The ITO,Vapi Ward-3, Vapi V. Shri Rakesh Kamlashanker Rai, Valsad

ITA 2304/AHD/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 85807 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 6 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-03-2015
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2008-2009
• Appeal Filed On: 12-09-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: K N BHATT
• Section: 68

Judgement Text

, C IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI N.S. SAINI, ACCOUNTANT MEMBER ./ ITA NO.2304/AHD/2011 / ASSTT. YEAR: 2008-09 ITO, VAPI WARD - 3 VAPI. VS SHRI RAKESH KAMLASHANKAR RAI AT & POST SARIGAM, MAIN ROAD RAL. UMBERGOAN, DIST. VALSAD. PAN : ADAPR 6459 D ! / (APPELLANT) '# ! / (RESPONDENT) REVENUE BY : SHRI NIMESH YADAV, SR.DR ASSESSEE BY : SHRI K.N. BHATT / DATE OF HEARING : 03/03/2015 / DATE OF PRONOUNCEMENT: 13/03/2015 $%/ O R D E R PER N.S. SAINI, ACCOUNTANT MEMBER: THIS AN APPEAL FILED BY THE REVENUE AGAINST ORDER OF THE CIT(A), VALSAD DAT ED 30.6.2011 FOR ASSTT.YEAR 2008-09. 2. THE GROUND NO.1 OF THE APPEAL OF THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE CIT(A) IN DELETING THE DISALLOWANC E OF RS.61,243/- MADE BY THE AO U/S. 36(1)(VA) OF THE IT ACT. 3. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND MATERIAL AVAILABLE ON RECORD. THE UNDISPUTED FACTS ARE THAT THE AO OBSERVED THAT THE ASSESSEE DEDUCTED RS.31,532/- AND RS.29,711/- FROM EMPLOYEES SALARY FOR THE MONTH OF APRIL, 2007 AND OCTOBER, 2007 RESPECTIVELY, WHICH WERE NOT PAID TO THE P.F. AUTHORITIES BEFORE THE DUE DATE PROVIDED UNDER THE PF ACT. HE, THEREFORE, ADDED ITA NO.2304/AHD/2011 2 THE SAME TO THE INCOME OF THE ASSESSEE UNDER SECTIO N 2(24)(X) R.W.S. SECTION 36(1)(VA) OF THE ACT. 4. ON APPEAL, THE CIT(A) ALLOWED DEDUCTION TO THE A SSESSEE BY FOLLOWING THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. ALOM EXTRUSION, 319 ITR 306 (SC) WHEREIN, IT WA S HELD THAT WHERE THE ASSESSEE HAS PAID THE EMPLOYEES CONTRIBUTION T O PF AFTER THE GRACE PERIOD BUT BEFORE THE DUE DATE OF FILING OF THE RET URN UNDER SECTION 139(1) OF THE ACT, DEDUCTION WAS ALLOWABLE. 5. WE FIND THAT THE ISSUE IS NOW COVERED BY THE DEC ISION OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. G UJARAT STATE ROAD TRANSPORT CORPORATION, (2014) 366 ITR 170 (GUJ) WHE REIN IT WAS HELD THAT WHERE THE ASSESSEE HAS NOT CREDITED THE EMPLOY EES CONTRIBUTION TO THE EMPLOYEES ACCOUNT IN THE RELEVANT FUND OR FUND S ON OR BEFORE THE DUE DATE MENTIONED IN EXPLANATION TO SECTION 36(1)(VA), THE ASSESSEE SHALL NOT BE ENTITLED TO DEDUCTION OF SUCH AMOUNT I N COMPUTING THE INCOME. RESPECTFULLY FOLLOWING THE SAME, WE SET AS IDE THE ORDER OF THE CIT(A) AND RESTORE BACK THE ORDER OF THE AO ON THIS ISSUE, AND THUS, THIS GROUND OF THE REVENUE IS ALLOWED. 6. THE GROUND NO.2 OF THE REVENUE IS DIRECTED AGAIN ST THE ORDER OF THE CIT(A) IN DELETING THE ADDITION OF RS.24,27,566 /- AND RS.3,09,600/- MADE UNDER SECTION 68 OF THE ACT. 7. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND MATERIAL AVAILABLE ON RECORD. THE UNDISPUTED FACTS ARE THAT THE ASSESSEE IS PROPRIETOR OF M/S.SA I PETROLEUM SERVICES AND M/S.SAI LABOUR AND SECURITY SERVICES. THE AO O N VERIFICATION OF CAPITAL ACCOUNT OF THE ASSESSEE IN RESPECT OF SAI P ETROLEUM SERVICES, FOUND THAT THE ASSESSEE HAD SHOWN INTRODUCTION OF O PENING CAPITAL OF RS.24,27,556/-. THE ASSESSEE WAS REQUIRED BY THE A O TO EXPLAIN THE SOURCE OF CAPITAL INTRODUCED DURING THE YEAR. THE ASSESSEE COULD NOT ITA NO.2304/AHD/2011 3 SUBMIT ANY EXPLANATION OR ANY EVIDENCE TO ESTABLISH THE GENUINENESS OF SOURCE OF INTRODUCTION OF OPENING CAPITAL OF RS.24, 27,556/-. THEREFORE, THE AO ADDED THE SAME TO THE INCOME OF THE ASSESSEE BY INVOKING THE PROVISIONS OF SECTION 68 OF THE ACT. 8. SIMILARLY, THE AO ALSO OBSERVED ON VERIFICATION OF CAPITAL ACCOUNT IN RESPECT OF SAI LABOUR AND SECURITY SERVICES THAT THE ASSESSEE HAS INTRODUCED CAPITAL OF RS.3,09,600/- IN CASH/BANK. THE ASSESSEE WAS REQUIRED TO EXPLAIN THE SOURCE OF CAPITAL INTRODUCE D DURING THE YEAR. THE ASSESSEE DID NOT SUBMIT ANY EXPLANATION OR EVID ENCE TO ESTABLISH THE GENUINENESS OF THE SOURCE OF CAPITAL INTRODUCED OF RS.3,09,600/-. THEREFORE, THE AO ADDED THE SAME TO THE INCOME OF T HE ASSESSEE BY INVOKING THE PROVISION OF SECTION 68 OF THE ACT. 9. ON APPEAL, THE CIT(A) DELETED THE ADDITION BY OB SERVING THAT THE ASSESSEE HAD EXPLAINED THE ISSUE IN DETAIL BY FURNI SHING VARIOUS DOCUMENTS, AUDIT REPORT, FINANCIAL STATEMENTS AND A BSTRACT OF CASH BOOK HIGHLIGHTING THE TRANSACTIONS, WHEREBY THE FUNDS WE RE MOVED FROM ONE PROPRIETARY CONCERN TO OTHER. HE OBSERVED THAT THE ASSESSEE HAS RIGHTLY SUBMITTED THAT IT WAS NOT AN ADDITION/CONTRIBUTION TO CAPITAL ACCOUNT BUT SIMPLY THE MOVEMENT OF FUNDS. THE CIT(A) OBSERVED THAT HE WAS CONVINCED WITH THE MOVEMENT OF FUNDS HIGHLIGHTED IN THE VARIOUS DOCUMENTS AND THE EXPLANATION FURNISHED BY THE ASSE SSEE. ACCORDING TO THE CIT(A), THE NATURE AND SOURCE OF THE MOVEMENT O F FUNDS STANDS EXPLAINED AND THE EXPLANATION PROVIDED BY THE ASSES SEE FOR THE MOVEMENT OF FUNDS WAS SATISFACTORY, AND THEREFORE, HELD THAT THE AO WAS NOT JUSTIFIED IN RAISING THE ISSUE OF PROVISION S OF SECTION 68 OF THE ACT. 10. BEFORE US, THE DR SUBMITTED THAT FINDING OF THE CIT(A) IS VAGUE AND FROM THE FINDING OF THE CIT(A) IT COULD NOT BE DECIPHERED WHAT WAS THE SOURCE OF INTRODUCTION OF CAPITAL OF RS.24,27,5 56/- AND ITA NO.2304/AHD/2011 4 RS.3,09,600/-. HE ALSO CONTENDED THAT THE ASSESSEE HAD NOT OFFERED ANY EXPLANATION ABOUT THE SOURCE BEFORE THE AO. 11. ON THE OTHER HAND, AR OF THE ASSESSEE SUPPORTED THE ORDER OF THE CIT(A). 12. WE FIND FORCE IN THE SUBMISSION OF THE DR THAT THE ORDER OF THE CIT(A) IS VAGUE AND FROM THE ORDER IT IS NOT CLEAR AS TO WHAT WAS THE EXACT SOURCE OF INTRODUCTION OF NEW CAPITAL IN TWO PROPRIETARY CONCERNS OF THE ASSESSEE, AND ON THE BASIS OF WHICH PARTICUL AR DOCUMENT THE CIT(A) WAS SATISFIED ABOUT THE SOURCE OF CAPITAL. BOTH THE PARTIES BEFORE US HAVE NOT FILED ANY PAPER BOOK. 13. HOWEVER, WE FIND THAT THE ASSESSEE EXPLAINED TH AT NO PROPER OPPORTUNITY TO EXPLAIN THE SOURCE OF INTRODUCTION O F CAPITAL WAS ALLOWED TO THE ASSESSEE BY THE AO. THE DR COULD NOT CONTRO VERT THE ABOVE CONTENTION OF THE ASSESSEE. IN THE ABOVE CIRCUMSTA NCES, IN OUR CONSIDERED VIEW, AS THE ASSESSEE WAS NOT ALLOWED RE ASONABLE OPPORTUNITY TO EXPLAIN THE SOURCE BY THE AO, IT SHA LL BE IN THE INTEREST OF JUSTICE TO RESTORE THE ISSUE TO THE FILE OF THE AO FOR ADJUDICATION AFRESH AFTER ALLOWING REASONABLE AND PROPER OPPORTUNITY OF HEARING TO THE ASSESSEE. WE THEREFORE, SET ASIDE THE ORDERS OF TH E LOWER AUTHORITIES AND REMIT THE MATTER BACK TO THE FILE OF THE AO FOR ADJUDICATION AFRESH AS PER LAW. THUS, THIS GROUND OF THE APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSE. 14. IN THE RESULT, THE APPEAL OF THE REVENUE IS PAR TLY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE COURT ON FRIDAY, THE 13 TH MARCH, 2015 AT AHMEDABAD. SD/- SD/- ( SHAILENDRA KUMAR YADAV ) JUDICIAL MEMBER ( N.S. SAINI) ACCOUNTANT MEMBER AHMEDABAD; DATED 13/3/2015