Prti Ranjan Gharai, Bhubaneswar V. DCIT, Bhubaneswar

CO 13/CTK/2014

• Counselvise Citation: [2014] 122 COUNSELVISE.COM (IT) 9566 (ITAT-CUTTACK)
• Duration Of Justice: 3 month(s) 29 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 30-05-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 31-01-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: K AJAY KUMAR
• Keywords: Unexplained cash credit; Unexplained expenditure
• Section: 69C; 40A(3); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH, CUTTACK BEFORE SHRI P.K. BANSAL, HONBLE ACCOUNTANT MEMBER AND SHRI D.T. GARASIA, HONBLE JUDICIAL MEMBER ITA NO. 546/CTK/2013 & CO NO. 13/CTK/2014 : (ASST. YEAR : 2009 - 10) DY. COMMISSIONER OF INCOME TAX, CIRCLE - 1(1), BHUBANESWAR (APPELLANT) VS. SHRI PRITIRANJAN GHARAI PLOT NO. 237, BAPUJI NAGAR, BHUBANESWAR (RESPONDENT /CROSS OBJECTOR ) PAN : ACOPG2446C ASSESSEE BY : SUNIL MISHRA REVENUE BY : K. AJAY KUMAR, DR DATE OF HEARING : 30/04/2014 DATE OF PRONOUNCEMENT : 30 /05/2014 O R D E R PER P.K. BANSAL : 1. TH E ABOVE APPEAL AND CROSS OBJECTION HA VE BEEN FILED AGAINST THE ORDER OF CIT( A) - I, BHUBANESWAR DT. 18.9.2013. THE CO FILED BY THE ASSESSEE , SINCE NOT PRESSED , STANDS DISMISSED AS SUCH. THE REVENUE HAS TAK E N THE FOLLOWING EFFECTIVE GROUNDS OF APPEAL: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) IS NOT JUSTIFIED IN LAW AS WELL AS ON FACTS IN DELETING THE ADDITION OF RS.73,13,121/ - MADE BY THE AO U/S. 40A(3) OF THE ACT. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) IS NOT JUSTIFIED IN LAW AS WELL AS ON FACTS IN DELETING THE ADDITION OF RS.1,06,000/ - MADE BY THE AO U/S. 4 0(A)(IA) OF THE ACT. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) IS NOT JUSTIFIED IN LAW AS WELL AS ON FACTS IN DELETING THE ADDITION OF RS.2,70,85,000/ - MADE BY THE AO ON ACCOUNT OF UNEXPLAINED EXPENDITURE U/S. 69C OF THE ACT. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) IS NOT JUSTIFIED IN LAW AS WELL AS ON FACTS IN DELETING THE ADDITION OF RS.1,43,25,617/ - MADE BY THE AO ON ACCOUNT OF UNEXPLAINED CASH CREDIT U/S. 68 OF THE ACT. 2 ITA NO. 546/CTK/2013 & CO 13/CTK/2014 (ASST. YEAR : 2009 - 10) 2. GROUND NO. 1 RELATES TO THE ADDITION OF RS.73,13,721/ - U/S 40A(3). THE AO OBSERVED THAT THE ASSESSEE MADE CASH PAYMENT IN EXCESS OF RS. 20,000/ - TO SHRI SHAKTI PRASAD PRADHAN AND JENA TRANSPORT. THEREFORE, HE MADE AN ADDITION OF RS.73,13,721/ - . THE ASSESSEE WENT IN APPEAL B EFORE CIT(A). THE CIT(A) AFTER HEARING THE SUBMISSION OF THE ASSESSEE CALLED FOR THE REMAND REPORT OF THE AO AND AFTER PERUSING THE DETAILS OF THE TRANSPORT CHARGES PAID BY THE ASSESSEE DELETED THE ADDITION BY OBSERVING THAT THE PAYMENT OF RS.6,42,480/ - HAS BEEN MADE TO THE EMPLOYEES OF THE ASSESSEE, AND IN NO CASE, SUCH PAYMENT ALSO EXCEED RS. 20,000/ - . IN RESPECT OF PAYMENT OF RS. 66,71,511/ - AS TRANSPORTATION CHARGES, THE AO HAS NOT FOUND ANY PAYMENT EXCEEDING RS. 20,000/ - . IN VIEW OF THE SAME, HE TOOK THE VIEW THAT THERE WAS NO VIOLATION OF SEC. 40A(3) AND ACCORDINGLY, HE DELETED THE ADDITION OF RS.73,13,721/ - . 2.1 WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY CONSIDERED THE SAME. THE LD. DR BEFORE US EXCEPT RELYING ON THE ORDER OF THE AO COULD NOT ADDUCE ANY EVIDENCE WHICH MAY PROVE THE FINDING GIVEN BY CIT(A) TO BE INCORRECT. UNDER THESE CIRCUMSTANCES, WE DO FIND ANY ILLEGALITY OR INFIRMITY IN DELETION OF THE ADDITION OF RS.73,13,721/ - . WE, THEREFORE, CONFIRM THE DELETION OF THE ADDITION OF RS.73,13,721/ - . THUS, THIS GROUND STANDS DISMISSED. 3. GROUND NO. 2 RELATES TO THE DELETION OF THE ADDITION OF RS.1,06,000/ - MADE BY THE AO U/S 40(A)(IA) OF THE ACT. THIS ADDITION HAS BEEN MADE BY THE AO AS THE ASSESSEE DID NOT FURNISH A NY EVIDENCE FOR DEDUCTION OF TAX ON THE SAME. THE ASSESSEE WENT IN APPEAL BEFORE CIT(A) AND SUBMITTED THAT THE SAID AMOUNT WAS PAID AS STOCKYARD RENT TO SHRI SURESH KUMAR NAYAK @ RS.9,000/ - P.M. FOR 11 MONTHS AND RS. 7,000/ - FOR THE LAST MONTH. THE STOCK YARD WAS VACATED IN THE LAST MONTH. THEREFORE, IT WAS SUBMITTED THAT THE PROVISIONS OF SEC. 194I WERE 3 ITA NO. 546/CTK/2013 & CO 13/CTK/2014 (ASST. YEAR : 2009 - 10) NOT APPLICABLE . CIT(A) AFTER VERIFYING THE FACTS NOTED THAT THE PROVISIONS OF SEC. 194I WERE NOT APPLICABLE AND THEREFORE THE ADDITION WAS DELETED. 3 .1 AFTER HEARING THE RIVAL SUBMISSIONS AND GOING THROUGH THE FACTS OF THE CASE, IN THE ABSENCE OF ANY CONTRARY EVIDENCE OR MATERIAL BEING FILED BY THE LD. DR, WE CONFIRM THE ORDER OF CIT(A). THUS, THIS GROUND STANDS DISMISSED. 4. GROUND NO. 3 RELATES TO THE DELETION OF THE ADDITION AMOUNTING TO RS.2,70,85,000/ - MADE BY THE AO U/S 69C OF THE ACT. THE AO NOTED THAT THE ASSESSEE MAINTAINS ACCOUNT NO. 523201010033066 IN UNION BANK OF INDIA, IRC VILLAGE, NAYAPALLI, BHUBANESWAR. IN THE ABSENCE OF CLARIFICATIO N, THE AO DISALLOWED ALL THE PAYMENTS. THE ASSESSEE WENT IN APPEAL BEFORE CIT(A) AND SUBMITTED THE PURPOSES IN RESPECT OF EACH OF THE PAYMENT MADE BY HIM WHICH IS AVAILABLE UNDER PARA 6 OF CIT(A)S ORDER. CIT(A) CALLED FOR THE REMAND REPORT OF THE AO. C IT(A) SINCE DID NOT FIND ANY ADVERSE FINDING IN THE REMAND REPORT DELETED THE ADDITION BY OBSERVING AS UNDER : 6.1 I HAVE GIVEN CAREFUL CONSIDERATION TO THE MATTER. IN THE REMAND REPORT, THE PAYMENTS HAVE BEEN CLARIFIED TO A GREAT DETAIL. THE PAYMENT OF RS.40,00,000/ - MADE TO ROY INFRASTRUCTURE AND PAYMENT OF RS.3,50,000/ - MADE TO SOHUM WORLD ARE LYING AS AD V ANCE IN THE BOOKS OF THE ASSESSEE AT THE YEAR END. THE PAYMENTS OF RS.5,00,000/ - RS.23,00,000/ - , RS.1 0 ,00,000/ - RS.5,00,000/ - AND RS.3,00,000/ - ARE A MOUNTS TRANSFERRED BY THE APPELLANT TO ANOTHER ACCOUNT WITH AXIS BANK. THE PAYMENTS OF RS.35,00,000/ - AND RS.50,00,000/ - MADE TO S. S. TRANSPORT ARE ON ACCOUNT OF TRANSPORTATION CHARGES AND DULY REFLECTED IN THE BOOKS OF ACCOUNTS. THE AMOUNT OF RS.75,00,00 0/ - PAID TO S. S. TRANSPORT AGENCY WAS AN ADVANCE WHICH HAS BEEN REPAID SUBSEQUENTLY. THE AMOUNT OF RS.35,000/ - IS A PAYMENT ON ACCOUNT OF SALARY. SUCH PAYMENTS ARE NOT UNEXPLAINED EXPENDITURE, HENCE COULD NOT HAVE BEEN DISALLOWED BY THE A O U/S . 69C. IN SO FAR AS PAYMENTS OF RS.8,00,000/ - AND RS.20,00,000/ - TO JBS CONSTRUCTION ARE CONCERNED, THE APPELLANTS SUBMISSION IN THE REJOINDER IS AS UNDER: GROUNDS OF APPEAL NO.4 4 ITA NO. 546/CTK/2013 & CO 13/CTK/2014 (ASST. YEAR : 2009 - 10) THE LEARNED A. O AFTER EXAMINING THE FACTS, RELEVANT RECORDS AND EXPLANATION OF THE A PPELLANT DURING THE COURSE OF REMAND HEARING HAS ACCEPTED THAT THE AMOUNT OF RS.2,70,85,000/ - WHICH WAS EARLIER ALLEGED TO BE UNEXPLAINED EXPENDITURE BY HIM IS FOUND TO BE DULY EXPLAINED. ONLY IN THE CASE OF PAYMENT TO JBS CONSTRUCTION AGAINST PURCHASE OF LAND THE A. O . HAS OBSERVED THAT THE AMOUNT OF RS. 20,00,000/ - WAS PAID THROUGH CHEQUE TO JBS CONSTRUCTION PRIOR TO THE DATE OF PURCHASE OF LAND ON 22.12.2008 WHEREAS THE TRANSACTION WAS RECORDED IN THE BOOKS OF THE APPELLANT ON 27.12.2008. THE APPELLANT SUBMITS THAT HE HAS RECORDED THE TRANSACTION IN HIS BOOK ON THE DATE WHEN THE CHEQUE WAS PRESENTED TO THE BANKER FOR CLEARING I.E ON 27.12.2008. THE A.O. HAS ACCEPTED THAT THE APPELLANT HAS PURCHASED A PIECE OF LAND FROM JBS CONSTRUCTION AT A COST OF RS.20 ,00,000/ - . THE A.O. HAS ALSO EXAMINED AND ACCEPTED THAT RS.20,00,000/ - WAS PAID THROUGH ACCOUNT PAYEE CHEQUE TO JBS CONSTRUCTION WHICH WAS PRESENTED FOR PAYMENT TO THE BANK OF THE APPELLANT ON 27.12.2008. WHICH MEANS A.O. HAS NO DOUBT AS TO THE SOURCE OF E XPENDITUR E. THE ONLY ISSUE THE A. O . HAS RAISED THAT EVEN THOUGH THE CONSIDERATION AMOUNT WAS PAID TO THE BUYER BEFORE THE DATE OF PURCHASE OF LAND ON 22.12.2008 BUT THE TRANSACTION WAS RECORDED IN THE BOOKS OF THE APPELLANT ON 27.12.2008 FOR WHICH HE HAS REPORTED THAT EXPLANATION OF THE AP PELLANT CAN NOT BE CONSIDERED AS SATISFACTORY. THE APPELLANT SUBMITS THAT SINCE THE A.O. HAS ALREADY OBSERVED THAT THE CONSIDERATION AMOUNT OF RS.20,00,000/ - WAS CLEARED ON 27.12.2008 IN FAVOR OF JBS CONSTRUCTION FROM THE REGULAR BANK ACCOUNT OF THE APPELL ANT MAINTAINED WITH UNION BA N K OF INDIA IT IS IMMATERIAL WHETHER THE TRANSACTION WAS RECORDED ON THE DATE OF CLEARING OF CHEQUE OR THE DATE OF ISSUE OF THE CHEQUE. MERELY BECAUSE THE TRANSACTION WAS RECORDED ON THE DATE OF CLEARANCE OF THE CHEQUE THE EXPLA NATION OF THE APPELLANT CAN NOT BE CONSIDERED AS NOT SATISFACTORY SO AS TO TREAT THE SAME AS UNEXPLAINED EXPENDITURE PARTICULARLY WHEN THE A. O . IS FULLY SATISFIED ABOUT THE SOURCE OF EXPENDITURE. IN VIEW OF THAT MATTER THE ADDITION OF RS.2,70,85,000/ - AS UNEXPLAINED EXPENDITURE IS LIABLE TO BE DELETED. IN VIEW OF THE FACTS ON RECORD AND EXPLANATION OF THE APPELLANT THAT THE PAYMENT OF RS.20,00,000/ - IS FOR PURCHASE OF LAND AND CANNOT BE CONSIDERED AS EXPENDITURE. THE AMOUNT OF RS. 8 ,00,000/ - WAS PAID FOR ADVANCE WHICH HAS ALSO BEEN PROPERLY RECORDED. IN VIEW OF THE SAME, THE PAYMENTS MADE TO JBS CONSTRUCTION ARE EXPLAINED AND NO ADDITION COULD BE MADE U/S.69C. ACCORDINGLY, THE ADDITION OF RS.2,70,85,000/ - MADE U/S.69C IS DELETED . 