Shri Bhanwarlal Sharma, Ahmedabad V. The Dy.CIT.,GNR Circle, Gandhinagar

ITA 941/AHD/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 94246 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 3 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-08-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 06-08-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 30-04-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRAVIN KUMAR
• Assessee Lawyers: GAURAV NAHATA
• Keywords: Business income; Depreciation
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH AHMEDABAD BEFORE S/SHRI RAJPAL YADAV, JM & ANIL CHATURVEDI, A M. ITA NO. 941/AHD/2012 ASST. YEAR 2008-09 BHANWARLAL SHARMA, B-85, NETAJINAGAR, NR. AMBAJI TEMPLE, MEGHANINAGAR, AHMEDABAD. VS DY. CIT, GANDHINAGAR CIRCLE, GANDHINAGAR, NOW DY. CIT, CIR-12, AHMEDABAD (APPELLANT) (RESPONDENT) PAN :AJQPS 4134E APPELLANT BY SHRI GAURAV NAHATA, AR RESPONDENT BY SHRI PRAVIN KUMAR, DR DATE OF HEARING: 6/8/2015 DATE OF PRONOUNCEMENT: 13/8/2015 O R D E R PER ANIL CHATURVEDI, ACCOUNTANT MEMBER. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF LD. CIT(A) DATED 10/10/2011 FOR ASST. YEAR 2008-09. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERI AL ON RECORD ARE AS UNDER. 3. THE ASSESSEE IS AN INDIVIDUAL WHO FILED HIS RETU RN OF INCOME FOR AY 2008-09 ON 31.3.2009 DECLARING TOTAL INCOME OF R S.19,480/-. THE CASE WAS SELECTED FOR SCRUTINY AND THEREAFTER ASSES SMENT WAS FRAMED UNDER SECTION 143(3) VIDE ORDER DATED 25/11/ 2010 AND THE ITA NO.941/AHD/2012 ASST. YEAR:2008-09 2 TOTAL INCOME WAS DETERMINED AT RS.11,75,820/-. AGGR IEVED BY THE ORDER OF THE AO, ASSESSEE CARRIED THE MATTER IN APP EAL BEFORE CIT(A) WHO VIDE ORDER DATED 10/10/2011 DISMISSED THE APPEA L OF ASSESSEE. AGGRIEVED BY THE ORDER OF CIT(A) ASSESSEE IS NOW IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUND:- 1. THE LD. CIT(A), GANDHINAGAR, AHMEDABAD HAS ERRED IN LAW AND ON FACTS IN PASSING APPELLATE ORDER DATED 10/10/201 1 FOR AY 2008-09 IN THE CASE OF APPELLANT BY CONFIRMING DISA LLOWANCE OF DEPRECIATION AND OTHER EXPENSES OF RS.11,14,338/-. 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND ON PERUSING THE COMPUTATION OF INCOME FILED BY THE ASSESSEE, TH E AO NOTICED THAT ASSESSEE HAS CLAIMED AGGREGATE EXPENSES OF RS.12,25 ,495/- ON ACCOUNT OF DEPRECIATION, ELECTRICITY, INSURANCE EXP ENSES, SALARY EXPENSES AND VEHICLE REPAIRS. THE ASSESSEE WAS ASKE D TO JUSTIFY THE CLAIM OF EXPENSES TO WHICH ASSESSEE INTER ALIA SUBM ITTED THAT THE EXPENSES WERE INCURRED TO EARN THE INCOME. THE SUBM ISSION OF THE ASSESSEE WAS NOT FOUND TO BE ACCEPTABLE TO THE AO A S ASSESSEE DID NOT FURNISH DETAILS OF INCOME. FURTHER IN ABSENCE O F ANY EVIDENCE IN RESPECT OF BUSINESS OF RESOLVING THE LAND DISPUTE A CTIVITIES AND IN ABSENCE OF ANY NEXUS BETWEEN THE INCOME AND THE EXP ENSES INCURRED, THE AO WAS OF THE VIEW THAT THE EXPENSES WERE NOT ALLOWABLE UNDER SECTION 57(III) OF THE I.T. ACT AND ACCORDINGLY DISALLOWED THE CLAIM OF EXPENSES ON ACCOUNT OF DEPR ECIATION (RS.9,61,973/-), INSURANCE (RS.80,865/-) AND VEHICL E