J.CHANDRAPRAKASH,CHENNAI vs. DCIT, OOTACAMUND

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ITA 289/CHNY/2017Status: DisposedITAT Chennai03 May 2017AY 2013-144 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal found that the assessment was flawed as the income was wrongly classified and the assessee was not given a fair opportunity to substantiate its expenditure claims. Therefore, the case was remanded for a fresh assessment.

What were the facts?

The assessee, engaged in the business of making gold jewellery, claimed significant expenditure against income declared under 'Income from other sources'. The Assessing Officer disallowed 50% of the claimed expenditure due to lack of supporting evidence.

What were the issues?

Whether the expenditure claimed by the assessee was adequately supported by evidence and if the income was correctly classified under 'Income from other sources'.

Which sections of the Income-tax Act were involved?

Section 57

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘B’ (SMC

Before: SHRI ABRAHAM P. GEORGE]

For Respondent: Shri. Murali Mohan, IRS, JCIT

आदेश / O R D E R

1.

Assessee in this appeal is aggrieved that expenditure incurred by him for earning the income was disallowed.

2.

Facts apropos that assessee who was in the business of making gold jewellary had filed his return for the impugned

ITA No. 289/Mds/2017 :- 2 -: assessment year declaring income of �15,55,400/-. During the course of the assessment proceedings the ld. Assessing Officer required the assessee to produce evidence on expenditure of �48,55,630/- claimed against income of �42,52,726/- shown under the head ‘’Income from other sources’’. Though assessee gave a break-up as under, it seems no evidence was produced in support of the claim.

‘’........1. I am herewith furnishing details of deduction claimed u/s. 57 of the I.T. Act, 1961 to the tune of �48,55,630/- as under:- a Making Charges paid � 36,01,710 b Designing Charges paid � 4,56,000 c Salary paid to Praveen � 1,32,000 d Salary paid to Shiva Kumar � 1,44,000 e Salary paid to Chandran � 1,20,000 f Salary paid to Sekar � 1,24,000 g Rent paid Sukumar Modi � 90,000 h Travelling Expenses � 1,55,000.....’’ As per the ld. Assessing Officer, the making charges earned by the assessee was shown under the head ‘’income from other sources’’, but no supporting documents were filed for the claim of expenditure of �48,55,630/-. He made a disallowance of 50% of such claim, and completed the assessment making an addition of �24,27,815/-.

ITA No. 289/Mds/2017 :- 3 -:

3.

Assessee’s appeal before the ld. Commissioner of Income Tax (Appeals) met with partial success. Ld. Commissioner of Income Tax (Appeals) was of the opinion that �7,60,000/- spent by the assessee on salary, rent and travelling expenses were allowable in full.

Further, according to him on making and designing charges of �40,57,710/- claimed, a disallowance of 25% alone was justified. He scaled down the total disallowance to �10,14,427/-.

Now before me, ld. Authorised Representative, pleading for 4. deleting the disallowance in-toto submitted that assessee was having vouchers for the expenditure and if given an opportunity can substantiate its claim for expenditure.

Per contra, ld. Departmental Representative strongly 5.

supported the orders of the authorities below.

6.

I have perused the orders and heard the rival contention. In the first place ld. Assessing Officer, despite noting assessees letter dated 29.03.2016, stating that he was doing a business of making of gold jewellary, still chose to assessee’s income under the head ‘’income from other sources’’. The residuary head can be used only where the income returned does not fit into specific heads. That apart, contention of the assessee now before me is that it was having

ITA No. 289/Mds/2017 :- 4 -: evidence in support of its claim for expenditure. Considering all these, we are of the opinion that the assessment has to be redone after giving a fair opportunity to the assessee to support its case. I therefore set aside the orders of the lower authorities and remit back to the ld. Authorised Representative for doing a de-novo assessment.

In the result, appeal of the assessee is allowed for statistical 7.

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