Patel Transport Co., Ahmedabad v. The Dy.CIT.,(OSD)Circle-9,, Ahmedabad

ITA 2885/AHD/2010 | 2006-2007
Pronouncement Date: 23-12-2010 | Result: Partly Allowed

Appeal Details

RSA Number 288520514 RSA 2010
Assessee PAN AAEFP9744Q
Bench Ahmedabad
Appeal Number ITA 2885/AHD/2010
Duration Of Justice 2 month(s) 8 day(s)
Appellant Patel Transport Co., Ahmedabad
Respondent The Dy.CIT.,(OSD)Circle-9,, Ahmedabad
Appeal Type Income Tax Appeal
Pronouncement Date 23-12-2010
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted D
Tribunal Order Date 23-12-2010
Date Of Final Hearing 14-12-2010
Next Hearing Date 14-12-2010
Assessment Year 2006-2007
Appeal Filed On 15-10-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D AHMEDABAD BEFORE S/SHRI MUKUL SHRAWAT JM AND N. S. SAINI AM PATEL TRANSPORT CO. BEHIND MEGHDOOT HOTEL NR. KARNAMUKTESHWAR TEMPLE O/S. SARANGPUR GATE AHMEDABNAD. VS DEPUTY COMMISSIONER OF INCOME TAX (OSD) CIRCLE-9 AHMEDABAD. (APPELLANT) .. (RESPONDENT) PAN :AAEFP 9744 Q APPELLANT BY :- SHRI JAIMIN GANDHI. RESPONDENT BY:- SHRI U. B. MISHRA D.R. O R D E R PER N. S. SAINI ACCOUNTANT MEMBER . THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-XV AHMEDABAD DATED 19-8-2010. 2. THE FIRST GROUND OF APPEAL RELATES TO THE CIT(A) ERRED IN CONFIRMING THE DISALLOWANCE MADE BY THE ASSESSING O FFICER AT 10% OF RS. 9 12 207/- AND RS.7 20 235/- OUT OF LOAD ING AND UNLOADING EXPENSES AND OUT OF TEMPORARY SALARY RESP ECTIVELY. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSI NG OFFICER HAS OBSERVED THAT THE ASSESSEE HAS DEBITED IN THE PROFI T AND LOSS ACCOUNT LOADING UNLOADING AND TRANSPORTATION EXPEN SES OF RS.9 12 207/- AND TEMPORARY SALARY OF RS.7 20 235/- . ON ITA NO.2885/AHD/2010 ASST. YEAR :2006-07 2 VERIFICATION OF VOUCHERS OF SUCH EXPENSES HE FOUND THAT THE EXPENSES ARE MOSTLY INCURRED IN CASH. THE VOUCHERS DO NOT CONTAIN FULL DETAILS SUCH AS NAME AND ADDRESS OF PAYEE. SOM E OF THE VOUCHERS ARE SELF PREPARED BY THE EMPLOYEES OF THE ASSESSEE AND BEAR ONLY THUMB IMPRESSION OF THE RECIPIENT. HE TH EREFORE CONCLUDED THAT THE EXPENSES ARE NOT FULLY VERIFIABL E INDEPENDENTLY AND THERE WAS POSSIBILITY OF INFLATION OF SUCH EXPE NSES AND/OR DEBITING NON-GENUINE AND NON-PROFESSIONAL EXPENSES UNDER THIS HEAD. HE THEREFORE DISALLOWED 10% OUT OF THE ABOVE TWO EXPENSES AND MADE ADDITION OF RS.1 63 944/- TO THE INCOME OF THE ASSESSEE. 4. IN APPEAL THE CIT (A) OBSERVED THAT IN COMPARIS ON TO THE PREVIOUS YEAR EXPENSES HAVE INCREASED AND THEREFORE CONFIRMED THE DISALLOWANCE MADE BY THE ASSESSING OFFICER. 5. THE AUTHORISED REPRESENTATIVE OF THE ASSESSEE AR GUED AND SUBMITTED THAT THE ASSESSING OFFICER WAS NOT JUSTIF IED ON MAKING ADHOC DISALLOWANCE OUT OF EXPENSES CLAIMED FOR LOAD ING AND UNLOADING CHARGES AND TEMPORARY SALARY. HE HAS NOT POINTED OUT ANY SPECIFIC EXPENSES DEBITED UNDER THE HEAD WHICH WAS NOT GENUINE OR INFLATED BY THE ASSESSEE. HENCE HE SUBMI TTED THAT THE DISALLOWANCE MADE SHOULD BE DELETED. 6. THE DEPARTMENTAL REPRESENTATIVE SUPPORTED THE OR DERS OF THE LOWER AUTHORITIES. 7. AFTER HEARING THE RIVAL SUBMISSIONS AND PERUSING THE MATERIAL AVAILABLE ON RECORD WE FIND THAT THE ASSE SSING OFFICER DISALLOWED 10% OUT OF LOADING AND UNLOADING CHARGES AND TEMPORARY SALARY EXPENSES CLAIMED BY THE ASSESSEE F OR THE REASON 3 THAT NO NAME AND ADDRESS OF THE PAYEE WAS MENTIONED ON THE VOUCHERS AND THAT IT CONTAIN THUMB IMPRESSION OF TH E EMPLOYEES OF THE ASSESSEE AND THUS THE EXPENSES WERE NOT VERIFIA BLE. 8. IN APPEAL THE ADDITION MADE WAS CONFIRMED BY TH E CIT (A) ON THE GROUND THAT THE EXPENSES DURING THE YEAR INC REASED IN COMPARE TO THE EXPENSES OF THE EARLIER YEAR. WE FIN D THAT THE LOWER AUTHORITIES HAVE MADE THE DISALLOWANCE OF 10% OF TO TAL EXPENSES WHICH WORKED OUT TO RS.1 63 994/- AS THE VOUCHERS O F LOADING AND UNLOADING CHARGES AND TEMPORARY SALARY WERE FOUND T O BE NOT VERIFIABLE. THE ASSESSEE POINTED OUT THAT NET PROFI T RATE OF THE YEAR UNDER CONSIDERATION AS DISCLOSED BY THE ASSESSEE ON THE ENHANCED TURNOVER WORKED OUT TO 7.15% WHICH COMPARES FAVOURA BLY WITH THE NET PROFIT RATE OF 5.29% ACCEPTED BY THE DEPAR TMENT IN THE CASE OF THE ASSESSEE IN THE IMMEDIATELY PRECEDING YEAR. THUS THE EXPENSES CLAIMED BY THE ASSESSEE CANNOT BE HELD TO BE UNREASONABLE OR EXCESSIVE. THE ABOVE SUBMISSIONS O F THE ASSESSEE COULD NOT BE CONTROVERTED BY THE REVENUE. IN THE A BOVE FACTS IN OUR CONSIDERED OPINION DISALLOWANCE OF RS.50 000/- OUT OF THE EXPENSES UNDER CONSIDERATION WILL MEET THE ENDS OF JUSTICE. WE THEREFORE SUSTAIN THE DISALLOWANCE OF RS.50 000/- AND DELETE THE BALANCE DISALLOWANCE OF RS.1 16 994/-. THUS THIS GR OUND OF APPEAL IS PARTLY ALLOWED. 9. GROUND NO.2 OF THE APPEAL OF THE ASSESSEE RELATE S TO THE ORDER OF THE CIT (A) CONFIRMING 10% OUT OF TELEPHON E EXPENSES ON ACCOUNT OF PERSONAL USE. 4 10. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS ING OFFICER OBSERVED THAT THE ASSESSEE HAS CLAIMED TELEPHONE AN D MOBILE EXPENSES OF RS.3 26 035/- ON ACCOUNT OF PERSONAL US E. HE THEREFORE DISALLOWED 1/5 TH OUT OF TELEPHONE EXPENSES DEBITED IN THE PROFIT AND LOSS ACCOUNT AND THEREBY MADE ADDITI ON OF RS.65 207/-. 11. IN APPEAL THE ASSESSEE SUBMITTED THAT THE ASSE SSEE ITSELF HAS DISALLOWED 20% OUT OF THE TELEPHONE EXPENSES FOR TE LEPHONE INSTALLED AT THE RESIDENCE OF THE PARTNERS AND THUS MADE DISALLOWANCE OF RS.9 273/-. THEREFORE NO FURTHER D ISALLOWANCE SHOULD HAVE BEEN MADE BY THE ASSESSING OFFICER. 12. THE CIT (A) RESTRICTED THE DISALLOWANCE AT 10% OF THE TELEPHONE EXPENSES ON THE GROUND THAT PERSONAL USE OF TELEPHONE CANNOT BE RULED OUT. 13. AFTER HEARING THE RIVAL SUBMISSIONS AND PERUSIN G MATERIAL AVAILABLE ON RECORD WE FIND THAT THE ASSESSING OFFI CER DISALLOWED 20% OUT OF THE TOTAL EXPENSES OF RS.3 26 035/- DEBI TED IN THE PROFIT AND LOSS ACCOUNT BY THE ASSESSEE ON ACCOUNT OF PERS ONAL USE AND MADE DISALLOWANCE OF RS.65 207/- AND AS THE ASSESS EE ITSELF MADE DISALLOWANCE OF RS. 9 273/- IN THE COMPUTATION OF I NCOME THE LEARNED ASSESSING OFFICER MADE FURTHER DISALLOWANCE OF RS. 55 934/- WHICH WAS RESTRICTED TO 10% BY THE C.I.T.( A). WE FIND THAT THE ASSESSEE HIMSELF DISALLOWED 20% OF TELEPHO NE EXPENSES INCURRED IN RESPECT OF TELEPHONE INSTALLED AT THE R ESIDENTIAL PREMISES OF PARTNERS. NO MATERIAL COULD BE BROUGHT ON RECORD BY THE REVENUE TO SHOW THAT THE PERSONAL USER OF THE T ELEPHONE WAS MORE THAN THE SAID AMOUNT OR AFTER CONSIDERING THE TOTAL VOLUME OF 5 BUSINESS OF THE ASSESSEE THE EXPENDITURE CLAIMED UN DER THE HEAD TELEPHONE EXPENSES WAS UNREASONABLE. IN THE ABOVE CIRCUMSTANCES THE DISALLOWANCE WAS MADE MERELY ON THE BASIS OF DO UBT OR PROBABILITY WITHOUT ANY COGENT MATERIAL. WE THEREFO RE DELETE THE DISALLOWANCE MADE BY THE LEARNED COMMISSIONER OF IN COME TAX (APPEALS) OUT OF THE TELEPHONE EXPENSES AND DIRECT THE LEARNED ASSESSING OFFICER TO RESTRICT THE DISALLOWANCE OF T ELEPHONE EXPENSES TO THE EXTENT 20% OF THE TELEPHONE EXPENSE S INSTALLED AT RESIDENCE OF THE PARTNERS. THUS THE GROUND OF APPE AL OF THE ASSESSEE IS ALLOWED. 14. IN THE RESULT THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. ORDER SINGED AND PRONOUNCED IN OPEN COURT ON 23 RD DAY OF DECEMBER 2010. SD/- SD/- (MUKUL SHRAWAT) (N .S. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD ON THIS 23 RD DAY OF DECEMBER 2010 PATKI COPY OF THE ORDER FORWARDED TO :- 1. THE ASSESSEE. 2. THE REVENUE. 3. THE CIT(APPEALS)- XV AHMEDABAD. 4. THE CIT CONCERNED. 5. THE DR ITAT AHMEDABAD 6. GUARD FILE. BY ORDER DEPUTY / ASSTT.REGISTRAR ITAT AHMEDABAD 6 DATE INITIALS 1. DRAFT DICTATED ON 14-12-2010 -------------- ----- 2. DRAFT PLACED BEFORE AUTHORITY 22-12-2010 ----- -------------- 3. DRAFT PROPOSED & PLACED 22-12-2010 ------------ ------- JM BEFORE THE SECOND MEMBER 4. DRAFT DISCUSSED/APPROVED 22-12-2010 --------- ---------JM/AM BY SECOND MEMBER 5. APPROVED DRAFT COMES TO P.S 22-12-2010 -------- ------------ 6. KEPT FOR PRONOUNCEMENT ON 23-12-2010 -------- ------------ 7. FILE SENT TO THE BENCH CLERK 23-12-2010 ----- --------------- 8. DATE ON WHICH FILE GOES TO THE A.R. ---------------- -------------------- 9. DATE OF DISPATCH OF ORDER ---------------- ---- -----------------