SREE AKSHAYAM ,CHENNAI vs. ITO , NON CORP. WARD 7 (5), CHENNAI

The appeal filed by the assessee is delayed by 74 days in filing the appeal, for which, the assessee has filed a petition for condonation of the delay, to which; the ld. DR has not raised any serious objection.

Brief facts of the case are that the assessee has filed his return of income on 31.10.2017 for the assessment year 2017-18 admitting its total income at NIL. The case was selected for scrutiny under CASS and notice under section 143(2) of the Income Tax Act, 1961 [“Act” in short] was generated and issued on 24.09.2018. Notice under section 142(1) of the Act was also issued to the assessee on 26.03.2019. After considering the details furnished by the assessee, the Assessing Officer has completed the assessment under section 143(3) of the Act dated 16.12.2019 assessing total income of the assessee at ₹.11,55,259/- by making disallowance of ₹.22,104/- being expenses are penal in nature and also ₹.5,35,500/- for want of proper bills/ vouchers. On appeal, the ld. CIT(A) partly allowed the appeal of the assessee.

On being aggrieved on the confirmation of disallowance of ₹.5,35,500/-, the assessee carried the matter in appeal before the Tribunal and contended in the grounds of appeal that the ld. CIT(A) has confirmed the disallowance without application of commercial expediency and nature of transactions in hotel business. Despite notice of hearing issued on the assessee, none appeared on behalf of the assessee when the appeal was taken up for hearing or any adjournment application filed. Hence, we proceed to decide the appeal on merits after hearing the ld. DR.

We have heard the ld. DR, perused the materials available on record and gone through the orders of authorities below. In the profit and loss account, the assessee has debited an amount of ₹.4,11,13,052/- under the head “Provisions/Raw Materials”. On verification of Bills/vouchers, the Assessing Officer noticed that some of the bills/vouchers are not puccka and do not contain the signatures of persons raising the bills to the extent of ₹.5,35,500/-. Accordingly, the Assessing Officer disallowed the said amount and brought to tax. On appeal, the ld. CIT(A) confirmed the disallowance. The contention of the assessee before the ld. CIT(A) was that all the payments were made through banking channel. The contention of the assessee in the grounds of appeal filed before the Tribunal was that the ld. CIT(A) has confirmed the disallowance without application of commercial expediency and nature of transactions in hotel business. It is an admitted fact that the assessee is running hotel, for which all the raw materials required for the hotel business cannot be purchased with puccka bills/vouchers. To meet the ends of natural justice, we remit the matter back to the file of the ld. CIT(A) to decide the issue afresh after considering the explanations as may be offered by the assessee. The assessee is also directed to furnish suitable explanation before the ld. CIT(A).

In the result, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced on 31st January, 2023 at Chennai.