MANARKATTU THEATRES P LTD,KOTTAYAM V. INCOME TAX OFFICER, KOTTAYAM

ITA 224/COCH/2025

AI Insights

Manarkattu Theatres Pvt. Ltd. appealed against the order of the Commissioner of Income Tax (Appeals), which upheld the additions made by the AO under sections 69C and 40A(3) of the Income-tax Act, 1961. The additions included unexplained expenditure, disallowance of certain expenses, and an estimated addition towards profit margin. The Tribunal found that the AO and CIT(A) had not considered the detailed submissions and evidence provided by the assessee during the assessment and appellate proceedings. Consequently, the Tribunal restored the matter to the AO for a fresh assessment, emphasizing the need for a fair consideration of the assessee's submissions.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 315375 (ITAT-COCHIN)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-05-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2018-2019
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: LEENA LAL; SENIOR
• Assessee Lawyers: MATHEW JOSEPH
• Keywords: Opportunity of being heard; Unexplained expenditure
• Section: 148; 69C

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN Before Shri George George K, Vice-President & Shri Inturi Rama Rao, Accountant Member ITA No.224/Coch/2025 :Asst.Year 2018-2019 Manarkattu Theatres Pvt. Ltd. Manarkattu Building, Pala Kottayam – 686 575. PAN :AABCM5156F. v. The Income Tax Officer Circle & TPS Kottayam. (Appellant) (Respondent) Appellant by : Sri.Mathew Joseph, CA Respondent by : Smt.Leena Lal, Senior AR Date of Hearing :15.05.2025 Date of Pronouncement : 16 .05.2025 O R D E R Per George George K, Vice-President : This appeal at the instance of assessee is directed against the order of the National Faceless Appeal Centre / Commissioner of Income Tax (Appeals) [hereinafter “CIT(A)”], dated 24.02.2025, passed u/s.250 of the Income-tax Act, 1961 (hereinafter “the Act”) The relevant assessment year is 2018-2019. 2. The grounds raised read as follows:- “1. The learned Commissioner of Income Tax (Appeals), NFAC, Delhi went wrong in upholding the addition of RS.1,72,14,705 as unexplained u/s 69C without considering the nature of business. The fact that this amount is included in the gross collection and expenses towards entertainment tax, distributors share etc. were paid from this was ignored by the Officer and the CIT (A) ITA No.224/Coch/2025. Manarkattu Theatres Private Limited. 2 2. The Assessing Officer and Commissioner of Income Tax (Appeals), NFAC, Delhi has erred in disallowing Rs.6,88,911 u/s40A(3) without considering the facts of the case. 3. The Assessing Officer and Commissioner of Income Tax (Appeals), NFAC, Delhi has went wrong in confirming the estimated addition of Rs.2,19,642 towards profit margin without pointing out any defects in the accounts.” 3. Brief facts of the case are as follows: The assessee is a company. It is running two cinema theatres. For the assessment year 2018-2019, the return of income was filed in response to notice issued u/s.148 of the Act, declaring total income to the tune of Rs.12,73,860. The assessment order was passed on 24.03.2023 u/s.147 r.w.s. 144B of the Act, determining total income at Rs.1,93,97,120. The addition made by the Assessing Officer (hereinafter “the AO”) are detailed below:- Addition for lesser NP with reference to last year Rs.2,19,643 Disallowance u/s.40A(3) Rs.6,88,911 Addition u/s.69C Rs.1,72,14,706 ------------------ Total Rs.1,81,23,260 ========== 4. Aggrieved by the assessment completed u/s.147 r.w.s. 144B of the Act, the assessee preferred appeal before the first appellate authority. The CIT(A) confirmed the additions made by the CIT(A) by holding that the assessee has not produced any evidence in support of its contentions. Consequently, the appeal of the assessee was dismissed. The relevant finding of the CIT(A), reads as follow:- ITA No.224/Coch/2025. Manarkattu Theatres Private Limited. 3 “5.1 Decision: I have carefully considered the relevant and material facts on record, in respect of this ground of appeal, as brought out in the assessment order. During the assessment proceedings, AO observed that the assessee had unexplained expenditure of Rs. 1,72,14,706/-, the assessee had under reported the net profit to the tune of Rs. 2,19,642/- and the assessee had falsely claimed expenditure of to the tune of Rs. 6,88,911/-. Subsequently, A notice u/s 148 of the Income Tax act, 1961 dated 30.03.2022 was issued along with various other notices. The assessee failed to give a satisfactory reply and provide any required details. Hence, the A.O. completed the assessment and passed order u/s. 147/147B of the Income-tax Act dated 24.03.2023 Assessing total Income at Rs. 1,93,97,119/-. 5.2. It is further noted and as detailed in preceding para above that during the appellate proceedings, the appellant has not furnished any substantial evidence in support of its grounds of appeal. The appellant has challenged the addition in the different grounds of appeal. However, the appellant has not furnished any substantial written submission or documentary evidence in support of its grounds of appeal challenging the addition. The appellant has also not submitted any copy of its written submission or documentary evidence filed during the assessment proceedings. The onus lies on the appellant to support any claim by bringing in cogent documentary evidence. In absence of any substantial written submission or documentary evidence in support of its grounds of appeal, I have no basis to take a contrary view in the appellate proceedings as I have no reason to interfere with the assessment order. As such, I do not find any infirmity in the order of Assessing Officer. Therefore, Addition of Rs. 1,72,14,706/-, Rs. 2,19,642/- and 6,88,911/- (Assessing total Income at Rs. 1,93,97,119/-) is hereby sustained on merits.” 5. Aggrieved by the order of the CIT(A), the assessee has filed the present appeal before the Tribunal. The learned has filed a brief written submission in support of its grounds. The learned AR submitted that the AO and the CIT(A) have not considered various documents uploaded by the assessee including cash book, day book, various expenses ledger, bank accounts, etc. It was submitted that the assessee had filed detailed written submissions to all the queries raised during the course of ITA No.224/Coch/2025. Manarkattu Theatres Private Limited. 4 assessment proceedings as well as appellate proceedings. However, the AO and the CIT(A) has not considered the same. The learned AR has placed on record e-proceedings response acknowledgement detailing various written submissions uploaded and the evidences in support of the submissions (both during the assessment proceedings and also appellate proceedings). 6. The learned Departmental Representative supported the orders of the AO and the CIT(A). 7. We have heard rival submissions and perused the material on record. The assessee has placed on record e-proceedings response acknowledgement. On a reference to the same, we find that the assessee had given detailed written submissions and uploaded the details including audited accounts, various expenditure ledger, bank account statements, etc. The assessee in response to the queries raised during the assessment proceedings and the appellate proceedings, had filed detailed submissions. We find on perusal of the assessment order and the CIT(A)’s order, none of the submissions and details submitted during the course of proceedings have been taken into consideration while passing the impugned orders. Therefore, in the interest of justice and equity, we restore the matter to the files of the AO for fresh adjudication of the issues raised herein. The AO is directed to afford reasonable opportunity of being heard to the assessee. The AO shall consider the written submission and the evidences placed on record, before a decision is taken in the matter. It is ordered accordingly. ITA No.224/Coch/2025. Manarkattu Theatres Private Limited. 5 8. In the result, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced on this 16th day of May, 2025. Sd/- (Inturi Rama Rao) Sd/- (George George K) ACCOUNTANT MEMBER VICE-PRESIDENT Cochin; Dated : 16th May, 2025. Devadas G* Copy to : 1. The Appellant. 2. The Respondent. 3. The CIT, Cochin. 4. The DR, ITAT, Cochin. 5. Guard File. Asst.Registrar/ITAT, Cochin "