Appeal Details
Counselvise Citation
[2016] 133 COUNSELVISE.COM (IT) 8106 (ITAT-CHENNAI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
8 month(s) 21 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
03-02-2016
Appeal Filed By
Assessee
Bench Allotted
B
Next Hearing Date
04-11-2015
Assessment Year
2009-2010
Appeal Filed On
12-05-2015
Judgement Text
, , IN THE INCOME - TAX APPELLATE TRIBUNAL B BENCH, CHENNAI . , . , BEFORE SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER & SHRI DUVVURU R L REDDY , JUDICIAL MEMBER ./ I.T.A.NO. 1 123 /MDS/201 5 / ASSESSMENT YEAR :20 0 9 - 1 0 M/S. CONELEC CONSULTANTS PVT. LTD., C/O. SUNDARAM & NARAYANAN, C.AS., 18, BALAIAH AVENUE, LUZ CHURCH ROAD, MYLAPORE, CHENNAI 600 004. [PAN: A A A C C4557D ] VS. THE INCOME TAX OFFICER , CO MPANY WARD I ( 1 ), CHENNAI. ( / APPELLANT ) ( / RESPONDENT ) / APPELLANT BY : SHRI K. MEENATCHI SUNDARAM , C.A. / RESPONDENT BY : DR. B. NISCHAL, JCIT / DATE OF HEARING : 0 4 . 11 .201 5 / DATE OF P RONOUNCEMENT : 03 . 0 2 .201 6 / O R D E R PER DUVVURU RL REDDY , JUDICIAL MEMBER : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INC OME TAX (APPEALS) 1 , CHENNAI , DATED 20 . 02. 20 15 RELEVANT TO THE ASSESSMENT YEAR 2009 - 10, WHEREIN THE ONLY GROUND RAISED BY THE ASSESSEE IS WITH REGARD TO CONFIRMATION OF DISALLOWANCE OF .8,00,294/ - . 2. THE ASSESSEE COMPANY FILED ITS RETURN OF INCOME ADMI TTING TAXABLE INCOME OF RS.2,97,119/ - . THE CASE WAS SELECTED FOR SCRUTINY AND NOTICE UNDER SECTION 143(2) OF THE INCOME TAX ACT, 1961 [ ACT IN SHORT] WAS ISSUE I.T.A. NO . 1 1 2 3 /M/ 15 2 ON 05.06.2012. THEREAFTER, THE NOTICE UNDER SECTION 142(1) OF THE ACT WAS ALSO ISSUED ON 08.08. 2012 REQUIRING THE ASSESSEE TO PROVIDE SUCH DETAILS BASED ON WHICH THE TAXABLE INCOME HAD BEEN ARRIVED AT. 3. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER HAS OBSERVED THAT THE NATURE OF BUSINESS ACTIVITY OF THE ASSESSEE IS PROVIDI NG NETWORK SERVICES FOR ALL SORTS OF SET TOP BOXES AND HAD SHOWN INCOME UNDER THE HEAD SALES COMMISSION AT .1,25,314/ - AGAINST WHICH THE ASSESSEE HAS CLAIMED EXPENDITURE TO THE TUNE OF .23,96,005/ - , WHICH ACCORDING TO HIM IS IN HIGHER SIDE AND NOT ACCE PTABLE WHILE COMPARING TO THE INCOME GENERATED. THEREFORE, THE ASSESSEE WAS ASKED TO FURNISH SUBSTANTIAL PROOF TO VERITY THE GENUINENESS OF THE EXPENDITURE CLAIMED. ACCORDINGLY, THE ASSESSEE HAS FILED BILLS/VOUCHERS, WHEREVER REQUIRED FOR ALL THE EXPENDITU RES. AFTER EXAMINING THE BILLS/VOUCHERS PRODUCED BY THE ASSESSEE, THE ASSESSING OFFICER HAS OBSERVED THAT THE ASSESSEE IS UNABLE TO PROVE THAT THESE EXPENDITURES WERE INCURRED ONLY FOR THE PURPOSE OF BUSINESS. FROM THE STATEMENT OF EXPENDITURE, THE ASSESSI NG OFFICER HAS FURTHER OBSERVED THAT WITH REGARD TO THE CLAIM OF EXPENDITURE OF .53,435/ - UNDER BUSINESS PROMOTION EXPENSES , TELEPHONE, POSTAGE & COURIER .68,062/ - , SECURITY CHARGES .76,000/ - , CAR MAINTENANCE CHARGES .1,12,060/ - , TRAVELLING EXPENSES .84,296/ - .ETC. ARE NOT AT ALL REQUIRED TO BE INCURRED FOR THE BUSINESS PURPOSES OF THE ASSESSEE. THUS, THE ASSESSING OFFICER HAS I.T.A. NO . 1 1 2 3 /M/ 15 3 DISALLOWED ALL THE EXPENDITURES CLAIMED BY THE ASSESSEE AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 4. ON APPEAL, AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND EXAMINING THE CASE, THE LD. CIT(A) WORKED OUT THE DISALLOWANCE AND RESTRICTED TO THE EXTENT OF RS.8,00,294/ - . 5. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 6. WE HAVE HEARD BOTH SIDES, PE RUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) R.W.S. 147 OF THE ACT ON 10.04.2013. WHEN THE ASSESSEE WAS ASKED TO FURNISH DETAILS ALONG WITH SUBSTANTIAL PROOF FOR THE EXPENDITURE CLAIMED, THE ASSESSEE HAS ATTACHED BILLS/INVOICES WHEREVER REQUIRED FOR ALL THE EXPENDITURE. THE ASSESSING OFFICER , SIMPLY COMPARING THE EXPENDITURE WITH REGARD TO EARNING OF THE INCOME , MADE THE ABOVE DISALLOWANCE . IF ANY CLAIM OF EXPENDI TURE MADE WITHOUT ANY EVIDENCE OR FOUND FALSE OR BOGUS, THEN THE ASSESSING OFFICER HAS EVERY RIGHT TO REJECT THE CLAIM AFTER RECORDING SALIENT FINDINGS . WHAT IS REQUIRED TO BE EXPENDED HAS TO BE SEEN FROM THE BUSINESSMEN POINT OF VIEW AND NOT FROM THE VIEW OF THE ASSESSING OFFICER. IN THIS CASE, THE ASSESSING OFFICER HAS ACCEPTED THAT THE ASSESSEE HAS ATTACHED BILLS/INVOICES WHEREVER REQUIRED FOR ALL THE EXPENDITURE CLAIMED, BUT REJECTED THE CLAIM OF THE ASSESSEE ONLY ON THE I.T.A. NO . 1 1 2 3 /M/ 15 4 GROUND THAT THE EXPENDITURE STA TED TO HAVE BEEN INCURRED BY THE ASSESSEE IS IN HIGHER SIDE. THE LD. CIT(A) HAS OBSERVED THAT THE DISALLOWANCE OF ENTIRE EXPENDITURE REFLECTED AT THE END OF THE I & E STATEMENT A T .23,96,005/ - IS DEFINITELY A MISTAKE. THE LD. CIT(A), AFTER REDUCING THE NET PROFIT ARRIVED AT IN THE DEBIT SIDE OF THE I & E STATEMENT OF .7,95,418/ - , WORKED OUT THE NET EXPENSES TO .16,00,587/ - [ .23,96,005 . 7,95,418/ - ] AND ALSO OBSERVED THAT THE EXPENDITURE APPEARS TO BE ON THE HIGHER SIDE. THEREFORE, THE LD. CIT(A) RESTRICTED THE DISALLOWANCE AT 50% OF THE NET EXPENSES WORKED BY HIM OF . 16,00,587/ - . 7. AFTER EXAMINING THE INCOME AND EXPENDITURE STATEMENT, THE LD. CIT(A) COULD NOT PINPOINT THE REQUIREMENT FROM THE ASSESSEE S SIDE FOR ACCEPTING THE CLAIM OF ITS EXPENDITURE. TO ACCEPT THE CLAIM OF EXPENDITURE, NECESSARY SUPPORTING BILLS/INVOICES ARE REQUIRED TO BE PRODUCED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER FOR VERIFICATION AND ONCE THE ASSESSEE HAS ATTACHED BILLS/INVOICES WHEREVER REQUIRED FOR ALL THE EXPENDITURES, WITHOUT ASSIGNING VALID REASON, THE ASSESSING OFFICER CANNOT DISALLOW THE CLAIM OF THE ASSESSEE , WHICH WAS FOUND BY THE LD. CIT(A) AS DEFINITELY A MISTAKE . HOWEVER, THE LD. CIT(A) HAS RESTRICTED 50 % THE DISALLOWANCE OF EXPENDITURE AFTER WORKING OUT THE NET EXPENSES. WHEN THE LD. CIT(A) FOUND THAT THE ENTIRE EXPENDITURE CLAIMED BY THE ASSESSEE AND DISALLOWED BY THE ASSESSING OFFICER IS DEFINITELY A MISTAKE, HE CANNOT RESTRIC T THE DISALLOWANCE, WHEN THE I.T.A. NO . 1 1 2 3 /M/ 15 5 ASSESSEE HAS FURNISHED BILLS/INVOICES FOR ALL THE EXPENDITURES CLAIMED. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES, WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND DIRECT THE ASSESSING OFFICER TO ALLOW THE EXPENDITURES CLAIMED B Y THE ASSESSEE. THUS, THE GROUND RAISED BY THE ASSESSEE IS ALLOWED. 8 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STANDS ALLOWED . ORDER PRONOUNCED ON THE 3 RD FEBRUARY , 2016 AT CHENNAI. SD/ - SD/ - (A. MOHAN ALANKAMONY ) ACCOUNTANT MEMBER ( DUVVURU R L REDDY ) JUDICIAL MEMBER CHENNAI, DATED, THE 03 . 0 2 .201 6 VM/ - / COPY TO: 1. / APPELLANT , 2. / RESPONDENT , 3. ( ) / CIT(A) , 4. / CIT , 5. / DR & 6. / GF.
Mehul