ACIT, UDAIPUR V. Shri Navneet Singh Arora, UDAIPUR

ITA 133/JODH/2010

• Counselvise Citation: 13323314 RSA 2010
• Duration Of Justice: 4 year(s) 6 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-09-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 05-09-2014
• Assessment Year: 2005-2006
• Appeal Filed On: 12-03-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 40A(3); 143(3); 194C; 68

Judgement Text

IN THE INCOMETAX APPELLATE TRIBUNAL JODHPUR BENCH: J ODHPUR ( BEFORE SHRI H ARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.K. SAINI, ACCOUNTANT MEMBER ) I.T.A. NO. 133 /JODH/201 0 (A.Y. 200 5 - 0 6 ) ACIT, V S SHRI NAVNEET SINGH ARORA, CIRCLE - 2, PROP. M/S. ARORA CARRIERS, UDAIPUR. PRATAP NAGAR, UDAIPUR. PAN NO. AAUPA0192R (APPELLANT) (RESPONDENT) ASSESSEE BY : - SHRI AMIT KOTHARI. . DEPARTMENT BY : - SHRI MAHESH KUMAR - D.R. DATE OF HEARING : 05 /0 9 /201 4 DATE OF PRONOUNCEMENT : 12 / 0 9 /2014 O R D E R P E R HARI OM MARATHA, J.M. : THIS APPEAL OF THE REVENUE, FOR A.Y. 2005 - 06, IS DIRECTED AGAINST THE ORDER OF LD. CIT(A), UDAIPUR, DATED 03.12.2009. 2. BRIEFLY STATED, THE FACTS OF THIS CASE ARE THAT THE ASSESSEE WAS THE PROPRI ETOR OF M/S. ARORA CARRIERS, UDAIPUR, AND CARRIED ON BUSINESS OF TRANSPORT CONTRACTOR. FOR A.Y. 2005 - 06, HE FILED HIS RETURN OF 2 INCOME (ROI), ON 30.10.2005, ALONG WITH AUDIT - REPORT IN FORM NO. 3CD, DECLARING TOTAL INCOME OF RS. 5,85,276/ - . THIS ROI WAS PR OCESSED U/S 143(1) ON 15.05.2006. THE REGULAR ASSESSMENT U/S 143(3) OF THE ACT WAS MADE VIDE ORDER DATED 28.12.2007 ON A TOTAL INCOME OF RS. 58,84,438/ - . IN ARRIVING AT THE ABOVE INCOME THE A.O. HAS MADE THE FOLLOWING ADDITIONS : - TAXABLE INCOME AS PER RE TURN OF INCOME RS. 5,85,276/ - ADD: AS DISCUSSED ABOVE. I) U/S 40(A)(IA) R S. 20,39,121/ - II) PAYMENTS MADE TO M/S. SHEKHAWATI FILLING STATION RS. 14,36,740/ - III) PAYMENTS MADE TO M/S. VERMA TYRES RS. 1,20,000/ - IV) DRAFTS MADE BUT DEBITED IN CASH BOOK U/S 68 RS. 3,00,400/ - V) DEPOSIT IN BANK ACCOUNT N RS. 5,00,000/ - VI) CASH CREDIT U/S 68 RS. 4,00,000/ - VII) SALE OF TRUCK (U/S 68) RS. 5,00,000/ - VIII) DONATION RS. 2,901/ - RS. 52, 99 , 165/ - TOTAL TAXABLE INCOME RS. 58,84,438/ - 2.1 AGGRIEVED, THE ASSESSEE WENT IN APPEAL AND LD. CIT(A) HAS DELETED MAJOR ADDITION. THE REVENUE HAS FILED THIS APPEAL AGAINST THE IMPUGNED DELETIONS BY RAISING THE FOLLOWING GROUNDS : - 3 1. DELETING THE DISALLOWANCE OF RS. 20,39,121/ - MADE BY THE AO U/S 40(A)(IA)OF THE I.T. ACT. 2. DELETING THE ADDITION OF RS. 14,36,740/ - MADE BY THE AO ON ACCOUNT OF CASH PAYMENTS TO M/S. SHEKHAWATI FILLING STATION. 3. DELETING THE ADDITION OF RS. 3 ,00,400/ - , RS. 5,00,000/ - & RS. 4,00,000/ - TOTALING TO RS. 12,00,400/ - U/S 68 OF THE I.T. ACT. 4. DELETING THE ADDITION OF RS. 5,00,000/ - MADE U/S 68 OF THE I.T. ACT ON ACCOUNT OF CASH RECEIPTS ON SALE OF TRUCKS. 2.2 WE HAVE HEARD RIVAL SUBMISSIONS AND HA VE CAREFULLY PERUSED THE ENTIRE RECORD. BOTH PARTIES HAVE REITERATED THEIR EARLIER ARGUMENTS. 2.3 THE FIRST GROUND RELATES TO DELETION OF ADDITION OF RS. 20,39,121/ - MADE ON ACCOUNT OF DISALLOWANCE U/S 40 - (A)(IA). THE FACTS APROPOS THIS GROUND ARE THAT F ROM THE PERUSAL OF THE LEDGER ACCOUNT OF TRANSPORTATION EXPENSES, IT WAS FOUND THAT THERE WERE ENTRIES EXCEEDING RS. 20,000/ - IN CASH AS WELL AS IN THE FORM OF JOURNAL ENTRIES. THE ASSESSEE PRODUCED BILLS OF CERTAIN EXPEN SES ALONG WITH BOOKS OF ACCOUNT S ON 28.11.2007. THE ASSESSEE DID NOT MAINTAIN INTERNAL / JOURNAL ACCOUNTS REVEALED THAT THE ENTRIES THEREIN DID NOT MATCH WITH THE CORRESPONDING COPY OF THE LEDGER ACCOUNT OF EXPENSES. . 4 THE P&L ACCOUNT OF THE S E BOOKS WAS FOUND TO BE TOTALLY DIFFERENT FROM THA T OF FURNISHED AS A AUDITED. THE REASON FOR THIS ANOMALY HAS BEEN STATED TO BE THAT THE KACCHHI BOOKS WERE PRODUCED ON THAT DATE BUT THE CORRECT BOOKS ARE BEING PRODUCED ON 28.11.2007. THE A.O. ASKED THE ASSESSEE TO PRODUCE THIRD PARTY EVIDENCE TO ESTABLIS H TRANSPORT EXPENSES. THE A.O. HAS MENTIONED HIS OWN REASONING AS TO WHY THE ASSESSEE CHA N GED HIS BOOKS OF ACCOUNTS. HOWEVER, THE ASSESSEES CONTENTION IN THIS REGARD IS AS UNDER: - THE KACCHI BOOKS ARE ONLY THE MEMORANDUM BOOKS AND SIMPLY WRITTEN FOR MEM ORANDUM PURPOSES. SUCH BOOKS ARE HAVING NO LEGAL SANCTITY . AFTER PREPARATION OF FINAL ANNUAL ACCOUNTS, THEREAFTER SUCH BOOKS ARE TREATED AS WASTE AND AT PRESENT NOT AVAILABLE WITH US. BUT THE AO WAS NOT SATISFIED AND HAS TREATED THE TRANSPORTATION EXPENS ES IN CONTRAVENTION TO THE PROVISIONS OF SEC. 40(A)(IA) AM OUNTING TO RS. 20,39,121/ - AND H A S DISALLOWED THE SAME U/S 40(A)(IA) AND HAS ADDED THEM BACK TO THE INCOME OF THE ASSESSEE OF THIS YEAR. THE LD. CIT(A) HAS DELETED THE ENTIRE ADDITION OF RS. 20,29,1 21/ - . THE REVENUE IS NOW AGGRIEVED. 5 3. BOTH PARTIES ARGUED ON SIMILAR LINES. WE HAVE CAREFULLY PERUSED THE SUBMISSIONS OF THE PARTIES WE HAVE FOUND IT FOR A FACT THAT THE ASSESSEE IS ONLY AN AGENT, WHO WOULD ARRANGE TRUCKS AND FREIGHT IN DIRECTLY PAID BY THE CONSIGNEES TO THE TRANSPORTER. THERE IS NO SUB CONTRACT WHILE CAN ATTRACT THE PROVISIONS OF SECTION 194C OF THE ACT. THE BUILDING IS ON TO PAY BASIS. THERE ARE TWO JUDGMENTS OF THIS VERY BENCH ON THIS ISSUE. THESE ORDERS ARE IN THE FOLLOWING CASES : - (I) RAVINDRA KUMAR YADAV IN ITA NO. 31/JODH/2012 DATED 10.01.2013. (II) RAHUL SETHI IN ITA NO. 175/JODH/2012 DATED 07.06.2013. (III) CIT VS. UNITED RICE LAND LTD. 174 TAXMAN 286. THE ABOVE JUDGMENTS ARE DIRECTLY ON THIS PO I NT. TO THE FACTS OF THE GIVEN CASE THE PROVIS I ONS OF SECTION 194C AND 40(A)(IA) ARE NOT ATTRACTED. THEREFORE, WE DONT FIND ANY FALLACY IN THE IMPUGNED FINDING OF LD. CIT(A). ACCORDINGLY, GROUND NO. (1) OF REVENUES APPEAL STANDS DISMISSED. 4. THE FACTS APROPOS GROUND NO. ( 2) O F THIS APPEAL ARE THAT A.O. HAS MA D E ADDITION OF RS.1 4,36,740/ - U/S 69 A OF THE ACT. THE ASSESSEE HAD PURCHASED DIESEL AND OIL FROM SHEKHAWAT FILLING STATION DURING THE YEAR. ALL PAYMENTS ARE RECORDED IN THE BOOKS OF THE ASSESSEE. THE A.O. 6 HAS FOUND THAT THESE PAYMENTS ARE IN CASH AND ARE NOT RECORDED IN THE BOOKS. THE A.O. HAS DIRECTLY CALLED FOR THE BOOKS OF SHEKH A WATI FILLING STATION AND HAS MADE THIS ADDITION. IN APPEAL, THE LD. CIT(A) HAS DELETED THIS ADDITION BY OBSERVING AS UNDER: - I HAVE CONSIDER ED THE SUBMISSIONS OF THE LEARNED A/R ALONG WITH THE FINDING OF THE A.O. GIVEN IN THE ASSESSMENT ORDER. FROM THE ORDER, IT APPEA R S THAT THE A.O. HAS MADE THE ADDITION PURELY ON THE BASIS OF LEDGER ACCOUNT OF THE APPELLANT AS APPEARING IN THE BOOKS OF ACCOU NT OF M/S. SHEKHAWATI FILLING STATION ACCOUNT OF PURCHASE OF DIESEL / PETROL. ADMITTEDLY, THERE IS NO SUCH ENTRIES IN THE BOOKS OF ACCOUNT OF THE APPELLANT. IT IS ALSO NOT A CASE OF THE A.O. THAT HE HAS OBTAINED COPY OF SOME OF THE BILLS OF PURCHASE OF DIE SEL/PETROL BY THE APPELLANT AND HE HAS MADE PAYMENTS TO SUCH BILL OUT OF HIS UNDISCLOSED INCOME AND THE SAME HAS NOT BEEN REFLECTED IN THE BOOKS OF ACCOUNT. FURTHER, IT IS ALSO APPEARS FROM THE ORDER THAT HE HAS MADE THE ADDITION UNDER SECTION 69A OF TH E ACT. PROVISIONS OF SECTION 69A READS AS UNDER: - WHETHER IN ANY FINANCIAL YEAR THE ASSESSEE IS FOUND TO BE THE OWNER OF ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLES AND SUCH MONEY, BU L LION, JEWELLERY OR VALUABLE A RTICLE SIS NOT RECORDED IN T HE BOOKS OF ACCOUNT, IF ANY MAINTAINED BY HIM FOR ANY 7 SOU R CE OF INCOME, AND THE ASSESSEE OFFERS NO EXPLANATION BO TH THE NATURE AND S OU RCE OF ACQUISITION OF THE MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLES, OR THE EXPLANTING OFFERED BY HIM IS NOT, I N THE OPINION OF THE ASSESSING OFFICER, SATISFACTORY, THE MONEY AND THE VALUE OF THE BULLION, JEWELLERY, OR OTHER VALUABLE ARTICLE MAY BE DEEMED TO BE THE INCOME OF THE ASSESSEE FOR SUCH FINANCIAL YEAR. THE ABOVE PROVISIONS CANNOT BE MADE APPLICABLE IN THE CASE OF THE APPELLANT A S IT IS NOT A SEARCH CASE. TILL ANY EVIDENCE IS BROUGH T ON RECORD THAT THE APPELLANT H A S MADE SUCH EXPENDITURE OUT OF BOOKS OF ACCOUNT, NO ADDITION CAN BE MADE. IN THE CASE OF THE APPELLANT, THE A.O. HAS MADE THE ADDITION ON THE BASIS OF THIRD PARTY BOOKS OF ACCOUNT WHICH CANNOT BE SUSTAINED PARTICULARLY WHEN THE BOOKS OF ACCOUNT OF THE APPELLANT HAS NOT BEEN REJECTED. THEREFORE, IN MY VIEW, THE ADDITION MADE BY THE A.O. UNDER SECTION 69A ON THE BASIS OF THIRD PARTY BOOKS OF ACCOU NT DESERVES TO BE DELETED AND I ORDER ACCORDINGLY. 5. BEFORE US BOTH PARTIES HAVE REITERATED THEIR EARLIER STAND. THE A.O. HAS MADE THIS ADDITION ON ACCOUNT OF DISALLOWANCE ON THE BASIS OF ACCOUNT COPY OF THE PARTY DIRECTLY OBTAINED , HE HAD CONSOLIDATED PAYMENTS MADE ON DIFFERENT DATES. AS PER THE BOOKS OF ACCOUNT OF THE ASSESSEE, THERE IS NO VIOLATION OF SECTION 40A(3) OF THE ACT, AS PAYMENT WERE BY DIFFE R E NT VEHICLES TO THE FILLING STATION. ALL THE PAYMENTS ARE 8 FULLY VERIFIABLE AND ALL THE EXPENSES ARE HELD AS GENUINE. TH E REFORE, WE DONT FIND ANY ERROR IN THE ABOVE INCORPORATED FINDING PORTION OF LD. CIT(A) AND CONFIRM T HE SAME. AS A RESULT, WE DISMISS GROUND NO. (2) OF REVENUES APPEAL. 6. GROUND NO. (3) IS REGARDING DELETION OF ADDITION OF RS. 12,00 ,400/ - ADDED U/ S68 OF THE ACT. THE FACTS OF THIS GROUND ARE THAT THE PERUSAL OF ASSESSEES BANK ACCOUNT WITH THE BANK OF INDIA, REVEALED THAT PAYMENTS OF RS. 1,00,200/ - AND OF RS. 2,00,200/ - WERE TRANSFERRED FROM THE BANK ACCOUNT ON 22.06.2004 AND 15.09.2 005 FOR MAKING BANK DRAFTS. THE ASSESSEE HAS ALSO DEBITED HIS CASH BOOK BY THIS AMOUNT. ACCORDING TO ASSESSEE IT WAS AN INADVERTENT MISTAKE. BUT, THE A.O. DID NOT ACCEPT THIS EXPLANATION AND HAS ADDED RS. 3,00,400/ - U/S 68 OF THE ACT. FURTHER IT WAS SEE N F ROM THIS BANK ACCOUNT THAT THE ASSESSEE HAD DEPOSITED RS. 5,00,000/ - ON 18.06.2014, WHEREAS AS PER THE CASH BOOK IT WAS DEPOSITED ON 22.06.2004. ON THIS DIFFERENCE THE A.O. HAS ADDED RS.5 LAKH S U/S 68 OF THE ACT. FURTHER THE ASSESSEE WITHDREW A SUM OF RS. 4 LA KHS ON 3.5.2004. BUT THIS IS SHOWN IN THIS CASH BOOK ON 1.5.2004. ON THIS REASON THE A.O. HAS ADDED RS. 4 LAKH S U/S 68 OF THE ACT. 9 7. BEFORE LD. CIT(A) THE ASSESSEE WAS SUCCESSFUL IN GETTING THIS ENTIRE ADDITION DELETED BECAUSE THE REASON FOR ADDITI ON IS SIMPLY THE NON TALLY OF DATES. THE LD. CIT(A) HAS GIVEN THE FOLLOWING REASONS FOR THIS DELETION : - I HAVE CONSIDERED THE ARGUMENTS OF THE LEARNED A/R ALONGWITH THE FINDINGS OF THE A.O. MADE IN THE ORDER UNDER APPEAL. THERE IS NO DISPUTE THAT THERE I S DIFFERENCE ON THE DATES OF WITHDRAWAL FROM THE BANK ACCOUNT OF THE APPELLANT AND IN THE CASH BOOK OF THE APPELLANT . THE A.O. TREATED THE ENTRY OF CASH UNDER SECTION 68 OF THE ACT AS THE APPELLANT COULD NOT GIVE EVIDENCE FOR THE SOURCE OF SUCH DEPOSITS. ON GOING THROUGH THE FINDINGS OF THE A.O. IT IS SEEN THAT HE HAS MAINLY MADE THE ADDITION AS ACCORDING TO HIM, THERE WAS NEGATIVE CASH BALANCE ON THE DATES OF INTRODUCTION OF THE CASH IN THE CASH BOOK. BUT THIS IS NOT CORRECT. ON GOING THROUGH THE COPY O F THE CASH BOOKS PRODUCED BEFORE ME DURING THE COURSE OF APPELLANT PROCEEDINGS, IT IS SEEN THAT THERE IS SUFFICIENT CASH BALANCE BEFORE ALL THE DATES ON WHICH THE APPELLANT SHOWN CASH DEPOSITS. THEREFORE, THE ACCOUNTANT OF THE APPELLANT AA S INADVERTENTLY H AS SHOWN THE CASH DEPOSITS BEFORE THE DATE OF WITHDRAWAL FROM THE BANK CANNOT BE RULED OUT. FURTHER, THERE IS ALSO NO EVIDENCE THAT THE CASH WITHDRAWN FROM THE BANK HAS BEEN EXPENDED FOR SOME OTHER PURPOSES. THEREFORE, IN MY VIEW, THE ADDITION MADE BY THE A.O. 10 AMOUNTING TO RS. 12,00,400/ - DESERVES TO BE DELETED AND I ORDER ACCORDINGLY. WE DONT FIND ANY INFIRMITY THE ABOVE FINDING, THEREFORE, WE CONFIRM THE SAME AND DISMISS GROUND NO. (3) OF THIS APPEAL. 8. THE FACTS OF GROUND NO. (4) WHICH IS IN RELA TION TO DELETION OF ADDITION OF RS. 5 LAKHS ADDED U/S 68 OF THE ACT ARE THAT THE ASSESSEE HAD SOLD HIS TRUCK ON 28.12.2004 FOR WHICH THE SALE PRICE WAS RECEIVED ON 14.12.2008. ACCORDINGLY, THE ASSESSEE MADE ENTRY OF THIS RECEIPT ON 14.12.2014. THE A.O. HAS DOUBTED THIS AND HAS ADDED THIS AMOUNT OF RS. 5 LAKH S U/S 68 OF THE ACT. THE LD. CIT(A) HAS DELETED THIS ADDITION. 9. BEFORE US BOTH PARTIES HAVE REITERATED THEIR EARLIER ARGUMENTS. WE HAVE FOUND THAT THE PARTY FROM WHOM THE ASSESSEE HAS RECEIVED RS. 5 L AKH S AGAINST SALE OF THE TRUCK HAS CONFIRMED THE DATE OF PAYMENT , A COPY OF WHICH ENCLOSED AT PAPER BOOK PAGE 85. COPY OF SALE LETTER IS ENCLOSED AT PAPER BOOK PAGE 84. THE SALE OF TRUCK IS NOT IN DISPUTE. THE A.O. HAS NOT BROUGHT ANY EVIDENCE ON RECORD TO PROVE THAT THE AMOUNT RECEIVED BY ASSESSEE WAS UTILIZED SAME WHERE ELSE. THEREFORE, IN THE TOTALITY OF THE FACTS AND THE CIRCUMSTANCES OF THIS ISSUE, WE ARE 11 IN AGREEMENT WITH LD. CIT(A). THIS ADDITION IS ALSO BASED MAINLY ON SUSPICION. ACCORDINGLY, WE DIS MISS GROUND NO. (4) OF THIS APPEAL. 10. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE COURT ON 12 TH SEPTEMBER , 2014. SD/ - SD/ - (N.K.SAINI) [HARI OM MARATHA] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 12 TH SEPTEMBER , 2014 VL/ - COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT BY ORDER 4. THE CIT(A) 5. THE DR SENIOR PRIVATE SECRETARY ITAT, JODHPUR