British Air Hostess Academy Pvt. Ltd., Chandigarh V. ITO, Chandigarh

ITA 232/CHANDI/2011

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 5463 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-04-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 07-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N K SANI
• Keywords: Principle of natural justice; Documents seized
• Section: 143(3); 133A; 131; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES A CHANDIGARH BEFORE SHRI D.K.SRIVASTAVA, ACCOUNTANT MEMBER AND MS SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO. 232/CHD/2011 ASSESSMENT YEAR: 2007-08 M/S BRITISH AIR HOSTESS ACADEMY PVT LTD, VS. THE IT O, CHANDIGARH WARD 4(3), CHANDIGARH PAN NO. AADCB0950E & ITA NO. 233/CHD/2011 ASSESSMENT YEAR: 2007-08 M/S BRITISH ACADEMY PVT LTD., VS. THE ITO, CHANDIGARH WARD 4(3), CHANDIGARH PAN NO. AACCB4985C (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI T.N.SINGLA RESPONDENT BY: SHRI N.K.SANI ORDER PER SUSHMA CHOWLA, JM BOTH THE APPEALS BY THE ASSESSEE ARE AGAINST THE OR DER OF CIT(A), CHANDIGARH DATED 22.11.2010 BOTH RELATING TO ASSESS MENT YEAR 2007-08 AGAINST THE ORDER PASSED UNDER SECTION 143(3) OF TH E I.T. ACT, 1961 INVOLVING SIMILAR ISSUES WERE HEARD TOGETHER. THE APPEALS ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 2 2. THE ASSESSEES HAVE RAISED THE FOLLOWING COMMON G ROUNDS OF APPEAL:- 1. THAT THE ORDER OF LD. CIT(A) IS BAD AND AGAINST FACTS AND LAW. 2. THAT THE LD. CIT(A) HAS WRONGLY PASSED ORDER UND ER SECTION 144 FOR NON-SUBMISSION OF BOOKS OF ACCOUNT WHEREAS THE BOOKS WERE PRODUCED BEFORE THE LD. ASSESSING OFFICER AND HE KEPT IT FOR CHECKING FOR A BOUT ONE MONTH. 3. THAT THE LD. CIT(A) HAD WRONGLY MADE AN ADDITION OF RS. 58,70,100/- AS DIFFERENCE IN FEE RECEIPTS DURIN G THE YEAR AND TREATED THE SAME AS UNRECORDED RECEIPT S IN THE BOOKS OF ACCOUNT. 4. THAT THE LD. CIT(A) HAS NOT GIVEN THE BENEFIT OF FEES REFUNDED TO STUDENTS WHO LEFT THE COURSES DURING TH E YEAR. 5. THAT THE LD. CIT(A) HAS NOT GIVEN THE BENEFIT OF EXPENSES OF SINGAPORE EDUCATIONAL TOUR AND ALSO THE FEES REFUNDED TO STUDENTS WHO HAD NOT ATTENDED THE SINGAPORE TOUR. 6. THAT THE LD. CIT(A) HAS WRONGLY MADE AN ADDITION OF RS. 1,96,000/- BY DISALLOWING ADVERTISEMENT EXPENSE PAID DURING THE YEAR FOR NON DEDUCTION OF TDS UND ER SECTION 40(A)(IA). 7. THAT THE LD. CIT(A) HAS WRONGLY MADE AN ADDITION OF RS. 5,18,721/-(I BY DISALLOWING RENT EXPENSE PAID DURING THE YEAR FOR NON DEDUCTION OF TDS UNDER SECTION 40(A)(IA). 3 3. THE BRIEF FACTS IN ITA NO. 232/CHD/2011 ARE THAT THE ASSESSEE HAD FURNISHED RETURN OF INCOME DECLARING TOTAL INCOME A T NIL. THE ASSESSEE WAS ENGAGED IN IMPARTING TRAINING TO AIR HOSTESSES AND THE CASE OF THE ASSESSEE WAS PICKED UP FOR SCRUTINY. SURVEY OPERAT IONS U/S 133A OF THE ACT WAS CONDUCTED AT THE BUSINESS PREMISES OF THE A SSESSEE ON 24.9.2007 AND DURING THE COURSE OF SURVEY, CERTAIN DOCUMENTS WERE FOUND AND IMPOUNDED, WHICH RELATED TO ASSESSMENT YEAR 2007-08 I.E. THE YEAR UNDER APPEAL. DURING THE ASSESSMENT PROCEEDINGS, VARIOU S NOTICES WERE SENT TO THE ASSESSEE WHICH WERE COMPLIED WITH ON CERTAIN DA TES. THE ASSESSEE DID NOT PRODUCE THE BOOKS OF ACCOUNT AND HENCE SUMMONS WERE ISSUED ON 24.8.2009 TO THE MANAGING DIRECTOR TO APPEAR PERSON ALLY ON 1.9.2009 AND TO PRODUCE COMPLETE BOOKS OF ACCOUNT WITH SUPPORTIN G DOCUMENTS FOR THE FINANCIAL YEARS 2004-05, 2005-06 & 2006-07. THE AS SESSEE FAILED TO ATTEND THE OFFICE IN COMPLIANCE WITH THE SUMMONS IS SUED AND FAILED TO PRODUCE THE BOOKS OF ACCOUNT. ANOTHER SUMMONS U/S 131 OF THE ACT WERE ISSUED TO APPEAR ON 4.9.2009 ALONG WITH INFORMATION . ON THE SAID DATE, THE MANAGING DIRECTOR OF THE ASSESSEE COMPANY APPEA RED BUT AS PER ASSESSING OFFICER FAILED TO PRODUCE THE BOOKS OF A CCOUNT. ANOTHER SHOW CASE NOTICE WAS ISSUED TO THE ASSESSEE THAT IN THE ABSENCE OF THE PRODUCTION OF BOOKS OF ACCOUNT, WHY BEST JUDGMENT A SSESSMENT SHOULD NOT BE FRAMED U/S 144 OF THE ACT. ON THE APPOINTED DAT E OF HEARING, THE BOOKS OF ACCOUNT WERE PRODUCED AND THE STATEMENT OF ONE O F THE DIRECTORS APPEARING ON THE SAID DATE WAS ALSO RECORDED. THE ASSESSEE WAS ASKED TO RECONCILE THE ENTRIES IN THE BOOKS OF ACCOUNT WITH THE IMPOUNDED MATERIAL. THE OBSERVATION OF THE ASSESSING OFFICER IN PARA 1. 4 AT PAGE 9 OF THE ASSESSMENT ORDER ARE THAT THE BOOKS OF ACCOUNT WERE MAINTAINED ONLY AFTER THE SURVEY CONDUCTED U/S 133A OF THE ACT AND THE SA ME WERE NOT REGULARLY MAINTAINED ON DAY TO DAY BASIS. ON THE NEXT DATE O F HEARING, THE COUNSEL 4 FOR THE ASSESSEE FURNISHED A CONSOLIDATED STATEMENT IN RESPECT OF THE RECEIPTS VIS-A-VIS BOOKS OF ACCOUNT AND THE DOCUME NTS SEIZED DURING THE SURVEY OPERATIONS. THE ASSESSING OFFICER REJECTING THE EXPLANATION OF THE ASSESSEE RESORTED TO THE PROVISIONS OF SECTION 145( 3) OF THE ACT AND MADE THE ASSESSMENT AS PROVIDED UNDER THE PROVISIONS OF SECTION 144 OF THE INCOME TAX ACT. THE ASSESSING OFFICER COMPUTED THE RECEIPTS NOT REFLECTED BY THE ASSESSEE IN ITS BOOKS OF ACCOUNT A T RS. 58,70,100/- WHICH WAS ADDED AS INCOME OF THE ASSESSEE. THE CIT(A) U PHELD THE REJECTION OF BOOKS OF ACCOUNT AND ALSO UPHOLDED THE ADDITION ON ACCOUNT OF THE RECEIPTS AS ADDITIONAL INCOME OF THE ASSESSEE. THE ASSESSEE IS IN APPEAL AGAINST THE ORDER OF CIT(A). 4. THE LD. AR FOR THE ASSESSEE DREW OUR ATTENTION T O THE VARIOUS COMMUNICATIONS MOVED BEFORE THE ASSESSING OFFICER A ND THE FURNISHING OF THE DETAILS FROM DAY TO DAY. VIDE LETTER DATED 9.10 .2009, IT WAS POINTED OUT THAT MAJORITY OF THE RECORDS WAS SEIZED BY THE REVENUE DEPARTMENT DURING THE SURVEY CONDUCTED AT THE PREMISES OF THE ASSESSEE. IT WAS FURTHER POINTED OUT THAT FURTHER COMPLETE BOOKS OF ACCOUNT IN THE SHAPE OF CASH BOOK, LEDGER, BANK STATEMENT OF COMPANY, BANK STATEMENT OF DIRECTORS ARE ALREADY SUBMITTED IN YOUR OFFICE, WHICH ARE LYI NG IN YOUR CUSTODY FOR YOUR KIND PERUSAL . FURTHER, IT WAS SUBMITTED THAT THE VOUCHERS OF EXPENSES WOULD BE PRODUCED ON 14.10.2009. VIDE LET TER DATED 14.10.2009, A REFERENCE WAS MADE TO THE STATEMENT RECORDED OF M R. GURMAIL SINGH, EMPLOYEE OF THE ASSESSEE COMPANY WHO IS TEACHING IN THE ACADEMY. IT WAS POINTED OUT THAT THE REGARDING THE QUERY ABOUT PREP ARATION OF BOOKS OF ACCOUNT IN THE YEAR UNDER CONSIDERATION, THE REPLY OF MR GURMIT SINGH WAS IN CONNECTION WITH THE PRINTING OF BOOKS OF ACCOUNT AND NOT MAINTENANCE OF BOOKS OF ACCOUNT. IT WAS CLAIMED BY THE ASSESSE E THAT REGULAR BOOKS OF 5 ACCOUNT WERE BEING MAINTAINED AND DURING SURVEY THE BOOKS OF ACCOUNT COULD NOT BE PRODUCED DUE TO VIRUS IN THE COMPUTER, WHERE THE BOOKS OF ACCOUNT WERE MAINTAINED. IN THE SAID LETTER IT WAS FURTHER MENTIONED THAT ALL THE BOOKS OF ACCOUNT WERE IMPOUNDED BY THE ASSE SSING OFFICER AND WERE KEPT FOR ABOUT A MONTH AND NO DEFECT WAS POINT ED OUT IN THE SAID BOOKS OF ACCOUNT, WHICH WAS RETURNED ON 14.10.2009. THE BILLS AND VOUCHERS OF EXPENSES WERE ALSO CLAIMED TO HAVE BEEN PRODUCED AND AFTER VERIFICATION, THE SAME WERE RETURNED TO SHRI GURMAI L SINGH ALONG WITH THE BOOKS OF ACCOUNT EARLIER IMPOUNDED. A REQUEST WAS MADE TO SUPPLY THE COPY OF THE STATEMENT RECORDED OF MR. GURMAIL SINGH . THE ASSESSEE ALSO MOVED A LETTER DATED 17.11.2009 UNDER WHICH IT CLAI MED TO HAVE FURNISHED THE RECONCILIATION OF RECEIPTS DURING THE YEAR AND IN THE SAID LETTER THERE IS A MENTION OF PRODUCTION OF BOOKS OF ACCOUNT. THE PL EA OF THE ASSESSEE IS THAT DESPITE THE ABOVE SAID EVIDENCE PRODUCED, THE BOOKS OF ACCOUNT WERE SUMMARILY REJECTED BY THE ASSESSING OFFICER. THE D ATE WISE SEQUENCE OF EVENTS WAS FURNISHED BEFORE THE CIT(A) WITH REGARD TO THE PRODUCTION OF BOOKS OF ACCOUNT AND OTHER RELATED EVIDENCE / DOCUM ENTS FILED WHICH HAS BEEN BRUSHED ASIDE BY THE CIT(A). 5. THE LD. DR FOR THE REVENUE PLACED RELIANCE ON TH E ORDERS OF THE AUTHORITIES BELOW. WE HAVE HEARD THE RIVAL CONTENT IONS AND PERUSED THE RECORDS. THE ASSESSMENT IN THE CASE WAS COMPLETED BY THE ASSESSING OFFICER AFTER REJECTING THE BOOK RESULTS SHOWN BY T HE ASSESSEE BY INVOKING THE PROVISIONS OF SECTION 145(3) OF THE ACT. THE BA SIS FOR REJECTING THE BOOKS OF ACCOUNT WAS THE NON PRODUCTION OF THE SAID BOOKS DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND ALSO SUPPORTIN G VOUCHERS IN RESPECT THEREOF. FROM THE PERUSAL OF THE COMMUNICATION BET WEEN THE ASSESSEE AND THE ASSESSING OFFICER, COPIES OF WHICH ARE AVAILAB LE ON RECORD, WE FIND 6 THAT THE ASSESSEE HAD PRODUCED THE BOOKS OF ACCOUNT BEFORE THE ASSESSING OFFICER WHICH AS PER THE ASSESSEE WAS KEPT BY THE A SSESSING OFFICER FOR A PERIOD OF MORE THAN ONE MONTH IN HIS OFFICE. THE A SSESSEE HAS ALSO POINTED OUT THE SAID FACT BEFORE THE CIT(A) AS PER THE WRITTEN SUBMISSIONS FURNISHED BEFORE THE CIT(A) PLACED AT PAGES 1 & 2 O F THE PAPER BOOK. ANOTHER BASIS FOR REJECTION OF THE BOOKS OF ACCOUNT IN THE PRESENT CASE IS THE STATEMENT OF ONE