AGS HOLIDAY RESORTS,VELLORE V. DCIT, CHENNAI

ITA 2012/CHNY/2024

AI Insights

The case involves AGS Holiday Resorts, a partnership firm engaged in lodging and boarding, which appealed against the order of the Commissioner of Income Tax (Appeals), Chennai. The appeal was related to the assessment year 2019-20, where the Assessing Officer had made an addition of ₹50,49,921 as disallowance on account of miscellaneous expenses, which was later reduced to ₹16,44,150 by the CIT(A). The Tribunal examined the details of the expenditures and found that most of them were incurred through banking channels, except for certain cash payments which were necessary due to the remote location of the assessee's business. The Tribunal concluded that the CIT(A) should have examined the details of cash payments in the ledger accounts and considered the circumstances under which these expenses were incurred.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 107548 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-11-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 19-11-2024
• Assessment Year: 2019-2020
• Appeal Filed On: 26-07-2024
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R.ANITA
• Assessee Lawyers: P. RANGA RAMANUJAM
• Keywords: Condonation of delay
• Section: 143(3)

Judgement Text

"आयकर अपीलीय अिधकरण, ’सी’ Ɋायपीठ, चेɄई IN THE INCOME-TAX APPELLATE TRIBUNAL ‘C’ BENCH, CHENNAI ŵी एस.एस. िवʷनेũ रिव, Ɋाियक सद˟ एवं ŵी अिमताभ शुƑा, लेखा सद˟ क े समƗ Before Shri S.S. Viswanethra Ravi, Judicial Member & Shri Amitabh Shukla, Accountant Member आयकर अपील सं./I.T.A. No.2012/Chny/2024 िनधाŊरण वषŊ/Assessment Year: 2019-20 AGS Holiday Resorts, No. 350/2G 350/2B1, Athanayur Village, Palkaniyur Road, Yelagiri Hills, Tirupattur, Vellore 635 853. [PAN: ABEFA0740L] Vs. The Deputy Commissioner of Income Tax, Central Circle 3(4), Chennai. (अपीलाथŎ/Appellant) (ŮȑथŎ/Respondent) अपीलाथŎ की ओर से / Appellant by : Shri P. Ranga Ramanujam, CA ŮȑथŎ की ओर से/Respondent by : Ms. R. Anita, Addl. CIT सुनवाई की तारीख/ Date of hearing : 19.11.2024 घोषणा की तारीख /Date of Pronouncement : 27.11.2024 आदेश /O R D E R PER S.S. VISWANETHRA RAVI, JUDICIAL MEMBER: This appeal filed by the assessee is directed against the order dated 22.05.2024 passed by the ld. Commissioner of Income Tax (Appeals), Chennai 20, Chennai for the assessment year 2019-20. 2. We find that this appeal was filed with a delay of 5 days. The assessee filed an affidavit for condonation of delay stating the reasons. Upon hearing both the parties and on examination of the said petition, we find the reasons stated by the assessee are bonafide, which really I.T.A. No.2012/Chny/24 2 prevented the assessee in filing the appeal in time. Thus, the delay of 5 days is condoned. 3. Ground No. 1 is general in nature and requires no adjudication. 4. Ground No. 2 raised by the assessee in challenging the action of the ld. CIT(A) in confirming the disallowance to the extent of ₹.16,44,150/- as against ₹.50,49,921/- in the given facts and circumstances of the case. 5. Brief facts leading to the case are that the assessee is a partnership firm engaged in the business of lodging and boarding under name and style of M/s. AGS Holiday Resorts. A survey was conducted on 07.02.2019 in the business premises of the assessee at Tirupattur. The assessee filed its return of income declaring a total income of ₹.65,43,970/- . Under scrutiny, the Assessing Officer determined income of the assessee at ₹.1,15,93,891/-, inter alia, making addition on account of disallowance at 30% of miscellaneous expenses at ₹.50,49,921/- vide his order dated 30.09.2021 passed under section 143(3) of the Income Tax Act, 1961 [“Act” in short]. The ld. CIT(A) restricted the said addition of cash payments to the extent of ₹.16,44,150/-. I.T.A. No.2012/Chny/24 3 6. The ld. AR Shri P. Ranga Ramanujam, C.A. drew our attention to page 7 of the impugned order and submits that the assessee incurred expenses in cash regarding garden maintenance, printing and stationery and subscription to periodicals. He argued