M/s. Bhailalbhai A. Patel, V. The Income tax Officer, Ward-9(2),

ITA 2106/AHD/2004

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 9364 (ITAT-AHMEDABAD)
• Duration Of Justice: 6 year(s) 5 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-11-2010
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 28-10-2010
• Assessment Year: 2000-2001
• Appeal Filed On: 18-06-2004
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S K MEENA
• Assessee Lawyers: S N SOPARKAR
• Keywords: Initiation of penalty proceedings
• Section: 143(3); 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD AHMEDABAD C BENCH (BEFORE S/SHRI G.D.AGARWAL, VICE-PRESIDENT AND T.K. SHARMA, JUDICIAL MEMBER) ITA NO.2106/AHD/2004 [ASSTT. YEAR : 2000-2001] BHAILALBHAI A. PATEL 4-A, KETAN SOCIETY NR.SARDAR PATEL COLONY NAVJIVAN, AHMEDABAD-4. VS. ITO, WARD-9(2) AHMEDABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI S.N. SOPARKAR REVENUE BY : SHRI S.K.MEENA O R D E R PER G.D. AGARWAL, VICE-PRESIDENT : THIS APPEAL IS BY THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-XV, AHMEDABAD DATED 10-03-2004 ARISING OUT OF THE ORDER OF THE ASSESSING OFFICER PASSED UNDER SECTION 143(3)) OF THE INCOME TAX ACT. 2. SINCE THE GROUNDS RAISED IN THE APPEAL ALONG WIT H MEMORANDUM OF APPEAL WERE ARGUMENTATIVE, THE LEARNED COUNSEL FOR THE ASSESSEE FURNISHED CONCISE GROUNDS OF APPEAL, WHICH READS AS UNDER: 1. THE LD.CIT(A) ERRED IN CONFIRMING VALIDITY F OR DER PASSED BY THE AO UNDER SECTION 143(3) OF THE ACT. 2. THE LD.CIT(A) ERRED IN CONFIRMING DISALLOWANCE R EGARDING TRACTOR BHADA EXPENSES OF RS.25,19,270/-. BOTH THE LOWER A UTHORITIES HAVE FAILED TO APPRECIATE EVIDENCES AND STATEMENTS OF PERSONS PROD UCED BEFORE THE AO. 3. THE LD.CIT(A) ERRED IN CONFIRMING THE LEVY OF IN TEREST U/S.234B & C. 4. THE LD.CIT(A) ERRED IN CONFIRMING LEVY OF PENALT Y U/S.271(1)(C). 3. AT THE TIME OF HEARING BEFORE US, NO ARGUMENTS W ERE ADVANCED WITH REGARD TO THE GROUND NO.1. ACCORDINGLY, THE SAME I S TREATED AS NOT PRESSED AND REJECTED AS SUCH. ITA NO.2106/AHD/2004 -2- 4. IN RESPECT OF GROUND NO.2, IT IS SUBMITTED BY TH E LEARNED COUNSEL THAT THE ASSESSEE DERIVES INCOME FROM CIVIL CONSTRUCTION WOR K. THAT IN THE CONSTRUCTION WORK, THE TRACTORS ARE UTILISED FOR THE PURPOSE OF CARRYING VARIOUS MATERIALS TO THE SITES OF THE ASSESSEES FIRM. THE ASSESSEE HAD HIRED TRACTORS FOR THE PURPOSE OF ITS BUSINESS AND PAID TRACTOR BHADA . THE SAME IS DULY SUPPORTED