M/s.Hameed & Company, Calicut V. ACIT, Tirur

ITA 273/COCH/2013

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 69119 (ITAT-COCHIN)
• Duration Of Justice: 7 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-12-2013
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 26-11-2013
• Assessment Year: 2005-2006
• Appeal Filed On: 08-05-2013
• Court: TRIBUNAL
• Department Lawyers: M ANIL KUMAR; LATHA V KUMAR
• Assessee Lawyers: C B M WARRIER
• Keywords: Depreciation; Opportunity of being heard

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE S/SHRI N.R.S.GANESAN, JM AND B.R.BASKAR AN, AM I.T.A. NO. 273/COCH/2013 ASSESSMENT YEAR : 2005-06 M/S. HAMID & COMPANY ENGINEERS PVT. LTD., KADALUNDI NAGARAM (P.O.), CALICUT-673 314. [PAN: AAACH 8652E] VS. THE ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE-2(2),TIRUR. (ASSESSEE -APPELLANT) (REVENUE-RESPONDEN T) ASSESSEE BY SHRI C.B.M. WARRIER, CA REVENUE BY SMT. LATHA V. KUMAR, JR. DR AND SHRI M. ANIL KUMAR, CIT(DR) DATE OF HEARING 26/11/2013 DATE OF PRONOUNCEMENT 20/12/2013 O R D E R PER B.R.BASKARAN, ACCOUNTANT MEMBER: THE ASSESSEE HAS FILED THIS APPEAL CHALLENGING THE ORDER DATED 28-02-2013 PASSED BY THE LD. CIT(A), KOZHIKODE AND IT RELATES TO THE ASSESSMENT YEAR 2005- 06. 2. THE FOLLOWING ADDITIONS MADE BY THE ASSESSING OF FICER, HAVING BEEN CONFIRMED BY THE LD. CIT(A), THE ASSESSEE HAS FILED THIS APPEAL BEFORE US. 1. DIFFERENCE IN ACCOUNT OF KOHINOOR CRANE SERVIC ES : RS. 25,15,865 2. AMOUNT PAYABLE TO ENVEE FEBERECT : RS. 23,15,283 3. DEPRECIATION CLAIMED ON MACHINERY PUR CHASED : RS. 1,15,250 4. AMOUNT PAYABLE TO MEDHA CONSTRUCTION : RS. 2,99,750 5. AMOUNT PAYABLE TO SIVA ENGG. & CONSTRU CTION CO.:RS. 4,25,988 TOTAL :RS. 55,92,258 I.T.A. NO. 273/COCH/2013 2 DURING THE COURSE OF HEARING, THE ASSESSEE DID NOT PRESS TWO ADDITIONS LISTED AS SL. NO. 4 AND 5 ABOVE AND HENCE THE GROUNDS RELATIN G TO THE SAME ARE DISMISSED AS WITHDRAWN. 3. THE FACTS RELATING TO THE REMAINING THREE ADDIT IONS ARE NARRATED BY THE LD. CIT(A) AS UNDER:- 4. THE FIRST EFFECTIVE GROUND OF APPEAL IS AGAINST DISALLOWANCE OF RS. 25,15,865/- BEING THE DIFFERENCE IN THE ACCOUNT OF KOHINOOR CRANE SERVICE. THE ASSESSEE CLAIMED A TOTAL SUM OF RS. 44,96,610.7 4 AS PAID DURING THE YEAR TOWARDS CRANE HIRE CHARGES. THIS AMOUNT ALSO INCLUDE RS. 25,15,865/- SAID TO HAVE BEEN PAID TO M/S. KOHINOOR CRANE SERVICE. DURING THE PROCESS OF ASSESSMENT, THE ASSESSING OFF ICER ISSUED LETTER TO THIS PARTY SEEKING CONFIRMATION PAYMENT BY THE ASSE SSEE. IN REPLY M/S. KOHINOOR CRANE SERVICE BY THEIR LETTER DATED 13.11 .2007 CATEGORICALLY STATED THEY HAD NO BUSINESS ACTIVITY WITH THE ASSES SEE. THUS, THE ASSESSING OFFICER CAME TO THE CONCLUSION THAT THE A SSESSEE WAS TRYING TO INFLATE THE CRANE HIRE CHARGES ACCOUNT TO REDUCE TH E PROFIT FOR THE YEAR. DURING THE COURSE OF APPEAL HEARING, THE ASSESSEE P RODUCED XEROX COPIES OF BILLS/INVOICES RECEIVED TOWARDS HIRE CHARGES, PA ID AT JUSL SITE, BELLARY, WHICH WERE FORWARDED TO THE ASSESSING OFFICER FOR V ERIFICATION. DURING THE REMAND PROCEEDINGS, ENQUIRIES WERE MADE BY THE ASSE SSING OFFICER WITH JUSL AND THEY HAVE ALSO CONFIRMED THAT NO SUCH MACH INERY WAS BROUGHT TO THEIR SITE DURING THE RELEVANT PERIOD. 