Income Tax Appellate Tribunal - Chennai
Gebrial De Prasad, Chennai vs Ito, Non Corp Ward-23(4), Chennai on 28 November, 2019
आयकर अपील य अ धकरण, 'बी' यायपीठ, चे नई।
IN THE INCOME TAX APPELLATE TRIBUNAL
'B' BENCH: CHENNAI
ी र मत कोचर, लेखा सद य एवं
ी ध$ु व%
ु आर.एल. रे 'डी, या*यक सद य के सम+
BEFORE SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER AND
SHRI DUVVURU R.L.REDDY, JUDICIAL MEMBER
ITA No.239/Chny/2019
*नधा,रण वष, /Assessment Year: 2010-11
Mr.Gabriel De Prasad, v. The Income Tax Officer,
Plot No.10, 10th Cross Street, Non-Corporate Ward-
Heritage Jayendra Nagar, 23(4)(i/c),Tambaram
Sembakkam, Chennai.
Chennai-600 073.
[PAN: ADUPG3864D]
(अपीलाथ//Appellant) (01यथ//Respondent)
अपीलाथ/ क2 ओर से/ Appellant by : Mr.I.Dinesh, Adv.
01यथ/ क2 ओर से /Respondent by : Mr. Gurubashyam, JCIT
सुनवाई क2 तार ख/Date of Hearing : 28.11.2019
घोषणा क2 तार ख /Date of Pronouncement : 28 .11.2019
आदे श / O R D E R
PER RAMIT KOCHAR, ACCOUNTANT MEMBER:
This appeal filed by assessee is directed against appellate Order dated 24.10.2018 passed by learned Commissioner of Income Tax (Appeals)-10, Chennai (hereinafter called "the CIT(A)"), in ITA No.214/16- 17/CIT(A)-10 for assessment Year (ay) 2010-11, the appellate proceedings before learned CIT(A) had arisen from assessment order dated 30.12.2016 passed by learned Assessing Officer (hereinafter called "the AO") u/s.143(3) read with Section 147 of the Income-tax Act, 1961 (hereinafter called "the Act").
ITA No.239/Chny/2019
:- 2 -:
2. The grounds of appeal raised by assessee in memo of appeal filed with Income-Tax Appellate Tribunal, Chennai (hereinafter called "the Tribunal") read as under:-
"1. The order of the Commissioner of Income Tax (Appeals) is opposed to law and contrary to the facts and circumstances of the case.
2. Reopening of Assessment
2.1. The Commissioner of Income Tax (Appeals) erred in upholding the reopening of Assessment u/s.147 of Income Tax Act, 1961.
3. Disallowance of exemption in respect of Allowances 3.1. The Commissioner of Income Tax (Appeals) erred in confirming the denial of exemption in respect of 50% of conveyance allowance. 3.2. The Commissioner of Income Tax (Appeals) grossly erred in confirming the denial of exemption in respect of other allowances under salary income aggregating Rs.1,81,140/-. 3.3. The Commissioner of Income Tax (Appeals) ought to have appreciated that the expenditure by way of allowance claimed by the Appellant were duly verified and acknowledged by the employer of the Appellant in Form No. 16 and therefore ought to have allowed the claim of the Appellant.
3.4. The Commissioner of Income Tax (Appeals) grossly erred in observing that Appellant had not substantiated the claim of expenditure, which was reimbursed by the employer. 3.5. The Commissioner of Income Tax (Appeals) ought to have appreciated that the conveyance allowance, books and periodicals, medical expenses, uniform allowance, academic allowance were all duly incurred by the Appellant and the same was acknowledged by the employer and reimbursed. Therefore, the entire expenditure claimed ought to have been allowed.
4. The Appellant craves leave to file additional grounds of appeal at or before time of hearing."
3. The assessee is an individual who was employee working with Diamond Engineering (Chennai) Private Limited in the capacity of Vice President- Finance. It was observed by Revenue that assessee has claimed huge deductions under the head 'Income from Salary' and there was a negative income in respect of house property, which led to re-opening of the concluded assessment by Revenue by invoking provisions of Section 147 ITA No.239/Chny/2019 :- 3 -:
of the 1961 Act. Originally return of income was processed u/s 143(1) of the 1961 Act and no scrutiny assessment was framed by Revenue by invoking provisions of Section 143(3) read with Section 143(2) of the 1961 Act. The re-opening was admittedly done after the expiry of four years but before the expiry of six years from end of the assessment year. The notice u/s 148 of the 1961 Act was issued by AO to assessee on 20.05.2016 which was claimed by AO to be served on assessee on 24.05.2016. During re-assessment proceedings , the AO asked assessee to substantiate various deductions claimed under the head 'income from salaries' but assessee expressed his inability to submit bills albeit it was claimed that these expenses were incurred for official purposes. The AO treated these expenses to be personal in nature and only deduction to the tune of 50% of conveyance expenses claimed by assessee were allowed by AO as being spent on official purposes amounting to Rs. 72,000/- , while rest of the deduction claimed towards expenses from Salary income, aggregating to Rs. 2,53,140/- were disallowed by AO and brought to tax, vide assessment order dated 30.12.2016 passed by the AO u/s 143(3) read with Section 147 of the 1961 Act, by holding as under:
"The assesses was requested to explain the deductions claimed under the head salary. The assesses furnished some explanations for these deductions. In his letter dated 15-9-2016. The assesses stated that though he does not have bills, the conveyance expenses of Rs.1,44,000/-was spent only for official purposes. In the absence of proof, the claim is restricted to 50% and balance of Rs.72,000/- is disallowed. Case discussed with assessee and the following expenses are also disallowed as they are personal in nature and also there is no supporting proof.
The following claims are disallowed.
Conveyance Allowance :Rs.72,000/-
Periodicals :Rs.60,000/-
Medical :Rs.15,000 /-
Refreshment :Rs.34,140/-
ITA No.239/Chny/2019
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Uniform allowance :Rs.48,000/-
Academic :Rs.24,000/-
------------
Rs.2,53,140/-
The assessment is completed as below:
Total income returned :Rs.6,43,269/-
Add: Disallowance as discussed above :Rs.2,53,140/-
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Total income assessed Rs.8,96,409/-
---------------"
4. Being aggrieved by an assessment framed by AO vide assessment order dated 30.12.2016 passed u/s 143(3) read with Section 147 of the 1961 Act, the assessee filed first appeal before Ld.CIT(A) and assessee submitted before learned CIT(A) as under:
"5.2 Appellant's submissions before the CIT(A) :
5.2.1 The relevant grounds filed by the appellant on this issue are as under: - 1, "...The learned Income Tax Officer has erred in making disallowance to the tune of Rs.2,53,140/- pertaining to allowances claimed as deductions under the head Salary. a. Conveyance Allowance of Rs.1,44,000 was spent for official purpose only, whereas the Assessing Officer has disallowed 50% of the Conveyance Allowance of Rs.72,000 for not producing the bills. The Assessee had filed the bills and proofs for claiming the Conveyance expenses with his employer and hence was unable to produce the same now. b. Reimbursement of Books & Periodicals of Rs.60,000 was disallowed. The Assessee was a Vice President - Finance and had to spend for reference Books & 'Subject' Periodicals for reference in official matters. For claiming reimbursement of expenses he had to submit the originals to his employer, so he was unable to produce the bills. c. Reimbursement of Medical Expenses of Rs.15,000 claimed u/s.17(2) was also disallowed. The maximum exemption to claim Medical Expenses reimbursement u/s. 17(2) is Rs.15,000. The Assessee had already filed the Medicine Purchase bills with the employer to claim his reimbursement of medical expenses, so he was unable to produce the medical bills now.
d. Refreshment of Rs.34,140 was disallowed. The Assessee is a Vice President - Finance in the Company, He had to spend some out of pocket expenses from his own pocket towards entertaining his official guests towards Lunch / Refreshment, which he claimed as reimbursement from his employer and was reimbursed after submitting the original bills. Hence, the proof for claiming reimbursement of Refreshment could not be produced. e. Rs.48,000 towards Uniform Allowance was disallowed. The Assessee is working as an Employee in Diamond Engineering Chennai P Ltd. which is engaged in a business of Engineering & Fabrication. The employees in the Company have to follow a proper dress code during Business hours. Since, the Assessee was a Vice President - Finance, he was given a Uniform Purchase reimbursement by submitting the original bills. Hence the Assessee was not able to produce the bills for claiming the Uniform Allowance, Only Senior Management people were asked to buy the dress by themselves and submit purchase bills ITA No.239/Chny/2019 :- 5 -:
for reimbursement, whereas employees, staff & workers were all supplied uniform by the Company itself directly.
f. Academic Allowance of Rs.24,000 was disallowed. The Assesses had to attend few training sessions / seminars during the course of his employment for which he incurred some expenses and the same was reimbursed by his employer. For getting the expenses reimbursed he had to submit the original bills, so he was unable to produce the bills /proofs during the Scrutiny Assessment.
2) Salary Certificate issued in Form 16 by the employer is enclosed herewith, wherein all the above allowances were duly allowed under appropriate sections after getting satisfied with the client. Also, the Appellant has already produced the bills to the employer to satisfy them and get the claim approved. Accordingly, it will not be possible for him to submit one more time the original bills to the Assessing Officer which were already submitted to the employer... "
During the appellate proceedings, the AR of the appellant reiterated the, grounds taken and further stated that he is unable to produced any evidences in support of the claims made by the appellant.
4.2 The Ld.CIT(A) rejected aforesaid contentions of the assessee . Before learned CIT(A) , the assessee in nut-shell had submitted that original bills were submitted before his employer and employer had itself granted these deduction from Gross Salary while issuing Form No. 16 based upon original bills submitted by assessee before his employer. The assessee had expressed its inability to submit bills even before learned CIT(A) and it was prayed to allow these expenses. It was claimed that expenses are incurred for official purposes. These contentions were rejected by Ld.CIT(A) and additions to income by way of aforesaid disallowance of expenses were confirmed/sustained by learned CIT(A) , vide appellate order dated 24.10.2018 passed by learned CIT(A).
5. The matter has now reached tribunal at behest of assessee who is aggrieved by appellate order passed by learned CIT(A) and assessee drew our attention to income tax return filed with the Department and also to Form No.16 issued by his employer whereby deductions for these expenses were given/allowed by employer while computing income from ITA No.239/Chny/2019 :- 6 -:
salaries. The learned counsel for assessee stated that assessee was working with M/s. Diamond Engineering ( Chennai) Private Limited at a senior position of Vice President - Finance. It was submitted that assessee had to incur certain expenses necessarily towards official purposes such as conveyance, entertainment of persons connected with employers business, medical expenses, books periodicals etc. for which reimbursements were sought from employer and original bills were submitted before employer. It was submitted that it is only after verification that employer has allowed these deduction from income from salaries received by assessee. It was submitted that assessee is not having bills with it to substantiate genuineness of these expenses and also to substantiate that these expenses were infact incurred by the assessee as the original bills were submitted before the employer who after verification allowed these deductions. It was submitted that mater being old for financial year 2009-10 , it is not possible at this stage to get bills for these expenses. It was reiterated by learned counsel for the assessee that these expenses were incurred for official purposes and the employer has itself allowed the same in Form No.16. It was brought to our notice that conveyance allowance to the tune of 50% aggregating to Rs. 72,000/- was itself allowed by the AO , while disallowance of expenses to the tune of Rs. 2,53,140/- was made by the AO. It was submitted that assessee has to wear proper uniform in office and for that purposes , these expenses were incurred. In nut-shell it is claimed that all these expenses were towards official purposes but there is no evidences to ITA No.239/Chny/2019 :- 7 -:
substantiate these expenses except that employer itself has allowed these expenses in Form No. 16 and original bills were submitted before employer. The Ld.Counsel for assessee also submitted that keeping in view social status, senior position held by assessee as. VP-Finance, these expenses are reasonable and accordingly should be allowed as deduction while computing income from salary. The Ld.DR objected to allowability of these expenses and submitted that assessee could not prove its claim for deduction of these expenses. The learned DR would rely on orders of authorities below.
