M/s Prabhakar Singh, Bhopal V. A.C.I.T., Range-3, Gwalior

ITA 95/AGR/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 9997 (ITAT-AGRA)
• Duration Of Justice: 1 year(s) 9 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-02-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 26-08-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 10-04-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: K C AGARWAL
• Keywords: Opportunity of being heard
• Section: 40A(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, AGRA BENCH, AGRA BEFORE : SHRI BHAVNESH SAINI, JUDICIAL MEMBE R AND MRS. ANNAPURNA MEHROTRA, ACCOUNT ANT MEMBER ITA NO. 95/AGRA/2014 ASSTT. YEAR : 2008-09 M/S. PRABHAKER SINGH, VS. A.C.I.T., RANGE-3, A-3, FORTUNE DELIGHT, GWALIOR. HOSHANGABAD ROAD, AHMEDPUR BHOPAL. [PAN: ARZPS 0204 J] (APPELLANT) (RESPONDENT) APPELLANT BY : SH. K.C. AGARWAL, ADVOCATE RESPONDENT BY : SH. WASEEM ARSHAD, SR. DR DATE OF HEARING : 28.01.2016 DATE OF PRONOUNCEMENT : 02.02.2016 ORDER PER BHAVNESH SAINI, JUDICIAL MEMBER: THIS APPEAL BY THE ASSESSEE HAS BEEN DIRECTED A GAINST THE ORDER OF LD. CIT(A), GWALIOR DATED 09.01.2014 FOR THE ASSESSMENT YEAR 2008-09. 2. WE HAVE HEARD THE LD. REPRESENTATIVES OF BOTH TH E PARTIES AND PERUSED THE MATERIAL ON RECORD. ITA NO. 95/AGRA/2014 2 3. THE LD. COUNSEL FOR THE ASSESSEE DID NOT PRESS G ROUND NO. 1 TO 3 AND 6 TO 12. THESE GROUNDS ARE, THEREFORE, DISMISSED AS BEIN G NOT PRESSED. 4. ON GROUND NO. 4, THE ASSESSEE CHALLENGED THE ADD ITION OF RS.2,63,170/- U/S. 40A(3) OF THE INCOME-TAX ACT. THE AO ON EXAMIN ATION OF THE LEDGER ACCOUNT OF VARIOUS EXPENSES FURNISHED BY THE ASSESS EE, OBSERVED THAT THE ASSESSEE HAS MADE CASH PAYMENTS IN EXCESS OF RS.20, 000/- WHICH HAVE BEEN DISALLOWED IN COMPUTATION OF INCOME OF THE ASSESSEE . THE AO, THEREFORE, DISALLOWED RS.2,63,170/- AND ADDED THE SAME TO THE INCOME OF THE ASSESSEE. SUCH DETAILS ARE NOTED IN PARA 4 OF THE ASSESSMENT ORDER AS WELL AS PARA 2 OF THE IMPUGNED ORDER. 4.1 THE ASSESSEES WRITTEN SUBMISSIONS WERE FORWARD ED TO THE AO FOR REMAND REPORT, IN WHICH THE AO EXPLAINED THAT PERUS AL OF LEDGER ACCOUNT OF MESS EXPENSES, CONVEYANCE EXPENSES AND HRA EXPENSES SHOWED THAT THESE EXPENSES ARE IN EXCESS TO RS.20,000/- FOR A SINGLE DAY. NOW, THE ASSESSEE HAS FILED PHOTOCOPIES OF THE BILLS, WHICH HAVE BEEN BIF URCATED IN TWO PARTS OR MORE TO SHOW THE PAYMENT BELOW THE LIMIT OF RS.20,000/-. THE AO STATED IN THE REMAND REPORT THAT THESE ARE SELF MADE VOUCHERS AND SOME OF THEM HAVE NO ITA NO. 95/AGRA/2014 3 SIGNATURE. THEREFORE, THE DISALLOWANCE IS LIABLE TO BE CONFIRMED. THE LD. CIT(A) CONFIRMED THE ADDITION AND DISMISSED THIS GROUND OF APPEAL. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. THE LD . COUNSEL FOR THE ASSESSEE FILED THE VOUCHERS OF THESE EXPENSES AND D ETAILS IN THE PAPER BOOK. ON MESS EXPENSES, THE DETAILS FURNISHED IN THE PAPE R BOOK SHOW THAT CONSOLIDATED AMOUNT ON ONE DAY EXCEEDS RS.20,000/-, BUT THE BILLS PRODUCED IN THE PAPER BOOK SHOW THAT THESE ARE PAYMENTS OF L ESS THAN RS.20,000/- TO DIFFERENT PARTIES ON DIFFERENT DATES. THEREFORE, TH E MESS EXPENSES REQUIRE VERIFICATION BECAUSE THE AO CANNOT SAY THAT THESE E XPENSES HAVE BEEN BIFURCATED WHEN THE ASSESSEE HAS SUPPORTED THE SAME BY BILLS. IF THE AO WAS NOT SATISFIED WITH THE EXPLANATION OF THE ASSESSEE, THOROUGH ENQUIRY COULD BE MADE FROM THE CONCERNED PARTIES WHO ISSUED THE BILL S IN FAVOUR OF THE ASSESSEE. THEREFORE, THE ORDER AUTHORITIES BELOW ON MESS EXPENSES IS SET ASIDE AND THE MATTER IS RESTORED TO THE FILE OF AO WITH T HE DIRECTION TO VERIFY THE BILLS FILED BY THE ASSESSEE WHICH APPEAR TO THE PAYMENT O F LESS THAN RS.20,000/- TO DIFFERENT PARTIES. THE AO SHALL PASS REASONED ORDER ON THE SAME BY GIVING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESS EE. ITA NO. 95/AGRA/2014 4 5.1 HOWEVER, AS FAR AS CONVEYANCE EXPENSES ARE CONC ERNED, THE ASSESSEE FILED BILLS OF THE SAME IN THE PAPER BOOK, WHICH RE VEAL THAT PAYMENTS OF RS.22,000/- EACH HAVE BEEN MADE ON 03.10.2007, 12.1 2.2007 AND 10.02.2008. THE LD. COUNSEL FOR THE ASSESSEE, THEREFORE, ADMITT ED THAT SINCE THESE PAYMENTS ARE MADE IN CASH IN EXCESS OF RS.20,000/-, THEREFORE, THE SAME MAY BE DISALLOWED. IN VIEW OF THE SUBMISSIONS OF THE LD . COUNSEL, THE ADDITION OF RS.66,000/- IS ACCORDINGLY CONFIRMED. 5.2 FURTHER AS REGARDS THE PAYMENT OF HRA IS CONCER NED, THE FIRST PAYMENT OF RS.39,905/- ON 02.05.2007, AS PER DETAILS SUBMIT TED BY THE ASSESSEE, WAS MADE TO DIFFERENT PERSONS LESS THAN RS.20,000/-. TH EREFORE, THIS ALSO REQUIRES VERIFICATION BY THE AO. WE, THEREFORE, SET ASIDE TH E ORDERS OF THE AUTHORITIES BELOW AND RESTORE THIS ISSUE TO THE FILE OF AO WITH THE DIRECTION TO RE-DECIDE THIS ISSUE BY GIVING REASONABLE AND SUFFICIENT OPPO RTUNITY OF BEING HEARD TO THE ASSESSEE. 5.3 SIMILARLY, ON 28.09.2007, HRA PAYMENT IS MADE O F RS.30,450/-, THE DETAILS OF WHICH ARE GIVEN AT PAGE 41 OF THE PAPER BOOK, WHICH SHOWS THAT EXCESS PAYMENT OF RS.25,000/- HAS BEEN MADE AND OTH ER PAYMENTS ARE LESS THAN RS.20,000/-. THE LD. COUNSEL FOR THE ASSESSEE ADMITTED THAT PAYMENT OF ITA NO. 95/AGRA/2014 5 RS.25,000/- IS LIABLE TO BE DISALLOWED BEING IN EXC ESS TO RS.20,000/-. THEREFORE, WE CONFIRM THE ADDITION OF RS.25,000/- O N THIS ACCOUNT. HOWEVER, THE REST OF THE TWO PAYMENTS OF RS.4,700/- AND RS.7 50/- ARE RESTORED TO THE FILE OF AO WITH THE DIRECTION TO VERIFY THE SAME AN D PASS REASONED ORDER ON THE SAME BY GIVING REASONABLE AND SUFFICIENT OPPORTUNIT Y OF BEING HEARD TO THE ASSESSEE. 5.4 ON THE SAME ISSUE, THE ASSESSEE FURTHER MADE PA YMENT OF RS.21,609/- ON 10.10.2007. THE LD. COUNSEL ADMITTED THAT THIS AMOU NT IS DISALLOWABLE. THEREFORE, ADDITION OF RS.21,609/- IS CONFIRMED. AS A RESULT, GROUND NO. 4 OF APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATIS TICAL PURPOSES. 6. ON GROUND NO. 5, THE ASSESSEE CHALLENGED THE DIS ALLOWANCE OF VARIOUS EXPENSES IN A SUM OF RS.1,73,867/-. THE SAME ARE CO NSIDERED SEPARATELY. TRAVELING EXPENSES ARE DISALLOWED @ 10% IN A SUM OF RS.43,098/-. THE ASSESSEE FAILED TO SUBMIT THE DETAILS OF THESE EXPE NSES BEFORE THE AO. PART OF SUCH EXPENSES WAS NOT FULLY ATTRIBUTABLE TO THE BUS INESS OF THE ASSESSEE. THE ASSESSEE COULD NOT ANSWER THE QUERY RAISED BY THE A O. THEREFORE, 10% WAS DISALLOWED WHICH HAS BEEN CONFIRMED BY THE LD. CIT( A). IN VIEW OF THE FACTS NOTED BY THE AUTHORITIES BELOW AND IN ABSENCE OF AN Y MATERIAL ON RECORD, WE ITA NO. 95/AGRA/2014 6 DO NOT FIND ANY REASON TO TAKE A DIFFERENT VIEW IN THE MATTER. THE ADDITION OF RS.43,098/- IS THUS CONFIRMED AND THIS GROUND OF AP PEAL OF THE ASSESSEE IS DISMISSED. 