Sri Manik chand Bararia, Supaul v. ITO, Saharsa

ITA 197/PAT/2013 | 2006-2007
Pronouncement Date: 28-09-2016 | Result: Partly Allowed

Appeal Details

RSA Number 19724314 RSA 2013
Bench Patna
Appeal Number ITA 197/PAT/2013
Duration Of Justice 3 year(s) 2 month(s) 20 day(s)
Appellant Sri Manik chand Bararia, Supaul
Respondent ITO, Saharsa
Appeal Type Income Tax Appeal
Pronouncement Date 28-09-2016
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted DB
Tribunal Order Date 28-09-2016
Assessment Year 2006-2007
Appeal Filed On 08-07-2013
Judgment Text
1 ITA NO. 197/PAT/2013 IN THE INCOME TAX APPELLATE TRIBUNAL PATNA BENCH PATNA. BEFORE SHRI SHAMIM YAHYA ACCOUNTANT MEMBER. (S.M.C.) I.T.A. NO. 197/PAT/2013. ASSESSMENT YEAR : 2006 - 07. MANIK CHAND BARARIA THE INCOME - TAX OFFICER PROP. M/S JAYSHREE PLYWOOD VS. WARD - 2 SAHARSA. SUPAUL. APPELLANT. RESPONDENT. APPELLANT BY : SHRI K.N. PRASAD. RESPONDENT BY : SHRI RAM BABU. DATE OF HEARING : 04 - 08 - 2016 DATE OF PRONOUNCEMENT : 28 TH SEPT. 2016 O R D E R THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LEARNED CIT(APPEALS) - I PATNA DATED 15 - 04 - 2013 AND PERTAINS TO ASSESSMENT YEAR 200 6 - 0 7 . THE GROUNDS OF APPEAL READ AS UNDER : 1 . FOR THAT THE GROUNDS OF APPEAL H E RETO ARE W ITHOUT PRE JUDICE TO EACH OTHER. 2. FOR THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE LEARN E D CIT (A) IS NOT JUSTIFIED IN CONFIRMING THE ADDITION OF RS . 5 00 000 1 - AS M ADE B Y T HE ASSESSING OFFICER ON ACCOUNT OF LOAN TAKEN FROM SMT . SAMIT A JAIN . THE ASSESSEE HAS DULY ESTABLISHED ALL THE THREE INGREDI E NTS I. E . ID EN T I T Y OF THE CREDITOR CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTIONS. T HE L EA RN ED CIT(A) HAS ARBITRARILY OBSERVED THAT THE APPELLANT HAS FAIL E D T O ES TA BLI S H CREDITWORTHINESS OF THE LOAN CREDITORS AND THE APPELLANT HA S FAIL E D TO DI SC H ARGE ONUS U/S 68 OF THE AC T . THE ADDITION OF RS. 5 00 000 1 - A S SU STA IN ED I S A RB IT R A R Y UNJUSTIFIED VOID AB - INITIO AND BAD IN LAW. IN AN Y CA SE THE A DDITI ON AS MADE 1 SUSTAINED IS FIT TO BE DELETED. 3. FOR THAT THAT IN THE FACTS AND CIRCUMSTANCE S OF TH E C ASE T HE L EAR N ED CIT(A) HAS FAILED TO GIVE DIRECTION FOR DELETION OF TH E DI SAL L OWA NC ES OF T HE CORRESPONDING INTEREST PAID TO (A) SMT . ARTI DUDHORIA 1 LABH CHAND DHUDHORI A 2 ITA NO. 197/PAT/2013 AND (B) SMT . SHANTA DEVI LODHA; IN WHOSE CASES THE ADDITION OFR S. 6 50 0 001 - AND RS. 5 00 0001 - RESPECTIV ELY AS MADE B Y TH E A SSESS IN G O FF I CER HAVE BEEN DELETED BY THE LEARNED CIT(A). IN ANY CASE THE DIS A LLOWANCES IN RE S P E CT OF INTEREST PAID TO (A) SMT . ARTI DUDHORIA 1 LABH CHAND DHUDH ORIA A ND ( B ) SMT . SHANTA DEVI LODHA;; IS FIT TO BE DELETED. 4. FOR THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE LEARNED CI T(A) IS NOT JUSTIFIED IN CONFIRMING THE DISALLOWANCES IN R ES P E C T O F B O NA F ID E AND LEGITIMATE INTEREST PAID TO SMT . SAM I TA J A IN. IN ANY CASE THE DI SA LLO WANCE AS MADE / SUSTAINED IS FIT TO BE DELETED. 5. FOR THAT IN THE FACTS AND CIRCUMSTANCES O F T HE CASE THE LEARNED CIT(A) IS NOT JUSTIFIED IN CONFIRMING / SUSTA I NING TH E D ISALLOWANCES OF R S . 9 082 / - M ADE UNDER THE HEAD TELEPHONE E X PENSES ON ACCOUN T O F ALLEGED PERSONAL USE. IN AN Y CASE THE DISALLO W ANCE AS MADE / SUSTAINED IS FIT TO BE DE L ETED . 6 . F OR THAT IN THE FACTS AND CIRCUMSTANCES O F T HE CASE THE L EARN E D CI T(A) I S NO T J US T IFIED IN CONFIRMING TH E D ISAL LO WANCES OF RS. 1500 1 - O N A C COUNT OF DONATION. IN ANY CASE THE DISAL L O W ANCE AS M A D E / SUSTAINED IS FIT TO BE DEL E T E D. 2. APROPOS THE ISSUE OF ADDITION OF RS.5 00 000/ - U/S 68. IN THIS CASE THE AO MADE THE ADDITION OF RS.16 50 000/ - ON ACCOUNT OF UNEXPLAINED LOANS FROM LOAN CREDITORS. 3. UPON ASSESSEES APPEAL LEARNED CIT(APPEALS) DELETED ALL THE ADDITIONS EXCEPT RS.5 00 000/ - FROM SMT. SAMITA JAIN. WHILE SUSTAINING THE ADDITION OF RS.5 00 000/ - THE LEARNED CIT(APPEALS) HELD AS UNDER : IN THE CASE OF SMT. SAMITA JAIN THE APPELLANT SUBMITTED THE CO PY OF PAN CARD COPY OF ACKNOWLEDGMENT OF FILING RETURN FOR THE AY 2006 - 07 COPY OF BALANCE SHEET AS ON 31.03.2006 SHOWING A SUM OF RS.5 00 000/ - ON THE ASSET SIDE OF THE BALANCE SHEET AGAINST THE APPELLANT CONFIRMATION FROM THE LOAN CREDITOR AND COPIES O F ELEVEN DEMAND DRAFTS PURCHASED BY THE LOAN CREDITOR FROM SBI PRATAP GANJ. ON PERUSAL OF THE RETURN FOR THE AY 2006 - 07 OF THE ALLEGED LOAN CREDITOR IT IS SEEN THAT SHE HAS AN OPENING CAPITAL BALANCE OF RS.6 96 242.66 AND HAS SHOWN WAGES FROM HANDICRAFT S AMOUNTING TO RS.93 600/ - . THERE ARE NO EARLIER YEARS RETURNS TO SUBSTANTIATE THE OPENING CREDIT BALANCE OF THE LOAN CREDITOR. FURTHER THERE ARE NO DETAILS WITH RESPECT TO THE WAGES FROM THE HANDICRAFTS RECEIVED BY HER. THERE IS ALSO NO BANK STATEMENT P ROVIDED AND THE ALLEGED PAYMENTS TO THE APPELLANT IS THROUGH DEMAND DRAFTS PURCHASED IN CASH. IN THIS CASE THE APPELLANT