Sh. Kulwinder singh, Kapurthala V. The Assistant Commissioner of Income Tax, Amritsar.

ITA 149/ASR/2016

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 0654 (ITAT-AMRITSAR)
• Duration Of Justice: 3 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-06-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 21-06-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 11-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A N MISHRA
• Keywords: Additional evidence
• Section: 68; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. (CAMP AT JALANDHAR) BEFORE SH. A.D. JAIN, JUDICIAL MEMBER AND SH. T.S. KAPOOR, ACCOUNTANT MEMBER ITA NO.149(ASR)/2016 ASSESSMENT YEAR:2009-10 PAN: ABMPS4026P SH. KULWINDER SINGH VS. ASSTT. COMMR. OF INCOME TA X, 66, GREEN PLAZA MARKET, CIRCLE-V, AMRITSAR NOW 43, SHIV COLONY, AMRITSAR. KAPURTHALA. (APPELLANT) (RESPONDENT) APPELLANT BY: SH. SANDEEP VIJH, CA RESPONDENT BY: SH. A.N. MISHRA, DR DATE OF HEARING: 21/06/2016 DATE OF PRONOUNCEMENT: 23/06/2016 ORDER PER A.D. JAIN, JM; THIS IS THE ASSESSEES APPEAL FOR THE ASSESSMENT YE AR 2009-10 AGAINST THE ORDER, DATED 09.12.2015, PASSED BY T HE LD. CIT(A), JALANDHAR. THE ASSESSEE HAS FILED THE FOLLOWING AMENDED GROUNDS: 1 (A) THAT THE LD. CIT(A), HAS ERRED IN SUSTAININ G THE ADDITION OF RS.83,18,322/- MADE U/S 68. THE SUBMISSIONS MADE AS WELL AS THE LEGAL AND FACTUAL POSITION ON THE ISSUE HAVE NOT BEEN APPRECIATED. (B) THE ADDITION OF RS.83,17,322/- REPRESENTING TH E COST OF MATERIAL PURCHASE INCLUDING TRANSPORTATION CHARGES AND APPEARING AS CREDIT BALANCES COULD NOT HAVE BEEN SU STAINED U/S 68. 2 ITA NO.149(ASR)/2016 A.Y. 2009-10 2 2. THAT THE LD. CIT(A), HAS ERRED IN REFUSING TO AD MIT ADDITIONAL EVIDENCE IN THE SHAPE OF AFFIDAVITS OF CERTAIN TRUC K DRIVERS FILED DURING THE APPELLATE PROCEEDINGS. 2. THE BRIEF FACTS OF THE CASES ARE THAT THE ASSESS EE IS A CONTRACTOR ENGAGED IN ROAD CONSTRUCTION/REPAIR. DURING THE YEAR, THE A SSESSEE HAD MADE PURCHASES OF MATERIAL AND THE AMOUNT OUTSTANDING TO SUPPLIERS WAS REFLECTED IN TERMS OF THE TRUCK NUMBER. SUCH CREDITORS WERE R S.83,13,191/- AS AGAINST TOTAL CREDITORS OF RS.1,41,17,200/-. IN RESPONSE TO A QUERY, THE ASSESSEE FURNISHED CONFIRMATION FROM VARIOUS CREDITORS. SUMM ONS WERE ISSUED BY THE AO TO CERTAIN PERSON AS LISTED AT PARA NO.6 AT PAGE NO.8 OF THE ASSESSMENT ORDER. THE SUMMONS WERE RECEIVED BACK MAINLY WITH T HE COMMENTS THAT THE ADDRESS WAS INCOMPLETE. THE AO EXAMINED THE BOOKS O F ACCOUNT PRODUCED BY THE ASSESSEE AND OBSERVED THAT THE ENTRIES WERE MAD E UNDER THE HEAD FREIGHT, OCTROI & CARTAGE AND THAT THE ENTRIES PERTAINED MA INLY TO FEBRUARY AND MARCH, 2009. IT WAS ALSO STATED THAT THE CREDITS HA D BEEN SHOWN IN THE BOOKS OF ACCOUNT UNDER THE REGISTRATION NUMBER OF THE VEH ICLE AND NOT IN THE NAME OF ANY PERSON. A TABULAR CHART WAS ALSO PREPARED BY TH E AO TO INDICATE THAT THE ADDRESSES SHOWN BY THE ASSESSEE WERE DIFFERENT FROM THE ADDRESS AS PER THE DTO, AMRITSAR, IN RESPECT OF CERTAIN SPECIFIC TRUCK S. IT WAS ALSO CONTENDED THAT THE TRUCK DRIVERS, WHOSE ADDRESSES WERE FURNISHED, WERE DIFFERENT FROM THE TRUCK OWNERS. THESE DISCREPANCIES WERE BROUGHT TO THE NOTICE OF THE ASSESSEE AND IT WAS EXPLAINED BY THE ASSESSEE THAT THE TRUCK DRIVERS ARE NOT AVAILABLE AT THEIR HOMES, AS THEY HAVE TO TRAVEL FROM ONE PLACE TO ANOTHER IN CONNECTION 3 ITA NO.149(ASR)/2016 A.Y. 2009-10 3 WITH WORK. IT WAS ALSO SHOWN THROUGH THE BOOKS OF A CCOUNT AND DOCUMENTS THAT THE PAYMENTS DUE AS ON 31.3.2009 WERE MADE IN THE NEXT YEAR AND UNDER THESE CIRCUMSTANCES, THE CREDITORS WERE GENUINE. TH E FIGURE OF AMOUNT WITHHELD BY THE DEPARTMENT AND CHEQUES IN HAND WAS ALSO GIVEN TO SUPPORT THE CONTENTION THAT THE CREDITORS COULD NOT BE PA ID IMMEDIATELY. THE EXPLANATION GIVEN BY THE ASSESSEE WAS NOT ACCEPTED BY THE AO BY STATING THE FOLLOWING REASONS: 1) THE ASSESSEE HAD FAILED TO PROVE GENUINENESS OF CREDITS IN THE NAME OF VEHICLE OWNERS AND THE SUMMONS WERE NOT SER VED ON THE CREDITORS AND THE ASSESSEE DID NOT PRODUCE THE CRED ITORS. 2) THE EXPENDITURE OF FREIGHT, OCTROI & CARTAGE IS HIGHER IS THE LAST QUARTER. EXPENSE UP TO DEC., 2008 IS WITH REFERENCE TO PERSONS WHEREAS THE SUBSEQUENT EXPENSE IS WITH REFERENCE TO TRUCK NUMBERS. ALSO EXCESS EXPENDITURE APPEARS TO HAVE BE EN INCURRED TO EVADE TAX. 3) CONFIRMATIONS OF CREDIT BALANCES IN THE NAME OF THE VEHICLE NUMBERS ARE NOT GENUINE AS THE SUMMONS SENT AT THE GIVEN ADDRESS WERE RECEIVED BACK UNSERVED. 4) THE ASSESSEE HAS NOT PRODUCED THE CREDITORS NOR HAS FURNISHED WHEREABOUTS OF THE CREDITORS. THE ASSESSEE HAD FAIL ED TO PROVE THE IDENTITY, CREDITWORTHINESS, CAPACITY AND GENUINENES S OF THE CREDITORS. THE AO REFERRED TO THE DECISION OF THE S UPREME COURT IN THE CASE OF A. GOVINDARAJULA MUDALIAR VS. CIT, RE PORTED AT 34 ITR 807 AND CIT VS. M. GANAPATHI MUDHALIAR, REPORTED AT 54 ITR 623 4 ITA NO.149(ASR)/2016 A.Y. 2009-10 4 AND THE DECISION OF THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF SHANKER INDUSTRIES VS. CIT, 114 ITR 689. 2.1. THE AO SUMMED IT UP BY STATING THAT THE CREDIT ENTRIES TOTALING TO RS.83,18,322/- ARE NOT GENUINE AND, THEREFORE, THES E WERE ADDED BACK AS INCOME OF THE ASSESSEE U/S 68 OF THE ACT. EVEN THE CASE LAWS CITED BY THE AO WERE WITH REFERENCE TO SECTION 68 OF THE ACT. 3. BY VIRTUE OF THE IMPUGNED ORDER, THE LD. CIT(A) CONFIRMED THE ACTION OF THE AO AND DISMISSED THE ASSESSEES APPEAL. 3. BEFORE US, IT HAS BEEN CONTENDED THAT THE PROVIS IONS OF SECTION 68 OF THE ACT CAN BE INVOKED IN CASE THE SAME AMOUNT IS RECEI VED BY AN ASSESSEE, HOWEVER, IN THE PRESENT CASE, THE CONCERNED TRANSAC TIONS WERE ONLY OF SUPPLY OF MATERIAL AND, THEREFORE, THE PROVISIONS OF SECTION 68 OF THE ACT ARE NOT APPLICABLE; THAT THOUGH THIS ISSUE WAS SPECIFICALL Y RAISED BEFORE THE LD. CIT(A), THE SAME HAS WRONGLY NOT BEEN ACCEPTED. 4. IT HAS FURTHER BEEN CONTENDED THAT IN A SIMILAR SITUATION, FOR THE EARLIER AND SUBSEQUENT ASSESSMENT YEARS, NO SUCH ADDITION H AS BEEN MADE. 5. THE LD. DR, ON THE OTHER HAND, FORCEFULLY RELYIN G ON THE IMPUGNED ORDER, HAS CONTENDED THAT MERE ENTRIES WERE MADE BY THE AS SESSEE AND NO MATERIAL WHATSOEVER WAS SUPPLIED AND, THEREFORE, THE PROVISI ONS OF SECTION 68 OF THE ACT ARE SQUARELY ATTRACTED AND WERE RIGHTLY APPLIED. 6. HAVING HEARD THE RIVAL CONTENTIONS IN THE LIGHT OF THE MATERIAL AVAILABLE ON RECORD, IT IS SEEN THAT IN PARA-3 OF THE ASSESSM ENT ORDER, THE AO OBSERVED 5 ITA NO.149(ASR)/2016 A.Y. 2009-10 5 THAT THE ASSESSEE HAD SHOWN NUMEROUS SUNDRY CREDITO RS ALONG WITH DETAILS, AS WAS AVAILABLE FROM THE EXAMINATION OF THE ASSESSEE S BOOKS OF ACCOUNT VIS--VIS HIS BALANCE SHEET. THE ASSESSEE IS A ROAD CONTRACTO R. HE RECEIVED MATERIAL FOR THE CONSTRUCTION OF THE ROAD. THE AMOUNTS IN QUESTI ON REPRESENTED PURCHASES MADE ON CREDITS. THE PROVISIONS OF SECTION 68 OF TH E ACT ARE CLEARLY NOT ATTRACTED TO AMOUNT REPRESENTING PURCHASES MADE ON CREDITS, AS IS ALSO HELD IN CIT VS. PANCHAM DASS JAIN, 205 CTR 444 (ALL.). TH E ASSESSEE RAISED THIS ISSUE BY WAY OF WRITTEN SUBMISSIONS (APB 37 TO 160, RELEV ANT PORTION AT PARA-5, ON PAGE 43) DATED 10.05.2014 FILED BEFORE THE CIT(A). THE LD. CIT(A) HAS, HOWEVER, NOT ADDRESSED THIS GRIEVANCE AT ALL AND MERELY UP HELD THE ADDITION MADE UNDER SECTION 68 OF THE ACT. ON BEHALF OF THE ASSES SEE, A COMPARATIVE CHART OF NET PROFIT RATE OF THE ASSESSEE FOR THE ASSESSMENT YEARS 2005-06 TO 1011-12 HAS BEEN FILED BEFORE US. IN THE EARLIER YEARS ALSO , NO SUCH ADDITION WAS MADE. FOR THE ASSESSMENT YEAR 2007-08, UNDER SCRUTINY ASS ESSMENT, THE ASSESSMENT WAS MADE AT 8%. THE POSITION REMAINED MUCH THE SAME FOR THE ASSESSMENT YEAR 2008-09. THE YEAR UNDER CONSIDERATION IS ASSES SMENT YEAR 2009-10. THE MATERIAL SUPPLIED TO THE ASSESSEE BY THE CONCERNED DEPARTMENT IS PART OF THE ASSESSEES TURNOVER. THE NET PROFIT RATE OF THE ASS ESSEE FOR THE YEAR UNDER CONSIDERATION WAS IN LINE WITH THE PRECEDING ASSESS MENT YEAR. FURTHER, THE TRADE CREDITORS IN THE EARLIER YEARS, I.E., A.YS. 2 007-08 & 2008-09 STAND ACCEPTED IN SCRUTINY ASSESSMENTS. THUS, THE GENUIN ENESS OF THE EXPENSES UNDER CONSIDERATION CANNOT BE DOUBTED. MOREOVER, TH E GENUINENESS OF THE EXPENDITURE WAS NOT AT ALL CALLED INTO QUESTION. I T WAS ONLY THAT NON- 6 ITA NO.149(ASR)/2016 A.Y. 2009-10 6 VERIFICATION THEREOF RAISED DOUBTS OF THE INCURRENC E THEREOF. THEN, EVEN IF THE CREDITS CONCERNING THE PURCHASES AND TRANSPORTATION OF THE MATERIAL ARE NOT TO BE ACCEPTED, AS DISCUSSED, STILL, THE PROVISIONS OF SECTION 68 OF THE ACT CANNOT BE INVOKED TO MAKE THE ADDITION. 7. IN VIEW OF THE ABOVE, THE GRIEVANCE OF THE ASSES SEE IS FOUND TO BE JUSTIFIED AND IT IS ACCEPTED AS SUCH. THE ORDER OF THE LD. CI T(A) IS REVERSED AND THE ADDITION IS DELETED. 8. IN THE RESULT, THE APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 23RD JUNE, 2016. SD/- SD/- (T. S. KAPOOR) (A.D. JAIN) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 23/06/2016. /SKR/. COPY OF THE ORDER FORWARDED TO: (1) THE ASSESSEE:SH. KULWINDER SINGH, KAPURTHAL A. (2) THE ACIT, CIR.1, ASR. (3) THE CIT(A), ASR (4) THE CIT, ASR. (5) THE SR DR, I.T.A.T. TRUE COPY BY ORDER INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.