Parneet Kaur Bagga, Hyderabad V. Dy. Commissioner of Income Tax , Central Circle-6(1), Hyderabad

ITA 71/Hyd/2018

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 7058 (ITAT-HYDERABAD)
• Duration Of Justice: 3 year(s) 7 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-08-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB-A
• Assessment Year: 2005-2006
• Appeal Filed On: 08-01-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: P MURALI MOHAN RAO
• Keywords: Set aside
• Section: 143(3); 80G

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH, HYDERABAD. BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER (THROUGH VIRTUAL HEARING) ITA NO. 71 /HYD/20 18 (ASST. YEAR : 20 05 - 06 ) MS. PARNEET KAUR BAGGA, HY DERABAD . .APPELLANT. PAN AHMPB 4483H VS. DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 6(1), HYDERABAD. ..RESPONDENT . APPELLANT BY : SHRI P. MURALI MOHAN RAO. R ESPONDENT BY : SHRI SANJEEV BHAGAT. (D.R.) DATE OF HEARING : 26.07 . 2021. DATE OF PRONOUNCEMENT : 30 .08 .2021. O R D E R PER S MT. P. MADHAVI DEVI , J.M. : THIS IS ASSESSEE'S APPEAL FOR THE ASSESSMENT YEAR 2005 - 06 AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) - 4, HYDERABAD DT.29.12.2009. 2 ITA NO. 71/HYD/2018 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE, AN INDIVIDUAL AND PROPRIETR IX OF M/S. POOJA MARKETING AGENCY , FILED HER RETURN OF INCOME FOR THE ASSESSMENT YEAR 2005 - 06 ON 1.11.2005 ADMITTING AN INCOME OF RS.1,64,56,944. DURING THE ASSESSMENT PROCEEDINGS U/S. 143(3) OF THE INCOME TAX ACT, 1961 ('THE ACT'), VARIOUS DETAILS WERE CALLED FOR WHICH WERE FURNISHED BY THE ASSESS EE. 3. AFTER PERUSAL OF THE DETAILS FILED BY THE ASSESSEE, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS DEBITED A SUM OF RS.12, 1 01 AS A DONATION AND SHE HAS PRODUCED A X EROX COPY OF RECEIPT ISSUED BY THE DONOR BUT THE RECEIPT D ID NOT HAVE ANY MENTION OF THE ELIGIBI LITY OR OTHERWISE OF THE DONATION U/S. 80G OF THE ACT. THEREFORE HE DISALLOWED THE SUM OF RS.12,101 AND BROUGHT IT TO TAX. 4. THE ASSESSING OFFICER FURTHER OBSERVED THA T THE ASSESSEE HAS DEBITED A SUM OF RS .10,72,000 TO THE PROFIT AND LOSS ACCOUNT UNDER THE HEAD TRADE EXPENSES. ON VERIFICATION OF THE DETAILS FILED BY THE ASSESSEE, HE OBSERVED THAT THIS EXPENDITURE IS NOTHING BUT AMOUNTS PAID TO THE OFFICIALS OF THE ANDHRA PRADESH B REVERAGES CORPORATION LI MITED AND HOLDING THAT TH IS EXPENDITURE HAS NO BEARING ON THE 3 ITA NO. 71/HYD/2018 ASSESSEE'S BUSINESS, THE ENTIRE AMOUNT WA S DISALLOWED BY THE ASSESSING OFFICER. 