Shri laxmilal P.Shah, Surat V. The Income tax Officer,Ward-2(1), Surat

ITA 818/AHD/2010

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 9805 (ITAT-AHMEDABAD)
• Duration Of Justice: 6 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-09-2010
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 17-09-2010
• Assessment Year: 2006-2007
• Appeal Filed On: 17-03-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S K JHA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH A BEFORE SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER AND SHRI N.S. SAINI, ACCOUNTANT MEMBER DATE OF HEARING : 17/09/2010 DRAFTED ON: 20/0 9/2010 ITA NO.818/AHD/2010 ASSESSMENT YEAR : 2006-07 SHRI LAXMILAL P.SHAH PROP. OF SHAILESH STEEL MAHAVIR BAZAR NEAR PETROL PUMP UDHNA, SURAT VS. THE INCOME-TAX OFFICER WARD-2(1) SURAT PAN/GIR NO. : AEDPS 1172 G ( APPELLANT ) .. ( RESPONDENT ) APPELLANT BY : NONE (WRITTEN SUBMISSIONS) RESPONDENT BY: SHRI S.K. JHA, D.R. O R D E R PER SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER : THIS IS AN APPEAL AT THE BEHEST OF THE ASSESSEE W HICH HAS EMANATED FROM THE ORDER OF LEARNED CIT(APPEALS)-II, SURAT DATED 08/12/2009 PASSED FOR ASSESSMENT YEAR 2006-07 BY RAISING FOLL OWING GROUNDS:- (I) DISALLOWANCE OF EXPENSES:- ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEA RNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN CONFI RMING DISALLOWANCE OF 20% FROM VEHICLE EXPENSES AND DEPRE CIATION AND TELEPHONE EXPENSES WHEN THE EXPENDITURE WAS INCURRE D FOR THE PURPOSE OF THE BUSINESS AND WAS REASONABLE IN THE B ACKGROUND OF THE TURNOVER OF THE APPELLANT. (II) LOW HOUSEHOLD EXPENSES:- ITA NO.818/AHD/ 2010 SHRI LAXMILAL P. SHAH VS. ITO ASST.YEAR - 2006-07 - 2 - ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LEAR NED COMMISSIONER OF INCOME-TAX (APPEALS) WAS NOT JUSTI FIED IN CONFIRMING THE ESTIMATE OF ANNUAL HOUSEHOLD EXPENSE S OF THE APPELLANT AT RS.2,28,000/- WITHOUT ANY BASIS OR EVI DENCE AND CONFIRMING THE ADDITION OF RS.58,800/-. (III) SHORTAGE / DEFICIT:- ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LE ARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN CONFI RMING THE ADDITION OF RS.20,386/- MADE BY THE ASSESSING OFFIC ER BY CONFIRMING THE SHORTAGE. (IV) MISCELLANEOUS :- (1) THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) OU GHT TO HAVE DELETED INTEREST CHARGED U/S.234B OF THE I.T. ACT, 1961. (2) THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) OU GHT TO HAVE DELETED INTEREST CHARGED U/S.234C OF THE I.T. ACT, 1961. (3) THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) OU GHT TO HAVE DELETED INTEREST CHARGED U/S.234D OF THE I.T. ACT, 1961. (4) THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR VARY AN Y OF THE GROUNDS OF APPEAL. 2. APROPOS GROUND NO.1, FACTS IN BRIEF AS EMERGED F ROM THE CORRESPONDING ASSESSMENT ORDER PASSED U/S.143(3) OF THE I.T. ACT, 1961 DATED 06/10/2008 WERE THAT THE ASSESSEE IN HIS INDIVIDUAL CAPACITY IS IN THE BUSINESS OF TRADING OF IRON & STEEL. IN RESPEC T OF 20%, DISALLOWANCE PERTAINING TO (I) VEHICLE EXPENSES, (II) DEPRECIATI ON AND (III) TELEPHONE EXPENSES, THE APPELLANT HAS SUBMITTED THROUGH WRITT EN SUBMISSIONS THAT ON IDENTICAL FACTS IN RESPECT OF HIS BROTHER; NAMEL Y, SHRI DINESHCHANDRA P.SHAH, PROPRIETOR OF SHAH & CO. SURAT, THE RESPEC TED ITAT AHMEDABAD BENCH D IN AN ORDER BEARING ITA NO.2947 /AHD/2008 FOR ASSESSMENT YEAR 2005-06 DATED 23/01/2009, IT WAS RE STRICTED TO 10% VIDE PARAGRAPH NOS.3 & 4; REPRODUCED BELOW:- ITA NO.818/AHD/ 2010 SHRI LAXMILAL P. SHAH VS. ITO ASST.YEAR - 2006-07 - 3 - 3. GROUND NO.1 RELATES TO THE DISALLOWANCE OF RS .298,371/- OUT OF VEHICLE AND TELEPHONE EXPENSES. THE AO WAS OF THE VIEW THAT THE EXPENSES; SO INCURRED WERE PARTLY VOUCHED AND P ARTLY NOT VOUCHED AND ARE PERSONAL IN NATURE. THEREFORE, HE DISALLOWED 20% OF THE VEHICLE AND TELEPHONE EXPENSES. WHEN TH E MATTER WENT BEFORE THE CIT(A), THE CIT(A) CONFIRMED THE SAME. 4. WE HAVE HEARD THE LEARNED DR AND CAREFULLY CON SIDERED THE SUBMISSIONS MADE BY HIM. THE PERSONAL USE OF THE VEHICLE AND TELEPHONE IN THIS CASE IS NOT RULED OUT BUT ON THE OTHER HAND THE ASSESSEE HAS TO DEAL WITH THE PARTIES WHICH ARE SIT UATED IN BIHAR, JHARKHAND AND PUNJAB AND OTHER FARAWAY PLACES. TH EREFORE, KEEPING IN VIEW THE TOTALITY OF THE FACTS AND CIRCU MSTANCES OF THE CASE, WE ARE OF THE VIEW THAT 10% OF THESE EXPENSES SHOULD BE DISALLOWED AND ACCORDINGLY WE SUSTAIN THE DISALLOWA NCE TO THE EXTENT OF RS.14,685/-. THUS, THIS GROUND STANDS P ARTLY ALLOWED. 3. SINCE ALMOST ON IDENTICAL FACTS, A VIEW HAS ALRE ADY TAKEN BY A RESPECTED CO-ORDINATE BENCH AND THE DISALLOWANCE W AS RESTRICTED TO 10%, THEREFORE, FOLLOWING THE SAME WE HEREBY DIRECT TO SUSTAIN THE DISALLOWANCE AT 10% ONLY. WE DIRECT ACCORDINGLY. THIS GROUND MAY BE TREATED AS PARTLY ALLOWED. 4. APROPOS GROUND NO.2, THE QUESTION OF LOW HOUSE-H OLD EXPENSES HAS ALREADY BEEN DECIDED BY THE TRIBUNAL IN THE CAS E OF ASSESSEES BROTHER, AS CITED SUPRA, WHEREIN THE DISALLOWANCE WAS DELETED VIDE PARAGRAPH NO.6; REPRODUCED BELOW:- 6. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS MA DE BY THE LEARNED DR. WE FIND THAT THE ADDITION HAS BEEN M ADE MERELY ON ESTIMATE BASIS. THE A HAS DULY SUBMITTED BEFORE T HE AUTHORITIES BELOW THAT THE ASSESSEE IS PUTTING UP IN THE RESIDENTIAL PREMISES BELONGING TO THE ASSESSEES WIFE. NO MAINTENANCE EXPENSES ARE INCURRED. NO EDUCATION EXPENSES HAVE BEEN INCURRED, AS THE MINOR CHILD IS TWO YEARS ITA NO.818/AHD/ 2010 SHRI LAXMILAL P. SHAH VS. ITO ASST.YEAR - 2006-07 - 4 - OLD. THE AO WITHOUT BRINGING ANY EVIDENCE TO THE CONTRARY AND VERIFYING FROM THE SOCIETY WHETHER THE ASSESSEE IS PUTTING UP, HOW MUCH EXPENDITURE HAS BEEN INCURRED BY THE ASSESSEE FOR T HE MAINTENANCE, MUNICIPAL TAX, WATER AND ELECTRICITY, ESTIMATED DRA WINGS ON PER MEMBER BASIS AND MADE THE ADDITION. IF THE AO, IN OUR OPINION, MAKES AN ADDITION U/S.69 ON ACCOUNT OF UNEXPLAINED EXPEND ITURE, THE ONUS LIES ON THE AO TO PROVE THAT THE ASSESSEE HAS ACTUALLY INCURRED THE EXPENDITURE. WE, THEREFORE, DELETE THE ADDITION O F RS.1,02,000/-. THUS, THIS GROUND STANDS ALLOWED. 