Deepak Singh, Lakhimpur-Kheri V. Principal Commissioner of Income Tax, Bareilly

ITA 276/LKW/2015

• Counselvise Citation: 27623714 RSA 2015
• Duration Of Justice: 2 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-07-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 07-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: DR ANAND KUMAR AGARWAL
• Keywords: Source of fund
• Section: 143(3); 194C; 263

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.276/LKW/2015 ASSESSMENT YEAR:2010 - 2011 PRINCIPAL COMMISSIONER OF INCOME - TAX BAREILLY. VS SHRI DEEPAK SINGH, HOUSE NO. 425, AVAS VIKAS COLONY, LAKHIMPUR KHERI. PAN:ASBPS9593H (RESPONDENT) (APPELLANT) SHRI YOGESH AGARWAL, ADVOCATE APPELLANT BY DR. ANAND KUMAR AGARWAL, C.I.T., D. R. RESPONDENT BY 11/06/2015 DATE OF HEARING 15 /07/2015 DATE OF PRONOUNCEMENT O R D E R PER A. K. GARODIA, A.M. THIS IS ASSESSEES APPEAL DIRECTED AGAINST THE ORDER PASSED BY LEARNED PRINCIPAL COMMISSIONER OF INCOME TAX, BAREILLY DATED 19/03/2015 FOR THE ASSESSMENT YEAR 2010 - 2011 U/S 263 OF THE ACT. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER: I . THE LD. PRINCIPAL COMMISSIONER OF INCOME TAX, BAREILLY [HERE - IN - AFTER REFERRED TO AS THE LD. CIT] ERRED ON FACTS AND IN LAW IN PASSING THE PRESENT ORDER U/S 263 AND IN STATING THAT THE ORDER OF THE ASSESSING OFFICER IS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE WITHOUT ANY COGENT REASON ONLY ON WHIMS AND FANCIES AND THUS THE PRESENT ORDER PASSED IN VIOLATION OF SETTLED PRINCIPLES OF LAW MAY KINDLY BE ORDERED TO BE QUASHED. NOTWIT HSTANDING AND WITHOUT PREJUDICE TO GROUND NO. I TAKEN ABOVE : - 2 II . THE LD. CIT GROSSLY ERRED ON FACTS AND IN LAW IN HOLDING THAT THE AO HAS OVERLOOKED CERTAIN FACTS/ EXPENSES/ SOURCES OF INCOME/ TRANSACTION OF INCOME IN BANK ACCOUNTS OF ASSESSEE DURING T HE COMPLETION OF ASSESSMENT PROCEEDINGS AND WHICH ARE CONTRARY TO THE REVENUE AND IN NOT APPRECIATING ' THAT THE AO HAD DULY VERIFIED ALL SOURCES OF INCOME ETC. AND THAT NEITHER IS THE ORDER PASSED U/S 143(3) ERRONEOUS OR PREJUDICIAL TO THE INTERESTS OF TH E REVENUE TO VALIDLY INITIATE PROCEEDINGS U/S 263 OF THE I.T. ACT, 1961 AND THUS THE ORDER SO PASSED BEING VOID - AB - INITIO MAY KINDLY BE ORDERED TO BE SET ASIDE. III . IN PASSING THE ORDER U/S 263 THE LD. CIT FAILED TO APPRECIATE OR RATHER CHOSE TO COMPLETELY IG NORE THE FACT THAT ON ALL ISSUES RAISED IN THE QUERY U/S 263 THE SUBMISSIONS ON MERIT HAD ALREADY BEEN FILED BEFORE THE AO AS WELL AS BEFORE HIM AND THAT DETAILED EXPLANATIONS AND SUBMISSIONS ALONG WITH DOCUMENTARY PROOF WERE FILED AND THAT ON MERIT NO ADDITION AT ALL IS SUSTAINABLE ON THE ISSUES RAISED IN ORDER PASSED U/S 263 AND THUS THE ORDER BEING DEVOID OF MERIT PASSED ON NOTIONS, CONJECTURES AND SURMISES MAY KINDLY BE ORDERED TO BE VACATED. IV . THAT WHILE PASSING THE PRESENT ORDER THE LD. CIT WAS NOT AT ALL JUSTIFIED IN HOLDING THAT THERE IS A DIFFERENCE IN TDS AS SHOWN BY THE ASSESSEE AND AS PER TDS CERTIFICATE WHEREAS THERE IS NO DIFFERENCE AT ALL IN THE SAME AND THE FIGURE IS DULY TALLIED AND THUS THERE IS NO EXCESS AS CLAIMED BY THE LD. CIT. V . WHILE HOLDING THAT AN AMOUNT OF RS.2,00,000/ - HAS BEEN PAID TO THEKEDAR WHICH ATTRACTS THE PROVISIONS OF SEC. 40(A)(IA) OF THE ACT THE LD. CIT WAS MISGUIDED BY THE FACT THAT SHRI. RAJEEV SINGH IS NOT A CONTRACTOR AND PAYMENT WAS MADE TO HIM FOR PURCHASE OF MATE RIAL INCLUDING GRIT, SAND AND BALU THAT TOO BY CHEQUE AND WHICH IS NOT COVERED UNDER THE PROVISIONS OF SEC. 194C AND THUS THIS PAYMENT IS DULY ALLOWABLE AND NO DISALLOWANCE AS IT IS CAN BE MADE UNDER THIS HEAD. 3 VI . THAT AS PER THE ORDER OF THE LD. CIT THERE IS AN ALLEGED DIFFERENCE IN CLOSING BALANCE IN ICICI BANK AS ON 31 M MARCH WHEREIN ACCORDING TO HIM, THE BANK STATEMENT SHOWS AN AMOUNT OF RS.7,08,191/ - WHEREAS IN FACT THE BALANCE SO REFLECTED IN THE BANK STATEMENT AS WELL THE CERTIFICATE ISSUED BY THE BAN K AND ALSO DULY FILED BEFORE THE LD. CIT CLEARLY SHOWS THE BALANCE AS RS.10,95,203/ - AND NOT RS.7,08,191/ - AS ALLEGED BY THE LD. CIT AND THUS THE ORDER BEING BIASED, PASSED ON IRRELEVANT CONSIDERATIONS MAY KINDLY BE ORDERED TO BE QUASHED. VII . IN HOLDING THAT AN AMOUNT RECEIVED OF RS.1,28,190/ - IS INCOME WHICH HAS NOT BEEN ACCOUNTED FOR DURING THIS YEAR THE LD. CIT CHOSE TO IGNORE THE SUBMISSION FILED ON THIS ISSUE THAT THE SAME HAS ALREADY BEEN DULY ACCOUNTED FOR DURING THE PREVIOUS ASSESSMENT YEAR AS THE SAME WAS RECEIVED IN THE PREVIOUS YEAR ITSELF AND DEPOSITED ON 31 S1 MARCH 2009 BUT ITS CLEARING AS BEEN RECEIVED IN URBAN COOPERATIVE BANK LIMITED, KHERI ONLY SUBSEQUENTLY IN THE YEAR UNDER CONSIDERATION AND THUS THIS INCOME IS ALREADY ACCOUNTED FOR IN THE PRE VIOUS ASSESSMENT YEAR AND DOES NOT CALL FOR ANY ADDITION. VIII . ON THE FACTS AND IN THE PECULIAR CIRCUMSTANCES OF THE PRESENT CASE THE LD. CIT WAS NOT AT ALL JUSTIFIED IN HOLDING THAT AO HAS NOT EXAMINED ALL PAYABLE EXPENDITURE AS SUNDRY DEBTORS ARE SHOWN AT AN AMOUNT OF RS.7,50,035/ - WHEREAS EXPENSES PAYABLE HAS BEEN SHOWN AT AN AMOUNT OF RS.15,17,395/ - AS ON 31 - 03 - 2010 AND CHOOSING TO IGNORE THE FACT THAT THE EXPENSES PAYABLE ALSO INCLUDES IN IT AMOUNT PAYABLE TO LABOUR, PROFESSIONAL CHARGES, SALARY ETC. AND T HAT THERE IS NO DISCREPANCY IN THE FIGURE SO SHOWN AND DISCLOSED. IX . WHILE CALCULATING THE TOTAL RECEIPTS THE LD. CIT AGAIN GROSSLY ERRED ON FACTS IN STATING THAT THERE IS A DIFFERENCE IN AMOUNTS RECEIVED IN BANKS AND THE TOTAL CONTRACT RECEIPTS AS PER FORM NO. 16A AS THE ENTIRE RECEIPTS WERE DULY EXPLAINED THROUGH A CHART FILED BEFORE HIM WHICH DULY CONFIRMED THE TOTAL RECEIPTS AND ALSO THE FACT THAT THE DIFFERENCE IN AMOUNT DEPOSITED IS IN VIEW OF DEDUCTIONS UNDER THE HEAD TDS, VAT, SECURITIES, ROYALTIES AN D OTHER MISC. EXPENSES DEDUCTED BY THE 4 PRINCIPALS AND THUS EVEN ON THIS COUNT THE LD. CIT DOES NOT HAVE ANY GROUND TO INVOKE THE PROVISIONS OF SEC. 263. X . THAT, THE LD. A.O. DID NOT AFFORD THE APPELLANT ANY PROPER OR SUFFICIENT OPPORTUNITY TO HAVE ITS SAY OR MAKE NECESSARY COMPLIANCE OF THE REASONS RELIED UPON BY HIM IN MAKING THE ADDITIONS AND THUS THE ASSESSMENT SO MADE WITHOUT AFFORDING ADEQUATE OPPORTUNITY MAY KINDLY BE ORDERED TO BE QUASHED. 3. IT WAS SUBMITTED BY LEARNED A.R. OF THE ASSESSEE THAT TH E SHOW CAUSE NOTICE ISSUED BY LEARNED CIT U/S 263 IS AVAILABLE ON PAGES 6 TO 8 OF THE PAPER BOOK AND THE ORIGINAL ASSESSMENT ORDER IS AVAILABLE ON PAGES 1 TO 3 OF THE PAPER BOOK. HE ALSO DRAWN OUR ATTENTION TO REPLY SUBMITTED BEFORE LEARNED CIT TO THE SHO W CAUSE NOTICE ISSUED BY HIM U/S 263 WHICH IS AVAILABLE ON PAGES 14 TO 16 OF THE PAPER BOOK AND IT WAS EXPLAINED BEFORE HIM THAT THE WORK WAS DONE IN TWO DIVISIONS I.E. FLOOD DIVISION AND IRRIGATION DIVISION BUT THE LEDGER ACCOUNT OF THE ASSESSEE WAS ONLY ONE I.E. EXECUTIVE ENGINEER, SHARDA NAGAR, LAKHIMPUR KHERI AND THE RECEIPT AS PER TDS CERTIFICATE AND AS PER BOOKS OF ACCOUNT RE TALLYING. REGARDING SECOND OBJECTION FOR PAYMENT OF RS.2,00,000/ - TO SHRI RAJEEV SINGH THEKEDAR FOR WHICH IT IS THE ALLEGATION THAT THE TDS WAS REQUIRED TO BE DEDUCTED U/S 194C OF THE ACT , I T WAS EXPLAINED THAT THIS AMOUNT IS PAID IN RESPECT OF SUPPLY OF MITTI AND BALU AND THEREFORE, NO TDS WAS DEDUCTIBLE FOR PURCHASE OF GOODS. 4. REGARDING THE THIRD OBJECTION OF LEARNED CIT, HE SUBMITTED THAT THE RELEVANT PARA OF THE STATEMENT IS AVAILABLE ON PAGES 19 & 20 OF THE PAPER BOOK AND IT CAN BE SEEN THAT ON 31/03/2010 , THE CLOSING BALANCE IS RS.10 , 9 5 ,203/ - . 5. REGARDING THE 4 TH OBJECTION OF LEARNED CIT THAT AN AMOUNT OF RS.1,28,190/ - WAS RECEIVED FROM URBAN CO - OPERATIVE BANK LIMITED, KHERI ON 5 22/04/2009 BUT IS NOT PART OF TOTAL RECEIPT, IT WAS EXPLAINED BEFORE LEARNED CIT THAT THIS AMOUNT WAS RECEIVED BY THE ASSESSEE ON 30/03/20 09 AND IT WAS DEPOSITED IN BANK ON THE SAME DATE FOR COLLECTION AND IT WAS ACCOUNTED FOR IN THE BOOKS FOR THE YEAR ENDING ON 31/03/2009 AND ONLY BECAUSE THE BANK HAS CREDITED THE PROCEEDS IN THE PRESENT YEAR, IT CANNOT BE SAID THAT ANY RECEIPT WAS UNACCOUN TED. 6. REGARDING HIS NEXT OBJECTION IN RESPECT OF ASSESSEE SHOWING SUNDRY DEBTORS OF RS.7,50,035/ - AND SHOWING PAYABLE EXPENDITURE OF RS.15,17,395/ - AS ON 31/03/2010 AND THE INFERENCE OF LEARNED CIT THAT THE ASSESSING OFFICER HAS NOT EXAMINED THE PAYABLE EXPENSES, IT WAS SUBMITTED BY THE ASSESSEE BEFORE LEARNED CIT THAT THE ASSESSING OFFICER HAS EXAMINED ALL THE BOOKS OF ACCOUNT IN DETAIL IN COURSE OF ASSESSMENT PROCEEDINGS AND THEREFORE, THERE IS NO ERROR IN THE ASSESSMENT ORDER. 7. REGARDING THE NEXT O BJECTION OF LEARNED CIT THAT THE ASSESSING OFFICER HAS NOT EXAMINED AND RECONCILED THE RECEIPTS REFLECTED IN BANK ACCOUNT BEING CREDITS IN THREE BANK ACCOUNT OF RS.77,26,244/ - , IT WAS EXPLAINED BEFORE LEARNED CIT THAT FROM THE TOTAL WORK DONE AT RS.94,03,4 88/ - AFTER MAKING VARIOUS DEDUCTIONS ON ACCOUNT OF TDS, VAT, SECURITY, ROYALTY AND OTHER EXPENSES, NET RECOVERABLE AMOUNT WAS RS.87,62,408/ - FROM WHICH THERE WAS OUTSTANDING DEBIT OF RS.13,871/ - AND THEREFORE, NET AMOUNT RECOVERABLE WAS RS.87,62,408/ - AND BALANCE AMOUNT OF RS. 7,50,035/ - WAS RECOVERABLE AMOUNT IN BALANCE SHEET AND THEREFORE, THERE IS NO PREJUDICE CAUSED TO THE REVENUE ON THIS ASPECT ALSO. HE SUBMITTED THAT FOR INVOKING THE PROVISIONS OF SECTION 263, LEARNED CIT SHOULD ESTABLISH THAT THE ASS ESSMENT ORDER IS ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF REVENUE AND SINCE LEARNED CIT COULD NOT MAKE OUT HIS CASE, HIS ORDER SHOULD BE QUASHED. 6 8. LEARNED D.R. OF THE REVENUE SUPPORTED THE ORDER OF LEARNED CIT. 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT IN THE ORDER PASSED BY LEARNED CIT U/S 263 AFTER REPRODUCING VARIOUS ALLEGATIONS AS PER NOTICE ISSUED BY HIM U/S 263, LEARNED CIT HAS MENTIONED IN PARA 4 OF HIS ORDER THAT THE ASSESSEE HAS FILED WRITTEN SUBMISSIONS ALONG WI TH THE ENCLOSURES, WHICH IS PLACED ON FILE AND THEREAFTER , HE DECIDED THE ISSUE AS PER PARA 5 OF HIS ORDER, WHICH IS REPRODUCED BELOW FOR THE SAKE OF READY REFERENCE: - 5. I HAVE GONE THROUGH THE SUBMISSIONS OF THE ASSESSEE AND THE RECORD OF THE CASE. I AM OF THE CONSIDERED VIEW THAT THE ASSESSMENT ORDER FRAMED BY THE INCOME TAX OFFICER, WARD - II, LAKHIMPUR KHERI HAS OVER LOOKED CERTAIN FACTS/EXPENSES/SOURCES OF INCOME/ TRANSACTION OF INCOME IN BANK ACCOUNT WHICH SHOULD HAVE BEEN EXAMINED PROPERLY. THE ASS ESSMENT ORDER PASSED BY THE INCOME TAX OFFICER, WARD - II, LAKHIMNUR KHERI IS ERRONEOUS IN LAW AND PREJUDICIAL TO THE INTEREST OF REVENUE AS PER THE ISSUES / FACTS NARRATED ABOVE AND THEREFORE, THE ASSESSMENT IS SET - ASIDE UNDER SECTION 263 OF THE I.T.ACT,19 61. THE INCOME TAX OFFICER, WARD - II, LAKHIMPUR KHERI IS HEREBY DIRECTED TO MAKE ASSESSMENT AFRESH LOOKING INTO THE ISSUES AND FACTS AS ABOVE AFTER GIVING PROPER OPPORTUNITIES TO THE ASSESSEE OF BEING HEARD. 9.1 FROM THE ABOVE PARA FROM THE ORDER OF LEAR NED CIT U/S 263 OF THE ACT, IT IS SEEN THAT NO CATEGORICAL FINDING IS GIVEN BY LEARNED CIT AS TO WHAT IS THE ERROR IN THE ASSESSMENT ORDER AND HOW THE ASSESSMENT ORDER IS PREJUDICIAL TO THE INTEREST OF REVENUE. HE HAS SIMPLY STATED THAT THE ASSESSING OFFI CER HAS OVER LOOKED CERTAIN FACTS/EXPENSES/SOURCES OF INCOME/TRANSACTION OF INCOME IN BANK ACCOUNT WHICH SHOULD HAVE BEEN EXAMINED PROPERLY. APART FROM THIS, WE FIND THAT FOR ALL THE POINTS RAISED BY 7 LEARNED CIT IN HIS NOTICE U/S 263, REPLY HAS BEEN FURNI SHED BY THE ASSESSEE BEFORE LEARNED CIT AND WHEN WE CONSIDER THE SAME, WE FIND THAT THE ASSESSMENT ORDER IS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF REVENUE AND THEREFORE, WE HOLD THAT THE ORDER PASSED BY LEARNED CIT U/S 263 IS NOT MAINTAINABLE . WE, THEREFORE, QUASH THE ORDER PASSED BY LEARNED CIT. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS ALLOWED. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD/. SD/. (SUNIL KUMAR YADAV) ( A. K. GARODIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 15 /07/2015 *C.L.SINGH COPY OF THE ORDER FORWARDED TO : 1.THE APPELLANT 2.THE RESPONDENT. 3.CONCERNED CIT 4.THE CIT(A) 5.D.R., I.T.A.T., LUCKNOW ASSTT. REGISTRAR