ITO, RAJSAMAND V. M/s. Bherunath Mienrals, RAJSAMAND

ITA 215/JODH/2014

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 82940 (ITAT-JODHPUR)
• Duration Of Justice: 5 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-09-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 07-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N A JOSHI
• Assessee Lawyers: U C JAIN SHRI GAUTAM BAID
• Keywords: Unexplained cash credit; Corroborative evidences
• Section: 194C; 139; 68

Judgement Text

IN THE INCOME TAX APPELALTE TRIBUNAL : JODHPUR BENCH : JODHPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.K. SAINI, ACCOUNTANT MEMBER. ITA NO. 215 /JODH/2014 (A.Y. 200 9 - 1 0 ) ITO, WARD - 1, RAJASMAND. VS. M/S. BHERUNATH MINERALS, KELWA, RAJASMAND. (APPELLANT) PAN NO. AAF IB 2367 D (RESPONDENT) ASSESSEE BY : SHRI U.C. JAIN , SHRI GAUTAM BAID & SHRI RAJENDRA JAIN. DEPARTMENT BY : SHRI N.A. JOSHI - D.R. DATE OF HEARING : 06 / 0 8 /201 4 . DATE OF PRONOUNCEMENT : 09 /0 9 /201 4 . O R D E R PER N.K. SAINI, A.M TH IS IS AN APPEAL BY THE DEPARTMENT AGAINST THE ORDER DATED 1 5/0 1 /201 4 OF L D . CIT(A), UDAIPUR . THE FOLLOWING GROUNDS HAVE BEEN RAISED IN THIS APPEAL: ON THE FACTS AND IN THE PRESENT CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED: - 2 1. DELETING THE ADDITION MADE ON ACCOUNT OF DISALLOWANCE OF JCB OF RS. 11,89,000/ - U/S. 40(A)(IA) OF THE I.T. ACT WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE HAS FAILED TO DEDUCT TDS AT THE TIME OF PAYMENT /CREDIT OF THE EXPENSES TOWARDS JCB. 2. DELETING THE ADDITION MADE ON ACCOUNT OF DISALLOWANCE OUT OF COMMISSIONER EXPENSES OF RS. 50,000/ - WITHOUT APPRECIA TING THE FACT THAT THESE EXPENSES HAVE BEEN DEBITED THROUGH INTERNALLY PREPAID VOUCHERS AND NO SUPPORTING EVIDENCES HAVE BEEN FURNISHED AS TO FOR WHAT PURPOSE OF COMMISSION HAS BEEN PAID. 3. DELETING THE ADDITION MADE ON ACCOUNT OF UNEXPLAINED CASH CREDIT OF RS. 72,600/ - U/S. 68 OF THE I.T. ACT WITHOUT APPRECIATING THE FACT THAT THE CREDITWORTHINESS OF THE CREDITORS AND GENUINENESS OF TRANSACTIONS HAVE NOT BEEN PROVED BY THE ASSESSEE. 2 VIDE GROUND NO. 1, THE GRIEVANCE OF THE DEPA RTMENT RELATES TO THE DELETION OF ADDITION OF RS. 11,89,000/ - MADE BY THE ASSESSING OFFICER U/S. 40(A)(IA) OF THE I.T. ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT IN SHORT) . 3. FACTS RELATING TO THIS ISSUE, IN BRIEF, ARE THAT THE DURING THE COURSE OF ASSESSMENT PROCEEDINGS , THE ASSESSING OFFICER WHILE GOING THROUGH THE TRADING ACCOUNT NOTICED THAT THE ASSESSEE HAD CLAIMED AN EXPENDITURE OF RS. 11,89,000/ - ON ACCOUNT OF JCB CHARGES FOR HIRING CLAIMED TO HAVE BEEN PAID FOR MINING, PLOT CUTTING AND WAST AGE REMOVAL WORK TO M/S. DWARKESH ENTERPRISES PVT. LTD. RS. 3,04, 4 00/ - AND TO M/S. S.K. DIAMOND LTD. RS. 8,84,600/ - . THE ASSESSING OFFICER WAS OF THE VIEW THAT THESE EXPENSES WERE IN THE NATURE OF CONTRACT WORK COVERED U/S. 194C OF THE 3 ACT . HE REQUIRED THE ASSESSEE TO SHOW CAUSE AS TO WHY THE ENTIRE AMOUNT OF THE EXPENSES AMOUNTING TO RS. 11,89,000/ - SHOULD NOT BE DISALLOWED U/S. 40(A)(IA) OF THE ACT . IN RESPONSE, THE ASSESSEE SUBMITTED THAT THE JC B EXPENSES WERE INCURRED PURELY FOR MINI NG WORK I.E. EARTHMOVING JOB, WHICH WAS NOT A WORK AS DEFINED U/S. 194C OF THE ACT. HOWEVER, THE ASSESSING OFFICER DID NOT FIND MERIT IN THE SUBMISSIONS OF THE ASSESSEE AND MADE THE ADDITION. 4. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) , WHO DELET ED THE ADDITION BY OBSERVING THAT THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT WERE APPLICABLE ONLY TO SUCH EXPENDITURE WHICH REMAINED PAYABLE ON THE LAST DATE OF THE RELEVANT PREVIOUS YEAR. HE ALSO MENTIONED THAT THE ASSESSING OFFI CER IN HIS REMAND REPORT HAD STATED THAT NO PAYMENT WAS OUTSTANDING AS ON 31/03/2009 AND THE ENTIRE PAYMENTS ON ACCOUNT OF JCB CHARGES WERE PAID BEFORE 31/03/2009. NOW THE DEPARTMENT IS IN APPEAL. 5. LEARNED D.R. STRONGLY SUPPORTED THE ORDER OF THE ASSESSING OFFICER WHILE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND RELIED THE OBSERVATIONS MADE BY THE LD. CIT(A). 4 6 . WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH TH E PARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. IN THE PRESENT CASE, IT IS NOTICED THAT NO TDS WAS OUTSTANDING AND PAYABLE AT THE TIME OF THE DUE DATE OF FILING THE RETURN U/S. 139(1) OF THE ACT. IT IS ALSO NOTICED THAT A PROVISO T O SUB - CLAUSE (IA) OF CLAUSE (A) TO SECTION 40 OF THE ACT HAS BEEN SUBSTITUTED BY THE FINANCE ACT, 2010 AND READ AS UNDER: - ( IA ) ANY INTEREST, COMMISSION OR BROKERAGE, [RENT, ROYALTY,] FEES FOR PROFESSIONAL SERVICES OR FEES FOR TECHNICAL SERVICES PAYABLE TO A RESIDENT, OR AMOUNTS PAYABLE TO A CONTRACTOR OR SUB - CONTRACTOR, BEING RESIDENT, FOR CARRYING OUT ANY WORK (INCLUDING SUPPL Y OF LABOUR FOR CARRYING OUT ANY WORK), ON WHICH TAX IS DEDUCTIBLE AT SOURCE UNDER CHAPTER XVII - B AND SUCH TAX HAS NOT BEEN DEDUCTED OR, AFTER DEDUCTION, [HAS NOT BEEN PAID ON OR BEFORE THE DUE DATE SPECIFIED IN SUB - SECTION (1) OF SECTION 139 :] [ PROVIDED THAT WHERE IN RESPECT OF ANY SUCH SUM, TAX HAS BEEN DE DUCTED IN ANY SUBSEQUENT YEAR, OR HAS BEEN DEDUCTED DURING THE PREVIOUS YEAR BUT PAID AFTER THE DUE DATE SPECIFIED IN SUB - SECTION (1) OF SECTION 139 , SUCH SUM SHALL BE ALLOWED AS A DEDUCTION IN COMPUTING THE INCOME OF THE PREVIOUS YEAR IN WHICH SUCH TAX HAS BEEN PAID . ] ALTHOUGH , THE SAID PROVISO IS SUBSTITUT ED W.E.F. 01/04/2010, HOWEVER, THE ITAT MUMBAI BENCH C IN THE CASE OF PIYUSH C. MEHTA VS. ACIT (SUPRA) BY FOLLOWING THE ORDER OF THE HON'BLE CALCUTTA HIGH COURT IN I.T.A.NO. 302/2011 GA 3200/2011 HAS HELD THAT THE AMENDMENT TO THE PROVISIONS OF SECTION 4 0(A)(IA) OF THE ACT IS RETROSPECTIVE W.E.F. 01/04/2005. IN THE PRESENT CASE, THE LD. CIT(A) WAS ALSO OF THE SAME VIEW WHILE DELETING THE DISALLOWANCE MADE BY THE ASSESSING OFFICER. WE 5 THEREFORE, BY FOLLOWING THE DECISION OF THE COORDINATE BENCH I.E. ITAT MUMBAI, IN THE CASE OF PIYUSH C. MEHTA VS. ACIT (SUPRA), DO NOT SEE ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A) ON THIS ISSUE. ACCORDINGLY, WE DO NOT SEE ANY MERIT IN THE APPEAL OF THE DEPARTMENT ON THIS ISSUE. 7 . NEXT ISSUE VIDE GROUND NO. 2 RELATES TO THE DELETION OF ADDITION OF RS. 50,000/ - MADE BY THE ASSESSING OFFICER OUT OF COMMISSION EXPENSES. 8 . FACTS RELATING TO THIS ISSUE, IN BRIEF, ARE THAT THE ASSESSEE CLAIMED EXPENSES OF RS. 89,300/ - UNDER THE HEAD COMMISSION. THE ASSESSING OF FICER WAS OF THE VIEW THAT THOSE EXPENSES WERE INCURRED IN CASH ON THE BASIS OF INTERNAL VOUCHERS . HE THEREFORE, DISALLOWED RS. 50,000/ - OUT OF THOSE EXPENSES. 9 . BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) AND SUBMITTED AS UNDER: - ' IN THIS CONNECTION, IT IS SUBMITTED THAT THE EXPENSES CLAIMED ARE VERY NOMINAL AND REASONABLE LOOKING TO THE SIZE AND NATURE OF THE BUSINESS. A BARE PERUSAL OF QUANTUM OF SUCH EXPENSES REVEALS THAT THE SAME CANNOT BE SAID AS EXCESSIVE OR UNREASONABLE. THE SAME ARE COMPARABLE FROM THE PRECEDING YEARS. THE ONLY CONTENTION OF THE ID. AO IS THAT SOME VOUCHERS ARE SELF MADE AND CASH PAYMENTS WERE MADE. IN THIS REGARD, IT IS SUBMITTED THAT SOME VOUCHERS ARE SELF GENERATED LOOKING TO NATURE OF EXPENSES AND SUC H PETTY EXPENSES WERE PAID IN CASH BUT THAT PER SE CANNOT BE REGARDED AS FALSE OR IMPROPER. 6 IN THIS VIEW OF MATTER, THE HUGE AD - HOC DISALLOWANCE OF RS.50000/ - WITHOUT ANY BASIS IS NOT WARRANTED.' 10 . THE LEARNED CIT(A), AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, OBSERVED THAT THE ASSESSING OFFICER MADE THE DISALLOWANCE WITHOUT PROVIDING OPPORTUNITY OF HEARING TO THE ASSESSEE AND IT WAS NOT THE CASE OF THE ASSESSING OFFICER THAT THE COMMISSION PAYMENT MADE IN THE PRECEDING ASSESSMENT YEARS WERE ALSO DISALLOWED. HE THEREFORE, BY CONSIDERING THE TURNOVER OF THE PROFIT RATE DECLARED ETC. BY THE ASSESSEE, DELETED THE DISALLOWANCE. NOW THE DEPARTMENT IS IN APPEAL. 11 . WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. IN THE PRESENT CASE, IT IS NOTICED THAT THE ASSESSING OFFICER DISALLOWED THE IMPUGNED AMOUNT WITHOUT ANY BASIS. HE DID NOT BRING ANY MATER IAL ON RECORD TO SUBSTANTIATE THAT THE EXPENSES WERE NOT INCURRED FOR THE BUSINESS PURPOSE. THEREFORE, THE DISALLOWANCE MADE BY THE ASSESSING OFFICER WAS RIGHTLY DELETED BY THE LD. CIT(A). WE DO NOT SEE ANY MERIT IN THIS GROUND OF THE DEPARTMENTAL APPEAL . 12. NEXT ISSUE VIDE GROUND NO. 3 RELATES TO THE DELETION OF ADDITION OF RS. 72,600/ - MADE BY THE ASSESSING OFFICER U/S. 68 OF THE ACT. 7 13 FACTS RELATING TO THIS ISSUE, IN BRIEF, ARE THAT THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS , NOTICED THAT THE ASSESSEE HAD INTRODUCED UNSECURED LOAN OF RS. 6,32,300/ - . IN SUPPORT OF THIS, THE ASSESSEE FILED THE CONFIRMATIONS AND AFFIDAVITS OF THE CREDITORS TO PROVE THE IDENTITY. THE ASSESSING OFFICER A S KED THE ASSESSEE TO PRODUCE ALL THE 12 CREDITORS. THE ASSESSEE PRODUCED 8 CREDITO R S AND FAILED TO PRODUCE THE REMAINING 4 CREDITORS NAMELY SHRI SAHABUDDIN S/O SHRI BANNYAKH RS. 19,800/ - , SHRI GULZAR KHAN S/O SHRI SUVAN KHAN RS. 16,000/ - , SHRI KUSHIR KHAN S/O SHRI HASIN KHAN RS. 17, 000/ - AND SHRI SHIV LAL S/O RUGA RAM RS. 19,800/ - . THE AMOUNT TOTALING TO RS. 72,600/ - DEPOSITED BY THEM WAS TREATED AS AN UNEXPLAINED AND ADDED TO THE INCOME OF THE ASSESSEE. 14 BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) AND SUBMITTED AS UNDER: - 'IN THIS CONNECTION, IT IS SUBMITTED THAT SUCH CASH CREDITS ARE PETTY IN NATURE AND ACCEPTING THE SAME IN CASH NEED NOT BE DOUBTED. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE HAD FURNISHED CONFIRMATIONS AND AFFIDAVITS OF THE CREDITORS, WHICH HAVE NOT BEEN DISBELIEVED BY THE ID. AO. IN THE SAID AFFIDAVITS, THE IDENTITY AND SOURCE WAS DULY GIVEN. IT WAS ALSO MENTIONED THAT THE SAME WERE REPAID IN THE SU BSEQUENT FINANCIAL YEAR AND AS SUCH, THE SAME REMAINS AS PROVED. 03. AS TO THE NON - PRODUCTION OF CREDITORS IN PERSON, IT IS SUBMITTED THAT OUT OF 12 SUCH CREDITORS, THE ASSESSEE COULD NOT PRESENT ONLY 4 CREDITORS THAT TOO FOR THE VALID REASONS. THE ASSESSE E HAD EXPRESSED SUCH INABILITY TO THE ID. AO IN PRODUCING THEM AS THEY HAD LEFT ELSEWHERE. THE AFFIDAVITS SWORN ON 8 OATH BY THE CREDITORS CLEARLY SHOW THAT THEY WERE RESIDING OUT OF RAJSAMAND AND SINCE THE AMOUNTS WERE PETTY AND HAVE ALREADY BEEN REPAID IN FULL, THEY MUST HAVE NOT ATTENDED. IT WAS BEYOND CONTROL OF THE APPELLANT - ASSESSEE TO COMPEL THEM FOR DOING SO. MOREOVER, THE MERE FACT THAT THE ASSESSEE COULD NOT PRODUCE THE CREDITORS BEFORE THE ID. AO COULD NOT BE DETRIMENTAL TO THE ASSESSEES CLAIM, WH ICH IS A SETTLED PROPOSITION OF LAW, ESPECIALLY WHEN THE ASSESSEE WAS ABLE TO FURNISH FULL IDENTITY OF THE CREDITORS. 04. SINCE THE REPAYMENT WAS MADE FROM THE KNOWN SOURCES, THERE IS NO QUESTION OF ANY UNEXPLAINED CREDITS. 05. IT IS FURTHER SUBMITTED THAT AS PER THE INDIAN EVIDENCE ACT, THE TRANSACTIONS APPEARING IN REGULAR BOOKS OF ACCOUNT SHOULD BE TREATED AS GENUINE UNLESS AND UNTIL THERE ARE CORROBORATIVE MATERIAL OR OTHER EVIDENCES TO REBUT THE SAME. IN LIGHT OF THE ABOVE, ADDITION MADE U/S 68 DESERVES TO BE DELETED. 15 THE LEARNED CIT(A), AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, OBSERVED THAT THE ASSESSEE HAD FILED THE CONFIRMATION AND AFFIDAVITS OF THE CREDITORS IN WHICH THEY HAVE CONFIRMED OF HAVING GIVEN THE AMOUNT TO THE ASSESSEE AND THE CREDIT CLAIMED IN THE NAMES OF FOUR CREDITORS HAD ALREADY BEEN SQUARED UP AND NO AMOUNT WAS OUTSTANDING. THE LD. CIT(A) WAS OF THE VIEW THAT MERELY ON THIS BASIS THAT THE ASSESSEE DID NOT PRODUCE THE CRED ITORS BEFORE THE ASSESSING OFFICER, THE CREDITORS COULD NOT BE TREATED AS UNEXPLAINED AND UNDISCLOSED INCOME OF THE ASSESSEE PARTICULARLY WHEN THERE WAS NO CORROBORATING EVIDENCE TO SUPPORT SUCH FINDINGS. HE ALSO OBSERVED THAT IT WAS NOT A CASE OF THE ASS ESSING OFFICER THAT HE CONDUCTED ENQUIRIES AND DURING THE COURSE OF 9 ENQUIRY, IT WAS FOUND THAT THE CREDITS CLAIMED IN THE NAME OF FOUR PERSONS WERE BOGUS AND THE ASSESSEE HAD ITSELF INTRODUCED ITS CONCEALED INCOME AS CREDIT IN THE NAME OF FOUR PERSONS. ACCORDINGLY, THE ADDITION MADE BY THE ASSESSING OFFICER WAS DELETED. NOW THE DEPARTMENT IS IN APPEAL. 16 LEARNED D.R. STRONGLY SUPPORTED THE ORDER OF THE ASSESSING OFFICER AND REITERATED THE OBSERVATIONS MADE IN THE ASSESSMENT ORDER. 17 IN HIS RIVAL SUBMISSIONS, LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE LD. CIT(A) AND STRONGLY SUPPORTED THE IMPUG N ED ORDER. 18 WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE MATERIAL A VAILABLE ON RECORD. IN THE PRESENT CASE, IT IS NOTICED THAT THE ASSESSING OFFICER HIMSELF ADMITTED THAT THE IDENTITY OF THE CREDITORS WERE PROVED. HE ALSO ACCEPTED EIGHT CREDITORS OUT OF 12 CREDITORS WHICH WERE PRODUCED BEFORE HIM HOWEVER, HE DID NOT MAKE ANY ENQUIRY IN RESPECT OF THOSE CREDITORS WHOM T HE ASSESSEE FAILED TO PRODUCE BEFORE THE ASSESSING OFFICER ALTHOUGH THE IDENTITY WAS NOT DOUBTED. WE THEREFORE, ARE OF THE VIEW THAT THE LD. CIT(A) RIGHTLY DELETED THE ADDITION WHEN THE CREDI TORS DISCLOSED THEIR PARTICULARS AND 10 CONFIRMED THAT THEY HAVE GIVEN LOAN TO THE ASSESSEE IN THEIR DULY SWORN E D AFFIDAVITS . ACCORDINGLY, WE DO NOT SEE ANY MERIT IN THIS GROUND OF THE DEPARTMENTAL APPEAL. 19 IN THE RESULT, APPEAL OF THE DEPARTMENT IS DISMISSED . ( ORDER PRONOUNCED IN THE COURT ON 09 TH SEPTEMBER , 201 4) . S D/ - SD/ - ( HARI OM MARATHA ) (N.K.SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 09 TH SEPTEMBER , 201 4 . VR/ - COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE LD. CIT 4. THE CIT(A) 5. THE D.R SR. PRIVATE SECRETARY , ITAT, JODHPUR .