Sri Sanjib Kumar Kothari, Kolkata V. THE ACIT, CIR-40/45, KOLKATA, Kolkata

ITA 778/KOL/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 9600 (ITAT-KOLKATA)
• Duration Of Justice: 8 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-01-2017
• Appeal Filed By: Assessee
• Bench Allotted: SMC
• Assessment Year: 2008-2009
• Appeal Filed On: 25-04-2016
• Court: TRIBUNAL
• Keywords: Wrong claim

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH : KOLKATA [BEFORE HONBLE SRI ABY T.VARKEY, JM & DR.A.L.SAI NI, AM] I.T.A NO. 778/KOL/201 6 ASSESSMENT YEAR : 2008-0 9 SRI SANJIB KR. KOTHARI -VS.- A.C.I.T., CI RCLE-40/45 KOLKATA KOLKATA [PAN : AFCPK 2509 K] (APPELLANT) (RESPONDENT) FOR THE APPELLANT : SHRI JITENDRA KAUS HI, ADVOCATE FOR THE RESPONDENT : SK. Z.H.TANWEER, JCIT, S R.DR DATE OF HEARING 27.12.2016 DATE OF PRONOUNCEMENT 11 . 01.2017. ORDER PER ABY T.VARKEY, JM THIS IS AN APPEAL PREFERRED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A)-13, KOLKATA DATED 15.01.2016 RELATING TO AY 2008-09 2. GROUND NO.1 RELATES TO THE DISALLOWANCE MADE BY THE AO AT A TOTAL OF RS.1,70,793/- BEING ONE FIFTH OF TELEPHONE EXPENSE FOR TELEPHONE OF RS.1,14,840/- AND TRAVELLING AND CONVEYANCE EXPENSES OF RS.7,39,125/-. 3. THE BRIEF FACTS OF THE CASE IS THAT DURING T HE ASSESSMENT PROCEEDINGS THE AO NOTES THAT THE ASSESSEE IN ITS PROFIT AND LOSS ACCOUNT OF HIS PROPRIETARY CONCERN HAS DEBITED RS.1,14,840/- UNDER THE HEAD TELEPHONE EXPENSES AND RS.7,39,125/- UNDER THE HEAD TRAVELLING AND CONVEYANCE EXPENSES. THE AO TOOK NOT E OF THE AUDITORS REPORT IN COL. 17(B) WHEREIN THE AUDITOR NOTES THAT IT WAS NOT POS SIBLE TO VERIFY WHETHER THE TELEPHONE AND MOTOR CAR WAS USED FOR PERSONAL PURPOSE BY THE ASSESSEE. THE AO MADE DISALLOWANCE OF 1/5 TH OF THE SAID EXPENSES TOTALING RS.1,70,793/-. AGGRI EVED THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A), WHO ALSO TAKING NOTE OF THE REPORT OF 2 ITA NO.778/KOL/2016 SRI SANJIB KUMAR KOTHARI A.YR.2008-09 2 THE AUDITOR CONFIRMED 1/5 TH OF THE TOTAL EXPENSES CLAIMED BY THE ASSESSEE ON T ELEPHONE EXPENSES. IN RESPECT TO THE CONVEYANCE AND TRANSPOR T EXPENSES THE LD. CIT(A) NOTES THAT THE ASSESSEE HAD GONE TO THAILAND, NETHERLAND, BANG KOK AND CHINA ETC AND SO HE WAS OF THE OPINION THAT THE ASSESSEES VISIT TO THESE PLAC ES MUST BE FOR PERSONAL REASONS AND HE CONFIRMED THE DISALLOWANCE TOTALING TO RS.1,70,743/ -. AGGRIEVED THE ASSESSEE IS BEFORE US. 4. WE HAVE HEARD BOTH THE PARTIES AND PERUSED T HE RECORDS. WE FIND THAT THE ASSESSEE HAS A PROPRIETARY CONCERN AND HE HAD DEBITED RS.1, 14,840/- UNDER THE HEAD TELEPHONE EXPENSES. WE NOTE THAT HE HAS NOT BEEN ABLE TO BRI NG ANY EVIDENCE TO THE NOTICE OF THE AO OR LD. CIT(A) OR BEFORE US THAT THE TELEPHONE EX PENSES PERSONALLY MADE BY HIM IS NOT COVERED BY THE EXPENSES CLAIMED. THEREFORE SOME PERSONAL EXPENSES MIGHT HAVE BEEN INCURRED BY THE ASSESSEE. HOWEVER, THE ADDITIO N OF 20% IS ON A HIGHER SIDE . SO WE RESTRICT THE EXPENSES OF USING TELEPHONE TO 10% AND SO, AO IS DIRECTED TO GIVE RELIEF ACCORDINGLY. 5. COMING TO THE CONVEYANCE AND TRAVELLING EXPE NSES OUR ATTENTION WAS TAKEN BY THE LD. AR TO PAGE NOS. 13 TO 35 OF THE PAPER BOOK. WE NOTE THAT THE ASSESSEE IS INTO EXPORT BUSINESS AND THEREFORE HAS TO TRAVEL EXTENSIVELY AB ROAD TO PROMOTE HIS SALE OF INDUSTRIAL CHEMICALS. IN SUCH A SCENARIO THE TRAVELLING EXPENS ES CLAIMED UNLESS PROVED TO BE BOGUS/PERSONAL HAS TO BE ALLOWED. WHEN THERE ARE NO EVIDENCES TO SUGGEST THAT TRAVELLING ABROAD IS NEITHER FOR PERSONAL PURPOSE OR IT IS A BOGUS CLAIM, THE CLAIM CANNOT BE DENIED ON THE BASIS OF SURMISES AND CONJECTURE S WHICH CANNOT STAND THE SCRUTINY OF LAW AND SO HAS TO BE DELETED. 6. THUS THE TELEPHONE EXPENSES CLAIMED BY THE ASSESSEE FOR WHICH AUTHORITIES BELOW DISALLOWED 20% IS RESTRICTED TO 10%. THE TRAVELLING EXPENSES CLAIMED BY THE ASSESSEE IS 3 ITA NO.778/KOL/2016 SRI SANJIB KUMAR KOTHARI A.YR.2008-09 3 ALLOWED AND NO DISALLOWANCE IS WARRANTED. THE APPE AL OF THE ASSESSEE ON GROUND NO.1 IS PARTLY ALLOWED. 7. GROUND NO.2 IS AGAINST THE DISALLOWANCE OF RS .41,673/- AND RS.73,728/- BEING 1/10 TH OF THE COOLIE CHARGES OF RS.4,16,732/- AND MISCELL ANEOUS EXPENSES (IMPORT) FOR DELIVERY AT RS.7,32,371/-. 8. THE BRIEF FACTS OF THE CASE IS THAT DURING T HE ASSESSMENT PROCEEDINGS THE AO NOTES THAT ON ACCOUNT OF COOLIE CHARGES AND MISCELLANEOUS EXPENSES (IMPORT) FOR DELIVERY THE ASSESSEE HAS CLAIMED EXPENDITURE OF RS.4,16,732/- A ND RS.7,32,371/- RESPECTIVELY. SO THE AO ASKED THE ASSESSEE TO PRODUCE THE BILLS AND VOUCHERS WITH THE LEDGER TO SUPPORT CLAIM OF THE EXPENSES. THE AO NOTES THAT THE PAYMEN TS WERE MADE IN CASH AND SUPPORTED BY SELF MADE DEBIT VOUCHERS. THE AO NOTES THAT THE VOUCHERS DID NOT CONTAIN ANY MAILING ADDRESS OR SIGNATURE OF THE RECIPIENTS. THEREFORE THE AO DISALLOWED 1/10 TH OF THE EXPENSES CLAIMED. AGGRIEVED THE ASSESSEE PRE FERRED AN APPEAL BEFORE THE LD. CIT(A), WHO WAS PLEASED TO DISMISS THE SAME. AGGRIE VED THE ASSESSEE IS BEFORE US. 9. WE HAVE HEARD THE PARTIES AND PERUSED THE RE CORDS. THE LD. AR TOOK OUR ATTENTION TO PAGES 36 TO 50 OF THE PAPER BOOK IN RESPECT TO T HE DETAILS OF COOLIE CHARGES AND FROM PAGES 51 TO 53 IN RESPECT TO MISCELLANEOUS EXPENSES OF IMPORT. HE TOOK OUR ATTENTION TO THE TAX AUDIT REPORT, BALANCE SHEET AND P&L ACCOUNT WHICH ARE PLACED AT PAGES 54 TO 84 OF THE PAPER BOOK. WE TAKE NOTE THAT THE ASSESSE E IS INTO TRADING BUSINESS OF INDUSTRIAL CHEMICALS AND HAS A TURN OVER DURING THE YEAR AT RS.6,75,32,197/- AND HAD DECLARED THE GROSS PROFIT OF 14.23% IN HIS RETURNED INCOME AT RS.20,97,387/-. IT WAS EXPLAINED BEFORE US THAT COLLIE CHARGES WAS INCURRE D FOR DELIVERY OF GOODS TO THE FACTORY SITE OF CUSTOMERS AND MISCELLANEOUS EXPENSES FOR IM PORT ARE SUPPORTED BY INDEPENDENT BILLS FOR SUPPORTING THE CLAIM AND NO CASH EXPENSES WERE INCURRED FOR THE MISCELLANEOUS EXPENSES ON IMPORT. WE NOTE THAT THE ASSESSEE HAD A UDITED ITS ACCOUNTS AND THE BOOKS 4 ITA NO.778/KOL/2016 SRI SANJIB KUMAR KOTHARI A.YR.2008-09 4 WERE CHECKED BY THE AO. THE AO HAS NOT POINTED OUT ANY DEFECTS IN THE BOOKS OR HAS REJECTED THE BOOKS.. THE CASE OF THE AO IS NOT THAT HE ASKED FOR SPECIFIC BILLS FOR THE EXPENDITURE CLAIMED ITEM-WISE WAS NOT PRODUCED BY T HE ASSESSEE. IF THE ASSESSEE FAILS TO PRODUCE ITEM WISE BILLS, THE AO IS FREE TO DOUBT TH E GENUINENESS OF THE CLAIM AND DISALLOW ITEM-WISE. IN THE CASE IN HAND, THE AO HAS PROCEEDED TO MAKE AD-HOC DISALLOWANCES. WE NOTE THAT ADHOC DISALLOWANCES AR E ARBITRARY IN NATURE AND CANNOT BE SUSTAINED IN THE LIGHT OF THE EVIDENCES PRODUCED AN D AUDITED BOOKS BEFORE THE AO. THEREFORE WE ARE INCLINED TO ALLOW THE APPEAL ON TH IS GROUND AND DIRECT DELETION OF ADDITION MADE BY THE AO ON THIS GROUND. 10. IN THE RESULT THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE COURT ON 11 .01.2017. SD/- SD/- [DR.A.L.SAINI] [ ABY T.VARK EY ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 11 . 01.2017. [RG PS] COPY OF THE ORDER FORWARDED TO: 1. SRI SANJIB KUMAR KOTHARI, C/O SRI R.P.SHARMA, AD VOCATE, 19-D, MUKTARAM BABU STREET, KOLKATA-700007. 2. A.C.I.T., CIRCLE-40/45, KOLKATA. 3. CIT(A)-13, KOLKATA. 4. CIT-15, KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER ASSTT.REGISTRAR, ITAT, KOLKATA BENCHES 5 ITA NO.778/KOL/2016 SRI SANJIB KUMAR KOTHARI A.YR.2008-09 5