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Income Tax Appellate Tribunal, AMRITSAR BENCH, AMRITSAR (SMC
Before: SH. KUL BHARAT
Both the appeals by the assessee are directed against the order dated 27.02.2018, passed by the Ld. Commissioner of Income Tax (Appeals)-2, Jalandhar (Camp office at Srinagar), pertaining to the Assessment Years 2012-13 & 2013-14. Both the appeals were taken up together and are being disposed by way of consolidated order for the sake of convenience and brevity.
First I take up ITA No. 277/Asr/2018. & 300/Asr/2018 2 Ajay Kumar Grover v. ITO 2. Only one the effective ground in this appeal is that the Ld. CIT(A) erred in sustaining addition made by the Assessing Officer by making ad-hoc disallowance of the expenditure.
The facts giving rise to this ground are that the case of the assessee was selected for scrutiny assessment and by making the assessment u/s 143(3) of the Income Tax Act, 1961, the Assessing Officer made disallowance of expenditure @ of 10% amounting to Rs.2,76,388/-.
Aggrieved, against this the assessee preferred an appeal before the Ld. CIT(A) who restricted the disallowance to the extent of Rs.50,000/- out of the total disallowance.
At the time of hearing no one attended the proceedings on behalf of the assessee, the assessee has placed on record, written arguments which are reproduced as under:
“This is an appeal against the order of the worthy CIT(A),Jammu dated 27-02-2018 for Asstt. Year 2012-13 THE FACTS OF THE CASE: The appellant assessee is a running a business of electric motors & allied items. For Asstt. Year 2012-13, the Ld. ITO completed the assessment under section 143(3) of IT Act. An addition of Rs. 2,76,388/- was made by him to the returned income of Rs.9,38,373/-&partly upheld by worthy CIT(A) to the extent of Rs. 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 to the returned income & 300/Asr/2018 3 Ajay Kumar Grover v. ITO Telephone/Mobile Expenses 1,79,787/- Misc. Expenses: 45,983/- Staff Welfare 1,73,746/- Travelling expenses 85,050/- Conveyance Expenses 3,12,116/- Distribution expenses 9,97,400/- Agency handling expenses 9,68,800/- Total: 27,63,882/-
While the worthy CIT(A) was kind enough to delete the addition of 10% of expenditure on distribution & Agency handling expenses, he reduced the balance addition to a lump sum amount of Rs. 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) all vouchers have been furnished and are available on record & requested him to peruse the assessment record to verify the same. This is recorded on para 4.1, page 2, line 5counting from below of the worthy CIT(A)’s order. However, to the dismay of appellant assessee, the worthy CIT(A), ignored this request of perusing the record to the detriment of appellant assessee & proceeded ahead to sustain the addition of Rs. 50,000/- Your honor,- An injustice has been done to appellant assessee in sustaining the addition of Rs. 50,000/- on mere lump sum basis which is neither backed by any details or logic but only surmise & conjectures particularly when the assessment record has not been perused by him. 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)
In the premises, it is prayed that & 300/Asr/2018 4 Ajay Kumar Grover v. ITO The Hon’ble Tribunal may be pleased to direct that the addition of Rs. 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.”
The Ld. Sr. DR opposed the submission and supported the assessment order.
I have heard the Ld. DR and perused the material available on record. I find that the Assessing Officer has made disallowance purely on ad-hoc basis, there is no material on record suggesting that the Assessing Officer has pointed out discrepancy in the accounts of the assessee. In the absence of such finding, there was no justification for making disallowance, I, therefore, direct the Assessing Officer to delete this disallowance. The ground raised in this appeal is allowed.
Now I take up AY 2013-14. The facts are identical as were in for the assessee’s own case for the AY 2012-13. The Ld. DR has adopted the same arguments. Since the facts are identical. The revenue has not pointed out any change into facts and circumstances, therefore, taking a consistent view. I hereby direct the Assessing Officer to delete this disallowance in this year as well. The grounds raised in this appeal are allowed.
In the result, both the appeals filed by the assessee are allowed.
Order pronounced in the open court on 16.06.2022