The ITO, Ward-2(3), Surat V. Shri Ritukumar R. Jariwala, Surat

ITA 899/AHD/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 63225 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 8 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-12-2012
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 29-11-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 26-03-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: T SANKAR
• Section: 69C

Judgement Text

, , , , D, IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD, D BENCH . .. . . .. . , !' !' !' !', , , , #$ %&'( #$ %&'( #$ %&'( #$ %&'(, , , , )* + ) )* + ) )* + ) )* + ) ' ' ' ' BEFORE S/SHRI G.C. GUPTA, VICE-PRESIDENT AND ANIL CHATURVEDI, ACCOUNTANT MEMBER) ITA NO.899/AHD/2010 [ASSTT.YEAR : 2006-2007] ITO, WARD-2(3) SURAT. /VS. SHRI RITUKUMAR R. JARIWALA 3/128, NAVAPURA, PARSHI SHERI SURAT. PAN : AFVPJ 6588 C ( (( (-. -. -. -. / APPELLANT) ( (( (/0-. /0-. /0-. /0-. / RESPONDENT) + 1 2 )/ REVENUE BY : SHRI T. SANKAR 4& 1 2 )/ ASSESSEE BY : SHRI KETAN JAGIRDAR 5 1 &(*/ DATE OF HEARING : 29 TH NOVEMBER, 2012 678 1 &(*/ DATE OF PRONOUNCEMENT : 14-12-2012 )9 / O R D E R PER G.C. GUPTA, VICE-PRESIDENT: THIS APPEAL BY THE REVENUE FOR THE A.Y.2006-2007 IS DIRECTED AGAINST T HE ORDER OF THE CIT(A)-II, SURAT DATED 21.12.2009. 2. THE GROUND NO.1 OF THE APPEAL OF THE REVENUE IS AS UNDER: ITA NO.899/AHD/2010 -2- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) HAS ERRED IN DELETING THE ADDITION MA DE BY THE AO OF RS.14,88,146/- ON ACCOUNT OF UNEXPLAINED EXPENSE S OF RS.14,88,146/-. 3. THE LEARNED DR SUBMITTED THAT THE ASSESSEE HAS D EBITED EXPENSES OF RS.37.20 LAKHS UNDER THE HEAD DEVELOPME NT CHARGES AND COULD NOT SUBSTANTIATE THE SAME BY PRODUCING ANY BI LLS OR VOUCHERS OR ANY OTHER PROOFS BEFORE THE AO. HE SUBMITTED THAT THE AO WAS JUSTIFIED IN DISALLOWING 40% OF SUCH EXPENSES BY TR EATING THE SAME AS UNEXPLAINED EXPENSES UNDER SECTION 69C OF THE ACT A ND MAKING AN ADDITION OF RS.14.88 LAKHS TO THE INCOME OF THE ASS ESSEE. HE SUBMITTED THAT THE ONUS WAS ON THE ASSESSEE TO PROV E THE GENUINENESS OF THE EXPENSES CLAIMED BY IT. HE RELIED ON THE OR DER OF THE AO. 4. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT THE ASSESSEE HAS FILED NECESSARY DETAILS BEFORE THE AO IN TAPAL AND THIS FACT HAS BEEN ACCEPTED BY THE CIT(A). HE SUBMITTED THAT THE COPY OF THE SAME HAS BEEN FILED BY THE ASSESSEE IN THE COMPILATION B EFORE THE TRIBUNAL, WHEREIN COPY OF THE WRITTEN EXPLANATION OF THE ASSE SSEE DATED 12-6- 2008 HAS BEEN FILED. HE RELIED ON THE ORDER OF THE CIT(A). 5. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND HAVE PE RUSED THE ORDERS OF THE AO AND THE CIT(A). WE FIND THAT THE ASSESSEE HAS FILED DETAILS OF SUCH EXPENSES CLAIMED BY IT UNDER THE HE AD DEVELOPMENT CHARGES BEFORE THE AO VIDE ITS LETTER DATED 12-6-20 08 FILED IN TAPAL BEFORE THE AO. THE CIT(A) HAS RECORDED THAT HE HAS GONE THROUGH THE LETTERS OF THE ASSESSEE DATED 12-6-2008 AND A LSO DATED 6-12- 2008, BOTH OF WHICH WERE SUBMITTED BEFORE THE AO. THE CIT(A) HAS CONCLUDED THAT SINCE THE ASSESSEE HAD FURNISHED RELEVANT DETAILS OF EXPENSES CLAIMED, THE AO COULD NOT MAKE ANY ITA NO.899/AHD/2010 -3- DISALLOWANCE ON THE GROUND THAT THE DETAILS WERE NO T FURNISHED AND WITHOUT MAKING ANY EFFORTS TO VERIFY SUCH EXPENSES. IN THESE FACTS OF THE CASE, WE ARE OF THE VIEW THAT THE DISALLOWANCE MADE BY THE AO AT 40% OF THE EXPENSES CLAIMED BY THE ASSESSEE UNDER T HIS HEAD IS VERY HIGH. HOWEVER, CONSIDERING THE NATURE OF THE EXPEN SES CLAIMED AND ALSO THE FACT THAT THE ASSESSEE, ALTHOUGH HAS FILED THE DETAILS OF THE EXPENSES, BUT COULD NOT PRODUCE COMPLETE SUPPORTING VOUCHERS THEREOF, WE HOLD THAT ENDS OF JUSTICE SHALL BE MET, IF AN AD HOC DISALLOWANCE OF RS.2 LAKHS IS SUSTAINED OUT OF THE EXPENSES CLAIMED BY THE ASSESSEE AS AGAINST DISALLOWANCES OF RS.14.88 L AKHS MADE BY THE AO, AND ACCORDINGLY, THE GROUND NO.1 OF THE REVENUE S APPEAL IS PARTLY ALLOWED. 6. THE GROUND NO.2 OF THE APPEAL OF THE REVENUE REA DS AS UNDER: 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) HAS ERRED IN DELETING THE ADDITION MA DE BY THE AO OF RS.6,13,000/- ON ACCOUNT OF UNVERIFIED CREDITORS . 7. THE LEARNED DR HAS RELIED ON THE ORDER OF THE AO . THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THESE WERE OLD C REDITORS AND WERE SQUARED UP DURING THE RELEVANT PERIOD, AND THEREFOR E THERE WAS NO VALID REASON TO MAKE ANY ADDITION. 8. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND HAVE PE RUSED THE ORDERS OF THE AO AND THE CIT(A). WE FIND THE FACT THAT THESE ACCOUNTS OF THE CREDITORS WERE OLD AND THE BALANCES WERE BRO UGHT FORWARD AND WERE SQUARED UP DURING THE RELEVANT PERIOD, COULD N OT BE CONTROVERTED ON BEHALF OF THE REVENUE, AND THEREFORE THE CIT(A) WAS FULLY JUSTIFIED IN DELETING THE ADDITION, AND ACCORDINGLY, THE ORDE R OF THE CIT(A) IS ITA NO.899/AHD/2010 -4- CONFIRMED AND THE GROUND NO.2 OF THE APPEAL OF THE REVENUE IS DISMISSED. 9. THE GROUND NO.3 OF THE APPEAL OF REVENUE IS AS U NDER: 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) HAS ERRED IN DELETING THE ADDITION MA DE BY THE AO OF RS.18,000/- ON ACCOUNT OF INTEREST ON ADVANCES. 10. THE LEARNED DR HAS RELIED ON THE ORDER OF THE A O. THE LEARNED COUNSEL FOR THE ASSESSEE HAS RELIED ON THE ORDER OF THE CIT(A). 11. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND HAVE P ERUSED THE ORDERS OF THE AO AND THE CIT(A). WE FIND THAT THE CIT(A) HAS RECORDED THAT ALL THE RELEVANT DETAILS PERTAINING T O THE LOANS AND ADVANCES GIVEN AND TAKEN, WERE ALWAYS AVAILABLE IN THE BALANCE-SHEET, WHICH WERE AVAILABLE WITH THE AO. THE CIT(A) HAS C ONCLUDED THAT IT IS ENTIRELY THE PREROGATIVE OF THE BUSINESSMEN TO D ECIDE WHETHER OR NOT ANY INTEREST SHOULD BE CHARGED ON ANY ADVANCE GIVEN . THE CIT(A) HAS CONCLUDED THAT IT WAS NOT A CASE OF THE ASSESSE E GIVING ADVANCE OUT OF INTEREST BEARING BORROWINGS, AND THEREFORE NO DI SALLOWANCE COULD BE MADE. THERE BEING NO MISTAKE IN THE ORDER OF THE C IT(A) ON THIS ISSUE, THE SAME IS CONFIRMED AND THE GROUND NO.3 OF THE REVENUES APPEAL IS DISMISSED. 12. IN THE RESULT, APPEAL OF THE REVENUE IS PARTLY ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE. SD/- SD/- ( %&' %&' %&' %&'( (( ( / ANIL CHATURVEDI) )* + )* + )* + )* + /ACCOUNTANT MEMBER ( . .. . . .. . /G.C. GUPTA) !' !' !' !' /VICE-PRESIDENT C OPY OF THE ORDER FORWARDED TO: