ACIT-13(1)(2), MUMBAI V. M/S. PIZZERIA PURE FOODS RESTAURANTS INDIA PVT LTD, MUMBAI

ITA 2108/MUM/2023

AI Insights

The case involves the Income Tax Department's appeal against the order of the CIT (A), which had allowed the appeal of M/s Pizzeria Pure Foods Restaurant India Pvt. Ltd by deleting a disallowance of Rs. 3,38,23,453/- on expenses claimed by the assessee. The expenses were initially disallowed by the AO due to the non-submission of requisite details and bills during the assessment proceedings. The CIT (A) reversed this decision, leading to the revenue's appeal to the Tribunal. The Tribunal upheld the CIT (A)'s decision, noting that the assessee had provided substantial evidence and that the AO had not conducted a thorough inquiry to substantiate the disallowance.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 123277 (ITAT-MUMBAI)
• Duration Of Justice: 3 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-09-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 20-09-2023
• Assessment Year: 2011-2012
• Appeal Filed On: 05-06-2023
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Additional evidence; Set aside
• Section: 250

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “C”, MUMBAI BEFORE SHRI ABY T. VARKEY, JUDICIAL MEMBER AND SHRI GAGAN GOYAL, ACCOUNTANT MEMBER ITA No. 2108/Mum/2023 (A.Y.2011-12) ACIT – 15(3) (1), R. No. 218, 2 nd floor, Aayakar Bhavan, M. K. Road Mumbai-400 020 ...... Appellant Vs. M/s Pizzeria Pure Foods Restaurant India Pvt. Ltd, 702, A Wing, 7 th floor, Prism Tower, Mindspace, Link Road, Goregaon (west), Mumbai-400 062 PAN – AAACP9511C ..... Respondent Appellant by : Shri H. M. Bhatt, Ld. DR Respondent by : Ms. Aarti Sathe & Ms. Aasavari Kadam, AR Date of hearing : 21/09/2023 Date of pronouncement : 22/09/2023 ORDER PER GAGAN GOYAL, A.M: This appeal by revenue is directed against the order of National Faceless Appeal Centre (for short “NFAC”) dated 13.04.2023 u/s. 250 of the Income Tax 2 ITA No. 2108/Mum/2023 M/s Pizzeria Pure Foods Restaurant India Pvt. Ltd Act, 1961 (in short ‘the Act’) for A.Y. 2011-12. The revenue has raised the following grounds of appeal:- On the facts and in the circumstances of the case and in law, the learned CIT (A) has erred in allowing relief to the assessee to the extent impugned in the grounds enumerated below: 1. "On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the disallowance of Rs. 3,38,23,453/- being 25% of the expenses claimed of Rs. 13,52,93,813/- without considering the fact that the assessee has not filed requisite details including bills for expenses, and key documentary evidences, in support of genuineness of transactions which were specifically called for during the course of assessment proceedings even though ample opportunities were given." 2. "On the facts and in the circumstances of the case and in law, the Ld. CIT (A) erred in deleting the disallowance of Rs.3,38,23,453/- being 25% of the expenses claimed of Rs.13,52,93,813/- despite the fact that the AO in his Remand Report rejected the acceptance of additional evidence and clearly mentioned that the addition was made for want of evidences, and that the assessee only submitted the breakup of expenses without any evidence/ledger extracts in support of its claims during the course of assessment proceedings." 3. "On the facts and in the circumstances of the case and in law, the Ld. CIT (A) erred in deleting the disallowance of Rs. 3,38,23,453/- being 25% of the expensed claimed of Rs. 13,52,93,813/- by accepting additional evidence submitted by the assessee during appellate proceedings stating that the case is covered by clause (a) of sub rule 1 of Rule 46A i.e. the AO did not admit evidence which ought to have been admitted, while undisputedly the addition was made by the AO for want of evidences." 3 ITA No. 2108/Mum/2023 M/s Pizzeria Pure Foods Restaurant India Pvt. Ltd 4. "On the facts and in the circumstances of the case and in law, the Ld. CIT (A) erred in deleting the disallowance of Rs. 3,38,23,453/- being 25% of the expensed claimed of Rs. 13,52,93,813/- by not appreciating the findings of the AO submitted through the remand report that in the present proceedings (say remand proceedings) also the assessee has only furnished summary with part details without producing the ledger extracts of each of the parties for the quantum of expenditure claimed in the year under consideration. In the absence of complete evidences the disallowance of expenses to the extent of 25% made by the AO was justified and ought to have been confirmed by the Ld. CIT (A)." The appellant prays that the order of the Ld.CIT (A) be set aside and the order of the AO be restored. The appellant craves leave to amend or alter any ground or add any other grounds which may be necessary. 2. The brief facts of the case are that assessee company filed its return of income on 26.09.2011, declaring total income at Rs. 2,54,80,624/-. Assessee filed revised return also to take credit of Self-Assessment Taxes paid. Case of the assessee was selected for compulsory scrutiny. During assessment proceedings, assessee was asked to submit necessary copies of expenses claimed under various heads. Assessee submitted details of T.D.S. acknowledgement, section, party code, Name & PAN No. etc. But bills were not produced and AO disallowed 25% of the total expenses claimed (Rs. 13, 52, 93,813/- under the head cost of Sales, Administration & Establishment Expenses and Selling & Distribution Expenses) amounting to Rs. 3, 38, 23,453/-. 4 ITA No. 2108/Mum/2023 M/s Pizzeria Pure Foods Restaurant India Pvt. Ltd 3. Assessee being aggrieved with this order, preferred an appeal before the Ld. CIT (A), who in turn allowed the appeal of the assessee and deleted the disallowances made by the AO. Now, revenue being aggrieved with the same preferred the present appeal before us. We have gone through the order of AO, Order of Ld. CIT (A) submissions of the assessee. Assessee has acquired the franchise of running Pizza Hut Restaurants. Accordingly, the assessee company is engaged in running pizza hut restaurants. Assessee Company has to incur various expenses such as raw materials required for making pizzas, food and beverages etc. Apart from the above the assessee also incurs expenses on salaries, administration and selling overheads etc. 4. Looking at the business model of the assessee, it can be understood that assessee is in the business of running restaurants which sell food items, hence voluminous amounts of bills and vouchers for the expenses will be there. We have gone through the submissions of assessee made before the Ld. CIT (A) also wherein, assessee submitted complete data and information pertaining to the expenses claimed. These submissions of the assessee were taken as additional evidence under rule 46A of the Income Tax Rules, 1962 and report of the AO is also taken into consideration by Ld. CIT (A) and assessee also filed its rejoinder in response to the report of AO. 5. We have gone through the submissions of assessee before Ld. CIT (A) as under alongwith findings of the Ld. CIT (A):- 5 ITA No. 2108/Mum/2023 M/s Pizzeria Pure Foods Restaurant India Pvt. Ltd 6 ITA No. 2108/Mum/2023 M/s Pizzeria Pure Foods Restaurant India Pvt. Ltd 7 ITA No. 2108/Mum/2023 M/s Pizzeria Pure Foods Restaurant India Pvt. Ltd 8 ITA No. 2108/Mum/2023 M/s Pizzeria Pure Foods Restaurant India Pvt. Ltd 9 ITA No. 2108/Mum/2023 M/s Pizzeria Pure Foods Restaurant India Pvt. Ltd 10 ITA No. 2108/Mum/2023 M/s Pizzeria Pure Foods Restaurant India Pvt. Ltd 11 ITA No. 2108/Mum/2023 M/s Pizzeria Pure Foods Restaurant India Pvt. Ltd 12 ITA No. 2108/Mum/2023 M/s Pizzeria Pure Foods Restaurant India Pvt. Ltd 13 ITA No. 2108/Mum/2023 M/s Pizzeria Pure Foods Restaurant India Pvt. Ltd 14 ITA No. 2108/Mum/2023 M/s Pizzeria Pure Foods Restaurant India Pvt. Ltd 15 ITA No. 2108/Mum/2023 M/s Pizzeria Pure Foods Restaurant India Pvt. Ltd 16 ITA No. 2108/Mum/2023 M/s Pizzeria Pure Foods Restaurant India Pvt. Ltd 17 ITA No. 2108/Mum/2023 M/s Pizzeria Pure Foods Restaurant India Pvt. Ltd 18 ITA No. 2108/Mum/2023 M/s Pizzeria Pure Foods Restaurant India Pvt. Ltd 19 ITA No. 2108/Mum/2023 M/s Pizzeria Pure Foods Restaurant India Pvt. Ltd 20 ITA No. 2108/Mum/2023 M/s Pizzeria Pure Foods Restaurant India Pvt. Ltd 21 ITA No. 2108/Mum/2023 M/s Pizzeria Pure Foods Restaurant India Pvt. Ltd 22 ITA No. 2108/Mum/2023 M/s Pizzeria Pure Foods Restaurant India Pvt. Ltd 23 ITA No. 2108/Mum/2023 M/s Pizzeria Pure Foods Restaurant India Pvt. Ltd 24 ITA No. 2108/Mum/2023 M/s Pizzeria Pure Foods Restaurant India Pvt. Ltd 6. We have thoroughly gone through the above facts and applicable law. It is observed that in remand report, AO has not carried out any substantial enquiry to confirm disallowances made on ad-hoc basis; no specific discrepancy has been pointed out in the submissions of the assessee. There is no case made out by the AO that inflated expenses has been booked out by the assessee and cash received back from the vendors, even the N.P declared by the assessee is substantially improved as compared to previous two years under consideration. Moreover, may not be full evidences in the form bills/vouchers submitted by the assessee before AO during the assessment proceedings, but substantial evidences were there alongwith financial ratios in favour of assessee, which confirms otherwise also the stand taken by assessee and without pointing out any specific deficiency. With this factual and settled legal back ground no ad-hoc disallowance can be made in the case of the assessee. 7. In the light of above we don’t find any perversity in the order of the Ld. CIT (A) and also the procedure adopted with reference to Rule 46A of the Income Tax Rules, 1962. In the result, grounds raised by the revenue are dismissed. 8. In the result, appeal of the revenue is dismissed. Order pronounced in the open court on 22 nd day of September, 2023. Sd/- Sd/- (ABY T. VARKEY) (GAGAN GOYAL) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai, दिन ांक/Dated: 22/09/2023 Sr. PS (Dhananjay) 25 ITA No. 2108/Mum/2023 M/s Pizzeria Pure Foods Restaurant India Pvt. Ltd Copy of the Order forwarded to: 1. अपील र्थी/The Appellant , 2. प्रदिव िी/ The Respondent. 3. आयकर आयुक्त CIT 4. दवभ गीय प्रदिदनदि, आय.अपी.अदि., मुबांई/DR, ITAT, Mumbai 5. ग र्ड फ इल/Guard file. BY ORDER, //True Copy// (Asstt. Registrar) ITAT, Mumbai