Income Tax Appellate Tribunal - Chandigarh
Sh. Bant Singh Chandale, Bilaspur vs Ito, Bilaspur on 5 January, 2017
1
IN THE INCOME TAX APPELLATE TRIBUNAL
CHANDIGARH BENCHES, 'SMC', CHANDIGARH
BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER
ITA No. 1244/CHD/2016
Assessment year: 2009-10
Sh. Bant Singh Chandale, Vs. The ITO,
Prop M/s Pukhraj Hotel & Restaurant, Bilaspur (H.P.)
Bilaspur (H.P.)
PAN No. ABLPS4908Q
(Appellant) (Respondent)
Appellant By : Sh. R.R.Thakur
Respondent By : Sh. S.K. Mittal
Date of hearing : 03.01.2017
Date of Pronouncement ` : 05.01.2017
ORDER
This appeal by the assessee has been directed against the order of Ld. CIT(A), Palampur dated 22.09.2016 for assessment year 2009-10.
2. I have heard Ld. Representatives of both the parties and perused the material on record. Ground No.1 is general and need no adjudication.
3. On ground No.2, the assessee has challenged the addition of Rs. 92,497/- paid as tractor charges without deducting TDS.
4. Brief facts are that during the course of assessment proceedings, it was noticed that assessee had paid tractor hire charges of Rs. 92,497/- to 2 one person Sh. Sukh Ram. As the amount paid to one person exceed Rs. 50,000/- during the year, the assessee was required to deduct tax at source on this payment u/s 194C(2) of the Income-tax Act, 1961 (in short 'the Act'), as amount was paid for transportation of loose cement outside the factory. The Assessing officer noted that since no TDS has been deducted on the tractor hire charges, therefore, the amount was liable to be disallowed u/s 40(a)(ia) of the Act. It was also noted that there is no relaxation in section 40(a)(ia) for allowing such expenditure in case of lack of knowledge on the part of the assessee. The assessee contended before Ld. CIT(A) that amount was paid to Shri Sukh Ram as tractor charges on different dates which was below taxable limit and the same had been shown by the concerned party in its return of income. The Ld. CIT(A) further noted that no evidence in support of same contention have been filed before the Assessing officer or before the appellate proceedings. The Ld. CIT(A), therefore, noted that assessee had violated the provisions of section 40(a)(ia) of the Act and rejected this ground of appeal of the assessee.
5. The Ld. counsel for the assessee contended that assessee is assessed in the status of individual and no TDS was required to deducted u/s 194C(4) of the Act. Ld. DR, however, relied on the orders of the authorities below and submitted plea of the assessee was not decided by the authorities below.
6. The submissions of the Ld. Counsel for the assessee have not been considered and dealt by the authorities below. I am of the view that this 3 issue, therefore, requires reconsideration at the level of the Assessing officer. I accordingly set aside the orders of the authorities below and restore this issue to the extent, whether in the case of individual; no TDS was liable to be deducted? The Assessing officer shall examine this issue as per the relevant provisions of law and shall decide the issue in accordance with law after giving reasonable opportunity of being heard to the assessee. This ground of appeal is accordingly allowed for statistical purposes.
7. On ground No.3, the assessee has challenged the addition of Rs. 30,000/- on account of salary. The Assessing officer on examination of the accounting charges noted that payment of Rs. 30,000/- was made in cash on 12.4.2008 in respect of accounting charges of Rs. 30,000/- shown as payable as on 1.4.2008. As the payment exceeding Rs. 20,000/- was made in cash in contravention of provisions of section 40A(3) of the Act, the same was not allowable expenditure.. The assessee submitted that this has happened due to misunderstanding of the relevant provisions as the payment was in respect of expenditure incurred in the preceding year. The liability was discharged by making payment in cash in assessment year under appeal. The Assessing officer, however, found that this payment is made in cash in violation of provisions of section 40A(3) of the Act and accordingly the amount was added. The Ld. CIT(A) dismissed this ground of appeal of the assessee.
8. After considering the rival submissions, I do not find any merit in this ground of appeal of the assessee. Ld. Counsel for the assessee referred 4 to Certificate of Rinku Kumar filed at page 3 of the paper book to show that it is not accounting charges but salary paid. This explanation was not given before the authorities below and no such Certificate has been filed. The assessee has therefore, made this afterthought submission and cannot be considered favorable. The assessee has submitted before the Assessing officer that payment is made due to misunderstanding of the relevant provisions of law. This by itself is no ground to disobey the provisions of law. This ground has no merit and accordingly dismissed.
