DCIT, Circle - 51, Kolkata, Kolkata v. Tapan Saha, Kolkata

ITA 1454/KOL/2010 | 2003-2004
Pronouncement Date: 14-01-2011

Appeal Details

RSA Number 145423514 RSA 2010
Assessee PAN ALBPS2303L
Bench Kolkata
Appeal Number ITA 1454/KOL/2010
Duration Of Justice 6 month(s)
Appellant DCIT, Circle - 51, Kolkata, Kolkata
Respondent Tapan Saha, Kolkata
Appeal Type Income Tax Appeal
Pronouncement Date 14-01-2011
Appeal Filed By Department
Bench Allotted A
Tribunal Order Date 14-01-2011
Date Of Final Hearing 14-01-2011
Next Hearing Date 14-01-2011
Assessment Year 2003-2004
Appeal Filed On 14-07-2010
Judgment Text
IN THE INCOME-TAX APPELLATE TRIBUNAL : A BENCH : KOLKATA [BEFORE HONBLE SHRI T. K. TYAGI J. M. & HONBLE S HRI C. D.RAO A.M.] ITA NOS. 1454 & 1455 (KOL) OF 2010 ASSESSMENT YEARS : 2003-04 & 2005-06 DY. COMMISSIONER OF INCOME TAX -VS.- M/S. TAPAN SAHA CIRCLE-51 KOLKATA. KOLKATA [ALBPS 2303 L] [APPELLANT] [RESPONDENT] APPELLANT BY : SHRI S. C. JA IN RESPONDENT BY : SHRI K. L. BHOW MIK PER C. D. RAO A. M. THESE TWO APPEALS ARE FILED BY THE DEPARTMENT FOR ASSESSMENT YEARS 2003-04 & 2005-06 AGAINST A COMMON ORDER OF THE LD. CIT(A) CENTRAL-I I KOLKATA DATED 22.03.2010. 2. SINCE THE FACTS IN BOTH THE APPEALS ARE IDENTICA L WE HEARD THESE APPEALS TOGETHER AND DISPOSE OF THE SAME BY THIS COMMON ORDER FOR THE SA KE OF CONVENIENCE. 3. IN BOTH THESE APPEALS THOUGH THE TAX EFFECT IS L ESS THAN RS.2.00 LAKHS THE REVENUE HAS FILED THESE APPEALS ON ACCOUNT OF AUDIT OBJECTION. 4. BRIEF FACTS OF THE ISSUE IN BOTH THESE APPEALS A RE THAT THE ASSESSING OFFICER BASED ON THE TAX AUDIT REPORT HAS DISALLOWED AN AMOUNT OF RS.2.0 0 LAKHS ON ACCOUNT OF SERVICE CHARGES PAID TO THE WIFE OF THE ASSESSEE AND NIECE RS.1.00 LAKH EACH FOR ASSESSMENT YEAR 2003-04 AND SIMILARLY DISALLOWED AN AMOUNT OF RS.1 12 200/- PA ID TO NIECE OF THE ASSESSEE FOR ASSESSMENT YEAR 2005-06. ON APPEAL THE LD. CIT(A) HAS DISALLO WED THE SAME BY OBSERVING AS UNDER :- I HAVE GONE THROUGH THE ASSESSMENT ORDER AND SUBMI SSIONS OF APPELLANT. THE FACTS SHOW THAT APPELLANT HAD PAID RS 1 00 000/ - TO HIS WIFE AND RS.1 00 000/- TO HIS NIECE AS SERVICE CHARGES WHICH WAS CONSIDERED BY THE AUDITOR AS EXPENDITURE IN THE NATURE OF PERSONAL EX PENDITURE IN THE AUDIT REPORT. IN THE ASSESSMENT U/S 143(3) MADE EARLIER O N 31.03 2006 THE CLAIM OF APPELLANT OF SUCH EXPENDITURE WAS ALLOWED BY THE ASSESSING OFFICER AND THERE WAS NO DISCUSSION OF THIS ISSUE IN THE ASSESS MENT ORDER. ASSESSING ITA NOS. 1454 & 1455/KOL/2010 2 OFFICER CONSIDERED THAT THERE WAS AN APPARENT MISTA KE AND RECTIFIED THE ORDER. HOWEVER THERE IS NO MENTION IN THE RECTIFICA TION ORDER IN RESPECT OF EXPLANATION SUBMITTED BY THE APPELLANT DURING THE R ECTIFICATION PROCEEDINGS. THE RESPECTIVE PAYEES I.E. THE WIFE A ND NIECE OF APPELLANT HAVE SHOWN THE CORRESPONDING RECEIPTS OF RS.1 00 00 0/.- EACH IN THEIR RETURNS OF INCOME. 1 FIND THAT EVEN AFTER THE COMME NT OF THE AUDITOR THAT THE PAYMENT TO WIFE AND NIECE ARE PERSONAL IN NATUR E THE APPELLANT HAS CLAIMED THIS EXPENDITURE AS BUSINESS EXPENDITURE IN THE RETURN OF INCOME BECAUSE APPELLANT CONSIDERED THE COMMENTS OF AUDITO R INCORRECT CONTEMPLATING THAT AUDITOR MIGHT HAVE TREATED THE P AYMENT OF SERVICE CHARGES TO WIFE AND NIECE AS PERSONAL IN NATURE DUE TO THE CLOSE RELATION OF THEM WITH THE APPELLANT. THE WIFE AND NIECE OF APPE LLANT HAVE SHOWN THE CORRESPONDING RECEIPTS AS REVENUE RECEIPTS IN THEIR RETURN OF INCOME WHICH SHOWS THAT THESE AMOUNTS ARE NOT IN THE NATURE OF G IFT OR CAPITAL EXPENDITURES BY THE APPELLANT. THERE IS NO BAR ON C LAIMING EXPENDITURE AS BUSINESS EXPENDITURE U/S. 37(1) OF THE 1.T.ACT IF THE PAYMENT IS TO A RELATIVE UNDER INCOME TAX ACT. HOWEVER WHETHER THE PAYMENT IS EXCESSIVE CAN BE EXAMINED BY THE ASSESSING OFFICER DURING THE SCRUTINY ASSESSMENT BUT THE QUESTION OF SUCH EXPENDITURE BEI NG EXCESSIVE IS A DEBATABLE ISSUE AND CANNOT BE A MISTAKE APPARENT FR OM RECORDS. IN NUTSHELL ALL THESE POINTS OF FACT AND LAW WERE NOT EXAMINED IN THE REGULAR ASSESSMENT AND ARE DEBATABLE IN NATURE THEREFORE TH E DECISIONS OF HBLE SUPREME COURT IN CASE OF VOLKART BROS. 80-ITR 50 AN D CIT VS HERO CYCLES PVT. LTD.- 228 ITR 463 ARE APPLICABLE AND IT IS HELD THAT ASSESSING OFFICER WAS WRONG IN PASSING THE RECTIFICATION ORDE R. ASSESSING OFFICER IS THEREFORE DIRECTED TO DELETE THE ADDITION OF RS. 2 00 000/- MADE ON ACCOUNT OF SERVICE CHARGES AND REDUCE THE TOTAL INCOME ACC ORDINGLY. SIMILARLY HE DELETED RS.1 12 200/- BY MAKING SIMIL AR OBSERVATIONS FOR ASSESSMENT YEAR 2005- 06. AGGRIEVED BY THIS THE REVENUE IS IN APPEAL BEF ORE US. 5. AT THE TIME OF HEARING LD. DEPARTMENTAL REPRESE NTATIVE RELIED ON THE ORDERS OF THE ASSESSING OFFICER. 6. ON THE OTHER HAND LD. AUTHORISED REPRESENTATIVE FOR THE ASSESSEE RELIED ON THE ORDERS OF THE LD. CIT(A). 7. AFTER HEARING THE RIVAL SUBMISSIONS AND ON CAREF UL PERUSAL OF THE ORDERS OF THE AUTHORITIES BELOW AND KEEPING IN VIEW OF THE FACT T HAT THE LD. DEPARTMENTAL REPRESENTATIVE COULD NOT CONTRACT THE FINDINGS OF THE LD. CIT(A) B Y BRINGING ANY MATERIAL CONTRARY TO THE ITA NOS. 1454 & 1455/KOL/2010 3 OBSERVATIONS MADE BY THE LD. CIT(A) IN THE IMPUGNED ORDER WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A) TO BE INFERRED WITH AND THE GROUN D TAKEN BY THE DEPARTMENT IS REJECTED. 8. IN THE RESULT BOTH THE APPEALS OF THE DEPARTMEN T ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 14. 01. 2011. SD/- SD/- [ D. K. TYAGI ] [ C. D. RAO ] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 14TH JANUARY 2011. COPY FORWARDED TO THE - 1. DY. COMMISSIONER OF INCOME TAX CIRCLE-51 169 A.J.C. BOSE ROAD (8 TH FLOOR) KOLKATA-14. 2. M/S. TAPAN SAHA PLOT NO.HB-194 SEC.III SALT LAKE CITY KOLKATA-70 106. 3. CIT(A)- (4) CIT- 5. D.R. I.T.A.T. KOLKATA. [TRUE COPY] BY ORDER DEPUTY/ASSISTANT REGISTRAR (KKC) I.T.A.T. KOLKATA.