The ACIT,Vapi Circle, Vapi V. Shri Haridas Bhaskaran P., Vapi

ITA 2755/AHD/2012

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 5962 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 4 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-04-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 17-04-2014
• Assessment Year: 2005-2006
• Appeal Filed On: 07-12-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K C MATHEWS
• Assessee Lawyers: B N RAO
• Keywords: Onus to prove
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH BEFORE: SRI D.K TYAGI, JUDICIAL MEMBER AND SHRI ANIL CHATURVEDI, ACCOUNTAN T MEMBER ASSTT. COMMISSIONER OF INCOME-TAX, VAPI CIRCLE, VAPI (APPELLANT) VS SRI HARIDAS BHASKARAN P ROOM NO. 103, PLOT NO. 1110/H/11 VIREN APARTMENT, CHANOD COLONY GIDC, VAPI- 396191 (RESPONDENT) REVENUE BY: SRI K.C. MATHEWS, SR.D.R. ASSESSEE BY: SRI B.N. RAO, A.R. DATE OF HEARING : 17-04-2014 DATE OF PRONOUNCEMENT : 29-04-20 14 / ORDER PER : D.K. TYAGI, JUDICIAL MEMBER:- THIS IS THE REVENUES APPEAL AGAINST THE ORDER OF LD. CIT(A), VALSD, GUJARAT DATED 25-09-2012. 2. REVENUE HAS TAKEN FOLLOWING EFFECTIVE GROUNDS:- 1 . ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD, CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.55, 90,682/- MADE BY THE AO ON ACCOUNT OF UNPROVED SUNDRY CREDITORS. ITA NO. 2755/AHD/2012 ASSESSMENT YEAR 2005-06 I.T.A NO.2755/AHD/2012 A.Y. 2005-06 PAGE NO ACIT VS. HARIDAS BHASKARAN P 2 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD, CIT(A) HAS ERRED IN ALLOWING THE DISALLOWANCE OF RS .1,20,368/- MADE BY THE AO OUT OF SALARY AND WAGES FOR WANT OF PROPER C HECK OVER THE EXPENSES. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD, CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.50, 000/- MADE BY THE AO ON ACCOUNT OF UNEXPLAINED AMOUNT. 3. GROUND NO. 1 RELATES TO ADDITION OF RS. 55,90,68 2/- MADE BY AO WHICH HAS BEEN DELETED BY LD. CIT(A). 4. AO OBSERVED WHILE VERIFYING THE BOOKS OF ACCOUNT AND EXTRACT OF SUNDRY CREDITORS THAT THE ASSESSEE HAS NOT EXECUTED ANY WORK THROUGH THEM DURING THE YEAR. THOUGH, THE PARTIES WERE PAID PART OF THE OUTSTANDING AMOUNT IN INSTALLMENTS OF RS. 20,000/- EACH BY CASH DURING THE YEAR. HOWEVER THE RECEIPTS ACKNOWLEDGING THE MONEY BY THE SUNDRY CREDITORS WERE NOT PRODUCED DURING THE COURSE OF ASSESSMENT P ROCEEDINGS. ASSESSEE WAS ASKED TO FURNISH THE CONFIRMATION FROM THESE SUNDRY CREDITORS. THE ASSESSEE DID NOT FILE CONFIRMATION N OR THEIR LATEST ADDRESSES. AO THEREFORE WAS OF THE VIEW THAT ASSESSEE HAS FAIL ED TO DISCHARGE THE ONUS TO PROVE THAT THE SUNDRY CREDITORS EXISTED ON 01-04-2004 AND 31-03- 2005. HE THEREFORE ADDED RS. 55,90,682/- APPEARING IN THE BOOKS OF ACCOUNT AS ON 01-04-2004 TO THE INCOME OF THE ASSES SEE ON ACCOUNT OF THE FOLLOWING SUNDRY CREDITORS BY OBSERVING THAT CLOSIN G BALANCES IN THOSE ACCOUNTS WERE OUTSTANDING FOR A LONG PERIOD. PROGRESS ENGG RS. 7,68,908/- SINDHU ENTERPRISE RS. 11,84,278/- T T ENGG FABRICATION RS. 3,78,570/- VISHNU ENGINEERING WORKS RS. 10,95,016/- I.T.A NO.2755/AHD/2012 A.Y. 2005-06 PAGE NO ACIT VS. HARIDAS BHASKARAN P 3 VOLGA ENGINEERING RS. 9,90,885/- B R FABRICATORS RS. 11,73,025/- --------------------- TOTAL RS. 55,90,682/- 5. LD. CIT(A) AFTER TAKING INTO CONSIDERATION THE S UBMISSION OF THE ASSESSEE WHICH HAS BEEN REPRODUCED BY HIM IN PARA 5 .2 OF HIS ORDER FOUND FROM THE LEDGER ACCOUNT OF ALL THE CREDITORS THAT T HE AMOUNTS WERE ALL OPENING BALANCES AND DURING THE YEAR UNDER APPEAL N O AMOUNT WAS CREDITED IN THE BOOKS OF ACCOUNT. HE FURTHER FOUND THAT THESE CREDITED BALANCES WERE NOT WRITTEN OFF. ON THE CONTRARY, IT WAS FOUND THAT THERE WAS VARIATION IN BALANCES OF THOSE PARTIES FROM 2004-05 TO 2008-09 WHICH CLEARLY INDICATE THAT THESE SUNDRY CREDITORS WERE A LIVE. THIS FINDING OF LD. CIT(A) RIGHTLY LED HIM TO HOLD THAT THE CREDIT AMOU NTS CAN NEITHER BE TREATED AS CESSATION OF LIABILITY U/S. 41(1) NOR CAN BE ADD ED U/S. 68 OF THE ACT. WE ARE THEREFORE NOT INCLINED TO INTERFERE WITH THE OR DER PASSED BY HIM AND THE SAME IS HEREBY UPHELD. THIS GROUND OF REVENUE IS DI SMISSED. 