Shri Kurian Ulahannan Moothukuzhiyil, Ankleshwar V. The Income Tax Officer, Ward-4, Bharuch

ITA 2524/AHD/2014

• Counselvise Citation: 252420514 RSA 2014
• Duration Of Justice: 1 year(s) 1 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-10-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 01-10-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 12-09-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAKESH JHA SR DR
• Keywords: Unexplained cash credit; Depreciation; Additional depreciation; Retrospective amendment
• Section: 194C; 131

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD .. , ( .) , BEFORE SHRI G.D. AGARWAL,VICE PRESIDENT (AZ) AND SHRI KUL BHARAT, JUDICIAL MEMBER ./ I.T.A. NO. 2524/AHD/2014 ( / ASSESSMENT YEAR : 2010-11) KURIAN ULAHANNAN MOOTHUKUZHIYIL PROP. STEEL PECKERS DF-11, SARDAR PATEL COMPLEX GIDC, ANKLESHWAR-393 001 / VS. THE INCOME TAX OFFICER WARD-4 BHARUCH-392 001 % & ./ ./ PAN/GIR NO. : ADEPM 3953 F ( %( / APPELLANT ) .. ( )*%( / RESPONDENT ) %( + / APPELLANT BY : SHRI SAKAR SHARMA, AR )*%( , + / RESPONDENT BY : SHRI RAKESH JHA, SR.DR -. , /& / DATE OF HEARING 01/10/215 0123 , /& / DATE OF PRONOUNCEMENT 21/10/2015 / O R D E R PER SHRI KUL BHARAT, JUDICIAL MEMBER : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF THE LD.COMMISSIONER OF INCOME TAX(APPEALS)-VI, BARODA [CIT(A) IN SHORT] DATED 01/07/2015 PERTAINING TO ASSESSMENT Y EAR (AY) 2010-11. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF AP PEAL:- 1. THE LEARNED CIT(A) ERRED ON FACTS AND IN LAW IN CO NFIRMING DISALLOWANCE OF ADDITIONAL DEPRECIATION OF RS.1,51, 059/-. ITA NO.2524/AHD /2014 KURIAN ULAHANNAN MOOTHUKUZHIYIL VS. ITO ASST.YEAR 2010-11 - 2 - 2. THE LEARNED CIT(A) ERRED ON FACTS AND IN LAW IN CON FIRMING DISALLOWANCE OF EMPLOYEES CONTRIBUTION FOR PF & ESI AMOUNTING TO RS.4,73,003/-. 3. THE LD.CIT(A) ERRED ON FACTS AND IN LAW IN CONFIRMI NG DISALLOWANCE OF EXPENSES U/S.40(A)(IA) OF RS.18,53,850/- ON THE GROUND THAT THE APPELLANT PAID TDS SO DEDUCTED BEYOND THE SPECIFIED DATE. 4. THE LD.CIT(A) ERRED ON FACTS AND IN LAW IN CONFIRMI NG DISALLOWANCE OF EXPENSES U/S.40(A)(IA) OF RS.18,29,036/- ON THE GROUND THAT THE APPELLANT EITHER FAILED TO DEDUCT TDS OR DEDUCTED A ND PAID SHORT TDS ON THESE EXPENSES. 5. THE LD.CIT(A) ERRED ON FACTS AND IN LAW IN CONFIRMI NG ADDITION U/S.68 FOR RS.3,94,000/-. YOUR APPELLANT CRAVES LEAVE TO ADD, ALTER AND/OR AM END ALL OR ANY OF GROUNDS BEFORE THE FINAL HEARING OF APPEAL. 2. BRIEFLY STATED FACTS ARE THAT THE CASE OF THE AS SESSEE WAS PICKED UP FOR SCRUTINY ASSESSMENT AND THE ASSESSMENT U/S.143( 3) OF THE INCOME TAX ACT,1961 (HEREINAFTER REFERRED TO AS THE ACT) WAS FRAMED VIDE ORDER DATED 01/03/201, THEREBY THE ASSESSING OFFICER (AO IN SHORT) MADE VARIOUS ADDITIONS ON ACCOUNT OF DISALLOWANCES OF EX PENDITURE. THE AO MADE DISALLOWANCE OF DEPRECIATION OF RS.1,51,059/-, DISALLOWANCE ON ACCOUNT OF LATE PAYMENT OF EMPLOYEES CONTRIBUTION TO PF & ESI INTO GOVERNMENT ACCOUNT OF RS.4,73,003/-, DISALLOWANCE B Y INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT ON ACCO UNT OF LATE DEPOSIT OF TAX TO THE GOVERNMENT ACCOUNT OF RS.18,53,850/-, DI SALLOWANCE BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA) ON ACC OUNT OF NON-DEDUCTION OF TDS OF RS.18,29,036/- AND ADDITION ON ACCOUNT OF UNEXPLAINED CASH CREDIT U/S.68 OF THE ACT OF RS.3,94,000/-. THE AS SESSEE BEING AGGRIEVED ITA NO.2524/AHD /2014 KURIAN ULAHANNAN MOOTHUKUZHIYIL VS. ITO ASST.YEAR 2010-11 - 3 - BY THE ASSESSMENT ORDER, PREFERRED AN APPEAL BEFORE THE LD.CIT(A), WHO AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE D ISMISSED THE APPEAL. AGGRIEVED BY THE ORDER OF THE LD.CIT(A), NOW THE AS SESSEE IS FURTHER IN APPEAL BEFORE US. 3. AT THE TIME OF HEARING, LD.COUNSEL FOR THE ASSES SEE SUBMITTED THAT HE DOES NOT WISH TO PRESS GROUND NO.1. THE LD.SR.D R HAS NO OBJECTION. IN VIEW OF THE STATEMENT MADE BY THE LD.COUNSEL FOR THE ASSESSEE, GROUND NO.1 IS DISMISSED AS NOT PRESSED. 4. GROUND NO.2 IS AGAINST CONFIRMING DISALLOWANCE O F EMPLOYEES CONTRIBUTION FOR PF & ESI OF RS.4,73,003/-. AT T HE TIME OF HEARING, LD.COUNSEL FOR THE ASSESSEE FAIRLY CONCEDED THAT TH IS ISSUE HAS BEEN DECIDED BY THE HONBLE JURISDICTIONAL HIGH COURT IN FAVOUR OF THE REVENUE IN THE CASE OF CIT VS. GUJARAT ROAD STATE T RANSPORT CORPORATION REPORTED AT (2014) 265 CTR 0064 (GUJ.). 4.1. AFTER HEARING BOTH THE SIDES AND RESPECTFULLY FOLLOWING THE JUDGEMENT OF HONBLE JURISDICTIONAL HIGH COURT IN T HE CASE OF CIT VS. GUJARAT ROAD STATE TRANSPORT CORPORATION(SUPRA), WE DISMISSED THE GROUND RAISED BY THE ASSESSEE. ITA NO.2524/AHD /2014 KURIAN ULAHANNAN MOOTHUKUZHIYIL VS. ITO ASST.YEAR 2010-11 - 4 - 5. GROUND NO.3 IS AGAINST CONFIRMING DISALLOWANCE O F EXPENSES U/S.40(A)(IA) OF RS.18,53,850/- ON ACCOUNT OF DEDUC TION OF TAX PAID AFTER THE SPECIFIC DATE. THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE TDS WAS DEPOSITED BEFORE THE DUE DATE FOR FILING OF RET URN OF INCOME U/S.139(1). HE DREW OUR ATTENTION TOWARDS PAGE NOS .14 TO 18, 33 TO 40, 58 & 59, 68 TO 70 & 96 OF THE PAPER-BOOK. THE LD.C OUNSEL FOR THE ASSESSEE RELIED ON THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. OMPRAKASH R CHAUDHARY REPORTED AT (2015) 57 TAXMANN.COM 38 (GUJARAT) HOLDING THAT THE AMENDMENT HAS RETROSP ECTIVE EFFECT W.E.F. 01/04/2005. 5.1. ON THE CONTRARY, LD.SR.DR SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AS WELL AS THE JUDGEMENT RELIED UPON BY THE LD.COUN SEL FOR THE ASSESSEE. THE CONTENTION OF THE LD.COUNSEL FOR THE ASSESSEE I S THAT THE TDS WAS DEPOSITED BEFORE THE DUE DATE FOR FILING OF RETURN . THE LAW IS WELL SETTLED, IN CASE THE ASSESSEE HAS PAID TAX BEFORE THE DUE DA TE OF FILING OF THE RETURN, THEN DISALLOWANCE U/S.40(A)(IA) IS NOT CALL ED FOR ON THE GROUND THAT TDS WAS NOT PAID BEFORE THE DUE DATE SPECIFIED IN T HE SECTION. THE REVENUE HAS NOT CONTROVERTED THE FACT THAT THE ASSE SSEE HAS DEPOSITED THE TAX BEFORE THE DUE DATE OF FILING OF THE RETURN, TH EREFORE WE DIRECT THE AO ITA NO.2524/AHD /2014 KURIAN ULAHANNAN MOOTHUKUZHIYIL VS. ITO ASST.YEAR 2010-11 - 5 - TO DELETE THE DISALLOWANCE. THUS, THIS GROUND OF A SSESSEES APPEAL IS ALLOWED. 7. GROUND NO.4 IS AGAINST CONFIRMING THE DISALLOWAN CE OF EXPENSES BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT OF RS.18,29,036/- FOR SHORT DEDUCTION OR NON-DEDUCTION OF TDS. THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT NO ORDER U/S.201 HAS BEEN PASSED AGAINST THE ASSESSEE AND, THEREFORE, ASSESSE E CANNOT MADE SUBJECT TO DISALLOWANCE U/S.40(A)(IA) IN VIEW OF SECOND PRO VISO INSERTED BY FINANCE ACT, 2012 W.E.F. 1.4.2013 BUT THIS AMENDMEN T HAS BEEN HELD TO BE CURATIVE AND HAS RETROSPECTIVE EFFECT FROM THE D ATE WHEN SECTION 40(A)(IA) WAS INSERTED BY FINANCE (NO.2) ACT, 2004 BY THE JUDGEMENT OF HONBLE HIGH COURT OF DELHI IN THE CASE OF CIT VS. ANSAL LAND MARK TOWNSHIP (P) LTD. IN ITA 160/2015 & ITA 161/2015 DA TED 26/08/2015. 7.1. ON THE CONTRARY, LD.SR.DR SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AS WELL AS THE JUDGEMENT RELIED UPON BY THE LD.COUN SEL FOR THE ASSESSEE. WE FIND THAT THE AO OBSERVED THAT THE ASSESSEE HAD NOT DEDUCTED THE TAX AT SOURCE ON ENTIRE AMOUNT OF PAYMENTS MADE/CREDIT ED TO DEEPAK ITA NO.2524/AHD /2014 KURIAN ULAHANNAN MOOTHUKUZHIYIL VS. ITO ASST.YEAR 2010-11 - 6 - FABRICATION, JJ ENGINEERING, KAVITA ENTERPRISE, NIT AI CHANDAN MANDAL, OM SAI ENGIEERING & MAHAVIR CRANE TOTALLING TO RS.1 8,29,036/-. THE LD.CIT(A) CONFIRMED THIS DISALLOWANCE BY OBSERVING AS UNDER:- 8.3. I HAVE CAREFULLY CONSIDERED THE FACTS AND TH E CIRCUMSTANCES OF THE CASE, OBSERVATIONS OF THE ASSESSING OFFICER, SUBMIS SIONS OF THE ASSESSEE AND THE MATERIAL AVAILABLE ON RECORD. THE ASSESSEE HAS HIMSELF ACCEPTED THAT HE IS A DEFAULTER ON THE PAYMENTS MAD E TO M/S OM SAI ENGINEERING. THE ASSESSEE CLAIMS THAT IT IS A MANUF ACTURER OR PRODUCER OF ARTICLES OR THINGS, AND IN THAT SENSE, IF IT AWA RDS A CONTRACT TO ANY PARTY FOR ANY WORK, IT IS LIABLE TO DEDUCT TAX @ 2% U/S 194C INSTEAD OF 1%, DEDUCTED BY THE ASSESSEE, WHICH IS APPLICABLE T O A CASE WHERE A CONTRACTOR AWARDS A SUBCONTRACT TO A SUB-CONTRACTOR . THE ASSESSEE HAS ALL ALONG DENIED THAT HE IS A CONTRACTOR. INSTEAD, HE CLAIMS TO BE A MANUFACTURER. A MANUFACTURER IS LIABLE TO DEDUCT TA X @ 2% U/S 194C. FURTHER, THE ASSESSEE HAS FAILED TO FURNISH ANY EVI DENCE AT THE APPELLATE STAGE TO ESTABLISH THAT ALL THE PAYEES, EXCEPT M/S MAHAVIR CRANE, WERE HIS SUB-CONTRACTORS AND NOT CONTRACTORS. IN THE ABS ENCE OF ANY EVIDENCE, IT CANNOT BE ACCEPTED THAT THE ALL THE PAYEES, EXCE PT M/S MAHAVIR CRANE, ARE ASSESSEE'S SUB-CONTRACTORS. IN THE CASE OF M/S MAHAVIR CRANES, WHICH IS A PROPRIETARY CONCERN, THE ASSESSE E SUBMITS THAT IT IS RENT PAYMENT AND SINCE THE TOTAL QUANTUM OF PAYMENT IS BELOW THE THRESHOLD LIMIT FOR DEDUCTION OF TAX, THE ASSESSEE WAS NOT LIABLE TO DEDUCT TAX AT SOURCE. HOWEVER, THE ASSESSEE HAS FAI LED TO PRODUCE A COPY OF THE RENT AGREEMENT BETWEEN THE ASSESSEE AND M/S MAHAVIR CRANES TO ESTABLISH THAT THE PAYMENTS WERE IN THE N ATURE OF RENT. THE ASSESSEE HAS HIMSELF ACCEPTED THAT HE HAD DEDUCTED