Mohmed Kurshid Alam Khan, Surat V. The ACIT., Range-3, Surat

ITA 2303/AHD/2011

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 0556 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 11 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-09-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 22-07-2016
• Assessment Year: 2004-2005
• Appeal Filed On: 12-09-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: O P MEENA
• Assessee Lawyers: RASESH SHAH
• Section: 143(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER ./ ITA.NO.2303/AHD/2011 / ASSTT. YEAR: 2004-2005 MOHMED KURSHID ALAM KHAN PROP. M.K. ENTERPRISES 1/4 TOWER BRIDGE APPTT. ADAJAN JUNCTION, RANDER, SURAT. PAN : AEBPK 1354 E. VS ACIT, CIR.3 SURAT. ! / (APPELLANT) '# ! / (RESPONDENT) ASSESSEE BY : SHRI RASESH SHAH, AR REVENUE BY : SHRI O.P. MEENA, SR.DR / DATE OF HEARING : 22/07/2016 / DATE OF PRONOUNCEMENT: 08/09/2016 $%/ O R D E R ASSESSEE IS IN APPEAL AGAINST THE ORDER OF THE LD.C IT(A)-3, SURAT DATED 27.3.2009 PASSED FOR THE ASTT.YEAR 2004-05. 2. SOLITARY GRIEVANCE OF THE ASSESSEE IS THAT THE L D.CIT(A) HAS ERRED IN CONFIRMING PENALTY OF RS.3,27,473/- IMPOSED BY THE AO UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL RUNNING PROPRIETARY-SHIP CONCERN UNDER THE NAME AND STYLE O F M.K. ENTERPRISE, WHERE HE WORKED AS AN ERECTION AND FABRICATION CONT RACTOR. HE HAS FILED HIS RETURN OF INCOME ON 30.9.2004 DECLARING TOTAL INCOM E AT RS.9,99,260/-. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY ASSE SSMENT AND ASSESSMENT ITA NO.2303/AHD/2011 2 ORDER WAS PASSED UNDER SECTION 143(3) ON 21.12.2006 . THE LD.AO HAS DETERMINED TAXABLE INCOME OF THE ASSESSEE AT RS.32, 55,577/-. HE MADE ADDITION OF RS.22,56,317/-. IN THE PENALTY PROCEED INGS, WE ARE CONCERNED WITH THE FOLLOWING ADDITIONS: I) UNEXPLAINED INCOME RS.62,500/- II) DISALLOWANCE OF BOGUS EXPENDITURE RS.75,000/- III) DISALLOWANCE OF BOGUS EXPENDITURE RS.91,000/- IV) DISALLOWANCE OF BOGUS/ IN GENUINE EXPENDITURE RS.8,83,007/- 4. WITH THE ASSISTANCE OF LD.REPRESENTATIVES, I HAV E GONE THROUGH THE RECORD CAREFULLY. IT EMERGES OUT FROM THE RECORD T HAT DISPUTE TRAVELLED UPTO THE TRIBUNAL IN CROSS APPEAL BEARING ITA NO.4409/AH D/2007 (ASSESSEES APPEAL) AND 4490/AHD/2007 (REVENUES APPEAL). AS F AR AS FIRST ADDITION OF RS.62,500/- IS CONCERNED, IT REVEALED THAT THE ASSE SSEE HAS MADE CERTAIN PAYMENTS TO THE PARTIES WHICH REMAINED UNVERIFIABLE . THE AO HAD ISSUED NOTICE UNDER SECTION 133(6), BUT THE SAME COULD NOT BE SERVED. HE WORKED OUT THE ALLEGED PAYMENT OF RS.62,500/- TO PARTIES VIZ. MODI SILK CORPORATION AND, M/S.RAJENDRA SING & CO. THE TRIBUNAL HAS OBSERVED THAT IN THE BOOKS OF THE RECIPIENT THE PAYMENT HAS BEEN CREDITED IN CASH, BU T DOES NOT EXPLAIN WHETHER PAYMENT HAS BEEN RECORDED IN THE BOOKS OF THE ASSES SEE. ON BASIS OF THIS REASON, ADDITION HAS BEEN CONFIRMED. TO MY MIND, T HIS ADDITION CANNOT BE EXPOSED THE ASSESSEE WITH PENALTY UNDER SECTION 271 (1)(C) OF THE ACT BECAUSE ACCORDING TO THE ASSESSEE PAYMENT WAS MADE BY ACCOU NT PAYEE CHEQUE. BOTH THE RECIPIENTS HAVE SHOWN RECEIPT OF PAYMENT, BUT T HEY HAVE RECORDED, AS IF IT WAS RECEIVED IN CASH. IT IS A DISALLOWANCE ON THE BASIS OF LACK OF EVIDENCE FILED DURING THE COURSE OF ASSESSMENT PROCEEDINGS. NATURE OF EXPENDITURE WAS ITA NO.2303/AHD/2011 3 NOT DISPUTED BY THE AO. ASSESSEE COULD NOT SUBSTAN TIATE HIS EXPLANATION IN THE ASSESSMENT PROCEEDINGS FOR CLAIMING THIS. 5. NEXT GROUND IS OF RS.75,000/-. THE TRIBUNAL HAS SET ASIDE THIS ISSUE FOR CROSS-VERIFICATION. THE FINDING RECORDED BY THE TR IBUNAL IN PARA-NO.42 READ AS UNDER: 42. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND P ERUSED THE MATERIAL ON RECORD. IN OUR CONSIDERED VIEW THE ISSU E REGARDING PAYMENT OF RS.75,000/- TO M/S APPOLLO CRANES CAN BE SUBJECTED TO FURTHER ENQUIRY. IF THE PAYMENT IS MADE BY L & T ON BEHALF OF THE ASSESSEE THEY CAN CONFIRM THE SAME. LET THE ASSESSE E PRODUCE THE CONFIRMATIONS FROM L & T AND ALSO SHOW TO THE AO TH AT JOURNAL ENTRIES HAVE BEEN PASSED IN THE BOOKS OF THE ASSESSEE, IF N OT THEN IT IS REALLY A SUPPRESSION OF RECEIPT BY THE ASSESSEE IN THE SENSE THAT CERTAIN PAYMENTS WHICH ASSESSEE OUGHT TO HAVE RECEIVED FROM L & T AND SHOWN AS RECEIPT IN THE TRADING ACCOUNT BUT HAVE ACTUALLY GONE TO M/S APPOLLO CRANE. IT CAN BE THEN PRESUMED THAT EXPENDITURE HAS BEEN CLAIMED BUT RECEIPTS HAVE NOT BEEN DECLARED. IF RECEIPTS ARE OU TSIDE THE BOOKS AND THEN EXPENDITURE HAS ALSO TO GO OUTSIDE THE BOOKS. IF EXPENDITURE IS DEBITED THEN RECEIPTS REMAINED UNACCOUNTED AND, THE REFORE, THEY HAVE TO BE TAXED ACCORDINGLY. IN ANY CASE THE ISSUE IS S UBJECT TO VERIFICATION AND CORRECT FACTS CAN BE FOUND ON ENQUIRY AS OBSERV ED ABOVE. ACCORDINGLY THE ISSUE REGARDING RS.75,000/- IS SET ASIDE TO THE FILE OF AO FOR VERIFICATION. 6. SINCE ADDITION WAS NOT CONFIRMED, THEREFORE, IT COULD NOT BE CONSIDERED FOR VISITING THE ASSESSEE WITH PENALTY. THE NEXT I TEM IS OF RS.91,000/-. TRIBUNAL HAS CONFIRMED THIS ADDITION BY OBSERVING A S UNDER: 43. IN RESPECT OF OTHER SUMS NAMELY RS.91,000/- CLA IMED TO HAVE BEEN PAID TO SHRI KAMAL KUMAR AND RS.8,63,077/- CLAIMED TO HAVE BEEN MADE TO OTHER FOUR PARTIES, WE ARE OF THE VIEW THAT ASSESSEE HAS FAILED TO SHOW WHY PAYMENTS HAVE BEEN MADE IN CASH AND WHE THER THEY WERE ACTUALLY RECEIVED BY THE CONCERNED PARTIES AND IF S O THEN FOR WHAT PURPOSE. SINCE THE FACT OF RECEIVING BY OTHER PARTY IS NOT CONFIRMED THE CLAIM OF EXPENDITURE CANNOT BE HELD AS GENUINE. ACC ORDINGLY, ADDITION ITA NO.2303/AHD/2011 4 TO THE EXTENT OF RS.91,000/- AND RS.8,63,077/- IS C ONFIRMED. THIS GROUND OF ASSESSEE IS PARTLY ALLOWED. 7. CASE OF THE ASSESSEE BEFORE THE AO WAS THAT IT H AD MADE PAYMENT OF RS.91,000/- TO SHRI KAMAL KUMAR. THE ADDITION HAS BEEN MADE ON THE GROUND THAT THIS PAYMENT WAS MADE IN CASH. BUT AGAIN, THE LD.AO HAS NOT HELD THAT EXPLANATION OF THE ASSESSEE WAS FALSE. THE ASSESSE E COULD NOT SUBSTANTIATE HIS EXPLANATION AS TO WHY THE PAYMENT WAS MADE IN CASH. THESE ARE EXPENDITURE INCURRED BY THE ASSESSEE IN ORDINARY COURSE OF BUSI NESS. HE HAS DULY SHOWN PAYMENT IN THE BOOKS. OTHER PARTIES HAVE ALSO SHOW N RECEIPTS IN THEIR BOOKS, BUT SOMEHOW, THEY HAVE NOT FILED CONFIRMATION DURIN G THE ASSESSMENT PROCEEDINGS. THUS, THE ASSESSEE FAILED TO PRODUCE EVIDENCE IN SUPPORT OF HIS EXPLANATION. IN OTHER WORDS, THE ASSESSEE FAILED T O SUBSTANTIATE HIS EXPLANATION. HE HAS MADE EXPLANATION WHICH COULD N OT BE HELD UNTRUE. ON THE DEGREE OF EVIDENCE, EXPLANATION WAS NOT ACCEPTE D. THEREFORE, I ALLOW THIS APPEAL OF THE ASSESSEE AND DELETE THE PENALTY. 8. IN THE RESULT, APPEAL OF THE APPEAL OF THE ASSES SEE IS ALLOWED. ORDER PRONOUNCED IN THE COURT ON 8 TH SEPTEMBER, 2016 AT AHMEDABAD. SD/- (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED 08/09/2016