M/s. Ponnusamy Hotel, CHENNAI V. JCIT, CHENNAI

ITA 2526/CHNY/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 4767 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 5 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-02-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 20-07-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 30-08-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S NATARAJA
• Assessee Lawyers: SUSHMA HARINI A

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: CHENNAI , , % BEFORE SHRI GEORGE MATHAN, JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBER ./ ITA NO.2526/CHNY/2016 /ASSESSMENT YEAR: 2010-11 M/S.PONNUSAMY HOTEL, NO.55/1, GOWDIYA MUTT ROAD, ROYAPETTAH, CHENNAI-600 014. [PAN: AAAFP 0621 N] VS. THE JT. COMMISSIONER OF INCOME TAX, BUSINESS RANGE-IX (I/C), KANNAMMAI BUILDING (4 TH FLOOR), NO.611, ANNA SALAI, CHENNAI-600 006. ( ' /APPELLANT) ( ()' /RESPONDENT) ' * / APPELLANT BY : MS.SUSHMA HARINI.A, ADV. ()' * /RESPONDENT BY : MR.S.NATARAJA, JCIT * /DATE OF HEARING : 14.02.2018 * / DATE OF PRONOUNCEMENT : 14.02.2018 / O R D E R PER GEORGE MATHAN , JUDICIAL MEMBER : ITA NO.2526/CHNY/2016 IS AN APPEAL FILED BY THE AS SESSEE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-1 3, CHENNAI, IN ITA NO.297/CIT(A)-13/2010-11 DATED 29.02.2016 FOR THE A Y 2010-11. 2. MR.S.NATARAJA, JCIT, REPRESENTED ON BEHALF OF TH E REVENUE AND MS.SUSHMA HARINI.A, ADV., REPRESENTED ON BEHALF OF THE ASSESSEE. ITA NO.2526/CHNY/2016 :- 2 -: 3. THE APPEAL IS DELAYED 118 DAYS, FOR WHICH, THE A SSESSEE HAS FILED NECESSARY AFFIDAVIT FOR CONDONATION OF DELAY. IT I S MENTIONED THAT THE MANAGING PARTNER WHO IS IN THE KNOW OF ALL THE AFFA IRS OF THE PARTNERSHIP FIRM, WAS SUFFERING FROM CORONARY ARTERY DISEASE, F OR WHICH, NECESSARY MEDICAL CERTIFICATE HAS ALSO BEEN PRODUCED. THE RE VENUE HAS OBJECTED TO THE CONDONATION OF THE DELAY. HOWEVER, THE AFFIDAV IT FILED BY THE ASSESSEE HAS NOT BEEN SHOWN TO BE FALSE. CONSEQUENTLY, THE DELAY IN FILING OF THE APPEAL IS CONDONED AND THE APPEAL IS DISPOSED OFF O N MERITS. 4. IT WAS SUBMITTED BY THE LD.AR THAT THE ASSESSEE IS A PARTNERSHIP FIRM, WHICH IS DOING BUSINESS OF RUNNING OF HOTELS. IN THE COURSE OF THE ASSESSMENT, SAMPLE EXAMINATION OF THE PURCHASES WER E VERIFIED IN RESPECT OF THE PURCHASE OF PRAWNS FROM SMT.V.LATHA. IT WAS FOUND THAT THE ASSESSEE HAD CLAIMED PURCHASES TO AN EXTENT OF RS.3 0,65,705/- AND AN OUTSTANDING CLOSING BALANCE OF RS.5,77,186/- AS ON 31.03.2010. IT WAS A SUBMISSION THAT THE AO HAD VERIFIED THE BANK STATEM ENT OF SMT.V.LATHA AND HAD NOTICED THAT THE PAYMENTS CREDITED FROM THE ASSESSEE DURING THE YEAR WAS ONLY TO AN EXTENT OF RS.22,35,325/-. CONS EQUENTLY, THE AO HAD ISSUED SHOW CAUSE NOTICE TO THE ASSESSEE AS TO WHY THE DIFFERENCE BETWEEN RS.30,65,705/- AND RS. 22,35,325/- COMING T O RS.8,30,380/-, WAS NOT LIABLE TO BE DISALLOWED. THE ASSESSEE HAD FILED THE RECONCILIATION STATEMENT ALONG WITH THE LEDGER COPIES. IT WAS A S UBMISSION THAT THE AO WITHOUT CONSIDERING THE RECONCILIATION HAD HELD THA T THERE WAS AN ABSENCE ITA NO.2526/CHNY/2016 :- 3 -: OF EVIDENCE IN RESPECT OF PAYMENT OF RS.8,30,380/- TOWARDS THE PURCHASES FROM