Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, AMRITSAR BENCH, AMRITSAR (SMC
Before: SH. KUL BHARAT
Per Kul Bharat, JM:
The appeal by the assessee is directed against the order dated 28.02.2018, passed by the Ld. Commissioner of Income Tax (Appeals)-2, Jalandhar (Camp office at Srinagar), pertaining to the Assessment Year 2013-14.
The assessee has raised the following grounds of appeal:
“1. On circumstances and facts of the case, the worthy CIT (A) has erred in sustaining a part of the addition to the extent of Rs. 2,50,000/- out of Rs.
ITA No. 276/Asr/2018 2 Vijay Kumar Grover v. ITO 3,62,607/- made by Ld. ITO on the ground of non-availability of vouchers etc. in support of expenses claimed in books of account.
The worthy CIT(A) has erred in partly upholding the action of Ld. ITO as stated in (1) above without appreciating the fact that Ld. ITO has not specifically pointed to any particular voucher or documentary evidence not made available to him.
On circumstances and facts of the case, the worthy CIT (A) has erred in not appreciating the fact that the additions made by Ld. ITO were made in a routine & perfunctory manner without application of mind & deserved to be deleted in toto and not in part.
The worthy CIT(A) has also erred in referring to cases decided by Hon’ble ITAT Amritsar Bench in support of his judgment without quoting such cases in detail, the issues & nature of expenses involved in such cases. He has also erred to appreciate that most of the expenses targeted by Ld. ITO like freight, advertisement expenses, cartage outwards, office maintenance, car running & maintenance do not contain any personal element and cannot be subject to any disallowance on % basis. Further, TDS wherever applicable has been adequately deducted.
The appellant craves leave to add, alter, modify or modify the grounds of appeal.”
The facts giving rise to the present appeal are that the case of the assessee was selected for scrutiny assessment and the assessment u/s 143(3) of the Income Tax Act, 1961 ‘hereinafter referred to as the Act’ framed vide order dated 06.02.2016 by confirming the assessment. The Assessing Officer made addition of Rs. 3,62,607/- being the ad-hoc disallowance out of various expenses.
Aggrieved, against this the assessee preferred an appeal before the Ld. CIT(A) who after opposed the submissions partly allowed the appeal thereby he sustained the addition of Rs.2,50,000/- out of disallowance of Rs.3,62,607/-.
ITA No. 276/Asr/2018 3 Vijay Kumar Grover v. ITO 5. Aggrieved, against this the assessee is in appeal before this Tribunal. At the time of hearing no one attended the proceedings on behalf of the assessee, however written arguments have been placed on record.
For the sake of clarity, the written arguments filed by the assessee are reproduced as under:
“This is an appeal against the order of the worthy CIT(A),Jammu dated 28-02-2018 for Asstt. Year 2013-14 THE FACTS OF THE CASE:
The appellant assessee is a running a business of electric motors& allied items. For Asstt. Year 2013-14, the Ld. ITO completed the assessment under section 143(3) of IT Act. An addition of Rs. 3,62,607/- was made by him to the returned income of Rs.10,75,020/-&partly upheld by worthy CIT(A) to the extent of Rs. 2,50,000/- NOW THE ARGUMENTS GROUND NOS.1 to 5
Your Honour- As is a common knowledge, various expenses have to be incurred to run any business . During the assessment proceeding, the Ld. ITO had listed following expenses & added back 10% of the same amounting to Rs. 3,62,607/-to the returned income Freight expenditure 20,97,114/- Advertisement 3,16,726/- Car running &maintenence Expenses 3,25,577/- Cartage 5,36,063/- Office expenses 3,50,594/- Total: 36,26,074/-
In the first appeal, the worthy CIT(A) was kind enough to restrict the addition to a lumpsum figure of Rs. 2,50,000/- which the appellant is contesting through this appeal. Your honor, the whole mantra behind this addition is non-furnishing of vouchers/Supporting documents by the assessee. During the appellate proceedings, the appellant assessee specifically brought to the notice of Ld. CIT(A) that firstly freight & advertisement expenditure should not attract
ITA No. 276/Asr/2018 4 Vijay Kumar Grover v. ITO any disallowance as TDS has been deducted and deposited on these expenses which worthy CIT has recorded in para 4.1, page 2, line 11(counting from below)in his order.It was also brought to his notice that Ld. ITO has given a specific finding in his order dated 06-02-2016(on page 2 para 2.1) that the assessee has also produced all documents regarding TDS like TDS quarterly returns, form 26AS,counterfoil of payment challans etc before him which were examined in detail & found in order. However, to the dismay of appellant assessee, the worthy CIT(A), ignored this request of considering this fact to the detriment of appellant assessee & proceeded ahead to sustain the addition of Rs. 2,50,000/- Your honor,- An injustice has been done to appellant assessee in sustaining the addition of Rs.2,50,000/- on mere lumpsum basis which is neither backed by any details or logic but only surmise & conjectures seemingly without going the assessment. Even for argument sake, if sum-total of freight & advertisement 24,13,840/, is taken out of the targeted pool of expenditure, what remains is only 12,12,234/- on which an addition of Rs. 2,50,000/- sustained by worthy CIT(A) is highly unjustified. Secondly the expenses have been wholly & solely incurred for business purposes & need not be added back. Thirdly & most importantly, the books of account of the appellant assessee stand audited u/s 44AB & the auditor has not pointed any deficiency of vouchers or part of any expenditure attributable to personal benefit. In support of my argument, reliance is placed on: a) Pearl Farben Chem(P) Ltd(ITA No.1122/Mum/2010) b) DCIT v M/s EPCOT Securities (P) Ltd.(ITA No.395/Mum/2009)
Last but not least, the worthy CIT (A) has referred to some judgments passed by Hon’ble ITAT, Amritsar in which addition of 10% of expenses has been upheld. The details of the judgment hasn’t been cited in the order enabling the assessee to compare the facts of the cases, nature of expenses subject to 10% addition etc& come up with proper arguments. The addition of Rs. 2,50,000/- on lumpsum basis establishes to have been sustained in a routine & perfunctory manner. In the premises, it is prayed that The Hon’ble Tribunal may be pleased to direct that the addition of Rs.2,50,000/- to income of appellant assessee sustained by worthy CIT(A) be deleted& the appeal may be decided on the basis of above arguments.”
ITA No. 276/Asr/2018 5 Vijay Kumar Grover v. ITO 7. The Ld. Sr. Departmental Representative opposed the submission and supported the orders of the authorities below are well.
I have heard the Ld. DR and perused the material available on record. I find that the Assessing Officer has purely made addition by making ad-hoc disallowance out of the expenditure @ of 10%. The Assessing Officer has not been specified at what vouchers were not available and what was the amount of such vouchers, therefore, the finding of the Assessing Officer is purely ad-hoc and based on conjectures and surmises. Such findings of the Assessing Officer cannot be sustained. Hence, the Assessing Officer is hereby directed to delete the disallowance.
The grounds raised in this appeal are allowed.
In the result, the appeal filed by the assessee is allowed.
Order pronounced in the open court on 16.06.2022
Sd/- (Kul Bharat) Judicial Member
Date: 16.06.2022 *GP/Sr. PS* Copy of the order forwarded to: (1) The Appellant: (2) The Respondent: (3) The CIT(A), (4) The CIT concerned (5) The Sr. DR, I.T.A.T (6) The Guard File True Copy By Order