TIMES INFOTAINMENT MEDIA LTD, MUMBAI V. ASST CIT 1(3), MUMBAI

ITA 4096/MUM/2013

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 9269 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 4 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-09-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2006-2007
• Appeal Filed On: 21-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V JUSTIN
• Assessee Lawyers: M SUBRAMANIAN
• Keywords: Opportunity of being heard; Principle of natural justice; Period of limitation; Initiation of penalty proceedings; Time period of passing order
• Section: 143(3)

Judgement Text

E IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY , JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER ./ I.T.A. NO. 4096 / MUM/201 3 ( / ASSESSMENT YEAR : 20 06 - 07 ) BENNET COLEMAN AND COMPANY LIMITED, (AS SUCCESSOR TO TIMES INFOTAINMENT MEDIA LIMITED ), THE TIMES OF INDIA BUILDING, DR. D.N. ROAD, MUMBAI 400 001. / V. ASSISTANT COMMISSIONER OF INCOME TAX - RANGE 1(3), ROOM NO. 540, 5 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI 400 020. ./ PAN : AAACB4373Q ( ./ PAN OF TIMES INFOTAINMENT MEDIA LIMITED AABCT5379H) ( / APPELLANT ) .. ( / RESPONDENT ) ASSESSEE BY : SHRI M. SUBRAMANIAN REVENUE BY : SHRI V. JUSTIN, / DATE OF HEARING : 24 .0 7 .2017 / DATE OF PRONOUNCEMENT : 25.09.2017 / O R D E R PER RAMIT KOCHAR, A CCOUNTANT MEMBER THIS APPEAL, FILED BY THE ASSESSEE, BEING ITA NO. 4096 /MUM/201 3 , IS DIRECTED AGAINST THE APPELLATE ORDER DATED 20.12.2012 PASSED BY LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - 7 , MUMBAI (HEREINAFTER CALLED THE CIT(A)), FOR ASSESSMENT YEAR 2006 - 07 , APPE LLATE PROCEEDINGS BEFORE LEARNED CIT(A) HAS ARISEN FROM THE ASSESSMENT ORDER DATED 24.12.2008 PASSED BY LEARNED ASSESSING OFFICER (HEREINAFTER CALLED THE AO) U/S 143(3) OF THE INCOME - TAX ACT, 1961 (HEREINAFTER C ALLED THE ACT) . ITA 4096 / MUM/201 3 2 2. THE GROUNDS OF APPE AL RAISED BY THE ASSESSEE IN THE MEMO OF APPEAL FILED WITH THE INCOME - TAX APPELLATE TRIBUNAL, MUMBAI (HEREINAFTER CALLED THE TRIBUNAL) READ AS UNDER: - 1. DISALLOWANCE OF RS. 11,27,064/ - BEING 10% OF VENUE MANAGEMENT EXPENSES . 1.1 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(APPEALS) ERRED IN UP HOLDING THE LEARNED AO'S ACTION OF DISALLOWING 10% OF THE EXPENDITURE INCURRED ON VENUE MANAGEMENT EXPENSES FOR WANT OF VERIFICATION ON AN ADHOC BASIS WITHOUT GIVING ANY COGENT REASON. TH E A PPELLANTS PRAY THAT THE ADHOC DISALLOWANCE MADE BY THE LEARNED AO ON THIS COUNT BE DELETED. 1.2 WITHOUT P REJUDICE TO THE ABOVE, IT IS SUBMITTED THAT THE DISALLOWANCE MADE BY THE LEARNED AO IS EXCESSIVE AND WITHOUT BASIS. 2. DISALLOWANCE OF RS. 7 ,10,046/ - BEING 5% O(VENUE EXPENSES . 