CHROME PICTURES P.LTD, MUMBAI V. ASST CIT 11(1), MUMBAI

ITA 4919/MUM/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 100757 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2015
• Appeal Filed By: Assessee
• Bench Allotted: C
• Next Hearing Date: 15-07-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 30-07-2012
• Court: TRIBUNAL
• Department Lawyers: B S BIST
• Assessee Lawyers: ASHOK L SHARMA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA, JUDICIAL MEMBER I.T.A. NO. 4919/M/2012 (AY:2008 - 2009 ) M/S. CHROME PICTURES PVT LTD., 504/505, MAKHIJA ARCADE, 35 ROAD, KHAR (W), MUMBAI 400 052. / VS. ACIT - 11(1), MUMBAI. ./ PAN : AACCC3031E ( / APPELLANT) .. ( / RESPONDENT ) / APPELLANT BY : SHRI ASHOK L. SHARMA / RESPONDENT BY : SHRI B.S. BIST, DR / DATE OF HEARING : 20.07 .2015 / DATE OF PRONOUNCEMENT : 28 .08.2015 / O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT (A) - 3, MUMBAI DATED 30.5.2012 FOR THE ASSESSMENT YEAR 2008 - 2009. IN THIS APPEAL, ASSESSEE RAISED THE FOLLOWING GROUNDS WHICH READ AS UNDER: 1. ON THE FACTS OF THE CASE, THE LD AO ERRED IN ADDING AND THE LD CIT (A) IN CONFIRMING THE ADDITION OF 25% OF EXPENSES OF COST OF PRODUCTION AMOUNTING TO RS. 50,42,186/ - INCURRED IN CASH TERMING IT AS NON - GENUINE. 2. ON THE FACTS OF THE CASE, THE LD AO ERRED IN ADDING AND LEARNED CIT (A) ERRED IN CONFI RMING THE ADDITION OF PRIOR PERIOD EXPENSES OF RS. 5,27,346/ - TO THE TOTAL INCOME. 2. BEFORE US, AT THE OUTSET, LD COUNSEL FOR THE ASSESSEE BROUGHT OUR ATTENTION TO THE GROUND NO.2 AND SUBMITTED THAT REVENUE OFFICERS MADE AN ADDITION OF RS. 5,27,346/ - ON ACCOUNT OF PRIOR PERIOD EXPENSES. IN THIS REGARD, AFTER NARRATING THE FACTS, LD COUNSEL FOR THE ASSESSEE FAIRLY MENTIONED THAT THE RELEVANT BILLS / INVOICES WERE RAISED AFTER THE END OF THE PREVIOUS YEAR. ON THE OTHER HAND, LD DR RELIED ON THE ORDERS OF THE REVENUE AUTHORITIES. 3. AFTER HEARING BOTH THE PARTIES, WE FIND PARA 2.3 OF THE CIT (A)S ORDER IS RELEVANT IN THIS REGARD. IN THE SAID PARA, IT IS DISCUSSED THAT THE SAID PRIOR PERIOD 2 EXPENSES ARE NOT ALLOWABLE CONSIDERING THE SYSTEM OF ACCOUNTING F OLLOWED BY THE ASSESSEE. IT IS NOT THE CASE OF THE ASSESSEE THAT THE PAYABILITY IS CRYSTALLIZED DURING THE YEAR UNDER CONSIDERATION. AFTER CONSIDERING THE FACTS NARRATED BY THE LD COUNSEL FOR THE ASSESSEE AS WELL AS THE RELEVANT MATERIAL PLACED BEFORE US , WE ARE OF THE OPINION, THE CONCLUSION DRAWN BY THE CIT (A) IN THIS REGARD IS FAIR AND REASONABLE AND IT DOES NOT CALL FOR ANY INTERFERENCE. ACCORDINGLY, GROUND NO.2 RAISED BY THE ASSESSEE IS DISMISSED. 4. IN CONNECTION WITH THE GROUND NO.1, LD COUNSEL FOR THE ASSESSEE NARRATED THE FACTS WHICH INCLUDE THAT THE ASSESSEE IS IN THE BUSINESS OF PRODUCTION OF AD - FILMS AND LOT OF CASH PAYMENTS ARE REQUIRED TO BE MADE TO THE TECHNICIANS, WAGES, ADMINISTRATIVE EXPENSES. DURING THE YEAR, ASSESSEE IN CURRED CASH EXPENSES AMOUNTING TO RS. 2,01,68,744/ - . DURING THE ASSESSMENT PROCEEDINGS, ASSESSEE COULD NOT FURNISH THE RELEVANT THIRD PARTY VOUCHERS TO SUBSTANTIATE ITS CLAIM OF THE SAID EXPENSES. CONSIDERING THE ASSESSEES FAILURE, AO PROCEEDED TO MAKE DISALLOWANCE APPLYING THE FLAT RATE OF 25% OF THE CLAIM AND MADE AN ADDITION OF RS. 50,42,186/ - . AGGRIEVED, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. 5. DURING THE PROCEEDINGS BEFORE THE FIRST APPELLATE AUTHORITY, AFTER C ONSIDERING THE SUBMISSIONS OF THE ASSESSEE, CIT (A) CONFIRMED THE CONCLUSIONS OF THE AO AND DISMISSED THE RELEVANT GROUND OF THE ASSESSEE. WHILE DISMISSING THE ASSESSEES GROUND, CIT (A) HELD THAT THE ASSESSEE FAILED TO ESTABLISH THE VERACITY AND GENUINEN ESS OF THE PAYMENTS AND THE CASH VOUCHERS ARE NOT SUPPORTED BY THE THIRD PARTY BILLS. AGAIN AGGRIEVED, ASSESSEE FILED THE PRESENT APPEAL BY RAISING THE ABOVE MENTIONED GROUND NO.1. 6. DURING THE PROCEEDINGS BEFORE US, ON THIS ISSUE, LD COUNSEL FOR THE ASSE SSEE FAIRLY SUBMITTED THAT THE ASSESSEE IS IN THIS LINE OF BUSINESS FOR MANY YEARS AND THE DISALLOWANCE OF THIS MAGNITUDE IS DONE ONLY IN THE YEAR UNDER CONSIDERATION. MENTIONING THAT CERTAIN AD - HOC ADDITIONS OF RS. 1 LAKH AND RS. 1.5 LAKHS WAS MADE IN TH E AYS 2011 - 12 AND 2012 - 13 RESPECTIVELY. FURTHER, HE MENTIONED THAT NO DISALLOWANCE WAS MADE IN THE SCRUTINY ASSESSMENT FOR THE AY 2010 - 2011. LD COUNSEL FOR THE ASSESSEE FAIRLY SUBMITTED THAT PROPORTIONATE AD - HOC DISALLOWANCE MAY BE MADE IN THIS YEAR ALSO AS THE DISALLOWANCE @ 25% IS EXTREMELY IN HIGHER SIDE. FURTHER, LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT ASSESSEE IS CONSISTENTLY 3 REPORTING THE TURNOVER RUNNING INTO CRORES AND THE EXPENDITURE OF RS. 2,01,68,744/ - IS REQUIRED TO FOR REGISTERING THE TUR NOVER OF RS. 17.2 CRS (ROUNDED - OF). 7. ON THE OTHER HAND, LD DR FOR THE REVENUE HEAVILY RELIED ON THE ORDERS OF THE REVENUE AUTHORITIES. HOWEVER, HE HAS NOT REPLY ON THE BASIS FOR ADOPTING 25% FOR MAKING DISALLOWANCE. 8. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS THE RELEVANT MATERIAL PLACED BEFORE US. ON HEARING BOTH THE PARTIES AND ON PERUSAL OF THE ORDERS OF THE REVENUE AUTHORITIES, WE FIND THE ASSESSEE HAS FAILED TO DISCHARGE ITS ONUS IN FURNISHING EVID ENCES IN SUPPORT OF THE CASH EXPENSES AMOUNTING TO RS. 2.01 CRS (ROUNDED - OF). WE ALSO FIND SIMILAR EXPENSES WERE INCURRED IN ALL THE AYS COMMENCING FROM AY 2007 - 08 TO 2012 - 13 AND THE A M O U N T O F EXPENSES INCURRED VARY FROM RS. 2.2 CRS TO RS. 1.3 CRS IN RESPECT OF THE ASSESSMENT YEARS. IT IS ALSO NOTICED THAT THE REVENUE DID NOT MAKE DISALLOWANCE IN SOME YEARS AND MADE DISALLOWANCE OF RS. 5 LAKSH IN AY 2011 - 2012 AND RS. 1 LAKH IN AY 2012 - 2013. IT IS ALSO IN THE YEAR UNDER CONSIDERATION, AO RESORTED TO DISALLOW 25% OF THE TOTAL CLAIM AND MADE HUGE ADDITION OF RS. 50.42 LAKHS. CONSIDERING THE ABOVE FACTS, WE ARE OF THE OPINION THAT SUCH % B A S E D AD - HOCISAM IS NOT ACCEPTABLE AS IT IS WITHOUT ANY BASIS. IN ALL FAIRNESS, IN OUR OPINION, MAKING AN AD - HOC AMOUNT OF RS. 5 LAKHS WOUL D MEET THE ENDS OF JUSTICE. ACCORDINGLY, WE DIRECT THE AO TO RESTRICT THE DISALLOWANCE TO RS. 5 LAKHS ON AD - HOC BASIS IN ORDER TO BRING THE FINALITY OF THE LITIGATION ON THIS ISSUE AS DISCUSSED IN OPEN COURT. THUS, GROUND NO.1 RAISED BY THE ASSESSEE IS P ARTLY ALLOWED. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 2 8 T H AUGUST, 2015. S D / - S D / - (AMIT SHUKLA) (D. KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; 2 8 .8. 2015 . . ./ OKK , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 4 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI