2019 (2) TMI 272

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....arned Commissioner of Income Tax (Appeals) has erred in bad in law as well as on facts in upholding the disallowance in respect of Cars and Telephones used by the staff members of the assessee firm under section 38 (2) of the Income Tax Act, 1961 by the learned assessing officer (AO) 3. That the assessee craves the right to add, alter, amend or withdraw any ground(s) of appeal. 2. At the time of hearing, an adjournment application was moved on behalf of the assessee. The appeal was passed over. In the second round also, no one was present on behalf of the assessee. On considering the material available on record, it was deemed appropriate to proceed with the present appeal ex-parte qua the assessee appellant on merit after heari....

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....stated as unden- "Car expenses : In this respect we are enclosing herewith month-wise and unit-wise details of expenses along with copies of ledger accounts and photocopies of relevant b ills exceeding Rs. 20000/- Telephone expenses : In this respect we are enclosing herewith month-wise and unit-wise details of expenses along with details of expenses exceeding Rs, 5000/-." 5.3 The reply furnished by the assessee has been considered and found untenable. No log book and telephone register have been maintained by the assessee. Therefore, use of car and telephone for other than business purposes cannot be ruled out. Section 38(2) of the Income Tax Act, 1961 provides that:- " Where any building, machi....

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....h of the expenses. The ld. Sr.DR relies upon the order stating that more than adequate relief has already been given to the assessee. 6. We have heard the submissions and perused the material on record. We find that the assessee before the CIT(A) has specifically addressed that out of the 10 cars maintained, only two were used personally by the partners. Similarly, out of 145 telephone numbers maintained, only two telephone numbers were being used by the partners. As per the submissions extracted from the assessment order, it is seen that the assessee has submitted that details have been maintained qua each of the vehicles/mobile numbers. In view thereof and considering the fact, the issue may also be of a recurring nature. we are of ....