Income Tax Appellate Tribunal - Chandigarh
British Air Hostess Academy Pvt. Ltd., ... vs Assessee
IN THE INCOME TAX APPELLATE TRIBUNAL
CHANDIGARH BENCHES 'A' CHANDIGARH
BEFORE SHRI D.K.SRIVASTAVA, ACCOUNTANT MEMBER
AND MS SUSHMA CHOWLA, JUDICIAL MEMBER
ITA No. 232/Chd/2011
Assessment Year: 2007-08
M/s British Air Hostess Academ y Pvt Ltd, Vs. The ITO,
Chandigarh Ward 4(3),
Chandigarh
PAN No. AADCB0950E
&
ITA No. 233/Chd/2011
Assessment Year: 2007-08
M/s British Academ y Pvt Ltd., Vs. The ITO,
Chandigarh Ward 4(3),
Chandigarh
PAN No. AACCB4985C
(Appellant) (Respondent)
Appellant By : Shri T.N.Singla
Respondent By: Shri N.K.Sani
ORDER
PER SUSHMA CHOWLA, JM
Both the appeals by the assessee are against the order of CIT(A), Chandigarh dated 22.11.2010 both relating to assessment year 2007-08 against the order passed under section 143(3) of the I.T. Act, 1961 involving similar issues were heard together. The appeals are being disposed of by this consolidated order for the sake of convenience. 2
2. The assessees have raised the following common grounds of appeal:-
1. That the order of Ld. CIT(A) is bad and against facts and law.
2. That the Ld. CIT(A) has wrongly passed order under section 144 for non-submission of books of account whereas the books were produced before the Ld. Assessing Officer and he kept it for checking for about one month.
3. That the Ld. CIT(A) had wrongly made an addition of Rs. 58,70,100/- as difference in Fee Receipts during the year and treated the same as unrecorded receipts in the books of account.
4. That the Ld. CIT(A) has not given the benefit of fees refunded to students who left the courses during the year.
5. That the Ld. CIT(A) has not given the benefit of expenses of Singapore Educational Tour and also the fees refunded to students who had not attended the Singapore Tour.
6. That the Ld. CIT(A) has wrongly made an addition of Rs. 1,96,000/- by disallowing advertisement Expense paid during the year for non - deduction of TDS under section 40(a)(ia).
7. That the Ld. CIT(A) has wrongly made an addition of Rs. 5,18,721/-(i by disallowing Rent Expense paid during the year for non -deduction of TDS under section 40(a)(ia).3
3. The brief facts in ITA No. 232/Chd/2011 are that the assessee had furnished return of income declaring total income at nil. The assessee was engaged in imparting training to Air Hostesses and the case of the assessee was picked up for scrutiny. Survey operations u/s 133A of the Act was conducted at the business premises of the assessee on 24.9.2007 and during the course of survey, certain documents were found and impounded, which related to assessment year 2007-08 i.e. the year under appeal. During the assessment proceedings, various notices were sent to the assessee which were complied with on certain dates. The assessee did not produce the books of account and hence summons were issued on 24.8.2009 to the Managing Director to appear personall y on 1.9.2009 and to produce complete books of account with supporting documents for the financial years 2004-05, 2005-06 & 2006-07. The assessee failed to attend the office in compliance with the summons issued and failed to produce the books of account. Another summons u/s 131 of the Act were issued to appear on 4.9.2009 along with information. On the said date, the Managing Director of the assessee company appeared but as per Assessing Officer failed to produce the books of account. Another show case notice was issued to the assessee that in the absence of the production of books of account, why best judgment assessment should not be framed u/s 144 of the Act. On the appointed date of hearing, the books of account were produced and the statement of one of the directors appearing on the said date was also recorded. The assessee was asked to reconcile the entries in the books of account with the impounded material. The observation of the Assessing Officer in para 1.4 at page 9 of the assessment order are that the books of account were maintained onl y after the survey conducted u/s 133A of the Act and the same were not regularl y maintained on day to day basis. On the next date of hearing, the counsel 4 for the assessee furnished a consolidated statement in respect of the receipts vis-a-vis books of account and the documents seized during the survey operations. The Assessing Officer rejecting the explanation of the assessee resorted to the provisions of section 145(3) of the Act and made the assessment as provided under the provisions of Section 144 of the Income Tax Act. The Assessing Officer computed the receipts not reflected by the assessee in its books of account at Rs. 58,70,100/- which was added as income of the assessee. The CIT(A) upheld the rejection of books of account and also upholded the addition on account of the receipts as additional income of the assessee. The assessee is in appeal against the order of CIT(A).
