NARANBHAI RAMBHAI ZALA,RAJKOT vs. INCOME TAX OFFICER, WARD-1(2), JUNAGADH

The captioned appeal has been filed at the instance of the assessee against the order of the Ld. Commissioner of Income Tax-(Appeals)-3, (in short the Ld. CIT(A)), Rajkot dated 16/11/2017arising in the matter of assessment order passed under Section 144of the Income Tax Act, 1961 (here-in-after referred to as "the Act") relevant to the Assessment Year 2011-12.

The Ld. CIT(A) has erred in law as well as on facts considering that the Ld. A.O. has erred in not providing reasonable opportunity to the appellant. The order deserves annulment.

The Ld. CIT(A) has erred in law as well as on facts in confirming order U/s. 144 passed without properly service of the notice on the appellant. The proceedings being bad in law deserve annulment. 4. The Ld. CIT(A) has erred in law as well as on facts in not confirming providing the material available with him and utilized against the assessee. The assessment thus made is in violation of principles of natural justice and deserves annulment following the guidelines issued by the Hon. Supreme Court in 249 ITR 216 (SC). 5. The Ld. CIT(A) erred in not considering that the Ld. A.O. has erred in not giving any notice against propose determination of total income as made by him and thereby violated the principals of natural justice. 6. The Ld. CIT(A) erred in not considering that the Ld. A.O. has erred in not giving any notice against propose determination of total income as made by him and thereby gave no opportunity to the assessee for invocation a provisions of section 144A and deprived the assessee to have the benefit of valuable guidance of Joint CIT Sir, though statutorily provided. 7. The assessment order passed is bad in law deserves annulment. 8. The Ld. C1T(A) has erred in law as well as on facts in confirming addition of Rs. 9,73, 562/- . The same needs deletion. 9. The Ld. CIT(A) has erred in law as well as on facts in confirming addition Rs. 9,73,562/- based on irrelevant material. The same needs deletion. 10. The Ld. CIT(A) has erred in law as well as on facts in not considering that the expenses, deductions and exemptions available to the appellant under the various provisions of the Act has not been granted by the Ld. A.O. as well as himself also. 11. Without prejudice, the Ld. CIT(A) has erred in law as well as on facts in not applying guidelines available U/s. 44AD. The taxability of gross income in full is neither legal nor statutory nor logical. 12. Without prejudice, the income determined needs suitable reduction. 13. Without prejudice the Ld. CIT(A) erred confirming disallowance of expenditure at 100%. The same needs suitable reduction. 14. Without prejudice the Ld. CIT(A) erred in not considering the identical cases to compare his own action. The assessment needs annulment. 15. The appellant craves leave to add/alter/amend and/or substitute any or all grounds of appeal before the actual hearing takes place.”

The facts in brief are that the assessee in the present case is an individual and filed his return of income declaring an income of Rs. 1,59,953/- under the head other sources. The assessee calculated income from other sources in the manner as detailed below:

Aggrieved assessee carried the matter before the Ld. CIT(A) who confirmed the order of the AO by observing as under: “5.1 There cannot be any dispute that if any assessee has claimed deduction of any expenditure onus is squarely upon him to provide the details along with evidences in respect of such expenses. In present case no details were provided nor any evidences were submitted before the AO justifying claim of the appellant towards such expenses. Even before me no such details have been provided nor any evidence has been submitted. The only effective submission made before me is that entire income receipt cannot be taxed and deduction to the reasonable expenditure is to be allowed. It is apparent that assessee has preferred not to submit any details regarding such expenditure and is hoping for the best reasonable estimate of income which the assessing officer or the appellate authority or CIT(Appeals) can grant to him. Such course of action is very unfortunate. In present case the income is arising from other sources and not from the business activities. The indulgence in a systematic business activities will definitely lead to incurrence of certain expenditure and in absence of exact quantification of such expenses or reasonable estimates should be made of such expenditure and only the expected reasonable profit should be taxed out of the said business transaction.

Being aggrieved by the order of the Ld. CIT(A), the assessee is in appeal before us.

The Ld. AR before us filed a written submission running into 5 pages wherein it was contended that the gross amount cannot be made subject to tax without considering the corresponding expenses.

On the contrary, the Ld. DR vehemently supported the order of the authorities below.

We have heard the rival contentions of both the parties and perused the materials available on record. In the case on hand, the assessee has shown gross income from other sources amounting to Rs.11,33,515/- against which a deduction of Rs.9,73,562/- was claimed under Section 57 of the Act. But both the authorities below have disallowed the same i.e. deduction/expenses of Rs.9,73,562/- in the absence of necessary documentary evidence. Even at the time of hearing before us, the Ld. AR in the written submission has submitted that the gross amount of income cannot be taxed without allowing the corresponding expenses which were claimed in the return of income.

However, the onus lies upon the assessee to furnish the necessary documentary evidences in support of the claim made in the income tax return. If the assessee fails to discharge the onus, there is no remedy available to the revenue to disallow the claim of the assessee. Nevertheless, in the interest of justice and fair play we are inclined to give one more opportunity to the assessee to produce the necessary documentary evidence in support of his contention before the AO. Hence, the ground of appeal raised by the assessee is allowed for the statistical purposes.

In the result, the appeal filed by the assessee is allowed for the statistical purposes.