ITO, UDAIPUR V. Late Shri Goutam Malara L/H Shri Vikas Malara, UDAIPUR

ITA 160/JODH/2013

• Counselvise Citation: 16023314 RSA 2013
• Duration Of Justice: 7 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-10-2013
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 24-10-2013
• Assessment Year: 1998-1999
• Appeal Filed On: 14-03-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: N A JOSHI

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.160/JODH/2013 (A.Y. 1998-99) ITO, WARD-1(2), VS. LATE SHRI GOUTAM MALARA UDAIPUR. L/H SHRI VIKAS MALARA, PROP. M/S. GOUTAM BOREWELL, 211-212, BAPU BAZAR, UDAIPUR. PAN NO. ABRPM 5055 D (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI AMIT KOTHARI. DEPARTMENT BY : SHRI N.A. JOSHI- D.R. DATE OF HEARING : 24/10/2013. DATE OF PRONOUNCEMENT : 28/10/2013. O R D E R PER N.K.SAINI, A.M THIS IS AN APPEAL BY THE DEPARTMENT AGAINST THE OR DER DATED 28/12/2012 OF LD. CIT (A), UDAIPUR. THE FOLLOWING GROUNDS HAVE BEEN RAISED IN THIS APPEAL: ON THE FACTS AND IN THE PRESENT CIRCUMSTANCES OF T HE CASE, THE LEARNED CIT (A) HAS ERRED IN:- 1. DELETING THE ADDITION OF RS. 1,37,426/- MADE ON AC COUNT OF UNEXPLAINED INCOME. 2 2. DELETING THE ADDITION OF RS. 13,79,426/- MADE O N ACCOUNT OF CREDIT BALANCE APPEARING IN THE NAME OF TAMILNADU PARTIES IGNORING THE FACT THAT ON ENQUIRY MADE ITO, SALEM FROM THE RESPE CTIVE PARTIES IT WAS CONFIRMED THAT A) M/S S.S. DRILLING EQUIPMENT, SALEM DID NOT DO ANY B USINESS AND IN FACT FIRM WAS NOT IN EXISTENT FROM 1995 AS T WO PARTNERS HAD DIED. B) THAT THE ERSTWHILE PARTNER OF M/S S.S. BOREWELL SER VICES, SALEM IN HIS LETTER CLEARLY STATED THAT FIRM WAS DISCONTI NUED W.E.F. 30.09.1994. C) THAT THE ERSTWHILE PARTNER OF M/S RENNA RIG SER VICES, SALEM HAS STATED THAT THE FIRM WAS DISCONTINUED W.E.F. 30 .03. 1992. 3. RESTRICTING THE ADDITION ON ACCOUNT OF DISALLOWANCE OF EXPENSES OF RS. 1,11,000/- TO RS. 25,000/- 4. DELETING THE ADDITION OF RS. 1,30,200/- MADE ON ACCOUNT OF DRILLING THAT THE APPELLANT CRAVES TO ADD, AMEND, ALTER, DEL ETE OR MODIFY ANY OR ALL THE ABOVE GROUNDS OF APPEAL BEFORE OR AT THE TIME O F HEARING. 2. THE FIRST ISSUE VIDE GROUND NO.1 RELATES TO THE DE LETION OF ADDITION OF RS. 1,37,426/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNEXPLAINED INCOME. DURING THE COURSE OF HEARING, LEARNED COUNSEL FOR THE ASSESSEE AT THE VERY OUTSET STATED THAT THIS GR OUND SHOULD NOT HAVE BEEN RAISED BY THE DEPARTMENT, WHEN THE ASSESSING O FFICER HIMSELF IN HIS REMAND REPORT DATED 24/03/2011 ACCEPTED THAT THERE CREPT IN SOME TYPOGRAPHICAL MISTAKE OR SLIP OF PEN WHILE TAKING T HE FIGURES AND THE FIGURES SUBMITTED BY THE ASSESSEE WERE CORRECT. 3 3. LEARNED D.R. COULD NOT CONTROVERT THE AFORESAID C ONTENTION OF THE LEARNED COUNSEL FOR THE ASSESSEE. 4. AFTER CONSIDERING THE SUBMISSIONS OF BOTH THE PAR TIES, IT IS NOTICED THAT THIS ADDITION MADE BY THE ASSESSING OFFICER WA S DELETED BY THE LEARNED CIT(A) BY OBSERVING IN PARA 4.3 OF THE IMPU GNED ORDER, WHICH READS AS UNDER:- I HAVE CONSIDERED THE CONTENTIONS OF THE APPELLANT AS WELL AS THE ASSESSMENT ORDER. THE COPY OF THE EXHIBIT AND CHART SUBMITTED BY THE APPELLANT WAS SENT TO THE LD. AO FOR HIS COMMENTS A ND THE LD. AO VIDE HIS REMAND REPORT DATED 24/03/2011 HAS STATED THAT THER E CREPT IN SOME TYPOGRAPHICAL MISTAKE OR SLIP OF PEN WHILE TAKING T HE FIGURES FROM THE NOTEBOOK. THE FIGURES NOW GIVEN BY THE A/R OF THE ASSESSEE IN HIS SUBMISSION DATED 11/03/2011 FILED BEFORE YOUR GOODS ELF IS CORRECT. THE NET RESULT IS (-) RS. 4119/- INSTEAD OF SURPLUS COM PUTED BY THE LD. AO. HENCE, IT IS CLEAR THAT THE THEN LD.AO MAKING THE O RIGINAL ASSESSMENT HAS NOT READ THE EXHIBIT CORRECTLY AND THE LD.AO MAKING THE AFRESH ASSESSMENT HAD ALSO NOT VERIFIED THE CHART MADE IN THE ASSESSM ENT ORDER WITH THE IMPOUNDED NOTEBOOK AND JUST ANNEXED THE ORIGINAL AS SESSMENT ORDER IN HIS ORDER DATED 31/12/2008. HENCE, THE ADDITION MA DE OF RS. 137416/- IS DELETED AND THE APPEAL ON THIS GROUND IS ALLOWED. 5. FROM THE ABOVE OBSERVATION, IT IS CRYSTAL CLEAR TH AT THE FIGURE COMPUTED BY THE ASSESSING OFFICER AT RS. 1,37,416/- WAS IN FACT A LOSS OF RS. 4,119/- AND THAT MISTAKE WAS ACCEPTED BY ASSESS ING OFFICER IN HIS REMAND REPORT DATED 24/03/2011, THEREFORE, WE ARE O F THE VIEW THAT THERE IS NO MERIT IN THIS GROUND OF THE DEPARTMENTA L APPEAL. 4 6. VIDE GROUND NO.2, THE GRIEVANCE OF THE DEPARTMENT R ELATES TO THE DELETION OF ADDITION OF RS. 13,79,762/-(WRONGLY MEN TIONED AS RS. 13,79,426/-) MADE BY THE ASSESSING OFFICER ON ACCOU NT OF CREDIT BALANCE APPEARING IN THE NAME OF 03 TAMILNADU PARTIES. 7. THE FACTS RELATED TO THIS ISSUE IN BRIEF ARE THAT T HE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS, NOTICE D THAT THE FOLLOWING TAMILNADU PARTIES WERE SHOWN AS CREDITORS AS ON 31/ 03/1998:- 1. S.S. DRILLING EQUIPMENTS, SALEM RS. 60,0 08/- 2. S.S. BOREWELL SERVICES, SALEM RS. 10,78,636/ - 3. RENNA RIG SERVICE, SALEM RS. 2,41,118/- ------------------- TOTAL RS. 13,79,762/- ------------------- 8. THE ASSESSING OFFICER CONDUCTED AN ENQUIRY THROUGH ITO, SALEM, WHO IN HIS REPORT SUBMITTED THAT THE PARTNERS OF M/ S. S.S. DRILLING EQUIPMENT, SALEM STATED THAT THE FIRM WAS NOT IN EX ISTENCE FROM 1995 AND NONE OF THE PARTNER DID ANY BUSINESS IN THE SAI D NAME. THE PARTNER OF S.S. BOREWELL SERVICE STATED THAT THE FIRM WAS A SSESSED AT WARD 1(10) AND GOT DISSOLVED W.E.F. 30/09/1994 AND THAT THE PA RTNER OF RENNA RIG SERVICE ADMITTED HAVING CARRIED OUT SOME DRILLING W ORK GIVEN BY SHRI MALLARA DURING THE FINANCIAL YEAR 1999-2000 AND 200 0-01 AND HE WAS PAID 5 APPROXIMATELY RS. 2,40,000/- AND RS. 3,60,000/- RES PECTIVELY. THE ASSESSING OFFICER MADE THE ADDITION BY OBSERVING TH AT THE ASSESSEE HAD NOT PRODUCED THE ABOVE TAMILNADU PARTIES FOR VERIFI CATION. 9. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER TO THE LEARNED CIT(A), WHO DELETED THE ADDITION BY OBSERVING THAT THE EXTRACTS OF THE LEDGER ACCOUNTS OF THE PARTIES IN PREVIOUS AND SUBS EQUENT YEARS REVEALED THAT THE ASSESSEE HAD BUSINESS TRANSACTIONS WITH TH E ABOVE PARTIES BEFORE AND AFTER THE YEAR UNDER CONSIDERATION, HENCE, THE CREDIT BALANCE APPEARING IN THE NAMES OF THOSE PARTIES WERE GENUIN E AND WERE TRADING IN NATURE. HE ALSO OBSERVED THAT THE ASSESSING OFFICE R WHILE MAKING THE AFRESH ASSESSMENT HAD NOT MADE ANY ENQUIRY AND MERE LY ON THE BASIS OF ORIGINAL ASSESSMENT ORDER, HE HAD PASSED THE ASSESS MENT ORDER. ACCORDINGLY, LEARNED CIT(A) DELETED THE ADDITION. BEING AGGRIEVED, THE DEPARTMENT IS IN APPEAL. 10. LEARNED D.R. SUPPORTED THE ORDER OF THE ASSESSING O FFICER AND THE LEARNED COUNSEL FOR THE ASSESSEE AT THE VERY OUTSET STATED THAT THIS ISSUE IS SQUARELY COVERED VIDE ORDER DATED 04/06/2013 IN ASSESSEES OWN CASE IN ITA NO. 325 & 326/JODH/2008 AND 765 & 748/JODH/2 007 FOR THE A.YS. 1999-2000 TO 2002-03, COPY OF THE SAID ORDER WAS FU RNISHED, WHICH IS PLACED ON RECORD. 6 11. AFTER CONSIDERING THE SUBMISSIONS OF BOTH THE PARTI ES AND THE MATERIAL ON RECORD, IT IS NOTICED THAT AN IDENTICAL ISSUE HAS BEEN DECIDED VIDE AFORESAID ORDER DATED 04/06/2013 IN FAVOUR OF THE ASSESSEE AND THE RELEVANT FINDINGS HAVE BEEN GIVEN IN PARA 5.3 OF TH E SAID ORDER, WHICH READS AS UNDER:- 5.3 BEFORE US BOTH PARTIES HAVE REITERATED THEIR CONTENTIONS. WE HAVE FOUND THAT EVEN IN THE INQUIRY GOT DONE THROUGH ITO (SALEM), PAYMENT OF RS. 3,60,000/- IN CASH HAVE BEEN FOUND TO HAVE BEEN MADE. THE ASSESSEE HAS PRODUCED CREDIT INVOICES TO THE TUNE O F RS. 18,78,401/-. IT WAS NOTICED THAT AS PER THE LEDGER ACCOUNT OF M/S. RAJAN RIG SERVICES, IN THE A.Y. 2002-03, THE OPENING BALANCE WAS RS. 18,78 ,401/- AND DURING THE YEAR HE HAS PAID RS. 11,73,000/- THROUGH CHEQUE S OF UBI, UDAIPUR AND PNB, UDAIPUR, IN THE MONTHS OF MAY, JUNE, JULY AND AUGUST. IN THE LEDGER ACCOUNT FOR A.Y. 2003-04, THE OPENING BALANC E IS RS. 11,89,101/- AND RS. 6,10,000/- HAVE BEEN PAID THROUGH CHEQUES, AND THE CLOSING BALANCE IS RS. 8,36,201/-. THE OUTSTANDING AMOUNT AND ITS PAYMENT STAND PROVED ON THE RECORD. WE CANNOT GIVE MUCH IM PORTANCE TO THE EX- PARTE REPORT OF ITO (SALEM), THAT IN PART SUPPORT T HE CONTENTION OF THE ASSESSEE. THUS, IN OUR CONSIDERED OPINION, THE LD. CIT(A) HAS CORRECTLY DELETED THE ADDITION OF RS. 18,78,401/-. THEREFORE , WE DISMISS GROUND NO. (2) OF THE REVENUES APPEAL. 12. SINCE, THE FACTS FOR THE YEAR UNDER CONSIDERATION A RE SIMILAR TO THE FACTS INVOLVED IN THE A.YS. 1999-2000 TO 2002-03, I N THOSE YEARS ALSO, THE ADDITION WHICH WAS MADE BY THE ASSESSING OFFICER ON THE REPORT OF THE ITO SALEM, WAS DELETED. SO, RESPECTFULLY FOLLOWING THE AFORESAID REFERRED TO ORDER DATED 04/06/2013 IN ASSESSEES OWN CASE, WE D O NOT SEE ANY MERIT IN THIS GROUND OF THE DEPARTMENTAL APPEAL. 7 13. VIDE GROUND NO.3, THE GRIEVANCE OF THE DEPARTMENT RELATES TO RESTRICTING THE ADDITION OF RS. 25,000/- OUT OF RS. 1,11,000/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF DISALLOWANCE OF EXP ENSES. 14. THE FACTS RELATED TO THIS ISSUE IN BRIEF ARE THAT T HE ASSESSING OFFICER MADE THE DISALLOWANCE @ 10% OUT OF EXPENSES INCURRE D BY THE ASSESSEE UNDER VARIOUS HEADS I.E. SHOP REPAIR AND MAINTENANC E, SALARY EXPENSES, VEHICLE REPAIR AND MAINTENANCE, OFFICE AND GENERAL EXPENSES, CONVEYANCE EXPENSES, ADVERTISEMENT EXPENSES, DIESEL AND OIL EX PENSES AND RETAINER SHIP CHARGES ETC. THE DISALLOWANCE WAS MADE BY THE ASSESSING OFFICER BY OBSERVING THAT NO VOUCHERS WERE PRODUCED FOR VERIFI CATION OF THE ABOVE EXPENSES. 15. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER T O THE LEARNED CIT(A) AND SUBMITTED THAT THE EXPENSES WERE INCURRE D WHOLLY FOR THE BUSINESS PURPOSES AND NO BASIS WAS GIVEN BY THE ASS ESSING OFFICER FOR MAKING THE DISALLOWANCE. IT WAS ALSO STATED THAT T HE VOUCHERS WERE PRODUCED DURING THE COURSE OF ASSESSMENT PROCEEDING S AND THE ASSESSEE HAD GIVEN DETAILS OF THE EXPENDITURE. IT WAS FURTH ER STATED THAT THE ADDITION MADE BY THE ASSESSING OFFICER WAS MERELY O N THE BASIS OF ESTIMATE, WHICH WAS VERY EXCESSIVE. 8 LEARNED CIT(A) AFTER CONSIDERING THE SUBMISSIONS O F THE ASSESSEE, OBSERVED THAT THE VOUCHERS FOR VARIOUS EXPENSES APP EARING IN THE TRADING ACCOUNT AND P & L ACCOUNT WERE MAINTAINED BY THE AS SESSEE, WHICH WERE ALSO PRODUCED FOR VERIFICATION. HOWEVER, LEARNED C IT(A) SUSTAINED THE ADDITION OF RS. 25,000/- BY OBSERVING THAT PERSONAL USE OF TELEPHONE, CONVEYANCE AND VEHICLE REPAIR AND MAINTENANCE COULD NOT BE RULED OUT. ACCORDINGLY, RELIEF OF RS. 86,000/- WAS ALLOWED. N OW, THE DEPARTMENT IS IN APPEAL. 16. LEARNED D.R. SUPPORTED THE ORDER OF THE ASSESSING O FFICER WHILE THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUB MISSIONS MADE BEFORE THE LEARNED CIT(A) AND SUPPORTED THE IMPUGNED ORDER PASSED BY HIM. 17. AFTER CONSIDERING THE SUBMISSIONS OF BOTH THE PARTI ES, IT APPEARS THAT THE ASSESSING OFFICER MADE THE DISALLOWANCE ON ESTIMATE BASIS AND THE LEARNED CIT(A) ALLOWED THE RELIEF BY OBSERVING THAT THE ASSESSEE MAINTAINED PROPER VOUCHERS FOR VARIOUS EXPENSES AND SOME WERE PRODUCED FOR VERIFICATION, HOWEVER DISALLOWANCE WAS SUSTAINED TO THE EXTENT OF RS. 25,000/- TO RULE OUT ANY USAGE ON ACC OUNT OF PERSONAL USE OF TELEPHONES, CONVEYANCE AND VEHICLE REPAIRS AND MAIN TENANCE ETC. IN OUR OPINION ALSO, IN SUCH TYPE OF CASES, THE PERSONAL U SE ON ACCOUNT OF 9 TELEPHONES, CONVEYANCE ETC. CANNOT BE RULED OUT. W E ARE OF THE VIEW THAT LEARNED CIT(A) WAS FAIR AND REASONABLE TO REST RICT THE DISALLOWANCE OF RS. 25,000/-. WE DO NOT SEE ANY MERIT IN THIS GR OUND OF THE DEPARTMENTAL APPEAL. 18. THE LAST ISSUE VIDE GROUND NO.4 RELATES TO THE ADDI TION OF RS. 1,30,200/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF DRILLING EXPENSES. 19. THE FACTS RELATED TO THIS ISSUE IN BRIEF ARE THAT T HE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS OBSERVE D THAT DRILLING INCOME WAS SHOWN BY THE ASSESSEE AFTER DEDUCTING TH E DRILLING EXPENSES TOTALING TO RS. 13,02,072/- AND THAT THE AFORESAID EXPENSES WERE NOT SUPPORTED BY THE VOUCHERS, HE, THEREFORE DISALLOWED 10% OF THE SAID EXPENSES AND ACCORDINGLY ADDITION OF RS. 1,30,200/- WAS MADE. 20. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER TO THE LEARNED CIT(A) AND SUBMITTED AS UNDER:- THE LEARNED AO HAS MADE ADDITION OF RS. 1,30,200/ - MERELY ON THE BASIS OF PRESUMPTION AND ESTIMATE. THE ASSESSEE HAD DULY SH OWN THE INCOME EARNED IN HIS RETURN OF INCOME. THE ASSESSEE WAS D OING DRILLING WORK FOR BOTH GOVT AS WELL AS PRIVATE PARTIES. THE ASSESSEE USED TO RAISE BILLS TO THE PARTIES ON THE BASIS OF MEASUREMENT BOOKS AND TAKE RUNNING BILLS FROM THE DRILLING MACHINE OWNERS FROM SOUTH AND HAS SHOWN TH E NET INCOME IN THE P 10 & L ACCOUNT AS NET DRILLING INCOME WHICH IS VERIFIA BLE FROM THE SEIZED RECORDS. THE LEARNED AO HAS MADE THE ADDITION WITH OUT MERELY ON THE BASIS OF ASSUMPTION & WITHOUT BRINING ANY FURTHER E VIDENCE ON RECORD. IT IS FURTHER SUBMITTED THAT THE DRILLING EXPENSES HAS BE EN TREATED AS FULLY GENUINE BY YOUR PREDECESSOR IN OFFICE IN THE APPEAL S OF SUBSEQUENT YEARS FOR THE A.Y. 1999-00, 2000-01 & 2001-02. HENCE, TH E ADDITION MADE MAY KINDLY BE DELETED. 21. THE LEARNED CIT(A) AFTER CONSIDERING THE SUBMISSIO NS OF THE ASSESSEE DELETED THE ADDITION BY OBSERVING IN PARA 8.4 OF TH E IMPUGNED ORDER, AS UNDER:- I HAVE CONSIDERED THE CONTENTIONS OF THE APPELLANT AS WELL AS THE ASSESSMENT ORDER AND FOUND THAT THE APPELLANT HAD S HOWN NET RECEIPTS IN THE TRADING ACCOUNT AND HAD MAINTAINED COMPLETE DET AILS OF THE DRILLING EXPENSES. THE AO HAD MADE THE ADDITION ON ESTIMATE BASIS WITHOUT BRINGING ANY ADVERSE MATERIAL ON RECORD. ALSO THE DRILLING EXPENSES ARE FOUND TO BE GENUINE IN THE APPEALS FOR SUBSEQUENT I .E. 1999-2000, 2000-01, 2001-02 FOR THE SAME PARTIES. HENCE THE DISALLOWAN CE OF RS. 1,30,200/- IS DELETED AND THE APPEAL IS ALLOWED ON THIS GROUND. NOW, THE DEPARTMENT IS IN APPEAL. 22. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PART IES AND THE MATERIAL AVAILABLE ON RECORD. IT IS NOTICED THAT T HE ORDERS OF THE LEARNED CIT(A) FOR THE SUBSEQUENT YEARS WHICH WERE ALSO HAV ING THE SIMILAR ISSUE WERE SUBJECT MATTER OF THE DEPARTMENTAL APPEAL IN I TA NOS. 408 & 409/JODH/2008 AND 819 & 777/JODH/2007 FOR THE A.Y. 1999-2000 TO 2002- 03, WHEREIN VIDE ORDER DATED 04/06/2013, THE ORDER OF THE LEARNED CIT(A) HAS BEEN AFFIRMED. WE THEREFORE, BY MAINTAINING CON SISTENCY, DO NOT SEE 11 ANY INFIRMITY IN THE ORDER OF THE LEARNED CIT(A) ON THIS ISSUE RAISED IN THE DEPARTMENTAL APPEAL. 23. IN THE RESULT, APPEAL OF THE DEPARTMENT IS DISMISSE D. (ORDER PRONOUNCED IN THE COURT ON 28 TH OCTOBER, 2013). SD/- SD/- (HARI OM MARATHA) (N.K.SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 28 TH OCTOBER , 2013. VR/- COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE LD.CIT 4. THE CIT(A) 5. THE D.R ASSISTANT REGISTRAR, ITAT, JODHPUR.