Shri Gurmeet Singh, Chandigarh V. Addl. CIT, Chandigarh

ITA 1199/CHANDI/2011

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 68392 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 7 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-08-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 02-07-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 09-12-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: J S NAGAR
• Assessee Lawyers: A K JINDAL
• Keywords: Earning of tax free income; Additional evidence

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH A, CHANDIGARH BEFORE SHRI T.R. SOOD, A.M AND MS. SUSHMA CHOWLA, JM ITA NO. 1193/CHD/2011 ASSESSMENT YEAR : 2008-09 A.C.I.T. CIRCLE 3(1) V GURMEET SINGH CHANDIGARH SCO 67, SECTOR 20-C CHANDIGARH ADYPS 3630D ITA NO. 1199/CHD/2011 ASSESSMENT YEAR : 2008-09 GURMEET SINGH V ADDL CIT, RANGE-III CHANDIGARH CHANDIGARH (APPELLANT) (RESPONDENT) DEPARTMENT BY SHRI J.S. NAGAR ASSESSEE BY: SHRI A.K. JINDAL DATE OF HEARING 4.7.2013 DATE OF PRONOUNCEMENT 2.8.2013 O R D E R PER T.R.SOOD, A.M THESE CROSS APPEALS ARE DIRECTED AGAINST THE ORDER DATED 10.9.2011 OF THE LD. CIT(A), CHANDIGARH. THESE APP EALS WERE HEARD TOGETHER AND ARE DISPOSED OFF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. ITA NO. 1193/CHD/2011 2. IN THIS APPEAL THE REVENUE HAS RAISED THE FOLLOW ING GROUNDS: 1 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAS ERRED IN FACTS AND LAW IN DELETI NG THE ADDITION OF RS. 58,50,000/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF INTRODUCTION OF UNEXPLAINED C ASH. 2 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE , ORDER OF THE LD. CIT(A) IS NOT ACCEPTABLE AS THE LD . CIT(A) HAS ACCEPTED THE FRESH EXPLANATION OF THE 2 ASSESSEE REGARDING DISCREPANCIES IN CASH DEPOSITS WITHOUT CONFRONTING THE A.O. WHICH AMOUNTS TO ADMITTANCE OF ADDITIONAL EVIDENCE AND THE SAME IS PROHIBITED UNDER RULE 46A OF THE I.T.RULES, AS THE ASSESSEE FAILED TO PRODUCE THE RELEVANT BOOKS OF ACCOUNTS AND OTHER CORROBORATIVE EVIDENCE BEFORE TH E A.O. FOR INSPECTION / EXAMINATION DURING THE COURSE OF ASSESSMENT AS CLEARLY DEPICTED IN PARA 2.3 OF THE ASSESSMENT ORDER. 3 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE , THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION O F RS. 2,12,288/- MADE BY THE A.O. ON ACCOUNT OF INTEREST FREE LOAN GIVEN TO THE SISTER CONCERN M/S. CHANDIGARH CA BLES PVT. LTD. WHEREAS ASSESSEE HAD RAISED HUGE LOAN AND DEBITED INTEREST TO THE PROFIT & LOSS ACCOUNT. 3. AFTER HEARING BOTH THE PARTIES WE FIND THAT DURI NG ASSESSMENT PROCEEDINGS THE AO NOTICED THAT THE ASS ESSEE WAS IN THE BUSINESS OF CONSTRUCTION OF DAMS, CANALS, IR RIGATION PROJECTS ETC. AND VARIOUS PROJECTS WERE GOING ON. HE NOTED THAT ON EXAMINATION OF CASH MAINTAINED AT VARIOUS O FFICES OF THE ASSESSEE REVEAL CERTAIN DISCREPANCIES. FURTHER DET AILS HAVE BEEN MENTIONED REGARDING THESE DISCREPANCIES FOR EX AMPLE IN CASE OF NCL PROJECT, THE BRANCH HAS SHOWN RECEIPT O F CASH AT RS. 7 LAKHS ON 19.8.2007, RS. 5 LAKHS ON 4.10.2007 AND RS. 5 LAKHS ON 1.11.2007. BUT THERE IS NO CORRESP ONDING ENTRY IN THE BOOKS OF HEAD OFFICE. ASSESSING OFFICER FOUN D THESE AMOUNTS WERE DEBITED ON 16.8.2007, 30.9.2007 AND 30 .10.2007. ON THE BASIS OF THESE DISCREPANCIES THE ASSESSING OFFICER ADDED A SUM OF RS. 58,50,000/- TO THE INCOME OF THE ASSESSEE. 