that the assessee is located at remote village and engaged local people for its garden maintenance and incurred garden expenses on day-today basis in cash. The assessee paid the said garden expenses on daily basis to various local labour and no chance of paying the said amount through banking channel to the local labourer. Further, he submits that the assessee used to procure printing and stationery material from local suppliers whenever it is required and the assessee used to pay in cash on periodicals at that time. Further, the assessee used to get periodicals like journals, newspapers, etc. from local vendors and was also paid in cash. He argued that the assessee out of the total miscellaneous expenses, incurred in cash only to the addition confirmed by the ld. CIT(A) as there was no chance to the assessee to pay the same through banking channel as those were incurred locally, where the assessee’s resort is located. 7. The ld. DR relied on the order of the Assessing Officer. I.T.A. No.2012/Chny/24 4 8. Having heard both the parties and on perusal of the records, we note that the Assessing Officer disallowed 30% of total miscellaneous expenses claimed under the head ‘other expenses’. We find the details of expenditure are placed in tabular form in page 7 of the impugned order. On perusal of the same, we note that the assessee incurred all the said expenditure through banking channel except garden expenses, printing & stationery and subscriptions to periodicals. The Assessing Officer adopted the disallowance at an estimation of 30% only on the reason that there was no details of evidence in support of claim of the assessee, but, whereas, on perusal of the tabular form of details of expenditure at page 7 of the impugned order, we note that the assessee incurred all the said expenditures through banking channel like bank charges, faver block expenses, swimming pool expenses, water charges, electrical & furniture expenses, kitchen maintenance, consumables, laundry expenses, income tax and general expenses. The ld. CIT(A) examined all the said details in the first appellate proceedings. The ld. AR submits that all the details were furnished before the Assessing Officer, but, however, he proceeded to disallow 30% on estimation basis is not correct. We find force in the arguments of the ld. AR that the Assessing Officer, without examining I.T.A. No.2012/Chny/24 5 the details, proceeded to disallow on estimation basis, in our opinion, it is not justified. 9. Coming to the impugned order, at para 7.8, we note that all the ledgers forming part of financials of the assessee were brought on record before the Assessing Officer and on examination of the same, the ld. CIT(A) restricted the addition to the extent of cash payments. In our opinion, the ld. CIT(A) ought to have examined the details of cash payments in the ledger accounts of the assessee and considered the same. We find no such consideration or examination made by the ld. CIT(A) with regard to the circumstances and reasons, which made the assessee to bear garden expenses, printing & stationery and subscription to periodicals in cash. Considering the facts and circumstances of the case, we accept the submissions of the ld. AR made in support of cash payments made with regard to garden expenses, printing & stationery and subscription to periodicals and the order of the ld. CIT(A) is not justified. Thus, the addition as restricted by the ld. CIT(A) is deleted and the ground raised by the assessee in ground No. 2 is allowed. I.T.A. No.2012/Chny/24 6 10. Ground No. 3 raised by the assessee is consequential in nature and requires no adjudication. 11. In the result, the appeal filed by the assessee is allowed. Order pronounced on 27th November, 2024 at Chennai. Sd/- Sd/- (AMITABH SHUKLA) ACCOUNTANT MEMBER (S.S. VISWANETHRA RAVI) JUDICIAL MEMBER Chennai, Dated, 27.11.2024 Vm/- आदेश की Ůितिलिप अŤेिषत/Copy to: 1. अपीलाथŎ/Appellant, 2.ŮȑथŎ/ Respondent, 3. आयकर आयुƅ/CIT, Chennai/Madurai/Coimbatore/Salem 4. िवभागीय Ůितिनिध/DR & 5. गाडŊ फाईल/GF. "