SHRI RAMESHWAR LAL KUMAWAT,JAIPUR vs. INCOME TAX OFFICER, WARD-2(5), , JAIPUR

PER VIJAY PAL RAO, JM :

CIT (Appeals)-1, Jaipur for the assessment year 2013-14. The assessee has raised the following grounds of appeal :-

“ 1. Under the facts & circumstances of the case CIT (A) has erred by not accepting the fact that proper opportunity of hearing was not provided.

2. Under the facts & circumstances of the case CIT (A) has erred by disallowing the expenses of Rs. 77,820/-. Details of same are as under. Further disallowance @ 10% of the under mentioned expenses are totally unjustified as the entire amount of expenses are incurred for business purpose.

S.No. Head of A/c Amount debited 10% of the claim in P & L A/c 1. Office expenses 93744 9374

3. Under the facts & circumstances of the case the CIT Appeal has erred by confirming the agricultural income Rs. 3,01,450/- as Income from other sources.

4. Under the facts & circumstances of the case the CIT Appeal has erred by confirming the disallowance of deduction u/s 24(a) of I.T. Act amounting Rs. 1,50,000/-.

2. None has appeared on behalf of the assessee when this appeal was called for hearing despite the fact that the date of hearing of the appeal before SMC was duly notified at the Notice Board as well as at the Website of the Tribunal. Even the assessee has not appeared before the ld. CIT (A) and the appeal of the assessee was decided by the ld. CIT (A) ex parte though on merits. Therefore, I propose to hear and dispose off the appeal ex parte.

Ground No. 1 is regarding proper opportunity of hearing not given by the ld. CIT (A).

Therefore, I do not find any merit or substance in the ground no. 1 of the assessee’s appeal when the ld. CIT (A) has given more than sufficient opportunities of hearing to the assessee.

Ground No. 2 is regarding disallowance of certain expenditures by the AO @ 20% for want of verifiable supporting evidence, vouchers, bills etc.

5. Having considered the submissions of the ld. D/R and perusal of the finding of the ld. CIT (A), it appears that though the assessee has challenged the action of the AO before the ld. CIT (A), however, nothing has been produced by the assessee before the ld. CIT (A) to controvert the finding that the payment made by the assessee in cash and through self-made vouchers and no proof of payment was produced in respect of the certain expenses as discussed in the assessment order, as it is apparent from the grounds of appeal itself that the AO made the disallowance in respect of the expenses under the head of Office expenses, Conveyance expenses, Salary expenses and Pump & Transportation expenses.

These findings of the AO though challenged but the assessee has failed to bring on record any material or other facts. The ld. CIT (A) has decided this in para 3.2.1 as under :-

“ 3.2.1. I have duly considered the assessment order and the material placed on record. It is noted that the AO has made disallowances out of various expenses claimed by the appellant in its profit and loss account @ 20% of such expenses. During the appellate proceedings, no submissions were made by the appellant. However, the disallowance made by the AO appears to be on the higher side. Considering the volume and nature of business of the appellant, it would be fair and reasonable to restrict the disallowance to 50% of the amount disallowed by the AO. Therefore, the disallowance of Rs. 1,55,641/- made by the AO is hereby restricted to Rs. 77,820/-.”

In view of the facts and circumstances as discussed above, I do not find any reason to interfere with the order of the ld. CIT (A) when the disallowance made by the AO @ 20% was restricted to 10% which is reasonable and proper as the assessee has failed to produce the verifiable supporting evidence for the claim of these expenses.

Ground No. 3 is regarding rejecting the claim of agriculture income of Rs. 3,01,450/-.

“ 3.3.1. In its return of income, the appellant has declared a sum of Rs. 3,01,450/- as agriculture income. During the assessment proceedings, the AO has required the appellant to produce documentary evidence in support of such agriculture income, however, no compliance was made and consequently, the same was treated by AO the as ‘income from other sources’. I do not find any infirmity in the findings of the AO in this regard and the action of the AO in treating agriculture income as ‘income from other sources’ is hereby upheld.”

Thus it is clear that the assessee has neither produced any documentary evidence before the AO nor any supporting evidence was produced before the ld. CIT (A).

Even the assessee is not attending the proceedings after filing the appeal.

Therefore, in the facts and circumstances when the assessee has not produced any documentary evidence in support of the claim, then the disallowance of agriculture income does not require any interference.

Ground No. 4 is regarding disallowance of deduction under section 24(a) of the IT Act.

“ 4. As per ITR computation it is observed that assessee has shown house property income by claiming deduction u/s 24(a) amounting to Rs. 1,50,000/-. The assessee was asked to produce documentary evidence in support of his claim and he has not furnished the same. In absence of any proof is produced, the claim made u/s 42(a) amounting of Rs. 1,50,000/- is hereby disallowed and added to the total income. Proceedings u/s 271(1)(c) is being initiated for furnishing inaccurate particulars of income.”

Though the deduction is stated to have been claimed under section 24(a) for a sum of Rs. 1,50,000/- against the income from House Property which was disallowed by the AO for want of any documentary evidence in support of the claim, the ld. CIT (A) has confirmed the said disallowance in para 3.4.1 as under :-

“ 3.4.1. The appellant has claimed deduction of Rs 1,50,000/- u/s 24(a) of the Act. During the assessment proceedings, the AO required the appellant to produce documentary evidence in support of such deduction, however, no compliance was made and consequently, the same was disallowed by the AO. I do not find any infirmity in the findings of the AO in this regard and the action of the AO in disallowing the deduction claimed by the appellant u/s 24(a) is hereby upheld as the onus is on the appellant to prove the deduction with documentary evidences, which it has failed even during the appellate proceedings.”

Thus it is clear from the order of the authorities below that neither the AO nor the ld. CIT (A) has considered this aspect that the claim under section 24(a) does not require any documentary evidence as it is standard deduction which is required to be allowed at a fixed percentage of the rental income. Since both the AO as well as the ld. CIT (A) has disallowed the claim for want of supporting evidence, therefore, it is not clear whether the deduction was claimed as standard deduction under section 24(a) or it was claimed under section 24(b) of the IT Act. Accordingly, in the facts and circumstances of the case, this issue is set aside to the record of the AO to reconsider this issue and decide after considering the provisions of section 24(a) or if the claim was made under section 24(b) then only production of documentary evidence is required.

Order is pronounced in the open court on 19/09/2019.