6. GROUND NO. 2 RELATES TO DISALLOWANCE OF RS. 1,20 ,368/- MADE BY AO OUT OF SALARY AND WAGES WHICH HAS BEEN ALLOWED BY L D. CIT(A). 7. AO OBSERVED THAT ASSESSEE IN HIS PROPRIETARY CON CERN M/S DEEPTI ENGINEERING HAS CLAIMED SALARY AND WAGES EXPENDITUR E OF RS. 8,02,450/-. ALL THE EXPENSES WERE PAID IN CASH AND SUPPORTED BY VOUCHERS AND MUSTER REGISTER. IT WAS NOTICED BY THE AO THAT IT CANNOT BE STATED THAT THE EXPENDITURE OF RS. 8,02,450/- INCURRED FOR THE PURP OSE OF BUSINESS ONLY. IN VIEW OF THESE, AO WAS OF THE VIEW THAT THE EXPENDIT URE CLAIMED IN THE HEAD OF SALARY AND WAGES WERE NOT VERIFIABLE AND CANNOT BE ALLOWED FULLY. I.T.A NO.2755/AHD/2012 A.Y. 2005-06 PAGE NO ACIT VS. HARIDAS BHASKARAN P 4 THEREFORE AMOUNT OF RS. 1,20,368/- I.E. 15% OF RS. 8,02,450/- WAS DISALLOWED AND ADDED TO THE INCOME OF THE ASSESSEE. 8. BEFORE LD. CIT(A) SALARY AND WAGES REGISTERS WER E PRODUCED TO SHOW THAT PAYMENTS WERE MADE UNDER THE HEAD SALARY WAGES THROUGH SALARY REGISTER. SALARY MUSTER WAS ALSO MAINTAINED BY THE ASSESSEE. IN VIEW OF THESE FACTS, LD. CIT(A) WAS OF THE VIEW THA T THERE IS NO NEED TO MAKE ANY ADDITION ON ADHOC BASIS ON THIS ACCOUNT SI MPLY STATING THAT REASONS THAT THE VOUCHERS WERE NOT MADE BY THE PART Y. WE FIND NO INFIRMITY IN SUCH FINDING OF LD. CIT(A) WHILE ALLOW ING DISALLOWANCE OF RS. 1,20,368/- MADE BY AO. THIS GROUND OF REVENUE IS A LSO DISMISSED. 9. THIRD GROUND RELATES TO ADDITION OF RS. 50,000/- MADE BY AO ON ACCOUNT OF UN-EXPLAINED AMOUNT WHICH HAS BEEN DELET ED BY LD. CIT(A). 10. AO WHILE PERUSING THE BALANCE-SHEET OF THE ASSE SSEE FOUND THAT ASSESSEE HAS SHOWN ADVANCE TO SUPPLIER OF RS. 6,90, 092/- IN THE NAME OF NEW GOODLUCK CRANE SERVICES. DURING THE COURSE OF ASSESSMENT PROCEEDINGS INQUIRIES WERE MADE FROM THE PARTY CONC ERNED I.E. NEW GOODLUCK CRANE SERVICES AND IT WAS FOUND THAT AMOUN T OF RS. 7,40,092/- HAS BEEN SHOWN IN THE LIST OF CREDITORS AGAINST THE NAME OF ASSESSEE. ASSESSEE WAS ASKED TO EXPLAIN THIS DIFFERENCE OF RS . 50,000/- AND WHEN ASSESSEE FAILED TO EXPLAIN THE SAME, ADDITION OF RS . 50,000/- WAS MADE TO THE INCOME OF THE ASSESSEE. 11. LD. CIT(A) AFTER TAKING INTO CONSIDERATION THE SUBMISSION OF THE ASSESSEE WAS OF THE VIEW THAT SINCE THE DIFFERENCE WAS NOT ON ACCOUNT OF CESSATION OF LIABILITY, IT WILL NOT FALL U/S. 41(1) OF THE ACT AND NO OTHER SECTION CAN BRING SUCH DIFFERENCES INTO TAX SINCE THE AMOUN T OF DIFFERENCE WAS A I.T.A NO.2755/AHD/2012 A.Y. 2005-06 PAGE NO ACIT VS. HARIDAS BHASKARAN P 5 BALANCE-SHEET ITEM AND NOT DEBITED TO PROFIT AND LO SS ACCOUNT AT ANY EARLIER POINT OF TIME. HE FURTHER OBSERVED THAT IT WAS NOT EXCESS MONEY RECEIVED BY ANY PARTY BUT IT WAS EXCESS MONEY PAID AND SINCE ASSESSEE HAS NOT MADE ANY CLAIM TO THESE EXPENSES, THIS ADDITION WAS NOT CALLED FOR. HE THEREFORE DELETED THIS ADDITION AND WE FIND NO INFI RMITY IN SUCH DELETION BY LD. CIT(A) AND THEREFORE THE ORDER PASSED BY HIM IS HEREBY UPHELD. THIRD GROUND OF REVENUES APPEAL IS ALSO DISMISSED. 12. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE AT CAPTION PAGE SD/- SD/- (ANIL CHATURVEDI) ( D.K. TYAGI) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD : DATED 29/04/2014 AK / COPY OF ORDER FORWARDED TO:- 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,