ACIT, Trivandrum V. M/s Chakrabarti Eye Care Centre, Trivandrum

ITA 393/COCH/2009

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 52269 (ITAT-COCHIN)
• Duration Of Justice: 2 year(s) 3 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-10-2011
• Appeal Filed By: Department
• Bench Allotted: DB
• Next Hearing Date: 11-08-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 02-07-2009
• Court: TRIBUNAL
• Keywords: Business expenditure; Onus to prove
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLAT E TRIBUNAL COCHIN BEN CH, COCHIN BEFORE S/SHRI N.VIJAYAKUMARAN, JM AND SANJAY AR ORA, AM I.T.A. NO. 393/COCH/2009 & C.O.NO. 30/COCH/2009 (BY THE ASSESSEE) ASSESSMENT YEAR: 2006-07 THE ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE-1(2), RANGE- 1, TRDIVANDRUM. VS. M/S. CHAKRABARTI EYE CARE CENTRE, BREEZE LAND, H.NO. 102, KOCHULLOR, TRIVANDRUM-11 [PAN:AAEFC 5336K] (REVENUE-APPELLANT) (ASSESSEE - RESPONDENT) REVENUE BY MS.VIJAYAPRABHA, JR.DR ASSESSEE BY SHRI RAJESH BHAT, CA-AR DATE OF HEARING 11/0 8/2011 DATE OF PRONOUNCEMENT 21/10/2011 O R D E R PER SANJAY ARORA, AM: THIS IS AN APPEAL BY THE REVENUE AND CROSS OBJECTI ON BY THE ASSESSEE ARISING OUT OF THE ORDER BY THE COMMISSIONER OF INCOME-TAX(APPE ALS)-I, TRIVANDRUM (CIT(A) FOR SHORT) DATED 10.2.2009, AND THE ASSESSMENT YEAR UND ER REFERENCE IS A.Y. 2006-07. 2. THE SOLE ISSUE RAISED IN THE PRESENT APPEAL IS T HE MAINTAINABILITY OF THE DELETION OF ADDITION AT ` 605533/- DIRECTED BY THE LD. CIT(A) OUT OF THE TOTA L DISALLOWANCE OF ` 644835/- EFFECTED BY THE ASSESSING OFFICER (AO) PER THE ASSESSMENT ORDER U/S. 143(3) OF THE INCOME-TAX ACT, 1961 ('THE ACT' HEREINAFTER) DA TED 31.10.2008 IN RESPECT OF THE ASSESSEES CLAIM FOR DIFFERENT BUSINESS EXPENSES. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS A PARTNERSHIP FIRM OF DOCTORS RUNNING AN OPHTHALMIC CLINIC IN TRIVANDRUM. ITS RET URN FOR THE YEAR WAS SUBJECT TO I.T.A. NO.393 & C.O. 30/COCH/2009 (ASSTT. YEAR: 2006-07) 2 SCRUTINY PROCEDURE, WHEREAT IT WAS FOUND THAT THE A SSESSEES CLAIM IN RESPECT OF EXPENSES BOOKED UNDER THE ACCOUNT HEADS `TRAVELLING AND CON VEYANCES ( ` 6,73,978/-) , `REPAIR AND MAINTENANCE ( ` 3,32,076/-) AND `ADVERTISEMENT CHARGES ( ` 2,83,617/-), WERE NOT ALLOWABLE, BEING SUPPORTED ONLY BY SELF-MADE VOUCHE RS. IN FACT, THERE WERE CASES OF NO VOUCHERS AT ALL. HE, ACCORDINGLY, DISALLOWED 50% O F THE ASSESSEES CLAIM, TREATING THE SAME AS BOGUS, I.E., IN RESPECT OF THESE EXPENSES, AGGREGATING TO ` 1289670/-, OR AT ` 6,44,835/-. IN APPEAL, THE ASSESSEE CONTENDED LACK OF COOPERATION AT THE AOS END. FURTHER, WITH REFERENCE TO THE IMPUGNED AMOUNT, IT WAS CLAIMED THAT EXPENSES TO THE EXTENT OF ` 323996/- WERE IN FACT BORNE BY ACCOUNT PAYEE CHEQUE S. DEDUCTING THE SAME FROM THE TOTAL OF ` 363298/-, I.E., FOR WHICH NO VOUCHERS WERE AVAILABL E, WOULD LEAD TO A GAP OF ONLY ` 39,302/-. THE SAME FOUND FAVOUR WITH THE LD. CIT(A ), WHO SUSTAINED THE DISALLOWANCE AT ` 39,302/-, DELETING THE BALANCE DISALLOWANCE, AMOUNT ING TO ` 605533/-. AGGRIEVED, THE REVENUE IS IN APPEAL. THE ASSESSEES CROSS OBJECTION IS SUPPORTIVE IN NATURE. 4. BEFORE US, IT WAS PLEADED BY THE LD. DR THAT THE ASSESSEE HAD ABYSMALLY FAILED TO SUBSTANTIATE ITS CLAIMS AND, THEREFORE, THE INFEREN CE OF THE ASSESSING OFFICER OF THE SAME AS INFLATED TO THE EXTENT OF 50%, DISALLOWING THE S AME, WAS LEGALLY JUSTIFIED. RELIANCE WAS PLACED BY HER ON THE DECISION IN THE CASE OF HEMAMBIKA CHITIES AND LOANS PVT. LTD. VS. DCIT , 266 ITR 427 (KER.). FURTHER, THE CIT(A) HAD RELI ED ON FRESH EVIDENCE/S, WITHOUT AFFORDING AN OPPORTUNITY TO THE AO TO EXAMINE THE S AME AND, THEREFORE, HIS ORDER IS IN CONTRAVENTION OF RULE 46A OF THE INCOME TAX RULES, 1962. THE LD. AR, ON THE OTHER HAND, WOULD SUBMIT THAT ALL THAT THE LD. CIT(A) HAD DONE WAS TO EXAMINE THE ASSESSEES CASE PATIENTLY, WHICH HAD NOT BEEN DONE BY THE AO. 5. WE HAVE HEARD THE PARTIES AND PERUSED THE MATERI AL ON RECORD. 5.1 THE IMPUGNED CLAIM IS U/S. 37 OF THE ACT, T HE ONUS TO PROVE WHICH, FORMING PART OF ITS RETURN OF INCOME, IS ONLY ON THE ASSESSEE. THE AO HAS GIVEN A SPECIFIC FINDING THAT THE IMPUGNED EXPENSES WERE NOT SUPPORTED BY VOUCHERS. IN FACT, THE SAME GETS CONFIRMED BY THE FACT THAT THE ASSESSEE HAS ADMITTED THAT THE EX PENSES UNDER THE THREE ACCOUNT HEADS I.T.A. NO.393 & C.O. 30/COCH/2009 (ASSTT. YEAR: 2006-07) 3 AGGREGATING TO ` 363298/- WERE NOT SUPPORTED BY ANY BILLS. AS SUCH, THE ONLY QUESTION, AS WE UNDERSTAND, THAT SURVIVES IS THE EXTENT OF THE D ISALLOWANCE THAT IS MERITED IN ITS CASE; THE AO INFERRING AN INFLATION AT ` 6,44,835/-. THE ASSESSEES CLAIM THAT IT HAD SUBMIT TED ALL THE DETAILS BEFORE THE AO, AND THAT NO FRESH EVIDEN CE WAS FILED BEFORE THE LD. CIT(A), IS ALSO INCONSISTENT WITH ITS PLEA OF LACK OF OPPORTUN ITY EXTENDED BY THE