5. SINCE A VIEW HAS ALREADY BEEN TAKEN IN THE GROUP CASE, THEREFORE, WE HAVE NO REASON TO ADOPT ANY OTHER VIEW, BUT TO F OLLOW THE SAME. WE ACCORDINGLY DIRECT TO DELETE THE ADDITION. THUS, THIS GROUND IS ALLOWED. 6. APROPOS GROUND NO.3, AGAIN IT HAS BEEN INFORMED THROUGH THE SAID WRITTEN SUBMISSION THAT THE APPELLANTS BROTHE R HAPPENED TO BE IN THE SAME LINE OF BUSINESS AND THEREIN AS WELL TH E ADDITION WAS MADE ON ACCOUNT OF ALLEGED SHORTAGE OF THE MATERIAL TRADED. HOWEVER, ON HEARING HIS SUBMISSION, THE RESPECTED TRIBUNAL HAS HELD THAT THE SHORTAGE/DEFICIT WAS REASONABLE KEEPI NG IN VIEW THE NATURE OF THE BUSINESS OF THE ASSESSEE VIDE PARAGRA PH NO.8; REPRODUCED BELOW:- 8. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS M ADE BY THE LEARNED DR AS WELL AS THE CONTENTIONS OF THE ASSES SEE RAISED BEFORE THE AUTHORITIES BELOW. IN OUR OPINION, SHO RTAGE IS BOUND TO HAPPEN AND ACCORDINGLY THE TAX AUDITOR HAS ALSO CER TIFIED THE SHORTAGE IN THEIR REPORT. THEY HAVE NOT QUALIFIED THE REPORT AS COME OUT OF THE ASSESSMENT ORDER. THE ASSESSEE HAS SUBMITTED THE EVIDENCES BEFORE THE AO THAT THE VENDOR DOES NOT E NTERTAIN THE CLAIM OF THE ASSESSEE WHETHER THE SHORTAGE IS LESS THAN 100 KGS. THIS IS ALSO A FACT THAT THE ASSESSEE HAS TO BUY TH E MATERIAL IN BULK ITA NO.818/AHD/ 2010 SHRI LAXMILAL P. SHAH VS. ITO ASST.YEAR - 2006-07 - 5 - AND SELL IT IN RETAIL. IT IS NOT DENIED THAT THE SHORTAGE/DEFICIT IN THE CASE OF THE ASSESSEE IS LESS THAN 5% OF THE TOTAL P URCHASES. IT IS ALSO NOT DENIED THAT THE EXPLANATION OF THE ASSESSE E THAT THE SHORTAGE/DEFICIT HAS BEEN ACCEPTED IN THE EARLIER Y EARS IN THE ORDER PASSED U/S.143(3). THERE CANNOT BE ANY THUMB RULE THAT NO SHORTAGE WILL BE ALLOWABLE TO THE ASSESSEE. WE AR E, THEREFORE, KEEPING IN VIEW THE FACTS AND CIRCUMSTANCES OF THE CASE, OF THE VIEW THAT THE SHORTAGE/DEFICIT CLAIMED BY THE ASSESSEE I S REASONABLE KEEPING IN VIEW THE NATURE OF THE BUSINESS OF THE A SSESSEE. WE ACCORDINGLY DELETE THE ADDITION MADE OF RS.92,875/- . THUS, THIS GROUND STANDS ALLOWED. 6.1. FOLLOWING THE AFORESAID DECISION, THIS GROUND IS ACCORDINGLY ALLOWED. 6.2. REST OF THE GROUNDS ARE CONSEQUENTIAL IN NATUR E HENCE NEEDS NO INDEPENDENT ADJUDICATION. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER SIGNED, DATED AND PRONOUNCED IN THE COURT ON 24/ 09 /2010. SD/- SD/- ( N.S. SAINI ) ( MUKUL KR. SHRAWAT ) ACCOUNTANT MEMBER JUDICIAL MEM BER AHMEDABAD; DATED 24/ 09 /2010 T.C. NAIR, SR. PS COPY OF THE ORDER FORWARDED TO : 1. THE ASSESSEE. 2. THE DEPARTMENT. 3. THE CIT CONCERNED 4. THE LD. CIT(APPEALS)-II, SURAT 5. THE DR, AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT.REGISTRAR), ITAT, AHMEDABAD ITA NO.818/AHD/ 2010 SHRI LAXMILAL P. SHAH VS. ITO ASST.YEAR - 2006-07 - 6 - 1. DATE OF DICTATION..20/9/2010 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 21/09/2010 OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S 23/09/2010 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 24/09/2010 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 9. DATE OF DESPATCH OF THE ORDER