POPCORN ENTERTAINMENT P.LTD,MUMBAI vs. ACIT 11(1), MUMBAI

आदेश / O R D E R

Per Joginder Singh (Judicial Member)

2.1 We have considered the rival submissions and perused the material available on record. The facts in brief are that the assessee company is in the business of entertainment, declared loss of Rs.19,26,988, in its return filed on 23rd November 2006. A survey action u/s 133A was carried out on 23rd November 2006. Certain documents were impounded wherein it was found that an amount of Rs.35,35,791, was not reflected in the books of account of the assessee. It was claimed by the assessee that these expenses were booked in the accounts of Mr. Prakash Khubchandani. However, neither any documentary evidence was furnished by the assessee nor any confirmation from Mr. Prakash Khubchandani was filed. These documents were found from the office premises of the assessee company. Such expenditure was treated as unexplained expenditure for which penalty was imposed u/s 271(1)(c). The A.O. asked the assessee to furnish the confirmation from the director but that was not done by the assessee. The ld. A.O. was of the view that had there been no survey by the Department, the income would have escaped assessment, therefore, the addition was made against which no appeal was filed by the assessee before this Tribunal meaning thereby the addition was accepted to be correct which was sustained by the ld. Commissioner of Income Tax (Appeals). We note that right from the assessment stage till this Tribunal, no evidence has been furnished by the assessee evidencing that the vouchers belongs to the director of the assessee firm or these documents pertains to the personal business of the director. Undisputedly, the expenditure was not reflected by the assessee in the return of income and the assessee company has not substantiated the genuineness of such expenditure. The expenditure of Rs.36,35,791, was incurred through the vouchers of the assessee company. Likewise, the disallowance of expenditure u/s 40A(3) of the Act amounting to Rs.6,29,974, being 20% of the total cash expenditure of Rs.31,49,868, was also confirmed which was in violation of the provisions of the Act. We note that the assessee deliberately did not show the unexplained expenditure, incurred out of books of account in its books of account and, therefore, there is a deliberate attempt on the part of the assessee firstly, to incur such expenses without routing the same in its books and secondly did not disclose the source of the expenses. Had there been no survey, such expenses would have remained out of taxation, therefore, Explanation-1 to section 271(1)(c) is clearly attracted. This factual matrix of incurring expenditure was discovered only during the course of survey proceedings, consequently, the explanation of the assessee is not justified and more so the assessee right from the assessment stage has not brought on record any evidence substantiating that such expenses were routed through the books or belongs to the director of the assessee firm. It is also noteworthy that knowing fully well that the addition was rightly made / sustained no appeal was filed by the assessee before this Tribunal against the quantum addition. The assessee has deliberately concealed its income and did not furnish any explanation to substantiate the genuineness of the expenditure. More so, the assessee furnished inaccurate particulars of its income, therefore, the penalty was rightly imposed, therefore, we find no infirmity in the conclusion drawn by the ld.CIT(A).

Finally, the appeal of the assessee is dismissed. This Order was pronounced in the open court on 20/11/2015.