The ACIT,Vapi Circle, Vapi V. Shri Natraja Rao, SILVASSA

ITA 1870/AHD/2010

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 67535 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 2 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-08-2013
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2006-2007
• Appeal Filed On: 31-05-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: JAGDISH
• Keywords: Bogus purchase; Unexplained cash credit
• Section: 143(3); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD BEFORE SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER AND SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER ITA NO. 1870/AHD/2010 A.Y: 2006-07 ACIT, VAPI CIRCLE, VAPI VS SHRI NATRAJA RAO, PROP. VISHAKH CONSTRUCTION & CONSULTANT PRAMUKH DARSHAN, SHOP NO.4 NAROLI ROAD, SILVASSA PAN: ABFPR 9764E (ASSESSEE) (REVENUE) REVENUE BY : SHRI JAGDISH, CIT-D.R. ASSESSEE(S) BY : SHRI HARIDAS BHAT, A.R. / // / DATE OF HEARING : 15/05/2013 / DATE OF PRONOUNCEMENT: 13/08/2013 / O R D E R PER SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER : THIS IS AN APPEAL FILED BY THE REVENUE ARISING FRO M THE ORDER OF LEARNED CIT(A), VALSAD. THE GROUNDS RAISED ARE DECIDED AS UNDER: 2. GROUND NO. 1 IS REPRODUCED BELOW: ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION MADE ON ACCOUNT OF BOGUS PURCHASES TO THE TUNE OF RS.17,59,225/- WITHOUT CON SIDERING THE FACTS THAT NO COGENT EVIDENCES WERE FURNISHED BY THE ASSE SSEE AT THE TIME OF SCRUTINY ASSESSMENT PROCEEDINGS. 3. FACTS IN BRIEF AS EMERGED FROM THE CORRESPONDING ASSESSMENT ORDER PASSED UNDER SECTION 143(3) DATED 30 TH OF DECEMBER, 2008 WERE THAT THE ASSESSEE IN INDIVIDUAL CAPACITY IS A ITA NO.1870/AHD/2010 ACIT VS. NATRAJA RAO, SILVASSA A.Y. 2006-07 - 2 - CIVIL CONTRACTOR. THE ALLEGATION OF THE AO WAS THAT THE ASSESSEE HAD MADE BOGUS PURCHASES. THE RECORDS OF THE ASSESS EE HAD DISCLOSED PURCHASE OF MORUM FROM ONE MR. AMIT KUM AR AMOUNTING TO RS.14,76,416/- AND SANITARY WOOD AND FIRE WORD FROM MR. SAJJIED OF RS.1,67,570/-. THE ASSESSEE HAS FURNISHED THE BILLS OF THOSE PARTIES. HOWEVER, THE AO WAS OF THE VIEW THAT THOSE BILLS WERE FABRICATED. SINCE, THE ASSESSEE WAS UNAB LE TO SUBSTANTIATE THE CORRECTNESS OF THE PURCHASES TO TH E SATISFACTION OF THE AO, THEREFORE, AN ADDITION OF RS.17,59,225/- WA S MADE. THE MATTER WAS CARRIED BEFORE THE FIRST APPELLATE AUTHO RITY. 4. BEFORE LEARNED CIT(A) THE ASSESSEE HAS FURNISHED PARTY- WISE DETAILS OF THE PURCHASES. IN RESPECT OF THE PU RCHASES MADE FROM MR. AMIT KUMAR, IT WAS SUBMITTED THAT THE SAID PARTY IS A SUPPLIER OF MORUM FROM HARIDWAR. THE ASSESSEE WAS GIVEN A CONTRACT TO FILL UP A LAND WITH MORUM. THE PAYMEN T WAS MADE TO THE ASSESSEE ON THE BASIS OF THE ACTUAL MEASUREM ENTS. THE BILLS OF THE ASSESSEE WERE VERIFIED BY AN ARCHITECT. THAT CONTRACT WAS GIVEN BY M/S. 21 ST CENTURY PRINTERS LIMITED, BHEL, HARIDWAR. THE ASSESSEE HAS ALSO INFORMED THE PAN OF MR. AMIT KUMAR. AS FAR AS THE OBJECTION OF NON REFERENCE OF SALES TAX AND CST REGISTRATION NUMBER WAS CONCERNED, IT WAS INFORMED THAT THE MORUM COMMODITY WAS NOT TAXABLE, HENCE, THE SUPPLIE R WAS NOT MENTIONING THE CST NUMBERS ON THE BILL. IN RESPECT