M S Maru Healthcare Pvt Ltd Jaipur v. Deputy Commissioner Of Income Tax Jaipur

Vk Dj Vihyh Vf Kdj K T Iqj U K Ihb T Iqj In The Income Tax Appellate Tribunal Jaipur Benches Jaipur Jh Fot Iky Jko U Kf D Lnl Oa Jh Hkkxpan Ys Kk Lnl Ds Le K Before Shri Vijay Pal Rao Jm Shri Bhagchand A M Vk Dj Vihy La Ita Nos 799 800 801 Jp 2017 Fu Kzkj K Ok Z Assessment Year 2010 11 2011 12 2012 13 M S Maru Healthcare Pvt Ltd B 105 Sethi Colony Jaipur Cuke Vs D C I T Central Circle 1 Jaipur Lfkk H Ys Kk La Thvkbzvkj La Pan Gir No Aafcm 0659 P Vihykfkhz Appellant Izr Fkhz Respondent Fu Kzkfjrh Dh Vksj Ls Assessee By Shri P C Parwal Ca Jktlo Dh Vksj Ls Revenue By Smt Pratibha Kaushik Cit Lquokbz Dh Rkjh K Date Of Hearing 26 12 2017 Mn Kksk Kk Dh Rkjh K Date Of Pronouncement 27 12 2017 Vknsk Order Per Bench All The Three Appeals Are Filed By The Assessee Em Anates From The Separate Orders Of The Ld Cit A 4 Jaipur Dated 04 09 2017 For The A Y 2010 11 2011 12 And 2012 13 2 All These Appeals Were Heard Together And For The Sake Of Convenience And Brevity Being Disposed Off By A Com Mon Order 3 Ita No 799 Jp 2017 Ita 799 To 801 Jp 2017 Maru Healthcare Vs Dcit 2 In This Case A Search And Seizure Operation U S 1 32 1 Of The Income Tax Act 1961 In Short The Act Was Carried O Ut On 08 6 2011 At The Different Premises Of Dr Anish Maru Group The Assessee Is One Of The Concern Of This Group The Assessment U S 143 3 Read With Section 153 A Of The Act Was Finalized On 10 3 2014 A T An Income Of Rs 6 97 050 The Ld Cit A Has Partly Allowed The Appe Al Of The Assessee 4 Now The Assessee Is In Appeal Before Itat By Takin G Following Grounds Of Appeal 1 The Ld Cit A Has Erred On Facts And In Law In Co Nfirming The Addition Of Rs 2 03 404 On Account Of Differ Ence Between Commission Income Of Rs 5 63 670 Shown In P L Account And Commission Income Of Rs 7 67 074 Shown In Form No 26 As By Not Appreciating The Explanation Given By The Assessee For Such Differen Ce 2 The Ld Cit A Has Erred On Facts And In Law In Con Firming The Disallowance Of Expenses Of Rs 2 26 863 3 The Assessee Craves To Amend Alter And Modify An Y Of The Grounds Of Appeal 4 The Appropriate Cost Be Awarded To The Assessee 5 Grounds No 3 And 4 Of The Assessees Appeal Are General In Nature And Does Not Require Any Adjudication There Fore The Same Dismissed Ita 799 To 801 Jp 2017 Maru Healthcare Vs Dcit 3 6 In The Ground No 1 Of The Appeal The Issue Inv Olved Is Confirming The Addition Of Rs 2 03 404 Made On Acc Ount Of Difference Between Commission Receipt Of Rs 5 63 670 Declare D By The Assessee And As Per Form 26 As At Rs 7 67 074 The Assesse E Has Declared Receipt Of Commission At Rs 5 63 670 In Its P L Account However As Per Form 26 As The Receipt Of Commission Was Rs 7 6 7 074 7 The Ld Cit A Has Decided The Issue By Holding As Under 5 I Have Perused The Facts Relating This Ground An D Submissions Made In This Regard I Find A O Is Justified In M Aking An Addition Of Rs 2 03 404 On Account Of Difference In Receipts Of Commission Received By The Appellant The Appellant Has Not Been Satisfactorily Explained The Difference In Com Mission Received And Commission Evident From The 26 As Unde R The Facts And Circumstances Of The Case The Additions M Ade By The A O Are Confirmed Accordingly Appellants Appeal In Ground No 1 Is Hereby Dismissed 8 The Ld Ar Of The Assessee Has Reiterated The Subm Issions As Made Before The Authorities Below He Was Asked To Ex Plain The Difference On The Basis Of Documentary Evidence But He Has Shown His Inability To Do So He Simply Repeated The Pleading S Made Before The Lower Authorities