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Income Tax Appellate Tribunal, AMRITSAR BENCH, AMRITSAR.
Before: DR. M. L. MEENA & SH. ANIKESH BANERJEE
ORDER Per:Anikesh Banerjee, JM:
The instant appeal of the assessee is directed against the order of the ld. Commissioner of Income Tax(Appeals)-1, Amritsar, [in brevity the CIT(A)] bearing appeal No.100/2016-17, date of order 22.03.2019, the order passed u/s 250(6) of the Income Tax Act 1961, [in brevity the Act] for A.Y. 2013-14.The impugned order was emanated from the order of the ld. Income Tax Officer,Ward- 3(3), Srinagar, (in brevity the AO) order passed u/s 143(3) of the Act date of order 25.03.2016. The assessee raised the following ground which are reproduced as under: “01) That on the facts and in the circumstances of the case, the Ld. CIT (Appeals) has not been justified in retaining and upholding an addition of Rs. 158,518/- + Rs. 32,949/-( aggregating to Rs, 191,467/-). The addition, so retained and upheld is unjustified, unwarranted and bad in law and may kindly be deleted.
02) That on the facts and in the circumstances of the case, the Ld. CIT (Appeals) has not been justified in retaining and upholding the addition of Rs. 596,500/- which represents the income received by the partners and deposited in their personal accounts. The income, so received by the firm from the partners on account of their agricultural income and added back by the Ld. A.O. and retained by the Ld. CIT (Appeals) is unjustified, unwarranted and bad in law and may kindly be deleted.
03) The assessee appellant reserves the right to add, withdraw, amend or alter the grounds of Appeal, before it is heard and disposed of by the Hon’ble ITAT.”
The brief fact of the case is that the assessee case was assessed u/s 143(3)
&the addition was made related to the payment of interest related to loan for purchase of asset and payment of the insurance of the same asset. As per the ld. AO the disallowance was called for the said asset was not put to use during claiming of expenses benefit. So, the 25% of the interest of loan related to this asset amount to Rs.1,58,518/- u/s 36(iii) and the insurance premium amount to Rs.32,949/- u/s 30 were added back with the total income of the assessee. The assessee claimed the documentation charges related to processing of bank loan.
The 100% of the documentation charges or Rs.95,000/- was added back with the total income of the assessee. The assessee claimed agricultural income Rs.5,96,500/- &directly added with the capital account of the assessee. But as per the ld. AO the assessee had no agricultural land so the entire income is unjust for &the addition was made u/s 68 of the Act with the total income of the assessee.
Being aggrieved, the assessee filed an appeal before the ld. CIT(A). The ld. CIT(A) upheld the order of the ld. AO.
Aggrieved assessee filed an appeal before us.
During the hearing none was present on behalf of the assessee. The matter is taken up with the consent of the ld. Sr. DR for further adjudication.
In totality of the fact the ld. Sr. DR argued and pointed out the sub para (ii). of para 4,page no. 4 of the appeal order which is extracted as below: “ii The ground of appeal no. 3 is against disallowance of 10% out of printing and stationery, vehicle running and maintenance, travelling and air ticket, shop repairs, 20% disallowance out of trade expenses claimed and 100% disallowance of documentation charges. As per assessment order assessee had debited expenses under various heads printing and stationery, vehicle running and maintenance, travelling and air ticket, shop repairs, disallowance trade expenses for want of vouchers as supporting vouchers of expenses were not produced at all. The AO disallowed 100% of documentation charges on the ground that amount is paid to the bank for obtaining secured loan. However, this is wrong as secured loan is carried forward from the preceding assessment years and hence no fresh charges
against loan can be entertained. Moreover no supporting evidence from the bank was furnished.
The AO disallowed 20% of trade expenses as the explanation furnished by the assessee that this expense represents loading, unloading, carriage forward, packing, winter expenses is not supported by any evidence. Decision- In the assessment proceedings the appellant has not produced any vouchers of expenses in respect of expenses claimed under heads printing and stationery, vehicle running and maintenance, travelling and air ticket, shop repairs, and trade expenses therefore disallowance of 10% of the expenditure claimed under these heads is justified and upheld. The disallowance out of trade expenses at 20% of trade expenditure for want of vouchers is considered excessive and reduced to 10% of the trade expenses claimed. As regards disallowance of 100% of documentation charges, AO disallowed 100% of documentation charges on the ground that amount is paid to the bank for obtaining secured loan. However, this is wrong as secured loan is carried forward from the preceding assessment years hence no fresh charges against loan can be entertained. Moreover, no supporting evidence from the bank was furnished. I agree with the above reasoning of the AO and accordingly the disallowance of Rs.95,000/- or 100% of documentation charges is confirmed.”
The revenue had added back the expenses on the ground that the machinery was not put to use, the 100% documentation charges related to loan and the agricultural income. In the grounds of the assessee has submitted that the said agricultural income is a share of partnership firm and the issue was agitated before the ld. CIT(A). But the submission was not taken in consideration during the appeal hearing.
We heard the submission of the ld. Sr.DR and considered the orders of both the revenue authorities. The two additions related the disallowance of expenses for machinery was not clarified by the revenue authorities properly. The date of installation and date of use was not discussed by both the revenue authorities.
Related to disallowance ofdocumentation charges of bank loan was assessed @100% or Rs. 95,000/-. But the said charge was paid for the bank loan which was utilized for the business for purchase of machinery. In case of agricultural income which was added back u/s 68 was duly explained by the assessee as per his submission. But the relevant partnership deed and the accounts of the firm was not placed before the ITAT. We set aside the matter to the ld. CIT(A) for further adjudication of the issues raised by the assessee. Needless to say, that assessee should get a reasonable opportunity for hearing and the documents which will be filed by the assessee should be accepted and considered by the ld. CIT(A) during the hearing proceeding.
In the result, the appeal of the assessee bearing is allowed for statistical purposes.
Order pronounced in the open court on 29.09.2022