OF MOHD. ARIF, IT WAS INFORMED THAT RUBBLE AND SAND WAS SUPPLIED. IN RESPECT OF MR. SAJJIED, IT WAS INFORMED THAT A BILL WAS ISSUED IN RESPECT OF SUPPLY OF ROAD MATERIAL. THE LEARNED CIT(A) HAS EXA MINED THOSE ITA NO.1870/AHD/2010 ACIT VS. NATRAJA RAO, SILVASSA A.Y. 2006-07 - 3 - EVIDENCE AND THEREAFTER ALLOWED THE CLAIM IN THE FO LLOWING MANNER:- FINDINGS: I HAVE GONE THROUGH THE OBSERVATIONS OF T HE AO IN THE ASSESSMENT ORDER AND REMAND REPORT. I HAVE CAREFULL Y CONSIDERED THE SUBMISSIONS MADE BY THE LEARNED A.R. THE AO HAS MADE THE ADDITIONS OUT OF THE PURCHASES ON THE GROUND THAT T HE BILLS WERE NOT HAVING ST/CST NUMBERS, THE BILLS DID NOT SHOW THE C OMPLETE ADDRESS AND CONTACT NUMBERS OF THE PARTIES, THE BILLS APPEA RS TO BE SELF MADE, AND DESCRIPTION IN THE PRODUCTS APPEARING IN THE BI LLS DOES NOT TALLY WITH THE NARRATION. THE APPELLANT HAS SUBMITTED THE PROOF OF ADDRESS AND OTHER ANTECEDENTS OF THE SUPPLIER ALONG WITH TH E REVENUE RECOGNITION IN THE BOOKS OF A/C. THERE IS STRENGTH IN THE APPELLANT'S SUBMISSIONS THAT THE PURCHASES WERE FOR FILLING MUR OM WHICH IS NOT TAXABLE UNDER SALES TAX. THE INDUSTRY HAS JUST STAR TED TO PICK UP AND THERE ARE NO ESTABLISHED PARTIES IN UTTARANCHAL WIT H PRINTED LETTERHEADS AND BILLS. THE ID AR OF THE APPELLANT H AS PLACED ON RECORD THE MATCHING INCOME BOOKED AGAINST THE SAID PURCHAS ES. THE ADDITIONS MADE INVOLVING TRANSACTIONS WITH MOHAMD A RIF RS.1,15,230/- IT WAS SUBMITTED THAT THE SUPPLIER I S FROM SILVASSA AND HAS PROVIDED 'RUBBLE AND SAND' DURING THE YEAR BY B ILL DATED 5 LH OCTOBER 2005 AMOUNTING TO RS. 1,15,239/-. OUT OF TH E AFORESAID BILL, RS. 81,239/- IS OUTSTANDING AND PAYABLE TO THE PART Y AT THE END OF THE YEAR ON 31 ST MARCH, 2006. RS. 34,000/- WAS PAID BY CHEQUE NO. 0272214 DRAWN ON HDFC BANK A/C. NO. 0742320001297 W HICH HAS BEEN DEBITED TO THE ACCOUNT BY THE BANK ON 7 !H OCTOBER 2005 AS PER COPY OF THE STATEMENT ENCLOSED. AS IN THE AFORESAID CASE, APART FROM THE DISALLOWANCE OF THE ENTIRE TRANSACTION WITH THE PARTY, THE OUTSTANDING IN THE ACCOUNT IS ALSO ADDITIONALLY ADD ED TO THE INCOME R.W SEC. 68 AND INCLUDED IN THE ADDITION OF RS.67,2 9,633/- RAISED AS DISCUSSED SEPARATELY HEREAFTER. THE APPELLANT HAS A CASE AND DESERVE TO GET RELIEF. SMILAR FINDING IS GIVEN IN THE CASE OF TRANSACTIONS INVOLVING SHRI SAJJEID. THUS I AM OF THE CONSIDERED OPINION THAT THE APPELLANT HAS PROVED THE GENUINENESS OF THE PURCHAS ES. CONSIDERING THE FACTS AND CIRCUMSTANCES I AM INCLINED TO GRANT RELIEF TO THE APPELLANT IN THIS GROUND OF APPEAL. ACCORDINGLY, TH IS GROUND OF APPEAL IS ALLOWED. 5. HAVING HEARD THE SUBMISSIONS OF BOTH THE SID ES, WE ARE OF THE CONSIDERED OPINION THAT LEARNED CIT(A) HAS RIGHTLY APPRECIATED ALL THOSE EVIDENCES WHICH WERE REJECTED BY THE AO WITHO UT ASSIGNING ANY CONVINCING REASON. THE COMMODITY SUPPLIED WERE NOT SUBJECT TO SALES TAX, THEREFORE, THE CST/ST NUMBER WERE NOT MENTIONED ON ITA NO.1870/AHD/2010 ACIT VS. NATRAJA RAO, SILVASSA A.Y. 2006-07 - 4 - THE BILLS. FURTHER, IT HAS ALSO BEEN NOTED THAT IN RESPECT OF SOME OF THE PARTIES, THE ENTIRE AMOUNT COULD NOT BE PAID DU RING THE YEAR UNDER CONSIDERATION, THEREFORE, THE PART OF THE AMO UNT REMAINED OUTSTANDING WHICH WAS PAID IN THE SUBSEQUENT YEAR T HROUGH ACCOUNT PAYEE CHEQUES. LEARNED CIT(A) HAS EXAMINED THOSE EVIDENCES AS WELL AND CONSIDERING THE FACTS OF THE CASE HELD THAT THE PURCHASES WERE GENUINE. THE VIEW TAKEN BY LEARN ED CIT(A) IS HEREBY CONFIRMED AND THE GROUND TAKEN BY THE REVENU E IS HEREBY DISMISSED. 