Shri Vidyasagar B. Singh, Baroda V. The Income Tax Officer-Ward-2(6), Baroda

ITA 1649/AHD/2015

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 0983 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 9 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-03-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 09-06-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: AOITYA SHUKLA SR DR
• Keywords: Source of fund; Additional evidence; Set aside
• Section: 143(3)

Judgement Text

- , - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH SMC BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI PRADIPKUMAR KEDIA, ACCOUNTANT MEMBER ./ ITA NO.1649/AHD/2015 / ASSTT. YEAR: 2010-11 SHRI VIDYASAGAR B. SHAH 5/61, PARISHRAM PARK NR. BAPU DARGH GORWA, BARODA. VS. ITO, WARD-2(6) BARODA. ( APPLICANT ) (RESPONDENT) ASSESSEE BY : SMT. KINJAL SHAH, AR REVENUE BY : SHRI AOITYA SHUKLA, SR.DR ! '#$ % &' / DATE OF HEARING : 08/03/2019 ()* % &' / DATE OF PRONOUNCEMENT: 25/03/2019 +, / O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL AGAINST O RDER OF THE LD.CIT(A)-5, BARODA DATED 20.2.2015 PASSED FOR THE A SSTT.YEAR 2010-11. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HAS FILED HIS RETURN OF INCOME ELECTRONICALLY ON 31.3.2011 DECLAR ING TOTAL INCOME AT RS.10,47,110/-. HIS CASE WAS SELECTED FO R SCRUTINY ASSESSMENT AND NOTICE UNDER SECTION 143(2) WAS ISSU ED AND SERVED UPON THE ASSESSEE. THE LD.AO HAS PASSED AN ASSESSMENT ORDER UNDER SECTION 143(3) ON 4.3.2013. HE MADE TH REE ADDITIONS VIZ. ITA NO.1649/AHD/2015 2 A) ADDITIONAL CAPITAL RS.11,32,500/- B) DISALLOWANCE U/S.40A(3) RS. 37,931/- C) DISALLOWANCE ON A/C OF WAGES RS. 2,50,000/- 3. DISSATISFIED WITH ORDER OF THE LD.AO ASSESSEE CA RRIED THE MATTER IN APPEAL BEFORE THE LD.CIT(A). IT WAS CONT ENDED BY THE ASSESSEE THAT DURING THE ASSESSMENT PROCEEDINGS, HE WAS UNABLE TO LAY HIS HAND ON THE RELEVANT EVIDENCE. THEREFOR E, AN APPLICATION WAS MOVED FOR SEEKING PERMISSION TO LEA D ADDITIONAL EVIDENCE. THE LD.CIT(A) REJECTED THE CONTENTIONS O F THE ASSESSEE ON THE GROUND THAT SO FAR AS ADDITION OF RS.11,32,5 00/- IS CONCERNED, THE ASSESSEE HAS AGREED FOR THIS ADDITIO N BEFORE THE AO AND THEREFORE PREVENTED THE AO TO MAKE FURTHER I NQUIRY. THEREFORE, THE ASSESSEE CANNOT TAKE THIS ISSUE IN A PPEAL. WITH REGARD TO THE LABOUR AND WAGES PAYMENT, THE LD.CIT( A) CONCURRED WITH THE AO. 4. BEFORE US, THE ASSESSEE HAS RAISED THREE GROUNDS OF APPEAL ALONG WITH ADDITIONAL GROUNDS. IN THE FIRST THREE GROUNDS, GROUND NO.3 IS GENERAL GROUNDS OF APPEAL ON WHICH NO SPECI FIC FINDING IS REQUIRED TO BE RECORDED. IN GROUND NO.2, THE ASSES SEE HAS PLEADED THAT THE LD.CIT(A) HAS ERRED IN CONFIRMING ADDITION OF RS.2,50,000/- WHICH WAS ADDED BY THE AO OUT OF WAGE S AND SALARY EXPENSES. 5. IT EMERGES OUT FROM THE RECORD THAT THE ASSESSEE HAS CLAIMED AN EXPENSES OF RS.91,04,857/- TOWARDS WAGES AND LABOUR CHARGES. ON AN ADHOC BASIS, THE LD.AO DISALLOWED RS.2,50,000/-. THE AO WAS OF THE VIEW THAT THE ASSESSEE FAILED TO PRODUCE COMPLETE MONTH-WISE DETAILS OF SALARY PAYMENT. AT THE TIME OF ITA NO.1649/AHD/2015 3 HEARING, THE LD.COUNSEL FOR THE ASSESSEE DID NOT PR ESS THIS GROUND OF APPEAL ON ACCOUNT OF SMALLNESS OF THE AMOUNT INV OLVED IN THIS ISSUE. HENCE, THIS GROUND OF APPEAL IS REJECTED. 