HAS FAIL E D TO DISCHARGE ITS ONUS U/S 68 OF THE IT ACT IN AS MUCH AS THE CREDITWORTHINESS OF THE LOAN CREDITOR MS. 3 ITA NO. 197/PAT/2013 SAMITA JAIN HAS NOT BEEN ESTABLISHED. THE SOURCE OF CASH WITH WHICH THE BANK DRAFTS WERE PURCHASED HAS NOT BEEN EXPLAINED. SINCE THE APPELLANT HAS FAILED TO ESTABLISH THE CREDITWORTHINESS OF THE ALLEGED LOAN CREDITOR HE HAS FAILED TO DISCHARGE THE ONUS CAST UPON HIM U/S 68 O F THE IT ACT AND HENCE THE AMOUNT OF RS.5 00 000/ - TREATED AS NOT SATISFACTORILY EXPLAINED BY THE APPELLANT U/S 68 OF THE IT ACT BY THE AO AND ADDITION OF THE SAID SUM TO THE TOTAL INCOME OF THE APPELLANT IS CONFIRMED. THE AO IS DIRECTED TO DISALLOW THE CO RRESPONDING INTEREST PAID/SHOWN AS PAYABLE TO THE ALLEGED LOAN CREDITOR. 4. AGAINST THE ABOVE ORDER THE ASSESSEE IS IN APPEAL BEFORE THE ITAT. 5. I FIND THAT IN THIS CASE THE ASSESSEE HAS SUBMITTED COPY OF PAN CARD OF THE CREDITOR COPY OF ACKNOWLEDGEME NT OF HER FILING RETURN FOR ASSESSMENT YEAR 2006 - 07 COPY OF HER BALANCE SHEET AS ON 31 - 03 - 2006 SHOWING A SUM OF RS.5 00 000 ON THE ASSET SIDE OF THE BALANCE SHEET AGAINST THE ASSESSEE CONFIRMATION FROM THE LOAN CREDITOR AND COPIES OF ELEVEN DEMAND DRAFTS PURCHASED BY THE LOAN CREDITOR FROM SBI PRATAP GANJ. ADVERSE INFERENCE HAS BEEN DRAWN BY THE LEARNED CIT(APPEALS) ON THE GROUND THAT OPENING CAPITAL BALANCE OF SMT. SAMITA JAIN HAS BEEN SHOWN AS RS.6 96 242/ - AND HER INCOME HAS SHOWN AS WAGES FROM HANDIC RAFTS AMOUNTING TO RS. 93 600/ - . LEARNED CIT(APPEALS) HAS ALSO DRAWN ADVERSE INFERENCE THAT EARLIER YEARS RETURNS ARE NOT THERE TO SUBSTANTIATE THE OPENING CREDIT BALANCE. THAT THE SOURCE OF CASH WITH WHICH THE BANK DRAFTS WERE PURCHASED HAS ALSO NOT BEEN EXPLAINED. 6. I FIND THAT ON MORE OR LESS SIMILAR EVIDENCES LEARNED CIT(APPEALS) HAS DELETED LOAN CREDITS AMOUNTING TO RS.11 50 000/ - . HOWEVER HE IS SUSTAINING THE LOAN FROM SMT. SAMITA JAIN ON THE GROUND THAT OPENING CAPITAL BALANCE REMAINS UNSUBSTANTI ATED AND PREVIOUS RETURNS ARE NOT AVAILABLE. IN THIS REGARD I FIND THAT MAKING ADVE R SE INFERENCE FOR NOT FILING RETURNS IS NOT JUSTIFIABLE IN THIS CASE AS THERE IS NO LAW FOR FILING TAX RETURNS IF THE SAME IS BELOW THE TAXABLE LIMIT. SIMILARLY THERE IS NO PRESUMPTION THAT PERSONS HAVING SMALL INCOME CANNOT MAKE ANY SAVINGS. IN THESE CIRCUMSTANCES I DO NOT FIND ANY JUSTIFICATION IN LEARNED CIT(APPEALS) SUSTAINING THIS ADDITION. HENCE I SET ASIDE THE ORDERS OF 4 ITA NO. 197/PAT/2013 AUTHORITIES BELOW ON THIS ISSUE. 7 . APROPOS DISALLOWANCE OF INTEREST ON LOANS. SINCE THE LOANS HAVE BEEN FOUND TO BE NOT LIABLE FOR DISALLOWANCE INTEREST THEREON CANNOT BE DISALLOWED. HENCE THE INTEREST ON THOSE LOANS IS TO BE ALLOWED. 8 . APROPOS THE ISSUE OF DISALLOWANCE UNDER THE HEAD TELEPHON E EXPENSES AND DONATION. ON THIS ISSUE THE AO MADE THE DISALLOWANCE HOLDING AS UNDER : IN THE P & L A/C ASSESSEE HAS DEBITED RS.90 829/ - UNDER THE HEAD TELEPHONE EXPENSES. CONSIDERING THE PERSONAL USE OF THE TELEPHONE AN ESTIMATED DISALLOWANCE OF 20% OF THE EXPENSES ARE MADE AND ADDED TO THE TOTAL INCOME. 20% OF THE EXPENSES COME TO RS.18 166/ - . IN THE P & L AC. ASSESSEE HAS DEBITED AN INADMISSIBLE ITEM OF EXPENDITURE OF RS.1 500/ - UNDER THE HEAD DONATION. RECEIPT OF THE DONATION PRODUCED DOES NOT SHOW ANY MENTION OF EXEMPTION U/S 80G OF THE I.T. ACT HENCE THE DONATION OF RS.1 500/ - IS DISALLOWED IN FULL AND ADDED TO THE TOTAL INCOME. 9 . UPON ASSESSEES APPEAL LEARNED CIT(APPEALS) DEALT WITH THE ISSUE AS UNDER: THE AO HAS MADE DISALLOWANCE OF 2 0% OF THE EXPENSES ON ACCOUNT OF TELEPHONE CHARGES AMOUNTING TO RS.18 166/ - BASED ON THE FACT THAT PERSONAL USE OF THE TELEPHONE CAN NOT BE RULED OUT. I AGREE WITH THE AO THAT TELEPHONE EXPENSES CERTAINLY INCLUDE EXPENDITURE FOR PERSONAL USE. HOWEVER THE DISALLOWANCE @ 20% IS CONSIDERED EXCESSIVE AND HENCE TO BE FAIR AND REASONABLE THE DISALLOWANCE OF THE TELEPHONE EXPENSES IS RESTRICTED TO 10% OF THE EXPENSES DEBITED TO THE P/L A/C AMOUNTING TO RS.9082/ - . THE ADDITION TO THE EXTENT OF RS.9082/ - IS HENCE CONFIRMED. 10 . AS REGARDS THE DONATION THE LEARNED CIT(APPEALS) DID NOT ACCEPT THE ASSESSEES CLAIM OF BUSINESS EXPEDIENCY AND UPHELD THE DISALLOWANCE. 1 1 . I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS AND PERUSED THE RECORDS. I 5 ITA NO. 197/PAT/2013 FIND THAT ON BOTH THE IS SUES THE ORDER OF THE LEARNED CIT(APPEALS) IS REASONABLE AND DOES NOT REQUIRE ANY INTERFERENCE. HENCE I AFFIRM THE SAME. 1 2 . IN THE RESULT THIS APPEAL FILED BY THE ASSESSEE STANDS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 28 TH DAY OF SEPT. 2016. SD/ - ( SHAMIM YAHYA) ACCOUNTANT MEMBER. DATED: 28 TH SEPT. 2016. COPY FORWARDED TO : 1. MANIK CHAND BARARIA PROP.M/S JAYSHREE PLYWOOD PRATAPGANJ SUPAUL. 2. I.T.O. WARD - 2 SAHARSA. 3. C.I.T. - PATNA. 4. CIT(APPEALS) - I PATNA. 5. D.R. ITAT PATNA. 6. GUARD FILE TRUE COPY BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL PATNA BENCH PATNA. WAKODE.