6. GROUND NO.2 IS REPRODUCED BELOW: ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION MADE ON ACCOUNT OF SUNDRY BALANCE WRITTEN OFF OF RS.7,63,040/- WITHOUT CONSIDERING TH E FACT THAT ASSESSEE FAILED TO ESTABLISH THAT DEBT HAS REALLY BECOME BAD AND IN FACT THE CALIM MADE BY THE ASSESSEE IS BAD DEBT OR DISCOUNT. 6.1 IT WAS NOTED BY THE AO THAT THE ASSESSEE HAD WR ITTEN OFF SUNDRY BALANCES OF RS.7,63,040/- IN RESPECT OF FOLL OWING PARTIES. SL. NO. NAME OF THE PARTY AMOUNT 1. SAICON STEEL PVT. LTD. 2,82,116 2. CREATIVE TEXTILE PVT. LTD. 89,630 3. CREATIVE OUTWEAR LTD. 2,42,505 4. TCPL 60,000 5. DESCON FIBRES PVT. LTD. 54,571 6. SABRI & CO. 34,218 TOTAL 7,63,040 6.2 THE ASSESSEES EXPLANATION WAS THAT IN SOME OF THE CASES THE CONTRACT WAS COMPLETED IN THE PAST AND THE BILLS WE RE RAISED BUT ITA NO.1870/AHD/2010 ACIT VS. NATRAJA RAO, SILVASSA A.Y. 2006-07 - 5 - THE PAYMENTS WERE NOT MADE. ON THE OTHER HAND, THE AO WAS OF THE VIEW THAT IN SOME OF THE CASES CERTAIN PAYMENTS WERE RECOVERED BY THE ASSESSEE, THEREFORE, IT WAS NOT JU STIFIED ON THE PART OF THE ASSESSEE TO WRITE OFF AN AMOUNT IN RESP ECT OF WHICH THE TRANSACTION WERE GOING ON. ACCORDING TO THE AO, PAR T OF THE AMOUNT WAS ALSO UNDER THE PROCESS OF RECOVERY; THER EFORE, IT WAS INCORRECT TO WRITE OFF THE AMOUNT DURING THE YEAR. IT HAS ALSO BEEN OBJECTED BY THE AO, IN THE CASE OF CREATIVE TEXTILE PRIVATE LIMITED, THAT THE ASSESSEE HAD NOT PRODUCED ANY EVI DENCE ABOUT THE EFFORTS MADE TO RECOVER THE OUTSTANDING BALANCE . ACCORDING TO THE AO, UNLESS AND UNTIL IT IS CLEAR THAT THE PARTY IS NOT GOING TO MAKE ANY FURTHER PAYMENT IT WAS NOT JUSTIFIED TO WR ITE OFF THE BALANCE AMOUNT. RESULTANTLY, AN ADDITION OF RS.7,63 ,040/- WAS MADE. 7. BEFORE LEARNED CIT(A), THE ASSESSEE HAS FURNISHE D THE REASONS ON THE BASIS OF WHICH THE DECISION TO WRITE OFF THE RESPECTIVE PARTY-WISE AMOUNT WAS TAKEN BY THE ASSES SEE. LEARNED CIT(A) HAS ALLOWED THE CLAIM ON TECHNICAL GROUND TH AT THE AMOUNTS WERE WRITTEN OFF IN THE BOOKS OF ACCOUNT DU RING THE YEAR UNDER CONSIDERATION AND THE CLAIM WAS MADE AS PER T HE BOOKS FOR THE YEAR UNDER CONSIDERATION. THEREFORE, DECISION O F TRF LIMITED, 323 ITR 397 (SUPRA) WAS RELIED UPON. THE RELEVANT P ARAGRAPHS ARE REPRODUCED BELOW: FINDINGS: I HAVE GONE THROUGH THE RIVAL SUBMISSIONS. IT IS A FACT THAT THE AO DID NOT DISAGREE WITH THE EXISTENCE OF DEBTO RS CREATED FROM THE CREDIT OF THE INCOME IN THE BOOKS OF THE ASSESS EE. IT IS ALSO FACT THAT THE DEBTS ARE WRITTEN OFF IN THE BOOKS OF ACCO UNTS. THUS I AM OF THE OPINION THAT THE SAME IS COVERED BY THE SUPREME COURT DECISION ITA NO.1870/AHD/2010 ACIT VS. NATRAJA RAO, SILVASSA A.Y. 2006-07 - 6 - IN THE CASE OF TRF LTD. VS. CIT CIVIL APPEAL NO.529 3 OF 2003, DATED FEBRUARY, 9, 2010 WHEREIN THE APEX COURT HAS HELD THAT AFTER 1 ST APRIL, 1989 IT IS NOT NECESSARY FOR THE ASSESSEE T O ESTABLISH THAT THE DEBT, IN FACT, HAS BECOME IRRECOVERABLE. IT IS ENOU GH IF THE BAD DEBT IS WRITTEN OFF AS IRRECOVERABLE IN THE ACCOUNTS OF THE ASSESSEE. THE ASSESSEES CASE IS SQUARELY COVERED UNDER THIS DECI SION AND THE AO IS DIRECTED TO DELETE THE ADDITION OF RS.7,63,040/-. T HUS THIS GROUND OF APPEAL IS ALLOWED. 