Shri Girishbhai Ranchodlal Maliwad, Vadodara V. The DCIT Circle-1(3), Vadodara

ITA 1688/AHD/2019

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 4293 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 10 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-10-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2015-2016
• Appeal Filed On: 13-11-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S.S. SHUKLA
• Keywords: TDS; Bogus
• Section: 44AD; 133(6); 143(2)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD (THROUGH WEB-BASED VIDEO CONFERENCING PLATFORM) ] BEFORE SHRI RAJPAL YADAV, VICE PRESIDENT AND SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER ITA NO. 1688/AHD/2019 ASSESSMENT YEARS : 2015-16 SHRI GIRISHBHAI RANCHODLAL MALIWAD, 61, FERTILIZER PARK, NIZAMPURA, VADODARA-390002 PAN : ACJPM 5021 C VS THE DY. COMMISSIONER OF INCOME-TAX, CIRCLE 1(3), VADODARA-390007 / (APPELLANT) / (RESPONDENT) ASSESSEE BY : NONE REVENUE BY : SHRI S.S. SHUKLA, SR DR / DATE OF HEARING : 28/09/2021 / DATE OF PRONOUNCEMENT: 04/10/2021 / O R D E R PER RAJPAL YADAV, VICE PRESIDENT : THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL AGAIN ST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS)-1, VAD ODARA (CIT(A) IN SHORT) DATED 09.09.2019 PASSED FOR ASSESSMENT YEAR 2015-16. IN THE SOLITARY SUBSTANTIAL GROUND OF APPEAL, THE ASSESSEE HAS PLEA DED THAT THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE AD-HOC DISALLOWA NCE OF RS.11,62,648/- BEING 25% OF CERTAIN OUTSTANDING CREDITORS. 2. IN RESPONSE TO THE NOTICE OF HEARING, NO ONE HAS COME PRESENT ON BEHALF OF THE ASSESSEE. WITH THE ASSISTANCE OF THE LEARNED DEPARTMENTAL REPRESENTATIVE, WE HAVE GONE THROUGH THE RECORD CAR EFULLY AND PROCEED TO DISPOSE OF THE APPEAL EX PARTE QUA THE ASSESSEE. ITA NO. 1688/AHD/2019 SHRI GIRISHBHAI RANCHODLAL MALIWAD VS. DCIT AY : 2015-16 2 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS AN INDIVIDUAL. HE HAS FILED HIS RETURN OF INCOME ON 29.09.2015 DECLAR ING TOTAL INCOME OF RS.51,92,900/-. THE ASSESSEE, AT THE RELEVANT TIME , WAS ENGAGED IN THE BUSINESS OF CIVIL CONSTRUCTION AS A CONTRACTOR AND SUB-CONTRACTOR IN THE NAME AND STYLE OF M/S. ENGINEERING BUILDERS. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY ASSESSMENT AND NOTICE UNDER S ECTION 143(2) OF THE ACT WAS ISSUED AND SERVED UPON THE ASSESSEE. ON SCRUTIN Y OF THE ACCOUNTS, IT REVEALED TO THE ASSESSING OFFICER THAT THE ASSESSEE HAS SHOWN TOTAL SUNDRY CREDITORS OF RS.2,89,83,434/-. THE LEARNED ASSESSI NG OFFICER HAS FURTHER OBSERVED THAT THE DETAILS OF SUNDRY CREDITORS EXCEE DING THE AMOUNT OF RS.5 LAKHS WERE CALLED FOR. THE ASSESSEE HAS SUBMITTED THE LIST OF SUNDRY CREDITORS ALONGWITH CONFIRMATION OF THE PERSONS HAV ING CLOSING BALANCE OF MORE THAN RS.5 LAKHS. THE ASSESSING OFFICER HAS CA LLED FOR THE LIST OF 10 SUNDRY CREDITORS AND ISSUED NOTICES UNDER SECTION 1 33(6) OF THE ACT WITH THE DIRECTION TO SUBMIT INFORMATION. ACCORDING TO HIS FINDINGS, IT HAS BEEN FOUND THAT OUT OF 10 SUNDRY CREDITORS, ONE SUNDRY C REDITOR DID NOT REPLY AND TWO NOTICES RETURNED UN-SERVED; THEREFORE, THREE SU NDRY CREDITORS OUT OF TEN SUNDRY CREDITORS, AS APPEARING IN THE BOOKS OF THE ASSESSEE, REMAINED UNVERIFIABLE. HE NOTED THAT THE DETAILS OF THESE C REDITORS AS UNDER:- SR. NO. NAME OF THE CREDITOR OUTSTANDING BALANCE 1 SHREE GLOBE TRADE RS.10,84,952/- 2 HASMUKHBHAI PATEL RS.19,10,185/- 3 VIPUL D. SHAH RS.16,55,456/ - TOTAL RS.46,50,593/- 4. THEREAFTER, THE LEARNED ASSESSING OFFICER HAS DI SALLOWED 25% OF THE ABOVE SUNDRY CREDITORS AMOUNTING TO RS.46,50,593/-. HE DREW SUPPORT FROM THE ORDER OF THE TRIBUNAL IN THE CASE OF VIJAY PROT EINS LTD. VS. ACIT, ITA NO. 1688/AHD/2019 SHRI GIRISHBHAI RANCHODLAL MALIWAD VS. DCIT AY : 2015-16 3 REPORTED IN (1996) 58 ITD 428 (AHD). ACCORDINGLY, AN ADDITION OF RS.11,62,648/- WAS MADE. 5. APPEAL TO THE LEARNED CIT(A) DID NOT BRING ANY R ELIEF TO THE ASSESSEE. THE LEARNED CIT(A) HAS SPECIFICALLY EXAMINED THESE THREE CASES INDIVIDUALLY AND RECORDED THE FINDINGS. FOR THE SAKE OF REFEREN CE, WE TAKE NOTE OF THE FINDING RECORDED BY THE LEARNED CIT(A) FOR ONE OF T HE CREDITORS NAMELY GLOBE TRADE, AS UNDER :- 4.3. I DISCUSS ONE BY ONE OF ABOUT ALL THREE CRED ITORS: GLOBE TRADE:- LEDGER A/C - ENGINEERING BUILDERS- APPEARING IN THE BOOKS OF GLOBE TRADE SHOWS AS UNDER: 01.04.2014 OPENING DEBIT BALANCE RS. 13,84,952/- 09.04.2014 CLOSING DEBIT BALANCE RS. 10 .84.952/- TDS RS.9,080/- CONCLUSION: LEDGER DETAILS SHOW THERE IS NO TRANSACTION BETWEEN THE APPELLANT AND CREDITOR DURING THE YEAR. HOWEVER, THE APPELLANT HA S DEDUCTED TDS OF RS.9,080/-. THE MOOT QUESTION ARISES HERE IS WHEN G LOBE TRADE DID NOT SUPPLY LABOUR DURING THE YEAR THEN APPELLANT SHOULD HAVE EXPLAINED THE RATIONALE BEHIND DEDUCTION OF TDS. UNDISPUTED];-, A PPELLANT IS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING- THEN IT MUST HAVE RAISED SOME BILLS BEFORE DEDUCTING TDS. ON THE OTHER HAND, ITR V TILED BY GL OBE TRADE SHOWS TDS IS FULLY CLAIMED IN ITR. BANK STATEMENT OF GLOBE TR ADE (CREDITOR) SUGGESTS CREDIT ENTRY OF RS.3,00,000/- FOLLOWED BY TRANSFER OF SAME AMOUNT BACK TO APPELLANT. IN OTHER WORDS, APPELLANT DEBITED ITS BA NK ACCOUNT FOR NAME SAKE ENSURING TDS COMPLIANCE SO AS TO GIVE A COLOUR OF G ENUINENESS OF TRANSACTION. DESPITE NOTICE U/S 133(6) ISSUED BY ME . THE CREDITOR DID NOT SUBMIT PF CERTIFICATE, GOMASTA DHARA CERTIFICATE, S HOP AND ESTABLISHMENT CERTIFICATE, DETAILS OF SITE WHERE LABOURS WERE SUP PLIED TO APPELLANT. THESE FACTS CONVINCE ME TO SAY THAT OUTSTANDING CREDIT BA LANCE IS NON GENUINE. 6. A PERUSAL OF THE ORDERS OF BOTH THE AUTHORITIES WOULD REVEAL THAT BOTH THE REVENUE AUTHORITIES FAILED TO APPRECIATE THE TR UE FACTS AND CORRECT ITA NO. 1688/AHD/2019 SHRI GIRISHBHAI RANCHODLAL MALIWAD VS. DCIT AY : 2015-16 4 POSITION OF LAW. LET US FIRST DEAL WITH THE ASSESS MENT ORDER. A SUNDRY CREDITOR CAN EITHER BE TRUE OR FALSE. THERE CANNOT BE ANY AD-HOC DISALLOWANCE @ 25%. IF THE ASSESSING OFFICER WAS N OT SATISFIED WITH THE INFORMATION SUPPLIED BY THOSE CREDITORS, HE SHOULD HAVE INVESTIGATED FURTHER AND SHOULD HAVE REACHED ON A FIRM CONCLUSIO N THAT THE CLAIM MADE BY THE ASSESSEE IS BOGUS ONE. IF M/S. GLOBE TRADE HAS WORKED FOR THE ASSESSEE AND AN OUTSTANDING BALANCE OF RS.10,84,952 /- IS REMAINED TO BE PAID, THEN HOW THE 25% CAN BE TERMED AS NON-GENUINE . THE LEARNED ASSESSING OFFICER HAS PLACED RELIANCE ON THE DECISI ON OF THE ITAT IN THE CASE OF VIJAY PROTEINS LTD. VS. ACIT (SUPRA) WHICH IS AL TOGETHER A DIFFERENT CASE. IN THAT CASE, THE ASSESSEE COMPANY WAS ENGAGED IN T HE BUSINESS OF PRODUCING EDIBLE OILS, OIL CAKES ETC IT HAS MADE CERTAIN PURCHASES WHICH WERE ALLEGED TO BE THE BOGUS. THE TRIBUNAL, AS A M ATTER OF FACT, FOUND THAT THERE IS NO DISPUTE WITH REGARD TO THE SALES ACHIEV ED BY THE ASSESSEE; AND, FOR ACHIEVING THOSE SALES, PURCHASES MUST HAVE DONE . THERE CAN BE OF DIFFERENT SOURCE NAMELY THE ASSESSEE HAS SHOWN PURC HASE FROM A BUT MATERIAL COULD HAVE BEEN SUPPLIED BY B. IN THAT EXERCISE, THERE CAN BE AVOIDANCE OF SALES TAX, EXCISE DUTY ETC IN THAT BA CKGROUND, THE TRIBUNAL HAS QUANTIFIED THE PROFIT ELEMENT EMBEDDED IN THOSE PURCHASES AT 25% AND CONFIRMED THE DISALLOWANCE OUT OF THOSE PURCHASES. SO, THE REFERENCE MADE BY THE ASSESSING OFFICER IS TOTALLY MISPLACED IN TH E GIVEN SET OF FACTS. 6.1 LET US REVERT TO THE FINDINGS RECORDED BY THE L EARNED CIT(A). THOUGH WE COULD HAVE DISCUSSED EACH THREE CASES, BUT THE A MOUNT INVOLVED IS TOO SMALL TO INDULGE IN SUCH AN EXERCISE. A PERUSAL OF THE DISCUSSION MADE BY THE LEARNED CIT(A) WITH REGARD TO M/S. GLOBE TRADE WOULD SHOW THAT THIS CONCERN HAS THE OPENING BALANCE OF RS.13,84,952/-. THE ASSESSEE HAS MADE PAYMENT OF RS.3,00,000/- DURING THE YEAR AND DEDUCT ED THE TDS. THE CLOSING BALANCE WAS SHOWN AT RS.10,84,952/-. THE LE ARNED CIT(A) WANTS THAT ITA NO. 1688/AHD/2019 