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Income Tax Appellate Tribunal, JAIPUR BENCHES (SMC
Before: SHRI RAMESH C SHARMAvk;dj vihy la-@ITA No. 546/JP/2018
ORDER PER: R.C. SHARMA, A.M. This is an appeal filed by the assessee against the order of ld.CIT(A)-2 Jaipur dated 12/03/2018 for the A.Y. 2014-15 in the matter of order passed U/s 143(3) of the Income Tax Act, 1961 (in short, the Act), wherein the assessee has raised following grounds of appeal:
1. On the facts and in the circumstances of the case the Ld. CIT(A) has grossly erred in confirming the lump sum disallowance of Rs. 80,000/- out of telephone and travelling expenses on account of involvement of personal use without appreciating the genuineness of the claim and further by grossly ignoring the fact that assessee is a private limited company, i.e. separate legal entity and no disallowance of expenses could be made on 2 ITA 546/JP/2018 M/s Andhi Marble Pvt. Ltd. Vs ACIT account of personal element, thus the disallowance so made deserves to be deleted.
2. On the facts and in the circumstances of the case the Ld. CIT(A) has grossly erred in confirming the disallowance of Rs. 2,00,000/- Vehicle Running & Maintenance Expenses and Sales Promotion Expenses by solely relying upon observations of Id. AO in assessment proceedings. 2.1 That, the Ld. CIT(A) has further erred in confirming the disallowance made by Id.AO without pointing out any defect / shortcoming with the details and evidences maintained by the assessee with respect to the said expenses, all of which were submitted before the Ld. AO during the course of assessment proceedings. Thus, the disallowance of Rs. 2,00,000/- deserves to be deleted.
3. That the appellant craves the right to add, delete, amend or abandon the ground of this appeal at the time or before the actual hearing of the case.”
2. Rival contentions have been heard and record perused. The facts in brief are that the assessee is engaged in the business of mining of marble blocks. During the course of scrutiny assessment, the A.O. found that the assessee has debited following expenditure in its P&L account S. No. Particulars Amount 1. Telephone Exp. 7,97,235.00 2. Travelling Exp. 59,817.00 3. Vehicle repairs & maintenance Exp. 14,29,805.00 4. Sales promotions Expenses 6,20,216.00 By observing that the expenses on telephone and travelling facilities are proved to be used for other than business purposes, the A.O. disallowed a lump sum amount of Rs. 80,000/- out of the same. With respect to 3 ITA 546/JP/2018 M/s Andhi Marble Pvt. Ltd. Vs ACIT expenditure on vehicle running and sales promotion, the A.O. observed that some of these expenses were not fully supported by proper bills/evidences due to which these expenses could not be verified completely, accordingly, he made a lump sum disallowance of Rs. 2.00 lacs. By the impugned order, the ld. CIT(A) confirmed the action of the A.O., against which the assessee is in further appeal before the ITAT.
3. It was argued by the ld AR of the assessee that the assessee being a private limited company, such disallowances for personal use or for non-business purposes cannot be made. She further contended that the expenditure on vehicle running, telephone etc. was incurred wholly and exclusively for business purposes, therefore, no disallowance should be made.
On the other hand, the ld DR has relied on the orders of the authorities below.
I have considered the rival contentions and carefully gone through the orders of the authorities below and found that the A.O. has basically made disallowance on ad hoc basis and primarily on the plea that the expenses were not supported by proper bills and vouchers, therefore, the same cannot be verified completely. I found that during the course of assessment proceedings, complete books of account and vouchers were 4 ITA 546/JP/2018 M/s Andhi Marble Pvt. Ltd. Vs ACIT produced before the A.O. who having examined them failed to point out any specific voucher of expense which was not genuine or had been inflated and the A.O. has made general observations in the assessment order that the genuineness of expenses is questionable. Keeping in view the nature of assessee’s business and totality of facts and circumstances of the case, I direct the A.O. to restrict the disallowance @ 5% of above expenses. I direct accordingly.
In the result, appeal of the assessee is allowed in part.
Order pronounced in the open court on 11th July, 2019
Sd/- ¼jes'k lh 'kekZ½ (RAMESH C SHARMA) ys[kk lnL;@Accountant Member Tk;iqj@Jaipur fnukad@Dated:- 11th July, 2019 *Ranjan आदेश की प्रतिलिपि अग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू vihykFkhZ@The Appellants- M/s Andhi Marble Pvt. Ltd., Jaipur. 1. izR;FkhZ@ The Respondent- The A.C.I.T., Circle-5, Jaipur. 2. vk;dj vk;qDr@ CIT 3. vk;dj vk;qDr¼vihy½@The CIT(A) 4. विभागीय प्रतिनिधि] आयकर अपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत 5. xkMZ QkbZy@ Guard File (ITA No. 546/JP/2018) 6. vkns'kkuqlkj@ By order,
सहायक पंजीकार@Aेेज. त्महपेजतंत