Sai Santhoshi Enterprises, Hyderabad V. Income Tax Officer, Ward-4(4), Hyderabad

ITA 2175/Hyd/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 3929 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 3 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2020
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB-A
• Next Hearing Date: 27-01-2020
• Assessment Year: 2015-2016
• Appeal Filed On: 14-11-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: K. HANMANDLOO
• Section: 40A(3); 143(3)

Judgement Text

ITA 2175 OF 2018 SAI SANTHOSHI ENTERPRISES HYD ERABAD. PAGE 1 OF 3 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A SMC BENCH, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER ITA NO.2175/HYD/2018 ASSESSMENT YEAR: 2015-16 M/S. SAI SANTHOSHI ENTERPRISES, HYDERABAD PAN:ACFFS1186A VS. INCOME TAX OFFICER WARD 4(4) HYDERABAD (APPELLANT) (RESPONDENT) ASSESSEE BY: SRI K. HANMANDLOO REVENUE BY : SRI SOLGY JOSE T. KOTTARAM, DR DATE OF HEARING: 21/02/2020 DATE OF PRONOUNCEMENT: 28/02/2020 ORDER THIS IS ASSESSEES APPEAL FOR THE A.Y 2015-16 AGAIN ST THE ORDER OF THE CIT (A)- 1, HYDERABAD, DATED 5-9-3 028. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FI RM FILED ITS RETURN OF INCOME FOR THE A.Y 2015-16 ON 26.09.2 015 ADMITTING TOTAL INCOME OF RS.10,12,450/-. DURING THE ASSESSME NT PROCEEDINGS U/S 143(3) OF THE ACT, THE AO NOTICED T HAT THE ASSESSEE HAS MADE CERTAIN PAYMENTS TO RELATED PARTI ES I.E. RS.6.00 LAKHS TOWARDS TO EACH OF THE PARTIES I.E., THE MANAGER, CASHIER, ADMIN HR AND STOCK VERIFICATION OFFICER. T HE AO HELD THE PAYMENTS TO BE EXCESSIVE AND RESTRICTED THE EXP ENDITURE AND DISALLOWED RS.4.00 LAKHS OUT OF THE TOTAL EXPENDITU RE. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT (A) WHO CONFIRMED THE ORDER OF THE AO AND THE ASSESSEE IS IN SECOND A PPEAL BEFORE THE TRIBUNAL. ITA 2175 OF 2018 SAI SANTHOSHI ENTERPRISES HYD ERABAD. PAGE 2 OF 3 3. WHILE THE LEARNED COUNSEL FOR THE ASSESSEE REITE RATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW, THE LEARNED DR SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 4. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE M ATERIAL ON RECORD, I FIND THAT FOR MAKING DISALLOWANCE U/S 40A(3) OF THE ACT, THE AO HAS TO GIVE A FINDING THAT THE PAYMENT TO RELATED PARTIES IS EXCESSIVE AND UNREASONABLE. THOUGH HE HA S NOT GIVEN ANY SUCH FINDING, HE HAS RESTRICTED THE SALARIES TO THE RELATED PARTIES. I FIND THAT THE ASSESSEE HAS CLAIMED TO HA VE PAID TO THE MANAGER, RS.6.00 LAKHS AND EVEN THE CASHIER AND STO CK VERIFICATION PERSON ARE ALSO RECEIVING RS.6.00 LAKH S PER ANNUM. THIS CLEARLY IS NOT SUSTAINABLE, BECAUSE THE SERVIC ES RENDERED BY EACH OF SUCH PARTIES WOULD NOT BE THE SAME AND THER EFORE, THEIR SALARIES HAVE TO BE COMMENSURATE WITH THE SERVICES RENDERED BY EACH OF SUCH PERSONS. THE REASONABLENESS OF THE SAM E HAVE NOT BEEN ESTABLISHED BY THE ASSESSEE. I FIND THAT THE A O HAS THEREFORE, MADE REASONABLE RESTRICTIONS OF THE EXPENDITURE, AN D I DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE CIT ( A) CONFIRMING THE SAID ORDER OF THE AO. ASSESSEES APPEAL IS ACCORDIN GLY DISMISSED. 5. IN THE RESULT, ASSESSEES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH FEBRUARY, 2020. SD/- (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED 28 TH FEBRUARY, 2020. VINODAN/SPS ITA 2175 OF 2018 SAI SANTHOSHI ENTERPRISES HYD ERABAD. PAGE 3 OF 3 COPY TO: 1 SAI SANTHOSHI ENTERPRISES C/O HANMANDLOO & CO., C .AS, FLAT NO.404, MOUNT NASIR APTS, BESIDE RAVINDRA BHARATHI, SAIFABAD, HYDERABAD 500004 2 ITO WARD 4(4) HYDERABAD 3 CIT (A)-1, HYDERABAD 4 PR. CIT 1, HYDERABAD 5 THE DR, ITAT HYDERABAD 6 GUARD FILE BY ORDER