GEEBEE EDUCATION P.LTD, MUMBAI V. ITO 1(1)4, MUMBAI

ITA 5412/MUM/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 84274 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 4 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-11-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 18-11-2014
• Assessment Year: 2005-2006
• Appeal Filed On: 20-07-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PAWAN KUMAR BERLA
• Assessee Lawyers: N M PORWAL
• Keywords: Unexplained expenditure
• Section: 69C; 143(3); 133(6)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI BEFORE S/SHRI R.C. SHARMA, (AM) AND VIVEK VARMA, (JM) . . , , , ./I.T.A. NO.5412/MUM/2011 ( / ASSESSMENT YEAR : 2005-06) GEEBEE EDUCATION PVT.LTD., 27, VASWANI MANSION, OPP. K C COLLEGE, CHURCHGATE, MUMBAI-400020 / VS. INCOME TAX OFFICER, 1(1)(4), MUMBAI. ( / APPELLANT) .. ( / RESPONDENT) ./ ! ./PAN/GIR NO. :AABCG4710B ' / APPELLANT BY SHRI N M PORWAL # ' /RESPONDENT BY SHRI PAWAN KUMAR BERLA $ % # &' / DATE OF HEARING : 18.11.2014 () # &' /DATE OF PRONOUNCEMENT : 28.11.2014 / O R D E R PER R.C. SHARMA, ACCOUNTANT MEMBER: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST T HE ORDER DATED 11.1.2011 FOR THE ASSESSMENT YEAR 2005-06, IN THE MATTER OF ORDER PASSED U/S 143(3) OF THE INCOME TAX ACT, 1961 (THE ACT). 2. FOLLOWING GROUNDS HAVE BEEN TAKEN BY THE ASSESSE E : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) ERRED IN CONFIRMING DISALLOWANCES OF RS.1748016/- MADE OUT O F ADVERTISEMENT EXPENSES AND MAKING ADDITION OF THE SAME TO THE TOT AL INCOME OF THE APPELLANT. PROVISIONS OF THE ACT OUGHT TO HAVE BEEN PROPERLY CONSTRUED AND REGARD BEING HAD TO FACTS OF THE CASE NO SUCH ADDITION SHOULD HAVE BEEN CONFIRMED AND MADE TO THE INCOME D ECLARED BY THE I.T.A. NO.5412/MUM/2011 2 APPELLANT. REASONS ASSIGNED BY HIM ARE WRONG AND IN SUFFICIENT TO JUSTIFY SAID DISALLOWANCES OUT OF ADVERTISEMENT EXPENSES. 2. THE ORDER MADE UNDER SECTION 143(3) OF THE ACT BY T HE LEARNED ASSESSING OFFICER AND CONFIRMED BY THE LEARNED COMM ISSIONER OF INCOME TAX (APPEALS) IS ILLEGAL, BAD-IN-LAW, ULTRA VIRUS A ND WITHOUT ALLOWING REASONABLE OPPORTUNITY OF THE HEARING, AND WITHOUT APPRECIATING THE FACTS, SUBMISSION AND EVIDENCES IN THEIR PROPER PERSPECTIV E AND IS LIABLE TO BE ANNULLED. 3 THE APPELLANT CRAVE LEAVE TO ADD, AMEND, ALTER AN D I OR VARY ANY OF THE GROUNDS OF APPEAL BEFORE OR AT THE TIME OF HEAR ING 2.1 THE ASSESSEE HAS ALSO TAKEN ADDITIONAL GROUNDS ARE AS UNDER : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE CIT(A) ERRED IN CONFIRMING DISALLOWANCES OF RS.17,48,016/- OUT O F THE ADVERTISING EXPENSES PAID TO M/S. SAMKIT ADVERTISING FOR THE PE RIOD 1ST APRIL, 2004 TO 4TH FEBRUARY, 2005 AS IF THE APPELLANT HAD DISCONTINUED ITS BUSINESS FOR THE SAID PERIOD WHEREAS HE HAS ALLOWED ALL OVERHEAD MONTHLY EXPENSES LIKE TELEPHONE EXPENSES, ELECTRICITY EXPENSES, STAT IONERY EXPENSES, INSURANCE ETC. FOR THE SAME PERIOD I.E. 1ST APRIL, 2004 TO 4 TH FEBRUARY, 2005. 2. THE CIT(A) ERRED IN CONFIRMING DISALLOWANCE OF P ART I ACCOUNTS FOR THE PERIOD 1ST APRIL, 2004 TO 4TH FEBRUARY, 2005 SIMPLY BECAUSE M/S. SAMKIT ADVERTISING MAINTAINED PART I ACCOUNTS SEPARATELY F OR THE PERIOD 1 APRIL, 2004 TO 4TH FEBRUARY, 2005 OF THE APPELLANT AND PART II ACCOUNT S FOR THE PERIOD 9TH DECEMBER, 2004 TO 31ST MARCH, 2005 OF THE APPELLANT SEPARATELY IN THEIR BOOKS OF ACCOUNTS. 3. CIT(A) ERRED IN CONFIRMING PART I ACCOUNTS FOR T HE PERIOD 1 ST APRIL, 2004 TO 4TH FEBRUARY, 2005 AS BOGUS TRANSACTIONS SIMPLY BECAUSE M/S. SAMKIT ADVERTISING MAINTAINED FOLLOWING TWO ACCOUNT S OF THE APPELLANT COMPANY SEPARATELY IN THEIR BOOKS OF ACCOUNTS AND D ID NOT SUBMIT BOTH THE ACCOUNTS TOGETHER TO THE ASSESSING OFFICER:- A) PART I ACCOUNTS FOR THE PERIOD 1 APRIL, 2004 TO 4 TH FEBRUARY, 2005 B) PART II ACCOUNTS FOR THE PERIOD 9 ' DECEMBER, 2004 TO 31ST MARCH, 2005. 4. THE CIT(A) ERRED IN NOT APPRECIATING THAT CERTAI N COMMON CHEQUES WERE ISSUED COVERING CERTAIN BILLS I.E. BILL NOS. 4 090, 3867 AND 3940 FROM PART I ACCOUNTS AND CERTAIN BILLS I.E. BILL NOS. 42 00, 4202, 4682 AND 4111 FROM PART II ACCOUNTS. THE CIT(A) FAILED TO APPRECI ATE THAT HOW THE SAME CHEQUES CAN BE CONSIDERED AS GENUINE FOR PART II AC COUNTS AND BOGUS FOR PART I ACCOUNTS. I.T.A. NO.5412/MUM/2011 3 5. THE CIT(A) ERRED IN NOT APPRECIATING THAT WHEN T HE SAME CHEQUES WERE ISSUED BOTH FOR PART I ACCOUNTS FOR THE PERIOD 1ST APRIL, 2004 TO 4 TH FEBRUARY, 2005 AND PART II ACCOUNTS FOR THE PERIOD 9TH DECEMBER, 2004 TO 31 ST MARCH, 2005, HOW CAN THE SAID COMMON CHEQUES BE A FTERTHOUGHT FOR PART I ACCOUNTS AND GENUINE FOR PART II ACCOUNTS. 6. THE CIT(A) ERRED IN NOT APPRECIATING THAT THE AS SESSMENT POSTULATES THE EXISTENCE OF REASONS FOR THE CONCLUS ION ARRIVED AT AND THAT THE SAME MUST BE SUPPORTED BY MATERIAL. 7. THE CIT(A) ERRED IN NOT APPRECIATING THAT THE A SSESSING OFFICER CANNOT ACT ON SUSPICION OR CONJECTURE OR PURE GUESS WITHOUT REFERENCE TO ANY MATERIAL OR EVIDENCE. 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PER USED. THE FACTS IN BRIEF ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF COACHING AND COUNSELING STUDENTS FOR VARIOUS COURSES. DURING THE YEAR UND ER CONSIDERATION, THE ASSESSEE HAS CLAIMED AN EXPENDITURE OF RS.1,57,80, 585/- AS AGAINST THE GROSS RECEIPT OF RS.1,61,81,441/-. THE ASSESSEE HAS INC URRED RS.24,16,974/- AS ADVERTISEMENT EXPENSES, PAID TO ONE M/S SAMKIT AD VERTISING. THE AO OBSERVED THAT M/S SAMKIT ADVERTISING HAS RAISED INVOICES TOTALING TO RS.9,06,555/- ON WHICH THE ASSESSEE MAY PAYMENT TOT ALLIG TO RS.6,68,958/-. IN A QUERY RAISED BY THE AO, IT WAS POINTED OUT THAT A SUM OF RS.24,26,974/- WAS PAID TO M/S SAMKIT ADVERTISEMENT ON ACCOUNT OF ADV ERTISEMENT EXPENSES. THE SAID PAYMENT WAS CONFIRMED BY M/S SAMKIT ADVERTIS EMENT AS PER THEIR CONFIRMATION LETTER FILED BEFORE AO. HOWEVER, THE AO DID NOT AGREE WITH THE CONTENTION OF THE ASSESSEE AND ACCORDINGLY THE DIF FERENCE OF RS.17,48,016/- WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE UNDER THE HEAD UNEXPLAINED EXPENDITURE U/S 69C OF THE ACT. BY THE IMPUGNED ORDER, THE LD. CIT(A) CONFIRMED THE ACTION OF THE AO. THE ASSESSEE IS I N FURTHER APPEAL BEFORE US. 4. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND CAR EFULLY GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. WE FOUND FROM THE RE CORD THAT WITH RESPECT TO THE ADVERTISEMENT EXPENSES, THE ASSESSEE HAD UNDERTAKEN ADVERTISEMENT THROUGH M/S SAMKIT ADVERTISEMENT, M/S SAMKIT ADVERTISEMEN T WAS MAINTAINING TWO SEPARATE ACCOUNTS OF ASSESSEE IN THEIR BOOKS. THE P ART I ACCOUNTS WAS MAINTAINED FOR THE PERIOD 1ST APRIL, 2004 TO 4 TH FEBRUARY, 2005 AND PART II ACCOUNTS FOR THE PERIOD 9TH DECEMBER, 2004 TO 31 ST MARCH, 2005. WE FOUND THAT THE ASSESSEE HAS DULY DEDUCTED TDS AT SOURCE IN RE SPECT OF BOTH ACCOUNTS FOR I.T.A. NO.5412/MUM/2011 4 THE PAYMENTS MADE TOWARDS EXPENDITURES AND ALL THA T PAYMENTS WERE BY ACCOUNT PAYEE CHEQUES. THE GENUINENESS OF EXPENDI TURE SO INCURRED WAS NOT IN DISPUTE, THEREFORE, MERELY BECAUSE, INITIAL CONFIRM ATION WAS FILED IN RESPECT OF ONE ACCOUNT BY THE CREDITOR, IT CANNOT BE SAID TH AT SECOND ACCOUNT WAS AFTER THOUGH, IN SO FAR AS THE ASSESSEE HAS MAINTAINED FULL ACCOUNT OF EXPENDITURE SO INCURRED AND PAYMENT SO MADE TO M/S SAMKIT ADVERTI SMENT. WE HAVE VERIFIED THE DETAILS OF STATEMENT OF ACCOUNT AND CONFIRMATI ON SO FILED BY THE ASSESSEE IN RESPECT OF BOTH THE ACCOUNTS. WE HAD ALSO VERIFIED BANK STATEMENT THROUGH WHICH THE PAYMENT WAS MADE TO M/S SAMKIT ADVERTISEMENT O UT OF THE REGULAR BANK ACCOUNT OF THE ASSESSEE. THE LETTER DATED 23.7.20 07 WAS ALSO WRITTEN BY M/S SAMKIT ADVERTISEMENT IN REPLY TO THE NOTICE ISSUED BY AO U/S 133(6) OF THE ACT, WHEREIN IT WAS CONFIRMED THAT M/S SAMKIT ADVERTIS EMENT HAS MAINTAINED TWO ACCOUNTS OF GEEBEE EDUCATION PRIVATE LIMITED (ASS ESSEE) FOR THE FINANCIAL YEAR 2004-05, HOWEVER, ERRONEOUSLY ONLY ONE LEDGER WAS SUBMITTED . M/S SAMKIT ADVERTISEMENT ALSO FURNISHED ALONG WITH THIS LETTE R BOTH THE ACCOUNTS OF EXPENDITURE INCURRED BY M/S SAMKIT ADVERTISEMENT, AND FOR WHICH BILLS WERE RAISED BY M/S SAMKIT ADVERTISEMENT. 5. IN VIEW OF THE ABOVE, WE DO NOT FIND ANY MERIT I N THE ACTION OF LOWER AUTHORITIES FOR MAKING ADDITION OF RS.18,87,481/- ON ACCOUNT OF ADVERTISEMENT EXPENSES. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 28TH NOV , 2014. () $ * + , 28TH NOV, 2014 ) # -% . SD SD ( / VIVEK VARMA) ( . . , / R.C. SHARMA, AM ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER $ /% MUMBAI 28TH NOV,2014. . . ./ SRL , SR. PS I.T.A. NO.5412/MUM/2011 5 !'#$ %$&' / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. $ 0& ( ) / THE CIT(A)- CONCERNED 4. $ 0& / CIT CONCERNED 5. 1- &2 , ' 2 , $ /% / DR, ITAT, MUMBAI CONCERNED 6. -3 4% / GUARD FILE. $ / BY ORDER, TRUE COPY 5 (ASSTT. REGISTRAR) ' 2 , $ /% /ITAT, MUMBAI