Shri Mukesh B.Shah, Ahmedabad V. The Income tax Officer,Ward-9(4), Ahmedabad

ITA 1177/AHD/2013

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 8615 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 10 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-03-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 26-02-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 26-04-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DINESH SINGH SR D R
• Keywords: Third party statement
• Section: 234B; 194C; 201(1)

Judgement Text

, , , , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT AND SHRI KUL BHARAT, JUDICIAL MEMBER ./ ././ ./ ITA NO. 1177/AHD/2013 / ASSESSMENT YEAR: 2007-08 MUKESHBHAI B. SHAH 160, NEW CLOTH MARKET, OUTSIDE RAIPUR GATE, RAIPUR, AHMEDABAD PAN : ADFPS 9410 A ITO, WARD 9 (4), AHMEDABAD / // / (APPELLANT) !' !' !' !' / // / (RESPONDENT) ASSESSEE(S) BY : SHRI TEJ SHAH, AR REVENUE BY : SHRI DINESH SINGH, SR. DR. #$ % &'(/ // / DATE OF HEARING : 26/02/2015 )* % &'( / // / DATE OF PRONOUNCEMENT: 17/03/2015 +, +, +, +,/ // / O R D E R PER G.D. AGRAWAL, VICE PRESIDENT: THIS IS AN APPEAL FILED BY THE ASSESSEE AND IS DIRE CTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME-TAX(APPEALS )-XV, AHMEDABAD DATED 04.02.2013 PERTAINING TO THE ASSESSMENT YEAR 2007-08. 2. GROUND NO.1 OF THE ASSESSEES APPEAL READS AS UN DER:- THAT THE LD. CIT(A) ERRED IN LAW AND ON THE FACTS O F THE CASE IN CONFIRMING THE ADDITION OF RS.16,47,395/- MADE BY THE LD. AO U /S 40(A)(IA) OF THE ACT. 3. AT THE TIME OF HEARING BEFORE US, IT IS STATED B Y THE LD. COUNSEL THAT THE ASSESSEE IS AN INDIVIDUAL AND THE ASSESSMENT YEAR U NDER CONSIDERATION IS ASSESSMENT YEAR 2007-08. THE REVENUE HAS MADE DISA LLOWANCE U/S 40(A)(IA) ON THE GROUND THAT THE ASSESSEE FAILED TO DEDUCT THE TAX U/S 194C IN ITA NO. 1177/AHD/2013 MUKESHBHAI B SHAH VS. ITO FOR AY 2007-08 2 RESPECT OF CERTAIN PAYMENTS. HE STATED THAT SECTION 194C HAD BEEN MADE APPLICABLE FOR THE INDIVIDUAL WITH EFFECT FROM 01.0 6.2007 AND THEREFORE, IT IS NOT APPLICABLE TO ASSESSMENT YEAR 2007-08. IN SUPP ORT OF THIS CONTENTION, HE RELIED UPON THE DECISION OF THE ITAT, AHMEDABAD BEN CH DATED 08.07.2011, IN THE CASE OF SHRI PRASHANT H SHAH VS. ACIT VIDE I TA NO.17/AHD/2011. HE ALSO STATED THAT THE ABOVE DECISION OF ITAT, AHMEDA BAD BENCH IS UPHELD BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE O F CIT VS. PRASHANT H SHAH, REPORTED IN [2013] 29 TAXMANN.COM 296 (GUJ.). HE, THEREFORE, SUBMITTED THAT WHEN THE ASSESSEE WAS NOT REQUIRED T O DEDUCT THE TAX U/S 194C IN THE YEAR UNDER CONSIDERATION, THE QUESTION OF ANY FAILURE TO DEDUCT THE TAX BY THE ASSESSEE AND THE CONSEQUENTIAL DISAL LOWANCE U/S 40(A)(IA) IS NOT CALLED FOR. 4. THE LD. DEPARTMENTAL REPRESENTATIVE, ON THE OTHE R HAND, RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 5. WE HAVE CAREFULLY CONSIDERED THE ARGUMENTS OF BO TH THE PARTIES AND PERUSED THE MATERIAL PLACED BEFORE US. WE FIND THA T THE ISSUE UNDER CONSIDERATION IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE ITAT, AHMEDABAD BENCH WHICH IS UPHELD BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF PRASHAT H SHAH (SUPRA). THE ITAT, AHMEDABAD BENCH HAS HELD AS UNDER:- IT IS FURTHER IMPORTANT TO MENTION THAT VIDE AN A MENDMENT WITH EFFECT FROM 01.06.2007 AND INDIVIDUAL OR HUF HAVE A LSO BEEN INDUCTED VIDE SUB-CLAUSE(K) IN SECTION 194C(1) OF THE IT ACT . AS THIS JUNCTURE, IT IS WORTH TO HOLD THAT AS FAR AS THE AY IN HAND IS C ONCERNED, I.E. AY 2007-08, THIS LATEST AMENDMENT OF SECTION 194C(1)(K ) OF THE ACT BEING INTRODUCED WITH EFFECT FROM 01.06.2007 HAS NO APPLI CABILITY. WE THEREFORE HOLD THAT IF THE REVENUE DEPARTMENT HAD M ADE AN ENDEAVOUR TO INVOKE THE PROVISIONS OF SECTION 40(A) (IA) FOR THE ITA NO. 1177/AHD/2013 MUKESHBHAI B SHAH VS. ITO FOR AY 2007-08 3 INFRINGEMENT OF THE PROVISIONS OF SECTION 194C OF T HE ACT BY HOLDING THAT THE ASSESSEE BEING AN INDIVIDUAL GOT COVERED B Y SUB-SECTION(1), THEN ACCORDING TO US, IT WAS AN INCORRECT APPLICATI ON OF LAW; THE ABOVE DECISION OF THE ITAT, AHMEDABAD BENCH WA S UPHELD BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE O F CIT VS. PRASHANT H SHAH (SUPRA), WHEREIN THEIR LORDSHIPS OF THE HONBLE HIG H COURT HAS HELD AS UNDER:- TILL CLAUSE (K) WAS INTRODUCED IN SUB-SECTION (1), THE CATEGORY OF INDIVIDUAL, HUF OR AOP WAS NOT INCLUDED. SUCH AMENDMENT WAS MAD E WITH EFFECT FROM 01.06.2007 AND OBVIOUSLY, THEREFORE, WOULD NOT APPL Y TO THE CASE ON HAND. THE TRIBUNAL, THEREFORE, CORRECTLY CAME TO THE CONC LUSION THAT THE CASE OF THE ASSESSEE WAS NOT COVERED UNDER SECTION 194C(1) SINC E IN THE INSTANT CASE THE PAYMENT WAS MADE BY THE ASSESSEE TO INDIVIDUALS {PA RA 7]. 6. THE FACTS OF THE ASSESSEES CASE ARE IDENTICAL. THEREFORE, ABOVE DECISIONS OF THE ITAT, AHMEDABAD BENCH AND HONBLE JURISDICTIONAL HIGH COURT WOULD BE SQUARELY APPLICABLE TO THE CASE OF T HE ASSESSEE. NO CONTRARY DECISION OF HONBLE JURISDICTIONAL HIGH COURT OR HO NBLE APEX COURT IS BROUGHT TO OUR KNOWLEDGE. WE, THEREFORE, RESPECTFUL LY FOLLOWING THE ABOVE DECISIONS OF ITAT, AHMEDABAD BENCH AS WELL AS HONB LE JURISDICTIONAL HIGH COURT IN THE CASE OF PRASHANT H SHAH (SUPRA), HOLD THAT, FOR ASSESSMENT YEAR 2007-08, THE ASSESSEE BEING INDIVIDUAL, WAS NOT LIA BLE TO DEDUCT TAX U/S 194C OF THE ACT. SINCE HE WAS NOT LIABLE TO DEDUCT THE T AX U/S 194C, THE DISALLOWANCE U/S 40(A)(IA) CANNOT BE MADE FOR THE A LLEGED FAILURE OF DEDUCTION OF TAX U/S 194C OF THE ACT. WE, THEREFOR E, DELETE THE DISALLOWANCE MADE U/S 40(A)(IA) OF THE ACT AND ALLOW GROUND NO.1 OF THE ASSESSEES APPEAL. 7. GROUND NOS. 2 AND 4 OF THE ASSESSEES APPEAL REA D AS UNDER:- ITA NO. 1177/AHD/2013 MUKESHBHAI B SHAH VS. ITO FOR AY 2007-08 4 2. THAT THE LD. CIT(A) ERRED IN LAW AND ON THE FACT S OF THE CASE IN CONFIRMING THE DISALLOWANCE OF RS.68,390/- MADE BY THE AO BEIN G AMOUNT PAID TOWARDS INSURANCE PREMIUM. 4. THAT THE LD. CIT(A) ERRED IN LAW AND ON THE FACT S OF THE CASE IN CONFIRMING THE ADDITION OF RS.2,25,000/- U/S 69 OF THE ACT. 8. THE AFORESAID GROUNDS WERE NOT PRESSED AT THE TI ME OF HEARING; ACCORDINGLY, THE SAME ARE REJECTED BEING NOT PRESSE D. 9. THE ASSESSEE HAD ALSO FILED AN APPLICATION SEEKI NG ADMISSION OF ADDITIONAL GROUND WHICH READS AS UNDER:- IN VIEW OF THE AMENDMENT MADE BY THE FINANCE ACT 20 12, NO DISALLOWANCE U/S 40(A)(IA) CAN BE MADE IF THE ASSESSEE IS NOT HE LD TO BE AN ASSESSEE IN DEFAULT U/S 201(1) OF THE ACT SINCE THE PAYEES HAVE ALREADY PAID THEIR TAXES. 10. AT THE TIME OF HEARING BEFORE US THE ADDITIONAL GROUND WAS ALSO NOT PRESSED; ACCORDINGLY, THE SAME IS NOT CONSIDERED EI THER FOR ADMISSION OR FOR ADJUDICATION. 11. GROUND NO.3 OF THE ASSESSEES APPEAL READS AS U NDER:- 3. THAT THE LD. CIT(A) ERRED IN LAW AND ON THE FACT S OF THE CASE IN CONFIRMING THE ADDITION OF RS.2,35,000/- AS PAYMENT OUT OF BOO KS FROM UNDISCLOSED INCOME. 12. THE FACTS OF THE CASE, AS DISCUSSED IN PARAGRAP H 5 OF THE ASSESSMENT ORDER, READ AS UNDER:- 5. ON VERIFICATION OF BOOKS OF ACCOUNT AND DETAILS FURNISHED BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS IT IS N OTICED ASSESSEE HAS PURCHASED TWO VEHICLES I.E. TAVERA MODEL NO.GJ-7-TT -9693 FOR RS.8,00,000/- AND GETZ MODEL NO.GJ-18-AC-3132 FOR RS.4,25,000/-. BOTH VEHICLES WERE PURCHASED FROM MR. MR. M.I. SHEIKH MOHAMMAD HANIF S HEIKH RESPECTIVELY. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASS ESSEE WAS ASKED TO FURNISH CONTRA CONFIRMATION AND SALE/PURCHASE DEED. ON VERIFICATION OF ITA NO. 1177/AHD/2013 MUKESHBHAI B SHAH VS. ITO FOR AY 2007-08 5 PURCHASE/SALE DEED AND CASH BOOK OF THE ASSESSEE, I T IS NOTICED THAT AN AMOUNT OF RS.50,000/- EACH HAS BEEN GIVEN IN CASH ON 01.05 .2006 AND 08.03.2007. BUT THE SAME IS NOT REFLECTED IN THE CASH BOOK. FUR THER, ON VERIFICATION OF PURCHASE/SALE AGREEMENT IT IS NOTICED THAT ON THE D ATE OF AGREEMENT THERE WAS NOT OUTSTANDING AMOUNT AGAINST THE PURCHASE OF ABOV E VEHICLES FOR WHICH RECEIPTS FOR THE PAYMENT RECEIVED HAVE BEEN GIVEN B Y THE SELLER IN SALE AGREEMENT. THEREFORE, ASSESSEE WAS ASKED TO EXPLAIN THE SAME. ASSESSEE HAS FURNISHED CONFIRMATION OF SHRI M.I. SHEIKH AND SHRI MOHAMMAD HANIF SHEIKH WITHOUT PAN OR ID PROOF. ASSESSEE HAS NOT P ROVED THE GENUINENESS OF THE ABOVE TRANSACTION BY NOT PRODUCING PAN OR ID PROOF WHICH IS MAIN INGREDIENTS REQUIRED TO PROVE THE SAME NOR EXPLAINE D DISCREPANCY NOTICED. THUS, IN FACT THE ASSESSEE HAS NOT SATISFACTORILY D ISCHARGED THE ONUS CAST UPON HIM TO PROVE THE GENUINENESS OF ABOVE MEN TIONED TRANSACTION BY NOT PROVING IDENTITY, AND GENUINENESS. HE HAS NOT S ATISFACTORILY ESTABLISHED THE GENUINENESS AND IDENTITY OF THE ABOVE PERSON; H ENCE THE SAME CANNOT BE TREATED AS GENUINE ONE AND THIS IS SIMPLY A DEVICE TO CREATE BOGUS LIABILITIES AND THEREBY REDUCE TAX LIABILITY OR PAYMENT MADE TO THE SELLER OUT OF BOOKS OF ACCOUNTS IN CASH. THE ASSESSEE HAS TOTALLY FAILED T O PROVE THE IMPORTANT INGREDIENTS THAT ARE IDENTITY AND GENUINENESS OF TH E TRANSACTION. THEREFORE, AMOUNT OF RS.2,35,000/- CLAIMED TO HAVE BEEN OUTSTA NDING AS ON 31.03.2007 IS NOTHING BUT COLORFUL DEVICE TO INVEST UNDISCLOSE D INCOME IN PAYMENTS OUT OF BOOKS. THEREFORE, THE SAID AMOUNT OF RS.2,35,000 /- IS ADDED TO THE TOTAL INCOME OF THE ASSESSEE TREATING THE SAME PAYMENT OU T OF BOOKS FROM UNDISCLOSED INCOME. PENALTY PROCEEDINGS U/S 271(1)( C) ARE SEPARATELY INITIATED FOR CONCEALMENT OF PARTICULARS OF INCOME. (ADDITION RS.2,35,000/-) 13. THE ABOVE FINDINGS OF THE ASSESSING OFFICER IS SUPPORTED BY THE LD. CIT(A) WITH THE FOLLOWING FINDINGS:- 5.3 GROUND NO.10 IS AGAINST THE ADDITION OF RS.2,3 5,000/- IN REFERENCE TO UNEXPLAINED AND UNDISCLOSED INCOME. CONSIDERING THE FACTS AS DISCUSSED BY A.O. IN THE ASSTT. ORDER AND IN THE ABSENCE OF ANY EVIDENCE FILED CONTRARY TO FACTS DISCUSSED BY A.O., I AM INCLINED TO ACCEPT TH E CONTENTIONS OF A.O. THE ADDITION SO MADE IS THEREFORE JUSTIFIED AND CONFIRM ED. THE GROUND IS DISMISSED. 14. AT THE TIME OF HEARING BEFORE US, THE LD. COUNS EL FOR THE ASSESSEE HAS REFERRED TO THE LEDGER ACCOUNT OF SHRI M.I. SHEIKH AND SHRI MOHAMMAD HANIF SHEIKH IN THE ASSESSEES BOOKS OF ACCOUNTS AN D POINTED OUT THAT THE ITA NO. 1177/AHD/2013 MUKESHBHAI B SHAH VS. ITO FOR AY 2007-08 6 LEDGER ACCOUNTS OF THE ASSESSEE HAVE BEEN DULY AFFI RMED BY SHRI M.I. SHEIKH AS WELL AS SHRI MOHAMMAD HANIF SHEIKH. HOWEVER, TH E LD. COUNSEL WAS FAIR ENOUGH TO ADMIT THAT EXCEPT THE ABOVE CONFIRMA TION OF THE LEDGER ACCOUNT, THE ASSESSEE DOES NOT HAVE ANY OTHER EVIDE NCE IN HIS POSSESSION AS THE MATTER IS VERY OLD. HE ALSO EXPRESSED HIS INAB ILITY TO PRODUCE THE PURCHASE/SALE DEED OF THESE VEHICLES WHICH ARE REFE RRED TO BY THE ASSESSING OFFICER IN HIS ORDER. FROM THE PERUSAL OF THE ASSES SMENT ORDER, IT IS CLEAR THAT THE ON THE PURCHASE/SALE DATE THERE IS MENTIONING O F SOME PAYMENTS WHICH ARE NOT TALLYING WITH THE ASSESSEES BOOKS OF ACCOU NTS. THEREFORE, THE DETAILS OF EXACT PAYMENTS MADE BY THE ASSESSEE WOULD BE CLE AR ONLY FROM THE PURCHASE/SALE DEED OF VEHICLES. IN THE SO CALLED C ONFIRMATION OF THE LEDGER ACCOUNT, WE FIND THAT THE ASSESSEE HAS PUT A SEAL M ENTIONING I CONFIRM THE ABOVE A/C IS TRUE & CORRECT AND BELOW THAT SEAL IT IS WRITTEN IN HINDI MOHAMMAD HANIF. IT SHOWS THAT THE SIGNATORY TO T HIS LEDGER ACCOUNT DOES NOT EVEN KNOW ENGLISH. SIMILAR IS THE POSITION IN THE LEDGER CONFIRMATION TO THE LEDGER ACCOUNT OF SHRI M.I. SHE IKH. IN VIEW OF THE ABOVE, IN OUR OPINION, THE ALLEGED SIGNATURE ON THE LEDGER ACCOUNT CANNOT BE RELIED UPON, ESPECIALLY WHEN THE ASSESSEE IS AVOIDING TO P RODUCE THE ORIGINAL DOCUMENTS ON THE BASIS OF WHICH THE VEHICLES HAVE B EEN PURCHASED BY THE ASSESSEE. ORDINARILY, NO PERSON WOULD TRANSFER THE VEHICLE UNLESS AND UNTIL FULL PAYMENT IS MADE. THE SALE DEED GIVES THE DETAI LS OF PAYMENTS. THE ASSESSEE IS AVOIDING THE PRODUCTION OF SALE DEED. IN VIEW OF ABOVE, WE DO NOT FIND ANY JUSTIFICATION TO TAKE A VIEW DIFFERENT THAN THE VIEW TAKEN BY THE LOWER AUTHORITIES. ACCORDINGLY, GROUND NO. 3 OF TH E ASSESSEES APPEAL IS REJECTED. 15. GROUND NO.5 OF THE ASSESSEES APPEAL READS AS U NDER:- 5. THAT THE LD. CIT(A) ERRED IN LAW AND ON THE FA CTS OF THE CASE IN CONFIRMING THE ORDER OF THE AO IN CHARGING INTEREST U/S 234A, 234B AND 234C OF THE ACT. ITA NO. 1177/AHD/2013 MUKESHBHAI B SHAH VS. ITO FOR AY 2007-08 7 16. AT THE TIME OF HEARING OF THE APPEAL BEFORE US, THE LEARNED COUNSEL FAIRLY STATED THAT THIS GROUND IS CONSEQUENTIAL. WE , THEREFORE, DIRECT THE ASSESSING OFFICER TO RE-WORK THE INTEREST IN ACCORD ANCE WITH LAW AFTER DETERMINATION OF FINAL INCOME AS PER OUR ORDER. 17. IN THE RESULT, THE ASSESSEES APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE COURT ON 17 TH MARCH, 2015 AT AHMEDABAD. SD/- SD/- (KUL BHARAT) JUDICIAL MEMBER G.D. AGRAWAL VICE-PRESIDENT (AZ, LZ & BZ) AHMEDABAD; DATED 17/03/2015 BIJU T., PS +, % !&- .+-& +, % !&- .+-& +, % !&- .+-& +, % !&- .+-&/ COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. !' / THE RESPONDENT. 3. & #/ / CONCERNED CIT 4. #/ ( ) / THE CIT(A) - XV, AHMEDABAD 5. -23 !& , , / DR, ITAT, AHMEDABAD 6. 34 5$ / GUARD FILE . +,# +,# +,# +,# / BY ORDER, TRUE COPY 6 66 6/ // / 7 7 7 7 ( DY./ASSTT.REGISTRAR) , , , , / ITAT, AHMEDABAD