M/s. Pace Computer Education Pvt.Ltd, Hyderabad V. DCIT, Hyderabad

ITA 126/HYD/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 61917 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 5 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-06-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 07-07-2011
• Assessment Year: 2001-2002
• Appeal Filed On: 27-01-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: NAGESWARA RAO
• Assessee Lawyers: GVVS MURTHY
• Keywords: Corroborative evidences; Assessment record; Revised return
• Section: 143(3); 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A', HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO. 126/HYD/2011 ASSESSMENT YEAR 2001-02 M/S. PACE COMPUTER EDUCATION PVT. LTD. HYDERABAD PAN: AACCP0784H VS. THE DY. COMMISSIONER OF INCOME-TAX, CIRCLE-16(3) HYDERABAD APPELLANT RESPONDENT APPELLANT BY: SHRI G.V.V.S. MURTHY RESPONDENT BY: SHRI NAGESWARA RAO DATE OF HEARING: 24 . 05 .201 2 DATE OF PRONOUNCEMENT: 29.06.2012 O R D E R PER CHANDRA POOJARI, AM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE CIT(A)-V, HYDERABAD DATED 9.11.2010 FOR ASSESSM ENT YEAR 2001-02. 2. THE ASSESSEE RAISED THE FOLLOWING GROUNDS OF APPEAL : 1. THE ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS)-V IS OPPOSED TO LAW AND FACTS AND EVIDENCE ON RECORD. 2. THE LEARNED CIT(A) IS NOT JUSTIFIED IN STATING THAT THE ASSESSEE HAS NOT LED ANY EVIDENCE TO SUBSTANTIATE I TS SUBMISSION THAT THERE WAS NO JUSTIFICATION FOR REPE ATING THE TWO IMPUGNED ADDITIONS WHICH WERE MADE IN THE ORIGINAL ASSESSMENT. 3. THE CIT(A)'S OBSERVATIONS THAT ON BEHALF OF THE ASS ESSEE NO EVIDENCE REGARDING SUPPRESSION OF RECEIPTS TO TH E TUNE OF RS. 30,40,539 WAS FILED BEFORE HIM IS NOT CORRECT, WHEN HE HIMSELF REPRODUCED PARA 2 OF ASSESSEE'S REPLY DT. 2-11-2010 FILED BEFORE HIM TO WHICH THE ASSESSEE ENCLOSED COPIES OF THE RELEVANT IMPOUN DED ITA NO. 126/HYD/2011 M/S. PACE COMPUTER EDUCATION PVT. LTD. ============================ 2 LEDGER PAGES WERE ENCLOSED, WHICH GO TO SHOW THAT T HE ASSESSEE'S CLAIM WAS NOT AN AFTERTHOUGHT TO REDUCE ITS RECEIPTS. 4. LIKE WISE, THE LEARNED CIT(A) WAS NOT CORRECT IN ST ATING THAT NOT A SINGLE ENTRY OF AMOUNT HAS BEEN RECONCIL ED AS A RESULT OF THE ARGUMENTS OF THE ASSESSEE WHEN T HE FIRST APPELLATE AUTHORITY REPRODUCED PARA 3 OF ASSESSEE'S LETTER DATED 2-11-2010 FILED BEFORE HIM TO WHICH' WERE ENCLOSED THE RELEVANT PAGES OF IMPOUNDE D LEDGER TO SUBSTANTIATE ITS CLAIM THAT SUCH EXPENSES TO THE TUNE OF RS. 12,90,140 WERE INCURRED TOWARDS ADVERTISEMENT AND THAT THEY WERE NOT INFLATED EXPENSES. 5. THE LEARNED CIT(A) WAS NOT CORRECT IN STATING IN PA RA 7.7 OF HIS ORDER THAT THE FIRM OF M/S. PACE MEDIA MERCANTILE CO. HAS NOT FILED ITS RETURN OF INCOME, WHEN COPY OF SUCH RETURN WAS FILED BEFORE THE A.O. AND T HE CIT(A) PERUSED THE ASSESSMENT RECORD. 6. THE LEARNED CIT(A) WAS NOT JUSTIFIED IN OBSERVING T HAT THE STORIES AND EXPLANATIONS GIVEN BY THE APPELLANT WERE WHOLLY UNSUBSTANTIATED, ESPECIALLY WHEN HE HIMSELF REPRODUCED THE RELEVANT PARAS OF ASSESSEE'S LETTER DT. 2-11-2010 FILED BEFORE HIM TO WHICH LETT ER RELEVANT PAGES OF IMPOUNDED LEDGER WERE ENCLOSED TO SUBSTANTIATE ASSESSEE'S CLAIM REGARDING THE TWO ADDITIONS IN QUESTION. 7. FOR THESE AND ANY OTHER GROUND OR GROUNDS OF APPEAL THAT MAY BE URGED AT THE TIME OF HEARING, IT IS PRA YED THAT THE TWO IMPUGNED ADDITIONS RELATING TO REDUCTI ON OF RECEIPTS AND INFLATION OF ADVERTISEMENT EXPENSES, B E DIRECTED TO BE DELETED. 3. BRIEF FACTS OF THE CASE ARE THAT THE FACTS ARE THAT THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF COMPUTER EDUC ATION AND TRAINING. A SURVEY UNDER SECTION 133A OF THE INCOM E-TAX ACT, 1961 WAS CONDUCTED IN THE BUSINESS PREMISES OF THE ASSES SEE ON 28.12.2001. DURING SURVEY PROCEEDINGS, THE SWORN ST ATEMENT OF SRI A. VENKAT REDDY, MANAGING DIRECTOR OF THE COMPA NY WAS RECORDED AND THE DIFFERENCES BOTH IN THE GROSS RECE IPTS AND ADVERTISEMENT EXPENSES SHOWN IN THE RETURN OF INCOM E VIS-A-VIS ITA NO. 126/HYD/2011 M/S. PACE COMPUTER EDUCATION PVT. LTD. ============================ 3 THE BOOKS OF ACCOUNT WERE CONFRONTED TO HIM. THE MA NAGING DIRECTOR SURRENDERED AN AMOUNT OF RS. 42,73,301 ON ACCOUNT OF THE DISCREPANCIES. HOWEVER, IN THE RETURN OF INCOM E FILED AFTER THE SURVEY OPERATION, AN ADDITIONAL INCOME OF ONLY RS. 20 LAKHS WAS DISCLOSED. THE DETAILS ARE REPRODUCED BELOW FROM TH E IMPUGNED ORDER OF THE ASSESSING OFFICER DATED 31.12.2008: 'A SURVEY U/S 133A OF I.T. ACT WAS CONDUCTED IN THE BUSINESS PREMISES OF THE ASSESSEE ON 28.12.2001. DURING SURVEY OPERATION , VERIFICATION OF BOOKS OF ACCOUNT REVEALED THE FOLLOWING DISCREPANCI ES. I. GROSS RECEIPTS: GROSS RECEIPTS AS PER THE RETURN OF INCOME - RS. 1, 62,75,354 GROSS RECEIPTS AS PER THE BOOKS OF ACCOUNT - RS. 1 ,92,58,513 RECEIPTS WHICH WERE NOT DECLARED IN THE RETURN - RS . 29,83,155 II. ADVERTISEMENT EXPENSES: ADVERTISEMENT EXPENDITURE AS PER THE RETURN OF INCO ME - RS. 44,00,296 ADVERTISEMENT EXPENDITURE AS PER THE BOOKS OF ACCOU NT - RS. 31,10,150 EXCESS EXPENDITURE CLAIMED IN THE RETURN OF INCOME - RS. 12,90,146 5. DURING SURVEY PROCEEDINGS, A SWORN STATEMENT OF SRI. A. VENKAT REDDY, MANAGING DIRECTOR OF THE COMPANY WAS RECORDE D ON 28.12.2001. SRI. A. VENKAT REDDY HAD DEPOSED THAT T HE RECEIPTS TO THE EXTENT OF RS. 29,83,155 WERE NOT DECLARED IN THE RE TURN OF INCOME AND AN EXPENDITURE OF RS. 12,90,146 WAS CLAIMED EXCESS UND ER ADVERTISEMENT EXPENSES. THE RELEVANT EXCERPTS OF HIS SWORN STATEM ENT ARE REPRODUCED BELOW: 'Q. NO: 20. IN THE PROFIT AND LOSS ACCOUNT, THE GRO SS RECEIPTS WERE SHOWN AT RS. 1,62,75,354 FOR THE FINANCIAL 2000-01. DURIN G THE COURSE OF SURVEY PROCEEDINGS IT WAS FOUND THAT THE GROSS RECEIPTS WE RE SHOWN AT RS. 1,92,58,513 IN THE BOOKS FOR THE FINANCIAL YEAR 200 0-01. THUS THERE IS A SUPPRESSION OF RECEIPTS TO THE TUNE OF RS. 29,83,15 5. PLEASE EXPLAIN THE DISCREPANCY? A. THESE RECEIPTS TO THE TUNE OF RS. 29,83,155 ARE THE RECEIPTS FROM VARIOUS FRANCHISE CENTRES WHICH IS NOT INCLUDED IN THE TOTAL GROSS RECEIPTS SHOWN IN THE RETURN OF INCOME FOR THE A. Y. 2001-02 . Q. NO: 21. ON PERUSAL OF THE AUDITED BALANCE SHEET AND P & L ACCOUNT FILED ALONG WITH THE RETURN OF INCOME FOR THE A. Y. 2001-02, ADVERTISEMENT EXPENSES WERE CLAIMED TO THE TUNE OF RS. 44,00,296. ON PERUSAL OF THE LEDGER FOLIO NO. 152 THE ADVERTISEME NT EXPENSES ARE REFLECTED TO THE TUNE OF RS. 31,10,150 ONLY. THUS A DVERTISEMENT EXPENSES WERE CLAIMED AT RS. 13 LAKHS MORE THEREBY REDUCING THE ASSESSEE COMPANY'S PROFIT. PLEASE EXPLAIN THE SAME? A: OUR ACTUAL EXPENDITURE TOWARDS ADVERTISEMENT EXP ENDITURE IS CORRECTLY AT RS. 31,10,150. I HAVE SEEN THE LEDGER ACCOUNT. YES, I HAVE ITA NO. 126/HYD/2011 M/S. PACE COMPUTER EDUCATION PVT. LTD. ============================ 4 SHOWN AN AMOUNT OF RS. 12,90,146 AS EXCESS EXPENDIT URE TOWARDS ADVERTISEMENT EXPENDITURE TO REDUCE THE INCOME. 6. IN VIEW OF THE ABOVE DISCREPANCIES FOUND DURING SURVEY OPERATION, THE MANAGING DIRECTOR HAD VOLUNTARILY OF FERED AN ADDITIONAL INCOME OF RS. 42,73,301 (RS. 29,83,155 + RS. 12,90, 146) WHICH IS EVIDENT FROM HIS ANSWER TO QUESTION NO. 24 WHICH IS REPRODUCED BELOW: Q. NO: 24. DO YOU WANT TO SAY ANYTHING OTHER THAN T HE ABOVE? A: THE ABOVE STATEMENT IS GIVEN BY ME VOLUNTARILY, WITHOUT ANY COERCION, FORCE OR THREAT AND WHATEVER STATED ABOVE IS CORRECTLY RECORDED AS STATED BY ME, SINCE I HAVE VOLUNTARILY OFFERED A N AMOUNT OF RS. 42,73,301 TOWARDS ``` 7. BUT, IN THE REVISED RETURN FILED ON 06.02.2002, ASSESSEE HAD OFFERED ONLY RS. 20,00,000 AS .ADDITIONAL INCOME. A SSESSEE, VIDE ITS LETTER DATED 07.02.2002 TRIED TO EXPLAIN THE DISCREPANCIES AS UNDER, STATING THAT SUCH DISCREPANCIES WERE OCCURRED DUE TO NON-PO STING OF THE JOURNAL ENTRIES IN THE RESPECTIVE LEDGER FOLIOS: (I) GROSS RECEIPTS (RS.): GROSS RECEIPTS AS PER THE BOOKS OF ACCOUNT IMPOUNDE D VIDE FOLIO NO. 38 (GENERAL LEDGER NO. 2) IN CREDIT. 1,92,58,513 ADD: SUNDRY DEBTORS (RECEIVABLES FROM FRANCHISEE) JOURNAL VOUCHER NO. 126 2,62,380 LESS: REFUNDABLE SECURITY DEPOSIT RECEIVED JV NO. 153 2,05,000 LESS: CENTRE SHARE FOLIO NO. 300 IN DEBIT BALANCE 3 0,40,539 GOSS RECEIPTS AS PER THE PROFIT AND LOSS ACCOUNT 1, 62,75,354 THE DIFFERENCE OF RS. 29,83,160 WAS AS RECONCILED I N ABOVE TABLE AND MAINLY ON ACCOUNT OF FINAL ENTRIES ENTERED 'IN JOUR NAL BOOK BUT NOT POSTED IN RESPECTIVE LEDGER FOLIOS. (II) ADVERTISEMENT AND COURSE MATERIAL EXPENSES: EXPENSES AS PER BOOKS OF ACCOUNT IMPOUNDED VIDE FOL IO NO. 152. 