I.T.O Wd - 2(3),Asansol, Asansol V. Priyanka Transport, Burdwan

ITA 1881/KOL/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 4145 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 6 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-12-2016
• Appeal Filed By: Department
• Bench Allotted: A
• Next Hearing Date: 05-10-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 12-06-2013
• Court: TRIBUNAL
• Assessee Lawyers: N O N E
• Keywords: Unexplained investment; Capital asset; Income from undisclosed sources; Additional evidence; Corroborative evidences
• Section: 143(3); 133(6); 69

Judgement Text

1 ITA NO.1881/KOL/2013 PRIYANKA TRANSPORT, AY 2008-09 IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: KOL KATA [BEFORE SHRI M. BALAGANESH, AM & SHRI S. S. VISWAN ETHRA RAVI, JM] I.T.A NO. 1881/KOL/2013 ASSESSMENT YEAR: 2008-09 INCOME-TAX OFFICER, WARD-2(3), ASANSOL. VS. PRIYA NKA TRANSPORT (PAN:AAJFP6845P) ( APPELLANT ) ( RESPONDENT ) DATE OF HEARING: 05.12.2016 DATE OF PRONOUNCEMENT: 16.12.2016 FOR THE APPELLANT: SHRI SALLONG YADEN, ADDL. C IT FOR THE RESPONDENT: N O N E ORDER PER SHRI M. BALAGANESH, AM: THIS APPEAL BY REVENUE IS ARISING OUT OF ORDER OF C IT(A), DURGAPUR VIDE APPEAL NO. 324/CIT(A)/ASL/ITO/WARD-2(3)/ASL/2010-11 DATED 25.0 3.2013. ASSESSMENT WAS FRAMED BY ITO, WARD-2(3), ASANSOL U/S. 143(3) OF THE INCOM E TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) FOR AY 2008-09 VIDE HIS ORDER DATED 2 0.12.2010. 2. THE CASE WAS LISTED FOR HEARING ON 30.3.2016 , 6.6.2016 , 10.8.2016 , 5.10.2016 AND 5.12.2016. NONE APPEARED ON BEHALF OF THE ASSESSEE DESPITE THE SERVICE OF NOTICE OF HEARING ON THE ASSESSEE THROUGH LEARNED DR. HENCE, WE PROC EED TO DISPOSE OFF THIS APPEAL AFTER HEARING THE LD DR AND BASED ON MATERIALS AVAILABLE ON RECORD. 3. THE FIRST ISSUE TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER THE LD CIT(A) IS JUSTIFIED IN DELETING THE ADDITION OF RS. 33,46,534/- MADE ON ACCOUNT OF UNDISCLOSED INVESTMENT IN FIXED DEPOSIT AND CAPITAL ASSET IN THE FACTS AND CI RCUMSTANCES OF THE CASE. 3.1. THE BRIEF FACTS OF THIS ISSUE IS THAT THE ASS ESSEE IS A PARTNERSHIP FIRM AND ENGAGED IN TRANSPORT BUSINESS. THE ASSESSEE HAD SUBMITTED THE TAX AUDIT REPORT ALONG WITH ITS ANNEXURES, COPY OF INSTRUMENT OF PARTNERSHIP AND OTHER PAPERS / DOCUMENTS / INFORMATION AS REQUISITIONED BY THE LD AO DURING THE COURSE OF ASS ESSMENT PROCEEDINGS BY PROPER REPRESENTATION BY THE LD AR OF THE ASSESSEE. THE L D AO OBSERVED THAT THE ASSESSEE FIRM WAS STARTED ON 1.7.2007 THROUGH