Manikchand Ganeshmal Raisoni, Pune V. ITO, Ward 2(1), Pune

ITA 2616/PUN/2012

• Counselvise Citation: 261624514 RSA 2012
• Duration Of Justice: 1 year(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-01-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 31-12-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: P L PATHADE
• Section: 40A(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER, AND SHRI G.S. PANNU, ACCOUNTANT MEMBER S. NO. ITA NO. A.Y. APPELLANT RESPONDENT 1 ITA NO.2613/ PN/2012 2009-10 SANJAY MANIKCHAND RAISONI, A-301, SHRI SHANTI NAGAR SOCIETY, S.NO.63/1/3, KONDHWA, PUNE - 411037 ITO, WARD 2(1), PUNE 2 ITA NO.2614/ PN/2012 2009-10 SAPNA SANJAY RAISONI, A-301, SHRI SHANTI NAGAR SOCIETY, S.NO.63/1/3, KONDHWA, PUNE - 411037 ITO, WARD 2(1), PUNE 3 ITA NO.2615/ PN/2012 2009-10 SANTOSH MANIKCHAND RAISONI, FLAT NO.2, GREEN LEAF APT., BEHIND TRENDZ FURNITURE, LULLANAGAR, PUNE 411040 ITO, WARD 2(1), PUNE 4 ITA NO.2616/ PN/2012 2009-10 MANIKCHAND GANESHMAL RAISONI, FLAT NO.2, GREEN LEAF APT., BEHIND TRENDZ FURNITURE, LULLANAGAR, PUNE 411040 ITO, WARD 2(1), PUNE ASSESSEE BY : SHRI NIKHIL PATHAK DEPARTMENT BY : SHRI P.L. PATHADE DATE OF HEARING : 28.01.2014 DATE OF ORDER : 29.01.2014 ORDER PER BENCH ALL THESE APPEALS PERTAIN TO THE SAME GROUP ON ALM OST SIMILAR ISSUES. SO THESE WERE HEARD TOGETHER AND ARE BEING DISPOSED OFF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. IN ITA NO.2613/PN/2012, THE ASSESSEE HAS FILED T HE APPEAL ON THE FOLLOWING GROUNDS: THE FOLLOWING GROUNDS ARE TAKEN WITHOUT PREJUDICE T O EACH OTHER-ON FACTS AND IN LAW, 2 1. THE LEARNED CIT(A) ERRED IN CONFIRMING THE DISALLOW ANCE OF RS.77,62,288/- U/S 40A (3) OF THE ACT. 2. THE LEARNED CIT (A) ERRED IN HOLDING THAT THE CASE OF THE ASSESSEE WAS NOT COVERED WITHIN THE EXCEPTIONS PROV IDED IN RULE 6DD AND HENCE, THE LEARNED A.O. WAS JUSTIFIED IN MAKING THE DISALLOWANCE. 3. THE LEARNED CIT (A) FAILED TO APPRECIATE THAT THE A SSESSEE HAD MADE PAYMENTS TO GOVT. UNDERTAKINGS AND THEREFO RE, THE CASE WAS COVERED UNDER RULE 6DD (B) AND HENCE, DISALLOWANCE MADE WAS NOT JUSTIFIED. 4. THE LEARNED CIT (A) ERRED IN HOLDING THAT THE PAYME NTS MADE BY THE ASSESSEE TO MSRTC, ETC. WERE NOT COVERED WIT HIN THE EXCEPTION PROVIDED UNDER RULE 6DD(B) AND THUS, THE DISALLOWANCE MADE BY LEARNED A.O. WAS JUSTIFIED. 5. THE LEARNED CIT (A) FAILED TO APPRECIATE THAT THERE WERE BUSINESS COMPULSIONS BECAUSE OF WHICH THE ASSESSEE HAD MADE THE PAYMENTS IN CASH EXCEEDING RS.20,000/- AND THEREFORE, IT IS SUBMITTED THAT SINCE THE PAYMENTS WERE MADE TO GOVT. THE DISALLOWANCE MADE OUGHT TO HAVE BEEN D ELETED. 6. THE LEARNED CIT (A) ERRED IN UPHOLDING THE DISALLOW ANCES OF RS.1,50,000/- MADE BY A.O. ON INTEREST FREE ADVANCE S. 7. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND OR DELETE ANY OF THE ABOVE GROUNDS OF APPEAL. 3. FIRST ISSUE IN THIS APPEAL IS WITH REGARD TO DIS ALLOWANCE OF 77,62,288/- MADE BY INVOKING PROVISIONS OF SECTION 40A(3) OF I.T. ACT. AT THE OUTSET OF HEARING, THE LEARNED AUTHORI ZED REPRESENTATIVE HAS POINTED OUT THAT A SIMILAR ISSUE AROSE IN A GRO UP CASE IN ITA NO.835/PN/2010 AND OTHERS INCLUDING THE ASSESSEES OWN CASE FOR A.Y. 2006-07 AND 2007-08, WHEREIN, THE SIMILAR ISSU E WAS RESTORED TO THE CIT(A) BY OBSERVING AS UNDER: 10. WE ARE UNABLE TO ACCEPT THE ARGUMENT CANVASSED BY THE LD. DR. THE ARTICLE 12 OF THE CONSTITUTION READS A S UNDER: THE STATE INCLUDES THE GOVERNMENT AND PARLIAMENT OF INDIA AND GOVERNMENT AND THE LEGISLATURE OF THE STATES AN D ALL LOCAL OR OTHER AUTHORITIES WITHIN THE TERRITORY OF INDIA OR UNDER THE CONTROL OF THE GOVERNMENT OF INDIA. 3 11. THE DEFINITION OF THE STATE UNDER ARTICLE 12 HA S COME FOR THE CONSIDERATION ON NUMBER OF OCCASIONS BEFORE THE HONBLE SUPREME COURT. THE STATE CONSISTS OF THREE DEPARTM ENTS, THE LEGISLATURE, THE EXECUTIVE AND THE JUDICIARY. WE N EED NOT GO INTO ALL THE LIMBS OF THE STATE AS ONLY THE LIMITED ISSUE BEFORE US IS WHETHER THE TERM GOVERNMENT USED IN CLAUSE (B) T O RULE 6DD INCLUDES EVEN THE AUTONOMOUS BODIES WHICH PARTAKES THE CHARACTER OF INSTRUMENTALITIES OF THE GOVERNMENT. THE CORE TEST TO BE APPLIED WHETHER A PARTICULAR CORPORATION WHIC H IS AUTONOMOUS BODY IS A PART OF GOVERNMENT, TO BE SEEN IN THE CONTEXT OF DEGREE OF CONTROL OVER MANAGEMENT AND PO LICY DECISIONS. WE FIND THAT IN THE CASE OF MSRTC AS PE R THE CERTIFICATE OF THE SHARE CAPITAL FILED BEFORE US, T HE ENTIRE SHARE CAPITAL IS CONTRIBUTED BY THE STATE GOVERNMENT AND THE CENTRAL GOVERNMENT AND THERE IS NO PRIVATE PARTICIPATION. W E FURTHER FIND THAT MSRTC IS INCORPORATED UNDER SPECIAL LEGIS LATION I.E., ROAD TRANSPORT CORPORATION ACT, 1950. WE HAVE EXAM INED THE PROVISIONS OF THE SAID ENACTMENT. AS PER SECTION 5 OF THE SAID ACT, THE STATE GOVERNMENT IS ONLY HAVING POWER TO A PPOINT THE CHAIRMAN AND OTHER MEMBERS IN THE MANAGING BODY. T HERE IS A FULL CONTROL OF THE STATE GOVERNMENT ON THE POLIC Y DECISIONS AS WELL AS MANAGEMENT. IN OUR OPINION, IF WE APPLY TH E TEST OF THE CONTROL AND MANAGEMENT AS WELL AS THE EQUITY PARTIC IPATION, MSRTC IS A STATE WITHIN ARTICLE 12 OF THE CONSTITUT ION. APPLYING THE ABOVE TEST, THE HONBLE SUPREME COURT HAS HELD, AS DISCUSSED HEREINABOVE, THAT THE AUTONOMOUS BODIE S LIKE STATE ROAD TRANSPORT CORPORATION OR WAREHOUSING COR PORATION WHERE THERE IS A FULL CONTROL BY THE GOVERNMENT, EI THER CENTRAL OR STATE, THESE ARE THE INSTRUMENTALITIES OF THE GO VERNMENT ONLY. 12. THE TERM GOVERNMENT IS VERY MUCH WIDE UNDER THE CONSTITUTIONAL SET UP. GOVERNMENT MAY BE CENTRAL OR STATE, OR IT MAY BE LOCAL GOVERNMENT WHICH IS ENVISAGED BY OUR CONSTITUTION, LIKE ZILLA PARISHAD, MUNICIPAL CORPOR ATIONS, MUNICIPAL COUNCILS, PANCHAYAT SAMITHIS, ETC. THE PU BLIC WORKS DEPARTMENT IS PART OF THE GOVERNMENT. IN OUR OPINI ON, THIS ASPECT HAS NOT BEEN CONSIDERED BY THE AUTHORITIES B ELOW AND THEY HAVE CLOSED DOOR TO THE ASSESSEES TO MAKE OUT THE CASE FOR EXAMINATION UNDER RULE 6DD. WE ARE, THEREFORE, OF THE OPINION THAT IN THE LIGHT OF OUR ABOVE DISCUSSION, THE PLEA OF THE ASSESSEES NEED RECONSIDERATION BY THE LD. CIT(APPEA LS). WE, THEREFORE, SET ASIDE THE ISSUE IN RESPECT OF THE DI SALLOWANCE MADE U/S.40A(3) TO THE FILE OF THE LD. CIT(A) TO DE CIDE THE SAME DE NOVO IN THE LIGHT OF OUR ABOVE OBSERVATIONS AND DISCUSSION. ACCORDINGLY, THE RELEVANT GROUNDS TAKEN BY THE ASSE SSEES IN ALL THESE APPEALS ARE ALLOWED FOR STATISTICAL PURPOSES. NEEDLESS TO SAY THE CIT(A) IS DIRECTED TO GIVE OPPORTUNITY OF B EING HEARD TO THE ASSESSEES AS PER THE PRINCIPLES OF NATURAL JUST ICE. 4 3.1 NOTHING CONTRARY WAS BROUGHT TO OUR KNOWLEDGE O N BEHALF OF REVENUE. FACTS BEING SIMILAR, SO FOLLOWING THE SAM E REASONING, WE SET ASIDE THE ISSUE IN RESPECT OF DISALLOWANCE OF 77,62,288/- U/S.40A(3) OF ACT TO THE FILE OF CIT(A) TO DECIDE T HE SAME ON DE NOVO IN THE LIGHT OF ABOVE LEGAL DISCUSSION AFTER PROVID ING DUE OPPORTUNITY OF HEARING TO THE ASSESSEE. A SIMILAR ISSUE AROSE IN ITA NOS.2614, 2615 AND 2616/PN/2012. FACTS BEING SIMILAR, SO FOL LOWING THE SAME REASONING, WE ALSO RESTORE THE ISSUES TO THE CIT(A) WITH A SIMILAR DIRECTIONS IN THESE APPEALS AS WELL. 4. NEXT ISSUE IS WITH REGARD TO DISALLOWANCE OF 1,50,000/- MADE BY THE ASSESSING OFFICER ON INTEREST FREE ADVANCES. AT THE OUTSET OF HEARING, AGAIN THE LEARNED AUTHORIZED REPRESENTATIV E HAS POINTED OUT THAT A SIMILAR ISSUE AROSE IN ASSESSEES OWN CA SE FOR A.Y. 2006- 07, WHEREIN VIDE PARA 26 SIMILAR ISSUE WAS RESTORED TO THE CIT(A) BY OBSERVING AS UNDER: 26. WE HAVE HEARD THE PARTIES ON THIS ISSUE. WE F IND THAT THE CONTENTION OF THE ASSESSEES THAT THERE WERE TRADE A DVANCES ON WHICH NO INTEREST WAS CHARGED, THAT HAS NOT BEEN PR OPERLY APPRECIATED BY THE AUTHORITIES BELOW. AS ADMITTEDL Y, THE ASSESSEE IS ALSO BIDDING THE AUCTIONS OF MSRTC AND, HENCE, THE INTEREST DEBITED TO THE PROFIT & LOSS ACCOUNT COMPR ISING THE ELEMENT OF INTEREST PAID FOR THE DELAYED PAYMENTS O N THE BIDDING OF THE AUCTIONS TO MSRTC. MOREOVER, WE ALS O FIND THAT AS CONTENDED BY THE ASSESSEE, THE CAPITAL ACCOUNT O F THE ASSESSEE IS SUBSTANTIALLY CREDIT BALANCES. IF IT I S SO, THEN TO THAT EXTENT IT CAN BE SAID THAT THE ASSESSEE HAS ADVANCE D THE MONEY INTEREST-FREE, OTHERWISE ALSO OUT OF ASSESSEES OWN CAPITAL. THIS ISSUE NEEDS RECONSIDERATION. WE ACCORDINGLY SET AS IDE THIS ISSUE TO THE FILE OF THE LD. CIT(A) FOR FRESH ADJUD ICATION. HE SHOULD CALL FOR THE REMAND REPORT OF THE ASSESSING OFFICER AND ADJUDICATE THE ISSUE AFTER HEARING THE ASSESSEES. 4.1 NOTHING CONTRARY WAS BROUGHT TO OUR KNOWLEDGE O N BEHALF OF REVENUE. FACTS BEING SIMILAR, SO FOLLOWING THE SAM E REASONING, WE RESTORE THE ISSUE TO THE CIT(A) WITH A SIMILAR DIRE CTION. A SIMILAR ISSUE AROSE IN ITA NOS.2614, 2615 AND 2616/PN/2012. FACTS BEING SIMILAR, SO FOLLOWING THE SAME REASONING, WE RESTOR E THIS ISSUE TO THE CIT(A) IN THESE APPEALS WITH A SIMILAR DIRECTION. 5 4.2 IN ITA NO.2616/PN/2012 FOR A.Y. 2009-10, THERE IS ONE MORE ISSUE RAISED BY THE ASSESSEE I.E. DISALLOWANCE OF 2,00,000/- WHICH READS AS UNDER: THE LEARNED CIT(A) ERRED IN UPHOLDING THE DISALLOW ANCES OF RS.2,00,000/- MADE BY A.O. AS UNPROVED DEBTORS HAVI NG CREDIT BALANCES. 4.2.1 AT THE OUTSET OF HEARING, THE LEARNED AUTHOR IZED REPRESENTATIVE DID NOT PRESS THIS GROUND OF DISALLO WANCE OF 2,00,000/-, SO SAME IS DISMISSED AS NOT PRESSED. 5. IN THE RESULT, ALL THE FOUR APPEALS FILED BY THE ASSESSEE GROUP ARE PARTLY ALLOWED AS INDICATED ABOVE. PRONOUNCED IN THE OPEN COURT ON THIS THE 29 TH DAY OF JANUARY, 2014. SD/- SD/- (G.S. PANNU) (SHAILENDRA KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE, DATED: 29 TH JANUARY, 2014 GCVSR COPY TO:- 1. ASSESSEE 2. DEPARTMENT 3. THE CIT(A)-II, PUNE 4. THE CIT-II, PUNE 5. THE DR, A BENCH, I.T.A.T., PUNE. 6. GUARD FILE BY ORDER //TRUE COPY// SENIOR PRIVATE SECRETARY, I.T.A.T., PUNE