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Income Tax Appellate Tribunal, VISAKHAPATNAM BENCH, VISAKHAPATNAM
Before: SHRI V. DURGA RAO, HON’BLE & SHRI D.S. SUNDER SINGH, HON’BLE
IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE SHRI V. DURGA RAO, HON’BLE JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH, HON’BLE ACCOUNTANT MEMBER ITA No. 391/VIZ/2017 (Asst. Year : 2012-13) Vupputuri Srinivasa Rao, vs. ACIT, Circle-2(1), D.No. 9-53, Pulladigunta, Guntur. Vatticherukuru Mandal, Guntur. PAN No. ABBPV 5376 J (Appellant) (Respondent)
Assessee by : Shri G.V.N. Hari – Advocate. Department By : Smt. Suman Malik – Sr.DR
Date of hearing : 17/01/2019. Date of pronouncement : 06/02/2019. O R D E R PER V. DURGA RAO, JUDICIAL MEMBER This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals)-1, Guntur, dated 30/11/2016 for the Assessment Year 2011-12. 2. There is a delay of 135 days in filing the appeal. The assessee has filed a petition for condonation of delay wherein he stated that the Managing Partner Sri Vupputuri Srinivasa Rao had been sick with high fever and weakness during the first week of January 2017 and was found to be affected with Hepatitis and
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Jaundice. He was given treatment immediately and was advised to take complete bed rest for two months. However, even after two months Sri Srinivasa Rao could not recover from fever and weakness. Therefore, the medication was continued and he was advised complete bed rest for another two months. The Managing Partner thus could not attend to his normal affairs during the period of 08.01 2017 to 20.06.2017. The assessee also filed medical certificate along with the petition. We have gone through the petition and also medical certificate filed by the assessee and find that there is a sufficient cause to condone the delay. Accordingly, we condone the delay. 3. So far as merits of the case is concerned, the only issue raised by the assessee in respect of addition of Rs. 28,70,661/-. In the Assessing Officer, the Assessing Officer has noted that on perusal of the return of income, which was downloaded from the AST module relevant to the Assessment Year 2012-13, it is seen that the assessee has debited certain amounts to the profit & loss account towards expenditure, the details of which are as under:- S.No. Head of expenditure Amount 1 Freight 1,99,719 2 Consumption of stores and Spare 5,46,000 parts 3 Rents 1,75,000 4 Commission 56,128 5 Other expenses 18,93,814 Total expenditure 28,70,661
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In the absence of the books of account and the relevant bills/vouchers, the details of said expenses and also purpose of expenses could not be ascertained. In absence of details and documentary evidence indicating the purpose of incurring such large amount of expenses, the allowability of deduction against the said expenses under the provisions of Income Tax Act, 1961 also could not be ascertained. In that view of the matter, the entire expenditure of Rs. 28,70,661/- is disallowed and added back to the total income of the assessee. 4. On appeal, ld. CIT(A) confirmed the order of the Assessing Officer. 5. On being aggrieved, assessee carried the matter in appeal before the Tribunal. 6. Ld. counsel for the assessee has submitted that the entire expenses cannot be disallowed on the ground of non-furnishing of details, therefore, disallowance can be restricted to 10% of the total expenditure incurred by the assessee. 7. On the other hand, ld. Departmental Representative strongly supported the orders of the authorities below. 8. We have heard both the sides, perused the material available on record.
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We have observed that the disallowance of entire expenditure is unjustified as the assessee cannot carry the business without incurring expenditure. Therefore, to meet the ends of justice, we hold that restriction of disallowance of expenditure to 10% is reasonable. Accordingly, we set aside the order passed by the ld. CIT(A) and direct the Assessing Officer to restrict the disallowance to 10%. This appeal on this issue is partly allowed. 10. In the result, appeal filed by the assessee is partly allowed. Order Pronounced in open Court on this 06th day of Feb., 2019.
Sd/- sd/- (D.S. SUNDER SINGH) (V. DURGA RAO) Accountant Member Judicial Member Dated: 06th Feb., 2019. vr/- Copy to: 1. The Assessee – Vupputuri Srinivasa Rao, D.No. 9-53, Pulladigunta, Vatticherukuru Mandal, Guntur. 2. The Revenue – ACIT, Circle-2(1), Guntur. 3. The Pr.CIT, Guntur. 4. The CIT(A)-1, Guntur. 5. The D.R., Visakhapatnam. 6. Guard file. By order
(VUKKEM RAMBABU) Sr. Private Secretary, ITAT, Visakhapatnam.