SUBODH KUMAR SINGH,BERMO V. ACIT, HAZARIBAGH

ITA 100/RAN/2023

AI Insights

The case involves Subodh Kumar Singh, who appealed against the order of the CIT(A), National Faceless Appeal Centre, Delhi, concerning the assessment year 2017-18. The primary grievances were the confirmation of an addition of \\u20b96,19,500 on account of excess depreciation claimed on trucks and \\u20b971,317 for staff welfare and bonus expenses. The Assessing Officer had disallowed the depreciation claim, reducing it from 30% to 15%, due to lack of evidence proving the trucks were used for hire. Similarly, the claim for staff welfare and bonus expenses was partially disallowed due to insufficient substantiation. The Tribunal found procedural lapses in the CIT(A)'s handling of the appeal and remanded the issues for further examination.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 28688 (ITAT-RANCHI)
• Duration Of Justice: 1 year(s) 5 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-11-2024
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Assessment Year: 2017-2018
• Appeal Filed On: 16-05-2023
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: KHUBCHAND T. PANDYA
• Assessee Lawyers: ANIL KUMAR JHA
• Keywords: Set aside; Depreciation; Principle of natural justice
• Section: 250

Judgement Text

" आयकर अपील\tय अ धकरण, राँची \u0010यायपीठ, राँची IN THE INCOME TAX APPELLATE TRIBUNAL RANCHI BENCH, RANCHI BEFORE SHRI PARTHA SARATHI CHAUDHURY, JM AND SHRI RATNESH NANDAN SAHAY, AM आयकर अपील सं./ITA No.100/RAN/2023 (\u0012नधा\u0014रण वष\u0014 / Assessment Year :2017-18) Subodh Kumar Singh Ravindra Path, Hazaribagh, Jharkhand-825301 (PAN: AGKPS4876L) Vs. ACIT, Circle-2, Hazaribagh (अपीलाथ\r /Appellant) : (\u000e\u000fयथ\r / Respondent) Appellant by : Shri Anil Kumar Jha, AR Respondent by : Shri Khubchand T. Pandya, Sr. DR सुनवाई क\u0014 तार\u0016ख / Date of Hearing : 04/11/2024 घोषणा क\u0014 तार\u0016ख/Date of Pronouncement : 08/11/2024 आदेश / O R D E R Per Partha Sarathi Chaudhury, Judicial Member : This appeal preferred by the assessee emanates from the order of ld. CIT(A), National Faceless Appeal Centre (NFAC), Delhi (hereinafter referred to as \"the Ld. CIT(A), NFAC\" dated 14.03.2023 passed u/s. 250 of the Income Tax Act, 1961 (hereinafter referred to as the \"Act\") for Assessment Year 2017-18 as per the grounds of appeal on record. 2. That on perusal of the grounds of appeal, there are essentially two issues of grievance of the assessee. First is the confirming of addition of ₹6,19,500/- on depreciation of trucks. Second is the addition of ₹71,317/- on account of staff welfare and bonus expenses. ITA No.100/Ran/2023 Subodh Kumar Singh, A.Y. 2017-18 2 3. That with regard to the first issue of depreciation claimed on trucks, in the Balance sheet for the year ending 31.03.2017, the assessee has claimed depreciation on two trucks @ 30% to the tune of ₹6,19,500/- totaling to ₹12,39,000/-. During the course of scrutiny, the assessee was asked to explain why the claim of depreciation should not be restricted to 15%? But the assessee had not furnished any cogent explanation and has not proved his onus substantiating the claim of excess depreciation of ₹6,19,500/- and thus the claim of depreciation on truck amounting to ₹6,19,500/- was disallowed and added to the total income of the assessee. 4. At the level of the Ld. CIT(A)/NFAC, the assessee was asked to produce evidences/details establishing the fact that the assessee is actually engaged in the business of running trucks on hire. However, the assessee failed to provide any documentary evidence substantiating his claim that he is running his trucks on hire and, therefore, claiming depreciation @ 30%. Accordingly, the Ld. CIT(A)/NFAC upheld the addition made by the Assessing Officer. 5. At the time of hearing the Learned. Authorized Representative of the Assessee reiterated the submissions made before the revenue authorities. The Learned. Authorised Representative also submitted that in terms with Rule 5 read with Appendix-I clause (3)(ii) where the motor lorries are used in the business of running them on hire in such case depreciation allowable is 30%. However, he could not substantiate through any documentary evidence as to the claim made that whether actually the trucks are plied on hire basis. 6. Per contra, the Learned. Departmental Representative supported the findings of the revenue authorities. 7. We have heard the submissions of the parties herein and have given careful consideration to the facts and circumstances and the documents on ITA No.100/Ran/2023 Subodh Kumar Singh, A.Y. 2017-18 3 record. With regard to the depreciation claim on two trucks, the revenue has applied Rule 5 App.-I clause (2) sub-clause (i) and had provided depreciation @ 15%. Whereas the assessee claims depreciation @ 30% stating that such trucks are used in the business of hire and, therefore, as per rule 5 App. -I, clause (3)(ii) the depreciation should be given @ 30%. The assessee has not provided any documentary evidences regarding the claim that the trucks are used on hire basis neither before the department nor at the time of hearing before this bench. However, an oral statement and confirmation on oath has been made by the Learned. Authorised Representative at the time of hearing that the assessee is engaged in various business and one of business is running the trucks on hire. But again the Learned. Authorised Representative has not furnished any evidence showing the business of hiring the trucks and the income received therefrom. We find that even the Learned. CIT(A)/NFAC has also not conducted any independent enquiry regarding this issue whether the trucks are used on hire business by the assessee. Principles of natural justice demands that as mandated by the provisions of the Act, the Learned. CIT(A) shall pass order in terms with section 250 (4) & (6) of the Act with due verification of the facts, enquiring the aspect on merits and then coming out with a speaking order. However, this exercise is missing in the order of the Learned. CIT(A)/National Faceless Appeal Centre, Delhi [the learned CIT (A)] In view thereof, we set aside this issue in the order of Learned CIT(A)/NFAC and remand it back to his file for de novo adjudication as per law and to come out with a speaking order determining on facts whether the trucks were used by the assessee as hire business or not. The Learned. CIT(A)/NFAC shall call for relevant report from the Assessing Officer enquiring into this aspect while complying with the principles of natural justice. That as per the above terms this issue is allowed for statistical purposes. ITA No.100/Ran/2023 Subodh Kumar Singh, A.Y. 2017-18 4 8. With regard to the other issue regarding disallowance of staff welfare and bonus expenses amounting to ₹71,317/- in the Profit and Loss Account the assessee had claimed ₹14,26,351/- under the head staff welfare and bonus expenses. During the assessment proceedings, the assessee was asked to explain the nature of expenses and furnish the evidence i.e. bills, vouchers etc. to prove the genuineness of the claim but assessee could not discharge his onus and substantiate the claim and accordingly, the Assessing Officer disallowed 5% of the expenses claimed i.e. ₹71,317/- under the said head and added to the total income of the assessee. That during the first appellate proceedings, the assessee only reiterated in statement but has not proved his onus substantiating this claim and, therefore, the action of the Assessing Officer was upheld. We are of the considered view that one final opportunity should be provided to assessee to substantiate his claim before Learned CIT(A)/NFAC with documentary evidences. In view thereof, this issue is remanded to the file of Learned. CIT(A)/NFAC for de novo adjudication as per law complying with principles of natural justice. 9, As per the above terms, this issue is also allowed for statistical purposes. 10. In the result the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open court on 08/11/2024. Sd/- Sd/- (Ratnesh Nandan Sahay) (Partha Sarathi Chaudhury) Accountant Member Judicial Member राँची Ranchi; \u001cदनांक Dated 08/11/2024 Jd, Sr.P.S.(on tour) ITA No.100/Ran/2023 Subodh Kumar Singh, A.Y. 2017-18 5 आदेश क\u001a \u001b\u0012त\u001dल\u001eप अ\u001fे\u001eषत/Copy of the Order forwarded to : आदेशानुसार/ BY ORDER, (Senior Private Secretary) On tour, ITAT, Ranchi 1. अपीलाथ\r / The Appellant- Shri Subodh Kumar Singh, Bermo 2. \u000e\u000fयथ\r / The Respondent- ACIT, Circle-2), Hazaribagh 3. आयकर आयु\u0006(अपील) / The CIT(A) NFAC, Delhi 4. आयकर आयु\u001eत / Pr. CIT, Ranchi 5. िवभागीय \u0010ितिनिध, आयकर अपीलीय अिधकरण, राँची / DR, ITAT, Ranchi 6. गाड! फाईल / Guard file. स\u000fया#पत \u000e$त //True Copy// "