Rajesh Kumar Saroj,, Delhi v. DCIT,, New Delhi

ITA 2138/DEL/2009 | 2004-2005
Pronouncement Date: 23-07-2010 | Result: Allowed

Appeal Details

RSA Number 213820114 RSA 2009
Assessee PAN ACOPS5597C
Bench Delhi
Appeal Number ITA 2138/DEL/2009
Duration Of Justice 1 year(s) 2 month(s) 3 day(s)
Appellant Rajesh Kumar Saroj,, Delhi
Respondent DCIT,, New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 23-07-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted F
Tribunal Order Date 23-07-2010
Date Of Final Hearing 19-07-2010
Next Hearing Date 19-07-2010
Assessment Year 2004-2005
Appeal Filed On 20-05-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F : NEW DELHI BEFORE SHRI I.P.BANSAL JM AND SHRI R.C.SHARMA AM ITA NO.2138/DEL/2009 ASSESSMENT YEAR : 2004-05 SHRI RAJESH KUMAR SAROJ COTTAGE NO.1 OBEROI APARTMENTS 2 SHAM NATH MARG DELHI 110 054. PAN NO.ACOPS5597C. VS. DY.COMMISSIONER OF INCOME TAX CIRCLE-20(1) NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S.N.NANDA CA. RESPONDENT BY : SHRI H.K.LAL SR.DR. ORDER PER R.C.SHARMA AM : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF CIT(A) DATED 12.3.2009 FOR THE AY 2004-05 IN THE MATTER OF ORDE R PASSED U/S 143(3) OF THE IT ACT. 2. FOLLOWING GROUNDS HAVE BEEN TAKEN BY THE ASSESSE E :- 1. LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HA S ERRED IN HOLDING THAT FRESH EVIDENCE WHICH WAS NOT FILED WIT H DY.COMMISSIONER OF INCOME TAX HAS BEEN FILED BEFORE HIM. 2. LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS FAILED TO APPRECIATE THAT NO FRESH EVIDENCE HAS BEEN FILED BY THE APPELLANT. THE SUPPORTING DOCUMENTS WERE PRODUCED ON THE DIREC TION OF COMMISSIONER OF INCOME TAX (APPEALS). 3. LEARNED COMMISSIONER OF INCOME TAX (APPEALS) FAI LED TO APPRECIATE THAT THE SUPPORTING DOCUMENT WERE NOT IN POSSESSION OF THE APPELLANT AS THESE WERE IN LONDON WHICH WAS CLO SED. ITA-2138/D/2009 2 4. LEARNED COMMISSIONER OF INCOME TAX (APPEALS) FAI LED TO APPRECIATE THAT HE HAS POWER TO CALL EVIDENCE U/S 2 50(4) OF THE INCOME TAX ACT. 5. LEARNED COMMISSIONER OF INCOME TAX (APPEALS) FAI LED TO APPRECIATE THAT DY.COMMISSIONER OF INCOME TAX HAS N OT CALLED ANY EVIDENCE AS HE HAD MADE QUERY ON DIFFERENT GROUNDS. 6. THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS ) HAS BEEN PASSED ON INCORRECT APPRAISAL OF THE FACTS AND LAW. 7. LEARNED AUTHORITIES BELOW HAVE ERRED IN DISALLOW ING RS.6 54 956/- BEING EXPENSE OF LONDON OFFICE FOR RE NT RATES AND TAXES. 8. LEARNED AUTHORITIES BELOW HAVE ERRED IN DISALLOW ING RS.8 07 876/- BEING EXPENSES OF LONDON OFFICE FOR SALARY. 9. LEARNED AUTHORITIES BELOW HAVE FAILED TO APPRECI ATE THAT LONDON OFFICE IS IN EXISTENCE SINCE 1977 AND THESE EXPENSES ARE BEING ALLOWED IN ALL THE PREVIOUS YEARS. 10. LEARNED AUTHORITIES BELOW HAVE ERRED IN DISALLO WING RS.5 57 800/- OUT OF EXPORT PROMOTION EXPENSES WITH OUT ANY COGENT BASIS. 11. LEARNED AUTHORITIES BELOW HAVE FAILED TO APPREC IATE THAT THE DEPRECIATION IS ALLOWABLE ON CAR AS BLOCK OF ASSETS . 12. LEARNED AUTHORITIES BELOW HAVE ERRED IN NOT ALL OWING LOSS ON SALES OF FLAT. 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PER USED. FACTS IN BRIEF ARE THAT THE ASSESSEE IS RUNNING BUSINESS UNDER THE NAM E AND STYLE OF M/S EVE GARMENTS AND M/S APPOLLO ENTERPRISES AS HIS PROPRIE TARY CONCERNS. DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE DECLARED TOT AL TURN OVER OF RS.17 20 28 022/- AND RS.4 37 74 733/- AND NET PROF IT OF RS.3 57 56 710/- AND RS.75 16 590/- FROM M/S APPOLLO ENTERPRISES AND M/S EVE GARMENTS RESPECTIVELY. DURING THE COURSE OF ASSESSMENT PROCEEDINGS IT WAS NOTICED THAT THE ASSESSEE HAS SHOWN PAYMENT OF RS.6 54 956/- AS RENT RATES AND T AXES. AS PER LETTER DATED ITA-2138/D/2009 3 29.11.06 THE ASSESSEE WAS ASKED TO FURNISH THE DET AILS OF RENT RATES AND TAXES EXPLAINING THE NATURE OF EXPENSES WITH DOCUMENTARY EVIDENCE. THE ASSESSEE REPLIED IN ITS LETTER DATED 4.12.06 THAT EXPENSES F OR LONDON OFFICE HAVE BEEN ACCOUNTED FOR. IN THE ABSENCE OF ANY DETAILS AND DOCUMENTARY EVIDENCES OF THE SAID PAYMENT THE EXPENSES OF RS.6 54 956/- CLAIMED BY ASSESSEE WERE DISALLOWED. DURING THE COURSE OF EXAMINING THE DETAILS OF SALAR Y PAYMENT IT WAS NOTICED BY THE AO THAT IN THE MONTH OF MARCH 2004 THE ASSESS EE HAS DEBITED SALARY OF RS.8 24 376. WHILE IN EARLIER FIVE MONTHS THE SALA RY PAID IS RS.16 500 PER MONTH ONLY. VIDE OFFICE LETTER DATED 29.11.06 THE ASSESS EE WAS ASKED TO FURNISH THE DETAILS OF HUGE SALARY PAYMENTS IN THE MONTH OF MAR CH 2004 ITSELF. THE ASSESSEE VIDE ITS LETTER DATED 4.12.06 REPLIED IN MARCH 2 004 EXPENSES FOR LONDON OFFICE HAVE BEEN ACCOUNTED FOR. THE AO OBSERVED THAT NO D OCUMENTARY EVIDENCE DETAILS OF EMPLOYEES ALONGWITH NATURE OF DUTIES WERE FURNIS HED BY THE ASSESSEE. THEREFORE IN THE ABSENCE OF ANY ADDRESS OF LONDON OFFICE AND ANY DOCUMENTARY EVIDENCE FOR THESE EXPENSES THE SAME WAS DISALLOWE D AFTER REDUCING THE REGULAR SALARY DEBITED EACH MONTH AMOUNTING TO RS.16 500. T HE DISALLOWANCE OUT OF SALARY PAYMENT COMES TO RS.8 07876. (RS.8 24 376/- - RS.16 500/- ). OUT OF THE EXPORT PROMOTION EXPENSES OF RS.22.31 LAKHS INCURRED DURIN G THE YEAR THE AO DISALLOWED 25% WHICH COMES TO RS.5 57 800/- BY OBSERVING THAT ASSESSEE HAS SIMPLY FURNISHED COPY OF LEDGER ACCOUNT FROM WHICH NATURE OF THE EXPENSES CANNOT BE VERIFIED. THE AO ALSO DISALLOWED ASSESSEES CLAIM FOR LOSS OF SALE OF FLAT AMOUNTING TO RS.3 53 899/- ON THE PLEA THAT DOCUMEN TARY EVIDENCE FOR PURCHASE AND SALE OF FLATS ALONGWITH JUSTIFICATION FOR THE L OSS CLAIMED WAS NOT FURNISHED. AGGRIEVED BY THE ORDER OF AO ASSESSEE APPROACHED T O THE CIT(A) AND BEFORE THE CIT(A) ASSESSEE AGAIN PRODUCED ALL THE DETAILS OF THE EXPENSES SO INCURRED AS WELL AS COMPUTATION OF LOSS ON SALE OF HOUSE. HOWEVER THE CIT(A) DECLINED TO ACCEPT THE DOCUMENTS SO FURNISHED BY OBSERVING THAT THE SA ME WAS IN CONTRAVENTION OF RULE 46A INSOFAR AS THESE WERE NOT PRODUCED BEFORE AO. HENCE THE ADDITION SO MADE BY THE AO WAS CONFIRMED BY CIT(A) AGAINST WHIC H ASSESSEE IS IN FURTHER APPEAL BEFORE US. ITA-2138/D/2009 4 4. WE HAVE CONSIDERED THE RIVAL CONTENTIONS CAREFU LLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FOUND FROM THE RECORD