4 ON APPEAL IT WAS MAINLY SUBMITTED THAT BASICALLY THERE IS NO DISCREPANCY AND THE ASSESSING OFFICER HAS NOT UN DERSTOOD THE ISSUE PROPERLY. IT WAS CONTENDED THAT IF THE C ASH IS DISPATCHED FROM THE HEAD OFFICE ON 16.8.2007 IT WIL L TAKE SOME TIME TO REACH AT NCL PROJECT. IF THE CASH REACHES THERE ON 3 19.8.2007 AND ENTRY WAS MADE ON THAT DATE OF ACTUAL PHYSICAL RECEIPT OF CASH THEN IT CANNOT BE SAID THAT IT IS A CASE OF DISCREPANCY. SIMILARLY OTHER DISCREPANCIES WERE EX PLAINED. THE LD. CIT(A) FOUND FORCE IN THESE SUBMISSIONS AND DELETED THE ADDITION. 5 BEFORE US, THE LD. DR FOR THE REVENUE STRONGLY SU PPORTED THE ORDER OF ASSESSING OFFICER. 6 ON THE OTHER HAND, THE LD. COUNSEL OF THE ASSESS EE REITERATED THE SUBMISSIONS MADE BEFORE THE LD. CIT( A) AND STRONGLY SUPPORTED THE IMPUGNED ORDER. 7 AFTER CONSIDERING THE RIVAL SUBMISSIONS WE FIND THAT THE DETAILS OF THE CASH RECEIVED BY VARIOUS BRANCHES AN D HEAD OFFICE HAS BEEN NOTED BY THE ASSESSING OFFICER AND EXPLAINED BEFORE THE LD. CIT(A) AS UNDER: CASH CREDITED IN THE BOOKS OF: AMOUNT EXPLANATION NCL AS RECEIVED FROM H.O. ON 19.08.2007 ON 04.10.2007 ON 01.11.2007 RS. 7 LACS RS. 5 LACS RS. 5 LACS PAYMENT RECORDED IN THE BOOKS OF H.O. ON 16.8.2008 REFER P.B. PAGE: 23-24 ON 30.09.2007 REFER P.B. PAGE : 25-27 ON 30.10.2007 REFER P.B. PAGE 28-29 IN THE BOOKS OF GANGA CANAL AS RECEIVED FROM H.O. ON 12.04.2007 ON 20.04.2007 ON 26.04.2007 RS. 5 LACS RS. 5 LACS RS. 3.5 LACS PAYMENT RECORDED IN THE BOOKS OF H.O ON 10.04.2007 PG 50-54 ON 18.04.2007 PG 55-59 ON 24.04.2007 PG 60-62 IN THE BOOKS OF KHANDWA (UPPER BEDA) AS RECEIVED FROM H.O. ON 21.10.2007 ON 30.10.2007 ON 23.11.2007 ON 11.12.2007 RS. 5 LACS RS. 5 LACS RS. 5 LACS RS. 5 LACS AMT. RECORDED IN THE BOOKS OF H.O. ON 18.10.2007 PG 35- 37 ON 27.10.2007 PG 38- 39 ON 20.11.2007 PG 40- 42 4 ON 08.12.2007 PG 43.45 IN THE BOOKS OF H.O. AS RECEIVED FROM NCL ON 13.06.2007 RS. 1 LAC IN THE BOOKS OF NCL RECORDED ON 11.06.2007 REFER PAGE 13 IN THE BOOKS OF H.O. AS RECEIVED FROM KHANDWA ON 05.10.2007 RS. 5 LACS RECORDED IN THE BOOKS OF BOOKS OF KHANDWA ON 03.10.2007 REFER PAGE 14 THE ABOVE CLEARLY SHOWS THAT BASICALLY THERE IS NO DISCREPANCY IN THE RECEIPT OF CASH BY VARIOUS BRANCHES AND ONL Y DISCREPANCY IS THAT THE CASH HAS BEEN DEBITED IN ON E ACCOUNT ON EARLIER DATE THEN THE DATE OF CREDIT ENTRY BY TH E BRANCH OR HEAD OFFICE. FOR EXAMPLE IN CASE OF NCL THE RECEIP T OF SUM OF RS. 7 LAKHS HAS BEEN ENTERED ON 19.8.2007 WHEREAS T HE HEAD OFFICE HAS DEBITED DEBITED IT ON 16.8.2007. FURTHE R SIMPLY BECAUSE IF THE CASH HAS BEEN DISPATCHED BY HEAD OFF ICE, IT WILL TAKE SOMETIME TO REACH THE BRANCH OFFICE AND IF THE ENTRY FOR RECEIPT OF CASH HAS BEEN MADE ON THE BASIS OF ACTU AL DATE OF PHYSICAL RECEIPT OF CASH THEN IT CANNOT BE A CASE O F DISCREPANCY. ALL THE INTER-OFFICE TRANSACTIONS MAT CH WITH EACH OTHER AND THE ONLY DISCREPANCY NOTED BY THE ASSESSI NG OFFICER IS THAT DEBIT ENTRY HAS BEEN MADE EARLIER THEN THE CREDIT ENTRY WHICH HAS BEEN NOTED EARLIER WHICH IS DUE TO THE RE ASON THAT PHYSICAL CASH WOULD REACH ITS DESTINATION THROUGH T HE EMPLOYEES ETC. ACCORDINGLY WE FIND NOTHING WRONG WITH THE ORDER OF THE LD. CIT(A) AND CONFIRM THE SAME. 8 GROUND NO. 2 AFTER HEARING BOTH THE PARTIES WE FIND THAT DURING ASSESSMENT PROCEEDINGS THE AO NOTICED THAT THE ASSESSEE HAS GIVEN INTEREST FREE ADVANCES TO CHANDI GARH CABLE PVT LTD., THEREFORE, BY INVOKING THE DECISION OF H ON'BLE PUNJAB 5 & HARYANA HIGH COURT IN CASE OF CIT V. ABHISHEK IND USTRIES, 286 ITR 1 (PH) DISALLOWED A SUM OF RS. 2,12,288/- B Y CALCULATING THE INTEREST AT 10%. 9 ON APPEAL BEFORE THE LD. CIT(A) IT WAS STATED THA T THE ASSESSING OFFICER HAS NOT DENIED THE FACT THAT THE AMOUNT WAS FOR PURCHASE OF MATERIAL AND LAND, THEREFORE, DISA LLOWANCE WAS NOT JUSTIFIED. THE LD. CIT(A) FOLLOWING THE EARLIE R ORDER OF HIS PREDECESSOR, ALLOWED THIS CLAIM. 10 BOTH THE PARTIES FAIRLY AGREED THAT THIS ISSUE I S COVERED BY THE ORDER OF THE TRIBUNAL FOR EARLIER YEARS I.E. AS SESSMENT YEAR 2006-07 IN ITAS NO. 1018 AND 1005/CHD/2010. 11 AFTER CONSIDERING THE RIVAL SUBMISSIONS WE FIND THAT IDENTICAL ISSUE CAME UP FOR CONSIDERATION OF THE TR IBUNAL IN ASSESSMENT YEAR 2006-07 AND IT WAS NOTED THAT MAJOR PORTION OF ADVANCE WAS FOR PURCHASE OF MATERIAL AND SOME PO RTION WAS FOR PURCHASE OF LAND. AFTER CONSIDERING VARIOUS CO MPONENTS OF ADVANCE FREE AND ADDITION OF RS. 15,000/- WAS MADE BY THE TRIBUNAL AGAINST DISALLOWANCE OF RS. 79,364/-. FOL LOWING EARLIER PROPORTION WE ARE OF THE OPINION THAT IN TH IS YEAR IF AN ADDITION OF RS. 35,000 IS MADE, THE SAME WOULD MEET THE ENDS OF JUSTICE. ACCORDINGLY WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND DIRECT THE ASSESSING OFFICER TO MAKE AN ADDITIO N OF RS. 35,000/- TOWARDS ADVANCE GIVEN WITHOUT INTEREST. 12 IN THE RESULT, APPEAL OF THE REVENUE IS PARTLY A LLOWED. ITA N0. 1199/CHD/2011 13 IN THIS APPEAL THE ASSESSEE HAS RAISED THE FOLLO WING GROUNDS OF APPEAL: 1 THAT THE LD. CIT(A) IS NOT JUSTIFIED IN UPHOLDIN G THE DISALLOWANCE OF RS.57,161,/- MADE BY ASSESSING 6 AUTHORITY U/S. 14-A OF THE I.T. ACT READ WITH RULE 8-D UNDER THE FACTS & CIRCUMSTANCES OF THE CASE. 2 A) THAT THE LD. CIT(A) IS NOT JUSTIFIED IN UPHOLD ING THE DISALLOWANCE OF RS.6,90,804/- U/S. 40(A)(IA) UN DER THE FACTS & CIRCUMSTANCES OF THE CASE. B) THAT THE APPELLANT DISPUTES THE QUANTUM OF ADDIT ION MADE. 14 GROUND NO.1 - AFTER HEARING BOTH THE PARTIES WE FIND THAT DURING ASSESSMENT PROCEEDINGS THE AO NOTICED THAT THE ASSESSEE HAS MADE INVESTMENTS OF RS. 16,10,100/- FO R EARNING EXEMPT INCOME. HE INVOKED RULE 8D AND MADE DISALLO WANCE OF RS. 57,161/- WHICH HAS BEEN CONFIRMED BY THE LD. CI T(A). 15 THE LD. COUNSEL OF THE ASSESSEE FAIRLY SUBMITTED THAT THIS ISSUE IS COVERED BY THE ORDER OF THE TRIBUNAL IN TH E EARLIER YEAR. 16 ON THE OTHER HAND, THE LD. DR FOR THE REVENUE R ELIED ON THE ORDER OF THE LD. CIT(A). 17 AFTER CONSIDERING THE RIVAL SUBMISSIONS WE FIND THAT DISALLOWANCE WAS UPHELD IN THE EARLIER YEAR ALSO AN D IN THIS YEAR EVEN RULE 8D IS APPLICABLE AND THE LD. COUNSEL OF THE ASSESSEE HAS NOT POINTED OUT ANY ERROR IN THE CALCU LATION MADE IN RULE 8D R.W.S. 14A, THEREFORE, WE CONFIRM THIS ADDITION. 18 GROUND NO. 2 DURING THE ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS MAD E CERTAIN PAYMENTS TO TATA CAPITAL LTD. AND KOTAK MAHINDRA PR IME LTD. IN RESPECT OF INTEREST WITH DEDUCTION OF TAX. ACCORD INGLY A SUM OF RS. 6,90,804/- WAS DISALLOWED BY INVOKING THE PR OVISIONS OF SECTION 40(A)(IA) OF THE ACT. THE ADDITION HAS BEE N CONFIRMED BY THE LD. CIT(A). 7 19 THE LD. COUNSEL OF THE ASSESSEE FAIRLY SUBMITTED THAT THIS ISSUE IS COVERED AGAINST THE ASSESSEE BY THE ORDER OF THE TRIBUNAL IN EARLIER YEARS. 20 WE HAVE HEARD THE RIVAL SUBMISSIONS CAREFULLY. THIS ISSUE CAME UP FOR CONSIDERATION OF THE TRIBUNAL IN ASSESS MENT YEAR 2006-07 IN ITAS NO. 1018 &B 1005/CHD/2010. THE SAM E WAS ADJUDICATED BY THE TRIBUNAL IN PARA 31 WHICH IS AS UNDER: 31 AFTER CONSIDERING THE RIVAL SUBMISSIONS, WE FIN D THAT AS FAR AS THE CONTROVERSY WHETHER TDS PROVISIONS ARE A PPLICABLE ON AMOUNT ALREADY PAID OR NOT, WE FIND THAT DECISIO N OF THE TRIBUNAL IN THE CASE OF MERILYN SHIPPING & TRANSPOR TS V ACIT (SUPRA) HAS ALREADY BEEN OVERRULED BY THE HON'BLE C ALCUTTA HIGH COURT IN CASE OF CIT VS. CRESCANT EXPORT SYNDI CATE AND, THEREFORE, PROVISIONS OF TDS ARE APPLICABLE ON AMO UNT ALREADY PAID DURING THE ASSESSMENT YEAR AS WELL AS AMOUNT R EMAINING PAYABLE AT THE END OF THE ASSESSMENT YEAR, THEREFOR E, WE CONFIRM THE ADDITION AMOUNTING TO RS. 68,52,119/-. AS FAR AS ISSUE REGARDING HIRE CHARGE IS CONCERNED, IT SEEMS THAT SOME OF THE AGREEMENTS WERE ALSO NOT FILED AND PROPERLY CONSIDERED BY THE ASSESSING OFFICER AS WELL AS LD. CIT(A), TH EREFORE, IN THE INTEREST OF JUSTICE, WE SET ASIDE THE ORDER OF LD. CIT(A) AND REMIT THE MATTER BACK TO THE FILE OF ASSESSING OFFI CER WITH A DIRECTION TO REEXAMINE THE ISSUE AND DETERMINE WHET HER ANY HIRE CHARGES TO THE EXTENT OF RS. 5,27,528/- ARE TH ERE AND THEN DECIDE THE ISSUE IN ACCORDANCE WITH LAW. FOLLOWING THE ABOVE, WE CONFIRM THE ORDER OF THE LD . CIT(A). 21 IN THE RESULT, APPEAL OF THE REVENUE IS PARTLY A LLOWED AND THE APPEAL OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 2.8.2013 SD/- SD/- (SUSHMA CHOWLA) (T.R. SOOD) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 2.8.2013 SURESH COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT/THE C IT(A)/THE DR