ITO, W-2, Mandi Gobindgarh HQ, Sirhind V. Sh. Parveen Kumar, Mandi Gobindgarh

ITA 280/CHANDI/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 9570 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 3 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-07-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 03-04-2019
• Assessment Year: 2011-2012
• Appeal Filed On: 05-03-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ZEENIA HONDA SR DR
• Keywords: Unexplained cash credit; Additional evidence
• Section: 40A(3); 68

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, B, CHANDIGARH . . , , BEFORE SHRI N.K. SAINI, VICE PRESIDENT & SHRISANJAY GARG, JUDICIAL MEMBER ./ ITA NO. 280/CHD/2018 / ASSESSMENT YEAR : 2011-12 THE ITO, WARD - 2, MANDI GOBINDGARH, HQ SIRHIND VS. SHRI PARVEEN KUMAR, PROP. M/S SHREE NEELKANTH MAHADEV STEEL INDUSTRIES, SHASTRI NAGAR, MANDI GOBINDGARH. ! ' ./ PAN NO: AAJPK8281G !#/ APPELLANT %& !# / RESPONDENT '()* /ASSESSEE BY : SHRI SUDHIR SEHGAL, ADVOCATE )* / REVENUE BY : SMT. ZEENIA HONDA, SR.DR + ,)( -' /DATE OF HEARING : 03.04.2019 ./ )( -' / DATE OF PRONOUNCEMENT : 02.07.2019 / ORDER PER SANJAY GARG, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE REVENU E AGAINST THE ORDER DATED 23.12.2017 OF THE COMMISSIONER OF INCOM E TAX (APPEALS ) , CHANDIGARH [HEREINAFTER REFERRED TO AS CIT(A)]. 2. THE REVENUE IN THIS APPEAL HAS TAKEN FOLLOWING GROUNDS OF APPEAL:- 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE LD. CIT(A) WAS RIGHT IN DELETING THE ADDI TION OF RS.1,07,50,461/-MADE BY THE ASSESSING OFFICER U/ S ITA NO. 280-C-18 SHRI PARVEEN KUMAR, MANDI GOBINDGARH 2 40A(3) OF THE INCOME TAX ACT, 1961 EVEN WHEN THE ASSESSEE FAILED TO PROVIDE EVIDENCE TO PROVE THAT T HE PAYMENTS MADE WERE ACTUALLY FOR INDIVIDUAL DRIVERS / TRUCK OWNERS. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE LD. CIT(A) WAS RIGHT IN DELETING THE ADDI TION OF RS. 1,64,48,273/-MADE BY ME ASSESSING OFFICER U/ S 68 OF THE INCOME TAX ACT, 1961 ON ACCOUNT OF UNEXPLAINED CREDITS EVEN WHEN THE ASSESSEE FAILED T O VERIFY THE IDENTITY, CREDITWORTHINESS AND GENUINENE SS OF THE TRANSACTIONS CARRIED OUT WITH THREE CREDITOR S. 3 . GROUND NO.1 : THE BRIEF FACTS RELATING TO THE ISSUE RAISED VIDE GROUND NO.1 ARE THAT THE ASSESSEE IS AN INDIVIDUAL ENGAGED IN THE BUSINESS OF TRADING IN IRON & STEEL. THE ASSESSEE B EING IN THE BUSINESS OF TRADING OF IRON & STEEL WAS REQUIRED TO INCUR EX PENDITURE ON ACCOUNT OF FREIGHT FOR TRANSPORTATION OF THE MATERIAL. THE ASSESSING OFFICER NOTED THAT THE CASH PAYMENT BEYOND THE PRESCRIBED LIMIT O F RS. 35,000/- WERE MADE TO VARIOUS TRANSPORT AGENCIES DURING THE YEAR UNDER CONSIDERATION IN A SINGLE DAY. THE AGGREGATE OF SUCH PAYMENTS WA S, THUS, DISALLOWED BY THE ASSESSING OFFICER UNDER THE PROVISIONS TO SE CTION 40A(3) OF THE INCOME TAX ACT, 1961 (IN SHORT 'THE ACT'). 4. BEING AGGRIEVED BY THE ADDITION MADE ABOVE BY TH E ASSESSING OFFICER, THE ASSESSEE PREFERRED APPEAL BEFORE THE L D. CIT(A). IT WAS CONTENDED BY THE ASSESSEE BEFORE THE LD. CIT(A) THA T THE PAYMENTS ON ACCOUNT OF FREIGHT WAS ACTUALLY MADE TO INDIVIDUAL TRUCK OWNERS THROUGH ITA NO. 280-C-18 SHRI PARVEEN KUMAR, MANDI GOBINDGARH 3 THE TRANSPORT AGENCIES WHO ONLY CHARGED THEIR COMM ISSION. IN SUPPORT OF THIS CONTENTION, THE ASSESSEE FILED CERTIFICATES FROM MAJOR TRANSPORT AGENCIES, WHEREBY, THEY CERTIFIED THAT THEY WERE NE ITHER THE OWNERS OF THE TRUCKS NOR WERE THEY BENEFICIARIES OF THE FREIG HT AMOUNTS PAID BY THE ASSESSEE. THAT THEIR ROLE WAS LIMITED TO PROVIDING TRUCKS TO THE ASSESSEE ON COMMISSION BASIS. 5. THE LD. CIT(A) CALLED FOR THE REMAND REPORT FROM THE ASSESSING OFFICER IN RESPECT OF THE EVIDENCES FURNISHED BY TH E ASSESSEE IN SUPPORT OF HIS CONTENTION. THE LD. CIT(A) CONSIDERING THE REMAND REPORT AND THE SUBMISSIONS OF THE ASSESSEE OBSERVED THAT THE ASSESSING OFFICER HAS NOT BEEN ABLE TO CONTRADICT THE SUBMISSIONS / EVIDE NCES FILED BY THE ASSESSEE. CONSIDERING THE NATURE OF PAYMENTS, THE RECIPIENTS BEING TRUCK OWNERS, PRACTICE OF THE TRANSPORT AGENCIES IN ARRAN GING TRUCKS FOR TRANSPORTATION SERVICES ON COMMISSION BASIS, THE LD . CIT(A) CONCLUDED THAT THE ASSESSEE HAD NOT BREACHED THE PROVISIONS OF SECTION 40A(3) AS NO PAYMENT ABOVE THE SPECIFIED LIMIT OF RS. 35,000 /- HAD BEEN MADE TO ANY INDIVIDUAL TRUCK OWNERS IN A DAY. HE, THEREFORE , DELETED THE ADDITIONS MADE BY THE ASSESSING OFFICER. 6. CONSIDERING THE RIVAL CONTENTIONS AND THE IMPUGN ED ORDER OF THE CIT(A) AND CONSIDERING THE NATURE OF THE PAYMENTS M ADE AND THE PRACTICE OF ENGAGING INDIVIDUAL TRUCK OWNERS THROU GH TRANSPORT AGENCIES ON COMMISSION BASIS AND ALSO CONSIDERING THE EVIDENCES FURNISHED BY THE ASSESSEE IN THE SHAPE OF CERTIFI CATE FROM THE ITA NO. 280-C-18 SHRI PARVEEN KUMAR, MANDI GOBINDGARH 4 TRANSPORT AGENCIES, WE DO NOT FIND ANY INFIRMITY I N THE ORDER OF THE CIT(A) IN DELETING THE ADDITIONS ON THIS ISSUE. THIS GROUND OF THE APPEAL OF THE REVENUE IS, THEREF ORE, DISMISSED. 