T.Vora Farmakem, RAIPUR V. Income Tax Officer Ward-1(3), RAIPUR

ITA 183/BIL/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 94005 (ITAT-RAIPUR)
• Duration Of Justice: 3 year(s) 10 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-06-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2005-2006
• Appeal Filed On: 16-08-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: D K JAIN
• Assessee Lawyers: ANKUSH GOLECHA
• Keywords: Unexplained cash credit; Corroborative evidences
• Section: 143(3); 194C; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, RAIPUR BENCH , RAIPUR BEFORE S/SHRI MUKUL K SHRAWAT, ( JM) AND SHAMIM YAHYA,(AM) I TA . NO . 183 / BLPR / 201 1 (ASSESSMENT YEAR : 200 5 - 06 ) T VORA PHARMAKEM, C/O FAST FORWARDING AGENCY, RING ROAD, GODWARA RAIPUR (C G) - 492001 VS. INCOME TAX OFFICER 1(3), CENTRAL REVENUE BUILDING, CIVIL LINES, RAIPUR (CG) - 492001 . APPELLANT .. RESPONDENT PAN/GIR NO. : AACFT8984G APPELLANT BY : SHRI ANKUSH GOLECHA RESPONDENT BY : SHRI D K JAIN DATE O F HEARING : 1 5 .6.2015 DATE OF PRONOUNCEMENT : 19 . 6. 201 5 O R D E R PER MUKUL K SHRAWAT, ( JM) : TH IS IS AN APPEAL FILED BY THE ASSESSEE ARISING FROM THE ORDER OF LD. CIT(A) DATED 28.2.2011 FOR THE ASSESSMEN T YEAR 200 5 - 06 . 2. T HE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS : 1. THE ORDER PASSED BY T HE AO AND PARTLY UPHELD BY THE CIT (A) IS BAD IN LAW AND IN FACTS OF THE CASE; 2. THE LD. CIT(A) ERRED IN UPHOLDING THE ACTION OF LD. AO OF ADDING AN AM OUNT OF R S.3,01,413/ - HOLDING THAT THE ASSESSEE HAS SHOWN SHORT RECEIPT FROM M/S PARLE SALES AND SERVICES PRIVATE LIMITED; 3. THE CIT(A) UPHOLDING THE ACTION OF THE AO OF ADDI NG AN AMOUNT OF RS.1,80,000/ - AS UNEXPLAINED CASH CREDIT, WHICH WAS INTRODUCED BY THE P ARTNER AS CAPITAL IN THE FIRM. 4. THE LD. CIT(A) ERRED IN RESTRICTING THE DISALLOWANCE TO RS.25,000/ - OUT OF FREIGHT CHARGES. THE LD. AO MADE AN LUMP SUM ITA. NO. 183 / BLPR/201 1 2 AMOUNT OF RS.50,000/ - OUT OF FREIGHT CHARGES, WITHOUT MENTIONING ANY SPECIFIC INSTANCES OF ANY LEA KAGE OF PROFIT 3 . THE FACTS IN BRIEF AS EMERGED FROM THE ASSESSMENT ORDER DATED 28.12.2007 PASSED UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 ARE THAT THE ASSESSEE FIRM IS C AND F AGENCY OF ALL, AHPL AND PSSL ETC. THE AO OBSERVED THAT AS PER TH E TDS CERTIFICATE ISSUED BY THE M/S PARLE SALES AND SERVICES PRIVATE LIMITED A COMMISSION AND BROKERAGE WAS MENTIONED AT RS.9,11,579/ - STATED TO BE PAID TO THE ASSESSEE. ON THE OTHER HAND, THE ALLEGATIONS OF THE AO WAS THAT HE ASSESSEE HAS NOT DISCLOSED T HE SAID AMOUNT IN THE PROFIT AND LOSS ACCOUNT FOR THE YEAR UNDER CONSIDERATION. AFTER EXAMINING THE NATURE OF PAYMENT, THE AO HAS TAXED THE DIFFERENCE AT UNDER : 4. AS PER THE TDS CERTIFICATES ISSUED BY M/S PARLE SALES SERVICES PRIVATE LTD OF INCOME THE TOTAL COMMISSION AND BROKERAGE OF RS.9,11,579/ - HAVE BEEN PAID TO THE ASSESSEE BY THE ABOVE NAMED COMPANY. IN THE PROFIT AND LOSS ACCOUNT NO ANY AMOUNT IN THE HEAD OF COMMISSION AND BROKERAGE ARE APPEARED CREDITED. VIDE THIS OFFICE LETTER DATED 13.12.20 07 THE ASSESSEE WAS ASKED TO EXPLAIN THE RECEIPTS AS PER THE TDS CERTIFICATE. BUT THE ASSESSEE HAS NOT GIVEN ANY EXPLANATIONS. THE AMOUNT CREDITED IN PROFIT AND LOSS ACCOUNT ARE APPEARED IN THE HEADS OF FIXED REMUNERATION, SERVICE CHARGES, FREIGHT AND HA MALI, BY SERVICE TAX REIMBURSED AND INTEREST REDUCED. THE ASSESSEE HAS FILED THE COPY OF ACCOUNT OF M/S PARLE SALES SERVICES (P) LTD IN WHICH HIT IS FOUND THAT THE TOTAL CREDIT AMOUNTS ARE RS.4,94,153/ - AND TOTAL DEBIT AMOUNTS ARE RS.6,94,683/ - SHOWING DEBIT BALANCE OF RS.2 , 00 , 530 / - . AS PER REPLY FILED ON 13.12.2007 THE AMOUNT OF RS.84517/ - ARE REPRESENTED THE AMOUNT OF EXPENSES INCURRED BY THE ASSESSEE ON BEHALF OF THE COMPANY AND REIMBURSED BY THE COMPANY AND THE AMOUNT OF RS.84 , 517/ - HAS NEITHER BE EN CREDITED NOR DEBITED IN THE PROFIT AND LOSS ACCOUNT OF THE ASSESSEE AND DID NOT AFFECT THE PROFIT AND LOSS ACCOUNT . THUS THE NET AMOUNT OF RECEIPTS FROM M/S PARLE SALES SERVICES (P) LTD OF RS.610166 (694683)( - ) 80517) HAS BEEN CREDITED IN THE PROFI T AND LOSS ACCOUNT. AS PER THE TDS CERTIFICATES THE COMMISSION AND BRODERAGE PAYMENTS BY THAT COMPANY ARE RS.911579/ - . THUS THE ASSESSEE HAS SHOWN THE RECEIPTS FROM M/S PARLE SALES SERVICES PRIVATE LIMITED LESS BY RS.301413/ - . ACCORDINGLY THE AMOU NT OF RS.301413/ - IS ADDED TO THE TOTAL INCOME OF THE ASSESSEE ON ACCOUNT OF SHORT RECEIPTS SHOWN. PENALTY PROCEEDINGS U/S 271(1)(C) ARE INITIATED ON THIS ISSUE. ITA. NO. 183 / BLPR/201 1 3 4 . WHEN THE MATTER WAS CARRIED BEFORE THE FIRST APPELLATE AUTHORITY, THE FIRST APPELL ATE AUTHORITY HAS UPHELD THE ADDITION MAINLY ON THE GROUND THAT THE DISCLOS URE OF THE DIFFERENCE IN THE SUBSEQUENT YEARS WAS NOT AS PER LAW BECAUSE THE ASSESSEE HAS MAINTAINED THE ACCOUNT ON MERCANTILE BASIS. ACCORDING TO HIM, THE ASSESSEE HAS WRONGLY D I F FERED THE INCOME IN