Nandighosh Estates Pvt. Ltd, Ganjam V. ACIT, Berhampur

ITA 139/CTK/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 7549 (ITAT-CUTTACK)
• Duration Of Justice: 2 year(s) 6 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-11-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 16-11-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 25-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B N DASH
• Assessee Lawyers: R P SAHU
• Keywords: Corroborative evidences; Assessment record

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK SMC BENCH, CUTTACK BEFORE SHRI N.S SAINI, ACCOUNTANT MEMBER ITA NO.139/CTK/2014 ASSESSMENT YEAR : 2009 - 2010 M/S. NANDIGHOSH ESTATES PVT LTD., GANDHI NAGAR, BERHAMPUR VS. ACIT, BERHAMPUR CIRCLE, BERHAMPUR. PAN/GIR NO. AABCN 6894 M (APPELLANT ) .. ( RESPONDENT ) ITA NO.177/CTK/2014 ASSESSMENT YEAR : 2009 - 2010 ACIT, BERHAMPUR CIRCLE, BERHAMPUR VS. M/S. NANDIGHOSH ESTATES PVT LTD., GANDHI NAGAR, BERHAMPUR PAN/GIR NO. AABCN 6894 M (APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY : SHRI R.P.SAHU, AR REVENUE BY : SHRI B.N.DASH, DR DATE OF HEARING : 1 6 /11 / 2016 DATE OF PRONOUNCEMENT : 16 /11 / 2016 O R D E R THESE ARE CROSS APPEALS FILED BY THE ASSESSEE AND REVENUE AG AINST THE ORDER OF CIT(A) BERHAMPUR , DATED 24.2.2014 , FOR THE ASSESSMENT YEAR 20098 - 2010 2 ITA NO.139/CTK/2014 ITA NO.177/CTK/2014 ASSESSMENT YEAR : 2009 - 2010 2. THE SOLE ISSUE INVOLVED IN THE APPEAL FILED BY THE ASSESSEE IS THAT THE LD CIT(A) WAS NOT JUSTIFIED IN SUSTAINING THE FOLLOWING ADDITIONS: I) BOREWELL EXPENSES : RS.5,13,410/ - II) DEMOLITION, CLEANING AND LEVELLING EXP. RS.1,70,000/ - III) ARCHITECT FEES AND EXP. : RS.2,21,580/ - RS.9,04,990/ - 3. I HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD. IN THE INSTANT CASE, THE ASSESSEE MADE PAYMENT OF RS.9,04,990/ - TO FOUR PARTIES WITHOUT DEDUCTING TDS FROM THE SAME. THEREFORE, THE ASSESSING OFFICER DISALLOWED DEDUCTION FOR THE SAME BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. 4. ON APP EAL BEFORE THE LD CIT(A), THE ASSESSEE ARGUED AND SUBMITTED THAT AS NO AMOUNTS WERE OUTSTANDING AND PAYABLE AS AT THE END OF THE PREVIOUS YEAR RELEVANT TO ASSESSMENT YEAR UNDER APPEAL TO THE CONCERNED PARTIES, NO DISALLOWANCE ON ACCOUNT OF NON - DEDUCTION OF TDS CAN BE MADE U/S.40(A)(IA) OF THE ACT. LD CIT(A) DID NOT ACCEPT THE EXPLANATION OF THE ASSESSEE ON THE GROUND THAT THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF CIT VS CRESCENT EXPORTS SYNDICATE (2013) 216 TAXMANN 258 (CAL) HAS HELD THAT PROVISIONS OF SECTION 40(A)(IA) IS APPLICABLE IN RESPECT OF ANY AMOUNT WHICH BECOMES PAYABLE AT ANY TIME OF THE PREVIOUS YEAR AND NOT NECESSARILY 3 ITA NO.139/CTK/2014 ITA NO.177/CTK/2014 ASSESSMENT YEAR : 2009 - 2010 ON THE LAST DAY OF THE PREVIOUS YEAR. ACCORDINGLY, HE CONFIRMED THE ACTION OF THE ASSESSING OFFICER. 5. I FIND THAT TH E HONBLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. VICTOR SHIPPING SERVICES (P) LTD., (2013) 357 ITR 642(ALL),HAS HELD THAT FOR DISALLOWING EXPENSES FROM BUSINESS AND PROFESSION ON THE GROUND THAT TAX HAS NOT BEEN DEDUCTED AT SOURCE, THE AMOUNT SHOULD BE PAYABLE AND NOT IT HAS BEEN PAID BY THE END OF THE YEAR. THE SLP FILED AGAINST THE JUDGMENT OF HONBLE ALLAHABAD HIGH COURT HAS BEEN DISMISSED BY THE HONBLE SUPREME COURT VIDE JUDGMENT DATED 2.7.2014 IN CC NO.(S) 8068/2014. I FIND THAT NO AMOUNT WAS O UTSTANDING AND PAYABLE AS AT THE END OF THE ACCOUNTING YEAR. THEREFORE, IN VIEW OF THE DECISION OF HONBLE ALLAHABAD HIGH COURT IN THE CASE OF VICTOR SHIPPING SERVICES (P) LTD (SUPRA), NO DISALLOWANCE U/S.40(A)(IA) WAS WARRANTED IN THE CASE OF THE ASSESSEE . IN THIS CASE, THE LD CIT(A) HAS CONFIRMED THE DISALLOWANCE FOLLOWING THE DECISION OF HONBLE CALCUTTA HIGH COURT IN THE CASE OF CRESCENT EXPORTS SYNDICATES (SUPRA). THE HONBLE SUPREME COURT IN THE CASE OF CIT VS.VEGETABLE PRODUCTS LTD., 88 ITR 192 (SC) HAS HELD THAT WHERE THERE ARE CONTRARY DECISIONS OF HONBLE HIGH COURTS ON AN ISSUE AND NONE OF WHICH IS HONBLE JURISDICTIONAL HIGH COURT, THEN THE DECISION IN FAVOUR OF THE ASSESSEE SHOULD BE FOLLOWED. THEREFORE, FOLLOWING THE DECISION OF HONBLE ALLA HABAD HIGH COURT IN THE CASE OF VICTOR SHIPPING SERVICES (P) LTD., (SUPRA), I SET ASIDE THE ORDERS OF LOWER 4 ITA NO.139/CTK/2014 ITA NO.177/CTK/2014 ASSESSMENT YEAR : 2009 - 2010 AUTHORITIES AND DELETE THE ADDITION OF RS.9,04,990/ - U/S.40(A)(IA) OF THE ACT AND ALLOW THE GROUND OF APPEAL OF THE ASSESSEE. 6. IN REVENUES APPEAL, THE SOLE GRIEVANCE IS THAT THE LD CIT(A) WAS NOT JUSTIFIED IN DELETING THE ADDITION OF RS. 14,11,838/ - MADE BY THE ASSE SSING OFFICER U/S.41(1) OF THE A CT ON ACCOUNT OF LIABILITIES CLAIMED AGAINST SUNDRY CREDITORS WITHOUT ANY SUPPORTING EVIDENCES. 7. I HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD. THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS SHOWN SUNDRY CREDITORS AND SUB - CONTRACTORS FOR MORE THAN THREE YEARS WITH THE SAME LIAB ILITY AS UNDER: SI. NO. NAME AND ADDRESS OF THE ASSESSEE AMOUNT IN (RS.) 1 A.K. TRADE COMPLEX 1,58,693/ - 2 ALPHINE DOORS & PLYWOODS 4,592/ - 3 ANDHRA CEMENT EASTERN LTD. 3,944/ - 4 AAYAPPA ENTERPRISES 2,39,700/ - 5 BAPUJI FERTILIZERS 4,513/ - 6 CHAYA AGENCIES 4,000/ - 7 DHILON ALLIED SERVICES 33,187/ - 8 GAYATRI DEVELOPRS 1,64,200/ - 9 KONARK ELECTRICAL 8,332/ - 10 SHAKTI STONE CRUSHING 3,34,048/ - 11 OM MAA DURGA CEMENT CONCRETE WORKS 20,024/ - 12 PADMA IRON & HARDWARES 17,885/ - 13 PRASHANTA TRADERS 1,40,000/ - 14 R.K. GUPTA &CO. 20,542/ - 15 SILLA TRADERS 5,298/ - 5 ITA NO.139/CTK/2014 ITA NO.177/CTK/2014 ASSESSMENT YEAR : 2009 - 2010 16 SRI KRISHNA ASSOCIATES 1,48,045/ - 17 SURYA AGENCIES 2,035/ - 18 V. ADIAMMA 1,97,010/ - SUB - CONTRACTORS SI. NO. NAME AND ADDRESS OF THE ASSESSEE AMOUNT IN (RS.) 1 B. GANGARAJU 60,650/ - 2 B. SRINU 1,94,739/ - 3 BIJAYA MOHANTY 59,952/ - 4 G. HARIBABU 95,746/ - 5 S. SRINU 25,761/ - 8. THE ASSESSING OFFICER OBSERVED THAT SINCE THE SUNDRY CREDIT AMOUNTS AND THE OUTSTANDING PAYMENT TO SUB - CONTRACTOR EXCEPT IN THE CASE OF M/S. SHAKTI STONE CRUSHING AND V. ADIAMMA OF THE SUNDRY CREDITORS LIST ARE RUNNING FOR LONG AND THERE WAS NO FURTHER TRANSACTION, THE ASSESSING OFFICER DEEMED THE LIABILITY OF THE ASSESSEE AS CEASED AND ADDED RS.14,11,838/ - TO THE INCOM E OF THE ASSESSEE U/S.41(1) OF THE ACT . 9. ON APPEAL, LD CIT(A) DELETED THE ADDITION OBSERVING AS UNDER: 4.3 I HAVE CAREFULLY CONSIDERED THE MATTER AND GONE THROUGH THE ASSESSMENT RECORDS IN THE PRESENCE OF THE AO AND THE ID. A/R OF THE APPELLANT. WH ILE IN THE ASSESSMENT ORDER, THE AO MENTIONS THAT HE ISSUED LETTERS IN 7 CASES AND TRIED TO SERVE NOTICES IN RESPECT OF ANOTHER THREE CASES(THE AO HAS NOT GIVEN THE LIST OF CASES IN HIS ASSESSMENT ORDER WHERE HE ATTEMPTED VERIFICATION), THE PERUSAL OF THE ASSESSMENT RECORDS INDICATE THAT NOTICE U/S.133(6) WAS ISSUED IN RESPECT OF 9 CASES ALL TOGETHER. OUT OF THESE 9 CASES, TWO CASES NAMELY M/S SUBUDHI ELECTRICAL AND BHAWANI SANKAR MISHRA DO NOT APPEAR IN 6 ITA NO.139/CTK/2014 ITA NO.177/CTK/2014 ASSESSMENT YEAR : 2009 - 2010 THE LIST OF 23 CASES GIVEN BY THE AO IN HIS ASSESSM ENT ORDER AND WHICH HAS ALSO BEEN REPRODUCED BY. THE AO IN HIS REMAND REPORT AS EXTRACTED ABOVE. OF THE REMAINING 7, THE AO ACCEPTED THE GENUINENESS OF THE TRANSACTION IN RESPECT OF SHAKTI STONE CRUSHING AND SHRI V. ADIAMMA(SL. NO.10 AND SI. NO.18 IN THE L IST GIVEN IN THE REMAND REPORT OF THE AO). THE VERIFICATION THUS WAS ATTEMPTED IN FIVE CASES NAMELY WITH THE SERIAL NUMBER IN THE REMAND REPORT GIVEN IN THE BRACKET, (1) A.K. TRADE COMPLEX, (13) PRASANTA TRADERS, (16) SRI KRISHNA ASSOCIATES, (4) AYYAPPA EN TERPRISES AND SI. NO.(8)GAYATRI DEVELOPERS, IT MAY BE MENTIONED HERE THAT OUT OF 23 PARTIES, WHICH ARE MENTIONED IN THE ASSESSMENT ORDER, THE AO MADE ADDITION IN RESPECT OF 21 PARTIES(EXCLUDING SHAKTI STONE CRUSHING AND V. ADIAMMA). OUT OF THESE 21 PARTIES , THE AO ACTUALLY ATTEMPTED VERIFICATION IN 5 CASES AS GIVEN ABOVE. THUS IN RESPECT OF REMAINING 16 PARTIES I.E. AT SI. NO.2, 3, 5, 6, 7, 9, 11, 12, 14, 15, 17, & ALL FIVE SUB - CONTRACTORS AS MENTIONED IN THE ASSESSMENT ORDER, THE AO HAS MADE THE ADDITION S IMPLY ON THE BASIS OF PRESUMPTION THAT THESE BALANCES ARE BOGUS BECAUSE THEY HAVE BEEN OUTSTANDING FOR THREE YEARS OR MORE. IN HIS REMAND REPORT, THE AO HAS SIMPLY REITERATED THE OBSERVATIONS MADE BY HIS PREDECESSOR IN THE ASSESSMENT ORDER WITHOUT BRINGING ANYTHING ON RECORD IN RESPECT OF THESE 16 PARTIES. SUCH ADDITIONS MERELY BASED ON PRESUMPTIONS CANNOT BE SUSTAINED. FURTHER, ON BEING ASKED BY ME, THE APPELLANT HAS FILED THE LEDGER COPIES OF THE ACCOUNTS OF THESE PARTIES IN THE SUBSEQUENT YEAR WHICH WERE EXAMINED IN THE PRESENCE OF THE AO DURING THE COURSE OF THE HEARING ON 18 - 02 - 2014. THE LEDGER COPIES OF THESE ACCOUNTS HAVE BEEN PLACED IN THE RECORD. PERUSAL OF THESE DETAILS SHOWS THAT THE OUTSTANDING PAYMENTS HAVE BEEN DISCHARGED BY THE APPELLANT IN TH E SUBSEQUENT PERIOD AND IN FACT IN CASE OF DHILLON ALLIED SERVICES AND M/S BIJAYA MOHANTY PART OF THE TRANSACTIONS HAVE BEEN PAID THROUGH BANK. IN FEW CASES LIKE SURYA AGENCIES(RS.2,035/ - ) AND AFTER MAKING PAYMENTS SMALL AMOUNTS LIKE RS.46/ - IN CASE OF SHR I G. HARI BABU AND RS.61/ - IN CASE OF SHRI G. SRINU HAVE BEEN WRITTEN BACK AND TAKEN TO P & L A/C. 4.3.1 SO FAR AS THE FIVE PARTIES IN RESPECT OF WHOM THE AO ATTEMPTED VERIFICATION, COPIES OF THE LEDGER ACCOUNTS OF THESE PARTIES WHICH WERE EXAMINED IN THE PRESENCE OF THE AO INDICATE THAT THE PAYMENTS HAVE BEEN MADE SUBSEQUENTLY. IN CASE OF SRI KRISHNA AGENCIES, PART OF THE PAYMENT HAS BEEN MADE THROUGH IOB. THEREFORE, EVEN IN THESE FIVE CASES THE RECORDS AS PRODUCED BY THE ID. A/R CLEARLY INDICATE THAT THESE LIABILITIES WERE SUBSISTING ON 31 - 03 - 2010. 4.3.2 TO SUM UP, THE AO HAS MADE ADDITION IN RESPECT OF SUNDRY CREDITORS IN 16 CASES ON THE BASIS OF PRESUMPTION THAT SINCE THESE BALANCES ARE OUTSTANDING FOR MORE THAN THREE YEARS THE SAME HAVE CEASED. IN THE REMAINING 5 CASES, HE MERELY ATTEMPTED A VERIFICATION BUT HIS CONCLUSION IS NOT BASED ON ANY INFORMATION RECEIVED FROM ANY 7 ITA NO.139/CTK/2014 ITA NO.177/CTK/2014 ASSESSMENT YEAR : 2009 - 2010 OF THESE PARTIES THAT THE BALANCES SHOWN AGAINST THEM ARE NOT RECEIVABLE BY THEM. IN THE 3 CASES IN WHICH THE AO ASKED FOR CONFIRMATIONS, THE SAME HAVE BEEN FILED BY THE ID. A/R. IT MAY BE MENTIONED HERE THAT IT IS NOT THE CASE OF THE AO THAT THE LIABILITIES ARE BOGUS BECAUSE THE PURCHASES RELATING TO THESE LIABILITIES HAVE BEEN ACCEPTED BY THE AO IN EARLIER YEARS. THE AO HAS BROUGHT NOTHING IN THE RECORD TO SUGGEST THAT THE A PPELLANT HAS EITHER DISCHARGED ITS LIABILITIES OUTSIDE ITS BOOKS OR THESE LIABILITIES HAVE CEASED TO EXIST. FURTHER, AS IS CLEAR FROM THE BOOKS OF ACCOUNT OF THE APPELLANT FOR THE SUBSEQUENT YEARS WHICH WERE EXAMINED IN THE PRESENCE OF THE AO PART OF THESE LIABILITIES HAVE BEEN DISCHARGED AND IN FEW CASES CONSISTING OF VERY SMALL AMOUNTS HAVE BEEN WRITTEN BACK. IT HAS BEEN HELD BY THE HON'BLE DELHI BENCH OF THE ITAT THAT THERE IS NO RULE THAT THE LIABILITY OUTSTANDING FOR MORE THAN 3 YEARS NEED NOT BE PAID AND THE SAME BECOMES THE INCOME OF THE ASSESSEE(REF: DCIT VS. CMYK PRINTECH LTD.(2011) 53 DTR 59(DEI TRIB); DCIT VS. HOTEL EXCELSIOR LTD.(2011) 60 DTR 450/141 TTJ 248(DEL TRIB)]. SIMILAR VIEW HAS ALSO BEEN TAKEN BY THE AHMADABAD BENCH OF ITAT IN ITO VS. BH AVESH PRINT PVT. LTD.(2011) 46 SOT 268/142 TTJ 128/64 DTR 401(AHD TRIB). THEREFORE, CONSIDERING THE TOTALITY OF THE CIRCUMSTANCES, LEDGER ACCOUNTS OF THESE PARTIES FOR .THE SUBSEQUENT PERIOD SUBMITTED BY THE ID. A/R (AS REQUIRED BY ME IN ORDER TO VERIFY TH E FACTUAL POSITION) EVIDENCING CONTINUATION OF THE LIABILITY AND PAYMENTS IN SUBSEQUENT PERIOD AND THE FACT THAT THE AO HAS MERELY PRESUMED THAT THE LIABILITIES HAVE CEASED U/S.41(L) WITHOUT BRINGING ANYTHING ON RECORD TO THIS EFFECT OR THROUGH ANY INDEPEN DENT CONFIRMATION FROM ANY OF THESE PARTIES THAT NO PAYMENT IS OUTSTANDING. I AM NOT INCLINED TO SUSTAIN THE ADDITION OF RS.14,11,838/ - MADE BY THE AO TOWARDS CESSATION OF LIABILITY OF SUNDRY CREDITORS. THE ADDITION OF RS.14,11,838/ - IS ACCORDINGLY DELE TED AND THE GROUND NO.1 IS DECIDED IN FAVOUR OF THE APPELLANT. 10. LD D.R. RELIED ON THE ORDER OF THE ASSESSING OFFICER. HE COULD NOT POINT OUT ANY SPECIFIC ERROR IN THE ORDER OF THE LD CIT(A). THEREFORE, I DO NOT FIND ANY INFIRMITY IN THE ORDER OF TH E LD CIT(A) TO INTERFERE, WHICH IS HEREBY CONFIRMED. THUS, THE GROUND OF APPEAL TAKEN BY THE REVENUE IS REJECTED. 8 ITA NO.139/CTK/2014 ITA NO.177/CTK/2014 ASSESSMENT YEAR : 2009 - 2010 11. IN THE RESULT, APPEAL FILED BY THE ASSESSEE ALLOWED AND THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCE D IN THE OPEN COUR T ON 1 6 /11 /2016 IN THE PRESENCE OF PARTIES. SD/ - ( N.S SAINI) A CCOUNTANT MEMBER CUTTACK; DATED 16 /11 /2016 B.K.PARIDA, SPS COPY OF THE ORDER FORWARDED TO : BY ORDER, ASST.REGISTRAR, ITAT, CUTTACK 1. THE APPELLANT /ASSESSEE: M/S. NANDIGHOSH ESTATES PVT LTD., GANDHI NAGAR, BERHAMPUR 2. THE RE VENUE : ACIT, BERHAMPUR CIRCLE, BERHAMPUR. 3. THE CIT(A) BERHAMPUR 4. CIT , BHUBANESWAR. 5. DR, ITAT, CUTTACK 6. GUARD FILE. //TRUE COPY//