POPCORN ENTERTAINMENT P.LTD, MUMBAI V. ACIT 11(1), MUMBAI

ITA 4968/MUM/2013

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 2370 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 4 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-11-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 21-04-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 01-07-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Unexplained expenditure
• Section: 40A(3); 133A

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES C, MUMBAI , , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI ASHWANI TANEJA, ACCOUNTANT MEMBER ITA NO.4968/MUM/2013 ASSESSMENT YEAR: 2006-07 POPOCRN ENTERTAINMENT PVT. LTD., BUNGLOW NO.160 AARAM NAGAR NO.2 J.P. ROAD, VERSOVA MUMBAI 400 061 / VS. THE ASSTT. CIT, CIRCLE-11(1), 6 TH FLOOR, AAYAKAR BHAVAN, M.K.ROAD, MUMBAI-400020 ( !'# /ASSESSEE) ( / REVENUE) P.A. NO.AAACP9533E $ % & ' / DATE OF HEARING : 19/11/2015 & ' / DATE OF ORDER: 20/11/2015 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THE ASSESSEE IS AGGRIEVED BY THE IMPUGNED ORDER DAT ED 27 TH MAY 2013 OF THE LD. FIRST APPELLATE AUTHORITY CONFI RMING THE PENALTY OF RS.14,49,333, IMPOSED U/S 271(1)(C) OF T HE INCOME TAX ACT, 1961 (HEREIN AFTER THE ACT ) WITHOUT APPRECIATING THE FACT THAT THE AMOUNT OF RS.36,35,791, ADDED TO THE INCOM E OF THE ASSESSEE AS UNEXPLAINED EXPENDITURE WAS IN FACT THE EXPENDITURE INCURRED BY ONE OF THE DIRECTORS OF THE ASSESSEE FI RM, DR. PRAKASH KHUBCHANDANI, IN HIS PERSONAL BUSINESS AND FURTHER CONFIRMING THE PENALTY ON THE ADDITION OF RS.6,29,974, BEING T HE DISALLOWANCE FOR CASH EXPENDITURE U/S 40A(3) OF THE ACT. 2. DURING THE HEARING OF THIS APPEAL, THE LD. COUNS EL FOR THE ASSESSEE, SHRI SUBHASH SHETTY, ADVANCED HIS ARGUMEN TS WHICH ARE IDENTICAL TO THE GROUND RAISED. THE LD. COUNSEL CONTENDED THAT THE VOUCHERS FOUND DURING THE SURVEY IN FACT B ELONG TO THE DIRECTOR OF THE ASSESSEE FIRM AND NOT TO THE ASSESS EE. THEREFORE, IT WAS CONTENDED THAT THE ADDITION WAS WRONGLY MADE AN D SO IS THE PENALTY. ON THE OTHER HAND, THE LD., D.R., SHRI ARV IND KUMAR, DEFENDED THE IMPOSITION AS WELL AS SUSTENANCE OF PE NALTY BY CONTENDING THE VOUCHERS FOUND DURING SURVEY IN FACT BELONGS TO THE ASSESSEE AND NO EVIDENCE AT ANY STAGE WAS PRODU CED BY THE ASSESSEE EVIDENCING THAT THE DOCUMENTS BELONGS TO T HE ASSESSEE FIRM. IT WAS ALSO CONTENDED THAT QUANTUM HAS BEEN A CCEPTED BY THE ASSESSEE AND NO APPEAL HAS BEEN FILED BEFORE TH IS TRIBUNAL AGAINST THE QUANTUM ADDITION. THIS FACTUAL MATRIX O F NOT FILING THE APPEAL WAS ACCEPTED BY THE LD. COUNSEL. 2.1 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PE RUSED THE MATERIAL AVAILABLE ON RECORD. THE FACTS IN BRIEF AR E THAT THE ASSESSEE COMPANY IS IN THE BUSINESS OF ENTERTAINMEN T, DECLARED LOSS OF RS.19,26,988, IN ITS RETURN FILED ON 23 RD NOVEMBER 2006. A SURVEY ACTION U/S 133A WAS CARRIED OUT ON 23 RD NOVEMBER 2006. CERTAIN DOCUMENTS WERE IMPOUNDED WHEREIN IT WAS FOU ND THAT AN AMOUNT OF RS.35,35,791, WAS NOT REFLECTED IN THE BO OKS OF ACCOUNT OF THE ASSESSEE. IT WAS CLAIMED BY THE ASSE SSEE THAT THESE EXPENSES WERE BOOKED IN THE ACCOUNTS OF MR. P RAKASH KHUBCHANDANI. HOWEVER, NEITHER ANY DOCUMENTARY EVID ENCE WAS FURNISHED BY THE ASSESSEE NOR ANY CONFIRMATION FROM MR. PRAKASH KHUBCHANDANI WAS FILED. THESE DOCUMENTS WERE FOUND FROM THE OFFICE PREMISES OF THE ASSESSEE COMPANY. SUCH EXPEN DITURE WAS TREATED AS UNEXPLAINED EXPENDITURE FOR WHICH PENALT Y WAS IMPOSED U/S 271(1)(C). THE A.O. ASKED THE ASSESSEE TO FURNISH THE CONFIRMATION FROM THE DIRECTOR BUT THAT WAS NOT DONE BY THE ASSESSEE. THE LD. A.O. WAS OF THE VIEW THAT HAD THE RE BEEN NO SURVEY BY THE DEPARTMENT, THE INCOME WOULD HAVE ESC APED ASSESSMENT, THEREFORE, THE ADDITION WAS MADE AGAINS T WHICH NO APPEAL WAS FILED BY THE ASSESSEE BEFORE THIS TRIBUN AL MEANING THEREBY THE ADDITION WAS ACCEPTED TO BE CORRECT WHI CH WAS SUSTAINED BY THE LD. COMMISSIONER OF INCOME TAX (AP PEALS). WE NOTE THAT RIGHT FROM THE ASSESSMENT STAGE TILL THIS TRIBUNAL, NO EVIDENCE HAS BEEN FURNISHED BY THE ASSESSEE EVIDENC ING THAT THE VOUCHERS BELONGS TO THE DIRECTOR OF THE ASSESSEE FI RM OR THESE DOCUMENTS PERTAINS TO THE PERSONAL BUSINESS OF THE DIRECTOR. UNDISPUTEDLY, THE EXPENDITURE WAS NOT REFLECTED BY THE ASSESSEE IN THE RETURN OF INCOME AND THE ASSESSEE COMPANY HA S NOT SUBSTANTIATED THE GENUINENESS OF SUCH EXPENDITURE. THE EXPENDITURE OF RS.36,35,791, WAS INCURRED THROUGH T HE VOUCHERS OF THE ASSESSEE COMPANY. LIKEWISE, THE DISALLOWANCE OF EXPENDITURE U/S 40A(3) OF THE ACT AMOUNTING TO RS.6 ,29,974, BEING 20% OF THE TOTAL CASH EXPENDITURE OF RS.31,49 ,868, WAS ALSO CONFIRMED WHICH WAS IN VIOLATION OF THE PROVIS IONS OF THE ACT. WE NOTE THAT THE ASSESSEE DELIBERATELY DID NOT SHOW THE UNEXPLAINED EXPENDITURE, INCURRED OUT OF BOOKS OF A CCOUNT IN ITS BOOKS OF ACCOUNT AND, THEREFORE, THERE IS A DELIBER ATE ATTEMPT ON THE PART OF THE ASSESSEE FIRSTLY, TO INCUR SUCH EXP ENSES WITHOUT ROUTING THE SAME IN ITS BOOKS AND SECONDLY DID NOT DISCLOSE THE SOURCE OF THE EXPENSES. HAD THERE BEEN NO SURVEY, S UCH EXPENSES WOULD HAVE REMAINED OUT OF TAXATION, THEREFORE, EXP LANATION-1 TO SECTION 271(1)(C) IS CLEARLY ATTRACTED. THIS FACTUA L MATRIX OF INCURRING EXPENDITURE WAS DISCOVERED ONLY DURING TH E COURSE OF SURVEY PROCEEDINGS, CONSEQUENTLY, THE EXPLANATION O F THE ASSESSEE IS NOT JUSTIFIED AND MORE SO THE ASSESSEE RIGHT FROM THE ASSESSMENT STAGE HAS NOT BROUGHT ON RECORD ANY EVID ENCE SUBSTANTIATING THAT SUCH EXPENSES WERE ROUTED THROU GH THE BOOKS OR BELONGS TO THE DIRECTOR OF THE ASSESSEE FI RM. IT IS ALSO NOTEWORTHY THAT KNOWING FULLY WELL THAT THE ADDITIO N WAS RIGHTLY MADE / SUSTAINED NO APPEAL WAS FILED BY THE ASSESSE E BEFORE THIS TRIBUNAL AGAINST THE QUANTUM ADDITION. THE ASSESSEE HAS DELIBERATELY CONCEALED ITS INCOME AND DID NOT FURNI SH ANY EXPLANATION TO SUBSTANTIATE THE GENUINENESS OF THE EXPENDITURE. MORE SO, THE ASSESSEE FURNISHED INACCURATE PARTICUL ARS OF ITS INCOME, THEREFORE, THE PENALTY WAS RIGHTLY IMPOSED, THEREFORE, WE FIND NO INFIRMITY IN THE CONCLUSION DRAWN BY THE LD .CIT(A). FINALLY, THE APPEAL OF THE ASSESSEE IS DISMISSED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT ON 20/11/2015. SD/ - (ASHWANI TANEJA) SD/ - (JOGINDER SINGH) ! / ACCOUNTANT MEMBER ' ! / JUDICIAL MEMBER $ % MUMBAI; ) DATED : 20/11/2015 F{X~{T? P.S/. .. #$'%&'(')% / COPY OF THE ORDER FORWARDED TO : 1. +,- / THE APPELLANT 2. ./,- / THE RESPONDENT. 3. 0 0 $ 1 ( + ) / THE CIT, MUMBAI. 4. 0 0 $ 1 / CIT(A)- , MUMBAI 5. 34 .! , 0 +' ! 5 , $ % / DR, ITAT, MUMBAI 6. 6' 7% / GUARD FILE. / BY ORDER, /3+ . //TRUE COPY// / (DY./ASSTT. REGISTRAR) , $ % / ITAT, MUMBAI