ITO, Patiala V. M/s National Coal Traders, Patiala

ITA 1061/CHANDI/2010

• Counselvise Citation: 106121514 RSA 2010
• Duration Of Justice: 5 year(s) 3 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-11-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 08-10-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 06-08-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS RAJINDER KAUR
• Keywords: Unexplained cash credit; Unexplained investment
• Section: 194C; 69

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES, CHANDIGARH BEFORE SHRI H.L.KARWA, HON'BLE VICE PRESIDENT & MS. ANNAPURNA MEHROTRA, ACCOUNTANT MEMBER ITA NO. 1061/CHD/2010 ASSESSMENT YEAR: 2007-08 THE ITO, VS. M/S NATIONAL COAL TRADERS, WARD-4, PATIALA PATIALA PAN NO. AACFN7942A & C.O. NO. 40/CHD/2010 (IN ITA NO. 1061/CHD/2010) ASSESSMENT YEAR: 2007-08 M/S NATIONAL COAL TRADERS, VS. THE ITO, PATIALA WARD-4, PATIALA PAN NO. AACFN7942A (APPELLANT) (RESPONDENT) APPELLANT BY : MRS. RAJINDER KAUR RESPONDENT BY : SH. TEJ MOHAN SINGH DATE OF HEARING : 08.10.2015 DATE OF PRONOUNCEMENT : 26.11.2015 ORDER PER H.L.KARWA, VP THIS APPEAL FILED BY THE REVENUE AND CROSS OBJECT IONS BY THE ASSESSEE ARE DIRECTED OF CIT(A), LUDHIANA DATED 24.06.2010 RELA TING TO ASSESSMENT YEAR 2007- 08. 2. GROUND NO.1 OF THE REVENUES APPEAL, READS AS UN DER:- 2 1. IN THE FACTS AND CIRCUMSTANCES OF THE CAS E, THE CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.32,00,000/ -, MADE BY THE AO ON A/C OF UNEXPLAINED CREDITS IN THE PARTNER S' CAPITAL ACCOUNTS, WITHOUT APPRECIATING THE FACT THAT THE AS SESSEE HAD FAILED TO DISCHARGE ITS INITIAL BURDEN OF PROVING T HE SOURCE OF CREDIT ENTRIES IN ITS BOOKS BY FURNISHING SATISFACT ORY, CLINCHING AND ACCEPTABLE PROOF TO SUBSTANTIATE ITS EXPLANATION AND HENCE THE AO WAS JUSTIFIED IN TREATING THE SAME AS UNDISCLOSED INCOME OF THE FIRM. 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE IS TRADING IN COALS UNDER THE NAME AND STYLE OF M/S NATIONAL COAL TRADE RS WITH THE FOLLOWING PARTIES. 1) SH. HARISH GUPTA 2) SH. KRISHAN KUMAR THE ASSESSING OFFICER OBSERVED THAT DURING THE PERI OD RELEVANT TO ASSESSMENT YEAR UNDER CONSIDERATION, FOLLOWING ADDITIONS HAVE BEEN MADE IN CASH IN THE CAPITAL ACCOUNT OF PARTNERS, SHRI HARSH GUPTA :- 1.3.2007 - RS. 7 LAKHS 2.3.2007 - RS. 10 LAKHS 3.3.2007 - RS. 10 LAKHS 11.3.2007 - RS. 5 LAKHS TOTAL - RS. 27 LAKHS IN THE CAPITAL COUNT OF SHRI KRISHAN KUMAR, PARTNER , THE FOLLOWING ADDITIONS HAVE BEEN MADE IN CASH:- 1.4.2006 - RS. 50,000/- 5.4.2006 - RS. 50,000/- 10.4.2006 - RS. 1,00,000/- 14.04.2006 - RS. 1,00,000/- 16.4.2006 - RS. 1 LAKHS 21.4.2006 - RS. 1 LAKHS 3 26.4.2006 - RS. 1,00,000 TOTAL - RS. 6,00,000/- THE ASSESSING OFFICER ASKED THE ASSESSEE TO EXPLAIN THE SOURCE OF CREDITS. IN THIS REGARD, THE ASSESSEE CONTENDED THAT WHILE THE CREDI TS IN THE ACCOUNT OF SHRI HARSH GUPTA, PARTNER WERE OUT OF WITHDRAWALS MADE ON EARL IER DATES AND WERE REDEPOSITED WITH AFTER PASSAGE OF SOME TIME, RANGING FROM M 9 D AYS TO 65 DAYS, THE CREDITS OF RS. 7 LAKHS WERE CREDITED IN THE ACCOUNT OF THE OTH ER PARTNER SHRI KRISHAN KUMAR OUT OF CASH IN HAND AS ON 31.3.2006 AND THE TIME GA P WAS LESS THAN A MONTH IN EACH CASE. FURTHER, IT WAS STATED BY THE ASSESSEE THAT R S. 7 LAKHS DEPOSITED ON 1.3.2007 WAS OUT OF WITHDRAWALS FROM THE SAME CAPITAL ACCOUN T ON 24.1.2007 AND 21.2.2007. SIMILARLY, THE CASH DEPOSITS OF RS. 5 LAKHS ON 2.3. 2007, RS. 10 LAKHS ON 3.3.2007 AND RS. 5 LAKHS ON 11.3.2000 WERE MADE OUT OF WITHD RAWALS OF RS. 20 LAKHS MADE ON 21.2.2007 FROM THE SAME CAPITAL ACCOUNT. REGARDI NG DEPOSITS IN THE CASE OF SHRI KRISHAN KUMAR, THE ASSESSEE SUBMITTED BEFORE T HE LOWER AUTHORITIES THAT THE DEPOSITS OF RS. 6 LAKHS WERE MADE FROM THE CASH IN HAND STANDING AS ON 31.3.2006 IN THE HANDS OF THE PARTNER. IN SUPPORT OF THE ABO VE CONTENTION, THE ASSESSEE SUBMITTED THAT THE BALANCE SHEET AND CAPITAL ACCOUN T IN INDIVIDUAL CAPACITY WHEREIN SHRI KRISHAN KUMAR WAS BEING ASSESSED TO TAX. THE A SSESSING OFFICER HAS ACCEPTED THE EXPLANATION IN RESPECT OF DEPOSIT OF RS. 1 LAKH S COMPRISED OF TWO ITEMS OF RS. 50,000/- EACH AND DISBELIEVED THE EXPLANATION OF TH E ASSESSEE IN RESPECT OF THE BALANCE AMOUNT OF RS. 32 LAKHS WHICH WAS ADDED TO T HE TOTAL INCOME OF THE ASSESSEE:-. 4. ON APPEAL, THE CIT(A) DELETED THE ADDITION OBSER VING AS UNDER:- 3.8 I HAVE GONE THROUGH THE FACTS OF THE CASE, T HE ORDER OF ASSESSMENT, WRITTEN SUBMISSIONS FILED BY THE ID. CO UNSEL FOR THE ASSESSEE AND REPLY FILED BY THE A.O. FROM THE FACTS AND PLEADINGS 4 THERE ARE TWO FACETS OF THE CONTROVERSY. WHETHER TH E EXPLANATION OFFERED BY THE ASSESSEE IN REGARD TO THE WITHDRAWAL S MADE EARLIER AND REDEPOSIT ON A LATER DATE IS ACCEPTABLE OR NOT? IF NOT WHETHER ANY ADDITION COULD BE MADE IN THE HANDS OF THE FIRM WHEN THE DEPOSITS WERE OWNED BY THE PARTNERS. IT IS NOTICED THAT IN THE CASE OF SHRI HARSH GUPTA THE FIRST WITHDRAWA L OF RS. 7,00,000/-- WAS. MADE ON 24.01.2007 AND REDEPOSITED ON 01.03.2007 I.E. WITHIN 65 DAYS. THE OTHER WITHDRAWA LS AGGREGATING TO RS. 20,00,000/- WERE MADE ON 21.02.2 007 AND REDEPOSITED FROM 02.03.2007 TO 11.03.2007 I.E WITHI N 11 TO 20 DAYS. SIMILARLY, IN THE CASE OF SHRI KRISHAN KUMAR, PARTNER THE OPENING CASH BALANCE AS ON 31.03.2006 WAS DEPOSITED IN HIS CAPITAL ACCOUNT UPTO 24.04.2006. IN MY CONSIDERED O PINION THE GAP IS NOT INORDINATE AS TO CALL FOR AN ADVERSE INF ERENCE. THE ASSESSEE HAS FILED THE COPY OF ACCOUNT SHOWING THE WITHDRAWLS MADE, THE BANK ACCOUNT FROM WHERE THE WITHDRAWALS W ERE MADE AND ALSO THE EXPLANATION CLAIMING THESE FACT. THE A .O COULD NOT BRING ON RECORD ANY ADVERSE MATERIAL JUSTIFYING THE REJECTION OF THE EXPLANATION OF THE ASSESSEE. HE HAS TAKEN NOTE OF CERTAIN THINGS AS NON DEPOSITING THE AMOUNT IN BANK, RISK I N KEEPING HUGE AMOUNTS AT HOME AND ALSO QUESTIONED THE PRUDEN CE OF THE ASSESSEE IN KEEPING LARGE SUM AT HOME. THESE ARE CE RTAIN FACTS WHICH COULD INSPIRE THE A.O TO MADE FURTHER ENQUIRI ES AND BRING SOME MATERIAL ON RECORD TO PROVE THAT THE CASH WITH DRAWN BY THE ASSESSEE WAS UTILIZED SOMEWHERE ELSE AND HENCE NO C ASH WAS AVAILABLE WITH HIM. IN THE ABSENCE OF SUCH A FINDIN G, THE CONJECTURES AND SURMISES WILL NOT BE ENOUGH TO TIE THE ASSESSEE WITH THE LIABILITY TO PAY TAX ON HIS OWN MONEY. INC IDENTALLY, IT IS PERTINENT TO NOTE THE DECISION OF HON'BLE JURISDICT IONAL HIGH COURT IN THE CASE OF CIT V. PREM CHAND JAIN, REPORT ED IN (1991) 189 ITR 320 IN WHICH IT HAS BEEN HELD THAT THE INTA NGIBLE ADDITIONS MADE IN EARLIER YEARS CAN BE A SOURCE OF UNEXPLAINED INVESTMENT IN THE SUBSEQUENT YEAR. THAT BEING SO, T HE A.O WAS NOT JUSTIFIED IN NOT BELIEVING THE EXPLANATION OF T HE ASSESSEE IN WHICH WITHDRAWALS OF SOME DAYS OR MONTHS BEFORE WER E EXPLAINED TO BE THE SOURCE OF DEPOSITS. SINCE THE ISSUE HAS B EEN DECIDED IN FAVOUR OF THE ASSESSEE ON THIS COUNT I.E. AVAILABIL ITY OF CASH FROM 5 EARLIER WITHDRAWALS, THE OTHER ISSUE REGARDING ASSE SSABILITY OF CREDITS IN THE ACCOUNTS OF PARTNERS IN THE BOOKS OF THE FIRM WILL BECOME ONLY ACADEMIC IN NATURE. 3.9 IN THE RESULT THIS GROUND IS ALLOWED AND T HE ASSESSEE GETS RELIEF OF RS. 32,00,000/-. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HAV E ALSO PERUSED THE MATERIALS AVAILABLE ON RECORD. SMT. RAJINDER KAUR , LD. DR HEAVILY RELIED ON THE ORDER OF THE ASSESSING OFFICER. ON THE OTHER HAND, SHRI TEJ MOHAN SINGH, LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE LOWER AUTHORITIES. THE CASE OF THE ASSESSEE IS THAT THE A MOUNT OF RS. 27 LAKHS WAS WITHDRAWN BY SHRI HARSH GUPTA IN THE CASH FROM THE CAPITAL ACCOUNT WITH THE FIRM FOR THE PURPOSE OF PURCHASING PROPERTY AND HAS ASSE SSED TO TAX AT GAUHATI. IT IS FURTHER STATED THAT THE AMOUNT WAS WITHDRAWN IN CAS H BECAUSE MANY TIME BANK REMAINS CLOSED RELATABLE TO THE VARIOUS REASONS WHE REIN ONE OF THE REASON IN KEEPING THE CASH IN HAND WAS TO STRIKE AND APPROPRI ATE AND REASONABLE PRICED DEAL FOR THE PROPERTY ON ACCOUNT OF THE CASH AVAILABILIT Y ON THE PAYMENT F WHICH THE SELLER WOULD COME AT THE BETTER NEGOTIATING TERMS W ITH THE ASSESSEE. IT WAS ALSO EXPLAINED THAT SINCE THE DEAL COULD NOT MEET THE RE QUIREMENT OF THE PARTNERS, THE SAME CASH WAS RE-DEPOSITED BACK WITH THE FIRM ON 1. 3.2007, 2.3.2007, 3.3.2007 AND 11.3.2007. REGARDING DEPOSITS IN THE CASE OF SHRI K RISHAN KUMAR, IT WAS CONTENDED THAT THE DEPOSITS OF RS. 6 LAKHS WAS MADE FROM THE CASH IN HAND STATING AS ON 31.3.2006 IN THE HANDS OF THE PARTNERS. IN OUR VIE W THE LD. COMMISSIONER HAS CORRECTLY REJECTED THE ACTION OF THE ASSESSING OFFI CER BECAUSE THE ASSESSING OFFICER HAS COMPLETELY IGNORED THE FACT THAT RS. 27 LAKHS I NTRODUCED IN THE CAPITAL ACCOUNT OF SHRI HARSH GUPTA (PARTNER) WAS EARLIER WITHDRAWN FROM HIS CAPITAL ACCOUNT TO PURCHASE THE PROPERTY. SIMILARLY, THE ASSESSING OF FICER HAS IGNORED THE FACT THAT AMOUNT OF RS. 6 LAKHS WAS INTRODUCED BY SHRI KRISHA N KUMAR (PARTNER) FROM THE CASH IN HAND STANDING AS ON 31.3.2006. THERE IS NO MATERIAL ON RECORD TO CONTROVERT 6 THE ABOVE CONTENTION OF THE ASSESSEE. AT THE SAME T IME WE MAY ALSO OBSERVE HERE THAT ASSESSEE FIRM IS MAINTAINING REGULAR AND PROPE R BOOKS OF ACCOUNT AND IN THE NORMAL COURSE OF BUSINESS, THE CONCLUSION DRAWN BY THE ASSESSING OFFICER THAT SUCH INCOME IS UNDISCLOSED INCOME OF THE ASSESSEE FIRM IS NOT CORRECT. IN THE INSTANT CASE THE PARTNERS OF THE ASSESSEES FIRM HAVE ADMIT TED THAT THEY HAD DEPOSITED THE CASH IN THEIR RESPECTIVE CAPITAL ACCOUNT WITH THE F IRM BY THEMSELVES AND SOURCE OF SUCH DEPOSITS ALSO EXPLAINED. IN THE CASE OF CIT V METACHEM INDUSTRIES (2000) 245 ITR 160 (M.P.), THE HON'BLE MADHYA PRADESH HIGH COURT HELD (HEAD NOTE) AS UNDER;- ONCE IT IS ESTABLISHED THAT THE AMOUNT HAS BEEN IN VESTED BY A PARTICULAR PERSON, BE HE A PARTNER OR AN INDIV IDUAL, THEN THE RESPONSIBILITY OF THE ASSESSEE IS OVER. WH ETHER THAT PERSON IS AN INCOME-TAX PAYER OR NOT AND WHERE HE H AD BROUGHT THIS MONEY FROM, IS NOT THE RESPONSIBILITY OF THE FIRM. THE MOMENT THE FIRM GIVES A SATISFACTORY EXPL ANATION AND PRODUCES THE PERSON WHO HAS DEPOSITED THE AMOUN T, THEN THE BURDEN OF THE FIRM IS DISCHARGED AND IN TH AT CASE THAT CREDIT ENTRY CANNOT BE TREATED TO BE THE INCOM E OF THE FIRM FOR THE PURPOSES OF INCOME-TAX. 6. THE HON'BLE MADHYA PRADESH HIGH COURT FURTHER OB SERVED THAT IT WAS OPEN TO THE ASSESSING OFFICER TO TAKE APPROPRIATE ACTION U/S 69 OF THE ACT AGAINST THE PERSON WHO IS NOT ABLE TO EXPLAIN THE INVESTMENT. I N THE INSTANT CASE, THE ASSESSEE WAS REQUIRED ONLY TO EXPLAIN THAT THE DISPUTED DEPO SITS HAVE BEEN MADE BY THE PARTNERS AND IT WAS RESPONSIBILITY OF THE PARTNERS TO ACCOUNT FOR THE INVESTMENTS MADE BY THEM. IN OUR VIEW, IF THE PARTNERS ADMITTED THE DEPOSITS IN THEIR CAPITAL ACCOUNTS, THEN BURDEN OF THE ASSESSEE FIRM IS DISCH ARGED. IN THE INSTANT CASE, THE EXPLANATION GIVEN BY THE FIRM CANNOT BE REJECTED. F URTHERMORE, THE TIME GAPS 7 BETWEEN THE WITHDRAWALS AND DEPOSITS IN THE CAPITAL ACCOUNT OF RESPECTIVE PARTNERS ARE NOT SUBSTANTIAL TO CALL FOR AN ADVERSE INFERENC E. IN VIEW OF THE ABOVE DISCUSSION, WE DECLINE TO INTERFERE WITH THE FINDIN GS OF CIT(A) ON THIS ISSUE. CONSEQUENTLY, WE DISMISS GROUND NO. 1 OF THE APPEAL . 