The ITO, Ward-9(1), Ahmedabad V. M/s. Narayan Builders, Ahmedabad

ITA 1763/AHD/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 89315 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 10 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-05-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 06-04-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 05-07-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: N C AMIN
• Keywords: Bogus purchase; Unexplained expenditure; Retrospective amendment

Judgement Text

, , , , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD 0 0 , !' , # BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER ./ ././ ./ ITA NO.1763/AHD/2011 & CO NO.182/AHD/2011 & '& & '& & '& & '&/ // / ASSESSMENT YEAR: 2005-06 ITO, WARD 9 (1), AHMEDABAD VS M/S. NARAYAN BUILDERS, 43, SHANKAR SOCIETY, NR. AMIKUNJ BUS STAND, AHMEDABAD PAN : AADFN 4405 H () () () () / // / (APPELLANT) *+ *+ *+ *+ () ()() () / // / (RESPONDENT & CROSS-OBJECTOR) REVENUE BY : SHRI NIMESH YADAV, SR. DR ASSESSEE(S) BY : SHRI N.C. AMIN, AR , - './ // / DATE OF HEARING : 06/04/2015 /0' - '. / // / DATE OF PRONOUNCEMENT: 08/05/2015 1 1 1 1/ // / O R D E R PER SHRI KUL BHARAT, JUDICIAL MEMBER:- THIS IS AN APPEAL FILED BY THE REVENUE AND THE CRO SS-OBJECTION FILED BY THE ASSESSEE, BOTH AGAINST THE ORDER OF TH E COMMISSIONER OF INCOME TAX (APPEALS)-XV, AHMEDABAD DATED 27.05.2011. SINC E THIS APPEAL AND THE CROSS-OBJECTIONS INVOLVE COMMON ISSUES, THESE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER FOR TH E SAKE OF CONVENIENCE. 2. FIRST WE TAKE UP THE APPEAL OF THE REVENUE VIDE ITA NO.1763/AHD/2011 FOR ASSESSMENT YEAR 2005-06. THE REVENUE HAS RAISED FOLLOWING GROUNDS OF APPEAL:- ITA NO. 1763 & CO 182 AHD 2011 ITO VS. NARAYAN BUILDERS FOR AY 2005-06 2 1. THE LD. COMMISSIONER OF INCOME-TAX (A)-XV, AHME DABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE PENALTY OF RS.15,7 2,182/- LEVIED U/S 271(1)(C) OF THE I.T. ACT. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A)-XV, AHMEDABAD OUGHT TO HAVE UPHELD THE ORDER OF THE ASS ESSING OFFICER. 3. IT IS THEREFORE, PRAYED THAT THE ORDER OF THE LD . COMMISSIONER OF INCOME-TAX (A)-XV, AHMEDABAD MAY BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 3. BRIEFLY STATED FACTS ARE THAT THE CASE OF THE AS SESSEE WAS PICKED UP FOR SCRUTINY ASSESSMENT AND THE ASSESSMENT U/S.143(3) O F THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) WAS FRA MED VIDE ORDER DATED 11.10.2007. WHILE FRAMING THE ASSESSMENT, THE ASSES SING OFFICER ALSO INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) ON THE ADDITIONS/DISALLOWANCE MADE BY