RAVI LOCHAN SINGH,PATNA V. ACIT, CIRCLE-5, PATNA

ITA 124/PAT/2020

AI Insights

This case involves an appeal by Ravi Lochan Singh against the order of the ACIT, Circle-5, Patna, which included several disallowances and additions to his income for the assessment year 2011-12. The primary issues revolved around unexplained expenditures, disallowances related to depreciation, rental income, and various other expenses including legal fees and commissions. The Tribunal noted that the assessee had multiple opportunities to present his case but failed to provide sufficient evidence to counter the findings of the lower authorities. The Tribunal also considered the impact of the COVID-19 pandemic on the delay in filing the appeal but found no merit in the grounds of appeal presented.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 33459 (ITAT-PATNA)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-01-2025
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2011-2012
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Unexplained expenditure; Depreciation; Capital expenditure; TDS; Bonafide mistake
• Section: 195; 250; 32; 40(a)(ia); 194C; 194J; 40a(ia)

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL “PATNA BENCH”, PATNA (VIRTUAL HEARING AT KOLKATA) SHRI DUVVURU RL REDDY, VICE PRESIDENT SHRI SANJAY AWASTHI, ACCOUNTANT MEMBER I.T.A. No. 124/Pat/2020 Assessment Year: 2011-12 Ravi Lochan Singh, Pustak Bhandra, Compound G.M. Road, Patna - 800004 ........…...…………….... Appellant [PAN: AKIPS4848Q] vs. ACIT, Circle-5, Patna, Birchand Patel Marg, Patna – 800001 ..........…..….................... Respondent Appearances by: Assessee represented by : None Department represented by : Ashwani Kr. Singal, JCIT Date of concluding the hearing : 01.01.2025 Date of pronouncing the order : 08.01.2025 O R D E R PER SANJAY AWASTHI, ACCOUNTANT MEMBER: 1. In this case, there is a delay of 241 days for which an application, accompanied by affidavit for condoning the said delay, has been filed. For the sake of record, the contents of the said petition is reproduced as under: “1 That the appellant received the order on 03.03.20 from CIT(A), Patna. 2 That the appellant then met his lawyer for filing of appeal and collecting papers from its office situated in Kolkata, and in the meantime, lockdown was declared on 24.03.2020. 3. That the appellant office was closed in Patna as well as in Kolkata during the entire lockdown. 4 That when the appellant office reopened in Patna in the second week of December, then only papers were collected and the same were provided to the counsel for filing of appeal. 2 ITA No. 124/Pat/2020 Ravi Lochan Singh 5 That the appeal was filed on 31.12.20 and the delay occurred due to Corona Pandemic as all the staff were not coming to the office and documents could not be provided to the counsel due to closure of the offices. 6 That the Appellant is living in Australia and after lockdown the borders of Australia is closed Till date and appellant at present is in Australia 7 That Hon'ble Apex court in Suo Moto writ Petition no 03/2020 VIDE ORDER DATED 23.03.20 has extended the limitation of all cases till further order. 8 That there is no latches on the part of the appellant and delay occurred due to Corona Pandemic and lock down declared by the Govt of India.” 1.1 Considering the reasons mentioned in the said petition, the delay is hereby condoned and the matter is admitted for adjudication. 2. It is noticed that this is an appeal filed on 31.12.2020 and has gone through 10 days of hearing beginning from 02.11.2022 to the last one being on 01.01.2025. It is seen that either adjournments have been taken by the Ld. AR or none have attended on certain other dates. In fact, on the last date of hearing also none attended and it is considered appropriate that this old pending matter may be disposed of on the basis of facts on record. In fact, a final opportunity was given on the penultimate date of hearing on 30.12.2024, when also none attended on behalf of the assessee. Accordingly, the Ld. DR’s assistance was requested by the Bench in going through the orders of authorities below and other material placed on record. 2.1 It is seen that in this case the order u/s 250 of the Income Tax Act, 1961 (hereafter ‘the Act’) dated 28.02.2020 has been decided against the assessee in respect of several additions which have been spelt out in the grounds of appeal, which shall be extracted. It is seen that before the Ld. CIT(A) considerable number of opportunities were given to the assessee and it is a matter of record that some of them have been utilised for filing submissions. Thereafter, the Ld. CIT(A) has considered the submissions and passed the impugned order on each of the issues as under: 3 ITA No. 124/Pat/2020 Ravi Lochan Singh “Ground No 1 regarding disallowed Rs. 1,18,405/- as an unexplained expenditure. On going through the assessment order it is found that the there is negative cash on hand with the appellant, which is a logical impossibility in practical. In books of accounts its presence denotes that some expenses have been paid out of the books. So this is unexplained expenditure. No comments on this ground in the AO's remand report. The addition has been made in light of the provisions of the Act relating to the issue. Hence this ground is dismissed. Ground No- 2 regarding disallowance of Rs. 1,49,100/- on account of depreciation on 2W the Millennium Building. On going through the assessment order it is observed that the appellant debited rent to his P& L a/c on account of the 2W. The appellant was using the building for the purpose of business even after purchasing it, till he let it out to another company from 8th October 2010 whereas he was purchased it on 31.05.2010. So put in use period works out to be only 130 days, which is less than 180 days. In the remand report the AO again stated that as per the provision of section 32 if the asset is acquired during the year and is put to use for a period of less than 180 days then 50% of the normal depreciation will be allowed as per the provision of section 32(1) of IT Act. Hence, the appellant's contention that the addition was arbitrary found incorrect and after considering the facts and merits of the case, I dismissed this ground. Ground No- 3 regarding disallowance of Rs. 2,32,000/- on account of 50% of the rental income of wife Ms. Shobhna Raj Singh. On going through the assessment order it is observed that Ms. Shobhna Raj Singh shown rental income of Rs. 4,64,000/- in her return for A.Y. 2011-12 from letting of 2W, The Millennium, whereas the said property was purchased through the loan which taken jointly with appellant. In the remand report the AO has also confirmed that the Millennium is a joint property of Shri Ravi Loachan Singh and his wife. Hence, the appellant's contention that the addition was not justified found incorrect and after considering the facts and merits of the case, I dismissed this ground. Ground No- 4 regarding disallowance of Rs. 6,27,002/- on account of expenses of Interior Decoration. On going through the assessment order as well as submission of the appellant it is observed the appellant made expenditure as interior decoration for flat 5D, Malayalya which is used to carry on the business more efficiently and effectively therefore this expenditure is capital in nature and can't be debited in P & L a/c. In the remand report the AO has also confirmed the it is capital expenditure. Hence, the addition has been made in light of the provisions of the Act relating to the issue. Hence this ground is dismissed. Ground No- 5 regarding disallowance of Rs. 4,26,866/- on account of 50% of interest on loan taken for purchases of property 5D, The Malayalaya. On going through the assessment order it is observed that the appellant purchased the said property jointly with his wife Ms. Shobhna Raj Singh and loan taken for purchase the said property from Deutsche Bank. In the remand report the AO has also mentioned that the loan certificate for the F.Y. 2010-11 issued by Deutsche Bank in the name of Shri Ravi Lochan Singh and 4 ITA No. 124/Pat/2020 Ravi Lochan Singh Shobhna Raj Singh with loan account no. 300005293200019 for the purpose of housing loan for flat no. 5D, Malayalay. Hence this addition of the AO is confirmed, and the appeal of the assessee is dismissed on this ground. Ground No- 6 regarding disallowance of Rs. 2,98,145/- on account of 50% of interest on loan taken for purchases of property 2W, The Millennium Building. This ground is same nature as ground no 5. Hence it is my opinion that the AO has disallowed amount of Rs. 2,98,145/- on the basis of 50% share of income of Rs. 5,96,289/- is confirmed and the appeal of the appellant is dismissed on this ground. Ground No-7 regarding disallowance of Rs. 3,72,000/- on account of legal fee and court expenses on the purchase of property 5D, The Malayalaya. The appellant debited amount of Rs. 1,12,000/- and amount of Rs. 2,60,000/- on account of court fee to Ms. Pratima Agrawal on the account of brokerage for purchasing the property SD, The Millennium. It is my opinion that these expenses are capital expenses and could not be allowed to debit in P&L A/c. In the remand report the AO has stated that the appellant has not furnished the valid documentary evidence. Hence, the disallowance of Rs. 3,72,000/- is confirmed and appeal of the appellant is dismissed in this ground. Ground-8 regarding commission paid of Rs.9,05,981/- u/s 194H the A.O has made the addition amount of Rs. 9,05,981/- with stating that assessee missed to deduct tax on payment on commission on amounting of Rs. 9,05,981/- made to resident Indian since the assessee has again violating the provision of section 194H of the Income Tax Act, 1961, section 40(a)(ia) is attracted here also. Hence, It is my opinion that the assessee has claimed Rs. 9,05,981/- under the head of commission but he has not deducted TDS on the payments u/s 194H. Therefore, the AO proceeded to make disallowance of Rs. 9,05,981/- u/s 40(a) (ia) of the Income Tax Act, 1961 and added back to the total income of the assessee. Hence this addition of Rs. 9,05,981/- is liable to be confirmed. Ground-9 regarding commission paid of Rs.11,41,679/- u/s 194H the A.O has made the addition amount of Rs. 11,41,679/- with stating that assessee missed to deduct tax on payment on commission on amounting of Rs. 11,41,679/- made to resident Indian since the assessee has again violating the provision of section 194H of the Income Tax Act, 1961, section 40(a)(ia) is attracted here also. Hence, It is my opinion that the assessee has claimed Rs. 11,41,679/- under the head of commission but he has not deducted TDS on the payments u/s 194H. Therefore, the AO proceeded to make disallowance of Rs11,41,679/- u/s 40(a) (ia) of the Income Tax Act, 1961 and added back to the total income of the assessee. Hence this addition of Rs. 11,41,679/- is liable to be confirmed. Ground-10 regarding consultancy fee paid of Rs. 2,93,160/- u/s 194J the A.O has made the addition amount of Rs. 2,93,160/- with stating that assessee missed to deduct tax on payment on consultancy fee on amounting of Rs. 2,93,160/- made to resident Indian since the assessee has again violating the provision of section 194J of the Income Tax Act, 1961, section 40(a)(ia) is attracted here also. Hence, 5 ITA No. 124/Pat/2020 Ravi Lochan Singh It is my opinion that the assessee has claimed Rs. 2,93,160/- under the head of consultancy fee but he has not deducted TDS on the payments u/s 194J. Therefore, the AO proceeded to make disallowance of Rs. 2,93,160/- u/s 40(a) (ia) of the Income Tax Act, 1961 and added back to the total income of the assessee. Hence this addition of Rs.. 2,93,160/- is liable to be confirmed. Ground 11 regarding TDS deductible under chapter XVII-B on account of advertisement a/c of Rs. 18,91,877/-. The A.O has made the addition amount of Rs. 18,91,877/- with stating that assessee missed to deduct tax on payment under the head of advertisement/promotion amounting of Rs. 18,91,877/-, made to resident Indian since the assessee has again violating the provision under chapter XVII-B of the Income Tax Act, 1961, section 40(a)(ia) is attracted here also. Hence, It is my opinion that the assessee has claimed Rs. 18,91,877/- under the head of advertisement but he has not deducted TDS on the payments. Therefore, the AO proceeded to make disallowance of Rs. 18,91,877/- u/s 40(a) (ia) of the Income Tax Act, 1961 and added back to the total income of the assessee. Hence this addition of Rs. 18,91,877/- is liable to be confirmed. Ground -12 disallowance of Rs. 50,000/- as reimbursement of actual expenditure. On the issue of disallowance of Rs. 50,000/- covered u/s 194C & 194J and also, as the assessee failed to make TDS on the payments, I have considered the issue. On the facts and merits of the same, I am of the view that the disallowance u/s 40a(ia) of the Act is correct and is therefore confirmed. Ground -13 disallowance of Rs. 88,452/- for non deduction of TDS. On this issue during the assessment proceeding the appellant admitted that it is an unintentional mistake failed to make TDS on the payments, I have considered the issue. On the facts and merits of the same, I am of the view that the disallowance u/s 40a(ia) of the Act is correct and is therefore confirmed. Ground -14 disallowance of Rs. 3,34,390/- for non-deduction of TDS. On the issue of disallowance of Rs. 3,34,390/- covered u/s 195 and also, as the assessee failed to make TDS on the payments, I have considered the issue. On the facts and merits of the same, I am of the view that the disallowance u/s 40a(ia) of the Act is correct and is therefore confirmed. Ground -15 disallowance of Rs. 94,305/- for non-deduction of TDS. This ground is same nature as ground no 14. Hence, I am of the view that the disallowance u/s 40a(ia) of the Act is correct and is therefore confirmed. Ground no. 16 is with regard to charge of interest u/s 234 of Rs. 7,97,562/-, which are consequential in nature.” 2.2 Aggrieved with this action, the assessee has filed an appeal through as many as 19 grounds of appeal which are seen to be lengthy and argumentative. 3. We have carefully gone through the submissions on record, the facts of this case and the orders of the authorities below. It is evident that the assessee has not been able to demonstrate at any stage that any of the 6 ITA No. 124/Pat/2020 Ravi Lochan Singh additions were made without considering the facts or law. For the sake of brevity, the individual additions are not discussed in detail but it deserves to be mentioned that the Ld. AO has applied the law correctly to the facts before him and arrived at an appropriate conclusion regarding the quantum of taxable income. The discussion in the order of Ld. CIT(A), extracted (supra) is found to be substantially correct with regard to the additions and we are unable to persuade ourselves to a different view in the absence of evidences contrary to those marshalled in the orders of authorities below. 3.1 With these remarks, the findings in the impugned order are upheld in full. 4. In the result, the appeal filed by the assessee is dismissed. Order pronounced in the court on 08.01.2025 Sd/- Sd/- (Duvvuru RL Reddy) (Sanjay Awasthi) Vice President Accountant Member Dated: 08.01.2025 AK, P.S. Copy of the order forwarded to: 1. Ravi Lochan Singh 2. ACIT, Circle-5, Patna 3. CIT(A)- 4. CIT- 5. CIT(DR) //True copy// By order Assistant Registrar, Kolkata Benches "