31,10,150.10 ADD: PAYMENT MADE TO PACE MEDIA & MERCANTILE SERVICES VIDE FOLIO NO. 125. 8,687,146.00 ADD: AMOUNT PAYABLE TO PACE MEDIA & MERCANTILE SERVICES VIDE JV NO. 166 4,22,000.00 ADVERTISEMENT EXPENSES AS PER P&L ACCOUNT 44,00,296 .10 THE DIFFERENCE OF RS. 12,90,146 WAS AS RECONCILED I N THE ABOVE TABLE AND MAINLY ON ACCOUNT OF FINAL ENTRIES ENTERED IN JOURN AL BOOK BUT NOT POSTED IN THE RESPECTIVE LEDGER FOLIOS.' THE ABOVE EXPLANATION OF THE ASSESSEE WAS NOT ACCEP TED WHILE PASSING ORDER U/S. 143(3) ON 28.11.2003 FOR THE FOLLOWING R EASONS: ITA NO. 126/HYD/2011 M/S. PACE COMPUTER EDUCATION PVT. LTD. ============================ 5 A) ASSESSEE HAD FAILED TO PRODUCE BILLS/VOUCHERS IN SU PPORT OF ITS ABOVE CLAIM. B) WITH REGARD TO REFUNDABLE SECURITY DEPOSIT OF RS. 2 ,05,000 AND CENTRE SHARE OF RS. 30,40,539 WHICH WAS STATED TO H AVE BEEN RECEIVED FROM CENTRES, NO INFORMATION WAS FILED REGARDING NA MES OF SUCH CENTRES AND THEIR ADDRESSES. THERE WAS NO AGREEMENT FOR GIV ING BACK CERTAIN SHARE TO SUCH CENTRES. C) WITH REGARD TO ADVERTISEMENT EXPENSES CLAIMED TO HA VE BEEN MADE TO PACE MEDIA AND MERCANTILE SERVICES, THERE W AS NO SUPPORTING EVIDENCE. D) THOUGH SEVERAL OPPORTUNITIES WERE ALLOWED TO FURNIS H EVIDENCE IN SUPPORT OF ASSESSEE'S CLAIM OF RECONCILIATION OF GROSS RECEIPTS AND ADVERTISEMENT VIDE ITS LETTER DATED 07.02.2002, THE RE WAS NO COMPLIANCE FROM THE ASSESSEE.' 4. THE ASSESSING OFFICER ADDED THE TWO DISCREPANCIES I N THE ORIGINAL ASSESSMENT ORDER SINCE THE ASSESSEE WAS NOT ABLE TO RECONCILE THE SAME. GIVING CREDIT FOR THE AMOUNT DISCLOSED IN THE RETURN OF IN COME I.E., RS. 20 LAKHS, A NET ADDITION OF RS. 22,73,301 WAS MADE. THE CIT(A) CONF IRMED THE ADDITION WHILE THE ITAT, AS ALREADY MENTIONED REMANDED THE FILE BA CK TO THE ASSESSING OFFICER FOR FRESH ASSESSMENT ORDER. IN THE IMPUGNED ORDER , THE ASSESSING OFFICER ONCE AGAIN REPEATED THE ADDITIONS AFTER GIVING FRESH OPP ORTUNITIES TO THE ASSESSEE. THE FOLLOWING REASONS WERE GIVEN: '15. THE ASSESSEE HAD FAILED TO PRODUCE PROPER EVID ENCE IN SUPPORT OF ITS CLAIM THAT ADVERTISEMENT EXPENSES WERE PAID TO M/S. PACE MEDIA AND MERCANTILE SERVICES. FURTHER, ASSESSEE DID NOT FILE ANY INFORMATION REGARDING THE BASIS FOR REFUNDING AMOUNTS TO FRANCH ISEE CENTRES. NO AGREEMENT COPIES WITH SUCH FRANCHISEE CENTRES WERE FILED AND NO PROPER EVIDENCE WAS FILED IN SUPPORT OF IT CLAIM OF REFUNDABLE SECURITY DEPOSIT & CENTRE SHARE. IN VIEW OF THE ABOVE AND AS THE ASSESSEE FAILED TO RECONCILE THE DISCREPANCY OF RS. 29,83,155 IN GROSS RECEIPTS AND RS. 12,90,146 IN ADVERTISEMENT EXPENSES AND AS THE ASSESSEE HAD ALRE ADY OFFERED TO TAX RS. 20,00,000 VIDE REVISED RETURN FILED, THE BALANC E AMOUNT OF RS. 22,73,301 IS NOW ADDED TO THE RETURNED INCOME. 17. DELAY IN REMITTANCES OF TDS : AS SEEN FROM COLUMN NO. 27 TO 3CD REPORT, THE ASSES SEE HAD REMITTED TDS OF RS. 4,125 BELATEDLY WHICH WAS DEDUC TED FROM PROFESSIONAL FEES. THEREFORE, THE ASSESSEE IS LIABL E TO PAY INTEREST U/S. 201(LA) FROM JANUARY, 2001 TO OCTOBER, 2001 ON RS. 4,125 AND FROM FEBRUARY, 2001 TO OCTOBER, 2001 ON RS. 4,125. THE I NTEREST U/S 201(1A) WORKED OUT TO RS. 492 AND RS. 512 TOTALLING TO RS. 1,004. THE INTEREST IS ACCORDINGLY CHARGED. ITA NO. 126/HYD/2011 M/S. PACE COMPUTER EDUCATION PVT. LTD. ============================ 6 18. WITH THE ABOVE DISCUSSION, INCOME OF THE ASSE SSEE IS COMPUTED AS UNDER: INCOME AS PER REVISED RETURN FILED ON 30.9.03 - RS . 21,41,240 ADD: 1. AS DISCUSSED IN PARAS 4 TO 16 ABOVE. - RS. 22,73,301 2. INTEREST U/S. 201(1A) AS ABOVE. - RS. 1, 004 TOTAL INCOME RS. 44,15,545 5. ON APPEAL THE CIT(A) CONFIRMED THE ORDER OF THE ASS ESSING OFFICER. AGAINST THIS THE ASSESSEE IS IN APPEAL BE FORE US ONCE AGAIN. 6. THE LEARNED AR SUBMITTED THAT DURING THE COURSE OF SURVEY OPERATIONS, AS PER THE MANUAL BOOKS OF ACCOUNT WHIC H WERE IMPOUNDED, THE GROSS RECEIPTS WERE RS. 1,92,58,513. HOWEVER, AS PER THE RETURN OF INCOME FILED, THE GROSS RECEIPTS SHOWN WERE RS. 1,62,75,354. THE MANAGING DIRECTOR WHO IS AN UNDER GRADUATE AND WHO IS NOT CONVERSANT WITH ACCOUNTS AND TAXATIO N, DEPOSED THAT THE DIFFERENCE IN RECEIPTS OF RS. 29,83,155 WA S NOT INCLUDED IN THE GROSS RECEIPTS, AND HE, OFFERED THE SAID DIFFER ENTIAL AMOUNT OF RS. 29,83,155 TOWARDS INCOME AS BOOKS WERE NOT MAIN TAINED PROPERLY. THEREAFTER, IN THE COVERING LETTER DT. 07 -02-2002, WHICH WAS ENCLOSED TO THE REVISED RETURN FILED ON 08-02-2 002 (I.E., WITHIN 1 1/2 MONTHS FROM DATE OF SURVEY), HE EXPLAINED T HE DISCREPANCY STATING THAT SUCH DISCREPANCY OCCURRED DUE TO NON-P OSTING OF JOURNAL ENTRIES IN THE RESPECTIVE LEDGER FOLIOS. GROSS RECEIPTS AS PER BOOKS OF ACCOUNTS IMPOUNDED VIDE FOLIO NO. 38 (GENERAL LEDGER NO. 2) IN CREDIT: 1,92,58,513 ADD: SUNDRY DEBTORS (RECEIVABLES FROM FRANCHISEE) JOURNAL VOUCHER NO. 126` 2,62,380 LESS: REFUNDABLE SECURITY DEPOSIT RECEIVED JV NO. 153 2,05,000 LESS: CENTRE SHARE FOLIO NO. 300 IN DEBIT BALANCE 30,40,539 GROSS RECEIPTS AS PER THE P&L ACCOUNT 1,62,75,354 ITA NO. 126/HYD/2011 M/S. PACE COMPUTER EDUCATION PVT. LTD. ============================ 7 7. THE AR SUBMITTED THAT THE MANNER OF BUSINESS OPERAT IONS OF THE ASSESSEE COMPANY IS THAT IT IMPARTS COMPUTER ED UCATION TO STUDENTS OF VARIOUS DURATIONS AND FOR THIS PURPOSE, THE ASSESSEE COMPANY APPOINTS VARIOUS FRANCHISEE CENTRES IN DIFF ERENT TOWNS AND CITIES AND IN DIFFERENT LOCALITIES, SPREAD OVER THE SOUTHERN STATES. AS THE FRANCHISOR, IT MAKES AVAILABLE THE C OURSE MATERIAL, CONDUCTS AND IMPARTS COACHING TO VARIOUS STUDENTS O F DIFFERENT TYPES OF COURSES, CONDUCTS EXAMINATIONS, AND ISSUES CERTIFICATES TO THE SUCCESSFUL CANDIDATES. FOR ALL THESE SERVICES, IT COLLECTS FEE AND SHARES THE SAME WITH FRANCHISEE CENTRES. ONE OF THE ALLEGATIONS OF THE DEPARTMENT IS THAT THE ASSESSEE COMPANY HAD NOT FILED ANY EVIDENCE REGARDING THE BASIS FOR PAYMENT TO FRANCHI SEE CENTRES. FROM THE COPIES OF THE AGREEMENTS REFERRED TO ABOVE , IT CAN BE SEEN THAT THERE WAS AN AGREEMENT ON THE PART OF THE ASSE SSEE-COMPANY TO PAY SUCH AMOUNTS TO DIFFERENT FRANCHISEE CENTRES AND THUS, THERE WAS AN OBLIGATION CAST UPON IT TO MADE SUCH P AYMENTS WHICH IS AN EXPENDITURE DIRECTLY RELATABLE TO EARNING INC OME. 8. THE LEARNED AR SUBMITTED THAT STATEMENTS DEMONSTRAT ING PAYMENT OF RS. 11,32,553 TO 55 DIFFERENT CENTRES CO NTAINING THE NAME OF THE CENTRE/ PLACE, DATE OF PAYMENT, AMOUNT, AND PROOF OF EACH SUCH PAYMENT ARE SUBMITTED. HE SUBMITTED THAT FROM THE RESPECTIVE PAGES, IT CAN BE SEEN THAT THE CLAIM OF PAYMENT IS INDICATED THROUGH CHEQUE OR DD OR CASH. MOST OF TH E PAYMENTS ARE THROUGH CHEQUES/DDS ONLY AND THESE PAYMENTS ARE CO-RELATED TO THE GLOBAL TRUST BANK ACCOUNT MAINTAINED BY THE ASSESSEE- COMPANY. 9. THE AR SUBMITTED THAT THE STATEMENTS CONTAINING NAM E AND ADDRESS OF THE CENTRE (WHEREVER AVAILABLE), PAYMENT VOUCHER NUMBER AND DATE OF PAYMENT, AMOUNT OF PAYMENT, MODE OF PAYMENT, AND PROOF OF SUCH PAYMENT, WHICH IS AGAIN CO-RELATED TO THE DEBIT ENTRIES ON DIFFERENT DATES IN ITS GLOBAL TRUST BANK ITA NO. 126/HYD/2011 M/S. PACE COMPUTER EDUCATION PVT. LTD. ============================ 8 ACCOUNT. THESE ENTRIES ARE SHOWN TO THE COMMISSIONE R AND ITI AS PER THE DIRECTIONS OF THE ASSESSING OFFICER, IN THE RE-ASSESSMENT PROCEEDINGS. THESE STATEMENTS DEMONSTRATE AND PROVE THE TOTAL PAYMENT OF RS. 16,54,040 MADE TO DIFFERENT FRANCHIS EE CENTRES. THE TOTAL RECEIPTS AS PER IMPOUNDED MANUAL BOOKS OF ACCOUNTS, THE GROSS RECEIPTS WERE RS. 1,92,58,513. THE DETAILS OF CENTRE- SHARE EXPENSES OF RS. 29,83,155 (SHOWN IN MD'S REPL Y AT RS. 30,40,539 ) AROSE ONLY ON ACCOUNT OF FINAL ENTRIES MADE IN THE JOURNAL BOOK, BUT NOT POSTED IN THE RESPECTIVE LEDG ER FOLIOS. THIS CAN BE SEEN FROM THE IMPOUNDED BOOKS WHICH ARE BEIN G PRODUCED BY THE ASSESSING OFFICER AT OUR REQUEST BEFORE THE COMMISSIONER. 10. THE LEARNED AR SUBMITTED THAT THE PLEA OF THE ASSES SEE COMPANY MAY BE ACCEPTED THAT IT WAS ABLE TO DEMONST RATE PAYMENT OF CENTRE-SHARES OF AN AMOUNT OF RS. 16,54, 040 OUT OF THE RS. 29,83,160. THE AR SUBMITTED THAT THE ASSES SEE COMPANY EXPRESSED ITS INABILITY TO LAY ITS HANDS ON THE VOU CHERS AND BILLS SUBMITTED BY IT TO THE DEPARTMENT ON THE EARLIER OC CASIONS FOR WHICH REGRETTABLY IT HAD NO EVIDENCE IN ITS POSSESS ION. THE AR SUBMITTED THAT THE BALANCE OF RS. 13,29,120 (THAT I S, TOTAL DISCREPANCY OF RS. 29,83,160 MINUS RS. 16,54,040 W HICH ASSESSEE COMPANY WAS ABLE TO PROVE) MAY BE TELESCOP ED, WITHOUT PREJUDICE, INTO THE ADDITIONAL INCOME OF RS. 20 LAK HS OFFERED AS PER THE REVISED RETURN. 11. REGARDING THE DIFFERENCE IN ADVERTISEMENT EXPENSES AND THE ADDITION OF RS. 12,90,146 THE AR SUBMITTED THAT THE ASSESSEE COMPANY FOR THE PURPOSE OF EXPANSION OF ITS BUSINES S OPERATIONS WAS INSERTING ADVERTISEMENTS IN DIFFERENT NEWSPAPER S, PERIODICALLY IN THE SOUTHERN STATES, FOR WHICH IT HAD INCURRED EXPENSES. IT ISSUED MANY ADVERTISEMENTS THROUGH DIFFERENT ADVERT ISING AGENCIES AND PAYMENTS WERE MADE TO THEM AT PERIODICAL INTERV ALS. HAVING COME TO KNOW THAT NEWSPAPERS GIVE ABOUT 15% AS COMM ISSION TO ITA NO. 126/HYD/2011 M/S. PACE COMPUTER EDUCATION PVT. LTD. ============================ 9 THE ADVERTISING AGENCIES, THE MANAGING DIRECTOR ENT ERED INTO A PARTNERSHIP NAMED 'M/S. PACE MEDIA AND MERCANTILE S ERVICES' WITH ANOTHER DIRECTOR AND THROUGH WHICH IT STARTED ISSUING ADVERTISEMENTS IN VARIOUS NEWSPAPERS. VOLUME IV IS THE CASH BOOK, BANK BOOK, GENERAL LEDGER AND JOURNAL OF M/S. PACE MEDIA AND MERCANTILE SERVICES (THE FIRM) FOR THE PERIOD 0 1-04-2000 TO 31- 03-2001. DURING THE COURSE OF SURVEY OPERATIONS, TH E SURVEY OFFICIALS FOUND THAT AS PER THE IMPOUNDED BOOKS OF ACCOUNTS VIDE FOLIO NO. 152, THE TOTAL ADVERTISEMENT EXPENSES WER E SHOWN AT RS. 31,10,150 WHILE AS PER THE RETURN OF INCOME FILED, THE ADVERTISEMENT EXPENSES CLAIMED WERE RS. 44,00,296, RESULTING IN ALLEGED OVERSTATEMENT OF SUCH EXPENDITURE IN THE RE TURN OF INCOME FILED BEFORE THE DEPARTMENT. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, THE MANAGING DIRECTOR EXPLAINED THAT T HE DIFFERENTIAL AMOUNT OF RS. 12,90,146 WAS RECONCILED IN THE FOLLO WING TABLE, AND IT WAS MAINLY ON ACCOUNT OF FINAL ENTRIES ENTERED I N THE JOURNAL BOOK BUT NOT POSTED IN THE RESPECTIVE LEDGER FOLIOS . EXPENSES AS PER BOOKS OF ACCOUNT IMPOUNDED VIDE FOLIO NO. 12 31,10,150.10 ADD: PAYMENT MADE TO PACE MEDIA AND MERCANTILE SERVICES VIDE FOLIO NO. 125 8,68,146.00 ADD: AMOUNT PAYABLE TO PACE MEDIA AND MERCANTILE SERVICES VIDE JV NO. 166 4,22,000.00 ADVERTISEMENT EXPENSES AS PER P& L ACCOUNT 44,00,296.10 12. THE LEARNED AR SUBMITTED THAT THE VIEW OF THE DEPAR TMENT HAS BEEN THAT THE ASSESSEE COMPANY IN ORDER TO REDU CE ITS TAX LIABILITY, INFLATED ITS ADVERTISEMENT EXPENSES BY T HE ABOVEMENTIONED SUM OF RS. 12,90,146 WHICH IS THE DI FFERENCE BETWEEN THE ADVERTISEMENT EXPENSES AS PER THE MANUA L BOOKS IMPOUNDED AND THE ADVERTISEMENT EXPENSES SHOWN IN T HE P&L ACCOUNT AS PER THE RETURN FILED. HE SUBMITTED THAT THE MANAGING DIRECTOR FLOATED A PARTNERSHIP TO GET THE BENEFIT O F 15% COMMISSION FROM THE NEWSPAPERS, AND ACCORDINGLY ROU TED THE ITA NO. 126/HYD/2011 M/S. PACE COMPUTER EDUCATION PVT. LTD. ============================ 10 ASSESSEE COMPANY'S ADVERTISEMENTS THROUGH THAT PART NERSHIP FIRM, NAMELY M/S PACE MEDIA AND MERCANTILE SERVICES . THE ASSESSEE COMPANY HAD TO PAY A TOTAL SUM OF RS. 12,9 0,146 TO THE FIRM TOWARDS ADVERTISEMENT EXPENSES AS AGAINST WHIC H A SUM OF RS. 8,68,146 WAS PAID ON DIFFERENT DATES DURING THE YEAR ITSELF THROUGH DIFFERENT CHEQUES, WHICH WERE REALIZED FROM THE ASSESSEE COMPANY'S BANK ACCOUNT, AND ALL THESE PAYMENTS ARE MAINLY THROUGH CHEQUES, EXCEPT ABOUT RS. 50,000 PAID BY WA Y OF CASH ON SIX DIFFERENT OCCASIONS. IN THE SAME LEDGER ACCOUNT , A SUM OF RS. 4,22,000 WAS SHOWN AS 'OUTSTANDING' PAYABLE TO THE SAID FIRM. THUS, IT IS NOT CORRECT TO SAY THAT THE ASSESSEE CO MPANY INFLATED ITS ADVERTISEMENT EXPENSES TO THE TUNE OF RS. 12,90 ,146 TO REDUCE ITS TAX LIABILITY AS PER ITS RETURN OF INCOME. THE AR SUBMITTED THAT IN THE MANUAL IMPOUNDED BOOKS OF ACCOUNT, THE PARTN ERSHIP FIRM'S ACCOUNT ALSO APPEARED AND THE TOTAL OF THIS ACCOUNT OF RS. 12,90,146 WAS NOT POSTED TO THE ADVERTISEMENT LEDGE R ACCOUNT, ON ACCOUNT OF WHICH ONLY THIS INFERENCE OF INFLATIO N OF EXPENDITURE WAS DRAWN. 13. THE AR SUBMITTED THAT SINCE THESE ENTRIES ARE FOUND IN THE IMPOUNDED BOOKS OF ACCOUNT ITSELF, THE IMPUGNED ADD ITION OF RS. 12,90,146 MAY PLEASE BE DIRECTED TO BE DELETED. EVE N HERE ALSO, SINCE PAYMENTS WERE MADE AT REGULAR INTERVALS TO M/ S. PACE MEDIA AND MERCANTILE SERVICES TO THE TUNE OF RS. 8,68,146 (OUT OF WHICH ABOUT RS. 50,000 WAS BY WAY OF CASH AND BALANCE WAS THROUGH CHEQUES), AT LEAST TO THE EXTENT OF RS. 8,68,146 FO R WHICH ENOUGH EVIDENCE WAS FILED BEFORE THE DEPARTMENT AS GENUINE PAYMENT AND THUS DIRECT THE A.O. TO DELETE THE ADDITION TO THAT EXTENT, (THE DIFFERENTIAL AMOUNT OF RS. 4,22,000) BEING TELESCOP ED WITHOUT PREJUDICE INTO THE ADDITIONAL INCOME OF RS. 20 LAKH S OFFERED IN THE REVISED RETURN. ITA NO. 126/HYD/2011 M/S. PACE COMPUTER EDUCATION PVT. LTD. ============================ 11 14. THE AR SUBMITTED THAT, DUE TO THE FACTS AND CIRCUMS TANCES MENTIONED IN DETAIL WHILE FILING REVISED RETURN OF INCOME, WHEREIN IT HAD OFFERED RS. 20 LAKHS TO PURCHASE PEACE WITH THE DEPARTMENT TO AVOID LITIGATION AND WITH A PRAYER NOT TO TAKE A NY PENAL ACTION AND IN THE SAME SPIRIT, IT HAS ACCEPTED THE REVISED RETURN, AND THEREFORE, WITH ALL ITS DISADVANTAGES IN NOT HAVING IN ITS POSSESSION ALL THE EVIDENCE AND MATERIAL TO PROVE ITS CASE FOR THE DELETION OF THE TOTAL ADDITION OF RS. 42,73,301, IT CONFINED IT SELF TO THE ADDITION OF RS. 22,73,301 (RS. 29,83,155 + RS. 12,90,146 - R S. 20,00,000) IN THE PRESENT APPEAL PROCEEDINGS. THE DR ALSO REL IED ON THE ORDER OF THE CIT(A). 15. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATE RIAL ON RECORD. THE MAIN PLEA OF THE ASSESSEE IS THAT THE DIFFERENCE BETWEEN GROSS RECEIPTS DISCLOSED TO THE DEPARTMENT AND MANUALLY PREPARED FOUND DURING THE COURSE OF SURVEY (RS. 1,9 2,58,513 RS. 1,62,75,354 = RS. 29,83,159) IS DUE TO PAYMENT OF C OMMISSION TO VARIOUS FRANCHISEES SPREAD OVER THE SOUTHERN PART O F THE STATE. IT WAS ALSO PLEADED THAT THE ASSESSEE DEDUCTED THE COM MISSION PAID TO THE FRANCHISEES AND DISCLOSED THE NET RECEIPTS. HOWEVER, IT WAS ACTUAL FACT THAT IN ANY FRANCHISE AGREEMENT, IT IS THE FRANCHISEES WHO PAY THE COMMISSION TO THE PRINCIPAL AND VICE-VE RSA. IT IS THE FRANCHISEE WHO IS IN THE FIELD OF GENERATION OF INC OME AND HE IS IN RECEIPT OF THE AMOUNT FROM THE CUSTOMERS AND THEN I T WILL BE PASSED TO THE PRINCIPAL AFTER DEDUCTING HIS SHARE O F INCOME. CONTRARY TO THIS THE ASSESSEE HAS TAKEN A PLEA THAT IT HAS PAID THE COMMISSION TO THE FRANCHISES AND THERE WAS A DIFFER ENCE BETWEEN THE GROSS AS PER RETURN OF INCOME AND AS DISCLOSED IN THE BOOKS OF ACCOUNT. AS THE ASSESSEE HAS TAKEN A PLEA THAT TH E DIFFERENCE IS ONLY ON ACCOUNT OF PAYMENT OF COMMISSION TO FRANCHI SEES, THE CIT(A) CALLED FOR THE REMAND REPORT FROM THE ASSESS ING OFFICER. THE ASSESSING OFFICER GIVEN THE REMAND REPORT AS FO LLOWS: ITA NO. 126/HYD/2011 M/S. PACE COMPUTER EDUCATION PVT. LTD. ============================ 12 '1. DIFFERENCE IN GROSS RECEIPTS: IN THE WRITTEN SUBMISSIONS FILED BY THE ASSESSEE- COMPANY, IT HAS CONTENDED THAT THE GROSS RECEIPTS A S SHOWN IN THE RETURN OF INCOME AT RS. 1,62,75,354/- ARE AFTER RECONCILIATION AND POSTING JOURNAL ENTRIES. GROSS RECEIPTS AS PER BOOKS OF ACCOUNTS IMPOUNDED VIDE FOLIO NO. 38 (GENERAL LEDGER NO. 2) IN CREDIT: 1,92,58,513 ADD: SUNDRY DEBTORS (RECEIVABLES FROM FRANCHISEE) JOURNAL VOUCHER NO. 126 2,62,380 LESS: REFUNDABLE SECURITY DEPOSIT RECEIVED JV NO. 153 2,05,000 LESS: CENTRE SHARE FOLIO NO. 300 IN DEBIT BALANCE 30,40,539 GROSS RECEIPTS AS PER THE P&L ACCOUNT 1,62,75,354 AS CAN BE SEEN FROM THE ABOVE CHART, THE MAJOR RECONCILIATION IS ON ACCOUNT OF PAYMENT OF CENTRE S HARE PAID OF RS. 30,40,539/-. IN THIS REGARD, THE ASSESS EE HAS CONTENDED THAT AS PER THE AGREEMENT ENTERED INT O WITH VARIOUS FRANCHISES, THE ASSESSEE-COMPANY WILL RECEIVE THE ENTIRE PAYMENTS AND AFTER RETAINING 25% AS ITS ROYALTY, THE BALANCE WILL BE PAID BACK TO THE FRANCHISES. AS SEEN FROM ONE OF THE AGREEMENT, THOUGH THERE IS A CLAUSE REGARDING RETAINING OF 25% ROYALTY AND REFUN D OF THE BALANCE OF AMOUNT, THE SAME IS NOT HOLDING GOOD WHEN WE EXAMINE THE ENTIRE RECEIPTS AS SHOWN BY THE ASSESSEE. THE SAME AGREEMENT ALSO SPEAKS ABOUT PROVIDING OF COURSE MATERIAL BY THE ASSESSEE-COMPAN Y AND ALSO UNDERTAKING THE ADVERTISEMENT CAMPAIGN. AS REGARDS THE FINANCIAL OPERATIONS, THE CLAUSE VI OF THE AGREEMENT ON PAGE 4 CLEARLY SPECIFIES THAT 'AN ACCOUNT WITH A NATIONALIZED BANK SHALL BE OPENE D IN THE NAME OF PACE COMPUTER EDUCATION P. LTD, AT T HE PLACE OF THE FRANCHISEE. ALL THE RECEIPTS OF THE FRANCHISEE CENTRES SHALL BE CAUSED TO BE DEPOSITED THEREIN. THE ACCOUNT SHALL BE OPERATED BY THE AUTHORITIES DESIGNATED BY PACE ..... THE SHARES IN THE TOTAL COLLECTION OF THE FRANCHISEE AND FRANCHISOR S HALL BE DETERMINED ON A MONTH TO MONTH BASIS AND DISTRIBUTED BETWEEN THEM BY 10 TH DAY OF THE FOLLOWING MONTH. FOR THIS PURPOSE, THE FRANCHISE SHALL SEND T HE PRESCRIBED MONTHLY REPORT FOR EACH OF THE COMPLETED MONTH BEFORE THE 5 TH DAY OF THE FOLLOWING CALENDAR ITA NO. 126/HYD/2011 M/S. PACE COMPUTER EDUCATION PVT. LTD. ============================ 13 MONTH TO ENABLE PACE FORWARD THE SHARE OF THE FRANCHISEE BY THE 10 TH OF THAT MONTH.' THUS, IN LIGHT OF THE ABOVE CLAUSES, IT IS NOT JUST THE PAYMENT OF RS. 30,40,543/- THAT REQUIRED TO BE SEEN BUT THE PROOF OF PAYMENT OF RS. 4.86 CRORES (BEING 75%) HAS TO BE SEEN EVEN CONSIDERING THE FIGURE GIVEN BY THE ASSESSEE COMPANY OF RS. 1.62 CRORES. FURTHER, AS SE EN FROM THE SCHEDULE VI TO THE PROFIT AND LOSS ACCOUNT FILED ALONG WITH THE RETURN OF INCOME, THE ASSESSEE-COMPA NY HAS INCURRED RS. 30.0 LAKHS TOWARDS PAYMENT TO NSIC , RS. 40.67 LAKHS TOWARDS COURSE MATERIAL AND RS. 44. 00 LAKHS TOWARDS ADVERTISEMENT EXPENDITURE. THUS, IT I S CLEAR THAT WHEN ALL THESE EXPENSES ARE TO BE BORNE BY THE ASSESSEE-COMPANY, THE FIGURES TAKEN IN THE BOOK S OF ACCOUNT HAVE NATURALLY TO BE NET FIGURES NOT GRO SS FIGURES. THESE ADJUSTMENTS AS MADE BY JOURNAL ENTRI ES ARE CLEARLY AN AFTERTHOUGHT TO REDUCE THE PROFIT OF THE COMPANY. IF AT ALL THE ASSESSEE-COMPANY HAS TO RECONCILE, IT HAS TO RECONCILE PAYMENTS OF RS. 4.86 CRORES AS CENTRE SHARE AND NOT MERE RS. 17 LAKHS, AS RECONCILED BY THE COMPANY. THE ASSESSEE COMPANY HAS NOT SHOWN ANY DETAILS IN THIS REGARD NOR THEY HAVE FILED ANY MONTHLY STATEMENTS RECEIVED FROM THE FRANCHISEE S IN SUPPORT OF THEIR CLAIM WHICH THEY WERE SUPPOSED TO RECEIVE AND WHICH WILL FORM BASIS FOR SHARING OF TH E REVENUES. THUS, THE CONTENTION OF THE ASSESSEE ITS ELF IS NOT SUBSTANTIATING THE STAND TAKEN BY AND IT APPEAR S IT IS ONLY AN AFTERTHOUGHT TO REDUCE THE GROSS RECEIPT S AFTER THE SUPPRESSION WAS DETECTED DURING THE SURVEY PROCEEDINGS.' 16. THE ABOVE REMAND REPORT CLEARLY ESTABLISHES THAT TH E ARGUMENT OF THE ASSESSEE BEFORE US IS ONLY AN AFTER THOUGHT WITHOUT EXPLAINING THE DIFFERENCES WITH SUPPORTING EVIDENCE . IN OUR OPINION THE ASSESSEE SUPPRESSED ITS INCOME. BEING SO, WE DO NOT FIND ANY INFIRMITY ON THIS ISSUE IN SUSTAINING THE ADDITION TOWARDS SUPPRESSION OF INCOME. 17. REGARDING ADVERTISEMENT EXPENSES THERE WAS A DIFFER ENCE BETWEEN THE AMOUNT CLAIMED IN THE RETURN OF INCOME AT RS. 44,00,296 AND AMOUNT ENTERED IN THE MANUAL LEDGER F OUND DURING THE COURSE OF SURVEY AT RS. 31,10,150. THUS THERE IS A DIFFERENCE OF RS. 12,90,140. THE PLEA OF THE ASSESSEE THAT T HIS HAS BEEN PAID TO M/S. PACE MEDIA & MERCANTILE CO. AND THEY HAVE D ISCLOSED THIS ITA NO. 126/HYD/2011 M/S. PACE COMPUTER EDUCATION PVT. LTD. ============================ 14 INCOME IN THE RETURN OF INCOME. BUT THERE WAS A CL EAR FINDING BY THE LOWER AUTHORITIES THAT NO SUCH RETURN HAS BEEN FILED AND THERE IS NO EVIDENCE OF TRANSFER OF ANY AMOUNT. THESE FI NDINGS OF THE CIT(A) WERE NOT CONTROVERTED BY THE ASSESSEE. FUR THER, THE REMAND REPORT SENT BY THE ASSESSING OFFICER WHICH I S REPRODUCED HEREIN BELOW CLEARLY DEMONSTRATES THAT THE ASSESSEE INFLATED THE ADVERTISEMENT EXPENDITURE AS WELL: '2 DIFFERENCE IN ADVERTISEMENT EXPENDITURE EXPENSES AS PER BOOKS OF ACCOUNTS IMPOUNDED VIDE FOLIO NO. 152 31,10,150.10 ADD: PAYMENT MADE TO PACE MEDIA AND MERCANTILE SERVICES VIDE FOLIO NO. 125 8,68,146.00 ADD: AMOUNT PAYABLE TO PACE MEDIA AND MERCANTILE SERVICES VIDE JV NO. 166 4,22,000.00 ADVERTISEMENT EXPENSES AS PER P&L ACCOUNT 44,00,29 6.10 AS SEEN FROM THE CHART ABOVE, THE DIFFERENCE IN ADVERTISEMENT EXPENDITURE IS MAINLY ON ACCOUNT OF AMOUNT PAID AND AMOUNT PAYABLE TO M/S. PACE MEDIA AND MERCANTILE SERVICES, WHICH IS A PARTNERSHIP FIRM OF THE DIRECTORS. IT WAS CONTENDED THAT AFTER NINE MONTHS OF BUSINESS, DURING FY 2000-01, THE ASSESSEE-COMPANY CAME TO KNOW ABOUT THE COMMISSION OF 15% RECEIVED AS ADVERTISING AGENCY AND ACCORDINGLY TO SAVE THAT ADDITIONAL 15%, IT HAS OPENED A PARTNERSHIP FIRM TO RELEASE THE ADVERTISEMENTS OF THE COMPANY. HOWEVER, AS SEEN FROM THE EVIDENCES ON RECORD, THE CONTENTION OF THE ASSESSEE APPEARS TO B E SELF CONTRADICTORY, THE PARTNERSHIP DEED OF M/S. PA CE MEDIA AND MERCANTILE SERVICES WAS ACTUALLY EXECUTED ON 1 ST DAY OF MARCH, 2000 AND WAS DULY REGISTERED WITH REGISTRAR OF FIRM ON 19 TH MAY, 2000 (COPY ENCLOSED). THUS, THE VERY CONTENTION OF THE ASSESSEE THAT IT CAME TO KNOW OF THE ADVERTISEMENT COMMISSION AFTER NINE MONTHS OF BUSINESS IS NOT CORRECT SINCE IT HAD ALREADY EXECUTED THE PARTNERSHI P DEED AND REGISTERED THE SAME MUCH IN ADVANCE. FURTHER, IT IS SEEN THAT THOUGH THE ASSESSEE- COMPANY WAS UNDER OBLIGATION TO DEDUCT TDS ON ALL ITA NO. 126/HYD/2011 M/S. PACE COMPUTER EDUCATION PVT. LTD. ============================ 15 ADVERTISEMENT PAYMENTS, IT HAD FAILED TO DO SO IN RESPECT OF PAYMENTS MADE TO M/S. PACE MEDIA AND MERCANTILE SERVICES. IT IS ALSO OBSERVED THAT THOUGH THE ASSESSEE- COMPANY IS CLAIMING HUGE PAYMENTS TO M/S. PACE MEDIA AND MERCANTILE SERVICES, THE FIRM HAS NOT FILED ITS RETURN OF INCOME DECLARING THE ABOVE INCOME FOR THE A Y 2001-. 02 TILL THE DATE OF SURVEY THOUGH THE DUE DATE FOR FILING THE SAME WAS LONG OVER. COMING TO THE CONTENTION THAT THERE WAS CONTINUOUS PAYMENTS TO M/S. P ACE MEDIA AND MERCANTILE SERVICES, PI AS PER THE IMPOUNDED MATERIAL, THE LEDGER ACCOUNT AS APPEARING ON PAGE- 125 OF BOOK NO. 5 (PHOTOCOPY ENCLOSED) IT IS CLEARL Y VISIBLE THAT THE CASH ENTRIES ARE INSERTED AND THE SAME ARE NOT FOLLOWING THE CHRONOLOGY OF VOUCHER NOS. AS ALREADY ENTERED. IN VIEW OF THE ABOVE DISCREPANCIES, THE CONTENTION OF THE ASSESSEE- COMPANY BEING CONTRADICTORY ON MANY COUNTS AND LACKING THE CONSISTENT EVIDENTIARY VALUE. IT CLEARLY APPEARS TO BE AN AFTERTHOUGHT TO INCREASE THE ADVERTISEMENT EXPENDITURE POST SURVEY TO REDUCE THE DECLARATION MADE DURING THE COURSE OF SURVEY PROCEEDINGS. THE ASSESSEE-COMPANY HAS FAILED TO GIVE ANY SPECIFIC AND CONCRETE EVIDENCE IN SUPPORT OF ITS CLAIM. BUT FOR MAKING BASELESS AND VAGUE ALLEGATIONS AGAINST THE DEPARTMENT AND REPEATING THE SAME THINGS AGAIN AND AGAIN, IT HAS NOT BROUGHT ANY MATERIAL FACTS ON RECORD FOR THE UNDERSIGNED TO DRAWN ANY DIFFERENT INFERENCE. THUS, IT IS SUBMITTED THAT THE CONTENTIONS OF THE ASSESSEE-COMPANY ARE WITHOUT ANY BASIS AND THE ORDER UNDER QUESTION IS DULY PASSED ON MERITS.' 18. AS SEEN FROM THE ABOVE REMAND REPORT, IN OUR OPINIO N, THE ASSESSEE MADE AN ATTEMPT TO REDUCE THE TAXABLE INCO ME BY INFLATING THE EXPENSES. OTHERWISE THERE CANNOT BE ANY REDUCTION IN THE INCOME DISCLOSED IN THE RETURN OF INCOME AS COMPARED TO MANUAL LEDGER AND INCREASE IN ADVERTISEMENT EXPENDI TURE AS COMPARED TO THE RETURN OF INCOME AND MANUAL LEDGER FOUND DURING ITA NO. 126/HYD/2011 M/S. PACE COMPUTER EDUCATION PVT. LTD. ============================ 16 THE COURSE OF SURVEY. IN VIEW OF THE ABOVE DISCUSS ION WE ARE INCLINED TO CONFIRM THE ORDERS OF THE LOWER AUTHORI TIES AND REJECT THE GROUND RAISED BY THE ASSESSEE. 19. IN THE RESULT, THE ASSESSEE APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH JUNE, 2012. SD/ - (SAKTIJIT DEY) JUDICIAL MEMBER SD/ - (CHANDRA POOJARI) ACCOUNTANT MEMBER HYDERABAD, DATED THE 29 TH JUNE, 2012 COPY FORWARDED TO: 1. M/S. PACE COMPUTER EDUCATION PVT. LTD., 201, MAYUR KUSHAL COMPLEX, ABIDS, HYDERABAD-500 001. 2. THE DEPUTY COMMISSIONER OF INCOME - TAX, CIRCLE - 16(3), AAYAKAR BHAVAN, HYDERABAD. 3. THE CIT(A) - V, HYDERABAD. 4. THE CIT - IV, HYDERABAD. 5 . THE DR A BENCH, ITAT, HYDERABAD. TPRAO