KUMAR DEVADAS ADVANI,MUMBAI vs. ITO 22(1)3, MUMBAI

सुनवाई क� तार�ख / : 17.10.2016 Date of Hearing घोषणा क� तार�ख / : 26 .10.2016 Date of Pronouncement आदेश / O R D E R Per N. K. Pradhan, A. M.: This is an appeal filed by the assessee. The relevant assessment year is 2009-10. It is directed against the order of Commissioner of Income Tax (Appeals)-25, Mumbai and arises out of the order u/s. 143(3) of the Income Tax Act, 1961 (‘the Act’).

(A.Y. 2009-10) Kumar Devdas Advani vs. ITO The second ground raised by the assessee is that the ld. CIT(A) erred in upholding the action of the A.O. in making the adhoc disallowance of Rs.1,05,461/- on account of godown hire related expenses alleging non-production of relevant accounts and vouchers without appreciating that the relevant details were submitted during the course of assessment as well as appellate proceedings.

The third ground raised by the assessee is that the ld. CIT(A) erred in upholding the action of the AO in making the adhoc disallowance of Rs.1,01,969/- on account of general expenses like computer expenses, conveyance, discount, miscellaneous expenses, office expenses, printing and stationery, repairs and maintenance, staff welfare, telephone, alleging payments in cash and non-production of relevant accounts and vouchers without appreciating that the relevant details were submitted during the course of assessment as well as appellate proceedings.

The fourth ground raised by the assessee is that the ld. CIT(A) erred in upholding the action of the AO in making the adhoc disallowance of Rs.2,15,522/- on account of staff salaries and loading/unloading alleging payments in cash and non- production of relevant accounts and vouchers without appreciating that the relevant details were submitted during the course of assessment as well as appellate proceedings.

The fifth ground raised by the assessee is that the ld. CIT(A) erred in upholding the action of the AO in making the adhoc disallowance of Rs.32,420/- on account of motor car petrol expenses and depreciation on motor car alleging personal element without bringing any material on record.

(A.Y. 2009-10) Kumar Devdas Advani vs. ITO 3.1 The AO then disallowed 25% of the truck hire related expenses; 15% of the godown hire related expenses; 10% of the general expenses; 5% of staff salaries & loading/unloading expenses and 1/5th of the petrol expenses alleging (i) absence of proper bills and vouchers , (ii) the said expenses being not verifiable and (iii) the said expenses being not for the business purpose.

3.2 The ld. CIT(A) sustained the adhoc disallowances made by the A.O. stating that the assessee could not produce the full details of these expenses either before the AO or before him with evidence.

3.3. The ld. Counsel of the assessee submits, before us, that the assessee had filed all the relevant details along with the copies of ledger accounts and vouchers before the AO during the course of assessment proceedings and in spite of this the AO has disallowed the expenses on adhoc basis.

3.4 The ld. DR submits, before us, that the assessee could not produce before the AO the relevant accounts and vouchers. Therefore, the AO has reasonably disallowed the expenses and after the disallowance the net profit comes to reasonable figure.

3.5 We have considered the rival submissions and perused the relevant material on record. We find that the AO at para 2 of the assessment order has stated that in response to notices u/s. 143(2) and 142(1) of the Act, the assessee along with Shri Hemant Mhatre, Accountant, attended from time to time, filed details and discussed the case. Therefore, it is clear that the assessee had filed before the AO the details called for . There is no merit in the finding of the AO in subsequent paras of the assessment order that the assessee could not produce the books of accounts, supporting bills and vouchers in support of these expenses. The paras subsequent to para 2 of the assessment order of the AO are contradictory in nature. The AO has not found any specific fault line in the books of account maintained by the assessee. The books of the accounts of the assessee are audited u/s. 44AB of the Act. Section 44AB was inserted

(A.Y. 2009-10) Kumar Devdas Advani vs. ITO from the assessment year 1985-86 and was primarily intended to ensure credibility of accounts maintained by an assessee. As evident from the assessment order, the AO could not locate any specific error or discrepancy in the books of accounts of the assessee. The disallowances made by him of the expenses narrated above are adhoc in nature without any support from the books of accounts. In view of the above, the adhoc disallowance of truck hire related expenses of Rs.1,16,157/-; godown hire related expenses of Rs.1,05,461/-; general expenses of Rs.1,01,969/-; staff salaries and loading/unloading expenses of Rs.2,15,522/-; and motor car, petrol expenses of Rs.32,420/- are deleted.

4.1 The AO during the assessment proceedings noted that the assessee has debited depreciation of truck @ 50% at Rs.4,59,032/-. Since the truck was put to use after 30th September, the AO allowed only half of the normal depreciation and disallowed 50% which comes to Rs.2,29,516/-.

4.2 The ld. CIT(A) held that the press release issued by CBDT dated 24.4.2009 relied on by the assessee does not override or apply to the proviso to section 32(1) of the Act where it is categorically stated that if the asset is not used for a period of more than 180 days, then the depreciation should be allowed @ 50% allowable for full year. As the AO has allowed depreciation @ 50%, the ld. CIT(A) upheld the disallowance of deprecation of Rs.2,29,516/- made by the AO.

(A.Y. 2009-10) Kumar Devdas Advani vs. ITO 4.3 The ld. Counsel of the assessee relied on the press release issued by CBDT dated 24.4.2009 . In the alternative, he stated that the balance depreciation be allowed in the next assessment year.

4.4. The ld. DR supported the order of the ld. CIT(A), upholding the disallowance of depreciation of Rs.2,29,516/- made by the AO.

4.5 We have considered the rival submissions and perused the relevant records. We find that it is settled position of law that if the asset is not used for a period of more than 180 days, then the depreciation should be allowed @ 50% of the depreciation allowable for the full year. Since the truck is put to use after 30th September, the AO has rightly allowed 50% of the normal depreciation. In view of the above, the disallowance of Rs.2,29,516/-, made by the AO and upheld by the ld. CIT(A) is confirmed.