IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “F”, MUMBAI BEFORE SHRI C.N. PRASAD, HON’BLE JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, HON’BLE ACCOUNTANT MEMBER

O R D E R

PER C.N. PRASAD (JM)

1. This appeal is filed by the assessee against the order of the Learned Commissioner of Income Tax (Appeals) – 2, Mumbai [hereinafter in short “Ld.CIT(A)”] dated 07.02.2018 for the A.Y. 2012-13.

2. Assessee in its appeal has raised following grounds: - “1. On facts and in law, the learned Commissioner of Income-tax (Appeals) [hereinafter referred to as "Ld. CIT(A)"] had erred in confirming the adhoc addition Rs.38,029/-being 10% of depreciation on motor car of Rs.3,80,285/- without appreciating the correct facts of the case. Under the facts and circumstances of the matter, he ought to have directed the learned Assessing Officer (hereinafter referred to as "the LAO") to delete the said addition.

2. On facts and in law, the Ld. CIT(A) had erred in confirming the adhoc addition Rs.32,438/- being 10% of Motor Car expenses of Rs.3,24,384/- without appreciating the correct facts of the case. Under the facts and circumstances of the matter, he ought to have directed the LAO to delete the said addition.

3. On facts and in law, the Ld. CIT(A) had erred in confirming the adhoc addition Rs.2,33,864/- being 10% of travelling expenses of Rs.23,38,637/- without appreciating the correct facts of the case. Under the facts and circumstances of the matter, he ought to have directed the LAO to delete the said addition.

4. The Appellant craves leave to add, alter, vary, omit, substitute or amend the above grounds of appeal, at any time before or at, the time of hearing of the appeal, so, as to enable the Hon. ITAT to decide this appeal according to law.”

3. None appeared on behalf of the assessee nor any adjournment was sought by the assessee. The notice sent through RPAD returned unserved with an endorsement by the postal authorities that assessee “Left”. Therefore, we proceed to dispose off this appeal on hearing the Ld. DR on merits.

4. Ld. DR referring to the assessment order passed u/s. 143(3) of the Act submits that the Assessing Officer while completing the assessment disallowed 10% of depreciation on Car, travelling expenses and Motor Car Expenses totaling to ₹.3,04,331/- treating it as not incurred wholly and exclusively for the business purpose since according to Assessing Officer some personal element cannot be ruled out. Ld.CIT(A) sustained the disallowances. Ld. DR vehemently supported the orders of the authorities below.

5. Heard Ld. DR on merits and perused the orders of the authorities below. On a perusal of the order of the Ld.CIT(A), we find that the Ld.CIT(A) considered this aspect of the matter elaborately with reference to the submissions of the assessee and the averments in the Assessment Order and upheld the action of the Assessing Officer in disallowing 10%

of the expenses. While holding so, the Ld.CIT(A) observed as under: -

“6.1 The ground no. 1 is on the issue of addition of Rs.3,04,331/- Appellant, HUF filed its return on 30.09.2012 declaring income of Rs.96,20,226/-. As seen from the records, the AO has identified an amount of Rs.3.04 lakhs which is being 10% of the expenditure identified to the tune of Rs.30,43,306/- towards depreciation on Car, Travelling expenses and Motor Car expenses. This amount treated as personal in nature out of the total deductions / expenses booked by the appellant to the tune of Rs.62.58 Crores (approx.) towards purchases or for expenses. The element of personal nature as identified by the AO is not very significant when compared with the expenses / purchases booked.

6.1.1 During the assessment proceedings, AO has identified three