The Agriculture Produce Market Committee, Dist.Gandhinagar V. The ACIT.,GNR Circle, Gandhinagar

ITA 1394/AHD/2008

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 1945 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 10 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-03-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 01-03-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 21-04-2008
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: N C AMIN
• Keywords: Additional evidence; Non-deduction of tax
• Section: 143(3); 40(a)(ia); 194C; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL : D BENCH : AHMEDABAD (BEFORE HONBLE SHRI T.K. SHARMA, J.M. & HON' BLE SHRI A.N.PAHUJA, A.M. ) I.T.A. NO. 1394/AHD./2008 ASSESSMENT YEAR : 2005-2006 THE AGRICULTURAL PRODUCE MARKET COMMITTEE -VS- THE A.C.I.T., GANDHINAGAR CIRCLE (PAN : AAALT 0015E) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI N.C.AMIN, A.R. RESPONDENT BY : SHRI ANIL KUMAR, SR.D.R O R D E R PER SHRI T.K. SHARMA, JUDICIAL MEMBER : THIS APPEAL FILED BY THE ASSESSEE IS AGAINST THE O RDER DATED 04.02.2008 PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS), GANDH INAGAR FOR THE ASSESSMENT YEAR 2005- 2006. 2. VARIOUS GROUNDS RAISED IN THIS APPEAL BY THE ASS ESSEE ARE AS UNDER: 1. THAT THE LEARNED CIT ( A ) HAS ERRED BOTH IN LAW AND ON THE FACTS OF THE CASE IN DISMISSING THE APPEAL OF THE APPELLANT. 2. THAT THE APPELLANT WAS PREVENTED BY REASONABLE AND SUFFICIENT CAUSE IN NOT PRODUCING COMPLETE MATERIALS BEFORE THE LEARNED A. O. REGARDING CASH CREDITS AMOUNTING TO RS.1,89,000/-. CONSIDERING THE MAT ERIALS LYING ON THE RECORD OF THE LEARNED CIT(A), THE APPEAL OF THE APPELLANT BE DECIDED ON MERITS. 3. THAT THE LEARNED CIT (A) HAS FAILED TO APPRECIATE THE FACTS THAT THE APPELLANT IS A BODY FORMED UNDER THE GUJARAT AGRICULTURE PRODUCE MARKET ACT, 1963, BEFORE COMING TO THE ADVERSE C ONCLUSION AND NOT CONSIDERING THE EVIDENCES FILED BY THE APPELLANT BEFORE THE LEARNED CIT(A). 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE OF THE APPELLANT THE CASH CREDITS AMOUNTING TO RS.1,89,000/- CONFIRMED BY THE LEA RNED CIT(A) BE DELETED. 5. THAT THE LEARNED CIT(A) HAS FURTHER ERRED BOT H IN LAW AND ON THE FACTS OF THE CASE REGARDING ADDITIONS OF RS.84,825/- BY APPLYI NG S.40(A)(IA) OF THE I.T. ACT 1961. 2 ITA NO. 1394-AHD-2008 6. THAT THE APPELLANT IS A BODY AND ITS INCOME IS NOT TAXABLE UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION AND H ENCE SEC.40(A) IS NOT APPLICABLE AND AS SUCH DISALLOWANCE OF RS.84,825/- IS WHOLL Y UNJUSTIFIED. 3. GROUND NO.1 IS GENERAL IN NATURE, THEREFORE, NEE DS NO ADJUDICATION. 4. THE FACTS RELATING TO CONTROVERSY INVOLVED IN GR OUND NOS. 2 TO 4 ARE THAT THE ASSESSEE IS A LOCAL AUTHORITY WHICH CARRIES OUT THE FUNCTION OF S ECURING FAIR MARKET PRICES TO AGRICULTURISTS FOR THEIR AGRICULTURAL PRODUCES. FOR THE ASSESSMENT YEA R UNDER APPEAL, IT FILED THE RETURN OF INCOME DECLARING LOSS OF RS.15,08,063/-. THE ASSESSING OFF ICER FRAMED THE ASSESSMENT UNDER SECTION 143(3) ON 01.10.2007 WHEREIN HE TREATED A SUM OF RS .1,89,000/- RECEIVED FROM 11 PARTIES AS UNSECURED LOANS AND ADDED THE SAME AS INCOME OF THE ASSESSEE UNDER SECTION 68 OF THE I.T. ACT, 1961. THE REASONING GIVEN BY THE ASSESSING OFFICER THAT CONFIRMATORY LETTERS OF 11 PARTIES DO NOT CONTAIN THEIR ADDRESSES. THE ASSESSING OFFICER ASKE D THE ASSESSEE TO PRODUCE ALL THE ELEVEN PERSONS BUT THE ASSESSEE COULD NOT PRODUCE THE SAME . 5. ON APPEAL BEFORE THE LEARNED COMMISSIONER OF INC OME TAX(APPEALS), IT WAS CONTENDED THAT THE ASSESSEE HAS COME INTO EXISTENCE AS PER GU JARAT AGRICULTURE PRODUCE MARKET ACT, 1963 TO REGULATE THE ENTIRE MARKET OF AGRICULTURE AND SOME OTHER PRODUCE FROM THE STAGE OF PROCURING TILL IT REACHES TO THE ULTIMATE CONSUMER. THE ASSESSEE I S A PUBLIC BODY FOR THE UPLIFTMENT OF FARMERS. THE ASSESSEE FILED CONFIRMATION LETTERS BEFORE THE ASSESSING OFFICER. DEHGAM IS A VERY SMALL TOWN AND ADDRESSED STATED IN THE CONFIRMATORY LETTE RS WAS SUFFICIENT TO LOCATE THE PERSONS AND THERE HAS BEEN NO INSTANCE IN THIS CASE THAT THE LE TTERS WRITTEN HAVE BEEN RETURNED BACK BY THE POSTAL AUTHORITIES. BEFORE THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS), THE A.R. OF THE ASSESSEE ALSO FILED PHOTO-COPIES OF THE RECEIPTS IN THE NAME OF DEPOSITORS SHOWING THE PAYMENT OF CONSIDERATION OF SUMS RANGING FROM RS.15,000/- TO R S.18,000/- AGAINST THE AGRICULTURAL PRODUCE SUPPLIED TO THE ASSESSEE. EVIDENCES WERE ALSO FILED , BEING THE ACKNOWLEDGEMENT OF THE AMOUNTS HAVING BEEN ISSUED BY CHEQUE TO THE PARTIES CONCERN ED ALONG WITH THE INTEREST AMOUNT. BEFORE THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS), IT WAS ALSO CONTENDED THAT THE ASSESSING OFFICER HAS NOT GIVEN ADEQUATE AND SUFFICIENT OPPOR TUNITY TO THE ASSESSEE TO ADDUCE THE EVIDENCES DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND MER ELY ON THE BASIS OF NON-ACCEPTANCE OF CONFIRMATION LETTERS, THE ADDITIONS HAVE BEEN MADE. 3 ITA NO. 1394-AHD-2008 5.1 AFTER CONSIDERING THE AFORESAID SUBMISSIONS, IN THE IMPUGNED ORDER, THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) HELD THAT THE O NUS UNDER SECTION 68 HAVE NOT BEEN DISCHARGED BY THE ASSESSEE AT THE ASSESSMENT STAGE. THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) ALSO HELD THAT THERE IS NO REASON TO A DMIT THE ADDITIONAL EVIDENCES AT THIS STAGE. HE, ACCORDINGLY, CONFIRMED THE ADDITION OF RS.1,89,000/ - MADE BY THE AO UNDER SECTION 68 OF THE I.T. ACT, 1961. 6. AT THE TIME OF HEARING BEFORE US, SHRI N.C.AMIN, LD. A.R. APPEARED ON BEHALF OF THE ASSESSEE AND CONTENDED THAT IF THE CONFIRMATION LET TERS FILED DO NOT HAVE ANY ADDRESS, THE ASSESSING OFFICER SHOULD ASK FOR FURTHER EVIDENCE O F PROVING THE IDENTITY AND CAPACITY OF THE CREDITORS AND GENUINENESS OF THE TRANSACTION. THIS WAS NOT DONE BY THE ASSESSING OFFICER. HE FURTHER SUBMITTED THAT THE AMOUNT OF DEPOSIT WAS RE FUNDED TO THE AGRICULTURISTS THROUGH ACCOUNT PAYEE CHEQUES ALONG WITH THE INTEREST. THEREFORE, T HE IDENTITY, CREDITWORTHINESS AND CAPACITY OF THE CREDITORS ARE PROVED. AS AGAINST THIS, THE LD. D.R., APPEARING ON BEHALF OF THE REVENUE, VEHEMENTLY SUPPORTED THE ORDER OF THE LD. LEARNED C OMMISSIONER OF INCOME TAX(APPEALS). 7. HAVING HEARD FOR BOTH THE SIDES, WE HAVE CAREFUL LY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. IN OUR OPINION, THE LEARNED COMM ISSIONER OF INCOME TAX(APPEALS) OUGHT TO HAVE ACCEPTED THE ADDITIONAL EVIDENCES I.E. BANK ST ATEMENT OF THE ASSESSEE INDICATING REPAYMENT OF LOAN TO ALL THE ELEVEN CREDITORS THROUGH ACCOUNT PAYEE CHEQUE ALONG WITH THE INTEREST. BEFORE US, THE ASSESSEE ALSO STATED THAT HE CAN PRODUCE AL L THE CREDITORS. KEEPING IN VIEW OF THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE VIEW THAT IT WILL MEET THE ENDS OF JUSTICE, IF THIS ISSUE IS RESTORED TO THE FILE OF THE ASSESSING OFFICER WITH THE DIRECTION THAT THE ASSESSEE SHOULD FURNISH ALL THE EVIDENCES AND ALSO PRODUCE T HE CREDITORS AND DISCHARGE THE ONUS LAID DOWN UNDER SECTION 68 OF THE I.T.ACT, 1961. THE ASSESSIN G OFFICER WILL EXAMINE THE EVIDENCES AS WELL AS THE CREDITORS AND READJUDICATE THE ADDITION OF R S.1,89,000/- AFRESH, IN ACCORDANCE WITH LAW. THEREFORE, THESE GROUNDS OF THE APPEAL BY THE ASSES SEE ARE ALLOWED FOR STATISTICAL PURPOSES. 8. THE FACTS RELATING TO THE CONTROVERSY IN GROUND NOS. 5 AND 6 OF THE APPEAL ARE THAT THE ASSESSING OFFICER MADE THE ADDITION OF RS.84,825/- UNDER SECTION 40(A)(IA) OF THE I.T. ACT ON ACCOUNT OF NON-DEDUCTION OF TAX ON PAYMENT OF SECUR ITY EXPENSES OF RS.84,825/-. THE LEARNED 4 ITA NO. 1394-AHD-2008 COMMISSIONER OF INCOME TAX(APPEALS) CONFIRMED THE A BOVE ADDITION FOR THE DETAILED REASONS GIVEN IN PARA 11 OF THE IMPUGNED ORDER WHICH READS AS UNDER: 11. THE ARGUMENTS ADVANCED BY THE AUTHORISED REP RESENTATIVE IS NOT SUSTAINABLE ON A NUMBER OF COUNTS. FIRSTLY, AS ALREADY STATED THAT THE APPELLANT HAD FILED RETURN OF INCOME UNDER NORMAL PROVISIONS OF THE A CT AND HAS ALSO FILED TAX AUDIT REPORT UNDER THE PROVISIONS OF SECTION 44AB, BUT NOW TO SAY THAT THE SECTION 40(A)(IA) IS NOT APPLICABLE, WOULD NOT BE CONSIST ANT. SECONDLY, SECTION 40(A)(IB) GETS CORRELATED TO THE ACTION UNDER CHAPTER XVIIB AND IN THIS PARTICULAR CASE, SECTION 194C THAT SECTION MANDATES SPECIFICALLY F OR DEDUCTION ON TAX ON PAYMENTS IN PURSUANCE OF THE CONTRACT BETWEEN A CONTRACTOR AND THE VARIOUS ENTITIES LISTED INCLUDING THE LOCAL AUTHORITY. THEREFORE, IN MY V IEW, THE ADDITION MADE BY THE ASSESSING OFFICER WAS WELL JUSTIFIED IN THE CIRCU MSTANCES. THEREFORE, THE SAME IS CONFIRMED. 9. AFTER HEARING BOTH THE SIDES AND CAREFULLY GONE THROUGH THE MATERIALS AVAILABLE ON RECORD, WE ARE CONVINCED THAT THE LEARNED COMMISSIONER OF I NCOME TAX(APPEALS) HAS GIVEN COGENT REASON FOR CONFIRMING THE ADDITION OF RS.84,825/- M ADE BY THE ASSESSING OFFICER UNDER SECTION 40(A)(IA) OF THE I.T. ACT, 1961. AS A MATTER OF FAC TS BEFORE US, THE LD COUNSEL OF THE ASSESSEE ALSO VIRTUALLY CONCEDED THE SAME. WE, THEREFORE, DECLINE TO INTERFERE. HENCE, GROUND NOS. 5 AND 6 ARE DISMISSED. 10. IN THE RESULT, FOR STATISTICAL PURPOSES, THE AP PEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. THE ORDER PRONOUNCED IN THE COURT ON 11.03.2011. SD/- SD/- (A.N.PAHUJA) (T.K. SHARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 11/03/2011 COPY OF THE ORDER IS FORWARDED TO : 1) THE ASSESSEE 2) THE DEPARTMENT. 3) CIT(A.) CONCERNED, 4) CIT CONCERNED, 5) D.R., ITAT, AHMEDABAD. TRUE COPY BY ORDER DEPUTY REGI STRAR, ITAT, AHMEDABAD TALUKDAR/SR.P.S. 5 ITA NO. 1394-AHD-2008