6. IN GROUND NO.1, THE GRIEVANCE OF THE ASSESSEE IS THAT THE LD.CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF R S.11,32,500/-. QUA THIS GROUND OF APPEAL OTHER ADDITIONAL GROUNDS TAK EN BY THE ASSESSEE ARE RELEVANT. IN THE ADDITIONAL GROUND, T HE ASSESSEE HAS PLEADED THAT THE LD.CIT(A) HAS NOT ENTERTAINED APPL ICATION MADE UNDER RULE 46A OF THE INCOME TAX RULES. THE LD.COU NSEL FOR THE ASSESSEE SUBMITTED THAT, BEFORE THE LD.CIT(A) AN AP PLICATION TO SEEK PERMISSION TO ADDUCE ADDITIONAL EVIDENCE WAS F ILED. THE ASSESSEE HAS ANNEXED HIS AFFIDAVIT AND CONTENDED TH AT ON ACCOUNT OF CERTAIN DISPUTE WITH M/S.RISHI CONSTRUCTION, A P ARTNERSHIP FIRM, HE COULD NOT PRODUCE RELEVANT EVIDENCE. HOWEVER, B EFORE THE LD.CIT(A) IN ORDER TO DEMONSTRATE THE SOURCE OF CAP ITAL CONTRIBUTION, HE HAS CONTENDED THAT A SUM OF RS.5,0 7,500/- WAS TAKEN AS A LOAN IN PERSONAL CAPACITY AND RS.6,25,00 0/- WAS WITHDRAWN FROM THE FIRM WHERE THE ASSESSEE IS A PAR TNER. THE LD.COUNSEL FOR THE ASSESSEE FURTHER CONTENDED THAT THE ASSESSEE HAS FILED PAN, COPY OF THE BANK STATEMENT, COPY OF PARTNERSHIP DEED, ACKNOWLEDGEMENT OF INCOME-TAX RETURN ALONG WI TH COMPUTATION STATEMENT AND OTHER DETAILS. ON THE S TRENGTH OF THESE DETAILS, IT COULD BE DEMONSTRATED THAT THE AS SESSEE HAS SUFFICIENT SOURCES, OUT OF WHICH IT COULD BE PROVED THAT CAPITAL WAS INTRODUCED BY THE ASSESSEE. 7. ON THE OTHER HAND, THE LD.DR RELIED ON THE ORDER S OF THE REVENUE AUTHORITIES. HE CONTENDED THAT ONCE THE AS SESSEE HAS ITA NO.1649/AHD/2015 4 AGREED FOR ADDITION BEFORE THE AO, THEN HE HAS NO R IGHT TO CHALLENGE THAT ORDER. 8. WE HAVE DULY CONSIDERED RIVAL CONTENTIONS AND GO NE THROUGH THE RECORD CAREFULLY. THERE IS NO DOUBT THAT BEFOR E THE LD.AO THE ASSESSEE WAS UNABLE TO PRODUCE ANY EVIDENCE DEMONST RATING SOURCE OF FUNDS AVAILABLE FOR INTRODUCTION OF CAPIT AL. HE AGREED FOR THE ADDITION BEFORE THE AO. BUT IN THE STATEMENT OF FACTS FILED BEFORE THE LD.CIT(A) HE INDICATED THE SOURCE OF FUN DS AND ALSO PLEADED THAT ON ACCOUNT OF CERTAIN UNAVOIDABLE CIRC UMSTANCES, HE COULD NOT PRODUCE THESE DETAILS. HE HAS DEMONSTRAT ED THAT THERE WAS A DISPUTE WITH PARTNERS IN THE PARTNERSHIP FIRM AND HE COULD NOT GET THE DETILS SHOWING WITHDRAWALS FROM THE FIR M. IT IS TRUE THAT ADMISSION MADE BY THE ASSESSEE BEFORE THE AO C OULD MAKE THE CASE AGAINST HIM, BECAUSE BY ADMITTING CERTAIN FACTS, HE PREVENTED THE AO TO MAKE INVESTIGATION. BUT IF IT IS DEMONSTRATED THAT SUCH ADMISSION WAS ON ACCOUNT OF MISCONCEPTION OF LAW OR MISCONSTRUCTION OF FACTS OR UNDER SOME COERCION, TH EN ON THE BASIS OF SUCH ADMISSION, ADDITION OUGHT NOT TO BE MADE. THERE MIGHT BE SOME NEGLIGENCE AT THE END OF THE ASSESSEE WHILE CO NDUCTING THE PROCEEDINGS BEFORE THE AO, BUT PUNISHMENT IN THE SH APE OF TAX LIABILITY ON THE ADDITION OF RS.11.00 LAKHS PLUS, I S DISPROPORTIONATE TO NEGLIGENCE COMMITTED BY THE ASSESSEE. HE HAS SO UGHT TO PRODUCE RELEVANT DETAILS FOR EXPLAINING SOURCE, THU S, THE LD.CIT(A) IN THE INTEREST OF JUSTICE, OUGHT TO HAVE EXERCISED POWER AVAILABLE UNDER SUB-CLAUSE (4) OF RULE 46A OF THE INCOME TAX RULES AND OUGHT TO HAVE PERMITTED THE ASSESSEE TO PRODUCE THO SE EVIDENCES. THE ASSESSEE HAS DEMONSTRATED AS TO WHY HE AGREED F OR THE ADDITION, BECAUSE HE WAS NOT HAVING REQUISITE DETAI LS FROM THE ITA NO.1649/AHD/2015 5 PARTNERSHIP FIRM AS WELL AS PAN OF THE PERSONS FROM WHOM LOAN WAS TAKEN. CONSIDERING ALL THESE DETAILS, WE ARE O F THE VIEW THAT ORDERS OF THE REVENUE ON THIS ISSUE DESERVE TO BE S ET ASIDE. WE ALLOW THIS GROUND OF APPEAL AND SET ASIDE BOTH THE ORDERS, AND REMIT THIS ISSUE TO THE FILE OF THE LD.AO FOR FRESH ADJUDICATION. NEEDLESS TO MENTION, THE ASSESSEE SHALL BE AT LIBER TY TO PRODUCE ANY EVIDENCE IN SUPPORT OF HIS CASE. THIS GROUND I S ACCORDINGLY ALLOWED FOR STATISTICAL PURPOSE. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE COURT ON 25 TH MARCH, 2019. SD/- SD/- (PRADIPKUMAR KEDIA) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER