DCIT, Bangalore V. M/s Natesan Travels (P) Ltd., Bangalore

ITA 807/BANG/2011

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 68352 (ITAT-BANGALORE)
• Duration Of Justice: 2 year(s) 2 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-11-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 19-11-2013
• Assessment Year: 2005-2006
• Appeal Filed On: 08-09-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRISCILLA SINGSIT
• Assessee Lawyers: V NARENDRA SHARMA
• Keywords: Rejection of books of accounts; Depreciation; Non compliance; Assessment record; Unabsorbed depreciation
• Section: 143(3); 142(1); 153A; 132; 144

Judgement Text

ITA NO.807 OF 2011 NATESAN TRAVELS PRIVATE LTD BANG ALORE PAGE 1 OF 6 IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BBENCH, BANGALORE BEFORE SHRI GEORGE GEORGE K. JUDICIAL MEMBER AND SHRI JASON P. BOAZ, ACCOUNTANT MEMBER ITA NO. 807/BANG/2011 (ASSESSMENT YEAR: 2005-06) DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 2(3) BANGALORE VS. M/S. NATESAN TRAVELS (P) LTD NO.59 RESIDENCY ROAD, BANGALORE PAN: AAACN 6011 H (APPELLANT) (RESPONDENT) DEPARTMENT BY: MS.PRISCILLA SINGSIT, DR ASSESSEE BY: SHRI V. NARENDRA SHARMA DATE OF HEARING: 19/11/2013 DATE OF PRONOUNCEMENT: 22/11/2013 O R D E R PER GEORGE GEORGE K. J.M. THIS APPEAL PREFERRED BY THE DEPARTMENT ARISE OUT OF THE CIT (A)S ORDER DATED 30.06.2011. THE RELEVANT ASSE SSMENT YEAR IS 2005-06. THE GROUNDS RAISED READ AS FOLLOWS: 1. THE ORDER OF THE LEARNED CIT (A) IS OPPOSED TO LAW, EQUITY, FACTS, WEIGHT OF EVIDENCE ON RECORD, FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE LEARNED CIT (A) IGNORED AND OVERLOOKED THE F ACT AND EVIDENCE ON RECORD THAT A SPECIFIC QUESTIONNAIR E WAS ISSUED AND DULY ACKNOWLEDGED BY THE ASSESSEE COMPANY WITH COMPANYS SEAL. ITA NO.807 OF 2011 NATESAN TRAVELS PRIVATE LTD BANG ALORE PAGE 2 OF 6 3. THE LEARNED CIT (A) FAILED TO APPRECIATE THAT NO T MENTIONING THE SECTION 144 IN THE FIRST PAGE OF THE ASSESSMENT ORDER DOES NOT MAKE THE ASSESSMENT IN VALID IN VIEW OF THE SECTION 292B, AS THE ASSESSMEN T MADE IS IN SUBSTANCE AND EFFECT IN CONFIRMITY WITH THE INTENT AND PURPOSE OF THE I.T. ACT. 4. THE LEARNED CIT (A) FAILED TO APPRECIATE THAT TH E ASSESSING OFFICER WAS CONSTRAINED TO PASS ORDER U/S 144 DUE TO DEFINITE NON COMPLIANCE BY THE ASSESSEE TO: I) THE NOTICES U/S 142(1) WITH QUESTIONNAIRE II) NOTICES U/S 143(2) TO PRODUCE EVIDENCE IN SUPPORT OF THE RETURN. 5. THE LEARNED CIT (A) IS NOT JUSTIFIED IN DELETING THE DISALLOWANCE OF RS.42,27,536 BEING 5% OF TICKET PURCHASE OF RS.8,54,93,953 WITHOUT CONSIDERING THE OUTRIGHT FAILURE TO FURNISH INFORMATION BY COMPLYIN G WITH STATUTOTY NOTICES AND ALSO THE FACTS AND CIRCUMSTANCES OF THE CASE. 6. THE LEARNED CIT (A) OUGHT TO HAVE TAKEN INTO ACC OUNT THAT IN THE P&L ACCOUNT, THE ASSESSEE HAD SHOWN THE TICKET SALE (NET OF DISCOUNT-WITHOUT FURNISHING T HE DETAILS OF THE DISCOUNTS) AT RS.7.74 CRORES, WHEREA S THE TICKET EXPENDITURE AT RS.8.54 CRORES AND DURI NG THE SCRUTINY PROCEEDINGS, THE ASSESSEE FAILED TO DISCHARGE ITS ONUS OF PROVING THE GENUINENESS OF TH E EXPENDITURE. 7. THE LEARNED CIT (A) OUGHT NOT TO HAVE GIVEN RELI EF WITHOUT GETTING THE EXPENDITURE CLAIM EXAMINED BY T HE ASSESSING OFFICER AND THEREFORE, IT IS PRAYED THAT THE ADDITIONS MADE MAY BE CONFIRMED OR ALTERNATIVELY TH E ASSESSMENT MAY BE SET ASIDE FOR VERIFICATION BY THE ASSESSING OFFICER . 2. BRIFELY STATED THE FACTS OF THE CASE ARE AS FOLL OWS: THE ASSESSEE IS A PRIVATE LIMITED COMPANY. IT IS E NGAGED IN THE BUSINESS OF TRAVEL AGENCY. FOR THE ASSESSMENT Y EAR 2005-06 ITA NO.807 OF 2011 NATESAN TRAVELS PRIVATE LTD BANG ALORE PAGE 3 OF 6 RETURN OF INCOME WAS FILED ON 31.10.2005 DECLARING A LOSS OF RS.14,33,062. THERE WAS SEARCH PROCEEDINGS U/S 132 OF THE ACT IN THE PREMISES OF THE ASSESSEE ON 17.10.2008 AND C ERTAIN BOOKS OF ACCOUNTS OF THE ASSESSEE WAS SEIZED. SUBSEQUENT TO THE SEARCH PROCEEDINGS, THE ASSESSMENT U/S 143(3) R.W.S. 153A WAS COMPLETED ON 24.12.2009 WHEREIN THE TOTAL INCOME WA S DETERMINED AT RS.11,80,180. THE ASSESSING OFFICER M ADE A DISALLOWANCE OF RS.42,27,536 BEING ADHOC ESTIMATION AT 5% OF RS.8,54,93,053 (PURCHASE OF AIR TICKETS). THE CIT ( A) ON FURTHER APPEAL ALLOWED THE ASSESSEES CLAIM AND DIRECTED TH E ASSESSING OFFICER TO DELETE THE DISALLOWANCES. THE REVENUE BE ING AGGRIEVED IS IN APPEAL BEFORE US. 3. THE LEARNED DR RELIED ON THE ORDER OF THE ASSESS ING OFFICER. THE LEARNED AR ON THE OTHER HAND SUBMITTED THAT PRI OR TO THE ASSESSMENT BEING COMPLETED U/S 143(3) R.W.S. 153A, THERE WAS AN ASSESSMENT COMPLETED IN THE NORMAL COURSE U/S 14 3(3) AND IDENTICAL ADDITIONS WERE MADE IN THE SAID ASSESSMEN T WHICH IS SUBJECT MATTER OF APPEAL BEFORE THE CIT (A). IT WAS FURTHER SUBMITED BY THE LEARNED COUNSEL THAT IN THE COURSE OF SEARCH PROCEEDINGS, NO INCRIMINATING DOCUMENTS WERE FOUND BY THE REVENUE AND THEREFORE, ASSESSMENT U/S 153A FOR DETE RMINING THE UNDISCLOSED INCOME WAS NOT WARRANTED. THE ESTIMATIO N OF INCOME BY MAKING AN ADHOC DISALLOWANCE IS NOT CONTEMPLATED FOR ASSESSMENT COMPLETED U/S 153A OF THE ACT. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE LEARNED CIT (A) HAS LISTED OUT ELABORATE ITA NO.807 OF 2011 NATESAN TRAVELS PRIVATE LTD BANG ALORE PAGE 4 OF 6 REASONS FOR ALLOWING THE APPEAL OF THE ASSESSEE. TH E RELEVANT FINDINGS OF THE CIT (A) FOR READY REFERENCE IS REPR ODUCED BELOW: 3.3 THE PERUSAL OF THE ASSESSMENT RECORDS AND THE APPELLANTS SUBMISSIONS REVEAL THE FOLLOWING: (I) EXCEPT NOTICES U/S 142(1) & 143(2) WHICH ARE NON STATUTORY FORMS, NO SPECIFIC QUESTIONS WERE ASKED EXCEPT STATING THAT DETAILS CALLED FOR VIDE LETTER DATED 12.10.2009 BUT THE 143(2) NOTICE DATED 12.10.2009 SIMPLY SAYS THAT DOCUMENTS, ACCOUNTS AND OTHER EVIDENCE ON WHICH YOU MAY RELY IN SUPPORT OF THE RETURN FILED BY YOU TO BE PRODUCED. (II) IN PAGE 2 OF THE ASSESSMENT ORDER, PARA 6 LAST LINE, THE ASSESSMENT IS STATED TO HAVE MADE U/S 144 BUT THE BODY OF THE ORDER IN THE FRONT PAGE COL. 13 IT STATES THAT THE SECTION AND SUB SECTION UNDER WHICH THE ASSESSMENT IS MADE AS 143(3) R.W.S. SECTION 153A OF THE I T ACT 1961. (III) THERE IS NOTING IN THE ASSESSMENT RECORDS TO THE EFFECT THAT ANY SPECIFIC DETAILS WERE CALLED BY THE A.O (IV) THE BODY OF THE ASSESSMENT ORDER MENTIONS THAT THE APPELLANTS A.R APPEARED FROM TIME TO TIME (PARA 4 OF PAGE 2 OF ASSESSMENT ORDER) AND THE ORDER SHEET NOTINGS DO NOT INDICATE ANY NOTINGS TO THIS EFFECT. (V) THE A.O MENTIONS THAT THE APPELLANT HAD FILED ITS RETURN OF INCOME DECLARING NET LOSS OF RS.14,33,062(FIRST LINE OF PARA 5 OF ASSESSMENT ORDER) BUT THE RETURN SHOWS THAT THE APPELLANT HAS SHOWN POSITIVE INCOME OF RS.14,33,062 BUT HAS SET OFF THE CARRIED FORWARD LOSSES AND DEPRECIATION. (VI) THE TOTAL INCOME AS PER P&L A/C IS RS.8,84,55,399 AND THE TOTAL EXPENSES CLAIMED ITA NO.807 OF 2011 NATESAN TRAVELS PRIVATE LTD BANG ALORE PAGE 5 OF 6 IS RS.8,73,95,967 THUS DECLARING PROFIT FOR THE YEAR AT RS.10,59,431 AND AFTER ADJUSTMENT OF AMOUNTS U/S 43B, 40A(I) AND DEPRECIATION, THE RETURNED GROSS TOTAL INCOME FOR THE YEAR IS RS.14,33,062. (VII) THERE IS NOTHING ON RECORD TO INDICATE THAT THE APPELLANT HAS INFLATED THE EXPENSES SINCE THE PAYMENTS TOWARDS PURCHASE IS MAINLY TO THE CONCERNED AIRLINES AND MAJORITY OF IT HAS GONE BY CHEQUES. (VIII) THE DETAILS OF COMMISSION RECEIPTS ARE ALREADY THERE IN THE P&L A/C AND THE SCHEDULES FORMING PART OF P&L A/C AND BALANCE SHEET WHEREIN THE DETAILS OF COMMISSION RECEIVED IS SHOWN AT RS.1,06,71,828 OUT OF THE TOTAL OTHER INCOME RECEIPTS OF RS.1,09,52,337 (SCHEDULE 1 OF P&L A/C ENCLOSED ALONG WITH THE RETURN OF INCOME WHICH IS AVAILABLE IN THE ASSESSMENT RECORDS OF THE A.O). IN VIEW OF THE ABOVE, IT IS HELD THAT THERE WAS NO CASE FOR REJECTION OF BOOKS OF ACCOUNTS AND RESORTING TO ESTIMATION OF EXPENSES BY QUANTIFYING 5% OF TOTAL AMOUNTS PAID TOWARDS TICKET PURCHASES AS DISALLOWABLE AMOUNT. PERHAPS, A.O HAS STARTED WITH THE PRESUMPTION THAT THE APPELLANT HAD DECLARED LOSSES BUT THE FACT WAS THAT IT WAS A POSITIVE INCO ME AND ONLY AFTER CLAIMING BROUGHT FORWARD BUSIENSS LOSSES/UNABSORBED DEPRECIATION, THE RETURNED INCOME WAS NIL. HAD THE A.O BEEN CAREFUL ENOUGH TO ATLEAST VERIFY THE FACTS, SUCH AN ARBITRARY AND ADHOC ESTIMATION COULD HAVE BEEN AVOIDED. HENCE THE DISALLOWANCE MADE BY THE A.O IS DELETED. 5. THE REVENUE HAS NOT PRODUCED ANY EVIDENCE OR ANY MATERIAL TO DISPEL THE FINDINGS OF THE CIT (A) REND ERED ABOVE. THEREFORE, WE REFRAIN FROM INTERFERING FROM THE ORD ER OF THE CIT (A) AND CONFIRM THE SAME. IT IS ORDERED ACCORDINGLY . ITA NO.807 OF 2011 NATESAN TRAVELS PRIVATE LTD BANG ALORE PAGE 6 OF 6 6. IN THE RESULT, APPEAL FILED BY THE REVENUE IS D ISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND NOVEMBER, 2013. SD/- SD/- (JASON P. BOAZ) (GEORGE GEORGE K) ACCOUNTANT MEMBER JUDICIAL MEMBER BANGALORE DATED 22 ND NOVEMBER,, 2013. VNODAN/SPS COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. THE DR, ITAT, BANGALORE 6. GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL, BANGALORE BENCHES, BANGALORE