IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH `SMC-2', NEW DELHI
Before Sh. N. K. Saini, AM
ITA No. 1048/Del/2015 : Asstt. Year : 2010-11
Sh. Surendra Singh, Vs ITO
1267, Radha Satsang Colony, Ward-1(1),
Muzaffarnagar Muzaffarnagar
(APPELLANT) (RESPONDENT)
PAN No. AIDPS7125H
Assessee by : Sh. Ankit Gupta, Adv.
Revenue by : Smt. Parwinder Kaur, Sr. DR
Date of Hearing : 20.07.2015 Date of Pronouncement : 05.08.2015
ORDER
Per N. K. Saini, AM:
This is an appeal by the assessee against the order dated
29.12.2014 of ld. CIT(A), Muzaffarnagar.
2. The grievance of the assessee vide Ground No. 2 relates
to the sustenance of addition of Rs. 20,000/- made by the AO
on account of estimated disallowance out of the expenses.
3. The facts related to this issue in brief are that the assessee has
claimed following expenses in the profits and loss account:
"Printing/Stationary Rs. 13,622/-
Misc. Expenses Rs. 1,962/-
Advertising Expenses Rs. 61,800/-
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Surendra Singh
Watch and word Expense Rs. 13,883/-
Rs. 91,276/-
The AO disallowed Rs. 20,000/- out of the aforesaid expenses on
adhoc basis for want of verifiability. When the matter was taken to the
ld. CIT(A), the said disallowance was confirmed by observing that the
expenses were not subjected to cross verification and the assessee had
not been able to controvert the findings made by the AO.
4. Being aggrieved the assessee is in appeal. The ld. Counsel for the
assessee submitted that the AO made the adhoc disallowance without
any basis and the ld. CIT(A) wrongly confirmed the same. In her rival
submissions the ld. DR supported the orders of the authorities below.
5. After considering the submissions of both the parties and material
on record, it is noticed that the AO made the impugned disallowance
without any basis and without pointing out any instance where the
expenses were not related to the business of the assessee. At the same
time the assessee had not produced the requisite details sought by the
assessee, therefore, some disallowance is called for. However, the
disallowance made by the AO appears to be excessive. I, therefore, to
meet the ends of justice, restrict the disallowance to Rs. 2,000/- which
will take care of the leakage, if any.
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6. The next issue vide Ground Nos. 3 & 4 relates to the sustenance of
addition on account of adhoc disallowance of Rs. 35,473/- out of
telephone and vehicle running/maintenance expenses.
7. The facts related to this issue in brief are that the AO during the
course of assessment proceedings noticed that the assessee had shown
telephone expenses at Rs. 94,420/-, vehicle running/maintenance at Rs.
20,823/- and himself disallowed 20% of the said expenses. However, the
AO made the disallowance @ 50% on account of personal use of
telephone and un-verifiability of expenses.
8. Being aggrieved, the assessee carried the matter to the ld. CIT(A)
who confirmed the addition by observing that the assessee had not been
able to furnish any details and evidences to the effect that such expenses
were wholly and exclusively incurred towards business purposes.
9. Now the assessee is in appeal. The ld. Counsel for the assessee
submitted that the AO made the disallowance without any basis and that
the assessee himself disallowed 20% of the expenses on account of
personal use and for other than business purposes. It was further
submitted that the ld. CIT(A) without assigning any cogent reason was
not justified in confirming the addition made by the AO. In her rival
submissions the ld. DR supported the orders of the authorities below.
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Surendra Singh
10. I have considered the submissions of both the parties and carefully
gone through the material available on the record. In the present case, it
is an admitted fact that the assessee himself disallowed 20% of the
expenses on account of personal use and the AO while increasing
disallowance to the extent of 50% of expenses had not assigned any
cogent reason, the ld. CIT(A) also confirmed the disallowance made by
the AO without any reason. I, therefore, by considering the totality of the
fact, delete the addition made by the AO and sustained by the ld. CIT(A)
particularly by keeping in view this vital fact that the AO had not
pointed out any specific instance where the expenses under the head
vehicle repairs & maintenance and telephone were not related to the
business purposes. At the same time, the assessee agreed that some of
the expenses were of personal nature and suo motu disallowed 20% of
the expenses, the disallowance made by the assessee appears to be
reasonable, therefore, the addition of Rs. 35,473/- made by the AO and
sustained by the ld. CIT(A) is deleted.
11. The next issue vide Ground No. 5 relates to the sustenance of
addition of Rs. 60,000/- made by the AO on account of job works, on
adhoc estimated basis.
12. The facts related to this issue in brief are that the AO during the
course of assessment proceedings noticed that the assessee had shown an
income of Rs. 1,20,000/- from consultations relating to job works but no
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Surendra Singh
details of the parties had been furnished. The AO pointed out that the
income shown by the assessee was on estimate basis, however, he
estimated the income at Rs. 1,80,000/- i.e. @ Rs. 15,000/- per month
instead of Rs. 1,20,000/- shown by the assessee @ Rs. 10,000/- per
month. Accordingly, the AO made the addition of Rs. 60,000/-.
13. Being aggrieved the assessee carried the matter to the ld. CIT(A)
and submitted that the estimated income at Rs. 1,80,000/- by the AO was
without any basis. The ld. CIT(A) on the other hand observed that the
assessee had not furnished any details and evidences in respect of
income earned from the job works. He, therefore held that the AO was
justified to make the addition of Rs. 60,000/-.
14. Now the assessee is in appeal. The ld. Counsel for the assessee
reiterated the submissions made before the authorities below and further
submitted that neither the AO nor the ld. CIT(A) has given any reason
while estimating the income of the assessee from job works.
15. In his rival submissions the ld. DR supported the order of the
authorities below.
16. I have considered the submissions of both the parties and carefully
gone through the material available on the record. In the present case, it
is an admitted fact that the assessee had not maintained any detail or
evidences in respect of income earned from job works. It, therefore,
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Surendra Singh
appears that the income shown at Rs. 1,20,000/- was on estimate basis.
At the same time, the AO also estimated the income at Rs. 1,80,000/-
without any basis and the ld. CIT(A) confirmed the addition made by the
AO in slipshod manner. In my opinion the addition made by the AO and
sustained by the ld. CIT(A) is excessive. I, therefore, to meet the ends of
justice, deem it appropriate to sustain the addition of R. 10,000/- on
account of job works.
8. In the result, the appeal of the assessee is partly allowed.
(Order Pronounced in the Court on 05/08/2015)
Sd/-
(N. K. Saini)
ACCOUNTANT MEMBER
Dated: 05/08/2015
*Subodh*
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(Appeals)
5.DR: ITAT
ASSISTANT REGISTRAR
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