V Ravinder Rao, Hyderabad v. Joint Commissioner of Income Tax, Range 8,, Hyderabad

ITA 381/HYD/2014 | 2009-2010
Pronouncement Date: 12-11-2014 | Result: Partly Allowed

Appeal Details

RSA Number 38122514 RSA 2014
Assessee PAN ADUPR1057K
Bench Hyderabad
Appeal Number ITA 381/HYD/2014
Duration Of Justice 8 month(s) 7 day(s)
Appellant V Ravinder Rao, Hyderabad
Respondent Joint Commissioner of Income Tax, Range 8,, Hyderabad
Appeal Type Income Tax Appeal
Pronouncement Date 12-11-2014
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted B
Tribunal Order Date 12-11-2014
Assessment Year 2009-2010
Appeal Filed On 05-03-2014
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B' HYDERABAD BEFORE SHRI P.M.JAGTAP ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY JUDICIAL MEMBER ITA NO.381/HYD/14 : ASSESSMENT YEAR 2009 - 10 SHRI V.RAVIDNER RAO HYDERABAD (PAN ADUPR 1057 K) V/S. JOINT COMMISSIONER OF INCOME - TAX RANGE 8 HYDERABAD (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI Y.SURYANARYAN RESPONDENT BY : SHRI RAJAT MITRA DR DATE OF HEARING 5 . 11 .2014 DATE OF PRONOUNCEMENT 12.11.2014 O R D E R PER P.M.JAGTAP ACCOUNTANT MEMBER : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) III HYDERABAD DATED 6.1.2012. 2. THE ISSUE INVOLVED IN GROUND NO.1 OF THE ASSESSEES APPEAL RELATES TO THE ADDITION OF RS.1 29 22 613 MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE LEARNED CIT(A) ON ACCOUNT OF DEEMED DIVIDEND UNDER S.2(22)(E) OF THE ACT. 3. THE ASSESSEE IN TH E PRES ENT CA S E IS AN INDIVIDUAL WHO IS M ANA G ING DIRECTOR OF M/S. SPEED PROJECTS & INFRASTRUCTURE PVT. LTD. HE FIL E D HIS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2009 - 10 ON 15.10.2009 DECL A RIN G TOTAL INCOME OF R S .48 32 780 AND AGRICULTURAL INCOME OF RS .2 LAKH S . DURIN G TH E COU R SE OF ASSESSMENT PROCEEDINGS IT WAS NO T ICED BY THE ASSESSING OFFICER THAT THE ASSESSEE HAS RECEIVED LOANS AMOUNTING TO RS .1 29 22 613 FROM M/S. SPEED PROJECTS AND I TA NO. 381/H YD/20 14 SHRI V.RAVIDNER RAO HYDERABAD 2 INFRASTRUCTURE PVT. LTD. ACCOR D ING TO TH E ASSESSING OFFICER THE SAID A MOUNT RECEIVED BY THE ASSESSEE WAS COVERED BY THE PROVI S ION S OF S.2(22)(E) AND CONSEQUENTLY INVOKING THE SAID PROVI S ION H E AD D ED THE AMOUNT OF R S .1 29 22 613 TO THE TOTAL IN C OM E O F THE ASSESSEE ON ACCOUNT OF DEEMED DIVIDEND. ON APPE A L THE LEARNED CIT(A) CO N FIRM E D THE SAID ADDITION MA D E B Y THE ASSESSING OFFICER. 4. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND ALSO PERUSED THE RELEVANT MATERIAL ON RECORD. THE ONLY CONTENTION RAISED BY THE LEARNED COUNSEL FOR THE ASSESSEE IS THAT M/S. SPEED PROJECTS AN D INFRASTRUCTURE PVT. LTD. H A D NOT COMMENCED BUSINESS AT THE RELEVANT TIME AND CONSEQUENTLY THE SAID COMPANY DID NOT HAVE ANY ACCUMULATED PROFITS OUT OF WHICH THE LOANS IN QUESTION COULD B E SAID TO HAVE BEEN AD V ANCED TO THE ASSESSEE. HE HAS CONTENDED THA T THE SAID LOANS TH E REFORE CANNO T BE TREATED AS DEEMED DIVIDEND IN C OM E O F TH E ASSESSEE UNDER S.2(22)(E). AS RIGHTLY CONTENDED BY THE LEARNED COUNSEL F OR THE ASSESSEE THE PAYMENT MADE BY A COMPANY WHI C H IS COVERED BY THE P R O VI SION S OF S.2(22)(E) CAN B E TR E ATED AS D E EMED DIVIDEND ONLY TO THE EXTENT TO WHICH SUCH COMPANY POSSESSES ACCUMULATED PROFITS AND TH I S POSITION CLEARLY EVIDENT F R OM THE PROVI SI ON S OF S.2(22)(E) IS NOT DISPUTED EVEN BY THE LEARNED DEPARTMENTAL REPRESENTATIVE. I T IS HO W EVER OBSER VED T H A T THE CLAIM O F TH E ASSESSEE THAT M/S. SPEED PROJECTS AND INFRASTRUCTURE PVT. LTD. D ID NO T POSSESS ANY ACCUMULATED PROFITS AT THE TIME OF ADVANCING THE AMOUNT IN QUESTION TO THE ASSESSEE HA S NO T BEEN VERIFIED EITHER BY THE ASSESSING OFFICER OR BY THE LEARNED CIT(A) ALTHOUGH SUCH CLAIM WAS SPECIFICALLY MADE IN TH E SUBMI S SION S MADE BEFORE THE ASSESSING OFFICER AND A SPECIFIC GROUND TO THIS EFFECT WAS ALSO RAISED BY THE ASSESSEE IN TH E APPEAL FIL E D BEFORE THE LEARNED CIT(A). WE THEREFORE CONSIDER IT JU ST AND P R OP E R TO RESTORE THIS ISSUE TO THE FIL E O F TH E ASSESSING OFFICER FOR THE LIMITED PU R PO S E OF VERIFYING THE CLAIM OF TH E ASSESSEE AS REGARDS NON - AVAILABILITY OF ANY ACCUMULATED PROFITS IN TH E C ASE OF M/S. SPEED PROJECTS AND INFRASTRUCTURE PVT. LTD. A T THE TIME I TA NO. 381/H YD/20 14 SHRI V.RAVIDNER RAO HYDERABAD 3 WHEN THE AMOUNT IN QUESTION W AS AD V ANCED TO THE ASSESSEE AND DECIDING THE ISSUE AFRESH IN ACCORDANCE WITH LAW. NEEDLESS TO OBSERVE THAT THE ASSESSING OFFICER SHALL AFFORD SUFFICIENT O P PORTUNITY OF H E ARING TO THE A SSESSEE. GROUND NO.1 IS ACCOR DINGLY TR E ATED AS ALLOWED FOR STATISTICAL PU R PO S ES. 5. THE I S SU E RAISED IN GROUND NO.2 OF THE ASSESSEES APPEAL R E L A TES TO THE ADDITION OF RS .27 LAKHS MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE LEARNED CIT(A) ON ACCOUNT O F DEEMED DIVIDEND UNDER S.2(22)(E) OF THE ACT. 6. DURING THE COURSE OF ASSESSMENT PROCEEDINGS IT WAS NO T ICED BY THE ASSESSING OFFICER THAT THE ASSESSEE HAS REC E IVED A LOAN OF R S .27 LAKH S FROM M/S. SPEED PROJECTS AND INFRASTRUCTURE PVT. LTD. ACCO RD ING TO HIM THE SAID LOAN AMO UNT WAS COVERED BY THE P R O V I SI ON S OF S.2(22)(E) AND CONSEQUENTLY INVOKING TH E SAID PROVISION S HE MADE ADDITION OF RS .27 LAKH S TO THE TOTAL INCOME O F THE ASSESSEE ON ACCOUN T O F DEEMED DIVIDEND. ON APPEAL THE CIT(A) CON F I R M E D THE ADDITION MADE BY THE ASSESSING OFFICER ON THIS ISSUE. 7. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND ALSO PERUSED THE RELEVANT MATERIAL ON RECORD. A T TH E TIM E OF H E ARING BEFORE US THE LEARNED COUN S EL FOR TH E ASSESSEE HAS RAISED A LIMITED CONTENTION BY POINTING OUT THAT OUT OF THE TOTAL LOAN AMOUNT O F RS .27 LAKH S IN QUESTION A SUM OF RS .17 LAKHS WAS RE C EIVED BY TH E ASSESSEE IN EARLIER YEARS AND THEREFORE THE ADDITION ON ACCOUNT O F DE E MED DIVIDEND UNDER S.2(22)(E) CAN BE MADE IN TH E C ASE OF THE ASSESSEE ONLY TO TH E EXTENT OF RS .10 LAKHS B E IN G THE AMOUN T RECEIVED DURING THE YEAR UNDER CONSIDERATION . THE LEARNED DEPARTMENTAL REPRESENTATIVE ON THE OTHER HAND HAS CONTENDED T HAT THIS ASPECT OF THE MATTER REQUIR E S VERIFICATION BY THE ASSESSING OFFICER. WE FIND MER IT IN THIS CONTENTION OF THE LEARNED DEPARTMENTAL REPRESENTATIVE. ACCORDINGLY WE RESTORE THIS ISSUE TO THE I TA NO. 381/H YD/20 14 SHRI V.RAVIDNER RAO HYDERABAD 4 FILE OF THE ASSESSING OFFICER FOR THE LIMITED PURPOSE OF VERIFYING THE CLAIM OF THE ASSESSEE THAT OUT OF RS.27 LAKHS LOAN RS.10 LAKHS ONLY WAS RE CEIVED IN THE YEAR UNDER CONSIDERATION AND THE BALANCE AMOUNT OF RS.17 LAKHS WAS RECEIVED IN EARLIER YEARS AND DECIDING THE ISSUE AFRESH IN ACCORDANCE WITH LAW. NEEDLESS TO OBSERVE THAT THE ASSESSING OFFICER SHALL AFFORD SUFFICIENT OPPORTUNITY OF HEARI NG TO THE ASSESSEE. GROUND NO. 2 IS ACCORDINGLY TREATED AS ALLOWED FOR STATISTICAL PURPOSES. 8. GROUNDS NO.3 AND 5 INVOL V E A COMMON ISSUE RELATIN G TO ADDITION OF RS .39 50 000 MADE BY TH E ASSESSING OFFICER AND CONFIRMED BY THE LEARNED CIT(A) ON ACCOUNT OF GROSS RECEIPTS SHOWN BY THE ASSESSEE R ELATING TO HIS BU S IN E SS OF IN T ERIOR DESIGN WORKS. 9. IN HIS RETURN OF I N C OM E FO R TH E YEAR UN D ER CONSIDERATION A LO S S OF RS.19 86 680 WAS CLAIMED BY THE ASSESSEE REL A TING TO THE BUSINESS OF INTERIOR DESIGN WORKS. DU R IN G THE COURSE O F ASSESSMENT PROCEEDINGS I T WAS NO T I C ED BY THE ASSESSING OFFICER THAT THE ASSESSEE HAS SHOWN GROSS RECEIPTS FROM TH E BU SI N ES S OF IN T E R IO R WORKS AT R S . 3 9 50 000 AND AFTER CLAIMING HUGE EXPENDITURE A LO S S OF RS . 1 9 86 680 WAS SHOWN. ON VER IFICATION TH E ASSESSING OFFICER FOUN D TH A T T HERE WAS ABSOLUTELY NO EVIDENCE REL A TIN G TO ANY INTERIOR DE S IG N ING WORK DON E BY TH E ASSESSEE AS WELL AS REGARDING TH E EXPENDITURE INCURRED IN RELATION TO THE SAID WORK. HE THER E FORE DISALLOWED THE CLAIM O F TH E ASSESSEE FOR LOSS RELATING TO HIS BUSIN E SS OF INTERIOR DESIGNING WORK AND TR E ATED THE ENTIRE AMOUNT OF GROSS RECEIPTS OF RS.39 50 00 AS BU S IN E SS IN C OM E O F THE ASSESSEE. 