M/s.R.B.Sons Cotton Traders, Raichur V. ITO-Ward-1, Raichur

ITA 1908/BANG/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 5492 (ITAT-BANGALORE)
• Duration Of Justice: 5 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-04-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 14-03-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 15-11-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SOWMYA ACHAR ADDITIONAL
• Assessee Lawyers: V K GURUNATHAN
• Keywords: Additional evidence

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC-C BENCH : BANGALORE BEFORE SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.1908/BANG/2016 ASSESSMENT YEARS : 2009-10 M/S. R. B. SONS COTTON TRADERS, KESHAR COMPLEX, LINGASUGAR ROAD, RAICHUR. PAN : AAJFR8892C VS. INCOME TAX OFFICER, WARD-1, RAICHUR. APPELLANT RESPONDENT ASSESSEE BY : SHRI. V. K. GURUNATHAN, ADVOCATE REVENUE BY : SMT. SOWMYA ACHAR, ADDITIONAL CIT DATE OF HEARING : 10.04.2017 DATE OF PRONOUNCEMENT : 21.04.2017 O R D E R PER A.K. GARODIA, ACCOUNTANT MEMBER THIS APPEAL IS FILED BY THE ASSESSEE WHICH IS DIRE CTED AGAINST THE ORDER OF THE CIT(A), GULBARGA DATED 29.07.2016 FOR THE ASSESSMENT YEAR 2009-10. THE GROUNDS RAISED BY THE ASSESSEE A RE AS UNDER: ITA NO. 1908/BANG/2016 PAGE 2 OF 8 ITA NO. 1908/BANG/2016 PAGE 3 OF 8 2. IT WAS SUBMITTED BY THE LEARNED AR OF THE ASSESSEE THAT GROUND NOS. 1 AND 2 ARE INTERCONNECTED. IT WAS SUBMITTED THAT AMOUNT OF RS.10,00,000/- WAS DEPOSITED BY THE ASSESSEE IN BAN K ACCOUNT AT RAICHUR ON 23.10.2008 AND THE SOURCE OF THIS CASH D EPOSITED IN BANK IS CASH WITHDRAWAL FROM THE BANK ACCOUNT OF THE ASSESS EE AT ITS SILLOD BRANCH OFFICE OF THE ASSESSEE ON 18.10.2008 AS PER THE BANK STATEMENT AVAILABLE AT PAGE NO. 32 OF THE PAPER BOOK. REGARD ING THIS OBJECTION OF THE AO THAT HOW THIS AMOUNT WAS TRANSFERRED FROM SI LLOD TO RAICHUR, HE SUBMITTED SOME ADDITIONAL EVIDENCES UNDER RULE 2 9 OF THE APPELLATE TRIBUNAL RULES, 1963. HE SUBMITTED THAT AT PAGE NO . 1 OF THE ADDITIONAL EVIDENCES IS A BILL OF RS. 1,500/- FOR P URCHASE OF DIESEL 36 LITRES ON 22.10.2008. HE ALSO DRAWN OUR ATTENTION TO PAGE NO.9 OF PAPER BOOK WHICH IS COPY OF CASH BOOK OF SILLOD BRA NCH FOR THE RELEVANT PERIOD AND HE POINTED OUT THAT AS PER ENTR Y ON 21.10.2008, AMOUNT OF RS.1,500/- IS DEBITED UNDER THE HEADING VEHICLE EXPENSES. HE SUBMITTED THAT BY USING THIS CAR NO. 7799 AS PER THE CAR NO. MENTIONED ON THE DIESEL PURCHASE SLIP OF 22.10.2008 , THE AMOUNT WAS SHIFTED TO RAICHUR. AT THIS JUNCTURE, THE BENCH RA ISED A QUERY AS TO HOW THE SLIP OF 22.10.2008 CAN BE ENTERED IN THE CASH B OOK OF SILLOD BRANCH ON 21.10.2008 AND WHO IS THE OWNER OF THIS VEHICLE NO. 7799. IN REPLY, THE LEARNED AR OF THE ASSESSEE COULD NOT GIVE ANY S ATISFACTORY EXPLANATION. LEARNED DR OF THE REVENUE SUPPORTED T HE ORDER OF THE CIT(A). ITA NO. 1908/BANG/2016 PAGE 4 OF 8 3. IN VIEW OF THE FACTS DISCUSSED IN THE ABOVE PARA, I T IS SEEN THAT THE ASSESSEE HAS NOT BEEN ABLE TO ESTABLISH THAT CA SH OF SILLOD BRANCH WAS TRANSFERRED TO RAICHUR FOR DEPOSITING IN THE BA NK ACCOUNT OF THE ASSESSEE AT RAICHUR. IN VIEW OF THIS, I FIND NO IN FIRMITY IN THE ORDER OF THE AUTHORITIES BELOW ON THIS ASPECT. ACCORDINGLY , THESE GROUNDS ARE REJECTED. 4. REGARDING GROUND NO. 3 AND 4 IN RESPECT OF DISALLOW ANCE OF RS.7,22,591/- UNDER SECTION 40(A)(IA) OF THE IT ACT , 1961, IT WAS SUBMITTED BY THE LEARNED AR OF THE ASSESSEE THAT AS PER PAGES 43 TO 46 OF THE PAPERBOOK, APPLICATION WAS FILED BY THE DEDU CTEE FOR NON DEDUCTION OF TDS BEFORE ITS AO ON 22.04.2008 AND AS PER PAGES 47-49 OF THE PAPERBOOK, 3 CERTIFICATES WERE GRANTED BY TH E AO TO DEDUCTEE ON 19.12.2008 FOR NON-DEDUCTION OF TDS IN RESPECT OF T HESE 3 PAYMENTS OF RENT OF RS.8,00,000/-, RS. 2,00,000/- AND RS.2,00,0 00/- (TOTAL RS.12,00,000/-). HE PLACED RELIANCE ON THE ORDER O F THE TRIBUNAL RENDERED IN THE CASE OF SHRI. G. SHANKAR VS. ACIT I TA NO. 1832/BANG/2013 DATED 10.10.2014 (COPY AVAILABLE ON PAGES 50-55 OF THE PAPERBOOK) AND IT WAS SUBMITTED THAT AS PER THIS TRIBUNALS ORDER, IT WAS HELD THAT PROVISIO TO SECTION 40(A)(I A) OF THE IT ACT INSERTED W.E.F. 1.4.2013 IS RETROSPECTIVE AND THERE FORE, IF INCOME WAS INCLUDED BY THE DEDUCTEE IN HIS TAXABLE INCOME AND TAX WAS PAID THEREON BY THE DEDUCTEE, NO DISALLOWANCE WAS TO BE MADE UNDER SECTION 40(A)(IA) OF THE IT ACT. HE SUBMITTED THAT IN THE PRESENT CASE, THE ITA NO. 1908/BANG/2016 PAGE 5 OF 8 DEDUCTEE HAS INCLUDED THIS AMOUNT OF INCOME IN TAXA BLE INCOME AND THEREFORE, NO DISALLOWANCE SHOULD BE MADE UNDER SEC TION 40(A)(IA) OF THE IT ACT. HE SUBMITTED THAT SINCE THIS ASPECT WA S NOT EXAMINED BY THE LOWER AUTHORITIES, FOR THE FACTUAL VERIFICATION OF THIS CLAIM AS TO WHETHER THE DEDUCTEE HAS INCLUDED THIS INCOME IN TA XABLE INCOME AND TAX HAS BEEN PAID BY HIM, THE MATTER MAY BE RESTORE D BACK TO THE FILE OF THE AO FOR FRESH DECISION. 5. THE LEARNED DR OF THE REVENUE SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 6. I CONSIDERED THE RIVAL SUBMISSIONS. IN VIEW OF THE AMENDMENT IN THE PROVISIONS OF SECTION 40(A)(IA) AND ALSO IN VIE W OF THE TRIBUNALS ORDER ON WHICH THE RELIANCE HAS BEEN PLACED, IT HAS TO BE ACCEPTED THAT IF THE DEDUCTEE HAS INCLUDED THIS RENTAL INCOME IN ITS TAXABLE INCOME AND TAX WAS PAID BY HIM THEN THE DISALLOWANCE UNDER SECTION 40(A)(IA) IN THE PRESENT CASE IS NOT JUSTIFIED. BUT SINCE TH E FACTUAL ASPECT HAS NOT BEEN EXAMINED BY THE AO, I THEREFORE RESTORE THIS M ATTER BACK TO THE AO FOR FRESH DECISION IN THE LIGHT OF THE ABOVE DIS CUSSION, AFTER PROVIDING AN OPPORTUNITY OF HEARING TO THE ASSESSEE . I WANT TO MAKE IT CLEAR THAT THE BURDEN IS ON THE ASSESSEE TO ESTABLI SH THAT THE DEDUCTEE HAS INCLUDED THIS RENTAL INCOME IN ITS TAXABLE INCO ME AND TAX WAS PAID BY HIM. GROUND NOS. 3 AND 4 ARE ALLOWED FOR STATIS TICAL PURPOSES. ITA NO. 1908/BANG/2016 PAGE 6 OF 8 7. REGARDING GROUND NO. 5, IT WAS SUBMITTED BY LEARNED AR OF THE ASSESSEE THAT ON PAGE NO. 6 OF THE ASSESSMENT ORDER , THE AO MADE DISALLOWANCE OF 15% OF VARIOUS EXPENSES INCURRED UN DER THE HEAD GINNING EXPENSES, HAMALI EXPENSES, KAPAS EXPENSES, PRESSING EXPENSES, TOTAL RS.28,79,877/- AND COMPUTED THE DIS ALLOWANCE AT RS.4,31,981/- AND THIS DISALLOWANCE WAS MADE BY HIM ON THIS BASIS THAT ALL THE PAYMENTS WERE MADE IN CASH AND THE ASSESSEE HAD PRODUCED ONLY SELF MADE VOUCHERS WHICH ARE NOT PROPERLY MADE AND GENUINE. HE FURTHER SUBMITTED THAT IN ADDITION TO THIS, A FURTH ER DISALLOWANCE OF RS. 76,890/- WAS MADE OUT OF REPAIRS AND MAINTENAN CE OF MACHINERY EXPENSES OF RS.5,35,642/- BEING 15% OF THE EXPENSES AND THIS DISALLOWANCE IS ALSO MADE ON THE SAME BASIS. THERE AFTER, HE DRAWN MY ATTENTION TO PARA 4.1 TO 5 OF THE ORDER OF THE CIT( A) AS PER WHICH IT WAS HELD BY THE CIT(A) THAT JUSTICE WILL BE MADE IF THE DISALLOWANCE IS RESTRICTED TO 25% OF THE DISALLOWANCE MADE. 8. HE SUBMITTED THAT EVEN CONFIRMING OF 25% OF DISALLO WANCE IS NOT JUSTIFIED IN THE FACTS OF THE PRESENT CASE. TH E LEARNED DR OF THE REVENUE SUPPORTED THE ORDERS OF THE AUTHORITY BELOW . I HAVE CONSIDERED THE RIVAL SUBMISSIONS. I FIND THAT THE ASSESSEE HA S NOT ESTABLISHED THE INCURRING OF THIS EXPENDITURE BY BRINGING ANY INDEP ENDENT EVIDENCES ON RECORD AND ALL THE EXPENSES HAVE BEEN INCURRED IN C ASH. THE AO HAS MADE DISALLOWANCE OF 15% OF THE EXPENSES WHICH HAS BEEN CONFIRMED BY THE CIT(A) ONLY TO THE EXTENT OF 25% OF THE DISA LLOWANCE AND IT MEANS THAT THE DISALLOWANCE CONFIRMED BY THE CIT(A) IS ONLY 3.75% OF ITA NO. 1908/BANG/2016 PAGE 7 OF 8 SUCH EXPENSES INCURRED BY THE ASSESSEE IN CASH WITH OUT BRINGING ANY INDEPENDENT EVIDENCES ON RECORD, IN SUPPORT OF SUCH EXPENSES. IN THE FACT OF THE PRESENT CASE, I AM OF THE CONSIDERED OP INION THAT SUCH DISALLOWANCE OF 3.75% IS NOT EXCESSIVE AND IT IS RE ASONABLE AND THEREFORE, I FIND NO REASON TO INTERFERE IN THE ORD ER OF CIT(A) ON THIS ISSUE. ACCORDINGLY, GROUND NO. 5 IS REJECTED. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON THIS 21 ST DAY OF APRIL, 2017. SD/- (A.K. GARODIA) ACCOUNTANT MEMBER BANGALORE, DATED, THE 21 ST APRIL, 2017. /NSHYLU/ ITA NO. 1908/BANG/2016 PAGE 8 OF 8 COPY TO: 1. APPELLANTS 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, ITAT, BANGALORE.