TAX OF RS. 4,635/- FROM PAYMENTS MADE TO M/S MAHAVIR CRANE. IF THE NAT URE OF THE PAYMENTS WAS RENT AND THE TOTAL EXPECTED PAYMENT DU RING THE PREVIOUS YEAR WAS BELOW THE THRESHOLD LIMIT FOR DEDUCTION OF TAX, WHY DID HE DEDUCT ANY TAX AT ALL? THE ASSESSEE HAS FAILED TO E STABLISH THAT THE NATURE OF THE PAYMENTS TO M/S MAHAVIR CRANES WAS 'R ENT'. THEREFORE, HIS CONTENTION THAT HE WAS NOT REQUIRED TO DEDUCT T AX ON THE TOTAL PAYMENTS TO M/S MAHAVIR CRANES CANNOT BE ACCEPTED. IN THE RESULT, THE ASSESSEE HAS FAILED TO ESTABLISH THAT HE HAS DEDUCT ED THE TAX CORRECTLY ITA NO.2524/AHD /2014 KURIAN ULAHANNAN MOOTHUKUZHIYIL VS. ITO ASST.YEAR 2010-11 - 7 - AND FAIRLY ON THE PAYMENTS MADE TO VARIOUS PAYEES A S PER PARA 11 OF THE ASSESSMENT ORDER AND THEREFORE, THESE PAYMENTS ARE LIABLE TO BE DISALLOWED U/S 40(A)(IA) OF THE ACT. HOWEVER, IN TH E CASE OF M/S OM SAI ENGINEERING, THE AMOUNT ON WHICH TAX WAS NOT DEDUCT ED AS PER THE ASSESSING OFFICER WAS RS. 10,64,245/-, WHEREAS THE SAME FIGURE AS CONCEDED AND OFFERED BY THE ASSESSEE DURING ASSESSM ENT AS WELL AS APPELLATE PROCEEDINGS WAS RS. 12,12,145/-. SINCE TH E AMOUNT ON WHICH TAX HAS NOT BEEN DEDUCTED BY THE ASSESSEE OUT OF TH E PAYMENTS MADE TO M/S OM SAI ENGINEERING, IS OFFERED BY THE ASSESSEE HIMSELF, THE ASSESSING OFFICER IS DIRECTED TO CALCULATE THE DISA LLOWANCE U/S 40(A)(IA) ADOPTING THE FIGURE OF RS. 12,12,145/- INSTEAD OF R S. 10,64,145/- AS FAR AS DISALLOWANCE OF PAYMENTS TO M/S OM SAI ENGINEERI NG IS CONCERNED. THE ASSESSEE FAILS ON THIS GROUND OF APPEAL. 8.1. THE LD.COUNSEL FOR THE ASSESSEE HAS PLACED REL IANCE ON THE JUDGEMENT OF HONBLE HIGH COURT OF DELHI IN THE CAS E OF CIT VS. ANSAL LAND MARK TOWNSHIP(P) LTD.(SUPRA). THE HONBLE HIG H COURT OF DELHI HAS HELD AS UNDER:- 12. RELEVANT TO THE CASE IN HAND, WHAT IS COMMON TO BOTH THE PROVISIONS TO SECTION 40(A)(IA) AND SECTION 210(1) OF THE ACT IS THAT THE AS LONG AS THE PAYEE/RESIDENT (WHICH IN THIS CASE I S ALIP) HAS FILED ITS RETURN OF INCOME DISCLOSING THE PAYMENT RECEIVED BY AN IN WHICH THE INCOME EARNED BY IT IS EMBEDDED AND HAS ALSO PAID TAX ON SUCH INCOME, THE ASSESSEE WOULD NOT BE TREATED AS A PERSON IN DEFAULT. AS FAR AS THE PRESENT CASE IS CONCERNED, IT IS NOT DISPUTED BY THE REVENUE THAT THE PAYEE HAS FILED RETURNS AND OFFERED THE SUM RECEIVED TO TAX. 13. TURNING TO THE DECISION OF THE AGRA BENCH OF I TAT IN RAJIV KUMAR AGARWAL VS. ACIT (SUPRA), THE COURT FINDS THAT IT H AS UNDERTAKEN A THOROUGH ANALYSIS OF THE SECOND PROVISO TO SECTION 40(A)(IA) OF THE ACT AND ALSO SOUGHT TO EXPLAIN THE RATIONALE BEHIND IT INSERTION. IN PARTICULAR, THE COURT WOULD LIKE TO REFER TO PARA 9 OF THE SAID ORDER WHICH READS AS UNDER: ITA NO.2524/AHD /2014 KURIAN ULAHANNAN MOOTHUKUZHIYIL VS. ITO ASST.YEAR 2010-11 - 8 - 'ON A CONCEPTUAL NOTE, PRIMARY JUSTIFICATION FOR SUCH A DISALLOWANCE IS THAT SUCH A DENIAL OF DEDUCTION IS TO COMPENSATE FOR THE LOSS OF REVENUE BY CORRESPONDING INCOME NOT BEING TAKEN INTO ACCOUNT IN COMPUTATION OF TAXABLE INCOME IN THE HANDS OF THE RECIPIENTS