A.C.I.T., Central Circle-IV,Kolkata, Kolkata V. M/s Utsav Rice Mills (P) Ltd., Kolkata

ITA 2820/KOL/2013

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 9155 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 2 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-03-2017
• Appeal Filed By: Department
• Bench Allotted: C
• Next Hearing Date: 14-09-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 19-12-2013
• Court: TRIBUNAL
• Keywords: Search and seizure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C, BENC H KOLKATA BEFORE SHRI A.T.VARKEY, JM & DR. A.L.SAINI, AM ./ ITA NO.2820/KOL/2013 ( / ASSESSMENT YEAR:2008-2009) ACIT, CC-VI, KOLKATA 3 RD FLOOR, AAYAKAR BHAWAN POORVA, E.M.BYE PASS, 110 SHANTI PALLY, KOLKATA- 700107 VS. M/S UTSAV RICE MILLS (P) LTD., ROOM NO.772, 7 TH FLOOR, 25, STRAND ROAD, MARSHAL HOUSE, KOLKATA-700001 ./ ./PAN/GIR NO.: AAACU 3922 G ( /APPELLANT ) .. ( / RESPONDENT ) ASSESSEE BY : SHRI K.M.ROY, FCA REVENUE BY : SHRI G.MALLIKARJUNA, CIT DR / DATE OF HEARING : 18/01/2017 /DATE OF PRONOUNCEMENT 15/03/2017 / O R D E R PER DR. ARJUN LAL SAINI, AM: THE CAPTIONED APPEAL FILED BY THE REVENUE, PERTAINI NG TO THE ASSESSMENT YEAR 2008-09, IS DIRECTED AGAINST THE OR DER PASSED BY LD. COMMISSIONER OF INCOME TAX (APPEALS)-I, KOLKATA, IN APPEAL NO.306/CC- VI/CIT(A)C-I/11-12, DATED 22-10-2013, WHICH IN TURN ARISES OUT OF AN ORDER PASSED BY THE ASSESSING OFFICER (AO) UNDER SECTION 153A/143(3) OF THE INCOME TAX ACT 1961, (IN SHORT THE ACT), DATED 31 .12.2011. 2. BRIEF FACTS OF THE CASE QUA THE ASSESSEE ARE THA T A SEARCH AND SEIZURE OPERATION WAS CONDUCTED ON 16-9-2009 AT THE RESIDENTIAL AND BUSINESS PREMISES OF THE ASSESSEE GROUP. IN RESPONS E TO NOTICE U/S.153A, THE ASSESSEE FILED HIS RETURN OF INCOME FOR THE REL EVANT ASSESSMENT YEAR ON 05.11.2011, DECLARING TOTAL INCOME OF RS.39,01,0 11/-. EARLIER THE ORIGINAL RETURN WAS FILED BY THE ASSESSEE ON 30-9-2 008 AT TOTAL INCOME OF RS.29,29,345/-. THE ASSESSEE CLAIMED EXPENDITURE OF RS.69,72,125/- ON ITA NO.2820/13 M/S UTSAV RICE MILLS (P) LTD. 2 ACCOUNT OF ADVERTISEMENT AND PUBLICITY. THE AO FOUN D FROM THE COPY OF RELEVANT LEDGER ACCOUNT THAT PAYMENT OF RS.34,11,53 8/- WAS MADE TO DIFFERENT TV CHANNELS FOR ADVERTISEMENT. THE AO DIS ALLOWED THE CLAIM ON THE GROUND THAT THE ASSESSEE COULD NOT PRODUCE SUPP ORTING EVIDENCE TO PROVE THE ADVERTISEMENT EXPENSES, WHICH WERE CLAIME D BY ASSESSEE, AND WHICH WERE INCURRED WHOLLY & EXCLUSIVELY FOR THE PU RPOSES OF THE BUSINESS OF THE ASSESSEE. THE AO ALSO DISALLOWED SOME OTHER EXPENSES CLAIMED BY THE ASSESSEE. 3. AGGRIEVED FROM THE ORDER OF THE AO, ASSESSEE FIL ED AN APPEAL BEFORE THE CIT(A), WHO HAS CONFIRMED THE ADDITIONS MADE BY THE AO OBSERVING THE FOLLOWINGS :- 1. I HAVE PERUSED THE RELEVANT ORDERS. I HAVE ALSO CONSIDERED THE RIVAL SUBMISSIONS. IT IS A MATTER OF RECORD THAT TH E ASSESSEE FILED HIS ORIGINAL RETURN ON 30.09.2008 DECLARING TOTAL INCOM E OF RS.29,29,345/-. THE SEARCH U/S.132 WAS CONDUCTED ON 16-09-2009 AT THE PREMISES OF THE ASSESSEE. IN THIS FACTUAL BA CKGROUND, I FIND THAT THE LIMITATION FOR THE SERVICE OF THE NOTICE U /S.143(2) HAD NOT EXPIRED ON THE DATE OF THE SEARCH. THE AO THUS HAD JURISDICTION U/S.143(3) FOR THE RELEVANT ASSESSMENT YEAR AS ON T HE DATE OF INITIATION OF THE SEARCH. I AM THEREFORE UNABLE TO ACCEPT THE ARGUMENT THAT THE AO HAD NO JURISDICTION U/S.153A T O MAKE ADDITIONS IN RESPECT OF THE ITEMS OF REGULAR ASSESS MENT WHICH HAD ALREADY BEEN DECLARED BY THE ASSESSEE IN HIS ORIGIN AL RETURN. SINCE THE LIMITATION FOR THE SERVICE OF THE NOTICE U/S.14 3(2) HAD NOT EXPIRED ON THE DATE OF INITIATION OF THE SEARCH, THE AO HAD JURISDICTION U/S 143(3); AND CONSEQUENTLY, I AM OF THE OPINION THAT THE AO RETAINED REGULAR AS WELL AS SEARCH JURISDICTION WHILE MAKING THE ASSESSMENT U/S.153A. THE AO WAS THUS COMPETENT TO MAKE ADDITIO NS IN RESPECT OF THE ITEMS OF REGULAR ASSESSMENT EVEN THOUGH NO I NCRIMINATING MATERIAL WAS FOUND IN THE SEARCH. GROUND NO.1 IS DI SMISSED. HOWEVER, I FIND THAT THE ADDITIONS MADE BY THE AO I N HIS ASSESSMENT ORDER ARE NOT SUSTAINABLE ON MERIT. FOR , IT WAS ARGUED IN COURSE OF THE APPELLATE PROCEEDINGS THAT THE EXP ENSES ON ADVERTISEMENT WERE INCURRED IN THE NORMAL COURSE OF THE BUSINESS WHICH IS DULY RECORDED IN THE REGULAR BOOKS OF ACCO UNT. I FIND MERIT IN THE ARGUMENT THAT THE AO HAS NOT POINTED OUT EVE N A SINGLE INSTANCE OF EXPENSE WHICH WAS NOT GENUINE OR NOT RE LATED TO THE BUSINESS OF THE ASSESSEE. ALSO, THERE IS NO FINDING OF THE AO IN HIS ITA NO.2820/13 M/S UTSAV RICE MILLS (P) LTD. 3 ASSESSMENT ORDER THAT THE CLAIM WAS EXCESSIVE OR UN REASONABLE AS COMPARED TO THE PRECEDING YEARS. THE AO HAS ACKNOWL EDGED IN THE ASSESSMENT ORDER THAT THE PAYMENTS WERE MADE TO DIF FERENT TV CHANNELS. THE AO HAS NEITHER DISPUTED THE PAYMENTS NOR THE GENUINENESS OF INCURRING OF THE EXPENSES. THE AO HA S NOTED IN THE ASSESSMENT ORDER THAT SEVERAL BOOKS OF ACCOUNT AND DOCUMENTS WERE SEIZED IN SEARCH U/S.132 OR IMPOUNDED IN SURVE Y U/S.133A WHICH WAS OBVIOUSLY AVAILABLE BEFORE HIM AT THE ASS ESSMENT STAGE. THE AO HAS ALSO NOTED IN THE ASSESSMENT ORDER THAT VARIOUS DETAILS, EXPLANATIONS & SUBMISSIONS AS CALLED FOR U/S.142(1) WAS SUBMITTED BY THE ASSESSEE. I AM THEREFORE, NOT IMPRESSED WITH THE ACTION OF THE AO IN MAKING THE DISALLOWANCE OF SUCH SUBSTANTI AL AMOUNT IN A CASUAL AND ROUTINE MANNER ON THE FLIMSY GROUND THAT RELEVANT DETAIL WAS NOT PRODUCED BEFORE HIM. FOR, MERE ABSENCE OF D ETAILS CANNOT JUSTIFY THE DISALLOWANCE WHEN NEITHER THE PAYMENTS NOR THE GENUINENESS OF INCURRING OF THE EXPENSES WAS UNDER DISPUTE. SECONDLY, THERE WAS NO BASIS OR MATERIAL ON RECORD FOR THE AO TO CONCLUDE THAT THE EXPENSES WERE NOT INCURRED WHOLLY & EXCLUSIVELY FOR THE PURPOSES OF THE BUSINESS. I FIND SUBSTANCE IN THE ARGUMENT THAT THE VERY FACT THAT THE PAYMENTS WERE MADE TO T HE TV CHANNELS RULE OUT THE POSSIBILITY OF THE EXPENSES BEING PERS ONAL IN NATURE. BUT EVEN OTHERWISE, THE AO WAS AT LIBERTY TO CONDUCT NE CESSARY INQUIRY FROM THE CONCERNED TV CHANNELS. IF THE AO WAS SUSPI CIOUS ABOUT THE NATURE OR PURPOSE OF THE EXPENSES, IT WAS OBLIG ATORY ON HIS PART TO BRING POSITIVE MATERIAL ON RECORD TO SHOW THAT T HE EXPENSES WERE INCURRED OTHERWISE THAN OR THE PURPOSES OF THE BUSI NESS. BUT I FIND THAT THE AO HAS MADE NO EFFORTS TO ASCERTAIN THE AC TUAL NATURE OR PURPOSE OF INCURRING OF THE EXPENSES. THE AO HAS BR OUGHT NO POSITIVE MATERIAL ON RECORD TO SHOW THAT THE EXPENS E WERE MADE OTHERWISE THAN FOR THE PURPOSES OF THE BUSINESS. MO REOVER, NO MATERIAL WAS FOUND EVEN IN THE SEARCH WHICH COULD B E MADE THE BASIS FOR DRAWING ADVERSE INFERENCE IN THE CASE OF THE ASSESSEE. IN THIS FACTUAL BACKGROUND, I AM OF THE CONSIDERED VIE W THAT THE ACTION OF THE AO IN SUMMARILY DISALLOWING THE CLAIM OF RS. 34,11,538/- ON ADVERTISEMENT IS NEITHER SUSTAINABLE IN LAW NOR ON FACTS. 4. NOT BEING SATISFIED WITH THE ORDER OF LD. CIT(A) , THE REVENUE IS IN APPEAL BEFORE US AND HAS TAKEN THE FOLLOWING GROUND S OF APPEAL :- (I) THAT, THE LD. CIT(A) HAS ERRED IN FACTS AS WELL AS IN CIRCUMSTANCES OF THE CASE IN DIRECTING TO DELETE TH E DISALLOWANCE OF RS.34,19,538/- UNDER THE HEAD ADVER TISEMENT AND PUBLICITY. 4.1. LD AR FOR THE ASSESSE HAS SUBMITTED BEFORE US THAT THE AO HAS NOT POINTED OUT EVEN A SINGLE INSTANCE OF EXPENSE WHICH WAS NOT GENUINE OR ITA NO.2820/13 M/S UTSAV RICE MILLS (P) LTD. 4 NOT RELATED TO THE BUSINESS OF THE ASSESSEE. ALSO, THERE IS NO FINDING OF THE AO IN HIS ASSESSMENT ORDER THAT THE CLAIM WAS EXCES SIVE OR UNREASONABLE AS COMPARED TO THE PRECEDING YEARS. THE AO HAS ACKN OWLEDGED IN THE ASSESSMENT ORDER THAT THE PAYMENTS WERE MADE TO DIF FERENT TV CHANNELS. THE AO HAS NEITHER DISPUTED THE PAYMENTS NOR THE GE NUINENESS OF INCURRING OF THE EXPENSES. THE AO HAS NOTED IN THE ASSESSMENT ORDER THAT SEVERAL BOOKS OF ACCOUNT AND DOCUMENTS WERE SEIZED IN SEARCH U/S.132 OR IMPOUNDED IN SURVEY U/S.133A WHICH WAS OBVIOUSLY AVAILABLE BEFORE HIM AT THE ASSESSMENT STAGE. THE AO HAS ALSO NOTED IN THE ASSESSMENT ORDER THAT VARIOUS DETAILS, EXPLANATIONS & SUBMISSI ONS AS CALLED FOR U/S.142(1) WAS SUBMITTED BY THE ASSESSEE. FOR, MERE ABSENCE OF DETAILS CANNOT JUSTIFY THE DISALLOWANCE WHEN NEITHER THE PA YMENTS NOR THE GENUINENESS OF INCURRING OF THE EXPENSES WAS UNDER DISPUTE. SECONDLY, THERE WAS NO BASIS OR MATERIAL ON RECORD FOR THE AO TO CONCLUDE THAT THE EXPENSES WERE NOT INCURRED WHOLLY & EXCLUSIVELY FOR THE PURPOSES OF THE BUSINESS. THE PAYMENTS WERE MADE TO THE TV CHANNELS AND THE SAME RULE OUT THE POSSIBILITY OF THE EXPENSES BEING PERS ONAL IN NATURE. BUT EVEN OTHERWISE, THE AO WAS AT LIBERTY TO CONDUCT NECESSA RY INQUIRY FROM THE CONCERNED TV CHANNELS. IF THE AO WAS SUSPICIOUS ABO UT THE NATURE OR PURPOSE OF THE EXPENSES, IT WAS OBLIGATORY ON HIS P ART OF AO TO BRING POSITIVE MATERIAL ON RECORD TO SHOW THAT THE EXPENS ES WERE INCURRED OTHERWISE THAN OR THE PURPOSES OF THE BUSINESS. ITA NO.2820/13 M/S UTSAV RICE MILLS (P) LTD. 5 4.2. ON THE OTHER HAND, LD. DR FOR THE REVENUE HAS PRIMARILY RELIED ON THE FINDINGS OF THE AO WHICH WE HAVE ALREADY NOTED IN OUR EARLIER PARA AND IS NOT BEING REPEATED FOR THE SAKE OF BREVITY. 4.3. HAVING HEARD THE RIVAL SUBMISSIONS, PERUSED TH E MATERIAL ON RECORD, WE ARE OF THE VIEW THAT THERE IS MERIT IN THE SUBMI SSIONS OF THE ASSESSEE, AS THE PROPOSITION CANVASSED BY LD. AR FOR THE ASSE SSEE ARE SUPPORTED BY THE FACTS NARRATED BY HIM ABOVE. AS LD. AR FOR THE ASSESSEE HAS POINTED OUT THAT THE AO HAS NOT POINTED OUT EVEN A SINGLE I NSTANCE OF EXPENSE WHICH WAS NOT GENUINE OR NOT RELATED TO THE BUSINES S OF THE ASSESSEE. ALSO, THERE IS NO FINDING OF THE AO IN HIS ASSESSME NT ORDER THAT THE CLAIM WAS EXCESSIVE OR UNREASONABLE AS COMPARED TO THE PR ECEDING YEARS. THE AO HAS ACKNOWLEDGED IN THE ASSESSMENT ORDER THAT TH E PAYMENTS WERE MADE TO DIFFERENT TV CHANNELS. THE AO HAS NEITHER D ISPUTED THE PAYMENTS NOR THE GENUINENESS OF INCURRING OF THE EX PENSES. BESIDES, THERE WAS NO BASIS OR MATERIAL ON RECORD FOR THE AO TO CONCLUDE THAT THE EXPENSES WERE NOT INCURRED WHOLLY & EXCLUSIVELY FOR THE PURPOSES OF THE BUSINESS. THE PAYMENTS WERE MADE TO THE TV CHANNELS AND THE SAME RULE OUT THE POSSIBILITY OF THE EXPENSES BEING PERS ONAL IN NATURE. BUT EVEN OTHERWISE, THE AO WAS AT LIBERTY TO CONDUCT NECESSA RY INQUIRY FROM THE CONCERNED TV CHANNELS. IF THE AO WAS SUSPICIOUS ABO UT THE NATURE OR PURPOSE OF THE EXPENSES, IT WAS OBLIGATORY ON HIS P ART OF AO TO BRING POSITIVE MATERIAL ON RECORD TO SHOW THAT THE EXPENS ES WERE INCURRED OTHERWISE THAN OR THE PURPOSES OF THE BUSINESS. CON SIDERING THE FACTUAL ITA NO.2820/13 M/S UTSAV RICE MILLS (P) LTD. 6 POSITION, WE DO NOT FIND ANY INFIRMITY IN THE ORDER PASSED BY THE LD CIT(A). THEREFORE, WE CONFIRM THE ORDER PASSED BY THE LD CI T(A). 4.4. IN THE RESULT, APPEAL FILED BY THE REVENUE, IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 15/03 /2017. S D/ - ( A.T.VARKEY ) SD/ - (DR. A.L.SAINI) / JUDICIAL MEMBER / ACCOUNTANT MEMBER /KOLKATA ; ! DATED 15/03/2017 ' $%& /PRAKASH MISHRA , 0 . / PS / COPY OF THE ORDER FORWARDED TO : / BY ORDER, / ( ASSTT. REGISTRAR) % & , / ITAT, 1. / THE APPELLANT-ACIT, CC-VI, KOLKATA 2. / THE RESPONDENT.-M/S UTSAV RICE MILLS (P) LTD. 3. 1 ( ) / THE CIT(A), KOLKATA. 4. 1 / CIT 5. 23 4 0056 , 56 , / DR, ITAT, KOLKATA 6. 4 78 / GUARD FILE. 2 0 //TRUE COPY//