ACIT, NEW DELHI vs. SH. ANURAG BIRLA, NEW DELHI

The assessee’s appeal is a recalled matter inasmuch as the earlier ex parte order was subsequently recalled by the tribunal vide its later order dated 13.5.2006.

First ground of the Revenue’s appeal is against acceptance of additional evidence in violation of Rule 46A of Income-tax Rules, 1962.

Ground Nos. 1 and 2 of the assessee’s appeal and ground no. 2 of the Revenue’s appeal are against the disallowance of interest u/s 36(1)(iii). The assessee debited a sum of Rs.56,22,619/- under the head ‘Interest paid.’ On perusal of details, it was observed that the interest of Rs.15,23,177/- was paid to HDFC Bank in respect of property at Saket and a further sum of Rs.11,89,372/- was paid to HDFC Bank for acquisition of property at Grand Mall, Gurgaon. In the absence of any satisfactory explanation given by the assessee, the AO made an addition for a sum totaling to Rs.27,12,549/-. The ld. CIT(A), after reproducing relevant parts of his order for the immediately preceding assessment year, allowed part relief. Both the sides are in appeal on their respective stands.

Having heard the rival submissions and perused the relevant material on record, we find that similar issue came up for consideration before the Tribunal in the assessee’s own case for the AY 2008-09. The Tribunal, vide its order dated 30.6.2015, in & 2380/Del/2012 has dealt with the issue by recording findings at para 10 of its order. Both the sides are in agreement that the facts and circumstances of the ground for this year are, mutatis mutandis, similar to those of the preceding year. Following the view taken by the Tribunal in assessee’s own case for the immediately preceding assessment year, we set aside the impugned order and remit the matter to the file of the ld. CIT(A) for dealing with this issue in consonance with the view taken by the Tribunal in the assessee’s own case for preceding year. This restoration is made to the ld. CIT(A) instead of the AO for the reasons in the following paras, which call for restoration only to the ld. CIT(A).

Ground nos. 3, 4 and 5 of the assessee’s appeal are against the enhancement made by the ld.CIT(A) under the head ‘Diwali expenses’ from Rs.15,234/- to Rs.86,172/-; under the head ‘Electricity and water charges’ from Rs.49,864/- to Rs.4,98,641/-; and under the head ‘Business promotion expenses’ from Rs.72,449/- to Rs.1,04,309/-. The ld. AR contended that enhancement notice was not given by the ld. CIT(A) before making the enhancement. The ld. DR did not have any case record to indicate whether or not any enhancement notice was issued by the ld. CIT(A). Under the given circumstances, we set aside the impugned order on this score and remit the matter to the file of the ld. CIT(A) for examining the assessee’s contention in this regard and deciding this issue in accordance with the law, after allowing a reasonable opportunity of hearing to the assessee.

Ground No.7 of the assessee’s appeal is against the confirmation of disallowance of Rs.2,13,364/- under the head ‘Vehicle running and maintenance’, ‘Interest paid on car loan’, ‘Depreciation’ and ‘Telephone expenses’ being personal expenses. The facts apropos this issue are that the AO made 10% disallowance out of the above referred expenses on account of personal use as the assessee could not adduce necessary evidence in support of the user of these facilities exclusively for the business purposes, which came to be approved in the first appeal. In the given facts and circumstances, we are of the considered opinion that the ld. CIT(A) was justified in approving such disallowance on account of the personal user by the assessee.

Ground Nos.3, 4 and 5 of the Revenue’s appeal are against deletion of disallowances on account of ‘Repairs and maintenance’, ‘Printing & stationery’ and ‘Printing charges’, which were made by the AO @ 10% because of the failure of the assessee to support necessary evidence in support of such expenses. The ld. CIT(A) deleted the addition. The Revenue is in appeal against such deletion.

After considering the rival submissions and perusing the relevant material on record, it is seen that the disallowance was made @ 10% of these expenses for the reason that the assessee did not furnish bills and vouchers in respect of these expenses. No evidence has been placed even before the Tribunal supporting these expenses with necessary bills and vouchers. As such, we restore these disallowances made by the AO, thereby overturning the impugned order on these issues. These grounds are allowed.

The only other ground taken by the Revenue in its appeal is against the deletion of disallowance on account of `Travelling expenses’. The facts of this ground are that the assessee debited travelling expenses at Rs.11,39,910/-. On perusal of the details, it was observed that a sum of Rs.9,48,451/- pertained to foreign travelling expenses. Only one copy of the bill was filed which showed that the assessee was accompanied by his wife. In the absence of the remaining bills/vouchers in respect of foreign expenses, the AO disallowed 30% of foreign travel expenses and 10% of domestic travel expenses. This resulted into disallowance of Rs.3,03,681/-, comprising of Rs.2,84,535/- out of foreign travel expenses and Rs.19,146/- out of domestic travel expenses. The ld. CIT(A) restricted the addition to Rs.2,41,177/-, against which the Revenue has come up in appeal before us.

Having heard the rival submissions and perused the relevant material on record, we find that the ld. CIT(A) has analysed the details of travelling expenses item-wise. The ld. DR could not point out any infirmity in the said analysis made by the ld. CIT(A) which has been recorded on page 6 of the impugned order. As such, we are not inclined to disturb the view taken by the ld. CIT(A) on this issue. This ground fails.

In the result, both the appeals are partly allowed.