M/s B.H. Khoja & Company, Karad V. DCIT, Satara

ITA 776/PUN/2009

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 3191 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 3 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-10-2010
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 29-06-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ABHAY DAMLE
• Keywords: Unexplained expenditure; Opportunity of being heard

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JM AND SHRI D. KARUNAKARA RAO, AM I.T.A. NO. 776/PN/2009: A.Y. 2005-06 B.H. KHOJA & COMPANY SHANWAR PETH, KARAD PAN AABFB 4296 N APPELLANT VS. DY. CIT SATARA RESPONDENT APPELLANT BY : SHRI M.K. KULKARNI RESPONDENT BY: SHRI ABHAY DAMLE ORDER PER SHAILENDRA KUMAR YADAV, JM THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGA INST THE ORDER OF THE CIT (A)-II PUNE DATED 29-4-2009 FOR A. Y. 2005-06 ON THE FOLLOWING GROUNDS. 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE LEARNED CIT(A)-II PUNE WAS NOT JUSTIFIED IN NOT ACCEPTING THE GROUND OF APPEAL OF THE APPELLANT THA T THE COMMISSION PAYMENT OF RS. 2,31,707/- COULD NOT BE T REATED AS UNEXPLAINED EXPENDITURE U/S 69-C OF THE ACT FOR DIS ALLOWANCE AND ADDITION. THOUGH IT WAS ONLY SHOWN IN THE AUDI T REPORT AND NOT CLAIMED AT ALL AS EXPENDITURE. THE ADDITION CONFIRMED BE DELETED. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE LEARNED CIT(A)-II, PUNE ERRED IN NOT DELETI NG THE ENTIRE CLAIM OF EXPENDITURE OF RS. 50,000/- BUT INSTEAD AL LOWING ONLY TO THE EXTENT OF RS. 18,364/- OUT OF RS. 50,000/- O F SUCH EXPENDITURE. THE EXPENDITURE BE ALLOWED IN FULL AS IT IS AN LEGITIMATE ONE. 2. THE FIRST ISSUE IS WITH REGARDS TO ADDITION OF R S. 2,31,707/- AS UNEXPLAINED EXPENDITURE U/S 69-C OF THE ACT. THE A.O NOTICED THAT ITA NO. 776/PN/09 B.H. KHOJA & CO. A.Y. 2005-06 , 2 IN AUDIT REPORT PART B, S.NO. 11 THE AUDITOR HAS SH OWN A SUM OF RS. 2,31,701/- AS COMMISSION PAID. ON BEING ASKED ABOU T THE SAME THE ASSESSEE EXPLAINED THAT COMMISSION OF RS. 2,31, 640/- WAS ONLY RECEIVED AND THIS WAS ALSO REFLECTED AS COMMISSION AMOUNT OF RS. 2,31,640/- AND DISCOUNT FOR VATAV OF RS. 61/-. T HE A.O HELD THAT THIS ENTRY MENTIONED BY THE AUDITOR RELATED TO COMM ISSION PAID OF RS. 2,31,701/- TREATING IT AS UNEXPLAINED EXPENDITU RE U/S 69-C OF THE ACT WHICH WAS CONFIRMED BY THE CIT(A). 3. THE ASSESSEE HAS TAKEN A DIFFERENT STAND BEFORE THE AUTHORITIES BELOW. IN ABSENCE OF PROPER EXPLANATION ON BEHALF OF THE ASSESSEE, IT COULD NOT GET FAVOUR FROM THE AUTHORITIES BELOW. HOWEVER, BEFORE US IT WAS SUBMITTED THAT THE COMMISSION PAYMENT OF RS. 2,31,701/- COULD NOT BE TREATED AS UNEXPLAINED EXPENDITURE U/S 69-C OF THE ACT FOR DISALLOWANCE OF ADDITION. IT IS SHOWN IN A UDITORS REPORT AND NOT CLAIMED IT AS AN EXPENDITURE. THIS ASPECT HAD TO BE DEEPLY PROBED BEFORE REACHING CERTAIN CONCLUSION ON THE IS SUE. SO, IN THE INTEREST OF JUSTICE, WE SET ASIDE THE ISSUE AND REM IT THE MATTER TO CIT(A) FOR HIS FRESH DECISION AS PER FACT AND LAW A FTER PROVIDING OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 4. THE NEXT ISSUE IS WITH REGARDS TO ALLOWING AN EX PENDITURE OF RS. 18,364/- OUT OF RS. 50,000/-. THE A.O MADE DIS ALLOWANCE OF RS. 50,000/- OUT OF VARIOUS EXPENSES AS MENTIONED I N PARA 2.5 OF THE ASSESSMENT ORDER. IT WAS NOTICED THAT THERE WA S A TOTAL AMOUNT ITA NO. 776/PN/09 B.H. KHOJA & CO. A.Y. 2005-06 , 3 OF EXPENDITURE OF RS. 2,10,908/- ON ACCOUNT OF TELE PHONE CAR/SCOOTER, TRAVELING, SHOP EXPENSES ETC. AND CON SIDERED THAT TRAVELING EXPENSES AND SHOP EXPENSES WERE SUPPORTED BY SELF MADE VOUCHERS . IN APPEAL, THE CIT(A) RESTRICTED THE DI SALLOWANCE TO 15% OF THE TOTAL EXPENSES. THE SAME HAS BEEN OPPOSED B EFORE US. TAKING ALL FACTS AND CIRCUMSTANCES INTO CONSIDERATI ON, PERSONAL ELEMENT CANNOT BE RULED OUT. SEEING THE PERSONAL E LEMENT IN THE BUSINESS DISALLOWANCE IN QUESTION NEED NO INTERFERE NCE FROM OUR SIDE. SAME IS CONFIRMED. 5. IN THE RESULT, THE APPEAL BY THE ASSESSEE IS PAR TLY ALLOWED. PRONOUNCED IN THE OPEN COURT ON 27 TH OCTOBER 2010. SD/- SD/- (D. KARUNAKARA RAO) (SHAILENDRA KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE,DATED THE 27 TH OCTOBER 2010 ANKAM COPY FORWARDED TO: (1) ASSESSEE (2) DEPARTMENT (3) CIT- III PUNE (4) CIT(A)-II PUNE (5) THE D.R. A' BENCH, PUNE TRUE COPY BY ORDER, ASSISTANT REGISTRAR INCOME-TAX APPELLATE TRIBUNAL, PUNE BENCHES, PUNE