Manarkattu Theatres Pvt Vs ITO (ITAT Cochin)
Income Tax Appellate Tribunal (ITAT), Cochin bench, has set aside the order of the National Faceless Appeal Centre (NFAC)/Commissioner of Income Tax (Appeals) [CIT(A)] in the case of Manarkattu Theatres Pvt. Ltd. for the Assessment Year 2018-19. The Tribunal has directed the Assessing Officer (AO) to re-adjudicate the matter, emphasizing that the lower authorities failed to consider the detailed submissions and evidence provided by the assessee during both assessment and appellate proceedings.
The assessee, Manarkattu Theatres Pvt. Ltd., a company operating two cinema theatres, had filed its return of income for A.Y. 2018-19 in response to a notice issued under Section 148 of the Income-tax Act, 1961, declaring a total income of Rs. 12,73,860. However, the AO, in an order dated March 24, 2023, passed under Section 147 read with Section 144B of the Act, determined the total income at a significantly higher figure of Rs. 1,93,97,120.
The additions made by the AO were primarily under three heads:
1. Addition for lesser Net Profit (NP) with reference to last year: 2,19,643
2. Disallowance under Section 40A(3): 6,88,911
3. Addition under Section 69C (unexplained expenditure): 1,72,14,706
Aggrieved by these additions, Manarkattu Theatres Pvt. Ltd. appealed to the CIT(A). However, the CIT(A) upheld all the additions, stating that the assessee had not produced “any substantial evidence in support of its contentions” during the appellate proceedings and had also not submitted copies of written submissions or documentary evidence filed during the assessment proceedings. The CIT(A) concluded that there was “no basis to take a contrary view” and sustained the additions on merits.