OF THE DIRECTOR MR GURMAIL SIN GH WHO IN REPLY TO A QUERY RAISED BY THE ASSESSING OFFICER ADMITTED THAT THE PRINT OUTS OF THE BOOKS OF ACCOUNT WERE TAKEN ON A LATER DATE. ADMITT EDLY, THE BOOKS OF ACCOUNT WERE MAINTAINED ON COMPUTER AND DURING THE COURSE OF SURVEY, NO PRINT OUTS WERE PRODUCED BEFORE THE SURVEY TEAM BEC AUSE OF THE CLAIM OF THE ASSESSEE THAT THERE WAS A VIRUS IN THE SAID COM PUTER. HOWEVER, THE SAID BOOKS OF ACCOUNT ALONGWITH SUPPORTING VOUCHERS WERE PRODUCED BEFORE THE ASSESSING OFFICER AND AS PER LETTER DATE D 17.10.2009 ADDRESSED TO THE ASSESSING OFFICER, THE ASSESSEE CLAIMS THAT THE SAID BOOKS OF ACCOUNT WERE KEPT BY THE ASSESSING OFFICER FOR MORE THAN ONE MONTH. THE SAID LETTER IS PLACED AT PAGE 6 OF THE PAPER BOOK. THE LD. AR FOR THE ASSESSEE POINTED OUT THAT THE AUTHORITIES BELOW HAV E FAILED TO LOOK INTO THE RECONCILIATION STATEMENT PREPARED BY THE ASSESSEE E XPLAINING RECEIPTS AS PER THE BOOKS OF ACCOUNT AND AS AVAILABLE IN THE IM POUNDED DOCUMENTS SEIZED DURING THE COURSE OF SURVEY. 6. IN THE ENTIRETY OF FACTS AND CIRCUMSTANCES OF TH E CASE, WE ARE OF THE VIEW THAT UNDER THE PRINCIPLES OF NATURAL JUSTICE T HE ASSESSEE SHOULD BE ALLOWED ANOTHER OPPORTUNITY TO EXPLAIN ITS CASE. T HE ASSESSEE IS MAINTAINING BOOKS OF ACCOUNT ALONGWITH SUPPORTING V OUCHERS AND WE DIRECT THE ASSESSING OFFICER TO AFFORD A REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE IN ORDER TO RECONCILE THE DIFFERENC E IN THE RECEIPTS VIS-A-VIS 7 BOOKS OF ACCOUNT AND THE PAPERS IMPOUNDED DURING TH E SURVEY. ACCORDINGLY, WE REMIT THE ISSUE BACK TO THE FILE OF ASSESSING OFFICER TO DECIDE THE ISSUE DE NOVO IN ACCORDANCE WITH LAW. 7. THE ASSESSEE BY WAY OF GROUND NOS. 6 & 7 HAS RAI SED THE ISSUES IN CONNECTION WITH THE DISALLOWANCE OF ADVERTISEMENTS EXPENSES AND RENT EXPENSES. AS WE ARE REMITTING THE ISSUE BACK TO TH E FILE OF ASSESSING OFFICER IN CONNECTION WITH DETERMINATION OF INCOME IN THE HANDS OF ASSESSEE, THE SAID ISSUES ARE ALSO REMITTED BACK TO THE ASSESSING OFFICER TO DECIDE THE SAME DE NOVO AFTER AFFORDING A REASONABL E OPPORTUNITY OF HEARING TO THE ASSESSEE IN ACCORDANCE WITH LAW. T HE GROUND OF APPEAL RAISED BY ASSESSEE ARE ALLOWED FOR STATISTICAL PURP OSES. 8. THE FACTS IN ITA NO. 233/CHD/2011 ARE IDENTICAL TO THE FACTS IN ITA NO. 232/CHD/2011 AND THE SIMILAR ISSUES HAVE BEEN R AISED BY THE ASSESSEE IN ITA NO.233/CHD/2011. WE REMIT THE PRESENT ISSU E ALSO BACK TO THE FILE OF ASSESSING OFFICER TO DECIDE THE SAME DE NOVO AF TER AFFORDING AS REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. THE GROUNDS OF APPEAL RAISED BY ASSESSEE ARE ALLOWED FOR STATISTICAL PURP OSES. 9. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 26 TH DAY OF APRIL, 2011. SD/- SD/- (D.K.SRIVASTAVA) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 26 TH APRIL, 2011 RKK 8 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR TRUE COPY BY ORDER ASSISTANT REGISTRAR, ITAT, CHANDIGARH