OF THE PAYMENTS. SUCH A POLICY MOTIVATED DEDUCTION RESTRICTIONS SHOULD, THEREFORE, NOT COME INTO PLAY WHEN AN ASSESSEE IS ABLE TO ESTABLISH THAT THERE IS NO ACTUAL LOSS OF REVENUE. THIS DISALLOWANCE DOES DEINCENTIVIZE NOT DEDUCTING TAX AT SOURCE, WHEN SUCH TAX DEDUCTIONS ARE DUE, BUT, SO FAR AS THE LEGAL FRAMEWORK IS CONCERNED, THIS PROVISION IS NOT FOR THE PURPOSE OF PENALIZING FOR THE TAX DEDUCTION AT SOURCE LAPSES. THERE ARE SEPARATE PENAL PROVISIONS TO THAT EFFECT. DEINCENTIVIZING A LAPSE AND PUNISHING A LAPSE ARE T WO DIFFERENT THINGS AND HAVE DISTINCTLY DIFFERENT, AND SOMETIMES MUTUALLY EXCLUSIVE, CONNOTATIONS. WHEN WE APPRECIATE THE OBJ ECT OF SCHEME OF SECTION 40(A)(IA), AS ON THE STATUTE, AND TO EXAMINE WHETHER OR NOT, ON A 'FAIR, JUST AND EQUITABLE' INT ERPRETATION OF LAW- AS IS THE GUIDANCE FROM HON'BLE DELHI HIGH COU RT ON INTERPRETATION OF THIS LEGAL PROVISION, IN OUR HUMB LE UNDERSTANDING, IT COULD NOT BE AN 'INTENDED CONSEQU ENCE' TO DISALLOW THE EXPENDITURE, DUE TO NON DEDUCTION OF T AX AT SOURCE, EVEN IN A SITUATION IN WHICH CORRESPONDING INCOME I S BROUGHT TO TAX IN THE HANDS OF THE RECIPIENT. THE SCHEME OF SE CTION 40(A)(IA), AS WE SEE IT, IS AIMED AT ENSURING THAT AN EXPENDIT URE SHOULD NOT BE ALLOWED; AS DEDUCTION IN THE HANDS OF AN ASSESSE E IN A SITUATION IN WHICH INCOME EMBEDDED IN SUCH EXPENDIT URE HAS REMAINED UNTAXED DUE TO TAX WITHHOLDING LAPSES BY T HE ASSESSEE. IT IS NOT, IN OUR CONSIDERED VIEW, A PENALTY FOR TA X WITHHOLDING LAPSE BUT IT IS A SORT OF COMPENSATORY DEDUCTION RE STRICTION FOR AN INCOME GOING UNTAXED DUE TO TAX WITHHOLDING LAPSE. THE PENALTY FOR TAX WITHHOLDING LAPSE PER SE IS SEPARATELY PROV IDED FOR IN SECTION 271 C, AND, SECTION 40(A)(IA) DOES NOT ADD TO THE SAME. THE PROVISIONS OF SECTION 40(A)(IA), AS THEY EXISTE D PRIOR TO INSERTION OF SECOND PROVISO THERETO, WENT MUCH BEYO ND THE OBVIOUS INTENTIONS OF THE LAWMAKERS AND CREATED UND UE HARDSHIPS EVEN IN CASES IN ( WHICH THE ASSESSEE'S TAX WITHHOLDING LAPSES DID NOT RESULT IN ANY LOSS TO THE EXCHEQUER. NOW THAT THE ITA NO.2524/AHD /2014 KURIAN ULAHANNAN MOOTHUKUZHIYIL VS. ITO ASST.YEAR 2010-11 - 9 - LEGISLATURE HAS BEEN COMPASSIONATE ENOUGH TO CURE THESE SHORTCOMINGS OF PROVISION, AND THUS OBVIATE THE UNINTENDED HARDSHIPS, SUCH AN AMENDMENT IN LAW, IN VIEW OF THE WELL SETTLED LEGAL POSITION TO THE EFFECT THAT A CURATIVE AMENDMENT TO AVOID UNINTENDED CONSEQUENCES IS TO BE TREATED AS RETROSPECTIVE IN NATURE EVEN THOUGH IT MAY NOT STATE SO SPECIFICALLY, THE INSERTION OF SECOND PROVISO MUST BE GIVEN RETROSPECTIVE EFFEC T FROM THE POINT OF TIME WHEN THE RELATED LEGAL PROVISION WAS INTRODUCED. IN VIEW OF THESE DISCUSSIONS, AS ALSO FOR THE DETAILED REASONS SET OUT EARLIER, WE -CANNOT SUBSCRIBE TO THE VIEW THAT IT COULD HAVE BEEN AN ''INTENDED CONSEQUENCE' TO PUNISH THE ASSESSEES FOR NON DEDUCTION OF TAX AT SOURCE BY DECLINING THE DEDUCTI ON IN RESPECT OF RELATED PAYMENTS, EVEN WHEN THE CORRESPONDING INCOME IS DULY BROUGHT TO TAX. THAT WILL BE GOING MUCH BEYOND THE OBVIOUS INTENTION OF THE SECTION. ACCORDINGLY, WE HOLD THAT THE INSERTION OF SECOND PROVISO TO SECTION 40(A)(IA) IS DECLARATO RY AND CURATIVE IN NATURE AND IT HAS RETROSPECTIVE EFFECT FROM 1ST APRIL, 2005, BEING THE DATE FROM WHICH SUB CLAUSE (IA) OF SECTION 40(A) WAS INSERTED BY THE FINANCE (NO. 2) ACT, 2004.' 14. THE COURT IS OF THE VIEW THAT THE ABOVE REASONING OF THE AGRA BENCH OF ITAT AS REGARDS THE RATIONALE BEHIND THE INSERTION OF THE SECOND PROVISO TO SECTION 40(A) (IA) OF THE ACT AND ITS CONCLUSION THAT THE SAID PROVISO IS DECLARATORY AND CURATIVE AND HAS RETROSP ECTIVE EFFECT FROM 1 ST APRIL 2005, MERITS ACCEPTANCE. 15. IN THAT VIEW OF THE MATTER, THE COURT IS UNABL E TO FIND ANY LEGAL INFIRMITY IN THE IMPUGNED ORDER OF THE ITAT IN ADO PTING THE RATIO OF THE DECISION OF THE AGRA BENCH, ITAT IN (RAJIV KUMAR AG ARWAL V. ACIT). 8.2. LOOKING TO THE TOTALITY OF THE FACTS OF THE CA SE, WE DEEM IT PROPER TO RESTORE THIS ISSUE BACK TO THE FILE OF AO TO VER IFY WHETHER ANY ORDER U/S.201 HAS BEEN PASSED AGAINST THE ASSESSEE. IN C ASE, NO ORDER HAS BEEN PASSED, THE AO WOULD DECIDE THIS ISSUE IN THE LIGHT OF THE JUDGEMENT OF THE HONBLE HIGH COURT OF DELHI IN THE CASE OF CIT VS. ANSAL LAND MARK ITA NO.2524/AHD /2014 KURIAN ULAHANNAN MOOTHUKUZHIYIL VS. ITO ASST.YEAR 2010-11 - 10 - TOWNSHIP (P) LTD.(SUPRA). THUS, THIS GROUND OF ASS ESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. 9. GROUND NO.5 IS AGAINST CONFIRMING THE ADDITION U /S.68 FOR RA.3,94,000/- IN RESPECT OF UNEXPLAINED CASH CREDIT . THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE AUTHORITIES BELOW W ERE NOT JUSTIFIED IN MAKING THE ADDITION. THE LD.COUNSEL FOR THE ASSES SEE SUBMITTED THAT CONFIRMATION, BANK STATEMENT OF DEPOSITOR WAS PRODU CED. THE ASSESSEE CANNOT BE MADE SCAPEGOAT FOR NON-APPEARANCE OF DEPO SITOR IN COMPLIANCE OF SUMMONS ISSUED TO HIM. EVEN IF THE ASSESSEE WAS REQUIRED TO EXPLAIN DEPOSIT SO RECEIPT ONLY AN AMOUNT OF RS.1,52,000/- RECEIVED ON 17/11/2009 WAS TO BE EXPLAINED. BALANCE AMOUNT WAS REPRESENTING RECEIPT OF AMOUNT AGAINST ADVANCES MADE EARLIER OR AMOUNTS SQUARED UP ON THE SAME DATE. THE AMOUNT OF TOTAL CREDIT STAND S AT RS.3,44,000/- AGAINST ADDITION OF RS.3,94,000/- IN THE ASSESSMENT ORDER. HE ALSO SUBMITTED THAT NO SHOW-CAUSE WAS ISSUED TO THE ASSE SSEE BY THE AO FOR MAKING THE ADDITION IN THIS RESPECT. 9.1. ON THE CONTRARY, LD.SR.DR SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT THE ASSESSEE WAS REQUIRED TO FURNISH THE DETAILS IN SUPPORT OF HIS CLAIM. THE LD.CIT(A) CONFIRMED T HIS ADDITION IN PARAS- 9.3 TO 9.6 OF HIS ORDER BY OBSERVING AS UNDER:- ITA NO.2524/AHD /2014 KURIAN ULAHANNAN MOOTHUKUZHIYIL VS. ITO ASST.YEAR 2010-11 - 11 - 9.3 I HAVE CAREFULLY CONSIDERED THE FACTS AND CIR CUMSTANCES OF THE CASE, THE OBSERVATIONS OF THE AO, THE SUBMISSIONS O F THE ASSESSEE MATERIAL AVAILABLE ON RECORD AND THE JUDICIAL PRONO UNCEMENTS ON THE SUBJECT. IT IS CLEAR FROM THE RECORDS THAT THE ASSE SSEE HAS FAILED TO ESTABLISH THE IDENTITY AND CREDITWORTHINESS OF THE CLAIMED CREDITOR VIZ SHRI MUSTAFA ABBASBHAI. HE REFUSED TO COMPLY WITH T HE SUMMONS U/S 131 ISSUED BY THE ASSESSING OFFICER. THERE ARE CASH DEPOSITS IN THE ACCOUNT OF SHRI MUSTAFA ABBASBHAI EITHER ON THE SAM E DAY OR A FEW DAYS PRIOR TO THE ISSUE OF CHEQUE TO THE ASSESSEE A ND THEREFORE, EVEN THE GENUINENESS OF THE TRANSACTION IS DOUBTFUL. SHRI MU STAFA ABBASBHAI IS AN EMPLOYEE OF THE ASSESSEE AND THEREFORE, THE ASSE SSEE EXERCISES CONTROL OVER HIS ACTIONS. THE TOTAL NET ANNUAL INCO ME OF SHRI MUSTAFA ABBASBHAI IS ONLY RS. 1,56,000/- AND AFTER CONSIDER ING HIS HOUSEHOLD EXPENSES, HE MAY NOT HAVE ENOUGH SAVINGS TO LOAN TO THE ASSESSEE. IT IS THE ASSESSEE WHO HAS SHOWN CREDITS BY WAY OF LOAN I N HIS BOOKS OF ACCOUNTS AND THE ONUS IS ON HIM TO PROVE THE IDENTI TY AND CREDITWORTHINESS OF THE CREDITOR AND ALSO ESTABLISH THE GENUINENESS OF THE TRANSACTION. IN ROSAHN DI HUTTI VS CIT [1977] 107 ITR 938 (SC) AND KALE KHAN MOHAMMAD HANIF VS CIT [1963] 50 ITR 1 (SC), IT WAS HELD THAT THE ONUS OF PROVING THE SOURCE OF A SUM O F MONEY FOUND TO HAVE BEEN RECEIVED BY AN ASSESSEE IS ON HIM. WHERE THE NATURE AND SOURCE OF A RECEIPT, WHETHER IT BE OF MONEY OR OTHE R PROPERTY, CANNOT BE SATISFACTORILY EXPLAINED BY THE ASSESSEE, IT IS OPE N TO THE REVENUE TO HOLD THAT IT IS THE INCOME OF THE ASSESSEE AND NO .FURTH ER BURDEN LIES ON THE REVENUE TO SHOW THAT THE INCOME IS FROM ANY PARTICU LAR SOURCE. IN SUMATI DAYAL VS CIT [1995] 214 ITR 801 (SC), IT WAS HELD THAT IF THE EXPLANATION OFFERED BY THE ASSESSEE ABOUT THE NATUR E AND SOURCE OF THE CREDITS IN HIS BOOKS OF ACCOUNTS IS NOT SATISFACTOR Y, THE AMOUNT CAN BE TREATED AS INCOME OF THE ASSESSEE. 9.4 IN C.KANT & CO. VS CIT 11980] 126 ITR 63 (CAL), IT WAS HELD THAT IN CASE OF CASH CREDIT ENTRY, IT IS NECESSARY FOR T HE ASSESSEE TO PROVE NOT ONLY THE IDENTITY OF THE CREDITOR BUT ALSO TO PROVE CAPACITY OF THE CREDITOR TO ADVANCE THE MONEY AND GENUINENESS OF THE TRANSAC TION. HON'BLE CALCUTTA HIGH COURT HAS ALSO HELD IN THE CASE OF CIT VS KORLAY TRADING CO. LTD. [1998] 232 ITR 820 (CAL) THAT MERE MENTION OF INCOME-TAX FILE NO. OF THE CREDITOR CANNOT BE SAID TO HAVE PRO VED THE GENUINENESS ITA NO.2524/AHD /2014 KURIAN ULAHANNAN MOOTHUKUZHIYIL VS. ITO ASST.YEAR 2010-11 - 12 - OF THE CREDIT. HON'BLE CALCUTTA HIGH COURT, IN THE CASE OF S.K. BOTHRA & SONS, HUF VS ITO 12011] 203 TAXMAN 436 (KOL), HELD THAT WHILE CONSIDERING WHETHER THE ALLEGED LOAN TAKEN BY THE A SSESSEE WAS GENUINE TRANSACTION, THE INITIAL ONUS IS ALWAYS ON THE ASSE SSEE AND IF NO EXPLANATION IS GIVEN OR THE EXPLANATION GIVEN BY TH E ASSESSEE IS NOT SATISFACTORY, THE ASSESSING OFFICER CAN DISBELIEVE THE ALLEGED TRANSACTION OF LOAN. 9.5 THE ASSESSEE HAS CLAIMED DURING THE APPELLATE P ROCEEDINGS THAT THE CREDIT MAY BE TREATED AS GENUINE SINCE THE TRANSACT IONS THROUGH CHEQUE MAY BE TREATED AS GENUINE. HOWEVER, IN THE ABSENCE OF THE PROOF OF CREDITWORTHINESS OF THE CREDITOR, IT CANNOT BE ACCE PTED THAT THE ASSESSEE HAS DISCHARGED THE ONUS. IN NEMI CHAND KOTHARI VS CIT [2003] 264 ITR 254 (GAU), IT WAS HELD THAT IT CANNOT BE SAID THAT A TRANSACTI ON WHICH TAKES PLACE THROUGH A CHEQUE IS ALWAYS SACROS ANCT. 9.6 IN VIEW OF THE ABOVE DISCUSSION, IT IS CLEAR THAT THE ASSESSEE HAS FAILED TO DISCHARGE' THE BURDEN OF PRIMARY ONUS CAS T ON HIM TO ESTABLISH EITHER THE IDENTITY OR CREDITWORTHINESS OF THE ALLE GED CREDITOR AND HAS ALSO FAILED TO PROVE THE GENUINENESS OF THE TRANSAC TION. THEREFORE, THE CREDIT OF RS.3,84,000/- IN ASSESSEES BANK ACCOUNT IS HELD TO BE UNEXPLAINED AND THE ORDER OF THE ASSESSING OFFICER IN THIS REGARD IS UPHELD. THE ASSESSEE FAILS ON THIS GROUND OF APPEA L. 9.2. THE LD.COUNSEL FOR THE ASSESSEE DREW OUR ATTEN TION TOWARDS PAGE NO.82 TO 87 OF THE PAPER-BOOK IN SUPPORT OF HIS CON TENTION THAT THERE WERE DEBIT AND CREDIT ENTRY INTO THE LEDGER ACCOUNT OF THE DEPOSITOR. WE FIND THAT THERE ARE DEBIT ENTRIES OF RS.1,50,000/-, THEN CREDIT ENTRIES OF RS.50,000/- & RS.1 LAC, AGAIN THERE IS A DEBIT ENTR IES OF RS.20,000/- AND THERE IS CORRESPONDING CREDIT ENTRY F RS.20,000 AND AGAIN THERE IS A CREDIT ENTRY OF RS.72,000/- AND DEBIT ENTRY OF RS.72,000/- . THE AO HAS ADDED THE ENTIRE ENTRY ENTRIES OF RS.3,94,000/- ALL THESE TRANSACTIONS HAVE BEEN ITA NO.2524/AHD /2014 KURIAN ULAHANNAN MOOTHUKUZHIYIL VS. ITO ASST.YEAR 2010-11 - 13 - ROUTED THROUGH BANKING CHANNEL. THE CLOSING BALANC E IS OF RS.1,52,000/-. WE FIND THAT THE AO HAS NOT GIVEN SET OFF OF THESE DEBIT ENTRIES, WHEN THE TRANSACTION IS ROUTED THROUGH BANKING CHANNEL, IDEN TITY OF DEPOSITOR IS ESTABLISHED, THEREFORE IN OUR CONSIDERED VIEW, THE AO WAS NOT JUSTIFIED IN MAKING THE DISALLOWANCE OF THE ENTIRE CREDIT ENTRIE S AMOUNTING TO RS.3,94,000/- AND HE OUGHT TO HAVE GIVEN THE SET OF F OF THE DEBIT ENTRY. THEREFORE, THE ADDITION IS SUSTAINED TO THE EXTENT OF RS.1,52,000/- AND REST OF THE ADDITION IS DIRECTED TO BE DELETED. THUS, T HIS GROUND OF ASSESSEES APPEAL IS PARTLY ALLOWED. 10. THE GROUND UNNUMBERED IS PRAYER TO THIS TRIBUNA L WHICH NEEDS NO INDEPENDENT ADJUDICATION. 11. IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLO WED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON WEDNESDAY, THE 21 ST DAY OF OCTOBER, 2015 AT AHMEDABAD. SD/- SD/- ( .. ) ( ) ( . ) ( G.D. AGARWAL ) ( KUL BHARAT ) VICE PRESIDENT (AZ) JUDICIAL MEMBER AHMEDABAD; DATED 21/ 10 /2015 6/..-, .-../ T.C. NAIR, SR. PS ITA NO.2524/AHD /2014 KURIAN ULAHANNAN MOOTHUKUZHIYIL VS. ITO ASST.YEAR 2010-11 - 14 - !'#$%&' &$ / COPY OF THE ORDER FORWARDED TO : 1. %( / THE APPELLANT 2. )*%( / THE RESPONDENT. 3. 789 : / CONCERNED CIT 4. : ( ) / THE CIT(A)-VI, BARODA 5. ;< )-89 , / 893 , 7 / DR, ITAT, AHMEDABAD 6. <= >. / GUARD FILE. ! / BY ORDER, *; ) //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION .. 14.10.2015 (DICTATION-PAD 13+ PAGES ATTACHED AT THE END OF THIS FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER ..19.10.2015 3. OTHER MEMBER... 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S. 21.10.15 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 21.10.15 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER