Nest Management Services Pvt.Ltd., Ahmedabad V. The Income tax Officer,Ward-5(1), Ahmedabad

ITA 479/AHD/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 60393 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 3 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-06-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 30-05-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 18-02-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: B L YADAV
• Assessee Lawyers: D K PARIKH
• Keywords: Salary income; Set aside
• Section: 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH AHMEDABAD (BEFORE SHRI MUKUL KUMAR SHRAWAT, JM AND SHRI A. MO HAN ALANKAMONY, AM) ITA NO.550/AHD/2011 A. Y.: 2007-08 THE INCOME TAX OFFICER, WARD-5(1), AHMEDABAD , 2 ND FLOOR, C.U.SHAH CHAMBERS, ASHRAM ROAD, AHMEDABAD 380 009 VS M/S. NEST MANAGEMENT SERVICES PVT. LTD., 10, KRISHNA APARTMENT, NR. CHOICE RESTAURANT, C. G. ROAD, NAVRANGPURA, AHMEDABAD PA NO. AABCN 7033 L (APPELLANT) (RESPONDENT) ITA NO.479/AHD/2011 A. Y.: 2007-08 M/S. NEST MANAGEMENT SERVICES PVT. LTD., 10, KRISHNA APARTMENT, NR. CHOICE RESTAURANT, C. G. ROAD, NAVRANGPURA, AHMEDABAD PA NO. AABCN 7033 L VS THE INCOME TAX OFFICER, WARD-5(1), AHMEDABAD , 2 ND FLOOR, C.U.SHAH CHAMBERS, ASHRAM ROAD, AHMEDABAD 380 009 (APPELLANT) (RESPONDENT) DEPARTMENT BY SHRI B. L. YADAV, SR. DR. ASSESSEE BY SHRI D. K. PARIKH, AR DATE OF HEARING: 30-05-2012 DATE OF PRONOUNCEMENT: 01 -06-2012 O R D E R PER A. MOHAN ALANKAMONY: THESE CROSS APPEALS ARE FILED BY THE REVENUE AND THE ASSESSEE AGGRIEVED BY THE ORDER OF THE LEARNED ITA NO.550 AND 479/AHD/2011 (AY 2007-08) M/S. NEST MANAGEMENT SERVICES PVT. LTD. 2 CIT(A)-XI, AHMEDABAD IN APPEAL NO.CIT(A)-XI/1231/09 -10 DATED 24 TH DECEMBER, 2010 PASSED U/S 144 READ WITH SECTION 25 0 OF THE IT ACT, FOR ASSESSMENT YEAR 2007-08. 2. THE REVENUE HAS RAISED THREE GROUNDS IN ITS APP EAL IN ITA NO.550/AHD/2011 AND THEY ARE LISTED HEREIN BELOW: 1. THE LD. COMMISSIONER OF INCOME TAX (A) HAS ERRE D IN LAW AND ON FACTS OF THE CASE IN DIRECTING THE AO TO VER IFY THE CONTENTION OF ASSESSEE AND TO DELETE THE ADDITION I F FOUND CORRECT, IN CONTRAVENTION OF SEC. 251 OF THE I.T. A CT. IN RESPECT OF THE FOLLOWING ISSUES: A. ADDITION OF RS.13,40,365/- BEING DISALLOWANCE OF UNPAID SERVICE TAX. B. ADDITION OF RS.15,66,720/- BEING DISALLOWANCE OF SERVICE TAX. C. ADDITION OF RS.6,61,224/- BEING DISALLOWANCE OF RENT EXPENSES. D. ADDITION OF RS.1,04,000/- BEING DISALLOWANCE OUT OF CONSULTANCY AND SALES INCENTIVE EXPENDITURE. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. COMMISSIONER OF INCOME TAX (A) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. 3. IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE L D. COMMISSIONER OF INCOME TAX (A) MAY BE SET-ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 3. THE ASSESSEE HAS, IN ITS APPEAL IN ITA NO.479/AH D/2011 RAISED THE FOLLOWING GROUNDS: ITA NO.550 AND 479/AHD/2011 (AY 2007-08) M/S. NEST MANAGEMENT SERVICES PVT. LTD. 3 THE APPELLANT THEREFORE, BEING AGGRIEVED BY THE AFORESAID ORDER PASSED BY THE CIT (A) DATED 24.12.2 010, BEGS TO PREFER PRESENT APPEAL ON THE INTER ALIA GROUNDS: - A. THAT THE CIT(A) HAS ERRED IN LAW IN HOLDING THA T THE ASSESSING OFFICER WAS JUSTIFIED IN PASSING THE ORDE R UNDER SECTION 144 OF THE ACT WITHOUT TAKING INTO CONSIDER ATION THE FACTS OF THE CASE OF THE APPELLANT THAT THE APP ELLANT COULD NOT REMAIN PRESENT BEFORE THE ASSESSING OFFIC ER AND THEREFORE, THE CIT(A) OUGHT TO HAVE SET ASIDE T HE ASSESSMENT ORDER REMANDING THE MATTER BACK TO THE ASSESSING OFFICER TO MAKE DE NOVO ASSESSMENT UNDER SECTION 144(3) OF THE ACT AFTER GIVING ADEQUATE OPP ORTUNITY TO THE APPELLANT. B. THAT THE CIT(A) HAS ERRED IN LAW IN CONFIRMING T HE DISALLOWANCE OF RS.10 LACS OUT OF THE SALARY INCOME BRUSHING ASIDE THE SUBMISSIONS AND THE DOCUMENTARY EVIDENCE PRODUCED BY THE APPELLANT TO THE EFFECT TH AT THE APPELLANT WHICH WAS CARRYING ON THE CONSULTANCY SER VICES TO SBI CARDS WAS REQUIRED TO MAKE THE PAYMENT OF SA LARY COMMUNICATING WITH THE INCREASE IN THE RECEIPT AS COMPARED TO THE PREVIOUS YEAR I.E. FINANCIAL YEAR 2 005-06. C. THAT THE CIT (A) HAS ERRED IN LAW IN BRUSHING AS IDE T HE SALARY ACCOUNT FROM THE LEDGER PRODUCED BY THE APPE LLANT FOR THE YEAR UNDER APPEAL. D. THAT THE CIT (A) HAS ERRED IN LAW IN CONFIRMING THE DISALLOWANCE OF RS.5 LACS OUT OF THE TELEPHONE EXPE NSES WITHOUT ANY BASIS AND IGNORING THE GROWTH IN BUSINE SS, INCREASE IN TELEPHONE EXPENSES WAS JUSTIFIED. THAT THE CIT (A) DID NOT CONSIDER THE LEDGER ACCOUNT OF THE TELEPHONE EXPENSES, WHEREIN THE TELEPHONE NUMBERS FROM WHICH TELE CALLING WAS MADE BY THE APPELLANT W AS ALSO MENTIONED. E. THE APPELLANT THEREFORE PRAYS THAT THE ADDITION S SUSTAINED BY THE CIT (A) MAY KINDLY BE ORDERED TO B E DELETED AND APPEAL BE ALLOWED IN TOTO. ITA NO.550 AND 479/AHD/2011 (AY 2007-08) M/S. NEST MANAGEMENT SERVICES PVT. LTD. 4 ITA NO.550/AHD/2011 (AY: 2007-08 - REVENUES APPEAL ) 4. THE ASSESSEE IS A PRIVATE LIMITED COMPANY ENGAGE D IN THE BUSINESS OF MANAGEMENT CONSULTANCY SERVICES, FILED ITS RETURN OF INCOME ON 30-10-2007 DECLARING TOTAL INCOME TO BE N IL. THE CASE WAS SELECTED FOR SCRUTINY AND ASSESSMENT ORDER WAS PASS ED U/S 144 OF THE IT ACT ON 14-12-2009. THE LEARNED AO HAD SPECIF ICALLY STATED IN THE ASSESSMENT ORDER THAT IN SPITE OF REPEATED OPPO RTUNITIES PROVIDED TO THE ASSESSEE, THE ASSESSEE FAILED TO BE PRESENT BEFORE THE REVENUE IN THE ASSESSMENT PROCEEDINGS AND HENCE, TH E REVENUE WAS LEFT WITH NO OTHER OPTION THAN TO PASS THE ASSESSME NT ORDER EX-PARTE U/S 144 OF THE ACT. THE LEARNED AO HAD MADE THE FOL LOWING ADDITIONS IN HIS EX-PARTE ORDER: UN-PAID SERVICE TAX PARA NO. 3 RS.13,40,365/- SERVICE TAX PARA NO.4 RS.15,66,720/- RENT EXPENSES PARA NO.5 RS.6,61,224/- OUT OF SALARY EXPS. PARA 6 RS.10,00,000/- OUT OF TELEPHONE EXPS. PARA 6(A) RS.5,00,000/- DISALLOWANCE U/S 40(A)(IA)- PARA 6(B) RS.1,04,000/- 5. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. HOWEVER, THE ASSESSEE FAILED T O COOPERATE IN THE PROCEEDINGS BEFORE THE FIRST APPELLATE AUTHORITY AN D THE LEARNED CIT(A) WAS ALSO FORCED TO PASS EX-PARTE ORDER BASED ON THE WRITTEN SUBMISSIONS FURNISHED BY THE LEARNED AR. 6. ON PERUSING THE ORDER OF THE LEARNED CIT(A) WE F IND THAT THE LEARNED CIT(A) HAD REMITTED BACK THE MATTER TO THE FILE OF THE LEARNED AO FOR VERIFICATION OF ALL THE ADDITIONS RAISED IN GROUND NO.1 OF THE ITA NO.550 AND 479/AHD/2011 (AY 2007-08) M/S. NEST MANAGEMENT SERVICES PVT. LTD. 5 APPEAL OF THE REVENUE. IT IS PERTINENT TO NOTE THE PROVISIONS OF SECTION 251 OF THE IT ACT WHEREIN THE POWERS OF THE COMMISS IONER OF INCOME TAX (APPEALS) TO SET ASIDE THE ORDER OF THE LEARNED AO HAS BEEN OMITTED BY THE FINANCE ACT, 2001 WITH EFFECT FROM 1 ST JUNE, 2001. THEREFORE, WE FIND THE ORDER OF THE LEARNED CIT(A) TO BE ERRONEOUS AND HEREBY, SET ASIDE THE SAME AND REMIT BACK THE C ASE TO THE FILE OF THE LEARNED CIT(A) TO PASS APPROPRIATE ORDER AS PER THE PROVISIONS OF THE ACT, AFTER OBTAINING REMAND REPORT FROM THE LEA RNED AO. WE FURTHER DIRECT THE ASSESSEE TO COOPERATE BEFORE THE REVENUE IN EXPEDITING THE APPELLATE PROCEEDINGS. THE LETHARGIC APPROACH OF THE ASSESSEE IS NOT APPRECIABLE KEEPING IN VIEW OF THE FACT THAT IT IS A REGISTERED PRIVATE LIMITED COMPANY INCORPORATED UND ER THE COMPANIES ACT AND, THEREFORE, BOUND BY VARIOUS STAT UTORY LAWS AND THE ASSESSEE OF THIS STATURE CANNOT SHY AWAY FROM I TS STATUTORY AND OTHER LEGAL COMPLIANCES. ITA NO.479/AHD/2011(AY:2007-08 ASSESSEES APPEAL) 7. SINCE, WE HAVE REMITTED BACK THE ENTIRE CASE WHI LE DISPOSING OFF THE APPEAL OF THE REVENUE TO THE FILE OF THE LE ARNED CIT(A), THE APPEAL OF THE ASSESSEE HAS BECOME INFRUCTUOUS AND I S DISMISSED ACCORDINGLY. ITA NO.550 AND 479/AHD/2011 (AY 2007-08) M/S. NEST MANAGEMENT SERVICES PVT. LTD. 6 10. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALL OWED FOR STATISTICAL PURPOSES AND THE APPEAL OF THE ASSESSEE IS DISMISSE D AS INFRUCTUOUS. ORDER PRONOUNCED IN THE OPEN COURT ON 01-06-2012 SD/- SD/- (MUKUL KUMAR SHRAWAT) JUDICIAL MEMBER (A. MOHAN ALANKAMONY) ACCOUNTANT MEMBER LAKSHMIKANT DEKA/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER DY. REGISTRAR, ITAT, AHMEDABAD 1. DATE OF DICTATION: 30-05-12 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER: 31 -05-12 OTHER MEMBER: 3. DATE ON WHICH APPROVED DRAFT COMES TO THE SR. P. S./P.S.: 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER FOR PRONOUNCEMENT: 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. P.S./P.S.: 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK: 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK: 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER: 9. DATE OF DESPATCH OF THE ORDER: