Sunitha Kumar Emmart, Bangalore V. ACIT, Bangalore

ITA 803/BANG/2011

• Counselvise Citation: 80321114 RSA 2011
• Duration Of Justice: 1 year(s) 1 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-10-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 03-10-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 07-09-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A SUNDAR RAJAN
• Assessee Lawyers: S R KIRON
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BANGALORE BENCH C BEFORE SMT. P MADHAVI DEVI, JUDICIAL MEMBER AND SHRI JASON P BOAZ, ACCOUNTANT MEMBER ITA NO.8 03/BANG/2011 (ASST. YEAR - 2008-09) SMT. SUNITHA KUMAR EMMART, NO.82, THE PRESIDENCY, ST. MARKS ROAD, B ANGALORE-560 001. . APPELLANT PAN ABVPK 2408 C. VS. THE ASST. COMMISSIONER OF INCOME-TAX, CIRCLE-1(1), BANGALORE. . RESPONDENT APPELLANT BY : SHRI S.R KIRON, C.A RESPONDENT BY : SHRI A SUNDAR RAJAN, JCIT DATE OF HEARING : 03-10-2012 DATE OF PRONOUNCEMENT : 11-10-2012 O R D E R PER P MADHAVI DEVI, JUDICIAL MEMBER : THIS APPEAL IS FILED BY THE ASSESSEE. THE RELEVANT ASSESSMENT YEAR IS 2008-09. THE APPEAL IS DIRECTED AGAINST TH E ORDER OF THE COMMISSIONER OF INCOME-TAX - (APPEALS) I AT BANGALO RE DATED ITA NO.803/B/11 2 12.08.2011. THE APPEAL ARISES OUT OF THE ASSESSMENT COMPLETED U/S 143(3) OF THE INCOME-TAX ACT, 1961. 2. THE ASSESSEE IS AN INDIVIDUAL EARNING INCOME BY WAY OF BUYING/ DISPLAY OF ART WORK FROM ARTISTS AND SELLING IT TO CUSTOMERS. SHE FILED HER RETURN OF INCOME FOR THE ASSESSMENT YEAR 2008-0 9 ON 16.9.2008 DECLARING AN INCOME OF RS.27,45,311/-. DURING THE COURSE OF PROCEEDINGS U/S 143(3), THE AO OBSERVED THAT THE AS SESSEE HAS DEBITED AN AMOUNT OF RS.5,08,119/- AND RS.6,89,099/- (NET) TOWARDS ARTIST EXPENSES AND SHOW EXPENSES RESPECTIVELY IN THE PROF IT AND LOSS ACCOUNT. THE DETAILS OF THE SAME WERE CALLED FOR AND THE ASSESSEE FURNISHED THE SAME. ON PERUSAL OF THE SAID DETAILS , THE AO OBSERVED THAT SOME OF THE PAYMENTS ARE PAID BY CASH AND ARE NOT FULLY VERIFIABLE. AND ALSO THAT BE THERE MAY BE SOME PERS ONAL ELEMENT INVOLVED, THEREFORE, THE AO DISALLOWED 20% OF THE P AYMENTS AND ADDED IT BACK TO THE INCOME OF THE ASSESSEE. 3. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFO RE THE CIT(A) HOLDING THAT THE DISALLOWANCE IS ARBITRARY AND EXPE NSIVE. THE CIT(A) AFTER CONSIDERING THE ASSESSEES SUBMISSIONS AT LEN GTH OBSERVED THAT THE ASSESSEE HAS NOT BEEN ABLE TO MAINTAIN COMPLETE VOUCHERS AND ITA NO.803/B/11 3 COULD NOT PRODUCE THE SAME BEFORE THE AO FOR VERIFI CATION, BUT HELD THAT THE DISALLOWANCE IS EXCESSIVE AND RESTRICTED T HE DISALLOWANCE TO 15% OF THE EXPENSES. 4. AGGRIEVED BY THE CONFIRMATION OF THE DISALLOWANC E TO 15% OF THE EXPENSES, THE ASSESSEE IS IN APPEAL BEFORE US. 5. THE LEARNED COUNSEL FOR THE ASSESSEE WHILE REITE RATING THE ASSESSEES SUBMISSIONS BEFORE THE AUTHORITIES BELOW HAVE DRAWN OUR ATTENTION TO THE WRITTEN SUBMISSIONS FILED BY THE A SSESSE BEFORE THE CIT(A) TO SUBMIT THAT THE EXPENSES WERE ON BREAKFAS T, FOOD, SNACK, TRANSPORTATION AND ACCOMMODATION FOR ARTISTS ATTEN DING GALLERY AND GALLERY SHOWS ETC. HE SUBMITTED THAT AUTHORITIES B ELOW MADE THE DISALLOWANCE WITHOUT IDENTIFYING ANY SPECIFIC EXPEN SES WHICH ARE NOT VERIFIABLE AND THAT THE DISALLOWANCE IS ARBITRARY A ND IS ONLY ON THE BASIS OF ASSUMPTIONS AND PRESUMPTIONS. HE SUBMITTE D THAT THE CIT(A)S FINDING THAT THE ASSESSEE HAS NOT BEEN ABL E TO MAINTAIN THE VOUCHERS AND PRODUCE THE SAME BEFORE THE AO IS INCO RRECT IN VIEW OF THE ASSESSEES SUBMISSION THAT ALL THE VOUCHERS WER E PRODUCED BEFORE THE AO FOR VERIFICATION. THUS, HE PRAYED THAT THE DISALLOWANCE BE DELETED. ITA NO.803/B/11 4 6. AS REGARDS THE ASSESSING OFFICERS OBSERVATION T HAT PERSONAL ELEMENT INVOLVED, HE PLACED RELIANCE UPON THE FOLLO WING DECISIONS IN RESPECT OF HIS CONTENTIONS THAT NO DISALLOWANCE ON PERSONAL ACCOUNT CAN BE MADE. 1. STATE OF MADRAS VS. G.J COELHO, 53 186 (SC) 2. SREE MEENAKSHI MILLS LTD. VS. CIT, 63 ITR 207 ( SC) 3. SAYAJI IRON AND ENGG. CO. VS. CIT, 253 ITR 749 (AT) 4. OMPRAKASH JOSHI VS. ITO, 123 TTJ 246 (JODHPUR) 7. THE LEARNED DR, ON THE OTHER HAND, SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT THE ASSESSEE H AS TO SUBSTANTIATE HER CLAIM BY PRODUCING THE NECESSARY EVIDENCES AND IN THE ABSENCE OF THE SAME, THE AUTHORITIES HAVE RIGHTLY DISALLOWED T HE EXPENSES. 8. HAVING HEARD BOTH THE PARTIES AND HAVING CONSIDE RED THE RIVAL CONTENTIONS, WE FIND THAT THE ASSESSEE HAS BEEN MA INTAINING VOUCHERS AND HAS PRODUCED THE SAME BEFORE THE AO & CIT(A). THE ONLY REASON FOR DISALLOWANCE BY THE AO ARE THAT THE SOME OF THE PAYMENTS ARE BY CASH AND ARE NOT VERIFIABLE. HAVING GONE INTO THE DETAILS OF EXPENSES, WE FIND THAT MOST OF THEM ARE ON ACCOUNT OF FOOD, S NACKS ETC. FOR ITA NO.803/B/11 5 WHICH, THE PAYMENTS NECESSARILY HAVE TO BE BY WAY O F CASH AND FOR SUCH PAYMENTS THERE CANNOT BE ANY EVIDENCE EXCEPT T HE SELF-MADE VOUCHERS. THESE EXPENSES ARE SAID TO BE ON ACCOUNT OF ARTISTS SHOWS AND GALLERIES ORGANIZED BY THE ASSESSEE AND AS PART OF THE SAID SHOWS SUCH EXPENDITURE IN CASH IS NECESSARY. AS LONG AS THE NECESSITY OR EXPEDIENCY OF THE SAID EXPENDITURE IS NOT DISPUTED BY THE AO, WITHOUT POINTING OUT ANY PARTICULAR EXPENDITURE AS NOT BEIN G INCURRED FOR THE ASSESSEES BUSINESS, THE SAME CANNOT BE DISALLOWED EVEN ON ESTIMATE OR ADHOC BASIS. AS REGARDS PERSONAL ELEMENT IN THE SAID EXPENDITURE, WE FEEL THAT THE DISALLOWANCE OF 2% OF THE EXPENSES CLAIMED BY THE ASSESSEE WOULD SUFFICE. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 11TH OCT, 2012. SD/- SD/- (JASON P BOAZ) (MADHAVI DEVI) ACCOUNTANT MEMBER JUDICIAL MEMBER VMS. BANGALORE, DATED : 11/10/2012 COPY TO : 1. THE ASSESSEE 2. THE REVENUE 3.THE CIT CONCERNED. 4.THE CIT(A) CONCERNED. 5.DR 6.GF BY ORDER SR. PRIVATE SECRETA RY, ITAT, BANGALORE.