DEED OF PARTNERSHIP AND AFTER COMMENCEMENT, THE FIRM OPENED 2 ITA NO.1881/KOL/2013 PRIYANKA TRANSPORT, AY 2008-09 ITS BANK ACCOUNT WITH STATE BANK OF INDIA, BIJPUR B RANCH ON 10.9.2007 VIDE NEW ACCOUNT NO. 11857773372 AND WITH INDUS IND BANK, ASANSOL BR ANCH ON 28.1.2008 VIDE ACCOUNT NO. 0128-M03905-060. THE LD AO OBSERVED THAT ON P ERUSAL OF THE INFORMATION FURNISHED BY THE STATE BANK OF INDIA, BIJPUR BRANCH IN COMPLI ANCE TO NOTICE U/S 133(6) OF THE ACT , THAT APART FROM THE CURRENT ACCOUNT NO. 11857773372 , THE ASSESSEE HAD A TERM LOAN ACCOUNT NO. 01562060570 AND ALSO TWO SHORT TERM DEPOSITS F OR RS. 6,50,000/- EACH TOTALING TO RS. 13,00,000/- WHICH WERE MARKED AS LIEN FOR THE AFORE SAID TERM LOAN, AMONG OTHER PRIMARY SECURITIES SUCH AS HYPOTHECATION OF VEHICLES. THE LOAN SANCTION LIMIT WAS RS 67,00,000/- AND ASSESSEE BROUGHT MARGIN MONEY OF RS. 18,34,534/ - FOR PURCHASE OF 6 VEHICLES. THE LOAN FROM BANK WAS TAKEN ON 27.3.2008. THE BANKER ISSUE D PAY ORDER FOR RS. 85,34,534/- FOR THE COST OF 6 VEHICLES IN FAVOUR OF FRENCH MOTOR CAR LT D, USHAGRAM, ASANSOL AND JAYASHREE AUTOMOBILES, DURGAPUR. APART FROM THE MARGIN MONE Y OF RS. 18,34,534/-, THE ASSESSEE ALSO DEPOSITED A SUM OF RS. 1,01,030/- FOR INSURANC E AND RS. 83,750/- FOR LOAN PROCESSING CHARGES INTO THE LOAN ACCOUNT ON 27.3.2008. THE BA NK DEBITED INTEREST UPTO 31.3.2008 AMOUNTING TO RS. 10,420/- AND ASSESSEE MADE REPAYME NT IN LOAN ACCOUNT UPTO 31.3.2008 A SUM OF RS. 16,800/-. HENCE TOTAL OUTGOING IN RESPE CT OF THIS TRANSACTION WAS RS. 20,46,534/- (18,34,534 + 1,01,030 + 83,750 + 10,420 + 16,800) . THE LD AO OBSERVED ON PERUSAL OF THE BALANCE SHEET AS ON 31.3.2008 THAT THE TERM LOAN AC COUNT OF RS 66,83,200/- (RS 67,00,000 LESS REPAYMENT OF RS 16,800) AS WELL AS ASSETS IN T HE FORM OF 6 VEHICLES AND THE INVESTMENT IN SHORT TERM DEPOSITS OF RS. 13,00,000/- WERE NOT REFLECTED THEREON. THE ASSESSEE WAS ASKED TO EXPLAIN THE SOURCE FOR PAYMENT OF MARGIN M ONEY , INSURANCE, LOAN PROCESSING CHARGES , INTEREST ON TERM LOAN AND REPAYMENT OF TE RM LOAN TOTALING TO RS. 20,46,534/- AND INVESTMENT IN FIXED DEPOSITS OF RS. 13,00,000. IN REPLY THE ASSESSEE SUBMITTED THAT THE ASSETS WERE NOT DELIVERED WITHIN 31.3.2008 AND HENC E, THE ASSET VALUE TOGETHER WITH THE TERM LOAN VALUES WERE NOT TAKEN INTO ACCOUNT WHILE COMPL ETING THE BOOKS OF ACCOUNTS OF THE ASSESSEE. REGARDING SOURCE OF DEPOSITS OF MARGIN M ONEY AND OTHER ANCILLARY PAYMENTS CONNECTED THEREON TOGETHER WITH THE INVESTMENT IN F IXED DEPOSITS, THE SAME WERE PAID FROM ASSESSEES BANK ACCOUNT WITH SBI , BIJPUR BRANCH. T HE LD AO OBSERVED THAT WITH REGARD TO THE EXPLANATION GIVEN FOR THE SOURCE OF MAKING THE AFORESAID PAYMENTS, THAT ON 27.3.2008, AN AMOUNT OF RS. 31,00,000/- WAS CREDITED INTO THE ACCOUNT OF THE ASSESSEE IN SBI BIJPUR BRANCH THROUGH TRANSFER AND SIMULTANEOUSLY ON THE E VEN DATE AMOUNT OF RS. 13,00,000/- , RS. 18,34,534 AND RS. 2,12,000/- WERE DEBITED VIDE CHEQUE NOS. 118466,118480 AND 3 ITA NO.1881/KOL/2013 PRIYANKA TRANSPORT, AY 2008-09 118481 RESPECTIVELY. THE LD AO OBSERVED FROM THE ST ATEMENT OF PAYMENTS RECEIVED BY CHEQUE ON ACCOUNT OF HIRE CHARGES FROM M/S RAJA TRA NSPORT, M/S MRINMAYE TRADING & MOVERS (P) LTD AND FOR MISCELLANEOUS JOBS, NO SUCH PAYMENT AMOUNTING TO RS. 31,00,000/- WAS FOUND RECORDED. ACCORDINGLY THE LD AO TREATED T HE SUMS OF RS. 33,46,534/- AS UNEXPLAINED INVESTMENT MADE BY THE ASSESSEE U/S 69 OF THE ACT AND ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. 3.2. THE ASSESSEE EXPLAINED THAT THE AMOUNT HAS BE EN CONTRIBUTED BY THE PARTNERS OF THE FIRM FROM THE CURRENT ACCOUNT OF THE ASSESSEE FIRM BY WAY OF TRANSFER AND SUCH CONTRIBUTION WAS ALSO NOT SHOWN IN THE BALANCE SHEET AS LIABILIT IES. THE ASSESSEE MADE THIS SUBMISSION IN THE FORM OF ADDITIONAL EVIDENCES AND THE SAME WERE SUBJECTED TO REMAND PROCEEDINGS AND REMAND REPORT OBTAINED THEREON FROM THE LD AO. THE LD AO STATED IN HIS REMAND REPORT VIDE HIS LETTER DATED 1.3.2013 THAT THE CONCERNED AMOUNT DID NOT FIGURE IN THE ASSESSEES BALANCE SHEET AND CONCLUDED IT TO BE UNACCOUNTED INCOME. T HE LD CIT(A) OBSERVED THAT THOUGH THE ASSETS CREATED BY THE FIRM AND CERTAIN LIABILITIES INCURRED BY IT HAVE BEEN LEFT OUT OF THE BALANCE SHEET OF THE ASSESSEE FIRM, IT COULD ONLY B E CONCLUDED THAT THE FINANCIAL STATEMENTS AS ERRONEOUS , BUT SUCH ERROR DOES NOT AUTOMATICALL Y LEAD TO NON-DISCLOSURE OF INCOME. WHAT IS TO BE SEEN IS AS TO WHETHER THE ASSESSEE HAD GIV EN SATISFACTORY EXPLANATION FROM THE PURVIEW OF SECTION 69 OF THE ACT. IN THE INSTANT C ASE, THE PARTNERS OF THE ASSESSEE FIRM HAVE STATED TO HAVE CONTRIBUTED FUNDS IN THE FORM WHICH IN TURN HAD BEEN UTILIZED FOR CREATION OF NECESSARY ASSETS IN THE FIRM, WHICH HAVE BEEN ADDED BACK U/S 69 OF THE ACT. THE LD CIT(A) OBSERVED THAT THOUGH THE DETAILS OF FUNDS CONTRIBUT ED BY THE PARTNERS WERE FORWARDED TO THE LD AO, THE LD AO DID NOT CONDUCT ENQUIRIES TO DISPR OVE THE CONTENTIONS OF THE ASSESSEE. THE LD. CIT(A) FINALLY CONCLUDED THAT THE EVIDENCE ON R ECORD , WHICH HAS NOT BEEN REFUTED BY THE LD AO IS THAT THE FUNDS CAME FROM THE PARTNERS ACC OUNTS AND FROM THE ASSESSEE FIRMS CURRENT ACCOUNT AND IN THAT EVENT, ACTION, IF ANY, LIES IN THE HANDS OF THE PARTNER AND NOT IN THE HANDS OF THE ASSESSEE FIRM. ONCE THE ORIGIN OF THE MONEY IS IDENTIFIED BY THE ASSESSEE AND THE ASSERTION HAS NOT BEEN REFUTED BY THE LD AO WITH EVIDENCE, NO CASE FOR APPLICATION U/S 69 OF THE ACT EXISTS. BASED ON THESE OBSERVATI ONS, HE PROCEEDED TO DELETE THE ADDITION. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US ON TH E FOLLOWING GROUND:- 1. THAT THE LD. CIT(A), ASANSOL HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.33,46,534/- MADE BY THE AO ON ACCOUNT OF UNDISCL OSED INVESTMENT IN FIXED DEPOSIT AND CAPITAL ASSET. 4 ITA NO.1881/KOL/2013 PRIYANKA TRANSPORT, AY 2008-09 3.3. THE LD DR ARGUED THAT THOUGH THE REMAND REPOR T WAS CALLED FOR BY THE LD CIT(A) WITH REGARD TO THE EVIDENCES AND SUBMISSIONS MADE BY THE ASSESSEE BEFORE THE LD CIT(A), THE LETTER OF THE LD CIT(A) TO LD AO SEEKING REMAND DID NOT SPECIFY THE LD AO TO MAKE ANY ENQUIRIES TO BE MADE ON THE SAID EVIDENCES AND HENC E THE LD AO CHOSE NOT TO MAKE ANY ENQUIRIES. HE ACCORDINGLY PRAYED FOR GIVING AN OPP ORTUNITY TO THE LD AO FOR MAKING NECESSARY ENQUIRIES IN THIS REGARD AND DECIDE THE I SSUE ACCORDINGLY. NONE APPEARED ON BEHALF OF THE ASSESSEE. 3.4. WE HAVE HEARD THE LD DR AND PERUSED THE MATER IALS AVAILABLE ON RECORD. WE FIND THAT THE LD CIT(A) HAD RECORDED A CATEGORICAL FINDING TH AT THE MONIES WERE DRAWN BY THE PARTNERS OF THE ASSESSEE FIRM FROM THE CURRENT ACCOUNT OF TH E FIRM AND USED THE SAME FOR INVESTMENT ON BEHALF OF THE ASSESSEE FIRM IN THE FORM OF MAKIN G PAYMENTS TOWARDS MARGIN MONEY FOR VEHICLES, INSURANCE, INTEREST ON TERM LOAN, REPAYME NT OF LOAN TO BANK AND INVESTMENT IN FIXED DEPOSITS WITH BANK. THE LD CIT(A) HAD OBSERVED TH AT THE LD AO HAD NOT GIVEN ANY ADVERSE COMMENTS IN HIS REMAND REPORT WITH REGARD TO THE SU BMISSIONS AND EVIDENCES FILED BY THE ASSESSEE. ACCORDINGLY, HE DECIDED TO DELETE THE AD DITIONS BASED ON THE MATERIALS AVAILABLE ON RECORD. EVEN BEFORE US, THE LD DR COULD NOT REF UTE THE FINDINGS OF THE LD CIT(A). HENCE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD CIT(A) IN THIS REGARD. ACCORDINGLY, THE GROUND NO. 1 RAISED BY THE REVENUE IS DISMISSED. 4. THE LAST ISSUE TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER THE LD CIT(A) IS JUSTIFIED IN DELETING THE DISALLOWANCE ON ACCOUNT OF TRANSPOR T HIRE CHARGES IN THE SUM OF RS. 22,40,653/- IN THE FACTS AND CIRCUMSTANCES OF THE C ASE. 4.1. THE BRIEF FACTS OF THIS ISSUE IS THAT THE ASS ESSEE DEBITED RS. 1,42,34,530/- IN PROFIT AND LOSS ACCOUNT UNDER THE HEAD TRANSPORT HIRE CHARGES AND RS. 81,71,992/- UNDER THE HEAD DIESEL PURCHASE ACCOUNT AGAINST GROSS TRANSPORTAT ION RECEIPTS OF RS. 2,32,57,865/-. THE LD AO OBSERVED THAT THE ASSESSEE HAD SHOWN OUTSTAND ING LIABILITIES OF RS. 43,48,760/-. ACCORDINGLY THE ASSESSEE WAS ASKED TO PRODUCE THE D ETAILS OF TRANSPORT HIRE CHARGES WITH SUPPORTING EVIDENCES. THE ASSESSEE REPLIED THAT AN AMOUNT OF RS. 45,85,744/- WAS OUTSTANDING AS RECEIVABLE FROM M/S RAJA TRANSPORT A S ON 31.3.2008 RESULTANT OF WHICH THERE WAS AN OUTSTANDING DUE OF RS. 43,48,760/- ON ACCOUN T OF TRANSPORT HIRE CHARGES PAYABLE AS ON 31.3.2008 WHICH IS REFLECTED UNDER OUTSTANDING L IABILITIES. THE LEDGER ACCOUNT OF 5 ITA NO.1881/KOL/2013 PRIYANKA TRANSPORT, AY 2008-09 TRANSPORT HIRE CHARGES WAS PRODUCED BY THE ASSESSEE FOR VERIFICATION BY THE LD AO. THE LD AO ON PERUSAL OF THE LEDGER ACCOUNT OBSERVED THAT ( I) TYPE OF VEHICLE HIRED ; (II) NAME OF THE PARTY FROM WHOM THE VEHICLES WERE HIRED ; (III) VEHICLE NUMBER ; (IV) BASIS OF DETERMINING HIRE CHARGES ; (V) DURATION OF UTILIZAT ION OF THE VEHICLES ; (VI) MODE OF PAYMENTS ; (VII) NATURE OF TRANSPORTING JOB EXECUTE D ETC., WERE NOT FOUND RECORDED IN THE LEDGER ACCOUNT OF THE ASSESSEE. ACCORDINGLY HE DIRE CTED THE ASSESSEE TO PRODUCE THE VEHICLE WISE / PARTY WISE FROM WHOM VEHICLES WERE HIRED TOG ETHER WITH EVIDENCE OF PAYMENTS. THE LD AO OBSERVED THAT THE ASSESSEE SUBMITTED SOME SEL F MADE DEBIT VOUCHERS WITH ILLEGIBLE SIGNATURE OF CUSTOMERS IN SUPPORT OF PAYMENT OF HIR E CHARGES AND NO DETAILS OF NAME AND ADDRESS OF THE CREDITORS AGAINST WHOM THE ASSESSEE HAD BOOKED LIABILITIES OF RS. 43,48,760/- WERE PRODUCED. HE OBSERVED THAT THE ASSESSEE FAILE D TO SUBMIT ANY PARTY WISE / VEHICLE WISE PAYMENT DETAILS. HE FURTHER OBSERVED THAT THE ASSE SSEE HAD STATED THAT THE MAIN JOB OF THE ASSESSEE WAS TO ARRANGE VEHICLES AS PER PARTIES REQ UIREMENT FOR TRANSPORTING MATERIALS AND PAYMENTS WERE MADE IN CASH TO DRIVERS AFTER COMPLET ION OF THE JOB AS THE DRIVERS WERE NOT READY TO TAKE PAYMENT THROUGH CHEQUES AND AS THE ID ENTITY OF THE ACTUAL OWNER OF THE VEHICLES WERE NOT KNOWN, THE PAYMENT WAS ENTERED IN THE BOOKS OF ACCOUNT AS TRANSPORTING CHARGES. THE LD AO HOWEVER, CONCLUDED THAT THE DE TAILS OF TRANSPORT HIRE CHARGES AND DIESEL PURCHASE ACCOUNT AS WELL AS CREDITORS REMAINED UNVE RIFIABLE. ACCORDINGLY, HE DISALLOWED 10% OF TOTAL EXPENDITURE INCURRED TOWARDS THAT ACCO UNT AND DISALLOWED A SUM OF RS. 22,40,653/- IN THE ASSESSMENT. 4.2. BEFORE THE LD CIT(A), THE ASSESSEE STATED THA T THE ENTIRE BOOKS F ACCOUNTS WERE PRODUCED ALONG WITH BILLS AND VOUCHERS AND NO DEFEC TS ON THESE HAVE BEEN POINTED OUT BY THE LD AO DURING THE ASSESSMENT PROCEEDINGS. THE L D CIT(A) DELETED THE DISALLOWANCE BY OBSERVING AS UNDER:- IT IS SEEN THAT LEDGER ACCOUNT OF EXPENSES WERE P RODUCED. AS FAR AS DIESEL PURCHASES ARE CONCERNED, PURCHASE VOUCHERS ARE SEEN TO HAVE BEEN PRODUCED. I DO NOT SEE WHY THE A.O. SHOULD CONSIDER THESE EXPENSES TO BE UNVERIFIABLE. HE DOES NOT APPEAR TO HAVE MADE ANY ATTEMPTS AT VERIFYING THEM. IN MY OPINION, I DO NO T SEE ANY ROOM FOR AN ESTIMATED DISALLOWANCE ON THESE ISSUES. NO BASIS FOR THE AO S ESTIMATION AT 10% IS SEEN IN THE ASSESSMENT ORDER AND NO LOGIC OF SUCH AN ESTIMATE I S OBSERVED THEREIN. THE DISALLOWANCE APPEARS TO HAVE BEEN BASED ON MERE SURMISES WITHOUT BRINGING ANY MATERIAL ON RECORD THAT INFLATION OF EXPENDITURE HAD INDEED TAKEN PLACE. UN DER THOSE CIRCUMSTANCES, I AM OF THE VIEW THAT THE DISALLOWANCES MADE ARE NOT SUSTAINABLE. TH ESE ARE DIRECTED TO BE DELETED. THESE GROUNDS OF APPEAL ARE ALLOWED. 6 ITA NO.1881/KOL/2013 PRIYANKA TRANSPORT, AY 2008-09 4.3. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US ON THE FOLLOWING GROUND :- 2. THAT THE LD. CIT(A), ASANSOL HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.22,40,653/- DISALLOWED BY THE AO ON ACCOUNT OF U NVERIFIABLE TRANSPORT HIRE CHARGES. 4.4. THE LD DR RELIED ON THE ORDER OF THE LD AO. NONE APPEARED ON BEHALF OF THE ASSESSEE. 4.5. WE HAVE HEARD THE LD DR. WE FIND THAT THE LD DR WAS NOT ABLE TO REFUTE THE FINDINGS OF THE LD CIT(A) THAT THE ADDITION HAS BEEN MADE ME RELY ON AN ESTIMATE BASIS. WE ALSO FIND THAT THE BOOKS OF ACCOUNTS WERE NOT REJECTED BY THE LD AO BY POINTING OUT SPECIFIC DEFECTS THEREON. IN THIS SCENARIO, WE FIND THAT THE LD CIT (A) HAD RIGHTLY DELETED THE DISALLOWANCE AND WE DO NOT FIND ANY JUSTIFIABLE REASON TO INTERF ERE WITH HIS ORDER IN THIS REGARD. ACCORDINGLY, THE GROUND NO. 2 RAISED BY THE REVENUE IS DISMISSED. 5. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 16.12.201 6 SD/- SD/- (S. S. VISWANETHRA RAVI) (M. BALAGANESH) JUDICIAL MEMBER ACCOUNTAN T MEMBER DATED : 16TH DECEMBER, 2016 JD.(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1 . APPELLANT ITO, WARD-2(3), ASANSOL. 2 RESPONDENT PRIYANKA TRANSPORT, NH-2, SATGREM DAHAR , P.O. SATGRAM., P.S. JAMURIA, BURDWAN-713358 3 . THE CIT(A), DURGAPUR 4. 5. CIT , DURGAPUR DR, KOLKATA BENCHES, KOLKATA / TRUE COPY, BY ORDER, ASSTT. REGISTRAR .