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Income Tax Appellate Tribunal, DELHI BENCH ‘E’ NEW DELHI
PER SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER
The present appeal filed by the assessee arises out of the order dated 22.11.2013 passed by the Ld. CIT(A)-XXVI, New Delhi for Assessment Year 2009-10.
The assessee runs a hotel in the name and style of M/s Regale Inn. The returned income for the year was Rs. 15,96,040/-. During the assessment proceedings, the assessee did not produce evidences in respect of purchase of new assets.
The Assessing Officer proceeded to hold that since these assets were not used for business purposes, depreciation was not Assessment Year: 2009-10 allowable and accordingly, a sum of Rs. 1,56,465/- was added back on account of depreciation. Further, the Assessing Officer restricted the depreciation on solar equipment @80% as prescribed and as against the claim @100%. The Assessing Officer also made the following disallowances:- i) Rs. 40,002/- being 1/6th of car running, car insurance and car depreciation expenses on account of personal use. ii) Rs. 30,550/- being 1/10th of telephone expenses on account of personal use. iii) Rs. 1,58,654/- being 1/10th of building repair and maintenance expenses in absence of supporting bills and vouchers. iv) Rs. 1,07,791/- being 1/5th of business promotion expenses, Diwali expenses and staff welfare expenses in absence of supporting bills and vouchers.
On appeal before the First Appellate Authority, the appeal was decided ex parte on merits and now the assessee has preferred this appeal before the Tribunal and has raised the following grounds:-
Assessment Year: 2009-10
1. On the facts and circumstances of the case, the order passed the learned Commissioner of Income Tax (Appeals) [CIT(A)] is bad both in the eye of law and on facts.
2. On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts and in law, in passing the order without giving assessee a proper and adequate opportunity of being heard in clear violation of principle of natural justice.
3(i) On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts and in law, in confirming the action of the AO in disallowing an amount of Rs.1,56,465/- on account of depreciation on various assets.
(ii) That the said disallowance has been confirmed despite the fact that the assessee has claimed proper depreciation on various assets allowable as per law.
4(i) On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts and in law, in confirming disallowance of an amount of Rs.2,61,800/- on account of depreciation on Solar equipments.
(ii) That the above disallowance has been confirmed despite the fact that the solar equipments are eligible for 100% depreciation as per law.
5(i) On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts and in law, in confirming disallowance of an amount of Rs.40,002/- on account of car repairs, maintenance, insurance and depreciation on car.
(ii) That the above disallowance has been confirmed ignoring the fact that the same was made arbitrarily at the rate of 1/6th without there being any basis for the same. Assessment Year: 2009-10 6(i) On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts and in law, in confirming disallowance of an amount of Rs.30,550/- on account of telephone expenses. (ii) That the above disallowance has been confirmed ignoring the fact that the same was made arbitrarily at the rate of 10% without there being any basis for the same. 7(i) On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts and in law, in confirming disallowance of an amount of Rs.1,58,654/- on account of various expenses. (ii) That the above disallowance has been confirmed ignoring the fact that the same was made arbitrarily at the rate of 10% without there being any basis for the same. 8(i) On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts and in law, in confirming disallowance of an amount of Rs. 1,07,791/- on account of expenses on building repair and maintenance. (ii) That the above disallowance has been confirmed ignoring the fact that the same was made arbitrarily at the rate of 5% without there being any basis for the same.
9. That the appellant craves leave to add, amend or alter any of the grounds of appeal.”
4. At the outset, the Ld. AR submitted that ground No. 2 regarding violation of principle of natural justice and ground no. 4 regarding the issue of depreciation on solar equipment were not being pressed.
5. Regarding the issue of depreciation disallowed to the extent of Rs. 1,56,465/-, the Ld. AR submitted that although the books Assessment Year: 2009-10 of account were duly audited, the claim of depreciation on the assets purchased during the year has not been accepted. As regards other disallowances, it was submitted that the same have been made on an estimation without any evidence. It was submitted that all the additions deserve to be deleted.
The Ld. DR placed reliance on the impugned order and submitted that the Ld. CIT(A) had rightly upheld the disallowance.
We have heard the submissions of both the parties and also perused the orders of the lower authorities. As regards the issue of depreciation on purchase of capital assets during the year, it might be true that presence of an audited balance sheet adds weight to the claim of the assessee in quite a number of cases.
However, the availability of an audited financial statement does not absolve the assessee from its primary responsibility of producing the relevant vouchers/supporting bills when required to do so. Moreover, the copy of the audited financial statements has not been filed before us. However, looking into the facts and circumstances of the case and in the interest of justice, we remit the matter to the file of the Assessing Officer to verify the 5 Assessment Year: 2009-10 additions to the block of assets and allow depreciation to the assessee in accordance with law after giving the assessee due opportunity to submit all the relevant bills/vouchers and supporting documents.
As regards the other disallowances amounting to Rs.3,36,997/-, it is seen that the additions have also been made for the reason that the assessee failed to produce the bills/vouchers. However, in the interest of justice, we remit these issues also to the file of the Assessing Officer for proper verification and allowance after affording proper opportunity to the assessee.
In the result, the appeal of the assessee is partly allowed for statistical purposes.
Order pronounced in the Open Court on 30th of March, 2016.