Shri T. Anandan, Villupuram V. ACIT, Villupuram

ITA 2032/CHNY/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 8175 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-10-2016
• Appeal Filed By: Assessee
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 04-07-2016
• Court: TRIBUNAL
• Department Lawyers: B SAHADEVAN
• Assessee Lawyers: V S JAYAKUMAR

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : CHENNAI . . . , . . ' #$ , % &' ( [ BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI D. S. SUNDER SINGH, ACCOUNTANT MEMBER ] ./ I.T.A.NO.2032/MDS/2016 / ASSESSMENT YEAR : 2011-12 SHRI T. ANANDAN NO.43-44 NEHRUJI ROAD VILLUPURAM 605 602 VS. THE ASSTT. COMMISSIONER OF INCOME-TAX VILLUPURAM CIRCLE VILLUPURAM [PAN AACPA 3922 D] ( )* / APPELLANT) ( +,)* /RESPONDENT) / APPELLANT BY : SHRI V.S JAYAKUMAR, ADVOCATE /RESPONDENT BY : SHRI B. SAHADEVAN, JCIT / DATE OF HEARING : 27 - 0 9 - 2016 ! / DATE OF PRONOUNCEMENT : 21 - 10 - 2016 / O R D E R PER D.S. SUNDER SINGH, ACCOUNTANT MEMBER THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS), PUDUCHER RY, DATED 27.4.2016 FOR ASSESSMENT YEAR 2011-12. 2. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF LODGING AND TRADING IN IMFL. FOR THE IMPUGNED ASSESSMENT YEAR THE ASSESSEE FILED THE RETURN OF INCOME ADMITTING A TOTAL INCOME OF ` 16,84,380/-. DURING ITA NO.2032/16 :- 2 -: THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER F OUND THAT THE ASSESSEE COULD NOT PRODUCE THE BILLS AND VOUCHERS F OR ` 1,05,500/- IN RESPECT OF THE BUSINESS PROMOTION EXPENSES AND ` 62,500/- IN RESPECT OF BATTA PAYMENTS. THEREFORE, THE ASSESSING OFFICE R MADE THE ADDITION OF ` 1,68,000/- IN AGGREGATE TO THE RETURNED INCOME. 3. AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER, TH E ASSESSEE WENT ON APPEAL BEFORE THE CIT(A). THE CIT (A) CONFIRMED TE ORDER OF THE ASSESSING OFFICER AS PER DISCUSSION MA DE IN PARA 7 OF HIS ORDER WHICH IS REPRODUCED AS UNDER: THE AO HAS DISALLOWED THE SALES PROMOTION EXPENSES OF RS1,05,500 AND BATTA EXPENSES OF RS.62,500/ - AFTER DUE VERIFICATION OF THE BOOKS OF ACCOUNTS, BILLS AND VO UCHERS PRODUCED BEFORE HIM. ONLY FOR WANT OF PROPER EVIDENCE, THE DISALLOWANCE WAS MADE. THE CHARGES INCURRED BY THE ASSESSEE TOWARDS SUPPLY OF SUNDAL O R SNACKS LIKE CHIPS ETC. WOULD HAVE BEEN INCLUDED IN THE SERVICE CHARGES LEVIED AND THEREFORE THEY AR E BEING COMPENSATED FOR THE ASSESSEE WHILE BILLING ITS CUST OMERS. THE EXPENSES CLAIMED SHOULD DEFINITELY BE SUPPORTED BY VOUCHERS. FURTHER, CONSIDERING THE NATURE OF BUSINE SS, THE INCOME DETERMINED BY THE AO CANNOT BE CONSIDERED AS EXCESSIVE AND UNREASONABLE HAVING REGARD TO THE TOT AL TURNOVER INVOLVED. ALL THINGS CONSIDERED, I HOLD TH AT THE DISALLOWANCE OF THE EXPENSES TO THE EXTENT OF ` .1,68,500/- BY THE A.O WAS QUITE JUSTIFIED AND THE DISALLOWANCE IS CONFIRMED. 4. DURING THE APPEAL, THE LD. AR OF THE ASSESSEE HAS VEHEMENTLY ARGUED THAT THE ADDITION MADE BY THE ASS ESSING OFFICER IS WITHOUT ANY BASIS AND IN THIS LINE OF BUSINESS, THE EXPENDITURE INCURRED IN THE FORM OF SUNDAL, CHIPS AND SNACKS WERE SERVED TO THE CUSTOMERS ITA NO.2032/16 :- 3 -: AND SUCH EXPENSES CANNOT BE PROPERLY VOUCHED BY THE ASSESSEE. CONSIDERING THE TURNOVER OF ` 1,51,26,283/-, THE EXPENDITURE INCURRED ON ACCOUNT OF SALE PROMOTION EXPENSES AND BATTA EXP ENSES ARE REASONABLE AND LESSER THAN THE EXPENDITURE INCURRED IN THE EARLIER YEARS. THEREFORE, THE LD. AR REQUESTED TO DELETE T HE ADDITION MADE BY THE ASSESSING OFFICER. 5. ON THE OTHER HAND, THE LD. DR RELIED ON THE ORDERS OF THE AUTHORITIES BELOW. 6. WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATE RIAL PLACED BEFORE US. THE ASSESSEE HAS TOTAL TURNOVER OF ` 1,51,26,283/- FOR THE YEAR UNDER CONSIDERATION AND DECLARED GROSS PROFIT OF ` 23,58,312/- WHICH WORKS OUT TO 15.59%. IN THE IMME DIATELY PRECEDING YEAR THE GROSS PROFIT WAS 23.28% AND IN THE SUBSEQU ENT ASSESSMENT YEAR THE GROSS PROFIT WAS 21.92%. WHEN THE BENCH A SKED THE LD. AR FOR REASONS IN REDUCTION OF THE GROSS PROFIT IN TH E ASSESSMENT YEAR UNDER CONSIDERATION, HE COULD NOT EXPLAIN WITH PR OPER REASONS AND CONCEDED FOR REASONABLE DISALLOWANCE. THEREFORE, A FTER CONSIDERING THE SUBMISSIONS AND THE DETAILS, WE DEEM IT FIT TO DISALLOW A LUMP SUM OF ` 1 LAKH TO MEET THE ENDS OF JUSTICE. ITA NO.2032/16 :- 4 -: 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PART LY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST OCTOBER, 2016, AT CHENNAI. SD/- SD/- ( . . . ' ) (N.R.S. GANESAN) / JUDICIAL MEMBER ( . . ' #$ ) (D.S. SUNDER SINGH) % / ACCOUNTANT MEMBER #$ / CHENNAI %& / DATED: 21 ST OCTOBER, 2016 RD &' ()*) / COPY TO: 1 . / APPELLANT 3. +,' / CIT(A) 5. )-. / / DR 2. / RESPONDENT 4. + / CIT 6. .01 / GF