SMT.V.LATHA AND CONSEQUENTLY, HAD DISALLOWED T HE SAID AMOUNT. IT WAS A SUBMISSION THAT ON APPEAL, THE LD.CIT(A) HAD CONFIRMED THE DISALLOWANCE. IT WAS A SUBMISSION OF THE LD.AR THA T THE ASSESSEE HAS NOT DONE ANY CASH PURCHASES AND ALL THE PURCHASES FROM SMT.V.LATHA WAS BY CHEQUE. THE LD.AR PLACED BEFORE US A COPY OF THE L EDGER ACCOUNT FOR A PERIOD FROM 01.04.2009 TO 31.03.2010. IT WAS A SUB MISSION THAT AS PER THE SAID LEDGER, THE OPENING BALANCE WAS RS.2,08,35 1/-, THE CLOSING BALANCE WAS RS.5,77,186/- AND THE TOTAL PAYMENTS WE RE TO AN EXTENT OF RS.29,45,705/-. IT WAS A SUBMISSION THAT THUS, AS PER THE LEDGER, ITSELF, THE ACCOUNT WAS A RUNNING ACCOUNT AND THE AO HAS NO T CONSIDERED THE FACT THAT EVEN THE CLOSING BALANCE HAS BEEN ACCEPTED BY THE SUPPLIER. IT WAS A SUBMISSION THAT IF THE PAYMENTS ARE CONSIDERED DURI NG THE YEAR, THEN THE RECONCILIATION WOULD BE CLEAR THAT THE ASSESSEE IS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING. AS PER THE MERCANTILE SYSTEM OF ACCOUNTING AND AS PER THE LEDGER MAINTAINED BY THE ASSESSEE, THE ASSE SSEE HAS MADE PURCHASES OF RS.30,65,705/-, OUT OF WHICH, OPENING BALANCE IF IT IS REDUCED AS ALSO THE CLOSING BALANCE IF IT IS REDUCED, THE P AYMENTS DURING THE YEAR NEARLY CAME TO RS.22.80 LAKHS. IT WAS A SUBMISSION THAT ALL THE PAYMENTS HAVING BEEN MADE BY CHEQUE, NO DISALLOWANCE IS CALL ED FOR. IT WAS A FURTHER SUBMISSION THAT THE RECONCILIATION AS SUBMI TTED BY THE ASSESSEE, HAS ALSO NOT BEEN DISLODGED BY THE REVENUE. ITA NO.2526/CHNY/2016 :- 4 -: 5. IN REPLY, THE LD.DR VEHEMENTLY SUPPORTED THE ORD ER OF THE AO AND THE LD.CIT(A). 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. 7. A PERUSAL OF THE LEDGER ACCOUNT AS PRODUCED BY T HE ASSESSEE CLEARLY SHOWS THAT ALL THE PAYMENTS TO SMT.V.LATHA IN RESPE CT OF THE PURCHASE OF PRAWNS ARE CLEARLY BY CHEQUE. THE AO RECOGNIZES TH AT RECONCILIATION STATEMENT HAS BEEN FILED BEFORE HIM. THE AO ALSO R ECOGNIZES THAT CLOSING BALANCE AS RECORDED BY THE ASSESSEE AND AS RECORDED BY SMT.V.LATHA, THE SUPPLIER, ARE IDENTICAL TO AN EXTENT OF RS.5,77,186 /-. HOWEVER, THE AO WHEN HE STATES THAT AN AMOUNT OF RS. RS.8,30,380/- HAS NOT BEEN SHOWN IN THE BANKING ACCOUNT OF SMT.V.LATHA, ADMITTEDLY, HAS NOT SATISFIED WHICH ARE THE PAYMENTS OR THE BILLS, WHICH HAS NOT BEEN S HOWN TO HAVE BEEN PAID IN THE CASE OF THE ASSESSEE. FURTHER, IF THE O PENING BALANCE AND THE CLOSING BALANCE OF THE LEDGER, IS REMOVED IN SO FAR AS THE SAID OPENING BALANCE IS RELATED TO THE EARLIER YEAR AND THE CLOS ING BALANCE IS NOT TO BE CONSIDERED AS IT WOULD NOT BE REFLECTED IN THE BANK ACCOUNT IN SO FAR AS IT HAS NOT BEEN PAID BY ISSUANCE OF CHEQUE, THE ACCOUN TS WOULD TALLY. THIS BEING SO, WE ARE OF THE VIEW THAT THERE IS NO DIFFE RENCE IN THE PURCHASE ACCOUNT, WHICH CALLS FOR ANY ADDITION AND CONSEQUEN TLY, THE SAME STANDS DELETED. ITA NO.2526/CHNY/2016 :- 5 -: 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON FEBRUARY 14, 2018, AT CHENNAI. SD/- SD/- ( ) ( S. JAYARAMAN ) /ACCOUNTANT MEMBER ( ) (GEORGE MATHAN) /JUDICIAL MEMBER /CHENNAI, 1 /DATED: FEBRUARY 14, 2018. TLN * (23 43 /COPY TO: 1. ' /APPELLANT 4. 5 /CIT 2. ()' /RESPONDENT 5. 3 ( /DR 3. 5 ( ) /CIT(A) 6. /GF