5. FURTHER THE ASSESSING OFFICER, OBSERVED THAT THE ASSESSEE HAS ALSO DEBITED A SUM OF RS.8,30,95,827 UND ER THE NARRATION S CHEME PAID . AFTER VERIFICATION OF THE BILLS AND VOUCHE RS FILED BY THE ASSESSEE, THE ASSESSING OFFICER OBSERVED THAT CERTAIN EXPENSES BOOKED UNDER THIS HEAD W ERE NOT SUPPORTED BY PROPER BILLS AND VOUCHERS. THEREFORE HE DISALLOWED 10% O F THE EXPENSES AMOUNTING TO RS.83,09,58 3 AND BROUGHT IT TO TAX. 6 . T HE ASSESSING OFFICER FURTHER VERIFIED THE CLAIM OF OTHER EXPENDITURE OF RS.3,38,45,072 AND FOUND THAT THEY ARE ALSO NOT SUPPORTED BY PROPER BILLS AND VOUCHERS. HE ACCORDINGLY DISALLOWED 10% OF THE S AME AND BROUGHT THE SUM OF RS.33,84,507 TO TAX. AGGRIEVED BY THESE ADDITIONS, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A) , WHO CONFIRMED THE ORDER OF THE ASSESSING OFFIC ER AND THE ASSESSEE IS IN SECOND APPEAL BEFORE THE T RIBUNAL BY RAISING THE FOLLOWING GROUNDS OF APPEAL : 1. THE ORDER OF THE LD. CIT (A) IS ERRONEOUS BOTH ON FACTS AND IN LAW. 2. THE LD. CIT (A) ERRED IN DISMISSING THE APPEAL. 4 ITA NO. 71/HYD/2018 3. THE LD.CIT(A) ERRE D IN UPHOLDING THE DISALLOWANCE OF RS.12,101/ - 4. THE LD.CIT (A) ERRED IN UPHOLDING THE DISALLOWANCE OF THE ENTIRE AMOUNT OF RS.10,72,000/ - CLAIMED UNDER THE HEAD TRADE EXPENSES. 5. THE LD.CIT (A) OUGHT TO HAVE APPRECIATED THAT THE EXPENDITURE OF RS.1 0,72,000/ _ HAS BEEN EXPENDED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF THE APPELLANT'S BUSINESS. 6. THE LD.CIT (A) ERRED IN UPHOLDING THE DISALLOWANCE OF RS.83,09,583/ - BEING 10% OF THE EXPENDITURE UNDER THE HEADS' SCHEMES PAID'. 7. THE LD.CIT(A) ERRED IN UPHOLDING THE DISALLOWANCE OF RS.33,84,507/ - BEING 10% OF THE EXPENDITURE UNDER THE HEADS 'CONVEYANCE', 'ENTERTAINMENT EXPENSES', STAFF WELFARE' AND 'VEHICLE MAINTENANCE' . 8. THE APPELLANT MAY ADD OR ALTER OR MEND OR MODIFY OR SUBSTITUTE OR DELETE AND / OR RESCIND ALL OR ANY OF THE GROUNDS OF APPEAL AT ANY TIME BEFORE OR AT THE TIME OF HEARING OF THE APPEAL. 7 . THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS NEVER CLAIMED EXEMPTION U/S. 80G OF THE ACT AND THEREF ORE THE DISALLOWANCE OF RS.12,101 IS NOT WARRANTED. 8 . AS REGARDS THE DISALLOWANCE OF 10% OF THE EXPENDITURE OF RS. 8,30,95,827 / - , THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAD RECEIVED SCHEME AND HAD ALSO TRANSFERRED IT 5 ITA NO. 71/HYD/2018 TO THE DISTRIBUTORS AS SCHEMES PAID AND HAS OFFERED NEARLY RS.50 LAKHS TO TAX UNDER THE SAID HEAD. HE SUBMITTED THAT THERE WILL NOT BE ANY BILLS AND VOUCHERS OF THE SCHEME AND THE ASSESSING OFFICER AND CIT(A) HAVE THEREFORE ERRED IN D ISALLOWING 10% OF THE TOTAL SCHEME PAID . THEREFORE, ACCORDING TO HIM THIS DISALLOWANCE OF 10% IS ALSO NOT CALLED FOR. 9 . AS REGARDS DISALLOWANCE OF 10% OF OTHER EXPENSES , HE SUBMITTED THAT THE ASSESSEE HAD MAINTAINED PROPER BOOKS OF ACCOUNTS AN D THE ASSESSING OFFICER HAS NOT BEEN ABLE TO POINT OUT ANY PARTICULAR EXPENDITURE WHICH IS NOT RELEVANT . HE THEREFORE PRAYED FOR DELETION OF THIS DISALLOWANCE. 10 . HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT THOUGH THE AS SESSEE CLAIMS THAT, SHE HAS NOT CLAIMED THE SUM OF RS.12,101/ - AS EXEMPT U/S. 80G OF THE ACT THE ASSESSEE HAS NOT BEEN ABLE TO PRODUCE ANY EVIDENCE TO THIS EFFECT. THEREFORE, WE DO NOT FIND ANY REAS ON TO INTERFERE WITH THE ORDER OF CIT(A) . THE ADDITION IS ACCOR DINGLY CONFIRMED. 11 . AS REGARDS THE ADDITION OF 10% OF SCHEMES PAID , WE FIND THAT THE ASSESSEE HAS RECEIVED THE SCHEME AND ALSO PAID THE SCHEME TO 6 ITA NO. 71/HYD/2018 HER DISTRIBUTORS AND THE BAL A NCE WHICH HAS NOT BEEN PAID TO THE SCHEME DISTRIBUTORS HAS BEEN OFFERED T O TAX. THE ASSESSEE HAS TRANSFERRED THE SCHEME TO THE CUSTOMERS AND AS STATED BY THE LEARNED COUNSEL FOR THE ASSESSEE, ALL THE RECEIPTS AND PAYMENTS WERE MADE BY CHEQUES. THEREFORE IN OUR OPINION THERE CANNOT BE ANY DISALLOWANCE OF SUCH PAYMENTS. THEREF ORE THE DISALLOWANCE OF 10% OF THE SCHEME PAID IS DELETED. 12 . AS REGARDS THE DISALLOWANCE OF 10% OF THE OTHER EXPENDITURE UNDER THE HEADS CONVEYANCE, ENTERTAINMENT EXPENSES, SALES PROMOTION, STAFF WELFARE AND VEHICLE MAINTENANCE , WE FIND THAT THE ASSESSING OFFICER HAS OBSERVED THAT THE ASSESSEE HAS NOT MAINTAINED PROPER BILLS AND VOUCHERS AND THEREFORE THE SAME ARE NOT VERIFIABLE . HOWEVER, THE LEARNED COUNSEL FOR THE ASSESSEE MENTIONED THAT ALL THE RELEVANT DETAILS WERE SUBMITTED BEFORE THE ASSESSING OFFICER, BUT THEY WERE NOT CONSIDERED BY HIM AND SOUGHT REMAND OF THE ISSUE TO THE ASSESSING OFFICER FOR RECONSIDERATION. HOWEVER, WE DO NOT FIND ANY REASON TO SET ASIDE THE MATTER TO BE EXAMINED BY ASSESSING OFFICER AFTER A LONG PERIOD OF 15 YEARS . T HEREFORE, IN THE INTEREST OF JUSTICE WE RESTRICT THE DISALLOWANCE TO 5% OF OTHER 7 ITA NO. 71/HYD/2018 EXPENDITURE . THE ASSESSING OFFICER IS DIRECTED TO RECOMPUTE THE INCOME AS PER ABOVE DIRECTIONS. 1 3 . IN THE RESULT, THE ASSESSEE'S APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 .08. 2021. SD/ - SD/ - (A. MOHAN ALANKAMONY) (SMT. P. MADHAVI DEVI) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DT. 30 .08 . 2021. * REDDY GP COPY TO : 1. MS. PARNEET KAUR BAGGA, 122/A, MLAS COLONY, ROAD NO.12, BANJARA HI LLS, HYDERABAD. 2. DCIT, CENTRAL CIRCLE 6(1), HYDERABAD. 3. C I T - III , HYDERABAD. 4. CIT(APPEALS) - IV, HYDERABAD. 5. DR, ITAT, HYDERABAD. 6. GUARD FILE. BY ORDER SR. PVT. SECRETARY, ITAT, HYDERABAD.