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Income Tax Appellate Tribunal, “B” BENCH, MUMBAI
आदेश / O R D E R महावीर ससुंह, न्याययक सदस्य/ PER MAHAVIR SINGH, JM:
This appeal of assessee is arising out of the order of the Commissioner of Income Tax (Appeals)]-17, Mumbai, [in short CIT(A)], in dated 06.11.2013. The Assessment was framed by the Income Tax Officer, Ward-8(2)(4), Mumbai (in short ITO/ AO) for the A.Y. 2009-10 vide order dated 25.11.2011, under section 143(3) of the Income-tax Act, 1961 (hereinafter ‘the Act’).
The first issue in this appeal of assessee is against the order of CIT(A) confirming the disallowance of business expenses on adhoc basis amounting to Rs. 2 lacs. For this assessee has raised the following ground no. 1: -
1. On the facts and circumstances of the case, the CIT(A) had erred in Law in confirming addition of ₹ 2,00,000/- out of Business Expenses which is unjustified.”
We have heard the rival contentions and gone through the facts and circumstances of the case. We noted that the Assessing Officer has disallowed the following expenses: - “Bank charges 4,576/- Depreciation 2,63,739/- Interest 1,45,414/- Motor car expenses 42,599/- Profession Tax 2,500/- Telephone expenses 15,517/-
4,74,345/-.”
The Assessing Officer disallowed Rs. 2 lacs on adhoc basis. The CIT(A) also confirmed the expense by stating that the assessee could not prove these expenses and assessee only filed evidences in the shape of self-made vouchers. We noted that the expense incurred in the shape of bank charges, telephone expense, depreciation and interest but according to us going by the nature of expenditure it cannot be said that there are any self-made vouchers. But now before us, the assessee’s
counsel has not denied that there is some element of personal in nature. Hence, we are of the view that reasonable disallowance of Rs. 1 lacs will meet the end of justice. The learned counsel fairly conceded that this can be made subject to the condition that this will not be treated as precedence for other years and this is purely smallness of the amount. The learned Sr. DR only relied on the orders of the lower authorities.
After hearing both the sides and going through the facts, we direct the AO to restrict the disallowance at Rs. 1 lacs treating the same as personal in nature. This issue of the assessee’s appeal is partly allowed.
The next issue in this appeal of assessee is as regards to addition made by Assessing Officer and confirmed by CIT(A) in regard to agriculture income treating the same as income from undisclosed sources. For this assessee has raised the following ground no. 2: -
2. On the facts and circumstances of case. The CIT(A) has erred in Law in confirming the Addition of ₹ 15,90,600/- Agricultural income as a undisclosed sources. Which is bad in Law.”
At the outset, the learned Counsel for the assessee stated that the Tribunal in future year i.e. AY 2010-11 in vide order dated 16.08.2016 has remanded the matter back to the file of the Assessing Officer vide Para 2.2 as under: - “2.2. I have considered the rival submissions and perused the material available on record. Without going into much deliberation, it is noticed that in his return, the assessee declared income of Rs.6,89,149/- along with agricultural income of Rs.17,78,520/-. The moot question to be adjudicated is that the assessee deposited
Rs.15 lakh in the bank account by claiming that the same was from agricultural income. Now, the question arises whether the amount of Rs.21,16,375/-, claimed to be from agricultural operation can be grown in four acres of land. The obvious reply is “NO”, more specifically when the assessee has not produced any evidence to justify his claim. However, before me, the assessee has submitted and assessment order in the case of Smt. Usha Umesh Mishra, order dated 15/12/2011, wherein, income of Rs.17,78,520/- was claimed to be agricultural income. The income of Rs.12 lakh was accepted out of agriculture operation and remaining 3 lakh, the addition was sustained u/s 68 of the Act as unexplained investment. In the present appeal, the assessee has also produced a certificate, claimed to be issued by Tehsildar, Kudal, which is based upon an affidavit dated 19/09/2011. The ld. Assessing Officer is directed to examine the authencity of this certificate (issued by the Tehsildar) (O.W. No.2901/11) dated 19/09/2011. In this certificate, it has been mentioned that if the information furnished by the assessee is found to be false then this certificate shall be treated as rejected, meaning thereby, no fruitful enquiry was made by the concerned authority before issuance of this certificate and is merely based upon the affidavit of the assessee. The ld. Assessing Officer is directed to examine whether crops were in fact grown on the land and if yes to what extent and also to examine whether the claimed amount was in fact borne out from the crops sold by the assessee. The ld. Assessing Officer can examine the genuineness of the claim from the neighboring farming and if so desires may get the report from concerned Patwari/Talathi. After making thorough examination of factual matrix decide in accordance with law. The assessee be given opportunity to substantiate his claim. The assessee is also directed to produce the proof of sale of agriculture produce like evidence from market committee or commission agent from grain market or wherever the crops were sold by the assessee. Thus, the appeal of the assessee is allowed for statistical purposes only…..”
The learned Counsel for the assessee as well as the learned Sr. DR fairly agreed that the facts and circumstances are exactly identical in this year also and this matter also can be restored back exactly on same directions. Hence, we set aside the issue to the file of the Assessing Officer. This issue of the assessee’s appeal is allowed for statistical purposes.
The next issue in this appeal of assessee is against the order of CIT(A) confirming the addition of computation of ALV. For this assessee has raised the following ground No. 3: -
3. On the facts and in the circumstances of case. The learned CIT(A) has erred in Law in 55,230/- as a annual Letting Value, which is bad in law.”
At the outset, the learned Counsel for the assessee stated that due to smallness of amount of Rs. 55,230/- under dispute, he does not want to contest the issue but he stated that this concession should not be considered as precedence in any other preceding years and in future years. We agree with the contention of the learned Counsel and this decision will have no precedence value in assessee’s own case for future years or past years. This issue of assessee’s appeal is dismissed as not pressed.
The next issue in this appeal of assessee is against the order of CIT(A) confirming the action of the Assessing Officer in disallowing expenses relatable to exempt income by invoking the provisions of section 14A of the Act read with rule 8D of the Rules. For this assessee has raised the following ground No. 4: -
4. The learned Commissioner of Income Tax (Appeals) has erred in Law in confirming the addition under section 14A of ₹ 1,56,076/-.”
We have heard the rival contentions and gone through the facts and circumstances of the case. At the outset, the learned Counsel for the assessee stated that the assessee has earned exempt income being dividend at Rs. 10,400/- and claimed the same as exempt under section 10(34) of the Act. The learned Counsel for the assessee fairly conceded that disallowance can be restricted to the exempt income in view of the decision of Hon'ble Bombay High Court in the case of in the case of Pr. CIT vs. Ballarpur Industries Limited in Income Tax Appeal No. 51 of 2016, wherein this issue has been considered following the judgment of Hon’ble Delhi High Court in the case of Chem invest Limited vs. CIT
(2015) 378 ITR 33 (Delhi) held as under: - “On hearing the learned Counsel for the Department and on a perusal of the impugned orders, it appears that both the Authorities have recorded a clear finding of fact that there was no exempt income earned by the assessee. While holding so, the Authorities relied on the judgment of the Delhi High Court in Income Tax Appeal No. 749/2014, which holds that the expression “does not form part of the total income” in Section 14A of the Income Tax Act, 1961 envisages that there should be an actual receipt of the income, which is not includible in the total income, during the relevant previous year for the purpose of disallowing any expenditure incurred in relation to the said income. The Income Tax Appellate Tribunal held that the provisions of Section 14A of the Income Tax Act, 1961 would not apply to the facts of this case as no exempt income was received or receivable during the relevant previous year. It is not the case of the Assessing Officer that any actual income was received by the assessee and the same was includible in the total income. In the facts of the case, the Authorities held that since the investments made by the assessee in the sister concerns were not the actual income received by the assessee, they could not have been included in the total income.”