And Submitted That The Revenue Sho Uld Explain The Difference As Assessee Had Not Receipt Certain Amou Nts Which Are Ita 799 To 801 Jp 2017 Maru Healthcare Vs Dcit 4 Mentioned In Form 26 As He Pleaded That The Other C Oncerns Are Also Assessed By The Same A O 9 On The Other Hand The Ld Cit Dr Has Relied On Th E Orders Of The Authorities Below And Pleaded That The Onus Is On Th E Assessee The Receipt Of Commission Is From The Group Concern Onl Y And The Assessees Director Is Common With The Director Of P Ayer Of Commission Therefore He Pleaded To Sustain The Add Ition 10 After Hearing Both The Sides The Bench Are Of The View That The Assessee Has Not Submitted Any Evidence Which Could Reconcile The Difference Between The Commission Received As Per F Orm 26 As At Rs 7 67 404 As Against Commission Declared By The As Sessee In Its P L Account Of Rs 5 63 670 The Payer Of Commission Is A Group Concern And Director Is Common The Onus Is On The Assessee To Explain The Discrepancy The Assessee Cannot Get Away Simply Stat Ing That The Assessing Officer Of Payer And Payee Is Same Since The Assessee Has Failed To Discharge The Primary Onus With Regard To Explain The Difference In The Receipts Of The Commission The B Ench Find No Merit In The Contention Of The Ld Ar Of The Assessee The As Sessee Has Miserably Failed To Provide A Satisfactory Explanat Ion With Regard To Difference In Commission Declared By The Assessee And Commission Ita 799 To 801 Jp 2017 Maru Healthcare Vs Dcit 5 Receipt As Per Form 26 As Hence This Ground Of Asse Ssees Appeal Stands Dismissed 11 In The Ground No 2 Of The Appeal The Issue In Volved Is Confirming The Disallowance Of Expenses Of Rs 2 26 863 The Ld Cit A Has Decided This Issue As Under 7 With Regard To Ground No 2 I Have Perused The Facts Relating This Ground And Submissions Made In This R Egard I Find A O Is Justified In Making An Addition Of R S 2 26 863 The A O Has Made An Elaborate Discussio N On Pg 2 Of The Assessment Order And Have Pointed Ou T Specific Defects In The Vouchers And Bills So Produ Ced By The Appellant Such Defect Includes Over Writing Wer E Prepared On The Last Day Of Finalization Of Account S Etc The A O Has Even Scanned Some Copies Of Vouchers I N The Order I Am Of The Firm View That Appellant Has Manufactured Voucher Etc For Making Such Claim The Observation Of The A O Is Unrebutted Even At The A Ppeal Stage The Addition Of Rs 2 26 863 Is Confirmed Ground No 2 Is Hereby Dismissed 12 The Ld Ar Of The Assessee Has Reiterated The Sub Missions As Made Before The Authorities Below He Has Also Submi Tted That The Matter May Be Restored Back To The File Of The Asse Ssing Officer For Verification As The Amount Includes The Salary Paid To Shri Sitaram Of Ita 799 To 801 Jp 2017 Maru Healthcare Vs Dcit 6 Rs 1 20 Lacs Who Is Looking The Work Of Administrat Ion Bank And Also Looking After The Project At Hisar And To Prem Bai Of Rs 54 000 Who Is Working As Office Assistant And Also The Work Of C Leaning Attending Telephones Taking Dak Etc The Ld Ar Also Submitted That Both These Persons Are Still Working With The Assessee Company A Nd The Assessee Shall Produce Them In Persons If Desired By The Ass Essing Officer For Confirmation And To Establish The Genuineness Of Th E Payments Of The Salary 13 On The Other Hand The Ld Cit Dr Has Relied On T He Orders Of The Authorities Below 14 After Hearing Both The Sides The Bench Is Of T He View That This Issue Needs A Fresh Look At The Level Of The Assess Ing Officer Wherein The Assessee Shall Be At Liberty To Produce The Per Sons To Whom The Salary Was Paid As The Ld Ar Claimed That These Pers Ons Are Still Working With The Assessee Company Accordingly This Issue Is Restored Back To The File Of The Assessing Officer This Appe Al Is Partly Allowed For Statistical Purposes 15 Ita No 800 Jp 2017 In This Appeal The Only Issue Involved Is Confirm Ing The Disallowance Of Depreciation On Car Of Rs 2 38 746 Interest On Car Loan Ita 799 To 801 Jp 2017 Maru Healthcare Vs Dcit 7 Of Rs 45 492 And Car Insurance Of Rs 10 600 A Ggregating To Rs 2 94 838 The Ld Cit A Has Decided This Issue By Holding As Under 5 I Have Perused The Order Of The A O And Submis Sions Made In This Regard I Find That A Os Action Is Correct As In Absence Of Log Book The Exact Extent Of Business Usage Of Car Cannot Be Ascertained The Appellants Claim That Vehicles Ar E Used Exclusively For Business Use Is Not Proved Beyond D Oubt Under These Facts And Circumstances The Addition Of Rs 2 94 838 Is Confirmed 16 Now The Assessee Is In Appeal Before The Itat Wh Ile Pleading On Behalf Of The Assessee The Ld Ar Has Submitted As Under 1 The Assessee Company Derives Income From Commiss Ion For Mlm Activities It Declared Net Profit Of Rs 78 23 406 On Commission Receipt Of Rs 85 91 151 2 The Ao On Examination Of The Profit Loss Accou Nt Observed That The Assessee Has Claimed Depreciation On Four Cars Purchased During The Year But Expenses On Petrol Repairs Dr Iver Salary Etc Is Not Claimed The Claim Of Assessee That Cars Wer E Given To The Members Working Under The Mtm Plan So That They Mak E More Efforts To Join Other Members So That Its Commissio N Income Increases Is Not Acceptable As In Absence Of Basic Log Book Use Of The Cars For Business Cannot Be Ascertained No Oth Er Evidences Have Been Produced For Use Of Cars By Any Members O F The Company No Details Of Any Such Member Have Been Pr Ovided Nor The Conditions Of Services Rendered By The Members Have Been Given He Therefore Disallowed Expenses Of Rs 2 94 838 Relatable To These Cars Ita 799 To 801 Jp 2017 Maru Healthcare Vs Dcit 8 3 The Ld Cit A Confirmed The Disallowance By Hol Ding That In Absence Of Log Book The Exact Extent Of Business U Sage Of Car Cannot Be Ascertained The Appellants Claim That V Ehicles Are Used Exclusively Of Business Use Is Not Proved Beyo Nd Doubt 4 It Is Submitted That Assessee Was A Member Of M S Swarn Bhumi Multitrade Pvt Ltd This Company Was Formed With O Bject Of Carrying On Business Of Multi Level Marketing Mlm The Assessee Was One Of The Initial Members Of This Com Pany In This Scheme The Member Grows Below A Person The Initial Member Gets More And More Commission Therefore To Increa Se The Net Work Of The Members Assessee Gave Cars To The Foll Owing Persons So That They Can Make More Efforts To Induc E Other Persons To Join The Scheme And Commission Income Of The Assessee Increases Particular Of Car Name Of The Member Address Of The Member Car Alto Sh Arun Prakash Gupta Ganesh Confectionery Sant Talkies Road Mahavir Puram Nai Basti Firozabad Up Car Ford Figo Smt Sanjana Kanwar W O Sh Padam Singh Ranawat Village Partapur Tehsil Garhi Distt Banswara Rajasthan Car Verna Smt Mangi Devi Sharma W O Sh K C Sharma 15 C R C Vyas Colony Near Uit Garden Bhilwara Rajasthan Car Squirepio Sh Khushi Ram Vaishnav Naionka Mohalla Village Kawas Tehsil Kekdi Distt Ajmer Rajasthan It Is For This Reason That Assessee Purchased The C Ar And Provided The Same To Above Persons Assessee Has Only Borne The Expenditure On Insurance Interest On Car Loan And The Depreciation The Expenditure On Running And Mainte Nance Of The Car Was To Be Borne By These Members It Is For Thi S Reason That No Expenditure With Reference To Running And Mainte Nance Of The Car Is Claimed By The Assessee By Providing The Ca Rs To These Persons The Commission Income Of The Assessee Incr Eased To Ita 799 To 801 Jp 2017 Maru Healthcare Vs Dcit 9 Rs 85 91 151 From Rs 5 63 670 In The Last Year The Ld Cit A Has Disallowed The Claim Only For The Reason That The User Of Car Cannot Be Proved Beyond Doubt Whereas The Fa Ct Is That Even After Giving The Complete Address Of The Perso Ns To Whom These Vehicles Were Provided No Enquiry Was Conduc Ted By Ld Cit A Further Absence Of Log Book Cannot Be A Ba Sis For Holding That Car Is Not Used For Business Purpose I Gnoring That Assessee Has Not Borne The Expenses Of Running Ma Intenance Further In The Next Ay When The Activity Of Mlm Ca Me To A Halt And These Cars Were Sold Ao Disallowed The Claim H Olding That There Is No Commission Income Received Thus In Th E Facts Of The Present Case User Of Car For The Purpose Of Busine Ss Is Well Proved And Therefore The Claim Of Depreciation Ca R Insurance And Interest On Car Loan Be Directed To Be Allowed To The Assessee 17 On The Other Hand The Ld Cit Dr Has Relied On The Orders Of The Authorities Below 18 After Hearing Both The Sides On This Issue The Bench Is Of The View That In The Interest Of Justice And Equity The Matter Needs A Relook At The Level Of The Assessing Officer Therefore T He Same Is Restored Back To The File Of The Assessing Officer Hence T His Appeal Of The Assessees Appeal Stands Allowed For Statistical Pur Poses 19 Ita No 801 Jp 2017 Ita 799 To 801 Jp 2017 Maru Healthcare Vs Dcit 10 In This Appeal The Only Issue Involved Is Confirm Ing The Disallowance Of Depreciation On Car Of Rs 1 83 578 Interest On Car Loan Of Rs 1 74 022 Car Insurance Of Rs 18 535 And Vehicle Repairing Expenses Of Rs 6 559 Aggregating To Rs 3 82 694 The Ld Cit A Has Decided This Issue By Holding As Under 5 I Have Perused The Order Of The A O And Submis Sions Made In This Regard The Observation Of The A O That No In Come From Commission Etc Have Been Declared As Vehicles Were Not Used For Business This Finding Remain Uncontroverted At The Appeal Stage The Factual Finding By The A O Being Correc T The Additions Made Are Confirmed 20 Now The Assessee Is In Appeal Before The Itat Th E Ld Ar Has Reiterated The Arguments As Made In Ita No 800 Jp 2017 21 On The Other Hand The Ld Cit Dr Has Relied On The Orders Of The Authorities Below 22 Since We Have Restored The Issue Of Ita No 800 Jp 2017 For The A Y 2011 12 To The File Of The Assessing Officer Therefore In The Interest Of Justice And Equity The Issue Involved In This Year Is Also Restored Back To The File Of The Assessing Officer Hence This Appeal Of The Assessees Appeal Stands Allowed For Statistical Purposes Ita 799 To 801 Jp 2017 Maru Healthcare Vs Dcit 11 23 In The Result Ita No 799 Jp 2017 Is Partly Al Lowed For Statistical Purposes And Ita No 800 801 Jp 2017 Are Allowed For Statistical Purposes Order Pronounced In The Open Court On 27 12 2017 Sd Sd Fot Iky Jko Fot Iky Jko Fot Iky Jko Fot Iky Jko Hkkxpan Hkkxpan Hkkxpan Hkkxpan Vijay Pal Rao Bhagchand U Kf D Lnl Judicial Member Ys Kk Lnl Accountant Member Tk Iqj Jaipur Fnukad Dated 27 Th December 2017 Ranjan Vknsk Dh Izfrfyfi Vxzsfkr Copy Of The Order Forwarded To 1 Vihykfkhz The Appellant M S Maru Healthcare Pvt Ltd Jaipur 2 Izr Fkhz The Respondent The Dcit Central Circle 1 Jaipur 3 Vk Dj Vk Qdr Cit 4 Vk Dj Vk Qdrvihy The Cit A 5 Fohkkxh Izfrfuf K Vk Dj Vihyh Vf Kdj K T Iqj Dr Itat Jaipur 6 Xkmz Qkbzy Guard File Ita No 799 To 801 Jp 2017 Vknskkuqlkj By Order Lgk D Iathdkj Asst Registrar