7. THE NEXT GROUND OF APPEAL IS AGAINST THE DISAL LOWANCE OF RS. 1,15,250/- BEING THE EXCESS CLAIM OF DEPRECIATION O N PLATE BLENDING MACHINE PURCHASED FORM M/S. RAJ EXPORTS. THE ASSESSI NG OFFICER CALLED FOR THE FULL DETAILS OF TRANSACTIONS WITH THE ASSESSEE DURING THE YEAR FROM M/S. RAJ EXPORTS AND FOUND THAT TOTAL TRANSACTION WAS FOR RS. 2,30,600/- AND CLOSING BALANCE WAS SHOWN AS NIL. VERIFICATION OF T HE INVOICE COPY FILED BY THE ASSESSEE REVEALED THAT THE ASSESSEE HAD PURCHAS ED A SECOND HAND MACHINE FOR RS. 11,22,000/- FROM RAJ EXPORTS. IT W AS ALSO NOTICED BY THE ASSESSING OFFICER THAT THE ASSESSEE IS TRYING TO IN FLATE THE COST OF MACHINERY BY FURNISHING NON-GENUINE PURCHASE BILL. IN VIEW OF THE ABOVE, THE AO DISALLOWED EXCESS DEPRECIATION CLAIMED BY TH E ASSESSEE TO THE TUNE OF RS. 1,15,250/- AND ADDED BACK THE SAME TO T HE INCOME RETURNED. 8. THE LAST EFFECTIVE GROUND OF APPEAL IS AGAINST T HE DISALLOWANCE OF RS. 23,15,283/- BEING THE AMOUNT PAYABLE TO ENVEE FA BERECT AND SHRI N. MOHAMMED, PROPRIETOR HAD PRODUCED THE SAME BEFORE T HE ASSESSING I.T.A. NO. 273/COCH/2013 3 OFFICER. ON GOING THROUGH THE SAME, IT WAS NOTICED BY THE ASSESSING OFFICER THAT THERE WERE 20 TRANSACTIONS WITH THE AS SESSEE DURING THE YEAR AND ALL THE PAYMENTS WERE MADE BY CHEQUE/CASH, EXCE PT ONE BILL, WHICH REMAINED UNPAID. ALL THE OTHER TRANSACTIONS WERE M ADE THROUGH STATE BANK OF MYSORE, WHICH WERE ACCEPTED IN ASSESSMENT. AN AMOUNT OF RS. 23,15,283/- WAS DISALLOWED IN THE ASSESSMENT ON THE STRENGTH OF STATEMENT RECORDED FROM SHRI N. MOHAMMED PROP. OF EN VEE FABERECT, WHO IS THE NEPHEW OF THE MANAGING DIRECTOR OF THE A SSESSEE-COMPANY. SHRI N. MOHAMMED STATED THAT BECAUSE OF THE RELATIO NSHIP WITH THE MANAGING DIRECTOR OF THE ASSESSEE-COMPANY ONLY, HE HAD DRAWN THE INVOICE NO. 001/2005-06 DATED 25.03.2005 FOR RS. 23 ,15,283/- IN FAVOUR OF THE ASSESSEE-COMPANY. THEREFORE, THE ASSESSING OFFICER TREATED THE ABOVE CLAIM OF THE ASSESSEE AS NOT GENUINE AND ADDE D THE SAME TO THE INCOME RETURNED. THUS, THE AO HAS MADE THE ABOVE SAID THREE ADDITION S ON THE REASONING THAT THE ASSESSEE COULD NOT PROVE THE GENUINENESS OF THE CLA IM. THE LD CIT(A) ALSO CONFIRMED THE ADDITIONS, SINCE NO FRESH MATERIAL WA S PLACED BEFORE HIM. AGGRIEVED, THE ASSESSEE HAS FILED THIS APPEAL BEFOR E US. 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND CARE FULLY PERUSED THE RECORD. THE MAIN CONTENTION URGED BY LD A.R BEFORE US IS THAT T HE ASSESSEE HAS MADE MAJORITY OF PAYMENTS TOWARDS THE ABOVE SAID EXPENSE S/PURCHASE OF MACHINERY BY WAY OF CHEQUES AND THE TAX AUTHORITIES HAVE TAKE N ADVERSE DECISION WITHOUT EXAMINING THE IDENTITY OF THE PAYEES OF THOSE CHEQU ES. WITH REGARD TO THE PAYMENTS MADE TO M/S ENVEE FEBERECT, IT WAS CONTENDE D BY LD A.R THAT THE ASSESSEE WAS NOT GIVEN AN OPPORTUNITY TO CROSS EXAM INE SHRI N MOHAMED, THE PROPRIETORY OF M/S ENVEE FEBERECT. ACCORDING TO LD A.R, THE ASSESSEE HAS MADE PAYMENTS BY WAY OF CHEQUES TO ALL THE THREE PARTIES AND THEY HAVE GIVEN STATEMENTS AGAINST THE ASSESSEE TO SUIT THEIR CONVE NIENCE AND HENCE THEIR STATEMENTS SHOULD NOT HAVE BEEN PLACED RELIANCE BY THE TAX AUTHORITIES. HOWEVER, THE LD D.R STRONGLY SUPPORTED THE ORDER PA SSED BY LD CIT(A) BY STATING THAT THE ASSESSING OFFICER HAS PROVED BEYON D DOUBT THAT THE EXPENSES CLAIMED BY THE ASSESSEE ARE BOGUS IN NATURE. I.T.A. NO. 273/COCH/2013 4 5. HOWEVER, WE NOTICE THAT THE ASSESSEE HAS MAD E PAYMENTS BY WAY OF CHEQUES AND HENCE THEY SHOULD HAVE BEEN ENCASHED TH ROUGH SOME BANK ACCOUNTS ONLY. HENCE, WE FIND MERIT IN THE CONTENT ION OF THE LD A.R THAT THE EXAMINATION OF THE PAYEES BANK ACCOUNTS WILL THROW LIGHT ABOUT THE GENUINENESS OF THE TRANSACTIONS. WE NOTICE THAT THE TAX AUTHOR ITIES HAVE TAKEN ADVERSE VIEW ON THE BASIS OF ENQUIRIES CONDUCTED WITHOUT EXAMINI NG THE PAYEES BANK ACCOUNTS. SIMILARLY THE STATEMENT GIVEN BY SHRI N MOHAMMED HAS BEEN RELIED UPON WITHOUT CONFRONTING THE SAME TO THE ASSESSEE. HENCE, IN OUR VIEW, THE ENQUIRIES CONDUCTED BY THE ASSESSING OFFICER ARE IN COMPLETE WITHOUT EXAMINING THE PAYEES BANK ACCOUNT AND WITHOUT CONFRONTING THE STATEMENT GIVEN BY SHRI N MOHAMMED. ACCORDINGLY, IN OUR VIEW, ALL THE THREE ADDITIONS DISCUSSED ABOVE REQUIRE FRESH EXAMINATION AT THE END OF THE AO. AC CORDINGLY, WE SET ASIDE THE ORDER OF LD CIT(A) ON THE ABOVE SAID THREE ISSUES A ND RESTORE THEM TO THE FILE OF THE ASSESSING OFFICER WITH THE DIRECTION TO EXAMINE THE SAME AFRESH BY MAKING NECESSARY ENQUIRIES IN THE LIGHT OF DISCUSSIONS MAD E SUPRA AND TAKE APPROPRIATE DECISION IN ACCORDANCE WITH LAW, AFTER AFFORDING NE CESSARY OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSES SEE IS TREATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED ACCORDINGLY ON 20-12-2 013 SD/- SD/- (N.R.S.GANESAN) (B.R.BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: KOCHI DATED: 20TH DECEMBER, 2013 GJ COPY TO: 1. M/S. HAMID & COMPANY ENGINEERS PVT. LTD., KADALUN DI NAGARAM (P.O.), CALICUT-673 314. I.T.A. NO. 273/COCH/2013 5 2. THE ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE -2(2), TIRUR. 3. THE COMMISSIONER OF INCOME-TAX(APPEALS), KOZHIKO DE 4. THE COMMISSIONER OF INCOME-TAX, KOZHIKODE.. 5. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 6. GUARD FILE. BY ORDER (ASSISTANT REGISTRAR) I.T.A.T, COCHIN