Appeal details
Counselvise Citation
[2016] 131 COUNSELVISE.COM (IT) 3305 (ITAT-MUMBAI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
6 year(s) 19 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
29-08-2016
Appeal Filed By
Department
Order Result
Dismissed
Bench Allotted
B
Next Hearing Date
16-02-2015
Assessment Year
2007-2008
Appeal Filed On
09-08-2010
Judgement Text
, INCOME TAX APPELLATE TRIBUNAL, MUMBAI B BENCH . . , BEFORE S/SH. MAHAVIR SINGH,JM & B.R. BASKARAN,AM ./ ITA NO./6116/MUM/2010, / ASSESSMENT YEARS: 2007-08 INCOME TAX OFFICER WARD-11-(1)(2), ROOM NO.436A, AAYAKAR BHAVAN, M.K. MARG, MUMBAI-400 020. VS. MS. MADHU RAMESH BHEL 4TH FLOOR, TARANGEN PRESIDENCY, 7TH N.S. ROAD, JUHU, MUMBAI-400 049. PAN:AAHPB 0133 A ( /APPELLANT ) ( / RESPONDENT ) REVENUE BY: MS. VINITA MENON-DR ASSESSEE BY: SHRI N.M. PORWAL / DATE OF HEARING: 29.08.2016 / DATE OF PRONOUNCEMENT: 29.08.2016 ,1961 254(1) ORDER U/S 254(1) OF THE INCOME-TAX ACT, 1961(THE AC T) O R D E R PER MAHAVIR SINGH,JM : THIS APPEAL BY THE REVENUE IS ARISING OUT OF THE ORDER OF CIT(A)-3, MUMBAI IN APPEAL NO.(OLD)CIT(A)-XI/ITO.11(1)(2)/IT-187/09-10; (NOW) APPEAL NO.CIT(A)- 3/ITO.11(1)(2)/IT-187/09-10 ORDER DATED 07.05.2010. THE ASSESSMENT WAS FRAMED BY ITO WARD-11(1)-2, MUMBAI U/S. 143(3) OF THE INCOME TAX ACT, 1961 (HEREAFTER THE ACT) FOR THE ASSESSMENT YEAR 2007-08 VIDE HIS ORDER DATED 08.12.2009. 2. THE ONLY IN THIS APPEAL OF REVENUE IS AGAINST TH E ORDER OF CIT(A) DELETING THE ADDITION OF ADVANCE RECEIVED BY THE ASSESSEE FROM R OSE AUDIO VISUAL PVT. LTD. FOR THIS THE REVENUE HAS RAISED FOLLOWING GROUND NO.1:- 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, LD. COMMISSIONER OF INCOME TAX (APPEALS) WAS JUSTIFIED IN DELETING THE ADDITION OF RS.56,50,000/- MADE ON ACCOUNT OF ADVANCE RECEIVED BY THE ASSESSEE FROM M/ S. ROSE AUDIO VISUAL PVT. LTD. 3. BRIEFLY STATED, FACTS ARE THAT THE ASSESSING OFF ICER (A.O.) DURING THE COURSE OF ASSESSMENT PROCEEDINGS ON PERUSAL OF BOOKS OF ACCOU NT OF THE ASSESSEE AND AUDIT 6116/M/10 MADHU RAMESH.B 2 REPORT OBSERVED THAT THE ASSESSEE IS FOLLOWING CASH SYSTEM OF ACCOUNTING. ACCORDING TO THE AO, THE ASSESSEE HAS SHOWN ADVANCES TO THE T UNE OF RS.90.00 LAKHS FROM DISTRIBUTORS, BUT IN THE BALANCE SHEET THE SAME WAS NOT OFFERED TO TAX. DURING THE YEAR THE ASSESSEE HAS SHOWN ADVANCES FROM NEGATIVE RIGHT S FROM B.I.S.K.H OF RS.56.50 LAKHS. ACCORDING TO THE AO, THE ASSESSEE HAS NOT OF FERED THE SAID ADVANCES AS INCOME AND HENCE, HE BROUGHT IT TO TAX FOR THE REASON THAT THE ASSESSEE IS FOLLOWING CASH SYSTEM OF ACCOUNTING. 4. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFO RE THE CIT(A) WHO DELETED THE ADDITION BY OBSERVING THAT THE ASSESSEE ACTUALLY IS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING. FOR THIS CIT(A) OBSERVED IN PARA 2.1.4 AND 2.1.5 AS UNDER:- 2.1.4 FACTS AND MATERIAL ON RECORD OUR CONSIDERED. IT IS APPARENT FROM THE COPIES OF RETURNS, ACCOUNTS AND BALANCE SHEET PROVIDED THAT I N RESPECT OF ROSE MOVIE COMBINES ACCOUNTS ARE MAINTAINED ON MERCANTILE BASIS. IT I S ALSO SEEN THAT THOUGH THERE WERE ADVANCES RECEIVED IN EARLIER YEARS, SUCH HAVE NOT BEEN CONSIDERED AS APPELLANT'S TAXABLE RECEIPT. THIS IS ALSO EVIDENCED FROM THE ASSESSMENT ORDER U/S. 143(3) FOR A.Y. 2005-2006, WHERE THOUGH THE AO HAS MENTIONED METHOD OF ACCOUNTING TO BE CASH, ALL OUTSTANDING LIABILITIES AND SUNDRY CREDITORS IN THE BALANCE SHEET OF PROPRIETARY CONCERN ROSE MOVIES COMBINE HAVE BEEN CONSIDERED FOR ADDITION TO TOTAL INCOME. BY ITS VERY NATURE, CASH SYSTEM OF ACCOUNTING WOU LD NOT HAVE OUTSTANDING LIABILITIES OR SUNDRY CREDITORS IN THE BALANCE SHEET AS ACCOUNT S ARE MAINTAINED ON ACTUAL RECEIPTS AND PAYMENTS ONLY. IT SEEMS THAT THE CONFU SION IN RESPECT OF THE METHOD OF ACCOUNTING HAS ARISEN BECAUSE THE APPELLANT FOLLOWS DIFFERENT METHOD OF ACCOUNTING FOR DIFFERENT INCOMES. MOREOVER, AS IS EVIDENT FROM THE DETAILS FILED BY THE APPELLANT, THE ENTIRE SUM OF RS. 56,50,000/- HAS NOT BEEN RECE IVED BY APPELLANT IN THE PY RELEVANT TO THE IMPUGNED ASSESSMENT YEAR. IT IS O NLY A SUM OF RS. 13,00,000/- WHICH WAS RECEIVED AS ADVANCE DURING THE PREVIOUS YEAR RELEVANT TO THE IMPUGNED ASSESSMENT. 2.L.5 ON A CONSIDERATION OF FACTS AND MATERIAL, IT IS HELD THAT APPELLANT IN ITS PROPRIETARY CONCERN M/S. ROSE MOVIES COMBINES FOLLO WS THE MERCANTILE SYSTEM OF ACCOUNTING AND HAS BEEN DOING SO FOR THE PAST FEW Y EARS. IN THE FACTS OF THE CASE, CONSIDERING THE ADVANCES RECEIVED IN THE IMPUGNED A ND EARLIER YEARS AS INCOME OF IMPUGNED YEAR IS NOT JUSTIFIABLE, ESPECIALLY WHEN A PPELLANT HAS DECLARED THE SAME AS INCOME OF A.Y. 2008-2009 BY FOLLOWING ITS SYSTEM OF ACCOUNTING. THE ADDITION IS DELETED. AGGRIEVED, REVENUE IS IN SECOND APPEAL BEFORE THE T RIBUNAL . 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE THR OUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE CIT(A) HAS RECORDED THE FINDING OF FACT 6116/M/10 MADHU RAMESH.B 3 AFTER GOING THROUGH THE CASE RECORDS I.E. THE COPIE S OF RETURNS, ACCOUNTS AND BALANCE SHEETS, THAT THE ASSESSEE IN RESPECT OF THE PARTY R OSE AUDIO VISUAL PVT. LTD. MAINTAINS ITS ACCOUNTS ON MERCANTILE BASIS. NOW BEFORE US, LD . SR.DR HAS NOT OBJECTED TO THIS FINDING AND ALSO COULD NOT CONTROVERT THE SAME. ONC E THERE IS A FINDING OF FACT THAT THE ASSESSEE IS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTI NG IN RESPECT OF ITS ACCOUNT AND RECEIVED ADVANCES OF RS.56.50 LAKHS FROM ONE ROSE A UDIO VISUAL PVT. LTD. AND THE SAME IS SHOWN AS ADVANCE IN BALANCE SHEET, THE SAME CANNOT BE TREATED AS INCOME OF THE ASSESSEE . IN VIEW OF THESE FACTS WE CONFIRM TH E FINDING OF CIT(A) AND APPEAL OF THE REVENUE IS DISMISSED. 6. IN THE RESULT APPEAL OF THE REVENUE IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH AUGUST, 2016 29 , 2016 SD/- SD/- ( . . / B.R. BASKARAN) ( / MAHAVIR SINGH ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER /MUMBAI, /DATE: 29.08.2016 . . . JV.SR.PS. / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ ! ' #$ , 4. THE CONCERNED CIT / ! ' #$ ; 5. DR A BENCH, ITAT, MUMBAI / % , B , . . . 6. GUARD FILE/ & //TRUE COPY// / BY ORDER, DY./ASST. REGISTRAR , /ITAT, MUMBAI.
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