ITO, CHURU V. M/s. Bhanji & Co., CHURU

ITA 140/JODH/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 78109 (ITAT-JODHPUR)
• Duration Of Justice: 2 year(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-04-2014
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 11-03-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 13-03-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: N A JOSHI
• Assessee Lawyers: SURESH OJA
• Keywords: Depreciation; Additional evidence

Judgement Text

IN THE INCOME TAX APPELALTE TRIBUNAL : JODHPUR BENC H : JODHPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.K. SAINI, ACCOUNTANT MEMBER. ITA NO.140/JODH/2013 (A.Y. 2008-09) ITO, WARD-2, VS. M/S. BHANJI & CO., CHURU. MOTOR MARKET, SARDAR SHAHAR, CHURU. PAN NO. AAHFB 6568 P (APPELLANT) (RESPONDENT) ITA NO.305/JODH/2013 (A.Y. 2008-09) BHANJI & COMPANY, VS. ITO, WARD-2, CHURU MOTOR MARKET, SARDARSHAHAR,, DISTRICT CHURU. PAN NO. AAHFB 6568 P (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SURESH OJA. DEPARTMENT BY : SHRI N.A. JOSHI - D.R. DATE OF HEARING : 11/03/2014. DATE OF PRONOUNCEMENT : 08/04/2014. O R D E R PER N.K. SAINI, A.M 2 THESE CROSS APPEALS BY THE DEPARTMENT AND THE ASSE SSEE ARE DIRECTED AGAINST THE ORDER DATED 12/12/2011 OF LD. CIT(A)-III, JAIPUR. SINCE, THE COMMON ISSUES ARE INVOLVED IN THESE TWO APPEALS WHICH WERE HEARD TOGETHER, SO, THESE ARE BEING DISPOSED OFF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 2 FIRST WE WILL DEAL WITH THE APPEAL OF THE ASSESSEE IN I.T.A.NO. 305/JP/2012. THE FOLLOWING GROUNDS HAVE BEEN RAISE D IN THIS APPEAL: 1. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN DISALLOWING AND REJECTING THE APPEAL RELATING TO TH E ADDITION MADE BY THE LEARNED ASSESSING OFFICER OF THE 15% OF THE TR ANSPORTATION CHARGES AMOUNTING TO RS. 1906730/- AND SIMILARLY 15 % OF THE LABOUR CHARGES AMOUNT TO RS. 75324/- IN THE TOTAL INCOME. 2. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE TH E LD. CIT(A) ERRED IN NOT ADMITTING THE FORM NO. 15-I FILED BEFORE HIM RE GARDING THE NON- APPLICABILITY OF THE TDS IN RELATION TO THE DEMAND CREATED FOR DISALLOWANCE OF RS. 12666716/- U/S 40(A)(IA) OF THE INCOME TAX ACT BY THE LEARNED ASSESSING OFFICER. 3. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE TH E LD. CIT(A) ERRED IN PARTLY DISALLOWING U/S 40(A)(IA) OF THE INCOME TAX ACT THE EXPENSES AMOUNTING TO RS. 12666716/- AND ADDITION IT TO THE INCOME IN SPITE OF THE FACT THAT THERE WAS NO REQUIREMENT OF DEDUCTION OF TDS ON IT AND THE SAME COULD NOT BE DISALLOWED. 4. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE TH E LD. CIT(A) ERRED IN HOLDING THAT THE ASSESSEE IS NOT MAINTAINING ACCOUN T/VOUCHER BILLS IN SPITE OF ALL RECORDS BEING SUBMITTED BEFORE HIM INC LUDING THE VOUCHERS IN SUPPORT OF LABOUR AND TRANSPORTATION CHARGES. 3 3. THE GRIEVANCE OF THE ASSESSEE VIDE GROUND NO. 1 R ELATES TO THE CONFIRMATION OF ADDITION MADE BY THE ASSESSING OFFI CER OUT OF THE TRANSPORTATION CHARGES AND LABOUR CHARGES CLAIMED B Y THE ASSESSEE. 4. THE FACTS RELATING TO THIS ISSUE, IN BRIEF, ARE T HAT THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS NOTICED THAT THE ASSESSEE CLAIMED TRANSPORTATION CHARGES AND LABOUR CHARGES AT RS. 1,27,11,538/- AND RS. 5,02,162/- RESPECTIVELY I N THE PROFIT & LOSS ACCOUNT. HE ASKED THE ASSESSEE TO PRODUCE THE VOUC HERS IN SUPPORT OF THE ABOVE EXPENSES. SINCE THE ASSESSEE DID NOT PRO DUCE THE VOUCHERS, THE ASSESSING OFFICER DISALLOWED 15% OF THE EXPENSE S. 5. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER T O THE LD. CIT(A) AND SUBMITTED THAT THE EXPENSES WERE DULY VOUCHED A ND ACCOUNTED FOR. THEREFORE, THE DISALLOWANCE MADE BY THE ASSESSING O FFICER WAS CONTRARY TO THE DETAILS SUBMITTED. 6 . THE LEARNED CIT(A), AFTER CONSIDERING THE SUBMISS IONS OF THE ASSESSEE, CONFIRMED THE ACTION OF THE ASSESSING OFF ICER BY OBSERVING THAT IN THE ABSENCE OF PROPER BILLS AND SUPPORTING RECOR DS, THE POSSIBILITY OF 4 MANIPULATION OR INFLATION THEREOF COULD NOT BE RUL ED OUT. RELIANCE WAS PLACED ON THE JUDGMENT OF HON'BLE JURISDICTION HIGH COURT IN THE CASE OF SHRI KAHNIYAL LAL JANGID REPORTED AT 217 CTR 354 WHEREIN THE CONCEPT OF THE ADHOC ADDITION ON LUMP SUM BASIS HAS BEEN PROVED IF THE RELEVANT DETAILS OF THE DOCUMENTS WERE NOT FOUND AVAILABLE I N SUPPORT THE EXPENSES CLAIMED BY THE ASSESSEE. NOW THE ASSESSEE IS IN APPEAL. 7 . LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT T HE BOOKS OF ACCOUNTS WERE PROPERLY MAINTAINED AND EXPENSES WERE SUPPORTED BY THE VOUCHERS. THEREFORE, ADHOC DISALLOWANCE WITHOUT ANY BASIS MADE BY THE ASSESSING OFFICER AND SUSTAINED BY THE LD. CIT(A) W AS NOT JUSTIFIED. 8 . IN HIS RIVAL SUBMISSIONS, LEARNED D.R. SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 9 . WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PA RTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON RE CORD. IN THE PRESENT CASE, IT APPEARS THAT THE ASSESSING OFFICER MADE TH E DISALLOWANCE @15% WITHOUT ANY BASIS. IT IS ALSO NOTICED THAT THE ASS ESSING OFFICER MADE THE IMPUGNED ADDITION BY OBSERVING THAT THE ASSESSEE DI D NOT PRODUCE THE VOUCHERS/EVIDENCE IN SUPPORT OF THE EXPENSES. ON T HE CONTRARY, THE 5 CLAIM OF THE ASSESSEE IS THAT IT WAS MAINTAINING TH E PROPER VOUCHERS/BILLS OF TRANSPORTATION AND LABOUR CHARGES AND THE SAME W ERE PRODUCED BEFORE THE ASSESSING OFFICER FOR VERIFICATION. IN THE PRE SENT CASE, A CONTRARY STAND HAS BEEN TAKEN BY THE PARTIES AND THE FACTS A RE NOT CLEAR. WE, THEREFORE, DEEM IT APPROPRIATE TO SET ASIDE THIS IS SUE BACK TO THE FILE OF THE ASSESSING OFFICER FOR FRESH ADJUDICATION IN ACC ORDANCE WITH LAW AFTER PROVIDING DUE AND REASONABLE OPPORTUNITY OF BEING H EARD TO THE ASSESSEE. 10 . THE NEXT ISSUE VIDE GROUNDS NO. 2 & 3 RELATES TO THE SUSTENANCE OF DISALLOWANCE MADE BY THE ASSESSING OFFICER UNDER SE CTION 40(A)(IA) OF THE I.T. ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT IN SHORT). 11 . FACTS RELATING TO THIS ISSUE, IN BRIEF, ARE THAT THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS, NOTICE D FROM THE DETAILS OF TRANSPORTATION AND FUEL EXPENSES THAT THE ASSESSEE PAID IN CASH A SUM OF RS. 1,27,11,538/- AND PROVIDED FUEL/DIESEL IN LIEU OF CARRIAGE EXPENSES OF GOODS AT RS. 80,29,988/- TOTAL OF BOTH CAME TO RS. 2,07,41,526/-. HE ALSO OBSERVED THAT THE ASSESSEE MADE PAYMENTS TO THE TRA NSPORTERS EXCEEDING RS. 50,000/- PER TRUCK AND THE PROVISIONS OF SECTIO N 194C(2) OF THE ACT WERE APPLICABLE. THE ASSESSING OFFICER, DISALLOWED RS. 1,45,73,446/- 6 UNDER SECTION 40(A)(IA) OF THE ACT BECAUSE NO TDS H AD BEEN DEDUCTED ON THE SAID PAYMENTS MADE TO THE TRUCK OWNERS. THE AS SESSING OFFICER BY CONSIDERING THIS FACT THAT THE ADDITION OF RS. 19,0 6,730/- HAD ALREADY BEEN ADDED IN THE TOTAL INCOME OF THE ASSESSEE ON A CCOUNT OF NOT MAINTAINING THE VOUCHERS/BILLS OF TRANSPORTATION CH ARGES ADDED A SUM OF RS. 1,26,66,716/- (RS. 1,45,73,446/- (-) RS. 19,0 6,730/-). 12. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) AND FURNISHED COPIES OF THE FORM 15-I OF THE TRUCK OWNERS AS ADDITIONAL EVIDENCES AND ALSO SUBMITTED THAT THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT WERE NOT APPLICABLE BECAUSE THE PAYMENTS HA D ALREADY BEEN MADE TO THE TRUCK OPERATORS AND NO AMOUNT REMAINED OUTSTANDING AT THE END OF RELEVANT FINANCIAL YEARS. RELIANCE WAS PLAC ED ON THE DECISION OF THE ITAT, JAIPUR BENCH IN THE CASE OF JAIPUR VIDHYUT VITRAN NIGAM LTD. REPORTED IN (2009) 123 TTJ (JP) 888. 13. THE LD. CIT(A) DID NOT FIND MERIT IN THE SUBMISSIONS OF THE ASSESSEE BY OBSERVING THAT FORM 15-I SUBMITTED BELATED WERE INADMISSIBLE AT THIS STAGE SINCE THESE FORMS WERE NOT SUBMITTED BEFORE T HE ASSESSING OFFICER, THEREFORE, GENUINENESS OF THE SAME COULD NOT BE ASC ERTAINED. LEARNED LD. CIT(A), HOWEVER, ACCEPTED THIS CONTENTION OF TH E ASSESSEE THAT THE 7 PROVISIONS OF SECTION 40(A)(IA) OF THE ACT WERE NOT APPLICABLE IN THE SITUATION WHEN THE AMOUNT DID NOT REMAIN PAYABLE OR OUTSTANDING. ACCORDINGLY, LD. CIT(A) DELETED THE ADDITION OF RS. 73,27,214/-. NOW THE ASSESSEE IS IN APPEAL FOR SUSTENANCE OF THE ADDITIO N AND THE DEPARTMENT HAS FILED THE APPEAL AGAINST THE RELIEF ALLOWED TO THE ASSESSEE. 14. LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUB MISSIONS MADE BEFORE THE AUTHORITIES BELOW AND FURTHER SUBMITTED THAT THE ASSESSEE FURNISHED THE FORM 15-I RECEIVED FROM THE TRUCK OPE RATORS, BUT THOSE WERE NOT CONSIDERED BY THE LD. CIT(A). HE FURTHER SUBMITTED THAT THE ISSUE MAY BE SENT BACK TO THE ASSESSING OFFICER TO DECIDE THE ISSUE AFTER CONSIDERING THE FORM 15-I FURNISHED TO THE LD. CIT( A). 15. LEARNED D.R. ALTHOUGH SUPPORTED THE ORDER OF THE AS SESSING OFFICER, BUT DID NOT OBJECT IF THE ISSUE IS SENT BACK TO THE ASSESSING OFFICER TO BE DECIDED AFTER CONSIDERING THE FORM 15-I FURNISHED B EFORE THE LD. CIT(A). 16. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PART IES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON RE CORD. IN THE PRESENT CASE, IT IS NOTICED THAT THE ASSESSING OFFICER DISA LLOWED A SUM OF 8 RS. 1,26,66,716/-, BUT THE LD. CIT(A) DELETED THE A DDITION OF RS. 73,27,214/-, HOWEVER, IT IS NOT CLEAR HOW THE F IGURE OF RS. 73,27.214/- WAS WORKED OUT BY THE LD. CIT(A). IN THE PRESENT C ASE, IT IS ALSO NOTICED THAT THE LD. CIT(A) ADMITTED THE ADDITIONAL EVIDENC ES IN THE FORM OF FORM NO. 15-I AND AT THE SAME TIME DID NOT CONSIDER THOS E FOR DECIDING THE ISSUE BY STATING THAT THE FORMS WERE SUBMITTED BELA TED AND NOT BEFORE THE ASSESSING OFFICER. IN OUR OPINION, WHEN THE LD . CIT(A) ADMITTED THE FORMS 15-I AS AN ADDITIONAL EVIDENCE HE SHOULD HAVE ASKED FOR THE REMAND REPORT FROM THE ASSESSING OFFICER ON THE GENUINENES S OF THOSE FORMS BUT THAT EXERCISE WAS NOT DONE. WE THEREFORE, CONSIDER ING THE PECULIAR FACTS OF THIS CASE, DEEM IT APPROPRIATE TO REMAND THIS IS SUE BACK TO THE FILE OF THE ASSESSING OFFICER TO BE ADJUDICATED AFRESH IN A CCORDANCE WITH LAW AFTER PROVIDING DUE AND REASONABLE OPPORTUNITY OF B EING HEARD TO THE ASSESSEE. 17. IN THE DEPARTMENTAL APPEAL, THE FOLLOWING GROUNDS H AVE BEEN RAISED:- 1. THE LD. CIT(A) HAS PASSED A PERVERSE ORDER IN A LLOWING THE CLAIM OF DEPRECIATION OF RS. 3,12,565/- EVEN WHEN THE BUSINE SS NECESSITY OF THE RELATED ASSETS AND OF THEIR BEING PUT TO USE WITHIN THE FINANCIAL YEAR REMAINED UNPROVED. 2. THE LD. CIT(A) HAS ERRED IN HOLDING THAT THE DEC ISION OF HON'BLE ITAT, JAIPUR BENCH, JAIPUR IN THE CASE OF JVVNL, 123 TTJ 888 WAS APPLICABLE 9 IN THE FACTS AND CIRCUMSTANCES OF THE ASSESSEE EVEN WHEN THE FACTS OF THE ASSESSEE WERE MATERIALLY DIFFERENT, PARTICULARL Y IN VIEW OF OUTSTANDING CURRENT LIABILITIES OF OVER 29 LAKHS FO R TRANSPORTATION/FUEL EXPENSES, IN THE BALANCE SHEET. 3 THE LD. CIT(A) HAS PASSED A PERVERSE ORDER IN DEL ETING THE DISALLOWANCE MADE UNDER SECTION 40(A)(IA) TO THE EX TENT OF RS. 73,27,214/- 4. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND, WITHDRAW OR INSERT ANY GROUND OR GROUNDS OF APPEAL BEFORE OR AT THE TI ME OF HEARING OF THE APPEAL. 18. SINCE, THE MAJOR ISSUE AGITATED BY THE DEPARTMENT VIDE GROUND NO. 3 IS CORRELATED WITH THE GROUNDS NO. 2 & 3 OF THE A SSESSEES APPEAL, WHICH WE HAVE ALREADY REMANDED BACK TO THE ASSESSIN G OFFICER FOR FRESH ADJUDICATION. THEREFORE, ALL THE ISSUES RAISED IN THE DEPARTMENTAL APPEAL ARE ALSO SENT BACK TO THE ASSESSING OFFICER TO BE A DJUDICATED ALONG WITH THE ISSUES RAISED BY THE ASSESSEE IN ITS APPEAL. 19. IN THE RESULT, BOTH THE APPEALS ARE ALLOWED FOR ST ATISTICAL PURPOSES. (ORDER PRONOUNCED IN THE COURT ON 08 TH APRIL, 2014). SD/- SD/- (HARI OM MARATHA) (N.K.SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 08 TH APRIL, 2014. VR/- COPY TO: 10 1. THE APPELLANT 2. THE RESPONDENT 3. THE LD.CIT 4. THE CIT(A) 5. THE D.R ASSISTANT REGISTRAR, ITAT, JODHPUR.