Income-tax Officer, V. Mr. Parvez Nazir Hussain Jafri, Aurangabad

ITA 1967/PUN/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 1086 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 9 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-08-2016
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 26-07-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 05-11-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: HITENDRA NINAWE
• Keywords: Opportunity of being heard
• Section: 40A(3); 143(3); 148

Judgement Text

] ]] ] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE , !', $ % BEFORE SHRI VIKAS AWASTHY, JM AND SHRI PRADIP KUMAR KEDIA, AM ITA NO.1967/PN/2014 ASSESSMENT YEAR : 2009-10 THE INCOME TAX OFFICER, WARD 2(3), AURANGABAD. . APPELLANT VS. MR. PARVEZ NAZIR HUSSAIN JAFRI, PROP. OF M/S JAFRI STEEL TRADERS, H.NO.2-3-23, ALI MANZIL, SHAH BAZAR, AURANGABAD. PAN : ACQPJ2534A . RESPONDENT / APPELLANT BY : SHRI HITENDRA NINAWE / RESPONDENT BY : SHRI M. K. KULKARNI / DATE OF HEARING : 27.07.2016 / DATE OF PRONOUNCEMENT: 17.08.2016 & / ORDER PER PRADIP KUMAR KEDIA, AM : THE CAPTIONED APPEAL FILED BY THE REVENUE IS AGAINS T THE ORDER OF CIT(A), AURANGABAD DATED 25.08.2014 RELATING TO ASS ESSMENT YEAR 2009-10 PASSED UNDER SECTION 143(3) R.W.S. 147 OF THE INCOM E-TAX ACT, 1961 (IN SHORT THE ACT). 2. THE RELEVANT FACTS, IN BRIEF, ARE THAT THE ASSES SEE IS AN INDIVIDUAL ENGAGED IN THE BUSINESS OF SUPPLY OF STEEL SCRAP TO VARIOUS RE-ROLLING MILLS UNDER THE NAME AND STYLE OF M/S JAFRI STEEL TRADERS, AURANGAB AD. THE CASE OF THE ASSESSEE WAS RE-OPENED BY ISSUANCE OF NOTICE UNDER SECTION 148 OF THE ACT. IN THE COURSE OF ASSESSMENT, THE ASSESSEE WAS CONFRONT ED ABOUT THE VIOLATION OF SECTION 40A(3) AND SECTION 40A(3A) OF THE ACT TO TH E TUNE OF RS.1,95,73,979/- AND RS.95,47,171/- RESPECTIVELY. IT WAS NOTICED BY THE ASSESSING OFFICER THAT 2 ITA NO.1967/PN/2014 ON VERIFICATION OF BANK ACCOUNT EXTRACTS MAINTAINED WITH BOMBAY MERCANTILE CO-OPERATIVE BANK LTD., MAIN BRANCH, AURANGABAD FOR THE PERIOD FROM 01.04.2008 TO 31.03.2009, IT IS SEEN THAT THE PAYME NTS WERE MADE TO VARIOUS PARTIES OTHERWISE THAN BY ACCOUNT PAYEE CHEQUES OR ACCOUNT PAYEE BANK DRAFT EXCEEDING RS.20,000/-. SUCH TRANSACTIONS WERE TOTA LING TO RS.2,91,21,150/-. THE LIST OF PARTIES TO WHOM SUCH PAYMENTS WERE MADE FORMS PART OF THE ASSESSMENT ORDER. THE AFORESAID LIST REVEALS THAT THE ENTIRE PAYMENT PEGGED AT RS.2,91,21,150/- HAS BEEN MADE IN TRANCHES TO ONLY ONE PARTY NAMELY J. A. TRADING COMPANY ON VARIOUS DATES DURING THE YEAR. T HE ADDITION OF RS.1,95,73,979/- REPRESENTS PURCHASE ON ACCOUNT OF SCRAP IN CONTRAVENTION OF PROVISION OF SECTION 40A(3). SIMILARLY, ANOTHER AM OUNT OF RS.95,47,171/- REPRESENTS PAYMENT TOWARDS SUNDRY CREDITORS OUTSTAN DING IN THE PRECEDING YEAR WHERE THE PAYMENT HAS BEEN PURPORTEDLY MADE IN CONT RAVENTION OF CLAUSE (3A) TO SECTION 40A OF THE ACT. THE ASSESSING OFFICER R ECORDED THE STATEMENT ON OATH OF THE CHARTERED ACCOUNTANT (CA), OF THE ASSES SEE WHERE THE CA OF THE ASSESSEE CONFIRMED THAT THE ASSESSEE HAS NOT FURNIS HED ANY EVIDENCE AS TO WHETHER THE CHEQUES/D.D. IN RESPECT OF PAYMENTS MAD E IN EXCESS OF RS.20,000/- WERE ACCOUNT PAYEE OR NOT. HE ACCORDIN GLY HELD THAT THE ASSESSEE HAS MADE PAYMENT OF RS.2,91,21,150/- IN VIOLATION O F SECTION 40A(3) AND (3A) OF THE ACT AND MADE AN ADDITION OF THE IMPUGNED AMO UNT TO THE TOTAL INCOME RETURNED BY THE ASSESSEE. 3. AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER, THE ASSESSEE MOVED AN APPEAL BEFORE THE CIT(A). THE CIT(A) PRIMARILY REL IED UPON HIS PREDECESSOR CIT(A) RELEVANT TO ASSESSMENT YEAR 2008-09 AND THE ORDER OF THE CO-ORDINATE BENCH OF THE TRIBUNAL THEREON DATED 28.12.2012 AND ALSO THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF ANUPAM TE LE SERVICES VS. ITO, 222 TAXMAN 318 TO COME TO THE CONCLUSION THAT THE ASSES SING OFFICER WAS NOT JUSTIFIED IN MAKING THE IMPUGNED ADDITION OF RS.2,9 1,21,150/- ON ACCOUNT OF DISALLOWANCE UNDER SECTION 40A(3) OF THE ACT. HE A CCORDINGLY DELETED THE IMPUGNED ADDITION MADE BY THE ASSESSING OFFICER. 3 ITA NO.1967/PN/2014 4. AGGRIEVED BY THE ORDER OF THE CIT(A), THE REVENU E IS IN APPEAL BEFORE US BY RAISING THE FOLLOWING GROUNDS OF APPEAL :- 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCE OF THE CASE, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS), AURANGABAD WA S CORRECT IN RELYING ON THE DECISION OF ITAT PUNE IN THE ASSESSEE OWN CA SE FOR A.Y.2008-09 AND HON'BLE GUJARAT HIGH COURT IN THE CASE OF ANUPAMA T ELE SERVICES VS ITO(2014) 222 TAXMAN 318, WHEN THE ASSESSEE HAS FAI LED TO PROVE THE BUSINESS EXPEDIENCY AND ANY OTHER RELEVANT FACTOR W HICH FORCED HIM TO MAKE PAYMENT OTHERWISE BY CROSS CHEQUE OR DD. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCE OF THE CASE, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS), AURANGABAD WA S CORRECT WHEN THE ASSESSEE HAS NOT PROVED THE IDENTITY OF THE PAYEE. 3. IN THE FACTS & CIRCUMSTANCES OF THE CASE, THE CI T(A) ERRED IN RELYING ON THE DECISION OF ITAT, PUNE IN ASSESSEE OWN CASE AND DEC ISION OF GUJRATH HIGH COURT WITHOUT APPRECIATING THE FACT THAT ASSESSEE HAS NOT PROVED THE IDENTIFY OF PAYEE AND BUSINESS EXPEDIENCY FOR VIOLATION OF SECTION 40A(3) . 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS), AURANGABAD MA Y BE VACATED AND THE ORDER OF THE A.O. MAY BE RESTORED. 5. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE A PPELLANT CRAVES LEAVE TO ADD AMEND OR ALTER ANY GROUNDS OF APPEAL. 5. THE LD. DEPARTMENTAL REPRESENTATIVE (DR) FOR THE REVENUE SHRI HITENDRA NINAWE CONTENDED THAT THE ASSESSEE HAS NOT GIVEN REFERENCE TO ANY FACT WHICH REVEALS BUSINESS EXPEDIENCY AND ANY OTHE R RELEVANT FACTOR WHICH FORCED HIM TO MAKE PAYMENT OTHERWISE THAN BY CROSS CHEQUE OR DD. THE LD. DR CONTENDED THAT NONE OF THE JUDICIAL PRECEDENTS C AN BE APPLIED IN THE ABSENCE OF BASIC FACTS AVAILABLE ON RECORD. THE AS SESSEE HAS NOT PROVED THE IDENTITY OF THE PAYEE AND BUSINESS EXPEDIENCY FOR T HE VIOLATION OF CONDITIONS PRESCRIBED UNDER SECTION 40A(3) OF THE ACT. HE CON TENDED THAT THE DECISION OF THE TRIBUNAL FOR THE ASSESSMENT YEAR 2008-09 AND TH AT OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF ANUPAM TELE SERVICES (SUP RA) HAVE BEEN RENDERED IN THE GIVEN SET OF FACTS. IN THE PRESENT APPEAL, THE ASSESSEE HAS NOT COME OUT WITH ANY EVIDENCE OR FACTS TO PROVE THE CIRCUMSTANCES WH ICH COMPELLED HIM TO BE IN ODDS WITH THE PROVISIONS OF THE ACT. HE THEREFORE CONTENDED THAT THE RELIEF GRANTED BY THE CIT(A) IS TOTALLY UNCALLED FOR AND C ONTRARY TO THE FACTS ON RECORD. THE LD. DR ALSO RELIED UPON THE DECISION O F THE HONBLE KERALA HIGH COURT IN THE CASE OF MRS ROADWAYS VS. CIT, (2014) 5 2 TAXMANN.COM 99 (KERALA) RELEVANT TO ASSESSMENT YEAR 2009-10 WHEREI N IT HAS BEEN HELD THAT 4 ITA NO.1967/PN/2014 ONLY IN INSTANCES WHERE THE ASSESSEE FALLS UNDER AN Y OF EXEMPTIONS COVERED IN RULE 6DD OF THE INCOME TAX RULES, 1962, THE ASSESSE E IS ENTITLED TO CLAIM AN EXEMPTION UNDER SECTION 40A(3) OF THE ACT. HE NEXT RELIED UPON THE DECISION OF THE HONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS. VENKATADHRI CONSTRUCTIONS, (2013) 31 TAXMANN.COM 71 (MADRAS) RE LEVANT TO ASSESSMENT YEARS 1993-94 AND 1995-96 TO SUPPORT THE CASE OF TH E REVENUE. HE ACCORDINGLY PLEADED FOR REVERSAL OF THE ORDER OF TH E CIT(A). 6. THE LD. AUTHORIZED REPRESENTATIVE (AR) FOR THE A SSESSEE SHRI M. K. KULKARNI, ON THE OTHER HAND, SUBMITTED THAT THE IDE NTICAL ISSUE AROSE IN THE ASSESSEES OWN CASE RELEVANT TO ASSESSMENT YEAR 200 8-09 WHERE THE CIT(A) GRANTED RELIEF TO THE ASSESSEE AND THE APPEAL OF TH E REVENUE WAS DISMISSED BY THE TRIBUNAL IN ITA NO.1143/PN/2011, ORDER DATED 28 .12.2012. HE ACCORDINGLY PLEADED THAT NO INTERFERENCE WITH THE O RDER OF THE CIT(A) IS CALLED FOR. 7. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS AND PERUSED THE MATERIAL PLACED ON RECORD. WE FIND THAT THE CO-ORD INATE BENCH OF THE TRIBUNAL HAD AN OCCASION TO DEAL WITH THE IDENTICAL ISSUE IN THE CASE OF THE ASSESSEE ITSELF RELEVANT TO ASSESSMENT YEAR 2008-09. THE CO-ORDINA TE BENCH OF THE TRIBUNAL AFTER EXAMINING THE FACTS OF THE CASE APPLIED THE L AW IN FAVOUR OF THE ASSESSEE AND CONFIRMED THE RELIEF GRANTED BY THE CIT(A). TH E RELEVANT OPERATIVE PARA OF THE ORDER OF THE CO-ORDINATE BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE RELEVANT TO ASSESSMENT YEAR 2008-09 READS AS UNDER :- 5. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PART IES AND PERUSED THE RECORD. THE LD. COUNSEL PLACED HIS HEAVY RELIANCE ON THE DE CISION OF THE ITAT BANGALORE BENCH IN THE CASE OF SRI. RENUKESHWARA RICE MILLS V . ITO, 93 ITD 263 (BANG.). RULES 6DD HAS UNDERGONE AMENDMENT FROM THE A.Y. 200 9-10. SO FAR AS THE DECISION IN THE CASE OF SRI. RENUKESHWARA RICE MILLS (SUPRA) IS CONCERNED, THE SAID ASSESSEE WAS IN THE BUSINESS OF RICE MILLS. THE ASSESSEE PUR CHASED THE RICE FROM THE AGRICULTURE PRODUCE COMMITTEE AND DEPOSITED THE AMO UNTS BY PREPARING THE CHALLAN & CASH WAS DEPOSITED IN BANK ACCOUNT OF THE SELLER NAMELY M/S. K. PARAMESHWARAPPA & CO. THE A.O. MADE THE DISALLOWANC E FOR THE VIOLATION OF THE SEC. 40A(3). WHEN THE MATTER REACHED BEFORE THE TRI BUNAL, THE TRIBUNAL RELIED ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF AT TARSINGH GURUMUKH SINGH, 191 ITR 667 AND DELETED THE ADDITION. IN THE PRESENT CA SE, THE ASSESSEE HAS PRODUCED CONFIRMATION OF THE PARTIES SHOWING THE IDENTITY TO WHOM THE PAYMENTS ARE MADE BY 5 ITA NO.1967/PN/2014 BEARER CHEQUES. MOREOVER, IT IS NOT CONTROVERTED BE FORE US THAT AS PER THE EVIDENCE IN FORM OF COPIES OF THE BANK CHEQUES OBTAINED FROM THE CONCERNED BANK, ALL THE RESPECTIVE PARTIES HAVE PUT THEIR SEALS AND SIGNATU RES ON SAID CHEQUES FOR GETTING PAYMENTS AND THAT SHOWS THAT THE PAYMENTS ARE RECEI VED BY THE PAYEES ONLY. MOREOVER, ASSESSEE ALSO DEMONSTRATED THE GENUINENES S OF THE PAYMENTS BY FILING THE LEDGER EXTRACTS OF THE SAID PARTIES IN THEIR BOOKS OF ACCOUNT AND PAYMENT OF VAT WAS ALSO CONFIRMED. THIS HAS NOT BEEN CONTROVERTED BEFO RE US. WE ALSO FIND THAT ON THE IDENTICAL FACTS IN THE IMMEDIATELY PRECEDING YEAR, THE LD CIT, BANGALORE, DELETED THE ADDITION IN THE REVISION PETITION FILED BY THE ASSE SSEE U/S. 264 OF THE ACT. WE FURTHER FIND THAT NOWHERE IT IS THE OBJECTION OF THE A.O. T HAT THE PAYMENTS BY THE BEARER CHEQUES TO THE PARTIES HAVE NOT GONE INTO THEIR ACC OUNTS. ANOTHER ASPECT IS THAT THERE IS NOT SINGLE CASH PAYMENT, BUT ALL PAYMENTS ARE MA DE BY THE BEARER CHEQUES. THE PURPOSE OF MAKING COMPULSION OF THE PAYMENT BY THE CROSSED CHEQUES IS TO ENSURE THAT THE PAYMENTS GO TO THE SAME PARTY. IN THIS CAS E, IT IS PROVED THAT A PAYMENT HAVE BEEN GONE TO THE PAYEE ONLY. IN OUR OPINION, THE LD CIT(A) HAS RIGHTLY DELETED THE ADDITION AND NO INTERFERENCE IS CALLED FOR IN HIS O RDER ON THIS ISSUE. ACCORDINGLY, THE RELEVANT GROUNDS TAKEN BY THE REVENUE ARE DISMISSED . 8. CLEARLY, THE CO-ORDINATE BENCH OF THE TRIBUNAL A RRIVED AT THE AFORESAID FINDINGS BASED ON CERTAIN FACTS AVAILABLE ON RECORD SUCH AS CONFIRMATION OF THE PARTIES, IDENTITY OF THE PAYEE, PAYMENT MADE BY BEA RER CHEQUES, ETC. AS NOTED ABOVE. IN THE PRESENT CASE, WE DO NOT FIND ANY EVI DENCE REFERRED TO BY THE CIT(A) WHICH IS FORMED THE FOUNDATION FOR GRANTING THE RELIEF. THE CIT(A) HAS MERELY REITERATED THE FINDINGS GIVEN BY HIS PREDECE SSORS AND THE ITAT IN THE EARLIER YEAR. THE QUESTION IS ESSENTIALLY FACTUAL AND REQUIRES ASCERTAINMENT OF CERTAIN FACTS. THE ASSESSEE IS DUTY BOUND TO EXPLA IN THE CIRCUMSTANCES WHICH COMPELLED HIM TO DISCARD THE PROVISIONS OF SECTION 40A(3) OR (3A) OF THE ACT AND EXPLAIN BUSINESS EXPEDIENCY FOR MAKING PAYMENT OTHERWISE THAN BY ACCOUNT PAYEE CHEQUES EACH YEAR. THESE FACTS ARE N OT AT ALL CLEAR ON RECORD. THE STATEMENT OF FACTS FILED BEFORE THE CIT(A) AL SO DOES NOT APPEAR TO EXPLAIN THE CAUSE FOR CONTRAVENTION OF THE PROVISIO NS OF SECTION 40A(3) OR SECTION 40A(3A) OF THE ACT. THUS, FACTS OF THE CAS E, FOR DEPARTURE FROM MANDATE OF SECTION 40A(3) OR (3A) REQUIRES TO BE AP PRECIATED. IN THIS VIEW OF THE MATTER, WE RESTORE THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER FOR EXAMINATION OF THE RELEVANT FACTS DE NOVO IN ACCORDANCE WITH LAW IN THE LIGHT OF THE RATIO LAID DOWN BY THE CO-ORDINATE BENCH OF THE TRIBUNAL IN ASSESSMENT YEAR 2008-09. NEEDLESS TO SAY, ASSESSEE SHALL BE A FFORDED PROPER OPPORTUNITY OF BEING HEARD WHILE DETERMINING THE ISSUE. 6 ITA NO.1967/PN/2014 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALLO WED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON THIS 17 TH DAY OF AUGUST, 2016. SD/- SD/- ( VIKAS AWASTHY ) ( PRADIP KUMAR KEDIA ) / JUDICIAL MEMBER $ / ACCOUNTANT MEMBER PUNE ; DATED : 17 TH AUGUST, 2016. & ' () *+( / COPY OF THE ORDER IS FORWARDED TO : 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A), AURANGABAD; 4) THE CIT, AURANGABAD; 5) THE DR B BENCH, I.T.A.T., PUNE; 6) GUARD FILE. &, / BY ORDER , ' # //TRUE COPY// $ %& # '( / SR. PRIVATE SECRETARY ) '* , / ITAT, PUNE