BY THE BILLS ISSUED BY THE PERSONS WHO SUPPLIED THE TRACTORS TO THE ASSESSEE. THAT THE PAYMENT HAS BEEN MADE TO EACH PERSON BY ACCOUNT PAY EE CHEQUE. THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO CARRIE D OUT INQUIRIES FROM THE OFFICES OF THE RTO AND IT WAS GATHERED THAT THE TRA CTOR NUMBERS GIVEN IN THOSE BILLS AND VOUCHERS WERE NOT OF TRACTORS. HE HAS ST ATED THAT THE TRACTOR NUMBERS IN THE BILL WERE NOTED BY THE PERSONS WHO PREPARED THE BILLS AND MERELY BECAUSE HE COMMITTED SOME MISTAKE IN WRITING THE TRACTOR NU MBERS, THE ASSESSEE CANNOT BE PENALISED. HE HAS STATED THAT OUT OF EIGHT PERS ONS TO WHOM THE TRACTOR BHADA WAS PAID, THE ASSESSEE PRODUCED FOUR PERSONS BEFORE THE AO AND THEY HAVE CONFIRMED HAVING WORKED FOR THE ASSESSEE AND HAVING RECEIVED THE TRACTOR BHADA . THEY ALSO EXPLAINED THE DISCREPANCY IN THE NOTIN G OF THE TRACTOR NUMBERS. AFTER CONSIDERING THEIR EXPLANATION, THE AO PARTLY ACCEPTED THE TRACTOR BHADA PAID TO THEM AND ONLY A SMALL AMOUNT WAS DISALLOWE D OUT OF THE TRACTOR BHADA PAID TO THEM . HOWEVER, IN RESPECT OF FOUR PERSONS, WHO COULD NOT BE PRODUCED, THE AO DISALLOWED THE ENTIRE TRACTOR BHADA. HE SUBMITTED THAT WHEN THE ASSESSEE HAS MADE THE PAYMENT BY CHEQUE, T RACTOR BHADA IS DULY SUPPORTED BY THE BILLS AND VOUCHERS AND THAT OUT OF EIGHT PERSONS, FOUR PERSONS WERE PRODUCED BEFORE THE AO, MERELY BECAUSE THERE W AS SOME ERROR IN MENTIONING THE TRACTOR NUMBERS, THE TRACTOR BHADA SHOULD NOT BE DISALLOWED. HE ALTERNATIVELY SUBMITTED THAT THE DISALLOWANCE MA DE BY THE AO IS EXCESSIVE AND ONLY SMALL PORTION OF THE TRACTOR BHADA PAID BY THE ASSESSEE MAY BE DISALLOWED. 5. THE LEARNED DR, ON THE OTHER HAND, REFERRED TO T HE BANK ACCOUNT OF THOSE PERSONS AND POINTED OUT THAT ADDRESS IN THE BANK AC COUNT OF THE ALLEGED ITA NO.2106/AHD/2004 -3- TRANSPORTERS WAS CARE OF ASSESSEE AND THE BANK ACCO UNT WAS OPENED WITH THE NOMINAL AMOUNT OF RS.500/- AND EACH TIME WHENEVER C HEQUE OF THE TRACTOR BHADA IS DEPOSITED IN THEIR ACCOUNT, IDENTICAL AMOUNT WAS WITHDRAWN IMMEDIATELY. FROM THESE FACTS, IT IS EVIDENT THAT MERELY BECAUSE THE PAYMENT WAS MADE BY CHEQUE, IT WOULD NOT BE AN EVIDENCE OF GENUINENESS OF THE PAYMENTS OR INCURRING OF EXPENDITURE FOR THE PURPOS E OF BUSINESS. HE ALSO POINTED OUT THAT IF THERE IS A CLERICAL MISTAKE IN WRITING THE TRACTOR NUMBER, IT MAY HAPPEN IN A FEW CASES, BUT WHEN THERE IS A MIST AKE IN NOTING THE NUMBER OF ALMOST EACH TRACTOR, IT ONLY LEAD TO THE INFERENCE THAT NO TRACTOR WAS ACTUALLY PLIED BY THOSE PERSONS, BUT ONLY THE BILLS WERE PRE PARED ON HYPOTHETICAL BASIS. HE HAS STATED THAT THE ONUS IS UPON THE ASSESSEE TO ESTABLISH THAT THE EXPENDITURE WAS INCURRED FOR THE PURPOSE OF BUSINESS. THE ASSE SSEE WAS UNABLE TO ESTABLISH THAT THE EXPENDITURE WAS ACTUALLY INCURRED AND IT W AS FOR THE PURPOSE OF THE ASSESSEES BUSINESS. THE LEARNED DR ALSO RELIED UP ON THE DECISION OF THE ITAT IN THE CASE OF M/S.POINEER CONSTRUCTION CO. VS. JCI T, ITA NO.101/AHD/2001 DATED 05-02-2003. 6. IN REJOINDER, THE LEARNED COUNSEL FOR THE ASSESS EE DISTINGUISHED THE ABOVE CASE OF THE ITAT ON THE GROUND THAT IN THE ABOVE ME NTIONED CASE, THE AMOUNT PAYABLE TO THE TRANSPORTER WAS OUTSTANDING WHILE IN THE CASE OF THE ASSESSEE THERE WAS NO OUTSTANDING AMOUNT. HE ALSO POINTED O UT THAT EVEN OTHERWISE IN THAT CASE ALSO, THE ENTIRE ADDITION WAS NOT SUSTAIN ED AND THE ITAT PARTLY SUSTAINED THE ADDITION. 7. WE HAVE CAREFULLY CONSIDERED THE ARGUMENTS OF BO TH THE SIDES AND PERUSED THE MATERIAL PLACED BEFORE US. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, THE AO CARRIED OUT DETAILED INQUIRIES FROM THE OFFICE OF THE RTO IN RESPECT OF THE VEHICLE NUMBERS MENTIONED IN THE COPIES OF THE BILLS FOR THE TRACTOR BHADA . THE DETAILS OF SUCH INQUIRY ARE PREPARED BY THE AO IN THE FORM OF A CHART AND WHICH IS GIVEN IN PAGE 3 OF THE ASSE SSMENT ORDER. FOR READY REFERENCE, WE REPRODUCE THE SAME AS UNDER: ITA NO.2106/AHD/2004 -4- SR. NO NAME OF THE TRACTOR CONTRACTOR VEHICLE NO. AS PER BILL AMOUNT AS PER BILL (RS.) MAKE OF THE VEHICLES AS PER THE RTO. 01 KALARAM MALARAM RJ-19-1943 72,020/- LUNA SUPER 1989 02 -DO- RJ-19-4058 72,660/- BAJAJ SUPER SCOOTER 1989 03 -DO- RJ-19-3885 70,760/- LUNA AUTO CYCLE 1989 04 -DO- RJ-19-4078 65,160/- LUNA SUPER 1989 05 -DO- RJ-19-368 66,420/- LUNA TFR 1989 06 -DO- RJ-20-3361 68,910/- SCOOTER PRIYA 1989 07 -DO- RJ-20-1588 68,480/- CAR FLAT 1971 08 -DO- RJ-19-3690 67,920/- TRACTOR TROLLY 1989 TOTAL-A 5,52,330/- 09 SHRI KALPNATH YADAV GJ-1-T-1019 1,53,200/- BAJAJ AUTO RICKSHAW 10 -DO- RJ-19-1277 32,520/- PRIYA SCOOTER 1989 11 -DO- GJ-1-T-2085 1,52,680/- BAJAJ AUTO RICKSHAW TOTAL-B 3,38,400/- 12 DHIRUBHAI PRABHUDAS PATEL GJ-2-T-1004 2,17,820/- AUTO RICKSHAW 1990 13 -DO- GJ-13-3940 67,300/- BAJAJ SUNNY 1992 TOTAL-C 2,85,120/- 14. RAMNIKBHAI M. PATEL GJ-15-3547 1,38,400/- NOT REGISTERED 15. -DO- GJ-13-470 50,720/- TRACTOR SUNREJ 1991 16. -DO- GJ-1-3570 60,5760/- PRIMER CAR TOTAL-D 2,49,680/- 17. RASIKLAL M. PATEL GJ-1-RR-2715 1,60,420/- MARUTI CAR 18. -DO- GJ-1-8581 74,920/- ESCORT TRACTOR 19 -DO- GJ-13-T-1080 14,280/- AMBASSADOR TAX 1974 TOTAL-E 2,49,620/- 20. PANKAJ RATILAL PATEL GJ-1-470 1,20,000/- AMBASSADOR CAR 21. -DO- GJ-1-T-1009 34,800/- BAJAJ AUTO RICKSHAW 22. -DO- GJ-1-L-6580 46,200/- MOTOR CYCLE TOTAL-F 2,01,000/- 23. KANARAM DEVARAM RJ-12-T-5130 1,37,460/- NOT REGISTERED 24. -DO- RJ-19-9135 1,39,420/- NOT REGISTERED 25. -DO- RJ-12-T-1382 1,41,400/- NOT REGISTERED 26. -DO- RJ-12-5008 1,33,220/- NOT REGISTERED 27 -DO- RJ-19-1840 83,280/- PRIYA SCOOTER 1989 28 -DO- RJ-19-0295 74,400/- BAJAJ SUPER SCOOTER 1989 TOTAL-G 7,09,180/- ITA NO.2106/AHD/2004 -5- 29. PREMARAM PUNARAM RJ-19-8335 1,52,180/- NOT REGISTERED 30. -DO- RJ-19-2028 1,51,400/- PRIYA SCOOTER 1989 31. -DO- RJ-19-5061 1,22,420/- LUNA TFR 1989 32. -DO- RJ-15-9005 1,02,540/- NOT REGISTERED 33. -DO- RJ-15-52-84 1,05,500/- NOT REGISTERED 34. -DO- RJ-19-7115 44,180/- HERO HONDA 1989 TOTAL-H 6,75,280/- TOTAL(A TO H) 32,60,550/- 8. ON THE BASIS OF THE ABOVE CHART, THE AO RECORDED THAT THE ASSESSEE HAS CLAIMED THE CARRIAGE EXPENSES FROM THE 34 VEHICLES. HOWEVER, OUT OF THESE 34 VEHICLES, ONLY THREE WERE THE TRACTORS AND 31 WERE NOT TRACTORS. THE AO ASKED THE ASSESSEE TO SHOW CAUSE AS TO WHY THE TRACTOR BHADA CLAIMED IN RESPECT OF THOSE VEHICLES NOT FOUND TO BE THE TRACTOR, SHOULD NOT BE DISALLOWED. THE REPLY FURNISHED BY THE ASSESSEE BEFORE THE AO READS AS UN DER: SIR, AS MENTIONED BY YOU, AS REGARDING EXPENSES IN CURRED UNDER THE HAD TRACTOR BHADA, WE HAVE TO STATE THAT ACTUALLY THEY HAVE DONE THE WORK ON OUR SITES BY TRACTORS ONLY AND THEY HAD BROUGHT TRACTORS AT OUR SITE ALSO. THEY HAVE MENTIONED THAT TRACTOR NUMBER IN BILLS GIVEN TO US FOR THE WORK DONE BY THEM AND WE HAVE C ONSIDERED THE TRACTOR NUMBER TO BE GENUINE AND CORRECT AND WE ARE NOT SUPPOSE TO ENQUIRE WITH THE RESPECTIVE RTO AS INQUIRED BY YOU. IN FACT, RESPECTIVE CONTRACTOR HAVE DONE THE WORK AT VARIOUS SITES BY TRACTORS ONLY AND THEY HAVE RAISED BILLS ON US AND WE HAVE A LSO MADE PAYMENT TO THEM BY A/C. PAYEES CHEQUES ONLY AND ALS O WE HAVE DEDUCTED INCOME TAX TDS FROM THEIR RESPECTIVE BILLS . SIR ALL WORK DONE BY THEM ARE GENUINE AND PAYMENT MADE BY US TO THEM ARE ALSO GENUINE, SO SAID SHOULD BE ALLOWED AS GENUINE EXPEN DITURE MADE BY US. 9. IN ADDITION TO THE ABOVE, THE ASSESSEE PRODUCED FOUR PERSONS