Prakash Shipping Agencies, CHENNAI V. ITO NCR 12(3), CHENNAI

ITA 2295/CHNY/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 4340 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 4 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-02-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Assessment Year: 2014-2015
• Appeal Filed On: 19-09-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: M SRINIVASA RAO
• Assessee Lawyers: K BALASUBRAMAIAN
• Section: 40A(3); 142(1)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , D B ENCH, CHENNAI . . . , ., # BEFORE SHRI N.R.S.GANESAN, JUDICIAL MEMBER AND SHRI S.JAYARAMAN, ACCOUNTANT MEMBER / I.T.A. NO.2295/CHNY/2017 '' /ASSESSMENT YEAR : 2014-15 M/S.PRAKASH SHIPPING AGENCIES, 247, THAMBUCHETTY STREET, CHENNAI-600 0001. VS THE INCOME TAX OFFICER, NON-CORPORATE WARD-12(3) CHENNAI. PAN: AAEFP1257A ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MR. K.BALASUBRAMAIAN, ADVOCATE /RESPONDENT BY : MR.M.SRINIVASARAO, CIT /DATE OF HEARING : 06.02.2019 /DATE OF PRONOUNCEMENT : 11.02.2019 / O R D E R PER S.JAYARAMAN, AM: THE ASSESSEE FILED THIS APPEAL AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-13, CHENNAI, IN ITA NO. 106 /CIT(A)-13/2014-15 DATED 24.07.2017 FOR ASSESSMENT YEAR 2014-15. 2. M/S. PRAKASH SHIPPING AGENCIES, THE ASSESSEE, I S DOING BUSINESS IN THE LINE OF SHIPPING AGENCY. WHILE COMPLETING T HE ASSESSMENT FOR ASSESSMENT YEAR 2014-15, THE ASSESSING OFFICER MAD E DISALLOWANCE TOWARDS OPENING BALANCE INCLUDED TRANSPORT CHARGES, BROKERAGE 2 ITANO.2295/CHNY/2017 DIFFERENCE, CASH PAYMENTS MADE UNDER SECTION 40A(3) , OFF DOCK DUES AND DIFFERENCE BETWEEN BANK STATEMENT AND ACTUAL PA YMENTS MADE FOR TRANSPORT CHARGES. AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A), WHO DISMISSED THE APPEAL. AGGRIEVED AGAINS T THAT ORDER, THE ASSESSEE FILED THIS APPEAL WITH THE FOLLOWING GROUN DS:- 1.1 ORDER UNDER APPEAL IS ILLEGAL, VOID AND WITHOUT JURISDICTION IN AS MUCH AS THE CASE WAS SELECTED FOR LIMITED SCRUTINY FOR CHECKING 1)HIGHER T/O IN SERVICE TAX RET URN COMPARED TO ITR & 2) TAX CREDIT IN ITR IS LESS THAN TAX CREDIT IN 26A S AND ON BOTH THE ABOVE COUNTS THE A/O HAS SATISFIED AND NO ADDITION WAS MADE BUT SHE TRAVELLED BEYOND THE ABOVE MANDATE TO MAKE OTHER DISALLOWANCES NOT CONNECTED WITH THE ABOVE, DISREGA RDING BOARDS INSTRUCTION NO.20/2015. 1.2 CIT (A) ERRED IN CONFIRMING THE ABOVE ILLEGALIT Y FOR THE REASON THAT ASSESSEE HAS NOT RAISED IT AS GROUNDS OF APPEAL, WHILE GROUND NO.1 QUESTIONS THE ABOVE ILLEGALITY AND HE FURTHER ERRED IN NOT CONSIDERING THE BOARDS INSTRUCTIONS AND CASE LAWS BROUGHT TO H IS NOTICE. WITHOUT PREJUDICE TO THE ABOVE: 2. CIT (A) ERRED IN CONFIRMING DISALLOWANCE MADE U/ S 40A(3)OF RS.2,90,000 PAID TO TRUCK DRIVERS WHO INSIST ON CAS H PAYMENT AS THEY DO NOT HAVE BANK A/C IN THE PLACE WHERE CARGO IS DE LIVERED AND DUE TO BUSINESS EXIGENCIES SUCH LORRY HIRE ETC., HAVE TO B E PAID ON THE SPOT. HE ERRED IN RELYING ON RULE 6ABA WHICH REFERS TO AG GREGATE AVERAGE ADVANCES MADE BY RURAL BRANCH OF A SCHEDULE BANK. 3 UNDER A MISTAKEN IMPRESSION A/O ERRED IN DISALLOW ING RS.1,72,464/- TOWARDS DOCK DUES AND THE CIT (A) ERRED IN CONFIRMI NG THE SAME. 4. UNDER A MISTAKEN IMPRESSION A/O ERRED IN DISALLO WING RS.3,53,900/- UNDER TRANSPORT CHARGES AND THE CIT (A) ERRED IN CO NFIRMING THE SAME. 3. THE LD. AR PRESENTED THE CASE ON THE LINES OF GR OUNDS OF APPEAL EXTRACTED, SUPRA. INVITING OUR ATTENTION TO THE PRO FIT & LOSS ACCOUNT, THE 3 ITANO.2295/CHNY/2017 LD. AR POINTED OUT THAT THE SHIPPING EXPENSES RECOV ERED IN THE CREDIT SIDE WAS AT 2,02,29,034/-, WHILE THE SHIPPING AND HANDLING EXPE NSES SHIPPING EXPENSES RECOVERED (SIC) IN DEBIT SIDE WA S ALSO AT 2,02,29,034/-. THEREFORE, THE ASSESSEE HAS NOT INCU RRED ANY EXPENDITURE AND HENCE, THE DISALLOWANCES MADE BY TH E ASSESSING OFFICER ARE ALSO NOT SUSTAINABLE ON MERITS. 4. PER CONTRA, THE LD. DR INVITED OUR ATTENTION TO A PORTION OF THE ASSESSMENT ORDER WHICH IS EXTRACTED AS UNDER:- THE CASE WAS SELECTED UNDER LIMITED SCRUTINY AND T HE CASS REASON WAS AS UNDER:- 1. HIGHER TURNOVER REPORTED IN SERVICE TAX RETURN C OMPARED TO ITR 2. TAX CREDIT(AND RECEIPTS) IN ITR IS LESS THAN TAX CREDIT IN 26AS SHRI G. ANATHAN, FCA APPEARED AND FILED COPY OF AUD IT REPORT AND THE DETAILS CALLED FOR U/S 142(1) OF IT, ACT, 1961. THE ASSESSEE FURNISHED DETAILS OF REIMBURSABLE EXPENSES, DEBIT NOTE, IMPOR T, DEBIT NOTE EXPORT, SHIPPING AND HANDLING EXPENSES. THE ASSESSEE FURNIS HED RECONCILIATION OF SERVICE TAX RETURN AND ITR FOR THE FINANCIAL YEA R 2013-14 WHICH WAS ACCEPTED. AS REGARDS THE DIFFERENCE IN TAX CREDIT AND RECEIPT S ADMITTED IN LNCOME-TAX RETURN AND 26AS, THE ASSESSE E WAS ASKED TO FURNISH THE DOCUMENTARY EVIDENCES FOR THE DIFFER ENCES ALONG WITH THE COPY OF LEDGER ACCOUNTS, BILLS AND BANK ST ATEMENTS VIDE LETTER DATED 24.10.2016. THE ASSESSEE FURNISHED A WRITE-UP ON THE ACCOUNTING PROCEDURES IN WHICH IT WAS SUBMITTED AS UNDER: ..OUR SCOPE OF SERVICE IS, ON BEHALF OF OUR CUSTO MERS, TO GET THE CLEARANCE FROM CUSTOMS AND PORT FOR THE EXPORT/IMPORT CONSIGNMENTS, COORDINATE WITH VARIOUS OTHER SERVICE PROVIDERS.... THE MONEY RECEIVED FROM OUR CUSTOMERS FOR THE PURPOSE OF AFORESAID EXPENSES ARE NOT 4 ITANO.2295/CHNY/2017 OUR INCOME, NEITHER HAVE WE CLAIMED THEM AS OUR EXPENSES IN OUR BOOKS OF ACCOUNTS. HENCE THESE AMOUNTS ARE NOT SHOWN IN OUR P&L AS INCOME AND/OR EXPENDITURE. THE ASSESSEE FURNISHED DETAILS OF DEBIT NOTE AND IN VOICE RAISED DURING THE PERIOD ALONG WITH THE BILLS AND BANK STA TEMENT. THE NECESSARY DETAILS ON EXPENSES INCURRED WERE ALSO CA LLED FOR AND PERUSED WITH THE BANK STATEMENTS. ON PERUSAL OF THE DETAILS PRODUCED, THE ASSESSMENT IS COMPLETED AS UNDER: 1. THE ASSESSEE HAS FURNISHED THE LEDGER ACCOUNTS O F TRANSPORT CHARGES ALONG WITH THE BREAKUP. FROM THE DETAILS FILED, IT WAS FOUND THAT THE ASSESSEE HAS T AKEN THE OPENING BALANCES OF THE FOLLOWING TRANSPORT OPERATORS IN THE TOTAL TRANSPORT CHARGES PAID AND T HE HENCE THE SAME IS DISALIOWED. THE LD. DR SUBMITTED THAT THE SCRUTINY ASSESSMENT W AS DONE TO VERIFY THE TRANSACTIONS ON TWO ISSUES VIZ., 1) HIGHER TURN OVER REPORTED IN SERVICE TAX RETURN COMPARED TO ITR AND 2) TAX-CREDIT (AND RECEIPTS ) IN ITR IS LESS THAN TAX CREDIT IN 26AS. THE ASSESSING OFFICER EXAMINED AND ACCEPTED THE FIRST ISSUE. WITH REGARD TO THE SECOND ISSUE VIZ., TAX CREDIT (AND RECEIPTS) IN ITR IS LESS THAN TAX CREDIT IN 26 AS, THE ASSESSING OFFICER EXAMINED THE ISSUES IN DETAIL AS PER THE BO LDED PORTION EXTRACTED, SUPRA, AND MADE THE IMPUGNED DISALLOWANCES. THUS, T HE LD. D R SUBMITTED THAT THE ASSESSING OFFICER HAS EXAMINED THE ISSUES ON WHICH THE ASSESSMENT WAS TO BESCRUTINIZED BY HIM AND T HEREFORE, HE HAS NOT TRAVELLED BEYOND THE MANDATE OF THE SCRUTINY.WITH R EFERENCE TO THE LD. ARS CONTENTION THAT THE CREDIT IN THE PROFIT & LO SS ACCOUNT UNDER THE 5 ITANO.2295/CHNY/2017 HEAD SHIPPING EXPENSES RECOVERY AND THE DEBIT I N THE PROFIT & LOSS ACCOUNT UNDER THE HEAD SHIPPING AND HANDLING EXPE NSES SHIPPING EXPENSES RECOVERED (SIC) ARE NOT ASSESSEES INCOME AND EXPENDITURE DO NOT MERIT AS THESE TRANSACTIONS HAVE BEEN ENTERE D IN THE PROFIT & LOSS ACCOUNT AND CERTIFIED BY THE CHARTERED ACCOUNTANT T O BE THE ASSESSEES TRANSACTION WHICH ARE MATERIAL FOR DETERMINING ITS PROFIT & LOSS. WHEN THE RECEIPTS AND EXPENDITURES ARE BROUGHT WITHIN THE SC OPE OF THE PROFIT & LOSS ACCOUNT, NATURALLY THE ASSESSING OFFICER HAS J URISDICTION TO EXAMINE THE GENUINENESS OF THE INCOME ADMITTED AND THE CORR ESPONDING EXPENDITURES CLAIMED. FURTHER, HE INVITED OUR ATTEN TION TO THE COPY OF THE SAME PROFIT & LOSS ACCOUNT AND SUBMITTED THAT THE CORRESPONDING FIGURES OF THE EARLIER YEARS UNDER THE HEAD SH IPPING EXPENSES RECOVERY AND THE DEBIT IN THE PROFIT & LOSS ACCOU NT UNDER THE HEAD SHIPPING AND HANDLING EXPENSES SHIPPING EXPENSES RECOVERED (SIC) HAVE NOT BEEN PROPERLY GIVEN. SINCE THE IMPUGNED TR ANSACTIONS ARE FALLING WITHIN THE SCOPE OF THE SECOND ISSUES OF TH E SCRUTINY MANDATE, THE ASSESSING OFFICER HAS CORRECTLYASSUMED THE JURISDIC TION, EXAMINED THE IMPUGNED TRANSACTIONS AND MADE APPROPRIATE DISALLOW ANCES, WHICH WERE RIGHTLY CONFIRMED BY THE LD. CIT(A). IN VIEW OF THE ABOVE, THE LD. DRSUBMITTED THAT THERE IS NO MERIT IN THE ASSESSEE S APPEAL AND HENCE THE APPEAL MAY BE DISMISSED. 6 ITANO.2295/CHNY/2017 6. THE LD. AR SUBMITTED THAT WHILE EXAMINING THE D ISALLOWANCES, THE AO HAS INCLUDED OPENING AND CLOSING BALANCES OF CE RTAIN TRANSACTIONS AND HENCE THEY HAVE NOT BEEN PROPERLY VERIFIED, SO HE PLEADED THAT THE IMPUGNED ISSUES MAY BE REMITTED BACK TO THE ASSESS ING OFFICER FOR A FRESH EXAMINATION IN ACCORDANCE WITH LAW. 7. WE HAVE HEARD RIVAL SUBMISSIONS, GONE THROUGH R ELEVANT MATERIAL ON RECORD AND FIND MERIT IN THE SUBMISSIONS OF THE LD DR, SUPRA. IT IS CLEAR FROM THE ASSESSMENT ORDER, AS EXTRACTED ABOVE , THAT THE ASSESSING OFFICER UNDERTOOK SCRUTINY TO EXAMINE THE ASPECTS F ALLING UNDER TAX CREDIT (AND RECEIPTS) IN ITR IS LESS THAN TAX CRED IT IN 26AS. WHILE DOING SO, HE HAS MADE THE IMPUGNED DISALLOWANCES AND HE NCE THE AOS ACTION IS WELL WITHIN HIS JURISDICTION. HOWEVER, T HE ASSESSEE PLEADED THAT THE IMPUGNED ISSUES REQUIRE RE-EXAMINATION AF RESH, WHICH IS NOT OPPOSED BY THE LD. DR. IN THE FACTS AND CIRCUMSTANC ES, WE DEEM IT FIT TO REMIT THESE ISSUES BACK TO THE AO FOR A FRESH EXAM INATION. THE ASSESSEE SHALL PLACE ALL THE MATERIALS IN ITS SUPPO RT BEFORE THE AO AND COMPLY TO THE AOS REQUIREMENTS AS PER LAW. THE A O IS FREE TO CONDUCT APPROPRIATE ENQUIRY AS DEEMED FIT, BUT HE SHALL FU RNISH ADEQUATE OPPORTUNITY TO THE ASSESSSEE ON THE MATERIAL ETC T O BE USED AGAINST IT AND DECIDE THE MATTER IN ACCORDANCE WITH LAW. 7 ITANO.2295/CHNY/2017 8. IN RESULT, THE ASSESSEES APPEAL IS TREATED AS P ARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 11 TH FEBRUARY, 2019 SD/- SD/- ( . . . ) ( . ) (N.R.S.GANESAN) ( S.JAYARAMAN) ( ! / JUDICIAL MEMBER) ( ! / ACCOUNTANT MEMBER) /CHENNAI, $ /DATED 11 TH FEBRUARY, 2019 SOMU () *) /COPY TO: 1. APPELLANT 2. RESPONDENT 3. + ( ) /CIT(A) 4. + /CIT 5. ) / /DR 6. 2 /GF