5 ITA NO. 546/CTK/2013 & CO 13/CTK/2014 (ASST. YEAR : 2009 - 10) 4.1 WE HAVE HEARD THE RI VAL SUBMISSIONS AND CAREFULLY CONSIDERED THE SAME. BEFORE US, THE LD. DR WAS FAIR ENOUGH TO CONCEDE THAT EXCEPT RELYING ON THE ORDER OF THE AO, HE DOES NOT HAVE ANY COGENT MATERIAL OR EVIDENCE. THE REMAND REPORT FAVOURS THE CASE OF THE ASSESSEE. WE, THE REFORE, FIND THAT THIS GROUND HAS NO MERIT. THEREFORE, WE DISMISS THE SAME. 5. GROUND NO. 4 RELATES TO THE DELETION OF THE ADDITION OF RS. 1,43,25,617/ - MADE BY THE AO ON ACCOUNT OF UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT. THE AO MADE THE ADDITION IN THE ABSENCE OF ANY EXPLANATION OF THE ASSESSEE. THE ASSESSEE WENT IN APPEAL BEFORE THE CIT(A). BEFORE THE CIT(A), THE ASSESSEE SUBMITTED THE PARTICULARS OF THE UNSECURED LOANS. CIT(A) CALLED FOR THE REMAND REPORT OF THE AO. AO EXAMINED ALL THE THREE UN SECURED LOANS SUBMITTED BY THE ASSESSEE IN THE REMAND REPORT AND CROSS - VERIFIED THE BANK STATEMENT AND NOTED THAT DURING THE YEAR LOAN AMOUNTS HAVE BEEN TAKEN AND RETURNED BACK THROUGH BANK ON DIFFERENT DATES. DETAILS OF THE UNSECURED LOAN TAKEN DURING TH E YEAR FROM THE ABOVE PARTIES ARE REFLECTED IN ANNEXURE - II OF THE TAX AUDIT REPORT. CIT(A) AFTER GOING THROUGH THE REMAND REPORT DELETED THE ADDITION BY OBSERVING AS UNDER : 7.1 I HAVE CAREFULLY CONSIDERED THE MATTER. THE LOANS HAVE BEEN OBTAINED THROUGH BANK AND REPAYMENTS HAVE ALSO BEEN MADE. THERE IS NO FINDING TO DOUBT THE EXISTENCE OF THE LOAN CREDITORS, THE CAPACITY OF THE LOAN CREDITORS AND GENUINENESS OF THE TRANSACTIONS. ALL THE PAYMENTS AND REPAYMENTS HAVE BEEN MADE THROUGH BANKING CHAN NEL AND THE CONCERNED LOAN CREDITORS APPEAR TO BE GROUP CONCERNS. IN VIEW OF THE SAME, THE LOAN ARE EXPLAINED FOR WHICH THE ADDITION MADE BY THE AO IS DELETED. 5.1 WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY CONSIDERED THE SAME ALONGWITH THE ORDER OF THE TAX AUTHORITIES BELOW. THE LD. DR EVEN THOUGH RELIED ON THE ORDER OF THE AO BUT COULD NOT PRODUCE ANY COGENT MATERIAL OR EVIDENCE WHICH MAY PROVE THAT THE LOANS AND ADVANCES TAKEN BY THE ASSESSEE ARE NOT GENUINE AND ARE NOT THROUGH BANKING CHANNEL . EVEN IN THE REMAND REPORT THE AO DID NOT DOUBT THE IDENTITY OF THE LOAN CREDITORS, THEIR CREDIT WORTHINESS AND 6 ITA NO. 546/CTK/2013 & CO 13/CTK/2014 (ASST. YEAR : 2009 - 10) THE GENUINENESS OF THE TRANSACTION. UNDER THESE CIRCUMSTANCES, WE DO NOT HAVE ANY ALTERNATIVE EXCEPT TO CONFIRM THE ORDER OF CIT(A). THUS, T HIS GROUND STANDS DISMISSED. 6. IN THE RESULT, THE APPEAL FILED BY THE REVENUE AND C.O FILED BY ASSESSEE STANDS DISMISSED. 7. ORDER PRONOUNCED IN PURSUANCE OF RULE 34(4) OF ITAT RULES, 1963 BY PUTTING ON NOTICE BOARD OF THE BENCH AT CUTTACK ON 30 / 05 /201 4 . SD/ - (D.T.GARASIA) JUDICIAL MEMBER SD/ - (P.K. BANSAL) ACCOUNTANT MEMBER PLACE : PANAJI DATED : 30 / 05 /201 4 *SSL* COPY TO : (1) APPELLANT (2) RESPONDENT (3) CIT CONCERNED (4) CIT(A) CONCERNED (5) D.R (6) GUARD FILE TRUE COPY, BY ORDER