M/s. Union Construction Co., Wadhwan V. The Joint Commissioner of Income Tax, Surendranagar Range, Surendranagar

ITA 182/RJT/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 0047 (ITAT-RAJKOT)
• Duration Of Justice: 3 year(s) 7 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-12-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 21-11-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 03-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C S ANJARIA
• Keywords: Unexplained cash credit; Unexplained investment

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, RAJKOT BENCH, RAJKOT [CONDUCTED THROUGH E-COURT AT AHMEDABAD] BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER AND SHRI S.S. GODARA, JUDICIAL MEMBER ./ ITA NO. 182/RJT/2013 ASSESSMENT YEAR : 2008-09 M/S. UNION CONSTRUCTION CO., OPP. PEOPLES CO-OP. BANK, B/H.CENTRAL COMPLEX, WADHAWAN PAN : AAAFU 3895 P VS DCIT, SURENDRANAGAR CIRCLE, SURENDRANAGAR / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SHRI VIMAL DESAI, CA REVENUE BY : SHRI C.S. ANJARIA, DR / DATE OF HEARING : 21/11/2016 / DATE OF PRONOUNCEMENT: 23/12/2016 / O R D E R PER S.S. GODARA, JUDICIAL MEMBER :- THIS ASSESSEES APPEAL FOR ASSESSMENT YEAR 2008-09, ARISES AGAINST CIT(A)-XVI, AHMEDABADS ORDER DATED 14.03.2013 PASS ED IN CASE NO. CIT(A)-XVI/DCIT/CIR.SNR/217/11-12, UPHOLDING ASSESS ING OFFICERS ACTION IMPOSING PENALTY OF RS.2,38,510/- VIDE ORDE R DATED 27.06.2011, IN PROCEEDINGS U/S 271(1)(C) OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT). 2. WE STRAIGHT WAY COME TO THE RELEVANT FACTS FIRST . THE ASSESSING OFFICER FRAMED A REGULAR ASSESSMENT IN ASSESSEES C ASE ON 23.12.2010 MAKING VARIOUS ADDITIONS/DISALLOWANCES OF INTEREST ACCRUED ON FDRS, UNEXPLAINED INVESTMENTS IN FDRS, CONTRACT RECEIPT R ECEIVED FROM M/S. CLASSIC NETWORK PVT LTD ALONG WITH UNEXPLAINED CASH CREDITS OF ITA NO. 182/RJT/2013 UNION CONSTRUCTION CO VS. DCIT AYS 2008-09 2 RS.4,86,451/-; ALL AGGREGATING TO RS.7,01,700/-. H E THEREAFTER INITIATED THE IMPUGNED PENALTY PROCEEDINGS ALLEGING CONCEALME NT OF PARTICULARS OF INCOME BY FURNISHING INACCURATE PARTICULARS OF S UCH INCOME. THE ASSESSEE DID NOT PREFER ANY APPEAL. QUANTUM PROCEE DINGS APPEAR TO HAVE ATTAINED FINALITY AT THIS STAGE. 3. WE NOW COME TO THE IMPUGNED PENALTY PROCEEDINGS. THE ASSESSEE ATTRIBUTED ALL THE ABOVE ADDITIONS TO BONA FIDE MISTAKE IN NECESSARY COMPUTATION AND INEFFICIENCY ON ACCOUNT O F ITS AUDIT STAFF IN NOT HIGHLIGHTING VARIOUS ABOVE ADDITION SUMS IN RET URNED FOLLOWED BY ABOVE SCRUTINY. THE ASSESSING OFFICER REJECTED THE SAME TO IMPOSE THE PENALTY IN QUESTION OF RS.2,38,510/-. THE CIT(A) CONFIRMS ASSESSING OFFICERS ACTION. 4. WE HAVE HEARD BOTH THE PARTIES. CASE FILE PERUSE D. RELEVANT FACTS NARRATED HEREINABOVE ARE NOT REPEATED FOR THE SAKE OF BREVITY. WE PROCEED ADDITION-WISE TO DEAL WITH THE IMPUGNED PEN ALTY PERTAINING TO THE ABOVE FOUR ISSUES. WE NOTICE FIRST OF ALL THAT THE ASSESSEE HAD SHOWN GROSS RECEIPTS FROM CONTRACTUAL WORK AMOUNTIN G TO RS.5,25,13,349/- ALONG WITH NET PROFIT @ 11.83%. T HE FIRST ADDITION MADE IN ITS HANDS IS THAT OF INTEREST ACCRUED ON FD RS AMOUNTING TO RS.1,12,544/-. LEARNED COUNSELS SOLE ARGUMENT BEF ORE US IS THAT SCHEDULE K TO HIS BALANCE-SHEET DULY REFLECTS THE A CCRUED INTEREST. IT PLEADS THE ONLY ERROR TO BE THAT OF NOT DECLARING T HE SAME AS INCOME ON A BONA FIDE BELIEF THAT THE SAME WAS TO BE DISCLOSE D AS INCOME AFTER MATURITY. LEARNED DEPARTMENTAL REPRESENTATIVE DOES NOT DISPUTE CONTENTS OF ASSESSEES BALANCE-SHEET HEREINABOVE. WE OBSERVE IN THESE ITA NO. 182/RJT/2013 UNION CONSTRUCTION CO VS. DCIT AYS 2008-09 3 FACTS THAT THE ASSESSEE HAD DULY SHOWN THE ACCRUED INTEREST AMOUNT IN ITS BALANCE-SHEET BUT DID NOT INCLUDE IT IN THE INC OME OF THE RELEVANT PREVIOUS YEAR. IT IS THUS CLEAR THAT THE ASSESSEE HAS A BONA FIDE EXPLANATION SINCE IT HAS NEITHER CONCEALED THE ABOV E ACCRUED INTEREST PARTICULARS NOR HAS IT PREFERRED ANY APPEAL AGAINST THE QUANTUM ADDITION IN QUESTION. WE THUS DELETE THE IMPUGNED PENALTY PERTAINING TO THIS FIRST ADDITION. 5. WE MOVE ON TO NEXT ADDITION OF UNEXPLAINED INVES TMENT IN FDRS OF RS.16,000/- AS DEPOSITED ON 02.06.2007 AND 01.05 .2007 INVOLVING AMOUNTS OF RS.15,000/- AND RS.1,000/-; RESPECTIVELY . THE ASSESSING OFFICER APPEARS TO HAVE OBSERVED THAT THE ASSESSEE FAILED TO FURNISH SOURCE OF THE SAID INVESTMENTS BY WAY OF PROPER ENT RY DEBITING THE SAME. THE ASSESSEES ONLY CASE IS THAT ITS DEPOSIT S OF THE RELEVANT PREVIOUS YEAR SHOWS A FIGURE OF RS.2,13,19,303/-. IT ACCORDINGLY PLEADS THAT THE IMPUGNED SUM OF RS.16,000/- HARDLY FORMS A FRACTION THEREOF SO AS TO BE DELIBERATELY CONCEALED. WE FIND FROM T HE ASSESSMENT ORDER THAT THE ASSESSEE DID NOT OFFER ANY EXPLANATION. I T HOWEVER PLEADED IN COURSE OF THE IMPUGNED PENALTY PROCEEDINGS THAT ITS AUDITORS HAD FAILED IN MAINTAINING PROPER ENTRIES IN ACCOUNTS SO AS TO DISCLOSE SOURCE OF THE ABOVE INVESTMENTS. WE FIND THAT ALL THESE AVERMENTS HAVE GONE UNREBUTTED SINCE THE ASSESSING AUTHORITY HAS NOT EVEN ASKED THE ASSESSEE TO DISCLOSE ALL DETAILS OF ITS ERRING AUDITORS. THE ASSESSING OFFICER RATHER APPEARS TO HAVE BEEN HEAVILY SWAYED BY HIS FINDINGS IN THE QUANTUM PROCEEDINGS TO IMPOSE THE IMPUGNED PENA LTY. WE REITERATE TRITE PREPOSITION OF LAW THAT EACH AND EV ERY ITA NO. 182/RJT/2013 UNION CONSTRUCTION CO VS. DCIT AYS 2008-09 4 DISALLOWANCE/ADDITION MADE IN COURSE OF QUANTUM PRO CEEDINGS DOES NOT IPSO FACTO RESULT IN LEVY OF THE IMPUGNED CONCE ALMENT PENALTY. WE THUS ACCEPT ASSESSEES CONTENTION QUA THE SECOND HE AD OF ADDITION FORMING BASIS OF THE CORRESPONDING PENALTY. 6. WE NOW COME TO THIRD ADDITION OF CONTRACT RECEIP TS RECEIVED FROM M/S. CLASSIC NETWORK PVT LTD OF RS.86,705/-. THE ASSESSING OFFICER NOTICED THE SAID PAYER TO HAVE DEDUCTED TDS AS PER ITS FORM NO.26AS WHEREAS THE ASSESSEE HAD NOT SHOWN THE CORR ESPONDING INCOME IN ITS RETURN. THE ASSESSEES ONLY PLEA IN THE INSTANT CASE IS THAT IT ENJOYS SUB-CONTRACTOR RELATIONSHIP WITH THE ABOV E PAYER WITHOUT HAVING ANY DIRECT NEXUS AND THAT THE SAID PARTY COU LD HAVE PASSED A CREDIT NOTE TO THE CONTRACTOR IN BETWEEN THEM WHICH COULD NOT BE INFORMED/INTIMATED TO THE ASSESSEE. THIS CRUCIAL P LEA OF SUB- CONTRACTUAL RELATIONSHIP BETWEEN PAYER AND PAYEE-AS SESSEE HAS NOWHERE BEEN SUBJECTED TO CROSS-VERIFICATION IN THE ASSESSMENT AS WELL AS PENALTY PROCEEDINGS. THE ASSESSING OFFICER HAS NOT EVEN BOTHERED TO PUT UP THE ASSESSEE ON NOTICE FOR PROVING THE SA ME BY WAY OF COGENT EVIDENCE. WE THUS FIND NO REASON TO CONCUR WITH TH E IMPUGNED PENALTY. THE SAME STANDS DELETED. 7. THIS LEAVES US WITH FORTH ADDITION OF UNEXPLAINE D CASH CREDIT OF RS.4,86,451/-. THE ASSESSEES ARGUMENT BEFORE US I S THAT IT IS HAVING MULTIPLE SITE OFFICES AT RAJKOT, MADHAD AND DEVAS A LONG WITH MAIN OFFICE AT WADHWAN HANDLED BY DIFFERENT AUDITOR STAF F FOLLOWED BY A CONSOLIDATED ACCOUNT BEING PREPARED AT THE HEAD OFF ICE. LEARNED ITA NO. 182/RJT/2013 UNION CONSTRUCTION CO VS. DCIT AYS 2008-09 5 COUNSEL SUBMITS THAT THE ASSESSING OFFICER FOUND AS SESSEES HEAD OFFICE TO HAVE MADE CASH PAYMENTS WITHOUT HAVING ENOUGH CA SH BALANCE RESULTING IN THE IMPUGNED ADDITION. WE NOTICE HERE IN AS WELL THAT THE ASSESSEES CASE IN PENALTY PROCEEDINGS WAS THAT IT HAD BROUGHT CASH OF RS.5532/- AND RS.480919/- ON 26.12.2007 AND 15.02.2 008 RESPECTIVELY WHICH WOULD BE PRESUMED TO HAVE BEEN UTILIZED IN TH E IMPUGNED CASH PAYMENTS WITHOUT BEING RECORDED IN THE CASH BOOKS. WE NOTICE FROM PENALTY ORDER THAT LEARNED ASSESSING OFFICER HAS NO WHERE REBUTTED THIS SPECIFIC PLEA IN HIS ORDER. WE THUS FIND FORCE IN ASSESSEES ARGUMENT QUA THIS ISSUE AS WELL. THE IMPUGNED PENALTY AS BA SED ON ALL THE ABOVE FOUR ADDITIONS STANDS DELETED. 8. THIS ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE COURT ON 23 RD DECEMBER, 2016 AT AHMEDABAD. SD/- SD/- (N.K. BILLAIYA) ACCOUNTANT MEMBER (S.S. GODARA) JUDICIAL MEMBER AHMEDABAD; DATED 23/12/2016 *BT / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ! / CONCERNED CIT 4. ! ( ) / THE CIT(A) 5. , / DR, ITAT, RAJKOT 6. & / GUARD FILE . / BY ORDER, TRUE COPY / ( DY./ASSTT.REGISTRAR) ' #, / ITAT, RAJKOT