9. On ground No.4, the assessee has challenged the addition of Rs. 41,164/- on account of depreciation claimed on hotel building by the assessee. The Assessing officer noted that assessee has shown rental income of Rs. 14,572/-. The assessee submitted that building of hotel Pukhraj with 12 rooms set etc. was given on rent to the Firm M/s Bant and Vikas Enterprises in which he was one of the partners and this building was head office of the firm. The Assessing officer on the basis of material on record noted that assessee was not running hotel and had given the building on rent, therefore, assessee was entitled for deduction u/s 24 of the Act from the gross rent which assessee had claimed. But the assessee had also claimed depreciation of Rs. 41,464/- on the fixed assets of the hotel including building, furniture etc. which was not allowable. The assessee submitted that rental was shown in respect of one portion of the building and depreciation was claimed on other portion of the building. The Assessing officer, however, noted that in the first submission the assessee has submitted that complete building was given on rent and now claimed that only one portion was given on rent. This plea on the 5 depreciation claimed, was an afterthought. No evidence has been furnished in support of the same. The assessee has also not furnished any rent agreement, therefore, it was held that assessee was not running the hotel and restaurant during the year, therefore, depreciation claimed was disallowed. The Ld. CIT(A) on this same reasoning confirmed the addition.
10. After considering the rival submissions, I am not inclined to interfere with the order of the authorities below in the absence of any evidence that the assessee was running the hotel and restaurant and no depreciation can be allowed to the assessee particularly when the building was given on rent. The rent agreement was also not filed to explain that part hotel premises were let out on rent. In the absence of any evidence on record, no interference is called for. This ground is accordingly dismissed.
11. On ground No.5 the assessee challenged the addition of Rs. 50,000/- under the house hold expenses. The Assessing officer noted that as per the details furnished by the assessee the assessee was having adult members in the family. He is reputed personality in the area and is maintaining good standard of living, the assessee has invested more than Rs. 1 lakh in LIC, therefore, total withdrawals of Rs. 1,05000/- were found insufficient. The Assessing officer noted that there were total six members in the family and assessee's daughter was in 2nd year of BDS in private college. The Assessing officer, therefore, found that household withdrawals are ver y less especially in view of the fact that assessee had claimed all the expenses on car and telephone from the business. The Assessing officer, 6 therefore, made addition of Rs. 50,000/- on account of low withdrawals. CIT(A) also confirmed addition.
12. After considering the rival submissions, I am not inclined to interfere with the orders of the authorities below. The Ld. Counsel for the assessee submitted that son of the assessee is earning and he had also contributed separately. However, no evidence in support of the same has been filed. The estimation made by the authorities below of household expenses is reasonable and correct. The Assessment year in appeal is 2009-10 and in this year household withdrawals of Rs. 1,05,000/- would be very low for the entire family of the assessee. The authorities below were reasonable in making only the addition of Rs. 50,000/- on account of low withdrawals. In the absence of any evidence in support of explanation of the assessee, this ground is dismissed.
13. On ground No.6, the assessee has challenged the addition of Rs. 80,000/- on account of undisclosed income. The assessee claimed agricultural income of Rs. 3,20,000/- and the same was credited in the capital account of the assessee. The assessee furnished evidence regarding land holding and copies of the receipts in support of the sale of agricultural produce. The Assessing officer noted that as per the receipts for sale of agricultural produce total sales were of Rs. 3,20,000/- which the assessee has shown as agricultural income. No expenses have been reduced from the gross income and assessee failed to furnish any evidence of the expenses incurred for earning agricultural income. The Assessing officer after considering the issue in detail disallowed 25% of the agricultural 7 income in a sum of Rs. 80,000/- treating the same as income from undisclosed sources. The Ld. CIT(A) confirmed the addition because assessee could not justif y the expenditure incurred on earning the agricultural income.
14. After considering the rival submissions, I do not find any merit in this ground of appeal of the assessee. The assessee has shown gross income on account of agricultural income but no details of expenses have been furnished for earning of agricultural income. The assessee was required to incur expenditure, however, no details of the expenditure have been produced. The Assessing officer correctly disallowed 25% of the agricultural income and rightly treated the same as undisclosed income of the assessee. No interference is required on this ground; the same is, therefore, dismissed.
15. In the result appeal of the assessee is partly allowed for statistical purposes.
Order pronounced in the Open Court.
Sd/-
(BHAVNESH SAINI) JUDICIAL MEMBER Dated : 5 t h January, 2017 Rkk Copy to:
1. The Appellant
2. The Respondent
3. The CIT
4. The CIT(A)
5. The DR