ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-16(1), MUMBAI V. M/S. CINEMANTRA ENTRTAINMENT MEDIA PVT. LTD, MUMBAI

ITA 5251/MUM/2019

• Counselvise Citation: [2021] 104 COUNSELVISE.COM (IT) 7504 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 3 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-11-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2013-2014
• Appeal Filed On: 08-08-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: RA JEEV WAGLAY
• Keywords: Additional evidence; TDS
• Section: 40(a)(ia); 194C; 251; 192; 194J; 73

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (VIRTUAL COURT) “G” BENCH, MUMBAI BEFORE SHRI MAHAVIR SINGH, HON'BLE VICE PRESIDENT AND SHRI S. RIFAUR RAHMAN, HON'BLE ACCOUNTANT MEMBER ITA NO. 5251/MUM/2019 (A.Y: 2013-14) ACIT – Circle – 16(1) Room No. 439, 4th Floor Aayakar Bhavan, M.K. Road Mumbai - 400020 v. M/s. Cinemantra Entertainment Media Pvt. Ltd., 15/C, Dwarka Sadan Ground Floor, Shivaji Park Dadar (W), Mumbai - 400028 PAN: AAFCC0336F (Appellant) (Respondent) Assessee by : Shri Rajeev Waglay Department by : Shri Ajay Singh Date of Hearing : 02.09.2021 Date of Pronouncement : 26.11.2021 O R D E R PER S. RIFAUR RAHMAN (AM) 1. This appeal is filed by the revenue against order of the Learned Commissioner of Income Tax (Appeals)–4, Mumbai [hereinafter in short “Ld.CIT(A)”] dated 21.05.2019 for the A.Y. 2013-14. 2. Revenue has raised following grounds in its appeal: - “i) Whether on the facts, in the circumstances of the case and as per law, the Ld.CIT(A) has erred i in admitting 2 additional’ evidence i in the course of the appellate proceedings in-contravention of the Provisions of Rule 46A of the I.T. Rules, in relation to Disallowance 2 ITA NO. 5251/MUM/2019 (A.Y: 2013-14) M/s. Cinemantra Entertainment Media Pvt. Ltd., of Rs.1,18,32,296/- out of Cost of Production made by the AO in absence of any verifiable evidences produced during the course of assessment proceedings. “ii) Whether on the facts, in the circumstances of the, case and as per law, the Ld.CIT(A) has erred in admitting additional evidence in the course of the appellate proceedings in contravention of the Provisions of Rule 46A of the IT. Rules, in relation to Disallowance of Rs.39,96,912/- u/s.40(a)(ia) made by the AO on account of short deduction of TDS. iii) Whether on the facts, in the circumstances of the case and as per law, the Ld.CIT(A) has erred in giving relief to the assessee without giving proper opportunity to the Assessing Officer to confirm the veracity and genuineness of the documents submitted during the appellate proceedings. iv) The appellant prays that the order of Ld.CIT(A) on the above grounds be set-aside and that of the assessing officer be restored. v) The appellant craves leave to amend or alter any ground or add a new ground which may be necessary. 3. Revenue has filed the grounds of appeal with the grievance that Ld.CIT(A) erred in admitting the additional evidences in contravention of the provision of Rule 46A of I.T. Rules especially relating to disallowance of ₹.1,18,32,296/- out of cost of production and disallowance u/s.40(a)(ia) of the Act. The general grievance is that Ld.CIT(A) has given relief to the assessee without giving proper opportunity to the Assessing Officer. 4. Brief facts relating to the Ground No. 1 are that, Assessing Officer observed from the Profit and Loss Account that assessee has debited ₹.8,66,31,591/- as cost of production under the head direct expenses, 3 ITA NO. 5251/MUM/2019 (A.Y: 2013-14) M/s. Cinemantra Entertainment Media Pvt. Ltd., when asked for the breakup of the cost of production Ld. AR of the assessee provided details of cost of production to the extent of ₹.7,47,99,295/-. Assessing Officer observed that on repeated reminders also assessee has not provided full details of entire cost of production. Accordingly, Assessing Officer disallowed the expenditure to the extent of ₹.1,18,32,296/- (₹.8,66,31,591/- -minus ₹.7,47,99,295/-). Aggrieved assessee preferred an appeal before the Ld.CIT(A) and before the Ld.CIT(A) assessee filed submissions as below: - “1. This pertains to the disallowance of Rs.1,18,32,296 out of cost of production on the ground that details in respect of the same were not tendered. 