The Income-tax Officer, Srinagar V. Sh. Umar Imtiyaz, Srinagar

ITA 616/ASR/2014

• Counselvise Citation: 61620914 RSA 2014
• Duration Of Justice: 5 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-03-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 09-10-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 142(1); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. A.D.JAIN, JUDICIAL MEMBER AND SH. B.P.JAIN, ACCOUNTANT MEMBER I.T.A. NO.616(ASR)/2014 ASSESSMENT YEAR:2010-11 PAN :AIOPB8429L INCOME TAX OFFICER, VS. SH. UMAR IMTIYAZ PROP. WARD-3(3), SRINAGAR. M/S. MEDIA POINT ZERO BRIDGE , SRINAGAR. (APPELLANT) (RESPONDENT) APPELLANT BY:SH.TARSEM LAL, DR RESPONDENT BY:WRITTEN SUBMISSIONS DATE OF HEARING:25/02/2015 DATE OF PRONOUNCEMENT: 17/03/2015 ORDER PER B.P.JAIN,AM: THIS APPEAL OF THE REVENUE ARISES FROM THE ORDER O F THE CIT(A), JAMMU, DATED 02.07.2014 FOR THE ASSESSMENT YEAR 20 10-11. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. WHETHER THE CIT(A), JAMMU WAS RIGHT IN LAW TO D ELETE THE ADDITION MADE U/S 68 OF THE I.T. ACT, 1961 ON ACCOU NT OF UNEXPLAINED SECURED AND UNSECURED LOANS AS THE ISSU E INVOLVED WAS REQUIRED TO BE CONFIRMED THROUGH THIRD PARTY CO NFIRMATION WHICH HAS NOT BEEN DONE DURING THE REMAND PROCEEDIN GS. ITA NO.616(ASR)/2014 2 2. WHETHER THE CIT(A), JAMMU WAS RIGHT IN LAW TO RE STRICT THE DISALLOWANCE OF TOTAL EXPENSES FROM 15% TO 8% AS TH E ASSESSEE FAILED TO PRODUCE ORIGINAL BILLS/PAYMENT VOUCHERS IN CONFIRMATION OF THE EXPENSES CLAIMED THROUGH THE RE CEIPT AND EXPENDITURE STATEMENT DRAWN BY HIM FOR THE YEAR UND ER REFERENCE. 2. THE BRIEF FACTS OF THE CASE AS PER AOS ORDER, W HICH FOR THE SAKE OF CONVENIENCE ARE REPRODUCED HEREINBELOW: THE ASSESSEE IS A PROPRIETORSHIP CONCERN AND DURING THE ASSESSMENT YEAR UNDER CONSIDERATION HAS CARRIED ON THE BUSINES S ACTIVITY RELATED TO PRODUCTION OF TV SERIAL WITH PRASAR BHARTI (BCI) DOORDARSHAN KENDRA SRINAGAR. THERE IS NO CHANGE IN THE BUSINESS OF THE ASSESSEE AS COMPARED TO THE LAST YEAR. TO SCRUTINIZE VARIOUS ASSETS OF THE TRADING ACTIVITIES OF THE ASSESSEE, VIDE NOTICE UND ER SECTION 142(1) DATED 02.11.2012, THE ASSESSEE WAS REQUIRED TO FILE /PRODUCE & EXPLAIN CERTAIN INFORMATION ALONG WITH BOOKS OF ACCOUNTS W. R.T. THE ASSESSMENT PROCEEDINGS UNDER CONSIDERATION AND CASE WERE FIXED FOR HEARING ON 23.08.2012. ON 23.08.2012, SH. SHABIR RESHI ADV. AR ATTENDED T HE SOUGHT ADJOURNMENTS ON THE REASON THAT THIS CLIENT WAS BUS Y IN SHOOTING OF A DOCUMENTARY FILM. HE WAS REQUIRED TO FURNISH REPLY TO THE QUESTIONNAIRE AND CASE WAS ADJOURNED TO 10.09.2012. ON 10.09.2012 AR ATTENDED AND FILED REPLY PARTLY WHICH IS PLACED ON RECORD. HE SOUGHT ANOTHER ADJOURNMENT WHICH WAS CONSIDERED AND CASE WAS ADJOURNED TO 11.10.2012. ON 11.10.2012, AR ATTENDED THE PROCEEDINGS AND FILED LEDGER EXTRACTS OF EXPENSES AND WAS ADVISED TO PRODUCE ORIGINAL BILLS, VOUCHERS OF EXPENSES AND BO OKS OF ACCOUNT, THEREBY FIXING THE CASE FOR HEARING ON 6.11.2012. O N 6.11.2012, AR ATTENDED AND WAS AGAIN ASKED TO FURNISH AND EXPLAIN AS UNDER: I) ORIGINAL BANK STATEMENT II) COPY OF FINAL ACCOUNTS INCLUDING BALANCE SHEET III) BILLS/VOUCHERS OF EXPENSES IN ORIGINAL IV) BOOK OF ACCOUNTS CALLED FOR ITA NO.616(ASR)/2014 3 AND CASE WAS ADJOURNED TO 21.12.2012. THEREAFTER NO NE ATTENDED THE PROCEEDING NOR ANY ADJOURNMENT WAS SOUGHT. ON 6.2.1 3, ANOTHER LETTER WAS ISSUED AND DEFECTS IN THE ACCOUNTS WERE COMMUNICATED TO THE ASSESSEE FIXING THE CASE FOR HEARING ON 3.2.201 3. THE ASSESSEE ALONG WITH HIS COUNSEL ATTENDED AND FILED THE DETAI LS/REPLIES WHICH ARE PLACED ON RECORD. NO BOOKS OF ACCOUNT, BILLS, VOUCH ERS AND CASH MEMOS WERE FILED/PRODUCED. THE CASE WAS DISCUSSED W ITH THEM. THE INCOME IS COMPUTED AS UNDER: 1.1. VIDE THIS OFFICE LETTER DATED 6.2.2012, THE AS SESSEE WAS CONFRONTED WITH THE FOLLOWING INFORMATION AND THE L ETTER WAS DULY SERVED UPON HIM. YOU HAVE FILED LEDGER ACCOUNT IN RESPECT OF LOAN FROM FRIENDS AND RELATIVES WHEREIN CLOSING BALANCE HAS BEEN SHOW N AT RS.31,97,979.00, YOU ARE REQUESTED TO FURNISH THE S OURCE, MODE OF RECEIPT, RELATION WITH THE PERSONS FROM WHOM RECEIV ED, THERE PAN, NAME AND COMMUNICATION ADDRESSES, WHETHER SECURED B Y THE ANY PLEDGED OR MORTGAGE OR RECEIVED AS UNSECURED LOANS, MAY BE EXPLAINED THE EVENT OF NON FILING OF THE ABOVE INFO RMATION ALONG WITH BOOKS OF ACCOUNTS, PROVISIONS OF SECTION 269SS/269T SHALL BE INVOKED IN YOUR CASE. THE ASSESSEE THROUGH COUNSEL FILED REPLY AND ADMIT TED HAVING DEPOSITED RS.55,61,960/- AND NARRATED AS UNDER: I) LOAN FROM J & K BANK BEINA RS.8,00,000.00 II) DEPOSITED BY MR. MAJIND AHMED RS.9,68,700.00 III) DEPOSITED THROUGH WIFE RS.5,00,000.00 IV) DEPOSITED LIC LOAN RS.2,19,000.00 V) LOAN FROM TELE SCREEN RS.2,24,000.00 VI) LOAN FROM FAHOOR MUFTI RS.1,80,000.00 IT FURTHER STATED THAT FOR SECURING UNSECURED LOAN NOTHING HAS BEEN PLEDGED OR MORTGAGED. A PERUSAL OF THE BALANCE SHEE T REVEAL THAT ASSESSEE HAS SHOWN LOAN FROM FRIENDS AND RELATIVES AT RS.14,02,479.00 AND FROM LIC AT RS.2,19,000. THE RE PLY OF THE ASSESSEE WAS PERUSED AND DISCUSSED WITH THEM. THEY WERE REQUIRED TO FURNISH DOCUMENTARY EVIDENCE AS DISCUSSED HEREINABO VE BUT NO DOCUMENTARY EVIDENCE, CONFIRMATIONS, AUTHORIZATION LETTER AND ITA NO.616(ASR)/2014 4 CREDITWORTHINESS OF THE PERSONS NAMED ABOVE REMAINE D TO BE EXPLAINED BY THE ASSESSEE. FOR WANT OF BOOKS OF ACC OUNT, ADEQUATE EVIDENCES AND REASONABLE EXPLANATION FOR RECEIVING THE LOANS AND THE REQUIREMENTS LAD UNDER THE INCOME-TAX ACT, JOTTED A QUESTION MARK ON THIS ISSUE. THEREFORE, PROVISIONS OF SECTION 68 OF THE ACT READ WITH SECTION 269SS, 269T OF THE ACT ARE SQUARELY ATTRACT ED AND APPLICABLE IN THIS CASE. THEREFORE, AS DISCUSSED, IN THIS PAR A, I DISALLOW AND ADD BACK AN AMOUNT OF RS.31,79,979/- TO THE TOTAL INCOM E OF THE ASSESSEE. FOR FURNISHING INACCURATE PARTICULARS OF ITS INCOME , PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT ARE INITIATED IN THIS CASE. 1.2. IT IS SEEN THAT THE ASSESSEE HAS DEBITED THE E XPENSES AS UNDER TO THE P & L ACCOUNT:- OFFICE ESTABLISHMENT 195,268 TRAVELLING & CONVEYANCE 187,222 REFRESHMENT 171,824 TELEPHONE 14,326 CAMERA CHARGES & CAMER MAN 177,000 HOTEL CHARGES & TRANSPORT CHARGES 276,158 VIDEO CASSETTES 92,476 SCRIPT 146,000 EDITING 143,480 CONSTUME AND MAKEUP 93,462 HIRING OF STUDIO 147,618 TOTAL 16.45.104.00 DURING THE COURSE OF ASSESSMENT PROCEEDINGS, ASSESS EE WAS ASKED TO PRODUCE BILLS/VOUCHERS AND STATE MODE OF PAYMENT. A SSESSEE PRODUCED LEDGER/LEDGER EXTRACTS. A TEST CHECK OF THE LEDGER REVEALS THAT MOST OF THE PAYMENTS HAVE BEEN MADE IN CASH, THEREFORE EXPE NDITURE INCURRED COULD NOT BE VOUCHED FULLY. HENCE, IN ABSENCE OF AL L THE BILLS, MONEY RECEIPTS AND CASH PAYMENTS MADE, THE EXPENDITURE CL AIMED CANNOT BE ACCEPTED AS CORRECT INCURRED. HOWEVER, KEEPING IN V IEW THE TRADING ACTIVITIES AND RECEIPTS DECLARED AN AMOUNT EQUAL TO 15% WHICH COMES IS TO RS.246,735/-. THE SAME IS ADDED BACK AND DISA LLOWED UNDER THESE HEADS FOR WANT OF EVIDENCES WHICH WOULD BE PO SSIBLE LEAKAGES OCCURRED UNDER THE HEAD OF EXPENDITURE DISCUSSED AB OVE. ITA NO.616(ASR)/2014 5 3. BEFORE THE LD. CIT(A), THE ASSESSEE MADE SUBMISS IONS, WHICH WERE FORWARDED TO THE AO FOR REPORT, WHO SUBMITTED THE R EMAND REPORT DATED 21.05.2014. THE AO IN HIS REMAND REPORT AFTER VERIF YING THE DOCUMENTS FURNISHED BY THE ASSESSEE REPORTED THAT THERE IS NO THING ADVERSE FOUND AND ACCORDINGLY, THE LD. CIT(A) WITH REGARD TO THE ADDI TION U/S 68 OF THE ACT AND ON THE BASIS OF THE REMAND REPORT OF THE AO DELETED THE ADDITION SO MADE BY THE AO. AS REGARDS THE AD-HOC ADDITION OF 15%, THE LD. CIT(A) RESTRICTED THE SAME TO 8%. 4. THE LD. DR RELIED ON THE ORDER OF THE ASSESSING OFFICER. 5. NOBODY APPEARED ON BEHALF OF THE ASSESSEE. HOWEV ER, THE ASSESSEE HAS SUBMITTED WRITTEN SUBMISSIONS AND PRAYED THEREIN TO DISMISS THE APPEAL OF THE REVENUE. 6. WE HAVE HEARD THE LD. DR AND PERUSED THE WRITTEN SUBMISSIONS OF THE ASSESSEE, PLACED ON RECORD. AS REGARDS THE ADDITION U/S 68 OF THE ACT MADE BY THE AO AMOUNTING TO RS.31,97,979/-, THE ASSESSEE HAS FURNISHED WITH REGARD TO THE SECURED AND UNSECURED LOANS AS UNDER: I) WRITTEN CONFIRMATION FROM EACH PERSON FROM WHOM UNSECURED LOAN WAS RAISED/REPAID BY THE APPELLANT ASSESSEE DU RING THE YEAR UNDER REFERENCE ALONGWITH COPY OF LEDGER ACCOUNT. II) WRITTEN CONFIRMATION FROM THE BANK CONCERN/LIC OF INDIA FROM WHOM SECURED LOAN IN THE FORM OF CONSUMPTION LOAN & LOAN AGAINST LIC POLICY WAS RAISED BY THE APPELLANT ASS ESSEE DURING THE YEAR UNDER REFERENCE. ITA NO.616(ASR)/2014 6 6.1. WITH REGARD TO AD-HOC DISALLOWANCE OF EXPENSES , THE ASSESSEE HAS SUBMITTED AS UNDER: COPY OF LEDGER ALONGWITH SELF GENERATED PAYMENT VO UCHERS IN RESPECT OF THE EXPENSES AS MENTIONED IN THE ABOVE REFERRED LETTER ISSUED BY THE UNDERSIGNED. ALTHOUGH THE APPELLANT ASSESSEE FAILED TO PRODUCE ORIGINAL BILLS/PAYMENT VOUCHERS IN CONFIRMATION OF THE EXPENSES CLAIMED THROUGH THE RECEIPT & EXPENDITURE STATEMEN T DRAWN BY HIM FOR THE YEAR UNDER REFERENCE. BUT IT IS ALSO A FACT THAT THE EXPENSES CLAIMED BY THE APPELLANT ASSESSEE ARE DIRECTLY RELA TED TO HIS DAY TO DAY PROFESSIONAL ACTIVITIES CARRIED OUT BY HIM DURING T HE YEAR UNDER REFERENCE. 6.2. FROM THE PERUSAL OF THE FACTS OF THE CASE, REP ORT OF THE AO AND THE DOCUMENTS SUBMITTED BEFORE THE AO IN THE ASSESSMENT PROCEEDINGS AND IN THE REMAND PROCEEDINGS, WE ARE OF THE VIEW THAT THE AO IS SATISFIED ABOUT THE GENUINENESS OF SECURED/UNSECURED LOANS AND NECESSIT Y OF EXPENSES RELATING TO THE PROFESSIONAL ACTIVITIES OF THE ASSESSEE. IN THE FACTS AND CIRCUMSTANCES, WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A), W HO HAS RIGHTLY DELETED THE ADDITION OF RS.31,97,979/- AND HAS RIGHTLY RESTRICT ED THE DISALLOWANCE OF EXPENSES FROM 15% TO 8%. FOR THE SAKE OF CONVENIENC E, WE REPRODUCE THE ORDER OF THE LD. CIT(A) AS UNDER: THE ASSESSING OFFICER HAS DISALLOWED AN EXPENDITURE OF RS.2,46,765/- OUT OF TOTAL EXPENSES CLAIMED AT RS.16,45,104/-. TH E AO HAS DISALLOWED 15% OF THE EXPENDITURE ON THE GROUND THA T BILLS, MONEY RECEIPTS WERE NOT AVAILABLE AND CASH PAYMENTS WERE MADE. THE APPELLANT ON THE OTHER HAND ASSERTED CONTRARY TO TH E FINDINGS OF THE AO BEFORE ME IN THE APPELLATE PROCEEDINGS. THE SUBM ISSION OF THE APPELLANT WAS SENT TO THE AO AND THE AO HAS FURNISH ED A REMAND ITA NO.616(ASR)/2014 7 REPORT DATED 21.05.2014. FROM THE REMAND REPORT, IT IS EVIDENT THAT THE AO IS SATISFIED ABOUT THE GENUINENESS OF THE UN SECURED LOAN AND NECESSITY OF EXPENSES RELATING TO THE PROFESSIONAL ACTIVITIES OF THE APPELLANT. AFTER GOING THROUGH THE SUBMISSION OF TH E APPELLANT AND REPORT, I FIND THAT AN ADDITION ON ACCOUNT OF UNEXP LAINED CREDITS HAVE BEEN MADE WITHOUT PROPER JUSTIFICATION. THE APPELLA NT HAS SHOWN LOAN FROM J & K BANK AND LIC AND THE AO COULD HAVE VERIF IED THEM EVEN IF THE ASSESSEE COULD NOT GIVE CONFIRMATIONS OF THE SE LOANS RAISED FROM THE SAID AGENCIES. THE THEN AO HAS NOT DONE HIS DU E DILIGENCE PROPERLY BEFORE JUMPING TO A CONCLUSION. THE PRESEN T AO IN THE REMAND REPORT HAS ACCEPTED THAT ALL THESE LOANS AR E SUPPORTED BY CONFIRMATIONS AND SOME OF THEM HAVE BEEN REPAID ALS O BY THE APPELLANT. IN VIEW OF ABOVE, I DO NOT SEE ANY JUSTI FICATION OF ADDITION U/S 68 AND THEREFORE, DELETE THE ENTIRE AMOUNT OF R S.31,97,979/-. 5.3. GROUND OF APPEAL. NO.2.4: CONCERNING DISALLOWA NCE OF RS.246765/- OUT OF TOTAL EXPENDITURE OF RS.1645104/ - (BEING 15% OF TOTAL EXPENDITURE OF 1645104/-) I FIND THAT THE AO IN HIS ORDER STATED THAT THE ENTIRE BILLS WERE NOT AVAILABLE AND PAYMEN TS WERE MADE IN CASH FOR THESE EXPENDITURE. THE PRESENT AO IN THE R EMAND REPORT, ALSO STATED THAT THE BILLS AND VOUCHERS ARE MOSTLY SELF GENERATED PAYMENT VOUCHERS. IN THE REMAND REPORT THE AO HAS OBSERVED THAT THE APPELLANT COULD NOT SUBSTANTIATE ALL PAYMENTS BY OR IGINAL BILLS AND VOUCHERS, NEVERTHELESS, IT IS A FACT THAT EXPENSES CLAIMED BY THE APPELLANT ARE DIRECTLY RELATED TO HIS DAY TO DAY P ROFESSIONAL ACTIVITIES. THE AO HAS MADE AN ADHOC ADDITION OF 15% WITHOUT C ITING ANY SPECIFIC DEFECTS, HOWEVER, IT IS ALSO A FACT THAT T HESE EXPENDITURES ARE NOT FULLY SUPPORTED BY THE ORIGINAL THIRD PARTY BIL LS. I, THEREFORE, TAKING A BALANCE VIEW AND IN THE INTEREST OF JUSTICE, 15% DISALLOWANCE IS RESTRICTED TO 8%. THIS GROUND OF APPEAL IS PARTLY A LLOWED. 6.3. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND OUR FINDINGS HEREINABOVE, WE DISMISS BOTH THE GROUNDS OF THE REV ENUE. ITA NO.616(ASR)/2014 8 7. IN THE RESULT, THE APPEAL OF THE REVENUE IN ITA NO.616(ASR)/2014 IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 17TH MARCH, 2015. SD/- SD/- (A.D.JAIN) (B.P. JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 17TH MARCH, 2015 /SKR/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE:SH. UMAR IMTIYAZ PROP. M/S. MEDICAL PO INT ZERO BRIDGE, SRINAGAR. 2. THE ITO WARD 3(3), SRINAGAR. 3. THE CIT(A), ASR. 4. THE CIT, ASR. 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.