Priyamda Media & Infotainment Private Limited Vs DCIT (ITAT Delhi)
ITAT Delhi held that without pointing out any specific defect in the audited books of accounts, AO cannot and should not make any estimated addition. Accordingly, such estimated addition deleted.
Facts- The assessee is engaged in the business of News Network, broadcasting and telecasting. The return was selected for scrutiny and assessment. Notably, where the parties have confirmed the lesser amount the AO made the addition u/s. 41 of the Act. Further, AO found that the assessee has made payment to contractors on which tax has been deducted at source but the same has not been deposited before the due date. AO made additions invoking the provisions of section 40a(ia) of the Act. Further since the assessee could not produce the books of account and vouchers invoking the provisions of section 145 (3) of the Act the AO disallowed 20% of the expenditure and made the addition of Rs.5080380/-.
CIT(A) dismissed the appeal. Being aggrieved, the present appeal is filed.
Conclusion- Held that the AO himself mentions that the expenses claimed by the assessee were also test checked and while making the addition the AO says that the books of account vouchers were not The logical question arises if the books and vouchers were not produced then from where the AO test checked the expenses. Further we do not find in the assessment order where the AO asked the assessee to produce books of accounts / vouchers for verification. Once again a logical question arises why 20% and why not 30, 50 even 100%. Without pointing out any specific defect in the audited books of accounts the AO cannot and should not make any estimated addition. We, therefore, direct the AO to delete the impugned addition of Rs.5080380/-.
Held that when the notices issued by the AO are bad in law being vague and ambiguous having not specified under which limb of section 271(1) (c) of the Act, the penalty proceedings initiated u/s 271(1)(c) are not sustainable.
FULL TEXT OF THE ORDER OF ITAT DELHI
ITA No.7489/Del/2017 and 1589/Del/2020 are two separate appeals by the assessee preferred against two separate orders of the CIT(A)-7, New Delhi dated 15.10.2017 and 24.02 .2020 pertaining to A.Y. 20 14-15.
ITA No.7489/Del/2017 ( A.Y. 2014-15)
2. ITA No.7489/Del/2017 is the appeal against the additions made in the assessment order dated 20.12.2016 framed u/s. 143 (3) of the Act and ITA No.1 598Del/2020 is the appeal against the levy of penalty u/s. 271 (1)(c) of the Act on the additions made in the assessment order.
3. Both these appeals were heard together and are disposed of by this common order for the sake of convenience and brevity.
4. Briefly stated the facts of the case are that the assessee is engaged in the business of News Network, broadcasting and telecasting. The return for the year was electronically filed on 11.2014 declaring loss of Rs.4,47,68,848/-. The return was selected for scrutiny assessment and accordingly statutory notices were issued and served upon the assessee.
5. While scrutinizing the return of income the AO noticed sundry payable in the balance sheet and asked the assessee to file confirmation of sundry creditors. The assessee showed its inability to file the confirmation. Notice u/s. 133 (6) of the Act was issued. The AO summarized the situation :-
6. In so far as item at Sr. No. 1 and 3 above where the notice u/s. 133(6) was not served, the AO made the addition of 6110570/-u/s. 41 of the Act.
7. In so far as item No.2 and 4 are concerned where the parties have confirmed the lesser amount the AO made the addition of Rs.12908555/- u/s. 41 of the Act.
8. Proceeding further the AO found that the assessee has made payment to contractors on which tax has been deducted at source but the same has not been deposited before the due date. Invoking the provisions of section 40a(ia) of the Act the AO made the addition of Rs.8852509/-.
9. Proceeding still further since the assessee could not produce the books of account and vouchers invoking the provisions of section 145 (3) of the Act the AO disallowed 20% of the expenditure totaling to Rs.25401898/- and made the addition of Rs.5080380/-.
10. The additions were challenged before the CIT(A) but without any success.
11. Representatives of both the sides were heard at length. Case records carefully perused and the relevant documentary evidences duly considered in the light of Rule 18 (6) of the ITAT
12. The trade payables as per the balance sheet at page-16 of the paper book is as under :-
Ref. No.5 Trade Payables
