M/S PARI INDIA,NEW DELHI vs. DCIT, NEW DELHI

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ITA 1495/DEL/2016Status: DisposedITAT Delhi16 September 2016AY 2012-133 pages

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

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal found no infirmity in the CIT(Appeals)'s order. It reasoned that the possibility of personal use of vehicles and telephones could not be ruled out, justifying some disallowance.

What were the facts?

The assessee firm appealed against the CIT(Appeals)'s order which upheld an addition of Rs. 1,62,931/-. The CIT(Appeals) had reduced an ad-hoc disallowance on car and telephone expenses from 20% to 10%.

What were the issues?

Whether ad-hoc disallowances on car and telephone expenses are justified without specific defects being pointed out, and if the reduction by the CIT(Appeals) is reasonable.

Which sections of the Income-tax Act were involved?

Section 143(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH : SMC-II, NEW DELHI

Before: SHRI SUNIL KUMAR YADAV

For Appellant: Shri Pulkit Gupta, CA
For Respondent: Shri S.K. Jain, Sr. DR
Hearing: 14.09.2016Pronounced: 16.09.2016

Date of hearing : 14.09.2016 Date of Pronouncement : 16.09.2016 O R D E R This appeal is preferred by the assessee against the order dated 18.01.2016 of the CIT(Appeals)-20, New Delhi inter alia on the following grounds:-

“1. That on the facts and in the circumstances of the case and in law the Learned Commissioner of Income Tax (Appeal) erred in dismissing the appeal of appellant firm and retaining addition/disallowance of Rs.1,62,931/- in the order passed by Ld. Deputy Commissioner of Income Tax Circle- 63(1) New Delhi u/s 143(3) of the Income Tax Act, 1961.

2.

That Ld. CIT (Appeal)-20 New Delhi grossly erred in law and on facts reducing Adhoc disallowance by applying mechanical rate of 10% out of "Car repair & maintenance, Advertisement & publicity, telephone and travelling expenses" amounting to Rs.1,22,967/ - (10% of 12,29,670/ -).

3.

That Ld. CIT (Appeal)-20 New Delhi grossly erred in law and on facts reducing Adhoc disallowance by applying mechanical rate of 10% out of telephone expenses amounting to Rs.39,964/ - (10% of 3,99,646/ -).

4.

That the order passed by the Ld. CIT (Appeal) New Delhi, being erroneous in law and on facts deserved to be deleted.

5. The appellant craves leave to add or amend any ground of appeal

.”

2. During the course of hearing, the ld. counsel for the assessee has opted not to press ground No.1. Accordingly the same is dismissed being not pressed.

3. With regard to ground Nos.2 & 3, the ld. Counsel for the assessee has contended that the AO has made adhoc additions without pointing out any defects in the claim of expenditure made by the assessee. Therefore, the adhoc additions deserve to be deleted.

4. The ld. DR has submitted that there is every possibility of personal use of vehicles and telephones, therefore the AO has made reasonable disallowance.

5.

I have carefully examined the orders of lower authorities in the light of rival submissions and I find that the assessee is a firm engaged in business of processing, selling & trading of rice and has claimed the expenditure on car and telephones. Nothing has been placed on record to establish that it has never used telephone or the car for personal use.

Therefore, the element of personal use cannot be ruled out. In light of these facts, some disallowances are to be made. Since the CIT(Appeals) has restricted the disallowance from 20% made by the AO to 10% of total claim, having noted that there is possibility of personal use of vehicles and telephones. I find no infirmity therein. Accordingly, I confirm the order of CIT(Appeals).

6.

In the result, the appeal of the assessee is dismissed.

Pronounced in the open court on this 16th day of September 2016.

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