6.1 THE NEXT ADDITION IS OF RS.73,307/- OUT OF DISA LLOWANCE OF TELEPHONE EXPENSES, OFFICE EXPENSES AND CONVEYANCE EXPENSES 20%. THE AO ON PERUSAL OF PROFIT AND LOSS ACCOUNT, NOTICED THAT THE ASSESS EE HAS DEBITED TELEPHONE EXPENSES, OFFICE EXPENSES AND CONVEYANCE EXPENSES I N A SUM OF RS.3,66,537/-. HOWEVER, THE ASSESSEE COULD NOT PRODUCE COMPLETE VO UCHERS. THEREFORE, THE SAME WERE NOT VERIFIABLE. THIS FACT WAS ADMITTED BY THE ASSESSEE. THE AO ACCORDINGLY DISALLOWED 20% OF THE EXPENSES FOR WANT OF VERIFICATION. THE LD. CIT(A) CONFIRMED THE ADDITION. 6.2. AFTER CONSIDERING THE RIVAL SUBMISSIONS, WE AR E OF THE VIEW THAT 20% DISALLOWANCE IS EXCESSIVE IN NATURE. THE AO ON TRAV ELING EXPENSES ETC. HAS DISALLOWED 10% OF THE EXPENSES. THEREFORE, THE AO S HOULD TAKE CONSISTENT VIEW IN THE MATTER UNDER ISSUE. ACCORDINGLY, THE OR DERS OF THE AUTHORITIES BELOW ARE MODIFIED TO THE EXTENT THAT THE AO SHALL MAKE DISALLOWANCE OUT OF THESE EXPENSES @ 10% INSTEAD OF 20%. THIS GROUND OF APPEAL IS PARTLY ALLOWED. ITA NO. 95/AGRA/2014 7 6.3. THE LAST ITEM IS OF DISALLOWANCE OF RS.57,462/ - OUT OF REPAIR AND MAINTENANCE EXPENSES. THE AO NOTED THAT SINCE THERE IS NO FIXED ASSET OWNED BY THE ASSESSEE, THEREFORE, REPAIR AND MAINTENANCE EXPENSES SHALL HAVE TO BE DISALLOWED. THE ASSESSEE HAS CLAIMED THAT THE AMOUN T HAS BEEN GIVEN AS COMPENSATION TO VARIOUS VEHICLE OWNERS WHOSE VEHICL ES WERE DAMAGED AT THEIR VARIOUS SITES. THE AO NOTED THAT THESE ARE IN THE NATURE OF PENALTY AND NOT ALLOWABLE EXPENSES AND MADE THE ADDITION. THE A O IN THE REMAND REPORT SUBMITTED BEFORE THE LD. CIT(A) THAT THE ASSESSEE H AS NO FIXED ASSETS IN THE BALANCE SHEET AND NOW THE ASSESSEE HAS SUBMITTED TH AT EXPENSES ARE INCURRED TO PREPARE THE WATCHMAN HUT AND BARRIERS TO CONTROL THE TRESPASSERS AND TO WATCH THE ILLEGAL ACTIVITIES. HOWEVER, THE ASSESSEE HAS NOT PRODUCED ANY BILLS AND VOUCHERS FOR THE SAME. THE LD. CIT(A) CONSIDERI NG THAT THESE EXPENSES HAVE NOT BEEN SUPPORTED BY ANY DOCUMENTARY EVIDENCE , DISMISSED THIS GROUND OF APPEAL. 6.4. AFTER CONSIDERING THE RIVAL SUBMISSIONS, WE DO NOT FIND ANY MERIT IN THIS GROUND OF APPEAL OF THE ASSESSEE. SINCE THE EXPENDI TURE CLAIMED BY THE ASSESSEE HAVE NOT BEEN SUPPORTED BY ANY DOCUMENTARY EVIDENCE OR MATERIAL ON RECORD, THEREFORE, WE ARE NOT INCLINED TO INTERF ERE WITH THE ORDERS OF THE ITA NO. 95/AGRA/2014 8 AUTHORITIES BELOW. THIS GROUND IS ACCORDINGLY DISMI SSED. IN THE RESULT, GROUND NO. 5 OF APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED AS INDICATED ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 02.02.2016. SD/- SD/- (ANNAPURNA MEHROTRA) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 02/02/16 *AKS/- COPY OF ORDER FORWARDED TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR