Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, “C (SMC
Before: SHRI CHANDRA POOJARI
आदेश / O R D E R This appeal by the assessee is directed against the order of the Commissioner of Income Tax (Appeals)-19, Chennai, dated 25.02.2015 for the assessment year 2007-2008.
The assessee has raised the following grounds:- ’(1) The respectable Commissioner of Income Tax (Appeals)- ‘ 19, Chennai was not justified while passing the order confirming addition towards disallowance of expenses I.T.A.No.1313/Mds/2015 :- 2 -:
�42,188/- (Salary �15,000, Travelling expenses �10,480/- Telephone �12,450/- and general expenses �4,258/-) for earning the commission receipts �1,29,450/-. (2) The Respectable Commissioner of Income Tax (Appeals)-19, Chennai was not justified while passing the order confirming addition towards investment in Spny Stones Pvt. Ltd �3,00,000/- made out of income and savings’’.
The facts of the case are that there was a search u/s.132 of the Act in the case of Shri K. Vigneshkumar, son of Shri P.
Karvannan, Managing Director of M/s. Sony Fireworks Private Limited. Books of accounts, documents and other materials relating to the assessee and the group concerns were found and seized/impounded. Originally before the search the assessee had not filed any returns of income. Subsequently, relevant statutory notices were issued. In response the assessee filed the return of incomes as under:
Asst. Year . Date of filing Income returned 2005-06 31.12.2009 Rs.92834/- 2006-07 31.12.2009 Rs.96098/- 2007-08 31.12.2009 Rs.118936/ - 2008-09 31.12.2009 Rs.315452/- During the course of assessment proceedings, for all the assessment years under appeal, the assessee had admitted Adayam income, commission and interest receipts as his I.T.A.No.1313/Mds/2015 :- 3 -: income, but claimed expenses towards salaries, foreign travel expenses and others. These expenses, as per the Assessing Officer could not be attributed to have been incurred for earning the above income. As the assessee could not provide proper explanation, the Assessing Officer completed the assessment by making an addition on account of expenses claimed by the assessee towards salaries, foreign travel expenses and others as they were not incurred for the purpose of earning the income and only expenses that are incurred for the purpose of earning the income can be allowed as income. For the assessment year 2007-08, in addition to the above, the assessee had invested �8 lakhs as share capital and �5 lakhs as advances. On verification, it was found that there was no sufficient cash balance in his personal accounts to source for �3 lakhs. For �3 lakhs, the assessee could not explain the sources for the investment and hence the Assessing Officer added the same as unexplained investment to the total income of the assessee. The details of assessment order passed u/s.143(3) rws 153A are given below:
I.T.A.No.1313/Mds/2015 :- 4 -:
Asst. Year Date of asst.order Income assessed 2005-06 06.12.2010 Rs.118850/- 2006-07 06.12.2010 Rs.130850/- 2007-08 06.12.2010 Rs.461124/- 2008-09 06.12.2010 Rs.363310/- Aggrieved, the assessee preferred an appeal before the Commissioner of Income Tax (Appeals).
Regarding first issue the Commissioner of Income Tax (Appeals) observed that the reason of the Assessing Officer for disallowing the expenses claimed against Adayam/ Commission receipts. Though the assessee had explained the nature of his business, however, no details, as called for with regard to earning of income and incurring of expenditure had been furnished. The assessee explains that many north Indian consumers who are not regular/fixed come to Sivakasi to place orders with fireworks factories at Sivakasi and that the assessee himself or through a part-time employee books fireworks orders to other fireworks factories & for the purpose he goes along with the customers to other fireworks factories advise them to select varieties and bargaining them with price etc. The customers may not be I.T.A.No.1313/Mds/2015 :- 5 -: regular or fixed, however, the places or the fireworks factories at Sivakasi would certainly be known to the assessee as the assessee himself belongs to a family owning a big brand fireworks factories under the brand name of 'Sony fireworks'. Since the assessee would be receiving Adayarri/ Commission from those 'other fireworks factories', it is not known as to why the details of those 'other fireworks factories', has been withheld and not provided even when specifically called for. It is also not known as to why the assessee books order for 'other fireworks factories' and not for his own group companies doing the same business. In the absence of any details furnished by the appellant, the submissions cannot be accepted as there is no detail or evidence brought on record by the assessee to show that the income has been earned by the assessee by carrying on the business the assessee claimed to have been doing. It is also pertinent to mention here that originally, before the search i.e., 21.10.2008, the assessee had not file any return of income for any of the assessment years under appeal, though the same were due before the date of search. No evidence with regard to actual I.T.A.No.1313/Mds/2015 :- 6 -:
incurring of expenditure has been furnished and thus when the actual source of income, claimed to be business income, is not known, then the eo-relation of the expenses with the source of income and the expenses having been incurred wholly and exclusively for such business is not established. It was pertinent to mention here that the assessee states that the customers only visit his place of business, i.e. Sivakasi then it was not known as . to how and why the assessee would be incurring travelling expenses, including foreign travel expenses. No bills or vouchers, with regard to any expenditure has been brought on record by the assessee even during the course of appeal proceedings. It was a settled law that for making a claim of expenditure to be allowable as business expenditure under section 37 of the Act, the onus is on the claimant assessee to prove that the expenditure had been incurred wholly and exclusively for the purpose of its business. It is considered relevant to reproduce-the extracts of the decision of High Court of Bombay in the case of Ramanand Sagar v. DCIT [2002] 122 TAXMAN 152 (BOM.), wherein the disallowance of business expenditure had been upheld on account of failure on the I.T.A.No.1313/Mds/2015 :- 7 -: part of the assessee to prove that the same had been incurred wholly and exclusively for the business of the assessee. In the present case, the assessee has not even proved the incurring of the expenditure claimed as business expenditure, let alone it being wholly and it's usually for the business of the assessee. The assessee therefore, has failed to discharge the onus cast on it by law. Therefore the claim of assessee with regard to the aforesaid expenses debited towards salaries, foreign travel & others etc., cannot be allowed. Accordingly, the Commissioner of Income Tax (Appeals) upheld the order of the Assessing Officer. Against this, the assessee is in appeal before us.
Heard both parties and perused the material on record. The assessee has not placed necessary evidence for support of the claim.
Whenever the assessee incurs any expenditure, it is the duty of the assessee to prove that expenditure was incurred wholly and exclusively for the purpose of business and also the assessee shall produce relevant evidence for the same. Since, the assessee has not produced required evidence, the lower authorities are justified in I.T.A.No.1313/Mds/2015 :- 8 -: disallowing the claim of the assessee. This ground of the assessee is dismissed.
The next ground raised by the assessee is with regard to
The fact of the case are that the assessee had invested �8 lacs as share capital and �5 lakhs as advance. The sources for the investment were examined by the Assessing Officer. The assessee furnished necessary bank account copies and the sources as below:
‘’(i) LIC policy loan from SBI : �5,00,000/- (ii) Withdrawal from M/s. Sqny Gremites : �5,00,000/- (iii) Withdrawal from Personal funds : �3,00,000/- On verification, it was found that there was no sufficient cash balance in his personal accounts to source for �3 lacs. The assessee has not brought any material on record to explain the sources for the investment. No material or evidence was furnished to substantiate the availability of funds for �3 lakhs. The Assessing Officer added a sum of �3 lakhs to the returned income as assessee’s unexplained investment.
Aggrieved, the assessee preferred an appeal before the Commissioner of Income Tax (Appeals). The Commissioner of Income Tax (Appeals) upheld the order of the Assessing Officer. Against this, the assessee is in appeal before us.
I.T.A.No.1313/Mds/2015 :- 9 -:
Heard both parties and perused the material on record. The assessee has pleaded that the amount was contributed from own capital and reserve and surplus. However, the assessee has not filed a copy of the balance sheet for my consideration. Hence, I am not in a position to appreciate the argument of the assessee counsel.
Accordingly, this issue is remitted back to the file of the Assessing Officer for fresh consideration with a direction to the assessee to file the balance sheet as on 31.03.2007 before the Assessing Officer explaining the investment and the Assessing Officer would decide the issue afresh. This ground of the assessee is partly allowed for statistical purposes. 9. In the result, the appeal of the assessee in is partly allowed for statistical purposes.
Order pronounced on Wednesday, the 2nd day of September, 2015, at Chennai.