M/S. GOLDEN SHELTERS PVT. LTD.,CHENNAI V. DCIT, CORP. CIRCLE-2(1), CHENNAI

ITA 2991/CHNY/2024

AI Insights

The case involves M/s. Golden Shelters Pvt. Ltd., which appealed against the disallowance of honorarium expenses claimed in their tax returns for the Assessment Years 2011-12 and 2012-13. The company had initially claimed an honorarium of Rs. 2,20,50,000 paid to volunteers, which was partially disallowed by the AO due to lack of documentary evidence. Following a survey, the AO reopened the assessment and disallowed the entire honorarium amount, which was later reduced to 75% by the CIT(A). The Tribunal found that since the issue was previously adjudicated, the AO was not competent to reassess the same in the reopened assessment.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 706036 (ITAT-CHENNAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2012-2013
• Other Referred Cases: CIT v. Reliance Energy Ltd. [255 CTR 357 (Bom.)], CIT v. Flothern Engineers (P.) Ltd. [225 Taxman 2230 (Mad.)]
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MADAN KUMAR
• Assessee Lawyers: RAKESH JOSHI; C.A VIRTUAL
• Keywords: Reassessment proceedings; Corroborative evidences
• Section: 143(3); 133A

Judgement Text

"आयकर अपीलीय अिधकरण, ‘ए’ \u0011ा यपीठ, चे\u0016ई। IN THE INCOME TAX APPELLATE TRIBUNAL ‘A’ BENCH: CHENNAI \u0019ी यस यस िव ने रिव, \u0011ा ियक सद एवं \u0019ी जगदीश, लेखा सद क े सम' BEFORE SHRI SS VISWANETHRA RAVI, JUDICIAL MEMBER AND SHRI JAGADISH, ACCOUNTANT MEMBER आयकर अपील सं./ITA Nos.2989 & 2991/Chny/2024 िनधा ;रण वष; /Assessment Years: 2011-12 & 2012-13 M/s. Golden Shelters Pvt. Ltd., No.33, Shafee Mohamed Road, Rutland Tower, Off Greams Road, Chennai – 600 006. [PAN: AABCG 9567C] Vs. The Dy. Commissioner of Income Tax, Corporate Circle-2(1), Chennai. (अपीलाथ\u0007/Appellant) (\b यथ\u0007/Respondent) अपीला थG की ओर से/ Appellant by : Shri Rakesh Joshi, C.A (virtual) IJथG की ओर से /Respondent by : Shri Madan Kumar, JCIT सुनवा ई की ता रीख/Date of Hearing : 03.04.2025 घोषणा की ता रीख /Date of Pronouncement : 30.06.2025 आदेश / O R D E R PER JAGADISH, A.M : Aforesaid two appeals filed by the assessee for Assessment Years (AYs) 2011-12 & 2012-13 arises out of the orders of Learned Commissioner of Income Tax (Appeal), Chennai-18 [hereinafter “CIT(A)”] dated 28.09.2024 in the matter of assessments framed by Ld. Assessing Officer [AO] u/s. 143(3) r.w.s 147 of the Income-tax Act, 1961 (hereinafter “the Act”) dated 10.12.2018. ITA Nos.2989 & 2991/Chny/2024 M/s. Golden Shelters Pvt. Ltd.` :- 2 -: 2. The facts in both the appeals of the assessee are identical and issues are common hence, we proceed to pass a common order. For brevity, we shall take up the appeal in ITA No.2989/Chny/2024 for A.Y 2011-12 as lead case. 3. The assessee-company is engaged in the business of providing accommodation facilities, spiritual healing, and conducting meditation and yoga classes. The assessee-company filed its return of income for A.Y. 2011-12 electronically, declaring total income of Rs. 2,25,41,470/. The A.O during course of scrutiny proceeding found that the assessee has paid Honorarium of Rs. 2,20,50,000/- to volunteers for various services, but no documentary evidence was produced to substantiate the claim. The A.O, therefore, made an ad-hoc disallowance of 50% of the claimed amount. Aggrieved by the addition, the assessee filed an appeal before the Ld. CIT(A), who confirmed the disallowance. Subsequently, a survey u/s 133A of the Act was conducted on 08.02.2018 and statement of Sri Badri Narayanan, Director of the assessee-company was recorded where he stated that although the expenses were genuinely incurred, the company was unable to furnish documentary evidence and, therefore, the Honorarium amount is offered as income. Based on this statement, the AO reopened the ITA Nos.2989 & 2991/Chny/2024 M/s. Golden Shelters Pvt. Ltd.` :- 3 -: assessment and made a further disallowance of Rs. 1,10,25,000/-. On appeal, the Ld. CIT(A) revised the disallowance to 75% of the total Honorarium claim on an ad-hoc basis. 4. Before us, the Learned Authorized Representative (AR) raised legal ground, contending that the issue of Honorarium was already considered during the original assessment proceedings, where a disallowance of 50% was made, and the same was upheld by the Ld. CIT(A). Therefore, the assessment order had merged with the order of the Ld. CIT(A) in respect of this issue. The Ld. AR, referring to the third proviso to Section 147 of the Act, argued that the AO is not empowered to assess or reassess income which relates to matters already subject to an appellate order. Since the issue of Honorarium was a subject matter of the original assessment and appellate proceedings, the AO could not have made an addition on the same issue in the reassessment proceedings. In support, the Ld. AR relied on the judgment of the Hon’ble Bombay High Court in the case of CIT v. Reliance Energy Ltd. [255 CTR 357 (Bom.)] and the decision of the Hon’ble Madras High Court in the case of CIT v. Flothern Engineers (P.) Ltd. [225 Taxman 2230 (Mad.)]. ITA Nos.2989 & 2991/Chny/2024 M/s. Golden Shelters Pvt. Ltd.` :- 4 -: 5. On the other hand, the Learned Departmental Representative (Ld. DR) relied on the orders of the lower authorities and argued that A.O was competent to reassess the income as assessee has agreed for further disallowances of honorarium during survey . 6. We have heard the rival submissions and perused the materials available on record. The AO, in the original assessment order, had disallowed 50% of the honorarium claimed, as the assessee failed to produce supporting evidence. This disallowance was upheld by the Ld. CIT(A). However, the AO based on a survey statement , reopened the assessment and disallowed the entire honorarium amount in the reassessment order u/s 147 . On appeal, the Ld. CIT(A), restricted the disallowance to 75% on an ad-hoc basis. We are in agreement to Ld A.R that the third proviso to Section 147 of the Act clearly stipulates that the AO in the reassessment order u/s 147 of the Act, can assess or reassess , only income other than the income involving matters which were not the subject matter of appeal. Since the disallowance of honorarium was already the subject matter of an appeal and was adjudicated by the Ld. CIT(A) in 143(3) proceeding , the AO could not reassess the same matter in reopened 147 assessment order. We, therefore, hold that further disallowances of honorarium made by A.O, ITA Nos.2989 & 2991/Chny/2024 M/s. Golden Shelters Pvt. Ltd.` :- 5 -: is not according to law. Accordingly, the further disallowances of honorarium to the extent of 25% confirmed by the Ld CIT(A) is, therefore reversed. In view of the above, the appeal filed by the assessee for A.Y. 2011-12 is allowed. ITA No.2991/Chny/2024: 7. We find that the identical issue is involved in assessee’s appeals for A.Y 2012-13 also and accordingly, our adjudication above in A.Y 2011-12 is mutatis mutandis applies therein also. Therefore, following our decision in the lead case, the disallowance made in this year is also deleted for the same reasons. 8. In the result, both the appeals filed by the assessee are allowed. Order pronounced on 30th day of June, 2025 at Chennai. Sd/- Sd/- (यस यस िव ने रिव) (SS Viswanethra Ravi) \u0001याियक \u0001याियक \u0001याियक \u0001याियक सद\bय सद\bय सद\bय सद\bय / Judicial Member (जगदीश) (Jagadish) लेखा लेखा लेखा लेखा सद\u0011य सद\u0011य सद\u0011य सद\u0011य /Accountant Member चे\u0013नई/Chennai, \u0016दनांक/Dated: 30th June, 2025. EDN/- ITA Nos.2989 & 2991/Chny/2024 M/s. Golden Shelters Pvt. Ltd.` :- 6 -: आदेश क\u0019 \bितिल प अ े षत/Copy to: 1. अपीलाथ\u0007/Appellant 2. \b थ\u0007/Respondent 3. आयकर आयु\u000f/CIT, Chennai 4. िवभागीय \bितिनिध/DR 5. गाड\u0018 फाईल/GF "