ITO, Bangalore V. M/s Crown Securities Pvt. Ltd., Bangalore

ITA 94/BANG/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 51305 (ITAT-BANGALORE)
• Duration Of Justice: 8 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-10-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 02-02-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUSAN THOMAS JOSE JT
• Assessee Lawyers: T V SUBRAMANYA BHAT
• Keywords: Retrospective amendment; Corroborative evidences; Assessment record; Tax effect

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SHRI N.K. SAINI, ACCOUNTANT MEMBER AND SHRI GEORGE GEORGE K., JUDICIAL MEMBER ITA NO. 94/BANG/2011 ASSESSMENT YEAR : 2007-08 THE INCOME TAX OFFICER, WARD 11(1), BANGALORE. VS. M/S. CROWN SECURITIES PVT. LTD., NO.43, GROUND FLOOR, 1 ST CROSS, VINAYAK NAGAR, BELLARY MAIN ROAD, BANGALORE 560 024. PAN: AABCC 1581G APPELLANT RESPONDENT APPELLANT BY : SMT. SUSAN THOMAS JOSE, JT.CIT(DR) RESPONDENT BY : SHRI T.V. SUBRAMANYA BHAT, C.A. DATE OF HEARING : 17.10.2011 DATE OF PRONOUNCEMENT : 17.10.2011 O R D E R PER N.K. SAINI, ACCOUNTANT MEMBER THIS IS AN APPEAL BY THE DEPARTMENT AGAINST THE OR DER DATED 15.11.2010 OF THE CIT(APPEALS)-I, BANGALORE FOR THE ASSESSMENT YEAR 2007-08. ITA NO.94/BANG/2011 PAGE 2 OF 5 2. GROUNDS OF APPEAL NOS.1, 4 & 5 ARE GENERAL IN NA TURE AND REQUIRE NO ADJUDICATION. THE FOLLOWING EFFECTIVE GROUNDS HAVE BEEN RAISED IN THIS APPEAL : 2. THE LEARNED CIT(A) HAS ERRED IN DELETING THE A DDITION OF RS.6,41,140-00 MADE ON ACCOUNT OF DISALLOWANCE OF E XPENSES CLAIMED UNDER THE HEAD SALARIES AND WAGES, WITHOU T APPRECIATING THE FACTS AND CIRCUMSTANCES UNDER WHIC H THE ADDITION WAS MADE BY THE ASSESSING OFFICER. 3. THE LEARNED CIT(A) ERRED IN DELETING THE ABOVE A DDITION WITHOUT CONSIDERING THE FACT THAT THE ASSESSEE HAS NOT PRODUCED ANY SUPPORTING EVIDENCES FOR THE ABOVE EXPENSES AND THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE HAS AGREE D FOR THE ABOVE DISALLOWANCE DURING THE COURSE OF ASSESSMENT PROCEE DINGS. 3. THE MAIN ISSUE INVOLVED IN THIS APPEAL RELATES T O THE ACTION OF LD. CIT(A) IN DELETING THE ADDITION OF RS.6,41,140 MADE ON ACCOUNT OF DISALLOWANCE OF EXPENSES CLAIMED UNDER THE HEAD SA LARIES AND WAGES. THE FACTS RELATED TO THIS ISSUE IN BRIEF ARE THAT T HE ASSESSEE COMPANY IS IN THE BUSINESS OF PROVIDING SECURITY SERVICES AND GAR DENERS. THE ASSESSEE FILED ITS RETURN OF INCOME ON 1.11.2007 DECLARING T OTAL INCOME OF RS.1,95,900. AFTER SCRUTINY THE ASSESSING OFFICER WAS OF THE VIEW THAT THE EXPENDITURE DEBITED TO THE P&L ACCOUNT TOWARDS THE SALARIES AND WAGES FOR RS.1,28,22,813 IS ON THE HIGHER SIDE AND HE THEREFO RE DISALLOWED 5% OF THE SAID AMOUNT AND MADE AN ADDITION OF RS.6,41,140. 4. THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT( APPEALS) AND SUBMITTED THAT THE BOOKS OF ACCOUNTS WERE AUDITED, NO DEFAULT COULD BE TRACED BY THE AO AND THERE WAS NO BASIS FOR CONSIDE RING THE SALARY AND WAGES AS HIGH. IT WAS SUBMITTED THAT THE AMOUNT OF RS.1,28,22,813 BEING ITA NO.94/BANG/2011 PAGE 3 OF 5 79% OF GROSS RECEIPTS WERE PAID TO AROUND 250 PERSO NNEL PLUS SOME MANAGEMENT STAFF OF 15 SHOULD NOT BE CONSIDERED HIG H. 5. THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE OBSERVED THAT THE DOCUMENTS FILED IN THE SHAPE OF A UDITORS REPORT AND COPY OF P&L ACCOUNT AND PAST ASSESSMENT RECORDS SHOWED N O DISTURBANCE OF ACCOUNTS. HE FOUND THAT ON AN AVERAGE THE SALARY COMES TO AROUND RS.4,000 PER MONTH WAS NOT MUCH. ON PREPONDERANCE OF PROBABILITY, THE LD. CIT(APPEALS) CONSIDERED IT JUSTIFIED TO DELETE THE ADDITION. NOW THE ASSESSEE IS IN APPEAL. 6. THE LD. COUNSEL FOR THE ASSESSEE, AT THE VERY O UTSET, STATED THAT THE TAX EFFECT IN THIS DEPARTMENTAL APPEAL IS LESS THAN THE AMOUNT PRESCRIBED BY THE CBDT FOR NOT FILING THE APPEAL, AND SO THE DEPA RTMENT SHOULD NOT HAVE FILED THIS APPEAL IN VIEW OF THE INSTRUCTIONS ISSUE D BY THE CBDT. 7. THE LD. DR, HOWEVER, STATED THAT THE ISSUE AGITA TED BY THE DEPARTMENT SHOULD BE DECIDED ON MERITS. 8. AFTER CONSIDERING THE SUBMISSIONS OF BOTH THE PA RTIES, IT IS NOTICED THAT SECTION 268A HAS BEEN INSERTED BY THE FINANCE ACT, 2008 WITH RETROSPECTIVE EFFECT FROM 1.4.99. THE PROVISIONS C ONTAINED IN SECTION 268A READ AS UNDER: 268A. (1) THE BOARD MAY, FROM TIME TO TIME, ISSUE ORDERS, INSTRUCTIONS OR DIRECTIONS TO OTHER INCOME-TAX AUTH ORITIES, FIXING SUCH MONETARY LIMITS AS IT MAY DEEM FIT, FOR THE PU RPOSE OF REGULATING FILING OF APPEAL OR APPLICATION FOR REFE RENCE BY ANY INCOME-TAX AUTHORITY UNDER THE PROVISIONS OF THIS C HAPTER. ITA NO.94/BANG/2011 PAGE 4 OF 5 (2) WHERE, IN PURSUANCE OF THE ORDERS, INSTRUCTION S OR DIRECTIONS ISSUED UNDER SUB-SECTION (1), AN INCOME- TAX AUTHORITY HAS NOT FILED ANY APPEAL OR APPLICATION FOR REFEREN CE ON ANY ISSUE IN THE CASE OF AN ASSESSEE FOR ANY ASSESSMENT YEAR, IT SHALL NOT PRECLUDE SUCH AUTHORITY FROM FILING AN APPEAL OR AP PLICATION FOR REFERENCE ON THE SAME ISSUE IN THE CASE OF - (A) THE SAME ASSESSEE FOR ANY OTHER ASSESSMENT YEAR, OR (B) ANY OTHER ASSESSEE FOR THE SAME OR ANY OTHER ASSESSMENT YEAR. (3) NOTWITHSTANDING THAT NO APPEAL OR APPLICATION FOR REFERENCE HAS BEEN FILED BY AN INCOME-TAX AUTHORITY PURSUANT TO THE ORDERS OR INSTRUCTIONS OR DIRECTIONS ISSUED UND ER SUB-SECTION (1), IT SHALL NOT LAWFUL FOR AN ASSESSEE, BEING A P ARTY IN ANY APPEAL OR REFERENCE, TO CONTEND THAT THE INCOME-TAX AUTHOR ITY HAS ACQUIESCED IN THE DECISION ON THE DISPUTED ISSUE BY NOT FILING AN APPEAL OR APPLICATION FOR REFERENCE IN ANY CASE. (4) THE APPELLATE TRIBUNAL OR COURT, HEARING SUCH APPEAL OR REFERENCE, SHALL HAVE REGARD TO THE ORDERS, INSTRUC TIONS OR DIRECTIONS ISSUED UNDER SUB-SECTION (1) AND THE CIR CUMSTANCES UNDER WHICH SUCH APPEAL OR APPLICATION FOR REFERENC E WAS FILED NOT FILED IN RESPECT OF ANY CASE. (5) EVERY ORDER, INSTRUCTION OR DIRECTION WHICH HA S BEEN ISSUED BY THE BOARD FIXING MONETARY LIMITS FOR FILING AN A PPEAL OR APPLICATION FOR REFERENCE SHALL BE DEEMED TO HAVE B EEN ISSUED UNDER SUB-SECTION (1) AND THE PROVISIONS OF SUB-SEC TIONS (2), (3) AND (4) SHALL APPLY ACCORDINGLY. 9. IT IS NOT IN DISPUTE THAT THE BOARDS INSTRUCTIO NS OR DIRECTIONS ISSUED TO OTHER INCOME-TAX AUTHORITIES ARE BINDING ON THOSE A UTHORITIES, THEREFORE, THE DEPARTMENT OUGHT NOT TO HAVE FILED THE APPEAL IN VI EW OF THE ABOVE MENTIONED PROVISIONS OF SECTION 268A SINCE THE TAX EFFECT IN THE INSTANT CASE IS LESS THAN RS.2 LAKHS I.E., THE AMOUNT PRESC RIBED BY THE CBDT FOR NOT FILING THE APPEAL, SO THIS APPEAL IS DISMISSED. 10. IN THE RESULT, THE APPEAL BY THE DEPARTMENT IS DISMISSED. ITA NO.94/BANG/2011 PAGE 5 OF 5 PRONOUNCED IN THE OPEN COURT ON THIS 17 TH DAY OF OCTOBER, 2011. SD/- SD/- ( GEROGE GEORGE K. ) ( N.K. SAINI ) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE, DATED, THE 17 TH OCTOBER, 2011. DS/- COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE (1+1) BY ORDER ASSISTANT REGISTRAR ITAT, BANGALORE.