THAT ASSESSEE WAS CARRYING ON THE BUSINESS OF EXPORTS SINCE LONG BACK. THE ALLEG ED EXPENSES WERE REGULARLY INCURRED BY IT. AS PER THE PAPER BOOK FURNISHED BE FORE US THE DETAILS WITH REGARD TO PAYMENT OF RENT SALARY BUSINESS PROMOTION ETC. WERE FURNISHED BEFORE THE LOWER AUTHORITIES. HOWEVER IT WAS NOT CLARIFIED A S TO WHETHER IT WAS ALSO BEFORE THE AO BUT AT THE VERY SAME TIME IT CANNOT BE DIS PUTED THAT ALL THESE DETAILS WERE BEFORE THE CIT(A) WHO HAS ALSO DISCUSSED THE SAME BUT DECLINED TO ACCEPT ON THE PLEA THAT IT WAS NOT PRODUCED BEFORE THE AO. WE FO UND THAT LONDON OFFICE RENT WAS CONSISTENTLY INCURRED BY THE ASSESSEE EVEN IN T HE EARLIER YEARS. EVEN DETAILS OF SALARY PAYMENT WERE ALSO FILED. IT APPEARS THAT CI T(A) HAS NOT CONSIDERED THE SAME MERELY BECAUSE IN HIS OPINION DETAILS WERE NO T FURNISHED BEFORE THE AO. UNDER SUCH CIRCUMSTANCES IF THE CIT(A) DOUBTS SUCH FURNISHING OF DETAILS BEFORE THE AO HE MAY VERY EASILY CALL FOR THE ASSESSMENT RECORDS TO VERIFY THE CONTENTION OF THE ASSESSEE AND CONSIDER THE SAME FOR ALLOWABIL ITY. HOWEVER THE CIT(A) HAS ADOPTED A SHORTCUT WAY AND WITHOUT UNDERTAKING ANY EFFORTS TO VERIFY ASSESSEES CONTENTION JUST DECLINED TO ACCEPT ALL THESE DETAI LS BY STATING THAT IT WAS NOT PLACED BEFORE THE AO DURING THE COURSE OF ASSESSMENT PROCE EDINGS. THERE IS NO DISPUTE TO THE WELL SETTLED LEGAL PROPOSITION THAT CIT(A) IS H AVING CO-TERMINUS POWER WITH THAT OF THE AO AND THE APPELLATE PROCEEDINGS ARE JU ST AN EXTENSION OF THE ASSESSMENT PROCEEDINGS. WHAT THE AO HAS FAILED TO SEE AND VERIFY THE CIT(A) IS EQUALLY COMPETENT TO CALL FOR THE SAME AND VERIFY EVEN HE HAS BEEN GIVEN POWERS UNDER THE STATUTE TO CALL FOR ANY DETAILS TO VERIFY THE CORRECTION OF CONTENTION OF THE ASSESSEE WITH REGARD TO ALLOWABILITY OF EXPENDITURE ETC. SIMILARLY EXPENDITURE ON BUSINESS PROMOTION WAS WITH RESPECT TO THE AIR TICK ET AND OTHER TRAVELING EXPENSES INCURRED IN CONNECTION WITH THE FOREIGN VISIT FOR B USINESS PURPOSES. THE AMOUNT OF FOREIGN EXPENSES WAS WITHDRAWN BY THE ASSESSEE FROM AUTHORIZED FOREIGN EXCHANGE DEALER WHICH WAS IN ACCORDANCE WITH THE GUIDELINES ISSUED BY THE RBI. INSPITE OF DETAILS SO FURNISHED THE CIT(A) INSTEAD OF VERIFYI NG THE SAME CONFIRMED THE AD- ITA-2138/D/2009 5 HOC DISALLOWANCE OF 25% MADE BY THE AO UNDER THE HE AD BUSINESS PROMOTION. EVEN THE LOSS ON ACCOUNT OF SALE OF FLAT WAS DUE TO INDEXATION AND NOT FOR ANY OTHER REASON THE SAME OUGHT TO BE CONSIDERED AS PER LAW. IN THE INTEREST OF JUSTICE AND FAIR PLAY WE SET ASIDE THE ORDER OF CIT(A) AND MAT TER IS RESTORED BACK TO THE FILE OF THE AO FOR DECIDING THE SAME AFRESH BY CONSIDERING THE VARIOUS DETAILS FILED BY THE ASSESSEE WHICH THE CIT(A) HIMSELF HAS ACCEPTED AS H AVING BEEN PRODUCED BEFORE HIM. WE DIRECT ACCORDINGLY. 5. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. DECISION PRONOUNCED IN THE OPEN COURT ON 23 RD JULY 2010. SD/- SD/- (I.P.BANSAL) (R.C.SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 23.07.2010. VK. COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ITAT DEPUTY REGISTRAR ITA-2138/D/2009 6