2.1 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(APPEALS) ERRED HOLDING THE LEARNED AO'S ACTION OF DISALLOWING 5% OF THE EXPENDITURE INCURRED ON VENUE EXPENSES FOR WANT OF VERIFICATION ON AN ADHOC BASIS WITHOUT GIVING ANY COGENT REASON. THE APPELLANTS PRAY THAT THE ADHOC DISALLOWANCE MADE BY THE LEARNED AO ON THIS COUNT BE DE LETED. 2.2 WITHOUT PREJUDICE TO THE ABOVE, IT IS SUBMITTED THAT THE DI SALLOWANCE MADE BY THE LEARNED AO IS EXCESSIVE AND WITHOUT BASIS. 3. DIS ALLOWANCE OF RS. 11,14,055/ - BEING 5% OF STAGE DECORATION EXPENSES 3.1 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(APPEALS) ERRED IN UPHOLDING THE LEARNED AO'S ACTION OF DISALLOWING 5% OF THE EXPENDITURE INCURRED ON STAGE DECORATION EXPENSES FOR WANT OF VERIFICATION ON AN ADHOC BASIS WITHOUT GIVING ANY COGENT REASON. ITA 4096 / MUM/201 3 3 THE APPELLANTS PRAY THAT THE ADHOC DISALLOWANCE MADE BY THE LEARNED AO ON THIS CO UNT BE DELETED. 3.2. WITHOUT PREJUDICE TO THE ABOVE, IT IS SUBMITTED THAT THE DISALLOWANCE MADE BY THE LEARNED AO IS EXCESSIVE AND WITHOUT BASIS. 4. DISALLOWANCE OF RS. 4,13,237/ - BEING 10% OF MISCELLANEOUS EVENT EXPENSES. 4.1 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(APPEALS) ERRED IN UPHOLDING THE LEARNED AO'S ACTION OF DISALLOWING 10% OF THE EXPENDITURE INCURRED ON MISCELLANEOUS EVENT EXPENSES FOR WANT OF VERIFICATION, ON AN ADHOC BASIS WIT HOUT ANY COGENT REASON. THE APPELLANTS PRA Y THAT THE ADHOC DISALLOWANCE MADE BY THE LEARNED AO ON THIS COUNT BE DELETED. 4.2 WITHOUT PREJUDICE TO THE ABOVE, IT IS SUBMITTED THAT THE DISALLOWANCE MADE BY THE LEARNED AO IS EXCESSIVE AND WITHOUT BASIS. 5. INITIATION OF PENALTY PROCEEDINGS UNDER SECTION 271(L)(C) O F THE ACT . 5.1 ON THE FACTS AND IN THE CIRCUMSTAN C ES OF THE CASE AND IN LAW, THE LEARNED CIT (APPEALS) ERRED IN DISMISSING THE GROUND OF APPEAL WITHOUT VALID REASONS IN RESPECT OF THE PENALTY PROCEEDINGS INITIATED BY THE AO ON THE ASSUMPTION THAT THE GROUND IS PRE - MATURE. 3. THE B RIEF FACTS OF THE CASE ARE THAT T HE ASSESSEE IS IN THE BUSINESS OF EVENT MANAGEMENT, ADVERTISING SERVICES AND FILMED ENTERTAINMENT. THE ASSESSEE HAS CLAIMED EXPENDITURE OF RS. 1,12,70,643/ - AND RS. 1,42,08,131/ - UNDER THE HEAD VENUE MANAGEMENT EXPENSES AND VENUE EXPENSE S RESPECTIVELY. IN THE PRECEDING YEAR, 20% OF THE TOTAL VENUE MANAGEMENT EXPENSES AND 10% OF TOTAL VENUE EXPENSES CLAIMED IN PROFIT AND ITA 4096 / MUM/201 3 4 LOSS ACCOUNT WERE DISALLOWED BY REVENUE . T HE ASSESSEE WAS SHOW CAUSED BY THE AO TO SUBMIT DETAILS AND EXPLANATION S ALONG WITH CONFIRMATION OF TWO TOP PARTIES UNDER EACH HEAD OF EXPENSES . IN REPLY, THE ASSESSEE FURNISHED THE DETAILS S UCH AS NAMES, ADDRESSES OF THE PARTIES ALONG WITH CONFIRMATIONS OF FEW PARTIES ONLY AT THE FAG END OF ASSESSMENT . THE A.O. DISALLOWED 10% OF