Asst.CIT., Circle-16(3), Hyderabad V. M/s Ocean Park Multi Tech Private Limited, Hyderabad

ITA 655/HYD/2013

• Counselvise Citation: 65522514 RSA 2013
• Duration Of Justice: 2 year(s) 2 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-07-2015
• Appeal Filed By: Department
• Bench Allotted: A
• Next Hearing Date: 21-07-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 03-05-2013
• Court: TRIBUNAL
• Department Lawyers: MOHAN SINGHANIA
• Assessee Lawyers: N NAGARAJU
• Keywords: Unexplained cash credit; Additional evidence
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A, HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER I.T.A. NO. 655/HYD/2013 ASSESSMENT YEAR: 2008-09 THE ASST. COMMISSIONER OF INCOME TAX , CIRCLE-16(3), HYDERABAD VS M/S. OCEAN PARK MULTI TECH PVT. LTD., HYDERABAD [PAN: AAACO5367P] (APPELLANT) (RESPONDENT) FOR REVENUE : SHRI MOHAN SINGHANIA, CIT- DR FOR ASSESSEE : SHRI N. NAGARAJU, AR DATE OF HEARING : 21-07-2015 DATE OF PRONOUNCEMENT : 24-07-2015 O R D E R PER B. RAMAKOTAIAH, A.M. : THIS IS A REVENUES APPEAL AGAINST THE ORDER OF T HE COMMISSIONER OF INCOME TAX (APPEALS)-V, HYDERABAD DATED 28-01-20 13. THE ISSUE IN THIS APPEAL IS WITH REFERENCE TO DISALLOWANCE OF EX PENDITURE BY THE ASSESSING OFFICER (AO) WHICH WAS DELETED BY THE CIT (A). 2. ASSESSEE IS A LIMITED COMPANY AND IS ENGAGED IN RUNNING AND MAINTENANCE OF AMUSEMENT PARKS. FOR THE AY. 2008-09 , ASSESSEE DECLARED AN INCOME OF RS. 1,86,26,930/-. IN THE SC RUTINY ASSESSMENT I.T.A. NO. 655/HYD/2013 M/S. OCEAN PARK MULTI TECH PVT. LTD., :- 2 -: COMPLETED BY THE AO U/S. 143(3) OF THE INCOME TAX A CT [ACT], THE AO MADE AN ADDITION OF UNEXPLAINED CREDITS BROUGHT IN AS SHARE APPLICATION MONEY TO AN EXTENT OF RS. 6,62,05,934/-, INCOME FRO M CAPITAL GAINS AT RS. 97,11,665/- AND DISALLOWANCE OF EXPENDITURE AT 15% OF THE TOTAL CLAIM AT RS. 93,28,835/-. THE ASSESSMENT ORDER WAS COMPLETED EX-PARTE U/S. 144. BEFORE THE LD. CIT(A), ASSESSEE FURNISHE D ADDITIONAL EVIDENCE AND LD. CIT(A) REFERRED THEM TO THE AO FOR VERIFICA TION ON A REMAND. THE AO VIDE HIS LETTER DT. 26-11-2012, GAVE HIS REMAND REPORT. WHILE ACCEPTING THAT ASSESSEES CONTENTIONS ARE GENUINE W ITH REFERENCE TO SHARE APPLICATION MONEY AND ALSO ADDITION OF CAPITA L GAIN, AO, HOWEVER, SUBMITTED THE FOLLOWING REMAND REPORT WITH REFERENC E TO THE DISALLOWANCE OF 15% OF THE EXPENDITURE. 'THE ASSESSEE CONTESTED THAT THE ASSESSING OFFICER HAS MADE THE ADDITION OF 15% OF EXPENSES ON THE GROUND THAT THE ASSESSEE HAS NOT SUBMITTED ANY BILL OR VOUCHERS. IN THIS RESPECT THE ASSESSEE WAS ASKED TO PRODUCE LEDGER, VOUCHERS AND BILLS IN SUPPORT OF THE EXPENSES DEBI TED. THE ASSESSEE HAS PRODUCED THE NECESSARY DOCUMENTS AND NECESSARY INFORMATION. ON VERIFICATION OF THE DETAILS SUBMITTED IT IS SE EN MAJORITY OF THE BILLS/VOUCHERS APPEARS TO BE GENUINE AND ONLY SMALL PORTION OF BILLS/VOUCHERS APPEARED TO BE SELF MADE. HENCE, D ISALLOWANCE OF EXPENSES OF ONLY 5% WOULD BE REASONABLE'. 3. LD. CIT(A) WHILE DELETING OTHER ADDITIONS HOWEVE R, DELETED THE ENTIRE DISALLOWANCE OF EXPENDITURE STATING AS UNDER : '8.1 I HAVE GONE THROUGH THE ASSESSMENT ORDER, REMA ND REPORT OF THE ASSESSING OFFICER AND THE OVERALL BILLS / V OUCHERS FURNISHED BY THE APPELLANT. THE OBSERVATION OF THE ASSESSIN G OFFICER IS THAT MAJOR PORTION OF THE BILLS ARE GENUINE AND ONLY A SMALL PORTION WERE SELF-MADE. THESE SELF-MADE VOUCHERS ARE COMMON IN EVERY LINE OF BUSINESS AND ON THIS COUNT ALONE, CERTAIN PERCENTA GE OF I.T.A. NO. 655/HYD/2013 M/S. OCEAN PARK MULTI TECH PVT. LTD., :- 3 -: DISALLOWANCE CANNOT BE MADE. AS CLAIMED BY THE AP PELLANT, NOT ALL THE VOUCHERS CAN BE OBTAINED FROM OUTSIDE AGENCIES BECAUSE SOME OF THE EXPENSES UNDER THESE THREE HEADS WERE INCUR RED BY THEM ENGAGING LOCAL PEOPLE AND ACCORDINGLY NO FOOLPROOF VOUCHERS CAN BE MAINTAINED BY THEM. HAVING CONSIDERED ALL THE FAC TS AND CIRCUMSTANCES OF THE CASE, I AM INCLINED TO ACCEPT THE VERSION OF THE APPELLANT AND ACCORDINGLY I DIRECT THE ASSESSING O FFICER TO DELETE THE DISALLOWANCE OF EXPENSES MADE AT RS. 93,28,835/-'. 4. REVENUE IS AGGRIEVED AND RAISED THE FOLLOWING TH REE GROUNDS: '2. THE CIT(A), ERRED IN IGNORING THE REMAND REPORT SUBMITTED BY THE ASSESSING OFFICER TO DISALLOW A PORTION OF 5% OF EXPENSES ON PROPER VERIFICATION OF BILLS/VOUCHERS SUBMITTED BY THE ASSESSEE. 3. THE CIT(A) ERRED IN STATING THAT THE PRACTICE OF MAKING SELF MADE VOUCHERS ARE COMMON IN EVERY LINE OF BUSINESS AND ON THIS COUNT ALONE CERTAIN PERCENTAGE OF DISALLOWANCE CAN NOT BE MADE. (GROUND NO. 4 WRONGLY NUMBERED AS NO. 5) 5. THE CIT(A) HAS NOT APPRECIATED THE FACT THAT VER IFICATION OF BILLS/VOUCHERS SUBMITTED BY THE ASSESSEE FOR AN AM OUNT OF RS. 93,28,835/- HAS RESULTED IN A RESULT OF IDENTIFICA TION OF BOGUS/SELF MADE VOUCHERS TO THE EXTENT OF 5%'. 5. LD. DR SUBMITTED THAT CIT(A) SHOULD NOT HAVE IGN ORED THE DISALLOWANCE OF 5% RECOMMENDED BY THE AO AFTER DUE VERIFICATION OF BILLS AND VOUCHERS SUBMITTED. LD. COUNSEL HOWEVER, PLACI NG THE REMAND REPORT ON RECORD SUBMITTED THAT ASSESSEE HAS FURNIS HED ALL THE VOUCHERS AS REQUIRED AND SUPPORTED THE ORDER OF CIT(A). 6. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PER USED THE ORDERS ON RECORD. AS CAN BE SEEN FROM THE ORDER OF AO, IT WAS EX-PARTE AND AO DISALLOWED 15% OF THE EXPENDITURE OUT OF CERTAIN HE ADS FROM TOTAL CLAIM OF RS. 9,95,69,348/-. OUT OF THE ABOVE AMOUNT, HE HAS CONSIDERED I.T.A. NO. 655/HYD/2013 M/S. OCEAN PARK MULTI TECH PVT. LTD., :- 4 -: OPERATING EXPENSES, ADMINISTRATIVE EXPENSES, ADVERT ISEMENT AND BUSINESS PROMOTION EXPENSES ONLY FOR DISALLOWANCE T OTALING TO RS. 6,21,92,247/-. ON THIS, 15% OF EXPENDITURE AT RS. 93,28,835/- WAS DISALLOWED TO COVER THE DEFICIENCIES. ASSESSEE F URNISHED THE NECESSARY VOUCHERS AND BILLS AND AS ACCEPTED BY THE AO IN THE REMAND REPORT, ASSESSEE HAS PRODUCED LEDGER, VOUCHERS, BILLS AND A O HAS ALSO CERTIFIED THAT MAJORITY OF THE BILLS/VOUCHERS APPEARS TO BE G ENUINE. HOWEVER, AO DID NOT QUANTIFY WHAT WAS THE EXTENT OF SMALL PORT ION OF BILLS/VOUCHERS APPEAR TO BE SELF-MADE. WITHOUT QUANTIFYING THE V OUCHERS OF SELF-MADE NATURE, IT IS NOT POSSIBLE TO ARRIVE AT A DECISION TO DISALLOW 5% OF THE TOTAL EXPENDITURE AS SUGGESTED BY THE AO. IN CASE THE SE LF-MADE VOUCHERS ARE ONLY 1% OF THE ENTIRE EXPENDITURE OF RS. 6.21 CRORE S, IT IS ILLOGICAL TO DISALLOW 5% OF THE EXPENSES. AS CAN BE SEEN FROM TH E REMAND REPORT, THE DETERMINATION OF 5% IS ALSO ARBITRARY AND AO HAS NO T QUANTIFIED THE EXTENT OF SELF-MADE VOUCHERS, WHILE CERTIFYING THAT ASSESSEE HAS PRODUCED MAJORITY OF THE BILLS AND VOUCHERS WHICH A RE GENUINE. IN VIEW OF THIS, SINCE AO ON VERIFICATION DID NOT FIND ANY MISTAKES IN THE CLAIM OF ASSESSEE, WE ARE OF THE OPINION THAT LD. CIT(A) IS JUSTIFIED IN ALLOWING THE ENTIRE EXPENDITURE. WE DO NOT SEE ANY MERIT IN THE REVENUES CONTENTION AND ACCORDINGLY, THE GROUNDS DOES NOT REQUIRE ANY C ONSIDERATION ON MERIT. 7. AS CAN BE SEEN FROM THE GROUND NO.5 RAISED, IT INDICATE THAT THERE IS NO APPLICATION OF MIND BY THE AO OR CIT(A). AS AGA INST THE AMOUNT OF RS. 6,21,92,247/- CONSIDERED BY THE AO FOR DISALLOW ANCE, THE GROUND INDICATES THAT BILLS AND VOUCHERS WERE PRODUCED FOR AN AMOUNT OF RS. 93,28,835/- WHICH AMOUNT, IS IN FACT, THE DISALLOWA NCE OUT OF THE TOTAL EXPENDITURE CONSIDERED BY THE AO. THIS INDICATE THE CASUAL APPROACH BY THE AO NOT ONLY DURING THE REMAND REPORT BUT ALSO W HILE PREFERRING THE I.T.A. NO. 655/HYD/2013 M/S. OCEAN PARK MULTI TECH PVT. LTD., :- 5 -: APPEAL. THERE IS NO MERIT IN REVENUES GROUNDS. ACCORDINGLY, THEY ARE REJECTED. 8. IN THE RESULT, APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 24 TH JULY, 2015. SD/- SD/- (SAKTIJIT DEY) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUN TANT MEMBER HYDERABAD, DATED 24 TH JULY, 2015 TNMM COPY TO : 1. THE ASST. COMMISSIONER OF INCOME TAX, CIRCLE-16( 3), 6 TH FLOOR, AAYAKAR BHAVAN, BASHEERBAGH, HYDERABAD. 2. M/S. OCEAN PARK MULTI TECH PVT. LTD., FLAT NO. 3 01, BLUE CHIP ARCADE, 3-6-111, HIMAYATHNAGAR, HYDERABAD. 3. CIT(APPEALS)-V, HYDERABAD. 4. CIT-IV, HYDERABAD. 5. D.R. ITAT, HYDERABAD. 6. GUARD FILE.