AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2019 (10) TMI 1000
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....oc basis. i. Rs. 50,000/- out of expenses incurred on account of Processing Expenses. ii. Rs. 50,000/- out of expenses incurred on account of Postage, Telegram and Telephone Expenses. iii. Rs. 50,000/- out of expenses incurred on account of General Expenses. That on the facts and in the circumstances of the case, the above adhoc disallowances made without pointing out any defect in the claim of the appellant, are wrong and are prayed to be deleted. 3. That the appellant craves leave to add, to alter, amend, modify, substitute, delete and/or rescind all or any of the grounds of appeal on or before final hearing, if necessity so arises. 2. The facts giving rise to the present appeal are that case of the assessee was picked up for scrutiny assessment and the assessment u/s 143(3) of the Income Tax Act, 1961 (hereinafter called as 'the Act') was framed vide order dated 10.3.2015. While framing the assessment, the A.O. made addition on account of disallowance of excessive depreciation of Rs. 3,93,876/-. The A.O. also made disallowance by invoking provisions of section 14A of the Act of Rs. 1,058/-. The A.O. further made adhoc disallowance ....
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.... the issue of taxability if the amount was not taxable by offering the same would not close the doors for the assessee to claim deduction if subsequently it is realised that the assessee was entitled for deduction u/s 80IA of the Act. We therefore, considering the totality of the facts and circumstances restore the issue of deduction to the file of the A.O. to verify the correctness of the claim if it is found that assessee has rightly claimed deduction u/s 80IA of the Act and has been allowed in subsequent years. Under the identical facts, the assessing officer would allow deduction as claimed by the assessee u/s 80IA of the Act. This ground of the assessee's appeal is allowed for statistical purposes. 6. Ground No.2 is against disallowance of the expenses on adhoc basis amounting to Rs. 1,50,000/-. Ld. Counsel for the assessee has reiterated the submissions as made in the written synopsis. The submissions of the assessee are as under: 7. Ld. D.R. opposed these submissions. 8. We have heard the rival submissions, perused the materials available on record and gone through the orders of the authorities below. The A.O. disallowed this expenditure on adhoc basis on the basis ....
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....he return of income filed under section 139(1). As the claim of the appellant was genuine, and was available to it as per law, the appellant made a claim during the assessment proceedings for this year before the Learned AO through 4th Written Submission made on 03.03.2015. (Copy enclosed at page no. 45 to 52) The Learned AO, while framing the assessment order did not entertained the submission made and claim of deduction made by the appellant u/s 80IA(4) of Rs. 30,60,276/- during the assessment proceedings, hence not allowed the claim to the appellant. Documents filed during the assessment proceedings to substantiate the claim: 5.4 With regard to the wind mill operation, it is submitted that the appellant has entered into an agreement with Tamil Nadu Electrical Board, Tirunelveli in earlier years for the sale of power generated from its wind mill. The appellant charges the amount for the electric units generated & supplied on regular basis. To substantiate the facts and to corroborate the claim the appellant thin 5.5 5.6 5.7 furnishes the following documents before ld. AO during the assessment proceedings: (1)....
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....llowed for the reason that the same was offered as income at the time of filing of income. Due to the rejection of a legitimate claim, the correct income has not been ascertained in the instant case and the purpose of assessment has been defeated. At this juncture, Your Honour's kind attention is brought towards the Article 265 of the Constitution of India which lay down the powers to levy various taxes and also states that no tax shall be levied or collected except by the authority of law. Thus only legitimate tax can be collected. Even a concession (negligence) by a tax-payer does not give authority to the tax collector to recover more than what is due from him under the law. Your Honour's kind attention is further invited to Circular issued by the Central Board of Direct Taxes Circular No: 14 (XL-35) dated April 11, 1955, which states as under: "Officers of the Department must not take advantage of ignorance of an assessee as to his rights. It is one of their duties to assist a taxpayer in every reasonable way, particularly in the matter of claiming and securing reliefs and in this regard the Officers should take the initi....
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....s been defeated. 5.11 It is also submitted that the appellant's ignorance to claim correct deduction in the return of income cannot be taken to the advantage by the Assessing Officer and it is the benevolent duty of Assessing Officer to assess the correct income of a person as per law even if the assessee fails to claim any benefit legitimately due to him. 5.12 It may be further pointed out that the proposition that legitimate claims of the assessee should be allowed even if raised during the assessment proceedings has been upheld by the Honourable Jurisdictional ITAT Indore Bench in the case of Admanum Finance Limited in AY 2010-11 in ITA No. 389/Ind/2012, 807 & 808/Ind/2014. In this case the assessee made a claim of bad debts during the course of assessment proceedings, which was not claimed in the return. This claim was not allowed by the AO stating that the claim was not made by revising the return and the AO also took shelter of the case of Goetz India. The said claim was allowed by the Honourable CIT(A) and the Honourable ITAT also endorsed the same. Copy of the relevant part of the order of the ITAT is enclosed at page 109 t....
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....m of deduction /exemption in the course of assessment proceedings and consequently the assessing officer was duty bound to adjudicate upon such claim, even though it was filed after the prescribed period under section 139(5). The Commissioner (Appeals) was justified in entertaining such claim of the assessee. The Hon'ble Delhi High Court in the case of Commissioner of Income-tax v. Bharat Aluminum Co. Ltd.303 ITR 256 observed that the assessee did not revised the return for which time as prescribed under section 139(5) of the Act had expired but made the claim during the assessment proceeding and the Assessing Officer allowed the claim after considering all the relevant facts and evidence and being in accordance with law. The Hon'ble High Court held that order passed by the Assessing Officer in accepting revised computation of income was not erroneous and prejudicial to the interest of the Revenue. CIT vs. Ramco International [2009] 332 ITR 0306 (Punjab & Haryana) enclosed at page no. 146 to 147 of the paper book: In this case the assessee did not make a claim for deduction u/s. 80IB in the return. The assessee however filed For....
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....and proper taxable income and to levy the tax in accordance with law. Such claims ought to have been allowed suomoto by the AO and can be allowed even at appellate stage. In light of the facts discussed above and judicial pronouncements relied upon and also in light of the decision of the jurisdictional ITAT, it is most humbly prayed that the rightful claim of the appellant made during the assessment proceedings be now allowed. Document 3 6. AS REGARDS GROUND NO. 2: ADDITION OF RS. 1,50,000/- MADE ON ACCOUNT OF ESTIMATED DISALLOWANCE OUT OF PROCESSING EXPENSES, POSTAGE, AND TELEGRAM & TELEPHONE EXPENSES AND OUT OF GENERAL EXPENSES. 6.1. Ground no. 2(i) raised is against the lump-sum disallowance of Rs. 50,000/- made out of processing expenses of Rs. 38,18,524/- making a general observation that some of the vouchers were self made by the employees, authenticity of which cannot be accepted in totality. Ground no. 2(ii) raised is against the lump-sum disallowance of Rs. 50,000/- made out of postage, telegram & telephone expenses of Rs. 5,66,779/-. The learned AO made an estimated disallowance out of the said expenses on account o....
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.... held to be impermissible. There are plethora of cases laws on this issue in favour of the appellant on which reliance is being placed viz: (i) (ii) (iii) (iv) (v) Sanghi Brothers (India) P. Ltd. versus Department of Income Tax - (2012) ITAT Indore Bench in ITA No. 286/Ind/ 2011 copy enclosed at page no. 148 to 151: In this case it was held by the Honourable jurisdictional ITAT that the assessee being a private limited company, the accounts of which were duly audited both under the Companies Act as well as Income Tax Act and the AO could not pin point any specific item of disallowable nature, that too without pin pointing any specific defect in the books of accounts, no ad-hoc disallowance is permissible. J.J. Enterprises vs. CIT: 254 ITR 216 (SC), Copy enclosed at page no. 152 to 153. In this case the Honourable Supreme court was pleased to second the findings of the Honourable Tribunal that the addition was unsustainable because it had been made 'on the basis of pure guess work'. Friends Clearing Agency P. Ltd. v. CIT: 332 ITR 269 (Del.) Copy enclosed at page no. 154 to 156. In this case the Honourable Del....