New Tirumala Music Centre, Hyderabad V. Income Tax Officer, Ward 9(2), Hyderabad

ITA 84/HYD/2014

• Counselvise Citation: 8422514 RSA 2014
• Duration Of Justice: 1 year(s) 4 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-06-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 13-01-2015
• Assessment Year: 1995-1996
• Appeal Filed On: 22-01-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: H PHANI RAJU
• Assessee Lawyers: S RAMA RAO
• Keywords: Corroborative evidences
• Section: 40A(3); 142(1); 133A; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO. 84/HYD/2014 ASSESSMENT YEAR: 1995-96 NEW TIRUMALA MUSIC CENTRE, HYDERABAD. PAN AACFN0448H VS. INCOME-TAX OFFICER, WARD 9(2), HYDERABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI S. RAMA RAO REVENUE BY : SHRI H. PHANI RAJU DATE OF HEARING 26-05-2015 DATE OF PRONOUNCEMENT 10-06-2015 O R D E R PER SAKTIJIT DEY, J.M.: THIS APPEAL BY ASSESSEE IS DIRECTED AGAINST THE O RDER DATED 07/10/2012 OF LD. CIT(A), VIJAYAWADA FOR THE AY 199 5-96. 2. THERE IS A DELAY OF 12 DAYS IN FILING THE AFORES AID APPEAL. ASSESSEE HAS FILED A PETITION SUPPORTED BY AN AFFID AVIT SEEKING CONDONATION OF DELAY. ON PERUSING THE CONTENTS OF T HE PETITION AS WELL AS THE AVERMENTS MADE IN THE AFFIDAVIT, WE ARE SATI SFIED THAT THERE IS SUFFICIENT CAUSE FOR NOT PRESENTING THE APPEAL IN T IME. ACCORDINGLY, WE CONDONE THE DELAY AND ADMIT THE APPEAL FOR HEARING ON MERIT. 3. ASSESSEE HAS RAISED FIVE GROUNDS. GROUND NOS. 1 & 5 BEING GENERAL IN NATURE DO NOT REQUIRE ANY SPECIFIC ADJUD ICATION. 2 ITA NO. 84 /HYD/2014 NEW TIRUMALA MUSIC CENTRE 4. IN GROUND NO. 2, ASSESSEE HAS CHALLENGED THE DEC ISION OF LD. CIT(A) IN SUSTAINING THE ADDITION OF RS. 4,86,900 O UT OF THE TOTAL ADDITION OF RS. 10,24,579. 5. BRIEFLY THE FACTS RELATING TO THIS ISSUE ARE, AS SESSEE A PARTNERSHIP FIRM, AT THE RELEVANT POINT OF TIME, WA S CARRYING ON BUSINESS IN ELECTRONICS AND HOUSE HOLD APPLIANCES. FOR THE AY UNDER CONSIDERATION, ASSESSEE FILED ITS RETURN OF INCOME ON 31/10/95 DECLARING TOTAL INCOME OF RS. 12,378. A SURVEY WAS CONDUCTED IN THE BUSINESS PREMISES OF ASSESSEE U/S 133A ON 30/09/97. DURING THE ORIGINAL ASSESSMENT PROCEEDING, AS OBSERVED BY AO, ASSESSEE NEITHER APPEARED NOR COMPLIED TO THE NOTICES ISSUED BY AO BY PRODUCING BOOKS OF ACCOUNT AND OTHER RELEVANT MATER IAL/DOCUMENTS, AS A RESULT, AO PROCEEDED TO COMPLETE THE ASSESSMEN T U/S 144 OF THE ACT. IN COURSE OF ASSESSMENT PROCEEDING, AO NOTICED THAT AS PER THE ENQUIRY REPORT OF ACIT (INVN.) ASSESSEE HAS PAID HU GE PAYMENTS TO SUNDRY DEBTORS DURING 06/04/1994 TO 21/03/1995 WHO SE PARTICULARS ARE NOT