REPAIRS (RS.71,500/-) AGGREGATING TO RS.11,14,338/-. AGGRIE VED BY THE ORDER ITA NO.941/AHD/2012 ASST. YEAR:2008-09 3 OF AO THE ASSESSEE CARRIED THE MATTER BEFORE CIT(A) WHO DISMISSED THE GROUND OF ASSESSEE BY HOLDING AS UNDER :- 5.2. I HAVE CONSIDERED THE ASSESSMENT ORDER, THE SUBMISSION AND THE FACTS OF THE CASE. THE FOLLOWING PERTINENT OBSERVATIONS ARE MADE ON THE ISSUE: (A) THE ASSESSEE HIMSELF HAS SHOWN THE INCOME AS I NCOME FROM OTHER SOURCES I.E. INTEREST INCOME RS.23,350/- AN D MISCELLANEOUS INCOME RS.7,10,000/- IN HIS INCOME-T AX RETURN. (B) BEFORE THE AO, THE APPELLANT CLAIMED THAT THE M ISCELLANEOUS INCOME WAS HIS BUSINESS INCOME AND HIS BUSINESS WAS RESOLVING LAND DISPUTES. (C) HOWEVER, THE AO NOTED THAT THE ASSESSEE WAS NOT ABLE TO GIVE DETAILS OF THE MISCELLANEOUS INCOME WHICH THE APPEL LANT COULD NOT FURNISH. NO BOOKS OF ACCOUNTS WERE MAINTAINED W ITH RESPECT TO THIS INCOME NOR ANY DETAILS FURNISHED. IT IS TO BE NOTED THAT NO SUCH DETAILS WERE FURNISHED EVEN IN THE APPELLATE P ROCEEDINGS. (D) NO DETAILS OF EVEN THE NAME OF THE PERSONS FROM WHOM SUCH RECEIPTS ARE CLAIMED HAVE BEEN GIVEN; WHAT TO SAY T HE DETAILS OF THE CLAIMED DISPUTES AND THE LEDGER ACCOUNTS OF THE PARTIES FROM WHOM PAYMENTS ARE CLAIMED TO BE RECEIVED. (E) THE APPELLANTS RELIANCE ON ASSESSMENT ORDER FO R 2004-05 IS OF NO AVAIL AS IN THAT YEAR THE NATURE OF BUSINESS WAS SHOWN AS SECURITY SERVICE AND COMMISSION BROKERAGE, EVEN IN THE ASSESSMENT ORDER. EVEN OTHERWISE EACH ASSESSMENT YE AR IS SEPARATE AND THE APPELLANT SHOULD HAVE SUBMITTED SO ME EVIDENCE TO ADDUCE THAT HE WAS CONDUCTING SOME BUSI NESS AS CLAIMED DURING THE ASSESSMENT PROCEEDINGS. (F) THE DETAILS OF NEXUS OF EXPENDITURE WITH THE EA RNING OF INCOME WAS ALSO NOT GIVEN. ITA NO.941/AHD/2012 ASST. YEAR:2008-09 4 THE INCOME DISCLOSED AS INCOME FROM OTHER SOURCES I N THE RETURN ITSELF, IN LIGHT OF THE ABOVE OBSERVATIONS CAN BEST BE SAID TO BE INCOME FROM UNKNOWN SOURCES AND HAS BEEN CORRECTLY ASSESSED UNDER THAT HEAD BY THE AO. NO EXPENSES CAN BE ALLOW ED WHEN EVEN THE NATURE OF INCOME IS NOT KNOWN. IN SUCH A C ASE, IT CANNOT BE SAID THAT AN EXPENSE WAS INCURRED FOR EARNING IN COME FROM UNKNOWN SOURCES. THE DISALLOWANCE MADE BY THE AO IS TOTALLY JUSTIFIED AND IS UPHELD. THE GROUNDS OF APPEAL RAIS ED BY THE APPELLANT ARE THEREFORE DISMISSED. 5. AGGRIEVED BY THE ORDER OF CIT(A) THE ASSESSEE IS NOW IN APPEAL BEFORE US. 6. BEFORE US, THE LD. AR REITERATED THE SUBMISSIONS MADE BEFORE THE AO AND THE CIT(A) AND FURTHER SUBMITTED THAT TH E ASSESSEE WAS ENGAGED IN THE BUSINESS OF RESOLVING LAND DISPUTES AND THE MISCELLANEOUS INCOME WAS HIS BUSINESS INCOME AND TH E EXPENSES CLAIMED BY THE ASSESSEE WERE IN RELATION TO EARNING OF BUSINESS INCOME. HE FURTHER SUBMITTED THAT AGAINST THE CLAIM OF TOTAL EXPENSES OF RS.12,25,495/- THE AO HAS ACCEPTED AND ALLOWED T HE PART OF EXPENSES LIKE SALARY EXPENSES AND OTHER EXPENSES AG GREGATING TO RS.1,11,157/- MEANING THEREBY THAT THE BUSINESS OF ASSESSEE HAS NOT BEEN DOUBTED NOR THE EXPENSES TO THE EXTENT ALLOWED BY HIM AND IN SUCH A SITUATION, THERE WAS NO REASON TO DISALLOW T HE BALANCE EXPENSES INCURRED BY THE ASSESSEE WHEN IT IS INCURR ED FOR THE SAME BUSINESS. HE FURTHER SUBMITTED THAT DUE TO OVERSIGH T THE INCOME WERE SHOWN UNDER THE HEAD INCOME FROM OTHER SOURCES AS AGAINST BUSINESS INCOME SHOWN IN EARLIER YEARS. HE FURTHE R SUBMITTED THAT SECTION 57(III) ONLY REQUIRES THAT THE EXPENDITURE MUST BE LAID OUT OR ITA NO.941/AHD/2012 ASST. YEAR:2008-09 5 EXPENDED WHOLLY AND EXCLUSIVELY FOR MAKING OR EARNI NG INCOME AND NOT THAT SUCH INCOME MUST HAVE BEEN EARNED AND FOR THIS PROPOSITION HE PLACED RELIANCE ON THE DECISION OF HONBLE APEX COURT IN THE CASE OF CIT VS. RAJENDRA PRASAD MOODY REPORTED IN (1978) 115 ITR 519. 7. THE LD. DR ON THE OTHER HAND SUPPORTED THE ORDER S OF AO AND THE CIT(A) AND FURTHER SUBMITTED THAT IN AY 2007-08 THE MATTER WAS REMITTED BY HONBLE TRIBUNAL TO AO AND IN SUCH A SI TUATION THE ISSUE MAY BE REMITTED TO AO. 8. THE LD. AR IN THE REJOINDER SUBMITTED THAT IN AY 2007-08, THE SALARY EXPENSES WAS NOT ALLOWED BY AO BUT IN THE YE AR UNDER CONSIDERATION IT HAS BEEN ALLOWED AND THEREFORE, TH ERE IS SLIGHT CHANGE IN THE FACTS AND ON THE CONTRARY THE CASE OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION IS ON A MUCH STRONGER FOOTING BECAUSE SALARY AND PART OF THE EXPENSES HAVE BEEN ALLOWED B Y AO. 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. ON PERUSING THE COMPUTATION OF INCOME PL ACED ON RECORD, WE FIND THAT IN THE COMPUTATION OF INCOME AGAINST T HE INCOME EARNED BY THE ASSESSEE, THE ASSESSEE HAD CLAIMED AGGREGATE EXPENSES OF RS.12,25,495/- OUT OF WHICH SOME OF THE EXPENSES AG GREGATING TO RS.1,11,157/- HAS BEEN ALLOWED BY THE AO AND THE RE MAINING EXPENSES OF RS.11,14,338/- HAVE BEEN DISALLOWED. C ONSIDERING THE FACT THAT ONLY PART OF THE EXPENSES HAVE BEEN DISAL LOWED UNDER SECTION 57(III) AND IN THE ABSENCE OF ANY FINDING O F THE AO THAT THE REMAINING EXPENSES INCURRED BY THE ASSESSEE ARE NON -GENUINE, WE ITA NO.941/AHD/2012 ASST. YEAR:2008-09 6 ARE OF THE VIEW THAT THE DISALLOWANCE OF PART OF TH E EXPENDITURE IS UNCALLED FOR. CONSIDERING THE AFORESAID FACTS, WE A RE OF THE VIEW THAT THE CLAIM OF EXPENDITURE CANNOT BE DISALLOWED AND A CCORDINGLY ALLOW THE GROUND OF ASSESSEE. 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSE E IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 13/8/2015 SD/- SD/- (RAJPAL YADAV) JUDICIAL MEMBER (ANIL CHATURVEDI) ACCOUNTANT MEMBER DATED: 13/8/2015 MAHATA COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER DY. REGISTRAR, ITAT, AHMEDABAD ITA NO.941/AHD/2012 ASST. YEAR:2008-09 7 1. DATE OF DICTATION:7/8/2015 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER: 10/8/2015 OTHER MEMBER: 3. DATE ON WHICH APPROVED DRAFT COMES TO THE SR. P. S./P.S.: 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER FOR PRONOUNCEMENT: 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. P.S./P.S.: 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK: 13/8/2015 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK: 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER: 9. DATE OF DESPATCH OF THE ORDER: