Khemka Stuart Leisure Ltd., New Delhi V. DCIT, Central Circle- 18, New Delhi

ITA 2878/DEL/2018

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 3628 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 5 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-10-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Assessment Year: 2013-2014
• Appeal Filed On: 24-04-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: AGAINST PASSED
• Keywords: Principle of natural justice
• Section: 142(1); 37(1); 143(2); 13

Judgement Text

1 ITA NO. 2878/DEL/2018 IN THE INCOME TAX APPE LLATE TRIBUNAL DELHI BENCH: C NEW DELHI BEFORE SH. ANIL CHATURVEDI, ACCOUNTANT MEMBER AND MS. SUCHITRA KAMBLE, J UDICIAL MEMBER I.T.A. NO. 2878/DEL/20 18 (A.Y 2013-14) (THROUGH VIDEO CON FERENCING) KHEMKA STUART LEISURE LTD. BGJC & ASSOCIATES LLP, RAJ TOWER, G-1, ALAKHNANDA COMMUNITY CENTRE, NEW DELHI AAACK4630P (APPELLANT) VS D CIT CENTRAL CIRCLE-18 NEW DELHI (RESPONDENT) ORDER PER SUCHITRA KAMBLE, JM THIS APPEAL IS FILED BY THE ASSESSEE AGAINST ORDER 22/03/2018 PASSED BY CIT(A)-27, NEW DELHI FOR ASSESSMENT YEAR 2013-14. 2. THE GROUNDS OF APPEAL ARE AS UNDER:- 1. THE HONBLE CIT(A) HAS NOT FOLLOWED THE LAW AN D NATURAL JUSTICE WHILE CONFIRMING ADDITIONS AND DISALLOWANCES BY THE LD. A .O. 2. THAT THE HONBLE COMMISSIONER OF INCOME TAX (APP EALS) HAS ERRED IN LAW AND ON FACTS BY CONFIRMING THE ADDITION ON ACCOUNT OF DISALLOWING EXPENSES OF ENTERTAIN TAX OF RS. 2,40,09,979/- 3. THE RETURN OF INCOME WAS FILED ON 18/9/2013 DECL ARING LOSS OF RS.2,51,16,000/-. STATUTORY NOTICE U/S 143(2) OF T HE INCOME TAX ACT, 1961 APPELLANT BY SH. RAJESHWAR PAINULY, CA RESPONDENT BY SH. M. K. PANDEY, SR. DR DATE OF HEARING 11.10.2021 DATE OF PRONOUNCEMENT 13.10.2021 2 ITA NO. 2878/DEL/2018 WAS ISSUED ON 11/9/2014. NOTICE U/S 142(1) ALONG W ITH QUESTIONNAIRE WAS ISSUED ON 22/6/2015. AS NOTICE U/S 143(2) AND 142( 1) WAS NOT RESPONDED, SHOW CAUSE NOTICE FOR PENALTY U/ 271(1)(B) WAS ISSU ED ON 3/9/2015 TO WHICH NO REPLY WAS RECEIVED FROM THE ASSESSEE. SUBSEQUEN TLY, PENALTY U/S 271(1)(B) FOR RS. 20,000/- WAS LEVIED ON THE ASSESSEE COMPANY . SUBSEQUENTLY, CA/AUTHORIZED REPRESENTATIVE OF THE ASSESSEE ATTEND ED THE PROCEEDINGS FROM TIME TO TIME AND FILED REPLY AND DETAILS. THE ASSE SSING OFFICER OBSERVED THAT THE ASSESSEE HAS CLAIMED OPERATING EXPENSES OF RS.2 ,40,09,979/- ON ACCOUNT OF THE ENTERTAINMENT TAXES. THE ASSESSING OFFICER HEL D THAT THOUGH THE ASSESSEE CLAIMED THE PAYMENT OF RS. 2,40,09,979/- IN PURSUAN CE OF THE ORDER OF THE DISTRICTED MAGISTRATE AND HONBLE ALLAHABAD HIGH CO URT AS OPERATING EXPENSES, THESE EXPENSES ARE NOT OF BUSINESS NATURE BUT ARE O F PENAL NATURE. THEREFORE, THE ASSESSING OFFICER MADE ADDITIONS OF RS. 2,40,09 ,979/-. 4. BEING AGGRIEVED BY THE ASSESSMENT ORDER, THE AS SESSEE FILED APPEAL BEFORE THE CIT(A). THE CIT(A) DISMISSED THE APPEAL OF THE ASSESSEE. 5. THE LD. AR SUBMITTED THAT THE CIT(A) ERRED IN CO NFIRMING THE ADDITION ON ACCOUNT OF DISALLOWING EXPENSES OF ENTERTAINMENT TA X. WITHOUT TAKING INTO ACCOUNT COGNIZANCE OF THE EVIDENCES PLACED BEFORE T HE ASSESSING OFFICER AS WELL AS BEFORE THE CIT(A). THE LD. AR FURTHER SUBMITTED THAT THE TRUE INTERPRETATION OF SECTION 37(1) ALONG WITH EXPLANATION 1 OF THE SA ID SECTION AS NOT TAKEN INTO ACCOUNT. THEREFORE, THE LD. AR SUBMITTED THAT THE MATTER MAY BE REMANDED BACK TO THE FILE OF THE CIT(A). 6. THE LD. DR RELIED UPON THE ASSESSMENT ORDER AND THE ORDER OF THE CIT(A). 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL AVAILABLE ON RECORD. IT IS PERTINENT TO NOTE THAT THE ASSESSEE HAS CLAIMED THE PAYMENT OF RS. 2,40,09,979/- AS OPERATING EXPENSES ON ACCOUNT OF E NTERTAINMENT TAXES. THE ASSESSING OFFICER AS WELL AS THE CIT(A) HAS NOT TAK EN PROPER COGNIZANCE OF THE 3 ITA NO. 2878/DEL/2018 ORDER PASSED BY THE DISTRICT MAGISTRATE AS WELL AS HONBLE ALLAHABAD HIGH COURT. THEREFORE, WE ARE REMANDING BACK THE ENTIRE ISSUE TO THE FILE OF THE CIT(A) FOR PROPER ADJUDICATION AS PER LAW. NEEDLES S TO SAY, THE ASSESSEE BE GIVEN OPPORTUNITY OF HEARING BY FOLLOWING PRINCIPLE S OF NATURAL JUSTICE. THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATIS TICAL PURPOSE. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 13 TH DAY OF OCTOBER, 2021 SD/- SD/- (ANIL CHATURVEDI) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEM BER DATED: 13/10/2021 R. NAHEED * COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI 4 ITA NO. 2878/DEL/2018