VERY CLEAR. ON VERIFYING THE DETAILS OF TRA NSACTIONS AVAILABLE IN THE BANK ACCOUNT, AO FOUND THAT THEY ARE NOT TALLYI NG. THEREFORE, IN ABSENCE OF ANY DETAILS SUBMITTED BY ASSESSEE, HE TR EATED THE AMOUNT OF RS. 23,14,743 AS INCOME OF ASSESSEE. BEING AGGRI EVED OF SUCH ADDITION, ASSESSEE PREFERRED APPEAL BEFORE LD. CIT( A) AND BEING UNSUCCESSFUL THERE, CARRIED FURTHER APPEAL BEFORE ITAT. ITAT HAVING SET ASIDE THE ORDER BACK TO FILE OF AO WITH CERTAIN DIRECTION, ASSESSMENT PROCEEDINGS WERE INITIATED AGAIN. 6. IN COURSE OF ASSESSMENT PROCEEDING, IN PURSUANCE TO THE DIRECTION OF ITAT, AS OBSERVED BY AO, ASSESSEE AGAI N FAILED TO PRODUCE BOOKS OF ACCOUNT TO SUBSTANTIATE THE AMOUNT OF RS. 23,14,743 CLAIMED TO HAVE BEEN PAID TO SUNDRY DEBTO RS. HOWEVER, IT WAS SUBMITTED BY ASSESSEE THAT THE SAID PAYMENTS WE RE MADE TO SUNDRY CREDITORS AND NOT SUNDRY DEBTORS. IN SUPPORT OF SUCH 3 ITA NO. 84 /HYD/2014 NEW TIRUMALA MUSIC CENTRE CONTENTION, ASSESSEE ALSO PRODUCED STATEMENT OF ACC OUNT WITH ANDHRA BANK. ON VERIFYING THE SAID ACCOUNT COPY, AO NOTICE D THAT CERTAIN AMOUNTS WERE PAID BY WAY OF CHEQUE/DD WHEREAS, CERT AIN AMOUNTS DO NOT FIND PLACE IN THE BANK ACCOUNT AND SOME AMOU NTS WERE PAID IN CASH. AO OBSERVED, TOTAL AMOUNT PAID IN CASH IN VIO LATION OF SECTION 40A(3) AMOUNTED TO RS. 7,32,147 AND AN AMOUNT OF RS . 8,78,150 WAS NOT FOUND IN THE BANK ACCOUNT. AO, THEREFORE, PROCE EDED TO DISALLOW 20% OUT OF THE TOTAL CASH PAYMENT OF RS. 7,32,147 B Y INVOKING THE PROVISIONS OF SECTION 40A(3). FURTHER, HE TREATED T HE AMOUNT OF RS. 8,78,150 WHICH WAS NOT FOUND IN THE BANK ACCOUNT AS INCOME OF ASSESSEE. ACCORDINGLY, TOTAL ADDITION MADE BY AO WA S RS. 10,24,579. BEING AGGRIEVED OF SUCH ADDITION, ASSESSEE PREFERRE D APPEAL BEFORE LD. CIT(A). 7. LD. CIT(A) ON VERIFYING THE FACTS AND EVIDENCES PRODUCED BEFORE HIM FOUND THAT ALL PAYMENTS MADE TO SUNDRY DEBTORS( SIC) WERE ROUTED THROUGH BANK ACCOUNT, EXCEPT, THE AMOUNT OF RS. 4,8 6,900. OBSERVING THAT ASSESSEE FAILED TO SUBSTANTIATE ITS CLAIM WITH SUPPORTING DOCUMENTARY EVIDENCE AS FAR AS THE SAID AMOUNT IS C ONCERNED, LD. CIT(A) CONFIRMED THE ADDITION TO THE EXTENT OF RS. 4,86,900. 8. LD. AR SUBMITTED BEFORE US, AT THE TIME OF SURVE Y BOOKS OF ACCOUNT WERE IMPOUNDED BY DEPARTMENT, HENCE, ASSESS EE WAS NOT ABLE TO EXPLAIN THE PAYMENTS MADE BEFORE AO ORIGINA LLY. LD. AR CONTESTING THE ADDITION OF RS. 4,86,900 SUSTAINED B Y LD. CIT(A) SUBMITTED, ASSESSEE DURING THE YEAR RECEIVED SALE C ONSIDERATION OF RS. 1,01,16,489 AND IT WAS HAVING SUFFICIENT CASH A VAILABLE WITH HIM TO MAKE PAYMENTS TO SUNDRY CREDITORS. THEREFORE, SO ME OF THE PAYMENTS WERE NOT ROUTED THROUGH BANK ACCOUNT. LD. AR SUBMITTED, HOWEVER SUCH PAYMENTS AMOUNTED TO RS. 3,90,000 AND NOT RS. 4,86,900. LD. AR SUBMITTED, EVEN THE SAID AMOUNT AL SO CANNOT BE CONSIDERED TO BE UNEXPLAINED AS ASSESSEE HAS SUFFIC IENT CASH AVAILABILITY TO MAKE PAYMENT. THEREFORE, HE SUBMITT ED, ADDITION SUSTAINED BY LD. CIT(A) SHOULD BE DELETED. 4 ITA NO. 84 /HYD/2014 NEW TIRUMALA MUSIC CENTRE 9. THE LD. DR, ON THE OTHER HAND, SUBMITTED BEFORE US, ASSESSEE HAVING FAILED TO EXPLAIN THE PAYMENTS MADE TO THE E XTENT OF RS. 4,86,900 WITH NO SUPPORTING EVIDENCE, ADDITION MADE HAS TO BE SUSTAINED. 10. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PARTI ES AND PERUSED THE MATERIALS ON RECORD. AS COULD BE SEEN, LD. CIT( A) AFTER VERIFYING THE MATERIALS AND EVIDENCES AVAILABLE ON RECORD, FO UND THAT ALL THE TRANSACTIONS/PAYMENTS WERE ROUTED THROUGH BANK ACCO UNT, EXCEPT THE AMOUNT OF RS. 4,86,900 AND ACCORDINGLY, SHE SUSTAIN ED THE ADDITION TO THAT EXTENT. BEFORE US ALSO, APART FROM SUBMITTING THAT ASSESSEE HAS SUFFICIENT CASH BALANCE AVAILABLE WITH HIM, LD. AR HAS NOT BROUGHT TO OUR NOTICE ANY DOCUMENTARY EVIDENCE TO ESTABLISH SU CH CLAIM. THEREFORE, IN ABSENCE OF ANY SUPPORTING EVIDENCE, I T IS NOT POSSIBLE TO ENTERTAIN THE CLAIM OF ASSESSEE THAT PAYMENT OF RS. 4,86,900 NOT ROUTED THROUGH BANK ACCOUNT, WAS OUT OF CASH BALANC E AVAILABLE WITH ASSESSEE. HOWEVER, ASSESSEES CLAIM THAT ACTUAL AMO UNT PAID TO SUNDRY CREDITORS WHICH WAS NOT ROUTED THROUGH BANK ACCOUNT AMOUNTED TO RS. 3,90,000, IN OUR VIEW, REQUIRES VER IFICATION. ACCORDINGLY, WE DIRECT AO TO VERIFY THIS FACT AND I F IT IS FOUND THAT THE ACTUAL PAYMENTS WHICH HAVE NOT BEEN ROUTED THROUGH BANK ACCOUNT IS RS. 3,90,000, THEN, THE ADDITION TO THAT EXTENT MAY SUSTAINED. THIS GROUND IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 11. THE NEXT ISSUE AS RAISED IN GROUND NO. 3 RELATE S TO DISALLOWANCE OF EXPENSES OF RS. 60,351. 12. BRIEFLY, THE FACTS ARE, WHILE VERIFYING THE P&L A/C, AO NOTICED THAT APART FROM CLAIMING VARIOUS EXPENDITURES, UNDE R DIFFERENT HEADS ASSESSEE HAS DEDUCTED EXPENDITURE OF RS. 4,02,340. ALLEGING THAT ASSESSEE HAS NOT PRODUCED BOOKS OF ACCOUNT AND BILL S & VOUCHERS TO SUBSTANTIATE THE EXPENDITURE CLAIMED, AO DISALLOWED 15% OUT OF THE SAID EXPENDITURE AMOUNTING TO RS. 60,351. BEING AGG RIEVED OF SUCH DISALLOWANCE, ASSESSEE PREFERRED APPEAL BEFORE LD. CIT(A). LD. CIT(A) 5 ITA NO. 84 /HYD/2014 NEW TIRUMALA MUSIC CENTRE ALSO CONFIRMED THE DISALLOWANCE BY OBSERVING THAT A SSESSEE HAS NOT PRODUCED ANY EVIDENCE TO SUBSTANTIATE ITS CLAIM. 13. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PARTI ES AND PERUSED THE ORDERS OF REVENUE AUTHORITIES AS WELL AS OTHER MATERIALS ON RECORD. AS COULD BE SEEN, AO DISALLOWED 15% OF THE TOTAL EX PENDITURE CLAIMED ON THE GROUND THAT ASSESSEE NEITHER PRODUCED ANY BO OKS OF ACCOUNT NOR PRODUCED ANY BILLS AND VOUCHERS IN RESPECT OF T HE SAID EXPENDITURE. LD. CIT(A) ALSO CONFIRMED THE DISALLOW ANCE FOR THE VERY SAME REASON. 14. BEFORE US ALSO, THE SITUATION HAS NOT IMPROVED AS ASSESSEE HAS FAILED TO BRING ANY EVIDENCE ON RECORD TO OVERTURN DISALLOWANCE MADE BY AO. IN VIEW OF THE SAME, WE ARE CONSTRAINED TO U PHOLD THE DISALLOWANCE MADE BY AO. ACCORDINGLY, GROUND RAISED IS DISMISSED. 15. IN GROUND NO. 4, ASSESSEE HAS CHALLENGED THE DI SALLOWANCE OF DEDUCTION CLAIMED ON ACCOUNT OF PAYMENT TOWARDS REM UNERATION AND INTEREST TO PARTNERS. 16. AS CAN BE SEEN, WHILE COMPLETING ASSESSMENT, AO DISALLOWED THE DEDUCTION CLAIMED TOWARDS PAYMENTS MADE TO PART NERS ON ACCOUNT OF REMUNERATION AND INTEREST BY OBSERVING THAT AS A SSESSEE HAS FAILED TO COMPLY NOTICES U/S 142(1), THE STATUS OF THE FIR M IS TREATED AS AOP AS PER SECTION 184(5) READ WITH SECTION 144(1)(B). LD. CIT(A) ALSO CONFIRMED THE DISALLOWANCE OF RS. 69,386 BY APPROVI NG THE OBSERVATIONS OF AO. 17. WE HAVE HEARD THE PARTIES AND PERUSED THE MATER IALS ON RECORD. UNDISPUTEDLY, IN CASE OF ASSESSEE ASSESSMENT WAS CO MPLETED U/S 144(1)(B) OF THE ACT BY TREATING THE STATUS OF ASSE SSEE AS AOP AS ASSESSEE FAILED TO COMPLY TO THE NOTICE U/S 142(1) OF THE ACT. THAT BEING THE CASE, DEDUCTION CLAIMED BY ASSESSEE ON AC COUNT OF PAYMENT MADE TOWARDS REMUNERATION AND INTEREST TO P ARTNERS CANNOT BE ALLOWED IN VIEW OF PROVISION CONTAINED U/S 184(5 ) OF THE ACT. IT 6 ITA NO. 84 /HYD/2014 NEW TIRUMALA MUSIC CENTRE ALSO NEEDS TO BE MENTIONED, ASSESSEE AT NO STAGE HA S CHALLENGED THE DECISION OF AO IN TREATING IT AS AN AOP. IN THE AFO RESAID FACTS AND CIRCUMSTANCES, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF LD. CIT(A) IN SUSTAINING THE ADDITION OF RS. 69,386 AND ACCORD INGLY THE SAME IS UPHELD. THIS GROUND IS DISMISSED. 18. IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLO WED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 10 TH JUNE, 2015. SD/- SD/- (P.M. JAGTAP) (SAKTIJIT DEY) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED: 10 TH JUNE, 2015 KV COPY TO:- 1) NEW TIRUMALA MUSIC CENTRE, SRI S. RAMA RAO, ADVOCATE, FLAT NO. 102, SHRIYAS ELEGANCE, H. NO. 3-6-643 , ST. NO. 9, HIMAYAT NAGAR, , HYDERABAD 500 029. 2) ITO, WARD 9(2), IT TOWERS, MASAB TANK, , HYDER ABAD 3 CIT(A), VIJAYAWADA 4) CIT-VI, HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDE RABAD.