2017 (4) TMI 873 - AT - Income Tax

Disallowance of claim of depreciation - Held that - FAA had no occasion to verify the correctness of the claim made by the assessee in absence of the said documents. Therefore,we are of the opinion that,in the interest of justice,matter should be restored back to the file of the FAA for fresh adjudication.He would decide the issue after affording a reasonable opportunity of hearing to the assessee and after considering the additional evidences produced before us. Ground is decided in favour of the assessee,in part. Disallowance of business expenses incurred by the assessee through credit card based on information of the AIR statement - Held that - We find that the assessee had not produced documentary evidences about the expenditure to prove that same was incurred wholly and exclusive for the business purposes. The bank statement, produced by it before the AO indicates the expenditure incurred but it does not prove the fact of incurring of expenditure for the business. Therefore, in our opinion the order of the FAA does not suffer from any legal infirmity. Upholding the same, we decide ground of appeal against the assessee.

Summary

Issues:
1. Admission of additional evidence under Rule 29 of ITAT Rules, 1963.
2. Disallowance of depreciation claim on fixed assets.
3. Further disallowance of depreciation by the FAA.
4. Disallowance of business expenses incurred through credit card.

Issue 1: Admission of Additional Evidence
The assessee filed an appeal challenging the order of CIT(A)-18, Mumbai. The assessee requested to admit additional evidence under Rule 29 of ITAT Rules, 1963, related to invoices of fixed assets purchased. The AR stated that due to a change in management, all evidence could not be produced earlier. The ITAT admitted the additional evidence as crucial for the case.

Issue 2: Disallowance of Depreciation Claim
The AO disallowed a depreciation claim of ?29.65 lakhs on certain additions to fixed assets due to lack of evidence. The FAA upheld the disallowance as the assessee failed to provide documentary evidence despite opportunities. The ITAT decided to restore the matter to the FAA for fresh adjudication, considering the additional evidence produced before them.

Issue 3: Further Disallowance of Depreciation
The FAA made a further disallowance of ?15.45 lakhs on depreciation. The ITAT, after restoring the matter to the FAA for fresh adjudication, decided this issue in favor of the assessee, in part.

Issue 4: Disallowance of Business Expenses
The AO disallowed business expenses of ?93,945 incurred through credit card based on AIR statement. The FAA upheld the disallowance as the assessee failed to provide complete documentary evidence. The ITAT also upheld this decision, stating that the bank statement did not sufficiently prove the business purpose of the expenditure.

In conclusion, the appeal filed by the assessee was partly allowed, with different issues being decided in favor of the assessee or the revenue authorities based on the evidence and submissions presented during the proceedings.