Sri Basavaraju @ Raju Sundaram, CHENNAI V. ITO Media Circle (OSD), CHENNAI

ITA 1050/CHNY/2010

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 1256 (ITAT-CHENNAI)
• Duration Of Justice: 6 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-01-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 18-01-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 25-06-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: B SRINIVAS
• Assessee Lawyers: K MEENAKSHISUNDHARAM

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BENCH C CHENNAI (BEFORE SHRI U.B.S. BEDI, JUDICIAL MEMBER AND SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER) ..... I.T.A. NO. 1050 / MDS/2010 ASSESSMENT YEAR : 2007-08 SHRI BASAVARAJU @ RAJU SUNDARAM, RAMASRAMA FLAT NO.I-5, 73, OLIVER ROAD, MYLAPORE, CHENNAI - 600 004. PAN : ACQPB9131R (APPELLANT) V. THE INCOME TAX OFFICER (OSD), MEDIA CIRCLE, CHENNAI - 600 034. (RESPONDENT) APPELLANT BY : SHRI K. MEENAKSHISUNDHARAM RESPONDENT BY : SHRI B. SRINIVAS O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER DATED 31.3.2010 OF THE COMMISSIONER OF INCOME TAX (APPEAL S)-VI, CHENNAI, FOR ASSESSMENT YEAR 2007-08. 2. ASSESSEE HAS RAISED THREE EFFECTIVE GROUNDS AND HAS CAPTIONED THEM AS GROUNDS OF LAW, GROUND AGAINST DISALLOWANCE OF EXPENSES AT 15% AND GROUND AGAINST ADDITION OF BANK INTEREST OF ` 4,10,789/-. WHEN THE CASE WAS TAKEN UP FOR HEARING, LEARNED COU NSEL FOR THE ASSESSEE SUBMITTED THAT HE WAS NOT PRESSING THE GRO UNDS OF LAW. I.T.A. NO. 1050/MD/10 2 HENCE, THESE GROUNDS ARE DISMISSED AS NOT PRESSED. SHORT FACTS IN RELATION TO OTHER TWO GROUNDS ARE AS UNDER:- 3. ASSESSEE, A DANCE DIRECTOR IN FILM FIELD HAD FIL ED HIS RETURN FOR THE IMPUGNED ASSESSMENT YEAR DECLARING INCOME OF ` 20,95,924/-. HE WAS REQUIRED TO PRODUCE BOOKS OF ACCOUNTS, BILLS AND VOUCHERS FOR EXPENSES CLAIMED. SUBMISSION OF THE ASSESSEE WAS T HAT SUCH BOOKS WERE WITH HIS PREVIOUS AUDITORS WHO WAS NOT CO-OPER ATIVE AND THEREFORE, IT WAS NOT POSSIBLE TO PRODUCE THE BOOKS . FURTHER, AS PER THE ASSESSEE, HE HAD OFFERED INCOME AS HIGH AS 78.9 2% OF THE PROFESSIONAL RECEIPTS AND THIS WAS ADEQUATE. THE A .O. FINDING THAT THE ASSESSEE COULD NOT PRODUCE ANY BOOKS OF ACCOUNT S, BILLS AND VOUCHERS FOR THE EXPENSES CLAIMED BY HIM, MADE 15% DISALLOWANCE OF THE FOLLOWING:- ` A. ASSISTANT SALARY 85,500 B. BUSINESS PROMOTION EXPENSES 99,192 C. CAR INSURANCE 18,436 D. TELEPHONE EXPENSES 50,091 E. TRAVELLING EXPENSES 1,45,745 F. VEHICLE MAINTENANCE 18,500 G. INTEREST ON CAR LOANS 70,368 H. INTERNET CHARGES 6,500 ---------- TOTAL 4,94,332 ---------- THE DISALLOWANCES THUS EFFECTIVELY WORKED OUT TO ` 74,150/-. I.T.A. NO. 1050/MD/10 3 4. A.O. ALSO NOTED THAT THE ASSESSEE HAD NOT SHOWN INTEREST FROM HIS FIXED DEPOSITS WITH STATE BANK OF INDIA AND HE SOUGHT EXPLANATION FROM ASSESSEE IN THIS REGARD. SUBMISSION OF THE AS SESSEE WAS THAT THE PROFESSIONAL INCOME OF ` 35,07,994/- RETURNED BY HIM INCLUDED THE INTEREST INCOME OF ` 4,19,475/-. HOWEVER, IT SEEMS ASSESSEE WAS UNABLE TO BRING ANY EVIDENCE FOR HIS CLAIM THAT PRO FESSIONAL INCOME INCLUDED THE INTEREST INCOME AND ACCORDINGLY AN ADD ITION OF ` 4,19,025/- WAS MADE UNDER THE HEAD INCOME FROM OTH ER SOURCES. 5. IN HIS APPEAL BEFORE THE CIT(APPEALS), ASSESSEE DID NOT DENY THE FACT THAT BOOKS OF ACCOUNTS OR BILLS OR VOUCHER S COULD NOT BE PRODUCED BEFORE THE A.O. HOWEVER, AS PER THE ASSES SEE, THE DISALLOWANCES HAD TO BE JUDGED FROM THE POINT OF VI EW OF JUSTIFICATION FOR MAKING SUCH DISALLOWANCE AND AS PER THE ASSESSE E, HE HAD RETURNED MORE THAN 15% OF GROSS RECEIPTS AS HIS INC OME AND THE CASE WAS SELECTED FOR SCRUTINY ALTHOUGH IT NEVER DESERVE D TO SCRUTINIZE ANY DISALLOWANCE. ACCORDING TO HIM, DISALLOWANCE OF 15 % OF EXPENSES WAS NOT CALLED FOR CONSIDERATION. IN SO FAR AS ADD ITION ON ACCOUNT OF INTEREST WAS CONCERNED, SUBMISSION OF THE ASSESSEE WAS THAT AN AFFIDAVIT WAS FILED REGARDING INTEREST BEING INCLUD ED IN THE GROSS RECEIPTS. HOWEVER, THE CIT(APPEALS) WAS NOT IMPRES SED. ACCORDING TO HIM, ASSESSEE HAD FAILED TO PRODUCE SUPPORTING E VIDENCE IN RESPECT OF ITS CLAIM FOR EXPENSES. THE DISALLOWANC E OF CLAIM OF I.T.A. NO. 1050/MD/10 4 EXPENDITURE TO A CERTAIN EXTENT WAS JUSTIFIED ACCOR DING TO THE LD. CIT(APPEALS). THE ADDITION OF ` 4,19,025/- ON ACCOUNT OF INTEREST WAS ALSO JUSTIFIED AS PER THE LD. CIT(APPEALS). HE THE REFORE, SUSTAINED THIS DISALLOWANCE TO THE EXTENT OF 7,5% OUT OF 15% MADE BY THE A.O. CONSIDERING THE FACTS OF THE CASE. HE DID NOT DIST URB THE ADDITION MADE ON ACCOUNT OF INTEREST. 6. NOW, BEFORE US, THE LEARNED A.R. SUBMITTED THAT THE ASSESSEE HAD SHOWN CONTINUOUSLY INCREASING INCOME OVER THE Y EARS AND THOUGH NO BOOKS OF ACCOUNTS WERE PRODUCED, THE DISALLOWANC ES WERE NOT WARRANTED. AS PER THE LEARNED A.R., DISALLOWANCE O F EXPENSES SUSTAINED TO THE EXTENT OF ` 7.5% WAS NOT JUSTIFIED IN THE FACTS AND CIRCUMSTANCES OF THE CASE. VIS--VIS THE BANK INTE REST, SUBMISSION OF THE LEARNED A.R. WAS THAT THE ASSESSEE HAD FILED A LETTER BEFORE THE CIT(APPEALS) ENCLOSING A CERTIFICATE FROM BANK WHIC H SHOWED THAT THE INTEREST ACCRUED TO HIM AS WAS ONLY ` 3,68,805/- AND NOT ` 4,19,485/-. IT WAS ARGUED BY THE LEARNED A.R. THAT THIS CERTIFI CATE WAS VERY PERTINENT AND WAS NOT CONSIDERED BY THE CIT(APPEALS ). 7. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL C ONTENTIONS. ASSESSEE COULD NOT PRODUCE ANY BOOKS OF ACCOUNTS NO R COULD HE PRODUCE ANY BILLS, VOUCHERS IN RESPECT OF THE EXPEN DITURE CLAIMED. WE CANNOT SAY THAT AN ASSESSEE WHO IS SHOWING PROGR ESSIVELY I.T.A. NO. 1050/MD/10 5 INCREASING INCOME, IS PRECLUDED FROM PRODUCING ANY BOOKS OR OTHER EVIDENCE IN RESPECT OF HIS RETURN. EVERY ASSESSMEN T YEAR IS DIFFERENT AND FOR EVERY ASSESSMENT YEAR, THE ASSESSEE IS DUTY BOUND TO SUPPORT HIS RETURN WITH NECESSARY BOOKS OF ACCOUNTS ALONG WITH VOUCHERS AND BILLS FOR CLAIM OF EXPENSES. THERE WA S FAILURE ON THE PART OF THE ASSESSEE HERE IN THIS REGARD. A.O. HAD MADE DISALLOWANCE OF 15% SINCE THE ASSESSEE COULD NOT PRODUCE ANY EVI DENCE IN RESPECT OF HIS CLAIM FOR EXPENDITURE. THE CIT(APPEALS) WAS MORE THAN FAIR WHEN HE SCALED DOWN THE DISALLOWANCE TO 7.5%. THE ASSESSEE FAILED TO PRODUCE BOOKS OF ACCOUNTS BEFORE THE CIT(APPEALS ), AND EVEN NOW BEFORE US, NO EVIDENCE WHATSOEVER WAS PRODUCED IN R ESPECT OF CLAIM FOR EXPENSES. HENCE WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE CIT(APPEALS) IN THIS REGARD. 8. IN SO FAR AS ADDITION OF BANK INTEREST IS CONCER NED, A CERTIFICATE FROM BANK DATED 31.3.2007 WAS FILED AND COPY THEREO F APPEARS AT PAGE NO.14 OF PAPER-BOOK FILED BY THE ASSESSEE. HO WEVER, THE LEARNED A.R. COULD NOT PRODUCE ANY PROPER REASON WH Y THIS CERTIFICATE COULD NOT BE PRODUCED DURING THE COURSE OF HEARING BEFORE THE A.O. THE DATE OF THE ORDER OF THE CIT(APPEALS) IS 31.3.2 010 AND THE LETTER ALONG WITH A CERTIFICATE WAS FILED BY THE ASSESSEE ON 12 TH APRIL, 2010. THIS TRIBUNAL CANNOT LEGITIMIZE LACHES AND A NEGLIG ENT ASSESSEE WHO HAD FAILED TO FILE NECESSARY RECORDS DESPITE LONG G AP OF TIME AVAILABLE I.T.A. NO. 1050/MD/10 6 WITH HIM, CANNOT CONSIDER THIS TRIBUNAL AS A FORUM FOR GETTING HIS LAPSES LEGITIMIZED. EVEN NOW THERE IS NO JUSTIFICA TION GIVEN BY THE ASSESSEE WHY IT SHOULD BE ACCEPTED AS ADDITIONAL EV IDENCE BEFORE US. WE ARE, THEREFORE, OF THE OPINION THAT THE CIT(APPE ALS) WAS FULLY JUSTIFIED IN NOT DISTURBING THE ADDITION MADE BY TH E A.O. TOWARDS BANK INTEREST. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. THE ORDER WAS PRONOUNCED IN THE COURT ON THE EIGHTE ENTH DAY OF JANUARY, 2011. SD/- SD/- (U.B.S. BEDI) (ABRAHAM P. GEO RGE) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 18 TH JANUARY, 2011. KRI. COPY TO: (1) APPELLANT (2) RESPONDENT (3) CIT(A)-VI, CHENNAI-34 (4) CIT, CHENNAI-IV, CHENNAI (5) D.R. (6) GUARD FILE