M/s P.R. Modi & Sons, Ranchi V. ITO, Ranchi

ITA 96/RAN/2016

• Counselvise Citation: [2016] 130 COUNSELVISE.COM (IT) 9981 (ITAT-RANCHI)
• Duration Of Justice: 8 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-12-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 28-03-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: CHAUDHURY ORAM
• Assessee Lawyers: S S.K.PODARDEVESH PODAR
• Keywords: Business expenditure; Set aside
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 92

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, RANCHI SMC BENCH, RANCHI BEFORE SHRI N.S SAINI, ACCOUNTANT MEMBER ITA NO.96/RAN/2016 ASSESSMENT YEAR : 2010 - 2011 M/S. P.R.MODI & SONS, RANDHIR PRASAD STREET, UPPER BAZAR, RANCHI. VS. ITO, WARD 2(3), RANCHI PAN/GIR NO. AAFFP 4665 D (APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY : S/ SHRI S.K.PODAR /DEVESH PODAR , AR REVENUE BY : SHRI CHAUDHURY ORAM , DR DATE OF HEARING : 7 /12/ 2016 DATE OF PRONOUNCEMENT : 7 /12/ 2016 O R D E R THIS IS AN APPEAL FILED BY THE ASSESSEE AGA I NST THE ORDER OF CIT(A) - RANCHI , DATED 14.1.2016 , FOR THE ASSESSMENT YEAR 2010 - 2011 . 2. THE SOLE ISSUE INVOLVED IN THIS APPEAL IS THAT THE LD CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN MAKING THE DISALLOWANCE OF 15% OUT OF EXPENSES CLAIMED UNDER THE HEAD TELEPHONE EXPENSES OF RS.88,646/ - , ADVERTISEMENT EXPENSES OF RS.41,670/ - , TRAVELLING EXPENSES OF RS.1 ,52,785/ - AND SHOP EXPENSES OF R S.93,340/ - . 2 ITA NO.96/RAN/2016 ASSESSMENT YEAR :2010 - 2011 3. I HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IN THE INSTANT CASE, THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE FAILED TO FURNISH DETAILS/DOCUMENTS REQUIRED BY HIM. THEREFORE, HE MADE AN ESTIMATED DISALLOWANCE OF 1 5% OUT OF EXPENSES CLAIMED UNDER THE HEAD TELEPHONE EXPENSES, ADVERTISEMENT EXPENSES, TRAVELLING EXPENSES AND SHOP EXPENSES AND ADDED RS.56,466/ - TO THE INCOME OF THE ASSESSEE. 4. ON APPEAL, LD CIT(A) CONFIRMED THE ACTION OF THE ASSESSING OFFICER. 5. BEF ORE ME, LD A.R. ARGUED AND SUBMITTED THAT IN ASSESSMENT YEAR 2008 - 09, THE ASSESSEE HAD SHOWN NET PROFIT RATIO OF 0.88%, IN ASSESSMENT YEAR 2009 - 2010, THE ASSESSEE HAD SHOWN NET PROFIT RATIO OF 1.12% AND THE NET PROFIT RATIO SHOWN BY THE ASSESS EE IN THE PRE SENT YEAR AT 1.51%. HE SUBMITTED THAT THIS IS STATED BY THE LD CIT(A) IN HIS ORDER AT PAGE 2 PARA 4.2. HE SUBMITTED THAT AS THE NET PROFIT RATIO IN THE PRESENT YEAR OF APPEAL WAS HIGHER AS COMPARED TO THE PAST ACCEPTED RESULTS OF THE ASSESSEE, THEREFORE, THERE WAS NO JUSTIFICATION FOR THE ASSESSING OFFICER TO MAKE ADHOC DISALLOWANCE OF GENUINE BUSINESS EXPENDITURE CLAIMED BY THE ASSESSEE AND ADDING RS.56,466/ - TO THE INCOME OF THE ASSESSEE. 6. LD D.R. RELIED ON THE ORDERS OF THE LOWER AUTHORITIES. 7. I FIND THAT THE ASSESSING OFFICER HAS MADE ADHOC DISALLOWANCE OF RS.56,466/ - @ 15% OF THE TOTAL EXPENDITURE OF RS.3,76,441/ - CLAIMED UNDER THE HEADS TELEPHONE, ADVERTISEMENT, TRAVELLING AND SHOP 3 ITA NO.96/RAN/2016 ASSESSMENT YEAR :2010 - 2011 EXPENSES ON THE GROUND THAT THE ASSESSEE FAILED TO PRODUCE THE DETAILS/DOCUMENTS. HE HAS FAILED TO POINT OUT FOR WHICH OF THE EXPENSES CLAIMED BY THE ASSESSEE, THE ASSESSEE FAILED TO PRODUCE THE DETAILS/DOCUMENTS. WITHOUT DOING SO, THE ASSESSING OFFICER CANNOT MAKE ADHOC DISALLOWANCE OUT OF GENUINE BUSINESS EXPE NDITURE OF THE ASSESSEE IN LAW AND THE LD CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE SAME. HENCE, I SET ASIDE THE ORDERS OF LOWER AUTHORITIES AND VACATE THE DISALLOWANCE OF RS.56,466/ - AND ALLOW THE GROUNDS OF APPEAL OF THE ASSESSEE. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRO NOUNCED IN THE OPEN COURT ON 7 /12/2016 IN THE PRESENCE OF PARTIES. SD/ - (N.S SAINI) A CCOUNTANT MEMBER RANCHI ; DATED 6 7 /12 /2016 B.K.PARIDA, SPS COPY OF THE ORDER FORWARDED TO : BY ORDER, SR.PS, ITAT, CAMP AT RANCHI 1. THE APPELLANT : M/S. P.R.MODI & SONS, RANDHIR PRASAD STREET, UPPER BAZAR, RANCHI 2. THE RESPONDENT. ITO, WARD 2(3), RANCHI 3. THE CIT(A) RANCHI 4. CIT , RANCHI 5. DR, ITAT, RANCHI 6. GUARD FILE. //TRUE COPY//