M/s. Nad Enterprise, Durgapur V. Add. CIT, Range - 2, Durgapur, Durgapur

ITA 188/KOL/2012

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 8034 (ITAT-KOLKATA)
• Duration Of Justice: 9 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-11-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 06-02-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P K MANDAL
• Assessee Lawyers: U DASGUPTA
• Section: 40A(3)

Judgement Text

I.T.A. NO. 188/ KOL. / 2012 AS SESSMENT YEAR : 2008-09 PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA A BENCH, KOLKATA BEFORE SHRI PRAMOD KUMAR (ACCOUNTANT MEMBER), AND SHRI GEORGE MATHAN (JUDICIAL MEMBER) I.T.A. NO.: 188/ KOL. / 2012 ASSESSMENT YEAR : 2008-09 M/S. NAD ENTERPRISE,.APPELLANT NETAJI MARKET, BENACHITY, DURGAPUR [PAN : AAFFN 4094 C] -VS.- ADDITIONAL COMMISSIONER OF INCOME TAX, .RESPONDENT, RANGE-2, DURGAPUR APPEARANCES BY: U. DASGUPTA, A.R., FOR THE APPELLANT P.K. MANDAL, D.R., FOR THE RESPONDENT DATE OF CONCLUDING THE HEARING : NOVEMBER 14, 2012 DATE OF PRONOUNCING THE ORDER : NOVEMBER 23, 2012 O R D E R PER PRAMOD KUMAR: 1. BY WAY OF THIS APPEAL, THE ASSESSEE-APPELLANT HA S CHALLENGED CORRECTNESS OF LEARNED COMMISSIONER OF INCOME TAX ( APPEALS)S ORDER DATED 29 TH NOVEMBER, 2011, FOR THE ASSESSMENT YEAR 2008-09 ON THE FOLLOWING GROUNDS :- (1) FOR THAT THE ORDER PASSED BY THE LD. CIT(A) IS ARBITRARY, EXCESSIVE, AND HENCE BAD IN LAW. (2) FOR THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) WAS NOT JUSTIFIED IN SUSTAINING THE ADDI TION MADE BY THE A.O. U/S. 40A(3) AMOUNTING TO RS.5,54,0 00/-, I.T.A. NO. 188/ KOL. / 2012 AS SESSMENT YEAR : 2008-09 PAGE 2 OF 4 SIMPLY ON THE BASIS OF CASH WITHDRAWAL ENTRIES IN THE BANK STATEMENT, WITHOUT CONSIDERING THE FACT THAT THE SA ID AMOUNT WITHDRAWN FROM BANK, HAS COME INTO CASH BOOK AND HAS NEVER BEEN CLAIMED AS AN EXPENDITURE AND AS SUC H THE QUESTION OF DISALLOWANCE DOES NOT ARISE, AND THE AD DITION MAY PLEASE BE DELETED. 2. THE SHORT ISSUE WE ARE THUS REQUIRED TO ADJUDICA TE IS WHETHER OR NOT THE CIT(APPEALS) WAS JUSTIFIED IN UPHOLDING THE IMPUGNED DISALLOWANCE OF RS.5,54,000/- U/S. 40A(3) OF THE IN COME TAX ACT, 1961. 3. THE ISSUE IN APPEAL LIES IN A VERY NARROW COMPAS S OF MATERIAL FACTS. THE ASSESSEE IS A PARTNERSHIP FIRM ENGAGED I N THE BUSINESS OF TRANSPORT CONTRACTORS. DURING THE COURSE OF ASSESSM ENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS MAD E SEVERAL DRAWINGS FROM BANK, BY WAY OF ORDINARY I.E. UNCROSSED CHEQUE S, AND HELD THAT THESE PAYMENTS DESERVE TO BE DISALLOWED U/S. 40A(3) OF THE INCOME TAX ACT. THE ASSESSEES CLAIM THAT THESE AMOUNTS WERE WITHDRAWN FROM TIME TO TIME, TO MEET BUSINESS REQUIREMENTS, FROM BANK O F THE ASSESESE FIRM THROUGH DIFFERENT PERSONS WHO ARE STAFF MEMBERS OF THE ASSESSEE-FIRM AND NO BUSINESS RELATIONS WITH THEM WAS REJECTED AS ASSESSEE COULD NOT PROVE THOSE NAMES IN THE SALARY REGISTER OF LABOUR SHEET. IT WAS IN THIS BACKDROP THAT THE AMOUNT OF RS.5,54,000/- WAS DISAL LOWED. AGGRIEVED, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE CIT(AP PEALS) BUT WITHOUT ANY SUCCESS. THE ASSESSEE IS NOT SATISFIED AND IS I N FURTHER APPEAL BEFORE US. 4. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RECORD AND CONSIDERED FACTUAL MATRIX OF THE CASE AS ALSO THE APPLICABLE LEGAL POSITION. I.T.A. NO. 188/ KOL. / 2012 AS SESSMENT YEAR : 2008-09 PAGE 3 OF 4 5. WE HAVE NOTICED THAT THE MAIN CONTENTION OF THE ASSESSEE IS THAT WHAT HAS BEEN DISALLOWED BY THE ASSESSING OFFICER A RE WITHDRAWALS FROM THE BANKS WHICH WERE NOT CLAIMED AS DEDUCTION ANYWAY. ALL THESE AMOUNTS WERE, ACCORDING TO THE LEARNED COUNSEL, DUL Y CREDITED IN THE CASH BOOK, AND, AS SUCH OCCASION FOR DISALLOWANCE D OES NOT ARISE. THIS LINE OF ARGUMENTS, ATTRACTIVE AS IT MAY SOUND WHEN SEEN IN ISOLATION OF PECULIAR FACTS OF THIS CASE, OVERLOOKS THE FOLLOWIN G UNCONTROVERTED FINDINGS IN THE ASSESSMENT ORDER:- ON CONTRARY IT HAS ALSO BEEN OBSERVED THAT J. SEKH (REPRESENT THE SL. NO. 8 OF THE ABOVE TABLE) CLAIME D BY THE A.R. OF THE ASSESSEE-FIRM AS ONE OF THE STAFF OF TH IS CONCERN IS NOTHING BUT A SUB-CONTRACTOR OF THE ASSESSEE. TH E CONCLUSION TAKEN BY THE REVENUE REGARDING ENTITY OF THE ALLEGED PERSON (I.E. J. SEKH) HAVE BEEN STRENGTHEN BY THE ASSESSEE-FIRM ITSELF BY SUBMITTING THE LIST OF SUB- CONTRACTORS WHEREIN THE NAME OF IDENTICAL PERSON AP PEARED VIDE SL. NO. 14. THUS, IT HAS BEEN ESTABLISHED FACT THAT THE ASSESSEE-FIRM HAS A NEXUS WITH THE SAID PARTY (I.E. J. SEKH). SUBSEQUENTLY, THE CROSS OBSERVATION HAS BEEN MADE T HROUGH BANK BOOK PRODUCED BY THE A.R. OF THE ASSESSEE AT T HE STAGE OF HEARING WITH REFERENCE TO BANK STATEMENT, BANK B OOK REVEALS THAT THE ASSESSEE HAS PASSED A CONTRA ENTRY IN CASH ON THE ALLEGED DATE (I.E. 27.06.2008) INSTEAD OF PR OPER REFLECTION OF PAYMENT MADE TO J. SEKH. ON THE OTHER HAND IT IS NOTICED FROM THE RELEVANT PARTY LEDGER THAT NO S UCH PAYMENT HAS BEEN RECORDED ON THE SPECIFIC DATE OR O THERWISE THE PAYMENT HAS BEEN MADE WITHOUT ROUTED THROUGH TH E RELEVANT LEDGER. MORE SIGNIFICANTLY IT IS NOTED FRO M THE BANK BOOK THAT ALL THE PAYMENTS OF THE ABOVE TABLE HAVE BEEN ACCOMMODATE BY PASSING CONTRA ENTRIES WITHOUT REFLE CTING THE NAME OF THE PERSON/ PARTY TO WHOM PAYMENT MADE WITHOUT ACCOUNT PAYEE CHEQUE OR DRAFT. THIS IS NOTH ING BUT AN ACCOUNTING JUGGLERY TO GIVE THE WRONG IMPRESSION ABOUT ACTUAL ACCOUNTING PRINCIPLE. IN THIS WAY, THE ASSES SEE-FIRM HAS TRIED TO MISLED THE SPIRIT OF SECTION 40A(3) IN ALL OTHER CASES. I.T.A. NO. 188/ KOL. / 2012 AS SESSMENT YEAR : 2008-09 PAGE 4 OF 4 6. IN VIEW OF THE ABOVE DISCUSSIONS, WHILE WE UPHOL D THE PLEA OF THE ASSESSEE THAT UNLESS AN AMOUNT IS CLAIMED AS DEDUCT ION THE SAME CANNOT BE DISALLOWED U/S. 40A(3), WE ALSO DEEM IT FIT AND PROPER TO REMIT THE MATTER TO THE FILE OF THE ASSESSING OFFICER FOR RE- EXAMINING THE MATTER AND RESTRICTING THE DISALLOWANCES, IF AT ALL SUSTAI NABLE IN LAW, TO THE AMOUNTS ACTUALLY PAID IN CONTRAVENTION OF SECTION 4 0A(3), OUT OF THE AFORESAID DRAWINGS, AND CLAIMED AS DEDUCTION IN COM PUTATION OF TAXABLE INCOME. WITH THESE DIRECTIONS, THE MATTER S TANDS RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR ADJUDICATION DE NOVO IN ACCORDANCE WITH THE LAW, BY WAY OF A SPEAKING ORDER AND AFTER GIVIN G A FAIR AND REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. WE ORDER SO. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES IN THE TERMS INDICATED ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 23 RD DAY OF NOVEMBER, 2012. SD/- SD/- GEORGE MATHAN PRAMOD KUMAR (JUDICIAL MEMBER) ( ACCOUNTANT MEMBER) KOLKATA, THE 23 RD DAY OF NOVEMBER, 2012 COPIES TO : (1) THE ASSESSEE (2) THE DEPARTMENT (3) COMMISSIONER OF INCOME-TAX (APPEALS) (4) COMMISSIONER OF INCOME TAX (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ETC ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.