DCIT, Central Cirlce-2,, Hyderabad v. M/s. Manokamana Chit Fund Pvt.Ltd, Hyderabad

ITA 342/HYD/2011 | 2003-2004
Pronouncement Date: 28-07-2011 | Result: Partly Allowed

Appeal Details

RSA Number 34222514 RSA 2011
Assessee PAN AAACM9450D
Bench Hyderabad
Appeal Number ITA 342/HYD/2011
Duration Of Justice 4 month(s) 23 day(s)
Appellant DCIT, Central Cirlce-2,, Hyderabad
Respondent M/s. Manokamana Chit Fund Pvt.Ltd, Hyderabad
Appeal Type Income Tax Appeal
Pronouncement Date 28-07-2011
Appeal Filed By Department
Order Result Partly Allowed
Bench Allotted SMC
Tribunal Order Date 28-07-2011
Assessment Year 2003-2004
Appeal Filed On 07-03-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A HYDERABAD BEFORE SHRI G.C. GUPTA VICE PRESIDENT AND SHRI AKBER BASHA ACCOUNTANT MEMB ER ITA NOS.200 TO 206/HYD/2011 : ASST. YEARS: 2002-0 3 TO 2008- 09 MANOKAMANA CHIT FUND PVT. LTD. GULZAR HOUSE HYDERABAD. (PAN: AAACM 9450 D) VS DCIT CENTRAL CIR-2 HYDERABAD. (APPELLANT) (RESPONDENT) ITA NOS.341 TO347/HYD/2011 : ASST. YEARS: 2002-03 TO 2008-09 DCIT CENTRAL CIR-2 MANOKAMANA CHIT FUND PVT. HYDERABAD. LTD. GULZAR HOUSE HYDERABAD. (PAN: AAACM 9450 D) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI GVVS MURTHY RESPONDENT BY : SHRI T. DIWAKAR PRASAD O R D E R PER AKBER BASHA ACCOUNTANT MEMBER: THESE FOURTEEN APPEALS SEVEN FILED BY THE ASSESSEE AN D OTHER SEVEN BY THE DEPARTMENT ARE DIRECTED AGAINST SE PARATE ORDERS OF CIT (A)-I HYDERABAD AND THEY PERTAIN TO THE ASSESSMENT YEARS 2002-03 TO 2008-09. SINCE COMMON ISSUES ARE INVOLVED IN ALL THE SE APPEALS THESE ARE TAKEN UP TOGETHER AND DISPOSED OFF BY THIS CO MBINED ORDER FOR THE SAKE OF CONVENIENCE. ITA NOS.200 TO 206 OF 2011 & OTHERS MA NOKAMANA CHIT FUND PVT. LTD.HYD. ============================= 2 2. SINCE FACTS ARE SIMILAR AND IDENTICAL IN ALL THESE APPEALS FOR THE SAKE OF BREVITY WE DEAL WITH FACTS AS MENTIONED IN ITA NO.200/HYD/2011 FOR ASSESSMENT YEAR 2002-03. BRIEFLY STA TED FACTS OF THE CASE ARE THAT A SEARCH AND SEIZURE OPERATION UNDER SE CTION 132 OF THE ACT WAS CARRIED OUT IN THE CASE OF THE ASSESSEE COMPAN Y. CONSEQUENT TO THE SEARCH NOTICES UNDER SECTION 153A WERE ISSUED AND SERVED ON THE ASSESSEE. THE ASSESSEE FILED THE RETURN OF INCOME FOR THE ASSESSMENT YEAR UNDER CONSIDERATION. THE ASSESSING OFFICER EX AMINED THE CASE AND COMPLETED THE ASSESSMENT BY MAKING THE DISALL OWANCE OF RS.17 74 135/- BEING THE 50% OF OVERALL EXPENDITURE DEBITED TO PROFIT AND LOSS A/C AND ADDITION OF RS.3 00 000/- UNDER SECTION 68 OF THE IT ACT REPRESENTING SHARE APPLICATION MONEY. AGGRIEVED