VENUE MANAGEMENT EXPENSES AND 5% OF VENUE EXPENSES ON THE GROUND THAT THE ASSESSE E FAILED TO SUBMIT THE DETAILS I N TIME AND FOR WANT OF VERIFICATION , VIDE ASSESSMENT ORDER DATED 24 - 12 - 2008 PASSED U/S 143(3) . SIMILARLY, WITH RESPECT TO THE STAGE DECORATION EXPENSES INCURRED BY THE ASSESSEE , 10% OF THE EXPENSES WAS DISALLOWED IN THE PRECEDING YEAR . THE ASSESSEE WAS A SKED TO EXPLAIN THE SAME THAT WHY SIMILAR STAND BE NOT TAKEN IN THIS YEAR AND THE AO PROPOSED TO DISALLOW 10% OF THE EXPENSES OF RS. 2,22,81,096/ - CLAIMED BY THE ASSESSEE AS STAGE DECORATION EXPENSE IN PROFIT AND LOSS ACCOUNT .T HE ASSESSEE WAS ASKED BY THE AO TO FURNISH COMPLETE DETAILS AND EXPLANATIONS ALONG WITH CONFIRMATION FROM TWO TOP PARTIES UNDER EACH HEAD OF EXPENSES . IT WAS SUBMITTED THAT IN PRECEDING YEAR, NO DETAILS WERE SUBMITTED AND HENCE DISALLOWANCE WAS MADE. THE ASSESSEE FURNISHED NAMES AND ADDRESSES OF THE PARTIES ALONG WITH CONFIRMATIONS OF FEW PARTIES ONLY AT FAG END OF THE ASSESSMENT , WHICH COULD NOT BE VERIFIED BY THE AO DUE TO WANT OF TIME KEEPING IN VIEW LIMITATION FOR FRAMING THE ASSESSMENT . THE A.O. ACCORDINGLY DISALLOWED 5% OF STAG E DECORATION EXPENSES WHICH COMES TO RS. 11,14,055/ - , VIDE ASSESSMENT ORDER DATED 24 - 12 - 2008 PASSED U/S 143(3). FURTHER, THE ASSESSEE HAS CLAIMED AN EXPENDITURE OF RS. 41,32,370/ - UNDER THE HEAD MISCELLANEOUS EXPENSES. THERE WAS DISALLOWANCE OF RS.22,5 0,000/ - IN PRECEDING YEAR OUT OF A CLAIM OF RS.1,33,29,862/ - , WHICH WAS DISALLOWED. THE ASSESSEE WAS ASKED BY THE AO TO EXPLAIN THE SAME AS TO WHY SIMILAR STAND SHOULD NOT BE TAKEN. THE AO ASKED THE ASSESSEE TO FURNISH COMPLETE ITA 4096 / MUM/201 3 5 DETAILS AND EXPLANATIONS AL ONG WITH CONFIRMATION FROM TWO TOP PARTIES UNDER EACH HEAD OF EXPENSES. I N RESPONSE THE ASSESSEE SUBMITTED THE NAME, ADDRESSES OF THE PARTIES ALONG WITH CONFIRMATIONS OF FEW PARTIES ONLY AT THE FAG END OF ASSESSMENT . SINCE THERE WAS A FAILURE ON THE PAR T OF THE ASSESSEE TO SUBMIT THE DETAILS AS ASKED FOR BY THE AO IN TIME AND ALSO FOR WANT OF VERIFICATION AS THE DETAILS WERE SUBMITTED AT FAG END OF ASSESSMENT PROCEEDINGS CLOSE TO LIMITATION PERIOD FOR FRAMING AN ASSESSMENT , THE DISALLOWANCE TO THE EXTEN T OF 10% WAS MADE BY THE A.O. FOR THE SUBJECT ASSESSMENT YEAR , VIDE ASSESSMENT ORDER DATED 24 - 12 - 2008 PASSED U/S 143(3). 4. AGGRIEVED BY THE ASSESSMENT ORDER DATED 24 - 12 - 2008 PASSED BY THE A.O. U/S 143(3) , THE ASSESSEE FILED FIRST APPEAL BEFORE THE LD. CIT(A) WHO DISMISSED THE APPEAL OF THE ASSESSEE , VIDE APPELLATE ORDER DATED 20 - 12 - 2012 PASSED BY LEARNED CIT(A) . 5. AGGRIEVED BY THE APPELLATE ORDER DATED 20 - 12 - 2012 PASSED BY THE LD. CIT(A), THE ASSESSEE FILED AN APPEAL BEFORE T HE T RIBUNAL. 6 . THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED AT THE OUTSET THAT THE ASSESSEE COMPANY NAMELY TIMES INFOTAINMENT MEDIA LIMITED GOT MERGED WITH BENNETT COLEMAN AND COMPANY LIMITED. SCHEME OF MERGER AS APPROVED BY HONBLE BOMBAY HIGH COURT IS PL ACED ON RECORD. IT WAS SUBMITTED THAT REVISED FORM NO 36 IS DULY FILED WITH THE TRIBUNAL. IT WAS SUBMITTED THAT ADHOC DISALLOWANCE HAS BEEN MADE BY THE A.O. WITHOUT POINTING OUT ANY DEFECT IN THE BOOKS OF ACCOUNTS MAINTAINED BY THE ASSESSEE. IT IS SUBMI TTED THAT THE ASSESSEE IS IN THE BUSINESS OF EVENT MANAGEMENT, ADVERTISING SERVICES AND FILMED ENTERTAINMENT. IT WAS SUBMITTED THAT T HE A.O. HAS MADE VARIOUS DISALLOWANCES ON ADHOC BASIS TOWARDS VENUE MANAGEMENT EXPENSES, VENUE EXPENSES, STAGE DECORATION E XPENSES AND MISCELLANEOUS EXPENSES . IT IS ITA 4096 / MUM/201 3 6 SUBMITTED THAT ALL THE REQUIRED DETAILS WERE SUBMITTED BEFORE THE A.O. DURING THE COURSE OF ASSESSMENT PROCEEDINGS U/S 143(3) R.W.S. 143(2), WHICH ARE ALSO PLACED BEFORE THE TRIBUNAL IN THE FORM OF PAPER BOOK VIDE PAGES 46 TO 89. SIMILARLY, ALL THE DETAILS WERE SUBMITTED BEFORE THE LD. CIT(A) WHICH ARE PLACED IN PAPER BOOK PAGE 90 - 92 BUT STILL THE DISALLOWANCE WAS CONFIRMED BY THE LD. CIT(A) ON ADHOC BASIS AND HE DID NOT CONSIDERED THE CONTENTION OF THE ASSESSEE W HILE DISMISSING APPEAL OF THE ASSESSEE . IT IS SUBMITTED THAT THE TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2005 - 06 IN ITA NO. 4091/MUM/2009 DATED 13 TH JULY, 2011 HAS UPHELD THE DISALLOWANCE TO TUNE OF 3% OF THE EXPENSES INCURRED . THE RELEVANT P ORTION OF THE ORDER IS REPRODUCED BELOW: - GROUND NO 2 REGARDING DISALLOWANCE OF EXPENDITURE ON ACCOUNT OF V ENUE MANAGEMENT , VENUE EXPENSES, PROFESSIONAL FEE AND STAGE DECORATION EXPENSES. 6.1 THE ASSESSING OFFICER HAS DISALLOWED 10% OF THE VENUE EXPENS ES, PROFESSIONAL FEE; STAGE DECORATION EXPENSES INCURRED ON THE GROUND OF NON PRODUCTION OF SATISFACTORY DOCUMENTARY EVIDENCE. 6.2 ON APPEAL , THE CIT(A ) HAS RESTRICTED THE DISALLOWANCE TO 3% OF THE SAID EXPENSES AFTER CONSIDERING THE F ACTS THAT FOR ASSESSMENT YEAR 2006 - 07 THE ASSESSING OFFICER DISALLOWED ONLY 1 % OF THE SIMILAR EXPENSES. 7. WE HAVE CONSIDERED THE RIVAL CONTENTION AND PERUSED THE RELEVANT MATERIAL ON RECORD. WHEN THE ASSESSEE HAS PRODUCED THE NAME AND OTHER PARTICULARS OF THE PARTIES ALONG WITH THE PAYMENTS MADE TO THEM AND THE ASSESSING OFFICER DID NOT DISPUTE THE FACTUM OF PAYMENT MADE TO THE CONCERNED PARTIES AND FURTHER WHEN THE ASSESSING OFFICER HIMSELF HAS RESTRICTED THE DISALLOWANCE ONLY TO 1% OF THE SIMILAR EXPENSES FOR THE FOR THE ASSESSMENT YEAR 2006 - 07, THEN WE DO NOT SEE ANY REASON TO INTERFERE WITH THE ORDER OF TH E ID CIT(A) IN RESTRICTING THE DISALLOWANCE TO 3% OF THESE EXPENSES. ACCORDINGLY, TH I S GROUND OF THE REVENUE IS DISMISSED. ITA 4096 / MUM/201 3 7 THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT SIMILAR VIEW MAY BE TAKEN BY U P HOLDING DISALLOWANCE @3% OF SUCH EXPENSES INCURRED BY THE ASSESSEE AS THE ASSESSEE IS NOT IN FAULT AS COMPLETE DETAILS WERE FILED BEFORE AO AS WELL LEARNED CIT(A) . THE ADHOC DISALLOWANCE MADE B Y THE A.O. IS NOT SUSTAINABLE IN THE EYES OF LAW. THE LEARNED COUNSEL FOR THE ASSESSEE RELIED UPON LARGE NUMBER OF DECISIONS WHICH ARE PLACED IN CASE LAW PAPER BOOK FILED BEFORE THE TRIBUNAL. IT IS ALSO SUBMITTED THAT IN SUBSEQUENT YEARS I.E. ASSESSMENT YEAR 2007 - 08 , 2008 - 09 AND 2009 - 10 , THE CASES OF THE ASSESSEE COMPANY WERE PROCESSED U/S 143(3) AND NO SUCH ADHOC D ISALLOWANCE ON THESE HEADS OF EXPENSES WERE MADE. THE SAID ASSESSMENT ORDERS ARE PLACED IN PAPER BOOK/PAGE 84 - 94. THUS IT WAS SUBMITTED THAT DISALLOWANCES HAVE BEEN MADE ON ADHOC BASIS ONLY FOR TWO YEARS NAMELY ASSESSMENT YEAR 2005 - 06 AND 2006 - 07 BY THE RE VENUE. IT IS SUBMITTED THAT THESE ADHOC DISALLOWANCES ARE NOT SUSTAINABLE IN THE EYES OF LAW. 7 . THE LD. D.R. SUBMITTED THAT THE DETAILS WERE SUBMITTED BY THE ASSESSEE ONLY AT THE FAG END OF THE ASSESSMENT PROCEEDINGS CLOSE TO EXPIRY OF LIMITATION PERIOD FOR FRAMING AN ASSESSMENT PREVENTING ANY VERIFICATION OF THOSE DETAILS BY THE AO AS NO ENQUIRY COULD BE CONDUCTED BY THE AO , WHICH LED TO DISALLOWANCE OF EXPENSES. IT WAS SUBMITTED THAT THE ASSESSEE IS AT FAULT AND HE JUSTIFIED THE ADDITIONS MADE BY THE A O WHICH WAS CONFIRMED BY LEARNED CIT(A). 8 . WE HAVE CONSIDERED RIVAL CONTENTION AND ALSO PERUSED THE MATERIAL ON RECORD. WE HAVE OBSERVED THAT T HE ASSESSEE IS IN THE BUSINESS OF EVENT MANAGEMENT, ADVERTISING SERVICES AND FILMED ENTERTAINMENT. WE FIND THE DISALLOWANCE WERE MADE BY THE AO ON ADHOC BASIS RELATING TO VENUE MANAG EMENT EXPENSES(10% OF EXPENSES DISALLOWED UNDER THIS HEAD), VENUE EXPENSES (5% OF EXPENSES DISALLOWED UNDER THIS HEAD), , STAGE DECORATION ITA 4096 / MUM/201 3 8 EXPENSES (5 % OF EXPENSES DISALLOWED UNDER THIS HEAD) AND MISCELLANEOUS EXPENSES (10% OF EXPENSES DISALLOWED UNDER THIS HEAD) INCURRED BY THE ASSESSEE MAINLY BECAUSE THE ASSESSEE SUBMITTED DETAILS AT THE FAG END OF THE ASSESSMENT PROCEEDINGS WHICH WAS CLOSE TO EXPIRY OF LIMITATION PERIOD FOR FRAMING OF AN ASSESSMENT PREVENTING VERIFICATION AND ENQUIRY BY THE AO AS ALSO CONFIRMATIONS AS SOUGHT BY THE AO WERE NOT SUBMITTED BY THE ASSESSEE . THE LEARNED CIT(A) HAS CONFIRMED THE ADDITIONS AS WERE MADE BY THE AO FOR THE IM PUGNED ASSESSMENT YEAR AND APPEAL OF THE ASSESSEE STOOD DISMISSED BY LEARNED CIT(A) . SIMILAR ADDITIONS WERE MADE IN THE PRECEDING ASSESSMENT YEAR I.E. 2005 - 06 BY THE AO AT HIGHER RATES WAS MADE IN IMPUGNED ASSESSMENT YEAR UNDER CONSIDERATION BEFORE US . TH E TRIBUNAL VIDE ITS ORDER DATED 13 - 07 - 2011 IN ITA NO. 4091/MUM/2009 FOR ASSESSMENT YEAR 2005 - 06 ON SIMILAR ISSUE S UPHELD THE DISALLOWANCE TO THE EXTENT OF 3% OF THE EXPENSES IN THE HANDS OF THE ASSESSEE , BY HOLDING AS UNDER: GROUND NO 2 REGARDING DI SALLOWANCE OF EXPENDITURE ON ACCOUNT OF V ENUE MANAGEMENT , VENUE EXPENSES, PROFESSIONAL FEE AND STAGE DECORATION EXPENSES. 6.1 THE ASSESSING OFFICER HAS DISALLOWED 10% OF THE VENUE EXPENSES, PROFESSIONAL FEE; STAGE DECORATION EXPENSES INCURRED ON THE GROU ND OF NON PRODUCTION OF SATISFACTORY DOCUMENTARY EVIDENCE. 6.2 ON APPEAL , THE CIT(A ) HAS RESTRICTED THE DISALLOWANCE TO 3% OF THE SAID EXPENSES AFTER CONSIDERING THE F ACTS THAT FOR ASSESSMENT YEAR 2006 - 07 THE ASSESSING OFFICER DISALLOWED ONLY 1 % OF THE SIMILAR EXPENSES. 7. WE HAVE CONSIDERED THE RIVAL CONTENTION AND PERUSED THE RELEVANT MATERIAL ON RECORD. WHEN THE ASSESSEE HAS PRODUCED THE NAME AND OTHER PARTICULARS OF THE PARTIES ALONG WITH THE PAYMENTS MADE TO THEM AND THE ASSESSING OFFICER DID NOT DISPUTE THE FACTUM OF PAYMENT MADE TO THE CONCERNED PARTIES AND FURTHER WHEN THE ASSESSING OFFICER HIMSELF HAS RESTRICTED THE DISALLOWANCE ITA 4096 / MUM/201 3 9 ONLY TO 1% OF THE SIMILAR EXPENSES FOR THE FOR THE ASSESSMENT YEAR 2006 - 07, THEN WE DO NOT SEE ANY REASON TO INTERFE RE WITH THE ORDER OF THE ID CIT(A) IN RESTRICTING THE DISALLOWANCE TO 3% OF THESE EXPENSES. ACCORDINGLY, TH I S GROUND OF THE REVENUE IS DISMISSED. THUS, AS COULD BE SEEN THAT THE TRIBUNAL VIDE ITS ORDER DATED 13 - 07 - 2011 FOR ASSESSMENT YEAR 2005 - 06 IN ITA NO 4091/MUM/2009 HAS MAINLY AFFIRMED THE APPELLATE ORDER OF LEARNED CIT(A) FOR ASSESSMENT YEAR 2005 - 06 WHO HAS UPHELD THE ADDITIONS TO THE TUNE OF 3% OF EXPENSES RELYING THAT FOR ASSESSMENT YEAR 2006 - 07 SIMILAR ADDITIONS WERE MADE BY THE AO TO THE TUNE OF ONLY 1% OF THE SAID EXPENSES AND IN CONTEXT THEREOF 3% DISALLOWANCE FOR ASSESSMENT YEAR 2005 - 06 WAS CONSIDERED FAIR AND REASONABLE . THE APPELLATE ORDER OF LEARNED CIT(A) - XXI,MUMBAI DATED 23 - 04 - 2009 IN APPEAL NO CIT(A)XXI/ACIT - 1(3)/IT - 152/07 - 08 FOR ASSE SSMENT YEAR 2005 - 06 IS REPRODUCED HEREUNDER: 8. VIDE GROUNDS NO. 6,7 & 8 OF APPEAL, THE APPELLANT HAS OBJECTED TO THE DISALLOWANCE OF RS. 40,22,800/ - BEING 20% OF THE VENUE MANAGEMENT EXPENSES AND RS. 23,11,665/ - BEING 10% OF VENUE EXPENSES , RS. 29,46,730/ - BEING 10% OF THE PROFESSION FEE INCURRED & RS. 27,03,453/ - BEING 10% OF THE STAGE DECORATION EXPENSES INCURRED, ALL FOR NON - PRODUCTION OF SATISFACTORY DOCUMENTARY EVIDENCES. 8.1. ON THE OTHER HAND, THE LD. AR OF THE APPELLANT HAS STATED THAT T HE NAMES OF THE PARTIES ALONG WITH THE PAYMENTS MADE TO THEM WERE PRODUCED BEFORE THE A.O. , BUT THE APPELLANT COULD NOT PRODUCE THE ADDRESSES OF THE PARTIES DUE TO LACK OF TIME AND THE SAME HAVE BEEN PRODUCED DURING THE APPELLATE PROCEEDINGS. 8.2 DURING THE APPELLATE PROCEEDINGS, THE LD. AR HAS STATED THAT THE BUSINESS OF THE APPELLANT COMPANY HAD BEEN TAKEN OVER BY A NEW COMPANY NAMELY TIMES INN OVATIVE LTD. IN THE ASSESSMENT FOR A.Y.2006 - 07 , THE A.O. HAS DISALLOWED ONLY 1% OF THE SIMILAR EXPENSES. 8.3 I HAVE CONSIDERED THE ISSUE. CONSIDERING THE ABOVE SUBMISSION AND CONSIDERING THE NATURE OF EXPENSES AND THE NATURE OF ACTIVITIES OF THE APPELLANT COMPANY, THE DISALLOWANCES MADE BY THE AO ARE ON THE HIGHER ITA 4096 / MUM/201 3 10 SIDE. THE AO IS, ACCORDINGLY , DIRECTED TO DISAL LOW 3% OF THE ABOVE EXPENSES AND ALLOW THE BALANCE EXPENSES AS UNDER: - NATURE OF EXPENSES TOTAL EXPENDITURE DISALLOWED BY THE A.O. EXPENDITURE DIRECTED TO BE DISALLOWED @ 3% EXPENDITURE DIRECTED TO BE ALLOWED VENUE MANAGEMENT EXPENSES 40,22,800/ - 6,03,420 / - 34,19,380/ - VENUE EXPENSES 23,11,665/ - 6,93,500/ - 16,18,165/ - PROFESSIONAL FEES 29,46,730/ - 8,84,019/ - 20,62,711/ - STAGE DECORATION EXPENSES 27,30,453/ - 8,11,036/ - 18,92,417/ - ON BEING ASKED BY THE BENCH FROM LEARNED COUNSEL FOR THE ASSESSEE THAT TO SHOW FROM ASSESSMENT ORDER FOR ASSESSMENT YEAR 2006 - 07 THAT THE DISALLOWANCE WAS MADE @1% ON SIMILAR EXPENSES BY THE AO WHILE FRAMING ASSESSMENT FOR ASSESSMENT YEAR 2006 - 07 AS IS REFERRED TO IN BY LEARNED CIT(A) WHILE GRANTING RELIEF TO THE ASSESSE E FOR ASSESSMENT YEAR 2005 - 06 BY UPHOLDING DISALLOWANCE @1% OF EXPENSES BECAUSE THE DISALLOWANCES FOR ASSESSMENT YEAR 2006 - 07 ARE MUCH HIGHER OF THE EXPENSES INCURRED BEING VENUE MANAGEMENT EXPENSES(10% OF EXPENSES DISALLOWED UNDER THIS HEAD), VENUE EXPENS ES (5% OF EXPENSES DISALLOWED UNDER THIS HEAD), , STAGE DECORATION EXPENSES(5% OF EXPENSES DISALLOWED UNDER THIS HEAD) AND MISCELLANEOUS EXPENSES (10% OF EXPENSES DISALLOWED UNDER THIS HEAD) INCURRED BY THE ASSESSEE, THE LEARNED COUNSEL FOR THE ASSESSEE COULD NOT GIVE SATISFAC TORY REPLY BUT STATED THAT THERE WAS AN ERROR IN THE ORDERS OF TRIBUNAL AND LEARNED CIT(A) FOR ASSESSMENT YEAR 2005 - 06 AND CORRECT ASSESSMENT YEAR SHOULD BE READ AS ASSESSMENT YEAR 2005 - 06 INSTEAD OF ASSESSMENT YEAR 2006 - 07 IN THEIR FINDINGS IN THE ORDERS FOR ASSESSMENT YEAR 2005 - 06(PARA 8.2 OF LEARNED CIT(A) ORDER AND PARA 6.1 AND 6.2 OF THE TRIBUNAL ORDER FOR ASSESSMENT YEAR 2005 - 06). THESE FINDING S IN THE ORDER OF LEARNED CIT(A) FOR ASSESSMENT YEAR 2005 - 06 ARE PERVERSE FINDING AS THE DISALLOWANCE IN ASSESSMENT YEAR 2006 - 07 ARE MUCH HIGHER THAN 1% AS IS SUGGESTED BY ITA 4096 / MUM/201 3 11 LEARNED CIT(A) IN HIS ORDERS FOR ASSESSMENT YEAR 2005 - 06 . RELYING UPON THE AFORESAID ERRONEOUS FACTUAL FINDINGS BY LEARNED CIT(A) FOR THE ASSESSMENT YEAR 2005 - 06 THAT TH E ADDITIONS HAVE BEEN MADE BY THE AO OF 1% OF SIMILAR EXPENSES IN ASSESSMENT YEAR 2006 - 07 , TRIBUNAL ALSO UPHELD THE DISALLOWANCE @3% WHILE PASSING ORDER FOR ASSESSMENT YEAR 2005 - 06 , THUS, ON THAT ERRONEOUS FINDING BOTH LEARNED CITA(A) AND TRIBUNAL HELD TH AT DISALLOWANCE OF 3% IS JUSTIFIED AND REASONABLE FOR ASSESSMENT YEAR 2005 - 06 . THIS ERROR CANNOT BE ALLOWED TO BE PERPETUATED. IN ANY CASE EVERY YEAR IS A SEPARATE ASSESSMENT YEAR AND PRINCIPAL OF RES JUDICATE IS NOT APPLICABLE TO INCOME - TAX PROCEEDINGS AL THOUGH CONSISTENCY IS TO MAINTAINED. MERELY BECAUSE THE EXPENSES WERE ALLOWED IN SUBSEQUENT YEAR IS ALSO NOT SUFFICIENT TO HOLD THAT THESE EXPENSES ARE ALLOWABLE IN THIS YEAR ALSO, THE ASSESSEE HAS TO SUBMIT EVIDENCES AND JUSTIFICATIONS FOR INCURRING OF THE SE EXPENSES TO FALL WITH IN MANDATE AND PROVISIONS OF THE 1961 ACT. THE ASSESSEE HAS CLAIMED THESE EXPENSES IN RETURN OF INCOME FILED WITH THE REVENUE AND THE ONUS IS ON THE ASSESSEE TO PROVE AND SUBSTANTIATE ITS ALLOWABILITY WITHIN PROVISIONS AND MANDATE OF THE 1961 ACT. THE ISSUE OF ALLOWABILITY OF EXPENSES IS PURELY FACTUAL MATTER WHICH REQUIRES INVESTIGATION OF FACTS AT THE FIRST STAGE AND THEREAFTER IT IS TO BE ALLOWED OR DISALLOWED BY WEIGHING IN THE CONTEXT OF PROVISIONS AND MANDATE OF THE 1961 ACT . THE ASSESSEE FILED DETAILS AT THE FAG END OF ASSESSMENT PROCEEDINGS WHEN ASSESSMENT PROCEEDINGS WERE GOING TO BE BARRED BY LAW OF LIMITATION PREVENTING AO TO CONDUCT NECESSARY VERIFICATION AND ENQUIRY FOR WANT OF TIME . THUS, KEEPING IN VIEW ENTIRE FACTUAL MATRIX OF THE CASE , THIS MATTER NEED TO BE RESTORED BACK TO THE FILE OF THE AO FOR DE - NOVO ADJUDICATION OF ALL THE ISSUES ON MERITS IN ACCORDANCE WITH LAW AFTER MAKING NECESSARY VERIFICATIONS AND ENQUIRY AS HE DEEM FIT IN DE - NOVO PROCEEDINGS. NEEDLESS TO SAY THAT THE AO SHALL GIVE PROPER AND ADEQUATE OPPORTUNITY OF BEING HEARD TO TH E ASSESSEE IN ACCORDANCE WITH PRINCIPLES OF NATURAL JUSTICE IN ACCORDANCE WITH LAW IN DENOVO PROCEEDINGS . THE ASSESSEE SHALL BE ALLOWED BY THE AO TO FILE ALL NECESSARY AND RELE VANT ITA 4096 / MUM/201 3 12 EVIDENCES/EXPLANATIONS IN SUPPORT OF ITS CONTENTIONS AND CLAIMS. WE ORDER ACCORDINGLY. 9 . IN THE RESULT, APPEAL OF THE A SSESSEE I N ITA NO. 4096 /MUM/201 3 FOR ASSESSMENT YEAR 20 06 - 07 IS ALLOWED FOR STATISTICAL PURPOSES . ORDER PRONOUNCED IN THE OPEN COURT ON 25 TH SEPTEMBER, 2017 . 25.09.2017 SD/ - SD/ - ( SAKTIJIT DEY ) ( RAMIT KOCHAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 25.09.2017 [ . . ./ R.K. , EX. SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - CONCERNED , MUMBAI 4. / CIT - CONCERNED , MUMBAI 5. , , / DR, ITAT, MUMBAI G BENCH 6. / GUARD FILE . / BY ORDER, //TRUE COPY// / ( DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI