK ACCOUNT, BANK STATEMENTS AND THE BUSINESS OUTL ET OF THE ASSESSEE COMPANY FOR EXPORT OF READYMADE GARMENTS. THUS, THE CIT(A) WAS NOT RIGHT IN CONFIRMING THE AD-HOC/ESTIMATED DISALLOWANCE OF THE EXPENDITURE WHICH WAS 4 ITA NO. 7158/DEL/2017 PURELY THAT OF BUSINESS EXPENSES. HENCE, THE APPEAL OF THE ASSESSEE IS ALLOWED. 8. IN RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 25TH DAY OF AUGUST, 2021. SD/- SD/- (PRASHANT MAHARISHI) (SUCH ITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEM BER DATED: 25/08/2021 R. NAHEED * COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGIS TRAR ITAT NEW DELHI