AGAI NST THE ASSESSMENT ORDER THE ASSESSEE WENT IN APPEAL BEFORE THE CI T (A). ON APPEAL THE CIT (A) HELD THAT OUT OF THE TOTAL EXPE NDITURE DEBITED TO PROFIT AND LOSS A/C OF RS.33 39 284/- MOST OF THE EXPEND ITURES ARE DULY EXAMINED BY THE AUDITORS AND HENCE NO DISALLOWANCE I S CALLED FOR. FOR THE BALANCE AMOUNT HE DIRECTED THE ASSESSING OFFICER TO R ESTRICT THE DISALLOWANCE AT 10% OF THE EXPENDITURE OTHER THAN THE EXPENDITURE DISCUSSED BY HIM IN HIS ORDER. AGGRIEVED BY THE FINDI NGS OF THE CIT (A) THE ASSESSEE IS IN APPEAL BEFORE US CONTENDING THAT T HE LOWER AUTHORITIES ARE NOT CORRECT IN SUSTAINING THE DISALLOWANCE OF 10% OUT OF THE TOTAL EXPENDITURE DEBITED TO THE PROFIT AND LOSS A/C WITHOUT CONSIDERING THE FACTS AND THE EVIDENCE SUBMITTED BY THE A SSESSEE. WHEREAS THE REVENUE IS IN APPEAL BEFORE US CONTENDING THAT THE CIT (A) IS NOT JUSTIFIED IN REDUCING THE DISALLOWANCE TO 10% OF THE EXPENDITURE OTHER THAN THE EXPENDITURE DISCUSSED BY THE CIT (A) IN HIS ORDER. ITA NOS.200 TO 206 OF 2011 & OTHERS MA NOKAMANA CHIT FUND PVT. LTD.HYD. ============================= 3 3. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT T HE COMPANY REGULARLY MAINTAINS ITS DAY TO DAY BOOKS OF ACCO UNT UNDER THE CHIT FUND ACT AND ALSO UNDER THE COMPANIES ACT AND THE BOOKS OF ACCOUNT ARE AUDITED. THE MAIN EXPENDITURE DEBITED TO PROFIT AND LOSS ACCOUNT WERE AGENCY COMMISSION BANK INTEREST DEPRECIATI ON DIRECTORS REMUNERATION ELECTRICITY CHARGES PREMIUM ON BILLS PAYABLE STAFF SALARIES TELEPHONE CHARGES VEHICLE MAINTENANCE L EGAL AND ADVOCATE EXPENSES ETC. THE REMAINING EXPENDITURE WERE MOSTLY LESS THAN RS.50 000/- UNDER VARIOUS HEADS. THIS EXPENDITU RE WAS INCURRED FOR CARRYING ON DAY TO DAY BUSINESS OPERATION. ALL THE EXPENDITURE WAS SUPPORTED BY THE VOUCHERS AND WHILE PERFORMING THE AU DIT THE EXPENDITURE WAS VERIFIED. DURING THE COURSE OF ASSESSMEN T PROCEEDINGS THE ASSESSEE APPEARED IN RESPONSE TO THE NOTICES AND IT IS N OT A FACT THAT THE ASSESSEE HAD NOT PRODUCED ANY EVIDENCE AS SUCH. THE ASSESSE E APPEARED ON 17-8-2009 ALONG WITH ALL THE DETAILS ASKE D BY THE ASSESSING OFFICER INCLUDING THE VOUCHERS AND REGISTERS AND THEREFOR E IT IS NOT THE CASE THAT THE ASSESSEE IS NOT HAVING ANY EVIDENCE FOR EXPE NDITURE DEBITED TO PROFIT AND LOSS ACCOUNT. SINCE THE EXPENDITU RE WAS INCURRED IN THE REGULAR COURSE OF CARRYING ON THE BUSINESS THE E XPENDITURE DEBITED TO PROFIT AND LOSS A/C IS FAIR AND REASONABLE. FURTHER ON THE AGENCY COMMISSION TAX WAS DEDUCTED AT SOURCE AND BANK INTE REST CHARGED BY THE BANKERS IN THEIR ACCOUNTS AND THE