4. The Ld. AR for the assessee drew our attention to the various communications moved before the Assessing Officer and the furnishing of the details from day to day. Vide letter dated 9.10.2009, it was pointed out that majorit y of the records was seized by the Revenue Department during the survey conducted at the premises of the assessee. It was further pointed out that "further complete books of account in the shape of cash book, ledger, bank statement of company, bank statement of directors are already submitted in your office, which are lying in your custody for your kind perusal". Further, it was submitted that the vouchers of expenses would be produced on 14.10.2009. Vide letter dated 14.10.2009, a reference was made to the statement recorded of Mr. Gurmail Singh, employee of the assessee company who is teaching in the academ y. It was pointed out that the regarding the query about preparation of books of account in the year under consideration, the repl y of Mr Gurmit Singh was in connection with the printing of books of account and not maintenance of books of account. It was claimed by the assessee that regular books of 5 account were being maintained and during survey the books of account could not be produced due to virus in the computer, where the books of account were maintained. In the said letter it was further mentioned that all the books of account were impounded by the Assessing Officer and were kept for about a month and no defect was pointed out in the said books of account, which was returned on 14.10.2009. The bills and vouchers of expenses were also claimed to have been produced and after verification, the same were returned to Shri Gurmail Singh along with the books of account earlier impounded. A request was made to suppl y the copy of the statement recorded of Mr. Gurmail Singh. The assessee also moved a letter dated 17.11.2009 under which it claimed to have furnished the reconciliation of receipts during the year and in the said letter there is a mention of production of books of account. The plea of the assessee is that despite the above said evidence produced, the books of account were summaril y rejected by the Assessing Officer. The date wise sequence of events was furnished before the C IT(A) with regard to the production of books of account and other related evidence / documents filed which has been brushed aside by the C IT(A).
5. The Ld. DR for the Revenue placed reliance on the orders of the authorities below. We have heard the rival contentions and perused the records. The assessment in the case was completed by the Assessing Officer after rejecting the book results shown by the assessee by invoking the provisions of section 145(3) of the Act. The basis for rejecting the books of account was the non production of the said books during the course of assessment proceedings and also supporting vouchers in respect thereof. From the perusal of the communication between the assessee and the Assessing Officer, copies of which are available on record, we find 6 that the assessee had produced the books of account before the Assessing Officer which as per the assessee was kept by the Assessing Officer for a period of more than one month in his office. The assessee has also pointed out the said fact before the CIT(A) as per the written submissions furnished before the CIT(A) placed at pages 1 & 2 of the paper book. Another basis for rejection of the books of account in the present case is the statement of one of the director Mr Gurmail Singh who in repl y to a query raised by the Assessing Officer admitted that the print outs of the books of account were taken on a later date. Admittedl y, the books of account were maintained on computer and during the course of survey, no print outs were produced before the survey team because of the claim of the assessee that there was a virus in the said computer. However, the said books of account alongwith supporting vouchers were produced before the Assessing Officer and as per letter dated 17.10.2009 addressed to the Assessing Officer, the assessee claims that the said books of account were kept by the Assessing Officer for more than one month. The said letter is placed at page 6 of the paper book. The Ld. AR for the assessee pointed out that the authorities below have failed to look into the reconciliation statement prepared by the assessee explaining receipts as per the books of account and as available in the impounded documents seized during the course of survey.
6. In the entiret y of facts and circumstances of the case, we are of the view that under the principles of natural justice the assessee should be allowed another opportunit y to explain its case. The assessee is maintaining books of account alongwith supporting vouchers and we direct the Assessing Officer to afford a reasonable opportunity of hearing to the assessee in order to reconcile the difference in the receipts vis-a-vis 7 books of account and the papers impounded during the survey. Accordingl y, we remit the issue back to the file of Assessing Officer to decide the issue de novo in accordance with law.
7. The assessee by way of ground Nos. 6 & 7 has raised the issues in connection with the disallowance of advertisements expenses and rent expenses. As we are remitting the issue back to the file of Assessing Officer in connection with determination of income in the hands of assessee, the said issues are also remitted back to the Assessing Officer to decide the same de novo after affording a reasonable opportunit y of hearing to the assessee in accordance with law. The ground of appeal raised by assessee are allowed for statistical purposes.
8. The facts in ITA No. 233/Chd/2011 are identical to the facts in ITA No. 232/Chd/2011 and the similar issues have been raised by the assessee in ITA No.233/Chd/2011. We remit the present issue also back to the file of Assessing Officer to decide the same de novo after affording as reasonable opportunity of hearing to the assessee. The grounds of appeal raised by assessee are allowed for statistical purposes.
9. In the result, both the appeals of the assessee are allowed for statistical purposes.
Order Pronounced in the Open Court on this 26 t h day of April, 2011.
Sd/- Sd/-
(D.K.SRIVASTAVA) (SUSHMA CHOWLA)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Dated : 26 t h April, 2011
Rkk
8
Copy to:
1. The Appellant
2. The Respondent
3. The CIT
4. The CIT(A)
5. The DR
True Copy
By Order
Assistant Registrar,
ITAT, Chandigarh