NIMISH J SHAH, MUMBAI V. DCIT 20(2), MUMBAI

ITA 916/MUM/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 3185 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 6 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 10-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K MISHRA
• Keywords: Depreciation; Principle of natural justice
• Section: 69C; 144; 154

Judgement Text

1 I.T.A. NO.916 /MUM/2014 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES H, MUMBAI BEFORE SHRI JOGINDER SINGH (JUDICIAL MEMBER) AND SHRI ASHWANI TANEJA (ACCOUNTANT MEMBER) I.T.A. NO. 916/MUM/2014 (ASSESSMENT YEAR : 2010-11) MR. NIMISH J SHAH G-601, ARSHIE COMPLEX OFF YARI ROAD, VERSOVA, ANDHERI (W MUMBAI 400 061 VS DY.CIT 20(2), MUMBAI PAN : AMPPS0040R (APPELLANT) (RESPONDENT) APPELLANT BY SHEETAL JAIN / SHRI HITESH KOTHARI RESPONDENT BY S HRI S.K. MISHRA DATE OF HEARING : 18-08-2016 DATE OF PRONOUNCEMENT : 24-08-2016 O R D E R PER ASHWANI TANEJA, AM THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER PASSED BY THE COMMISSIONER OF INCOME-TAX (APPEALS)[HEREINAFTE R CALLED CIT(A)] DT 29-11- 2013 PASSED AGAINST THE ORDER U/S 154 DT 14-2-2011 FOR A.Y. 2009-10 ON THE FOLLOWING GROUNDS: 1.THE LEARNED C.I.T.(A) 31 HAS ERRED IN CONFIRMING ADDITION/S 69C OF RS. 6,17,862 FOR TH E REASONS STATED IN ORDER WITHOUT APPRECIATING FULL FACTS AND WHICH IS FAR FR OM NATURAL JUSTICE EQUITY AND FAIR PLAY 2 THE L EARNED C.I.T. (A) 31 HAS ERRED IN CONFIRMING DISALLOWANCE OF RS. 52,785 FROM THE DEPRECIATION FOR THE REASONS STATED IN ORDER WITHOUT APPRECIATIN G FULL FACTS. 3 . THE LEARNED C.I.T. (A) 31 HAS ERRED IN CONFIRMING DISALLOWANCE OF RS. 4,53,458 FROM 2 I.T.A. NO.916 /MUM/2014 THE EXPENSES BEING 30% OF THE TOTAL EXPENSES FOR THE REASONS STA TED IN ORDER WITHOUT APPRECIATING FULL FACTS. 2. DETAILED ARGUMENTS WERE MADE BY BOTH THE SIDES AND HAVE BEEN CONSIDERED WHILE DISPOSING OF THIS APPEAL. GROUND 1: IN THIS GROUND, THE ASSESSEE HAS CHALLENGED THE AC TION OF THE LD.CIT(A) IN CONFIRMING THE ADDITION U/S 69C OF RS. 6,17,862. IT IS NOTED FROM THE PERUSAL OF THE ORDERS OF LOWER AUTHORITIES THAT THI S ADDITION WAS MADE BY THE ASSESSING OFFICER ON THE BASIS OF AIR INFORMATION O N THE GROUND THAT ASSESSEE COULD NOT SUBSTANTIATE THE SOURCE OF CREDIT CARD EX PENSES. IT IS NOTED THAT THE ASSESSMENT ORDER WAS PASSED EXPARTE U/S 144 FOR WAN T OF PROPER REPRESENTATION FROM THE ASSESSEE AND IN ABSENCE OF PROPER DETAILS AND DOCUMENTARY EVIDENCES. HOWEVER, AT THE STAGE OF FI RST APPEAL, THE ASSESSEE SUBMITTED SUFFICIENT EVIDENCES TO EXPLAIN THE SOURC ES OF THE EXPENSES INCURRED THROUGH CREDIT CARD. THE LD.CIT(A) SENT THESE DETA ILS AND EVIDENCES TO THE ASSESSING OFFICER FOR REMAND REPORT. THE CIT(A) CO NSIDERED THE REMAND REPORT BUT ADDITION BY THE ASSESSING OFFICER WAS UPHELD ON THE GROUND THAT THE SOURCES OF THESE EXPENSES COULD NOT BE SUBSTANTIATE D. 3. WITH THE ASSISTANCE OF THE LD.COUNSEL, IT WAS NOTED BY US THAT DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE DERIVED INCO ME FROM SALARY, INCOME FROM HOUSE PROPERTY AS WELL AS INCOME FROM BUSINESS . THE GROSS TOTAL INCOME RETURNED BY THE ASSESSEE DURING THE YEAR WAS AMOUNT ING TO RS.39,03,585. IT IS FURTHER NOTED BY US THAT AGGREGATE AMOUNT OF PAYMEN T MADE BY THE ASSESSEE TOWARDS USAGE CREDIT CARD AMOUNTING TO RSA.6,17,862 THROUGH VARIOUS CHEQUES AS PER DETAILS GIVEN BELOW:- DT OF PAYMENT AMOUNT (RS.) CHEQUE NO. BANK NAME AND ACCOUNT NUMBER 08-APR-08 44,739 159285 ABN AMRO BANK - 855804 06-MAY-08 28,831 583308 ICICIBANK 001101011816 3 I.T.A. NO.916 /MUM/2014 03-JUN-08 33,455 583317 ICICIBANK 001101011816 08-SEP-08 11,556 583324 ICICIBANK 001101011816 03-OCT-08 66,288 154595 ABN AMRO BANK 855804 04-NOV-08 103,674 564701 ABN AMRO BANK 855804 04-DEC-08 83,486 564710 ABN AMRO BANK 855804 06-JAN-09 26,892 564715 ABN AMRO BANK - 855804 13-JAN-09 80,000 637116 HSBC BANK 04-FEB-09 45,440 196382 ABN AMRO BANK 855804 07-MAR-09 93,500 196389 ABN AMRO BANK - 855804 IT IS NOTED FROM THE ABOVE DETAILS THAT ENTIRE PAY MENTS HAVE BEEN MADE THROUGH CHEQUES FROM THE BANK ACCOUNTS OF THE ASSES SEE. WITH THE ASSISTANCE OF LD.COUNSEL IT WAS NOTED BY US THAT THESE BANK AC COUNTS WERE DULY DISCLOSED BY THE ASSESSEE IN HIS BALANCE-SHEET ALSO. THESE P AYMENTS HAVE BEEN MADE FROM THE REGULAR BANK ACCOUNTS OF THE ASSESSEE. TH ESE FACTS WERE NOT DISPUTED BY THE LD.DR OR EVEN BY THE LOWER AUTHORITIES. UND ER THESE CIRCUMSTANCES, WE FIND THAT THE ASSESSEE HAD DULY DISCLOSED THE SOURC E OF THE AMOUNT PAID TO THE CREDIT CARD AGENCIES. THE PAYMENTS WERE UNDISPUTED LY MADE FROM THE REGULAR BANK ACCOUNTS OF THE ASSESSEE. UNDER THESE CIRCUMS TANCES, WE FAIL TO UNDERSTAND HOW ADDITION COULD BE MADE IN THIS REGAR D, THAT TOO, U/S 69C OF THE ACT WHICH PERMITS ADDITION OF ONLY THOSE EXPENSES W HICH ARE NOT RECORDED IN THE BOOKS OF ACCOUNT. IN THIS CASE, THE PAYMENTS H AVE UNDISPUTEDLY BEEN MADE FROM REGULAR BANK ACCOUNTS OF THE ASSESSEE. WE FIN D NO REASON OR JUSTIFICATION FOR THE ADDITION MADE BY THE ASSESSING OFFICER AND, THEREFORE, THE SAME IS DIRECTLY TO BE DELETED. THIS GROUND IS ALLOWED. 4. GROUNDS 2 & 3 : IN GROUNDS 2 & 3, THE ASSESSEE HAS CONTESTED THE AC TION OF THE LOWER AUTHORITIES IN MAKING ADHOC DISALLOWAN CE ON ACCOUNT OF DEPRECIATION AND EXPENSES @20% AND 30% RESPECTIVELY . IT WAS FAIRLY STATED BY THE LD.COUNSEL THAT COMPLETE DETAILS AND DOCUMENTAR Y EVIDENCES COULD NOT BE 4 I.T.A. NO.916 /MUM/2014 FURNISHED TO FULLY SUBSTANTIATE THE EXPENSES. BUT THE DISALLOWANCE MADE WAS ON THE HIGHER SIDE. THE LD.DR SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES IN THIS REGARD. 5. AFTER CONSIDERING THE FACTS AND CIRCUMSTANCES OF TH E CASE, WE FIND THAT DISALLOWANCE OF DEPRECIATION @20% IS JUSTIFIED, WHE REAS THE DISALLOWANCE OF EXPENSES @30% IS ON HIGHER SIDE AND SINCE THE ASSES SING OFFICER HAS HIMSELF MADE DISALLOWANCE OF DEPRECIATION @20%, IN OUR VIEW , THE SAME PARAMETER SHOULD BE FOLLOWED FOR DISALLOWING THE EXPENSES ALS O AND, THEREFORE, THE DISALLOWANCE OF EXPENSES IS RESTRICTED TO 20%. THE ASSESSING OFFICER IS DIRECTED TO RESTRICT THE DISALLOWANCE TO 20% OF THE EXPENSES . THE ASSESSEE GETS RELIEF ACCORDINGLY. THUS, GROUND 2 IS DISMISSED AND GROUN D 3 IS PARTLY ALLOWED. 6. AS A RESULT, THIS APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE COURT ON THIS 24 TH DAY OF AUG, 2016. SD/- SD/- (JOGINDER SINGH) (ASHWANI TANEJA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DT :24 TH AUG, 2016 PK/- COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT 5. THE LD. DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE , H-BENCH (TRUE COPY) BY ORDER ASSTT.REGISTRAR, ITAT, MUMBAI BENCHES