Shivji Devraj Sharma, Baroda V. Income Tax Officer, Baroda

ITA 2100/AHD/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 9415 (ITAT-AHMEDABAD)
• Duration Of Justice: 7 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-03-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 03-12-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 15-07-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: VILAS V SHINDE
• Keywords: Unexplained cash credit; Gift
• Section: 143(3); 194C; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH AHMEDABAD BEFORE S/SHRI RAJPAL YADAV, JM, & MANISH BORAD, AM. ITA NO.2100/AHD/2015 ASST. YEAR: 2005-06 SHIVJI DEVRAJ SHARMA, PROP. SHIVAM TRANSPORT SERVICES, MARUTI COMPLEX, GIDC RANOLI, BARODA. VS. INCOME-TAX OFFICER, WARD 2(5),, BARODA. APPELLANT RESPONDENT PAN AERPP 3057M APPELLANT BY ARTI N. SHAH, AR RESPONDENT BY SRI VILAS V. SHINDE, DR DATE OF HEARING: 3/12/2015 DATE OF PRONOUNCEMENT: 02/03/2016 O R D E R PER MANISH BORAD, ACCOUNTANT MEMBER . THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF LD. CIT(A)-5, BARODA DATED 11.03.2015. ASSESSMENT WAS F RAMED U/S 143(3) OF THE IT ACT, 1961 (IN SHORT THE ACT) FOR A SST. YEAR 2005-06 ON 31.12.2007 BY ITO, WARD-2(5), BARODA. ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL :- 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS )-5, VADODARA HAS ERRED IN LAW AND ON FACTS OF THE CASE BY CONFIRMING THE ADDITION OF RS.2,50,000/- IN RESPECT OF UNEXPLAINED CASH CREDIT U/S 68 OF THE INCOME TAX ACT, 1961. ITA NO.2100/AHD/2015 ASST. YEAR 2005-06 2 2. THE LEARNED COMMISSIONER OF INCOME TAX, (APPEA LS)-5, VADODARA HAS ERRED IN LAW AND ON FACTS OF THE CASE BY CONFIRMING THE DISALLOWANCE OF RS.2,50,507/- U/S.40(A)(IA) OF THE INCOME TAX ACT, 1961 MADE BY THE ASSESSING OFFICER THOUGH THE APPELLANT WAS NOT LIAB LE TO DEDUCT TDS U/S.194C . 3. YOUR APPELLANT PRAYS TO RESERVE THE RIGHT TO AD D, ALTER, AMEND AND/OR WITHDRAW ANY OF THE ABOVE GROUNDS OF APPEAL. 2. BRIEFLY STATED FACTS AS CULLED OUT FROM THE RECO RDS ARE THAT THE ASSESSEE IS AN INDIVIDUAL ENGAGED IN THE BUSINESS O F PROVIDING TRANSPORT SERVICES UNDER THE PROPRIETORSHIP OF M/S SHIVAM TRANSPORT SERVICES AND FILED ITS RETURN OF INCOME ON10.10.200 5 DECLARING TOTAL INCOME OF RS.1,37,636/-. THE CASE WAS SELECTED FOR SCRUTINY ASSESSMENT AND NOTICE U/S 143(2) OF THE ACT WAS ISS UED ON 26.10.2007. INCOME OF THE ASSESSEE WAS ASSESSED AT RS.6,38,143/- AFTER MAKING FOLLOWING ADDITIONS :- I) ADDITION ON ACCOUNT OF UNEXPLAINED CASH CREDITS RS.2,50,000/- II) DISALLOWANCE U/S 40(A)(IA) OF THE IT ACT RS.2,50, 507/- 3. AGGRIEVED ASSESSEE WENT IN APPEAL BEFORE LD. CIT (A) BUT THE SAME WAS DISMISSED BY THE FIRST APPELLATE AUTHORITY OBSERVING THAT ASSESSEE COULD