THE ITO-3(1), Bhopal V. M/s. Narmada Vehicles Pvt. Ltd., Bhopal

ITA 25/IND/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 2368 (ITAT-INDORE)
• Duration Of Justice: 11 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-01-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 23-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Additional evidence; Bad and doubtful debts
• Section: 143(3); 142(1)

Judgement Text

ITA NO.25/IND/2017 ASST. YEAR 2007-08 NARMADA VEHICLES PVT. LTD 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ITA NO.25/IND/2017 ASSESSMENT YEAR: 2007-08 ORDER PER MANISH BORAD, AM. THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINS T THE ORDER OF LD. COMMISSIONER OF INCOME-TAX (APPEALS), UJJAIN (CAMP AT BHOPAL) [IN SHORT REFERRED TO AS THE CIT (A)] DATED 25.10.2016 ARISING OUT OF THE ORDER U/S 143(3) OF THE INCOME TAX ACT DATED 20.12. 2011 FRAMED BY INCOME TAX OFFICER 3(1), BHOPAL VS. M/S. NAR MADA VEHICLES PVT.LTD, 6/1, INDUSTRIAL AREA, GOVINDPURA, BHOPAL ( REVENUE ) (RE SPONDENT ) PAN NO.AAACN4996R RE VENUE BY SHRI K.G. GOYAL , SR. DR RESPONDENT BY SHRI S. S . DESHPANDE ,CA (AR) DATE OF HEARING: 10.01.2018 DATE OF PRONOUNCEMENT: 16.01.2018 ITA NO.25/IND/2017 ASST. YEAR 2007-08 NARMADA VEHICLES PVT. LTD 2 THE LD. ASSTT. COMMISSIONER OF INCOME-TAX-2(1), BHO PAL PERTAINING TO ASSESSMENT YEAR 2007-08. 2. BRIEFLY STATED OF FACTS AS CULLED OUT FROM THE R ECORDS ARE THAT ASSESSEE IS A PRIVATE LIMITED COMPANY AND IS DEALER OF HUNDAI CARS. RETURN OF INCOME WAS FILED ON 31.10.2007 DECLARING INCOME OF RS.1,87,767/-. THE CASE SELECTED FOR SCRUTINY. NO TICES U/S 143(2) AND 142(1) OF THE ACT WERE DULY SERVED UPON THE ASS ESSEE ALONG WITH QUESTIONNAIRE. IN THE ASSESSMENT PROCEEDINGS THE L D.A.O OBSERVED THAT THE ASSESSEE HAS SHOWN ADVANCES FROM CUSTOMERS AT RS.1,29,74,290/-. VARIOUS DETAILS ABOUT THE IDENTI TY INCLUDING NAME, ADDRESS AND OTHER RELEVANT DETAILS WERE CALLE D FOR BUT THE ASSESSEE FAILED TO SATISFY THE LD.A.O AND HE ACCORD INGLY ADDED RS.1,29,74,290/- TO THE INCOME OF THE ASSESSEE. DI SALLOWANCES WERE ALSO MADE AT RS.3,00,000/- FOR DEFERRED REVENU E EXPENSE, DISALLOWANCE OF MISCELLANEOUS EXPENSE AND DIRECTOR ACCOMMODATION EXPENSE OF RS.75,000/- AS WELL AS PRIOR PERIOD EXPE NSES AT RS.1,09,007/-. INCOME ASSESSED AT RS.1,36,46,060/- . AGAINST THESE ADDITIONS THE ASSESSEE PREFERRED AN APPEAL BE FORE LD.CIT(A) AND PARTLY SUCCEEDED. 3. NOW THE REVENUE IS IN APPEAL PRESSING FOLLOWING GROUNDS. 4. THE LEARNED DEPARTMENTAL REPRESENTATIVE VEHEMENTLY ARGUED ON BOTH THE ABOVE GROUNDS SUPPORTING THE ORDER OF LEAR NED ASSESSING OFFICER. THE LD.COUNSEL RELIED ON THE FINDINGS OF T HE LD. CIT(A). ITA NO.25/IND/2017 ASST. YEAR 2007-08 NARMADA VEHICLES PVT. LTD 3 5. WE HAVE HEARD THE RIVAL ARGUMENTS AND PERUSED TH E RECORD PACED BEFORE US. GROUND NO.1 : WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE LD.CIT(A) WAS JUSTIFIED IN DELETING ADDIT ION ON ACCOUNT OF UNEXPLAINED CREDIT OF RS.1,29,74,290/- 6. THE LD.A.O MADE THIS ADDITION FOR WANT OF DETAIL S TOWARDS ADVANCE FROM CUSTOMERS WHICH STOOD AT RS.1,29,74,29 0/-. ALL NECESSARY DETAILS WERE FILED BY THE ASSESSEE BEFORE THE FIRST APPELLATE AUTHORITY WHO ADMITTED THE ADDITIONAL EVIDENCES FIL ED UNDER RULE 46A(1)(B) OF THE I.T RULES AND CALLED FOR THE REMAN D REPORT. THE LD. CIT(A) AFTER APPRECIATING THE DETAILS OF EACH AND E VERY CUSTOMER HAVING ITS BALANCE IN THE LIST OF ADVANCES FROM CUS TOMERS DELETED THE IMPUGNED ADDITION OBSERVING AS FOLLOWS; 5.2 GROUND NO.2: THROUGH THIS GROUND OF APPEAL TH E APPELLANT HAS CHALLENGED THE ADDITION OF RS.1,29,74,290/- ON ACCO UNT OF UNEXPLAINED CREDIT. THE AO TREATED THE ADVANCES FROM VARIOUS C USTOMERS AGAINST SALE OF CARS AS UNEXPLAINED CASH CREDIT. THIS AMOUNT RE PRESENTS THE MONEY DEPOSITED BY THE CUSTOMERS FOR PURCHASE OF CAR. SO ME CUSTOMERS PAY THE SALE PRICE OF A CAR IN INSTALLMENTS AND SUCH AMOUNT IS ALSO KEPT IN THE ACCOUNT STYLED ADVANCE FROM CUSTOMERS TILL THE FU LL AMOUNT IS REALIZED AND THE SALE IS COMPLETE. SOMETIMES CUSTOMER DEPOSITS MONEY FOR A PARTICULAR PURPOSE AND THEN DOES NOT AVAIL OF THE SERVICE, IN THESE CASES SOME AMOUNT BECOMES PAYABLE TO THE CUSTOMER AND IS REFUN DED LATER WHICH MAY TAKE SOME TIME. THE LIST ALSO INCLUDES CUSTOMERS WH O HAVE NOT PAID THE BALANCE AMOUNT. THE APPELLANT IS MAINTAINING BOOKS OF ACCOUNT ALONG WITH SUPPORTING VOUCHERS IN SUPPORT OF THE SAID CREDITS/ DEBITS. THE BOOKS OF ACCOUNT WERE PRODUCED AND THE RELATED SUPPORTING DO CUMENTS OF THE CUSTOMERS WERE PRODUCED DURING THE COURSE OF ASSESS MENT PROCEEDINGS. THE CUSTOMER LEDGER ACCOUNTS WERE PUT UP FOR VERIFI CATION. THE AO EXAMINED THE SAME AND DID NOT POINT OUT ANY DISCREP ANCY OR OBSERVATION WHICH WOULD GO TO PROVE THE RECORD AS INCOMPLETE/ I NCORRECT OR TO THE DISSATISFACTION OF THE AO. THE INFORMATION DESIRED BY THE AO IN THE PARTICULARLY SPECIFIED FORMAT IS NOT MAINTAINED BY THE APPELLANT. BY MERELY THE INFORMATION HAS NOT BEEN MAINTAINED BY THE APPE LLANT IN THE FORM ITA NO.25/IND/2017 ASST. YEAR 2007-08 NARMADA VEHICLES PVT. LTD 4 SPECIFIED CANNOT BE CONSIDERED AS NO PROPER RECORD HAS BEEN MAINTAINED. THE APPELLANT PRODUCED COMPLETE DETAILS SUCH AS NAM E, ADDRESS, MODE OF PAYMENT, PHONE NOS, SALE BILL NOS, VEHICLE NO. ETC FOR THE SAID AMOUNT OF RS.1,29,74,290/-, PARTY-WISE. THIS STATEMENT IS PR ODUCED. IT CAN BE SEEN FROM THE STATEMENT THAT THE CREDIT STANDING IN THE CUSTOMERS ACCOUNT HAS BEEN SET OFF BY A SALE BILL OR BY A RETURN OF MONEY OR BY WRITING OFF IN THE BOOKS OF ACCOUNT OF THE APPELLANT AS UNCLAIMED/UNPA ID BY THE CUSTOMER. HOWEVER, THE WRITING BACK OF THE UNCLAIMED AMOUNT D OES NOT ABSOLVE THE APPELLANT FROM THE LIABILITY TO PAY BACK THE SAID A MOUNT WHEN CLAIMED BY THE CUSTOMER. THE APPELLANT DURING THE COURSE OF A SSESSMENT PROCEEDINGS PRODUCED BEFORE THE AO ALL THE CUSTOMERS DOCUMENT F ILES THAT CONTAINED ALL THE DETAILS AND DOCUMENTS OF SUCH CUSTOMER SINCE TH E BEGINNING TILL THE CONCLUSION OF SALE SUCH AS IDENTITY, ADDRESS, RTO P APERS, INSURANCE PAPERS, BANK FINANCE DETAILS ETC. THEREFORE, THE M ONEY RECEIVED IS IN FACT AGAINST THE SALE OF CARS AND COMPLETE DETAILS ALONG WITH DOCUMENTARY EVIDENCES HAD BEEN FILED BEFORE THE AO. THEREFORE, THE AO IS NOT JUSTIFIED IN TREATING THE ADVANCE RECEIPT AS UNEXPLAINED CRED IT. THEREFORE, THE ADDITION MADE BY THE AO AMOUNTING TO RS.1,29,74,290 /- IS DELETED. THE APPEAL ON THIS GROUND IS ALLOWED. 7. FROM THE PERUSAL OF THE FINDINGS OF LD. CIT(A) A S WELL AS IN THE GIVEN FACTS AND CIRCUMSTANCES OF THE CASE AS WELL A S IN GOING THROUGH THE DETAILS OF ADVANCES FROM CUSTOMERS PLAC ED AT PAGE 10 TO 17 OF THE PAPER BOOK, WE FIND THAT COMPLETE DETA ILS OF THE ADVANCES RECEIVED FROM CUSTOMERS AGAINST SALE OF CA RS AND SPARE PARTS ARE SHOWN FOR THE PERIOD ENDING 31.03.2007 A ND AMOUNT RECEIVED IN FINANCIAL YEAR 2007-08 AND FURTHER ADJU STMENT OF TOTAL AMOUNT RECEIVED AGAINST THE INVOICES RAISED FOR THE CARS SOLD TO VARIOUS CUSTOMERS AS WELL AS TREATMENT OF REMAINING AMOUNT WHICH INTER ALIA INCLUDES AMOUNTS WRITTEN OFF AS TO MISCE LLANEOUS INCOME/BAD DEBTS IN SUBSEQUENT YEARS. FURTHER WE A LSO OBSERVE THAT THE BOOKS OF ACCOUNTS ARE AUDITED, AMOUNT RECE IVED ARE THROUGH ACCOUNT PAYEE CHEQUES AND NO MAJOR ERROR H AS BEEN POINTED OUT BY THE TAX AUDITOR AND ASSESSING OFFICE R IN THE BOOKS OF ITA NO.25/IND/2017 ASST. YEAR 2007-08 NARMADA VEHICLES PVT. LTD 5 ACCOUNTS. WE THEREFORE FIND NO REASON TO INTERFERE IN THE FINDINGS OF LD. CIT(A) DELETING THE IMPUGNED ADDITION TOWARDS U NEXPLAINED CREDIT IN THE FORM OF GIVEN ADVANCES FROM CUSTOMERS OF RS.1,29,74,290/-. IN THE RESULT GROUND NO.1 OF THE REVENUE IS DISMISSED. 8. GROUND NO.2: THE LD. A.O DISALLOWED EXPENSES TO THE TUNE OF RS.75,000/-WHICH INCLUDES RS.25,000/- ON ACCOUNT OF MISCELLANEOUS EXPENSES AND RS.50,000/- FOR EXPENSE S FOR DIRECTORS ACCOMMODATION. 9. WE OBSERVE THAT THE DISALLOWANCE OF RS.25,000/- WAS ON ACCOUNT OF NON MAINTENANCE OF VOUCHERS AND THERE IS NO SPEC IFIC REPLY DEMONSTRATING THE GENUINENESS OF THESE EXPENSES. H OWEVER AS REGARD TO DIRECTORS ACCOMMODATION EXPENSE OF RS.50 ,000/- WE FIND THAT THIS AMOUNT HAS BEEN ALLOWED AS REMUNERATION A ND PERQUISITES AND IS AS PART OF TOTAL AMOUNT OF RS.2,46,840/- PAI D BY THE ASSESSEE COMPANY FOR DIRECTORS ACCOMMODATION. IN THESE FACT S WE FIND NO INFIRMITY IN THE FINDINGS OF LD. CIT(A) DELETING DI SALLOWANCE OF RS.50,000/- AND SUSTAINING THE DISALLOWANCE OF RS.2 5,000/-. WE ACCORDINGLY DISMISS GROUND NO.2 OF THE REVENUE. 10. IN THE RESULT THE APPEAL OF THE REVENUE IS DISM ISSED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 16.01.201 8. SD/- SD/- (KUL BHARAT) (MANISH BORAD) JUDICIAL MEMBER ACCOUNTANT ME MBER / DATED : 16 TH JANUARY, 2018 ITA NO.25/IND/2017 ASST. YEAR 2007-08 NARMADA VEHICLES PVT. LTD 6 COPY TO: THE APPELLANT/RESPONDENT/CIT CONCERNED/CIT (A) CONCERNED/ DR, ITAT, INDORE/GUARD FILE. BY ORDER PRIVATE SECRETARY/DDO, INDORE ITA NO.25/IND/2017 ASST. YEAR 2007-08 NARMADA VEHICLES PVT. LTD 7 1. DATE OF DICTATION : 11/01/2018 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER : 12/01/2018 3. DATE ON WHICH APPROVED DRAFT COMES TO THE SR.P.S./P .S: 12.1.2018 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT: 12.1.2018 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S.:15.1.18 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK: 17. 1.18 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK: 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISSTANT R EGISTRAR FOR SIGNATURE OF THE ORDER. 9. DATE OF DESPATCH OF THE ORDER: