IRBAZ SHOE COMPANY,CHENNAI vs. ITO NCW 10(2), CHENNAI

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ITA 3040/CHNY/2018Status: DisposedITAT Chennai09 March 2020AY 2009-104 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the disallowance was made on the basis of surmises and conjectures without specific defects being pointed out. Following a previous similar order, the Tribunal allowed the assessee's appeal.

What were the facts?

The Assessing Officer disallowed Rs. 2,49,000/- for car maintenance and postage expenses, citing lack of proper bills/vouchers or self-made ones. The CIT(A) dismissed the assessee's appeal against this disallowance.

What were the issues?

Whether disallowance of business expenditure is justified without specific defects in bills/vouchers. Whether disallowance based on surmises and conjectures is sustainable.

Which sections of the Income-tax Act were involved?

Section 37(1)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “A” BENCH, CHENNAI

Before: SHRI GEORGE MATHAN & SHRI S. JAYARAMAN

Hearing: 18.12.2019Pronounced: 09.03.2020

आदेश/ O R D E R

PER S. JAYARAMAN, ACCOUNTANT MEMBER :

1.

The assessee filed this appeal against the order of Commissioner of Income Tax (Appeals)-12, Chennai in dated 20.08.2018 for assessment year 2009-10.

2.

The Ld. AR submitted there is 12 days delay in filing the appeal.

The partners of the firm were away from the station and hence, the :-2-: appeal papers could not be signed. As soon as they came, the appeal papers were signed and filed. Since, the delay is neither wilful nor wanton, due to the circumstances beyond the control of the assessee it was pleaded that the delay in filing the appeal may be condoned.

3.

We heard the rival parties and condone the delay.

4.

M/s. Irbaz Shoe Company, the assessee, is a manufacturer and exporter of shoe uppers etc. While making the assessment for assessment year 2009-10, the Assessing Officer found that the assessee has incurred expenditure under the head car maintenance/general expenses and postage. He required the assessee to produce vouchers and bills in support of such expenditure and observed that in some cases either the bills/vouchers are not produced or the bills/vouchers produced were found to be self-made. Therefore, he disallowed Rs. 2,49,000/- and completed the assessment. Aggrieved, the assessee filed an appeal before the CIT(A). The CIT(A) dismissed the appeal. Aggrieved against that order the assessee filed this appeal.

5.

The Ld. AR submitted that the assessee has incurred the impugned expenditure for the purpose of business and he supported that such expenditures are wholly and exclusively incurred for the purposes by comparing the corresponding figures of assessment years 2008-09, 2009-10 & 2010-11. He submitted that without pointing out the specific defects vis-a-vis the bills/vouchers, the Assessing Officer disallowed the expenditure on surmises. On similar issue, this tribunal has already allowed the assessee’s appeal in the assessment year 2010-11, in dated 12.02.2016. Therefore, he pleaded that the assessee’s appeal may be allowed. Per contra, the Ld. DR submitted that the assessee has not produced the bills/vouchers before the appellate authority and hence, he supported the order of the Ld. CIT(A).

6.

We heard the rival submissions and gone through the relevant material. We find that the Assessing Officer has not specifically pointed out which of the bills/vouchers on which he was unsatisfied and for what reasons. Further, the relevant portion of this tribunal order, supra, relied on by the assessee is extracted as under:

“Ground no.2:- Addition of `1,90,080/- being disallowance of vehicle maintenance expenses on estimate basis:- Assessing Officer 9. During the course of assessment proceedings, it was observed by the learned Assessing Officer that the assessee had debited its profit and loss account on account of vehicle maintenance of Rs. 38,01,617/- . Since certain vehicles on which such expenditure incurred were not owned by the assessee, the learned Assessing Officer opined that the expenditure claimed by the assessee was on the higher side and therefore disallowed 5% of the same. On appeal, the learned Commissioner of Income Tax (Appeals) confirmed the order of the learned Assessing Officer accepting his view.

10.

We do not find any merit in this addition made by the Revenue on the basis of surmises and conjectures. Any expenditure incurred towards the :-4-: Act, unless it is proved that those expenses were not incurred for the business of the assessee. Therefore, we hereby delete the addition of Rs.1,90,080/-made by the learned Assessing Officer on the basics of presumption that the expenditure incurred by the assessee is excessive, which was further sustained by the learned Commissioner of Income Tax (Appeals).”

In view of the above facts and circumstances, following the above order, the disallowance made on the basis of surmises and conjectures of the AO cannot be sustained. Therefore, the assessee’s appeal is allowed.

7.

In the result, the assessee’s appeal is allowed.

Order pronounced on Monday, 09th March, 2020 at Chennai.

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