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Income Tax Appellate Tribunal, “SMC”, BENCH MUMBAI
Before: SHRI MAHAVIR SINGH & SHRI G. MANJUNATHA
IN THE INCOME TAX APPELLATE TRIBUNAL “SMC”, BENCH MUMBAI BEFORE SHRI MAHAVIR SINGH, JUDICIAL MEMBER & SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ITA No.5457/Mum/2018 (Assessment Year :2013-14) Deepak Ramkumar V ACIT-24(1) Thakuraney s. Mumbai Flat No.1, Devprayag, P-1 Neera Desai Road Andheri(W), Mumbai-400 058
PAN/GIR No.AABPT9778M Appellant) .. Respondent)
Revenue by Akhtar H. Ansari Assessee by Rajendra Kumar Jain
Date of Hearing 15/10/2019 Date of Pronouncement 15/10/2019 आदेश आदेश / O R D E R आदेश आदेश PER BENCH:
This appeal filed by the assessee is directed against, the order of the Commissioner of Income Tax (Appeals)–36, Mumbai, dated 27/04/2018 and it pertains to Assessment Year 2013-14.
The assessee has raised the following grounds of appeal:- 1) The Ld. CIT(A) erred in dismissing the appeal. The reason for dismissal are wrong and contrary to the facts. 2) The Ld. CIT(A) Erred in Confirming in Law and on facts the Ad-hoc disallowance of Expenses. 3) The Ld.CIT(A) had erred in Law and on facts in not giving an opportunity of being heard and providing evidences in support of claim
2 ITA No.5457/Mum/2018 Deepak Ramkumar Thakuraney by the Assesse. Assessee prays to give an opportunity to produce forward his contentions and evidences. 4) Assesse may be afforded an opportunity to produce the legal and factual position before confirming the additions. 5) The Assesses craves leave to add, amend alter amend or drop any or all Grounds of appeal at the time of the Appeal proceedings.
The brief facts of the case are that the assessee is engaged in the business of Real Estate Advisor, filed its return of income for AY 2013-14 on 01/10/2013, declaring total income of Rs. 31,84,704/-. The case was selected for scrutiny and the assessment has been completed u/s 143(3) of the I.T.Act 1961 on 14/03/2016, determining the total income at Rs. 39,05,630/-, by making additions towards 20% adhoc disallowance of business promotion expenses, office expenses, mobile expenses and travel expenses amounting to Rs. 7,20,925/-, on the ground that the assessee has failed to file complete details of expenses and justify the claim against business income with cogent evidence. The assessee carried the matter in appeal before the first appellate authority. However, neither appeared nor furnished any details. Therefore, the Ld.CIT(A) for the detailed reasons recorded in his appellate order, dated 27/04/2018 confirmed additions made towards adhoc disallowance of expenses. The relevant findings of the Ld.CIT(A) are as under:-
In ground NO.1 & 2 the assessee has challenged the disallowed of Rs. 7,20,925/- @20% of business expenses on ad-hoc basis. The AO during the assessment proceedings requested the assessee to produce supporting vouchers to substantiate the expenses claimed. The AR of the appellant assessee has furnished the details/vouchers partly for verification. However, during the course of assessment proceedings, most of the bills and vouchers for the said expenses have not been produced by the assessee. Therefore, the AO made the disallowance of Rs. 7,20,925/- @ 30% of business expenses on ad-hoc basis.
4.1 As per the statements of facts filed by the appellant, the appellant stated that during the year under consideration the appellant is a real
3 ITA No.5457/Mum/2018 Deepak Ramkumar Thakuraney estate consultant and his client are foreign consulates & multinational companies, his job is to arranges house/office etc. for them on rental basis. Further, he stated that the client being high profile ambassador, envoy, group head etc., all the business meetings are invariably carried out at five star hotels/clubs, so, he has to incur huge amount at these restaurants. The appellant further stated that during the course of assessment proceedings, the AO has not appreciated these facts and commercial expediency of the business. However, to substantiate the above claims the appellant did not produce any documentary evidence during the course of appellate proceedings. Further, no cogent reasoning was mentioned regarding the contention of the AO that most of the bills and vouchers were not produced before him. Appellant’s argument that being a consultant he arranges high profile meetings in 5-star hotels and clubs, has no help to the appellant, on the contrary it becomes more significant to produce bill and & voucher in support of these business meetings which incur huge amount of money as per the appellant. Therefore in light of the foregoing argument and lack of evidence the disallowance made by the A.O. is upheld and the grounds of appeal are dismissed.
The Ld. AR for the assessee submitted that the Ld.CIT(A) had confirmed additions towards adhoc disallowance of expenses without affording proper opportunity of hearing to the assesee and also, ignoring all evidences filed by the assessee before the Ld. AO to justify expenses debited under various heads of expenditure. He further submitted that the disallowances made by the AO is on higher side and therefore, may be scaled down to 5% of said expenses.
The Ld. DR, on the other hand, strongly supported order of the Ld.CIT(A).
We have heard both the parties, perused the material available on record and gone through orders of the authorities below. Although, the Ld. AO had made additions towards 20% adhoc disallowance of expenses debited under the head business promotion expenses, office expenses, mobile expenses and travel
4 ITA No.5457/Mum/2018 Deepak Ramkumar Thakuraney expenses, but failed to give any reasons for making such adhoc disallowance. We, further, noted that the Ld. AO had made disallowances by making one line observations that the assesee has not able to justify claim of expenses against business income with cogent evidences. It is the claim of the assessee that expenses debited under various heads are fully supported by necessary evidences and he has furnished complete details before the Ld. AO. The assesee, further claimed that no doubt, certain expenses are supported by self made vouchers. But, fact remains that if, we consider nature of expenses, it is difficult to maintain complete details of supporting bills and vouchers. He, further submitted that additions made by the Ld. AO towards 20% adhoc disallowance of expenses is on higher side and hence, it may be reduced to 5% of said expenses.
Having considered arguments of both the sides, we find merits in arguments of the Ld. AR for the assessee that although, the Ld. AO had disallowed 20% expenses under those heads, but failed to arrive at proper conclusion, as to how and why he has disallowed 20% expenses. Therefore, considering facts and circumstances of this case and also, taken note of the fact that the assessee has aggred for 5% disallowances of those expenses, we deem it appropriate to scaled down disallowance of business promotion expenses and other expenses to 10% as against 20% disallowed by the AO. Hence, we direct the Ld. AO to restrict disallowances to 10% of those expenses.
In the result, appeal filed by the assessee is partly allowed.
5 ITA No.5457/Mum/2018 Deepak Ramkumar Thakuraney
Order pronounced in the open court on this 15 /10/2019
Sd/- Sd/-
(MAHAVIR SINGH) (G. MANJUNATHA) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai; Dated 15/10/2019 Thirumalesh Sr.PS
Copy of the Order forwarded to : The Appellant 1. The Respondent. 2. The CIT(A), Mumbai. 3. CIT 4. DR, ITAT, Mumbai 5. BY ORDER, Guard file. 6. स�यािपत �ित //True Copy// (Asstt. Registrar) ITAT, Mumbai