DEPRECI ATION WAS CLAIMED BASED ON THE ASSETS POSSESSED BY THE COMPANY AND DEPRECIATION STATEMENT WAS ALSO SUBMITTED ALONG WITH TA X AUDIT REPORT. CONSIDERING THIS THE EXPENDITURE DEBITED IS ALLOWABL E EXPENDITURE AND NO DISALLOWANCE IS CALLED FOR. THE ASSESSEE ALSO SUBMITTED THAT THE ASSESSING OFFICER WHILE COMPLETING THE ASSESSMENT FOR ALL THE YEARS DID ITA NOS.200 TO 206 OF 2011 & OTHERS MA NOKAMANA CHIT FUND PVT. LTD.HYD. ============================= 4 NOT COMPUTE THE DISALLOWANCE PROPERLY AND CORRECTLY AND HAD MECHANICALLY COMPLETED THE ASSESSMENT. 4. ON THE OTHER HAND THE LEARNED DEPARTMENTAL REP RESENTATIVE SUBMITTED THAT THE ASSESSEE HAS NOT PRODUCED THE SUPPORTING DOCUMENTARY EVIDENCE BILLS AND VOUCHERS FOR VERIFICATIO N IN SUPPORT OF ALL THE EXPENDITURE IN SPITE OF SEVERAL OPPORTUNITIE S GIVEN BY THE ASSESSING OFFICER. EVEN THE RETURN OF INCOME FILED BY TH E ASSESSEE AFTER PROLONGED PERSUASION BY THE ASSESSING OFFICER. THE ONUS OF PRODUCTION OF BOOKS OF ACCOUNT AND OTHER DOCUMENTS ARE ENTIRELY ON THE ASSESSEE COMPANY. THE ASSESSING OFFICER DISALLOWED ONLY 50% OF THE OVER-ALL EXPENDITURE CLAIMED BY THE ASSESSEE. THE CIT (A) WAS NOT JUSTIFIED IN SUSTAINING THE 10% OF THE EXPENDITURE OTHER THAN THE EXPENDITURE LIKE AGENCY COMMISSION ELECTRICITY CHARGES ETC. DISCUSSED BY HIM. IT IS PRAYED TO DISALLOW THE EXPENDITURE AT 50% OF OVER-AL L EXPENDITURE. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE ASSESSEE COMPANY NOT PRODUCED ANY DOCUMENTARY EVIDENCE VOUCHERS IN SUPPORT OF THE EXPENDITURE CLAIMED BY IT. EVEN BEFORE US THE LEAR NED COUNSEL FOR THE ASSESSEE DID NOT BRING ANYTHING ON RECORD TO PROVE THAT THE ASSESSEE PRODUCED THE EVIDENCES CALLED FOR BY THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS. WHEN THE DOCUMENTARY EV IDENCE OF CORROBORATIVE VALUE ACCORDING TO THE ASSESSEE IS AVAILABL E WITH THE ASSESSEE THE LOWER AUTHORITIES CANNOT ACT ON THE AUDIT RE PORT OF THE COMPANY OR TDS CERTIFICATE ISSUED BY THE ASSESSEE ALONE. IT IS THE DUTY OF THE ASSESSEE TO FURNISH ALL THE REQUIRED DETAILS EVID ENCES BEFORE THE ASSESSING OFFICER FOR MAKING THE ASSESSMENT. THE LAW OF EV IDENCE ITA NOS.200 TO 206 OF 2011 & OTHERS MA NOKAMANA CHIT FUND PVT. LTD.HYD. ============================= 5 MANDATES THAT IF THE BEST EVIDENCE IS NOT PLACED BEFORE THE AUTHORITIES AND ADVERSE INFERENCE CAN BE DRAWN AGAINST THE ASSESSEE. W E FIND THAT SOME OF THE EXPENDITURES I.E. BANK INTEREST DEPRECIAT ION DIRECTORS SITTING FEE AND DIRECTORS REMUNERATION ARE ALL VERIFI ABLE NATURE AND NO DISALLOWANCE IS CALLED FOR. AT THE SAME TIME FOR OTH ER EXPENDITURES CLAIMED BY THE ASSESSEE NOT MENTIONED ABOVE THE ONUS IS ON THE ASSESSEE TO PRODUCE THE EVIDENCE IN SUPPORT OF ITS CLAIM. HOWEVER THE DISALLOWANCE OF 50% OF THE OVER-ALL EXPENDITURE MADE BY THE ASSESSING OFFICER IS ON THE HIGHER SIDE. IN VIEW OF THE ABOVE IN OUR CONSIDERED OPINION THE ENDS OF JUSTICE WOULD BE MET IF WE RESTRI CT THE DISALLOWANCE AT 25% OF THE TOTAL EXPENDITURE OTHER THAN BANK INT EREST DEPRECIATION DIRECTORS SITTING FEE AND DIRECTORS REMUNERATION. WE D IRECT ACCORDINGLY. THE GROUND RAISED BY THE REVENUE IS PARTLY ALLOWED WH ERE THE GROUND RAISED BY THE ASSESSEE FOR ALL THE YEARS UNDER CONSIDERATIO N IS REJECTED. 6. THE ONLY OTHER GROUND RAISED BY THE ASSESSEE IN ITA NO.203/HYD/2011 SURVIVING FOR OUR ADJUDICATION IS WHET HER THE LOWER AUTHORITIES ARE JUSTIFIED IN SUSTAINING THE ADDITION OF RS.5 20 812/- BEING THE UNEXPLAINED CASH BALANCE OR NOT. IT IS THE CONTENT ION OF THE ASSESSEE THAT THE ASSESSING OFFICER MADE THE ADDITION BY COMP ARING THE MAIN CASH BOOK WITH THE ACTUALS. THERE WAS A BALANCE I N THE REGULAR CASH BOOK AS WELL AS IN THE PETTY CASH BOOK. HENCE THERE SHOULD NOT BE ANY ADDITION ON THIS ACCOUNT. WE FIND THAT THE ASSESSING OFFICER MADE THE SAID ADDITION ONLY ON THE GROUND THAT THE ASSESSEE COMPANY NOT EXPLAINED THE DIFFERENCE OF THE CASH BALANCE IN SPITE OF DUE OPPORTUNITIES GIVEN BY HIM. AFTER CONSIDERING THE TOTALITY OF FACTS AND CIRCUMSTANCES OF THE CASE WE FEEL IT PROPER AND JUST TO RESTORE THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO VERIFY THE CLAIM OF THE ASSESSEE. ITA NOS.200 TO 206 OF 2011 & OTHERS MA NOKAMANA CHIT FUND PVT. LTD.HYD. ============================= 6 WE ALSO DIRECT THE ASSESSEE TO PRODUCE BOTH MAIN CASH BOOK AND PETTY CASH BOOK FOR VERIFICATION BEFORE THE ASSESSING OFFICER AND EXPLAIN THE DIFFERENCE OF CASH BALANCE BETWEEN THE BALANCE-SHEET AND THE CASH BOOK IF ANY. 7. IN THE RESULT ALL THE APPEALS FILED BY THE ASSESSEE ARE DISMISSED EXCEPT ITA NO.203/HYD/2011 WHICH IS PARTLY ALLOW ED FOR STATISTICAL PURPOSE WHEREAS ALL THE APPEALS FILED BY THE REVENUE ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE COURT ON 28-7-2011. SD/- SD/- (G.C. GUPTA) (AKBER BASHA) VICE PRESIDENT. ACCOUNTANT MEMBER. DT/- 28-7-2011. COPY FORWARDED TO: 1. MANOKAMANA CHIT FUND PVT. LTD. 22-5-127/1 SURA J MARKET GULZAR HOUSE HYDERABAD. 2. 3. 4 5. JMR* DCIT CENTRAL CIRCLE-2 HYDERABAD. CIT (A)-I HYDERABAD. CIT AP HYDERABAD. THE DR ITAT HYDERABAD. ITA NOS.200 TO 206 OF 2011 & OTHERS MA NOKAMANA CHIT FUND PVT. LTD.HYD. ============================= 7