SAMINA M. LOKHANDWALA, MUMBAI V. ACIT CEN CIR 46, MUMBAI

ITA 797/MUM/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 1717 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-02-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Next Hearing Date: 12-02-2013
• Assessment Year: 2009-2010
• Appeal Filed On: 06-02-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: BHAMIKA VORA
• Keywords: Depreciation; Corroborative evidences

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI E BENCH MUMBAI BENCHES, MUMBAI BEFORE SHRI SANJAY ARORA, AM & SHRI VIJAY PAL RAO, JM ITA NO. 797/MUM/2012 (ASST YEAR 2009-10 ) SAMINA M LOKHANDWALA V-14C TERTULLIAN ROAD OPP DR PETER DIAS ROAD, BANDRA(W) MUMBAI VS THE ASST COMMR OF IN COME TAX CEN CIR 46, MUMBAI (APPELLANT) (RESPONDENT) PAN NO. ABCPL 2895D ASSESSEE BY MS BHAMIKA VORA REVENUE BY SH O P MEENA DT.OF HEARING 12 TH FEB 2013 DT OF PRONOUNCEMENT 15 TH , FEB 2013 ORDER PER VIJAY PAL RAO, JM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER DATED 30.11.2011 OF THE COMMISSIONER OF INCOME TAX(APPEALS) FOR THE ASS ESSMENT YEAR 2009-10. 2 THE SOLITARY GROUND RAISED BY THE ASSESSEE IN THI S APPEAL IS AS UNDER: ON THE FACTS AND CIRCUMSTANCES OF THE APPELLANTS C ASE IN LAW THE LD COMMISSIONER OF INCOME TAX(APPEALS) ERRED IN CONFIR MING THE ADHOC DISALLOWANCE OF ` 1,50,000/- MADE BY THE AO.. 3 DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAS CLAIMED EXPENSES ON VARIOUS H EADS IN THE P&L ACCOUNT OF SAMS ART HUB; BUT NO VOUCHERS ARE PRODUCED FOR VERI FICATION. THE ASSESSING OFFICER HAS OBSERVED THAT THE IN ABSENCE OF THE VOUCHERS, T HE GENUINENESS OF THE EXPENSES CANNOT BE ASCERTAINED. ACCORDINGLY, AN ADHOC DISA LLOWANCE OF ` 1,50,000/- WAS MADE AND THE SAME WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE. ITA NO. 797/M/2012 . 2 3.1 ON APPEAL, THE COMMISSIONER OF INCOME TAX(APPE ALS) HAS CONFIRMED THE DISALLOWANCE MADE BY THE ASSESSING OFFICER ON SIMI LAR REASONING, APART FROM THE REASONS THAT CERTAIN EXPENSES WHICH ARE IN THE NATU RE OF PRE-OPERATIVE EXPENSES FOR COMMENCEMENT OF THE NEW BUSINESS IN THE NAME OF M/S SAM ART HUB. 4 BEFORE US, THE LD AR OF THE ASSESSEE HAS SUBMITTE D THAT THE MAJORITY OF THE EXPENSES WERE PAID THROUGH BANKING CHANNEL. IN SUPP ORT OF HER CONTENTIO0N, SHE HAS REFERRED THE LEDGER ACCOUNT WITH RESPECT TO THE EXPENSES IN QUESTION AND SUBMITTED THAT THESE EXPENSES WERE PAID THROUGH CHE QUE AS DETAILS ARE GIVEN IN THE ENTRIES OF THE RELATED LEDGER ACCOUNT. SHE HAS FUR THER SUBMITTED THAT WHEN THE ASSESSEE HAS FURNISHED ALL THE DETAILS AND LEDGER A CCOUNT SHOWING THE NATURE OF EXPENSES WHICH ARE INCURRED DURING THE NORMAL COURS E OF BUSINESS, THEN THE ADHOC DISALLOWANCE IS NOT JUSTIFIED. 4.1 ALTERNATIVELY, THE LD AR HAS SUBMITTED THAT THE DISALLOWANCE OF ` 1,50,000/- IS EXCESSIVE IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE WHEN THE ASSESSEE HAS RETURN THE LOSS OF ` 3,48,000/- AND THERE WAS NO MOTIVE TO AVOID TAX. 4.2 ON THE OTHER HAND, THE LD DR HAS RELIED UPON TH E ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT WHEN THE ASSESSEE HAS NOT PRODUCED THE SUPPORTING EVIDENCE FOR VERIFICATION OF THE GENUINENESS OF THE EXPENSES, THEN THE DISALLOWANCE MADE BY THE ASSESSING OFFICER IS JUSTIFIED. 5 HAVING CONSIDERED THE RIVAL SUBMISSIONS AS WELL A S THE RELEVANT MATERIAL ON RECORD, WE NOTE THAT THE EXPENSES CLAIMED BY THE AS SESSEE PERTAIN TO THE PURCHASE OF PAINTINGS, PAINTING MATERIAL, ADVERTISEMENT, BA NK CHARGES, BUSINESS PROMOTION, COMMISSION ON PAINING, ELECTRICITY CHARGES, INTERNE T CHARGES, MEMBERSHIP AND SUBSCRIPTION, OFFICE EXPENSES, POSTAGE & COURIER, P RINTING & STATIONARY, PROFESSIONAL ITA NO. 797/M/2012 . 3 FEES, REPAIR & MAINTENANCE, SALARY, TELEPHONE CHARG ES, WEB DESIGNING, DEPRECIATION ETC.,, AS MANIFEST FROM THE LEDGE ACCOUNT OF DIFFER ENT HEADS OF EXPENSES. 5.1 WE FURTHER NOTE THAT MOST OF THESE EXPENSES ARE PAID THROUGH CHEQUE AS DETAILS GIVEN IN THE LEDGER ACCOUNT AND NATURE OF E XPENSES CLEARLY SHOW THAT THESE EXPENSES ARE INCURRED IN CONNECTION WITH THE BUSINE SS OF THE ASSESSEE. HOWEVER, THE ASSESSEE FAILED TO PRODUCE THE VOUCHERS IN SUPPORT OF THE CLAIM. THEREFORE, THE ASSESSING OFFICER HAS RIGHTLY INVOKED HIS JURISDICT ION FOR ADHOC DISALLOWANCE OF THE EXPENSES. 5.2 SINCE MOST OF THE PAYMENTS ARE MADE THROUGH CHE QUE AND FEW SMALL AMOUNTS ARE PAID CASH; THEREFORE, IN OUR OPINION, T HE DISALLOWANCE OF ` 1,50,000/- IS ON THE HIGHER SIDE. ACCORDINGLY, IN THE INTEREST OF JUSTICE AND IN THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE VIEW THAT A REASONABLE ESTIMATE OF DISALLOWANCE WILL SERVE THE END OF JUSTICE. HENCE, WE ESTIMATE THE DISALLOWANCE OF ` . 50,000/- AS REASONABLE INSTEAD OF ` 1,50,000/- MADE BY THE ASSESSING OFFICER. 6 IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE I S PARTLY ALLOWED. ORDER PRONOUNCEMENT IN THE OPEN COURT ON THIS 15 TH , DAY OF FEB 2013 SD/- SD/ - ( SANJAY ARORA ) ACCOUNTANT MEMBER ( VIJAY PAL RAO ) JUDICIAL MEMBER PLACE: MUMBAI : DATED: 15 TH , FEB 2013 RAJ* ITA NO. 797/M/2012 . 4 COPY FORWARDED TO: 1 APPELLANT 2 RESPONDENT 3 CIT 4 CIT(A) 5 DR /TRUE COPY/ BY ORDER DY /AR, ITAT, MUMBAI