Dy. Commissioner of Income Tax , Circle-2(2), Hyderabad V. Hyderabad Race Club, Hyderabad

ITA 977/Hyd/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 9427 (ITAT-HYDERABAD)
• Duration Of Justice: 10 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-04-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB-A
• Next Hearing Date: 27-03-2019
• Assessment Year: 2014-2015
• Appeal Filed On: 15-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: Y V S T SAI
• Keywords: TDS; Set aside

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A ', HYDERABAD BEFORE S MT. P. MADHAVI DEVI , JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN , ACCOUNTANT MEMBER ITA NO. 977 / HYD/201 8 ASSESSMENT YEAR: 20 1 4 - 1 5 DY. COMMISSIONER OF INCOME - TAX, CIRCLE 2 (2), HYDERABAD. VS. HYDERABAD RACE CLUB, HYDERABAD. PAN AAAC H 2773C APPELLANT RESPONDENT REVENUE BY: S HRI Y.V.S.T. SAI ASSESSEE BY: SHRI K.C. DEVDAS DATE OF HEARING: 27 / 0 3 / 201 9 DATE OF PRONOUNCEMENT: 05 / 0 4 /201 9 O R D E R PER S. RIFAUR RAHMAN , AM: T H IS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF CIT(A) 2 , GUNTUR , DATED, 06 / 03/ /201 8 FOR AY 20 1 4 - 1 5 . 2. BRIEF FACTS OF THE CASE ARE, THE ASSESSEE A LIMITED COMPANY, ENGAGED IN THE BUSINESS OF MAINTAINING AND OPERATION OF HORSE RACE COURTS FURNISHED ITS RETURN OF INCOME FOR THE AY 2014 - 15 ON 17/11/2014 ELECTRONICALLY U/S 139(1) OF THE INCOME - TAX ACT, 1961 ( IN SHORT THE ACT) DECLARING A TOTAL INCOME OF RS. 43,92,93,370/ - AND PAID TAXES AMOUNTING TO RS. 15,52,00,499/ - . SUBSEQUENTLY, THE CASE WAS SELECTED FOR SCRUTINY AND ACCORDINGLY STATUTORY NOTICES WERE ISSUED TO THE ASSESSEE. IN RESPONSE THE ASSESSEE FILE D THE REQUIRED INFORMATION. I.T.A. NO. 977 /HYD/1 8 HYDERABAD RACE CLUB, HYD. 2 2.1 THE AO OBSERVED THAT T HE ASSESSEE COMPANY MADE PAYMENTS OF ABOVE RS.5000/ - AND BELOW RS.5000/ - TO WINNING BETTING HOLDERS. IN RESPECT OF CASH PAYMENTS OF ABOVE RS. 5000/ - , THE ASSESSEE HAS MAINTAINED PROPER RECORD OF RECIPIENTS I.E. NAME & ADDRESS ETC. IN RESPECT OF PAYMENTS LESS THAN RS.5000, NO PROPER RECORD TO IDENTIFY THE PAYEE IS AVAILABLE / PRODUCED. DURING F.Y 13 - 14 RELEVANT TO A.Y 1 4 - 15, THE ASSESSEE COMPANY MADE CASH PAYMENTS OF LESS THAN RS.5,000/ - TO THE EXTENT OF RS.655,97,09,000 / - . HE OPINED THAT T HE ASSESSEE WA S UNABLE TO PRODUCE NAMES AND ADDRESS OF THE PAYEES, WITHOUT WHICH THE GENUINENESS OF PAYMENT COULD NOT BE VERIFIED. THE A.R FURTHER RELIED ON THE I.T.A.T JUDGEMENT IN ITS OWN CASE PE RTAINI NG TO 2004 - 05, 2005 - 06,2006 - 07, 2007 - 08,2008 - 09 & 2009 - 10. 