SHAMUN FAZALBHOY, MUMBAI V. I.T.O. - 19(3)(4), MUMBAI

ITA 8852/MUM/2011

• Counselvise Citation: 885219914 RSA 2011
• Duration Of Justice: 2 year(s) 6 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-07-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Next Hearing Date: 08-07-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 29-12-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: CAP PRADEEP SHOURYA ARYA
• Keywords: Depreciation
• Section: 37(1)

Judgement Text

6 , IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE S/SHRI B.R.BASKARAN (AM) AND SANJAY GARG, (JM) . . , , ./I.T.A. NO.8852/MUM/2011 ( ! ' / ASSESSMENT YEAR : 2006-07) SHRI SHAMUN FAZALBHOY 332, ABHAR CO-OP. H. S, 21 ST ROAD, KHAR (W), MUMBAI-400052 / VS. INCOME TAX OFFICER, 19(3)(4) MUMBAI. ( #$ / APPELLANT) .. ( %&#$ / RESPONDENT) # ./ ' ./PAN/GIR NO. : AAGPF0061J #$ ( / APPELLANT BY : NONE %&#$ ) ( /RESPONDENT BY : CAP.PRADEEP SHOU RYA ARYA * ) + , / DATE OF HEARING : 8.7.2014 -.'! ) + , /DATE OF PRONOUNCEMENT : 18..7.2014 / / O R D E R PER B.R.BASKARA ACCOUNTANT MEMBER: THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINS T THE ORDER DATED 12.9.2011 PASSED BY LD. CIT(A)-30, MUMBAI AND IT RE LATES TO THE ASSESSMENT YEAR 2006-07. 2. NONE APPEARED ON BEHALF OF THE ASSESSEE THOUGH T HE CASE WAS ADJOURNED ON THE EARLIER OCCASIONS AT THE SPECIFIC REQUESTS M ADE BY THE COUNSEL OF THE ASSESSEE. HOWEVER, NOBODY WAS PRESENT AT THE TIME W HEN THE APPEAL WAS CALLED FOR HEARING AND HENCE WE PROCEED TO DISPOSE OF TH E APPEAL EX-PARTE, WITHOUT PRESENCE OF THE ASSESSEE. THE APPEAL IS BARRED BY LIMITATION BY 15 DAYS. THE I.T.A. NO.8852/MUM/2011 2 ASSESSE HAS MOVED A PETITION REQUESTING THE BENCH T O CONDONE THE DELAY IN FILING THE APPEAL. WE HEARD LD D.R AND ALSO PERUSED THE S UBMISSIONS MADE BY THE ASSESSE IN THE PETITION. HAVING REGARD TO THE SUBM ISSIONS, WE CONDONE THE DELAY AND ADMIT THE APPEAL FOR HEARING. 3. THE ASSESSEE IS AGGRIEVED BY THE DECISION OF LD. CIT(A) IN RESPECT OF THE FOLLOWING ISSUES : A) DISALLOWANCE OF PURCHASES; B) DISALLOWANCE OF ADMINISTRATIVE AND SELLING EXPEN SES; AND C) DISALLOWANCE OF DEPRECIATION. 4. WE HAVE HEARD THE LD.DR AND PERUSED THE RECORD A VAILABLE BEFORE US. FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF COMMERCIAL PHOTOGRAPHY AND TRADING THEREIN. THE RETURN OF INC OME FILED BY THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION WAS TAKEN UP FOR SCRUT INY. THE ASSESSEE HAD CLAIMED PURCHASES TO THE TUNE OF RS.11,37,755/-. TH E ASSESSEE WAS ASKED TO PRODUCE BOOKS OF ACCOUNTS/BILLS/VOUCHERS TO SUPPORT THE ABOVE SAID CLAIM OF PURCHASES. SINCE THE ASSESSEE FAILED TO FURNISH ANY EVIDENCE, THE AO DISALLOWED 30% OF THE PURCHASES CLAIMED BY THE ASSESSEE HOLDIN G THAT THE PURCHASES ARE NON-VERIFIABLE AND HENCE NOT ALLOWABLE U/S 37(1) O F THE INCOME TAX ACT, 1961 (THE ACT). THE ASSESSEE HAD ALSO CLAIMED A SUM O F RS.5,31,036/- AS ADMINISTRATIVE AND SELLING EXPENSES. SINCE THE AS SESSEE FAILED TO FURNISH DETAILS/VOUCHERS TO SUPPORT THE ABOVE SAID CLAIM OF EXPENSES, THE AO DISALLOWED 30% OF THE SAME. THE ASSESSEE HAS CLAIMED DEPRECI ATION TO THE TUNE OF RS.2,06,246/-. HOWEVER, THE ASSESSEE DID NOT FILE ANY DEPRECIATION STATEMENT I.T.A. NO.8852/MUM/2011 3 AND DID NOT FURNISH ANY DETAILS THEREOF RELATING TO THE SAID CLAIM. HENCE, THE AO DISALLOWED 50% OF THE DEPRECIATION CLAIMED BY THE A SSESSEE. 5. IN THE APPELLATE PROCEEDINGS, THE LD. CIT(A) CONFIRMED THE DISALLOWANCE OF PURCHASES AND GRANTED PARTIAL RELIEF ON THE DISA LLOWANCE RELATING TO ADMINISTRATIVE & SELLING EXPENSES AND DIRECTED THE AO TO ALLOW THE DEPRECIATION AFTER DUE VERIFICATION. AGGRIEVED BY THE ORDER OF LD. CIT(A), THE ASSESSEE HAS FILED THIS APPEAL BEFORE US. 6. IN RESPECT OF PURCHASES, WE NOTICE THAT THE ASSE SSEE HAS FAILED TO FURNISH THE RELEVANT DETAILS/ BILLS AND VOUCHERS. BEFORE T HE LD. CIT(A), THE ASSESSEE CONTENDED THAT THE PURCHASES MADE BY HIM THROUGH CR EDIT CARD (RS.1.86 LAKHS) CAN BE CONSIDERED AS SECONDARY EVIDENCE TO SUPPORT THE SAID CLAIM. IT WAS ALSO SUBMITTED THAT THE PURCHASES MADE FROM M/S STUDIO F AVOURITE (RS.8.06 LAKHS) IS SUPPORTED BY CONFIRMATION LETTER OBTAINED FROM TH E ABOVE SAID CONCERN. IT WAS NOTICED THAT M/S STUDIO FAVOURITE WAS THE PROPRIETA RY CONCERN OF THE ASSESSEES FATHER. WE NOTICE THAT THE SAID CONTENTIONS DID NO T FIND FAVOUR OF THE LD. CIT(A). HOWEVER, THE FACT REMAINS THAT THE ABOVE SAID TWO T YPES OF PURCHASES AGGREGATING TO RS.9.92 LAKHS FORMS MAJOR PORTION OF THE TOTAL AMOUNT OF PURCHASES CLAIM OF RS.11.37 LAKHS. OUT OF THE TWO , THE ASSESSE SEEMS TO HAVE FURNISHED A CONFIRMATION LETTER OBTAINED FROM M/S S TUDIO FAVOURITE CONFIRMING THE PURCHASES MADE FROM THEM. THE PURCHASES MADE THROU GH CREDIT CARD, ESTABLISHES THE FACT OF PURCHASES ALSO TO SOME EXTE NT. HENCE, IN OUR VIEW, THE DISALLOWANCE OF PURCHASES CLAIM TO THE TUNE OF 30% APPEARS TO BE ON HIGHER SIDE. CONSIDERING THE FACT THAT THE ASSESSE HAS FAI LED TO FURNISH THE PRIMARY I.T.A. NO.8852/MUM/2011 4 EVIDENCES AND OTHER CIRCUMSTANCES OF THE ISSUE, WE ARE OF THE VIEW THAT THIS MATTER WOULD MEET ENDS OF JUSTICE IF THE DISALLOWAN CE IS RESTRICTED TO RS.50,000/-. ACCORDINGLY, WE MODIFY THE ORDER OF LD. CIT(A) ON T HIS ISSUE AND DIRECT THE AO TO RESTRICT DISALLOWANCE OUT OF PURCHASES TO RS.50,000 /-. 7. THE NEXT ISSUE RELATES TO DISALLOWANCE OF ADMINI STRATIVE AND SELLING EXPENSES. WE HAVE ALREADY NOTICED THAT THE LD. CIT (A) HAS REDUCED THE DISALLOWANCE TO 20% AS AGAINST THE 30% DISALLOWED BY THE AO. FROM THE ORDER OF THE LD. CIT(A), WE NOTICE THAT THE ASSESSEE HAS INCURRED THESE EXPENSES TOWARD PURCHASES OF BOOKS AND PERIODICALS, CAR REPA IRS, TELEPHONE EXPENSES, SALARIES, REPAIRS AND MAINTENANCE, PRINTING AND STA TIONERY AND PROFESSIONAL FEES. ACCORDING TO THE ASSESSEE, MOST OF THE EXPENSES WER E INCURRED THROUGH CHEQUE PAYMENT/CREDIT CARD PAYMENT. SINCE THE ASSESSEE HA S FAILED TO FURNISH THE RELEVANT VOUCHERS AND BILLS, IN OUR VIEW , DISALLO WANCE OF PART OF THE CLAIM IS JUSTIFIED TO TAKE CARE OF DEFICIENCY IF ANY IN THE SAID CLAIM. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE, IN OUR VIEW, IT WOUL D MEET ENDS OF JUSTICE, IF WE RESTRICT THE DISALLOWANCE TO 10% OF THE AMOUNT CLA IMED BY THE ASSESSEE. ACCORDINGLY, WE MODIFY THE ORDER OF LD. CIT(A) AND DIRECT THE AO TO RESTRICT THE DISALLOWANCE TO 10% OF ADMINISTRATIVE AND SELLING E XPENSES CLAIMED BY THE ASSESSEE. 8. THE NEXT ISSUE RELATES TO DISALLOWANCE OF DEPREC IATION AMOUNT CLAIMED BY THE ASSESSEE. WE NOTICE THAT THE LD. CIT(A) HAS RES TORED THE MATTER TO THE FILE OF AO TO EXAMINE THE ISSUE AFRESH WITH REFERENCE TO THE ADDITION MADE TO FIXED I.T.A. NO.8852/MUM/2011 5 ASSETS AND AFTER DUE VERIFICATION. HENCE, WE DO NO T FIND ANY INFIRMITY IN THE ORDER OF LD. CIT(A) ON THIS ISSUE. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT O N 18TH JULY, 2014 . -.'! * 0 1 2 18TH JULY, 2014 . ) 3 SD SD ( /SANJAY GARG) ( . . , / B.R. BASKARAN ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER * MUMBAI: 18TH JULY,2014. . . ./ SRL , SR. PS ! '!# / COPY OF THE ORDER FORWARDED TO : 1. #$ / THE APPELLANT 2. %&#$ / THE RESPONDENT. 3. * 5+ ( ) / THE CIT(A)- CONCERNED 4. * 5+ / CIT CONCERNED 5. 67 %+8 , , 8 ! , * / DR, ITAT, MUMBAI CONCERNED 6. 9 : / GUARD FILE. / * / BY ORDER, TRUE COPY ; (ASSTT. REGISTRAR) , 8 ! , * /ITAT, MUMBAI