M/s IMG Academics Bharata (P) Limited, Hyderabad V. ITO, Ward 2(1), Hyderabad

ITA 560/HYD/2013

• Counselvise Citation: 56022514 RSA 2013
• Duration Of Justice: 10 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2004-2005
• Appeal Filed On: 22-04-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: K HARITA
• Assessee Lawyers: A V RAGHURAM
• Keywords: Corroborative evidences

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A', HYDERABAD BEFORE SHRI B.RAMAKOTAIAH, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NO.560/HYD/13 : ASSESSMENT YEAR 2004 - 05 M/S. IMG ACADEMI C S BHARATA (P)LTD., HYDERABAD ( PAN - AABLI 1929 E) V/S. INCOME TAX OFFICER WARD 2(1), HYDERABAD (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI A.V.RAGHURAM RESPONDENT BY : SMT. K.HARITA DR DATE OF HEARING 26.2.2014 DATE OF PRONOUNCEMENT 26.2.2014 O R D E R PER SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME - TAX(APPEALS) - III, HYDERABAD DATED 26.12.2007 , FOR THE ASSESSMENT YEAR 2004 - 05. 2. EFFECTIVE GROUNDS OF THE ASSESSEE IN THIS APPEAL ARE AS FOLLOWS 1. THE OR D ER OF THE LEARNED CIT(A) IS ERRONEOUS BOTH ON FACTS AND IN LAW IN SO FAR AS IT IS PREJU D I C IAL TO THE ASSESSEE. 2. THE LEARNED CIT(A) ERRED IN DECIDING THE M AT TER EX - PARTE. 3. THE LEARNED CIT(A) FAIL E D TO APPRECIATE THE FACT THAT EVEN FORM THE ASSESSMENT ORDER IT IS EVIDENT THAT WHAT THE AO HAS DISALLOWED IS THE EXPENDITURE INCURRED NOT BY THE ASSESSEE BUT BY TH E AMERICAN COMPANY WHICH RAISED THE DEBIT NOTES AND THAT THE DE TAILS O F SUCH EXPENDITURE TO TH E EXTENT THOUGH PROVIDED TO THE ASSESSING OFFICER, H E M ADE THE DISALLOWANCE FOR WANT OF SUPPORTING EVIDENCE FOR SUCH EXPENDITURE WHICH WILL NO T B E WITH THE ASSESSEE AND THE R EBY ERRED IN CONFIRMING THE D I SALLO W ANCE. 4. ITA NO. 56 0 / HYD/20 13 M/S. IMG ACADEMI C S BHARATA (P)LTD., HYDERABAD 2 3. FACTS OF THE CA S E IN BRIEF ARE THAT THE ASSESSEE COMPANY IS ENGAGED IN EVENT MANAGEMENT BUSINESS. FOR THE Y E AR UNDER APPEAL, IT FILED RETURN OF INCOME ON 28.10.2004 DE C LARING LOSS OF RS.26,20,240. THOUGH TH E SAID RETURN WAS INITIALLY PROCESSED UN D ER S.143(1) OF THE ACT, IN THE SCRUTINY ASSESSMENT THAT FOLLOWED, THE ASSESSING OFFICER DISALLOWED EXPENDITURE AGGREGATING TO RS .72,77,769, AND COMPLET E D THE ASSESSMENT ON A TOTAL INCOME OF RS .46,57,428 IN THE FOLLOWING MANNER - DURING THE COURSE OF SCRUTINY PROCEE D INGS THE ASSESSEE WAS ASKED TO P R O D UCE THE BOOK S O F ACCOUN T S AND BIL L S/VOUCH E RS FOR THE EXPENSES CLAIMED. THE ASSESSEES AR PRODUCED XEROX COPIES OF SOME OF TH E VOUCH E RS AND IN FO RMED THAT THE ORIGINALS ARE NO T TRACEABLE AND EXPRESSED HIS IN ABILITY TO P RO DUCE EVEN THE XEROX COPIES FOR THE BALAN C E EXPENSES. THE XEROX COPIES OF THE VOU C HERS PRODUCED ARE VERIFIED. IT IS NO T ICED THA T THE MAJO R IT Y OF EXPENDITURE WAS BOOKED AS EXPENDITURE INCURRED BY T HE HOLDING COMPANY I.E., IMG ACADEMIES EAST L TD., LLC, NEW J ERSY, FOR WHICH THE HOLDING COMPANY SENDS SIMPLE DEBIT NOTE. FOR THE EXPENDITURE ALLEGEDLY INCURRED BY THE HOL D IN G COMPANY NO SUPPORTING EVIDEN C E IS ENCLO S ED. CONSIDERING THE FACTS O F T H E CA S E THE EXPENDITURE SAID TO HAVE BEEN INCURRED BY THE HOL DI N G COMPANY IN CASE OF THE FOLLO W IN G HEADS OF EXPENDITURE IS HEREBY DISALLOWED AND ADDED BACK - 1 . OFFICE MAI N TENANCE RS.4226716/ - 2 . PROFESSIONAL SERIES CHARGES RS.2766504/ - 3 . TRAVELLING EXPENSES RS. 284449/ - TOTAL EXPENDITURE RS.7277669/ - IN VIEW OF THE ABO V E THE TOTAL INCOME OF THE ASSESSEE I S DE T ERMIN E D AS UNDER: TOTAL LOSS R ETURNED BY THE ASSESSEE RS.2620241/ - ADD: EXPENDITURE DISALLO W ED ASS DISCUSSED ABOVE R S .7277669/ - TOTAL INCOME ASSESSED RS.4657428/ - . 4. ON APPEAL, THE CIT(A), BY THE IMPUGNED EX - PARTE ORDER, CONFIRMED THE DISALLOWANCE OF EXPENDITURE MADE BY THE ASSESSING OFFICER. 5. AGGRIEVED BY THE ORDER OF THE CIT(A), ASSESSEE IS IN SECOND APPEAL BEFO RE US WITH THE GROUNDS, NOTED IN PARA - 2 ABOVE. ITA NO. 56 0 / HYD/20 13 M/S. IMG ACADEMI C S BHARATA (P)LTD., HYDERABAD 3 6. WE HEARD BOTH SIDES AND PERUSED THE IMPUGNED ORDERS OF THE REVENUE AUTHORITIES AND MATERIAL AVAILABLE ON RECORD. IT HAS BEEN THE CLAIM OF THE ASSESSEE THAT PART OF THE EXPENDITURE CLAIMED BY IT HAS BE E N INCURRED BY ITS HOLDING COMPANY AT NEW JERS E Y. THE ASSESSING OFFICER TOO TOOK NOTE OF THE FACT THAT MAJORITY OF EXPENDITURE WAS BOOKED AS EXPENDITURE INCURRED BY THE HOLDING COMPANY, IMG ACADEMIES EAST LTD., LLC, NEW J ERS E Y, FOR WHICH THE HOL D IN G COMP ANY SENT A SIMPLE DEBIT NOTE , AND ASSESSEES CLAIM IN RELATION TO THIS PART OF EXPENDITURE IS NOT SUPPORTED BY ANY SUPPORTIVE EVIDENCE. EVEN IN RESPECT OF OTHER EXPENDITURE INCURRED BY THE ASSESSEE, ASSESSEE COULD NOT FURNISH COMPLETE BILLS/VOUCHERS BEFOR E THE ASSESSING OFFICER, AND THE ASSESSING OFFICER NOTED THAT THE ASSESSEE COULD FURNISH XEROX COPIES OF BILLS AND VOCUERHS IN RESPECT OF SOME OF EXPENDITURE INCURRED, AND EXPRESSED HELPLESSNESS TO FURNISH SUCH BILLS/VOUCHERS IN RESPECT OF OTHER EXPENDITUR E AS THE SAME WERE NOT TRACEABLE. BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE PRAYED FOR ONE MORE OPPORTUNITY BEFORE THE ASSESSING OFFICER, TO SUBSTANTIATE THE CLAIM OF THE ASSESSEE WITH REGARD TO THE EXPENDITURE INCURRED BY THE ASSESSEE. CONSIDERIN G TOTALITY OF FACTS AND CIRCUMSTANCES OF THE CASE, WE ACCEDE TO THE PRAYER OF THE ASSESSEE, WE SET ASIDE THE IMPUGNED ORDER OF THE CIT(A) ON THIS ISSUE, AND RESTORE THE MATTER TO THE FILE OF THE ASSESSING OFFICER, WITH A DIRECTION TO RE - EXAMINE THE CLAIM O F THE ASSESSEE AFRESH WITH REGARD TO VARIOUS EXPENDITURE, AFTER GIVING ONE MORE OPPORTUNITY TO THE ASSESSEE TO FURNISH NECESSARY BILLS/VOUCHERS OR SUCH OTHER EVIDENCE IN SUPPORT OF SUCH EXPENDITURE. THE ASSESSING OFFICER SHALL ACCORDINGLY REDECIDE THE ISS UE IN ACCORDANCE WITH LAW AND AFTER GIVING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. 3. IN THE RESULT, APPEAL OF THE ASSESSEES IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ITA NO. 56 0 / HYD/20 13 M/S. IMG ACADEMI C S BHARATA (P)LTD., HYDERABAD 4 ORDER PRONOUNCED IN THE COURT AT THE CONCLUSION OF HEARING ON 26.2.2014 SD/ - SD/ - ( B.RAMAKOTAIAH ) (ASHA VIJAYARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER DT/ - 26 TH FEBRUARY, 2014 COPY FORWARDED TO: 1. M/S. IMG ACADEMI C S BHARATA (P)LTD., C/O. SHRI K.VASANT KUMAR, A.V. RAGHU RAM, ADVOCATES, FLAT NO.610, 6TH FLOOR, BABUKHAN ESTATE, BASHEERBAGH, HYDERABAD - 1. 2 . INCOME TAX OFFICER WARD 2(1), HYDERABAD 3. 4. COMMISSIONER OF INCOME - TAX(APPEALS) III, HYDERABAD COMMISSIONER OF INCOME - TAX II HYDERABAD 5. DEPARTMENTAL REPRES ENTATIVE, ITAT, HYDERABAD. B.V.S