2.2 THE AO FURTHER OBSERVED THAT THE ASSESSEE INSTEAD OF PRODUCING THE REQUIRED INFORMATION STATED THAT THE FACTS ARE THE SAME AS IN EARLIER YEARS AND THAT EVERYTHING WAS COMPUTERIZED AND THAT THE HON BLE I TAT ON SIMILAR FACTS AND CIRCUMSTANCES HAS DELETED THE DISALLOWANCE. THE AO WAS OF THE VIEW THAT I T IS TRUE THAT THE HON'BLE ITA T HAS DELETED THE AD - HOC DISALLOWANCE. HOWEVER, THE DEPARTMENT HAS NOT ACCEPTED THE DECISION OF THE TRIBUNAL AND THE MATTER IS PENDING BEFORE THE HON'BLE JURISDICTIONAL HIGH COURT. 5.5 IN LIGHT OF THE ABOVE OBSERVATIONS, THE AO HELD THAT SINCE ASSESSEE S INABILITY TO PRODUCE THE NAME AND ADDRESS OF THE PAYEES, 15% OF RS.655,97,09,000 / - , WHERE THE ASSESSE E NOT DEDUCTED TDS ON SUCH PAYMENT AMOUNTING TO RS.98,39,56,350 / - WA S DISALLO WED BY RELYING ON THE JUDGMENT OF THE HONBLE ALLAHABAD HIGH COURT IN THE CASE OF MOTILAL PADAMPAT UDYOG LTD. VS. CIT 187 ITR 515 (ALL.) I.T.A. NO. 977 /HYD/1 8 HYDERABAD RACE CLUB, HYD. 3 6. AGGRIEVED BY THE ORDER OF AO, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A) AND THE CIT(A) FOLLOWING THE DECIS ION OF THE COORDINATE BENCH OF THIS TRIBUNAL IN ASSESSEES OWN CASES FOR AYS 2004 - 05 TO 2009 - 10 DELETED THE DISALLOWANCE OF RS. 98,39,56,350/ - MADE BY THE AO TOWARDS UNVERIFIABLE PAYMENTS TO THE WINNER S OF BETTING FOR BELOW RS. 5,000/ - . 7. AGGRIEVED BY THE ORDER OF CIT(A) THE REVENUE IS IN APPEAL BE FORE US RAISING THE FOLLOWING GROUNDS OF APPEAL: 1) WHETHER, ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(A) IS CORRECT IN FOLLOWING THE DECISION OF THE APPELLATE TRIBUNAL IN DELETING THE DISALLOWANCE OF 15% OF EXPENDITURE ON AD - HOC BASIS WITHOUT APPRECIATING THE FACTS THAT THERE IS A LACK OF EVIDENCE SUPPORTING THE PAYMENTS ALLEGEDLY MADE (UPTO A LIMIT OF RS. 5000/ - ) 2) ANY OTHER GROUND THAT MAY BE URGED AT THE TIME OF HEARING. 8. CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT THE ISSUE IN DISPUTE IS SQUARELY COVERED BY THE DECISIONS OF THE COORDINATE BENCH OF THIS TRIBUNAL IN ASSESSEES OWN CASE FOR EARLIER AYS 2004 - 05 TO 2009 - 10. IN AY 2009 - 10, THE COORDINATE BENCH HAS HELD AS UNDER: 7. WE HAVE CONSIDERED RIVAL SUBMISSIONS OF THE PARTIES AND PERUSED THE MATERIAL ON RECORD. ON PERUSAL OF THE DOCUMENTS SUBMITTED BEFORE US WE FIND THAT IDENTICAL ISSUE OF AD HOC DISALLOWANCE OF 15% CAME UP FOR CONSIDERATION BEFORE THE INCOME - TAX - APPELLATE TRIBUNAL, HYDERABAD - BENCH IN CASE OF THE VERY SAME ASSESSEE RIGHT FROM THE ASST. YEAR 2004 - 05. THE COORDINATE BENCH OF THIS TRIBUNAL IN A SERIES OF ORDERS HAVE DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. IN THE LATEST ORDER PASSED FOR THE ASST. YEAR 20 08 - 09 IN ITA NO.120/HYD/2012 DATED 16 - 7 - 2012, THE TRIBUNAL FOLLOWING ITS