Preet Leasing (P) Ltd. vs Commissioner of Income Tax II

Satish Chandra, J.—Heard Sri R.B. Shukla, learned Counsel for the appellant and Sri D.D. Chopra, learned Counsel for the respondent.

This appeal has been preferred u/s 260-A of the Income Tax Act, 1961 against the judgment and order dated 27th July, 2007 passed by the Income Tax Appellate Tribunal, Lucknow Bench ''A'', Lucknow in I.T.A. No. 344/Luc/07 with respect to the Assessment Year 2003-04.

The brief facts of the case shows that the assessee is engaged in the hotel business. During scrutiny, the Assessing Officer found that the assessee had debited in the profit and loss account a sum of Rs. 4,47,545/- as lodging commission. The assessee mentioned that lodging commission was paid to rickshaw-puller, auto drivers for bringing the customers to hotel from bus-stand and railway-station. On verification, the Assessing Officer found that the vouchers were self-made bearing smudged thumb impressions. The Assessing Officer also noticed various discrepancies as mentioned in his order, so he has disallowed the total claim of the assessee by observing that the assessee had tried to evade tax by adopting mal-practice by preparing false vouchers. However, Commissioner of Income Tax (Appeals) by looking the business needs and practice in the line of business has allowed 50% expenditure claimed by the assessee. The Appellate Tribunal by the impugned order has disallowed 40% of the total claim by the assessee.

Learned Counsel for the appellant submitted that the expenditures were made for the purposes of business and as such the Appellate Tribunal ought to have allowed the entire expenditure incurred by the appellant. He further submitted that it was not proper for the Appellate Tribunal to disallow 40% of the expenditure which was in fact made by the appellant for promotion of the business. Learned Counsel for the appellant has relied upon the following decisions:

Deputy Commissioner of Income Tax Vs. Super Tannery (India) Ltd.,

Raj Kumar Daya Shankar v. CIT (1972) Tax 32 (All.)

The Commissioner of Income Tax Vs. South India Corporation (Agencies) Limited,

Commissioner of Income Tax, Bombay Vs. Walchand and Co. Private Ltd.,

J.K. woolen Manufacturers Vs. Commissioner of Income Tax, U.P.,

S.A. Builders Ltd. Vs. Commissioner of Income Tax (Appeals), Chandigarh and Another,

M/s. Sri Venkata Satyanarayana Rice Mill Contractors Co. Vs. Commissioner of Income Tax, Andhra Pradesh, II,

Sanjeevi & Co. v. CIT 62 ITR 156

CIT v. Coimbatore Salem Transport (Private) Ltd. 61 ITR 381

10 COMMISSIONER OF Income Tax Vs. CITY AHMEDABAD SPINNING AND WEAVING MFG. CO.,

On the strength of the aforesaid judgments, learned Counsel for the appellant submitted that there is no provision to disallow a part of expenditure on the ground of excessiveness as the expenditures claimed by the appellant were genuine and the books of account were not rejected by the Assessing Authority. He further submitted that the appellant is entitled for the entire claim which was made before the authorities.

Sri D.D. Chopra, learned Counsel for the respondent, submitted that there is no illegality in the order passed by the Income Tax Appellate Tribunal and as the expenditures were not genuine, the Tribunal has rightly disallowed 40% of the total claim made by the assessee.

We have considered the submissions made by the learned Counsel for the parties and gone through the record.

We are of the view that as per the finding of the Assessing Officer, the claim was made by preparing false vouchers. The vouchers were self made bearing thumb impressions which cannot be verified. However, by looking the practice in the line of business, the Commissioner of Income Tax (Appeals) has already disallowed 50% of the claim. The Tribunal has further granted relief by taking a lenient view and disallowed only 40% of the claim which appears reasonable in the facts and circumstances of the case. Needless to mention that in the instant case, the disallowance were restricted on estimate basis. The same is a question of fact and the Tribunal is the final fact finding authority as per the ratio laid down by Hon''ble the Supreme Court in the case of Kamla Ganpati v. Controller of Estate U.P. 253 ITR SC 692. There is no illegality in the impugned judgment and order passed by the Income Tax Appellate Tribunal.

The appeal is devoid of merits. It is accordingly dismissed.