Smt. Madhuri P. Kawadia, Ahmedabad V. The Dy. CIT, Circle-3(1)(2), Ahmedabad

ITA 735/AHD/2016

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 2779 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 11 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 23-03-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: P B PARMAR ADITI SHETH
• Keywords: Business income; Corroborative evidences; Deemed dividend; Accommodation entries; Capital expenditure; TDS
• Section: 143(3); 2(22)(e); 143(2); 44AB; 48; 13; 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH BEFORE: SHR I KUL BHARAT , JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER SMT. MATH URI PRADIP KAWDIYA, C - 302, PRES T I GE TOWER, B/H, JUDGES BUNGLOW, BODAKDEV, AHMEDABAD - 3800054 PAN: AEDPK8810M (APPELLANT) VS THE ACIT , CIRCLE - 5 , AHMEDABAD (RESPONDENT) REVENUE BY : S H RI VIDHYUT TRIVEDI , SR. D . R. ASSESSEE BY: SHRI P.B. PARMAR, ADITI SHETH , A.R S . DATE OF HEARING : 26 - 0 2 - 2 020 DATE OF PRONOUNCEMENT : 28 - 02 - 2 020 / ORDE R P ER : AMARJIT SINGH, ACCOUNTANT MEMBER : - THESE TWO APPEAL S ARE FILED BY THE ASSESSEE AGAINST THE DECISION OF LD. CIT(A) OF TWO DIFFERENT ASSESSMENT YEARS IN SUSTAINING THE VARIOUS DISALLOWANCES MADE BY THE ASSESSING OFFICER. SINCE THE COMMON ISSUE ON IDENTICAL FACTS ARE INVOLVED IN THESE APPEALS THEREFORE THESE APPEALS ARE ADJUDICATED TOGETHER BY THIS COMMON ORDER. ITA NO. 1551/AHD2015 I T A NO S . 1551/AHD/2015 & 735 / A HD/20 16 A SS ESSMENT YEAR 2011 - 12 & 2012 - 13 I.T.A NO S. 1551 /AHD /2015 & 735 /AHD/20 16 A.Y. 2011 - 2012 & 2012 - 13 PAGE NO SMT. MADHURI PRADIP KAW A DIYA VS. ACIT 2 2. THE FACT IN BRIEF IS THAT RETURN OF INCOME DECLARING INCOME OF RS. 66 , 65 , 590/ - WAS FILED ON 28 TH SEP, 2011. THE CASE WAS SUBJECT TO SCRUTINY AND NOTICE U/S. 143(2) OF THE ACT WAS ON 4 TH JULY, 2013. THE ASSESSMENT U/S. 143(3) OF THE ACT WAS FINALIZED ON28TH FEB, 2014 AND TOTAL INCOME WAS ASSESSED AT RS. 1 , 91 , 99 , 231/ - . THE REMAINING FACTS OF THE CASE ARE DISCUSSED WHILE ADJUDICATING THE GROUNDS OF APPEALS OF THE ASSESSEE AS UNDER: - GROUND NO. 1(DISALLOWANCE O F COMMISSION EXPENSES OF RS. 59 , 600/ - ) 3. DURING THE COURSE OF ASSES SMENT, THE ASSESSING OFFICER NOTICED THAT ASSESSEE HAS CLAIMED COMMISSION EXPENSES TO T HE AMOUNT OF R S. 59,60 0/ - . T HE ASSESSING OFFICER HAS ASKED TO THE ASSESSEE TO FURNISH SUPPORTING DETAIL TO PROVE THE GENUINENESS OF COMMISSION EXPENSES. HOWEVER, THE ASSESSEE HAS NOT FURNISHED THE REQUIRED DETAILS I.E. THE LIST OF COMMISSION AGENTS, PAN , DEDUC TION OF TDS, CONFIRMATION ETC. E VEN THE ASSESSEE HAS NOT SUBSTANTIATED THE NATURE OF SERVICES RENDERED BY THE COMMISSION AGENTS. CONSEQUENTLY, THE CLAIM OF COMMISSION EXPENSES WAS DISALLOWED. 