Income Tax Appellate Tribunal - Jaipur
M/S Madan Lal Hari Narain, Jaipur vs Income Tax Officer , Jaipur on 21 May, 2018
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IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR
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BEFORE: SHRI VIJAY PAL RAO, JM & SHRI BHAGCHAND, AM
vk;dj vihy la-@ITA No. 882/JP/2017
fu/kZkj.k o"kZ@Assessment Year : 2012-13
M/s Madan Lal Hari Narain, cuke Income Tax Officer,
98, Petrol Pump, Bagru, Tehsil- Vs. Ward 7(2),
Sanganer, Jaipur. Jaipur.
LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AACFM 0949 E
vihykFkhZ@Appellant izR;FkhZ@Respondent
fu/kZkfjrh dh vksj ls@ Assessee by : Shri Rishabh Agarwal (CA)
jktLo dh vksj ls@ Revenue by : Smt. Poonam Roy (DCIT)
lquokbZ dh rkjh[k@ Date of Hearing : 17/05/2018
mn?kks"k.kk dh rkjh[k@ Date of Pronouncement : 21/05/2018
vkns'k@ ORDER
PER: BHAGCHAND, A.M. The appeal filed by the assessee emanates from the order of the ld. CIT(A)-3 Jaipur dated 26/09/2017 for the A.Y. 2012-13.
2. The assessee is engaged in the business of trading of petrol, diesel and other lubricated items on behalf of Indian Oil Corporation Ltd.. The return of income for the year under consideration was filed on 15/9/2012 declaring total income of Rs. 54,660/-. The Assessing Officer finalized the assessment U/s 143(3) of the Income Tax Act, 1961 (in short the Act) at an total income of Rs. 7,51,980/-. The ld. CIT(A) has given part relief to the assessee.
2 ITA 882/JP/2017_ Madan Lal Hari Narain Vs. ITO
3. Now the assessee is in appeal before the ITAT by taking following grounds of appeal:
"1. That on the facts and circumstances of the case and in law, the Id. CIT(A) grossly erred in disallowing Salary Expense by Rs. 94,320/- being 10% of total expense of Rs 9,43,200/- ignoring the fact that the expense was incurred for business and all the payments are supported by vouchers.
2. That on the facts and circumstances of the case and in law, the Id. CIT(A) grossly erred in disallowing Tanker Running Expense by Rs. 1,14,449 /- being 10% of total expense of Rs. 11,44,480/- ignoring the fact that the expense was incurred for business and is supported by bills / vouchers and against this expense the assessee earned Rental Income from Tanker of Rs. 13,07,504/- thereby generating net income from Tanker of Rs. 1,63,204/- for the business.
3. That on the facts and circumstances of the case and in law, the Id. CIT(A) grossly erred in sustaining a disallowance of Rs. 94,724/- on account of bad debts claimed u/s 36(1 )(vii) of the Income-tax Act, 1961, thereby ignoring the judgment of Hon'ble Supreme Court in the case of TRF Ltd. vs. CIT [2010] 190 Taxman 391 (SC).
4. That the humble appellant craves leave to add, amend, alter, modify, substitute or delete any ground or grounds of appeal on or before the hearing of the appeal."
4. In the grounds No. 1 and 2 of the appeal the issue involved are sustaining disallowance of Rs. 94,320/- out of salary expenses being 10% of the total salary expenses and also sustain disallowance of Rs. 1,14,449/- out of tanker running expenses being 10% of these expenses debited in the books of account. The ld CIT(A) has dealt this issue by holding as under:
3 ITA 882/JP/2017_ Madan Lal Hari Narain Vs. ITO
5.3 I have carefully considered the material before me. I find that Assessing Officer made disallowance @ 25% out of various expenses making observation that the expenses are not fully vouched. The A/R of the appellant submitted that the appellant having the bill voucher which are self made and some payment made in cash. From the above, it is established that the expenses are not fully vouched but the Assessing Officer made disallowance @ 25% of the expenses without any basis. The disallowance made by the Assessing Officer is unreasonable and excessive. Therefore, considering the facts of the case and nature of the expenses, I restricted the allowance @ 10% of total expenses which comes as under:
S. No. Name of Expenses Disallowance made by Confirm the Assessing Officer
1. General Expenses 3373 1350
2. Generator expenses 15890 6356
3. Jeep Repair & 23122 9249 Maintenance
4. Pump Expenses 24317 9727
5. Repair & Maintenance 4591 1847 expenses
6. Salary expenses 235800 94320 7. Stationery expenses 2199 880
8. Tanker Running 286120 114449 expenses These grounds are partly allowed."
5. We have heard both the sides on this issue and also considered the case laws relied upon. It is noticed that the ld. CIT(A) has sustained 10% of the various disallowances of the expenses. The assessee has challenged only the disallowances under the head 'salary expenses and tanker running expenses. The other disallowances of 10% of expenses like general expenses, generator expenses, jeep repair and 4 ITA 882/JP/2017_ Madan Lal Hari Narain Vs. ITO maintenance, pump expenses, repair and maintenance expenses and stationary expenses have been accepted by the assessee. The Assessing Officer has recorded the findings that the assessee has failed to produce all the relevant bills/vouchers for verification with regard to these expenses. Non production of bills/vouchers for verification definitely invites some disallowances. In our considered view, the ld.
CIT(A) was justified in sustaining 10% addition for want of verification of these expenses. Accordingly, grounds No. 1 and 2 of the assessee stand dismissed.
6. In the ground No. 3 of the appeal, the issue involved is sustaining disallowance of Rs. 94,724/- on account of bad debts. The ld. CIT(A) has dealt this issue in his order at para 6.3 and held as under:
"6.3 I have carefully considered the material before me. I find that the appellant failed to file any evidence which prove that Rs. 32,400/- was shown as income of any earlier year. This is primary condition for treating the bad debts.
In the case of SP Rural Police Thana Bagru. These dues are against the Rajasthan Government. The dues against any State Government cannot be treated as bad debts.
Therefore, considering the above observation, I am of the view that the addition made by the Assessing Officer of Rs. 94724/- disallowance bad debts is as per law. This ground is not allowed."
5 ITA 882/JP/2017_ Madan Lal Hari Narain Vs. ITO
7. After hearing both the sides on this issue, we are of the view that the assessee has written all these amounts in its books of account as on 31/3/2012. In view of the CBDT circular No. 12/2016 dated 30/6/2016 we are of the view that the ld. CIT(A) was not justified in sustaining this addition. Similarly the Hon'ble Supreme Court in the case of TRF Vs. CIT (2010) 190 Taxman 391 (SC) has held that it is not necessary for the assessee to establish that the debt, in fact, has become irrecoverable. It is enough if the bad debts is written off as irrecoverable in the accounts of the assessee. Moreover, this fact on the record shows that the amount with SP Rural Police Thana Bagru was outstanding towards the sales. Non recovery of sale amount is business loss. It is allowable expenses as per law. Accordingly, we direct to delete the addition sustain by the ld. CIT(A).
8. Ground No. 4 of the appeal is general in nature and does not require any adjudication.
9. In the result, the appeal of the assessee is partly allowed.
Order pronounced in the open court on 21/05/2018.
Sd/- Sd/-
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(VIJAY PAL RAO) (BHAGCHAND)
U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member
Tk;iqj@Jaipur
fnukad@Dated:- 21st May, 2018
*Ranjan
6 ITA 882/JP/2017_
Madan Lal Hari Narain Vs. ITO
vkns'k dh izfrfyfi vxzfs 'kr@Copy of the order forwarded to:
1. vihykFkhZ@The Appellant- M/s Madan Lal Hari Narain, Jaipur.
2. izR;FkhZ@ The Respondent- The ITO, Ward 7(2), Jaipur.
3. vk;dj vk;qDr@ CIT
4. vk;dj vk;qDr¼vihy½@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. 882/JP/2017) vkns'kkuqlkj@ By order, lgk;d iathdkj@Asst. Registrar