SHAIKH MAQSOOD ALAM, Jaipur V. ACIT, Ajmer

ITA 128/JPR/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 5391 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 2 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-04-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 02-02-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Depreciation; Question of law; Non compliance; Commercial expediency
• Section: 43B; 143(3); 194C; 68

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH FOE FLAG ;KNO] YS[KK LNL; ,OA JH YFYR DQEKJ] U; KF;D LNL; DS LE{K BEFORE: SHRI VIKRAM SINGH YADAV, AM & SHRI LALIET K UMAR, JM VK;DJ VIHY LA-@ ITA NOS. 128/JP/2015 FU/KZKJ.K O'K Z@ ASSESSMENT YEARS : 2010-11 . SHAIKH MAQSOOD ALAM, PROP. M/S. AZAD FABRICATORS, RAAS BABRA ROAD, USMAN, HOUSE DUNGAR KHORA, NUNDRI, BEAWAR. CUKE VS. THE ACIT, CIRCLE-2, AJMER. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO. ABLPA 5253 F VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT VK;DJ VIHY LA-@ ITA NOS. 103/JP/2015 FU/KZKJ.K O'K Z@ ASSESSMENT YEARS : 2010-11 . THE ACIT, CIRCLE-2, AJMER. CUKE VS. SHAIKH MAQSOOD ALAM, PROP. M/S. AZAD FABRICATORS, RAAS BABRA ROAD, USMAN, HOUSE DUNGAR KHORA, NUNDRI, BEAWAR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO. ABLPA 5253 F VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY S BY : SHRI VINOD GUPTA (CA) JKTLO DH VKSJ LS@ REVENUE BY : SHRI O.P. BATEJA (ADDL. CIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 22.03.2016. ?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 26/04/2016. 2 ITA NO. 128 & 103/JP/2015 SHAIKH MAQSOOD ALAM VS. ACIT. VKNS'K@ ORDER PER SHRI LALIET KUMAR, J.M. THESE ARE TWO CROSS APPEALS FILED BY THE ASSESSEE AND DEPARTMENT ARISING AGAINST THE ORDER OF LD. CIT (A), AJMER DATED 28.11 .2014 FOR THE ASSESSMENT YEAR 2010-11. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER :- 1. IMPUGNED ASSESSMENT ORDER PASSED U/S 143(3) IS BAD IN LAW AND ON FACTS BEING AGAINST THE PRINCIPAL OF NATURAL JUSTIC E AND FOR MANY MORE OTHER REASONS. 2. UNDER THE FACTS AND CIRCUMSTANCES, LD. AO HAS ERRED BY MAKING ADDITION OF RS. 4,37,136/- BY DISALLOWING FOLLOWING EXPENSES ON AD- HOC BASIS. FURTHER, CIT (A) ERRED BY CONFIRMING THE DISALLOWANCES. THE DISALLOWANCE MADE IS UNJUSTIFIED, ILLEGAL OR EX CESSIVE. SR. EXPENSES TOTAL EXPENSES AMOUNT (IN INR) PERCENTAGE DISALLOWED AMOUNT DISALLOWED (IN INR) 1. VEHICLE EXPENSES 1809825.00 10% 180982.00 2. TRAVELLING & TRANSPORT EXPENSES 1280771.00 20% 256154.00 TOTAL 437136.00 3. UNDER THE FACTS AND CIRCUMSTANCES, LD. AO HAS ERRED BY MAKING ADDITION OF RS. 11,448/- CONSIDERING IT TO BE CONTR ACT INCOME. FURTHER, CIT (A) ERRED BY SUSTAINING THE SAME. THE ADDITION MADE IS UNJUSTIFIED, ILLEGAL OR EXCESSIVE. 4. UNDER THE FACTS AND CIRCUMSTANCES, LD. A.O. HAS ERR ED BY MAKING ADDITION OF RS. 9924/- ON ACCOUNT OF DIFFERENCE IN BALANCE OF KOTAK MAHINDRA BANK LTD A/C. FURTHER, CIT (A) ERRED BY SU STAINING THE SAME. THE ADDITION MADE IS UNJUSTIFIED, ILLEGAL OR EXCESSIVE. 5. UNDER THE FACTS AND CIRCUMSTANCES, LD. AO HAS ERRED BY MAKING ADDITION OF RS. 87,351/- BY TREATING CREDIT ENTRY O F M/S. ANNAGRAM FINANCE LIMITED AS INCOME. FURTHER, CIT (A) ERRED B Y SUSTAINING THE SAME. THE ADDITION MADE IS UNJUSTIFIED, ILLEGAL OR EXCESSIVE. 3 ITA NO. 128 & 103/JP/2015 SHAIKH MAQSOOD ALAM VS. ACIT. 6. UNDER THE FACTS AND CIRCUMSTANCES, LD. AO HAS ERRED BY MAKING ADDITION OF RS. 4,10,807/- ON ACCOUNT OF CESSATION OF LIABILITY U/S 41(1). FURTHER, CIT (A) ERRED BY SUSTAINING THE SAM E. THE ADDITION MADE IS UNJUSTIFIED, ILLEGAL OR EXCESSIVE. 7. UNDER THE FACTS AND CIRCUMSTANCES, LD. AO HAS ERRED BY MAKING DISALLOWANCES OF RS. 1,43,000/- U/S 40(A)(IA). FURT HER, CIT (A) ERRED BY SUSTAINING THE SAME. THE DISALLOWANCE MADE IS UN JUSTIFIED, ILLEGAL OR EXCESSIVE. 8. THAT UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE LD. AO HAS ERRED BY INITIATING PENALTY PROCEEDINGS U/S 271(1)( C) OF THE ACT. THE GROUND RAISED BY THE REVENUE ARE AS UNDER :- IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CAS E THE LD. CIT (A), AJMER HAS ERRED IN : 1. DELETING THE ADDITION OF RS. 2,27,063/- MADE BY THE AO ON ACCOUNT OF DISALLOWANCE OF WELFARE EXPENSES, WITHOUT APPREC IATING THE FACTS OF THE CASE; 2. DELETING THE ADDITION OF RS. 2,51,987/- MADE BY THE AO ON ACCOUNT OF DISALLOWANCE OF SITE EXPENSES, WITHOUT APPRECIAT ING THE FACTS OF THE CASE; 3. DELETING THE INTEREST ON NSC OF RS. 240/- WITHOUT A PPRECIATING THE FACTS OF THE CASE; 4. DELETING THE DISALLOWANCE U/S 43B OF RS. 49,29,482/ - WITHOUT APPRECIATING THE FACTS OF THE CASE; 5. DELETING THE ADDITION OF RS. 1,05,000/- MADE BY THE AO ON ACCOUNT OF ADVANCE FOR AGRICULTURAL LAND, WITHOUT APPRECIAT ING THE FACTS OF THE CASE; 6. DELETING THE ADDITION OF RS. 46,000/- MADE BY THE A O ON ACCOUNT OF CASH FROM NEW SUPER ENGG. WITHOUT APPRECIATING THE FACTS OF THE CASE. 7. DELETING THE ADDITION OF RS. 19,500/- MADE BY THE A O ON ACCOUNT OF CASH FROM SHREE CEMENT, WITHOUT APPRECIATING THE FA CTS OF THE CASE. 4 ITA NO. 128 & 103/JP/2015 SHAIKH MAQSOOD ALAM VS. ACIT. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS ENGAGED IN THE BUSINESS OF FABRICATION, ERECTION AND MAINTENANCE WORK ON JOB B ASIS MAINLY FOR SHREE CEMENT LTD., J. K. WHITE CEMENT LTD., J. K. CEMENT LTD. AN D LIVE WIRE ETC., FILED HIS INCOME TAX RETURN FOR THE AY 2010-11, DECLARING TOTAL INCO ME AT RS. 60,94,610/- ON 13.10.2010. THE CASE WAS SCRUTINIZED UNDER SECTION 143(3) AND THE AO COMPLETED THE ASSESSMENT VIDE ORDER DATED 22.03.2013 PASSED U NDER SECTION 143(3) DETERMINING TOTAL INCOME AT RS. 1,27,73,548/- BY MA KING VARIOUS DISALLOWANCES AND ADDITIONS TOTALING TO RS. 66,78,938/-. AGGRIEVED B Y THE ORDER OF AO, THE ASSESSEE PREFERRED APPEAL BEFORE LD. CIT (A) WHO ALLOWED PAR TIAL RELIEF AS UNDER :- SR. ADDITION/DISALLOWANCE MADE BY LD. AO LD. CIT(A) DELETED CONFIRMED 1 AD - HOC DISALLOWANCE @ 10% OUT OF VEHICLE EXPENSES 1,80,982 0 1,80,982 2 AD - HOC DISALLOWANCE @ 10% OUT OF WELFARE EXPENSES 2,27,063 2,27,063 0 3 AD - HOC DISALLOWANCE @ 20% OUT OF TRAVELLING & TRANSPORT EXPENSES 2,56,154 0 2,56,154 4 AD - HOC DISALLOWANCE @ 20% OUT OF SITE EXPENSES 2,51,987 2,51,987 0 5 CONTRACT INCOME BASED ON ENTRY APPEARING ON 26AS 11,448 0 11,448 6 ACCRUED INTEREST OF NSC 240 240 0 7 DIFFERENCE IN BALANCE OF KOTAK MAHINDRA BANK 9,924 0 9,924 8 CREDIT BALANCE OF M/S ANNAGRAM FINANCE LIMITED 87,351 0 87,351 9 ADDITION U/S 41(1) 4,10,807 0 4,10,807 10 DISALLOWANCES U/S 40(A)(IA) 1,43,000 0 1,43,000 11 DISALLOWANCES U/S 43B 49,29,482 49,29,482 0 12 ADDITION ON ACCOUNT OF UNEXPLAINED CASH CREDIT U/S 68 1,05,000 1,05,000 0 13 ADDITION ON ACCOUNT OF UNEXPLAINED CASH CREDIT U/S 68 46,000 46,000 0 14 ADDITION ON ACCOUNT OF UNEXPLAINED CASH CREDIT U/S 68 19,500 19,500 0 5 ITA NO. 128 & 103/JP/2015 SHAIKH MAQSOOD ALAM VS. ACIT. 3. AGGRIEVED BY THE ORDER OF LD. CIT(A), BOTH THE P ARTIES FILED CROSS APPEALS BEFORE THIS TRIBUNAL. NOW WE DECIDE BOTH THE APPEAL S GROUND-WISE AS UNDER. FIRST WE TAKE UP THE ASSESSEES APPEAL. ASSESSEES APPEAL ITA NO. 128/JP/2015 : 4. GROUND NO. 1 : THE LD. A/R FOR THE ASSESSEE HAS NOT PRESSED TH IS GROUND HENCE THE SAME IS DISMISSED AS NOT PRESSED. 5. GROUND NO. 2 RELATES TO DISALLOWANCE OF RS. 4,37,136/- ON ACCOU NT VEHICLE EXPENSES AND TRAVELLING & TRANSPORT EXPENSES. THE AO WHILE MAKING ASSESSMENT NOTICED THAT THE ASSESSEE HAS DEBITED A SUM OF RS. 18,09,825/- TO THE PROFIT & LOSS ACCOUNT UNDER THE HEAD VEHICLE EXPENSES. THE ASSESS EE IS NOT HAVING ANY SEPARATE VEHICLE FOR PERSONAL USE. THE ASSESSEE HAS 3 SONS A ND ELEMENT OF PERSONAL USE CANNOT BE RULED OUT. FURTHER, THE ASSESSEE IS NOT M AINTAINING LOG BOOK FOR RECORDING USE OF VEHICLE FOR BUSINESS AS WELL AS PERSONAL PUR POSE. THEREFORE, THE AO CONSIDERING THE PERSONAL USE OF THE VEHICLES, DISAL LOWED 10% OF THE TOTAL EXPENSES WHICH COMES TO RS. 1,80,982/- AND THE SAME IS ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE. 5.1. IN RESPECT OF TRAVELLING AND TRANSPORTATION EX PENSES, THE ASSESSEE HAS DEBITED A SUM OF RS. 12,80,771/- TO THE PROFIT & LO SS ACCOUNT. THE AO DURING ASSESSMENT PROCEEDINGS NOTED THAT 90% OF THESE EXPE NSES ARE INCURRED IN CASH AND MOST OF THE EXPENSES ARE SUPPORTED BY INTERNAL VOUC HERS WITHOUT BILLS/TICKETS ETC. THE ASSESEE WAS ASKED VIDE ORDER SHEET DATED 21.12. 