DCIT 9(1), MUMBAI V. AK & I ADVERTISING P.LTD, MUMBAI

ITA 5916/MUM/2010

• Counselvise Citation: 591619914 RSA 2010
• Duration Of Justice: 1 year(s) 8 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-04-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 11-04-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 27-07-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V V SHASTRI
• Keywords: Business expenditure
• Section: 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES H, MUMBAI BEFORE SHRI B. RAMAKOTAIAH (AM) AND SHRI S.S. GODAR A (JM) ITA NO.5916/M/2010 ASSESSMENT YEAR/BLOCK PERIOD: 2005-06 DEP UTY COMMISSIONER OF INCOME TAX - 9(1), ROOM NO.223, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI 400 020. VS. M/S. A.K & I ADVERTISING PVT. LTD., 403, SECTOR 1, RIZVI COMPLEX, SHERLY RAJAN ROAD, BANDRA, MUMBAI 400 050. PAN: AABCA3852G (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI V.V. SHASTRI RESPONDENT BY: SHRI BHARAT KANABAR DATE OF HEARING: 11.4.2012 DATE O F PRONOUNCEMENT:20.04.2012 O R D E R PER S.S. GODARA, J.M: THE REVENUE HAS FILED THE INSTANT APPEAL AGAINST TH E IMPUGNED ORDER PASSED BY THE LD. CIT (A)-19, MUMBAI DATED 7.5.2010 FOR THE ASSESSMEN T YEAR 2005-06. 2. IN THE INSTANT APPEAL, TOTAL THREE GROUNDS HAVE BEEN RAISED. GROUND NOS. 2 & 3 ARE GENERAL IN NATURE. IN GROUND NO.1, THE REVENUE HAS CHALLENGED THE DELETION OF DISALLOWANCE OF RS. 10,85,056/- BEING 10% OF THE PURCHASES MADE BY THE LD. CIT (A). 3. FACTS OF INSTANT CASE ARE THAT IN THE ASSESSMENT PROCEEDINGS, THE ASSESSEE CLAIMED EXPENDITURE OF PURCHASES, SPOT PAYMENTS, MOBILE PRO FESSIONALS OR TECHNICAL WORKERS CHARGES. HOWEVER, THE ASSESSING OFFICER INSTEAD OF ACCEPTING THE CLAIM OF EXPENDITURE ABOVE SAID ISSUED NOTICES TO THE ALLEGED PAYEES IN QUESTION U/S 133(6 ) OF THE INCOME TAX ACT (HEREINAFTER TO BE REFERRED TO AS THE ACT). 2 ITA NO.5916/M/2010 4. IN FURTHERANCE TO THE NOTICES U/S 133(6), THE PA YEES IN QUESTION WHO HAD RECEIVED ALLEGED PAYMENTS FROM THE ASSESSEE DID NOT COME FOR WARD TO SUPPORT HIS CLAIM. THE ASSESSEE EXPLAINED BEFORE THE ASSESSING OFFICER THAT THE ABO VE SAID PAYMENTS WERE VERY MUCH INDISPENSIBLE BUSINESS EXPENSES IN ASSESSEES BUSIN ESS OF ADVERTISING. BUT THE ASSESSING OFFICER VIDE ASSESSMENT ORDER DATED 6.12.2000 DISALLOWED TH E ASSESSEES CLAIM. ADDED 10% OF THE AMOUNT IN QUESTION BUT DID NOT DOUBT THE PAYMENTS ( IN PRINCIPLE). 5. IN APPEAL PREFERRED BY THE ASSESSEE, THE LD. CIT (A) HELD THAT THE ASSESSING OFFICER HAD MADE ADDITION ON SURMISES WITHOUT ANY MATERIAL ON R ECORD TO HOLD THAT PAYMENTS IN QUESTION WERE BELOW RS. 2 LACS NOT GENUINE. HE ALSO OBSERV ED THAT THE ASSESSING OFFICER HAD NOT DISALLOWED THE CLAIM OF EXPENDITURE IN QUESTION. H ENCE, THE REVENUE HAS FILED THE INSTANT APPEAL. 6. THE LD. DR APPEARING FOR THE REVENUE HAS VEHEMEN TLY ARGUED THAT THE LD. CIT (A) HAS COMMITTED A MISTAKE OF LAW AS WELL AS FACT IN DELET ING THE DISALLOWANCE IN QUESTION MADE BY THE ASSESSING OFFICER. IN THIS REGARD, HE ALSO STATED THAT SINCE THE ASSESSEE HAD FAILED TO VERIFY THE PAYMENTS IN QUESTION, THEREFORE, THE ASSESSING OFFI CER HAD RIGHTLY MADE THE DISALLOWANCE. HENCE, PRAYED FOR ACCEPTANCE OF THE APPEAL. 7. ON THE OTHER HAND, LEARNED AR APPEARING FOR THE ASSESSEE HAS SUBMITTED THAT THE PAYMENTS IN QUESTION WERE SPOT PAYMENTS PAID TO VAR IOUS PROFESSIONALS AS THE ASSESSEE IS IN THE BUSINESS OF ADVERTISING. ALSO EMPHASIZED THE A SSESSING OFFICER HIMSELF HAS RETURNED A FINDING THAT TRANSACTIONS ARE IN FACT GENUINE. REG ARDING ABSENCE OF RESPONSE IN FURTHERANCE TO THE NOTICES U/S 133(6) THE LEARNED AR CLARIFIED THA T SINCE THE PAYMENTS IN QUESTION ONLY PERTAIN TO VARIOUS PAYEES AND THAT TO REGARDING SMALL AMOUN T, THEREFORE IT IS NOT PRACTICABLE FOR THEM TO 3 ITA NO.5916/M/2010 COME TO THE ASSESSING OFFICER FOR THE PURPOSE OF VE RIFICATION. HE ALSO EXPLAINED THE TRAIL OF EXPENDITURE IN QUESTION BEFORE US. LEARNED AR STAT ED THAT ALL THESE EXPENSES IN QUESTION ARE PURELY ROUTINE EXPENSES. HENCE, PRAYED FOR REJECTI ON OF APPEAL. 7.1. AFTER HEARING BOTH THE LEARNED REPRESENTATIVES AS WELL AS PERUSING THE IMPUGNED FINDINGS, IT IS EVIDENT THAT IN PRINCIPLE, THE ASSE SSING OFFICER HAS NOT TERMED THE EXPENDITURE IN QUESTION AS NON-GENUINE. MEANING THEREBY, THE SPOT PAYMENTS HAVE BEEN UPHELD TO HAVE BEEN INCURRED BY THE ASSESSEE. SINCE, THE SAME PAYMENTS ARE ONLY OF VARIOUS MEAGER AMOUNTS PAID ON THE SPOT KEEPING IN MIND THE PECULIAR ASPECTS OF ADVERTISING, THE LD. CIT (A) HAS ACCEPTED THE ASSESSEES CONTENTION. IN VIEW OF THE FACTS AN D CIRCUMSTANCES OF THE CASE, WE ARE ALSO AGREEING WITH THE LD. CIT (A) THAT REGARDING SPOT P AYMENT IN QUESTION MADE TO VARIOUS INDIVIDUALS, IT IS NOT PRACTICABLE EITHER FOR THE A SSESSEE OR FOR THE ASSESSING OFFICER TO VERIFY THE SAME. 8. ACCORDINGLY, FINDING NO MERIT IN THE INSTANT APP EAL, WE DISMISS THE SAME. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 20 TH DAY OF APRIL, 2012. SD/- SD/- (B. RAMAKOTAIAH) (S.S. GODARA) ACCOUNTANT MEMBER JUDICIAL ME MBER DATE : 20.04.2012 AT :MUMBAI OKK COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A), MUMBAI CONCERNED 4. THE CIT, MUMBAI CONCERNED 5. THE DR H BENCH, ITAT, MUMBAI 4 ITA NO.5916/M/2010 // TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI.