HASITMAL J. JAIN, MUMBAI V. ITO 14(1)(2), MUMBAI

ITA 910/MUM/2010

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 9361 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 9 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-12-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 28-11-2011
• Assessment Year: 2000-2001
• Appeal Filed On: 05-02-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: P C MAURYA
• Assessee Lawyers: HITESH H JAIN
• Keywords: Salary income; Corroborative evidences

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES SMC , MUMBAI BEFORE SHIRI RAJENDRA SINGH, A.M. ITA NO. : 910/MUM/2010 ASSESSMENT YEAR : 2000-01 & ITA NO. : 911/MUM/2010 ASSESSMENT YEAR : 2001-02 M R. HASTIMAL J. JAIN 5/7, VITHOBA LANE,1 ST FLOOR, MUMBAI-400 002. PAN NO : AEXPS 4207 A VS. THE INCOME TAX OFFICER, WARD - 14(1)-2, 2 ND FLOOR, EARNEST HOUSE, NARIMAN POINT, MUMBAI-400 021. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI HITESH H. JAIN RESPONDENT BY : SHRI P. C. MAURYA DATE OF HEA RING : 28.11.2011 DATE OF PRONOUNCEMENT : 02.12.2011 ORDER PER RAJENDRA SINGH (AM) : THESE APPEALS BY THE ASSESSEE ARE DIRECTED AGAINST DIFFERENT ORDERS BOTH DATED 20.07.2009 OF THE LD. CIT(A)-XIV FOR THE ASSESSMENT YEARS 2000-01 AND 2001-02. THE DISPUTES RAISED IN BOTH TH ESE APPEALS ARE BEING DISPOSED OF BY A SINGLE CONSOLIDATED ORDER FO R THE SAKE OF CONVENIENCE. THE IDENTICAL DISPUTE RAISED IS REGARD ING DISALLOWANCE OF EXPENSES. ITA NO :910 & 911/MUM/2010 MR. H ASTIMAL J. JAIN 2 2. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT TH E ASSESSEE FOR THE ASSESSMENT YEARS 2000-01 AND 2001-02 HAD NOT FILED RETURN OF INCOME. ON THE BASIS OF CERTAIN INFORMATION RECEIVED, STATE MENT OF THE ASSESSEE HAD BEEN RECORDED U/S.131 OF THE I.T. ACT BY THE IN VESTIGATION WING, IN WHICH THE ASSESSEE ADMITTED INCOME FROM BROKERAGE A CTIVITIES AND AGREED TO DECLARE THE SAME FOR THE PURPOSE OF TAXATION. TH E ASSESSMENT FOR THE TWO ORDERS WAS, THEREFORE, SUBSEQUENTLY REOPENED BY THE AO AND NOTICE U/S.148 WAS SERVED. THE ASSESSEE DECLARED BROKERAGE INCOMES OF `. 1,69,960/- AND `. 3,79,460/- RESPECTIVELY FOR THE TWO YEARS IN THE RETURNS FILED U/S.148. THE ASSESSEE HAD ALSO CLAIME D CERTAIN EXPENSES AND ONLY THE NET INCOME WAS OFFERED FOR TAXATION. T HE DETAILS OF EXPENSES CLAIMED FOR THE TWO YEARS WERE AS UNDER:- HEAD A.Y. 2000-01 A.Y. 2001-02 SALARY `. 65,125 `. 1,52,315 STAFF WELFARE `. 5,311 `. 38,362 CONVEYANCE `. 28,462 `. 64,542 TELEPHONE `. 19,316 `. 39,181 BROKERAGE AND COMMISSION `. 16,996 `. 37,946 SUNDRY EXPENSES `. 8,312 `. 12,317 TOTAL `. `.`. `. 1,44,523 `. `.`. `. 3,45,664 3. THE AO AFTER EXAMINATION OF THE DETAILS OF EXPEN SES OBSERVED THAT THE ASSESSEE HAD SUBMITTED ONLY NAMES OF THREE PERS ONS FOR PAYMENT OF SALARY WITHOUT ANY EVIDENCE. EVEN THE ADDRESSES OF THREE PERSONS WERE NOT GIVEN. IN RESPECT OF STAFF WELFARE EXPENSES, TH E ASSESSEE STATED THAT THE EXPENSES WERE ON TEA, COFFEE, COLD DRINKS, LUNC H, MEDICAL EXPENSES ETC. FOR STAFF MEMBERS. BUT NO SUPPORTING BILLS AND VOUCHERS WERE PRODUCED. SIMILARLY, NO SUPPORTING EVIDENCE HAD BEE N GIVEN IN RESPECT OF ITA NO :910 & 911/MUM/2010 MR. H ASTIMAL J. JAIN 3 CONVEYANCE EXPENSES, BROKERAGE AND COMMISSION ETC. EVEN THE CONFIRMATIONS REGARDING BROKERAGE PAID WERE NOT GIV EN. THE AO OBSERVED THAT IN THE ASSESSMENT YEARS 2003-04 AND 2004-05 TH E ASSESSEE HAD NOT CLAIMED ANY EXPENSES ON ACCOUNT OF SALARIES. HE, TH EREFORE, DISALLOWED THE ENTIRE EXPENDITURE OF SALARY. IN RESPECT OF OTH ER EXPENSES, THE AO DISALLOWED 50% OF THESE EXPENSES FOR WANT OF EVIDEN CE. THE ASSESSEEE HAD ALSO CLAIMED RENT PAYMENT OF `. 1,001/- BUT COULD NOT FILE EVEN THE RENT RECEIPT. THE AO, THEREFORE, DISALLOWED THE REN T RECEIVED ALSO IN BOTH THE YEARS. THE AO, ACCORDINGLY, ASSESSED THE TOTAL INCOME AT `. 1,74,400/- AND `. 3,26,090/- RESPECTIVELY FOR TWO YEARS. 4. IN APPEAL, THE CIT(A) CONFIRMED THE DISALLOWANCE OF CERTAIN EXPENSES. THE CIT(A) ALSO OBSERVED THAT SINCE NO ST AFF MEMBERS HAD BEEN EMPLOYED, THERE WAS NO QUESTION OF ALLOWING STAFF W ELFARE EXPENSES. HE, THEREFORE, DISALLOWED THE STAFF WELFARE EXPENSES FU LLY. IN REGARD TO THE OTHER EXPENSES, HE CONFIRMED THE ORDER OF THE AO IN DISALLOWING 50% OF THE EXPENSES. SIMILARLY, THE DISALLOWANCE OF RENT WAS ALSO UPHELD. AGGRIEVED BY THE SAID DECISION THE ASSESSEE IS IN A PPEAL BEFORE THE TRIBUNAL IN BOTH THE YEARS. 5. AT THE TIME OF HEARING OF THE APPEAL NO ONE APPE ARED ON BEHALF OF THE ASSESSEE TO ARGUE THE CASE. A LETTER DATED 28.1 1.2011 WAS FILED, CLAIMED TO BE THE SON OF THE ASSESSEE SEEKING ADJOU RNMENT WHO DID NOT EVEN HAVE THE AUTHORISATION TO APPEAR BEFORE THE TR IBUNAL. IT HAS ALSO TO BE NOTED THAT EARLIER ALSO THERE HAS BEEN NO REPRES ENTATIVE FROM THE SIDE OF THE ASSESSEE AND THE APPEAL HAD BEEN DECIDED EX PARTE. BUT IT WAS SUBSEQUENTLY RECALLED AT THE REQUEST OF THE ASSESSE E. BUT AGAIN THERE IS NO REPRESENTATION IN THE MATTER. I, THEREFORE, PROC EED TO DECIDE THE APPEAL ON THE BASIS OF MATERIAL AVAILABLE ON RECORD AND AF TER HEARING THE LD. DR WHO STRONGLY SUPPORTED THE ORDERS OF AUTHORITIES BE LOW. ITA NO :910 & 911/MUM/2010 MR. H ASTIMAL J. JAIN 4 6. I HAVE PERUSED THE RECORDS AND CONSIDERED THE MA TTER CAREFULLY. THE DISPUTE IS REGARDING DISALLOWANCE OF VARIOUS EX PENSES. IT MAY BE NOTED THAT THE ASSESSEE HAD NOT DECLARED THE SUBSTA NTIAL BROKERAGE INCOME WHICH WAS EARNED BY HIM. THE INCOME WAS DECL ARED ONLY IN RESPONSE TO NOTICE U/S.148. IN THE RETURN FILED U/S .148 THE ASSESSEE CLAIMED HUGE EXPENSES UNDER VARIOUS HEADS AS MENTIO NED EARLIER, WHICH WERE NOT SUPPORTED BY ANY EVIDENCE. THE ASSESSEE CL AIMED SALARY EXPENDITURE BUT COULD NOT GIVE EVEN THE ADDRESSES O F THE EMPLOYEES. IT IS ALSO TO BE NOTED THAT IN THE ASSESSMENT YEARS 2003- 04 AND 2004-05 NO SALARY INCOME HAD BEEN CLAIMED. UNDER THESE CIRCUMS TANCES, DISALLOWANCE OF SALARY IS FULLY JUSTIFIED. THE ASSE SSEE ALSO CLAIMED STAFF WELFARE EXPENSES WHICH IS NOT SUPPORTED BY ANY EVID ENCE. SINCE IT HAS BEEN HELD THAT THERE WAS NO JUSTIFICATIONS FOR SALA RY, THE QUESTION OF STAFF WELFARE EXPENSES DOES NOT ARISE. THEREFORE, DISALLO WANCE OF ENTIRE STAFF WELFARE EXPENSES BY CIT(A) IS FOUND TO BE IN ORDER. AS REGARDS TO THE OTHER EXPENSES, DISALLOWANCE HAS BEEN MADE AT THE R ATE OF 50%. IN MY VIEW, DISALLOWANCE IS EXCESSIVE AND, THEREFORE, I R ESTRICT THE DISALLOWANCE TO 30% OF THE EXPENSES CLAIMED. THE DISALLOWANCE OF RENT IS JUSTIFIED IN THE ABSENCE OF SUPPORTING EVIDENCE AND THE SAME IS, THEREFORE, UPHELD. 7. IN THE RESULT, BOTH THE APPEALS ARE PARTLY ALLOW ED. ORDER PRONOUNCED ON THIS 2 ND DAY OF DECEMBER, 2011. SD/- ( RAJENDRA SINGH ) ACCOUNTANT MEMBER MUMBAI, DT: 02/12/2011 ITA NO :910 & 911/MUM/2010 MR. H ASTIMAL J. JAIN 5 COPY FORWARDED TO : 1. THE APPELLANT, 2. THE RESPONDENT, 3. THE C.I.T. 4. CIT (A) 5. THE DR, SMC - BENCH, ITAT, MUMBAI //TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI ROSHANI