NOT PROVE THE IDENTITY, CREDITWORTHI NESS AND GENUINENESS OF THE UNEXPLAINED CASH CREDIT OF RS.2, 50,000/- RECEIVED FROM ASHWINKUMAR L. PATEL RS. 75,000/- SUMITRABEN J PATEL RS.1,25,000/- FALGUNIBEN PATEL RS. 50,000/- ITA NO.2100/AHD/2015 ASST. YEAR 2005-06 3 AND DISALLOWANCE U/S 40(A)(IA) OF THE ACT WAS CONFI RMED AS THE ASSESSEE HAS NOT DEDUCTED TDS U/S 194C OF THE ACT. 4. AGGRIEVED, ASSESSEE IS NOW IN APPEAL BEFORE THE TRIBUNAL. 5. AS REGARDS GROUND NO.1 AGAINST THE ACTION OF LD. CIT(A) CONFIRMING THE ADDITION OF RS.2,50,000/- IN RESPECT OF UNEXPLAINED CASH CREDIT, THE LD. AR SUBMITTED THAT THE SUM OF R S.2,50,000/- WAS RECEIVED FROM - ASHWINKUMAR L. PATEL RS. 75,000/- SUMITRABEN J PATEL RS.1,25,000/- FALGUNIBEN PATEL RS. 50,000/- LD. AR SUBMITTED THAT IN THE CASE OF FALGUNIBEN PAT EL, THE AMOUNT WAS RECEIVED THROUGH ACCOUNT PAYEE CHEQUE FROM FALG UNIBEN PATEL AND THE SOURCE OF CASH DEPOSIT IN THE BANK ACCOUNT HAS ARISEN OUT OF GIFTS RECEIVED IN CASH FROM HER GRAND FATHER MR. RA MANBHAI NAGJIBHAI PATEL WHO IS AN AGRICULTURIST HAVING 8 BIGHAS AGRI CULTURAL LAND. BESIDES, MR. RAMANBHAI N. PATEL HAS RETIRED FROM RA ILWAY DEPARTMENT. LD. AR SUBMITTED THAT FALGUNIBEN PATEL HAS RECEIVED GIFTS FROM HER GRAND FATHER AND ACCUMULATED PAST SA VINGS FOR PAST MANY YEARS AND ALSO REFERRED THAT SHE HAS WITHDRAWN RS.43,000/- FROM HER BANK ACCOUNT WITH SHREE CHHANI NAGRIK SAHA KARI BANK LTD. BY WAY OF WITHDRAWAL OF RS.10,000/- ON 11/3/2004, R S.10,000/- ON 4/5/2004 AND RS.23,000/- ON 15/9/2004. ITA NO.2100/AHD/2015 ASST. YEAR 2005-06 4 AS REGARDS OTHER TWO UNSECURED LOANS FROM ASHWINKUM AR L PATEL OF RS.75,000/- AND FROM SUMITRABEN J. PATEL OF RS.1,25 ,000/- LD. AR JUST REFERRED TO THE SUBMISSIONS MADE BEFORE LD. CIT(A) BUT COULD HARDLY PROVE ON RECORD ABOUT THE IDENTITY, BANK STATEMENT, INCOME-TAX RETURN OF ASHWINKUMAR L. PATEL AND SUMITRABEN J PATEL EXCE PT THEIR AFFIDAVITS. 6. AS REGARDS GROUND NO.2 REGARDING CONFIRMATION OF DISALLOWANCE OF RS.2,50,507/- U/S 40(A)(IA) OF THE ACT, LD. AR S UBMITTED THAT ASSESSEE IS AN INDIVIDUAL AND IS RUNNING HIS BUSINE SS IN HIS SOLE PROPRIETORSHIP CONCERN M/S SHIVAM TRANSPORT SERVICE S AND THE ASST. YEAR 2005-06 I.E. UNDER APPEAL IS THE FIRST YEAR IN WHICH THE TURNOVER OF THE ASSESSEE EXCEEDED THE MONETARY LIMIT OF GROS S TURNOVER REFERRED TO IN SECTION 44AB I.E. RS.60 LAKHS AND AS THIS WAS THE FIRST YEAR OF AUDIT, THEREFORE, ASSESSEE WAS NOT LIABLE T O DEDUCT TDS U/S 194C OF THE ACT AND IN SUPPORT OF THE SAME LD. AR R EFERRED TO THE COPY OF THE INCOME-TAX RETURN AND COMPUTATION OF IN COME FOR ASST. YEAR 2004-05 SHOWING THAT THE ASSESSEE HAS FILED RE TURN OF INCOME UNDER SECTION 44AE IN ASST. YEAR 2004-05 AND WAS NO T COVERED UNDER THE PROVISIONS OF SECTION 44AB OF THE ACT. 7. ON THE OTHER HAND, LD. DR SUPPORTED THE ORDERS O F LOWER AUTHORITIES. 