4. THE ASSESSEE HAS FILED APPEAL BEFORE THE LD. CIT(A). THE LD. CIT(A) HAS DISMISSED THE APPEAL OF THE ASSESSEE REITERATING THE FACTS REPORTED BY THE ASSESSING OFFICER. 5. WE HAVE HEARD RIVAL CONTENTION ON THIS ISSUE. IT IS NOTICED THAT ASSESSEE HAS NOT FURNISHED BASIC DETAIL I.E. BILL/VOUCHER, PAN, LIST OF COMMISSION AGENTS AND DETAIL OF SERVICES RENDERED FO R WHICH COMMISSION WAS PROVIDED; I N SPITE OF G IVING A NUMBER OF OPPORTUNITIES. T HE ASSESSEE HAS ALSO FAILED TO FURNISH SUCH BASIC DETAIL BEFORE THE LD. CIT(A) . E VEN DURING THE COURSE OF I.T.A NO S. 1551 /AHD /2015 & 735 /AHD/20 16 A.Y. 2011 - 2012 & 2012 - 13 PAGE NO SMT. MADHURI PRADIP KAW A DIYA VS. ACIT 3 AP PELLATE PROCEEDINGS BEFORE US, THE ASSESSEE HAS NOT FILED ANY SUCH DETAIL. THEREFORE, WE DO NOT FIND ANY REASON TO INTERFERE IN THE FINDING OF LD. CIT(A). ACCORDINGLY, THIS GROUND OF APPEAL OF THE ASSESSEE IS DISMISSED. GROUND NO. 2 (DISALLOWANCE OF RS . 2,36,986/ - U/S. 37 OF THE ACT) 6. DURING THE COURSE OF ASSES SMENT, THE ASSESSING OFFICER NOTICED THAT ASSESSEE HAS CLAIMED TOTAL AMOUNT OF RS. 2 , 36 , 986/ - AS TRAVELLING AND VEHICLE EXPENSES U/S. 37 OF THE ACT. ON QUERY, THE ASSESSEE HAS EXPLAINED THAT HE HAS INCURRED TRAVELLING AND VEHICLE EXPENSES FOR PURPOSE OF BUSINESS AND RE NTING CAR TO INDIA CEMENT LTD. 7. THE ASSESSEE HAS NOT AGREED WITH SUBMISISONFO THE ASSESSEE STATING THAT NO EVIDENCE WERE PRODUCED. THEREFORE, CLAIM OF THE ASSESSEE WAS DI SALLOWED. 8. AGGRIEVED ASSESSEE HAS FILED APPEAL BEFORE THE LD. CIT(A). THE LD. CIT(A) HAS DISMISSED THE APPEAL OF THE ASSESSEE STATING THE AT THE TIME OF ASSESSMENT PROC EEDINGS, THE ASSESSEE HAS NOT FURNISHED ANY SUPPORTING EVIDENCES PERTAINING TO EXPENSES CLAIMED. 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. THE ASSESSING OFFICER HAS DISALLOWED THE TRAVSELLING EXPENSES TO THE AMOUT FOR RS. 88881/ - AND FUEL EXPENSES TO THE AMOUNT OF RS. 1 , 48 , 105/ - ON THE GROUND T HAT SUPPORTING BILL AND VOUCHER OF INCURRING OF THESE EXPENSES WERE NOT FURNISHED BY THE ASSESSEE. I.T.A NO S. 1551 /AHD /2015 & 735 /AHD/20 16 A.Y. 2011 - 2012 & 2012 - 13 PAGE NO SMT. MADHURI PRADIP KAW A DIYA VS. ACIT 4 10. DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE US, THE LD. COUNSEL HAS REFERRED PAGE N O. 13 OF THE PAPER BOOK AS THE LEDGER ACCOUNT OF TRAVELING E XPENSES AND STATED THAT SUCH EXPENSES WERE DULY AUDITED U/S. 44AB OF THE ACT AS PER THE AUDIT REPORT PLACED AT PAGE NO. 25 TO 37 OF THE PAPER BOOK. SIMILARLY, IN RESPECT OF FUE L EXPENSES, THE LD. COUNSEL HAS REFERRED PAGE NO. 14 OF THE PAPER BOOK PERTAINI NG TO THE LEDGER ACCOUNT OF SUCH EXPENSES AND STATED THAT THESE EXPENSES WERE ALSO DULY AUDITED AS PER AUDIT REPORT U/S. 44AB OF THE ACT. WE HAVE GONE THROUGH THE LEDGER ACCOUNT PLACE D IN THE PAPER BOOK AND IT IS NOTICED THAT ASSESSEE HAS SIMPLY STATED T H AT PAYMENT WAS MADE MOSTLY IN CASH ON DIFFERENT DATES BUT NO OTHER RELEVANT SUPPORTING EVIDENCES LIKE BILL/VOUCHER AND NATURE OF EXPENSES INCURRED WERE FURNISHED. AFTER CONSIDERING THE FACT THAT ASSESSEE HAS SHOWN CAR HIRING INCOME TO THE AMOUNT OF RS. 3 , 34 , 626/ - IN THE SCHEDULE K PLACED IN TH E PAPER BOOK AS BUSINESS INCOME, THEREFORE , IT IS NOT JUSTIFIED TO DISALLOW 100% EXPENSES INCURRED UNDER THE HEAD TRAVELLING AND FOOD EXPENSES. CONSIDERING THE CAR RENTAL INCOME AND THE INCOME EARNED FROM BUSINESS WE ARE OF THE VIEW THAT IT IS REASONABLE TO RESTRICT THE DISALLOWANCE TO THE EXTENT OF 30% OF SUCH EXPENSES FOR WANT OF RELEVANT PROPER BILL AND VOUCHER. ACCORDINGLY, WE RESTRICT THE DISALLOWANCES UND ER THE HEAD TRAVELLING AND FUEL EXPENSES TO RS. 72,000/ - , THEREFORE, THIS GROUND OF THE APPEAL IS ALLOWED. GROUND NO. 3(ADDITION OF RS. 39 , 527 U/S. 2(22)(E) OF THE ACT) 11 . DURING THE COURSE OF ASSES SMENT, THE ASSESSING OFFICER NOTICED THAT ASSESSEE HAD RECEIVED LOAN/ADVANCES TO THE TOTAL AMOUNT OF RS. 56 , 89 , 212/ - FROM THE COMPANY M/S. OMKARA CONCRETE AND MACHINERIES PVT. LTD. AND THE ASSESSEE WAS HOLDING MORE THAN 50% SHARE OF THE SAID COMPANY. THEREFORE, I.T.A NO S. 1551 /AHD /2015 & 735 /AHD/20 16 A.Y. 2011 - 2012 & 2012 - 13 PAGE NO SMT. MADHURI PRADIP KAW A DIYA VS. ACIT 5 THE ASSESSING OFFICER HAS ATTRACTED PROVISION OF SECTION 2(2)(E) OF THE ACT AND MADE ADDITION TO TH E AMOUNT OF RS. 56 , 8 9 , 201/ - AS DEEMED DIVIDEND TO THE TOTAL INCOME OF THE ASSESSEE. 12. THE ASSESSEE HAS PREFERRED APPEAL BEFORE THE LD. CIT(A). THE LD. CIT(A) HAS RESTRICTED ADDITION TO THE EXTENT OF RS. 39 , 527/ - TO THE ACCUMULATED PROFIT OF M/S. O MKARA CONCRETE AND MACHINERIES PVT. LTD.. 13. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATIEREAL ON RECORD. THE ASSESSING OFFICER HAS MADE ADDITION OF RS. 5,68,921/ - U/S. 2(2)(E) IN RESPECT OF FUND RECEIVED BY ASSESSEEE FROM M/S. OMKARA CONCRETE AND MACHINERIES PVT. LTD WHEREIN THE ASSESSEE WAS HOLDING 10% OF SHARES OF THAT COMPANY. THE LD. CIT(A) HAS RESTRICTED THE DISALLOWANCE TO THE EXTENT OF RS. 39127/ - BEING AMOUNT OF RESERVE AND SURPLUS OF THE COMPANY AS ON 31 ST MARCH, 2011. DUR ING THE COURSE OF APPELLATE PROCEEDINGS BEFORE US, THE LD. COUNSEL HAS CONTENDED THAT THESE TRANSACTIONS OF THE ASSESSEE COMPANY WITH M/S. OMKARA CONCRETE AND MACHINERIES PVT. LTD. WAS IN THE NATURE OF RENTAL CURRENT ACCOMMODATION ADJUSTMENT ENTRIES AND H E HAS REFERRED PAGE NO. 5 OF THE PAPER BOOK CONTAINING LEDGER ACCOUNT OF THE COMPANY IN THE BOOKS OF ACCOUNT OF THE ASSESSEE DEMONSTRATING THAT THERE WERE NUMBER OF DEBIT AND CREDIT ENTRIES. AFTER CONSIDERING THE ABOVE SUBMISSION OF THE ASSESSSEE, IT IS N OTICED THAT THERE ARE LARGE NUMBER OF ENTRIES REFLECTED IN THE LEDGER ACCOUNT OF THE COMPANY AS POINTED OUT BY THE LD. COUNSEL AS ADJUSTMENT ENTRIES. AFTER CONSIDERING THE NATURE OF TRANSACTION BEING RUNNING ACCOUNT AS OF THE NATURE OF ADJUSTMENT ENTRIES, WE DELETE THE I.T.A NO S. 1551 /AHD /2015 & 735 /AHD/20 16 A.Y. 2011 - 2012 & 2012 - 13 PAGE NO SMT. MADHURI PRADIP KAW A DIYA VS. ACIT 6 IMPUGNED ADDITION. THEREFORE, THIS GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED. ITA NO. 735/AHD/2015 14. THIS APPEAL OF THE ASSESSEE IS PERTAINED TO ASSESSMENT YEAR 2012 - 13 BASED ON SIMILAR FACT AND ISSUES AS ADJUDICATED ABOVE IN THE AP PEAL OF THE ASSESSEE FOR ASSESSMENT YEAR 2011 - 12 VIDE ITA 1551/AHD/2015 ABOVE IN THIS ORDER. GROUND NO. 1 (DISALLOWANCE OF COMMISSION EXPENSES OF RS. 13,550/ - 15. AS ADJUDICATED ABOVE IN THIS ORDER, THE ASSESSEE HAS FAILED TO FURNISH THE BASIC DETAIL I .E. BILL/VOUCHER, DETAIL OF COMMISSION EXPENSES AND DETAIL OF RENTAL SERVICES ETC. EVEN BEFORE US DURING THE COURSE OF APPELLATE PROCEEDINGS, THEREFORE, THIS GROUND OF APPEAL OF THE ASSESSEE IS DISMISSED. GROUND NO. 2 (PRE EMI INTEREST) 16. DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE US, THE ASSESSEE HAS MADE ALTERNATIVE PLEA BEFORE THE ASSESSING OFFICER THAT EXPENDITURE IN THE FORM OF PRE EMI INTEREST I.E. CAPITALIZED, LD. CIT(A) HAS TREATED THE EMI INTEREST AS CAPITAL EXPENDITURE INSTEAD OF REVE NUE EXPENDITURE AS PER THE ALTERNATIVE PLEA OF THE ASSESSEE. AFTER CONSIDERING THE ABOVE, WE DO NOT FIND ANY REASON TO INTERFERE IN THE DECISION OF LD. CIT(A), THEREFORE, THIS GROUND OF APPEAL STANDS DISMISSED. GROUND NO. 3(DISALLOWANCE OF RS. 3,12,594/ - ) I.T.A NO S. 1551 /AHD /2015 & 735 /AHD/20 16 A.Y. 2011 - 2012 & 2012 - 13 PAGE NO SMT. MADHURI PRADIP KAW A DIYA VS. ACIT 7 17. CONSIDERING THE SAME REASON ON IDENTICAL FACTS AS ADJUDICATED ABOVE IN THIS ORDER IN THE CASE OF THE ASSESEE FOR ASSESSMENT YEAR 2011 - 12, THE DISALLOWANCE OF THESE EXPENSES IS RESTRICTED TO 30% TO THE AMOUNT OF RS. 93780/ - FOR WANT OF PROPER BILL AND VOUCHER. THEREFORE, THIS GROUND OF APPEAL IS PARTLY ALLOWED. GROUND NO. 4 (ADDITION OF RS.14,06,966/ - U/S. 2(2)(E) OF THE ACT) 18. WITHOUT REITERATING THE FACTS TO THIS ISSUE AS ALREADY DISCUSSED IN THE CASE OF ASSESSEE FOR ASSESSMENT YEAR 2011 - 1 2 VIDE ITA NO. 1551/AHD/2015 AS CITED ABOVE THE ASSESSING OFFICER HAS MADE ADDITION IN RESPECT OF FUND R ECEIVED BY THE ASSESSEE FROM THE FOLLOWING COMPANIES WHEREIN AS SESSEE HAS MORE THAN 10% STAKE F ROM M/S. OMKARA CONCRETE AND MACHINERIES PVT. LTD RS. 13,59,943/ - , FROM M/S OMKARA INFOWAB PVT. LTD. RS. 59,000/ - 19. THE LD. CIT(A) HAS CONFIRMED THE ADDITION TO THE AMOUNT OF RS. 14 , 06 , 966/ - COMPRISING ADDITION OF RS. 13 , 59 , 943/ - PERTAINING TO THE AMOUNT RECEIVED FROM M/S. OMKARA CONCRETE AND MACHINERIES PVT. LTD AND RS. 47023/ - FROM M /S OMKARA INFOWAB PVT. LTD. AFTER APPLYING THE FINDING ON SIMILAR ISSUE AND IDENTICAL FACTS AS CITED ABOVE VIDE ITA NO. 1551/AHD/2015 THE DISALLOWANCE IN RESPECT OF M/S. OMKARA CONCRETE AND MACHINERIES PVT. LTD. IS DELETED AS IT HAS BEEN SEEN FROM THE LEDGER OF THE COMPANY THAT THERE WERE LARGE NUMBER OF TRANSACTIONS IN THE FORM OF ACCOMMODATION ADJUSTMENT ENTRIES. HOWEVER, IN THE CASE OF OMKARA INFOWEB PVT. LTD., THE LD. COUNSEL HAS REFERRED PAGE NO. 29 OF THE PAPER BOOK S TATING THAT IN THIS CASE THERE WAS ALSO A NUMBER OF TRANSACTIONS IN THE FORM OF CURRENT ACCOMMODATION ENTRIES. I.T.A NO S. 1551 /AHD /2015 & 735 /AHD/20 16 A.Y. 2011 - 2012 & 2012 - 13 PAGE NO SMT. MADHURI PRADIP KAW A DIYA VS. ACIT 8 HOWEVER ON PERUSAL OF THE PAGE NO. 29, IT WAS FOUND THAT THERE WERE ONLY THREE ENTRIES BY WHICH THE AMOUNT W A S CREDITED TO THE ASSESSEE BY THE O MKARA INFOWEB PVT. LTD AND THERE WERE NOT ANY ADJUSTMENT ENTRIES AS CLAIMED BY THE LD. COUNSEL, THEREFORE, WE SUSTAIN THE DISALLOWANCE TO THE EXTENT OF LOAN AMOUNT OF RS. 47 , 023/ - AS UPHELD BY THE LD. CIT(A), THEREFORE, THIS GROUND OF APPEAL OF THE ASSESSE E IS PARTLY ALLOWED. 20. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE PARTLY ALLOWED. ORDER PR ONOUNCED IN THE OPEN C OURT ON 28 - 02 - 20 20 SD/ - SD/ - ( KUL BHARAT ) ( AMARJIT SINGH ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD : DATED 28 /02 /2020 / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,