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Income Tax Appellate Tribunal, MUMBAI BENCHES “A”, MUMBAI
आदेश / O R D E R
Per Joginder Singh (Judicial Member) The Revenue is aggrieved by the impugned order dated 17/06/2010, of the ld. First Appellate Authority, Mumbai. Ground no.1(i) is general in nature requires no deliberation from our side. The next effective ground i.e. 1(a) raised by the assessee pertains to addition amounting to Rs.1,42,427/-, out of Rs.3,15,000/-, cash found during survey carried out u/s 133A of the Act. The ld. DR, Shri Aarsi Prasad, defended the addition made by the ld. Assessing Officer, whereas, the ld. counsel for the assessee, Shri Hari. S. Raheja, defended the conclusion arrived at in the impugned order by contending that not a single piece of paper was not found from the premises and even there was no error in the accounts of the assessee. Plea was also raised that the amount of Rs.3,15,000/- was withdrawn from the bank one day prior to the date of survey.
We have considered the rival submissions and perused the material available on record. The facts, in brief, are that the assessee, a partnership firm, at the relevant time was engaged in the business of transportation for the last about more than 30 years. A survey u/s 133A of the Act was carried out at the business premises of the assessee on 14/03/2007, wherein, the statement of Shri Anand Khosla, partner of the assessee firm was recorded, wherein, he made a disclosure of Rs.1 crore on account of certain discrepancies. However, it is noteworthy that no incriminating documents/material was impounded during the course of survey. The addition was broadly made on the basis of statement recorded during survey. During survey, cash amounting to Rs.3,15,000/- was found. It was explained by the assessee that the cash was withdrawn from the bank on 13/03/2007. In the books of accounts, the cash as on 14/03/2007 was Rs.1,42,427/-, thus, the ld. Commissioner of Income Tax (Appeals) disallowed Rs.1,72,573/-, which was un-reconciled account balance. Without going into much deliberation, we find no merit in the ground of the Revenue, therefore, the same is dismissed.
The next ground pertains to adding the amount of Rs.26 lakh out of Rs. 36 lakh disclosed as unaccounted renovation of office and residential premises. The crux of argument advanced on behalf of the Revenue is in support of the addition, whereas, the ld. counsel for the assessee is that the renovation of offices at Santosh Nagar and Kailash Bhavan, these premises are not owned by the assessee, therefore, there is no question of incurring expenditure on renovation by the firm. It was also pleaded that no incriminating documents or bills for the so called renovation were found during survey which can warrant such addition. The assessee retracted the statement with respect to the disclosure and the addition was made on the basis of statement of Shri Anand Khosla. However, since retraction was made to the statement, the ld. Assessing Officer was expected to verify the factual matrix. The ld. Commissioner of Income Tax (Appeals) restricted the addition to the tune of Rs.10 lakh. Without making such deliberation and the assessee is not in appeal, we sustain the order of the ld. Commissioner of Income Tax (Appeals) as the ld. Assessing Officer has not brought any record or material to justify the addition. This ground of the Revenue is, therefore, dismissed.
The next addition of Rs.6,14,575/-, is with respect to mistakes and commission during survey carried out u/s 133A of the Act. The crux of argument advanced on behalf of the Revenue is that the ld. Commissioner of Income Tax (Appeals) while granting relief to the assessee failed to appreciate that the additions were made on the basis of statement recorded during survey. On the other hand, the ld. counsel for the assessee defended the conclusion arrived at in the impugned order.
4.1. We have considered the rival submissions and perused the material available on record. Before adverting further, we note that in the ground raised by the Revenue, it has been accepted by the Department that the additions were made on the basis of statement recorded during survey, therefore, on this count itself, the Revenue has no case at all because, the statement has to be linked with the material and only then the addition can be made. The addition has been made on the basis of other mistakes and commission. However, no such mistakes or commission has been pointed out, thus, such a addition cannot be sustained, therefore, we find no merit in the ground of the Revenue, consequently, dismissed.
Ground no.2 (i) raised by the Revenue pertains to reducing the disallowance to 5% of loading and unloading expenses instead of 50% made by the ld. Assessing Officer. The ld. DR, defended the addition, whereas, the ld. counsel for the assessee defended the conclusion arrived at in the impugned order.
5.1. We have considered the rival submissions and perused the material available on record. The facts, in brief, are that the ld. Assessing Officer made disallowance of Rs.7,17,490/- being 50% of loading and unloading expenses on ad-hoc basis. While doing so, the ld. Assessing Officer observed that the assessee did not produce any documentary evidence which establishes the expenses. The stand of the assessee is that the expenses of loading and unloading are mostly incurred by the drivers and the payments are made to illiterate workers, who don’t give any bill of receipts. Broadly, we are in agreement with the finding contained in the impugned order which were arrived at after considering the totality of facts. The disallowance of 50% of the expenses on ad-hoc basis cannot be said to be justified, thus, the order of the ld. Commissioner of Income Tax (Appeals), on this issue is sustained.
The next ground pertains to reducing the disallowance to 10% of the trip expenses instead of 80% made by the ld. Assessing Officer. The crux of argument advanced on behalf of the Revenue is in support to the addition, whereas, the ld. counsel for the assessee defended the conclusion arrived at in the impugned order.
6.1. We have considered the rival submissions and perused the material available on record. The facts, in brief, are that the assessee is a transporter. In its profit & loss account under various head, like diesel expenses, tyre expenses, driver incentives, repair and maintenance, per trip, made a claim. The ld. Assessing Officer made disallowance of Rs.26,10,441/- on the plea that the claim expenses were not incurred by the assessee for business purposes, therefore, he disallowed 80% of such expenses and added to the total income. Totality of facts clearly indicates that the disallowance was purely made on ad-hoc basis, which cannot be sustained. The impugned order was passed by the ld. Commissioner of Income Tax (Appeals) considering the totality of facts, therefore, the same is upheld.
The last ground raised by the Revenue pertains to reducing the disallowance of Rs.96,000/- of staff salary expenses instead of Rs.1,91,104/-. The crux of argument advanced by ld. DR is in support to the addition, whereas, the ld. counsel for the assessee, defended the conclusion arrived at in the impugned order.
7.1. We have considered the rival submissions and perused the material available on record. The facts, in brief, are that in its profit & loss account, the assessee debited Rs.4,03,024/- towards staff cost/staff salary. On verification of the salary register, it was noticed by the Assessing Officer that the staff salary comes to Rs.2,11,920/-. The assessee vide letter dated 18/12/2009 claimed that a salary of Rs.15,000/- per month paid to Mrs. Archana Khosla, who assist the partners in their day to day business activities. In support of its contention, the assessee also filed a salary certificate. However, the ld. Assessing Officer did not accept the contention of the assessee and the amount of Rs.1,91,104/- paid to Mrs. Archana Khosla was disallowed. On the plea that the assessee has not produce any evidence that Mrs. Khosla actually served in the office or assisted the partners. On examination of record and after considering the totality of facts, the ld. Commissioner of Income Tax (Appeals) reduced the addition of Rs.11,104/- from the addition. Mrs. Khosla is a commerce graduate and used to assist the partners in day to day business. The disallowance was restricted to Rs.96,000/-. We find no infirmity in the conclusion of the ld. Commissioner of Income Tax (Appeals).
Finally, the appeal of the Revenue is dismissed.
This Order was pronounced in the open court in the presence of ld. representative from both sides at the conclusion of the hearing on 10/02/2016.