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. FIRST WE TAKE UP GROUND NO.1 REGARDING A DDITION MADE BY ITA NO.2100/AHD/2015 ASST. YEAR 2005-06 5 ASSESSING OFFICER U/S 68 OF THE ACT IN RESPECT OF U NEXPLAINED CASH CREDIT OF RS.2,50,000/- RECEIVED FROM - ASHWINKUMAR L. PATEL RS. 75,000/- SUMITRABEN J PATEL RS.1,25,000/- FALGUNIBEN PATEL RS. 50,000/- 8.1 AS REGARDS UNSECURED LOAN RECEIVED FROM ASHWINK UMAR L. PATEL AT RS.75,000/- AND FROM SUMITRABEN J. PATEL OF RS.1 ,25,000/-, ASSESSEE HAS NOT PROVIDED ANY DETAILS EXCEPT THE AF FIDAVITS AND COPIES OF SOME LEDGER ACCOUNT AND BANK ACCOUNT OF A SST. YEAR 2007- 08 AND FOLLOWING YEARS. THESE AFFIDAVITS CANNOT BE TAKEN AS A SUBSTANTIVE PROOF IN ORDER TO SATISFY THE PROVISION S OF SECTION 68 OF THE ACT IN REGARD TO THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF LOAN TAKEN DURING THE YEAR. NO EVIDENCE IN THE FORM OF P AN, BANK STATEMENT, INCOME-TAX RETURN HAVE BEEN PUT ON RECOR D BEFORE THE LOWER AUTHORITIES. IN THESE CIRCUMSTANCES WE FIND T HAT ASSESSEE HAS NOTHING MORE TO PROVE THE GENUINENESS OF UNSECURED LOANS TAKEN FROM ASHWINKUMAR L. PATEL AND SUMITRABEN J. PATEL A T RS.75,000/- AND RS.1,25,000/- RESPECTIVELY. 8.2 AS REGARDS LOAN TAKEN FROM FALGUNIBEN PATEL OF RS.50,000/- WE FIND THAT THIS LOAN AMOUNT HAS BEEN TAKEN BY CHEQUE AND THE SOURCE OF CASH DEPOSIT OF RS.50,000/- IMMEDIATELY BEFORE I SSUE OF THE CHEQUE TO THE ASSESSEE HAS BEEN SHOWN TO HAVE BEEN RECEIVED AS GIFT FROM GRAND FATHER AND PAST SAVINGS AS WELL AS WITHDRAWAL OF RS.43,000/- IN PREVIOUS MONTHS FROM HER BANK ACCOUN T. WE FURTHER ITA NO.2100/AHD/2015 ASST. YEAR 2005-06 6 FIND THAT ASSESSEE HAS SUBMITTED DETAILS OF GRAND F ATHER OF FALGUNIBEN PATEL NAMELY MR. RAMANBHAI N. PATEL WHO HAS RETIRED FROM RAILWAY DEPARTMENT AND IS OWNING 8 BIGHAS OF AGRICULTURAL L AND. IN THESE CIRCUMSTANCES, WE ARE INCLINED TO BELIEVE THAT THER E WAS SOME SOURCE OF CASH DEPOSIT OF RS.50,000/- IN THE BANK ACCOUNT OF FALGUNIBEN PATEL AND WE ACCORDINGLY FIND THAT THE LOAN TAKEN F ROM FALGUNIBEN PATEL TO BE GENUINE. IN VIEW OF OUR ABOVE DISCUSSIO N, WE HOLD THAT OUT OF THE ADDITION ON ACCOUNT OF UNEXPLAINED CASH DEPO SIT OF RS.2,50,000/- LOAN OF RS.50,000/- FROM FALGUNIBEN PATEL IS EXPLAINED AND WE DELETE THE ADDITION OF RS.50,000/-. ACCORDIN GLY, ASSESSEE GETS PART RELIEF IN THIS GROUND. 9. NOW WE TAKE UP GROUND NO.2 AGAINST DISALLOWANCE OF RS.2,50,507/- U/S 40(A)(IA) OF THE ACT FOR NON DEDU CTION OF TDS U/S 194C OF THE ACT UNDER THE PROVISIONS OF SECTION 194 C WHICH READS AS UNDER :- 194C. (1) ANY PERSON RESPONSIBLE FOR PAYING ANY SUM TO A NY RESIDENT (HEREAFTER IN THIS SECTION REFERRED TO AS THE CONTRACTOR) FOR CARRYING OUT ANY WORK (INCLUDING SUPPLY OF LABOUR FOR CARRYING OUT ANY WORK) IN PURSUANCE OF A CONTRACT BETWEEN THE CONTRACTOR AND A SPECIFIED PERSON SHALL, AT THE TIME OF CREDIT OF SU CH SUM TO THE ACCOUNT OF THE CONTRACTOR OR AT THE TIME OF PAYMENT THEREOF IN CASH OR BY ISSUE OF A CHEQUE OR DRAFT OR BY ANY OTHER MODE, WHICHEVER IS EARLIER, DEDUCT AN AMOUNT EQUAL TO ( I ) ONE PER CENT WHERE THE PAYMENT IS BEING MADE OR C REDIT IS BEING GIVEN TO AN INDIVIDUAL OR A HINDU UNDIVIDED FAMILY; ( II ) TWO PER CENT WHERE THE PAYMENT IS BEING MADE OR C REDIT IS BEING GIVEN TO A PERSON OTHER THAN AN INDIVIDUAL OR A HINDU UNDIVIDED FAMIL Y, OF SUCH SUM AS INCOME-TAX ON INCOME COMPRISED THERE IN. (2) WHERE ANY SUM REFERRED TO IN SUB-SECTION (1) IS CREDITED TO ANY ACCOUNT, WHETHER CALLED 'SUSPENSE ACCOUNT' OR BY ANY OTHER NAME, IN THE BOOKS OF ACCOUNT OF THE PERSON ITA NO.2100/AHD/2015 ASST. YEAR 2005-06 7 LIABLE TO PAY SUCH INCOME, SUCH CREDITING SHALL BE DEEMED TO BE CREDIT OF SUCH INCOME TO THE ACCOUNT OF THE PAYEE AND THE PROVISIONS OF THIS SECTION SHALL APPLY ACCORDINGLY. (3) WHERE ANY SUM IS PAID OR CREDITED FOR CARRYING OUT ANY WORK MENTIONED IN SUB-CLAUSE (E) OF CLAUSE (IV) OF THE EXPLANATION, TAX SHALL BE DEDUCTED AT SOURCE ( I ) ON THE INVOICE VALUE EXCLUDING THE VALUE OF MATER IAL, IF SUCH VALUE IS MENTIONED SEPARATELY IN THE INVOICE; OR ( II ) ON THE WHOLE OF THE INVOICE VALUE, IF THE VALUE O F MATERIAL IS NOT MENTIONED SEPARATELY IN THE INVOICE. (4) NO INDIVIDUAL OR HINDU UNDIVIDED FAMILY SHALL B E LIABLE TO DEDUCT INCOME-TAX ON THE SUM CREDITED OR PAID TO THE ACCOUNT OF THE CONTRACT OR WHERE SUCH SUM IS CREDITED OR PAID EXCLUSIVELY FOR PERSONAL PURPOSES OF SUCH INDIVIDUA L OR ANY MEMBER OF HINDU UNDIVIDED FAMILY. (5) NO DEDUCTION SHALL BE MADE FROM THE AMOUNT OF A NY SUM CREDITED OR PAID OR LIKELY TO BE CREDITED OR PAID TO THE ACCOUNT OF, OR TO, THE C ONTRACTOR, IF SUCH SUM DOES NOT EXCEED [THIRTY] THOUSAND RUPEES : PROVIDED THAT WHERE THE AGGREGATE OF THE AMOUNTS OF SUCH SU MS CREDITED OR PAID OR LIKELY TO BE CREDITED OR PAID DURING THE FINANCIAL YEAR EX CEEDS [SEVENTY-FIVE] THOUSAND RUPEES, THE PERSON RESPONSIBLE FOR PAYING SUCH SUMS REFERRE D TO IN SUB-SECTION (1) SHALL BE LIABLE TO DEDUCT INCOME-TAX UNDER THIS SECTION. (6) NO DEDUCTION SHALL BE MADE FROM ANY SUM CREDITE D OR PAID OR LIKELY TO BE CREDITED OR PAID DURING THE PREVIOUS YEAR TO THE ACCOUNT OF A C ONTRACTOR DURING THE COURSE OF BUSINESS OF PLYING, HIRING OR LEASING GOODS CARRIAGES, ON FU RNISHING OF HIS PERMANENT ACCOUNT NUMBER, TO THE PERSON PAYING OR CREDITING SUCH SUM. (7) THE PERSON RESPONSIBLE FOR PAYING OR CREDITING ANY SUM TO THE PERSON REFERRED TO IN SUB-SECTION (6) SHALL FURNISH, TO THE PRESCRIBED IN COME-TAX AUTHORITY OR THE PERSON AUTHORISED BY IT, SUCH PARTICULARS, IN SUCH FORM AN D WITHIN SUCH TIME AS MAY BE PRESCRIBED. 9.1 FROM GOING THROUGH THE ABOVE PROVISIONS, PERSON RESPONSIBLE TO DEDUCT TDS INCLUDES ANY INDIVIDUAL WHO TOTAL SAL ES, GROSS RECEIPTS OR TURNOVER FROM THE BUSINESS OR PROFESSION CARRIED ON BY HIM EXCEEDS MONETARY LIMIT SPECIFIED IN CLAUSE (A) OR C LAUSE (B) OF SEC.44AB OF THE ACT DURING THE FINANCIAL YEAR IMMED IATELY PRECEDING FINANCIAL YEAR IN WHICH SUCH SUM IS CREDITED OR PAI D TO THE ACCOUNT OF THE CONTRACTOR. APPLYING THE FACTS OF THE CASE TO T HESE PROVISIONS WE FIND THAT THE ISSUE IN APPEAL IS FOR ASST. YEAR 200 5-06 AND ASSESSEE WOULD HAVE BEEN LIABLE TO DEDUCT TDS IF IT WAS COVE RED U/S 44AB OF ITA NO.2100/AHD/2015 ASST. YEAR 2005-06 8 THE ACT FOR THE PRECEDING YEAR I.E. ASST. YEAR 2004 -05. FROM GOING THROUGH THE RECORDS AVAILABLE ON PAPER BOOK WE FIND THAT THE ASSESSEE HAS FILED ITS RETURN OF INCOME FOR ASST. Y EAR 2004-05 ON 28.10.2004 AND HAS SHOWN INCOME FROM BUSINESS OR PR OFESSION UNDER THE DEEMING PROVISIONS OF SECTION 44AB OF THE ACT AVAILABLE FOR INCOME FROM RUNNING HEAVY VEHICLES. CERTAINLY ASSES SEE WAS NOT FALLING UNDER THE PROVISIONS OF SECTION 44AB OF THE ACT FOR ASST. YEAR 2004-05. IT WAS THE ASSESSMENT YEAR 2005-06 IN WHIC H TOTAL GROSS TURNOVER OF THE ASSESSEE EXCEEDED THE LIMIT OF RS.6 0 LACS PROVIDED IN SECTION 44AB OF THE ACT. WE, THEREFORE, ARE OF THE VIEW THAT ASSESSEE BECAME LIABLE TO DEDUCT TDS FROM ASST. YEAR 2006-07 AND CERTAINLY WAS NOT REQUIRED TO DEDUCT TDS UNDER THE PROVISIONS OF SECTION 194C OF THE ACT FOR ASST. YEAR 2005-06. THEREFORE, THE A SSESSING OFFICER WAS NOT CORRECT IN MAKING DISALLOWANCE U/S 40(A)(IA ) OF THE ACT AT RS.2,50,507/-. WE ACCORDINGLY DELETE THIS ADDITION OF RS.2,50,507/- AND ALLOW THE GROUND OF ASSESSEE. 10. IN THE RESULT, THE APPEAL OF ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 2 ND MARCH, 2016 SD/- SD/- (RAJPAL YADAV) JUDICIAL MEMBER (MANISH BORAD) ACCOUNTANT MEMBER DATED 02 /03/2016 MAHATA/- ITA NO.2100/AHD/2015 ASST. YEAR 2005-06 9 COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER ASST. REGISTRAR, ITAT, AHMEDABAD 1. DATE OF DICTATION: 17/02/2016 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER: 17/02/2016 OTHER MEMBER: 3. DATE ON WHICH APPROVED DRAFT COMES TO THE SR. P. S./P.S.: 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER FOR PRONOUNCEMENT: __________ 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. P.S./P.S.: 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK: 2/3/16 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK: 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER: 9. DATE OF DESPATCH OF THE ORDER: