Sh. Sudhir Bhandari, JODHPUR v. ITO, JODHPUR

IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH JODHPUR BEFORE SHRI S.V. MEHROTRA ACCOUNTANT MEMBER AND SHRI V.D. RAO JUDICIAL MEMBER ITA NO: 383 / JU / 2010 ASSTT. YEAR: 2007 2008 SHRI SUDHIR BHANDARI PROP. OF INCOME-TAX OFFICER M/S P.C. BHANDARI & CO. V/S WARD-3(3) CYCLE MARKET JODHPUR. JODHPUR. PAN: AANPB 9952 D (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI R.R. SI NGHVI A.R. RESPONDENT BY : SHRI AVDESH KU MAR D.R. ORDER PER V.D. RAO: JM THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDERS OF THE LD. CIT (A) JODHPUR DATED 23-3-2010 RELATI NG TO ASSESSMENT YEAR 2007 2008. 2 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL BEFORE THE TRIBUNAL. GROUNDS OF APPEL: 1. THAT THE LEARNED AUTHORITIES BELOW HAVE GROSSLY ERRED IN MAKING/SUSTAINING THE ADDITION OF RS. 4003 /- REPRESENTING THE AMOUNT OF DIFFERENCE IN THE ACCOUNTS OF SOME OF SUPPLIERS WHICH IS ILLEGAL AND BAD IN LAW. 2. THAT THE LEARNED AUTHORITIES BELOW HAVE ALSO ERRED IN MAKING/SUSTAINING THE ADDITION OF RS. 3900/- REPRESENTING IN DISALLOWANCE OF THE CLAIM OF BAD DEBTS WHICH IS ALSO ILLEGAL AND BAD IN LAW. 3. THAT THE LEARNED CIT (A) HAS SERIOUSLY ERRED IN CONFIRMING THE ADDITION OF RS. 18 908/- REPRESENTIN G THE ALLEGED DEEMED DEPRECIATION ON THE BUSINESS BUILDING CONSTRUCTED IN THE F Y 2005-06 AND PUT TO USE IN BUSINESS IN THE F Y 2006-07 WHEREAS THE 3 LEARNED ASSESSING OFFICER DID PRESUME SUCH USE IN THE F Y 2005-06 WHICH IS ALSO ILLEGAL AND BAD IN L AW. 4. THAT THE LEARNED CIT (A) HAS ALSO ERRED IN CONFIRMING THE ADDITION OF RS.46 846/- REPRESENTING THE 1/5 DISALLOWANCE OUT OF THE EXPENSES O THE ACCOUNT OF PETROL SHOP EXPENSES TELEPHONE EXPENSES TRAVELING VEHICLES REPAIRS AND DEPRECIATION ON VEHICLES AND MOBILE PHONE WHICH IS ALSO ILLEGAL BAD IN LAW AND IS WITHOUT ANY MATERIA L. 3. GROUND NO.1 & 2 NOT PRESSED BY THE LD. COUNSEL FOR THE ASSESSEE; THEREFORE BOTH THESE GROUNDS ARE DISMISS ED. 4. FACTS ARE IN BRIEF THAT THE ASSESSEE IN THE BUSI NESS OF CYCLE TRADING AND THE ASSESSEE HAS CONSTRUCTED A BUILDING IN THE FINANCIAL YEAR 2005 2006 RELEVANT TO THE ASSESSMENT YEAR 20 06 -2007. THE CONSTRUCTION HAS COMPLETED AT THE FAG END OF TH E FINANCIAL YEAR 2005 -2006 IN THE MONTH OF MARCH 2006. THE ASSESSEE IN HIS RETURN OF INCOME CLAIMED DEPRECIATION OF RS. 1 89 086/- ON A SHOW ROOM BUILDING CONSTRUCTED IN THE PREVIOUS YEAR . DURING THE 4 COURSE OF THE ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER HAS OBSERVED THAT A SHOWROOM WAS CONSTRUCTED IN THE PRE VIOUS YEAR AND IT HAD BEEN USED FOR BUSINESS ALSO THEREFORE THE ASSESSING OFFICER HAS DISALLOWED THE DEPRECIATION OF 10% ON R S.1 89 086/- ON THE GROUND THAT IT IS DEEMED DEPRECIATION OF PRE VIOUS YEAR. 5. ON BEING AGGRIEVED THE ASSESSEE CARRIED THE MATT ER IN APPEAL BEFORE THE LD. CIT (A) AND IT WAS SUBMITTED THAT TH E BUILDING WAS COMPLETED AT THE FAG END OF THE FINANCIAL YEAR 2005 2007 AND IT COULD BE FIRST TO USE IN THE BUSINESS IN THE MONTH OF MAY 2006. HOWEVER THE LD. CIT (A) REJECTED THE CLAIM OF THE ASSESSEE ON THE GROUND THAT ASSESSEE NOT MADE ANY OBJECTION BEFORE THE ASSESSING OFFICER. 6. WE HAVE HEARD BOTH THE SIDES PERUSE THE RECORDS AND GONE TO THE ORDERS OF THE AUTHORITIES BELOW. 7. REGARDING GROUND NO.3 WHEN IT WAS SPECIFICALLY SUBMITTED BY THE ASSESSEE THAT THE BUILDING WAS PUT TO USE ON LY IN THE MONTH OF MAY 2006 AND WITHOUT MAKING ANY ENQUIRY THE ASS ESSING OFFICER ON SUSPICION DISALLOWED THE 10% OF DEPREC IATION ON THE 5 GROUND THAT IT MUST HAVE BEEN PUT TO USE IN THE EAR LIER YEAR. THE LD. CIT (A) HAS ALSO SUPPORTED THE SUSPICION OF THE ASSESSING OFFICER. WE FIND THAT THE DISALLOWANCE MADE BY THE AUTHORITIES BELOW ONLY ON THE SUSPICION AND IT CANNOT BE JUSTIF IED IN THE EYE OF LAW. WE THEREFORE SET ASIDE THE ORDER PASSED BY THE ASSESSING OFFICER AND THIS GROUND OF APPEAL RAISED BY THE ASS ESSEE IS ALLOWED. 8. GROUND NO.4 OF APPEAL RELATING TO ADDITION OF RS .46 846/- RELATING TO VARIOUS EXPENSES. THE ASSESSEE HAS CLA IMED THE ABOVE AMOUNT OF RS. 46 846/- ON ACCOUNT OF PETROL SHOP E XPENSES TELEPHONE EXPENSES VEHICLES REPAIR DEPRECIATION ON VEHICLES AND MOBILE PHONE AND TRAVELING EXPENSES AND WITH REGARD TO REMAINING EXPENSES HE CONFIRMED THE ORDER PASSED BY THE LD. C IT (A) ON THE GROUND THAT THE ASSESSEE HAS FAILED TO PROVE THESE EXPENSES INCURRED ONLY AND EXCESSIVELY FOR THE PURPOSE OF TH E BUSINESS. 9. WE HAVE HEARD BOTH THE SIDES PERUSE THE RECORDS . AFTER CAREFUL EXAMINATION OF THE ORDERS OF THE AUTHORITIE S BELOW AND BY CONSIDERING THE NATURE OF BUSINESS OF THE ASSESSEE WE RESTRICT 6 DISALLOWANCE TO THE EXTENT OF RS.20 000/- AND THIS GROUND OF APPEAL RAISED BY THE ASSESSEE IS PARTLY ALLOWED. 10. IN THE RESULT THIS APPEAL FILED BY THE ASSESSE E IS PARTLY ALLOWED. 11. O RDER WAS PASSED IN THE OPEN COURT DATED ON 9 TH FEBRUARY 2011. SD/- SD/- (S.V. MEHROTRA) (V.D. RAO) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 9 TH FEBRUARY 2011 KAMAL KUMAR COPY FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. INCOME-TAX OFFICER 4. CIT 5. D/R 6. GUARD FILE