Padmapriya, CHENNAI V. ITO, CHENNAI

ITA 1649/CHNY/2013

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 4507 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-10-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 20-08-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N MADHAVAN IRS
• Assessee Lawyers: G GOPALAN RETD
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI BEFORE DR. O.K.NARAYANAN, VICE-PRESIDENTAND SHRI VIKAS AWASTHY, JUDICIAL MEMBER ITA NO. 1649(MDS)/2013 ASSESSMENT YEAR : 2009-10 SMT. PADMAPRIYA, C BLOCK, 4 TH STREET, 133, KKR GARDEN, MADHAVARAM, CHENNAI - 600 060. PAN : AJDPP 9163 H V. INCOME TAX OFFICER, WARD XI(4), 2 ND FLOOR, KANNAMAI BUILDING, CHENNAI - 600 006. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI G. GOPA LAN, RETD. JCIT RESPONDENT BY : SHRI N. MADHAVAN , IRS, JCIT DATE OF HEARING : 14 TH OCTOBER, 2013 DATE OF PRONOUNCEMENT : 21 ST OCTOBER, 2013 O R D E R PER DR.O.K.NARAYANAN, VICE-PRESIDENT THIS APPEAL FILED BY THE ASSESSEE RELATES TO ASSE SSMENT YEAR 2009-10. THE APPEAL IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-IV AT CHENNAI, DATED 18.4.2 013 AND ARISES OUT OF THE ASSESSMENT COMPLETED UNDER SECTION 143(3 ) OF INCOME- TAX ACT, 1961. 2. THE FIRST ISSUE RAISED BY THE ASSESSEE IN THE PR ESENT APPEAL IS THAT THE CIT(APPEALS) HAS ERRED IN CONFIRMING TH E ADDITION MADE 2 I.T.A. NO. 1649/MDS/13 BY THE ASSESSING OFFICER AMOUNTING TO ` 5,00,000/- UNDER SECTION 68 OF INCOME-TAX ACT, 1961, AS UNEXPLAINED CASH CRE DIT. 3. ACCORDING TO ASSESSEE, SHE HAD PURCHASED AN IMMO VABLE PROPERTY FROM ONE SHRI RAVI FOR A CONSIDERATION OF ` 25,00,000/-. BUT, THE PAYMENT MADE TO SHRI RAVI WAS FOR ` 30,00,000/- BY WAY OF BANKERS CHEQUE. THE ACTUAL CONSIDERATION AS PER R EGISTERED DOCUMENT IS ` 25,00,000/- AND AS SUCH, THE BALANCE OF ` 5,00,000/- WAS RETURNED BY SHRI RAVI TO THE ASSESSEE AND THIS AMOUNT WAS REFLECTED IN THE ACCOUNTS. IT IS THE CASE OF THE A SSESSEE THAT THE CONSIDERATION QUOTED FOR THE TRANSACTION WAS INITIA LLY ` 30,00,000/- AND IT WAS ON THE BASIS OF INITIAL NEGOTIATIONS, A LOAN WAS ARRANGED FROM BANK. LATER ON, THE ACTUAL CONSIDERATION WAS REDUCED TO ` 25,00,000/-, BUT THE BANK LOAN WAS NOT DISTURBED AS THE LOAN WAS ALREADY SANCTIONED. THE LOAN WOULD BE DISBURSED ON LY TO THE SELLER OF THE PROPERTY. THEREFORE, THE ASSESSEE HAD NO WA Y BUT TO PAY THE ENTIRE AMOUNT OF ` 30,00,000/- TO THE VENDOR THROUGH BANK INSTRUMENT AND THEREAFTER CLAIMED THE REFUND OF ` 5,00,000/- FROM HIM. ACCORDING TO ASSESSEE, THE SOURCE OF ` 5,00,000/- HAS BEEN EXPLAINED VERY WELL AND IT IS NOT REQUIRED IN THE F ACTS OF THE CASE THAT AN ADDITION OF ` 5,00,000/- IS TO BE MADE IN THE PRESENT CASE, UNDE R SECTION 68 OF INCOME-TAX ACT, 1961. 3 I.T.A. NO. 1649/MDS/13 4. THERE IS NO DISPUTE ON THE FACT THAT THE PROPERT Y PURCHASED BY THE ASSESSEE WAS ACTUALLY REGISTERED FOR A CONSI DERATION OF ` 25,00,000/-. THE VALUE AS PER REGISTERED DOCUMENT IS ` 25,00,000/-. THE LOWER AUTHORITIES HAVE NO CASE THAT THE VALUE O F THE LAND IS SOMETHING MORE THAN THE REGISTERED VALUE. IT IS AL SO AN ACCEPTED FACT THAT THE ASSESSEE HAD APPLIED FOR A LOAN OF ` 30,00,000/- FROM THE BANK AND THE CONSIDERATION WAS PAID BY THE BANK DIRECTLY TO THE VENDOR THROUGH BANK INSTRUMENT. IN SUCH CIRCUMSTAN CES, THE EXPLANATION OFFERED BY THE ASSESSEE IS PLAUSIBLE TH AT IN THE PECULIAR CIRCUMSTANCE OF THE CASE, THE ASSESSEE HAD TO PAY A N AMOUNT OF ` 5,00,000/- IN EXCESS OF THE CONSIDERATION, TO THE V ENDOR AND THEREAFTER GOT A REFUND OF ` 5,00,000/- FROM THE VENDOR. THIS WAS MAINLY BECAUSE OF THE INVOLVEMENT OF BANK LOAN. 5. IN THESE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, WE FIND THAT THIS IS NOT A FIT CASE WHERE SECTION 68 HAS TO BE INVOKED. IT IS NOT A CASE WHERE ASSESSEE HAS NOT EXPLAINED. THE A SSESSEE HAS EXPLAINED CONVINCINGLY THE SITUATION THAT WOULD ARI SE IN DAY-TO-DAY LIFE. SECTION 68 IS A DEEMING PROVISION. THEREFOR E, THE SAID SECTION CANNOT BE INVOKED UNLESS THE CIRCUMSTANCES ARE FULL Y ESTABLISHED SO AS TO INVOKE THE DEEMING PROVISION OF SECTION 68. IN THE PRESENT CASE, EXPLANATION OFFERED BY THE ASSESSEE IS PLAUSI BLE AND A PLAUSIBLE EXPLANATION IS USUALLY TREATED AS A PIECE OF EVIDENCE. IN 4 I.T.A. NO. 1649/MDS/13 THE PRESENT CASE, THE PLAUSIBLE EXPLANATION OFFERED BY THE ASSESSEE IS SUPPORTED BY CORROBORATIVE FACT. 6. ACCORDINGLY, WE FIND THAT THE LOWER AUTHORITIES ARE NOT JUSTIFIED IN MAKING THE ADDITION OF ` 5,00,000/- UNDER SECTION 68/69 OF INCOME-TAX ACT, 1961. THE SAID ADDITION OF ` 5,00,000/- IS DELETED. 7. THE SECOND ISSUE RAISED BY THE ASSESSEE IS THAT THE CIT(APPEALS) HAS ERRED IN CONFIRMING THE ADDITION M ADE BY THE ASSESSING OFFICER, AMOUNTING TO ` 4,92,587/-, UNDER SECTION 40(A)(IA) OF INCOME-TAX ACT, 1961, ON THE FREIGHT E XPENSES, ON THE GROUND THAT NO TDS WAS MADE. 8. THE ASSESSEE IS A MANUFACTURER OF PLASTIC CANS A ND ALL THE CANS ARE SUPPLIED TO OIL COMPANIES LIKE INDIAN OIL CORPORATION LIMITED, BHARAT PETROLEUM LIMITED, AT THE FACTORY S ITE SITUATED AT THADAPALLI IN ANDHRA PRADESH. THERE IS NO EVIDENCE ON RECORD TO SHOW THAT THE ASSESSEE HAS ENGAGED ANY PARTICULAR T RANSPORTER ON THE BASIS OF ANY CONTRACT TO TRANSPORT THE PLASTIC CANS FROM ASSESSEES FACTORY TO THE OIL COMPANIES. IT IS TRU E THAT THE ASSESSEE HAD MADE PAYMENTS TO M/S JOTHI KRISHNA TRANSPORT, B UT, M/S JOTHI KRISHNA TRANSPORT AS SUCH WAS NOT TRANSPORTING THE PLASTIC CANS SENT BY THE ASSESSEE. ON THE OTHER HAND, M/S JOTHI KRISHNA 5 I.T.A. NO. 1649/MDS/13 TRANSPORT WAS RUNNING TRUCKS TO TRANSPORT THE PLAST IC CANS OF THE ASSESSEE, ESPECIALLY, EMPTY TRUCKS GOING BACK AFTER UNLOADING THE CARGO AT CHENNAI. THE FACTS SHOW THAT THE ASSESSEE HAD NOT ENTERED INTO ANY WRITTEN OR ORAL AGREEMENT WITH M/S JOTHI KRISHNA TRANSPORT. M/S JOTHI KRISHNA TRANSPORT WAS ACTING ONLY AS TRANSPORT BROKER AND THE CONSIGNMENTS WERE DESPATCHED ON THE BASIS OF AVAILABILITY OF TRUCKS FROM TIME TO TIME. IN THESE CIRCUMSTANCES, THERE WAS NO LIABILITY ON THE PART OF THE ASSESSEE TO DEDUCT TAX AT SOURCE. THEREFORE, THE DISALLOWANCE OF ` 4,92,587/- IS NOT WITHIN LAW. THE SAID ADDITION IS ACCORDINGLY DELETED. 9. IN THE RESULT, THIS APPEAL FILED BY THE ASSESSEE IS ALLOWED. 10. ORDER PRONOUNCED ON MONDAY, THE 21 ST OCTOBER, 2013 AT CHENNAI. SD/- SD/- (VIKAS AWASTHY) (DR. O .K.NARAYANAN) JUDICIAL MEMBER VICE-PRESIDENT CHENNAI, DATED, THE 21 ST OCTOBER, 2013. KRI. COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT-IX, CH ENNAI 4. CIT(A)-IV, CHENNAI-34 5. DR 6. GF.