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Income Tax Appellate Tribunal, ‘A(SMC
Before: SHRI ABRAHAM P. GEORGE]
आदेश / O R D E R
In this appeal filed by the assessee directed against an order dated 07.04.2016 of ld. Commissioner of Income Tax (Appeals)- Puduchery, it has raised the following grounds:- 1.‘’The order of the learned Commissioner (Appeals) has been passed without referring to the records and past assessment orders which have been subject to order of the Appellate Tribunal and has been passed solely relying on the ITA No.1500/Mds/16. :- 2 -: agreement extracted from the Appellant's representative before the Assessing Officer. 2.The learned Commissioner (Appeals) has erred in confirming the order of the Assessing officer without noticing that the addition made in the order has not been based on any specific omission or defect noticed by the Assessing Officer in the books of account, records or receipts and the Assessing Officer has not rejected the books of accounts as not reflecting the true state of affairs under section 145 of the Income-Tax Act. 3.The learned commissioner (Appeals) ought to have appreciated that an assessment cannot be made on the basis of any agreement extracted from the assessee or his representative and there is no provision in the Income-tax Act to do so. Assessments can be done only on the basis of books of account and records. The representative has obviously given the agreement just to please the Assessing Officer and to get into the good books of the Officer in respect of assessments in other cases.
4.The learned commissioner (Appeals) has deliberately omitted to mention in his order the affidavit filed by the appellant's representative denying that he had agreed for any proposal for fixing the rate of thirumanam (marriage)and that he had not agreed for any addition to the returned income. 5.The learned commissioner (Appeals) has also erred in not noticing that the number of marriage functions arrived at in the assessment order on page 2, i.e. serial numbers 22 to 71 comes to only 50 as shown in the assesee's statement reproduced on the same page and not 59, adopted by the Assessing Officer which is purely an arithmetical mistake which has to be rectified.
6.The learned commissioner (Appeals) has also erred in not noticing that there was no basis for assuming the number of receptions at 44 against 23 shown by the assessee and the Assessing Officer has not found nor mentioned any omissions in the books of account indicating any such understatement, especially when the entire receipts have been checked and accepted by the Service Tax Department. 7.The learned commissioner (Appeals) has further erred in ITA No.1500/Mds/16. :- 3 -: confirming the increase of 10% over last year's figures of the rentals for the various functions without any rhyme or reason.
The learned Commissioner (Appeals) ought to have allowed the telescoping of the sum of ₹6,37,900/- being additional income offered against the addition made, Assessment Order he appellant had no other income from business except share of income and hence the income offered, should be treated as emanating from the business of Kalyana Mandapam only.
The learned Commissioner (Appeals) has omitted to consider the ground that there had been a totalling mistake in the assessment order of ₹2,00,000/- to direct the officer to rectify the same’’.
Facts apropos are that assessee proprietor of M/s. Vel 2.
Sokkanathan Thirumana Nilayam and M/s. Dhanam Sales Centre had filed return of income for the impugned assessment year disclosing income of �10,53,100/-. There was a survey operation u/s.133A of the Income Tax Act, 1961 (in short the ‘’Act’’) in the business premises of M/s. Vel Sokkanathan Thirumana Nilayam on 16.09.2009. During the survey, Revenue authorities found marriage invitations numbering fifty nine. According to the ld. Assessing Officer, there were evidence to show that assessee had held twenty three number more of receptions than what was shown by it in the return of income filed. Ld. Assessing Officer worked out receipts of the assessee as under:-
ITA No.1500/Mds/16. :- 4 -:
Marriages (59 X �44,600) = �26,31,400 Reception (44 X �19,800) = � 8,71,200 Meeting (1 X �21,620) = � 21,620 Exhibition (6 X �71,552) = � 4,29,312/- ----------------- Total = �39,53,532/- ------------------ Since assessee has returned �25,80,201/- as rental collections, difference of �13,73,331/- was added as income.
Aggrieved, assessee moved in appeal before ld. Commissioner of Income Tax (Appeals). Contention of the assessee was that books of accounts were produced but were rejected without any reasons. As per assessee rental from marriage hall was arbitrarily estimated by the ld. Assessing Officer. Further as per assessee, he had in his return of income offered an additional income of �6,37,900/, and this should have been allowed for setoff. Further contention of the assessee was that rental rates for marriage hall was arbitrarily increased by 10% from that of the preceding year. Ld. Commissioner of Income Tax (Appeals) after going through the contentions of the assessee was of the opinion that ld. Authorised Representative of the assessee had during the course of assessment proceedings accepted the findings of the ld. Assessing Officer regarding income from the marriage hall. Further according to him number of excess functions worked out by the ld. Assessing Officer was not based on any presumption but based on impounded documents. In so far as claim
ITA No.1500/Mds/16. :- 5 -: of set off income of �6,37,900/- offered by the assessee, observation of the ld. Commissioner of Income Tax (Appeals) was that assessee never claimed rental income as representing the credits appearing in its capital account. Ld. Commissioner of Income Tax (Appeals) also held that enhancement of rental rates by 10% done by ld. Assessing Officer was reasonable. With these observations, he dismissed the appeal filed by the assessee.
Now before me, ld. Authorised Representative strongly assailing the orders of the lower authorities submitted that ld. Assessing Officer had relied on a file containing marriage invitations with serial numbers 22 to 71 for computing rental during the relevant previous year. As per ld. Authorised Representative against actual forty nine numbers. Ld. Assessing Officer had considered fifty nine numbers. According to him, the impounded records which were relied on by the ld. Assessing Officer was never made available to the assessee. Further, as per ld. Authorised Representative enhancement of 10% of rental income was also not based on any valid reasoning.
In any case, according to him assessee itself had admitted an additional income of �6,37,900/- in its return and therefore any addition for difference in rental income ought to have been reduced atleast by this amount.
ITA No.1500/Mds/16. :- 6 -:
Per contra, ld. Departmental Representative strongly 5.
supported the orders of the authorities below. Further he submitted that additions were accepted by the assessee’s representative, and grounds taken by the assessee should be dismissed.
I have heard rival submissions and perused the orders of the lower authorities. Ld. Commissioner of Income Tax (Appeals) has confirmed the addition after noting that additions were agreed by the ld. Authorised Representative of the assessee before the ld. Assessing Officer. He has reproduced relevant order sheet entry in full. It is mentioned therein that ld. Authorised Representative had accepted the suppression of nine functions for marriage and twenty three receptions. When ld. Authorised Representative had entered in appearance before ld. Assessing Officer and accepted suppression of income, it would be naïve to presume that he had done so without being aware of about the contents of the impounded documents. The increase of rate for Thirumanan mandapam was based on a comparison of rates with earlier years. In the circumstances, I am of the opinion that rental income from Thirumanam mandapam was correctly worked out at �39,53,532/-. The only question remaining is whether assessee could be allowed telescoping of �6,37,900/- additionally returned by it against difference of �13,73,331/- which was added to its income. Ld. Commissioner of ITA No.1500/Mds/16. :- 7 -:
Income Tax (Appeals) had denied this claim of set off only for a reason that credits in the capital account had no link with the additional rental income. I am of the opinion that credits in the capital account could only have been due to additional rental income earned by the assessee. In the facts and circumstances, I am of the opinion that assessee’s claim of set off of �6,37,900/- against addition of �13,73,331/- has to be allowed. I direct the ld. Assessing Officer to give relief to the assessee to this extent. Balance of the addition stands confirmed.
In the result, the appeal of the assessee is partly allowed. Order pronounced on Wednesday, the 25th January, 2017, at Chennai.