Sri Gopal Gupta, New Delhi vs Assessee

I.T.A.No. 5265/DEL/2013 A.Y. : 2010-11 Sri Gopal Gupta, Deputy Commissioner of 339, F.I.E., Patparganj, VS. Income Tax, New Delhi Central Circle-2, (PAN: AAAPG7111J) New Delhi (APPELLANT) (RESPONDENT)

Assessee by : Sh. Sanjay Kumar, Accountant

Department by : Sh. B.R.R. Kumar, Sr. DR

Date of Hearing : 15-4-2015 Date of Order : 17-4-2015

ORDER

PER H.S. SIDHU : JM The Assessee has filed the present appeal against the

impugned order dated 5/9/2013 passed by the Commissioner of

Income Tax (Appeals)-III, New Delhi pertaining to the assessment

year 2010-11.

2. The following grounds have been raised in the Assessee's

appeal.

1

ITA NO. 5265/DEL/2013

"1. That on the facts and circumstances of the case

appellant's case, the Ld. CIT(A) erred both in fact and in law in

partially confirming adhoc estimated disallowance of car

running expense @10% as against @20% made by AO, only on

conjecture and surmises that personal use of car cannot be

ruled out, when both AO as well as CIT(A) have acknowledged

furnishing of log book of car, which contains entries of

business trips only.

2. That the appellant craves leave to add, amend or alter

any of the grounds of appeal."

3. The brief facts of the case are that the Return of Income

declaring income of Rs. 9,76,86,192/- was filed by the assessee on

15.10.2010. The same was processed u/s. 143(1) of the I.T. Act,

1961 at the returned income. The case was selected for

compulsory scrutiny. Notice u/s. 143(2) of the I.T. Act, 1961 was

issued to the assessee on 12.9.2011, which was duly served upon

the assessee through speed post. Notice u/s. 142(1) of the I.T. Act,

1961 along with questionnaire was issued to the assessee on

10.1.2012. Due to change of incumbency, notice u/s. 143(2) was

issued on 31.7.2012. In response thereto, assessee's counsel

attended the assessment proceedings from time to time and

furnished the details. During the year under consideration, the

2 ITA NO. 5265/DEL/2013

assesse earned income from business or profession, share of profit

from Partnership firms, house property and other sources. Copy of

Profit and Loss account, balance sheet and audit report u/s. 44AB of

the Act, for the year under consideration, was submitted by the

assessee during the course of assessment proceedings. The

Assessing Officer during the assessment proceedings noted that the

assessee is also proprietor of M/s Srimatrix. M/s Srimatrix is

engaged in providing technical knowhow to the group concern.

This is one kind of royalty which is charged by Sh. Srigopal Gupta on

account of knowledge of process of Jarda / Gutka/ Pan Masala given

to sister concern. The Assessing Officer further noted that during

the year the assessee has received total fees of Rs. 780.99 lacs and

against the same expenses of Rs. 77.73 lacs were debited. The

major expense is on account of salary and vehicle expenses.

During the year the assessee has purchased an imported car

"Bentley" and claimed depreciation of Rs. 27.51 lacs alongwith

interest on car loan of Rs. 14.44 lacs as well as car expenses

including petrol and maintenance of Rs. 3,11,064/-. On going

through the Wealth Tax record it has been noticed that this is the

only car assessee having in individual capacity. Therefore, personal

use of car cannot be denied. Hence, out of the above said

expenses for personal use of a car sum of 1/5th is disallowed which

comes to Rs. (Rs. 45,06,064/5)= Rs. 9,01,210/- and assessed income

3 ITA NO. 5265/DEL/2013

at Rs. 9,85,87,400/- vide his order dated 28.1.2013 passed u/s.

143(3) of the I.T. Act, 1961.

4. Aggrieved by the aforesaid assessment order, the assessee

preferred an appeal before the Ld. CIT(A), who vide impugned

Order dated 5.9.2013 has partly allowed the appeal of the assessee

by restricting the addition from 20% to 10% which comes to

Rs. 4,50,605/-.

5. Against the order dated 05.9.2013 of the Ld. CIT(A) assessee

is in appeal before the Tribunal.

6. During the hearing before us, Sh. Sanjay Kumar,

Accountant/Authorised Signatory from the Appellant has filed an

Application dated 15.4.2015 for adjournment of hearing on the

ground that appellant is out of town. In our considered opinion, the

ground for non-appearance of the appellant seems not to be

genuine, hence, we reject this Adjournment Application and proceed

further to adjudicate the issue in dispute on merits. However, Sh.

Sanjay Kumar, Accountant of the Appellant was present during the

hearing.

7. Ld. DR has relied upon the order of the Ld. CIT(A) and stated

that Ld. CIT(A) in the interest of justice has passed a well reasoned

order and the same may be upheld.

4

ITA NO. 5265/DEL/2013

8. We have heard both parties and perused the relevant record

available with us especially the orders of the revenue authorities.

We find that the major expense is on account of salary and vehicle

expenses. During the year the assessee has purchased an

imported car "Bentley" and claimed depreciation of Rs. 27.51 lacs

alongwith interest on car loan of Rs. 14.44 lacs as well as car

expenses including petrol and maintenance of Rs. 3,11,064/-. We

also find that the Assessing Officer on going through the Wealth Tax

record has noticed that this is the only car assessee having in

individual capacity. Therefore, personal use of car cannot be

denied. Hence, out of the above said expenses for personal use of

a car sum of 1/5th was disallowed which comes to Rs. (Rs.

45,06,064/5)= Rs. 9,01,210/-. We further find that the Ld. CIT(A) in

the instance case has observed that there is no doubt that log book

is maintained but considering the fact that the assessee is running a

sole proprietary business and owns a high end luxury car (Bentley),

therefore, definitely the use of car for personal purpose cannot be

ruled out. Therefore, Ld. CIT(A) has rightly held that in the interest of

justice, a disallowance of 10% of expenses is made on estimated

basis as against 20% as made by the Assessing Officer, which comes

to disallowance of Rs. 4,50,605/-. In the background of the aforesaid

discussions, we find force in the finding of the Ld. CIT(A) in partially

confirming the addition from 20% to 10% i.e. Rs. 4,50,605/-. Hence,

5 ITA NO. 5265/DEL/2013

we do not see any reason to interfere in the well reasoned finding

given by the Ld. CIT(A) on the issue in dispute, therefore, we

uphold the finding of the Ld. CIT(A) on the issue and reject the

ground raised by the assessee.

9. In the result, the Appeal filed by the assessee stands dismissed.

Order pronounced in the Open Court on 17/4/2015.

Sd/- Sd/-

[S.V. MEHROTRA] [H.S. SIDHU] ACCOUNTANT MEMBER JUDICIAL MEMBER

Date 17/4/2015

"SRBHATNAGAR" Copy forwarded to: - 1. Assessee-

2. Respondent - 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY By Order,

Assistant Registrar, ITAT, Delhi Benches

6