SUBSEQUENT YEAR. THE FINDING OF THE LD.CIT(A) WERE AS UNDER : 5.3 I HAVE CAREFULLY GONE THROUGH THE ASSESSMENT ORDER AND SUBMISSIONS OF THE APPELLANT. THE AO DEALT WITH THE ISSUE IN DETAIL IN PARA 4 OF THE ASSE SS MENT ORDER . THE DIFFERENCE IN THE AMOUNT OF GROSS RECEIPTS REFLECTED IN THE TDS CERTIFICATE ISSUE BY M/S PARLE SALES AND SERVICES LIMITED AND INCOME SHOWN BY THE APPELLANT IS NOT IN DISPUTE. DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE ME , THE APPELLANT MERELY SUBM ITTED THAT THE DIFFERENCE WAS OWNING TO THE AMOUNT OF REIMBURSEMENT OF ACTUAL EXPENSES REFLECTED IN TDS CERTIFICATE ISSUE BY M/S PARLE SALES AND S ERVICE PRIVATE LIMITED. HOWEVER, THE APPELLANT FAILED TO SUBSTANTIATE IS SUBMISSION BY BRINGING ON RECORD CO RROBORATIVE EVIDENCE IN THE FORM OF AGREEMENT BETWEEN THE APPELLANT AND SAID PARTY. THE ONUS, IN THE FACTS AND CIRCUMSTANCES OF THE CASE, WAS CERTAINLY ON THE APPELLANT TO PROVE THAT THE AMOUNTS REFLECTED IN THE TDS CERTIFICATE ALSO INCLUDED THE AMOUNTS OF REIMBURSEMENT OF ACTUAL EXPENSES. THE APPELLANT HAS PLACED RELIANCE ON THE DECISION OF T HE HONBLE DELHI HIGH COURT IN CIT V/S MULTI SYSTEM SECURITIES (P) LT D (2008) 305 ITR 298 (DEL). I HAVE GONE THROUGH THE DECISION OF THE HONBLE HIGH COURT RELIE D UPON BY THE APPELLANTS . I FIND THAT THE DECISION OF THE HONBLE HIGH COURT HAS BEEN RENDERED ON DIFFERENT FACTS INASMUCH AS THE SAID DECISION HAS BEEN RENDERED IN THE CONTEST OF ADVANCE MONEY RECEIVE D . I FIND THAT THE APPELLANT IS FOLLOWING MERCANTIL E SYS TE M OF ACCOUNTING AND HENCE , IT WAS INCUMBENT UPON THE APPELLANT TO RECOGNIZE AS ITS INCOME WHICH HAS ACCRUED DURING THE PREVIOUS YEAR . THE APPELLANT FAILED TO BRING ON RECORD ANY EVIDENCE TO ESTABLISH THAT THE ADVANCE MONEY WAS REFLECTED IN THE TDS CERTIFICATE ISSUE D BY M/S PARLE SALES AND SERVICES PVT.LTD. THE SUBMISSIONS OF THE APPELLANT THAT, THE DIFFERENCE AMOUNT HAS BEEN OFFERED FOR TAXATION IN THE SUBSEQUENT YEAR HAS NOT BEEN SUBSTANTIATED AND THEREFORE LACKS MERITS. FURTHER, AS THE ORDER UNDER CONSIDERATION WAS THE FIRST YEAR OF OPERATION OF THE APPELLANT, THERE WAS NO QUESTION OF RUNNING ACCOUNT OF M /S PARLE SALES AND SERVICES PVT.LTD IN THE BOOKS OF THE APPELLANT. I AM OF THE CONSIDERED OPINION THAT, THE APPELLANT CANNOT DEFER ITS INCOM E TO SUBSEQUENT YEAR MERELY DUE TO THE REASON THAT THE BILL WAS RAISED IN THE NEXT FINANCIAL YEAR AND THAT THE INCOME HAS BEEN TAKEN IN THE NEXT FINANCIAL YEAR. AS MENTIONED ABOVE, THE APPELLANT SHOULD HAVE RECOGNIZED THE ENTIRE ITA. NO. 183 / BLPR/201 1 4 AMOUNT AS INCOME WHICH HAS ACCRUED UPTO 31.3.2005 DURING THE YEAR UNDER CONSIDERATION ITSELF. HENCE, DUE TO THE REASON STATED ABOVE, THIS GROUND OF APPEAL OF THE APPELLANT IS DISMISSED AND ADDITION IS SUSTAINED. 5 . ON THIS BACK GROUND, WE HAVE HEARD BOTH THE SIDES AT SOME LENGT H. AT THE OUTSIDE, IT IS WORTH TO MENTION THAT THE ASSESSEE HAS FURNISHED A WRITTEN SUBMISSION BEFORE THE LD. CIT(A), COPY OF WHICH IS PLACED AT PAGES 8 TO 59 WHICH WAS ALLEGEDLY NOT CONSIDERED BY THE LD.CIT(A). THE CONTENTION OF THE ASSESSEE IS THAT THE LEDGER ACCOUNT OF M/S PARLE SALES AND SERVICES PVT.LTD FOR THE FINANCIAL YEAR 2004 - 05 AND 2005 - 06 HAVE BEEN FURNISHED BEFORE THE AUTHORITIES BELOW TO RECONCILE THE DIFFEREN CE BUT THAT WAS OVERLOOKED AND THE ISSUE WAS WRONGLY DECIDED AGAINST THE ASSESSEE . TO SUPPORT THE ABOVE CONTENTION , THE WRITTEN SUBMISSIONS HAVE BEEN PLACED BEFORE US. THE RELEVANT PORTION IS EXTRACTED BELOW: THE TOTAL BILLS RAISED BY THE ASSESSEE ALONG WITH THE REIMBURSEMENT AMOUNT TO M/S PARLE SALES SERVICE PRIVATE LIMITED WAS RS. 674058/ - . THE BILLS WERE RAISED FOR THE PERIOD FROM JULY 2004 TILL FEBRUARY 2005, AS THE ASSESSEE STARTED THE WORK FROM JULY 2004 ONLY. SINCE THE ASSESSEE DID NOT RAISE THE BILLS OF MARCH 2005 IN THE YEAR IT DID NOT DEBITED THE SAID AMOUNT IN THE A CCOUNT OF M/S PARLE SALES AND SERVICES PVT.LTD. THE SAID BILL WAS RAISED IN THE NEXT FINANCIAL YEAR AND THE INCOME HAS BEEN TAKEN IN THE NEXT FINANCIAL YEAR. IT IS MAINTAINING A RUNNING ACCOUNT OF THE CUSTOMER AND ALL THE AMOUNTS ARE PROPERLY RECORDED IN ITS BOOKS. THE FOLLOWING TABLE DEMONSTRATES THAT THE ASSESSEE HAS ACCOUNTED ALL THE AMOUNTS IN THE BOOKS OF ACCOUNTS PARTICULARS AMOUNT TOTAL RECEIPT AS PER TDS CERTIFICATE ISSUED BY COMPANY U/S 194C (PARLE SALES AND SERVICES PVT.LTD) AS MENTIONED BY AO (A) RS.9,11,579 TOTAL AMOUNT DEBITED IN ACCOUNTS OF PARLE SALES AND SERVICES PVT.LTD BY THE ASSESSEE IN FY 2004 - 05 FROM JULY 2004 TILL FEBRUARY 2005 (EXCEPT INTEREST) RS.6,74,058 INVOICE BOOKED IN APRIL 2005 (FY 2005 - 06) PER TAINING TO MARCH 2005 RS.2,48,445/ - (B) RS.9,22,503 ITA. NO. 183 / BLPR/201 1 5 AFTER TAKING INTO CONSIDERATION THE BILL OF MARCH 2005 ACCOUNTED IN APRIL 2005 THE TOTAL AMOUNT TAKEN TO THE CREDIT OF PROFIT AND LOSS ACCOUNT IS HIGHER THAN THE AMOUNT REFLECTED IN TDS CERTIFICATE BY THE COMPANY. THE DIFFERENCE , AS POINTED OUT BY THE LD. AO IS DUE TO ENTRY OF THE S AID AMOUNT IN THE NEXT FY I.E 2005 - 06 IN OUR CONSIDERED OPINION THE REVENUE AUTHORITIES HAVE NOT APPRECIATED THE EVIDENCE I.E. LEDGER ACCOUNT OF THE SAID PARTY WHICH H AS RESULTED INTO THE IMPUGNED ADDITION AS CHALLENGED BEFORE US. THE VEHEMENT CONTENTION BEFORE US IS THAT THE DIFFERENCE WAS DULY RECONCILED FROM THE STATEMENT OF ACCOUNT. HOWEVER, IN THE INTE REST OF NATURAL JUSTI CE WE DEEM IT PROPER TO RESTORE THIS ISS UE BACK TO THE FILE OF THE AO TO EXAMINE THE DETAILS OF TDS CERTIFI CATE IN THE LIGHT OF LE DGER OF THE SAID PARTY AS ALSO THE ACCOUNT OF THE ASSESSEE TO VER IFY WHE THER THE DIFFERENCE WAS DULY ACCOUNTED FOR IN THE SUBSEQUENT YEAR AS CLAIMED BEFORE US. WE AR E NOT IN AGR EE MENT WITH THE FINDINGS OF THE LD.CIT(A) THAT THIS IS A C ASE OF DEFERMENT OF THE INCOME . THE CASE OF THE ASSESSEE IS THAT THE BILLS HAVE NOT BEEN RAISED DURING THE FINANCIAL YEAR UNDER CONSIDERATION . WITHOUT APPRECIATING AL L THESE ASPECT S , THE LD. CIT(A) HAS INCORRECTLY AFFIRMED THE ADDITION AS MADE BY T HE AO. THE FINDINGS OF T HE LD. CIT(A) IS HEREBY REVERSED. HOWEVER, THE MATTER IS RESTORED BACK TO THE FILE OF THE AO TO BE DECIDED DENOV O AS PER DIRECTION. 6 . RES ULTANTLY , THIS GROUND O F THE ASSESSEE MAY BE TREATED AS ALLOWED FOR STATISTICAL PURPOSES. 7 . WITH REGARD TO THE GROUND NO.2, THE AO HAS OBSERVE D THAT IN THE BOOKS OF ACCOUNT OF THE ASSESSEE FIRM CERTAIN AMOUNTS WERE INTRODUCE D BY THE PARTNER IN THEIR CAPITAL ACCOUNT. THE AO H AS ACCEPTED THE CAPITAL INTRODUCE D BY THE ONE OF THE PARTNER S MR.MAYUR VORA BUT THE CAPITAL INTRODUCED BY ANOTHER PARTNER VI Z MR. SHAILENDR A JAIN OF RS.180000/ - WAS TAXED IN THE HANDS OF THE ASSESSEE BY INVOKING THE PROVISIONS OF SECTION 68 OF THE ACT . ITA. NO. 183 / BLPR/201 1 6 8 . BEING AGGRIEVED, THE MATTER WAS CARRIED BEFORE THE LD.CIT(A). THE LD. CIT(A) HAS CONFIRMED THE ACTION OF T HE AO BASICALLY ON THE GROUND THAT CERTAIN OPPORTUNITIES WERE GIVEN BY THE AO BUT THE ASSESSEE HAS NOT EXPLAINED THE SOURCE OF DEPOSITS . ACC ORDING TO THE LD.CIT(A), THE ASSESSEE HAD MERELY SUBMITTED THE COPY OF CONFIRMATION OF ACCOUNT OF MR. SHAILENDRA JAIN WHICH W AS NOT SUFFICIENT TO FULFILL THE CONDITION PRESCRIBED UNDER SECTION 68 OF THE ACT. 9 . ON THIS ISSUE WE HAVE HEARD BOTH THE PARTIE S. OUR ATTENTION HAS BEEN DRAWN ON THE WRITTEN SUBMISSION FILED BEFORE THE LD. CIT(A) FOR THE LEGAL PROPOSITION THAT IN A SITUATION WHEN THE CONFIRMATION OF THE ACCOUNT OF SHRI SHAILENDRA JAIN WAS PLACED BEFORE THE REVENUE AUTHORITIES ALONG WITH THE COM PUTATION OF INCOME AS WELL AS RETURNED INCOME FOR AY 2005 - 06, THE BALANCE SHEET AND OTHER SUPPORTING EVIDENCE THEN NO ACTION SHOULD HAVE BEEN TAKEN IN THE HANDS OF T HE ASSESSEE FIRM. WE HAVE EXAMINED THE CA S E LAW RELIED UPON BY THE ASSESSEE SPECIALLY THE DECISION IN THE CASE OF CIT V/S METACHEM INDUSTRIS (2000) 245 ITR 160 (MP), WHEREIN THE HONBLE COURT HAS HELD THAT ONCE IT IS ESTABLISHED THAT THE AMOUNT IN QUESTION HAS BEEN INVESTED BY A PARTNER AND THAT PARTNER IS ASSESSED TO INCOME TAX THEN RESPONS IBILITY OF T HE ASSESSMENT FIRM IS OVER. IF THE PARTNER HAD OWNED RESPONSIBILITY AS WELL AS CAPITAL INTRODUCED BY HIM THEN THE FIRM SHOULD NOT BE HELD RESPONSIBLE FOR HE SAID INVESTMENT . IN ADDITION TO THIS CA S E LAWS, FURTHER, IN THE CASE OF SAROGI C REDIT CORP V/S CIT (1976) 103 ITR 344 (PAT), IT WAS HELD THAT THE AO SHOULD NOT ASK FOR THE SOURCE OF SOURCE OF CREDIT ENTRY. RESPECTFULLY FOLLOWING THE ABOVE PRECEDENT AS WELL AS AFTER EXAMINING THE EVIDENCE PLACED ON RECORD, WE HEREBY REVERSE THE FIND ING OF THE REVENUE AUTHORITIES AND DIRECT THE AO TO DELETE THE ADDITION. 10 . WITH REGARD TO THE GROUND NO.3, THE FACTS ARE THAT THE ASSESSEE HAS CLAIMED FREIGHT CHARGES TO THE TUNE OF RS.551563/ - . THE ALLEGATION OF THE AO WAS THAT THE ASSESSEE HAS NOT PRODUCED PAKKA BILL OF TRANSPORTATION ITA. NO. 183 / BLPR/201 1 7 TO COVER UP THE PROBABLE LEAKAGE OF RS.50,000/ - WAS DISALLOWED OUT OF FREIGHT CHARGES PAID. 11 . WHEN THE MATTER WAS CARRIED BEFORE THE LD. CIT(A), THE DISALLOWANCE OF RS.50,000/ - WAS RESTRICTED TO RS.25,000/ - AFT ER EXAMINING THE FEW CASE LAWS AND THE FACTS O F THE CASE. 12 . HAVING HEARD BOTH THE SIDES AN D AFTER CONSIDERING THE OBSERVATIONS MADE BY THE AO IN RESPECT OF THE SELF MADE VOUCHERS, WE ARE OF THE VIEW THAT PART RELIEF GRANTED BY THE LD. CIT(A) WAS REAS ONABLE NO INTERFERENCE IS REQUIRED. THIS GROUND OF THE ASSESSEE IS DISMISSED. 13 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED THAT TOO FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 19TH JUNE , 201 5 SD SD ( SHAMIM YAHYA ) ( MUKUL K SHRAWAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER RAIPUR : 19 TH JUNE,2015. SRL , SR. PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A) - CONCERNED 4. CIT CONCERNED 5. DR, ITAT, RAIPUR CONCERNED 6. GUARD FILE. BY ORDER, SENIOR PRIVATE SECRETARY /ASSTT.REGISTRAR