AJAY VISHVANATH PATODIA,SURAT vs. INCOME TAX OFFICER, WARD 1(2)(1)/SRT

The grounds of appeal raised by the assessee are as follows:-

Now we shall take up ground No.1 raised by the assessee. At the outset, Ld. Authorized Representative (AR) for the assessee submits before the Bench Form- 26A of Deepti Khandelia, Pawan Khandelia, Ratanlal Khandelia (HUF) and Ansuya Kandelia. The Ld. AR contended that these payees have included the interest income in their respective return of income, therefore, no disallowance is warranted.

On the other hand, Ld. Senior Departmental Representative (Sr.DR) for the Revenue submits that since the assessee has submitted the Form-26A for the first time before the Tribunal, therefore this issue should be remitted back to the file of the Assessing Officer to examine, whether payees have included the interest income in their respective return of income and paid taxes thereon.

We have heard both the parties and perused the materials available on record. We note that assessee has submitted Form-26A in respect of all the payees for the first time before Tribunal and Assessing Officer did not get opportunity to examine these Form-26A, and also not examined whether payee has included interest income in their return of income and offered for taxes. We are of the view that matter may be remitted back to the file of the Assessing Officer to examine Form No.26A and return of income of payees. We direct the Assessing Officer to examine Form-26A and return of income of payees to ascertain the fact whether these payees have included in their respective return of income the interest income and offered for taxes or not. If these payees had included interest income in their respective return of income and offered for taxes, then in that situation Assessing Officer should delete the addition. Therefore, this ground of assessee’s appeal is allowed for statistical purposes in above terms.

Ground No.2 raised by assessee relates to ad hoc disallowance of shop expenses, staff welfare expenses, telephone & mobile expenses and vehicle expenses. A.Y. 14-15 Ajay V. Patodia. 7. The Ld. Counsel submits that since the assessment order was framed u/s 143(3) of the Act and therefore ad hoc disallowance should not be made.

On the other hand, Ld. Sr.DR for the Revenue submits that assessee made the payment in cash by preparing self-made vouchers, therefore element of personal use is involved in these expenses and hence the Assessing Officer has rightly disallowed @ 20% of these expenses.

We have heard both the parties and perused the materials available on record. We note that during the course of assessment proceedings, assessee was asked to furnish the details of the respective expenses alongwith supporting proof and evidences. On verification of the details such as bills / vouchers produced, it was noticed that no complete record has been maintained by the assessee with regard to the above mentioned expenses. We note that the payments have been made in cash on self-made vouchers and element of personal use involved in the above expenses cannot be ruled out. We note that assessee has not maintained any long book / call register in respect of vehicle and telephone. In absence of complete details and supporting evidences with regard to the quantum and nature of claim it cannot be ascertained as to whether these expenses in totality have been incurred wholly and exclusively for the business purposes. Therefore, for want of proper check over the aforesaid expenses, 20% of such expenses which comes to Rs.93,121/- was disallowed by AO. We note that assessee had also claimed depreciation on car to the extent of Rs.65,740/- and since personal use involved in car expenses, therefore 20% of such expenses has been disallowed. We find that a corresponding disallowance out of depreciation claimed on motor car which comes to Rs.13,148/- was disallowed and added to the total income of assessee. Thus, expenses disallowed by AO relate to personal use. Therefore, we do not find any infirmity in the order of Ld. CIT(A), hence we dismiss the ground raised