THE ASSESSING OFFICER BY INVOKING PROVISION S OF SECTION 40(A)(IA) OF THE ACT AS ALSO ON THE BASIS OF BOGUS PURCHASES, UN EXPLAINED EXPENDITURE, ETC. IN THE QUANTUM PROCEEDINGS, THE ASSESSEE HAS TAKEN THE MATTER UP TO THE STAGE OF THE TRIBUNAL; HOWEVER, IN THE PENALTY PROCEEDINGS THE ASSESSING OFFICER LEVIED PENALTY OF RS.16,79,650/- FROM THE A DDITION/DISALLOWANCE OF RS.47,25,947/-. AGAINST THIS PENALTY ORDER, THE AS SESSEE HAS FILED AN APPEAL BEFORE THE LD. CIT(A) WHO, AFTER CONSIDERING THE SU BMISSIONS OF THE ASSESSEE, PARTLY ALLOWED THE APPEAL. WHILE PARTLY ALLOWING T HE APPEAL, THE LD. CIT(A) DELETED THE PENALTY ON THE ADDITION OF RS.44,45,998 /- WHICH WAS MADE BY THE ASSESSING OFFICER BY INVOKING PROVISIONS OF SEC TION 40(A)(IA) OF THE ACT FOR NOT DEPOSITING THE TAX IN THE GOVERNMENT ACCOUN T. HOWEVER, IN RESPECT OF ADDITION CONFIRMED BY THE ITAT ON ACCOUNT OF BOG US PURCHASES AND UNEXPLAINED EXPENDITURE, THE LD. CIT(A) CONFIRMED T HE PENALTY ON BOTH COUNTS. THE REVENUE IS NOW IN APPEAL BEFORE US AGA INST THE ORDER OF THE CIT(A) IN RESPECT OF DELETING THE PENALTY ON THE AD DITION OF RS.44,45,998/- MADE U/S 40(A)(IA) OF THE ACT, WHEREAS IN THE CROSS -OBJECTION BY THE ITA NO. 1763 & CO 182 AHD 2011 ITO VS. NARAYAN BUILDERS FOR AY 2005-06 3 ASSESSEE, THE ASSESSEE HAS CHALLENGED THE CONFIRMAT ION OF THE PENALTY BY THE LD. CIT(A) ON ACCOUNT OF BOGUS PURCHASES AND UNEXPL AINED EXPENDITURE. 4. THE ONLY EFFECTIVE GROUND IN THE REVENUES APPEA L IS AGAINST THE DELETION OF PENALTY OF RS.15,72,182/- LEVIED BY THE ASSESSING OFFICER ON ADDITION MADE ON ACCOUNT OF NON-DEPOSITION OF TAX O F RS.44,45,998/- IN THE GOVERNMENT ACCOUNT. 5. THE LD. SR. DR. SUPPORTED THE ORDER OF THE ASSES SING OFFICER. ON THE CONTRARY, LD. COUNSEL FOR THE ASSESSEE SUBMITTED TH AT THE ADDITION MADE BY THE ASSESSING OFFICER HAS BEEN DELETED BY THE CO-OR DINATE BENCH OF THE TRIBUNAL. HE DREW OUR ATTENTION TO THE ORDER OF TH IS TRIBUNAL DATED 08.04.2011 IN ITA NO.2599/AHD/2008 FOR ASSESSMENT Y EAR 2005-06 IN THIS REGARD. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND MATERIAL AVAILABLE ON RECORD. WE FI ND THAT THE ASSESSING OFFICER HAD MADE ADDITIONS BY INVOKING PROVISIONS O F SECTION 40(A)(IA) BY OBSERVING AS UNDER:- THE ABOVE REPLY OF THE ASSESSEE IS NOT ACCEPTED AS THE SECTION 40(A)(IA) IS SELF SPEAKING SECTION FOR DISALLOWANCE OF THE SUMS WHICH HAS BEEN MADE WITHOUT DEDUCTION OF TAX UNDER CHAPTER XVIIB OF THE ACT. IN VIEW OF THE ABOVE, AN AMOUNT OF RS.44,45,798/- M ADE TO VARIOUS SUB- CONTRACTOR, LABOURER AND TRANSPORTERS WITHOUT DEDUC TION OF TAX AND AFTER DEDUCTION OF TAX NOT PAID WITHIN TIME, IS DISALLOWE D AND ADDED TO THE INCOME OF THE ASSESSEE. HOWEVER, WE FIND THAT THE CO-ORDINATE BENCH OF THE TRIBUNAL HAS DELETED THIS ADDITION BY OBSERVING AS UNDER:- 4. GROUND NO.1 RELATES TO OVER ALL SUM OF RS.44,45 ,798/- WHEREAS GROUND NOS.2, 3 & 4 RELATE TO SUM OF RS.34,76,738/- AND GROUND NOS. 5 & 6 RELATE TO SUM OF RS.9,69,060/-. ITA NO. 1763 & CO 182 AHD 2011 ITO VS. NARAYAN BUILDERS FOR AY 2005-06 4 5. REGARDING SUM OF RS.34,76,738/- DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO FOUND THAT ASSESSEE HAS MADE THE PAYMENT OF THIS SUM TO FOLLOWING SIX PARTIES: SL. NAME OF THE PARTY DATE OF DU E DATE OF DATE OF TDS NO. AMOUNT PAID DE POSITING DEPOSITED BEFORE TD S 31/03/2005 1 PATEL LABOUR CONTRACTOR 9,09,874/- 31 .3.2005 RS.68,528/- ON 2 PATEL BUILDERS 13,17,520/- 31 .3.2005 30.05.2005; 3 PATEL CORPORATION 9,98,997/- 31 .3.2005 RS.4,532/- ON 4 PRUTIV CONSTRUCTION CO. 1,57,000/- 31 .3.2005 31.5.2005 & 5 DEVIBHAI SOLANKI 15,000/- 31 .3.2005 RS.1,569/- ON 6 SHANKERBHAI B.PANCHAL 78,338/- 31 .3.2005 23.8.2005 TOTAL 34,76,738/- ACCORDING TO THE AO AS TDS DEDUCTED ON THE PAYMENTS OF THESE PARTIES WAS NOT PAID BY 31.3.2005 BUT WAS PAID SUBSEQUENTLY IN THE NEXT F.Y. IT IS HIT BY SECTION 40(A)(IA). THEREFORE, DEDUCTION CANNOT BE ALLOWED T O THE ASSESSEE. 6. THE LD. CIT(A) CONFIRMED THE ADDITION ON THE GRO UND THAT PAYMENT IS LATE AND NOT MADE BEFORE THE END OF THE F.Y. 7. BEFORE US, THE LD. AR SUBMITTED THAT BY VIRTUE O F PROVISO TO SECTION 40(A)(IA) BY FINANCE ACT, 2008 INTRODUCED WITH RETROSPECTIVE EFF ECT FROM 1.4.2005, IF PAYMENT IS MADE ON OR BEFORE THE DATE SPECIFIED IN SUB- SECTIO N (1) OF SECTION 139, THEN NO SUCH DISALLOWANCE CAN BE MADE. HE SUBMITTED THAT THIS AM ENDMENT COULD NOT BE BROUGHT TO THE NOTICE OF LD. AO AS IT HAD NOT BECOME LAW WH EN THE AO PASSED THE ORDER. 8. ON THE OTHER HAND, THE LD. DR SUPPORTED THE ORDE RS OF AUTHORITIES BELOW. 9. AFTER CONSIDERING THE RIVAL SUBMISSIONS, WE ALLO W THE CLAIM OF ASSESSEE AS IT IS MENTIONED BY THE AO AND LD. CIT(A) THAT PAYMENTS HA VE BEEN MADE OF THE TDS SO MADE BY 23.8.2005 WHEREAS LAST DATE OF FILING OF RE TURN WAS 31.10.2005 FOR ASST. YEAR 2005-06. SINCE PROVISIONS OF SECTION 40(A)(IA) AS AMENDED BY FINANCE ACT WITH RETROSPECTIVE EFFECT 1.4.2005 ARE COMPLIED WIT H NO DISALLOWANCE IS CALLED FOR. GROUND NOS.2,3 & 4 ARE, THEREFORE, ALLOWED. SINCE IN THE QUANTUM PROCEEDINGS, THE ADDITIONS HA S BEEN DELETED BY THE COORDINATE BENCH OF THE TRIBUNAL, THEREFORE, TH E PENALTY ON THIS AMOUNT DOES NOT SURVIVE. WE, THEREFORE, DO NOT SEE ANY RE ASON TO INTERFERE WITH THE ITA NO. 1763 & CO 182 AHD 2011 ITO VS. NARAYAN BUILDERS FOR AY 2005-06 5 ORDER OF THE CIT(A) AND THE SAME IS HEREBY UPHELD O N THIS ISSUE. THUS, THIS GROUND RAISED BY THE REVENUE IS REJECTED. 7. GROUNDS NOS. 2 & 3 ARE GENERAL IN NATURE AND REQ UIRE NO SEPARATE ADJUDICATION. 8. NOW WE TAKE UP THE CROSS-OBJECTION OF THE ASSESS EE. THE ONLY EFFECTIVE GROUND IN THIS CROSS-OBJECTION IS WITH RE GARD TO THE CONFIRMATION OF PENALTY OF RS.1,07,468/- U/S 271(1)(C) OF THE ACT. 9. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ADDITIONS MADE BY THE ASSESSING OFFICER AND SUSTAINED BY THE CIT(A) A ND THE TRIBUNAL ON ACCOUNT OF BOGUS PURCHASES AND UNEXPLAINED EXPENDIT URE OF RS.2,44,640/- AND 27,959/- RESPECTIVELY WHICH WERE PURELY MADE ON THE BASIS OF ESTIMATION; THEREFORE, ON THESE AMOUNTS THE PENALTY SHOULD NOT HAVE BEEN LEVIED. ON THE CONTRARY, THE LD. DR. SUPPORTED THE ORDER OF THE ASSESSING OFFICER. 10. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED TH E ORDERS OF THE LOWER AUTHORITIES AND MATERIAL AVAILABLE ON RECORD. WE FI ND THAT THE ADDITIONS OF RS.2,44,640/- ON ACCOUNT OF BOGUS PURCHASES AND RS. 35,509/- (RS.27,959/-+ RS.7,550/-) ON ACCOUNT OF UNEXPLAINED EXPENDITURE H AVE BEEN CONFIRMED BY THE CO-ORDINATE BENCH OF THE TRIBUNAL VIDE ITS ORDE R DATED 08.04.2011 IN ITA NO.2599/AHD/2008 FOR ASSESSMENT YEAR 2005-06. NOT HING CONTRARY WAS BROUGHT TO OUR KNOWLEDGE ON BEHALF OF THE ASSESSEE IN THIS REGARD. MOREOVER, THE ASSESSEE COULD NOT RECONCILE THE DISC REPANCY NOTICED WITH RESPECT TO THE PURCHASES MADE FROM REGENT GRANNITE INDIA/NIRAV SALES CORPORATION EITHER BEFORE THE LOWER AUTHORITIES OR EVEN BEFORE THE TRIBUNAL. IN THIS BACKGROUND, THE CIT(A) WAS RIGHTLY UPHELD T HE PENALTY LEVIED BY THE ASSESSING OFFICER ON THESE AMOUNTS FOR FURNISHING I NACCURATE PARTICULARS OF ITA NO. 1763 & CO 182 AHD 2011 ITO VS. NARAYAN BUILDERS FOR AY 2005-06 6 INCOME. THEREFORE, THE FINDING OF THE CIT(A) IN TH IS REGARDS NEEDS NO INTERFERENCE FROM OUR SIDE AND THE SAME IS UPHELD. THUS, THE CROSS-OBJECTION FILED BY THE ASSESSEE IS REJECTED. 11. IN THE RESULT, THE APPEAL FILED BY THE REVENUE AS WELL AS THE CROSS- OBJECTION FILED BY THE ASSESSEE, BOTH ARE DISMISSED . ORDER PRONOUNCED IN THE COURT ON 8 TH MAY, 2015 AT AHMEDABAD. SD/- SD/- ( N.S. SAINI) ACCOUNTANT MEMBER (KUL BHARAT) JUDICIAL MEMBER AHMEDABAD; DATED 08/05/2015 *BIJU T. 1 - *'2 32'' 1 - *'2 32'' 1 - *'2 32'' 1 - *'2 32''/ COPY OF THE ORDER FORWARDED TO : 1. () / THE APPELLANT 2. *+() / THE RESPONDENT. 3. ' 4 / CONCERNED CIT 4. 4 ( ) / THE CIT(A) 5. 2!7 *' , , / DR, ITAT, AHMEDABAD 6. 78& 9, / GUARD FILE . 1 1 1 1 / BY ORDER, TRUE COPY : :: :/ // / ; ; ; ; ( DY./ASSTT.REGISTRAR) , , , , / ITAT, AHMEDABAD