M/s Khoday Technologies Limited, Bangalore V. ITO, Bangalore

ITA 1015/BANG/2011

• Counselvise Citation: 101521114 RSA 2011
• Duration Of Justice: 4 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-03-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 08-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUSAN THOMAS JOSE
• Assessee Lawyers: S SUKUMAR

Judgement Text

I II IN THE INCOME TAX APPELLATE TRIBUNAL N THE INCOME TAX APPELLATE TRIBUNAL N THE INCOME TAX APPELLATE TRIBUNAL N THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BANGALORE BANGALORE BANGALORE BENCH BENCH BENCH BENCH B BB B (SMC) (SMC) (SMC) (SMC) BEFORE BEFORE BEFORE BEFORE SHRI SHRI SHRI SHRI N. N.N. N.BARAT BARAT BARAT BARATH HH HVAJA SANKAR, V VAJA SANKAR, V VAJA SANKAR, V VAJA SANKAR, VICE PRESIDENT ICE PRESIDENT ICE PRESIDENT ICE PRESIDENT ITA NO.1015(BANG)/2011 (ASSESSMENT YEAR: 2006-07) M/S.KHODAY TECHNOLOGIES LTD. BREWERY HOUSE, 7 TH MILE, KANAKAPURA ROAD, BANGALORE-560 062. PAN: AABCK 9975 C PAN: AABCK 9975 C PAN: AABCK 9975 C PAN: AABCK 9975 C VS. APPELLANT INCOME-TAX OFFICER, WARD 11(2), BANGALORE. RESPONDENT APPELLANT BY: SHRI S.SUKUMAR, ADVOCATE. RESPONDENT BY: SMT. SUSAN THOMAS JOSE, JCIT. DATE OF HEARING : 13-03-2012 DATE OF PRONOUNCEMENT: 13-03-2012 O R D E R O R D E R O R D E R O R D E R THIS IS AN APPEAL PREFERRED BY THE ASSESSEE-M/S.KH ODAY TECHNOLOGIES LTD., BANGALORE, FOR THE ASSESSMENT YE AR 2006-07 AGAINST THE APPELLATE ORDER DATED 09-09-2011 OF THE CIT(A)-I, BANGALORE. 2. THE ONLY ISSUE IS WHETHER THE CIT(A) OUGHT TO N OT HAVE CONFIRMED THE ADDITION OF `84,059/- MADE BY THE AO U/S 41(1) OF THE INCOME-TAX ACT, 1961 [HEREINAFTER REFERRED TO AS 'T HE ACT']. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A COMPANY IN THE BUSINESS OF PROVIDING MAN POWER TO THE COMPANIE S ON CONTRACT ITA NO.1015(BANG)/2011 PAGE 2 OF 5 BASIS. FOR THE ASSESSMENT YEAR 2006-07, IT FILED R ETURN OF INCOME DECLARING LOSS OF `5,45,126/-. THE AO COMPLETED TH E ASSESSMENT ON A LOSS OF `4,61,067- AFTER MAKING AN ADDITION OF `84, 059/- U/S 41(1) OF THE ACT. DURING THE ASSESSMENT PROCEEDINGS, THE AO OBSERVED DISCREPANCY BETWEEN THE ACCOUNTS OF THE ASSESSEE AN D M/S.BATHA ADVERTISING ASSOCIATIES [BAA FOR SHORT]. THE BOO KS OF THE ASSESSEE SHOWED THAT IT HAD TO PAY `1,20,900/- TO BAA FOR PU BLICATION OF AN ADVERTISEMENT IN TIMES OF INDIA WITH REFERENCE TO BILL NO.285/2000 DATED 21-12-2000 AND THE SAME BALANCE PAYABLE WAS C ONTINUING UP TO 31-3-2006 I.E. ASSESSMENT YEAR 2006-07. THE AO CALLED FOR THE COPY OF THE ACCOUNT OF THE ASSESSEE WITH BAA. THEY SHOWED THAT THE OUTSTANDING RECEIVABLE IS OF `36,841/-. THEREFORE, THE AO ASKED THE ASSESSEE TO RECONCILE THE ACCOUNTS. AT THAT STAGE, IT WAS EXPLAINED THAT THE ASSESSEE IS ONE OF THE SEVERAL COMPANIES O F THE KHODAY GROUP COMMONLY KNOWN AS HOUSE OF KHODAYS. ALL TH ESE COMPANIES ADVERTISE THROUGH BAA. THEREFORE, IN ALL LIKELIHOO D, BAA WOULD HAVE MIXED UP THE ACCOUNTING. THEREFORE, THE AOS QUERY SHOULD HAVE BEEN SPECIFIC AS TO THE BILL NO.285/2000 DATED 21-1 2-2000 OF KHODAY TECHNOLOGY AND AS PER THEIR RECORD, THE BILL IS STI LL PAYABLE BY THEM. THE AO, THEREFORE, ASKED FOR COPY OF LEDGER ACCOUNT OF THE HOUSE OF KHODAYS FOR THE PERIOD FROM1-4-2000 TO 31-3-2001 AN D HE ALSO CALLED FOR COPY OF RELEVANT ACCOUNT FROM BAA FOR THAT PERI OD. THE COPY OF ACCOUNTS WERE NOT SUPPLIED BY THE HOUSE OF KHODAYS BUT WAS SUPPLIED BY BAA WHICH REVEALED THAT THE OUTSTANDING PAYABLE AS ON 31-3-2001 STOOD AT `1,20,900/- BUT GOT REDUCED TO ` 36,841/- AS ON 31-3-2006. HENCE, THE AO MADE THE ADDITION. ITA NO.1015(BANG)/2011 PAGE 3 OF 5 3. AGGRIEVED, THE ASSESSEE MOVED THE MATTER IN APPE AL BEFORE THE FIRST APPELLATE AUTHORITY. BEFORE THE CIT(A) AL SO SAME ARGUMENTS HAD BEEN MADE. THE CIT(A) CONFIRMED THE ADDITION M ADE BY THE AO. STILL AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE U S RAISING THE FOLLOWING GROUNDS OF APPEAL: 1. THE HONBLE CIT(A) ERRED IN CONFIRMING THE ASSESSME NT MADE BY THE ITO, WARD 11(2), BANGALORE BY DISMISSIN G THE APPEAL FILED BY THE APPELLANT. 2. TH E H O N ' BL E C IT (A) O U G HT N O T T O H AVE CO N F I RME D TH E ADD I TI O N OF R S.8 4 , 0 5 9 / - M A D E B Y TH E A SSESS IN G O F FI CE R UND ER SEC T ION 41 ( 1 ) O F TH E IT AC T . 3. THE HON ' BL E CIT(A) HA S UNJU S TIFI A BL Y I G N O R E D TH E C L A IM OF TH E APP E LL A NT THAT A SUM OF ` L , 2 0 ,9 00 / - WAS P AYA BL E T OWA RD S PUBLI C ATION OF AD VE RTI SE M E N T TH RO U G H M/S . BATH A A D VE RTI S IN G ASS O C I A T E S W HI C H WAS PA YA BLE E V EN A S ON 31 . 03.200 6 . 4. TH E HON ' BLE CIT(A) E RR E D IN REL Y IN G ON THE LEDGER ACCO U NT COP Y PRO V ID E D B Y M/ S. B A TH A A D VE R T I S IN G ASSOC I A TE S I N W HI C H ALL THE BILL S O F KH O D AY GR O UP OF CONC E RN S A ND A LL P AY M E NTS M A DE B Y KH O D AY GROUP OF CONCERN S W E R E S HO W N AND COMPARING WITH TH A T OF THE APPELLANT , W HICH WA S ALSO BROUGHT TO THE N O TICE O F TH E A SSE S S IN G O FF IC E R AS WE LL AS T O CIT (A) . 5. TH E HON ' BL E CIT (A) OU G HT T O H AVE O BT A IN E D C LARI F ICATION ON FACT S FROM M / S. BATH A ADVERTISIN G A SSO CIATE S , AS RE QUE S T E D B Y LETTER DT . 24 . 12 . 2008 A DDRE SSE D T O A SSESS IN G OFFI CER W H E TH E R BILL N O . 28 5 / 2000 D A T E D 21 . 1 2 . 2 000 WAS P A ID B Y TH E A PP E LL A NT W HI C H T H E A O FAIL E D T O E NQUIR E BEFOR E C ONFIRMING TH E A DDITION MAD E ERRONEOU S LY BY TH E AS S E SS ING O F FICER . 6. TH E HON ' BL E CIT (A ) OU G HT NO T TO H AVE R EJE CTED THE CONTENTION O F TH E A PP E LL A N T W ITH O UT A S P EAKI N G O RD E R BUT B Y M E R E L Y RE L Y IN G ON CONFIRM A TI O N F ROM T H E ASSESSI N G O FF I CER . 7. T H E A DDITION S M A D E B Y TH E ASSESSING OFF I CE R U L S . 41 ( 1 ) ON C ON JECT UR ES A ND S URMI S E S THAT TH E A MOUNT I S N O L O N G ER P AYA BL E S HOULD NOT HA V E B E EN CON F IRM E D B Y TH E HON ' BLE CIT(A) WITHOUT PROPER ENQUIRY. ITA NO.1015(BANG)/2011 PAGE 4 OF 5 8. FOR THESE AND S UCH OTHER G ROUND S THAT M AY BE URGED AT THE TIME O F H E ARIN G TH E A PP EA L MA Y B E A LL OWE D A ND JU S TI CE R E ND E R E D . 4. WHEN THE APPEAL WAS POSTED FOR HEARING, LEARNED COUNSEL FOR THE ASSESSEE PLACED ON RECORD A SMALL COMPILATI ON CONSISTING OF 9 PAGES COMPRISING THE FOLLOWING: I) WRITTEN SUBMISSIONS II) COPY OF THE LETTER DATED 24-12-2008 ADDRESSED T O THE ITO, WARD-11(2), BANGALORE. BY PLACING THE ABOVE MATERIAL ON RECORD, HE SUBMITT ED THAT IF AN OPPORTUNITY IS GIVEN, THE ASSESSEE WOULD PROVE THAT THE OUTSTANDING AT THE END OF THE FINANCIAL YEAR 31-3-2006 WAS `1,2 0,900/- AND NOT `36,841/- AS DECIDED BY THE LOWER AUTHORITIES. HE SUBMITTED THAT BAA MIGHT HAVE MAINTAINED THE ACCOUNT IN THE NAME OF H OUSE OF KHODAYS WHEREAS THIS ASSESSEE-M/S.KHODAY TECHNOLOGY , HAVING A SEPARATE IDENTITY, WOULD BE ABLE TO GET IT RECONCIL ED, IF AN OPPORTUNITY IS GIVEN TO HIM. 5. I HAVE ALSO HEARD THE LEARNED DEPARTMENTAL REPR ESENTATIVE. AFTER CAREFUL CONSIDERATION OF THE SUBMISSIONS, IN THE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE, I FIND THAT BAA IS M AINTAINING ACCOUNT IN THE NAME OF HOUSE OF KHODAYS WHEREAS THE ASSES SEE IS ONLY A PART OF HOUSE OF KHODAYS. HENCE, I FIND THAT THERE IS SOME FORCE IN THE CONTENTION OF THE LEARNED COUNSEL FOR THE ASSES SEE THAT HE WOULD BE ABLE TO RECONCILE THE ACCOUNTS, IF AN OPPORTUNIT Y IS GIVEN. HENCE, IN THE INTERESTS OF JUSTICE, I DEEM IT FIT AND PROP ER TO RESTORE THE MATTER BACK TO THE FILE OF THE AO WITH A DIRECTION TO GIVE AN OPPORTUNITY TO THE ASSESSEE TO RECONCILE THE BALANC E IN RESPECT OF THE ITA NO.1015(BANG)/2011 PAGE 5 OF 5 ASSESSEE AS ON 31-3-2006 AND THEN DECIDE ACCORDING TO LAW, OF COURSE, AFTER GIVING EFFECTIVE OPPORTUNITY OF HEARI NG TO THE ASSESSEE. THE ASSESSEE IS ALSO DIRECTED TO PRODUCE NECESSARY STATEMENT IN RESPECT OF IT IN THE BOOKS OF BAA BEFORE THE AO AND RECONCILE THE BALANCE AS PER THE ACCOUNTS OF BOTH THE PARTIES. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS TR EATED AS ALLOWED FOR STATISTICAL PURPOSES ONLY. ORDER PRONOUNCED IN THE OPEN COURT AFTER THE HEARIN G ON 13 TH MARCH 2012 SD/ SD/ SD/ SD/- -- - (N.BARATHVAJA SANKAR) (N.BARATHVAJA SANKAR) (N.BARATHVAJA SANKAR) (N.BARATHVAJA SANKAR) VICE VICE VICE VICE- -- -PRESIDENT PRESIDENT PRESIDENT PRESIDENT EKS COPY TO : COPY TO : COPY TO : COPY TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A) CONCERNED 4. CIT 5. DR, ITAT, BANGALORE 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, ITAT, BANGALORE