2019-VIL-981-ITAT-HYD
Income Tax Appellate Tribunal HYDERABAD
ITA No. 1344/Hyd/2013 (Assessment Year: 2006-07)
Date: 04.12.2019
CHARMINAR BOTTLING COMPANY PVT. LTD.
Vs
ASST. COMMISSIONER OF INCOME-TAX, CIRCLE â 8 (1) , HYDERABAD.
BENCH
SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI V. DURGA RAO, JUDICIAL MEMBER
JUDGMENT
PER V. DURGA RAO, J.M.:
This appeal filed by the assessee is directed against the order of CIT(A) – III, Hyderabad for the AY 2006-07.
2. When this appeal is taken up for hearing, none appeared on behalf of the assessee, however, the assessee filed a letter dated 20th November, 2019 stating therein that the counsel who was to attend this appeal was unable to attend for hearing due to professional preoccupation.
2.1 On perusal of order sheet entries, we find that this appeal was posted for hearing on umpteen number of occasions from 05/02/2014 till the last hearing i.e. 28/11/2019 as many as 25 times adjournments, particularly, adjournments took place on the request or there was no compliance from the assessee on the dates fixed for hearing.
2.2 Moreover, as per M.A. No. 03/Hyd/2018, vide its order dated 22/01/2018, the Tribunal recalled the order and posted for hearing on 10/04/2018, but, there was no compliance from the assessee and thereafter, it was adjourned on three occasions.
2.2 Since there is no evidence to support the reasons for seeking adjournment this time, we reject the adjournment letter and proceed to decide the appeal on merits.
3. Briefly the facts of the case are that the assessee is a company in which public are not substantially interested and was engaged in the business of manufacturing and trading of aerated water of different flavours, fruit juices and packaged drinking water etc. For the AY under consideration, it filed its return of income on 30/10/2006 declaring a total income of Rs. NIL from business after setting of losses of earlier years and book profit of Rs. 10,80,86,926/- under the provisions of section 115JB of the Act. The AO completed the assessment determining the total income of the assessee at Rs. 72,65,913/- by making various additions.
4. When the assessee preferred an appeal before the CIT(A), the CIT(A) partly allowed the appeal of the assessee, against which the assessee is in appeal before us raising the following grounds of appeal:
“1. Because the learned Commissioner of Income Tax, Appeals III, Hyderabad had confirmed the addition though the Assessing Officer had no jurisdiction and has erred on facts and in law in treating the amount of Rs. 1,37,69,626/- as "Income from Other Sources" under section 69 of the Income Tax Act, 1961.
2. Because the learned Commissioner of Income Tax, Appeals III, Hyderabad has erred in applying the principles of T.D.S., on equipments taken on hire and its charges amounting to Rs. 5,24,925/-.
3. Because the learned Commissioner of Income Tax, Appeals III, Hyderabad has erred to appreciate the facts of treating Rs. 43,73,124/- paid to Market Sales Staff as compensation relating to business as expenses.
4. An amount of Rs. 2,24,795/- towards provident fund ( employer contribution Rs. 1,08,237/- & employees contribution Rs. 1,16,558/- ) and Rs. 2,69,319/- towards E.S.I.C., ( employer contribution Rs. 1,86,135/- & employees contribution Rs. 83,184/- ) payments made during the year includes both employer and employees contributions. Both these amounts needs to be allowed as a business expenditure. The learned Commissioner of Income Tax, Appeals III, Hyderabad, has allowed only employers contribution and not employees contribution.
5. Because the WDV of assets of Rs. 69,172/- being repairs and maintenance capitalized in earlier years effect is not considered in arriving at capital gains working.
6. Because the transfer proceeds were made in the month of March, 2006 provisions of section 234 C of the Income Tax Act, 1961 do not apply. In the instant case the learned Commissioner of Income Tax, Appeals III, Hyderabad has erred in not considering the levy of Rs. 3,63,980/- towards such interest
7. The assessee craves leave to add or alter any of the ground of appeal on or before the date of hearing.”
5. As regards ground No. 1 relating to the addition of Rs. 1,37,69,626/- u/s 68 of the Act, the AO observed that a survey u/s 133A was conducted on the business premises of the assessee on 08/02/2006, in which, certain documents were found and impounded. These documents reveal that the assessee has purchased around 9 acres of land in RR District for a consideration of Rs. 9,02,33,471/- as per the registered agreement of sale dated 01/12/2005. Along with the impounded registered agreement there were also two typed statements where details of payments made by cheques, through cash as well as details of cash received by the assessee were meticulously written. These annexures are marked as page 19 and page 20 of annexure 2/CBC of the impounded material. The AO found that the notings of these pages correlated very well with the registered agreement of sale. Statements of Sri Sanjay Kaul CEO and Sri Y. Bhaskara Rao, GM(F), were also recorded and it was further confirmed that the documents contained the actual transaction i.e. both the cheque part as well as the cash part. The AO after examining the issue elaborately held as under:
“4.3 In this connection it may be mentioned here that Sri Sanjay Kaul, C.E.O. of the assessee was the authorized signatory to the transactions of MIs. SMV Agencies (P) Ltd, Delhi, a sister concern of the assessee company, who was available at Hyderabad at the time of survey proceedings. Sri Sanjay Kaul, in his statement Dt. 10.02.2006 had stated that the property in question was purchased by MIs. SMV Agencies (P) Ltd. Delhi. He further stated that Rs. 11,00,000/- was paid by the assessee as 'advance' on account of M/s. SMV Agencies. The entry for the said amount of Rs. 11,00,0001- was duly recorded on the papers marked as Page Nos. 19 & 20. Payment of Rs. 11,00,000/- through cheque by the assessee on 19.11.2005 was duly recorded by the assessee in its books of account. When the transactions recorded on page Nos. 19 & 20 ((Annexure 2/CBC of the impounded material) do coincide with the entries made in the books of account of the assessee, it cannot be said that the scribbling on the back side of page No. 19 do not belong to the assessee. When once the amounts paid officially through banking channels were duly recorded on page No. 19 and when some unofficial payments made were also recorded on page No. 19, the assessee cannot say that the official payments made belong to it and the unofficial payments made do not belong to it. In the circumstances, the amount of Rs. 1,17,30,350/- representing cash payments to various parties and Rs. 20,39/276/-- representing brokerage and Solicitors payments are treated as unaccounted expenditure incurred by the assessee and accordingly, the same totaling to Rs. 1,37,69, 626/- is treated as "income from other sources" under Sec. 69 of the I. T. Act, 1961. As the assessee has concealed the particulars of its income, penalty proceedings u/s.271(1)(c) of the I.T. Act, 1961 are separately initiated.”
6. When the assessee preferred an appeal before the CIT(A), the CIT(A) confirmed the addition made by the AO by observing as under:
“4.4 From the above, it is very clear that the land deal in question was made by the appellant. Mis SMV agencies is also a company in the same group and the entire management is made by the aforementioned two persons. There is no doubt that a substantial amount of on money was paid and these amounts are clearly written in cash in the papers referred to supra. Books of accounts and other documents of Mis SMV agencies are also prepared by the aforementioned persons and their subordinates in the appellant company. Therefore writing or entering the transaction in those books is entirely within the hands of the appellant. The evidence is compelling that the land deal was actually done by the appellant and the on money was also paid by the appellant and only the name of M/s SMV agencies was placed. Therefore, I fully agree with the addition made by the assessing officer and the same is ordered to be confirmed.”
7. As regards ground No. 2 relating to the addition of Rs. 5,24,925/- u/s 40(a)(ia) of the Act, the AO observed that the assessee had debited an amount of Rs. 5,24,925/- in the P&L Account under the head ‘selling and distribution expenses towards lease charges on cooling equipment. When asked to give details as to the TDS made on the said amount, the AR of the assessee stated that he was not sure whether any TDS was deducted on the said amount and conceded that the said amount may be disallowed invoking the provisions of section 40(a)(ia) of the Act. In view of the submissions of the AR of the assessee, the AO disallowed an amount of Rs. 5,24,925/-.
7.1 On appeal, the CIT(A) confirmed the addition made by the AO observing that these are long term leases and contracts on which TDS was to be deducted and the assessee agreed to the disallowance during the course of assessment proceedings.
8. As regards ground No. 3 relating to the addition of Rs. 43,73,124/- on account of deferred market expenses, the AO found that the assessee had claimed as business expenses, some amounts which it claimed to have paid to certain employees of its C&F agents. The AO held that these were not business expenses.
8.1 On appeal, the CIT(A) following the decision of the ITAT in assessee’s own case for AY 2003-04, confirmed the addition made by the AO, as the ITAT has confirmed the similar disallowance in AY 2003-04.
9. As regards ground No. 4 relating to disallowance of amount of Rs. 2,24,795/- towards PF and Rs. 2,69,3219/- towards ESIC, the assessee stated that the entire amounts should not be disallowed because the contributions of employers out of the above amounts are allowable deductions. The CIT(A), accordingly, directed the AO to quantify any contributions of the employers in the aforementioned amounts and the same are to be allowed as deductions as per law.
10. Ground No. 5 was not pressed by the assessee before the CIT(A).
11. Ground No. 6 is regarding levy of interest u/s 234C, which is consequential in nature, therefore, the AO is directed accordingly.
12. After hearing the ld. DR and perusing the material on record, we are of view that since there is no Representation from the assessee and the findings of the CIT(A) are uncontroverted, we uphold the order of CIT(A) in the appeal under consideration and dismiss the appeal of the assessee.
13. In the result, appeal of the assessee is dismissed.
Pronounced in the open Court on 4th December, 2019.
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