7. GROUND NO. 2 : THE REVENUE THROUGH ITS GROUND NO.2 HAS CONTESTED THE ACTION OF THE CIT(A) IN DELETING THE ADDITION MADE BY THE ASSESSING OFFICER INTO THE INCOME OF THE ASSESSEE U NDER THE PROVISIONS OF SECTION 68 OF THE I.T. ACT. 8. THE BRIEF FACTS RELEVANT TO THE ISSUE ARE THAT T HE ASSESSING OFFICER NOTICED THAT THERE WERE OUTSTANDING BALANCE OF THR EE CREDITORS IN THE BOOKS OF THE ASSESSEE. HE, THEREFORE, CALLED UPON T HE ASSESSEE TO FURNISH THE EVIDENCES TO PROVE THE IDENTITY AND CREDITWORT HINESS OF THE CREDITORS AND GENUINENESS OF THE TRANSACTIONS. THE ASSESSEE T HOUGH, FILED THE ADDRESSES OF THE AFORESAID CREDITOR, HOWEVER, COULD NOT PRODUCE THEM BEFORE THE ASSESSING OFFICER. THE ASSESSING OFFICER , THEREFORE, HELD THAT THE ASSESSEE FAILED TO ESTABLISH THE CREDITWOR THINESS OF THE CREDITORS AND GENUINENESS OF THE TRANSACTIONS AND TREATED THE OUTSTANDING BALANCES OF THE PARTIES AS UNEXPLAINED CREDITS UNDE R THE PROVISIONS OF SECTION 68 OF THE ACT AND MADE THE IMPUGNED ADDITIO NS. 9. IN APPEAL BEFORE THE CIT(A), THE ASSESSEE FURN ISHED THE WRITTEN SUBMISSIONS AND ADDITIONAL EVIDENCES WHEREUPON THE REMAND REPORT WAS ALSO CALLED UPON FROM THE ASSESSING OFFICER BY THE LD. CIT(A). AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE AND THE REMAND REPORT OF THE ITA NO. 280-C-18 SHRI PARVEEN KUMAR, MANDI GOBINDGARH 5 ASSESSING OFFICER, THE LD. CIT(A) OBSERVED THAT TH E AFORESAID CREDIT BALANCES WERE IN RESPECT OF PURCHASES MADE BY THE A SSESSEE ON CREDIT BASIS FROM THERE PARTIES NAMELY I) M/S JAGAT STEE LS ALLOYS (II) SHRI HARI ALLOYS & (III) M/S MEHNDIPUR BALAJI STEELS. T HAT THE PURCHASE TRANSACTIONS OTHERWISE HAVE BEEN ACCEPTED BY THE AS SESSING OFFICER ALONG WITH ASSESSEES BOOK RESULTS. THAT THE PURCHA SES WERE ADMITTED BY THE ASSESSING OFFICER AND THERE WAS NO QUESTION OF CASTING ANY DOUBT REGARDING THE AMOUNT OUTSTANDING OF THE CREDITORS A GAINST THE AFORESAID PURCHASES MADE ON CREDIT BASIS. THE LD. CIT(A), A CCORDINGLY, HELD THAT IT WAS NOT A CASE OF UNEXPLAINED CREDITS. 10. AFTER CONSIDERING THE RIVAL CONTENTIONS, WE DO NOT FIND ANY MERIT IN THIS GROUND OF THE REVENUE AND THE SAME IS ACCOR DINGLY DISMISSED. IN THE RESULT, THE APPEAL OF THE REVENUE IS HEREBY DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 02.07.2019 SD/- SD/- ( . . / N.K. SAINI) ( ! / SANJAY GARG) '#$ / VICE PRESIDENT %& / JUDICIAL MEMBER DATED : 02.07.2019 .. 1)%(2343( / COPY OF THE ORDER FORWARDED TO : 1. !# / THE APPELLANT 2. %& !# / THE RESPONDENT 3. + 5( / CIT 4. + 5( ( )/ THE CIT(A) 5. 36 %(7 , - 7 , 89:; / DR, ITAT, CHANDIGARH 6. :< , / GUARD FILE ITA NO. 280-C-18 SHRI PARVEEN KUMAR, MANDI GOBINDGARH 6 1 + / BY ORDER, = / ASSISTANT REGISTRAR