10. BEFORE TH E LEARNED CIT(A) THE FOLLO W IN G WRITTEN SUBMI S SION S W E RE FILED BY THE ASSESSEE IN SUPPORT OF HIS CLAIM FOR LO S S IN RELATION TO THE BU S IN E SS OF IN T ERIO R DESIGNING WORK. I TA NO. 381/H YD/20 14 SHRI V.RAVIDNER RAO HYDERABAD 5 APPELLANT HAS CARRIED ON CERTAIN INTERIOR WORKS IN FLATS BEARING NO.A01 JASMINE BLOCK OF N ECTOR GARDEN MADHAPUR HYDERABAD AND FLAT NO.302 JASMINE BLOCK OF N ECTAR GARDEN MADHAPUR HYDERABAD AND HAS EXECUTED THE INTERIOR DECORATION WORK S OF FALSE CEILING WORKS CARPENTRY WORKS ETC. FOR EXECUTION OF THE WORKS THE APP E LL A N T HAS RECEIVED AN AMOUNT O F RS .39 50 000/ - AGAINST WHICH THE APPELLANT HAS CL A IM E D INCIDENTAL EXPENDITURE AND ADMINI S TRATIVE AND FIN A NCIAL EXPENSES IN TH E FORM OF FINANCE CH A RGES PAID TO THE BANK E RS FOR AVAILING LOAN FACILI T I E S FOR ACQUI R IN G THE VEHICLES WHICH ARE USED FOR THE PU R P O SE OF BUSIN E SS AND APART F R OM TH E SE EXPEN SE S THE APP E LLAN T HAS CLAIMED DEPRECIATION ON THE VEHICLES AND VEHICLE MAINTENANCE EXPENSES WHICH ARE ALL PART AND PARCEL O F THE BUSINESS E XP EN S ES AND ARE INCIDENTAL FOR CAR R YING ON TH E CONTRACT WORKS AND THEY AR E ALL ALLOWABLE. THE WORKS UNDERTAKEN FROM THE OWNERS OF TH E FLATS ARE THE INDEPENDENT FLATS PU R CHA S ED BY THEM AND IT HAS GOT NOTHING TO DO WITH THE VILL A S SOLD DURIN G THE Y E AR BY THE COMP A NY AS THEY ARE THE INDE PE NDENT WORKS UNDERTAKEN BY HIM AND CARRIED ON THE WORKS ACCORDING TO TH E ORAL INSTRUC T IO N S GIVEN BY TH E O W NERS OF THE FL A TS BU T THE AO MISTOOK THAT THE WORKS WERE CAR R I E D ON IN THE FLATS THAT WHICH WERE SOLD BY TH E COMPANY DURIN G THE YEAR AND CITING THAT H E HAD DECLINED TO ACCEPT THE EXPENDITUR E CLAIMED BY TH E APP E LLANT AND TAXED THE ENTIRE RECEIPTS AS THE BUSIN E SS INCOME. THE ASSESSING OFFICER IGNORED THE FACT THAT THE BUSINESS INCOME COMPRISING BUSIN E SS RECEIPTS ARE RECEIVED AFTER INCURRING CERTAIN EXPENDITURE WHICH IS INCIDENTAL TO THE BUSIN E SS AND THE LEGITIMATE BUSIN E SS EXPENSES ARE ALL TO BE ALLOWED AS PER SECTION 37 OF THE INCOM E TAX ACT FOR THE GENERAL BUSIN E SS E X PEN S ES AND AS PER SECTION 32 F O R THE DEPRECIATION OF THE A SSET WHICH ARE PUT TO USE FOR THE BU S INESS OF THE ASSESSEE ARE TO BE ALLOWED IN TOTAL. I TA NO. 381/H YD/20 14 SHRI V.RAVIDNER RAO HYDERABAD 6 AS SUCH THE BUSIN E SS EXPENDITURE OF RS.59 36 677/ - INCLUDING D E P R E C I A TION OF R S .26 50143/ - AS CLAIMED MAY BE ALLOWED. 11. THE LEARNED CIT(A) DID NO T FIND MERIT IN TH E SUBMI S SIONS MADE BY TH E ASSESSEE AND UP HEL D THE ACTION OF THE ASSESSING OFFICER IN TREATING THE GROSS RECEIPTS OF RS .39 50 000 AS IN C OM E OF TH E ASSESSEE BUT CHARGEABL E TO TAX AS INCOME FROM OTHER SOU R CES FOR TH E FOLLO W IN G REASON S GIVEN IN P ARA G RA PHS 6.2 AND 6.3 OF THE IMP UGNED OR D ER - 6 . 2. I HAVE SEEN CAREFULLY ALL THE FACTS AND THE EVIDENCE IN THIS REGARD. IT IS VERY CLEAR THAT NO INTERIOR DESIGNING WORK WAS CARRIED OUT BY THE APPELLANT. THE APPELLANT HAS NEITHER DEMONSTRATED ANY KNOWLEDGE OR SKILLS REGARDING THIS WORK AND HAS ALSO NOT PRO VIDED ANY EVIDENCE WHATSOEVER THAT SUCH DESIGNING WORK HAD INDEED BEEN DONE BY HIM. NOT A SINGLE VOUCHER OR EVIDENCE HAS BEEN PRESENTED REGARDING THE EXPENDITURE IN QUESTION. IT IS ALSO INTERESTING TO NOTE THAT THE APPELLANT HAS NOT GIVEN EVEN ONE DETAI L OF THE TYPE OF INTERIOR DESIGNING WORK DONE BY HIM. THERE IS NO COPY OF ANY AGREEMENT WITH ANYONE AND THERE ARE NO DETAILS OF ANY KIND DESIGN WHICH WAS MADE BY THE APPELLANT. I ALSO AGREE WITH THE ASSESSING OFFICER THAT EVEN IF SOMEONE HAD INTERIOR DESIG NING WORK THERE WAS NO JUSTIFICATION IN USING A FLEET OF CARS FOR SUCH WORK. 6.3 FROM THE ABOVE FACTS AND EVIDENCE IT IS CLEAR THAT THE ENTIRE EXERCISE IN CLAIMING INTERIOR DESIGN BUSINESS IS AIMED AT NOT PAYING TAXES. THE APPELLANT HAD DELIBERATELY MA DE A FALSE CLAIM AND ALSO CLAIMED A HUGE AMOUNT OF DEPRECIATION ON CARS OWNED AND USED BY HIM PERSONALLY. BOGUS LOSSES HAVE BEEN CLAIMED TO REDUCE THE INCIDENCE OF TAXATION. I AGREE WITH THE ASSESSING OFFICER IN DISALLOWING THE CLAIM OF DEPRECIATION AND T HE UNEVIDENCED EXPENSES. I ALSO HOLD THAT THE RECEIPT OF RS.39 50 000/ - IS TO BE TAXES AS INCOME FROM OTHER SOURCES. THE GROUND OF APPEAL STANDS DISMISSED. 12. AT THE TIME OF H E ARING B E FORE US THE LEARNED COUNSEL F OR THE ASSESSEE HAS MAINLY REITER ATED THE SUB MI SSION S MADE BEFORE THE LEARNED CIT(A). HE HAS ALSO CONTENDED ALTERNATIVELY THAT THE INCOME O F T H E ASSESSEE F R OM THE BU S IN E SS OF IN TE RIOR DESIGNING WORK MAY B E E S TIM A TED BY APPLYING A NET PROFIT RATE TO THE GROSS RECEIPTS OF R S .39.50 LAKHS. I TA NO. 381/H YD/20 14 SHRI V.RAVIDNER RAO HYDERABAD 7 13. THE LEARNED DEPARTMENTAL REPRESENTATIVE. ON THE OTHER HAND STRONGLY RELIED ON TH E IMPU G N E D ORDER OF THE LEARNED CIT(A) IN SUPPORT OF THE REVENUES CASE AND SUBMITTED THAT THE SPECIFIC FINDING RECORDED BY THE LEARNED CIT(A) IN HI S IMPUGNED ORDER WH ILE HOLDING THE CLAIM OF THE ASSESSEE REL A TI N G TO THE IN TE RIO R DESIGNING BU S IN E SS AS FAL S E MAY B E TAKEN IN T O CON SID ERATION WHIL E D E CIDIN G THIS ISSUE. 14. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND ALSO PERUSED THE RELEVANT MATERIAL ON RECORD. I T I S OBSERVED THAT THE CLAIM OF THE ASSESSEE O F HAVING CARRIED ON THE BUSINESS O F IN TE RIOR DESIGNING WORK WAS REJECTED BY THE ASSESSING OFFICER AFTER H A VING FOUND THAT THERE WAS ABSOLU T ELY NO EVIDENCE PRODUCED BY THE ASSESSEE TO E STABLI S H THAT ANY SUCH B U S I N E SS W A S ACTUALLY D ON E BY TH E ASSESSEE OR EVEN TO ESTABLISH THAT ANY EXPENSE RELATING TO TH E SAID BU S IN E SS W AS ACTUALLY INCURRED BY THE ASSESSEE. ON APPEAL TH E LEARNED CIT(A) ALSO FOUN D ON VERIFICATION OF THE RELE V ANT FACTS AND EVIDENCE THAT NO INTERIOR DESIGNING WORK WAS ACTUALLY CARRIED OUT BY TH E ASSESSEE. HE ALSO NO T ED T H A T THERE WAS NOTHING BRO UG H T ON RECORD BY THE ASSESSEE TO DEMONSTRATE THAT ANY KNOWLEDGE O R SKILL REQUIRED TO CARRY OUT SUCH WORK WAS POSSESSED BY HIM. HE ALSO FOUN D TH A T NOT A SING LE VOUCHER OR EV I DENCE WAS P R ESENTED BY TH E ASSESSEE IN SUPPORT OF H IS CLAIM OF H A VING INCURRED EXPENDITURE IN R E L A TION TO TH E SAID WORK. AS NOTE D B Y HIM N OT EVEN A COPY OF ANY AGREEMENT WITH ANY ONE WAS PRODUCED BY THE ASSESSEE TO SUPPORT ITS CLAIM OF HAVING DON E THE IN T ERIOR DESIGNING WORK AND ALSO NO DETAILS WERE FURNISHED TO SHOW ANY KIND OF DESI G N THAT WAS MADE BY HI M . ON THE BASIS O F TH E SE FINDINGS THE LEARNED CIT(A) UPHELD THE A C T ION OF THE ASSESSING OFFICER IN TREATING THE CLAIM O F THE ASSESSEE OF HAVING CARRIED ON THE BU S IN ES S OF INTERIOR DESIGNING WORK AS FALSE AND ADDED TH E GROSS REC E IP T S OF RS.39 50 00 0 TO THE TOTAL INCOM E O F TH E ASSESSEE ALTHOUGH UN D ER A DIFFERENT HEAD INCOM E FROM OTHER SOU R CES. I TA NO. 381/H YD/20 14 SHRI V.RAVIDNER RAO HYDERABAD 8 15. AT TH E TIM E O F H E ARING BEFORE US THE LEARNED COUN SE L FOR THE ASSESSEE HAS NO T BEEN ABL E TO REBUT OR CON T ROVERT THE FIN D IN G S O F FACT RECORDED BY THE ASSESSING OFFICER AS WELL AS THE LEARNED CIT(A) TO DISPUTE THE GENUINE N ESS OF HI S CLAIM OF HAVING CARRIED ON THE BU SI N ES S O F INT ERIOR DESIGNING WORK. H E HAS ALSO N O T B E EN ABLE TO P R O D U C E ANY EVIDENCE WHATSOEVER TO ESTABLISH THAT ANY SUCH BUSINESS WAS ACTUALLY CARRIED ON BY HIM OR ANY OF THE EXPENDITURE CLAIMED IN RELATION TO THE SAID BUSINESS WAS ACTUALLY IN C URRED BY HIM. THIS BEING THE POSIT IO N WE FIND NO JU S TIFIABLE REASON TO IN T ERF E RE WI T H T H E IMPU G N ED ORDER OF TH E LEARNED CIT(A) UPHOLDIN G TH E A CT ION OF TH E ASSESSING OFFICER IN TR E ATIN G THE CLAIM OF THE ASSESSEE O F HAVING CARRIED ON THE BUSINESS OF IN T ERIOR DESIGNING WORK A S BOGUS OR FALSE. HAVING UPHELD THE ACTION OF THE AUTHO R ITI E S BELOW IN TR E ATING THE CLAIM O F THE ASSESSEE OF HAVING CARRIED ON THE BU S IN E SS OF INTERIOR DESIGNING WORK AS FALSE WE ALSO FIND NO MERIT IN TH E ALTERNATIVE CON T EN T ION OF TH E LEARNED COUNSEL FOR THE ASSESSEE THAT THE INCOME FROM THE SAID B U SI N ESS MAY B E ESTIMATED BY APPLYING NET PROFIT RATE. WE TH E R E FORE UPHOLD THE I MP UG N E D ORD E R OF THE LEARNED CIT(A) ON THIS ISSUE AND REJ E CT GROUN D S NO.3 AND 5 OF TH E ASSESSEES APPEAL. 1 6 . THE ISSUE RAISED IN GROUND NO.4 REL A TES TO THE ADDITION OF R S .2 56 966 M A DE BY TH E ASSESSING OFFICER AND CONFIRMED BY TH E LEARNED CIT(A) ON ACCOUNT O F REIMBU R SEMENT OF CONVEYANCE EXPENSES. 1 7 . DURIN G THE YE A R UN D ER CONSIDERATION THE ASSESSEE H A D RECEIVED A SUM OF R S .2 56 9 6 6 FROM M/S. SPEED P ROJECTS AND INFRASTRUCTURE P VT. LTD. TOWARDS CON V EYANCE EXPENSE S . SIN C E THE SAID AMOUN T WAS NO T OFFERED TO TAX BY TH E ASSESSEE THE SAME WAS ADDED BY TH E ASSESSING OFFICER TO THE TOTAL IN C OM E O F THE ASSESSEE . B E F O RE THE LEARNED CIT( A) IT WAS CONTENDED ON BEHALF OF THE ASSESSEE THAT THE AMOUNT IN QUE S TION WAS RECEIVED BY HIM TOWARDS REIMBURSEMENT O F CONVEYANCE EXPENSES ACTUALLY IN C URRED BY HIM. THE LEARNED CIT(A) I TA NO. 381/H YD/20 14 SHRI V.RAVIDNER RAO HYDERABAD 9 HOW E VER DID NO T ACCEPT THIS CONTENTION OF TH E ASSESSEE IN TH E ABSENCE OF ANY EVIDENCE OR DETAILS FURNISHED IN SUPPORT THEREOF . 1 8 . WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND ALSO PERUSED THE RELEVANT MATERIAL ON RECORD. THE LEARNED COUNSEL FOR THE ASSESSEE HAS SUBMI T TED THAT THE AMOUNT IN QU E STION RECEIVED BY TH E ASSESSEE TOWARDS R E IMBURSEMENT O F CONVEYANCE EXPEN S ES ACTUALLY INCURRED IS EX E MPT U NDER S.10(14) ( I) OF TH E ACT. AS PER THE SAID PROVIS I ON ANY SPECIAL ALLOW A NCE OR BENEFIT NOT B E IN G IN THE NATURE O F PERQUISITE SPECIFICALLY GRANTED TO MEET EXPENSE WHOLL Y NECE S SARILY AND EXCLU S IVELY INCURRED FOR IN TH E PERFORMANCE OF THE DUTY OF AN OFFICE OR EMPLOYMENT OF PROFIT TO THE EXTENT TO WHICH SUCH E X PENSES ARE ACTUALLY INCURRED FOR THAT PU R PO S E I S EXEMPT FROM TAX. THERE IS HO W E V ER NO EVIDENC E BROUGHT ON RECORD BY THE LEARNED COUN S EL FOR THE ASSESSEE BEF O RE US TO SHOW THAT ANY SPECI A L ALLOWANCE WAS SP E CIFICALLY GRANTED TO TH E ASSESSEE BY THE EMPLOYER TO M E ET C O N VEY ANCE EXPENS E WHOLLY NECESSARILY AND EX C LU S IVELY IN THE PERFO R MANCE OF HIS DUTY. THERE IS ALSO NO EVIDENCE PLACED ON RECORD BEFORE US TO SHOW THAT THE AMOUN T IN QUESTION CLAIMED TO B E R E C EIVED BY THE ASSESSEE ON ACCOUNT OF CONVEYANCE ALLOWANCE WAS ACTUALLY IN C U R RED FOR SUCH PURPO S E. IN TH E ABSENCE OF SUCH DETAILS AND EVIDENCE WE ARE UNABLE TO ACCEPT THE CON T ENT I ON OF TH E ASSESSEE THA T THE AMOUNT IN QUESTION IS EX E MPT F R OM TAX UNDER S.10(14) ( I) AND REJECTING THE SAME WE UPHOL D THE DISALLOWANCE MADE BY THE ASSESSING OFFICER AND SUSTAINED BY THE LEARNED CIT(A) ON THIS ISSUE. GROUND NO .4 OF THE ASSESSEE S A PP E AL I S ACC ORDINGLY DISMISSED. 1 9 . AS REGARDS GROUND NO S .6 AND 7 I T IS OB SE RVED THAT THE ISSUE S INVOLVED THEREIN REL A TIN G TO TH E ADDITIONS OF RS.3 00 000 AND RS.13 252 HAVE BEEN DECIDED BY THE LEARNED CIT(A) VIDE PARAGRAPHS 7.2 AND 8 OF HIS IMPUGN E D OR D ER AS UNDER - I TA NO. 381/H YD/20 14 SHRI V.RAVIDNER RAO HYDERABAD 10 7.2 WITH REGARD TO THE RECEIPT OF R S .3 LAKH S THE ASSESSING OFFICER HAS STATED THAT THIS WAS RECEIVED FROM M R. V. AGAM RAO. THE ASSESSING OFFICER STATED THAT THIS AMOUN T WAS RECEIVED DURING THE CURRENT YEAR AND NO DETAILS HAVE BEEN PROVIDED WITH RESPECT TO THI S CASH CREDIT. ON THE OTHER HAND TH E APP E LL A N T C L A IM S THAT THIS IS NO T A NEW CREDIT DURIN G THE YEAR AND WAS SHOWN IN THE EARLIER YEARS BALANCE SHEET. I N THIS REGARD THE ASSESSING OFFICER IS DIR E CTED TO VERIFY THE CONTENTION OF TH E APP E LL A N T AND I F THE SAM E CREDIT HAS BE E N DI SC LOSED IN THE EARLIER YEARS THEN NO ADDITION I S TO BE MADE AND IF THE SAME IS NEW THEN TH E ADDITION STANDS CONFIRMED BECAU S E NO DETAILS HAVE B E EN PROVIDED. ********** 8. THE NINTH GROUND O F APP E AL REL A TES TO TH E ADDIT I ON OF RS .13 252 / - AGAINST MEDICAL IN S U R ANCE PREMIUM. I FIND TH A T THE ASSESSING OFFICER HAS NO T GIVEN ANY REASONS FOR TH E AFOREM E N T ION E D DISALLOWANCE WHEREAS THE APP E LL A N T CL A IMS THAT ALL EVIDENCE WAS PRESENTED. THE ASSESSING OFFICER IS DIRECTED TO LO O K AT AND V E RIFY THE EVIDENCE AND ALLO W THE CLAIM AS PER LAW. I T IS CLEARLY EVIDENT F R OM TH E RELEVANT PO R TION S OF TH E IMPU G N ED ORDER OF T HE LEARNED CIT(A) REPRODUCED ABOVE THAT BOTH THE ISSUES RELATING TO THE ADDITION OF RS.3 LAKH S AND RS.13 352 HAVE BEEN RESTORED BY THE LEARNED CIT(A) TO TH E FIL E O F THE ASSESSING OFFICER FOR DECIDING THE SAME AFRESH AFTER VERIFYING THE SPECIFIC CLAIM S MADE BY TH E ASSESSEE ON TH E S E ISSUE S BEFORE HIM AND IN OUR OPINION THE ASSESSEE CA NNOT BE SAID TO HAVE ANY GRIEVANCE ON THESE ISSU E S ARI SI N G FROM THE IMP UG N E D O R DER OF THE LEARNED CIT(A). WE TH E R E FORE DISMISS G R OUND NOS.6 AND 7 OF THE ASSESSEES APPEAL WITH A DIRECTION TO TH E ASSESSING OFFICER TO FOLLOW THE DIRECTION S GIVEN BY THE LEARNED CIT(A) ON BOTH THE ISSUES INVOLVED IN GROUN D NOS.6 AND 7 OF TH E ASSESSEES APPEAL. I TA NO. 381/H YD/20 14 SHRI V.RAVIDNER RAO HYDERABAD 11 20 . IN TH E R E SUL T APPEAL O F TH E ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE COURT ON 12 TH NOVEMBER 2014 SD/ - SD/ - ( SAKTIJIT DEY ) ( P.M.JAGTAP ) JUDICIAL MEMBER ACCOUNTANT MEMBER DT/ - 12 TH NOVEMBER 2014 COPY FORWARDED TO: 1. SHRI V.RAVIDNER RAO C/O.SHRI C.R. SEKHAR REDDY ADVOCATE G - 3 RELIANCE HOMES 8 - 2 - 547/R ROAD NO.7 BANJARA HILLS HYDERABAD 2 . JOINT COMMISSIONER OF INCOME - TAX RANGE 8 HYDERABAD 3. COMMISSIONER OF INCOME - TAX(APPEALS) I II HYDERABAD 4. COMMISSIONER OF INCOME - TAX II HYDERABAD 5. DEPARTMENTAL REPRESENTATIVE ITAT HYDERABAD B.V.S