SANTOSH KUMAR TAMBI, JAIPUR V. INCOME TAX OFFICER, JAIPUR

ITA 993/JPR/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 6334 (ITAT-JAIPUR)
• Duration Of Justice: 7 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-07-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 15-12-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: P P MEENA JCIT DR DHK
• Assessee Lawyers: C M BATWARA
• Keywords: Depreciation; Business expenditure; Opportunity of being heard; Onus to prove
• Section: 143(3)

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,O JH HKKXPUN] YS[KK LNL; LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI BHAGCHAND, AM VK;DJ VIHY LA-@ ITA NO. 993/JP/2017 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR: 2012-13 SHRI SANTOSH KUMAR TAMBI PROP: M/S. KALU RAM RAKESH KUMAR 56, NEW GRAIN MANDI, CHOMU, DISTT. JAIPUR CUKE VS. THE ITO WARD- 7(3) JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: AAVPT 6020 A VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY: SHRI C.M. BATWARA, ADVOCATE JKTLO DH VKSJ LS@ REVENUE BY:SHRI P.P. MEENA, JCIT - DR LQUOKBZ DH RKJH[K@ DATE OF HEARING : 17/07/2018 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 20 /07/2018 VKNS'K@ ORDER PER BHAGCHAND, AM THE APPEAL FILED BY THE ASSESSEE EMANATES FROM THE ORDER OF THE LD. CIT(A)-3, JAIPUR DATED 03-10-2017 FOR THE ASS ESSMENT YEAR 2012-13 RAISING THEREIN FOLLOWING GROUNDS OF APPEAL. 1. THAT THE IMPUGNED ORDER PASSED BY THE LD. CIT(A) -III, JAIPUR AGAINST LAW AND FACTS OF THE CASE. 2. THAT THE LD. CIT(A) ERRED IN CONFIRMING ADDITION IN INCOME RS. 3,00,000/- OUT OF SALARY PAID TO RELATIV ES U/S 40A(2)(B) OF THE I.T. ACT, 1961 WHEREAS THE FOUR EMPLOYEES (TWO RELATIVES AND TWO OTHERS) AND GROSS REMUNERATION RS. 1,56,000/- WERE REDUCED IN ITA NO.993/JP/2017 SHRI SANTOSH KUMAR TAMBI, VS ITO, WARD- 7(3) JAIP UR 2 COMPARISON TO PREVIOUS YEAR WHILE TURNOVER WAS INCR EASED BY RS. 4,65,40,071/- APPROX 15% IN COMPARISON TO PREVIOUS YEAR (AS PER ANNEXURE A FILED ALONGWITH APPEAL BEFORE CIT (APPEA LS). 3. THAT THE LD. CIT(A) ERRED IN CONFIRMING THE ADDI TION OF RS. 61,258/- WITHOUT CONSIDERING THE FACT THAT IT W AS DONE IN FURTHERANCE OF BUSINESS AND TO RESOLVE DISPUTE THE LIABILITY OF FREIGHT AND ARRANGE ON THE GOODS WAS DEBITED AND CONSEQUENT IAL CREDIT ENTRY WERE ALSO PASSED IN ACCOUNT OF THE RELEVANT PERSON. 4. THAT THE LD. CIT(A) ERRED IN CONFIRMING THE WHIM SICAL AND ARBITRARY ADDITION OF 20% OF EXPENSES AMOUNT DE BITED IN PROFIT & LOSS A/C AS UNDER: TRAVELLING EXPENSES RS. 79200/- SHOP EXPENSES RS. 49720/- TELEPHONE EXPENSES RS. 32081/- CAR EXPENSES RS. 209146/- TOTAL RS. 3,70147/- WITHOUT CONSIDERING NATURE OF BUSINESS RESULTS AND STATUTORY PROVISIONS IN REGARD TO EXPENSES. 2.1 THE GROUND NO. 1 RAISED BY THE LD.AR OF THE ASS ESSEE IS GENERAL IN NATURE WHICH NEEDS NO ADJUDICATION. 3.1 APROPOS GROUND NO. 2, THE LD.AR OF THE ASSESSE E SUBMITTED THAT THE SIMILAR ISSUE WAS DECIDED BY THE LD. CIT(A) VID E HIS ORDER DATED 01- 02-2018 IN THE CASE OF THE SAME ASSESSEE FOR THE AS SESSMENT YEAR 2013- 14 BY OBSERVING AS UNDER:- 5.3 I HAVE CAREFULLY CONSIDERED THE MATERIAL BEFO RE ME. I FIND THAT ASSESSING OFFICER MADE THE DISALLOW ANCE OUT OF SALARY MAKING THE OBSERVATION THAT MAXIMUM SALA RY HAS BEEN PAID IN CASH TO THE FAMILY MEMBERS AND RELATIV ES AND SERVICES PROVIDED BY THEM ACCORDING TO THE PAYMENTS ACCORDING TO THE PAYMENTS ARE NOT JUSTIFIABLE. THE A/R OF THE ITA NO.993/JP/2017 SHRI SANTOSH KUMAR TAMBI, VS ITO, WARD- 7(3) JAIP UR 3 APPELLANT SUBMITTED THAT THE EVERY BUSINESS IS INCR EASED THE TURNOVER IN THIS YEAR IS RS. 38,58,28,784/- AS AGAI NST RS. 37,17,99,099/- IN LAST YEAR. FURTHER HE SUBMITTED T HAT THE ASSESSEE REDUCED TWO EMPLOYEES OUT OF SIX EMPLOYEES SECTION 40(A)(2)(B) OF I.T. ACT AND CONSEQUENTIAL S ALARY WAS ALSO REDUCED RS. 2,55,000/- IN COMPARISON TO PREVIO US YEAR. HE FURTHER ARGUED THAT LEARNED ASSESSING OFFICER HI MSELF ALLOWED THE SALARY PAID TO THE RELATIVE RS. 90,000/ - IN THE ASSESSMENT YEAR 2014-15 AND ASSESSMENT COMPLETED U/ S 143(3) OF THE I.T. ACT. HE ALSO SUBMNITED THAT THE SALARY WAS AGREED, DECIDED AND PAID ACCORDING TO THE PERIOD OF SERVICES, SINCERITY FOR JOB WITH RESPONSIBILITY AS OFFICE SUP ERINTENDENT- CUM-CLERK. ALL RELATIVE EMPLOYEES ARE COMMERCE GRAD UATE (B.COM) AND HAVING EXPERIENCE MORE THAN FIVE YEARS. THEY ALL ARE REGULARLY WORKING 12 TO 16 HOURS AND THE LD . AO HAD NOT CALLED THEM PERSONALLY. THE LD AO FAILED IN DIS CHARGING HIS BURDEN TO PROVE THAT THE SALARY IS PAID TO ANYO NE MORE THAN CONSIDERATION FOR SERVICES DONE BY HIM. I PURSUED THE RECORD AND I FIND THAT THERE IS NO FO RCE IN THE SUBMISSION OF THE A/R OF THE APPELLANT THAT THE TURNOVER IN THIS YEAR INCREASE, THE SALARY PAID TO PERSON U/ S 40A(2)(B) IS ALSO REDUCED IN THIS YEAR. THE ASSESSING OFFICER FAILED TO PROVE THAT HOW THE UNREASONABLE SALARY WAS PAID TO PERSON U/S 40A(2)(B) OF THE PERSON. THE PERSON COVERED U/S 40A(2)(B) WERE WORKING FOR 12 TO 16 HOURS IN A DAY. THEREFORE, THE OBSERVATION MADE BY THE ASSESSING OF FICER THAT THE SALARY PAID TO THE PERSON U/S 40A(2)(B) WE RE EXCESSIVE IS NOT CORRECT. HENCE, I DIRECT THE ASSES SING OFFICER TO DELETE THE ADDITION MADE OUT OF SALARY O F RS. 2,50,000/-. THIS GROUND IS ALLOWED. 3.2 AFTER HEARING BOTH THE PARTIES AND PERUSING THE ORDER OF THE LD. CIT(A)-3, JAIPUR DATED 01-02-2018, IT IS NOTED THAT LD. CIT(A) HAS DISPOSED OFF THE SIMILAR GROUND IN ASSESSEE'S OWN C ASE FOR THE ASSESSMENT ITA NO.993/JP/2017 SHRI SANTOSH KUMAR TAMBI, VS ITO, WARD- 7(3) JAIP UR 4 YEAR 2013-14 AND THUS DELETED THE ADDITION MADE OUT OF SALARY PAID TO THE RELATIVES. HENCE, ON THE SIMILAR FACTS AND CIRCUMS TANCES OF THE CASE, THE ISSUE IS RESTORED TO THE FILE OF THE LD. CIT(A) TO DECIDE IT AFRESH IN VIEW OF HIS DECISION TAKEN IN ASSESSEE'S OWN CASE FOR THE A SSESSMENT YEAR 2013-14. THUS GROUND NO. 2 OF THE ASSESSEE IS ALLOW ED FOR STATISTICAL PURPOSES. 4.1 IN GROUND NO. 3, THE ASSESSEE IS AGGRIEVED THAT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS. 61,258/- WI THOUT CONSIDERING THE FACT THAT IT WAS DONE IN FURTHERANCE OF BUSINESS AN D TO RESOLVE THE DISPUTE OF LIABILITY OF FREIGHT. 