ACIT 16(1) v. Rishi K Rajani
[Citation -2016-LL-0918]

Citation 2016-LL-0918
Appellant Name ACIT 16(1)
Respondent Name Rishi K Rajani
Court ITAT-Mumbai
Relevant Act Income-tax
Date of Order 18/09/2016
Assessment Year 2010-11
Judgment View Judgment
Keyword Tags trading company • sales tax • expenditure on foreign travel • bogus purchase
Bot Summary: 'On the fact and the circumstances of the case and in the law, the Ld.CIT(A) has erred in restricting the disallowance of Rs.33,47,382/- towards foreign travel expenses to Rs.28,575/- without appreciating the fact that the AO has clearly brought in the assessment order that the assessee had visited to places which were not related to his business. On the fact and the circumstances of the case and in the 2 I.T.A. No.5572/Mum/2014 law, the Ld.CIT(A) has erred in restricting the disallowance of Rs.33473821- towards foreign travel expenses to Rs.28,575/- after relying on the decision of Ld, CIT(A) in the assessee's own case for 2009-10 vide order No.CIT(A)/ACITI6(1)/322/201 1-12 dtd.30.11.2012 without appreciating the fact the said decision has not been accepted by the Department and filed appeal before Hon'ble ITAT on 0702.2013 vide appeal No. ITA 1071 /Mum/201 3. The brief facts are that the Assessing Officer made adhoc disallowance of 1/3rd foreign travel expenses on the ground that the same was not relatable to the business, on the basis of disallowance made in earlier years. The Ld.CIT(A) deleted the disallowance relying upon his order of earlier years. We have gone through the orders of lower authorities as well as the orders of the Tribunal for earlier years. Keeping in view the totality of facts and circumstances of the case brought before us, we respectfully follow the order of the Tribunal for A.Ys 2007- 08, 2008-09 2009-10 and sustain the disallowance to the extent of 10. During the course of hearing before us, the Ld.DR supported the order of the Assessing Officer and also alternatively submitted that disallowance sustained by the Ld. CIT(A) was too low and should be further increased.


IN INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES D , MUMBAI BEFORE SHRI SANJAY GARG (JUDICIAL MEMBER) AND SHRI ASHWANI TANEJA (ACCOUNTANT MEMBER) I.T.A. No.5572/Mum/2014 (Assessment Year : 2010-11) ACIT 16(1) vs Rishi K Rajani 5-A, Bhagwat Niwas, 2nd Floor Peddar Road,Mumbai-26 PAN : AABPR06002C (Appellant) (Respondent) Appellant by Shri Mathrudev Vasudevan Respondent by Shri B.S. Bist (CIT DR) Date of hearing : 17-10-2016 Date of pronouncement : 18 -10-2016 ORDER Per ASHWANI TANEJA, AM This appeal has been filed by revenue against order of Commissioner of Income-tax (Appeals)-27, Mumbai [hereinafter called CIT(A)] dated 25-06-2014 passed against assessment order u/s 143(3) dated 24-03-2013 for A.Y. 2010-11 on following grounds: 1. 'On fact and circumstances of case and in law, Ld.CIT(A) has erred in restricting disallowance of Rs.33,47,382/- towards foreign travel expenses to Rs.28,575/- without appreciating fact that AO has clearly brought in assessment order that assessee had visited to places which were not related to his business." 2. "On fact and circumstances of case and in 2 I.T.A. No.5572/Mum/2014 law, Ld.CIT(A) has erred in restricting disallowance of Rs.33473821- towards foreign travel expenses to Rs.28,575/- after relying on decision of Ld, CIT(A) in assessee's own case for 2009-10 vide order No.CIT(A)/ACITI6(1)/322/201 1-12 dtd.30.11.2012 without appreciating fact said decision has not been accepted by Department and filed appeal before Hon'ble ITAT on 0702.2013 vide appeal No. ITA 1071 /Mum/201 3." 3. "Whether on fact and circumstances of case and in law, Ld.CIT(A) is right in restricting addition made u/s 69C of Rs.1,16,244/- to 12.5% of Rs.1,16,244/- i.e.Rs.14,530/on account of bogus purchase?" 4. "Whether on fact and circumstances of case and in law, Ld.CIT(A) is right in estimating earning at very low rate particularly when alleged sellers of goods to assessee being provider of accommodation entries has admitted before Sales Tax Department that accommodation entries were provided to assessee and also field enquires resulted in confirmation of bogus purchases." 5. Whether on fact and circumstances of case and in law, Ld.CIT(A) is right in not appreciating findings of AO in assessment order that sellers were available at address shown in purchases bills." 2. Grounds 1 & 2 : These grounds are common and deal with issue of disallowance of travel expenses made by Assessing Officer at rate of 1/3rd but deleted by Ld.CIT(A). 3. brief facts are that Assessing Officer made adhoc disallowance of 1/3rd foreign travel expenses on ground that same was not relatable to business, on basis of disallowance made in earlier years. Ld.CIT(A) deleted disallowance relying upon his order of earlier years. 4. During course of hearing, both parties agreed that issue involved is covered with orders of earlier years. Ld.Counsel placed 3 I.T.A. No.5572/Mum/2014 before us order passed by Tribunal dated 28-10-2015 for assessment years 2006-07, 2007-08, 2008-09 and 2009-10 and requested for applying same in year before us. 5. We have gone through orders of lower authorities as well as orders of Tribunal for earlier years. It is noted that assessee was engaged in business of designing, manufacturing, trading and exporting of western ladies dresses. It has been observed by this Tribunal in its order for these years that assessee was required to make travel to various countries for not only marketing its designs and dresses but also to find out latest trends and designs prevailing in various countries. It is noted that in A.Ys 2007-08, 2008-09 and 2009-10 disallowance was restricted to 10% by Tribunal on ground that necessary details and other evidences were not made available by assessee. 6. It is noted that in year before us, finding has been given by Ld.CIT(A) that relevant details and documentary evidences have been furnished by assessee. It was submitted that under these circumstances, decision of A.Ys 2007-08, 2008-09 and 2009-10 should be made applicable in preference to decision for A.Y. 2006-07 and accordingly, disallowance cannot be sustained for more than 10%. Keeping in view totality of facts and circumstances of case brought before us, we respectfully follow order of Tribunal for A.Ys 2007- 08, 2008-09 & 2009-10 and sustain disallowance to extent of 10%. Order of Ld.CIT(A) is modified accordingly. 7. Grounds 3,4 & 5: These grounds pertain to disallowance made by Assessing Officer u/s 69C on account of purchases amounting to Rs.1,16,244/-. 4 I.T.A. No.5572/Mum/2014 8. brief facts are that during course of assessment proceedings, it was noted by Assessing Officer that assessee had made purchases of R.1,16,244 of sample items from Vijayalaxmi Trading Company and payment for same was made by account payee cheque. But Assessing Officer was of view that as per information received from sales-tax department, aforesaid party was not genuine and consequently Assessing Officer treated these purchases as bogus and disallowed same u/s 69C of Act. Before Ld.CIT(A) assessee made detailed submissions and therefore, Ld. CIT(A) restricted disallowance to 12.5% of aforesaid purchases and deleted balance amount of disallowance. Revenue is before us for disallowance deleted by Ld.CIT(A). 9. During course of hearing before us, Ld.DR supported order of Assessing Officer and also alternatively submitted that disallowance sustained by Ld. CIT(A) was too low and should be further increased. 10. Per contra, Ld. Counsel supported order of Ld.CIT(A). 11. We have gone through orders of lower authorities. During course of hearing, both parties fairly agreed that keeping in view facts and circumstances of case, disallowance @25% would be reasonable in this case. Under these circumstances, we direct Assessing Officer to make disallowance @25%. order of Ld.CIT(A) is modified accordingly. 5 I.T.A. No.5572/Mum/2014 12. As result, appeal of revenue is partly allowed. Order was pronounced in open court at conclusion of hearing. Sd/- Sd/- (SANJAY GARG) (ASHWANI TANEJA) JUDICIAL MEMBER ACCOUNTANT MEMBER th Mumbai, Dt : 18 September, 2016 Pk/- Copy to : 1. appellant 2. respondent 3. CIT(A) 4. CIT 5. Ld. Departmental Representative for Revenue, D-Bench (True copy) By order ASSTT.REGISTRAR, ITAT, MUMBAI BENCHES ACIT 16(1) v. Rishi K Rajani
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