EARLIER ORDER DELETED THE ADDITION BY OBSERVING AS UNDER: - I.T.A. NO. 977 /HYD/1 8 HYDERABAD RACE CLUB, HYD. 4 '5. WE HAVE HEARD THE ARGUMENTS OF BOTH THE PARTIES, PERUSED THE RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BEL OW. WE FIND THAT THIS ISSUE IS COVERED BY THE ORDER OF THE ITA T, HYDERABAD BENCHES IN ASSESSEE'S OWN CASE FOR AY2007 - 08 VIDE IN ITA NO. 1425/HYD/2011 VIDE PAGES 2 TO 11 OF THE ORDER AND AT PARA 8, THE TRIBUNAL HELD AS FOLLOWS: WE FIND THAT THE EARLIER O RDER OF THE ITAT HAVE ELABORATELY DEALT WITH THE ISSUE. THE DEPARTMENT HAS NOT BROUGHT ANYTHING TO SHOW THAT THE FACTS OF THE CASE ARE A NY DIFFERENT FROM THAT FOR THE AY 2004 - 05 AND 2005 - 06 COVERED BY THE ITAT ORDER. THE ACTIVITY OF THE ASSESSEE IS SUCH TH AT THEY. HAVE TO DEAL DAILY WITH NUMEROUS INDIVIDUALS IN A SHORT SPAN OF TIME WHEN THE BETTINGS ARE ON. THEY ACCEPT BETS AND SETTLE THE WINNING AMOUNTS TO THE WINNING PUNTERS. IT WILL BE DIFFICULT TO MAINTAIN COMPLETE DETAILS ABOUT ALL THE PERSONS. THE ENT IRE PAYMENT WAS THROUGH COMPUTERIZED SYSTEM. THE PAYMENT WAS MADE TO THE PERSON HOLDING THE WINNING TICKET. THE DEPARTMENT HAS NOT BROUGHT TO OUR NOTICE OF ANY INSTANCE OF PAYMENT WHEN THERE WAS NO WINNING TICKET. IN THE CIRCUMSTANCES, RESPECTFULLY FOLLOWI NG THE DECISION OF THE COORDINATE BENCH IN THE ASSESSEE'S OWN CASE WE DELETE THE AD HOC DISALLOWANCE OF 10% OF THE TOTAL PAYMENT FOR WINNING BETS OF LESS THAN 2500/ - EACH. THE APPEAL OF THE ASSESSEE ON THIS ISSUE IS ALLOWED. ' 7. SINCE THE ISSUE UNDER CO NSIDERATION IS IDENTICAL TO THE ONE DECIDED BY THE CO - ORDINATE BENCH IN ASSESSEE'S OWN CASE FOR A Y 2007 - 08(SUPRA), RESPECTFULLY FOLLOWING THE SAME, WE SET ASIDE THE ORDER OF THE CIT(A) AND ALLOW THIS GROUND OF APPEAL OF THE ASSESSEE. ' AS THE ISSUE IN D ISPUTE IS MATERIALLY IDENTICAL TO THE SAID AY, WE UPHOLD THE ORDER OF CIT(A) IN DELETING THE DISALLOWANCE OF RS. 98,39,56,350/ - MADE BY THE AO TOWARDS UNVERIFIABLE EXPENDITURE, AS THE DECISION OF THE CIT(A) IS IN CONSONANCE WITH THE ORDER OF TRIBUNAL AND T HE GROUNDS RAISED BY THE REVENUE ON THIS ISSUE ARE DISMISSED. I.T.A. NO. 977 /HYD/1 8 HYDERABAD RACE CLUB, HYD. 5 9 . IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 5 TH APRIL , 201 9. SD/ - ( P. MADHAVI DEVI ) JUDICIAL MEMBER SD/ - ( S. RIFAUR RAHMAN ) ACCOUNTANT MEMBER HYDERABAD, DATED 5 TH APRIL , 201 9. KV COPY FORWARDED TO: 1. DCIT, CIRCLE 2 (2), ROOM NO. 513, 5 TH FLOOR, SIGNATURE TOWERS, KONDAPUR, HYDERABAD. 2 . M/S HYDERABAD RACE CLUB, 16 - 10 - 1/A/1, RACE COURSE ROAD, MALAKPET, HYDERABAD 500 0 36 . 3 . CIT (A) , GUNTUR 4. PR. CIT 2 , HYDERABAD 5. THE DR, ITAT, HYDERABAD 6. GUARD FILE