8. HAVING HEARD THE SUBMISSIONS OF BOTH THE SIDES A ND AFTER CONSIDERING THE TOTALITY OF THE FACTS AND CIRCUMSTA NCES OF THE CASE AS ALSO THE CASE LAW CITED OF TRF LIMITED (SUPRA) W E ARE NOT INCLINED TO INTERVENE WITH THE FACTUAL AS WELL AS L EGAL FINDING OF LEARNED CIT(A) ON THE ISSUE OF WRITE OFF OF SUNDRY BALANCE. IN THE RESULT WE FIND, NO FORCE IN THIS GROUND OF THE REVE NUE. HENCE DISMISS. 9. GROUND NO.3 IS REPRODUCED BELOW: ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LD. CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE OF RS.20,49, 400/- MADE OUT OF WAGES CLAIMED WITHOUT CONSIDERING THE FACT THAT ASS ESSEE FAILED TO FURNISH THE COMPLETE DETAILS WITH REFERENCE TO CLAI M OF THIS EXPENSE. 9.1 THE ASSESSEE HAS CLAIMED EXPENDITURE UNDER THE HEAD WAGES. THE ASSESSEE WAS ASKED TO PRODUCE THE BILL S ALONG WITH THE ATTENDANCE REGISTER. THE ASSESSEE HAS FAILED TO PRODUCE THE WAGE REGISTER. IN THE OPINION OF THE AO, THERE WAS A POSSIBILITY FOR THE INFLATION OF THE WAGES, HENCE, 15% OF THE WAGE S EXPENDITURE WAS DISALLOWED. RESULTANTLY, AN ADDITION OF RS.20,4 9,400/- WAS MADE. ITA NO.1870/AHD/2010 ACIT VS. NATRAJA RAO, SILVASSA A.Y. 2006-07 - 7 - 10. IT WAS EXPLAINED TO THE LEARNED CIT(A) THAT WAG ES DEBITED TO P & L A/C WERE AT RS. 1,36,63,304/- UNDER THE HE AD DIRECT COST. MONTH-WISE DETAILS OF THE PAYMENTS OF THE WA GES WAS PROVIDED AT THE TIME OF ASSESSMENT. THE ASSESSEE HA S ALSO MAINTAINED THE MONTHLY BILLS IN RESPECT OF THE WAGE S. IT WAS POINTED OUT TO LEARNED CIT(A) THAT THE AO HAD ACCEP TED THE FACT THAT THE ASSESSEE HAD CARRIED OUT SUBSTANTIAL WORK DURING THE YEAR. SINCE THE ASSESSEE WAS IN THE BUSINESS OF EXECUTION OF CONTRACT WORK, THEREFORE, THE MAIN EXPENDITURE OF THE ASSESS EE WAS TOWARDS PAYMENT OF WAGES TO THE LABOURS. THE AO HAD MADE AN AD-HOC DISALLOWANCE ALTHOUGH THE TURNOVER OF THE ASSESSEE HAD INCREASED SUBSTANTIALLY. CONSIDERING ALL THOSE ASPECTS, LEARN ED CIT(A) HAS GIVEN THE VERDICT IN ASSESSEES FAVOUR AS FOLLOWS: FINDINGS: I HAVE GONE THROUGH THE RIVAL SUBMISSION S. THE AO HAS MADE THE ADDITIONS OUT OF THE WAGES OBSERVING THAT THERE IS A POSSIBILITY OF INFLATION OF THE WAGES. THE AO HAS C OME TO A CONCLUSION BASED ON SURMISES AND HE DID NOT PLACE ON RECORD AN YTHING TO PROVE THE INFLATION OF WAGES. THE ADDITIONS MADE JUST BY CASTING A DOUBT ON THE RECORD KEEPING OF THE ASSESSEE, DISREGARDING TH E GROUND REALITIES AND THE NATURE OF TRADE, WITHOUT BRINGING ANY EVIDE NCE/FACTS ON RECORD. ON THE OTHER HAND THE APPELLANT HAS PLACED ON RECORD THE JUSTIFICATION FOR THE EXPENSES, ALONG WITH THE SAMP LES OF RECORDS MAINTAINED FOR SUCH EXPENSES. I FIND STRENGTH IN TH E JUSTIFICATION GIVEN BY THE APPELLANT. THUS I AM OF THE CONSIDERED OPINI ON THAT AD-HOC ADDITIONS WITHOUT EVIDENCES ON RECORDS NOT SUSTAINA BLE IN THE EYES OF THE LAW. NO FRESH FINDING GIVEN BY THE AO IN THE RE MAND REPORT AS WELL. IN THIS CIRCUMSTANCES ADDITIONS MADE WITH FRI BULOUS REASONING CANNOT STAND BEFORE THE LAW AND UNJUSTIFIABLE. THE AO IS DIRECTED TO DELETE THE ADDITION MADE IN THIS GROUND. ACCORDINGL Y, THIS GROUND OF APPEAL IS ALLOWED. 11. SUBMISSIONS OF BOTH THE SIDES HAVE BEEN CONSIDE RED. ONCE THE ADMITTED FACTUAL POSITION WAS THAT THE TURN OVE R HAD INCREASED THEN THE WAGES SHOULD ALSO HAVE BEEN INCREASED BECA USE THE ASSESSEE IS A CIVIL CONTRACTOR. THERE WAS NO COGENT EVIDENCE IN THE ITA NO.1870/AHD/2010 ACIT VS. NATRAJA RAO, SILVASSA A.Y. 2006-07 - 8 - POSSESSION OF THE AO THAT THE WAGES HAVE BEEN INFLA TED BY THE ASSESSEE. WE ARE OF THE VIEW THAT AN AD-HOC ADDITIO N WAS WITHOUT ANY BASIS. CONSIDERING THE NATURE OF THE EXPENDITUR E AND THE SURROUNDING CIRCUMSTANCES OF THE CASE; WE HEREBY AF FIRM THE VIEW TAKEN BY THE LEARNED CIT(A). IN THE RESULT, THIS GR OUND OF THE REVENUE IS HEREBY DISMISSED. 12. GROUND NO.4 IS REPRODUCED BELOW: ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION ON ACCOUN T OF UNEXPLAINED CREDITORS, WITHOUT CONSIDERING THE FACT THAT THE AS SESSEE DID NOT FILE THE BALANCE CONFIRMATIONS DULY CERTIFIED BY THE OPP OSITE PARTIES, THOUGH REQUESTED FROM TIME TO TIME. 12.1 THE AO HAD MADE AN ALLEGATION THAT THE ASSESSE E HAD NOT FURNISHED THE CONFIRMATION HENCE PREPARED A LIST OF 51 PERSONS IN WHOSE ACCOUNTS THE OUTSTANDING BALANCES WERE MORE T HAN RS.50,000/-. THE ASSESSEE WAS ASKED TO FURNISH THE CONFIRMATIONS AND TO PRODUCE THOSE PARTIES. IN THE ABSENCE OF THE CONFIRMATION, THE AO HAD MADE AN ADDITION OF RS.67,29,633/- IN TH E HANDS OF THE ASSESSEE. 13. IT WAS EXPLAINED THAT THE SUNDRY CREDITORS WERE MAINLY THOSE PERSONS WHO HAVE PROVIDED GOODS OR WAGES TO THE ASS ESSEE. THE ASSESSEE HAS MADE CERTAIN GROUPS HAVING IDENTICAL F ACTS OUT OF THE LONG LIST OF THE CREDITORS. THE GROUP-WISE EXPLANAT ION OF THE ASSESSEE WAS AS UNDER:- ITA NO.1870/AHD/2010 ACIT VS. NATRAJA RAO, SILVASSA A.Y. 2006-07 - 9 - GROUP A: IN THIS LIST, THE BALANCES WERE BROUGHT FORWARD FROM THE PREVIOUS YEAR; HENCE, THERE WAS NO UNEXPLA INED CREDIT. GROUP B: IN THIS LIST, TRANSACTIONS OF PURCHASES FROM THOSE PARTIES WERE MADE. GROUP C: CONTAINS THE LIST OF SUB-CONTRACTORS THROUGH WHICH BUSINESS TRANSACTION WAS CARRIED OUT. GROUP D: CONTAINS THE LIST OF PURCHASES MADE AND THE REJECTION OF PURCHASES OF THOSE PARTIES. GROUP E: CONTAINS THE LIST OF PARTIES FROM WHOM THE AMOUNT WAS RECEIVED BY CHEQUES. 14. LEARNED CIT(A) HAS CALLED FOR A REMAND REPORT O N THE BASIS OF THE SUBMISSIONS OF THE ASSESSEE AND AFTER CONSID ERING THE REPLIES RELIEF WAS GRANTED IN THE FOLLOWING MANNER:- FINDINGS: I HAVE GONE THROUGH THE RIVAL SUBMISS IONS. THE AO HAS MADE THE ADDITIONS ON THE BASIS OF ONLY ONE OBS ERVATION OF NON SUBMISSION OF CONFIRMATIONS OF CREDITORS. HE HAS R E-ITERATED THE SAME IN THE REMAND REPORT ALSO. THE APPELLANT HAS EXPLAI NED REASONS FOR HIS INABILITY TO FILE THE SAME IN TIME WHICH ARE ME NTIONED IN THE PREAMBLE OF THE ORDER. BASED ON THESE FACTS IT IS I MPORTANT TO EXAMINE THE APPELLANT. 9.4.1 WITH REGARD TO GROUP 'A' INVOLVING 21 PARTI ES WHOSE BALANCE WAS BROUGHT FORWARD FROM THE PREVIOUS YEAR AND HAS BEEN CARRIED DOWN AT THE END OF THE YEAR AND WHERE THERE ARE NO TRANSACTIONS DURING THE YEAR IN THE ACCOUNT. THE DECISIONS RELIE D UPON BY THE APPELLANT HAS BEEN CONSIDERED. THE RATIO IN THE DEC ISIONS IN THE CASE OF CIT V/S. PRAMESHWAR BOHRA (2008) 301 ITR 404 (RAJ) AND CIT V/S USHA STUD AGRICULTURAL FARMS LTD. (2008) 301 IT R 384 (DEL) ARE APPLICABLE IN THIS CASE. I AGREE WITH THE APPEL LANT THAT THE BALANCE OUTSTANDING OF THE SUNDRY CREDITORS WHERE THERE WAS NO TRANSACTION IN THE CURRENT ACCOUNTING YEAR THE PROVISION U/S. 6 8 OF THE ACT IS NOT ATTRACTED. FURTHER THESE CREDITORS AND THEIR BALANC E OUTSTANDING HAS BEEN ACCEPTED IN THE BOOKS OF A/C. THESE CREDIT BAL ANCES HAVE BEEN ACCEPTED BY THE AO IN THE SCRUTINY ASSESSMENT COMPL ETED IN THE EARLIER YEAR. IN THIS CIRCUMSTANCES I AM INCLINED T O GRANT RELIEF. THUS ITA NO.1870/AHD/2010 ACIT VS. NATRAJA RAO, SILVASSA A.Y. 2006-07 - 10 - THE APPELLANT GETS RELIEF OF OUTSTANDING IN THIS GR OUP AMOUNTS TO RS. 25,17,767/-. 9.4.2 WITH REGARD TO GROUP 15 INVOLVING 15 PARTIE S WITH WHOM THERE WERE TRANSACTIONS OF PURCHASES DURING THE YEAR. THE APPELLANT GETS RELIEF IN THE SIMILAR ANALOGY AS IN THE CASE OF GRO UP A PARTIES APPLIED IN THIS GROUP OF CASES TO THE EXTENT OF OPENING BAL ANCES. WITH REGARD TO THE BILLS PERTAINING TO THE YEAR STANDING UNPAID AT THE END OF THE YEAR, I AM NOT FULLY SATISFIED WITH THE EXPLANATION S GIVEN BY THE ASSESSEE. THE PRIMARY ONUS OF PROVING AN EXPENSE IS ON THE ASSESSEE WHICH IS NOT DISCHARGED TO THE SATISFACTION OF THE AO. TO THIS EXTENT THE ADDITION IS SUSTAINED. THUS IN THESE PARTIES TH E APPELLANT GETS RELIEF OF RS.8,58,673/-. THUS OUT OF RS. 20,02,861/ -, THE AO IS DIRECTED TO RESTRICT THE DISALLOWANCE AT RS.11,44,188/-. ACC ORDINGLY, THIS GROUND OF APPEAL IS PARTLY ALLOWED. 9.4.3 WITH REGARD TO GROUP C INVOLVING 13 P ARTIES WITH WHOM THERE WERE TRANSACTIONS IN THE NATURE OF A SUB-CONT RACT DURING THE YEAR. IT IS VERIFIED FROM THE RECORDS BEFORE ME THA T ALL THESE PARTIES ARE SUBJECTED TO TAX DEDUCTION AT SOURCE AND RETURN OF TDS WAS FILED BEFORE FILLING THE R/I. HOWEVER, THE CONTENTION RA ISED BY THE AO HAS NOT BEEN EXPLAINED ADEQUATELY. THE MINIMUM REQUIREM ENT THE APPELLANT NEED TO SATISFY HERE IS THAT THE CONFIRMA TION OF BALANCES FROM THOSE PARTIES WHICH THE APPELLANT HAD FAILED E VEN AT THE APPELLATE PROCEEDING. IN THESE CIRCUMSTANCES I AM I N AGREEMENT WITH THE ACTION OF THE AO. THUS THE PLEA OF THE APPELLAN T FOR GRANT OF RELIEF IN THIS GROUP AMOUNTS TO RS. 14,29,433/- IS DISMISS ED . 9.4.4 WITH REGARD TO GROUP D CONSISTING OF TWO PA RTIES WHERE THE ADDITION OF THE BALANCE IN THE ACCOUNT OF AN AGGR EGATE AMOUNT OF RS. 4,92,155/- HAS BEEN MADE IN ADDITION TO THE DIS ALLOWANCE OF THE ENTIRE PRINCIPLE AMOUNT OF TRANSACTION OF PURCHASE FROM THESE TWO PARTIES. THESE PARTIES ARE ALREADY DISCUSSED AT L ENGTH IN GROUND NO. 1. THESE ADDITIONS THUS STANDS DELETED SINCE THE PU RCHASES ARE PROVEN TO BE GENUINE AS PER GROUND NO. I. THUS THE APPELLA NT S RELIEF OF OUTSTANDING IN THIS GROUP AMOUNTS TO RS. 4,92,155/- , 9.4.5 WITH REGARD TO GROUP E INVOLVING ONE PARTY OF RS. 2,87,417/-, THE APPELLANT HAS SUBMITTED THAT A CONFIRMATION FRO M THE PARTY IS SINCE PROCURED. THE ADDITION WAS MADE ON THE SINGLE POINT OF NON RECEIPT OF CONFIRMATION. THE AO HAS NOT COMMENTED A DVERSELY ON THE CONFIRMATION SINCE PROCURED IN THE REMAND REPORT. T HEREFORE, I AM OF THE OPINION THAT THIS ADDITION DOCS NOT SUSTAIN, AN D ASSESSEE GETS A RELIEF OF RS. 2,87,4 17/-. 9.4.6. THUS IN THIS GROUND THE APPELLANT GETS RELI EF OF RS.41,56,012/- AND THE ADDITION OF RS. 25,73,621/- (RS.11,44,188/- + 41,29,433/-) STANDS CONFIRMED. 15. WE HAVE HEARD BOTH THE SIDES AND EXAMINED THE R ECORDS AVAILABLE BEFORE US. IT APPEARS THAT THE AO HAS TAK EN A VIEW IN ITA NO.1870/AHD/2010 ACIT VS. NATRAJA RAO, SILVASSA A.Y. 2006-07 - 11 - RESPECT OF SUNDRY CREDITORS WHICH WERE EXAMINED BY HIM WHILE INVESTIGATING THE PURCHASE OF BUILDING MATERIAL, ET C. IN SOME OF THE CASES, THE AO HAD EVEN MADE THE ADDITION ALTHOUGH T HE DETAILS OF THE CHEQUES HAVE BEEN FURNISHED BY THE ASSESSEE. LE ARNED CIT(A) HAS THOROUGHLY EXAMINED EACH AND EVERY LIST AND THE REUPON GRANTED RELIEF TO THE ASSESSEE. IT IS WORTH TO MENT ION THAT THE LEARNED CIT(A) HAS AFFIRMED A SUM OF RS.25,73,621/- UNDER THIS HEAD AND THE ASSESSEE IS NOT IN APPEAL. CONSIDERING ALL THESE ASPECTS AND THE CASE LAW RELIED UPON, WE HEREBY AFF IRM THE FINDING OF LEARNED CIT(A) AND DISMISSED THIS GROUND OF THE REVENUE. 16. GROUND NO.5 IS REPRODUCED BELOW: ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LD. CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE MADE U/S 40(A)(IA) OF THE ACT AMOUNTING TO RS.1,35,98,554/- WITHOUT CONSI DERING THE FACT THAT THE PAYMENT OF TDS WAS MADE INTO THE GOVERNMEN T IN CONTRAVENTION OF THE PROVISIONS OF SECTION 200(1) O F THE ACT, 1961. 17. IT WAS NOTED BY THE AO THAT PAYMENT OF RS.2,24, 67,670/- WAS MADE TO CONTRACTOR AND THE ASSESSEE WAS ASKED T O FURNISH THE DETAILS OF THE TDS DEDUCTED. IN THE ABSENCE OF THE DETAILS OF TDS, THE AO HAD MADE THE ADDITION OF THE ENTIRE PAYMENT. 18. BEFORE LEARNED CIT(A), THE SUBMISSIONS OF THE ASSESSEE WAS THAT THE TDS WAS DEDUCTED. THOSE BILLS WERE FOR WARDED TO THE AO AND IN THE REMAND REPORT, THE AO HAS INFORMED AS UNDER: THE AO IN HIS REMAND REPORT SUBMITTED AS BELOW: THE ASSESSEE HAS CLAIMED THAT THE TDS WAS DEDUCTED IN RESPECT OF PAYMENT TO THE SUB CONTRACTOR AND TDS RETURN WAS AL SO FILED BY HIM. IT HAS BEEN CLAIMED BY THE ASSESSEE THAT FOLLOWING PAYMENTS OF TDS WAS MADE BY HIM FOR THE YEAR UNDER CONSIDERATION: ITA NO.1870/AHD/2010 ACIT VS. NATRAJA RAO, SILVASSA A.Y. 2006-07 - 12 - DESCRIPTION TOTAL PAYMENTS MADE (RS.) TDS DEDUCTED (RS.) DATE OF PAYMENT OF TDS INTO THE GOVERNMENT A/C. PAYMENTS TO SUB- CONTRACTORS 49,02,418/- 50,000/- 07.10.2005 -DO- 1,71,55,890/- 1,75,000 01.05.2006 RS.2,2058,308/- RS.2,25,000/- PERUSAL OF THE ANNEXURE CONSISTING THE DETAILS OF P AYMENTS TO SUB CONTRACTOR, AMOUNTING TO RS.1,71,55,890/-, REVEALED THAT ONLY PAYMENTS TO THE TUNE OF R.39,66,698/- WERE MADE/PAR TYS ACCOUNTS WERE CREDITED IN THE MONTH OF MARCH, 2006. REMAININ G PAYMENTS OF RS.1,31,89,192/- WERE MADE UP TO 28.02.2006 AND HEN CE TDS ON SUCH PAYMENTS SHOULD HAVE BEEN PAID INTO THE GOVERNMENT ACCOUNT ON OR BEFORE 31.03.2006, AS PER THE PROVISIONS OF SECTION 2000(1) OF THE ACT. IN THE PRESENT CASE, THE ENTIRE TDS OF RS.1,75,000/ - HAS BEEN PAID ON 01.05.06 AND HENCE THE PROVISION OF SECTION 40(A)(I A) ARE CLEARLY ATTRACTED IN THE CASE OF THE ASSESSEE TO THE TUNE O F RS.1,31,89,192/-. SIMILARLY, NO TDS IS MADE ON THE PAYMENT OF RS.4,09 ,362/- [2,24,67,670 2,20,58,308]. IN VIEW OF THE ABOVE F ACTS, THIS ADDITION MAY KINDLY BE DECIDED ON MERITS. 19. AFTER CONSIDERING THE EXPLANATION OF THE ASSESS EE, LEARNED CIT(A) HAS HELD AS UNDER:- I HAVE GONE THROUGH THE RIVAL SUBMISSIONS. IT IS IM PORTANT TO NOTE HERE THAT THE SECTION 40(A)(IA) WAS AMENDED RETROSP ECTIVELY BETWEEN THE PASSING OF THE ASSESSMENT ORDER AND THIS DATE. THERE IS NO DISPUTE THAT THE TDS WAS DEDUCTED DURING THE LAST MONTH OF THE PREVIOUS YEAR, THE SAME WAS PAID BEFORE THE DUE DATE SPECIFI ED IN SUB SECTION 139(1) OF THE ACT. THE HONBLE DELHI HC IN THE CASE OF CIT VS. NESTLE INDIA LTD. (2005) 195 CTR (DEL) 98 : (2005) 275 ITR 1 (DEL) HELD THAT: WHERE ASSESSEE HAD DEDUCTED TAX AT SOURCE FROM ROY ALTY PAYMENT IN THE SAME FINANCIAL YEAR AND DEPOSITED TH E SAME IN THE NEXT FINANCIAL YEAR WITHIN LIMITATION PRESCRIBE D UNDER CHAPTER XVII-B R.W.S. 200(1), NO DISALLOWANCE OF RO YALTY PAYMENT COULD BE MADE BY INVOKING SECTION 40(A)(I). 19.1 BY FOLLOWING THE DECISION OF HONBLE COURT, LE ARNED CIT(A) HAS DIRECTED THE AO TO DELETE THE ADDITION. ITA NO.1870/AHD/2010 ACIT VS. NATRAJA RAO, SILVASSA A.Y. 2006-07 - 13 - 20. IN RESPECT OF THE ABOVE GROUND, THE ASSESSEES COUNSEL HAS FURNISHED FOLLOWING CASE LAWS: (A) ROYAL BUILDERS VS. ACIT, 2011-TIOL-831- ITAT-AH M (B) H S MOHINDRA TRADERS VS. ITO (2010) 132 TTJ (DE L) 701 (C) BAPUSHAEB NANSAHEB DHUMAI VS. ACIT 40 SOT 361 ( MUMBAI) (2010) (D) KANUBHAI RAMJIBHAI VS. ITO 44 SOT 264 (2011)(AH D) (E) CIT VS. VIRGIN CREATIONS 2012-TIOL-181-HC-KOL-I T (F) ACIT VS. ISHAN DYES & CHEM LTD 2013-TIOL-329-IT AT-AHM. 21. HAVING HEARD THE SUBMISSIONS, WE ARE OF THE VIE W THAT NOW THIS ISSUE IS VERY WELL SETTLED AND AS PER THE AMEN DED PROVISIONS, IF THE PAYMENTS HAVE MADE BEFORE THE DUE DATE OF FILIN G OF THE RETURN THEN THE SAME IS ALLOWABLE. WE HAVE NOTED THAT LD. CIT(A) HAS NOT EXAMINED THE EACH AND EVERY DETAIL OF PAYMENT AND T HE CORRESPONDING DATES OF THE DEPOSIT OF T.D.S. WE DEE M IT PROPER TO RESTORE THIS GROUND BACK TO CIT(A) FOR THE LIMITED PURPOSE TO EXAMINE THE DATES OF THE DEPOSITS OF THE T.D.S. AND IF THE SAME IS AS PER THE LAW AS PRONOUNCED IN THE CASE LAW CITED ABOVE THEN THE SAME SHOULD BE ALLOWED. WITH THESE REASONS, THIS GR OUND OF THE REVENUE MAY BE TREATED AS ALLOWED BUT FOR STATISTIC AL PURPOSE ONLY. 22. IN THE RESULT, THE APPEAL OF THE REVENUE IS PAR TLY ALLOWED. SD/- SD/- (ANIL CHATURVEDI ) (MUKUL K R. SHRAWAT ) ACCOUNTANT MEMBER JUDICIAL MEMB ER AHMEDABAD; DATED /08/2013 PRABHAT KR. KESARWANI, SR. P.S. TRUE COPY ITA NO.1870/AHD/2010 ACIT VS. NATRAJA RAO, SILVASSA A.Y. 2006-07 - 14 - / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. !' / THE RESPONDENT. 3. #$#% ' '& / CONCERNED CIT 4. ' '&() / THE CIT(A)-III, AHMEDABAD 5. )*' %, ' ' % , ,-$ / DR, ITAT, AHMEDABAD 6. *./ 0 / GUARD FILE. / BY ORDER, 1 11 1/ // /,' #2 ,' #2 ,' #2 ,' #2 ( DY./ASSTT.REGISTRAR) ' ' % ' ' % ' ' % ' ' % , , , , ,-$ ,-$ ,-$ ,-$ / ITAT, AHMEDABAD