ITO, New Delhi V. M/s J.R.R. Construction Pvt. Ltd., New Delhi

ITA 2250/DEL/2011

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 3449 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-07-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2007-2008
• Appeal Filed On: 05-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SALIL MISHRA
• Keywords: Income from undisclosed sources; Additional evidence
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH D DELHI) BEFORE SHRI G.E. VEERABHADRAPPA, HONBLE VICE PRESIDENT AND SHRI A.D. JAIN, JUDICIAL MEMBER ITA NO. 2250(DEL)2011 ASSESSMENT YEAR: 2007-08 INCOME TAX OFFICER, M/S. J.R.R. CONSTRUCTION PVT. LTD., WARD 4(1), NEW DELHI. V. PRAKRITI APARTME NTS,SEC.6, DWARKA, NEW DELHI-110075. (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI SALIL MISHRA, DR RESPONDENT BY: SHRI R,.S. SINGHVI, CA ORDER PER A.D. JAIN, J.M. THIS IS DEPARTMENTS APPEAL FOR ASSESSMENT YEAR 200 7-08, TAKING THE FOLLOWING EFFECTIVE GROUNDS: 1. THE ORDER OF THE LD. CIT(A) IS ERRONEOUS AND CO NTRARY TO THE FACTS AND LAW. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) HAS ERRED IN RESTRICTING THE ADDITION U/S 68 OF THE ACT TO ` 9,99,389/- AS AGAINST ` 28,91,389/- MADE BY THE AO BEING THE UNCONFIRMED UNSECURED LOANS. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN DELETING THE ADDITION O F ` 2,00,000/- MADE ON ACCOUNT OF LABOUR AND WAGES CHARGES. ITA 2250(DEL)2011 2 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN DELETING THE ADDITION O F ` 6,90,518/- MADE ON ACCOUNT OF DIESEL EXPENSES. 2. GROUND NO.1 IS GENERAL. 3. APROPOS GROUND NO.2, THE AO MADE ADDITION OF ` 28,91,389/- U/S 68 OF THE INCOME TAX ACT, ON ACCOUNT OF UNSECURED LOAN S. IT WAS OBSERVED THAT THE TOTAL DEPOSITS WERE OF ` 30,41,389/-. THE DEPOSIT OF ` 1,50,000/-, PERTAINING TO SHRI JASVIR SINGH WAS ALLOWED. IT WA S OBSERVED THAT THE ASSESSEE COMPANY HAD NOT BEEN ABLE TO DISCHARGE ITS ONUS OF PROVING THE GENUINENESS OF LOANS RECEIVED DURING THE YEAR. 4. BY VIRTUE OF THE IMPUGNED ORDER, THE LEARNED CIT (A) RESTRICTED THE ADDITION TO ` 9,99,389/-. THIS BRINGS THE DEPARTMENT BEFORE US BY WAY OF GROUND NO.2. 5. THE LEARNED DR HAS CONTENDED THAT THE LD. CIT(A) HAS ERRED IN RESTRICTING THE ADDITION FROM ` 28,91,389/- TO ` 9,99,389/-, IGNORING THE CATEGORICAL FINDINGS RECORDED BY THE AO; THAT THE LD. CIT(A) HAS ALSO IGNORED THE FACT THAT THE ASSESSEE FAILED TO DISCHA RGE THE ONUS OF PROVING THE CREDIT WORTHINESS OF THE CREDITORS AND THE GENUINEN ESS OF THE TRANSACTION; AND ITA 2250(DEL)2011 3 THAT THE LD. CIT(A) HAS FURTHER ERRED IN ACCEPTING THE ADDITIONAL EVIDENCE AT THE BACK OF THE AO. 6. THE LEARNED COUNSEL FOR THE ASSESSEE, ON THE OTH ER HAND, HAS STRONGLY RELIED ON THE IMPUGNED ORDER. IT HAS BEEN SUBMITTE D THAT THE LOANS HAD BEEN RECEIVED FROM EITHER THE EXISTING DEPOSITORS OR DIR ECTORS; THAT THE ASSESSEE, BY FILING COMPLETE DETAILS, HAD DULY DISCHARGED ITS ONUS OF PROVING THE IDENTITY AND CREDIT-WORTHINESS OF THE CREDITORS AS WELL AS THE GENUINENESS OF THE TRANSACTIONS; THAT THE ASSESSEE HAD FURNISHED T HE CONFIRMATION LETTERS, ASSESSMENT PARTICULARS INCLUDING PAN AND BANK STATE MENTS TO SHOW THAT THE PAYMENTS HAD BEEN MADE THROUGH BANKING CHANNELS IN RESPECT OF RAJBIR SINGH, JASVIR SINGH, SUNIL GUPTA, SUNAINA YADAV AND SARUP SINGH; THAT RAJBIR SINGH AND JASVIR SINGH WERE EXISTING DIRECTO RS AND HAD ADVANCED LOANS TO THE ASSESSEE COMPANY IN THE EARLIER YEAR A LSO; THAT THE BANK STATEMENTS REFLECTED THE GENUINENESS OF THE TRANSAC TIONS; THAT HOWEVER, THE AO DID NOT CARRY OUT ANY FURTHER INVESTIGATION, NOR WAS IT PROVED THAT THE MONEY HAD FLOWED FROM THE COFFERS OF THE ASSESSEE A ND WAS PLOUGHED BACK TO THE AO; AND THAT THE DEPARTMENTS OBJECTION REGA RDING ADDITIONAL EVIDENCE HAVING BEEN ENTERTAINED BY THE LD. CIT(A) AT THE BACK OF THE AO IS INCORRECT, SINCE ALL THE CONCERNED EVIDENCES WERE P LACED BEFORE THE AO AND THE CIT(A). ITA 2250(DEL)2011 4 7. IN THIS REGARD, THE ASSESSEE HAD RAISED FREE UNS ECURED LOANS OF ` 30,41,389/- FROM 12 CREDITORS DURING THE YEAR. LO AN OF ` 1,50,000/- FROM ONE CREDITOR WAS BY THE AO TO HAVE SATISFACTORILY E XPLAINED. THE AO THUS MADE ADDITION OF THE BALANCE AMOUNT OF ` 28,91,389/- FROM 11 CREDITORS, TREATING THE SAME TO BE THE ASSESSEES INCOME FROM UNDISCLOSED SOURCES. THE LD. CIT(A) FOUND THE LOANS TO THE TUNE OF ` 18,92,000/- TO BE SATISFACTORILY EXPLAINED BY THE ASSESSEE COMPANY. THESE LOANS COMPRISED ` 1,00,000/- FROM RAJBIR SINGH, ` 6,45,000/- FROM JASVIR SINGH, ` 1,00,000/- FROM SUNIL GUPTA, ` 5 0,000/- FROM MS.SUNAINA YADAV AND ` 9,97,000/- FROM SARUP SINGH. THE ASSESSEE HAD FURNISHED THE PANS OF THESE CREDITORS, THEREBY FIXING THEIR IDENTITY. RAJBIR SINGH AND J ASVIR SINGH WERE EXISTING DIRECTORS OF THE ASSESSEE COMPANY. THEY HAD ADVAN CED LOANS TO THE ASSESSEE COMPANY IN THE PRECEDING YEAR TOO. BESIDE S, BANK STATEMENTS IN THE SHAPE OF BANK ACCOUNTS OF THE RESPECTIVE LOAN CREDI TORS WERE FURNISHED. THEY REFLECTED THE TRANSACTIONS TO HAVE BEEN CARRIE D OUT THROUGH BANKING CHANNELS. THE CREDIT-WORTHINESS OF THE CREDITORS WAS DULY ESTABLISHED. THEY HAD SUFFICIENT FUNDS TO MAKE THE INVESTMENT AN D TO ADVANCE LOANS. ITA 2250(DEL)2011 5 THESE INVESTMENTS/LOANS STOOD DULY DISCLOSED IN THE BALANCE SHEET. THIS APART, THE ASSESSEE HAD FILED CONFIRMATION LETTERS, WHEREIN THE DETAILS OF PERMANENT ACCOUNT NUMBERS WERE GIVEN. HOWEVER, THE AO DID NOT DEEM IT FIT TO CARRY OUT ANY FURTHER ENQUIRY TO VERIFY THE LOANS. NO MATERIAL WAS BROUGHT ON RECORD THAT THE MONEY ACTUALLY BELONGED TO THE ASSESSEE ITSELF AND HAD BEEN DISGUISED AS LOANS RECEIVED. THERE WAS, AS SUCH, NO REASON FOR THE AO TO CONCLUDE THAT THESE LOANS REMAINED UNEXPLAINE D. 8. APROPOS THE GRIEVANCE OF THE DEPARTMENT THAT THE LD. CIT(A) ADMITTED ADDITIONAL EVIDENCE WITHOUT CONFRONTING IT TO THE A O, THE ALLEGED FACTUM OF SUCH ADMISSION OF ADDITIONAL EVIDENCE BY THE LD. CI T(A) IS NOT BORNE OUT FROM THE IMPUGNED ORDER. RATHER, IN PARA 4.5 AT PA GE 8 OF THE ORDER UNDER APPEAL, THE LAST SENTENCE READS AS FOLLOWS:- NEEDLESS TO MENTION THE EVIDENCES IN SUPPORT OF TH E IMPUGNED LOANS WERE MADE AVAILABLE BY THE ASSESSEE DURING THE ASSESSMENT AND APPELLATE PROCEEDINGS, ON THE BASIS OF WHICH IT CAN BE CONCLUDED THAT THE AFOREMENTIONED LENDERS HAD SUFFICIENT FUNDS TO MAKE THE INVESTMENT AND TO ADVANCE LOANS AND THOSE INVESTMEN TS/LOANS HAVE BEEN DULY DISCLOSED IN ITS BALANCE SHEET. (EMPHASI S SUPPLIED). THERE IS, THEREFORE, NO FORCE IN THIS CONTENTION OF THE DEPARTMENT. 9. IN THE ABOVE FACTS, THE FINDINGS OF FACT RECORDE D BY THE LD. CIT(A) ARE UNASSAILABLE AND ARE CONFIRMED AS SUCH. ACCORDING LY, GROUND NO.2 IS REJECTED. ITA 2250(DEL)2011 6 10. TURNING TO GROUND NOS. 3&4, THE AO MADE ADDITIO NS OF ` 2,00,000/- ON ACCOUNT OF LABOUR AND WAGES CHARGES AND ` 6,90,518/- ON ACCOUNT OF DIESEL EXPENSES, RESPECTIVELY. APROPOS THE LABOUR AND WAGES CHARGES, THE AO OBSERVED THAT THE ASSESSEE HAD CLAIMED AN AMOUNT OF ` 36,89,650/-. THE DISALLOWANCE WAS MADE, OBSERVING THAT CONSIDERING THE NATURE OF BUSINESS, FREQUENT AND TEMPORARY ENGAGEMENT OF THE LABOUR AND VOLUME OF LABOUR & WAGES PAID A LUMP SUM AMOUNT OF ` 2,00,000/- OUT OF LABOUR & WAGES IS DISALLOWED AND ADDED TO THE INCOME OF THE ASSESSEE. 11. SOFAR AS REGARDS THE DIESEL EXPENSES, IT WAS O BSERVED THAT DURING THE YEAR, DIESEL EXPENSES INCURRED WERE OF ` 1,38,10,376/-, AS COMPARED TO THE EARLIER YEAR EXPENSES OF ` 65,04,559/-; THAT THOUGH THE GROSS RECEIPTS OF THE ASSESSEE HAD INCREASED BY 55% FROM ` 3,75,79,896/- TO ` 5,83,26,894/-, THE DIESEL EXPENSES HAD INCREASED BY 112% FROM ` 65,04,559/- TO ` 1,38,10,376/-; THAT THE ASSESSEE HAD TAKEN THE STAN D THAT THE DIESEL CONCERNED BY THE COMPANY DURING THE YEAR WAS HIGHER THAN THAT CONCERNED IN THE EARLIER YEAR DUE TO THE PRODUCTION ON USING AGGREGATE MATER IAL FROM LEGAL ITA 2250(DEL)2011 7 MARKET/MINES BY THE CONCERNED DEPARTMENTS, DUE TO W HICH, THE AGGREGATE WAS TO BE PURCHASED FROM CHATTERPUR, KHAJURAHO, SAT NA, ETC. , WHICH WERE FAR AWAY FROM THE SITES AND THAT ALSO, DIESEL RATES HAD INCREASED IN THAT FINANCIAL YEAR; AND THAT THE REPLY OF THE ASSESSEE NOTWITHSTANDING, KEEPING IN VIEW THE NATURE OF ASSESSEES BUSINESS AND IN THE A BSENCE OF FURTHER DETAILS, 5% OF THE CLAIMED EXPENSES, AMOUNTING TO ` 6,90,518/-, WAS BEING DISALLOWED AS UNREASONABLE. 12. THE LD. CIT(A) DELETED BOTH THESE ADDITIONS, WH ICH IS WHY GROUND NOS. 3&4 HAVE BEEN RAISED BY THE DEPARTMENT. 13. THE LD. DR HAS CONTENDED THAT THE LD. CIT(A) HA S ERRED IN DELETING THESE ADDITIONS; THAT WHILE DOING SO, THE LD. CIT(A ) HAS FAILED TO CONSIDER THAT THE ASSESSEE DID NOT FURNISH NECESSARY DOCUMEN TS TO SUBSTANTIATE ITS CLAIM OF EITHER LABOUR AND WAGES CHARGES OR DIESEL EXPENSES BEFORE THE AO. 14. THE LEARNED COUNSEL FOR THE ASSESSEE, ON THE OT HER HAND, SUPPORTING THE IMPUGNED ORDER, HAS CONTENDED THAT BOTH THESE ADDIT IONS HAVE CORRECTLY BEEN DELETED SINCE THE ENTIRE DETAILS WERE DULY FURNISHE D BY THE ASSESSEE AND THERE WAS NOTHING AVAILABLE WITH THE AO TO MAKE THE DISAL LOWANCES/ADDITIONS. 15. APROPOS THE LABOUR AND WAGES CHARGES, INDEED, T HE ASSESSMENT ORDER DOES NOT EVINCE ANY MATERIAL HAVING BEEN AVAILABLE WITH THE AO, WHICH ITA 2250(DEL)2011 8 COULD HAVE FORMED THE BASIS OF THE DISALLOWANCE OF ` 2,00,000/-, AS MADE BY THE AO. THE ACCOUNTS OF THE ASSESSEE WERE NOT FOU ND TO BE DISCREPANT IN ANY MANNER. IT WAS ALSO NOT THE AOS CASE THAT TH E LABOUR AND WAGES EXPENSES HAD NOT BEEN INCURRED BY THE ASSESSEE FOR ITS BUSINESS PURPOSES. THE AO, FURTHER, DID NOT GIVE ANY REASON FOR MAKING THE ESTIMATED DISALLOWANCE OF ` 2,00,000/-. IT WAS MADE JUST ON THE BASIS OF THE N ATURE OF THE BUSINESS OF THE ASSESSEE AND THE FREQUENCY AND TEMPORARY NATURE OF ENGAGEMENTS OF THE LABOUR AND THE VOLUME OF WAGES A ND LABOUR PAID. THIS, TO OUR MIND, AS CORRECTLY OBSERVED BY THE LD. CIT(A), IS NO BASIS TO MAKE AN ESTIMATED ADDITION. 16. THE SAME REMAINS THE POSITION WITH REGARD TO TH E DIESEL EXPENSES ALSO. HERE TOO, THE AO DID NOT HAVE WITH HIM, ANY EVIDENCE OR MATERIAL FOR MAKING THE DISALLOWANCE. NO DISCREPANCY WHATSOEVER WAS FOUND IN THE ACCOUNTS OF THE ASSESSEE. THE EXPENSES WERE NOT F OUND TO HAVE BEEN INCURRED FOR PURPOSES OTHER THAN THE BUSINESS PURPO SES OF THE ASSESSEE. 17. IN VIEW OF THE ABOVE, NO FORCE IS FOUND IN GROU ND NOS. 3&4 ALSO AND THE SAME ARE REJECTED TOO. 18. IN THE RESULT, THE APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 22..07.2011. ITA 2250(DEL)2011 9 SD/- SD/- (G.E. VEERABHADRAPPA) (A.D. JAIN) VICE PRESIDENT JUDICIAL MEMBER DATED: 22.07.2011 *RM COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR TRUE COPY BY ORDER DEPUTY REGISTRAR.