Sh. Ganesh Kumar M/s. Ganesh Kumar & Co., Gurdaspur V. The Dy Commissioner of Income Tax, Pathankot

CO 9/ASR/2017

• Counselvise Citation: [2017] 123 COUNSELVISE.COM (IT) 3027 (ITAT-AMRITSAR)
• Duration Of Justice: 4 month(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 27-07-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 24-07-2017
• Assessment Year: 2013-2014
• Appeal Filed On: 27-03-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: P N ARORA
• Assessee Lawyers: DHARAM SINGH
• Section: 143(3); 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. T. S. KAPOOR, ACCOUNTANT MEMBER AND SH. N.K. CHOUDHRY, JUDICIAL MEMBER I.T.A NO.531/(ASR)/2016 ASSESSMENT YEAR: 2013-14 PAN: ABZPK7279F DY.C.I.T., CIRCLE-VI, PATHANKOT. VS. SH. GANESH KUMAR, PROP M/S GANESH KUMAR & CO., LABOUR CONTRACTOR, G.T. ROAD, MANDI, GURDASPUR. (APPELLANT) (RESPONDENT) CROSS OBJECTION NO. 09/(ASR)/2017 (ARISING OUT OF ITA NO.531/(ASR)/2016) ASSESSMENT YEA R: 2013-14 SH. GANESH KUMAR, PROP M/S GANESH KUMAR & CO., LABOUR CONTRACTOR, G.T. ROAD, MANDI, GURDASPUR VS. DY.C.I.T., CIRCLE-VI, PATHANKOT. (CROSS OBJECTORS) (RESPONDENT) APPELLANT BY: SH. DHARAM SINGH (D. R.) RESPONDENT BY: SH. P. N. ARORA (ADV .) DATE OF HEARING: 25.07.2017 DATE OF PRONOUNCEMENT: 27.07.201 7 ORDER PER T. S. KAPOOR (AM): THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST T HE ORDER OF LD. CIT(A), AMRITSAR DATED 29.07.2016 FOR ASST. YEAR: 2 013-14. 2. THE EFFECTIVE GROUND TAKEN BY REVENUE IS ITS GRI EVANCE WITH THE ORDER OF LD. CIT(A), BY WHICH HE HAS DELETED THE AD DITION OF ITA NO. 531(ASR)/2016 C.O NO.09(ASR)/2017 ASSESSMENT YEAR: 2013-2014 2 RS.50,14,982/-, WHICH THE ASSESSING OFFICER HAD MAD E ON ACCOUNT OF UNEXPLAINED TRANSPORTATION CHARGES PAYABLE AND OUTS TANDING AS ON 31.03.2013. THE ASSESSEE HAS ALSO FILED CROSS OBJEC TIONS AGAINST THE APPEAL FILED BY REVENUE WHICH IS ONLY SUPPORTIVE OF LD. CIT(A)S ORDER. 3. AT THE OUTSET, THE LD. DR SUBMITTED THAT THE LD. CIT(A) WHILE DELETING THE ADDITION HAD NOT CONSIDERED THE FINDIN GS OF ASSESSING OFFICER, WHEREIN HE HAD HELD THAT THE IDENTITY OF T HE PERSONS TO WHOM PAYMENTS WERE PAYABLE WAS NOT ESTABLISHED AND THE L D. CIT(A) HAS ALLOWED RELIEF TO THE ASSESSEE WRONGLY, THEREFORE, HE PRAYED THAT THE MATTER SHOULD BE SET ASIDE TO THE ASSESSING OFFICER FOR VERIFICATION OF EXPENSES PAYABLE WHICH THE ASSESSEE HAD CLAIMED TO HAVE BEEN OUTSTANDING AS ON 31.3.2013. 4. THE LD. AR, ON THE OTHER HAND SUBMITTED THAT IT IS WRONG ON THE PART OF LD. DR TO STATE THAT THE DETAILS OF EXPENSE S OUTSTANDING WAS NOT EXPLAINED TO ASSESSING OFFICER AND IN THIS RESPECT, THE LD. AR INVITED OUR ATTENTION TO PAPER BOOK PAGE 4 TO 5 WHERE ASSESSING OFFICER VIDE SHOW CAUSE NOTICE DATED 07.10.2015 HAD REQUIRED ASSESSEE TO EXPLAIN THE OUTSTANDING EXPENSES AMOUNTING TO RS.5014982/-. THE LD. AR INVITED OUR ATTENTION TO PAPER BOOK PAGE 6 TO 7 WHERE THE A SSESSEE HAD EXPLAINED THE AMOUNT OF RS.5014982/- BEING THE LATE ST OUTSTANDING BILLS RELATING TO THE PERIOD FROM 26.03.2013 TO 31.03.201 3 AND FOR WHICH PAYMENTS WERE MADE IN THE NEXT YEAR. THE LD. AR SUB MITTED THAT ITA NO. 531(ASR)/2016 C.O NO.09(ASR)/2017 ASSESSMENT YEAR: 2013-2014 3 COMPLETE DETAIL OF TRANSPORTATION CHARGES PAID AND PAYABLE DURING THE YEAR WAS ALSO SUBMITTED TO ASSESSING OFFICER AND IN THIS RESPECT OUR ATTENTION WAS INVITED TO PAPER BOOK PAGE 26 TO 37 W HERE A COPY OF TRANSPORTATION CHARGES PAYABLE WAS PLACED. THE LD. AR THEN TOOK US TO PAPER BOOK PAGE 67 TO 76 WHERE THE TRANSPORTATION C HARGES PAYABLE ACCOUNT FOR NEXT YEAR REFLECTING PAYMENTS MADE DURI NG THE YEAR FROM THE OLD OUTSTANDING AMOUNT WAS PLACED. THE LD. AR, FURT HER TOOK US TO LD. CIT(A)S ORDER WHEREIN THE LD. CIT(A) HAD MADE A FI NDING OF FACT THAT HE HIMSELF HAD EXAMINED THE BOOKS OF ACCOUNT AND HAD V ERIFIED THE PAYMENTS TO PAYEES WHICH WERE IDENTIFIED BY TRUCK N UMBERS. 5. THE LD. AR, FURTHER SUBMITTED THAT THE ASSESSEE WAS REGULARLY MAINTAINING HIS BOOK OF ACCOUNT ON MERCANTILE BASIS AND EVERY YEAR, THERE WERE OUTSTANDING TRANSPORTATION CHARGES WHIC H REMAINED PAYABLE AND IN THIS RESPECT OUR ATTENTION WAS INVITED TO PA PER BOOK PAGE 7 WHERE IT WAS SUBMITTED BEFORE ASSESSING OFFICER THAT IN T HE EARLIER TWO YEARS ALSO, THERE WERE TRANSPORTATION CHARGES PAYABLE WHI CH WERE QUITE HIGH AS COMPARED TO THE CHARGES PAYABLE IN THE YEAR UNDER C ONSIDERATION AND IN THE EARLIER YEAR THE ASSESSING OFFICER HAD NOT MADE ANY ADDITION ON THIS ACCOUNT. OUR ATTENTION WAS ALSO INVITED TO COPY OF THE ASSESSMENT ORDER IN RESPECT OF THESE TWO YEARS. 6. THE LD. AR, FURTHER INVITED OUR ATTENTION TO AN ORDER WHERE IN SIMILAR FACTS AND CIRCUMSTANCES, THE HON'BLE ITAT A MRITSAR BENCH HAD ITA NO. 531(ASR)/2016 C.O NO.09(ASR)/2017 ASSESSMENT YEAR: 2013-2014 4 DECIDED THE ISSUE IN FAVOUR OF AN ASSESSEE IN THE C ASE OF M/S V. K. TRANSPORT CO. IN ITA NO. 448 VIDE ORDER DATED 24.11 .2016 AND IN THIS RESPECT, OUR ATTENTION WAS INVITED TO PAPER BOOK PA GE 88 TO 90. 7. WE HAVE HEARD THE RIVAL PARTIES AND HAVE GONE THOUGH THE MATERIAL PLACED ON RECORD. WE FIND THAT ASSESSEE IS IN THE B USINESS OF CARRIAGE CONTRACT WITH FOOD CORPORATION OF INDIA AND THE ASS ESSEE DERIVES INCOME FROM TRANSPORTATION OF WHEAT AND RICE FOR THE F.C.I . THE ASSESSEE USED TO CHARGE F.C.I. FOR TRANSPORTATION OF FOOD PRODUCTS A ND IN RETURN USED TO HIRE VARIOUS TRUCK OPERATORS TO WHOM PAYMENTS WERE MADE. AS ON 31.03.2013 AN AMOUNT OF RS.50,14,982/- REMAINED OUT STANDING OUT OF TOTAL TRANSPORTATION CHARGES. THE ASSESSING OFFICER VIDE NOTICE DATED 07.10.2015 HAD REQUIRED ASSESSEE TO EXPLAIN THE OUT STANDING TRANSPORT TRUCK CHARGES TO WHICH THE ASSESSEE REPLIED VIDE LE TTER DATED 26.10.2015 PLACED IN PAPER BOOK PAGE 6 TO 7. IN THE REPLY, THE ASSESSEE EXPLAINED THAT THE OUTSTANDING CHARGES PAYABLE RELATED TO THE PERIOD OF 26.03.2013 TO 31.03.2013 AND ALSO STATED THAT COPY OF ACCOUNT OF CHARGES PAYABLE HAS ALREADY BEEN FURNISHED. THE ASSESSEE FURTHER SU BMITTED THAT THE PAYMENT OF OUTSTANDING AMOUNT HAS BEEN MADE IN THE NEXT YEAR AND ALSO SUBMITTED THE COPY OF ACCOUNT OF THE NEXT FINANCIAL YEAR SHOWING PAYMENTS FOR THE OUTSTANDING AMOUNTS. THE COPY OF A CCOUNT OF OUTSTANDING FREIGHT AND ITS PAYMENT IN THE NEXT YEA R ARE PLACED IN PAPER BOOK PAGE 34 TO 76. THE ASSESSING OFFICER INSTEAD O F FURTHER EXAMINING THE CLAIM OF ASSESSEE PASSED THE ORDER ON 29.10.201 5. THE ASSESSING ITA NO. 531(ASR)/2016 C.O NO.09(ASR)/2017 ASSESSMENT YEAR: 2013-2014 5 OFFICER DID NOT DOUBT THE TRANSPORTATION CHARGES WH ICH WERE PAID DURING THE YEAR ITSELF AND MADE ADDITION ONLY ON ACCOUNT O F OUTSTANDING CHARGES WHICH IS NOT CORRECT. THE ASSESSEE HAD BOOKED A TOT AL TRANSPORT CHARGES AT RS.8,87,18,416/- WHICH IS EVIDENT FROM PROFIT AN D LOSS PLACED AT PAPER BOOK PAGE 17. THE ASSESSING OFFICER DID NOT MAKE AN Y ADDITION FOR THE TOTAL AMOUNT NEITHER HE UNDERTOOK ANY INVESTIGATION , HE JUST TOOK UP THE OUTSTANDING AMOUNT AS ON 31.03.2013 AND MADE THE AD DITION THEREOF. MOREOVER, WE FIND THAT ASSESSEE HAVE BEEN FOLLOWING MERCANTILE SYSTEM OF MAINTAINING BOOKS OF ACCOUNT AND HAS BEEN CONTINUOU SLY ENGAGED IN THE SAME TYPE OF BUSINESS AND IN THE EARLIER TWO YEARS, THE TRANSPORTATION CHARGES PAYABLE AS COMPARED TO THE TOTAL TRANSPORTA TION CHARGES BOOKED DURING THE YEAR WERE TO THE EXTENT OF 27% TO 19% WH EREAS IN THE PRESENT YEAR SUCH PERCENTAGES IS ONLY 5.65% AND IN THE EARL IER YEARS, NO SUCH ADDITION WAS MADE IN SPITE OF THE FACT THAT THE ASS ESSMENT WAS COMPLETED U/S 143(B) AND 144. THE PART OF SUBMISSIO NS MADE TO ASSESSING OFFICER AS CONTAINED IN LETTER DATED 26.1 0.2015 ARE REPRODUCED HEREIN UNDER: A. YEAR TRANSPORTATION CHARGES PAYABLE % ORDER 2010-11 40140203-00 10850203- 00 27.03 ORDER U/S 143(3) ORDER DATED 20/02/2013 TRANSPORTATION CHARGES PAYABLE ACCEPTED. 2012- 13 79465940- 00 15559992- 00 19.52 ACCEPTED U/S 144 ORDER DATED 27/01/2015 2013- 14 88718416-00 5014982- 00 5.65 WHICH IS VERY NOMINAL ITA NO. 531(ASR)/2016 C.O NO.09(ASR)/2017 ASSESSMENT YEAR: 2013-2014 6 MOREOVER, WE FIND THAT THE AMRITSAR BENCH IN THE CA SE OF DCIT VS. V.K. TRANSPORT CO. IN ITA 448 VIDE ORDER DATED 24.1 1.2016 HAD ALREADY DECIDED SIMILAR SITUATION AND AS IT IS THE ISSUE IN FAVOUR OF ASSESSEE BY HOLDING AS UNDER: ADMITTEDLY, THE ASSESSEE IS IN THE BUSINESS OF TRA NSPORT OF GOOD GRAINS FOR FCI. FOR THIS PURPOSE, THE ASSESSEE HAS TO HIRE THE TRANSPORTATION FACILITY PRIVATE TRUCKS. IT IS ALSO COMMONLY KNOWN THAT THE TRANSPORTATION CHARGES ARE GENERALLY PAID TO THE CONCERNED PERSONS OPERATI NG THE TRUCKS INCLUDING THE DRIVERS AND OWNERS. THE ASSESSEE DURING THE YEA R EARNED GROSS RECEIPT OF RS.14,56,42,632/- ON ACCOUNT OF TRANSPORTATION C HARGES, WHEREAS, BOOKED THE EXPENDITURE ON ACCOUNT OF TRANSPORT CHAR GES AT RS. 13,86,94,510/-. OUT OF THE ABOVE STATED AMOUNT, ONL Y RS.43,50,350/- HAS REMAINED UNPAID AT THE END OF THE FINANCIAL YEAR. T HE ASSESSING OFFICER HAS NOT DOUBTED THE PAYMENT MADE DURING THE YEAR. H E HAS ONLY MADE ADDITION IN RESPECT OF THE CHARGES SHOWN AS PAYABLE AT THE END OF THE YEAR. THE ASSESSEE HAD MENTIONED THE TRUCK NUMBERS TO WHO M THE PAYMENT WAS PAYABLE. THE LD. AR OF THE ASSESSEE HAS BROUGHT OUR ATTENTION TO THE PAPER BOOK PAGES 18 TO 23 AND HAS CONTENDED THAT TH E ABOVE EXPENSES HAVE ACTUALLY BEEN PAID BY THE ASSESSEE DURING THE NEXT FINANCIAL YEAR. THE ASSESSEE HAS PRODUCED THE EVIDENCES OF MAKING T HE ABOVE PAYMENT DURING THE SUBSEQUENT PERIOD ALONG WITH THE VOUCHER S ETC. AND BOOKS OF ACCOUNT BEFORE THE CIT(A). THE LD. CIT(A) HAS GIVEN A CATEGORICAL FINDING THAT THE SAID EVIDENCES INCLUDING THE VOUCHERS ETC. WERE PRODUCED BEFORE HIM AND WHICH WERE VERIFIED BY HIM. HE HAS ALSO GIV EN A FINDING THAT THESE EVIDENCES WERE ALSO PRODUCED BEFORE THE ASSES SING OFFICER BUT THE ASSESSING OFFICER HAS NOT COMMENTED ON THE SAID EVI DENCES. UNDER THESE CIRCUMSTANCES WHEN THE LD. CIT(A) HAS GIVEN A CATEG ORICAL FINDING THAT THE NECESSARY EVIDENCES SUCH AS BOOKS OF ACCOUNT ALONGW ITH RECEIPTS/ VOUCHERS OF PAYMENT OF TRANSPORTATION CHARGES WERE PRODUCED BEFORE HIM AND THE SAME HAVE BEEN VERIFIED, WE ARE NOT INCLINE D TO INTERFERE OR TO DOUBT THE ABOVE SAID VERIFICATION DONE BY THE CIT(A ). EVEN OTHERWISE, ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER IS CRYPTIC. ON THE ONE HAND, THE ASSESSING OFFICER DOUBTS THE GENUINENESS OF THE TRANSACTIONS IN RESPECT OF THE EXPENDITURE PAYABLE AND ON THE OTHER HAND, THE ASSESSING OFFICER HAS NOT COMMENTED ABOUT THE TRANSPORTATION CHARGES ALREADY PAID DURING THE YEAR. EVEN ASSESSING OFFICER DID NOT BOT HER TO MAKE ANY INQUIRY IN RESPECT OF THE PAYMENT OF RS.63,25,930/- PERTAIN ING TO THE PRECEDING ASSESSMENT YEAR. NO INQUIRES WERE MADE BY THE ASSES SING OFFICER EVEN IN RESPECT OF THE EXPENDITURE CLAIMED PAYABLE DURING T HE YEAR. THE ASSESSING OFFICER DID NOT BOTHER TO MAKE AN INQUIRY BY CALLIN G THE OWNERS OF THOSE TRUCKS TO VERIFY THE PAYMENTS MADE BY THE ASSESSEE. THE ADDITIONS HAVE BEEN MADE MERELY ON ASSUMPTION BASIS IN RESPECT OF THE AMOUNT PAYABLE ONLY. WHEN THE ASSESSEE HAS BEEN CONSISTENTLY FOLLO WING THE MERCANTILE ITA NO. 531(ASR)/2016 C.O NO.09(ASR)/2017 ASSESSMENT YEAR: 2013-2014 7 SYSTEM OF ACCOUNTING AND THIS METHOD OF ACCOUNTING HAS CONSISTENTLY BEEN ACCEPTED THE REVENUE AUTHORITIES, WE DO NOT FIND AN Y JUSTIFICATION ON THE PART OF THE ASSESSING OFFICER TO MAKE DEPARTURE THE REFROM THIS YEAR WITHOUT ANY CONVINCING REASON ON THIS ISSUES. WE, T HEREFORE, DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A) AND THE SA ME IS, THEREFORE, UPHELD. THE APPEAL OF THE REVENUE IS THEREFORE, DISMISSED. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES AND I N VIEW OF THE JUDICIAL PRECEDENT, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF LD. CIT(A), THEREFORE, THE APPEAL FILED BY REVENUE IS DISMISSED . AS FAR AS THE CROSS OBJECTIONS OF THE ASSESSEE ARE CONCERNED, THESE ARE ONLY TO SUPPORT THE ORDER OF LD. CIT(A) AND NO SEPARATE RELIEF HAS BEEN CLAIMED IN THE CROSS OBJECTIONS, THEREFORE, THE CROSS OBJECTIONS OF THE ASSESSEE ARE NOT MAINTAINABLE AND THE SAME ARE DISMISSED. 8. IN THE RESULT, THE APPEAL FILED BY THE REVENUE AS WELL AS THE CROSS- OBJECTIONS FILED BY ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 27.07.2017. SD/- SD/- (N. K. CHOUDHRY) (T. S. KAPOOR) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 27.07.2017. /GP/SR. PS . COPY OF THE ORDER FORWARDED TO: (1) THE ASSESSEE: (2) THE (3) THE CIT(A), (4) THE CIT, (5) THE SR DR, I.T.A.T., TRUE COPY BY ORDER