The DCITS.K. Circle, Himatnagar V. Narayansingh Gulabsingh & G.H. Vijapura & Co.,(JV), Himatnagar

ITA 2414/AHD/2007

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 9020 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 8 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-02-2010
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 06-01-2010
• Assessment Year: 2004-2005
• Appeal Filed On: 04-06-2007
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: P ORAM
• Assessee Lawyers: K C THAKER

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH A BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI D.C. AGRAWAL, ACCOUNTANT MEMBER DATE OF HEARING : 06/01/2010 DRAFTED ON: 20/01/2010 ITA NO.2414/AHD/2007 ASSESSMENT YEAR : 2004-05 THE I.T.O. S.K.WARD-3 HIMATNAGAR VS. NARAYANSINGH GULABSINGHJI & M/S.G.H.VIJAPURA & CO.(JV) MEHTAPURA CROSSING HIMATNAGAR PAN/GIR NO. : AAAAN-1793-J (APPELLANT) .. (RESPONDENT) APPELLANT BY : SHRI P.ORAM, SR. D.R. RESPONDENT BY: SHRI K.C. THAKER, C.A. O R D E R PER D.C.AGRAWAL , ACCOUNTANT MEMBER :- THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE LEARNED CIT(APPEALS)-IX, AHMEDABAD DATED 22/03/200 7 PASSED FOR ASSESSMENT YEAR 2004-05, BY RAISING FOLLOWING GROUN DS: 1. THE LD. CIT(A) ERRED IN LAW AND ON THE FACTS OF THE CASE IN DELETING THE ADDITION OF RS.37,79,000/- MADE ON ACC OUNT OF NON- GENUINE LIABILITY CREATED BY THE ASSESSEE TOWARDS S UB-CONTRACT EXPENSES DEBITED TO PROFIT & LOSS ACCOUNT A/C. IN THE NAME OF M/S.TARSHIL ASSOCIATES AND ALSO CREATED NON-GENUINE LIABILITY TOWARDS PURCHASE OF BITUMEN FROM M/S.SONAL COALTAR CO. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESS ING OFFICER. ITA NO .2414/AHD/2007 ASST.YEAR 2004-05 - 2 - 3. IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE CIT(A) MAY BE CANCELLED AND THAT OF THE ASSESSING OFFICER MAY BE RESTORED TO THE ABOVE EFFECT. 2. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE HA D FILED RETURN OF INCOME ON 30/10/2004 DECLARING TOTAL INCOME OF RS.1 5,01,012/-. ASSESSEE IS A CONTRACTOR ENGAGED IN ROAD CONSTRUCTI ON ACTIVITIES AND HAS SHOWN TOTAL CONTRACTUAL RECEIPT OF RS.8,64,87,628/- . DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTIC ED EXPENSES OF RS.10,51,98,278/- IN THE PROFIT & LOSS ACCOUNT. T HIS INCLUDED PURCHASE OF BITUMEN WORTH RS.37,79,000/- FROM ONE M/S.SONAL COALTAR CO., AHMEDABAD. DURING THE ASSESSMENT YEAR IN QUESTION , THE ASSESSEE HAS SHOWN THE SAID PAYMENT AS OUTSTANDING AND M/S.SONAL COALTAR CO. HAS BEEN SHOWN AS SUNDRY CREDITOR IN THE BALANCE-SHEET FILED ALONGWITH THE RETURN OF INCOME. THE ASSESSING OFFICER FOUND THAT M/S.SONAL COALTAR CO. IS PROPRIETARY-CONCERN OF ONE PERSON, NAMELY SHRI M ITIN PRAVINCHANDRA SHAH, AHMEDABAD. NO EVIDENCE FOR PURCHASE OF BITU MEN, LIKE COPIES OF DAILY WAGE, CHALLAN, ETC. FROM THAT PARTY WERE FILE D. THE PAYMENT WAS SHOWN TO HAVE BEEN MADE FROM 20/02/2005 TO 11/05/20 05 BY CHEQUES TO M/S.SONAL COALTAR CO. WHICH WERE APPARENTLY DEPOSIT ED IN ITS BANK ACCOUNT BUT CASH WAS WITHDRAWN THROUGH SELF CHEQUES . THE ASSESSING OFFICER OBTAINED THESE SELF CHEQUES FROM THE BANKIN G AUTHORITIES AND ITA NO .2414/AHD/2007 ASST.YEAR 2004-05 - 3 - FOUND THAT THE PERSONS WHO HAVE WITHDRAWN THE MONEY WERE THE EMPLOYEES OF THE ASSESSEE. THE ACCOUNT IN WHICH T HE CHEQUES ISSUED BY THE ASSESSEE WERE DEPOSITED IS ACCOUNT NO.19181 WIT H THE UNITED BANK OF INDIA AT HIMATNAGAR WHERE THE ASSESSEE IS OPERATING /RESIDING. THE ACCOUNT WAS INTRODUCED BY SHRI G.N. RATHOD WHO BELONGED TO ASSESSEE GROUP. INSPECTOR CARRIED OUT THE ENQUIRY AND FOUND THAT PE RSONIS NOT AVAILABLE AT THE GIVEN ADDRESS OR THE ADDRESS IS NOT GENUINE. T HE PARTY IS SAID TO BELONG TO AHMEDABAD, BUT COULD NOT BE LOCATED. IT WAS EXPLAINED BY THE ASSESSEE THAT THAT PARTY MIGHT HAVE BEEN WITHDRAWN THE CASH FOR ITS DAY-TO- DAY REQUIREMENTS OR THE PARTY MIGHT HAVE CHANGED H IS ADDRESS. THE PAYMENT WAS MADE LATE BECAUSE THERE WAS DISPUTE WIT H THAT PARTY. THE ASSESSING OFFICER, HOWEVER, DID NOT AGREE ON THE GR OUND THAT ASSESSEE DID NOT GIVE GENUINE AND CORRECT ADDRESS OF M/S.SONAL COALTAR CO. NO COPIES OF PURCHASE BILLS OR DELIVERY CHALLANS WERE FURNISH ED. THE MONEY WAS WITHDRAWN BY THE EMPLOYEES OF THE ASSESSEE AND, THE REFORE, PURCHASE MADE FROM THAT PARTY WAS NOT GENUINE. HE ACCORDINGLY P ROPOSED ADDITION OF RS.37,79,000/-. 3. THE LEARNED CIT(APPEALS) DELETED THE ADDITION ON THE GROUND THAT ASSESSEE HAS NOT ONLY CARRIED OUT THE CONTRACT WORK , HE HAS PASSED THE ITA NO .2414/AHD/2007 ASST.YEAR 2004-05 - 4 - CONTRACT TO A SUB-CONTRACTOR, NAMELY, TARSHIL ASSOC IATES. THE PURCHASES MADE FROM M/S.SONAL COALTAR CO. ARE DEBITED TO THE ACCOUNT OF TARSHIL ASSOCIATES. THE ASSESSEE HAD INCURRED THE EXPENSES ON BEHALF OF THE SUB- CONTRACTOR. FURTHER, AMOUNT PAID TO M/S.SONAL COA LTAR CO. HAS NOT BEEN CLAIMED AS DEDUCTION FOR EXPENDITURE BY THE ASSESSE E BUT THE SAME HAS BEEN ADJUSTED IN THE ACCOUNT OF TARSHIL ASSOCIATES FROM WHOM THE ASSESSEE HAS GOT A FIXED PERCENTAGE OF PROFIT. THEREFORE, T HE SAME SHOULD BE CONSIDERED IN THE ASSESSMENT OF TARSHIL ASSOCIATES ONLY. 4. ON THE OTHER HAND, THE LEARNED DEPARTMENTAL REPR ESENTATIVE POINTED OUT THAT ABOVE AMOUNT WAS OUTSTANDING AS CR EDIT IN THE BALANCE- SHEET OF THE ASSESSEE. THEREFORE, ONUS IS ON THE ASSESSEE TO PROVE THE GENUINENESS OF THE CREDIT. IF IT WAS A PURCHASE, THEN ASSESSEE HAS TO ESTABLISH THE GENUINENESS OF THE PURCHASE. THE ASS ESSING OFFICER HAS ON THE OTHER HAND FOUND THAT NO SUCH PURCHASE HAS BEEN MADE AND THE PAYMENT HAS ACTUALLY NOT GONE TO M/S.SONAL COALTAR CO. FURTHER, HOW THE PURCHASE HAS BEEN TRANSFERRED TO TARSHIL ASSOCIATES HAS NOT BEEN CLARIFIED BY THE ASSESSEE. THE ASSESSEE HAS NOT FURNISHED C OPY OF THE PURCHASE BILLS, DELIVERY CHALLANS AND THERE IS NO PROOF OF SUPPLY OF MATERIAL. ITA NO .2414/AHD/2007 ASST.YEAR 2004-05 - 5 - 5. ON THE OTHER HAND, LEARNED AUTHORISED REPRESENTA TIVE OF THE ASSESSEE SUBMITTED THAT ASSESSEE HAS NOT MADE ANY PURCHASE THEMSELF. IT WAS ONLY A JOURNAL ENTRY PASSED BY THE ASSESSEE BY CREDITING M/S.SONAL COALTAR CO. AND DEBITING TARSHIL ASSOCIATES, SUB-CO NTRACTOR TO WHOM THE WORK WAS ASSIGNED. AT THE END OF THE YEAR, ADJUST MENTS IN THE ACCOUNTS WERE MADE AND ABOVE PURCHASES HAVE ALSO BEEN ADJUST ED AGAINST THE ACCOUNT OF TARSHIL ASSOCIATES. 6. IN ADDITION TO ABOVE, THE LEARNED AUTHORISED REP RESENTATIVE OF THE ASSESSEE SUBMITTED THAT AS PER THE DIRECTION OF THE LEARNED CIT(APPEALS) THE ASSESSMENT OF TARSHIL ASSOCIATES WAS RE-OPENED AND ABOVE AMOUNT WAS ADDED IN ITS HANDS AS NON-GENUINE PURCHASE WHIC H WAS DELETED BY THE LEARNED CIT(APPEALS) WHOSE ORDER WAS CONFIRMED BY T HE TRIBUNAL. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE MATERIAL AVAILABLE ON RECORD. LOOKING TO THE FACTS AND CIR CUMSTANCES OF THE CASE, WE THINK IT PROPER TO RESTORE THE MATTER TO THE FIL E OF ASSESSING OFFICER FOR GIVING AN OPPORTUNITY TO THE ASSESSEE TO PRODUCE TH E PURCHASE BILL AND DELIVERY CHALLAN OF PURCHASE OF BITUMEN AND ITS DEL IVERY. THE ASSESSEE WILL ALSO PRODUCE THE PROPRIETOR M/S.SONAL COALTAR CO. FOR VERIFICATION BY THE ASSESSING OFFICER AS TO THE GENUINENESS OF THE PURCHASE. THE ITA NO .2414/AHD/2007 ASST.YEAR 2004-05 - 6 - ASSESSING OFFICER WILL PROVIDE THE PHOTOCOPY OF THE CHEQUES OBTAINED BY HIM FROM THE BANK TO THE ASSESSEE SO AS TO IDENTIFY THE PERSONS WHO HAVE WITHDRAWN THE MONEY FROM THE BANK ACCOUNT OF M/S.SO NAL COALTAR CO. IF IT IS FOUND THAT M/S.SONAL COALTAR CO. HAS ACTUALLY DELIVERED BITUMEN OF ASSESSEE OR TO TARSHIL ASSOCIATES, THEN NO ADDITION IS CALLED FOR. 8. WITH OUR ABOVE OBSERVATIONS, WE ALLOW THE APPEAL OF THE REVENUE FOR STATISTICAL PURPOSES. 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS TREA TED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER SIGNED, DATED AND PRONOUNCED IN THE COURT ON 05/02/ 2010. SD/- SD/- ( BHAVNESH SAINI ) ( D.C.AGR AWAL ) JUDICIAL MEMBER ACCOUNTANT M EMBER AHMEDABAD; DATED 05 / 02 /2010 T.C. NAIR COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT. 2. THE RESPONDENT 3. THE CIT CONCERNED.4. THE LD. CIT(APPEALS)-IX, AH MEDABAD 5. THE DR, AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT.REGISTRAR), ITAT, AHMEDABAD