AO. AGAIN, THE PAYMENT BY CHEQUE WOULD NOT BY ITSELF JUSTIFY A CLA IM U/S. 37, THOUGH, WITHOUT DOUBT, PAYMENT BY AN ACCOUNT PAYEE CHEQUE, AS CLAIMED BY T HE ASSESSEE, LENDS CREDENCE TO ITS CLAIM IN-AS-MUCH AS THE PAYEE IS CONFIRMED. NOTHING MORE; AND NOTHING LESS. IN FACT, WE OBSERVE THAT EACH OF THE THREE IMPUGNED EXPENSES AR E THOSE WHICH WOULD LEAD TO GENERATION OF EVIDENCE IN THE NORMAL COURSE OF THEI R INCURRENCE AND, THUS, THE ABSENCE OF ANY EVIDENCE, REQUIRING THE BOOKING OF EXPENSES THR OUGH SELF-GENERATED VOUCHERS, IS APPARENTLY NOT UNDERSTANDABLE. THE ASSESSEES PLEA OF BEING NOT CONVERSANT WITH THE MAINTENANCE OF VOUCHERS IS ALSO NAVE; IT RETURNING AN INCOME OF ` 42.96 LAKHS, WITH ITS ACCOUNTS BEING AUDITED AND, AS IT APPEARS, FOR SOME YEARS NOW (PRIOR TO THE CURRENT YEAR). 5.2 UNDER THE CIRCUMSTANCES, WE CONSIDER THAT THE L D. CIT(A) HAS NOT FOLLOWED THE PROPER PROCEDURE. THERE IS NOTHING ON RECORD TO SHO W OF THE ASSESSEES EXPLANATION, TENDERED IN SUPPORT OF ITS CLAIM/S, OF THE PAYMENTS BEING BY CHEQUE BEFORE THE AO. THE SAME WOULD, IN ANY CASE, COVER ONLY THE EXPENSES OF ` 3.24 LAKHS, SO THAT AN ACCEPTANCE THEREOF WOULD RESULT IN REDUCING THE BASE AMOUNT OF ` 12.90 LAKHS BY THAT AMOUNT. UNDER THE CIRCUMSTANCES, WE ONLY CONSIDER IT FIT AND PROP ER THAT THE MATTER IS REMITTED BACK TO THE FILE OF THE AO FOR A PROPER VERIFICATION AND CO NSIDERATION OF THE ASSESSEES CLAIM AND ADJUDICATION IN ACCORDANCE WITH LAW PER A SPEAKING ORDER AFTER ALLOWING IT REASONABLE OPPORTUNITY TO PRESENT ITS CASE BEFORE HIM. WE MAY CLARIFY THAT WE ARE THEREBY NOT EXPRESSING ANY OPINION ON THE MERITS OF THE CASE. W E DECIDE ACCORDINGLY. THE CROSS OBJECTION BY THE ASSESSEE, AS AFORE-NOTED, IS ONLY SUPPORTIVE IN NATURE. I.T.A. NO.393 & C.O. 30/COCH/2009 (ASSTT. YEAR: 2006-07) 4 6. IN THE RESULT, THE BOTH THE REVENUES APPEAL AND THE ASSESSEES C.O. ARE ALLOWED FOR STATISTICAL PURPOSES. SD/- SD/- (N.VIJAYAKUMARAN) (SANJAY ARORA) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: ERNAKULAM DATED: 21 ST OCTOBER, 2011 GJ COPY TO: 1. M/S. CHAKRABARTI EYE CARE CENTRE, BREEZE LAND, H .NO. 102, KOCHULLOR, TRIVANDRUM-11. 2. THE ASST. COMMISSIONER OF INCOME TAX, CIRCLE-1(2 ), RANGE 1, TRIVANDRUM. 3. THE COMMISSIONER OF INCOME-TAX (APPEALS)-I, TRIV ANDRUM. 4. THE COMMISSIONER OF INCOME-TAX, TRIVANDRUM. 5. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 6. GUARD FILE .