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Income Tax Appellate Tribunal, “B” BENCH: KOLKATA
Before: Shri N. V. Vasudevan, JM & Shri M. Balaganesh, AM]
ORDER
Per Shri M. Balaganesh, AM:
This appeal by assessee is arising out of order of CIT(A)-Asansol vide Appeal No. 265/CIT(A)/Asl/W-2(3)/Asl/11-12 dated 20.08.2013. Assessment was framed by ITO, Ward-2(3), Asansol u/s. 143(3) of the Income-tax Act, 1961 (hereinafter referred to as “the Act”) for Assessment Year 2009-10 vide his order dated 28.11.2011.
The assessee has raised following grounds in respect of first issue: “1. That the Ld CIT (Appeal) erred in law and also in facts by upholding the addition of Rs. 1,83,088/- on account of unreconciled transaction (purchases) made from M/s Upline Travels Pvt. Ltd.
2. The Ld CIT (Appeal) erred in law and also in facts by not considering the assessee's submission that inflated purchases (unreconciled portion) included Rs 1,15,599/ - for own consumption, which was not debited to the P /L account, hence the addition to that extent is unjustified.
3. The Ld CIT (Appeal) erred in law and also in facts by not considering the assessee's submission that inflated purchases (unreconciled portion) was only to the extent of Rs. 67,489/- against which gross profit @ 9.42 % which works out Rs. 6,357/- was liable to be added and not Rs. 1,83,088/-.
4. That the Ld CIT(A) erred in law and also in fact by holding that provision of Section 145(3) was not required to be invoked, though the addition towards trading account has been made. This observation of Ld. CIT (A) is contrary to the Hon'ble Supreme Court decision in Sargam Talkies v / s CIT (2010) 328 ITR 513 SC and Kolkata IT AT decision in the case of ITO v / s Pranav Prakash Dutta ITR 1492/kol/2011 AY 2007-08.”
The first issue to be decided in this appeal is as to whether addition of Rs.1,83,088/- towards difference in balance in the account of Upline Travels Pvt. Ltd. (in short UTPL) could be made in the facts and circumstances of the case.
2 Chhote Prasad. AY 2009-10 4. Brief facts of this issue are that the assessee runs travel agency under the name and style of M/s. Shivam Tours & Travels. During the course of hearing, the authorized representative of the assessee produced audit report in Form 3CB and 3CD dated 28.09.2009 together with its annexure and supporting documents as requisitioned by the Ld. AO. The Ld. AO obtained information u/s. 133(6) of the Act from UTPL from whom assessee purchased air tickets. The Ld. AO found difference in closing balance and purchases made from the UTPL by comparing the transactions with ledger account of the said party as per information obtained u/s. 133(6) of the Act. According to AO, there is a difference of Rs.1,83,088/- in total transactions during the year. But according to assessee, the difference in closing balance in the said party account was only Rs.4,972/-. The assessee filed various explanations in this regard. The Ld. AO did not agree with the explanation and proceeded to add Rs.1,83,088/- in the assessment, which was upheld by the Ld. CIT(A). We find that the assessee has filed explanation that difference in balance is only Rs.4,972/-. The Ld. AR also argued that difference in purchase during the year is only Rs.67,489/- and applying GP @ 9.42% on the same, the addition, if any, would have to be restricted only to Rs.6,358/- (Rs.67,489 x 9.42%). It was argued by the Ld. AR that the Ld. AO has not rejected the books of account produced by the assessee. In fact, the difference in closing balance in the account of assessee vis-à-vis UTPL occurred due to different method of accounting applied by UTPL. The Ld. DR vehemently supported the order of the AO. We feel that , in the facts and circumstances of the case, to meet the ends of justice, this issue requires fresh examination by Ld. AO. Hence, the issue is set aside to his file to decide the same afresh in accordance with law. The assessee is at liberty to produce fresh evidence and reconciliation statement in support of his contention. Ground Nos. 1 to 4 by the assessee are allowed for statistical purposes.
The next issue to be decided in this appeal is as to whether the Ld. CIT(A) is justified in upholding the disallowance of Rs.24,250/- on car insurance and of Rs.29,660/- on interest on car loan in the facts and circumstances of the case.
The Ld. AO observed that the assessee has debited the following expenses in his P&L Account: (i) Car insurance Rs.24,250/- 3 Chhote Prasad. AY 2009-10 (ii) Interest on car loan Rs.29,660/- (iii) Depreciation Rs.26,620/- Rs.80,800/- The Ld. AO observed that the assessee purchased a new Scorpio Car on 02.04.2008 out of vehicle loan from Axis Bank. The assessee did not claim any depreciation in respect of this new car. Accordingly, the AO concluded that the said car was not used for business purposes and disallowed Rs.80,800/- in the assessment. Before Ld. CIT(A), the assessee stated that he had borne the full expenses for running the vehicle out of personal withdrawals of his wife from her Axis Bank account, Asansol. It was argued that the fact of not debiting the running expenses in the P&L Account cannot be basis of disallowance of car insurance and interest on car loan. The Ld. CIT(A) observed that assessee had claimed depreciation only in respect of old car amounting to Rs.26,620/- and accordingly, granted relief for the same and upheld the addition made towards car insurance and interest on car loan. Aggrieved, assessee is in appeal before us on the following ground no. 5: “5. That Ld. CIT(A) erred in law and also in facts by upholding the disallowance of Rs.24,250/- s car insurance and Rs.29,660/- as interest on car loan against the new Scorpio purchased during the year, which was used for business purposes.”
7. We have heard rival submissions and perused the material available on record. We find that the assessee had not furnished any evidence to substantiate that new Scorpio Car was indeed used only for the business purposes of the assessee and accordingly, the expenditure incurred thereon towards that car in the form of car insurance and interest on car loan cannot be allowed as business expenditure. Hence, the disallowance made by the Ld. CIT(A) is hereby confirmed. Ground no. 5 of assessee’s appeal is dismissed.
8. In the result, appeal of assessee is partly allowed for statistical purposes.
9. Order is pronounced in the open court on 20.05.2016 Sd/- Sd/- (N. V. Vasudevan) (M. Balaganesh) Judicial Member Accountant Member Dated : 20th May, 2016 APPELLANT – Shri Chhote Prasad, Sitaram Bhawan Kalla C.H, Pin- 1. 713340, P.O. Asansol, Dist. Burdwan. Respondent –ITO, Ward-2(3), Asansol 2 The CIT(A), Asansol 3.
4. CIT , Asansol