Sri. E. Krishnappa, Bengaluru V. Income Tax Officer, Ward-2(2)(2), Bengaluru

ITA 2633/BANG/2017

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 6193 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 8 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-08-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2008-2009
• Appeal Filed On: 06-12-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR P V PRADEEP KUMAR
• Keywords: Opportunity of being heard; TDS; Set aside
• Section: 40(a)(ia)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : BANGALORE BEFORE SHRI B.R BASKARAN, ACCOUNTANT MEMBER AND SMT. BEENA PILLAI, JUDICIAL MEMBER ITA NO.2633/BANG/2017 ASSESSMENT YEAR : 2008-09 E KRISHNAPPA PROP : M/S E.K ENTERTAINERS & E.K LAND DEVELOPERS, NO.1, ADAKAMARANAHALLI, MAKALI POST.21 ST KM, TUMKUR ROAD, BENGALURU-562 123. PAN AFFPK 2791 A. VS. THE INCOME-TAX OFFICER, WARD-2(2)(2), BENGALURU. APPELLANT RESPONDENT APPELLANT BY : SMT. PRATIBHA R, ADVOCATE RESPONDENT BY : DR. P.V PRADEEP KUMAR, ADDL. CIT (DR) DATE OF HEARING : 06.08.2019 DATE OF PRONOUNCEMENT : 07.08.2019 O R D E R PERB.R BASKARAN,ACCOUNTANT MEMBER THE APPEAL OF THE ASSESSEE IS DIRECTED AGAINST TH E ORDER DATED 17-08-2017 PASSED BY LD CIT(A)-2, BENGALURU A ND IT RELATES TO THE ASSESSMENT YEAR 2008-09. THE ASSESSEE IS AG GRIEVED BY THE DECISION OF LD CIT(A) IN CONFIRMING THE ADDITION OF RS.90.10 LAKHS RELATING TO REVENUE COLLECTIONS AND DISALLOWANCE OF EXPENSES OF RS.110.00 LAKHS. ITA NO.2633/BANG/2017 PAGE 2 OF 6 2. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF P RODUCTION OF FILMS UNDER THE NAME AND STYLE M/S E K ENTERTAINERS. HE IS ALSO ENGAGED IN THE BUSINESS OF DEVELOPMENT OF LANDS IN THE NAME OF E.K LAND DEVELOPERS. BOTH THE ABOVE SAID ISSUES RELATE TO THE BUSINESS OF PRODUCTION OF FILMS. 3. THE REVENUE CARRIED OUT A SURVEY OPERATION IN THE HANDS OF THE ASSESSEE ON 18-07-2007. DURING THE COURSE OF SURVEY OPERATIONS, THE ASSESSEE HAD DECLARED INCOME OF RS.631.95 LAKHS FOR AY 2008- 09. HOWEVER, IN THE RETURN OF INCOME, THE ASSESSEE DECLARED ONLY RS.424.36 LAKHS. ON EXAMINATION OF DETAILS, THE AO NOTICED THAT THERE WAS A DIFFERENCE OF RS.90.10 LAKHS IN THE CO LLECTION ACCOUNT, I.E., THE COLLECTION WAS SHOWN LESS. HENCE THE ASS ESSEE WAS ASKED TO RECONCILE THE DIFFERENCE. 4. THE ASSESSEE SUBMITTED THAT DURING THE COURS E OF SURVEY OPERATIONS ON 18-07-2007, HE HAD ADMITTED INCOME OF RS.631.95 LAKHS, WHICH INCLUDED COLLECTIONS FOR THE PERIOD F ROM THE DATE OF SURVEY TO 31.3.2008 ALSO, WHICH WAS ESTIMATED AT RS .2.00 CRORES. IT WAS SUBMITTED THAT THE ACTUAL COLLECTION HAS FALLEN DOWN AND HENCE THERE WAS SHORTFALL IN THE INCOME FROM COLLECTIONS TO THE TUNE OF RS.90.10 LAKHS. HOWEVER, THE ASSESSEE DID NOT FURN ISH DEMAND AND COLLECTION REGISTER BEFORE THE AO TO SUBSTANTIA TE HIS EXPLANATIONS. HENCE THE AO MADE ADDITION OF RS.90. 10 LAKHS TO THE TOTAL INCOME OF THE ASSESSEE. 5. THE AO FURTHER NOTICED THAT THE ASSESSEE HAS CLAIMED EXPENSES TO THE TUNE OF RS.110.00 LAKHS, WHICH INCLUDED EXPE NSES OF ITA NO.2633/BANG/2017 PAGE 3 OF 6 RS.50.00 LAKHS TOWARDS WALL POSTERS AND RS.10.00 LA KHS TOWARDS SILVER JUBILEE CELEBRATIONS. SINCE THE ASSESSEE DI D NOT FURNISH VOUCHERS, THE AO DISALLOWED THE ABOVE SAID AMOUNT O F RS.110.00 LAKHS. THE AO ALSO OBSERVED THAT THE ASSESSEE HAS NOT DEDUCTED TDS FROM THE ABOVE SAID EXPENSES AND HENCE THE PROV ISIONS OF SEC.40(A)(IA) WILL ALSO APPLY. 6. BEFORE LD CIT(A), THE ASSESSEE FURNISHED RECON CILIATION STATEMENTS TO SUBSTANTIATE HIS CLAIM OF SHORTFALL I N COLLECTIONS. HOWEVER, THE LD CIT(A) OBSERVED THAT LOWER DECLARAT ION OF INCOME IS NOT ATTRIBUTABLE TO LOWER COLLECTIONS. THE LD CIT( A) ALSO CONFIRMED THE DISALLOWANCE OF EXPENSES OF RS.110.00 LAKHS ALS O U/S 40(A)(IA) OF THE ACT. WITH REGARD TO THE DISALLOWANCE MADE FOR NON-PRODUCTION OF VOUCHERS, THE LD CIT(A) DID NOT GIVE ANY DECISIO N. 7. WE HEARD THE PARTIES AND PERUSED THE RECORD. WE SHALL FIRST TAKE UP THE ISSUE OF ADDITION OF RS.90.10 LAKHS ON ACCOUNT OF SHORTFALL IN COLLECTIONS REVENUE. WE NOTICE THAT T HE ASSESSEE HAS FURNISHED RECONCILIATION STATEMENT BEFORE THE LD CI T(A), BUT THE FIRST APPELLATE AUTHORITY HAS NOT EXAMINED IT. WE ALSO N OTICE THAT THE ASSESSEE HAS FAILED TO FURNISH THE DEMAND AND COLLE CTION REGISTER BEFORE THE AO TO SUBSTANTIATE ITS CLAIM, EVEN THOUG H HE HAS FILED A RECONCILIATION STATEMENT ON THE BASIS OF ABOVE REGI STER BEFORE THE LD CIT(A). UNDER THESE SET OF FACTS, WE ARE OF THE VI EW THAT THIS ISSUE REQUIRES FRESH EXAMINATION AT THE END OF THE AO. A CCORDINGLY, WE SET ASIDE THE ORDER PASSED BY LD CIT(A) ON THIS ISS UE AND RESTORE THE SAME TO THE FILE OF THE AO FOR EXAMINING IT AFR ESH. WE ALSO DIRECT THE ASSESSEE TO PRODUCE DEMAND AND COLLECTION REGIS TER BEFORE THE ITA NO.2633/BANG/2017 PAGE 4 OF 6 AO AND/OR OTHER DOCUMENTS TO SUBSTANTIATE ITS CLAIM OF SHORTFALL IN THE COLLECTIONS. 8. WITH REGARD TO THE DISALLOWANCE OF EXPENSES, T HE LD A.R SUBMITTED THAT THE ASSESSEE HAS CLAIMED EXPENSES TO THE TUNE OF RS.1,08,30,057/- ONLY UNDER THE HEAD POST PRODUCTI ON EXPENSES. HOWEVER, THE AO HAS ADOPTED A ROUND SUM OF RS.110.0 0 LAKHS FOR MAKING DISALLOWANCE. SHE FURTHER SUBMITTED THAT MA NY OF THE EXPENSES DO NOT ATTRACT TDS PROVISIONS. SHE SUBMIT TED THAT THE ASSESSEE MAY BE GIVEN AN OPPORTUNITY TO PRODUCE THE RELEVANT VOUCHERS BEFORE THE AO. 9. WE HEARD LD D.R AND PERUSED THE RECORD. WE N OTICE THAT THE AO HAD DISALLOWED THE EXPENSES TO THE TUNE OF RS.11 0.00 LAKHS ON ACCOUNT OF NON-PRODUCTION OF VOUCHERS AND ALSO BY A PPLYING THE PROVISIONS OF SEC.40(A)(IA) OF THE ACT. WE WERE SH OWN THAT THE POST PRODUCTION EXPENSES CLAIMED BY THE ASSESSEE WERE ON LY RS.108.30 LAKHS ONLY. THE LD A.R HAS SOUGHT AN OPPORTUNITY T O PRODUCE THE RELEVANT VOUCHERS AND ALSO SUBMITTED THAT MANY OF T HE EXPENSES DO NOT ATTRACT TDS PROVISIONS AND HENCE DISALLOWANCE U /S 40(A)(IA) IS NOT WARRANTED. 10. IN VIEW OF THE ABOVE, WE ARE OF THE OPINION T HAT THIS ISSUE ALSO REQUIRES EXAMINATION AT THE END OF AO. ACCORDINGLY , WE SET ASIDE THE ORDER PASSED BY LD CIT(A) ON THIS ISSUE AND RES TORE THE SAME TO THE FILE OF THE AO FOR EXAMINING IT AFRESH. ITA NO.2633/BANG/2017 PAGE 5 OF 6 11. AFTER AFFORDING ADEQUATE OPPORTUNITY OF BEING HEARD, THE AO MAY TAKE APPROPRIATE DECISION IN ACCORDANCE WITH LA W. 12. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 7 TH AUGUST, 2019. SD/ - (BEENA PILLAI) JUDICIAL MEMBER SD/ - (B.R BASKARAN) ACCOUNTANT MEMBER BANGALORE, DATED, 7 TH AUGUST, 2019. / VMS / COPY TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASST. REGISTRAR, ITAT, BANGALORE. ITA NO.2633/BANG/2017 PAGE 6 OF 6 1. DATE OF DICTATION 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER . 3. DATE ON WHICH THE APPROVED DRAFT COMES TO SR.P.S .. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER .. 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. P.S. .. 6. DATE OF UPLOADING THE ORDER ON WEBSITE.. 7. IF NOT UPLOADED, FURNISH THE REASON FOR DOING SO .. DICTATION NOTE ENCLOSED . 8. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .. 9. DATE ON WHICH ORDER GOES FOR XEROX & ENDORSEMENT 10. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 11. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER . 12. THE DATE ON WHICH THE FILE GOES TO DISPATCH SEC TION FOR DISPATCH OF THE TRIBUNAL ORDER .