VIZ. SHRI DHIRUBHAI PRABHUDAS PATEL, SHRI RAMNIKBHAI M. PATEL , SHRI RASIKLAL M. PATEL AND PANKAJ R. PATEL. THEIR STATEMENTS WERE RECORD ED BY THE AO AND IN THE STATEMENT THEY HAVE EXPLAINED THE MISTAKES IN RESPE CT OF SOME TRACTOR NUMBERS AND HAVE GIVEN CORRECT TRACTOR NUMBERS. THEREAFTER , THE AO SUSTAINED THE DISALLOWANCE IN THEIR HANDS AS UNDER: ITA NO.2106/AHD/2004 -6- I) SHRI DHIRUBHAI P. PATEL RS.17,820/-; II) SHRI RASIKLAL M. PATEL RS.14,280/-; III) SHRI RAMNIKBHAI M. PATEL RS.1,98,960/-; IV) SHRI PANKAJ R. PATEL RS.81,000/- THE REMAINING FOUR PERSONS, VIZ. SHRI KALURAM VALAR AM, KALPNATH YADAV, KANARAM DEVARAM AND PREMARAM PUNARAM COULD NOT BE P RODUCED AND IN THEIR CASE THE ENTIRE AMOUNT WAS DISALLOWED AS UNDER: I) SHRI KALURAM VALARAM RS.5,52,330/-; II) SHRI KALPNATH YADAV RS.3,38,400/-; III) SHRI KANARAM DEVARAM RS.7,09,180/-; IV) SHRI PREMARAM PUNARAM RS.6,75,220/- 10. FROM THE ABOVE, WE CAN DIVIDE THE TRANSPORTERS UNDER CONSIDERATION IN TWO CATEGORIES. IN THE FIRST CATEGORY FOUR PERSONS WHO WERE PRODUCED BEFORE THE AO AND IN WHOSE CASES, THE AO HIMSELF ACCEPTED THE PAYMENT OF TRACTOR BHADA PARTLY. IN THE SECOND CATEGORY ALSO THERE ARE FOU R PERSONS WHO WERE NOT PRODUCED BEFORE THE AO. 10.1 IN THE CASE OF SHRI DHIRUBHAI PRABHUDAS, THE A O HAS RECORDED THAT HE WAS PRODUCED BEFORE THE AO ALONG HIS IDENTITY IN TH E FORM OF HIS DRIVING LICENCE WITH PHOTO. IN HIS STATEMENT BEFORE THE AO HE STATED THAT DURING THE YEAR UNDER CONSIDERATION, HE CARRIED OUT THE CARTIN G WORK AMOUNTING TO RS.2,85,120/- AT VALLABHIPUR BRANCH CANAL SITE OF T HE ASSESSEE. HE HAS ALSO STATED THAT FOR THIS PURPOSE, HE HAD BORROWED SOME OF THE TRACTORS FROM DIFFERENT PERSONS OF HIS VILLAGE AND HE HAS FURNISHED THE DET AILS OF SUCH TRACTORS ALONG WITH REGISTRATION CERTIFICATE OF THESE VEHICLES. 10.2 SIMILARLY, SHRI RAMNIKBHAI M. PATEL APPEARED B EFORE THE AO AND PROVED HIS IDENTITY BY PRODUCING IDENTITY CARD ISSU ED BY THE ELECTION COMMISSION. HE ALSO PRODUCED THE REGISTRATION CERT IFICATE OF TRACTORS PLIED BY ITA NO.2106/AHD/2004 -7- HIM AT THE ASSESSEES SITE. HE CONFIRMED TO HAVE C ARRIED OUT THE TRACTOR CARTING WORK AMOUNTING TO RS.2,49,680/- FOR THE ASSESSEE. HE ALSO EXPLAINED THE DISCREPANCY IN REGISTRATION NUMBER MENTIONED IN THE BILLS ISSUED BY HIM. 10.3 SHRI RASIKLAL M. PATEL ALSO APPEARED BEFORE TH E AO AND PROVIDED HIS IDENTITY BY PRODUCING I-CARD ISSUED BY THE ELECTION COMMISSION. HE ALSO ADMITTED TO HAVE CARRIED OUT THE CARTING WORK AMOUN TING TO RS.2,49,620/- AT VALLABHIPUR BRANCH CANAL SITE OF THE ASSESSEE. HE FURNISHED THE REGISTRATION CERTIFICATE OF THE TRACTOR AND HE ALSO EXPLAINED TH E MISTAKE IN MENTIONING THE TRACTOR NUMBER. 10.4 SIMILARLY, SHRI PANKAJ R. PATEL ALSO APPEARED BEFORE THE AO AND PROVED HIS IDENTITY BY PRODUCING THE DRIVING LICENSE ISSUE D BY THE RTO. HE ALSO PRODUCED THE REGISTRATION CERTIFICATE OF THE TRACTO R AND ADMITTED TO HAVE CARRIED OUT THE WORK AMOUNTING TO RS.2,01,000/- FOR THE ASS ESSEE. 11. CONSIDERING THE ABOVE FACTS, IN OUR OPINION, IN THE CASE OF THE ABOVE FOUR PERSONS, THE ASSESSEE HAS DISCHARGED THE ONUS OF PR OVING THE EXPENDITURE INCURRED BY IT. ALL THE FOUR PERSONS HAVE ACCEPTED THAT THEY HAVE CARRIED OUT CARTING WORK FOR THE ASSESSEE. THEY HAVE ALSO EXPL AINED THE DISCREPANCY IN THE TRACTOR NUMBER AND ALSO PRODUCED THE CORRECT TRACTO R NUMBER. IN THE ABOVE CIRCUMSTANCES, IN OUR OPINION THERE WAS NO JUSTIFIC ATION FOR DISALLOWANCE OF CARTING EXPENSES PAID TO THESE FOUR PERSONS. ACCOR DINGLY, WE DELETE THE DISALLOWANCE IN RESPECT OF CARTING EXPENSES PAID TO SHRI DHIRUBHAI P. PATEL, RAMNIKBHAI PATEL, RASIKLAL PATEL AND PANKAJ R. PATE L. 12. NOW, WE COME TO FOUR PERSONS WHO WERE NOT PRODU CED BEFORE THE AO. THEY ARE KALURAM VALARAM, KAPNATH YADAV, KANARAM DE VARAM AND PREMARAM PUNARAM. WE FIND THAT SHRI KALURAM VALARAM HAS CLA IMED TO HAVE CARRIED OUT THE WORK WITH EIGHT TRACTORS, WHILE KALPNATH YADAV CLAIMED TO HAVE CARRIED OUT THE TRANSPORT WORK WITH THREE TRACTORS. SHRI KANAR AM DEVARAM WITH SIX TRACTORS AND PREMARAM PUNARAM ALSO CARRIED OUT WITH SIX TRAC TORS. THAT IN THE CASE OF ITA NO.2106/AHD/2004 -8- PREMARAM PUNARAM, KANARAM DEVARAM AND KALPNATH YADA V, ALL THE NUMBERS GIVEN BY THE ALLEGED TRANSPORT CONTRACTORS WERE NOT OF TRACTORS. IN THE CASE OF KALPANATH YADAV, OUT OF EIGHT VEHICLES, ONLY ONE WA S TRACTOR TROLLEY AND OTHER WERE TWO-WHEELERS OR THE CARS. THE ASSESSEE HAS CL AIMED THAT THERE COULD BE MISTAKE IN MENTIONING THE TRACTOR NUMBER. HOWEVER, IN OUR OPINION, THE MISTAKE MAY OCCUR WHILE WRITING THE NUMBERS OF ONE OF THE MANY VEHICLES. BUT IN THE CASE BEFORE US, OUT OF TWENTY-THREE VEHICLES , TWENTY-TWO VEHICLES WERE NOT TRACTORS. IT CANNOT BE ACCEPTED THAT THERE CAN BE MISTAKE WHILE WRITING VEHICLES NUMBERS IN RESPECT OF TWENTY-TWO OUT OF TH E TOTAL TWENTY-THREE VEHICLES. IN VIEW OF THE ABOVE FACTS, IN OUR OPIN ION, NO EVIDENTIARY VALUE CAN BE GIVEN TO THE TRANSPORT BILLS ISSUED BY THESE PER SONS. 13. NOW WE COME TO THE ASSESSEES CONTENTION THAT P AYMENTS WERE MADE BY ACCOUNT PAYEE CHEQUES. SINCE, THE BANK ACCOUNT OF EACH AND EVERY PERSON IS ALMOST SAME, WE HEREIN BELOW REPRODUCE THE FOLLOWIN G ACCOUNT OF SHRI KANARAM DEVARAM: KANARAM DEVARAM LAKHTARSIDE, SURENDRANAGAR C/O. BHAILALBHAI A. PATEL PH: 7412552 DATE DESCRIPTION CHEQUE NO. DEBIT RS. CREDIT RS. BA LANCE RS. OPENING BALANCE ... B/F 511.00 511.00 15/04/1999 BY TRANSF. 50000 PAY CASH 17213 50000 511.00 29/04/1999 BY TRANSF. 60000 BY CASH 17214 60000 511.00 07/06/1999 BY TRANSF. 100000 BY CASH 17215 100000 511.00 08/07/1999 BY TRANSF. 57289 BY CASH 17216 57289 511.00 15/07/1999 BY TRANSF. 50000 BY CASH 17217 50000 511.00 06/09/1999 INT.AUG/1999 14 525.00 16/10/1999 BY TRANSF. 20000 BY CASH 17218 20000 525.00 01/11/1999 BY TRANSF 35000 BY CASH 35000 515.00 12/11/1999 CHQ.BOOK 96 10 515.00 ITA NO.2106/AHD/2004 -9- CHARGE 24/11/1999 BY TRANSF. 50000 BY CASH 17220 50000 515.00 07/12/1999 BY TRANSF. 40000 BY CASH 30451 40000 515.00 21/12/1999 BY TRANSF. 75000 BY CASH 30452 75000 515.00 05/01/2000 BY TRANSF. 100000 BY CASH 30453 100000 515.00 01/03/2000 BY TRANSF. 100000 BY CASH 30454 100000 03/03/2000 INT.MAR.2000 14 529.00 31/03/2000 BY TRANSF. 64087 BY CASH 30455 64087.00 529.00 CLOSING BALANCE 529.00 801915.00 801915.00 TRANSACTIONS 14 15 FROM THE ABOVE, IT IS EVIDENT THAT IN THE BANK ACCO UNT HIS ADDRESS IS C/O OF THE ASSESSEE. AGAIN THE ABOVE ACCOUNT IS OPENED ON 15- 4-1999 BY A SUM OF RS.511/- AND ON THE SAME DAY, THERE WAS A DEPOSIT O F RS.50,000/- WHICH WAS WITHDRAWN BY CASH ON THE SAME DAY. THEREAFTER, EVE RY TIME, WHENEVER THERE WAS DEPOSIT OF CHEQUE, WHICH IS CLAIMED TO BE FOR T RANSPORTATION CHARGES, EQUAL AMOUNT IS WITHDRAWN BY CASH ON THE SAME DATE. ON 2 9-4-1999, RS.60,000/- WAS DEPOSITED AND RS.60,000/- WAS WITHDRAWN. ON 7- 6-1999 RS.1,00,000/- WAS DEPOSITED AND AN EQUAL AMOUNT WAS WITHDRAWN. ON 8 -7-1999, RS.57289/- WAS DEPOSITED AND THE SAME AMOUNT WAS WITHDRAWN. AT TH E END OF THE YEAR, HIS BALANCE WAS RS.529/- OF WHICH RS.511/- WAS THE DEPO SIT AT THE TIME OF OPENING OF THE ACCOUNT AND THE REMAINING AMOUNT WAS TOWARDS SOME INTEREST CREDITED BY THE BANK. CONSIDERING THIS POSITION OF THE ACCOUNT , THE ONLY INFERENCE CAN BE DRAWN IS THAT THE PAYMENT IS MADE BY CHEQUE JUST TO CREATE THE EVIDENCE OF PAYMENT OF TRACTOR BADA BY CHEQUE. IT IS A SETTLED LAW THAT THE ONUS IS UP ON THE ASSESSEE TO ESTABLISH THAT THE CLAIM OF EXPENDITURE IS GENUINE AND THE SAME WAS INCURRED FOR THE PURPOSE OF BUSINESS. ON THE FACTS OF THE ASSESSEES CASE, WE ARE OF THE OPINION THAT THE ASSESSEE WAS UNABLE TO ESTA BLISH EITHER THE GENUINENESS OF THE EXPENDITURE OR THAT THE EXPENDITURE WAS INCU RRED FOR THE PURPOSE OF BUSINESS IN RESPECT OF THE ABOVE FOUR ALLEGE D TRANSPORTERS. THEREFORE, IN OUR OPINION, DISALLOWANCE OF RS.22,07,210/- CL AIMED TO HAVE BEEN PAID ITA NO.2106/AHD/2004 -10- TO S/SHRI KALURAM VALARAM, KALPNATH YADAV, KANARAM DEVARAM AND PREMARAM PUNARAM WAS FULLY JUSTIFIED. 14. BEFORE WE PART WITH THE MATTER, WE MAY MENTION THAT THE LEARNED DR HAS RELIED UPON THE DECISION OF ITAT BENCH IN THE CASE OF M/S.POINEER CONSTRUCTION. THE LEARNED COUNSEL FOR THE ASSESSEE TRIED TO DISTINGUISH THE SAME BY POINTING OUT THAT IN THE ABOVE CASE, THE AM OUNT PAYABLE TO THE ALLEGED TRANSPORTER WAS OUTSTANDING AND THE TRANSPORTERS WE RE ALSO DIFFERENT THAN THE TRANSPORTER IN THE CASE UNDER CONSIDERATION. WE AG REE WITH THE LEARNED COUNSEL THAT THE DECISION OF OTHER ASSESSEE GIVEN BY THE IT AT ON THE FACTS OF THE SAID CASE CANNOT BE APPLIED PER SE IN THE INSTANT CASE UNLESS THE FACTS ARE IDENTICAL . HOWEVER, CONSIDERING THE FACTS OF THE ASSESSEES CA SE INDEPENDENTLY, WE ARE OF THE OPINION THAT OUT OF THE DISALLOWANCE OF RS.25,1 9,270/- BY THE AO WHICH IS ALSO SUSTAINED BY THE CIT(A), IN OUR OPINION, ONLY DISALLOWANCE OF RS.22,07,210/- IS REQUIRED TO BE DELETED. WE THERE FORE SUSTAIN THE DISALLOWANCE AT RS.22,07,210/- 15. NEXT GROUND REGARDING CHARGING OF INTEREST UNDE R SECTION 234B AND 234C OF THE ACT, BOTH THE PARTIES AGREED THAT THE SAME IS C ONSEQUENTIAL IN NATURE. IN VIEW OF THIS, WE DIRECT THE AO TO CHARGE INTEREST UNDER SEC TION 234B AND 234C OF THE ACT AFTER FINAL DETERMINATION OF THE INCOME AS PER OUR ABOVE ORDER. 16. THE LAST GROUND REGARDING INITIATION OF PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT AND ADJUDICATION THEREOF IS PR EMATURE AT THIS STAGE, AND THEREFORE, THE SAME IS DISMISSED. 17. IN RESULT, ASSESSEES APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 26 TH NOVEMBER, 2010. SD/- SD/- (T.K. SHARMA) JUDICIAL MEMBER (G.D. AGARWAL) VICE-PRESIDENT PLACE : AHMEDABAD DATE : 26-11-2010 ITA NO.2106/AHD/2004 -11- COPY OF THE ORDER FORWARDED TO: 1) : APPELLANT 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR, ITAT. BY ORDER DR/AR, ITAT, AHMEDABAD