MRS. DEVI MAGESH BABU, ARNI V. ITO WARD 2, CHENNAI

ITA 535/CHNY/2018

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 0343 (ITAT-CHENNAI)
• Duration Of Justice: 9 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-11-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2014-2015
• Appeal Filed On: 14-02-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: P S PRABHAKARC A
• Keywords: Principle of natural justice

Judgement Text

, SMC , IN THE INCOME TAX APPELLATE TRIBUNAL C SMC BENCH : CHENNAI BEFORE SHRI GEORGE MATHAN, JUDICIAL MEMBER ./ I.T.A.NO.535 /CHNY/2018 / ASSESSMENT YEAR : 2014-15 MRS.DEVI MAGESH BABU , M/S.PNMN ENTERPRISES, 285,GANDHI ROAD, ARNI 632 301. VS. THE INCOME TAX OFFICER, WARD-2,CHENNAI. [PAN AERPD 7813 B] ( / APPELLANT) ( /RESPONDENT) / APPELLANT BY : SHRI P.S.PRABHAKAR,C.A /RESPONDENT BY : SHRI B.SAGADEVAN,JCIT,D.R ! '# / DATE OF HEARING : 20 - 1 1 - 201 8 $% ! '# / DATE OF PRONOUNCEMENT : 20 - 1 1 - 201 8 / O R D E R THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST T HE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-13, CHENNAI IN ITA NO.105/CIT(A)-13/2014-15 DATED 19.09.2017 FOR THE A SSESSMENT YEAR 2014-15 2. SHRI P.S.PRABHAKAR REPRESENTED ON BEHALF OF THE ASSESSEE AND SHRI B.SAGADEVAN REPRESENTED ON BEHALF OF THE REVENUE. ITA NO.535/CHNY/2018 :- 2 -: 3. IT WAS SUBMITTED BY LD.A.R THAT ASSESSEE RUNS PETROL BUNK OF IOC AT VELLORE. IT WAS A SUBMISSION THAT THE TURNOV ER OF ASSESSEE WAS ` 44.53 CRORES AND THE NET PROFIT DECLARED WAS ` 14 LAKHS. IT WAS A SUBMISSION THAT THE LD. ASSESSING OFFICER ON PRESUM PTION THAT THE SALARIES PAID BY THE ASSESSEE TO THE STAFF AT ` 15,250/- WAS EXCESSIVE, DETERMINED THE SALARY PAID PER EMPLOYEE AT ` 5,000/- PER MONTH AND MADE CORRESPONDING DISALLOWANCE. IT WAS A SUBMISSIO N THAT THE LD. ASSESSING OFFICER HAD ALSO DISALLOWED BUSINESS PROM OTION EXPENSES OF ` 1,48,111/-, WHICH WAS THE EXPENDITURE INCURRED BY T HE ASSESSEE ON ONE OF THE VEHICLES OF ITS CUSTOMERS IN WHICH THE E MPLOYEE OF THE ASSESSEE HAD FILLED PETROL INSTEAD OF DIESEL AND IT HAD RESULTED SUBSTANTIAL REPAIRS TO THE VEHICLE. IT WAS A SUBMIS SION THAT CONSEQUENTLY LD. ASSESSING OFFICER HAD ESTIMATED TH E INCOME OF ASSESSEE BY TAKING THE PROFIT EARNED AT 20 PAISE PE R LITRE (DIESEL/PETROL). IT WAS A SUBMISSION THAT NO ESTIM ATION CAN BE DONE TO THE ASSESSEES INCOME, UNLESS BOOKS WERE REJECTE D BY THE LD. ASSESSING OFFICER. IT WAS A PRAYER THAT THE ADDITIO N MADE BY LD. ASSESSING OFFICER AMOUNTING TO ` 13,73,445/- ALONG WITH PENALTY PROCEEDINGS U/S.271(1)(C) OF THE ACT MAY BE DELETED . 4. IN REPLY, THE LD.D.R SUBMITTED THAT BOOKS OF AC COUNTS HAD BEEN CALLED FOR IN THE COURSE OF ASSESSMENT PROCEEDINGS, WHICH IS EVIDENT IN PAGES 1 & 2 OF THE ASSESSMENT ORDER. IT WAS A SUBMI SSION THAT NO ITA NO.535/CHNY/2018 :- 3 -: BOOKS WERE PRODUCED AND CONSEQUENTLY, THERE WAS NOT HING FOR THE LD. ASSESSING OFFICER TO REJECT. IT WAS A FURTHER SUBMI SSION THAT AS THE BOOKS HAD NOT BEEN PRODUCED, THE HANDS OF THE LD. A SSESSING OFFICER WERE TIED AND THE SAME HAD RESULTED IN THE ESTIMATI ON. IT WAS A FURTHER SUBMISSION BY LD.D.R THAT HE HAD NO OBJECTION, IF THE ISSUES ARE RESTORED TO THE FILE OF LD. ASSESSING OFFICER FOR D ENOVO ASSESSMENT. TO THIS PROPOSITION, THE LD.A.R ALSO FAIRLY ENDORSED T HE VIEW OF THE LD.D.R AND AGREED THAT THE ISSUES MAY BE RESTORED TO THE F ILE OF LD. ASSESSING OFFICER. 5. I HAVE CONSIDERED THE RIVAL SUBMISSIONS. A PER USAL OF PARA-5 OF THE ASSESSMENT ORDER SHOWS THAT SALARY PAID BY THE ASSESSEE TO HER EMPLOYEE AT ` 15,250/- PER MONTH HAS BEEN REJECTED, AND THE SALAR Y TAKEN AT ` 5,000/- PER MONTH. THIS HAS BEEN DONE ON THE BASIS OF INQUIRY DONE BY THE INSPECTOR ATTACHED TO THE ASSES SING OFFICERS OFFICE. IT IS NOTICED THAT THIS HAS NOT BEEN PUT T O THE ASSESSEE FOR REBUTTAL. FURTHER, THE LD. ASSESSING OFFICER HAS RE JECTED THE ASSESSEES CLAIM OF BUSINESS PROMOTION EXPENDITURE WITHOUT EXA MINING THE VEHICLE OWNER. THE LD. ASSESSING OFFICER HAS ALSO NOT EXAMI NED WHETHER THE VEHICLE HAD ACTUALLY INCURRED THE SAID EXPENDITURE AND WHETHER INSURANCE HAD BEEN CLAIMED ON THE SAME. FURTHER, HO W THE LD. ASSESSING OFFICER HAS DETERMINED 20 PAISE PER LITRE (DIESEL/PETROL) AS A PROFIT EARNED IS ALSO NOT COMING OUT OF THE ASSESSM ENT ORDER. A PERUSAL ITA NO.535/CHNY/2018 :- 4 -: OF ASSESSMENT ORDER ALSO ADMITTEDLY SHOWS THAT THER E IS NO RECORDING OF THE BOOKS HAVING BEEN PRODUCED BEFORE THE LD. AS SESSING OFFICER. THIS BEING SO, IN THE INTEREST OF NATURAL JUSTICE A ND FOR DETERMINING THE CORRECT FACTS, THE ISSUES IN THE APPEAL ARE RESTORE D TO THE FILE OF LD. ASSESSING OFFICER FOR RE-ADJUDICATION AFTER GRANTIN G THE ASSESSEE ADEQUATE OPPORTUNITY TO SUBSTANTIATE HER CASE. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT AFTER CONCLUSION OF HEARING ON 20 TH NOVEMBER, 2018, AT CHENNAI. SD/ - ( ) (GEORGE MATHAN) ! ' / JUDICIAL MEMBER & / CHENNAI ' / DATED: 20 TH NOVEMBER, 2018. K S SUNDARAM (!)* +*! / COPY TO: 1 . / APPELLANT 3. ,!- . / CIT(A) 5. */0!1 / DR 2. / RESPONDENT 4. ,! / CIT 6. 023 / GF