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

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 Assessment Year 2012-13

raising therein following grounds of appeal.

ITA No.993/JP/2017 Shri Santosh Kumar Tambi, vs ITO, Ward- 7(3) Jaipur comparison to previous year while turnover was increased by Rs. 4,65,40,071/- approx 15% in comparison to previous year (As per Annexure A filed alongwith appeal before CIT (Appeals). 3. That the ld. CIT(A) erred in confirming the addition of Rs. 61,258/- without considering the fact that it was done in furtherance of business and to resolve dispute the liability of freight and arrange on the goods was debited and consequential credit entry were also passed in account of the relevant person. 4. That the ld. CIT(A) erred in confirming the whimsical and arbitrary addition of 20% of expenses amount debited 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 assessee is general in

nature which needs no adjudication.

3.1 Apropos Ground No. 2, the ld.AR of the assessee submitted that

the similar issue was decided by the ld. CIT(A) vide his order dated 01-

02-2018 in the case of the same assessee for the Assessment Year 2013-

14 by observing as under:-

‘’5.3 I have carefully considered the material before me. I find that Assessing Officer made the disallowance out of salary making the observation that maximum salary has been paid in cash to the family members and relatives 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) Jaipur appellant submitted that the every business is increased the turnover in this year is Rs. 38,58,28,784/- as against Rs. 37,17,99,099/- in last year. Further he submitted that the assessee reduced two employees out of six employees section 40(A)(2)(b) of I.T. Act and consequential salary was also reduced Rs. 2,55,000/- in comparison to previous year. He further argued that learned Assessing Officer himself 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 superintendent- cum-clerk. All relative employees are commerce graduate (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 discharging his burden to prove that the salary is paid to anyone more than consideration for services done by him.

I pursued the record and I find that there is no force 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 Officer that the salary paid to the person u/s 40A(2)(b) were excessive is not correct. Hence, I direct the Assessing Officer to delete the addition made out of salary of 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 case for the Assessment

ITA No.993/JP/2017 Shri Santosh Kumar Tambi, vs ITO, Ward- 7(3) Jaipur Year 2013-14 and thus deleted the addition made out of salary paid to the

relatives. 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 Assessment Year

2013-14. Thus Ground No. 2 of the assessee is allowed 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/- without considering the

fact that it was done in furtherance of business and to resolve the dispute

of liability of freight.

4.2 After hearing both the parties, it is noted that this grounds pertains

to not furnishing supporting original debit note before the lower

authorities and this ground has not been raised before 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 the assessee. The

assessee is also directed to submit the relevant before the ld. CIT(A)

concerning the issue in question for adjudication before him. Thus

Ground No. 2 of the assessee is allowed for Statistical purposes.

ITA No.993/JP/2017 Shri Santosh Kumar Tambi, vs ITO, Ward- 7(3) Jaipur 5.1 Apropos Ground No. 4, the ld.AR of the assessee submitted that

the similar issue was decided by the ld. CIT(A) vide 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 before me. I find that Assessing Officer treated 20% of the following expenses conveyance expenses ,shop expenses, telephone expenses, travelling expenses and depreciation on car as unvouched and non-business purposes and made the disallowance of Rs. 98,866/-. The A/R of the appellant failed to file any evidence which prove that the expenses are not fully vouched and for business purposes. Therefore, I am of the view that the Assessing Officer rightly made the observation that all the above expenses are not fully vouched and non-business purposes. The Assessing Officer treated 20% of the above expenses without any basis and unreasonable. Hence, I treat 10% of the above expenses as non-business purpose and 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 mandatory deduction. Therefore, the depreciation on car disallow for personal use is not as per law as held by the Hon'ble ITAT in various cases. Hence, I direct the Assessing Officer to delete the depreciation 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 case 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) Jaipur 10% of the addition and also deleted the expenses on 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/- ¼ fot; iky jko ½ ¼HkkxpUn½ (Vijay Pal Rao) (Bhagchand) U;kf;d lnL; /Judicial Member ys[kk lnL;@Accountant Member

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