6. We have considered rival contentions and perused the material on record. We have observed that assessee was working in a Senior Position as Vice President-Finance with M/s. Diamond Engineering (Chennai) Private Limited during the year under consideration . The assessee had earned Gross Salary of Rs. 17,76,610/- during the year under consideration. The assessee had been issued Form No.16 by his employer, wherein from aforesaid Gross Salary earned by assessee, total deduction of Rs. 5,57,460/- towards expenses reimbursement /allowances were allowed by the employer. The AO disallowed claim of expenses reimbursement/ allowance to the tune of Rs. 2,53,140/- from Salary Income, which expenses were mainly in the nature of conveyance , periodicals, medical , refreshment, uniform and academic expenses claimed by the assessee . The AO , however had inter-alia allowed Rs. 72,000/- being 50% of conveyance expenses claimed to the tune of Rs. ITA No.239/Chny/2019
:- 8 -:
1,44,000/-, while balance conveyance expenses reimbursement to the tune of Rs. 72,000/- was disallowed by the AO while framing scrutiny assessments, which disallowance of conveyance expenses forms part of total disallowance of Rs. 2,53,140/- of expenses made by the AO. The assessee had however consistently claimed that he submitted original bills to his employer , who based on such bills submitted by assessee in original granted deduction/allowances from Gross Salaries earned by assessee. The assessee had however had expressed his inability to produce these bills before AO as well learned CIT(A) on the grounds that original bills are with employer. Even before us same plea is taken that assessee did not have any bill/evidence to prove genuineness of these expenses or to prove that these expenses were at all incurred by the assessee. It is also claimed by assessee before us that matter is very old as it pertains to previous year 2009-10 relevant to ay: 2010-11 and assessee is not in a position to produce original bills/evidences at this stage to substantiate genuineness of these expenses or to prove that these expenses were at all incurred by assessee. It is also claimed that assessee is a retired person. It is also a matter of fact as is emanating from records that AO as well learned CIT(A) did not issue any notices u/s 133(6) and/or summons under Section 131 of the 1961 Act to assessee's employer namely M/s. Diamond Engineering ( Chennai) Private Limited to get aforesaid information/evidences directly from assessee's employer. The assessee has also not raised any serious challenge before us as to invocation of provisions of Section 147 of the 1961 Act by Revenue. It is a ITA No.239/Chny/2019 :- 9 -:
matter of record that originally return of income was processed by Revenue u/s 143(1) of the 1961 Act and no scrutiny assessment was framed by Revenue originally u/s 143(3) read with Section 143(2) of the 1961 Act. Thus, keeping in view totality of circumstances of this case before us , as well in fairness to both the parties and also keeping in view preponderance of probabilities in context of assessee social and economic status being VP-Finance and having earned Gross Salary of Rs. 17,76,610/- during previous year relevant to ay: 2010-11 and also that employer allowed these deductions in Form No. 16 itself , we allow these expenses to the tune of 50% of total disallowance of Rs. 2,53,140/- made by authorities below, while balance of 50% of disallowances of these expenses to the tune of Rs. 2,53,140/- made by authorities below stood confirmed. We order accordingly.
7. In the result, the appeal filed by assessee in ITA No.239/Chny/2019 for ay: 2010-11 is partly allowed.
Order pronounced on the 28th day of November, 2019 in Chennai.
Sd/- Sd/-
(ध$ु वु% आर.एल. रे 'डी) (र मत कोचर)
(DUVVURU R.L.REDDY) (RAMIT KOCHAR)
या*यक सद य/JUDICIAL MEMBER लेखा सद य/ACCOUNTANT MEMBER
चे नई/Chennai,
=दनांक/Dated: 28th November, 2019.
TLN
आदे श क2 0*त लOप अPेOषत/Copy to:
ITA No.239/Chny/2019
:- 10 -:
1. अपीलाथ//Appellant 4. आयकर आयU
ु त/CIT
2. 01यथ//Respondent 5. Oवभागीय 0*त*न ध/DR
3. आयकर आयुUत (अपील)/CIT(A) 6. गाड, फाईल/GF