Smt. Pragyan Mohanty, Bhubaneswar V. ITO, Bhubaneswar

ITA 446/CTK/2015

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 7171 (ITAT-CUTTACK)
• Duration Of Justice: 1 year(s) 4 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-03-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 29-03-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 23-11-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: D K PRADHAN
• Section: 145

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK SMC BENCH, CUTTACK BEFORE SHRI N.S SAINI, ACCOUNTANT MEMBER ITA NO. 446/CTK/2015 ASSESSMENT YEAR : 2011 - 12 SMT. PRAGYAN MOHANTY, PLOT NO.9/656, SURYA VIHAR, GADA MAHAVIR ROAD, GARAGE CHHAK, OLD TOWN, BHUBANESWAR. VS. ITO, WARD 1(2), AAYAKAR BHAVAN, BHUBANESWAR. PAN/GIR NO. (APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY : SHRI SUNIL MISHRA, AR REVENUE BY : SHRI D.K.PRADHAN , DR DATE OF HEARING : 29 /03 / 2017 DATE OF PRONOUNCEMENT : 2 9 /03 / 2017 O R D E R THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) - 1, BHUBANESWAR , DATED 31.8.2015 , FOR THE ASSESSMENT YEAR 2011 - 12 . 2. GROUND NOS. 1 AND 6 OF THE APPEAL ARE GENERAL IN NATURE AND HENCE, REQUIRE NO SEPARATE ADJUDICATION BY ME. 3. IN GROUND NO.2 OF THE APPEAL, THE GRIEVANCE OF THE ASSESSEE IS THAT THE CIT(A) ERRED IN UPHOLDING THE ADDITION OF RS.2,56,805/ - . 2 ITA NO. 446/CTK/2015 ASSESSMENT YEAR : 2011 - 12 4. I HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD. THE ASSESSING OFFICER ON EXAMINATION OF BANK ACCOUNT MAINTAINED BY THE ASSESSEE JOINTLY ONE WITH HER MI NOR DAUGHTER AND ANOTHER WITH HER HUSBAND, FOUND THAT CONTRACT RECEIPTS OF RS.32,10,061/ - HAD NOT BEEN DISCLOSED IN THE ACCOUNTS. THEREFORE, HE ESTIMATED THE PROFIT/INCOME THEREFROM AT 8% AND ADDED RS.2,56,805/ - TO THE INCOME OF THE ASSESSEE. 5. BEFORE THE CIT(A), NO EVIDENCE OR MATERIALS WERE PRODUCED TO TAKE A DIFFERENT STAND. THEREFORE, HE CONFIRMED THE ACTION OF THE ASSESSING OFFICER. 6. BEFORE ME, LD AUTHORISED REPRESENTATIVE OF THE ASSESSEE HAS NOT FILED ANY POSITIVE MATERIAL TO CONTROVERT THE FINDINGS OF THE CIT(A). HENCE, I DO NOT FIND ANY GOOD AND JUSTIFIABLE REASON TO INTERFERE WITH THE ORDER OF THE CIT(A), WHICH IS HEREBY CONFIRMED AND GROUND OF APPEAL OF THE ASSESSEE IS DISMISSED. 7. IN GROUND NO.3 OF THE APPEAL, THE GRIEVANCE OF THE ASSESSEE IS THAT THE CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS.2,34,256/ - MADE BY THE ASSESSING OFFICER AS UNEXPLAINED MONEY. 8. I HAVE HEARD THE RIVAL SUBMISS IONS AND PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD. THE ASSESSING OFFICER FOUND THAT A SUM OF RS.4,47,216/ - WAS DEBITED TOWARDS LICENSE FEES IN THE PROFIT AND LOSS ACCOUNT WHICH WAS IN EXCESS BY RS.47,916/ - . THE ACTUAL LIC ENSE FEE PER MONTH PAYABLE ON LIQUOR BUSINESS DURING THE RELEVANT PERIOD WAS 3 ITA NO. 446/CTK/2015 ASSESSMENT YEAR : 2011 - 12 RS.32,275/ - AND THEREFORE, THE TOTAL EXPENDITURE WAS SUPPOSED TO BE RS.3,99,3 00/ - (RS.33,275 X 12). ON VERIFICATION OF PAYMENTS AND RECEIPTS FROM THE STATE EXCISE, IT WAS FOUND TH AT A SUM OF RS. 1,86,340/ - WAS PAID IN ADVANCE TOWARDS LICENSE FEES FOR THE NEXT FINANCIAL YEAR 2011 - 12 AND THIS WAS IN THE NATURE OF PRE PAID EXPENDITURE TO BE SHOW N IN THE BALANCE SHEET AS AN ASSET. THIS WAS NOT DONE AND THEREBY BEING EXCESS PAYMENT OF LICENSE FEE, THE ASSESSING OFFICER MADE AN ADDITION OF RS.2,34,256/ - (RS.1,86,340 + RS.47,916). 9. BEFORE THE CIT(A), IT WAS CONTENDED THAT RS.2,34,256/ - COULD NOT BE TREATED AS UNEXPLAINED MONEY IGNORING THE ACCOUNTING SYSTEM CONSISTENTLY FOLLOWED BY T HE ASSESSEE. 10. THE CIT(A) CONFIRMED THE ORDER OF THE ASSESSING OFFICER OBSERVING THAT THE DISCREPANCIES NOTICED BY THE ASSESSING OFFICER HAVE NOT BEEN EXPLAINED SEPARATELY BY THE ASSESSEE BY BRINGING ANY MATERIALS AND, THEREFORE, THE CONTENTION OF THE AS SESSEE CANNOT BE ACCEPTED. 11. BEFORE ME, LD AUTHORISED REPRESENTATIVE OF THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE LOWER AUTHORITIES. 12. I FIND THAT THE ASSESSING OFFICER HAS FOUND THAT THE ASSESSEE HAS PAID LICENSE FEES OF RS.1,86,340/ - FO R THE SUBSEQUENT FINANCIAL YEAR 2011 - 12 AND, THEREFORE, THIS WAS A PREPAID EXPENDITURE OF THE ASSESSEE. HE ALSO FOUND THAT THE ASSESSEE HAD PAID EXCESS LICENSE FEES OF RS.47,916/ - . 4 ITA NO. 446/CTK/2015 ASSESSMENT YEAR : 2011 - 12 THEREFORE, THE ASSESSING OFFICER DISALLOWED RS.2,34,256/ - (RS.1,86,340 + RS.47,916) AND ADDED THE SAME TO THE INCOME OF THE ASSESSEE. 13. WHEN QUESTIONED BY THE BENCH AS TO WHAT IS THE METHOD OF ACCOUNTING FOLLOWED BY THE ASSESSEE, LD A.R. OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE WAS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTIN G. THUS, AS PER THE CONSISTENTLY FOLLOWED METHOD OF ACCOUNTING BY THE ASSESSEE, WHICH IS MERCANTILE SYSTEM, ONLY EXPENDITURE WHICH HAS ACCRUED AND BECAME DUE DURING THE YEAR IS ALLOWABLE DEDUCTION TO THE ASSESSE AS PER SECTION 145 OF THE ACT. LD A.R. OF T HE ASSESSEE HAS NOT BROUGHT ANY POSITIVE MATERIAL ON RECORD TO CONTROVERT THE FINDINGS OF LOWER AUTHORITIES THAT RS.2,34,256/ - BEING LICENSE FEE TO STATE EXCISE WAS THE EXPENDITURE FOR SUBSEQUENT FINANCIAL YEAR 2011 - 12 AND NOT FOR THE YEAR UNDER CONSIDERAT ION. HENCE, THE DISALLOWANCE MADE BY THE ASSESSING OFFICER OF RS.2,34,256/ - WAS FULLY JUSTIFIED AND, THEREFORE, I UPHOLD THE ORDER OF THE CIT(A) AND DISMISS THE GROUND OF APPEAL OF THE ASSESSEE. 14. GROUND NO.4 OF THE APPEAL READS AS UNDER: THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD CIT(A) HAS COMMITTED SERIOUS ERROR IN UPHOLDING THE ADDITION OF RS.733/ - AS ALLEGED UNDISCLOSED LIABILITY WHICH IS CONTRARY TO THE FACTS. 15. AT THE TIME OF HEARING, LD A.R. DID NOT PRESS THIS GROUND OF A PPEAL AND, THEREFORE, SAME IS DISMISSED FOR WANT OF PROSECUTION. 5 ITA NO. 446/CTK/2015 ASSESSMENT YEAR : 2011 - 12 16. IN GROUND NO.5 OF THE APPEAL, THE GRIEVANCE OF THE ASSESSEE IS THAT THE CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS.2,07,150/ - AS UNDISCLOSED RECEIVABLES. 17. I HAVE HEARD THE RIVAL SUB MISSIONS AND PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD. ON VERIFICATION OF DETAILS OF TDS TRANSACTIONS FROM 26AS FORMS, THE ASSESSING OFFICER FOUND THAT CONTRACT RECEIPTS OF RS.2,07,105/ - REMAINED TO BE CREDITED TO THE BANK ACCOUNT OF THE ASSESSEE AS AT THE END OF THE YEAR, WHICH HAS NOT BEEN SHOWN AS AN ASSET IN THE BALANCE SHEET. THEREFORE, HE MADE ADDITION OF RS.2,07,150/ - TO THE INCOME OF THE ASSESSEE. 18. BEFORE THE CIT(A), THE ASSESSEE COULD NOT OFFER ANY EXPLANATION OR FURNISH ANY EVIDENCE TO THE CONTRARY AND, THEREFORE, THE CIT(A) CONFIRMED THE ORDER OF THE ASSESSING OFFICER. 19. BEFORE ME, LD AUTHORISED REPRESENTATIVE OF THE ASSESSEE COULD NOT POINT OUT AN Y ERROR IN THE ORDER OF THE CIT (A) OR PRODUCE ANY POSITIVE MA TERIAL TO CONTROVERT THE FINDINGS OF LOWER AUTHORITIES. I, THEREFORE, FIND NO GOOD AND JUSTIFIABLE REASON TO INTERFERE WITH THE ORDER OF THE CIT(A), WHICH IS HEREBY CONFIRMED AND GROUND OF APPEAL OF THE ASSESSEE IS DISMISSED. 6 ITA NO. 446/CTK/2015 ASSESSMENT YEAR : 2011 - 12 20. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED . ORDER PRO NOUNCED IN THE OPEN COURT ON 29 /03 /2017 IN THE PRESENCE OF PARTIES. SD/ - ( N.S SAINI) A CCOUNTANT MEMBER CUTTACK; DATED 2 9 /03 /2017 B.K.PARIDA, SPS COPY OF THE ORDER FORWARDED TO : BY ORDER, SR.PRIVATE SECRETARY ITAT, CUTTACK 1. THE APPELLANT : SMT. PRAGYAN MOHANTY, PLOT NO.9/656, SURYA VIHAR, GADA MAHAVIR ROAD, GARAGE CHHAK, OLD TOWN, BHUBANESWAR. 2. THE RESPONDENT. ITO, WARD 1(2), AAYAKAR BHAVAN, BHUBANESWAR 3. THE CIT(A) - 1, BHUBANESWAR 4. PR.CIT - 1, BHUBANESWAR 5. DR, ITAT, CUTTACK 6. GUARD FILE. //TRUE COPY//