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TMI Blog2017 (9) TMI 1584X X X X Extracts X X X X X X X X Extracts X X X X ..... sment proceedings when assessment proceedings were going to be barred by law of limitation preventing AO to conduct necessary verification and enquiry for want of time. Thus, keeping in view entire factual matrix of the case, this matter need to be restored back to the file of the AO for de-novo adjudication of all the issues on merits - I.T.A. No.4096/Mum/2013 - - - Dated:- 25-9-2017 - SHRI SAKTIJIT DEY, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER For The Assessee : Shri M. Subramanian For The Revenue : Shri V. Justin ORDER PER RAMIT KOCHAR, Accountant Member This appeal, filed by the assessee, being ITA No. 4096/Mum/2013, is directed against the appellate order dated 20.12.2012 passed by learned Commissioner of Income Tax (Appeals)- 7, Mumbai (hereinafter called the CIT(A) ), for assessment year 2006-07, appellate proceedings before learned CIT(A) has arisen from the assessment order dated 24.12.2008 passed by learned Assessing Officer (hereinafter called the AO ) u/s 143(3) of the Income-tax Act, 1961 (hereinafter called the Act ) . 2. The grounds of appeal raised by the assessee in the memo of appeal filed with the Income-Tax Appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out prejudice to the above, it is submitted that the disallowance made by the learned AO is excessive and without basis. 5. Initiation of penalty proceedings under section 271(l)(c) of the Act. 5.1 On the facts and in the circumstances of the case and in law, the learned CIT (Appeals) erred in dismissing the ground of appeal without valid reasons in respect of the penalty proceedings initiated by the AO on the assumption that the Ground is pre-mature. 3. The brief facts of the case are that the assessee is in the business of event management, advertising services and filmed entertainment. The assessee has claimed expenditure of ₹ 1,12,70,643/- and ₹ 1,42,08,131/- under the head venue management expenses and venue expenses respectively. In the preceding year, 20% of the total venue management expenses and 10% of total venue expenses claimed in Profit and Loss Account were disallowed by Revenue. The assessee was show caused by the AO to submit details and explanations along with confirmation of two top parties under each head of expenses. In reply, the assessee furnished the details such as names, addresses of the parties along with confirmations of f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment order dated 24-12-2008 passed by the A.O. u/s 143(3), the assessee filed first appeal before the ld. CIT(A) who dismissed the appeal of the assessee, vide appellate order dated 20-12-2012 passed by learned CIT(A). 5. Aggrieved by the appellate order dated 20-12-2012 passed by the ld. CIT(A), the assessee filed an appeal before the tribunal. 6. The ld. counsel for the assessee submitted at the outset that the assessee company namely Times Infotainment Media Limited got merged with Bennett Coleman and Company Limited. Scheme of merger as approved by Hon ble Bombay High Court is placed on record. It was submitted that revised form no 36 is duly filed with the tribunal. It was submitted that adhoc disallowance has been made by the A.O. without pointing out any defect in the books of accounts maintained by the assessee. It is submitted that the assessee is in the business of event management, advertising services and filmed entertainment. It was submitted that the A.O. has made various disallowances on adhoc basis towards venue management expenses, venue expenses, stage decoration expenses and miscellaneous expenses. It is submitted that all the required details were submitte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso submitted that in subsequent years i.e. assessment year 2007-08, 2008-09 and 2009-10, the cases of the assessee company were processed u/s 143(3) and no such adhoc disallowance on these heads of expenses were made. The said assessment orders are placed in paper book/page 84-94. Thus it was submitted that disallowances have been made on adhoc basis only for two years namely assessment year 2005-06 and 2006-07 by the Revenue. It is submitted that these adhoc disallowances are not sustainable in the eyes of law. 7. The ld. D.R. submitted that the details were submitted by the assessee only at the fag end of the assessment proceedings close to expiry of limitation period for framing an assessment preventing any verification of those details by the AO as no enquiry could be conducted by the AO, which led to disallowance of expenses. It was submitted that the assessee is at fault and he justified the additions made by the AO which was confirmed by learned CIT(A). 8. We have considered rival contention and also perused the material on record. We have observed that the assessee is in the business of event management, advertising services and filmed entertainment. We find the disa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nue is dismissed. Thus, as could be seen that the tribunal vide its order dated 13-07-2011 for assessment year 2005-06 in ITA no 4091/Mum/2009 has mainly affirmed the appellate order of learned CIT(A) for assessment year 2005-06 who has upheld the additions to the tune of 3% of expenses relying that for assessment year 2006-07 similar additions were made by the AO to the tune of only 1% of the said expenses and in context thereof 3% disallowance for assessment year 2005-06 was considered fair and reasonable. The appellate order of learned CIT(A)-XXI,Mumbai dated 23-04-2009 in appeal no CIT(A)XXI/ACIT-1(3)/IT-152/07-08 for assessment year 2005-06 is reproduced hereunder: 8. Vide grounds no. 6,7 8 of appeal, the appellant has objected to the disallowance of ₹ 40,22,800/- being 20% of the venue management expenses and ₹ 23,11,665/- being 10% of venue expenses, ₹ 29,46,730/- being 10% of the profession fee incurred ₹ 27,03,453/- being 10% of the stage decoration expenses incurred, all for non-production of satisfactory documentary evidences. 8.1. On the other hand, the ld. AR of the appellant has stated that the names of the parties along ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee, the learned counsel for the assessee could not give satisfactory reply but stated that there was an error in the orders of tribunal and learned CIT(A) for assessment year 2005-06 and correct assessment year should be read as assessment year 2005-06 instead of assessment year 2006-07 in their findings in the orders for assessment year 2005-06(para 8.2 of learned CIT(A) order and para 6.1 and 6.2 of the tribunal order for assessment year 2005-06). These findings in the order of learned CIT(A) for assessment year 2005-06 are perverse finding as the disallowance in assessment year 2006-07 are much higher than 1% as is suggested by learned CIT(A) in his orders for assessment year 2005-06. Relying upon the aforesaid erroneous factual findings by learned CIT(A) for the assessment year 2005-06 that the additions have been made by the AO of 1% of similar expenses in assessment year 2006-07, tribunal also upheld the disallowance @3% while passing order for assessment year 2005-06, thus, on that erroneous finding both learned CITA(A) and tribunal held that disallowance of 3% is justified and reasonable for assessment year 2005-06. This error cannot be allowed to be perpetuated. In an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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