2. As can be seen from Sr. no. 5 of the questionnaire given by the AO to the Appellant, [P.17] the AO had asked for the break-up of cost of production of more than Rs. 1,00,000/ and in terms of letter dated 2.2.2016, [P. 18-19] the said details were duly tendered vide Ann. 4 and Ann. 5 [P. 20 – 29]. 3. The said expenses by cheque amounted to Rs. 7,52,22,235 and by cash amounted to Rs. 9,52,567/. 4. The total expenditure incurred was Rs.8,66,31,591 as can be seen from the Profit and Loss Account [P. 30 - 32] and as such, the difference of Rs. 1,04,56,789/-(8,66,31,591 - 7,52,22,235 - 9,52,567) (and not Rs. 1,18,32,296 as stated by the AO) represented expenditure under various heads which were below Rs. 1 Lakh. 5. In the scenario, after having asked for the details above Rs.1,00,000 only, the AO could not have added the amount of Rs.1,18,32,296 just for the sake of it without looking into the details he had asked for. And hence, the said addition deserves to be deleted in toto as without any basis.” 4 ITA NO. 5251/MUM/2019 (A.Y: 2013-14) M/s. Cinemantra Entertainment Media Pvt. Ltd., 5. After considering the submissions of the assessee, Ld.CIT(A) allowed the appeal of the assessee with the following observations: - “7. Ground No. a: Vide this ground, Appellant has agitated against disallowance of Rs.1,18,32,296/- out of cost of production on the ground that necessary details were not furnished by the Appellant. In Para of the assessment order, the Ld. A.O had mentioned that the assessee company had debited Rs.8,66,31,591/- as cost of production under the head direct expenses. According to the A.O, during the course of assessment proceedings, necessary details regarding expenses incurred under the head production were called for and inspite of multiple reminders, the Appellant only furnished details of & 7,47,99,295/-. A.O held that no details in respect of expenses amounting to Rs.1,18,32,296/- were furnished by the Appellant. Therefore, he disallowed the same and added it to the total taxable income. 7.1 During the course of appellate proceedings, the Appellant strongly objected to the observations made by the Ld. A.O. In support of its claim, Appellant filed a copy of the questionnaire issued by the Ld. A.O alongwith the notice u/s 142(1). According to the Appellant, vide Q. No. 5 of the questionnaire, the Ld. A.O only called the details in respect to expenses which were more than Rs. 1 lakh. No details in respect of expenses incurred below ₹.1 lakhs were called by the Ld. A.O. Appellant filed the copy of the questionnaire issued by the Ld. A.O which is placed on Page No. 17 of the Paper book. 7.2 From perusal of the questionnaire issued by the Ld. A.O, the submission of the Appellant is found to be correct. During the course of appellate proceedings, the Appellant filed details of the balance expenses which were not asked by the A.O during the assessment proceedings. The Appellant submitted that during the course of assessment proceedings the AO had issued a questionnaire to the assessee and the same is placed on Page 17 of the written submissions filed by the assessee before me. The AO had asked for the break-up of cost of production of more than Rs.1 Lakh as was seen from Para 5 of the questionnaire at Page 17 of the written submissions. Accordingly, the assessee submitted the details vide its letter dated 02.02.2016 which was placed at Page No. 18 & 19 of the written submissions and the details were marked at Annexure 4 & 5 of the letter dated 2.2.2016 and the same were enclosed at Pg. 20 to 29 of the written submissions, filed before me. 7.3. Assessee further stated that the expenditures incurred by cheques amounted to Rs.7,52,22,235/- and not Rs.7,47,99,295/- as stated by the AO in his assessment order. The difference was 5 ITA NO. 5251/MUM/2019 (A.Y: 2013-14) M/s. Cinemantra Entertainment Media Pvt. Ltd., because the amount of Rs.7,47,99,295/- was after TDS and as such, the total expenses in respect of which details were given were Rs.7,52,22,235/-. Some of the expenses were incurred in cash and details of all such expenses are placed at Page 28 and 29 of the written submissions. The total of such expenses was ₹.9,52,567/-. 7.4 The observations of the Ld. A.O in the assessment order are based on the limited informations called by him during assessment proceedings. During the course of appellate proceedings, the appellant submitted all details of the expenses which were not called by the A.O during the assessment proceedings. In view of the details filed and re-conciliation of expenses submitted by the Appellant, appeal of the assessee on this ground is, allowed.” 6. Aggrieved revenue is in appeal before us that Ld.CIT(A) has admitted additional evidences in the course of the appellate proceedings against the provisions of Rule 46A of I.T. Rules. Before us Ld. DR also made similar submissions and prayed that Ld.CIT(A) has violated the Rule 46A of I.T. Rules and this issue should be remitted back to Ld.CIT(A) since Ld.CIT(A) has not called for any remand report. 7. Considered the rival submissions and material placed on record, we observe from the record that assessee has filed the information before the Assessing Officer based on the notice issued by him in respect of expenses which were more than ₹.1,00,000/- and assessee has filed the information by respectfully following the directions of the Assessing Officer. Ld.CIT(A) in his order clearly brought on record that the assessee has filed only those information as called for by the Assessing Officer. If at all, Assessing Officer wanted to verify he could have asked the 6 ITA NO. 5251/MUM/2019 (A.Y: 2013-14) M/s. Cinemantra Entertainment Media Pvt. Ltd., information from the assessee. We observe from the record that assessee has filed all the information including the information which Assessing Officer has not called for before Ld.CIT(A) and Ld.CIT(A) adjudicated based on the information available on record. It is within his power as he has coterminous power to call for the information and complete the assessment as per section 251 of the Act. Therefore, we do not see any reason to interfere with the findings of the Ld.CIT(A) and we do not see any violation in applying Rule 46A of I.T. Rules. The information submitted by the assessee is accepted by the Ld.CIT(A) which is within his power, there is no necessity for him to remit this information back to the Assessing Officer and it is not something which required detailed verification. Therefore, we dismiss the ground raised by the revenue. 8. With regard to Ground No. 2, Assessing Officer observed during assessment proceedings that from the details of TDS short deduction filed by the assessee vide letter dated 10.03.2016, the details are as below: Particulars Amount Rs Tanvesh Jain 240000 Chandravan More 3500000 Sunil Khedkar 66546 Shushant Tangare 46807 Nilesh Patwardhar 143559 Total 3996912 7 ITA NO. 5251/MUM/2019 (A.Y: 2013-14) M/s. Cinemantra Entertainment Media Pvt. Ltd., 9. Assessing Officer observed that as per section 40(a)(ia) of the Act the above amount has to be disallowed. When the Ld. AR of the assessee was asked why the above expenses should not be disallowed and added to the total income of the assessee, the Ld. AR of the assessee has not offered any substantial explanation, accordingly, Assessing Officer disallowed ₹.39,96,912/- u/s.40(a)(ia) of the Act. 10. Aggrieved assessee preferred an appeal before the Ld.CIT(A) and filed following submissions before Ld.CIT(A): - “1. This pertains to the disallowance of Rs.39,96,912/- u/s.40(a)(ia) on the ground of short deduction of TDS. 2. All the details were tendered and even the copies of Form 16 and Form 16A were given. 3. Mr. Tanvesh Jain was paid an amount of Rs. 6,00,000/- (and not Rs. 2,40,000/as stated by the AO) on account of professional charges & tax was duly deducted at source u/s. 194J of I. T. Act, 1961 as can be seen from Form no. 16A for the F. Y. 2012-13. [P.66 -69] 4. Mr. Chandravanden More was paid an amount of Rs.54,76,735 (and not Rs. 35,00,000/- as stated by the AO) for contractual service and tax was duly deducted at source u/s. 194C of I. T. Act, 1961 as can be seen from Form no. 16A for the F. Y. 2012-13. [P.70-73] 5. Mr. Sunil Khedkar was paid salary of Rs. 66,546/- & no tax was deducted as his income was much below the taxable limit. 6. Mr. Sushant Tangare was paid salary of Rs. 4,30,000 (and not Rs.46,807 as stated by the AO) and tax was duly deducted at source u/s. 192 of |. T. Act, 1961 as can be seen from Form no. 16 for the F. Y. 2012-13. [P.74-75] 7. Mr. Nilesh Patwardhan was paid salary of Rs. 3,89,333 (and not Rs.1,43,559 as stated by the AO) and tax was duly deducted at source u/s. 192 of, I.T. Act, 1961 as can be seen from Form no. 16 for the F. Y. 2012-13. [P. 76-77]. 8 ITA NO. 5251/MUM/2019 (A.Y: 2013-14) M/s. Cinemantra Entertainment Media Pvt. Ltd., 8. As such, it can be seen that the observations made by the AO were totally baseless and the disallowance made by the AO u/s. 40(a)(ia) deserves to be deleted in toto in the absence of any short deduction of tax at source.” 11. After considering submissions of the assessee, Ld.CIT(A) allowed the grounds raised by the assessee with the following observations: “12.1 During the course of appellate proceedings, a written submission was filed which finds place in Para 5 of this order. All the details and copies were submitted before the AO vide assessee's letter dated 2.2.2016 which is placed at Sr. no.15 at page 18 & 19 of the written submissions. Mr. Tanvesh Jain was paid & 6,00,000/- (and not © 2,40,000/- as stated by the AO) on account of professional charges and tax was duly deducted at source u/s 194 J of I.T. Act, 1961 as was seen from Form No. 16A on page 66 to 69 of the written submissions. Mr. Chandravanden More was paid an amount of Rs.54,76,735/- (and not Rs.35,00,000/as stated by the AO) for contractual services and tax was duly deducted at source u/s. 194C of |.T. Act, 1961 as was seen from Form No. 16A on Page 70 - 73 of the written submissions. 12.2. Mr. Sunil Khedkar was paid salary of Rs.66,546/and no tax was deducted as his income was much below the taxable limit. Mr.Sunil Tangare was paid salary of ₹.4,30,000/and not Rs.46,807/- as stated by the AO) and tax was duly deducted at source u/s. 192 of I.T. Act, 1961 as can be seen from Form No.16 of the written submissions placed on page 74 & 75 of the written submissions. Mr. Nilesh Patwardhan was paid salary of Rs.3,89,333 (and not Rs.1,43,559/as stated by the AO) and the tax was duly deducted at source u/s. 192 of |.T. Act, 1961 as was seen from Form no. 16 Placed on Page 76 and 77 of the written submissions. 12.3 The Appellant strongly objected to the observations of the A.O that tax was not appropriately deducted and details were not filed by the Appellant. In view of the details and reconciliation furnished by the Appellant during the course of assessment proceedings as well as during the appellate proceedings, appeal of the assessee on this ground is allowed.” 12. Considered the rival submissions and material placed on record, we observed from the record that assessee has filed the details of TDS, challans, and service tax challans at the time of assessment proceedings 9 ITA NO. 5251/MUM/2019 (A.Y: 2013-14) M/s. Cinemantra Entertainment Media Pvt. Ltd., refer to Page Nos. 28 to 30 of the Paper Book and Page No. 31 to 42 of the Paper Book. All the information filed by the assessee before the Assessing Officer relates to Form – 16 and Form – 16A information relating to TDS. This information clearly indicates that this information was very much available before the Assessing Officer and the same information were perused and adjudicated by the Ld.CIT(A) as such there is no new information submitted by the assessee before the Ld.CIT(A). Assessee has filed only the details and reconciliation in order to substantiate its claim. Therefore, we do not see any violation of Rule 46A in this case. Therefore, we are inclined to reject the contention of the Assessing Officer and the ground raised by the department. Considering the above discussions, we are inclined to dismiss the grounds raised by the revenue. 13. In the result, appeal filed by the Revenue is dismissed. Order pronounced on 26.11.2021 as per Rule 34(4) of ITAT Rules by placing the pronouncement list in the notice board. Sd/- Sd/- (MAHAVIR SINGH) (S. RIFAUR RAHMAN) VICE PRESIDENT ACCOUNTANT MEMBER Mumbai / Dated 26.11.2021 Giridhar, Sr.PS 10 ITA NO. 5251/MUM/2019 (A.Y: 2013-14) M/s. Cinemantra Entertainment Media Pvt. Ltd., Copy of the Order forwarded to: 1. The Appellant 2. The Respondent. 3. The CIT(A), Mumbai. 4. CIT 5. DR, ITAT, Mumbai 6. Guard file. //True Copy// BY ORDER (Asstt. Registrar) ITAT, Mum