M/s. The Advertising Corporation of India Ltd., , Kolkata V. ITO, Ward - 4(2), Kolkata

ITA 2225/KOL/2018

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 9179 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 9 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-08-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 26-10-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RANU BISWAS
• Keywords: Rejection of books of accounts; Business expenditure; Principle of natural justice; Condonation of delay; TDS; Set aside; FORM 26AS
• Section: 143(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BENCH B KOLKATA BEFORE SHRI S ANJAY GARG , JUDICIAL MEMBER AND DR. M.L.MEENA, ACCOUNTANT MEMBER . / ITA NO. 2225 /KOL/201 8 ASSESSMENT YEAR: 20 1 3 - 14 M/S. THE ADVERTISING CORPORATION OF INDIA PVT. LTD . 1 & 2 OLD COURT HOUSE CORNER, KOLKATA - 700 001. PAN:AABCT7864K / V/S . I.T.O. WARD 4(2), KOLKATA, AAYKAR BHAVAN, P - 7 CHOWRINGHEE SQUARE, KOLKATA - 700 069. / APPELLANT .. / RESPONDENT HEARING THROUGH VIDEO CONFERENCING / BY APPELLANT SHRI SOUMITRA CHOUDHURY, AR / BY RESPONDENT S MT. RANU BISWAS, ADDL. CIT, . DR / DATE OF HEARING 02 - 08 - 2021 / DATE OF PRONOUNCEMENT 06 - 08 - 2021 / O R D E R P ER SANJAY GARG, JUDICIAL MEMBER : TH E PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGAINST THE ORDER DATED 16 - 08 - 2018 OF THE COMMISSIONER OF INCOME T AX (APPEALS) , 2 , KOLKATA [HEREINAFTER REFERRED TO AS CIT(A)] . 2. THE ASSESSEE IN THIS APPEAL HAS TAKEN FOLLOWING GROUNDS OF APPEAL: - 1. FOR THAT ON THE FACTS OF THE CASE, THE LD. C.I. T. (A) HAS WRONGLY PASSED THE APPELLATE ORDER WITHOUT PROPER APPLICATION OF MIND AND FAILED TO GIVE PROPER OPPORTUNITY OF HEARING WHICH IS AGAINST THE PROVISION OF LAW AND BEYOND HIS COMPETENT JURISDICTION. ITA NO. 2225/KOL/2018 A.Y 2013 - 14 THE ADVERTISING CORPORATION OF (I) P.LTD. PAGE 2 2. FOR THAT THE LD. CIT(A) HAS ACCEPTED THE ADDITIONAL GROUND OF APPEAL BY FOLLOWING TH E JUDGEMENT OF HON'BLE SUPREME COURT IN THE CASE OF JUTE CORPORATION OF INDIA, 53 TAXMAN P - 85, BUT ULTIMATELY DISMISSED THE GROUND ON A MISUNDERSTAND OF LAW, REQUIRE A FRESH HEARING FOR THE SAKE OF NATURAL JUSTICE, BUT THE NOTICE U/S. 143(2) OF THE I.T. AC T WAS NOT SERVED WITHIN STATUTORY TIME AS SUCH THE ASSESSMENT. 3. FOR THAT THE A.O. ACTED VINDICTIVELY BY MAKING DISALLOWANCES OF BUSINESS EXPENSES WITHOUT REJECTING THE METHOD OF ACCOUNTING 'MERCANTILE' FOLLOWED IN EARLIER AND SUBSEQUENT ASSESSMENT YEAR S AND HAS NOT REJECTED THE BOOKS OF ACCOUNTS AND METHOD OF ACCOUNTING, AS SUCH CIT(A) HAS ACTED BEYOND HIS COMPETENT JURISDICTION BY CONFIRMING THE DISALLOWANCE@20% OF TOTAL EXPENSES RS.926,993/ - I.E. RS.183,399 / - . 4. FOR THAT ON THE FACTS OF THE CASE, THE LD. C.I.T.(A) WAS WRONG IN ADDING TO INCOME RS.26,78,770 / - BASED ON WRONG, PERVERSE AND DECISION WITHOUT ALLOWING PROPER OPPORTUNITY OF HEARING, THEREFORE, THE SAID ORDER IS BASED ON SURMISE, SUSPICION AND CONJECTURE AND LIABLE TO BE QUASHED AND/ OR CANCELLED. 5. FOR THAT ON THE FACTS OF THE CASE, THE LD. C.I.T.(A) HAS ACTED ARBITRARILY BY ADDING TO INCOME BASED ON 26AS REPORT BUT 26AS REPORT DID NOT EMPOWER THE AUTHORITIES BELOW TO ESTIMATE THE IN COME AS BUS IN ESS IN COME UTMOST IT CAN BE DETERMINE O N NET PROFIT/ GROSS / PROFIT. 6. FOR THAT THE RENTAL INCOME OF RS.74,262/ - HAS BEEN TAKEN INTO ACCOUNT, SO THE INCLUSION OF THE SAID INCOME IS AMOUNTED TO DOUBLE TAXATION NOT PERMISSIBLE TO ANY TAXATION LAW. 7. FOR THAT THE APPELLANT RESERVES THE RIGHT TO ADDUCE ANY FURTHER GROUND OR GROUNDS, IF NECESSARY, AT OR BEFORE THE HEARING OF THE APPEAL. 3. THIS APPEAL OF THE ASSESSEE IS TIME BARRED BY 3 DAYS. A SEPARATE APPLICATION FOR CONDONATION OF DELAY HAS BEEN FILED. CONSIDERING THE SHORTNESS OF THE DELA Y PERIOD, AND THE REASONS GIVEN, THE DELAY IN FILING THE PRESENT APPEAL IS HEREBY CONDONED. 4 . GROUND NO. 1 IS GENERAL IN NATURE AND DOES NOT REQUIRE FOR SPECIFIC ADJUDICATION. 5 . G ROUND NO. 2: , T HE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT HE DOES NOT PRESS GROUND NO. 2 . GROUND NO. 2 IS , THEREFORE, DISMISSED AS NOT PRESSED. GROUND NO. 3 6 . VIDE GROUND NO. 3 THE ASSESSEE HAS CONTESTED THE ACTION OF THE LOWER AUTHORITIES IN MAKING DISALLOWANCE OF 20% OF THE MISC. & OTHER EXPENSES. THE ISSUE HAS BEEN DISCUSSED BY THE LEARNED ASSESSING OFFICER ( IN SHORT, THE LD. AO ) AT PAGE - 2 OF THE ASSESSMENT ORDER. A PERUSAL OF THE RELEVANT PART OF THE ASSESSMENT ORDER REVEALS THAT THE LD. AO NOTED THE ASSESSEE HAD DEBITED VARIOUS EXPE NSES UNDER VARIOUS HEADS. THE ITA NO. 2225/KOL/2018 A.Y 2013 - 14 THE ADVERTISING CORPORATION OF (I) P.LTD. PAGE 3 LD. AO OBSERVED THAT THE FOLLOWING EXPENDITURE DEBITED TO THE P & L ACCOUNT WERE NOT EXPLAINABLE OR SUBSTANTIABLE WITH THE DOCUMENTS AVAILABLE WITH THE ASSESSEE. SL.NO. HEAD/SUB - HEAD AMOUNT DEBITED (RS.) 01. TRAVELLING & CONVEYANCE 4,54,306 02. GENERAL CHARGES 3,65,001 03. MISCELLANEOUS EXPENSES 9,26,993 7 . THOUGH THE LD. AO NOTED THAT THE ASSESSEE HA D SUBMITTED THE DETAILS (BREAK - UP/LEDGER FOLIO), PHOTO COPIES OF DOCUMENTS/VOUCHERS ETC. , YET HE OBSERVED THAT MERE FILING OF DOCUMENTS WAS NOT ENOUGH AND THAT BY FILING OF THE DOCUMENTS, THE CORRECTNESS OF THE SAME C OULD NOT BE ESTABLISHED. HE, THEREFORE, MADE ADHOC DISALLOWANCE 20% OF THE AFORE MENTIONED EXPENDITURE. THE LD. CIT(A) CONFIRME D THE DISALLOWANCE SO MADE BY THE LD.AO 8 . A PERUSAL OF THE ASSESSMENT ORDER IT SELF REVEALS THAT THE ASSESSEE HA D FURNISHED THE REQUISITE DOCUMENTS/ EVIDENCES RELATING TO THE INCURRING OF THE EXPENDITURE. BUT THE LD. AO WITHOUT EXAMINING THOSE DOCUMENTS A ND WITHOUT POINT ING OUT ANY ERROR IN THOSE DOCUMENTS HAS SIMPLY MADE THE ADHOC 20% DISALLOWANCE, WHICH IS NOT JUSTIFIABLE IN THE EYES OF LAW. THE AFORESAID DISALLOWANCE MADE BY THE LD. AO IS , THEREFORE , SET ASIDE/DELETED. THIS GROUND IS ALLOWED IN FAVOUR OF THE ASSESSEE. GROUND NOS. 4,5 & 6 9 . VIDE GROUND NOS. 4,5 & 6 THE ASSESSEE HAS CONTESTED THE ADDITION OF 26,78,770/ - AND FURTHER ADDITION OF RS. 74,262/ - ON ACCOUNT OF DIFFERENCE BETWEEN THE INCOME REPORTED BY THE ASSESSEE AS COMPARED TO TDS INFORMATION IN FORM 26AS. THE LEARNED COUNSEL FOR THE ASSESSEE INVITED OUR ATTENTION TO THE RELEVANT PART OF THE ASSESSMENT ORDER AND THE RELEVANT DOCUMENTS FILED A ND SUBMITTED THA T THE INCOME DECLARED BY THE ASSESSEE IS MUCH MORE THAN THAT IS D ECIPHERABLE FROM FORM 26AS. THE LEARNED COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE ASSESSEE HAS TAKEN INTO ACCOUNT ALL THE INCOME AS DEPICTED IN FORM 26AS. THE LEARNED COUNSEL HAS SUBMITTED THAT THE ASSESSEE MAY BE GIVEN OPPORTUNITY TO RE CON CILE THE FIGURES OF INCOME AS COMPARED TO THE INFORMATION IN FORM 26AS. THE LEARNED DEPARTMENTAL ITA NO. 2225/KOL/2018 A.Y 2013 - 14 THE ADVERTISING CORPORATION OF (I) P.LTD. PAGE 4 REPRESENTATIVE ( IN SHORT, THE LD. DR) HAS NOT OBJECTED TO THE SAME. THIS ISSUE IS , ACCORDINGL Y , RESTORED TO THE FILE OF THE LD. AO WITH A DIRECTION TO VERIFY THE CONTENTION OF THE ASSESSEE FROM THE ACCOUNTS OF THE ASSESSEE AND DECIDE THE ISSUE AFRESH AS PER LAW. 10. GROUND NO. 7 IS GENERAL IN NATURE. IN VIEW OF OUR FINDINGS ABOVE, THE APPE AL OF THE ASSESSEE IS TREATED AS PARTLY ALLOWED. ORDER PRONOUNCED IN OPEN COURT AT THE TIME OF HEARING ON 06 - 08 - 2021 SD/ - SD/ - (M.L.MEENA) (S ANJAY GAR G ) ACCOUNTANT MEMBER JUDICIAL MEM BER DATED 06 - 08 - 2021 **PP/SPS / COPY OF ORDER FORWARDED TO: - 1. /APPELLANT /ASSESSEE: M/S. THE ADVERTISING CORPORATION OF INDIA PVT. LTD 1 & 2 OLD COURT HOUSE CORNER, KOLKATA - 700 001. 2. /RESPONDENT - THE I.T.O., WARD 4(2) AAYKAR BHAWAN, P - 7 CHOWRINGHEE SQUARE, KOLKATA - 700 069. 3. / CONCERNED CIT 4. - / CIT (A) 5. , / DR, ITAT, KOLKATA 6. / GUARD FILE. BY ORDER/ , /TRUE COPY/ SENIOR PRIVATE SECRETARY /D.D.O