SHRI GIRISHBHAI RANCHODLAL MALIWAD VS. DCIT AY : 2015-16 5 M/S. GLOBE TRADE SHOULD SUBMIT THE PF CERTIFICATE O F THE LABOURERS OR THE MANPOWER SUPPLIED IT TO THE ASSESSEE IN THE PAST, I TS PWD REGISTRATION CERTIFICATE, IF ANY, AND OTHER DETAILS; WHEREAS, M /S. GLOBE TRADE HAS FILED ITS RETURN OF INCOME UNDER SECTION 44AD OF THE ACT SHOW ING INCOME @ 8% OF TOTAL TURNOVER. IT WAS NOT SUPPOSED TO MAINTAIN TH E BOOKS OF ACCOUNTS AND OTHER DETAILS. IF IT WAS NOT HAVING THOSE DETAILS, HOW THESE SUNDRY CREDITORS APPEARING IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE BECOME BOGUS?! IT IS AN IRREGULARITY, IF ANY, AT THE END OF THE MANPOWER SU PPLIER. THE EXISTENCE OF THE PARTY IS NOT IN DISPUTE. WHERE IS THE NECESSITY TO TAKE WORK IN THIS YEAR? IT CAN BE AN OUTSTANDING SUNDRY CREDITOR FROM THE E ARLIER YEARS OUT OF WHICH PARTLY PAID IN THIS YEAR. WE FAILED TO APPRECIATE THE LOGIC GIVEN BY THE LEARNED FIRST APPELLATE AUTHORITY. ONE OF THE OBSE RVATIONS MADE BY LEARNED CIT(A) IS THAT A CREDIT ENTRY OF RS.3,00,000/- WAS SHOWN IN THE BANK STATEMENT OF M/S. GLOBE TRADE FOLLOWED BY TRANSFERR ING THE SAME AMOUNT BACK TO THE ASSESSEE. BUT THIS ASPECT HAS NOT BEEN FURTHER ELABORATED BY REPRODUCING THE BANK STATEMENT AND WHY THE LEARNED CIT(A) HAS NOT ISSUED A NOTICE FOR ENHANCEMENT OF DISALLOWANCE. BECAUSE, IN THAT CASE, THE WHOLE AMOUNT OF RS.13,84,952/- SHOULD BE CONSIDERED AS BO GUS AND NOT 25% OF THAT. TO OUR MIND, BOTH THE AUTHORITIES HAVE NOT AP PRECIATED THE FACTS IN RIGHT PERSPECTIVE AND, THEREFORE, NO DISALLOWANCE I S CALLED FOR. WE, THEREFORE, DELETE THE DISALLOWANCE AND ALLOW THE AP PEAL OF THE ASSESSEE. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE COURT ON 4 TH OCTOBER 2021 AT AHMEDABAD. SD/- SD/- (PRADIP KUMAR KEDIA) ( RAJPAL YADAV) ACCOUNTANT MEMBER VICE-PRESIDENT AHMEDABAD, DATED 04/10/2021 *BT ITA NO. 1688/AHD/2019 SHRI GIRISHBHAI RANCHODLAL MALIWAD VS. DCIT AY : 2015-16 6 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ) ( / THE CIT(A)- 5. , , /DR,ITAT, AHMEDABAD, 6. / GUARD FILE. / BY ORDER, TRUE COPY (ASSTT. REGISTRAR) ITAT, AHMEDABAD 1. DATE OF DICTATION- 30.09.2021 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 30.09.2021 OTHER MEMBER 30.09.2021. 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S. - 04.10.2021 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 04.10.2021.. 5. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .05.10.2021 6. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 7. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REG ISTRAR FOR SIGNATURE ON THE ORDER 8. DATE OF DESPATCH OF THE ORDER