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Income Tax Appellate Tribunal, “B” BENCH, PUNE
Before: SHRI D. KARUNAKARA RAO, AM & SHRI VIKAS AWASTHY, JM
आदेश / ORDER
PER VIKAS AWASTHY, JM :
This appeal by the Revenue is directed against the order of Commissioner of Income Tax (Appeals)-II, Nashik dated 27-02-2013 for assessment year 2009-10. The assessee has filed cross objections against the aforesaid order of Commissioner of Income Tax (Appeals).
The cross objections have been filed with the delay of 12 days. The assessee has filed an application seeking condonation of delay in filing of the appeal supported by an affidavit. After perusal of the same, we are satisfied that the delay in filing of cross objections is not intentional or deliberate but has been caused due to reasons as stated in the affidavit. Thus, the delay in filing of cross objections is condoned and the same are admitted to be heard and disposed of on merits.
The brief facts of the case as emanating from records are: The assessee is a transport contractor. A survey action u/s. 133A of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) was carried out at the business premises of the assessee on 18-02-2009. During the course of survey, the assessee disclosed additional income of Rs.25,00,000/-. The assessee filed its return of income for the impugned assessment year on 19-09-2009 declaring total income of Rs.40,47,390/-. In scrutiny assessment proceedings, the Assessing Officer made additions/disallowances on following counts : (i) Additional income declared during survey Rs.23,34,463/-. (ii) Disallowances u/s. 40A(2)(b) : (a) Freight Rs.8,93,130/-.
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(b) Salary Rs.3,24,000/-. (c) Interest Payment Rs.1,37,700/-. (iii) Sundry Creditors, Chandan Jain Rs.11,74,411/-. (iv) Commission paid to Rajendra Kumar Jain Rs.7,90,400/-.
Aggrieved by the assessment order dated 16-12-2011, the assessee filed appeal before the Commissioner of Income Tax (Appeals). The Commissioner of Income Tax (Appeals) vide impugned order deleted the following additions : (i) Addition made on account of income declared during survey Rs.23,34,463/-. (ii) Disallowances u/s. 40A(2): (a) Freight Rs.8,93,130/-. (b) Interest Rs.1,37,700/-. (iii) Sundry Creditors, Chandan Jain Rs.8,80,808/-. (iv) Commission paid to Rajendra Kumar Jain Rs.5,62,500/-.
Thus, the Commissioner of Income Tax (Appeals) sustained disallowances u/s. 40A(2) on account of payment of salary Rs.3,24,000/-, partial sundry creditors Rs.2,93,603/- and part of commission paid to Rajendra Kumar Jain Rs.1,87,500/-. Against the aforesaid findings of Commissioner of Income Tax (Appeals), the Revenue is in appeal assailing the relief granted to the assessee and the assessee is in cross objections against the additions confirmed.
Shri Ajay Modi representing the Department submitted that in ground No. 1, the Revenue has challenged deleting of addition Rs.23,34,303/- on account of additional income declared during survey.
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The ld. DR submitted that during survey the assessee had declared additional income of Rs.25,03,303/-. In assessment order, addition was worked out to Rs.24,34,463/-, whereas, while computing income the figure was wrongly taken as Rs.23,34,463/-. The Assessing Officer in proceedings u/s. 154 rectified the mistake vide order dated 18-07-2012 and thus, the addition of Rs.24,34,463/- was made. The action of the Commissioner of Income Tax (Appeals) in deleting the aforesaid addition is not acceptable as the assessee has credited additional amount declared in the profit and loss account and at the same time claimed proportionate expenditure against the additional income declared. The assessee has shown lower NP at 2.76% as compared to net profit in assessment year 2010-11 at 4.62%. The ld. DR vehemently supporting the findings of Assessing Officer prayed for reversing the findings of Commissioner of Income Tax (Appeals) in deleting the addition.
4.1 In respect of ground Nos. 2 and 3 relating to disallowances u/s. 40A(2) the ld. DR submitted that the assessee has made payments to the tune of Rs.8,93,130/- on account of freight to the Directors. The assessee has not produced any agreement/document indicating that the assessee company had hired vehicles for transportation from the Directors. The terms and conditions, rate, etc. paid to the Directors has not been specified in any of the documents. Therefore, the assessee’s claim of payment of freight to the Directors at market rate has not been substantiated. Merely, for the reason that TDS has been deducted on the payments would not suffice to establish that the freight has been paid to the Directors at market price. The ld. DR in support of his submissions placed reliance on the judgment of Hon’ble Delhi High Court in the case of Schneider Electric India Ltd. Vs. Commissioner of Income Tax reported as 171 Taxman 177.
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The ld. DR further submitted that the assessee has paid interest to the tune of Rs.22,95,000/- at the rate of 15% on unsecured loans obtained from specified persons as against 14.5% rate of interest paid to the bank. The assessee has failed to show any cogent reason as to why 0.5% higher rate of interest was paid to the specified persons. The Assessing Officer disallowed excess interest payment i.e. 0.5% of Rs.22,95,000/- = Rs.1,37,700/-. The Commissioner of Income Tax (Appeals) after having observed that there was calculation error in computing 0.5% of Rs.22,95,000/- i.e. instead of Rs.1,37,700/- it should have been 11,475/-, deleted the entire addition. The ld. DR asserted that the Commissioner of Income Tax (Appeals) should have at least confirmed the disallowance of correct amount of Rs.11,475/-.
4.2 In respect of ground No. 4 in the appeal, the ld. DR submitted that Shri Chandan Jain is an employee of the assessee working as Area Manager at Patna Branch. He is getting salary of Rs.5,000/- per month. In the books of assessee there is an outstanding credit balance of Rs.83,105/-. The account extract in his name shows that an amount of Rs.10,91,306/- have been remitted out of total of Rs.11,74,411/-. The assessee was asked to explain and produce the vouchers to show genuineness of expenditure amounting to Rs.11,74,411/- made through Shri Chandan Jain. The assessee failed to produce any vouchers. The Commissioner of Income Tax (Appeals) sustained additions to the extent of 25% of total expenditure i.e. 25% of Rs.11,74,411/- = Rs.2,93,603/- and deleted the remaining addition of Rs.8,08,808/-. The ld. DR submitted that it is quite surprising as to how Shri Chandan Jain who is receiving meager salary of Rs.5,000/- per month has incurred huge expenditure on behalf of the assessee and receives reimbursement of expenditure at latter
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point of time. The outstanding amount at the end of the year is Rs.83,105/- which is yet to be reimbursed to Shri Chandan Jain. The ld. DR asserted that Shri Chandan Jain was not maintaining any voucher. The entire expenditure is recorded in petty cash book without any corroborative evidence. The genuineness of the expenditure has not been proved either before the Assessing Officer or before the Commissioner of Income Tax (Appeals). The Commissioner of Income Tax (Appeals) has been generous in deleting the addition of Rs.8,08,808/- without there being any cogent evidence.
4.3 In respect of ground No. 5 relating to payment of commission to Shri Rajendra Kumar Jain, the ld. DR submitted that the assessee has paid commission to the tune of Rs.7,90,400/- to Shri Rajendra Kumar Jain for procuring some business. The assessee has filed an affidavit of Shri Rajendra Kumar Jain during the First Appellate proceedings. The assessee has paid commission of 3,00,000/- by cheque and the balance amount has been paid in cash. During the course of scrutiny assessment, the assessee has failed to produce bank statement indicating payment of commission to Shri Rajendra Kumar Jain. The Commissioner of Income Tax (Appeals) in para 10.2 of his order has observed : - No reasonableness for payment of commission to Shri Rajendra Kumar Jain has been brought on record, - Freight charges of Rs.4,90,400/- paid without any documentary evidence, - Statement of Shri Rajendra Kumar Jain by way of an affidavit is self serving document and cannot be accepted at its face value,
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- Payment of commission and freight to Shri Rajendra Kumar Jain are not supported by any documentary evidence, - Inflation of expenditure by Shri Rajendra Kumar Jain cannot be ruled out.
Yet the Commissioner of Income Tax (Appeals) restricted the addition to Rs.1,87,500/- as against the addition of Rs.7,90,400/- made by the Assessing Officer. The ld. DR prayed for reversing the findings of Commissioner of Income Tax (Appeals) and upheld the additions made by Assessing Officer.
On the other hand Shri Sunil Ganoo appearing on behalf of the assessee vehemently defended the order of Commissioner of Income Tax (Appeals) in deleting the additions.
5.1 The ld. AR submitted that the Commissioner of Income Tax (Appeals) has erred in confirming the disallowance u/s. 40A(2)(b) in respect of payment of salary to the following persons : Name of the Person Salary Paid Disallowance Shri Kantilal Kothari Rs.7,20,000/- Rs.60,000/- Shri Ujwal Kothari Rs.7,20,000/- Rs.60,000/- Shri Hemant Kothari Rs.7,20,000/- Rs.60,000/- Mrs. Anamika Kothari Rs.1,92,000/- Rs.72,000/- Mrs. Payal Kothari Rs.1,92,000/- Rs.72,000/- Total Rs.25,44,000/- Rs.3,24,000/-
5.2 The ld. AR submitted that in earlier assessment years the assessee has been paying salary to the aforesaid persons and the Department has
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allowed the same. All these persons are subject to tax at higher tax bracket, therefore, there is no question of diverting the funds to reduce the tax. All these persons have disclosed the amount in their respective return of income and have paid tax thereon. Under such circumstances, it would be unjustified if the said amount is disallowed in the hands of the assessee. This would result in double taxation of the same amount. In support of his submissions, the ld. AR placed reliance on the decision of Hon’ble Bombay High Court in the case of Commissioner of Income Tax Vs. Indo Saudi Services (Travel) P. Ltd. reported as 310 ITR 306.
We have heard the submissions made by the representatives of rival sides and have perused the orders of the authorities below. We have also considered the decisions on which rival sides have placed reliance. The first ground raised in the appeal by the Department is against deleting of addition of Rs.23,34,463/- made on account of income declared during survey. The Revenue has assailed deleting of disallowance primarily on the ground that the assessee has claimed proportionate expenditure against the additional income declared. Similar plea was taken by the Assessing Officer in his remand report before the Commissioner of Income Tax (Appeals). The relevant extract of the findings of Commissioner of Income Tax (Appeals) given in para 7.2 of the impugned order on the issue are as under : “Further, in the Profit and Loss account, it is also revealed that the appellant has disclosed total contract charges received (Sch-13) at Rs.12,91,09,697/- which included the additional income of Rs.25,03,303/- declared during survey action u/s. 133A. I further note that the auditor has given a remark in this context as under : "On 18th Feb. 2009, the Income tax survey u/s. 133A of the Income- tax Act was carried out in the premises of Company, on the basis of that the Company has shown additional income of Rs.25,03,303/- by way of return freight received. This has been accounted in the books of account from 01/04/2008 to the date of survey.”
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Therefore, I am of the considered opinion that the aforesaid assertion of AO is factually incorrect, as appellant has rightly credited the said declared amount to the Profit and Loss account, annexed with the return of income in Sch.13 of the audit report, and thus addition made by AO is not justified and cannot be sustained as it has resulted in double addition. Further, considering the ratio/principles laid down by the Hon. Jurisdictional ITAT Pune's decision in the case of ACIT vs M/s. Adeep Enterprises of Nashik [ITA No.1323/PN/09 for AY.2006-07 dt.19-01-2012] the addition made by the AO cannot be sustained. The appellant has given details of increased depreciation due to purchase of new vehicles and interest during AY. 2009- 10 which have resulted into low NP if additional income of Rs.25,03,303/- declared during survey is reduced from the gross receipts. The facts of the present case are squarely covered by the above referred case of hon'ble IT AT, Pune. In view of the above, addition of Rs.23,34,463/- is hereby deleted. Therefore, ground no. 1 is allowed.”
After hearing both the sides we observe that the findings of the Commissioner of Income Tax (Appeals) are well reasoned and hence warrant no interference. Accordingly, ground No. 1 raised in the appeal by the Department is dismissed.
In ground No. 2 of the appeal the Revenue has assailed deleting of disallowance u/s. 40A(2) in respect of freight payment of Rs.8,93,130/-. The contention of the ld. DR is that the assessee has not produced any agreement/document indicating that the assessee company had hired vehicles from the Directors.
A perusal of the assessment order shows that the Assessing Officer has not disputed the payment of freight expenses or the fact that the vehicles of the Director were not used for transportation of goods. The disallowance u/s. 40A(2)(b) has been made merely for the reason that excessive payments have been made to the Directors for transportation of goods. The Assessing Officer in para 5 of the assessment order made disallowance of 10% of total payment of Rs.89,31,000/-, treating it to be excessive. The assessee produced copies of vouchers before Commissioner of Income Tax (Appeals) indicating freight paid to the Directors and the
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freight paid to unrelated parties. The Commissioner of Income Tax (Appeals) sought remand report from Assessing Officer. There is no finding of fact given by the Assessing Officer that freight paid to the Directors of assessee company is at higher rate vis-à-vis the payment of freight to the third parties. The Assessing Officer disallowed 10% of the freight charges merely on presumptions and assumptions without giving any finding and comparative analysis of freight paid to the Directors and unrelated parties. The submissions of ld. DR sans merit. We do not find any infirmity in the order of Commissioner of Income Tax (Appeals) in deleting the addition. Accordingly, ground No. 2 raised in the appeal by the Department is dismissed.
In ground No. 3 of the appeal, the Revenue has assailed deleting of disallowance u/s. 40A(2) in respect of interest Rs.1,37,700/-. The assessee has paid interest @ 14.5% to the Bank as against interest @ 15% to the related parties. The assessee explained that 0.5% excess interest paid to the related parties is justified as the funds are easily available from the related parties on simple interest, without any security and without loan processing charges. If the funds are to be procured from bank, the assessee would have to pass though the hassle of creating mortgaged, deposit of title deeds, creating of security, payment of loan processing charges and finally payment of compound interest on loan amount. In order to bypass cumbersome process and formalities for obtaining loan from Bank, payment of marginal higher interest is justified. Further, it is pointed that while making disallowance u/s. 40A(2) the Assessing Officer wrongly computed disallowance at Rs.1,37,700/-. The disallowance if at all is to be made, it should have been Rs.11,475/- i.e. 0.5% of Rs.22,95,000/-. Taking into consideration the facts and the justification
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given by the assessee for paying marginally higher rate of interest, we are of considered view that the Commissioner of Income Tax (Appeals) has rightly deleting the disallowance made by Assessing Officer u/s. 40A(2)(b) in respect of interest payment. We concur with the findings of Commissioner of Income Tax (Appeals). Accordingly, ground No. 3 raised by the Department in appeal is dismissed.
In ground No. 4 of the appeal the Department has assailed deleting of addition of Rs.8,08,808/- in respect of sundry creditors Shri Chandan Jain. The assessee in ground No. 2 of the cross objection has impugned the findings of Commissioner of Income Tax (Appeals) in confirming the addition of Rs.2,93,603/- in respect of same addition. During assessment proceedings the Assessing Officer disallowed Rs.11,74,411/-, the entire expenditure of Patna Branch paid to Shri Chandan Jain. It has been alleged that Shri Chandan Jain, Area Manager of the assessee company is receiving a meager salary of Rs.5,000/- per month and has incurred huge expenditure on behalf of the assessee company that has been reimbursed to him at later point of time. From the total aforesaid amount, Rs.83,105/- is still outstanding. On the other hand the contention of the assessee is that Shri Chandan Jain is managing the affairs of assessee at Patna. He is arranging for unloading of rail wagons at Patna Station and dispatching the goods at various destinations around Patna by hiring small vehicles. The assessee company is purportedly maintaining separate accounts for Patna and the payments are made to him by cheque. The findings of the Commissioner of Income Tax (Appeals) in respect of addition made on account of sundry creditor Chandan Jain are as under : “9.2 I have carefully considered the facts narrated in the assessment order, submission and the evidence submitted by the appellant, remand report of the AO and comments of the appellant on remand report, I find that AO has enclosed a copy of the letter of Shri. Chandan Jain of Patna and the
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copies of account extracts and vouchers evidencing payment with his assessment order. I have gone through the details of the said annexures and find that Shri. Chandan Jain had maintained details of related expenses with reference to each RR No. and V.P. No. I further observe that appellant had transported goods by Railway Wagon to Patna as per Railway Receipt No. and V.P. No. As noted in the said annexures. However, it is obvious that appellant company has relied upon the statement furnished by Shri. Chandan Jain and accordingly passed the payment without verifying the correctness of claim of expenses, which is without any corroborative evidence. Under the circumstances and in order to decide the issue, I am of the opinion that while majority of expenses were bound to have been spent for unloading the wagons and related activities, a possibility of inflation of expenses on the part of Shri. Chandan Jain cannot be ruled out especially when no corroborative vouchers are being maintained by Shri. Jain. The appellant company has passed the entry without verifying the genuineness of expenses shown by Shri. Jain. In view of the above and considering the entire facts of the case, I am of the considered opinion that it would be in the fitness of things that out of the said expenses, an amount Rs.2,93,603/- [25% of Rs.11,74,411/-] is sustained in order to plug the leakage of revenue. Therefore, appellant gets relief at Rs.8,80,808/-. Accordingly, this ground is partly allowed.”
We find that the First Appellate Authority on this issue is reasonable and justified in disallowing 25% of total expenditure in respect of Patna Branch. We concur with the findings of Commissioner of Income Tax (Appeals). Accordingly, ground No. 4 raised in the appeal by the Department and ground No. 2 raised in the cross objections of the assessee are dismissed.
In ground No. 5 of the appeal, the Revenue has assailed the findings of Commissioner of Income Tax (Appeals) deleting the addition of Rs.5,62,500/- in respect of payment of commission and transportation charges to Shri Rajendra Kumar Jain at Guwahati. The assessee in ground No. 3 of cross objections has assailed the findings of Commissioner of Income Tax (Appeals) in sustaining disallowance of Rs.1,87,500/- in respect of same addition. It has been contended before us that except for self serving statement of Shri Rajendra Kumar Jain no document has been placed on record by the assessee to show the nature of services rendered
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by him for which commission has been paid. On the other hand contention of the assessee is that the assessee company is maintaining regular books of account which are duly audited. The commission and transportation expenses paid to Shri Rajendra Kumar Jain is debited to Profit and Loss Account. Shri Rajendra Kumar Jain filed an affidavit confirming the receipt of aforesaid amounts. The commission and freight charges are paid to Shri Rajendra Kumar Jain after deducting tax at source.
A perusal of records reveal that total payment of Rs.7,90,400/- was made to Shri Rajendra Kumar Jain at Guwahati. This payments constitute two segments : (i) Rs.3,00,000/- towards the commission for providing various services to the customers of assessee, such as settling of claim for shortages, damages, etc., and (ii) Rs.4,90,400/- towards transportation charges, unloading and loading of goods at Guwahati station, labour charges, managing labour, etc. The Commissioner of Income Tax (Appeals) after examining the submissions of assessee and the remand report of Assessing Officer partly deleted the addition by observing as under : “During remand proceedings, AO has examined Shri Rajendra Kumar Jain of Guwahati on oath on 23/07/2012 and forwarded the copy of the statement with his comments vide letter dt. 24/07/2012. Appellant has submitted its comments on the remand report vide letter dt.30/07/2012. I find from the rival submission that Shri. Rajendra Kumar Kanhaiyalal Jain is staying at Guwahati and looking after the business affairs of the appellant. During the year under consideration, appellant company is shown to have paid commission of Rs.3,00,000/- and also freight charges of Rs.4,90,400/- for use of his trucks/vehicles. Appellant company has deducted TDS on the said payments. The commission and freight received by Shri. R.K. Jain are reflected in the extract of accounts attached with the assessment order and the return of income filed by him. The copy of the same was forwarded by the AO. However, I find that no reasonableness for payment of commission to Shri. R.K. Jain has been brought on record by the appellant. Freight charges of Rs.4,90,400/- shown to have been paid to Shri. R.K. Jain are also without any documentary evidence. The statement of Shri R.K. Jain are also without any documentary evidence. The statement of Shri R.K. Jain is self serving and cannot be accepted at its face value especially in the absence of proof of services rendered by Shri Jain for the appellant and for want of
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various other documentary evidences such bank statement etc. It is therefore, seen that appellant company has relied upon the statement furnished by Shri R.K. Jain and accordingly passed the payment without verifying the correctness of claim of expenses, which is without any documentary evidence. The freight expenses of Rs.4,90,400/- and commission of Rs.3,00,000/- are not fully substantiated by documentary evidences. Inflation of claim of expenses by Shri R.K. Jain cannot be ruled out as there was no supervision of the appellant on Shri R.K. Jain. In view of the above and considering the entire facts of the case, I am of the considered opinion that it would be in the fitness of things that out of the said expenses, an amount Rs.1,87,500/- [25% of Rs.7,50,000] is sustained in order to plug the leakage of revenue. Therefore, appellant gets relief at Rs.5,62,500/-. Accordingly, this ground is partly allowed.”
We find that the order of Commissioner of Income Tax (Appeals) is justified in granting part relief to the assessee in the facts and circumstances of the case. It is not the case of Revenue that the assessee has no business connection at Gauhati. Shri R.K. Jain is managing the affairs of assessee at Gauhati. In the process he must have incurred some expenditure on behalf of assessee’s business. At the same time the assessee has not furnished any evidence to show that the entire expenditure incurred was verified. Therefore, the Commissioner of Income Tax (Appeals) was justified in disallowing 25% of such expenditure. The findings of Commissioner of Income Tax (Appeals) warrant no interference on this issue. Accordingly, ground No. 5 raised in the appeal by the Department and ground No. 3 raised in the cross objections by assessee are dismissed.
In the result, the appeal of the Revenue is dismissed.
Now, the only issue left for adjudication in the cross objections filed by the assessee is ground No. 1 relating to disallowance u/s. 40A(2)(b) Rs.3,24,000/- in respect of payment of salary to the Directors and relatives of the Directors. The ld. AR has tried to justify salary paid to Shri Kantilal
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Kothari being one of the promoter of the assessee company, Shri Ujwal Kothari, and Shri Hemant Kothari both professionally qualified and are looking after entire business affairs of the assessee company, Mrs. Anamika Kothari and Mrs. Payal Kothari are Post Graduate in commerce and they are assisting in accounting and management of assessee. Shri Kantilal Kothari, Shri Ujwal Kothari and Shri Hemant Kothari are paid salary of Rs.7,20,000/- per annum whereas Mrs. Anamika Kothari and Mrs. Payal Kothari are receiving annual salary of Rs.1,92,000/-. The ld. AR has submitted that since all the persons are professional qualified and are engaged in managing affairs of the company, therefore, the salary paid to them is justified.
On the other hand the contentions of the ld. DR is that during the period relevant to the assessment year 2008-09 Shri Kantilal Kothari, Shri Ujwal Kothari and Shri Hemant Kothari were receiving salary of Rs.4,80,000/- each per annum and Mrs. Anamika Kothari and Mrs. Payal Kothari were receiving salary of Rs.1,44,000/- each per annum. There has been increase of 50% in the salary of Shri Kantilal Kothari, Shri Ujwal Kothari and Shri Hemant Kothari i.e. Rs.2,40,000/- each per annum and the salary of Mrs. Anamika Kothari and Mrs. Payal Kothari has been increase by 33.3% i.e. Rs.48,000/- each. The assessee has failed to give reasons for such steep rise in salaries as compared to increase in profits/growth of the assessee company. The ld. DR has contended that by giving steep hike in salary, the assessee has tried to reduce tax liability that has been enhanced due to additional income declared during survey.
A perusal of the impugned order shows that there has been increase in the salaries of specified persons ranging from 33.3% to 50% as against marginal increase in net profits of the assessee. The assessee has not been
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able to justify substantial increase in the salary during the assessment year under appeal. The Commissioner of Income Tax (Appeals) has further observed that there is no such corresponding increase in the salary of other staff/employees of the assessee company. A close scrutiny of the impugned order reveal that as against the salary of Rs.4,80,000/- in assessment year 2008-09 the salaries of Shri Kantilal Kothari, Shri Ujwal Kothari and Shri Hemant Kothari has been increase to Rs.7,20,000/- per annum. The Assessing Officer has made disallowance of Rs.60,000/- to effectively bring salary down to Rs.6,60,000/-. Whereas, in the case of Mrs. Anamika Kothari and Mrs. Payal Kothari the salaries have been increased from Rs.1,44,000/- per annum each in assessment year 2008- 09 to Rs.1,92,000/- in assessment year 2009-10. After disallowance of Rs.72,000/-, their salaries have been brought down to Rs.1,20,000/-, which is less than the salary received by them in assessment year 2008- 09. The increase in salary of Shri Kantilal Kothari, Shri Ujwal Kothari and Shri Hemant Kothari by 37.5% (approx) has been accepted by the Department. The increase in salary of Mrs. Anamika Kothari and Mrs. Payal Kothari is only 33.3% which to our considered view is fair and justified. The disallowance made in the case of both the ladies have further resulted in anomaly by reducing the salary in assessment year under appeal less than what they were receiving in assessment year 2008- 09. Accordingly, the disallowance of Rs.1,44,000/- made in respect of Mrs. Anamika Kothari and Mrs. Payal Kothari, Rs.72,000/- each is deleted. As far as the disallowance of other three persons are concerned i.e. Shri Kantilal Kothari, Shri Ujwal Kothari and Shri Hemant Kothari the same is justified. The disallowance of Rs.1,80,000/- for above three persons (Rs.60,000/- each) is confirmed. Accordingly, ground No. 1 raised in the cross objections by the assessee is partly allowed.
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As far as ground Nos. 2 and 3 of the cross objections are concerned they have already been adjudicated along with ground Nos. 4 and 5 of the appeal by the Department and have been dismissed. In the result, the cross objections are partly allowed.
To sum up, the appeal of Revenue is dismissed and the cross objections are partly allowed.
Order pronounced on Friday, the 05th day of January, 2018.
Sd/- Sd/- (डी. करुणाकरा राव/D. Karunakara Rao) (ववकास अवस्थी / Vikas Awasthy) ऱेखा सदस्य / ACCOUNTANT MEMBER न्याययक सदस्य / JUDICIAL MEMBER ऩुणे / Pune; ददनाांक / Dated : 05th January, 2018 RK आदेश की प्रयिलऱवऩ अग्रेवषि / Copy of the Order forwarded to : अऩीऱाथी / The Appellant. 1. प्रत्यथी / The Respondent. 2. आयकर आयुक्त (अऩीऱ) / The CIT(A)-II, Nashik 3. आयकर आयुक्त / The CIT-II, Nashik 4. ववभागीय प्रयतयनधध, आयकर अऩीऱीय अधधकरण, “बी” बेंच, 5. ऩुणे / DR, ITAT, “B” Bench, Pune. गाडड फ़ाइऱ / Guard File. 6. //सत्यावऩत प्रयत // True Copy// आदेशानुसार / BY ORDER,
यनजी सधचव / Private Secretary, आयकर अऩीऱीय अधधकरण, ऩुणे / ITAT, Pune