Assistant Commissioner of Income Tax, Srinagar V. M/s Ali Shah Kathidarwaza, Srinagar

ITA 192/ASR/2015

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 5737 (ITAT-AMRITSAR)
• Duration Of Justice: 2 year(s) 10 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 29-01-2018
• Assessment Year: 2010-2011
• Appeal Filed On: 20-04-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BALWINDER KAUR LD
• Assessee Lawyers: VARUN SONI LD
• Keywords: Unexplained cash credit
• Section: 143(3); 133(6); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR BEFORE SH. SANJAY ARORA, ACCOUNTANT MEMBER AND SH. N.K.CHOUDHRY, JUDICIAL MEMBER ITA NO.192(ASR)/2015 ASSESSMENT YEAR:2010-11 ASST. CIT CIRCLE, SRINAGAR VS. M/S ALI SHAH KATHIDARWAZA SAIDA KADAL, SRINAGAR PAN:AAFFA1339R (APPELLANT) (RESPONDENT) APPELLANT BY: SMT. BALWINDER KAUR (LD. DR) RESPONDENT BY: SH. VARUN SONI (LD.CA) DATE OF HEARING: 29.01.2018 DATE OF PRONOUNCEMENT: 28.02.2018 ORDER PER N.K.CHOUDHRY, JM: THE INSTANT APPEAL HAS BEEN PREFERRED BY THE REVENUE DEPARTMENT, U/S 143(3) OF THE ACT, 1961 (HEREINAFTER CALLED AS 'THE ACT'), ON FEELING AGGRIEVED AGAINST THE ORDER DATED 28.01.2015 PASSED BY THE LD. CIT(A), JAMMU FOR ASST. YEAR:2010-11. 2. THE REVENUE DEPARTMENT HAS RAISED THE FOLLOWING GROU NDS OF APPEAL. 1. WHETHER THE LD. COMMISSIONER OF INCOME TAX (APP EALS), JAMMU WAS RIGHT IN ALLOWING DISALLOWANCE ON ACCOUNT OF PRACHI CHARGES AS THE ASSESSEE FAILED TO PRODUCE AN Y BILL/VOUCHER/DOCUMENTS/INFORMATION TO SUBSTANTIATE THE EXPENDITURE OF THESE EXPENSES. ITA NO.192/ASR/2015 (A.Y.2010-11) ACIT VS. M/S ALI SHAH KAT HIDARWAZA SAIDA KADAL 2 2. WHETHER THE LD. COMMISSIONER OF INCOME TAX (APP EALS), JAMMU WAS RIGHT IN ADDITION MADE AS UNEXPLAINED CRE DITS WITHIN THE MEANING OF SECTION 68 OF THE I.T. ACT, 1 961 AS ALL THE SUNDRY CREDITORS HAVING BALANCE ABOVE RS. ONE L AKH HAVE NOT BEEN CONFIRMED. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE RETURN DECLAR ING THE INCOME OF RS.22,33,760/- WAS FILED ON 7 TH OCTOBER, 2010. SUBSEQUENTLY, THE CASE WAS SELECTED FOR SCRUTINY AND NOTIC E U/S 143(2) OF THE ACT, DATED 29.09.2011 WAS ISSUED AND THER EAFTER, VIDE NOTICE U/S 139D DATED 25 TH APRIL, 2012, THE ASSESSEE WAS REQUESTED TO FURNISH A COPY OF AUDIT REPORT U/S 44AB OF THE ACT AND FINALLY THE ASSESSING OFFICER MADE THE ADDITION OF RS.1,07,010/- QUA PARCHI CHARGES, RS.1,89,000/- QUA BUSI NESS PROMOTION EXPENSES, RS.1,00,000/- QUA FOREIGN TRAVELI NG EXPENSES AND RS.71,82,400/- QUA SUNDRY CREDITORS. 4. ON APPEAL, THE LD. CIT(A) WHILE CONFIRMING THE OTHER ADDITION, DELETED THE ADDITION QUA PRACHI CHARGES TO THE TUNE OF RS.1,07,010/- AND ADDITION OF RS.71,82,400/- QUA UNEX PLAINED CREDITORS . 5. FEELING AGGRIEVED AGAINST THE ORDER PASSED BY THE LD. CIT(A), THE REVENUE DEPARTMENT PREFERRED THE INSTANT APPEAL AND IN SUPPORT OF ITS CASE SUBMITTED THAT THE EXPENSES QU A PRACHI CHARGES NEITHER PROPERLY VOUCHED NOR SUPPORTED W ITH ANY CREDIBLE PRIMARY DOCUMENT SUCH AS BILL/VOUCHERS AND THE SA ME HAVE BEEN INCURRED IN CASH, THEREFORE NOT OPEN TO VER IFICATION AND NO RECEIPTS FROM THE DRIVERS WERE PRODUCED AND NEIT HER THE DETAILS OF THE DRIVERS TO WHOM THE PAYMENTS HAVE BEEN MADE WERE FURNISHED FOR CROSS-EXAMINATION. ITA NO.192/ASR/2015 (A.Y.2010-11) ACIT VS. M/S ALI SHAH KAT HIDARWAZA SAIDA KADAL 3 WITH REGARD TO THE SUNDRY CREDITORS, IT WAS SUBMITTED BY THE LD. DR THAT SINCE THE CREDITORS WERE ON A HIGHER SI DE, THEREFORE, CONFIRMATORY LETTERS U/S 136(6) WERE ISSUED B Y THE AO ON TEST CHECK BASIS IN ORDER TO ENQUIRE, THE BALANCE OU TSTANDING IN THEIR BOOKS AGAINST THE ASSESSEE, HOWEVER, SOME OF THE LETTERS RETURNED BACK AS UNSERVED WITH THE POSTAL REMARKS INCOMPLETE ADDRESS HOWEVER, IN SOME OF THE CASES NO REPLY/CONFIRMATION WAS RECEIVED BY THE ASSESSING OFFICER TILL THE DATE OF PASSI NG THE ASSESSMENT ORDER, THEREFORE, THE ASSESSING OFFICER OBSERVED T HAT IN THE PRESENT CASE, THE ASSESSEE HAS FAILED TO DISCHARGE HIS ONUS TO ESTABLISH THE IDENTITY/CREDITWORTHINESS OF THE PARTIE S INVOLVED AND THE GENUINENESS OF THE TRANSACTIONS, THEREFORE THE AMOUNT INVOLVED HAS BEEN TREATED AS UNEXPLAINED WITH THE ME ANING OF SEC.68 OF THE I.T. ACT AND ADDED BACK TO THE INCOME OF THE ASSESSEE. 6. ON THE OTHER HAND, THE APPELLANT SUBMITTED THAT THE AO ERRED IN ADDING BACK 1/3 RD OF THE PRACHI CHARGES WITHOUT APPRECIATING THE NATURE OF THE EXPENSES, WHICH WERE PA ID TO THE TAXI DRIVERS FOR BRINGING CUSTOMERS AND WERE IMPERATIV ES AND ESSENTIAL IN THE TRADE PRACTICE IN THE ASSESEES BUSINESS AND HAVE BEEN DULY RECORDED IN THE BOOKS OF ACCOUNT AND PR OPERLY SUPPORTED TAKING INTO ACCOUNT IN THE NATURE OF THE EXP ENSES, WHICH HAVE BEEN DULY CONSIDERED BY THE LD. CIT(A) AND EVEN OTHERWISE, THE LD. CIT(A) WHILE PASSING AN ORDER RELI ED UPON THE REMAND REPORT DATED 19 TH JANUARY, 2015. 7. WE HAVE GONE THROUGH WITH THE FACTS AND CIRCUMSTANCES OF THE CASE AND RIVAL SUBMISSIONS OF THE PARTIES, THE LD. CIT (A) ITA NO.192/ASR/2015 (A.Y.2010-11) ACIT VS. M/S ALI SHAH KAT HIDARWAZA SAIDA KADAL 4 WHILE DELETING THE AMOUNT OF RS.1,07,010/- QUA PRACHI CHARGES OBSERVED THAT THE SUBMISSION OF THE ASSESSEE TO THE EFFE CT THAT PRACHI CHARGES ARE PAID TO THE TAXI DRIVER TO ENCOURAGE THEM TO BRING CUSTOMERS TO THE APPELLANTS ESTABLISHMENT AND THE NATURE OF THE EXPENDITURE IS SUCH THAT NO INVOICE BILL IS POSSIBL E, THEREFORE, IT CANNOT BE ACCEPTED TO RECEIVE BILLS/INVOI CES FROM THE LOCAL TAXI DRIVERS, FOUND FORCE. IT WAS FURTHER OBSERVED BY THE LD. CIT(A) THAT MOREOVER, THIS PAYMENT CANNOT BE TERMED A S COMMISSION BECAUSE ONE CANNOT LINK THE VISIT OF CUSTOMERS TO THE APPELLANTS ESTABLISHMENT WITH CERTAIN SALES BECAUSE TAXI DRIVERS MAY GET THE MONEY BUT THERE MUST BE SALE OF ARTICLES IS NOT GUARANTEED AND THE PRACHI CHARGES WERE MORE IN THE NAT URE OF THE BUSINESS PROMOTION EXPENSES ,WHICH APPEARS TO BE BONA FIDE. WE HAVE APPLIED MIND INDEPENDENTLY TO THE OBSERVATIO N OF THE LD. CIT(A) AS WELL AS RIVAL SUBMISSIONS OF THE PARTIES, A ND DO NOT FIND ANY CONTRARY MATERIAL AND/OR ANY SUBSTANCE IN THE SUBMISSION OF THE REVENUE DEPARTMENT, TO UN-SUBSTANTIA TE THE OBSERVATION OF THE LD. CIT(A) AND IN OUR CONSIDERED OP INION THAT REASONING GIVEN BY THE LD. CIT(A) FOR DELETION OF EX PENSES TO THE TUNE OF RS.1,07,010/- SEEMS TO BE QUITE LOGICAL AND REA SONABLE, HENCE, THE GROUND NO.1 RAISED BY THE REVENUE DEPARTME NT IS LIABLE TO BE DISMISSED. NOW COMING TO THE GROUND NO.2 QUA UNEXPLAINED CREDIT WITHIN THE MEANING OF SEC.68 OF THE ACT. WE HAVE GIVE N OUR THOUGHTFUL CONSIDERATION TO THE OBSERVATION OF THE LD. CIT(A), AS WELL AS RIVAL SUBMISSIONS OF THE PARTIES AS IN THE INSTAN T CASE THE APPELLANT HAD PRODUCED A LIST OF CREDITORS ALONG WITH THEIR ADDRESS AND COPY OF THE LEDGER AND THE DOCUMENTS PROVIDE D , WHICH WERE FORWARDED BY THE LD. CIT(A) TO THE AO FOR VERIFICATION ITA NO.192/ASR/2015 (A.Y.2010-11) ACIT VS. M/S ALI SHAH KAT HIDARWAZA SAIDA KADAL 5 AND COMMENTS THEREON AND IN PURSUANCE TO THAT AO HAD ISSU ED NOTICES U/S 133(6) TO THE CREDITORS AT THE ADDRESSES PROVI DED BY THE ASSESSEE AND DURING THE REMAND PROCEEDINGS, CREDITOR S HAVE CONFIRMED BALANCE OUTSTANDING ALONG WITH LEDGER CO PY OF THE ACCOUNT OF APPELLANT IN THEIR BOOKS. THE LD. CIT(A ) WHILE DELETING THE AFORESAID ADDITION RELIED UPON THE REMA ND REPORT AND RIGHTLY DELETED THE SAME WHICH DOES NOT REQUIRE A NY INTERFERENCE ON THE AFORESAID ANALYZATION. WE ARE OF THE CONSIDERED VIEW THAT THAT THE ORDER UNDER CHALLENGE DO ES NOT SUFFER FROM ANY PERVERSITY, ILLEGALITY AND IMPROPRIET Y, THEREFORE, THE APPEAL FILED BY THE REVENUE DEPARTMENT IS LIABLE TO BE DISMISSED. 8. IN THE RESULT, THE APPEAL FILED BY THE REVENUE DEPA RTMENT STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 28 .02.2018. SD/- SD/- (SANJAY ARORA) (N.K.CHOUDHRY) ACCOUNTANT MEMBER J UDICIAL MEMBER DATED:28.02.2018 /PK/ PS. COPY OF THE ORDER FORWARDED TO: (1) M/S ALI SHAH KATHIDARWAZA SAIDA KADAL, SRINA GAR (2) THE ASST. CIT, CIRCLE SRINAGAR (3) THE CIT(A), JAMMU (4) THE CIT CONCERNED (5) THE SR DR, I.T.A.T., AMRITSAR TRUE COPY BY ORDER