M/S. PONNUSAMY HOTEL,CHENNAI vs. JCIT, CHENNAI

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ITA 2526/CHNY/2016Status: DisposedITAT Chennai14 February 2018AY 2010-115 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the ledger account clearly showed all payments were by cheque. The AO had not identified specific payments or bills that were not paid. Considering the opening and closing balances, the accounts tallied, and no disallowance was warranted.

What were the facts?

The assessee, a hotel business, claimed purchases of prawns amounting to Rs. 30,65,705/-. The AO disallowed Rs. 8,30,380/- stating that payments credited to the supplier's bank account were less than the claimed purchases. The assessee argued that all payments were by cheque and presented a ledger showing a running account with an opening and closing balance.

What were the issues?

Whether the disallowance of purchase expenses is justified when the assessee provides a ledger showing payments by cheque and a running account, and the supplier acknowledges the closing balance?

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘C’ BENCH: CHENNAI

Before: SHRI GEORGE MATHAN & SHRI S. JAYARAMAN

For Appellant: Adv. :
5.

In reply, the Ld.DR vehemently supported the order of the AO and the Ld.CIT(A).

6.

We have considered the rival submissions.

7.

A perusal of the ledger account as produced by the assessee clearly shows that all the payments to Smt.V.Latha in respect of the purchase of prawns are clearly by cheque. The AO recognizes that reconciliation statement has been filed before him. The AO also recognizes that closing balance as recorded by the assessee and as recorded by Smt.V.Latha, the supplier, are identical to an extent of Rs.5,77,186/-. However, the AO when he states that an amount of Rs. Rs.8,30,380/- has not been shown in the banking account of Smt.V.Latha, admittedly, has not satisfied which are the payments or the bills, which has not been shown to have been paid in the case of the assessee. Further, if the opening balance and the closing balance of the ledger, is removed in so far as the said opening balance is related to the earlier year and the closing balance is not to be considered as it would not be reflected in the bank account in so far as it has not been paid by issuance of cheque, the accounts would tally. This being so, we are of the view that there is no difference in the purchase account, which calls for any addition and consequently, the same stands deleted.

8.

In the result, the appeal filed by the assessee is allowed.

Order pronounced in the Open Court on February 14, 2018, at Chennai.

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