2014 (12) TMI 1201 - AT - Income Tax

Tribunal orders reexamination of AIR data, disallows partner's conveyance, upholds car and telephone expenses.

M/s. ANS Law Associates, Versus Assistant Commissioner of Income Tax – 11 (2),

The Tribunal directed the AO to reexamine the issues of addition based on AIR information and disallowance of partner's conveyance allowance, citing the ... Addition on account of AIR information - Held that:- It has been held time and again by this Tribunal that the additions made solely on the basis of AIR information are not sustainable in the eyes of the law. If the assessee denies that he is in receipt of income from a particular source, it is for the AO to prove that the assessee has received income as the assessee cannot prove the negative. It is the case of the assessee that it had received only ₹ 1,00,000/- from Allied Digital Services Ltd. However, as per the AIR information, the assessee had received ₹ 4,49,440/- from the said party. There is no reference of amount of ₹ 1,00,000/- in the AIR information, rather, the detail of amount has been given as ₹ 3,00,000/- on 02.01.08 and ₹ 1.49 lakh on 24.03.08. The issue be restored to the file of the AO for consideration afresh in this respect. - Decided in favour of assessee for statistical purposes. Disallowance on account of partner’s conveyance allowance - Held that:- A.R. has submitted that in fact the amount in question was not the conveyance allowance rather the same was reimbursement of the actual expenses incurred by the partners in the ordinary course of business. It has been further submitted that the firm owns one car only and hence the outside conveyance as and when required was used by the partners. The expenses were very reasonable. Thus we restore this issue to the file of the AO to examine it afresh in the light of the submissions made by the Ld. A.R. and the evidences in the shape of vouchers etc. in this regard.- Decided in favour of assessee for statistical purposes. Disallowance on account of depreciation of car and telephone expenses - Held that:- From the record, it has been found that the lower authorities have disallowed only 1/5th of the amount. Taking into consideration of the facts and circumstances of the case, we find that the same is a quite reasonable disallowance. Hence, we confirm the finding of the lower authorities on this issue.- Decided against assessee Issues:1. Addition of Rs. 4,49,440 on account of AIR Information.2. Disallowance of Rs. 1,80,000 on account of Partner's Conveyance Allowance.3. Disallowance of Rs. 30,510 on account of Car and Telephone expenses.Issue 1 - Addition of Rs. 4,49,440 on account of AIR Information:The appellant, a partnership firm, disputed an addition based on AIR information showing receipts from a specific party. Despite providing evidence of receiving a lesser amount, the AO made the addition. The CIT(A) upheld the addition citing discrepancies. The Tribunal noted that additions solely based on AIR information are unsustainable without further evidence. Citing precedents, the Tribunal directed the issue back to the AO for a fresh assessment considering the appellant's submissions and confirmation from the party in question.Issue 2 - Disallowance of Rs. 1,80,000 on account of Partner's Conveyance Allowance:The AO disallowed conveyance allowance to partners citing absence in the partnership deed and separate vehicle expenses. The CIT(A) affirmed this disallowance. The appellant argued that the amount was reimbursement for business-related expenses, not conveyance allowance. The Tribunal decided to send the issue back to the AO for a reevaluation based on the appellant's contentions and supporting evidence.Issue 3 - Disallowance of Rs. 30,510 on account of Car and Telephone expenses:The AO disallowed a portion of car and telephone expenses due to perceived personal use. The CIT(A) agreed with this disallowance. The Tribunal found the 1/5th disallowance reasonable based on the circumstances and confirmed the lower authorities' decision. The appeal was partly allowed for statistical purposes.In conclusion, the Tribunal addressed the issues raised by the appellant concerning additions based on AIR information, disallowance of conveyance allowance, and disallowance of car and telephone expenses. The Tribunal directed the AO to reexamine the first two issues based on fresh evidence and submissions, while confirming the decision on the third issue. The appeal was partly allowed for statistical purposes.