4.2 AFTER HEARING BOTH THE PARTIES, IT IS NOTED THA T THIS GROUNDS PERTAINS TO NOT FURNISHING SUPPORTING ORIGINAL DEBIT NOTE B EFORE THE LOWER AUTHORITIES AND THIS GROUND HAS NOT BEEN RAISED BEF ORE THE LD. CIT(A). IN THE INTEREST OF EQUITY AND JUSTICE, THE GROUND NO. 2 OF THE ASSESSEE IS RESTORED TO THE FILE OF THE LD. CIT(A) FOR AFRESH CONSIDERATION BY PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO T HE ASSESSEE. THE ASSESSEE IS ALSO DIRECTED TO SUBMIT THE RELEVANT BE FORE THE LD. CIT(A) CONCERNING THE ISSUE IN QUESTION FOR ADJUDICATION B EFORE HIM. THUS GROUND NO. 2 OF THE ASSESSEE IS ALLOWED FOR STATIST ICAL PURPOSES. ITA NO.993/JP/2017 SHRI SANTOSH KUMAR TAMBI, VS ITO, WARD- 7(3) JAIP UR 5 5.1 APROPOS GROUND NO. 4, THE LD.AR OF THE ASSESSE E SUBMITTED THAT THE SIMILAR ISSUE WAS DECIDED BY THE LD. CIT(A) VID E HIS ORDER DATED 01-02-2018 IN THE CASE OF THE SAME ASSESSEE FOR THE ASSESSMENT YEAR 2013-14 BY OBSERVING AS UNDER:- 6.3 I HAVE CAREFULLY CONSIDERED THE MATERIAL BEFO RE ME. I FIND THAT ASSESSING OFFICER TREATED 20% OF THE FOLL OWING EXPENSES CONVEYANCE EXPENSES ,SHOP EXPENSES, TELEPHONE EXPEN SES, TRAVELLING EXPENSES AND DEPRECIATION ON CAR AS UNVOUCHED AND N ON-BUSINESS PURPOSES AND MADE THE DISALLOWANCE OF RS. 98,866/-. THE A/R OF THE APPELLANT FAILED TO FILE ANY EVIDENC E WHICH PROVE THAT THE EXPENSES ARE NOT FULLY VOUCHED AND F OR BUSINESS PURPOSES. THEREFORE, I AM OF THE VIEW THAT THE ASSE SSING OFFICER RIGHTLY MADE THE OBSERVATION THAT ALL THE ABOVE EXPENSES AR E NOT FULLY VOUCHED AND NON-BUSINESS PURPOSES. THE ASSESSING OFFICER TR EATED 20% OF THE ABOVE EXPENSES WITHOUT ANY BASIS AND UNREASONABLE. HENCE, I TREAT 10% OF THE ABOVE EXPENSES AS NON-BUSINESS PURPOSE A ND UNVOUCHED. ACCORDINGLY, I CONFIRM THE ADDITION AS UNDER:- S.N. NAME OF EXPENSES CONFIRM 1. OUT OF CONVEYANCE EXPENSES 18,419 2. OUT OF SHOP EXPENSES 5,928 3. OUT OF TELEPHONE EXPENSES 1,807 4. OUT OF TRAVELLINGN EXPENSES 3,070 THE ADDITION MADE OUT OF DEPRECIATION ON CAR IS MAN DATORY DEDUCTION. THEREFORE, THE DEPRECIATION ON CAR DISAL LOW FOR PERSONAL USE IS NOT AS PER LAW AS HELD BY THE HON'BLE ITAT IN VA RIOUS CASES. HENCE, I DIRECT THE ASSESSING OFFICER TO DELETE THE DEPRECIA TION ON CAR OF RS. 40,418/-. THIS GROUND IS PARTLY ALLOWED. 5.2 AFTER HEARING BOTH THE PARTIES AND PERUSING THE ORDER OF THE LD. CIT(A)-3, JAIPUR DATED 01-02-2018, IT IS NOTED THAT LD. CIT(A) HAS DISPOSED OFF THE SIMILAR GROUND IN ASSESSEE'S OWN C ASE FOR THE ASSESSMENT YEAR 2013-14 AND REDUCED THE NON-BUSINESS EXPENSES TO THE EXTENT OF ITA NO.993/JP/2017 SHRI SANTOSH KUMAR TAMBI, VS ITO, WARD- 7(3) JAIP UR 6 10% OF THE ADDITION AND ALSO DELETED THE EXPENSES O N DEPRECIATION OF CAR .HENCE, ON THE SIMILAR FACTS AND CIRCUMSTANCES OF THE CASE, THE ISSUE IS RESTORED TO THE FILE OF THE LD. CIT(A) TO DECIDE IT AFRESH IN VIEW OF HIS DECISION TAKEN IN ASSESSEE'S OWN CASE FOR THE 2013- 14. THUS GROUND NO. 4 OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES . 6.0 IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES AS INDICATED ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 20 -07-2018 . SD/- SD/- FOT; IKY JKO HKKXPUN (VIJAY PAL RAO) ( BHAGCHAND) U;KF;D LNL; / JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 20/07/ 2018 *MISHRA VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- SHRI SANTOSH KUMAR TAMBI, JAIPUR 2. IZR;FKHZ@ THE RESPONDENT- THE ITO, WARD- 7(3), JAIPUR 3. VK;DJ VK;QDRVIHY@ CIT(A). 4. VK;DJ VK;QDR@ CIT, 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO.993 /JP/2017) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR