ITO, Ward - 49(2), Kolkata, Kolkata V. M/s. Indian Termal Engineering, Kolkata

ITA 1651/KOL/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 75041 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 1 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-01-2014
• Appeal Filed By: Department
• Bench Allotted: C
• Assessment Year: 2008-2009
• Appeal Filed On: 01-12-2011
• Court: TRIBUNAL
• Department Lawyers: P K CHAKRABORTY
• Assessee Lawyers: R CHOWDHURY
• Keywords: Unexplained cash credit
• Section: 143(3); 133(6)

Judgement Text

, C , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: KOL KATA () BEFORE , /AND , ! ) [BEFORE SHRI MAHAVIR SINGH, JM & SHRI SHAMIM YAHYA, AM] ' ' ' ' / I.T.A NO. 1 651/KOL/2011 #$ %& #$ %& #$ %& #$ %&/ // / ASSESSMENT YEAR: 2008-09 INCOME-TAX OFFICER, WD-49(2), KOLKATA. VS. M/S. I NDIA THERMAL ENGINEERING. (PAN: AABFI9370C) (() /APPELLANT ) (*+()/ RESPONDENT ) DATE OF HEARING: 27.12.2013 DATE OF PRONOUNCEMENT: 30.01.2014 FOR THE APPELLANT: SHRI P. K. CHAKRABORTY, JCIT, S R. DR FOR THE RESPONDENT: SHRI R. CHOWDHURY / ORDER PER SHRI MAHAVIR SINGH, JM : THIS APPEAL BY REVENUE IS ARISING OUT OF ORDER OF C IT(A)-XXXII, KOLKATA IN APPEAL NO. 64/CIT(A)-XXXII/10-11/49(2)/KOL DATED 27.07.2011. ASSESSMENT WAS FRAMED BY ITO, WARD- 49(2), KOLKATA U/S. 143(3) OF THE INCOME-TAX ACT, 1 961 (HEREINAFTER REFERRED TO AS THE ACT) FOR ASSESSMENT YEAR 2008-09 VIDE HIS ORDER DATED 09.11. 2010. 2. IN THIS APPEAL REVENUE HAS RAISED TWO ISSUES I.E . RESTRICTING THE DISALLOWANCE OF LABOUR CHARGES AT 10% FROM 20% MADE BY AO AND ALSO DELETIN G THE ADDITION OF UNEXPLAINED CASH CREDIT OF RS.19,26,376/-. FOR THIS, REVENUE HAS RA ISED FOLLOWING GROUND: IN THIS CASE ADDITION OF RS.9,663/- ON ACCOUNT OF LABOUR CHARGES AND RS.19,26,376/- ON ACCOUNT OF UNEXPLAINED CASH CREDIT MADE BY THE AO. ON GOING THROUGH THE APPEAL ORDER LD. CIT(A) RESTRICTED THE LABOUR CHARGE 10% IN PLAC E OF 20% AND RECEIPT OF RS.19,26,376/- WAS NOT SHOWN BY THE ASSESSEE IN THE BALANCE SHEET HENCE ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE. A/R OF THE ASSES SEE ADMITTED IT IS A APPARENT MISTAKE. THE EXPLANATION SUBMITTED BY THE A/R OF THE ASSESSE E IS APPARENTLY NOT ACCEPTED. 2. THAT, IN DOING SO, LD. CIT(A) OVERLOOKED THE FAC T THAT A CLEAR MISTAKE APPARENT FROM THE RECORD OCCURRED IN THE ASSESSMENT ORDER INASMUC H AS THE EXPENDITURE PERTAINING TO THE AY 2005-06 WAS WRONGLY ALLOWED IN AY 2006-07. 3. FIRST WE WILL DEAL WITH THE ISSUE OF RESTRICTING TH E DISALLOWANCE OF LABOUR CHARGES AT 10% AS AGAINST 20%. WE FIND THAT THE CIT(A) HAS REDUCE D THE DISALLOWANCE BY OBSERVING AS UNDER: 2 ITA NO. 1651/K/2011 M/S. INDIAN THERMAL ENGINEERING, AY:2008-09 IN THIS REGARD THE ASSESSEE CONTENDED THAT MOST OF THE LABOURERS WERE ILLITERATE AND ASSESSEE COULD NOT GET OPPORTUNITY TO GET ALL THE V OUCHERS SIGNED AND THAT SUCH OMISSION WAS UNINTENTIONAL. I DO NOT FIND ANY MERIT IN THE CONTENTION RAISED BY THE ASSESSEE. HOWEVER, CONSIDERING THE FACT THAT THE DISALLOWANCE OF LABOUR CHARGES TO THE TUNE OF RS.2,91,909/- HAS ALREADY BEEN CONFIRMED IN GROUND NO.1. I AM OF THE OPINION THAT FURTHER DISALLOWANCE OF 20% OF LABOUR CHARGES FOR B EING UNVERIFIABLE IS EXCESSIVE. THEREFORE, I RESTRICT THE DISALLOWANCE ON THIS ACCO UNT TO 10% I.E. TO RS.9,663/-. THE ASSESSEE GETS RELIEF OF RS.9,663/-. AGGRIEVED, REVENUE PREFERRED APPEAL BEFORE US. 4. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH THE ASSESSMENT ORDER AND FOUND THAT THE AO HAS MADE ADDITION BY OBSERVING AS UNDER: DURING THE YEAR, THE FIRM INCURRED EXPENSES TOWARD S LABOUR PAYMENTS THROUGH ELF MADE VOUCHERS FROM THE MONTHS OF APRIL, 2007 TO JANUARY, 2008. THESE SELF MADE VOUCHERS WERE FULLY UNSIGNED/NOT PROPERLY VOUCHED, AMOUNTING TO RS.96,631/-. HENCE, 20% OF RS.96,631/- I.E. RS.19326/- IS DISALL OWED FOR WANT OF PROPER VOUCHERS. THIS BEING AN AD HOC ADDITION THERE IS NOTHING WHIC H NEEDS INTERFERENCE IN THE ORDER OF CIT(A) AND EVEN SR. DR COULD NOT ARGUE ANYTHING ON THIS. IN THE ABSENCE OF THE SAME OR ON MERIT ALSO THERE IS NOTHING, WHICH REQUIRES INTERFERENCE IN TH E ORDER OF CIT(A). HENCE, WE CONFIRM THE ORDER OF CIT(A) AND THIS ISSUE OF REVENUES APPEAL IS DISMISSED. 5. THE NEXT ISSUE IN THIS APPEAL OF REVENUE IS AS R EGARDS TO THE ORDER OF CIT(A) DELETING THE UNEXPLAINED CASH CREDIT OF RS.19,26,376/-. WE FIND THAT THE AO MADE THIS ADDITION BY OBSERVING AS UNDER: ON VERIFICATION, IT IS SEEN THAT THE SAID CONSIDER ATION (I.E. RS.76,78,096/-) WAS DULY REFLECTED IN ASSESSEES BANK STATEMENT ( INDIAN OVER SEAS BANK, SEALDAH BRANCH). M/S. YAASHI STEEL PRODUCTS (P) LTD. VIDE ITS LETTER DATE D 21/7/10 HAS INFORMED THAT ALL THE PAYMENTS,. EXCEPT RS. 21,000/- HAD BEEN PAID BY ACC OUNT PAYEE CHEQUE. BUT THE CLOSING BALANCE AS SHOWN BY THE M/S. YAASHI STEEL PRODUCTS (P) LTD. OF RS. 19,26,376/- WHICH IS NOT REFLECTED IN BALANCE SHEET FILED AS ON 31.03.20 08 FILED BY THE ASSESSEE. BESIDES A/R FILED A LIST OF ADVANCE FROM PARTIES WHEREIN NO NAM E OF M/S. YAASHI STEEL PRODUCTS (P) LTD. WAS FOUND. A/R OF THE ASSESSEE WAS ASKED VIDE NOTE SHEET DATED 13/8/10 AND LETTER ISSUED DATED 09/09/10 TO EXPLAIN ABOUT THE TREATMEN T OF CLOSING BALANCE AS SHOWN BY THE M/S. YAASHI STEEL PRODUCTS (P) LTD. OF RS.19,26 ,376/- WHICH WAS NOT SHOWN BY THE ASSESSEE IN THE BALANCE SHEET BUT SHOWN BY THE M/S. YASHI STEEL PRODUCTS (P) LTD. IN THEIR LEDGER. IN RESPONSE, THE A/R OF THE ASSESSEE ADMITTED IT AS APPARENT MISTAKE. THEREFORE, RECEIPT OF RS.19,26,376/- FROM M/S. YAAS HI STEEL PRODUCTS (P) LTD. IS TREATED AS UNEXPLAINED CASH CREDIT AS PER I.T. ACT, 1961 WH ICH THE ASSESSEE HAS FAILED TO DISCLOSE IN HIS BALANCE SHEET AND HENCE, ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE. 3 ITA NO. 1651/K/2011 M/S. INDIAN THERMAL ENGINEERING, AY:2008-09 AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE CIT(A). BEFORE CIT(A), ASSESSEE FILED RECONCILIATION AND EXPLAINED THE DEFICIENCY. THE CI T(A) DELETED THE ADDITION. AGGRIEVED, REVENUE CAME IN APPEAL BEFORE US. 6. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE ASSESSEE HAS CARRIED OUT SOME WORK ON BEHALF OF YAASHI STEEL PRODUCTS (P) LTD. (YSSPL) FOR AN AMOUNT OF RS.76,78,096/-. ACCORDING TO ASSESSEE AND ACCORDING TO THE THIRD PARTY YSSPL, EXCEPT A SUM OF RS.21,000/-, THE ENTIR E PAYMENT IS PAID BY ACCOUNT PAYEE CHEQUE. BUT THE CLOSING BALANCE AS SHOWN BY YSSPL OF RS.19, 26,376/- WAS NOT REFLECTED BY ASSESSEE. THIS IS A FACT THAT THE ASSESSEE HAS DISCLOSED ALL THE PAYMENTS MADE BY YSSPL IN ITS BOOKS OF ACCOUNT AND DULY ACCEPTED BY THE AO IN THE ASSESSME NT ORDER. THE ASSESSEE ALSO FILED THE LIST OF ADVANCES RECEIVED OR THE DEBTORS AND CREDITORS LIST IN WHICH THE NAME OF YSSPL WAS NOT APPEARING. AS THE NAME WAS NOT APPEARING, AO REQUI RED THIS THIRD PARTY YSSPL TO EXPLAIN THE DISCREPANCY BY ISSUING NOTICE U/S. 133(6) OF THE AC T. IN RESPONSE TO THIS NOTICE U/S. 133(6) OF THE ACT YSSPL COULD NOT EXPLAIN ANYTHING EXCEPT FILING THE ACCOUNT STATEMENT OF THE ASSESSEE IN THEIR BOOKS OF ACCOUNTS WHEREIN AN AMOUNT OF RS.19, 26,376/- IS SHOWN AS PAYABLE, BUT THIS ASPECT WAS NEVER EXAMINED BY THE AO FURTHER. IT IS A FACT THAT ACCORDING TO ASSESSEE AS WELL AS AO THE SUM OF RS.19,26,376/- IS PART OF THE WORK DO NE BY ASSESSEE AT RS.76,78,096/- AND THE SAME WAS RECEIVED BY ASSESSEE BY ACCOUNT PAYEE CHEQ UE. ONCE THIS IS THE FACT, THE AO SHOULD HAVE EXAMINED THE PARTY YSSPL AND SHOULD HAVE VERIF IED FACTS FROM THEM. THE AO HAS NEVER DONE THAT PROCEDURE AND ONCE HE HAS LEFT AT THAT, H E HAS NO BUSINESS TO MAKE ADDITION IN THE HANDS OF THE ASSESSEE PARTICULARLY WHEN ENTIRE PAYM ENT IS RECEIVED BY ASSESSEE BY ACCOUNT PAYEE CHEQUE EXCEPT THE AMOUNT OF RS.21,000/-. HENC E, WE FIND NO INFIRMITY IN THE ORDER OF CIT(A) AND THE APPEAL OF REVENUE IS DISMISSED. 7. IN THE RESULT, APPEAL OF REVENUE IS DISMISSED. 8. ORDER IS PRONOUNCED IN THE OPEN COURT ON 30.01.2 014. SD/- SD/- , ! , (SHAMIM YAHYA ) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 30TH JANUARY, 2014 PRONOUNCED BY SD/- (A.P. GEORGE) SD/- (M. SINGH) AM JM ./ #01 2 JD.(SR.P.S.) 3 *4 5 4%6- COPY OF THE ORDER FORWARDED TO: 4 ITA NO. 1651/K/2011 M/S. INDIAN THERMAL ENGINEERING, AY:2008-09 1 . () / APPELLANT ITO, WARD-49(2), KOLKATA. 2 *+() / RESPONDENT M/S. INDIAN THERMAL ENGINEERING, 3, KAMAL PARK, P.O. BIRATI, KOLKATA-700 051. 3 . # ( )/ THE CIT(A), KOLKATA 4. 5. # / CIT KOLKATA 4:; *# / DR, KOLKATA BENCHES, KOLKATA +4 */ TRUE COPY, #