7. VIDE GROUND NOS. 2 TO 4 OF THE APPEAL, THE REVEN UE HAS CHALLENGED THE ACTION OF THE CIT(A) IN DELETING THE ADDITION OF R S. 61,37,850/- OUT OF THE TOTAL ADDITION OF RS. 72,21,520/- MADE BY THE ASSESSING O FFICER ON ACCOUNT OF DISALLOWANCE OF PAYMENTS U/S 40(A)(IA) OF THE ACT F OR FAILURE TO DEDUCT TDS AS PER SECTION 194C OF THE ACT AND VIDE CROSS OBJECTION NO .1 OF C.O. NO. 40/CHD/2010, THE ASSESSEE HAS CHALLENGED THE ACTION OF THE CIT(A ) IN SUSTAINING THE DISALLOWANCE OF FREIGHT PAYMENTS @ 15% AMOUNTING TO RS. 10,83,15 0 OUT OF DISALLOWANCE OF RS. 72,21,520/-. THE ASSESSING OFFICER HAS OBSERVED THA T IN THE TRADING ACCOUNT OF BRANCH OFFICE OF THE ASSESSEE AT GAUHATI, THE ASSES SEE HAS DEBITED A SUM OF RS. 72,21,520/- UNDER THE HEAD CARRIAGE O/W AND RS. 24 ,60,578/- UNDER THE HEAD LOADING CHARGES. THESE EXPENSES WERE INCURRED FOR TRANSPORTATION OF COAL FROM ASSESSEES BUSINESS PREMISES LOCATED AT GAUHATI TO RAILWAY STATION OF GAUHATI. THE ASSESSING OFFICER REQUIRED THE ASSESSEE TO PRODUCE THE BILLS /VOUCHERS MAINTAINED BY IT IN RESPECT OF THESE EXPENSES AND DETAILS OF T AX DEDUCTED AT SOURCE THEREFROM. BEFORE THE ASSESSING OFFICER, THE ASSESSEE PRODUCED VOUCHERS IN RESPECT OF CARRIAGES INWARD AND LOADING CHARGES AND CLAIMED TH AT THESE PAYMENTS WERE NOT SUBJECT TO TDS BECAUSE PAYMENTS IN EACH CASE DURING THE YEAR IS BELOW RS. 50,000/-. HOWEVER, THE ASSESSING OFFICER NOTICED TH AT IN FREIGHT VOUCHERS ONLY TRUCK NUMBERS WERE MENTIONED. THERE WAS NO MENTION OF NAMES OF TRUCK OWNERS ON THESE VOUCHERS. THE ASSESSING OFFICER OPINED THAT T HERE WAS A POSSIBILITY THAT MORE THAN ONE TRUCK IS OWNED BY ONE PERSON. ACCORDING T O HIM, IN SUCH A CASE, THE TDS IMPLICATIONS ARE APPLICABLE. SINCE THE NAMES OF THE OWNERS OF TRUCK WERE NOT PROVIDED BY THE ASSESSEE, THE ASSESSING OFFICER HEL D THAT THE EXPENSES CLAIMED ON 8 ACCOUNT OF FREIGHT CANNOT BE ALLOWED AS THESE ARE S UBJECT TO DEDUCTION OF TAX AT SOURCE. THE ASSESSING OFFICER ASKED THE ASSESSEE TO PRODUCE THE TRUCK OWNERS. HOWEVER, THE ASSESSEE HAS SHOWN IN INABILITY TO PRO DUCE THE TRUCK OWNERS AS THE AREA IN WHICH THE ASSESSEE WAS OPERATING WAS TERROR ISTS AFFECTED AREA. THE ASSESSING OFFICER CONCLUDED THAT THE ASSESSEE FAIL ED TO DISCHARGE THE ONUS, THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT ARE APPL ICABLE AND THE PAYMENT MADE FOR CARRIAGE AT RS. 72,21,520/- COULD NOT BE ALLOWED AS DEDUCTION. ON APPEAL, THE CIT CONFIRMED THE ADDITION TO THE EXTENT OF RS. 10,83,1 50/- AND ALLOWED A RELIEF OF RS. 61,37,850/- OBSERVING AS UNDER:- 4.9 I HAVE GONE THROUGH THE ORDER OF ASSE SSMENT, THE WRITTEN SUBMISSIONS FILED BY THE COUNSEL FOR THE AS SESSEE AND THE REPLIES FILED BY THE A.O. DURING THE COURSE OF APPELLATE PROCEEDINGS THE ASSESSEE HAS ALSO FILED THE REPORT OF HIS EXAMINER OF QUESTIONED DOCUMENT, IN THE SHAPE OF OB JECTIONS TO THE REPORT OF THE EXAMINER OF QUESTIONED DOCUMENTS ENGAGED BY THE DEPARTMENT, AS NOTICED FROM THE TEXT OF THE REPORT ON LETTER PAD OF THE ASSESSEE'S EXPERT, WHICH IS VIRTU ALLY AND VERBATIM SAME AS THE PLEADINGS MADE BEFORE THE A.O. DURING APPELLATE PROCEEDINGS FURTHER OPPORTUNITY TO A.O. A ND ASSESSEE WAS PROVIDED AND MATTER WAS REMANDED TO A. O. IN LIGHT OF ASSESSEE'S REPORT OF FINGER PRINT EXPERT B UT EVEN AFTER THE RESULT OF REMAND REPORT OF A.O. THE FACT REMAIN ED THE SAME. IT IS NOTICED FROM, THE FACTS THAT THE ASSESS EE HAS BEEN CARRYING ON HIS BUSINESS IN GUWAHATI IN NORTH EAST WHERE THE LAW AND ORDER SITUATION IS NOT UNKNOWN TO AN AVERAG E INDIAN. IN FACT THE ASSESSEE IN HIS PAPER BOOK HAS ALSO FIL ED EVIDENCE IN SUPPORT, THOUGH NO SUCH EVIDENCE WAS REQUIRED. I T IS A FACT THAT THE COAL WAS TRANSPORTED FROM THE BUSINESS PRE MISES OF THE ASSESSEE TO THE RAIL HEAD FOR TRANSPORTATION AT DIFFERENT PLACES WITHIN THE STATE OF PUNJAB. THE PAYMENT FOR TRANSPORTATION IS ALSO AN ADMITTED FACT. IT IS ALSO NOTICED FROM THE COPIES OF ACCOUNT OF VARIOUS TRUCKS, FILED WITH THE WRITTEN SUBMISSIONS AND PLACED AT PAGES 168 TO 375, THAT TH E PAYMENTS IN RESPECT OF VARIOUS TRUCKS WERE MADE AT FIGURES B ELOW RS. 9 50,000!-. IN CASE OF NO TRUCK THE PAYMENT EXCEEDS R S. 50,000/-. IF THE CASE IS SEEN FROM, THE ANGLE OF THE ASSESSEE DULY AUDITED BOOKS OF ACCOUNT WERE PRODUCED BEFORE THE A.O, THE COPIES OF ACCOUNT OF THE PAYEE TRUCKS NUMBER WISE WERE ALSO F ILED WHICH SHOWED PAYMENT TO EACH OF THEM AT THE AMOUNT BELOW RS. 50,000/-. HENCE PRIMA-FACIE, NO CASE FOR DEDUCTION OF TAX AT SOURCE CAN BE MADE OUT AND THE ASSESSEE HAVING FILE D THIS EVIDENCE, THE ONUS SHIFTED ON TO THE A.O TO PROVE T HAT THE APPARENT WAS NOT REAL. THE ONLY APPREHENSION OF THE A.O REMAINS THAT MORE THAN ONE TRUCK MIGHT HAVE BEEN OW NED BY ONE PERSON, AND THE RECEIPT IN HIS HANDS WOULD GO A BOVE RS. 50,000/-. THERE IS NO LOGICAL CONCLUSION BASED ON T HOROUGH ENQUIRIES ON RECORD THAT THERE IS MORE THAN ONE TRU CK IS OWNED BY A SINGLE PERSON. THE FACTS WHICH INDUCED THE A.O TO MAKE THE ADDITION OF THAT MAGNITUDE ARE THAT IT MAY BE P OSSIBLE THAT MORE THAN ONE TRUCK MIGHT BE OWNED BY THE PAYEES. H E HAS ALSO POINTED OUT CERTAIN VOUCHERS WHICH ARE SEEMING LY NOT CORRECT OR SIGNED BY SAME PERSON. IT IS THE CASE OF THE A.O THAT THE VOUCHERS PRODUCED BY THE ASSESSEE WERE NOT OF T HE AGE CLAIMED BY THE ASSESSEE AND THERE ARE CERTAIN DEFEC TS E.G., THE REPETITION OF SAME THUMB IMPRESSION ON CERTAIN VOUC HERS. THE EXPERT ENGAGED BY THE ASSESSEE HAS TRIED TO DISLODG E THE FINDINGS OF THE EXPERT ENGAGED BY THE A.O. I AM AFR AID THAT AS FAR AS THE TECHNICAL MATTERS ARE CONCERNED NEITHER THE A.O NOR MYSELF WILL BE ABOVE TO MAKE ANY COMMENT BUT, HOWEV ER, THE NET RESULT OF THIS EVIDENCE IS THAT SOME VOUCHERS H AVE BEEN FOUND TO BE NOT PROPERLY MAINTAINED AND SOME HAVE D EFECTS. CAUGHT IN SUCH A SITUATION WHERE THE A.O COULD NOT BRING ANY CLINCHING ADVERSE MATERIAL ON RECORD AND THE ASSESS EE ALSO FAILED TO SATISFY THE A.O REGARDING CERTAIN VOUCHER S OR COULD NOT PRODUCE THE PAYEES FOR THE REASONS AS REPEATED ABOVE AND HARDSHIP FACED BY HIM DUE TO TURMOIL IN THAT AREA. THE EXPENDITURE CAN AT LAST BE ALLOWED ON ESTIMATE BASI S. IT IS NOTICED THERE IS NOTHING ON RECORD TO SHOW THAT PAY MENT EXCEEDING RS. 50,000/- WAS MADE BY THE ASSESSEE TO ANY TRUCK OWNER. THE A.O.'S ACTION IN MAKING TOTAL ADDITION O F RS. 72.21 LACS IS AT BEST BASED ON HIS PRESUMPTION AND CANNOT BE 10 SUSTAINED AS SUCH. HOWEVER, AS THE ASSESSEE FAILED TO ALLAY THE APPREHENSIONS OF THE A.O THAT MORE THAN ONE TRUCK M IGHT BE OWNED BY ONE PERSON AND THEY COULD ALSO NOT BE PROD UCED, IT WOULD BE FAIR IF THE DISALLOWANCE IS MADE ON ESTIMA TE BASIS. IN MY CONSIDERED VIEW IT WILL BE FAIR IF THE DISALLOWA NCE IS RESTRICTED TO 15 % OF THE TOTAL EXPENDITURE. IN TAK ING THIS FIGURE OF 15%. I HAVE TAKEN INTO CONSIDERATION THE POSSIBILITY OF OWNERSHIP OF MORE THAN ONE TRUCK BY FEW PERSONS. THIS GROUND IS, THEREFORE, PARTLY ALLOWED. (ADDITION CONFIRMED = 10,83,150) (RELIEF=61,37,850 ) 8. WE HAVE HEARD SMT. RAJINDER KAUR, LD. DR AND SHR I TEJ MOHAN SINGH LD. COUNSEL FOR THE ASSESSEE AT LENGTH. IN THIS CASE TH E ASSESSEE HAS TAKEN A STAND THAT IN VIEW OF SECTION 40(A)(IA) READ WITH SECTION 194C (5) OF THE ACT, FREIGHT EXPENSES WERE NOT SUBJECT TO TDS BECAUSE THE PAYMENTS IN EAC H CASE DURING THE PERIOD RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION IS BELOW RS. 50,000/- THEREFORE, THERE WAS NO QUESTION OF DISALLOWANCE US / 40(A)\(IA) READ WITH SECTION 194C (5) OF THE ACT.. IT IS APPARENT FROM THE RECOR DS THAT THE ASSESSEE CLAIMED THAT ALL THE TRANSACTIONS FOR THE EXPENSES IS GENUINE AN D DULY ENTERED ARE RECORDED IN THE BOOKS OF ACCOUNT AND NOT SUBJECT TO TDS SINCE N ONE OF THE TRANSACTIONS EXCEEDED THE PRESCRIBED LIMIT OF RS. 50,000/- AS PE R THE PROVISIONS OF SECTION 194C(5) OF THE ACT. THE ASSESSEE FURTHER CLAIMED TH AT THE PERSONS TO WHOM SUCH PAYMENTS WERE MADE COULD NOT BE PRODUCED BECAUSE TH E AREA IN WHICH EH ASSESSEE IS OPERATING IS AS TERRORIST AFFECTED CONTROLLED BY MILITANTS NAMELY UNITED LIBERATION FRONT OF ASSAM (ULFA) WHICH ARE WORKING LIKE LOCAL GOVERNMENT PARALLEL TO STATE GOVERNMENT AND THE ACTIVITIES BY THE STATE GOVERNMENTS AND THE FUNCTIONARIES THEREOF ARE UNDERTAKEN ONLY AFTER SEE ING THE APPROVAL OF THE ULFA ON THE PAPER ELSE THE GOVERNMENT FUNCTIONARIES TOO DEC LINE TO WORK UNDER THE TERROR OF BEING KILLED. THE GOVERNMENT OF INDIA HAD EVEN BAN NED SUCH AN OUTFIT BUT THE SAID ORGANISATION IS STILL OPERATING IN THE SAME AREA. WE ARE OF THE VIEW THE LD. CIT(A) 11 HAS CORRECTLY APPRECIATED THE EXPLANATION OF THE A SSESSEE. FURTHERMORE, THE LD. CIT(A) AFTER EXAMINING THE COPIES OF ACCOUNTS OF VA RIOUS TRUCKS, CAME TO THE CONCLUSION THAT THE PAYMENTS IN RESPECT OF VARIOUS TRUCKS WERE MADE AT FREIGHT BELOW RS. 50,000/-. THE LD. CIT(A) HAS CATEGORICAL LY STATED THAT IN CASE OF NO TRUCK THE BILL EXCEEDED RS. 50,000/-. COPIES OF ACC OUNT OF VARIOUS TRUCKS ARE ALSO FILED BEFORE US. EVEN THE COPIES OF ACCOUNTS BEARIN G TRUCK NUMBER WISE WAS ALSO SUBMITTED BEFORE THIS BENCH WHICH SHOWED PAYMENT TO EACH OF THEM BELOW THE AMOUNT OF RS. 50,000/-. THERE IS NO MATERIAL ON RE CORD TO CONTROVERT THE ABOVE FACTS. AT THE SAME TIME, THE CASE OF REVENUE IS TH AT IT MAY BE POSSIBLE THAT MORE ONE TRUCK MIGHT HAVE BEEN OWNED BY THE PAYEES AND T HE RECEIPT IN THEIR HANDS WOULD GO ABOVE RS. 50,000/-. THE ASSESSING OFFICER HAS ALSO POINTED OUT THAT CERTAIN VOUCHERS ARE SIGNED BY SAME PERSONS AND ALS O POINTED OUT CERTAIN OTHER DEFECTS IN THE VOUCHERS. IT IS TRUE THAT ASSESSEE P RODUCED FREIGHT PAYMENT VOCHERS WHEREIN ONLY TRUCK NUMBERS WERE GIVEN. THE NAMES OF THE TRUCK OWNERS HAVE NOT BEEN MENTIONED ON THOSE VOUCHERS. THEREFORE, THERE IS A POSSIBILITY THAT MORE THAN ONE TRUCK MIGHT BE OWNED BY ONE PERSON. NONE OF THE TRUCK OWNERS WAS PRODUCED BEFORE THE ASSESSING OFFICER. IT IS ALSO APPARENT F ROM THE RECORDS THAT AMPLE OPPORTUNITIES WERE GIVEN TO THE ASSESSEE TO PROVIDE THE NAMES OF THE OWNERS OF THE TRUCK TO WHOM FREIGHT CHARGES WERE PAID. AS PER THE PROVISIONS OF LAW, THESE PAYMENTS ARE SUBJECT TO TDS. UNDER THE LAW, THE ONU S WAS ON THE ASSESSEE TO PROVE THE GENUINENESS OF FREIGHT PAYMENTS MADE BY I T. THE LD. CIT(A) HAS UPHELD THE ACTION OF THE ASSESSING OFFICER THAT MORE THAN ONE TRUCK MIGHT HAVE BEEN OWNED BY ONE PERSON AND THE RECEIPT IN HIS HANDS WO ULD GO ABOVE RS. 50,000/-. IN OUR OPINION, THE ABOVE STAND OF THE REVENUE CANNOT BE RULED OUT SINCE THE ONUS WAS ON THE ASSESSEE TO PROVE THE GENUINENESS OF FREIGHT PAYMENTS MADE BY IT TO VARIOUS TRUCK OWNERS. CONSIDERING THE ENTIRE FACTS AND CIRC UMSTANCES OF THE PRESENT CASE, THE ENDS OF JUSTICE WILL MEET IF THE DISALLOWANCE I S RESTRICTED TO 10% OF THE TOTAL EXPENSES AGAINST 15% SUSTAINED BY THE CIT(A)T. ACCO RDINGLY, WE DIRECT THE ASSESSING OFFICER TO RECOMPUTE THE DISALLOWANCE ACC ORDINGLY. THEREFORE, GROUND 12 NOS. 2 TO 4 OF THE REVENUES APPEAL ARE DISMISSED W HILE GROUND NOS. 1 & 2 OF THE CROSS OBJECTIONS ARE ALLOWED PARTLY AS INDICATED AB OVE. 9. NO OTHER POINT WAS RAISED OR ARGUED BEFORE US. 10. IN THE RESULT, APPEAL OF THE EVIDENCE IS DISMIS SED WHILE CROSS OBJECTIONS FILED BY THE ASSESSEE IS ALLOWED PARTLY. ORDER PRONOUNCED IN THE OPEN COURT ON 26.11.2015 SD/- SD/- (ANNAPURNA MEHROTRA) (H.L.KARWA) ACCOUNTANT MEMBER VICE PRESIDENT DATED: 26 TH NOV., 2015 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR