DCIT, CHENNAI V. K G Krishnan (HUF), CHENNAI

ITA 1760/CHNY/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 5189 (ITAT-CHENNAI)
• Duration Of Justice: 6 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-04-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 28-04-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 20-10-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K E B RENGARAJAN JR

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHENNAI BENCH B BEFORE DR. O.K.NARAYANAN, VICE-PRESIDENT AND SHRI HARI OM MARATHA, JUDICIAL MEMBER I.T.A. NO. 1760/MDS/2010 ASSESSMENT YEAR : 2007-08 THE DEPUTY COMMISSIONER OF INCOME-TAX, BUSINESS CIRCLE-III, CHENNAI. VS. K.G.KRISHNAN (HUF), OLD NO.11, NEW NO.2, HASTHAGIRI STREET, WEST MAMBALAM, CHENNAI 600 033. PAN AAAHK 3630 E (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K.E.B.RENGARAJAN, JR. STANDING COUNSEL RESPONDENT BY : SHRI K. BALASUBR AMANIAN O R D E R PER DR. O.K.NARAYANAN, VICE PRESIDENT THIS APPEAL IS FILED BY THE REVENUE. THE RELEVANT ASSESSMENT YEAR IS 2007-08. THE APPEAL IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS) VIII, AT ITA 1760/10 :- 2 -: CHENNAI DATED 30.7.2010 AND ARISES OUT OF THE ASSES SMENT COMPLETED UNDER SEC.144 OF THE INCOME-TAX ACT, 1961 . 2. THE REVENUE HAS RAISED TWO SPECIFIC GROUNDS IN T HIS APPEAL. THE FIRST GROUND IS THAT THE COMMISSIONER OF INCOME -TAX (APPEALS) HAS ERRED IN DELETING AN ADDITION OF ` 11,56,463/- ESTIMATED BY THE ASSESSING AUTHORITY AT 15% OF ` 77,09,795/-, TREATED AS PROFIT ON UNDISCLOSED TURNOVER. THE SECOND GROUND IS THAT TH E COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN D ELETING THE DISALLOWANCE OF ` 5 LAKHS MADE BY THE ASSESSING OFFICER AGAINST UNPROVED EXPENSES. 3. WE HEARD BOTH SIDES IN DETAIL. 4. ON THE BASIS OF THE ACCOUNTS AND OTHER DETAILS F URNISHED BY THE ASSESSEE, IT HAS COME TO LIGHT THAT THE AMOUNT OF ` 77,09,795/- TREATED BY THE ASSESSING OFFICER AS TURNOVER WAS IN FACT, REIMBURSEMENT OF EXPENSES OR EXPENSES REIMBURSED BY ICICI BANK, INCURRED BY THE ASSESSEE ON THEIR BEHALF. TH E FACTUM OF REIMBURSEMENT OF EXPENSES BY ICICI BANK HAS BEEN PR OVED ON THE BASIS OF THE MATERIALS AVAILABLE ON RECORDS. W HEN THE SAID AMOUNT OF ` 77,09,795/- IS FOUND AS THE REIMBURSEMENT OF EXPENSES INCURRED BY THE ASSESSEE ON BEHALF OF ICIC I BANK, THERE ITA 1760/10 :- 3 -: IS NO JUSTIFICATION TO STRAIGHT AWAY ESTIMATE THE I NCOME BY 15% OF THAT AMOUNT. THE ASSESSEE HAS SEPARATELY ACCOUNTED FOR SERVICE CHARGES OUT OF IT. THE ASSESSEE HAD RETURNED THE I NCOME AFTER MEETING THE EXPENSES. IT IS FURTHER TO BE SEEN THA T THE EXPENSES WERE INCURRED BY THE ASSESSEE ON BEHALF OF ICICI BA NK AND SERVICES WERE ALSO RENDERED BY THE ASSESSEE TO THAT BANK ON THE BASIS OF AGREEMENTS ENTERED INTO BETWEEN THE ASSESS EE AND THE BANK. THE ASSESSEE HAS DEDUCTED TAX AT SOURCE UNDE R SEC.194C ON BOTH THE PAYMENTS MADE BY WAY OF REIMBURSEMENT A S WELL AS ON PAYMENTS MADE AGAINST SERVICE BILLS RAISED BY TH E ASSESSEE AGAINST THE BANK. THEREFORE, WE FIND THAT THE COMM ISSIONER OF INCOME-TAX (APPEALS) IS JUSTIFIED IN DELETING THE A DDITION OF ` 11,56,463/- FASTENED BY THE ASSESSING OFFICER BY WA Y OF ESTIMATION. 5. REGARDING THE ADDITION OF ` 5 LAKHS, IT IS TO BE SEEN THAT THE SAID AMOUNT REPRESENTED THE EXPENSES INCURRED BY TH E ASSESSEE IN CARRYING ON ITS SERVICE BUSINESS. THIS DISALLOW ANCE HAS BEEN MADE BY THE ASSESSING AUTHORITY BY WAY OF ADDITION OF ESTIMATE. BUT IT IS TRUE THAT THE ASSESSEE HAS MAINTAINED BOO KS OF ACCOUNT AND PREPARED PROFITS AND LOSS ACCOUNTS UNIT WISE AN D THE EXPENSES HAVE BEEN PROPERTY EXPLAINED. THEREFORE I N THE FACTS ITA 1760/10 :- 4 -: AND CIRCUMSTANCES OF THE CASE, THERE IS NO GROUND T O MAKE AN ADDITION OF ` 5 LAKHS. THE COMMISSIONER OF INCOME-TAX (APPEALS) HAS RIGHTLY DELETED THE ADDITION. 6. IN RESULT, THE APPEAL FILED BY THE REVENUE IS DI SMISSED. ORDER PRONOUNCED ON FRIDAY, THE 29 TH DAY OF APRIL, 2011. SD/- SD/- (HARI OM MARATHA) JUDICIAL MEMBER (DR. O.K.NARAYANAN) VICE-PRESIDENT CHENNAI, DATED : 29 TH APRIL, 2011 MPO* COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR