M/s. Kumaralayam Properties (P) Ltd., CHENNAI V. ITO, CHENNAI

ITA 2717/CHNY/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 7630 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-03-2017
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 28-12-2016
• Assessment Year: 2012-2013
• Appeal Filed On: 19-09-2016
• Court: TRIBUNAL
• Department Lawyers: V NANDA KUMAR
• Assessee Lawyers: PRACTITIONER
• Keywords: Reasonable cause

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: CHENNAI . . . , ! '#.. $ %!& , ( )* BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI D.S.SUNDER SINGH, ACCOUNTANT MEMBER ! ./ ITA NO.2717/MDS/2016 + ,+ /ASSESSMENT YEAR: 2012-13 M/S.KUMARALAYAM PROPERTIES, NO.41/2B, IIND FLOOR, ROYAL COURT, VENKATANARAYANA ROAD, T. NAGAR, CHENNAI-600 017. [PAN: AACCK 4608 F] VS. THE INCOME TAX OFFICER, CORPORATE WARD-4(3), CHENNAI. ( -. /APPELLANT) ( /0-. /RESPONDENT) -. 1 2 / APPELLANT BY : MR.K.MEENAKSHISUNDHARAM, IT CONSULTANT & PRACTITIONER /0-. 1 2 /RESPONDENT BY : MR.V.NANDA KUMAR, JCIT $ 1 3( /DATE OF HEARING : 28.12.2016 45, 1 3( /DATE OF PRONOUNCEMENT : 09.03.2017 / O R D E R PER D.S.SUNDER SINGH , ACCOUNTANT MEMBER : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST AN ORDER DATED 27.07.2016 OF COMMISSIONER OF INCOME TAX (APPEALS)- 8, CHENNAI, IN ITA NO.93/2015-16 FOR THE AY 2012-13. 2.0 THE ASSESSMENT WAS COMPLETED U/S.143(3) ON TOTAL I NCOME OF RS.19,59,450/-. DURING THE ASSESSMENT PROCEEDINGS, THE AO MADE THE FOLLOWING ADDITIONS TO THE RETURNED OF INCOME:- ITA NO.2717/MDS/2016 :- 2 -: (I) ADVERTISEMENT AND SALES PROMOTION EXPENSES - RS.51 ,230/- (II) RATES, TAXES AND INSURANCE - RS.13,594/- (III) NON-DEDUCTION OF TDS I.R.O. PAYMENT TO AUDITOR - R S.75,000/- (IV) OTHER GENERAL AND ADMINISTRATIVE EXPENSES - RS.81,0 42/- (V) EMPLOYEE REMUNERATION & BENEFITS - RS.13,53,200/ - ALL THE GROUNDS OF APPEAL ARE RELATED TO THE ABOVE ADDITION OF RS.19,59,450/- 3.0 BEFORE THE AO THE LD.AR OF THE ASSESSE, MR. MEENAK SHISUNDARAM AND THE REPRESENTATIVE OF THE COMPANY, SHRI SIDDIQU E, GENERAL MANAGER APPEARED AND AGREED FOR THE ABOVE DISALLOWANCE, AS THE ASSESSEE COULD NOT ESTABLISH THE EXPENDITURE WITH RELEVANT EVIDENC ES. THE ASSESSEE WENT ON APPEAL BEFORE THE LD.CIT(A) AND PLEADED FOR REST RICTING THE DISALLOWANCE OF 20% OF THE EXPENDITURE OTHER THAN T HE AUDIT FEES AND TO RESTRICT THE DISALLOWANCE TO 30% IN THE CASE OF AUD IT FEE. 4.0 BEFORE THE LD.CIT(A) ALSO THE ASSESSEE DID NOT FU RNISH ANY EVIDENCE TO ESTABLISH THE GENUINENESS OF EXPENDITURE, HENCE THE LD.CIT(A) CONFIRMED THE ADDITION MADE BY THE AO. 5.0 AGGRIEVED BY THE ORDER OF LD.CIT(A) THE ASSESSEE IS ON APPEAL BEFORE THIS TRIBUNAL. APPEARING FOR THE ASSESSEE, SHRI K. MEENAKSHISUNDE RAM, LD.COUNSEL ARGUED THAT THE ASSESSEE HAS LOST ALL VOUCHERS, BIL LS, EVIDENCES IN THE RECENT FLOODS AND THE ASSESSEE IS NOT IN A POSITION TO PRODUCE THE EVIDENCES TOWARDS EXPENSES. THE LD.AR CONTENDED TH AT ON SIMILAR FACTS 20% OF THE EXPENDITURE WAS DISALLOWED IN GENERAL. T HEREFORE, HE REQUESTED FOR RESTRICTING THE DISALLOWANCE TO 20% O F THE EXPENSES INSTEAD ITA NO.2717/MDS/2016 :- 3 -: OF TOTAL DISALLOWANCE OF THE EXPENSES UNDER THE HEA DS MENTIONED IN THE EARLIER PARAGRAPHS. 6.0 ON THE OTHER HAND, THE LD.DR SUBMITTED THAT THE CO NTENTIONS AND THE ARGUMENTS OF THE ASSESSEE WERE ADDRESSED BY THE LD.CIT(A) IN HIS ORDERS AND THERE WAS NO EFFECT OF THE FLOODS AS STA TED BY THE ASSESSEES AR SINCE THE ASSESSMENT WAS COMPLETED BEFORE THE OC CURRENCE OF FLOODS. ACCORDING TO THE LD.DR, SINCE ASSESSEE FAILED TO PR ODUCE ANY EVIDENCES, THE ENTIRE ADDITION MADE BY THE AO REQUIRED TO BE C ONFIRMED. 7.0 WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MAT ERIAL PLACED ON RECORD. 8.0 THE LD.CIT(A) IN HIS ORDER DISCUSSED ALL THE ISSUE S/CONTENTIONS RAISED BY THE ASSESSE IN PARA NO.4.1 WHICH IS EXTRA CTED AS UNDER FOR THE SAKE OF CONVENIENCE: 4.1 I HAVE CONSIDERED THE OBSERVATIONS OF THE ASSE SSING OFFICER AND THE SUBMISSIONS MADE BY THE APPELLANT. THE ASSESSING OFFICER DISALLOWED E XPENSES CLAIMED TO THE TUNE OF RS.15,74,066/- SINCE THE APPELLANT FAILED TO FURNIS H THE NECESSARY EVIDENCE IN THIS REGARD. ON THE OTHER HAND, THE APPELLANT PLEADS THAT MANY OF THE EMPLOYEES WHO WERE IN THEIR EMPLOYMENT EARLIER HAVE LEFT THE JOBS WITH THE APPE LLANT AND THAT THE WOES OF THE APPELLANT WERE FURTHER COMPOUNDED BY THE FLOODS IN CHENNAI IN DECEMBER, 2015. I FIND NO FORCE IN THE ARGUMENTS OF THE APPELLANT. FIRSTLY, THE FLOODS IN CHENNAI OCCURRED IN DECEMBER, 2015, MUCH AFTER THE ASSESSMENT PROCEEDINGS WERE COMPLETE D. SECONDLY, THE APPELLANT- COMPANY IS SUBJECTED TO INTERNAL AUDIT AS PER COMPANIES ACT AND TAX AUDIT U/S.44AB OF THE INCOME TAX ACT, AND THEREFORE, THE APPELLANTS EXPLANATION THAT THE DEFAULT WAS CAUSED DUE TO EMPLOYEES LEAVING THEIR JOBS - A COMMON OCCURRENCE IN CORPORATE SECTOR - CANNOT BE CONSIDERED AS A REASONABLE CAUSE FOR FAILURE TO PER FORM A STATUTORY OBLIGATION. THIRDLY, THE APPELLANTS ARGUMENT THAT THE STRICT RULES OF EVIDE NCE ACT DO NOT APPLY IN INCOME TAX PROCEEDINGS DOES NOT HOLD WATER SINCE THIS IS A CAS E OF TOTAL ABSENCE OF EVIDENCE. LASTLY, AS THE ASSESSING OFFICER OBSERVED, THE APPELLANT HAD AG REED FOR THE DISALLOWANCE OF THESE EXPENSES CLAIMED IN THE COURSE OF ASSESSMENT PROCEE DINGS, AND THEREFORE, IT IS NOT GIVEN TO THE APPELLANT TO APPROBATE AND REPROBATE ON THIS IS SUE. MOREOVER, THE APPELLANT HAS AGAIN PLEADED FOR PARTIAL DISALLOWANCE BEFORE ME WHICH GO ES ON TO PROVE THAT THE APPELLANT INDULGED IN SUCH ACTIVITY ON REGULAR BASIS ONLY TO RETRACT LATER ON. IN VIEW OF THE ABOVE, THE DISALLOWANCE OF RS.15,74, 066/- MADE BY THE ASSESSING OFFICER IS SUSTAINED SINCE NO SUCH CIRCUMSTANCES EXIST - BEYON D THE CONTROL OF THE APPELLANT AS CLAIMED - TO EXPLAIN THE FAILURE TO FURNISH EVIDENC E AS PER THE STATUTORY REQUIREMENTS. THE APPELLANT FAILS ON THIS GROUND. ITA NO.2717/MDS/2016 :- 4 -: 9.0 DURING THE APPEAL HEARING FOR A QUERY RAISED FROM THE BENCH, THE ASSESSEE HAS EXPRESSED INABILITY TO PRODUCE ANY EVI DENCE IN THE FORM OF BILLS, VOUCHERS, ETC., IN SUPPORT OF ITS CLAIM FOR EXPENSES UNDER THE HEAD SALES, PROMOTION, RATES & TAXES AND INSURANCE PAYME NT MADE TO AUDITOR, GENERAL ADMINISTRATIVE EXPENSES AND EMPLOYEE REMUNE RATION BENEFITS. IN THE ABSENCE OF EVIDENCES TO SUPPORT THE CLAIM, THE EXPENDITURE CANNOT BE HELD TO BE INCURRED FOR THE PURPOSE OF BUSINESS AND THE GENUINENESS OF THE EXPENDITURE IS NOT PROVED. FURTHER, IT CAN BE SEEN FROM THE ASSESSMENT ORDER AND THE LD.CIT(A)S ORDER THAT THE ASSESSEE H AS EXPRESSED INABILITY TO PRODUCE EVIDENCES AND ACCEPTED FOR THE DISALLOWA NCE OF EXPENDITURE. THIS FACT HAS NOT BEEN DISPUTED BY THE ASSESSE. TH EREFORE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD.CIT(A) AND THE SAME IS CONFIRMED. 11.0 IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 9 TH MARCH, 2017, AT CHENNAI. SD/- SD/- ( . . . ) (N.R.S. GANESAN) /JUDICIAL MEMBER ( '# . . $ %!& ) (D.S.SUNDER SINGH) ( /ACCOUNTANT MEMBER /CHENNAI, 6! /DATED: 9 TH MARCH, 2017. TLN 1 /3%7 87,3 /COPY TO: 1. -. /APPELLANT 4. $ 93 /CIT 2. /0-. /RESPONDENT 5. 7 : /3 /DR 3. $ 93 ( ) /CIT(A) 6. #+ = /GF