2012 AS TO WHY 20% OF THESE EXPENSES SHOULD NOT BE DISALLOWED. THE EXPLANATION GIVEN BY THE ASSESSEE DATED 6 ITA NO. 128 & 103/JP/2015 SHAIKH MAQSOOD ALAM VS. ACIT. 27.12.2012 WAS CONSIDERED BUT THE AO COULD NOT FIND IT CONVINCING FOR THE REASONS THAT TRAVELLING EXPENSES ARE NOT SUPPORTED BY BILLS /TICKETS, NO DETAILS /SUPPORTING VOUCHERS ARE GIVEN IN RESPECT OF ACCOMMODATION, MEA L/REFRESHMENT ETC. AND IN ABSENCE OF THESE DETAILS POSSIBILITY TO INFLATE THE SE EXPENSES ARE THERE. THEREFORE, THE AO CONSIDERED IT FIT TO DISALLOW 20% OF THESE E XPENSES WHICH COMES RS. 2,56,154/- AND ADDED TO THE INCOME OF THE ASSESSEE. THUS A TOTAL DISALLOWANCE OF RS. 4,37,136/- (RS. 1,80,982 + 2,56,154) WAS MADE BY THE AO. 6. ON BEING AGGRIEVED BY THE ORDER OF AO, THE ASSES SEE FILED APPEAL BEFORE LD. CIT (A), WHO SUSTAINED THE DISALLOWANCE BY OBSERVIN G THAT ASSESSEE HAS MERELY EXPLAINED THAT LOOKING TO THE NATURE OF BUSINESS AN D FOR COMMERCIAL EXPEDIENCY, THE EXPENDITURE INCURRED ARE REASONABLE, BUT THE ASSESS EE HAS NOT CONTROVERTED THE FINDINGS OF THE AO THAT ASSESSEE WAS NOT HAVING ANY SEPARATE VEHICLE FOR PERSONAL USE. THE ASSESSEE HAS ALSO NOT MAINTAINED ANY LOG BOOK FOR USE OF VEHICLES. THE LD. CIT (A) REFERRING TO SECTION 38(2) OF THE IT ACT, H ELD THAT PROPORTIONATE DISALLOWANCE IN RESPECT OF PERSONAL USE OF BUSINESS ASSETS IS RE ASONABLE. THUS HE CONFIRMED THE DISALLOWANCE OF RS. 1,80,982/-. 6.1. IN RESPECT OF DISALLOWANCE OF RS. 2,56,154/- U NDER THE HEAD TRAVELLING & TRANSPORTATION EXPENSES, THE LD. CIT (A) OBSERVED T HAT THE AO HAS POINTED OUT SPECIFIC DEFECT IN THE CLAIM OF THESE EXPENSES MENT IONING THAT SOME OF THE EXPENSES IN THE RANGE OF RS. 11,000/- TO RS. 15,000/- WERE C LAIMED WHEREAS THE BILLS ARE IN THE RANGE OF RS. 500/- TO RS. 2,000/- ONLY. FURTHE R, THE ASSESSEE HAS NOT PRODUCED BILLS FROM THE VARIOUS TRUCK OPERATORS, TAXIES ETC. USED FOR TRANSPORTATION. THE ASSESSEE HAS ALSO NOT PRODUCED DETAILS AS TO WHERE AND BY WHOM THESE EXPENSES 7 ITA NO. 128 & 103/JP/2015 SHAIKH MAQSOOD ALAM VS. ACIT. WERE INCURRED. CONSIDERING THE OVER-ALL FACTS AND C IRCUMSTANCES OF THE CASE, THE LD. CIT (A) CONFIRMED THE DISALLOWANCE OF RS. 2,56,154/ -. THEREFORE, HE CONFIRMED TOTAL DISALLOWANCE OF RS. 4,37,136/-. 7. NOW THE ASSESSEE IS IN APPEAL BEFORE US. 7.1. THE LD. A/R FOR THE ASSESSEE SUBMITTED THAT THE AO MADE DISALLOWANCE OF RS. 1,80,982/- BEING 10% OF THE TOTAL VEHICLE EXPENSES WHICH INCLUDES EXPENDITURE ON PETROL & DIESEL OF RS. 8,17,152/-, DEPRECIATION OF RS. 3,10,962/-, REPAIR & MAINTENANCE OF RS. 6,81,711/-. FURTHER, DISALLOWED RS. 2,56,154/- BEING 20% OF THE TOTAL TRAVELING & TRANSPORTATION EXPENSES. THE LD. A/R ARGUED THAT THE EXPENSES INCURRED BY THE ASSESSEE ON VEHICLE, TRAVEL AND TRA NSPORTATION SHOULD BE EVALUATED AND ASSESSED ONLY AFTER CONSIDERING THE PECULIAR NA TURE OF THE BUSINESS OF THE ASSESSEE. ASSESSEE IS ENGAGED IN BUSINESS OF FABRIC ATION, ERECTION AND MAINTENANCE WORK ON TURNKEY BASIS, WHICH INVOLVES VARIOUS WORKS TO BE DONE ON SITE TO SITE BASIS. THE SITES AND LOCATION ON WHICH SUCH WORK IS REQUIR ED TO BE PERFORMED ARE SITUATED MAINLY AT REMOTE LOCATIONS. THEREFORE, FREQUENT MOV EMENT OF WORKERS/LABORERS ARE REQUIRED FROM ONE SITE TO ANOTHER ON DAY TO DAY BAS IS. ASSESSEE ALSO TRAVELS FREQUENTLY TO LOOK AFTER THE WORK PROGRESS AT SITES . THE ASSESSEE IS TO WORK ON DIFFERENT REMOTES SITES BY EMPLOYING LABOURS AND TE CHNICIANS. THE FABRICATION AND ERECTION JOBS IS UNDERTAKEN BY DEPLOYING TOOLS, CON SUMABLES, MACHINES AND DEPUTING EMPLOYEES AND LABOURS, ALSO SAFETY MEASURES OF EMPL OYEES AND LABOURS IS TO BE ENSURED. THE ASSESSEE HAS EMPLOYED ABOUT 500 TO 600 LABOURS ON VARIOUS SITES AS PER THE JOB REQUIREMENTS, MOST OF THE LABOURS ARE S OURCED OUT OF THE STATE. FOR THESE PURPOSE THE ASSESSEE APPELLANT HAS TO PAY TRA NSPORTATION CHARGES TO VARIOUS 8 ITA NO. 128 & 103/JP/2015 SHAIKH MAQSOOD ALAM VS. ACIT. TRUCK OPERATORS, BUS FARE TO LABOURS, HIRE TAXI, JE EPS, THREE WHEELERS AND OTHER MEANS OF TRANSPORTATION WHICH ARE GENERALLY PAID IN CASH. THE FREQUENT TRANSPORTATION OF WORKERS/LABORERS FROM ONE SITE TO ANOTHER AND MOVEMENT OF MACHINERIES AND OTHER SMALL-SMALL ITEMS ARE PREVALE NT IN THIS TYPE OF INDUSTRY. FURTHER, WHILE MAKING DISALLOWANCE, THE AO HAS NOT BROUGHT ON RECORD ANY SPECIFIC DEFECT OR EVIDENCE WHICH SHOWS THAT EITHER EXPENSES HAS NOT BEEN INCURRED OR INCURRED FOR PERSONAL PURPOSES. THEREFORE, IN ABSEN CE OF SUCH INSTANCE THE DISALLOWANCE IS UNJUSTIFIED. THE LD. A/R FURTHER SU BMITTED THAT THE AO AS WELL AS LD. CIT(A) HAVE FAILED TO APPRECIATE THE REASONABLENESS AND COMMERCIAL EXPEDIENCY OF THE EXPENDITURE INCURRED WITH RESPECT TO THE NATURE OF BUSINESS CARRIED BY THE ASSESSEE-APPELLANT AND MADE/SUSTAINED ADHOC DISALLO WANCE. THEREFORE, THE LD. A/R PRAYED THAT THE DISALLOWANCE MADE MAY BE DELETED. 7.2. ON THE OTHER HAND, THE LD. D/R FOR THE REVENUE SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 7.3. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSE D THE MATERIAL AVAILABLE ON RECORD. OUT OF THE TOTAL VEHICLE EXPENSES, RS. 8,1 7,152/- IS TOWARDS PETROL AND DIESEL EXPENSES, RS. 3,10,962/- IS TOWARDS DEPRECIATION AN D RS. 6,81,711/- IS FOR REPAIR AND MAINTENANCE. THE ASSESSEE, IN OUR VIEW, HAS FAILED TO PRODUCE ANY EVIDENCE ESTABLISHING THAT THERE ARE OTHER VEHICLES OWNED BY THE COMPANY WHICH WERE BEING USED BY THE ASSESSEE OR THE FAMILY MEMBERS OF THE A SSESSEE FOR THEIR PERSONAL USE. ACCORDINGLY WE DISALLOW LUMP SUM AMOUNT OF RS. 1,30 ,982/- AND GRANT THE BENEFIT OF RS. 50,000/-. 9 ITA NO. 128 & 103/JP/2015 SHAIKH MAQSOOD ALAM VS. ACIT. 7.4. SIMILARLY, THE AUTHORITIES BELOW HAVE DISALLOW ED AN AMOUNT OF RS. 2,56,154/- TOWARDS TRAVELING & TRANSPORTATION EXPENSES. IN OUR VIEW, ALL THE VOUCHERS AND THE INVOICES PREPARED BY THE ASSESSEE WERE OF SELF MADE VOUCHERS. NOTHING HAS BEEN BROUGHT ON RECORD BY THE AUTHORITIES BELOW WHICH SH OWS THE COMPARISON BETWEEN TURNOVER AND THE TRAVELING AND TRANSPORTATION EXPEN SES INCURRED BY THE ASSESSEE. THE ASSESSEE AND HIS EMPLOYEES ARE REQUIRED TO VISI T VARIOUS SITES IN THE REMOTE AREAS FOR EXECUTION OF THEIR WORK AND AT TIMES IT I S NOT POSSIBLE TO PROCURE THE THIRD PARTY VOUCHERS FROM THE SERVICE PROVIDER. CONSIDER ING THE TOTALITY AND CIRCUMSTANCES AND COMMERCIAL EXIGENCY, WE DEEM IT APPROPRIATE TO RESTRICT THE TRAVELING AND TRANSPORTATION EXPENSES TO EXTENT OF RS. 1,56,154/- . THUS THE ASSESSEE WILL GET THE BENEFIT OF RS. 1,00,000/-. 8. GROUND NO. 3 RELATES TO ADDITION OF RS. 11,448/- ON ACCOUNT OF CONTRACT INCOME. DURING THE COURSE OF ASSESSMENT PROCEEDING S, THE AO NOTICED THAT THE ASSESSEE HAS RECEIVED AN INCOME OF RS. 91,46,762/- FROM J.K. WHITE CEMENT WORKS WHEREAS IN ITS DETAILS IT IS REVEALED THAT INCOME O F RS. 91,58,211/- HAS BEEN RECEIVED. THEREFORE, THE ASSESSEE WAS ASKED TO RECO NCILE THE SAME. IN REPLY DATED 20.02.2013, THE ASSESSEE SUBMITTED THAT THE NSDL HA S WRONGLY SHOWN THE EXCESS PAYMENT OF RS. 11,448/-. THE AO HAS NOT ACCEPTED TH E SUBMISSION FOR THE REASON THAT THE ASSESSEE HAS NOT POINTED OUT THE PARTICULA R ENTRY WHERE THE PAYMENT WAS MADE LESS BY RS. 11,448/- BY J.K. WHITE CEMENT WOR KS. THEREFORE, THE AO MADE THE ADDITION OF RS. 11,448/- TO THE INCOME OF THE A SSESSEE. 9. ON APPEAL BEFORE LD. CIT (A), THE LD. CIT (A) SU STAINED THE ADDITION BY OBSERVING AS UNDER :- 10 ITA NO. 128 & 103/JP/2015 SHAIKH MAQSOOD ALAM VS. ACIT. 5.3. I HAVE CONSIDERED THE CONTENTIONS OF THE APPE LLANT AS WELL AS ASSESSMENT ORDER. IT IS SEEN THAT THERE WAS DIFFERE NCE OF RS. 11,448/- IN THE RECEIPTS SHOWN BY THE ASSESSEE AND AS PER TH E ITS DETAILS AVAILABLE WITH THE AO. THE ASSESSEES EXPLANATION O F ABOVE DIFFERENCE IS GENERAL IN NATURE THAT DEDUCTOR AND DEDUCTEE MAY HAVE SHOWN THE PAYMENT/RECEIPTS IN DIFFERENT YEARS. HOWEVER, THE A SSESSEE HAS NOT RECONCILED AS TO HOW AND IN WHICH YEAR, THE ABOVE P AYMENT HAS BEEN OFFERED BY THE ASSESSEE IN THE RECEIPTS TO THE EXTE NT OF RS. 11,448/- EITHER BEFORE THE AO OR DURING THE APPEAL. THE ONUS LIES ON THE ASSESSEE TO RECONCILE THE DIFFERENCE WHICH HAS NOT BEEN DISCHARGED. IN VIEW OF THE ABOVE DISCUSSIONS AND FINDINGS OF TH E AO, THE ADDITION MADE BY THE AO IS CONFIRMED. 10. NOW THE ASSESSEE IS BEFORE US. 10.1. THE LD. A/R FOR THE ASSESSEE SUBMITTED THAT THE ADDITION MADE BY AO IS BASED ON EXCESS AMOUNT APPEARING ON FORM NO. 26AS. THE BA SIS FOR MAKING ADDITION IS WRONG DUE TO THE FACT THAT, THE DEDUCTOR IS LIABLE TO DEDUCT TDS ON PAYMENT OR CREDIT WHICHEVER IS EARLIER, DUE TO WHICH SOMETIME THE DEDUCTEE BOOKS INCOME IN DIFFERENT FINANCIAL YEAR AND DEDUCTOR BOOKS EXPENDI TURE IN DIFFERENT YEAR. FURTHER, MERELY ON THE BASIS OF FORM NO. 26AS NO ADDITION CA N BE MADE. THEREFORE, ADDITION MADE BY LD AO AND SUSTAINED BY LD. CIT (A) WITHOUT ANY CONCRETE EVIDENCE OF ESCAPEMENT OF INCOME, IS WRONG AND UNJUSTIFIED AND DESERVES TO BE DELETED. 10.2. THE LD. D/R SUPPORTED THE ORDERS OF THE AUTHO RITIES BELOW AND REQUESTED THAT THE ADDITION BE CONFIRMED. 10.3. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUS ED THE MATERIAL AVAILABLE ON RECORD. IT IS THE ADMITTED CASE THAT THE ADDITION MADE BY THE AO IS BASED ON THE EXCESS AMOUNT APPEARING IN FORM NO. 26AS. SINCE THE INCOME HAS NOT BEEN BOOKED IN THE FINANCIAL YEAR, THEREFORE, NO ADDITION CAN B E MADE ON THIS HEAD AND, THEREFORE, 11 ITA NO. 128 & 103/JP/2015 SHAIKH MAQSOOD ALAM VS. ACIT. THE ADDITION OF RS. 11,448/- IS DELETED AND THE GRO UND IS DECIDED IN FAVOUR OF THE ASSESSEE. 11. GROUND NO. 4 RELATES TO ADDITION OF RS. 9,924/- ON ACCOUNT OF DIFFERENCE IN BALANCE OF KOTAK MAHINDRA BANK LTD. THE AO ON PERU SAL OF SUBMISSION IT IS NOTICED THAT THE ASSESSEE HAS SHOWN CLOSING BALANCE OF RS. 4,10,750/- FROM KOTAK MAHINDRA WITH A/C NO. TFE-350406 IN THE BALANCE SHEET. BUT T HERE IS A BALANCE OF RS. 4,00,826/- AS PER BANK STATEMENT. AS THE ASSESSEE C OULD NOT RECONCILE THE DIFFERENCE OF RS. 9,924/-, THE AO MADE THE ADDITION OF THIS AM OUNT. 12. ON APPEAL BEFORE LD. CIT (A), THE LD. CIT (A) C ONFIRMED THE ADDITION BY OBSERVING AS UNDER :- 7.3. I HAVE CONSIDERED THE CONTENTION OF THE APPE LLANT AS WELL AS ASSESSMENT ORDER. IT IS SEEN THAT THE EXPLANATION G IVEN BY THE ASSESSEE IS GENERAL IN NATURE AND ASSESSEE HAS NOT BEEN ABLE TO RECONCILE THE DIFFERENCE OF RS. 9924/- AS POINTED OUT B Y THE AO IN THE CREDIT SHOWN IN THE BANK STATEMENT AND THAT SHOWN IN THE BALANCE SHEET OF THE ASSESSEE IN RESPECT OF LOAN FROM KOTAK MAHINDRA BAN K LTD. IN SUCH CIRCUMSTANCES, IT IS APPARENT THAT THE AMOUNT TO TH E EXTENT OF RS. 9924/- HAS BEEN PAID BY THE ASSESSEE OUTSIDE THE BO OKS OF ACCOUNTS TO THE BANKERS. IN VIEW OF ABOVE DISCUSSIONS AND FINDINGS OF THE AO , THE ADDITION MADE THE AO IS CONFIRMED. 13. NOW THE ASSESSEE IS BEFORE US. 13.1. THE LD. A/R FOR THE ASSESSEE SUBMITTED THAT T HE OUTSTANDING BALANCE AS PER KOTAK MAHINDRA BANK WAS RS. 4,00,826/- AND AS PER B OOKS OF ACCOUNTS WAS RS. 4,10,750/-. THE DIFFERENCE IN THE BALANCE BETWEEN B OTH IS THE SOLE BASIS OF ADDITION. THE ADDITION MADE ON ACCOUNT OF DIFFERENCE IN BALAN CE IS WRONG AS THE ASSESSEE IS FOLLOWING DOUBLE ENTRY OF ACCOUNTING SYSTEM WHEREIN , FOR EVERY DEBIT ENTRY THERE IS A 12 ITA NO. 128 & 103/JP/2015 SHAIKH MAQSOOD ALAM VS. ACIT. CREDIT ENTRY AND VICE VERSA. THEREFORE, UPON SETTLE MENT OF LOAN ACCOUNT DIFFERENCE, IF ANY, WILL BE AUTOMATICALLY BE TRANSFERRED TO INCOME /EXPENDITURE ACCOUNT. FURTHER, FOR DIFFERENCE IN BALANCE THERE CAN BE MANY REASONS, LI KE DUE TO LEVY OF CHARGES, DIFFERENCE IN RATE OF CALCULATION OF INTEREST ETC. THEREFORE, ADDITION MADE BY AO CONSIDERING THE DIFFERENCE IN BALANCE OF A LOAN ACC OUNT AS INCOME OF THE APPELLANT IS WRONG, UNJUSTIFIED AND WILL RESULT IN DOUBLE TAXATI ON. FURTHER, THE LD. CIT (A) WHILE SUSTAINING THE ADDITION OBSERVED THAT IT IS APPARENT THAT AMOUNT TO THE EXTENT OF RS. 9,924/- HAS BEEN PAID BY THE ASSESSEE OUTSIDE THE B OOKS OF ACCOUNT TO THE BANK . THE OBSERVATION SHOWS THAT LD. CIT (A) HAS FAILED T O APPRECIATE WHOLE ISSUE AND SUSTAINED ADDITION U/S 69C, WHEREAS THE LD AO MADE ADDITION U/S 41(1) OF THE ACT AND CAME TO CONCLUSION MERELY ON THE BASIS OF SURMI SES. UNDER THE FACTS AND CIRCUMSTANCES, THE LD. A/R REQUESTED TO DELETE THE ADDITION. 13.2. ON THE OTHER HAND, THE LD. D/R SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES. HE REQUESTED THAT THE ADDITION MAY BE CONFIRMED. 13.3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUS ED THE MATERIAL AVAILABLE ON RECORD. THE SHORT ISSUE INVOLVED IN THE PRESENT GR OUND IS THE DIFFERENCE OF PAYMENT OF RS. 9,924/- OUTSIDE THE BOOKS OF ACCOUNT OF THE ASSESSEE TO THE BANK I.E. KOTAK MAHINDRA BANK LTD. IN FACT, THE ASSESSEE IS FOLLOW ING DOUBLE ENTRY OF ACCOUNTING SYSTEM WHERE FOR EVERY DEBIT ENTRY THERE IS A CORRE SPONDING CREDIT ENTRY AND FOR EVERY CREDIT ENTRY THERE IS A DEBIT ENTRY AND IT WA S DULY EXPLAINED BY THE ASSESSEE THAT IF THERE IS AN INCREASE IN THE PAYMENT, THE CO RRESPONDING ENTRY WILL BE MADE IN THE BOOKS OF ACCOUNT. IF THE ADDITION IS MADE THEN IT WILL AMOUNT TO DOUBLE TAXATION. IN OUR VIEW THE ISSUE RAISED BY THE ASSESSEE IS TRI FLE IN NATURE. HOWEVER, SINCE THE 13 ITA NO. 128 & 103/JP/2015 SHAIKH MAQSOOD ALAM VS. ACIT. ASSESSEE IS FOLLOWING THE DOUBLE ENTRY OF ACCOUNTIN G SYSTEM, THEREFORE WE FIND JUSTIFICATION IN THE EXPLANATION GIVEN BY THE ASSES SEE. ACCORDINGLY THE ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE AND AGAINST THE R EVENUE. 14. GROUND NO. 5 RELATES TO ADDITION OF RS. 87,351/- ON ACCOUNT OF CREDIT ENTRY OF M/S. AMNNAGRAM FINANCE LTD. AS INCOME. DURING A SSESSMENT PROCEEDINGS, THE AO NOTICED THAT THERE IS A OUTSTANDING BALANCE OF R S. 87,351/- IN RESPECT OF SECURED LOANS FROM M/S. ANNAGRAM FINANCE LTD. FOR THE PURPO SE OF VERIFICATION, THE ASSESSEE WAS ASKED TO FILE CONFIRMATION VIDE QUESTIONNAIRE D ATED 03.07.2012 AND 26.10.2012. IN COMPLIANCE, THE ASSESSEE STATED THAT COMPANY WAS MERGED WITH OTHER COMPANY AND NO CONFIRMATION BE RECEIVED AND IT IS A BALANCE OUTSTANDING FOR LAST 10 YEARS DUE TO DISPUTE. THE REPLY OF THE ASSESSEE WAS CONSIDER ED BY THE AO BUT IT WAS NOT ACCEPTABLE TO HIM FOR THE REASONS GIVEN THAT NO PRU DENT BUSINESSMAN WILL KEEP THE BALANCE OUTSTANDING FOR LAST 10 YEARS. THE CREDITO R IS A LIMITED COMPANY AND THE ASSESSEE COULD NOT PRODUCE ANY PAPER OF DISPUTE FRO M THE COMPANY. THE ASSESSEE HAS ALSO NOT DISCLOSED THE NAME AND ADDRESS OF THE COMPANY IN WHICH ANNAGRAM FINANCE LTD HAS MERGED. TAKING INTO CONSIDERATION A LL THESE FACTS, THE AO TREATED THE CREDIT ENTRY OF RS. 87,351/- AS INCOME OF THE ASSES SEE AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 15. ON BEING AGGRIEVED BY THE ORDER OF AO, THE ASSE SSEE PREFERRED APPEAL BEFORE LD. CIT (A) WHO CONFIRMED THE ADDITION BY OBSERVING AS UNDER :- 8.3. I HAVE CONSIDERED THE CONTENTIONS OF THE APPE LLANT AS WELL AS ASSESSMENT ORDER. IT IS SEEN THAT THE ASSESSEE HAD CLAIMED THE OUTSTANDING LIABILITY OF RS. 87,351/- AS LOAN FROM ANNAGRAM FINANCE LTD. THIS AMOUNT IS OUTSTANDING FOR LAST TEN YEARS. HOWEVER, ASSESSEE HAS NOT BEEN ABLE TO GIVE ANY CONFIRMATION AS TO PR ESENT EXISTENCE OF ABOVE LIABILITY TO SUCCESSOR CONCERN I.E. ICICI BA NK AS CLAIMED BY THE 14 ITA NO. 128 & 103/JP/2015 SHAIKH MAQSOOD ALAM VS. ACIT. ASSESSEE. FURTHER, ASSESSEE HAS MERELY STATED THAT THERE WAS SOME DISPUTE WITH THE ABOVE CONCERN BUT THIS CLAIM IS W ITHOUT ANY BASIS AS NO CORRESPONDENCE IN THIS REGARD HAD BEEN BROUGHT O N RECORD. THE ONUS LIES ON THE ASSESSEE TO PROVE THE EXISTENCE OF THE LIABILITY TO PAY THE ABOVE AMOUNT IN THE YEAR UNDER CONSIDERATION WH ICH HAS NOT BEEN DISCHARGED BY THE ASSESSEE. IN VIEW OF ABOVE DISCUSSIONS AND FINDINGS OF THE AO , THE ADDITION MADE BY THE AO IS CONFIRMED. 16. NOW THE ASSESSEE IS BEFORE US. 16.1. THE LD. A/R FOR THE ASSESSEE SUBMITTED THAT I N THE BOOKS OF ACCOUNTS OF ASSESSEE APPELLANT, THERE IS A OUTSTANDING SECURED LOAN OF RS. 87,351/- FROM ANNAGRAM FINANCE LTD. IT WAS EXPLAINED TO THE AO AN D LD CIT(A) THAT THE SAID COMPANY WAS MERGED WITH THE ICICI BANK ALTHOUGH ASS ESSEES LIABILITY TO PAY HAS NOT CEASED. THE BALANCE OF RS. 87,351/- IS STILL OU TSTANDING AND IS PAYABLE. THE ASSESSEE IS MAINTAINING BOOKS OF ACCOUNTS UNDER DOU BLE ENTRY ACCOUNTING SYSTEM, WHEREIN, FOR EVERY DEBIT ENTRY THERE IS A CREDIT EN TRY AND VICE VERSA. THEREFORE, UPON SETTLEMENT OF LOAN ACCOUNT DIFFERENCE, IF ANY, WILL BE AUTOMATICALLY BE TRANSFERRED TO INCOME/EXPENDITURE ACCOUNT. FURTHER, CONSIDERING TH E SAID AMOUNT AS INCOME WILL RESULT IN DOUBLE TAXATION. IT IS IMPORTANT TO NOTE THAT THE SAID OUTSTANDING BALANCE IS OUTSTANDING SINCE LONG AND THE DEPARTMENT HAS ACCEP TED THE BALANCE OUTSTANDING IN THE NAME OF M/S ANNAGRAM FINANCE LTD. IN SCRUTINY A SSESSMENT ALSO COMPLETED U/S 143(3) FOR AY 2009-10. HENCE THE GENUINENESS OF OU TSTANDING BALANCE IS NOT UNDER DOUBT. UNDER THE FACTS AND CIRCUMSTANCES, MERELY ON THE BA SIS OF NON-RECEIPT OF CONFIRMATION OF A BALANCE, WHICH WERE ALREADY ACCEP TED DURING THE SCRUTINY ASSESSMENT OF PREVIOUS YEARS, NO ADDITION CAN BE MA DE. FURTHER, AMOUNT UNDER CONSIDERATION IS A OUTSTANDING ON ACCOUNT OF LOAN A ND HAS NOT BEEN CLAIMED AS 15 ITA NO. 128 & 103/JP/2015 SHAIKH MAQSOOD ALAM VS. ACIT. EXPENSES EARLIER. FURTHER, THE APPELLANT HAS NOT WR ITTEN OFF THE AMOUNT AND NOR THE ANNAGRAM FINANCE LTD. HAS WAIVED SAID LIABILITY, TH EREFORE, COULD NOT BE TREATED AS INCOME. IT IS RELEVANT TO MENTION HERE THAT, NEITHE R AO NOR CIT(A) HAS STATED UNDER WHICH SECTION ADDITION IS MADE/SUSTAINED. THEREFORE, ADDITION MADE BY LD AO AND SUSTAINED BY LD. CIT(A) IS WRONG AND MISPLACED AND DESERVED TO BE DELETED. 16.2. ON THE OTHER HAND, THE LD. D/R SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES. HE REQUESTED THAT THE ADDITION BE CONFIRMED. 16.3. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED T HE MATERIAL AVAILABLE ON RECORD. SINCE THE COMPANY, NAMELY, M/S. ANNAGRAM FI NANCE LTD. WAS MERGED WITH THE ICICI BANK LTD., THE AMOUNT OF RS. 87,351/- IS OUTSTANDING AND PAYABLE BY THE ASSESSEE. IN OUR VIEW, RETURN OF INCOME OF M/S. AN NAGRAM FINANCE LTD. WAS SUBJECTED TO SCRUTINY ASSESSMENT WAS COMPLETED, THE REFORE, THERE CANNOT BE ANY DOUBT ABOUT THE PAYABLE NATURE OF RS. 87,351/- MERE LY ON ACCOUNT OF NON RECEIPT OF CONFIRMATION. NO ADDITION CAN BE MADE ON THIS ACCOU NT. IN VIEW THEREOF, THE ADDITION MADE BY THE AO AND SUSTAINED BY THE LD. CIT (A) DES ERVES TO BE DELETED AND ACCORDINGLY THE SAME IS DELETED. THE ISSUE IS DECID ED IN FAVOUR OF THE ASSESSEE. 17. GROUND NO. 6 RELATES TO ADDITION OF RS. 4,10,807/- ON ACCOUNT O F CESSATION OF LIABILITY U/S 41(1). DURING THE COURSE OF ASSESSME NT PROCEEDINGS CONFIRMATIONS OF CREDITOR HAVING OUTSTANDING BALANCES EXCEEDING OF R S. 2 LAKHS WERE CALLED BY THE AO. THE ASSESSEE COULD NOT GIVE CONFIRMATION OF NATIONA L GAS AGENCY STATING THAT BALANCE IS PENDING FOR LAST 10 YEARS AND THERE IS N O TRANSACTION. THE AO CONSIDERED THE CONTENTION OF THE ASSESSEE BUT COULD NOT FOUND TO BE ACCEPTABLE. ON ENQUIRY, THE AO FOUND THE ENTRIES TO BE IN-GENUINE. THE AO HELD THAT THE ASSESSEE IS RESPONSIBLE 16 ITA NO. 128 & 103/JP/2015 SHAIKH MAQSOOD ALAM VS. ACIT. TO GIVE EXPLANATION REGARDING CREDIT ENTRIES FOUND IN THE BOOKS OF ACCOUNTS. THE ASSESSEE HAS FAILED TO FURNISH CONFIRMATION, ADDRES S AND ASSESSMENT DETAILS OF THE CREDITORS. THE VIDE ORDER SHEET DATED 21.12.2012 A SKED THE ASSESSEE AS TO WHY THIS LIABILITY SHOULD NOT BE TREATED AS CESSATION OF LIA BILITY U/S 41(1) OF THE ACT. THE ASSESSEE REPLIED AS UNDER :- THE ASSESSEE HAS NEVER CREDITED THE AMOUNT OF M/S. NATIONAL GAS AGENCIES IN THEIR CAPITAL ACCOUNT. HENCE AS PER THE PROVISION OF THE SECTION 41(1) OF I.T. ACT, 1961, THE SAME CANNOT BE TREATED AS INCOME. ASSESSEES SUBMISSION WAS NOT FOUND ACCEPTABLE. THE AO THEREFORE, TREATED THE CREDIT BALANCE OF RS. 4,10,807/- AS CESSATION OF LI ABILITY U/S 41(1) OF THE IT ACT AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 18. ON APPEAL, THE LD. CIT (A) CONFIRMED THE ADDITI ON BY OBSERVING AS UNDER :- 9.3. I HAVE CONSIDERED THE CONTENTIONS OF THE APPE LLANT AS WELL AS ASSESSMENT ORDER. IT IS SEEN THAT AS PER THE ASSESS EE, ASSESSEE HAD EARLIER MADE THE PURCHASE AGAINST WHICH THE SAID PA YMENT IS OUTSTANDING AND THIS ENTRY OF RS. 4,10,807/- IS OUT STANDING SINCE LAST TEN YEARS AND SAME HAS NOT BEEN WRITTEN OFF IN ITS BOOKS OF ACCOUNTS. HOWEVER, IT IS APPARENT THAT ASSESSEE HAS NOT BEEN ABLE TO FILE ANY CONFIRMATION OF THE ABOVE CONCERN REGARDING THE LIA BILITY OF THE ASSESSEE AND EVEN AT THE REMAND STAGE, ASSESSEE HAS BEEN ABLE TO GET THE SAID CONFIRMATION OR VERIFICATION DON AT THE RE MAND STAGE OF ABOVE LIABILITY. THE SAID LIABILITY CAN NOT BE TREATED T O BE EXISTING AT PRESENT WITHOUT ANY DOCUMENT IN SUPPORT THERE OF AS CLAIMED BY THE ASSESSEE. IN VIEW OF ABOVE DISCUSSIONS AND FINDINGS OF THE AO , THE ADDITION MADE BY THE AO IS CONFIRMED. 19. NOW THE ASSESSEE IS BEFORE US. 19.1. THE LD. A/R FOR THE ASSESSEE HAS SUBMITTED THAT DURING THE ASSESSMENT PROCEEDINGS THE A.O. CALLED FOR CONFIRMATION OF ACC OUNTS OF M/S. NATIONAL GAS AGENCY 17 ITA NO. 128 & 103/JP/2015 SHAIKH MAQSOOD ALAM VS. ACIT. HAVING OUTSTANDING BALANCE OF RS. 4,10,807/- FOR WH ICH, CONFIRMATION COULD NOT BE PROVIDED. LD. A.O. RAISED THE DOUBT IN ABSENCE OF C ONFIRMATION AND OBSERVED THAT THE ENTRY IS NOT GENUINE. IT IS PERTINENT TO NOTE THAT IT WAS EXPLAINED TO THE LD. A.O. AS WELL LD CIT(A) THAT THE BALANCE IS OUTSTANDING FOR LAST 10 YEARS AND IT AROSE WHEN, APPELLANT WAS CARRYING CONTRACT AT PARADEEP FOR M/S . CIMMCO BIRLA LTD. HOWEVER, DUE TO BAD FINANCIAL POSITION OF THE SAID COMPANY, APPELLANT HAVE TO LEFT THE SAID CONTRACT AND SINCE THEN THE BALANCE WITH THE SAID P ARTY IS OUTSTANDING. FURTHER, DEPARTMENT IN SCRUTINY ASSESSMENT ALSO COMPLETED U/ S 143(3) FOR AY 2009-10 HAS ACCEPTED THE BALANCE OUTSTANDING IN THE NAME OF M/S NATIONAL GAS AGENCY, THEREFORE, ENTIRE PREMISE OF CONCLUSION BY THE AUTH ORITIES BELOW, THAT BALANCE OUTSTANDING IS NOT GENUINE IS WRONG AND INCONSISTEN T, WITHOUT ANY MATERIAL. IT IS FURTHER WORTHWHILE TO NOTE THAT IT WAS EXPLAINED TH AT APPELLANT HAS NOT TRANSFERRED THE SAID AMOUNT TO THE CAPITAL ACCOUNT OR PRESUMED AS NOT PAYABLE, RATHER, IT HAS BEEN SHOWN AS PAYABLE, CONSIDERING THE BUSINESS PRI NCIPLE APPELLANT WILL ALWAYS WILLING TO PAY. HOWEVER, LD. A.O. RATHER CONSIDERIN G THE EXPLANATION IN RIGHT PERSPECTIVE WRONGLY OBSERVED THAT IF AMOUNT OF CREDITORS IS NOT CREDITED IN THE BOOKS OF ACCOUNTS AND HOW THIS ENTRY IS FOUND TO HA VE BEEN WRITTEN IN THE BOOKS OF ACCOUNTS , WHEREAS, IT WAS EXPLAINED THAT AMOUNT HAS NOT CRE DITED TO THE CAPITAL ACCOUNT. THE APPELLANT HAS ACKNOWLEDGED HIS LIABILI TY IN WRITING TO PAY M/S NATIONAL GAS AGENCY BY SIGNING THE BALANCE SHEET IN WHICH TH E SAID PARTY WAS SHOWN AS SUNDRY CREDITOR, ON YEAR TO YEAR BASIS. IN SUPPORT OF HIS CONTENTION THE LD. A/R PLACED RELIANCE ON THE FOLLOWING JUDGMENTS :- 1. BOMBAY DYEING & MANUFACTURING CO. LTD. V. STATE OF BOMBAY, AIR 1958 SC 328. 18 ITA NO. 128 & 103/JP/2015 SHAIKH MAQSOOD ALAM VS. ACIT. 2. MAHABIR COLD STORAGE VS CIT (1991) 188 ITR 91, 3. CIT VS. TAMIL NADU WAREHOUSING CORPORATION (2007) 2 92 ITR 310(MAD), 4. CIT VS GP INTERNATIONAL LTD., 229 CTR 86 (P & H), 5. AMBICA MILLS LTD VS CIT 54 ITR 167 (GUJ), THE LD. A/R SUBMITTED THAT IN VIEW OF FORGOING DISC USSIONS OF FACTS AND JUDICIAL PRONOUNCEMENTS, THE CONTENTION OF LD. AO & LD CIT(A ) THAT LIABILITY HAS CEASE TO EXIST, IS TOTALLY WRONG AND MISPLACED AND DESERVES TO BE DELETED. 19.2. ON THE OTHER HAND THE LD. D/R SUPPORTED THE O RDERS OF THE AUTHORITIES BELOW AND REQUESTED THAT THE ADDITION BE CONFIRMED. 19.3. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED T HE MATERIAL AVAILABLE ON RECORD. IN OUR VIEW, IT IS THE WISDOM OF THE PERSO N MANAGING THE BUSINESS TO OPT FOR CESSATION OF LIABILITY AND IT IS NOT FOR THE REVENU E TO SIT IN THE ARM CHAIR OF THE BUSINESSMAN AND DECIDE THE ISSUE. THE AMOUNT OF RS. 4,10,807/- WAS OUTSTANDING IN THE ACCOUNT OF M/S. NATIONAL GAS AGENCY FOR THE LAS T 10 YEARS AND THE SAME HAS BEEN CONTINUOUSLY SHOWING IN THE RETURN OF INCOME. FOR THE A.Y. 2009-10 THE SAME HAS BEEN SHOWN AS DUE AND PAYABLE IN THE ACCOUNTS O F M/S. NATIONAL GAS AGENCY AND NO OBJECTION WAS RAISED ABOUT THE GENUINENESS O F THE SAID AMOUNT. SINCE IN THE PRESENT FINANCIAL YEAR THE LIABILITY HAS NOT CEASED IN THE BALANCE SHEET OF THE ASSESSEE, THEREFORE, MERELY ON ACCOUNT OF NON RECEI PT OF THE CONFIRMATION OF BALANCE, THE SAME CANNOT BE PRESUMED BY THE AO AND LD. CIT (A) THAT THE LIABILITY CEASES TO EXIST. IN VIEW THEREOF, WE DELETE THE AD DITION AND ALLOW THE APPEAL ON THIS GROUND. 19 ITA NO. 128 & 103/JP/2015 SHAIKH MAQSOOD ALAM VS. ACIT. 20. GROUND NO. 7 RELATES TO DISALLOWANCE OF RS. 1,43,000/- U/S 40(A )(IA) OF THE ACT. THE AO ON VERIFICATION OF THE ACCOUNTS FOUND THAT SOME OF THE PERSONS WERE PAID EXCEEDING RS. 50,000/- DURING THE YEAR UNDER R EFERENCE. ON THIS, VIDE QUESTIONNAIRE DATED 26.10.2012 THE ASSESSEE WAS ASK ED TO FURNISH THE ACCOUNTS OF THE PARTIES TO WHOM TRANSPORTATION CHARGES WERE PAI D AND MADE TDS. THE ASSESSEE VIDE LETTER DATED 21.12.2012 SUBMITTED THAT NO TDS WAS MADE. THE AO ON PERUSAL OF ANNEXURE-N, FOUND THAT THE FOLLOWING PERSONS WER E PAID EXCEEDING RS. 50,000/- DURING THE YEAR :- HARSH FREIGHT CARRIERS RS. 79,000/- BHAGWATI ROADWAYS RS. 64,000/- NEW JODHPUR GUHATI ROADWAYS RS. 70,000/- THE EXPLANATION GIVEN BY THE ASSESSEE IN RESPECT OF HARSH FREIGHT CARRIERS AND BHAGWATI ROADWAYS WERE NOT FOUND ACCEPTABLE, THEREF ORE, THE AO MADE THE ADDITION OF RS. 1,43,000/- WHEREAS THE EXPLANATION IN RESPEC T OF NEW JODHPUR GUHATI ROADWAYS WAS ACCEPTED. 21. ON APPEAL, THE LD. CIT (A) CONFIRMED THE ADDITI ON BY OBSERVING AS UNDER :- I HAVE CONSIDERED THE CONTENTIONS OF THE APPELLAN T AS WELL AS ASSESSMENT ORDER. IT IS SEEN THAT FORM NO. 15-J WAS OBTAINED BY THE ASSESSEE FROM THE ABOVE TRANSPORTERS I.E. SUB-CONTR ACTORS WHILE ASSESSEE WAS REQUIRED TO OBTAIN FORM NO. 15-I FROM THE SUB CONTRACTORS AND ASSESSEE HAS NOT DEDUCTED THE TDS O N THE PAYMENTS MADE TO THEM. THE ASSESSEE HAS PROVIDED THE COPIES OF THE ABOVE FORMS 15-J. HOWEVER, IT MAY BE MENTIONED THAT ASSES SEE IS REQUIRED TO OBTAIN FROM NO. 15-I AS PER RULE 29D FOR NOT DEDUCT ING THE TAX FROM SUB CONTRACTORS AND THEN FURNISH THE FORM 15-J PRES CRIBED TO THE CONCERNED JURISDICTION CIT AS PER THE PROVISO 2 AN D 3 TO SEC. 194C(3)(I) OF THE I.T. ACT. FURTHER, IN THE FORM NO . 15-J OBTAINED FROM THE SUB CONTRACTORS, THE DATE OF OBTAINING SUCH FOR M HAS NOT BEEN MENTIONED. SO IT CAN NOT BE SAID THAT IT HAS BEEN O BTAINED PRIOR TO MAKING THE PAYMENTS TO ABOVE PARTIES. 20 ITA NO. 128 & 103/JP/2015 SHAIKH MAQSOOD ALAM VS. ACIT. AS SUCH, THE ASSESSEE HAS NEITHER OBTAINED THE PROP ER FORM NO. 15-I FROM THE TRANSPORTERS NOR ANY DATE IS MENTIONED ON THE SAID FORMS FOR THE ABOVE TRANSACTIONS. IT HAS ALSO NOT BEEN SHOWN THAT ASSESSEE HAS SUBMITTED THAT FORM NO. 15-J TO THE CONCERNED CIT OR PRESCRIBED INCOME TAX AUTHORITY. IN VIEW OF ABOVE DISCUSSIONS AND FINDINGS OF THE AO , THE ADDITION MADE THE AO IS CONFIRMED. 22. NOW THE ASSESSEE IS IN APPEAL BEFORE US. 22.1. THE LD. A/R FOR THE ASSESSEE SUBMITTED THAT DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE HAS PAID RS. 79,000/- TO HARSH FREIGHT CARRIER ON 29.6.2009 AND RS. 64,000/- TO BHAGWATI ROADWAYS ON 31.7.2009 TOWARDS TRANSPORTATION CHARGES AFTER OBTAINING THE DECLARAT ION IN PRESCRIBED FORM NO. 15J, THEREFORE, APPELLANT DID NOT DEDUCT THE TDS. HOWEVER, THE A.O. MADE THE DISALLOWANCE WITH RESPECT TO THESE TWO PARTIES OF R S. 1,43,000/- (RS. 79,000 + RS. 64,000) U/S 40(A)(IA). THE LD. A/R FURTHER SUBMITT ED THAT IT IS AN UNDISPUTED FACT THAT ENTIRE EXPENDITURE WHICH HAVE DISALLOWED U/S 4 0(A)(IA) AMOUNTING TO RS. 1,43,000/- HAVE BEEN PAID DURING THE YEAR AND THERE IS NO AMOUNT OUTSTANDING OR PAYABLE AT THE END OF THE YEAR. PERUSAL OF SECTION 40(A)(IA) IT IS CLEAR THAT AMOUNT WHICH IS PAYABLE AT THE END OF THE YEAR CAN ONLY BE DISALLOWED. THEREFORE, UNDER THE FACTS AND CIRCUMSTANCES SAME CANNOT BE DISALLOWED U NDER SAID SECTION. IN THIS REGARD THE LD. A/R PLACED RELIANCE ON THE FOLLOWING DECISIONS :- CIT VS. VECTOR SHIPPING SERVICES P. LTD. 357 ITR 642 (ALL.HC) MERILYN SHIPPING & TRANSPORT VS. ACIT 16 OTR (TRIB.) 1 M/S. HERBICIDES (INDIA) LTD. VS. ACIT ITA NO. 391/JP/2013 (ITAT JAIPUR). 21 ITA NO. 128 & 103/JP/2015 SHAIKH MAQSOOD ALAM VS. ACIT. ACIT VS. SHRI GIRDHARI LAL BARGOTI, ITA NO. 757/JP/2012 (ITAT JAIPUR) JVVNL VS. DCIT, 123 TTJ 888 (ITAT JAIPUR) FROM THE FOREGOING DISCUSSION FACTS AND JUDICIAL PR ONOUNCEMENTS IT IS CLEAR THAT NO DISALLOWANCE U/S 40(A)(IA) IS WARRANTED AND THUS IT IS REQUESTED TO DELETE THE ADDITION MADE BY LD AO AND SUSTAINED BY LD CIT(A). 22.2. ON THE OTHER HAND, THE LD. D/R SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW AND REQUESTED THAT THE DISALLOWANCE BE CONFIRMED. 22.3. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED T HE MATERIAL AVAILABLE ON RECORD. IN THE MATTER OF SHRI RAJENDRA YADAV IN ITA NO. 895/JP/2012 THE COORDINATE BENCH HAS TAKEN THE VIEW AS UNDER : 6. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IT IS AN ADMITTED FACT THAT T HE APPELLANT CARRIED ON THE BUSINESS OF TRADING OF MARBLE TILES AND SLAB. I T IS ALSO AN ADMITTED FACT THAT THE MARBLE BLOCKS ARE PURCHASED BY THE AS SESSEE AND THE SAME MARBLE BLOCKS ARE SENT TO M/S. GARVIT STONEX, M/S. CHANDA MARBLES & M/S. NIDHI GRANITES FOR THE PURPOSE OF SA WING AND EDGE CUTTING WITH A VIEW TO CONVERT THE MARBLE BLOCKS IN TO MARBLE TILES. IN THE ASSESSMENT YEAR UNDER CONSIDERATION, THE ASSESS EE HAS PAID A SUM OF RS 1,54,711/- TO M/S. M/S. GARVIT STONEX, RS. 3, 92,711/- TO M/S. CHANDA MARBLES & RS. 2,28,700/- TO M/S. NIDHI GRAN ITES TOTALING RS. 7,76,122/- FOR EDGE CUTTING AND SAWING CHARGES ON V ARIOUS DATES. FROM THE DETAILS GIVEN, THE AO AND THE LD. CIT (A) HAS W ORKED OUT THE AVERAGE CUTTING AND SAWING CHARGES OF MORE THAN RS. 2155/- PER DAY PAID TO THE SAID M/S. GARVIT STONEX, M/S. CHANDA MA RBLES & M/S. NIDHI GRANITES. IN OUR VIEW, THE SAID FIRMS/COMPANIES AR E DOING THE EDGE CUTTING AND SAWING ON REGULAR BASIS AND ARE ALSO HA VING BUSINESS RELATIONSHIP WITH THE ASSESSEE. THE REGULAR BILLS WERE BEING RAISED BY THE SAID CONCERNED PERSONS ON THE ASSESSEE AND THE ASSESSEE HAD BEEN MAKING THE PAYMENT TO THE SAID PERSONS. WE DO NOT AGREE WITH THE CONTENTION OF THE ASSESSEE THAT THERE IS NO WRI TTEN CONTRACT OR ORAL CONTRACT WITH THE SAID PERSONS/FIRMS WHICH MAKE THE PAYMENT AMENABLE FOR DEDUCTION OF TDS UNDER SECTION 194C OF THE IT ACT. WE 22 ITA NO. 128 & 103/JP/2015 SHAIKH MAQSOOD ALAM VS. ACIT. DO NOT FIND FORCE IN THE SUBMISSIONS, AS PER OUR UN DERSTANDING, UNDER THE CONTRACT AT EVERY PROMISE AND EVERY SET OF PROM ISES ARE FORMED. THE CONSIDERATION FOR EACH OTHER IS AN AGREEMENT AN D AN AGREEMENT ENFORCEABLE BY LAW IS A CONTRACT. IN THE PRESENT CA SE, THE CONTRACT STANDS CONCLUDED WHEN THE ASSESSEE ASKED M/S. GARVI T STONEX AND OTHERS TO DO THE EDGE CUTTING AND SAWING OF GRANITE BLOCKS AND CONVERT THEM INTO MARBLE TILES FOR IT FOR A CONSIDERATION. THE MOMENT THE SAID CONTRACTORS/PERSONS DOING THE SAWING AND EDGE CUTTI NG OF THE MARBLE BLOCKS, THE SAID PERSONS ARE ENTITLED FOR THE AMOUN T REQUIRED TO BE PAID AS PER THE BILLS RAISE BY THEM. IN FACT, IN THE PRE SENT CASE AFTER DOING THE EDGE CUTTING AND SAWING, THE CHARGES WERE EVEN PAID BY THE ASSESSEE, IN OUR UNDERSTANDING, A CONTRACT HAS COM E INTO EXISTENCE BETWEEN THE ASSESSEE AND M/S. GARVIT STONEX AND OTH ERS. IN OUR VIEW, THE ASSESSEE IS RESPONSIBLE FOR PAYING THE AMOUNT T O SUCH PERSONS I.E. CONTRACTOR FOR CARRYING OUT THE SPECIFIC WORK. THE REFORE, THE ASSESSEE IS LIABLE TO DEDUCT THE TAX ON SUCH PAYMENTS. SINC E THE ASSESSEE HAS FAILED TO DEDUCT THE TAX ON THE AMOUNT PAID BY IT T O SUCH PERSONS/CONTRACTOR, THE ASSESSEE IS DUTY BOUND TO D EDUCT THE TAX, AND NON DEDUCTION OF TAX BY THE ASSESSEE, ATTRACTS THE PROVISIONS OF SECTION 40(A)(IA). 6.1. RECENTLY IN THE MATTER OF P.M.S. DIESELS 2015 ] 59 TAXMANN.COM 100 (PUNJAB & HARYANA), HONBLE PUNJAB & HARYANA HIGH COURT HAD ELABORATELY DISCUSSED THE JUDGMENT P ASSED BY THE HONBLE CALCUTTA HIGH COURT AND HONBLE GUJARAT HIG H COURT, HONBLE ALLAHABAD HIGH COURT AND OTHER JUDGMENTS AS AVAILAB LE AND THEREAFTER HAS COME TO THE CONCLUSION THAT THE PROVISIONS OF S ECTION 40(A)(IA) ARE MANDATORY IN NATURE AND NON COMPLIANCE/NON DEDUCTIO N OF TAX ATTRACTS DISALLOWANCE OF THE ENTIRE AMOUNT. HAVING SAID SO, WE WILL BE FAILING IN OUR DUTY IF WE DO NOT DISCUSS THE AMENDMENT BROUGHT IN BY THE FINANCE (NO. 2) ACT 2014 WITH EFFECT FROM 1.4.2015 BY VIRTUE OF WHICH PROVISO TO SECTION 40(A)(IA) HAS BEEN INSERTED, WHI CH PROVIDES THAT IF ANY SUCH SUM TAXED HAS BEEN DEDUCTED IN ANY SUBSEQU ENT YEAR OR HAS BEEN DEDUCTED DURING THE PREVIOUS YEAR BUT PAID AFT ER THE DUE DATE SPECIFIED IN SUB-SECTION (1) OF SECTION 139, SUCH S UM SHALL BE ALLOWED AS A DEDUCTION IN COMPUTING THE INCOME OF PREVIOUS YEAR, AND FURTHER, SECTION 40(A)(IA) HAS BEEN SUBSTITUTED WHEREIN THE 30% OF ANY SUM PAYABLE TO A RESIDENT HAS BEEN SUBSTITUTED. IN THE PRESENT CASE, THE AUTHORITIES BELOW HAS ADDED THE ENTIRE SUM OF RS. 7 ,51,322/- BY DISALLOWING THE WHOLE OF THE AMOUNT. THOUGH THE SUB STITUTION IN SECTION 40 HAS BEEN MADE EFFECTIVE WITH EFFECTIVE F ROM 1.4.2015, IN OUR VIEW THE BENEFIT OF THE AMENDMENT SHOULD BE GIVEN T O THE ASSESSEE EITHER BY DIRECTING THE AO TO CONFIRM FROM THE CONT RACTORS, NAMELY, M/S. GARVIT STONEX, M/S. CHANDA MARBLES AND M/S. NI DHI GRANITES AS TO WHETHER THE SAID PARTIES HAVE DEPOSITED THE TAX OR NOT AND FURTHER OR RESTRICT THE ADDITION TO 30% OF RS. 7,51,322/-. IN OUR VIEW, IT WILL BE 23 ITA NO. 128 & 103/JP/2015 SHAIKH MAQSOOD ALAM VS. ACIT. TIED OF JUSTICE IF THE DISALLOWANCE IS ONLY RESTRIC TED TO 30% OF RS. 7,51,322/-. ACCORDINGLY, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED IN THE ABOVE SAID MANNER. RESPECTFULLY FOLLOWING THE JUDGMENT OF THE COORDINA TE BENCH, 1/3 RD AMOUNT OF RS. 1,43,000/- IS UPHELD AND THE REMAINING ADDITION IS DELETED. THUS THE GROUND OF THE ASSESSEE IS PARTLY ALLOWED. 23. NOW WE TAKE UP THE APPEAL OF THE REVENUE. 23.1. GROUND NOS. 1 AND 2 OF THE REVENUES APPEAL RELATE TO DELETION OF ADDI TION OF RS. 2,27,063/- AND RS. 2,51,987/- MADE BY THE A O ON ACCOUNT OF DISALLOWANCE OF WELFARE EXPENSES AND DISALLOWANCE OF SITE EXPENSES RESPECTIVELY WITHOUT APPRECIATING THE FACTS OF THE CASE. THE AO WHILE M AKING THE ASSESSMENT FOUND THAT ALMOST 90% OF THE EXPENSES ARE PAID IN CASH ON ACCO UNT OF LABOUR FOOD, MEDICAL TREATMENT, TEA, REFRESHMENT ETC. AND THESE EXPENSES ARE VOLUMINOUS IN NATURE AND ARE NOT VERIFIABLE IN ABSENCE OF PROPER BILLS AND V OUCHERS. ALL THE EXPENSES ARE SUPPORTED BY SELF MADE VOUCHERS. THE AO ALSO MENT IONED THAT THE HOUSE RENT IS ALSO CLAIMED UNDER THIS HEAD AND HOUSE RENT IS NOT HELD TO HAVE BEEN PAID FOR WELFARE EXPENSES. THEREFORE, IN THE ABSENCE OF PROP ER SUPPORTING BILLS, 10% OF THESE EXPENSES ARE DISALLOWED WHICH COMES TO RS. 2,27,063 /- IN RESPECT OF WELFARE EXPENSES. 23.2. IN RESPECT OF SITE EXPENSES, THE AO ON VERIFI CATION OF DETAILS OF LEDGER ACCOUNT FOUND THAT ABOUT 80% PAYMENTS WERE MADE IN CASH AND NO NARRATION IS WRITTEN IN ABOUT 40% OF THE LEDGER ACCOUNT. THESE EXPENSES ARE ON ACCOUNT OF TEA, 24 ITA NO. 128 & 103/JP/2015 SHAIKH MAQSOOD ALAM VS. ACIT. REFRESHMENT, POOJA, FOOD, SNACKS ETC. THESE TYPE OF EXPENSES ARE ALSO CLAIMED UNDER LABOUR/STAFF WELFARE EXPENSES. THE ASSESSEE WAS ASK ED AS TO WHY 20% OUT OF SITE EXPENSES SHOULD NOT BE DISALLOWED AS 80% OF THE EXP ENSES HAVE BEEN INCURRED IN CASH. THE ASSESSEE VIDE REPLY DATED 27.12.2012 SUB MITTED THAT THE SITE EXPENSES OF THE BUSINESS INCLUDES TRANSFER OF ANY TOOLS AND MAC HINERIES FROM ONE SITE TO ANOTHER, HIRE CHARGES OF VARIOUS MACHINERIES, GOODS RECEIVED FROM AWARDERS ON SITE AND CHARGES DEDUCTED BY THEM, PROVIDING TEA & REFRESHME NT TO EMPLOYEE IN LATE HOUR WORKING, MEDICAL FACILITIES PROVIDED ON SITE AND VA RIOUS PETTY EXPENSES INCURRED IN WHERE WORK IS UNDERTAKEN. HENCE THESE EXPENSES ARE REASONABLE. THE AO COULD NOT FIND THE EXPLANATION OF THE ASSESSEE CONVINCING, TH EREFORE, HE MADE THE DISALLOWANCE @ 20% WHICH COMES TO RS. 2,51,987/- AND ADDED TO TH E INCOME OF THE ASSESSEE. 24. ON APPEAL, THE LD. CIT (A) DELETED BOTH THE AD DITIONS ON THE GROUND THAT THE AO HAS NOT BROUGHT ON RECORD ANY MATERIAL SHOWING T HAT THE EXPENSES ARE BOGUS NEITHER THEY ARE EXCESSIVE OR UNREASONABLE. THE LD. CIT (A) OBSERVED THAT LOOKING TO THE NATURE OF THE BUSINESS I.E. FABRICATIONS, ERECT ION AND MAINTENANCE ON JOB WORK BASIS CARRIED OUT BY THE ASSESSEE AT VARIOUS SITES, THE EXPENSES ARE HELD TO BE REASONABLE. THEREFORE, THE LD.CIT (A) TAKING INTO CONSIDERATION VARIOUS ASPECTS OF ASSESSEES BUSINESS, DELETED BOTH THE ADDITIONS. 25. NOW THE REVENUE IS IN APPEAL BEFORE US. 25.1. THE LD. D/R FOR THE REVENUE HAS SUBMITTED THA T THE LD. CIT (A) WAS NOT RIGHT IN DELETING THE ADDITION MADE BY THE AO. HE SUPPORT ED THE ORDER OF THE AO. 25.2. ON THE OTHER HAND, THE LD. A/R OF THE ASSESSE E SUPPORTED THE ORDER PASSED BY LD. CIT (A) AND REQUESTED THAT THE ORDER OF LD. CIT (A) BE CONFIRMED. 25 ITA NO. 128 & 103/JP/2015 SHAIKH MAQSOOD ALAM VS. ACIT. 25.3. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUS ED THE MATERIAL ON RECORD. IT IS AN ADMITTED CASE THAT THE BOOKS OF ACCOUNTS OF THE ASSESSEE ARE DULY AUDITED U/S 44AB OF THE IT ACT AND THE BOOKS OF ACCOUNTS WERE D ULY PRODUCED ALONG WITH SUPPORTING DOCUMENTS. THE BOOKS OF ACCOUNTS HAVE NO T BEEN REJECTED BY THE AO U/S 145(3). NO SPECIFIC INSTANCE WAS SHOWN WHERE THE EX PENDITURE WERE NOT DEDUCTIBLE. SINCE THE ASSESSEE IS DOING ITS BUSINESS IN THE REM OTE AREA, THEREFORE, IT IS NECESSARY FOR THE ASSESSEE TO PROVIDE VARIOUS FACILITIES IN T HE REMOTE AREA SO THAT THE BUSINESS CAN CONTINUE SMOOTHLY IN SUCH HOSTILE AND REMOTE AR EA. IN OUR VIEW, THE EXPLANATION GIVEN BY THE ASSESSEE FOR PROVIDING THE RENTAL ACCO MMODATION FACILITY CLOSER TO THE WORK SITE, TO THE STAFF, IS A REASONABLE EXPLANATIO N AND COMES WITHIN THE REALM OF STAFF WELFARE. IF THE ACCOMMODATION IS NOT PROVIDE D NEAR TO THE WORK PLACE BY THE ASSESSEE, THEN NOT ONLY THE COMMUTATION CHARGES WIL L BE PROVIDED TO THE EMPLOYEES BUT ALSO THE HIGHER RATE OF RENT WILL BE PAID BY TH E EMPLOYEES TO THE LANDLORD/HOUSE OWNER. IN THAT EVENTUALITY, THERE WILL BE ADDITIONA L FINANCIAL BURDEN ON THE ASSESSEE. NO PRUDENT BUSINESSMAN WOULD LIKE TO INCUR MORE EXP ENDITURE ON THE ACCOMMODATION OR ON THE LODGING AND STAYING OF THE EMPLOYEES/STAFF OF THE COMPANY. THERE IS ELEMENT OF COMMERCIAL EXPEDIENCY WHICH IS REQUIRED TO BE BORNE IN MIND WHILE MAKING ANY ADDITION ON THIS GROUND. IN OUR VIEW, THE FINDING OF THE AO WAS WITHOUT ANY MERIT AND THE ORDER PASSED BY LD . CIT (A) WAS IN ACCORDANCE WITH THE SETTLED BUSINESS NORMS. THE LD. CIT (A) H AS PASSED THE ORDER AFTER CONSIDERING VARIOUS ASPECTS INCLUDING COMMERCIAL EX PEDIENCY, BUSINESS INTEREST, LOCATION OF THE WORK SITE AND OTHER ATTENDING CIRCU MSTANCES. IN VIEW THEREOF, WE DISMISS THE GROUND OF THE REVENUE. 26 ITA NO. 128 & 103/JP/2015 SHAIKH MAQSOOD ALAM VS. ACIT. 26. GROUND NO. 3 RELATES TO DELETING THE INTEREST ON NSC OF RS. 240 /- WITHOUT APPRECIATING THE FACTS OF THE CASE. WHILE MAKING AS SESSMENT, THE AO NOTICED THAT AN ASSET OF RS. NSC WORTH RS. 3,000/- WAS SHOWN IN THE BALANCE SHEET AND THE ASSESSEE HAS NOT OFFERED INTEREST ON THE SAME. THE ASSESSEE WAS ASKED AS TO WHY INTEREST SHOULD NOT BE CHARGED ON NSC AMOUNT. THE A SSESSEE STATED THAT NO INTEREST WAS CHARGED. THEREFORE, THE AO CHARGED INTEREST @ 8 % WHICH COMES TO RS. 240/- AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 27. AGGRIEVED, ON APPEAL BEFORE LD. CIT (A), THE LD . CIT (A) DELETED THE ADDITION BY OBSERVING AS UNDER :- I HAVE CONSIDERED THE CONTENTIONS OF THE APPELLAN T AS WELL AS ASSESSMENT ORDER. IT IS SEEN THAT AS PER THE APPELL ANT, THE ABOVE NSCS HAD GOT MATURED ON 09.11.2006 ONLY AND NO INTEREST WAS ALLOWED BY THE POST OFFICE AFTER ITS MATURITY AND THESE NSCS A RE STILL LYING WITH THE SALES TAX DEPARTMENT WHICH WERE GIVEN FOR THE PURPO SE OF REGISTRATION. ACCORDINGLY, NO INTEREST HAS ACCRUED TO THE ASSESSEE DURING THE YEAR AND ADDITION MADE THE AO IS DELETED . 28. NOW THE REVENUE IS IN APPEAL BEFORE US. 28.1. THE LD. D/R FOR THE REVENUE SUPPORTED THE ORD ER OF THE AO. 28.2. ON THE OTHER HAND, THE LD. A/R FOR THE ASSESS EE PLACED RELIANCE ON THE ORDER OF THE CIT(A) AND SUBMITTED THAT THE LD. CIT(A) HAS RIGHTLY DELETED THE ADDITION MADE BY LD AO. 28.3. WE HAVE HEARD RIVAL SUBMISSIONS AND CONSIDERE D THE MATERIAL ON RECORD. THE AMOUNT INVOLVED IS PETTY. MOREOVER, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT (A), THEREFORE, WE CONFIRM THE DELETION OF ADDITION. 27 ITA NO. 128 & 103/JP/2015 SHAIKH MAQSOOD ALAM VS. ACIT. 29. GROUND NO. 4 RELATES TO DELETION OF DISALLOWANCE OF RS. 49,29,4 82/- U/S 43B OF THE IT ACT. DURING THE COURSE OF ASSESSMENT PRO CEEDINGS, THE AO WHILE EXAMINING THE BOOKS OF ACCOUNTS NOTICED THAT LIABIL ITY OF RS. 1,13,41,817/- ON ACCOUNT OF SERVICE TAX IS OUTSTANDING AS ON 31.3.20 10. THE AO VIDE ORDER SHEET DATED 21.12.2012 ASKED THE ASSESSEE TO FURNISH PROO F OF PAYMENT OF SERVICE TAX. THE ASSESSEE VIDE SUBMISSION DATED 27.12.2012 FURNISHED THE DETAILS AND PROOF OF PAYMENT OF SERVICE TAX AND STATED THAT SERVICE TAX OF RS. 15,59,493/- ON PAYMENTS WERE NOT RECEIVED FROM THE PARTIES. THE ASSESSEE F URTHER STATED VIDE SUBMISSION DATED 11.02.2013 AS UNDER : SECTION 68 READ WITH RULE 6 OF SERVICE TAX RULES SHOW THAT SERVICE PROVIDER BECOMES LIABLE TO MAKE THE PAYMENT OF SERV ICE TAX BY THE 5 TH OF THE MONTH IMMEDIATELY FOLLOWING THE CALENDAR MON TH IN WHICH THE PAYMENT ARE RECEIVED TOWARDS THE VALUE OF TAXABLE S ERVICE. IF THERE IS NO LIABILITY TO MAKE THE PAYMENT TO THE CREDIT OF CENTRAL GOVERNMENT BECAUSE OF NON RECEIPT OF PAYMENT FROM T HE RECEIVER OF THE SERVICES, THEN IT CANNOT BE SAID THAT SUCH SERV ICE TAX HAS BECOME PAYABLE IN TERMS OF CLAUSE (A) OF SECTION 43B BECAU SE THAT CLAUSE SPECIFICALLY MENTIONS SUM PAYABLE BY THE ASSESSEE . SO, IN SUCH CASE, DISALLOWANCE U/S 43B OF SUCH SERVICE TAX AMOUNT WHI CH IS YET TO BE COLLECTED IS BAD IN LAW. THE AO CONSIDERED THE SUBMISSIONS OF THE ASSESSEE B UT HE FIND IT NOT TENABLE FOR THE REASON THAT LIABILITY OF SERVICE TAX IS CRYSTALLIZE D AND CLAIMED IN THE BALANCE SHEET. THE NAME OF THE PARTIES AND DETAILS OF PAYMENT TO B E RECEIVED ARE SUBMITTED. AS PER DETAILS, AMOUNT TO BE RECEIVED IS SHOWN AT RS. 1,51 ,40,706/- AND SERVICE TAX @ 10% COMES TO RS. 15,14,070/- BUT THE ASSESSEE HAS WORKE D OUT 10% AT RS. 15,59,492/- WHICH IS NOT CORRECT AND DIFFERENCE IS NOT RECONCIL ED NOR GOT VERIFIED. THE LIABILITY OF SALES TAX IS CALCULATED AND REFLECTED IN THE BALANC E SHEET. THE ASSESSEE SUBMITTED 28 ITA NO. 128 & 103/JP/2015 SHAIKH MAQSOOD ALAM VS. ACIT. AMOUNT OF DEBTORS TO BE COLLECTED AMOUNTING TO RS. 1,51,40,706/-. ON PERUSAL OF INDIVIDUAL ENTRY OF DEBTORS IT IS FOUND THAT OUT OF TOTAL AMOUNT OF RS. 1,51,40,706/- TO BE COLLECTED, RS. 85,46,207/- IS DEPOSIT LYING WITH THE COMPANIES. THE SERVICE TAX LIABILITY DOES NOT ARISE ON AMOUNT OF DEPOSIT. AS P ER CHALLAN, THE AO FOUND THAT PAYABLE SERVICE TAX WAS WORKED OUT BY THE ASSESSEE AT RS. 97,82,325/- (RS. 1,13,41,817 RS. 15,59,492) AND PAYMENT OF RS. 62, 22,335/- WERE MADE BEFORE FILING RETURN OF INCOME AND BALANCE PAYMENT OF RS. 33,75,974/- WERE MADE AFTER FILING OF RETURN OF INCOME. THEREFORE, THE AO DISAL LOWED PAYMENT RS. 33,75,974/-. 29.1. THE AO FURTHER TAKEN INTO ACCOUNT SERVICE TAX WHICH WERE NOT PAID AT RS. 15,43,508/- (I.E. SERVICE TAX PAYABLE RS. 1,13,41,8 17 RS. 97,98,309/- SERVICE TAX PAID). THUS THE AO MADE TOTAL DISALLOWANCE OF RS. 3 3,75,974 + RS. 15,43,508 = RS. 49,29,482/- UNDER SECTION 43B AND ADDED TO THE TOTA L INCOME OF THE ASSESSEE. 30. AGGRIEVED, THE ASSESSEE FILED APPEAL BEFORE LD. CIT (A), WHO DELETED THE DISALLOWANCE BY OBSERVING THAT ASSESSEE IS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING AND ASSESSEE HAS NOT CLAIMED SERVICE TAX AS DEDUCTI ON IN PROFIT & LOSS ACCOUNT OR OTHERWISE IN COMPUTATION OF INCOME. SO PROVISIONS O F SECTION 43B ARE NOT APPLICABLE IN THE CASE OF THE ASSESSEE. IT IS APPARENT THAT I F THE SERVICE TAX HAS NOT BEEN DEBITED IN THE PROFIT & LOSS ACCOUNT, SAME CANNOT B E DISALLOWED U/S 43B OF THE I.T. ACT. FURTHER IT HAS ALSO BEEN MENTIONED THAT SERVIC E TAX CANNOT BE DISALLOWED IN CASE IT HAS NOT BEEN RECEIVED BY ASSESSEE FROM THE CLIEN TS FOR ONWARD PAYMENT TO THE GOVERNMENT. IT IS APPARENT THAT BOTH THE SUMS OF RS . 33,75,974 + RS. 15,43,508 FOR SERVICE TAX HAVE NOT BEEN DEBITED BY THE ASSESSEE I N THE PROFIT AND LOSS ACCOUNT. SO NO DISALLOWANCE ON THIS ACCOUNT CAN BE MADE. FURTHE R SUM OF RS. 15,59,493 HAS NOT 29 ITA NO. 128 & 103/JP/2015 SHAIKH MAQSOOD ALAM VS. ACIT. BEEN RECEIVED BY THE ASSESSEE FROM THE CLIENTS, DET AILS OF WHICH WERE SUBMITTED TO THE AO. AS SUCH, NO DISALLOWANCE OF THIS SUM CAN BE MADE U/S 43B OF THE I. T. ACT. 31. BEING AGGRIEVED, THE REVENUE IS BEFORE US. 31.1. THE LD. D/R FOR THE REVENUE RELIED ON THE ORD ER OF THE AO AND REQUESTED TO SET ASIDE THE ORDER OF LD. CIT (A) AND CONFIRM THE ADDITION. 31.2. ON THE OTHER HAND, THE LD. A/R OF THE ASSESSE E SUPPORTED THE ORDER OF LD. CIT (A) AND CONTENDED THAT THE LD. CIT (A) HAS RIGHTLY DELETED THE ADDITION. APPELLANT IN HIS BALANCE SHEET HAS SHOWN RS. 1,13,41,817.81 AS S ERVICE TAX UNDER THE HEAD CURRENT LIABILITIES & PROVISIONS, OUT OF WHICH, R S. 49,29,482 WERE DISALLOWED BY THE LD. A.O. ON THE GROUND THAT THE SAME HAS NOT BEEN P AID BEFORE THE DUE DATE OF FILING OF THE INCOME TAX RETURN OF THE RELEVANT ASSESSMENT YEAR. HOWEVER, OUT OF SAID RS. 49,29,482, APPELLANT PAID RS. 33,75,974 AFTER SAID DUE DATE AND REMAINING RS. 15,43,508 WERE NOT PAID SINCE COULD NOT BE RECOVERE D. IT IS PERTINENT TO NOTE HERE THAT APPELLANT IS FOLLOWING MERCANTILE SYSTEM OF AC COUNTING AND HAS NOT CLAIMED THE SERVICE TAX AS DEDUCTION ANYWHERE IN THE PROFIT & L OSS ACCOUNT OR OTHERWISE IN COMPUTATION. THE COPY OF THE BALANCE SHEET, PROFIT & LOSS ACCOUNT ALONGWITH ENCLOSURES ARE PLACED ON RECORD. PERUSAL OF THE SA ME, SUBSTANTIATE THE CLAIM OF THE ASSESSEE REGARDING THE ACCOUNTING SYSTEM FOLLOWED B Y THE ASSESSEE, ACCORDING TO WHICH, NO SUCH AMOUNT HAS BEEN CLAIMED AS EXPENDITU RE OR DEDUCTION AND IT IS ONLY A BALANCE SHEET ITEM. THEREFORE, THE LD. A/R PRAYED THAT THE ORDER OF LD. CIT (A) BE CONFIRMED. 30 ITA NO. 128 & 103/JP/2015 SHAIKH MAQSOOD ALAM VS. ACIT. 31.3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUS ED THE MATERIAL AVAILABLE ON RECORD. THE COORDINATE BENCH TRIBUNAL IN THE MATT ER OF ASHOK PARNAMI VS. ACIT, ITA NO. 777/JP/2013 HAS HELD AS UNDER :- 7. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PAR TIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. THE A SSESSEE HAS NOT DEBITED SERVICE TAX IN P&L ACCOUNT, WHICH HAS BEEN SHOWN IN SERVICE TAX ACCOUNT SEPARATELY. THE HONBLE DELHI HIGH COUR T IN THE CASE OF CIT VS. NOBLE HEWITT (I) (P) LTD. (SUPRA) HAS HELD THAT THE ASSESSEE FOLLOWED MERCANTILE SYSTEM OF ACCOUNTING AND COLLEC TED SERVICE TAX. THE AMOUNT OF SERVICE TAX HAS NOT BEEN DEBITED IN T HE P&L ACCOUNT AS ALSO NOT CLAIMED AS DEDUCTION, THEREFORE, AMOUNT CO ULD NOT BE DISALLOWED. FURTHER THE HONBLE BOMBAY HIGH COURT I N THE CASE OF CIT VS. M/S CALIBRE PERSONNEL SERVICES PVT. LTD. (SUPRA ) BY CONSIDERING THE HONBLE DELHI HIGH COURT DECISION IN THE CASE OF CI T VS. NOBLE HEWITT (I) (P) LTD. (SUPRA) WHEREIN BOTH THE ISSUES I.E. S ECTION 43B AND ISSUE OF MERCANTILE SYSTEM OF ACCOUNTING HAD ALSO BEEN CO NSIDERED AND HELD THAT IN CASE OF ASSESSEE, SECTION 43B NO DISALLOWAN CE CAN BE MADE. THE HON'BLE SUPREME COURT HAS ALSO DISMISSED THE SL P FILED BY THE DEPARTMENT IN THE CASE OF CIT VS. M/S CALIBRE PERSO NNEL SERVICES PVT. LTD. (SUPRA). BY RESPECTFULLY FOLLOWING THE DECISIO N OF BOTH THE HONBLE COURTS, WE DELETE THE ADDITION CONFIRMED BY THE LD CIT(A). MOREOVER, THE SERVICE TAX WAS PAYABLE BY THE ASSESS EE WHEN IT IS RECEIVED FROM THE PARTIES. SINCE THE SERVICE TAX WAS NOT RECEIVED, TH EREFORE THE LIABILITY TO PAY DOES NOT ARISE AS THE SAME IS PAYABLE ON ACTUAL BASIS. IN T HE MATTER OF FOUR SEASONS (INDIA) TOURS LTD. IN ITA NO. 570/JP/2013 DATED 12.2.2016, THE TRIBUNAL HAS HELD AS UNDER :- 3.2. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSE D THE RECORD. IN THE PRESENT CASE, SINCE SERVICE TAX WAS NOT PAYABLE BY THE ASSESSEE, THE RIGOR OF SECTION 43B OF THE ACT COULD NOT BE AP PLIED TO ITS CASE. APART FROM THE ABOVE, WE FIND THE DELHI HIGH COURT IN THE CASE OF CIT V. NOBLE AND HEWITT (I) (P.) LTD. [2008] 305 ITR 324 / 166 TAXMAN 48 (DELHI) HAS ON IDENTICAL ISSUE TAKEN THE VIEW THAT PROVISIONS OF SEC.43B CANNOT BE INVOKED UNLESS THE ASSESSEE HAS CLAIMED B Y WAY DEDUCTION THE AMOUNTS SPECIFIED U/S.43B WITHOUT MAKING ACTUAL PAYMENT. THE FOLLOWING WERE THE RELEVANT OBSERVATIONS OF THE COU RT IN THIS REGARD: 31 ITA NO. 128 & 103/JP/2015 SHAIKH MAQSOOD ALAM VS. ACIT. '5. LEARNED COUNSEL FOR THE REVENUE URGES THAT THE DECISION OF THE CALCUTTA HIGH COURT IN CHOWRINGHEE SALES BUREAU P. LTD. [1977] 110 ITR 385 , COVERS THE POINT IN ITS FAVOUR. WE ARE UNABLE TO AGREE. IN THAT CASE, IT WAS HELD THAT THE LIABILITY TO PAY SALES TAX AROSE THE MOMENT A SALE OR PURCHASE WAS E FFECTED AND IF AN ASSESSEE WAS MAINTAINING ACCOUNTS ON THE MERC ANTILE SYSTEM IT WOULD BE ENTITLED TO DEDUCTION OF THE EST IMATED LIABILITY OF SALES TAX, EVEN THOUGH SUCH SALES TAX HAD NOT BEEN PAID TO THE SALES TAX AUTHORITIES. THE QUESTION THE RE CONCERNED WAS THE ENTITLEMENT OF THE ASSESSEE TO DEDUCTION UN DER SECTION 10(1) AND 10(2)(XV) OF THE INDIAN INCOME-TAX ACT, 1 922. THE DECISION IS CLEARLY DISTINGUISHABLE IN ITS APPLICAT ION TO THE PRESENT CASE. HERE WE ARE CONCERNED WITH AN ASSESSEE WHO HA S NOT EVEN CLAIMED ANY DEDUCTION ON THE GROUND OF SERVICE TAX AND HAS NOT DEBITED THE AMOUNT TO ITS PROFIT AND LOSS A CCOUNT. MOREOVER, THE PROVISIONS OF SECTION 43B OF THE ACT ARE QUITE CLEAR IN THIS REGARD. THE DECISION OF THE CALCUTTA HIGH COURT IN CHOWRINGHEE SALES BUREAU P. LTD'S CASE [1977] 110 ITR 385 WAS NOT IN THE CONTEXT OF THE APPLICABILITY OF SECT ION 43B OF THE ACT. 6. IN OUR OPINION, SINCE THE ASSESSEE DID NOT DEBIT THE AMOUNT TO THE PROFIT AND LOSS ACCOUNT AS AN EXPENDITURE NO R DID THE ASSESSEE CLAIM ANY DEDUCTION IN RESPECT OF THE AMOU NT AND CONSIDERING THAT THE ASSESSEE IS FOLLOWING THE MERC ANTILE SYSTEM OF ACCOUNTING, THE QUESTION OF DISALLOWING THE DEDU CTION NOT CLAIMED WOULD NOT ARISE. 7. LEARNED COUNSEL FOR THE REVENUE SUBMITS THAT THE ASSESSEE HAS SOUGHT TO EVADE TAX UNDER THE MERCANTILE SYSTEM OF ACCOUNTING. WE ARE OF THE VIEW THAT IT IS NOT FOR T HE REVENUE AUTHORITIES TO TELL THE ASSESSEE HOW TO MAINTAIN IT S ACCOUNTS.' FURTHER AS FAR AS SERVICE TAX IS CONCERNED, AS PER THE LAW PREVAILING DURING THE PREVIOUS YEAR, THE LIABILITY TO PAY THE SAME ARISES ONLY ON RECEIPT BY THE ASSESSEE. SINCE THE LIABILITY TO PAY SERVICE TAX DOES NOT EXIST IN THE PRESENT CASE, THE SERVICE TAX CANNOT B E SAID TO BE 'PAYABLE' AND THEREFORE PROVISIONS OF SEC.43-B OF T HE ACT COULD NOT ALSO BE INVOKED. 32 ITA NO. 128 & 103/JP/2015 SHAIKH MAQSOOD ALAM VS. ACIT. RESPECTFULLY FOLLOWING THE JUDGMENT OF THE COORDINA TE BENCH, WE DO NOT FIND ANY MERIT IN THE APPEAL FILED BY THE REVENUE. ACCORDING LY, THE SAME IS DISMISSED ON THIS GROUND. 32. GROUND NO. 5 RELATES TO DELETION OF ADDITION OF RS. 1,05,000/- ON ACCOUNT OF ADVANCE FOR AGRICULTURAL LAND. THE AO NOTICED THAT THE ASSESSEE HAS RECEIVED CASH IN THE RANGE OF RS. 15,000/- TO RS. 19,000/- ON VARIOU S DATES FROM NUMBER OF PARTIES. THE AO VIDE ORDER SHEET DATED 21.12.2012 ASKED THE ASSESSEE TO FILE CONFIRMATIONS FROM CREDITORS WITH THEIR IDENTITY. THE ASSESSEE FU RNISHED THE CONFIRMATIONS OF THE PARTIES EXCEPT THE FOLLOWING :- DATE CASH PAYMENT 16.5.2009 18,500/ - 18.5.2009 18,500/ - 3.6.2009 18,500/ - 8.7.2009 18,500/ - 10.8.2009 18,500/ - 10.9.2009 12,500/ - TOTAL 1,05,000/ - IN SUPPORT OF THE ABOVE CASH PAYMENT RECEIVED, ONLY LEDGER ACCOUNTS OF ADVANCE FOR AGRICULTURE LAND DULY SIGNED BY THE ASSESSEE AND NO T BY THE CREDITOR WAS RECEIVED. THE CONFIRMATION OF THE PERSON AND THEIR IDENTITY W HO PAID CASH HAS NOT BEEN SUBMITTED. THE ASSESSEE CONTENDED THAT PAYMENT OF R S. 1,05,000/- WAS GIVEN IN ADVANCE IN MARCH, 2008 TO BUY LAND AS EVIDENT FROM LEDGER ACCOUNT. AS PER AGREEMENT THE ASSESSEE WILL PAY REMAINING AMOUNT AN D GET THE SALE DEED DONE IN THE MONTH OF JUNE, 2008 BUT ASSESSEE CLAIMED TO HAV E RETURNED AMOUNT IN THE YEAR UNDER REFERENCE. MOREOVER, ASSESSEE HAS NOT DISCHAR GED HIS ONUS BY FURNISHING CONFIRMATION ALONG WITH IDENTITY OF THE PERSON FROM WHOM CASH WAS RECEIVED ON 33 ITA NO. 128 & 103/JP/2015 SHAIKH MAQSOOD ALAM VS. ACIT. DIFFERENT DATES. THEREFORE, AMOUNT OF RS. 1,05,000/ - IS TREATED AS UNEXPLAINED CASH CREDIT U/S 68 OF THE IT ACT AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 33. ON APPEAL, LD. CIT (A) DELETED THE ADDITION BY OBSERVING AS UNDER :- 12.3. I HAVE CONSIDERED THE CONTENTIONS OF THE AP PELLANT AS WELL AS ASSESSMENT ORDER. IT IS SEEN THAT AS PER THE AGREEM ENT DATED 07.03.2008 FILED ON RECORD, ASSESSEE HAD GIVEN ADVA NCE FOR THE PURCHASE OF AGRICULTURAL LAND OF RS. 100,000/-. THE ASSESSEE GAVE THE LEDGER ACCOUNT AS PER WHICH TOTAL ADVANCE GIVEN WAS RS. 1,05,000/- (RS. 1,00,000 + RS. 5,000/-). HOWEVER, THE LAND DEA L WAS LATER CANCELLED AND ABOVE SUM WAS RECEIVED BACK DURING TH E YEAR UNDER CONSIDERATION. IN ABOVE CIRCUMSTANCES, IT IS APPARE NT THAT IDENTITY OF THE OWNERS OF THE LAND IS APPARENT FROM THE RECORD. FURTHER ASSESSEE HAS MERELY RECEIVED BACK THE AMOUNT GIVEN AS ADVANC E. THE ABOVE CLAIM OF THE ASSESSEE HAS NOT BEEN DISPROVED BY THE AO BY ANY FURTHER INVESTIGATION. IT IS NOT A CASE WHERE IT CAN BE SAI D LAND OWNERS ARE THE CASH CREDITORS OF THE ASSESSEE. AS SUCH, THE ADDITI ON MADE BY THE AO IS DELETED. 34. NOW THE REVENUE IS IN APPEAL BEFORE US. 34.1. THE LD. D/R FOR THE REVENUE SUPPORTED THE ORD ER OF THE AO AND REQUESTED THAT ORDER OF LD. CIT (A) BE SET ASIDE AND ADDITION BE C ONFIRMED. 34.2. ON THE OTHER HAND, THE LD. A/R SUPPORTED THE ORDER OF THE LD. CIT (A) AND CONTENDED THAT THE LD. CIT(A) HAS RIGHTLY DELETED T HE ADDITION. THE LD. A/R FURNISHED THE EXPLANATION SUPPORTED WITH DOCUMENTS CONTAINING COMPLETE DETAILS BACKED BY LEDGER ACCOUNT OF THE PREVIOUS PERIOD. THEREFORE, T HE ASSESSEE HAS DISCHARGED HIS BURDEN OF EXPLAINING RECEIPT, ALTHOUGH, IT IS A REC EIPT AGAINST THE PREVIOUS PAYMENT MADE BY HIM ONLY, FOR WHICH, SECTION 68 COULD NOT B E INVOKED, EVEN THOUGH, APPELLANT HAS EXPLAINED THE CREDIT SUBSTANTIATED WI TH CORROBORATIVE MATERIAL I.E. COPY OF THE AGREEMENT AND COPY OF LEDGER ACCOUNT OF THE ADVANCE IS PLACED ON RECORD. THUS THE LD. A/R PRAYED THAT THE ORDER OF THE LD. C IT (A) BE CONFIRMED. 34 ITA NO. 128 & 103/JP/2015 SHAIKH MAQSOOD ALAM VS. ACIT. 34.3. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUS ED THE ORDERS PASSED BY THE AO AND LD. CIT (A) AND MATERIAL ON RECORD. IN OUR VIEW, THE ASSESSEE HAS DISCHARGED HIS PRIMARY ONUS OF EXPLAINING THE RECEI PT AGAINST THE PREVIOUS PAYMENT MADE BY HIM. IN OUR VIEW SECTION 68 IS NOT ATTRACTE D AND, THEREFORE, THE ORDER PASSED BY LD. CIT (A) IS REQUIRED TO BE UPHELD. THE GROUND IS DISMISSED. 35. GROUND NO. 6 RELATES TO DELETION OF ADDITION OF RS. 46,000/- ON ACCOUNT OF CASH FROM NEW SUPER ENGINEERING. THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS ASKED THE ASSESSEE VIDE ORDER SHEET DAT ED 21.12.2012 TO FURNISH CONFIRMATIONS ALONG WITH IDENTITY OF THE PARTIES FR OM WHOM CASH FOUND ON VERIFICATION OF CASH BOOK, WAS RECEIVED. THE ASSESS EE SUBMITTED ONLY LEDGER COPY OF BOOKS OF ACCOUNTS AND NO CONFIRMATION AND ASSESSMEN T DETAILS FURNISHED AND ALSO NOT PROVED IDENTITY OF THE PARTY. THEREFORE, CASH C REDIT OF RS. 46,000/- RECEIVED ON 10.12.2009, 15.01.2010 AND 28.01.2010 IS TREATED AS UNEXPLAINED U/S 68 OF THE IT ACT AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 36. BEING AGGRIEVED, THE ASSESSEE FILED APPEAL BEFO RE LD. CIT (A), WHO DELETED THE ADDITION CONSIDERING THE CONTENTIONS OF THE ASSESSE E AS WELL AS ASSESSMENT ORDER. THE LD. CIT (A) ACCEPTED THE EXPLANATION OF THE ASS ESSEE THAT THE ASSESSEE HAD MADE THE PAYMENT TO M/S. NEW SUPER ENGINEERING BY A CCOUNT PAYEE CHEQUE NO. 722142 DRAWN ON SBBJ BHIWADI ON 09.10.2009 OF RS. 4 6,000/- AGAINST THE PROPOSED SUPPLIES OF MATERIAL BY THEM. IT WAS ALSO EXPLAINED THAT SINCE THE MATERIAL WAS NOT SUPPLIED, SO THE MONEY WAS RECOVERED BACK ON PIECE MEAL BASIS. THE PAYMENT HAS BEEN MADE THROUGH BANKING CHANNEL AND SUBSEQUENTLY THE AMOUNT HAS BEEN RECOVERED BACK DUE TO NON SUPPLY OF THE MATERIAL BY THE PAYEE. AS SUCH IT IS A CASE 35 ITA NO. 128 & 103/JP/2015 SHAIKH MAQSOOD ALAM VS. ACIT. OF RECOVERY OF ADVANCE GIVEN TO M/S. NEW SUPER ENGI NEERING AND SAID PARTY CANNOT BE HELD TO BE CASH CREDITOR FOR THE ASSESSEE. THERE FORE, THE LD. CIT (A) DELETED THE ADDITION. 37. NOW THE REVENUE IS BEFORE US. 37.1. THE LD. D/R SUPPORTED THE ORDER OF THE AO. 37.2. ON THE OTHER HAND, THE LD. A/R FOR THE ASSESS EE SUPPORTED THE ORDER OF THE LD. CIT (A) AND CONTENDED THAT THERE IS NO INFIRMITY IN THE ORDER OF LD. CIT (A) AND HE HAS RIGHTLY DELETED THE ADDITION. THE LD. A/R PRAYE D THAT ORDER OF CIT (A) BE CONFIRMED. 37.3. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED T HE MATERIAL AVAILABLE ON RECORD. IN OUR VIEW, IT IS A CLEAR CASE OF MAKING ADVANCE BY THE ASSESSEE TOWARDS SUPPLY OF MATERIAL. THE PAYMENT OF ADVANCE WAS MAD E TO M/S. SUPER ENGINEERING THROUGH BANKING CHANNEL AGAINST THE ORDER PLACED BY THE ASSESSEE. LATER ON, ON THE FAILURE OF THE SUPPLYING PARTY, THE ADVANCE WAS REC OVERED BACK. UNDER THE CIRCUMSTANCES, THE ASSESSEE COULD NOT BECOME A CRED ITOR AS THE ASSESSEE IS GETTING BACK HIS OWN MONEY ON THE FAILURE OF SUPPLIER TO SU PPLY THE MATERIAL TO THE ASSESSEE. UNDER THE FACTS AND CIRCUMSTANCES, SECTION 68 DO NO T ATTRACT IN THIS CASE. THEREFORE, WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT (A ) ON THIS GROUND. THE GROUND IS DISMISSED. 38. GROUND NO. 7 RELATES TO DELETION OF ADDITION OF RS. 19,500/- ON ACCOUNT OF CASH FROM SHREE CEMENT. ON VERIFICATION OF CASH BO OK, THE AO NOTICED THAT RS. 19,500/- WAS CLAIMED TO HAVE BEEN RECEIVED IN CASH FROM SHREE CEMENT LTD. ON 10.10.2009. THE AO CALLED FOR CONFIRMATION IN RESPE CT OF CASH CREDIT BUT ASSESSEE 36 ITA NO. 128 & 103/JP/2015 SHAIKH MAQSOOD ALAM VS. ACIT. SUBMITTED A COPY OF LEDGER ACCOUNT OF SHREE CEMENT LTD. WITHOUT ANY ENDORSEMENT FROM THE COMPANY. THE AO AFTER GOING THROUGH THE DE TAILS, HELD THAT THE ASSESSEE HAS FAILED TO EXPLAIN CASH CREDIT ENTRY AND THE SAM E IS DEEMED TO BE UNEXPLAINED AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 39. ON APPEAL, THE LD. CIT (A) DELETED THE ADDITION BY OBSERVING AS UNDER :- 14.3. I HAVE CONSIDERED THE CONTENTIONS OF THE A PPELLANT AS WELL AS ASSESSMENT ORDER. IT IS SEEN THAT THE PAYMENT AD VICE OF THE SHREE CEMENT HAS BEEN PERUSED AS PER WHICH ASSESSEE HAS R ECEIVED THE AMOUNT OF RS. 16,93,639/- ON 09.11.2009 FROM M/S. S HREE CEMENT LTD. AS PER THIS PAYMENT ADVICE, VARIOUS ADVANCE PAYMENT S MADE TO THE ASSESSEE HAVE BEEN ADJUSTED BY M/S. SHREE CEMENT LT D AGAINST THE BILLS RAISED BY THE ASSESSEE. IN THIS PAYMENT ADVICE, IT HAS BEEN NOTED THAT AGAI NST THE BILL OF RS. 32,851/- RAISED ON 20.10.2009, ADVANCE PAID BY THE SHREE CEMENT OF RS. 19,500/- HAS BEEN ADJUSTED. SO IT CANNOT BE SAI D THAT M/S. SHREE CEMENT LTD. HAD MADE THE PAYMENT TO THE ASSESSEE ON 09.11.2009. IN FACT THE BALANCE OUTSTANDING AMOUNT ONLY WAS PAID O N 09.11.2009 AFTER DEDUCTING THE ADVANCES ALREADY PAID TO THE AS SESSEE INCLUDING THAT OF RS. 19,500/- ACCORDINGLY THE ADDITION MADE BY THE AO IS DELETED. 40. NOW THE REVENUE IS BEFORE US. 40.1. THE LD. D/R SUPPORTED THE ORDER OF THE AO 40.2. ON THE OTHER HAND, LD. A/R OF THE ASSESSEE SU PPORTED THE ORDER OF LD. CIT (A) AND CONTENDED THAT THE LD. CIT (A) HAS RIGHTLY DELE TED THE ADDITION AFTER DISCUSSING THE FACTS, LEGAL PROVISION AND CIRCUMSTANCES OF THE CASE. THEREFORE, HE PRAYED THE ORDER OF LD. CIT (A) BE CONFIRMED. 40.3. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED T HE MATERIAL ON RECORD. THE AMOUNT OF RS. 19,500/- REFLECTED AS AN ADVANCE IS A CTUALLY PART AMOUNT OF AN INVOICE RAISED FOR RS. 32,851/- AGAINST M/S. SHREE CEMENT L TD. WHICH WAS ADJUSTED AGAINST THE CONSOLIDATED PAYMENT ADVICE RECEIVED BY THE ASS ESSEE FOR RS. 16,93,639/- VIDE 37 ITA NO. 128 & 103/JP/2015 SHAIKH MAQSOOD ALAM VS. ACIT. CHEQUE/DD NO. 825416 DATED 09.11.2009. THUS THE ENT RY OF RS. 19,500/- MADE BY THE ASSESSEE ON 10.10.2009 IS ONLY AGAINST SAID INV OICE AND THE ENTRY WAS CORRECTLY MADE. THEREFORE, WE SEE NO INFIRMITY IN THE ORDER O F THE LD. CIT (A), WHICH IS HEREBY CONFIRMED. THE GROUND IS DISMISSED. 41. THE TRIBUNAL IS THE FINAL FACT FINDING BODY AND THE REVENUE IS EXPECTED TO FILE APPEAL ON SERIOUS ISSUES AND SHOULD EXERCISE SELF R ESTRAIN IN FILING OF APPEAL WHERE SMALL ADDITIONS AMOUNTING TO RS. 10,000/- TO RS. 50 ,000/- AND SERIOUS QUESTION OF LAW IS INVOLVED . WE DO NOT APPRECIATE SUCH KIND O F PRACTICE BEING ADOPTED BY THE REVENUE FOR FILING THE APPEAL WHEREBY THE BENEFIT O F RS. 240/-, 46,000/- AND 19,500/- WERE GIVEN BY THE LD. CIT (A) TO THE ASSES SEE. IN OUR VIEW, THIS KIND OF PRACTICE SHOULD BE REVIEWED BY THE CONCERNED AUTHOR ITIES DURING INTERNAL APPRAISAL. 42. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED AND APPEAL OF REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 26/04/2016 . SD/- SD/- FOE FLAG ;KNO] YFYR DQEKJ (VIKRAM SINGH YADAV) (LALIET KUMAR) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 26/04/2016 DAS/ VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT-SHRI SHAIKH MAQSOOD ALAM, BEAWAR. 2. IZR;FKHZ@ THE RESPONDENT- THE ACIT, CIRCLE-2, AJMER. 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDRVIHY@ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO. 128 & 103/JP/2015) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR 38 ITA NO. 128 & 103/JP/2015 SHAIKH MAQSOOD ALAM VS. ACIT. 39 ITA NO. 128 & 103/JP/2015 SHAIKH MAQSOOD ALAM VS. ACIT.