M/S. Chandaka Meadows, Bhubaneswar V. ITO, Ward-4(2), Bhubaneswar

ITA 281/CTK/2019

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 0177 (ITAT-CUTTACK)
• Duration Of Justice: 4 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-12-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2015-2016
• Appeal Filed On: 20-08-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J K LENKA
• Assessee Lawyers: DILLIP MOHANTY
• Keywords: Unexplained investment
• Section: 40A(3); 69B; 201

Judgement Text

P A G E 1 | 8 IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK SMC BENCH, CUTTACK BEFORE SHRI CHANDRA MOHAN GARG , JUDICIAL MEMBER ITA NO . 281 /CTK/201 9 ASSESSMENT YEAR : 201 5 - 2016 M/S. CHANDAKA MEADOWS, PLOT NO.300, KHARVEL NAGAR, UNIT - III, BHUBANESWAR. VS. ITO, WARD 4(2), BHUBANESWAR. PAN/GIR NO. AAHFC 2455 J (APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY : SHRI DILLIP MOHANTY , AR REVENUE BY : SHRI J.K.LENKA , DR DATE OF HEARING : 24 / 1 2 / 201 9 DATE OF PRONOUNCEMENT : 31 / 1 2 / 201 9 O R D E R THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A), 2 , BHUBANESWAR DATED 27.6.2019 FOR THE ASSESSMENT YEAR 2015 - 16 . 2. ALTHOUGH, IN THIS APPEAL, THE ASSESSEE HAS RAISED MULTIPLE GROUNDS OF APPEAL, BUT AT THE TIME OF HEARING, THE SOLITARY GRIEVANCE OF THE ASSESSEE HAS BEEN CON FINED TO TWO ISSUE S I.E. ADDITION OF RS.7,3 9 , 4 00/ - U/S.69B AS UNEXPLAINED INVESTMENT AND ADDITION OF SAME AMOUNT OF RS.7,39,400/ - U/S. 40A(3) OF THE ACT. 3. L D A.R. OF THE ASSESSEE SUBMITTED THAT THE LD CIT(A) IS NOT JUSTIFIED IN CONFIRMING THE ADDITION OF RS.7,94,900/ - U/S.69 B OF THE ACT AS ITA NO.281/CTK/2018 ASSESSMENT YEAR : 2015 - 2016 P A G E 2 | 8 UNEXPLAINED INVESTMENT BY THE AO, WHEN THE SUNDRY CREDITOR HAS CONFIRMED THAT THE CLOSING BALANCE OF THE ASSESSEE IN HIS BOOKS AS AT 31 ST MARCH, 2015 IS AT RS.21,504/ - AS AGAINST THE CLAIM OF THE ASSESSEE THAT THE LIABILITY AGAINST JAGDAMBA STEELEX IS RS.7,56,404/ - . HE SUBMITTED THAT IN THE REMAND REPORT, THE ASSESSING OFFICER STATED THAT THE AMOUNT OF RS.7,56,404/ - WAS P AID BY M/S. GANAPATI MULTICOMPLEX PVT LTD., ON BEHALF OF THE ASSESSEE, WHICH PROVES THAT THE ASSESSEE HAS NOT PAID ANY AMOUNT TO THE SUNDRY CREDITOR M/S. JAGADAMBA STEELEX. LD COUNSEL REITERATING THE ABOVE SUBMISSIONS SUBMITTED THAT THE LD CIT(A) HAS DIREC TED THE AO TO ALLOW THE ASSESSEE TO CROSS EXAMINE JAGADAMBA STEELEX AND SUBMIT A REMAND REPORT. THE REMAND REPORT WAS SUBMITTED BY THE AO ON 2.3.2019, WHEREIN, IN 5 TH LINE ONWARD AT PAGE 2 OF THE REPORT, WHICH IS VERY RELEVANT FOR THE PURPOSE, THE AO STATED THAT THE ABOVE SAID AMOUNT WAS PAID BY M/S. GANAPATI MULTICOMPLEX PVT LTD., ON BEHALF OF M/S. CHANDAKA MEADOWS. LD COUNSEL CONTENDED THAT IT IS UNDISPUTEDLY PRO VED THAT THE ASSESSEE HAS NOT PAID THE AMOUNT TO SUNDRY CREDITOR M/S. JAGADAMBA STEELEX DURING THE IMPUGNED PERIOD. THEREFORE, IT CAN BE SAFELY CONCLUDED IN FAVOUR OF THE ASSESSEE THAT ADDITION OF RS.7,56,404/ - IN THE BOOKS OF THE ASSESSEE ARE NOT CORRECT AND HENCE, ADDITION IS LIABLE TO BE DELETED. LD COUNSEL SUBMITTED THAT SINCE ADDITION U/S.69B IS NOT CORRECT, THEREFORE, CONSEQUENTIAL ADDITION U/S.40A(3) OF THE ACT FOR THE EQUAL AMOUNT IS ALSO NOT JUSTIFIED AND LIABLE TO BE DELETED. ITA NO.281/CTK/2018 ASSESSMENT YEAR : 2015 - 2016 P A G E 3 | 8 4. REPLYING TO ABO VE, LD D.R. SUBMITTED THAT SUPPORTED THE ORDER OF THE LD CIT(A) AND SUBMITTED THAT THE EXPLANATION FURNISHED BY THE ASSESSEE WAS NOT PLAUSIBLE AND ACCEPTABLE BECAUSE THE STATEMENT OF ACCOUNT HAS BEEN FURNISHED AFTER DULY STAMPED AND SIGNED BY JAGADAMBA STE ELEX, WHEREIN, JAGADAMBA STEELEX HAS RECEIVED THE AMOUNT BY CASH FROM THE ASSESSEE AND IN EACH SUCH DATES AGGREGATE PAYMENT EXCEEDS RS.20,000/ - . HENCE, THE ADDITION U/S.40A(3) OF THE ACT IS SUSTAINABLE. SUPPORTING THE ACTION OF THE AO IN MAKING THE ADDI TION U/S.69B OF THE ACT, LD DR SUBMITTED THAT THE PARTNER OF JAGADAMBA STEELEX HAS SIGNED ON THE FIRST PAGE ON 25.11.2017, WHEREIN, HE CLEARLY MENTIONED THAT THE CLOSING BALANCE AT RS.21,504, WHICH CLEARLY SHOWS THAT THE PLEA TAKEN UP BY THE ASSESSEE WAS N OT ACCEPTABLE AND AMOUNT OF RS.7,34,900/ - WAS RIGHTLY ADDED TO THE INCOME OF THE ASSESSEE U/S. 69B OF THE ACT AND THE AO WAS ALSO RIGHT IN MAKING ADDITION OF SIMILAR AMOUNT U/S. 40A(3) OF THE ACT. 5. PLACING REJOINDER TO ABOVE, LD A.R. AGAIN DREW MY ATTENT ION TOWARDS REMAND REPORT VIDE DATED 2.3.2019 SUBMITTED BY THE AO BEFORE THE LD CIT(A) - 2, BHUBANESWAR AND SUBMITTED THAT AFTER EXAMINING THE BOOKS OF ACCOUNT AND ALL RELEVANT PAPERS OF THE ASSESSEE, SUNDRY CREDITOR M/S. J AGADAMBA STEELEX AND GANAPATI MULTI COM PLEX PVT LTD., THE AO CLEARLY OBSERVED THAT THE AMOUNT OF RS.7,34,900/ - WAS PAID BY GANAPATI MULTICOMPLEX PVT LTD ., TO JAGADAMBA STEELEX ON BEHALF OF THE ASSESSEE AND HENCE, SAME WAS RECORDED IN THE BOOKS OF JAGADAMBA STEELEX IN THE LEDGER ITA NO.281/CTK/2018 ASSESSMENT YEAR : 2015 - 2016 P A G E 4 | 8 OF THE ASSESS EE IN THE CREDIT SIDE KEEPING THE BALANCE OF RS.21,504 (DR). LD COUNSEL STRENUOUSLY CONTENDED THAT WHEN JAGADAMBA STEELEX IS RECEIVING PAYMENT FROM GANAPATI MULTICOMPLEX PVT LTD , ON BEHALF OF THE ASSESSEE THEN IF THERE IS ANY VIOLATION OF PROVISIONS OF S ECTION 40A(3) OF THE ACT IN THE SAID TRANSACTION BETWEEN THE CREDITOR AND THIRD PARTY, WHO IS MAKING PAYMENT ON BEHALF OF THE ASSESSEE, NO ADDITION CAN BE MADE IN THE HANDS OF THE ASSESSEE FOR SUCH VIOLATION. LD COUNSEL PRAYED THAT WHEN THE AO IS RELYING ON THE LEDGER OF JAGADAMBA STEELEX, WHEREIN, TOTAL CREDIT OF RS.7,56,404/ - HAS BEEN SHOWN AND THEREAFTER DEDUCTING THE AMOUNT OF RS.7,34,900/ - , THE REMAINING DEBIT BALANCE HAS BEEN SHOWN AS RS.21,504/ - , THEN HOW THE ADDITION U/S. 69B OF THE ACT CAN BE MADE IN THE HANDS OF THE ASSESSEE BY MAKING ALLEGATION OF UNDISCLOSED OR UNEXPLAINED INVESTMENT. 6 . I HAVE HEARD THE RIVAL SUBMISSIONS OF BOTH THE SIDES AND PERUSED THE RECORD OF THE CASE. THE ASSESSING OFFICER MADE ADDITION OF RS.7, 3 4,900/ - U/S.69B OF THE AC T AS UNEXPLAINED INVESTMENT ON THE GROUND THAT THE ASSESSEE HAD SHOWN CREDIT OF RS.7,56,404/ - AS ON 31.3.2015 AGAINST JAGADAMBA STEELEX. IN REPLY TO ASSESSING OFFICER QUERY, JAGADAMBA STEELEX REPLIED THAT THE OPENING BALANCE FOR THE YEAR WAS NIL, WHEREAS THE TOTAL PURCHASES MADE BY THE ASSESSEE WAS OF RS.7,56,404/ - AND TOTAL PAYMENTS RECEIVED IN CASH FROM THE ASSESSEE WAS RS.7,34,900/ - LEAVING A BALANCE OF RS.21,504/ - . IT WAS IN THIS BACKDROP THAT THE ASSESSING OFFICER ASKED THE ASSESSEE TO RECONCILE THE STATEMENT OF JAGADAMBA STEELEX WITH ITA NO.281/CTK/2018 ASSESSMENT YEAR : 2015 - 2016 P A G E 5 | 8 ITS BOOKS OF ACCOUNT. THE ASSESSEE REPLIED THAT IT HAS NOT MADE ANY PAYMENTS TO JAGADAMBA STEELEX AND THE PAYMENTS MADE TO JAGADAMBA STEELEX WERE MADE THROUGH BANKING CHANNEL DURING NEXT ASSESSMENT YEAR 2016 - 17 AND THE RE IS NO QUESTION OF PAYMENT IN CASH. THE ABOVE EXPLANATION OF THE ASSESSEE DID NOT FIND FAVOUR BY THE AO AND IN TURN, HE MADE ADDITION OF RS.7,39,400/ - . 7. ON CAREFUL CONSIDERATION OF THE RIVAL SUBMISSION, I AM OF THE VIEW THAT WHEN DURING REMAND PROCEED INGS BEFORE THE AO ON 14.12.2018, JAGADAMBA STEELEX PRODUCED XEROX COPIES OF CASH BOOK FOR FINANCIAL YEAR 2014 - 15 RELEVANT TO ASSESSMENT YEAR 2015 - 16, ALONGWITH COPIES OF BANK STATEMENT FOR THE SAME FINANCIAL PERIOD THEN THE EXISTENCE OF JAGADAMBA STEELEX CANNOT BE DENIED. THE AO IN THE REMAND REPORT, ALSO STATED THAT THE SAID AMOUNT WAS PAID BY M/S. GANAPATI MULTICOMPLEX PVT LTD., ON BEHALF OF THE ASSESSEE AND SAME WAS CORRECTLY RECORDED IN THE BOOKS OF ACCOUNT OF M/S. JAGADAMBA STEELEX AND XEROX COPY OF CASH BOOK WAS PLACED ON RECORD AND SENT TO LD CIT(A) FOR HIS PERUSAL. PARA 4 OF THE REMAND REPORT ALSO REVEALS THAT ON 27.12.2018, THE MANAGING PARTNER OF THE ASSESSEE FIRM APPEARED AND PRODUCED THE LEDGER COPY OF M/S. JAGADAMBA STEELE X, WHEREIN, IT WAS SEEN THAT THE ASSESSEE HAS PAID RS.7,56,404/ - IN THE NEXT FINANCIAL YEAR I.E. 2015 - 16 ON DIFFERENT DATES AND IN EACH SUCH DATE TOTAL AMOUNT PAID BY CASH IS BELOW RS.20,000/ - . IN PARA 5 OF THE REMAND REPORT, THE AO NOTED THAT THE OUTSTAN DING LIABILITY WAS ITA NO.281/CTK/2018 ASSESSMENT YEAR : 2015 - 2016 P A G E 6 | 8 NEVER PAID THROUGH BANK ACCOUNT BUT SAME WAS PAID IN CASH IN THE NEXT FINANCIAL YEAR 2015 - 16 RELEVANT TO ASSESSMENT YEAR 2016 - 17. IN SUCH SITUAT ION, IT IS NOT AN ISSUE FOR MY ADJUDICATION THAT WHEN THE ASSESSEE PAID AMOUNT TO JAGADAMB A STEELEX, THE ISSUES FOR MY CONSIDERATION ARE THAT FIRSTLY, AS TO WHETHER THE ASSESSEE HAS FALSELY SHOWN CREDIT AMOUNT OF RS.7,56,404/ - DUE TO M/S JAGADAMBA STEELEX WITHOUT ANY BASIS AND WITHOUT DISCLOSING PAYMENT OF RS.7,34,900/ - AND SECONDLY SAID PAYM ENT OF RS.7,34,900/ - WAS MADE IN VIOLATION OF SECTION 40A(3) OF THE ACT. THE REMAND REPORT PARA 2 SHOWS THAT THE AMOUNT OF RS.7,34,900/ - WAS PAID BY GANAPATI MULTI COMPLEX PVT LTD., TO JAGADAMBA STEELEX ON BEHALF OF THE ASSESSEE AND IT WAS THE CONTENTION OF THE ASSESSEE THAT THE AMOUNT WAS PAID DURING NEXT FINANCIAL YEAR 2015 - 16. BE THAT AS IT MAY, FIRST OF ALL, I OBSERVE THAT THE EXISTENCE OF JAGADAMBA STEELEX CANNOT BE DENIED AND THIS FACT ALSO CANNOT BE DENIED THAT THERE WAS CREDIT BALANCE OF RS.7,56, 404/ - IN THE BOOKS OF THE ASSESSEE IN THE NAME OF JAGADAMBA STEELEX DURING FINANCIAL YEAR 2014 - 15. WHEN THE AO IS DEEMING THAT THE ASSESSEE HAS MADE PAYMENT OF RS.7,34,900/ - IN CASH WITHOUT DISCLOSING THE SAME IN THE BOOKS OF ACCOUNT AND MAKING ADDITION OF SAME AMOUNT U/S.69B OF THE ACT, THEN IT IS THE DUTY AND ONUS ON THE SHOULDERS OF THE AO TO ESTABLISH FACTUM OF UNDISCLOSED INVESTMENT BY ASSESSEE. I AM UNABLE TO SEE ANY POSITIVE EVIDENCE IN THIS REGARD. FOR THE SAKE OF ARGUMENTS, IT IS ACCEPTED THAT M/ S GANAPATI MULTICOMPLEX PVT KLTD., MADE PAYMENT ON BEJHALF OF THE ASSESSEE ITA NO.281/CTK/2018 ASSESSMENT YEAR : 2015 - 2016 P A G E 7 | 8 THEN ALSO THE CREDIT AT M/S. JAGADAMBA STEELEX WILL BE REDUCED AND THE SAME AMOUNT WILL HAVE TO BE SHOWN AS DUE TO M/S. GANAPATI MULTICOMPLEX RESULTING INTO SAME AMOUNT OF SUNDRY C REDITORS. THERE IS NO POSITIVE EVIDENCE ON RECORD THAT THE M/S. GANAPATI MULTICOMPLEX TOOK AMOUNT FROM ASSESSEE AND FURTHER PAID TO M/S. JAGADAMBA STEELEX AND THIS AMOUNT WAS UNDISCLOSED INVESTMENT OF ASSESSEE ATTRACTING PROVISIONS OF SECTION 69B OF THE A CT. THEREFORE, I AM UNABLE TO AGREE WITH THE CONTENTION OF THE AO AND LD CIT(A) TREATING THIS ENTIRE AMOUNT OR PART OF AMOUNT OF RS.7,34,900/ - AS UNEXPLAINED INVESTMENT BY THE ASSESSEE ATTRACTING THE PROVISIONS OF SECTION 69B OF THE ACT. 8. ON CAREFUL CON SIDERATION OF THE RIVAL SUBMISSIONS AND MATERIALS PLACED ON RECORD ALONGWITH REMAND REPORT DATED 2.3.2019, I AM UNABLE TO SEE ANY VALID REASON , SUPPORTED BY ANY POSITIVE EVIDENCE , SHOWING AND ESTABLISHING THAT DURING THE RELEVANT PERIOD, THE ASSESSEE HA S MADE PAYMENT OF RS.7,34,900/ - IN CASH TO JAGADAMBA STEELEX IN VIOLATION OF PROVISIONS OF SECTION 40A(3) OF THE ACT. THEREFORE, I AM COMPELLED TO INCLINE TO HOLD THAT THE AO WAS NOT CORRECT IN MAKING ADDITION OF SIMILAR AMOUNT U/S.69B AND U/S 40A(3) OF T HE ACT AND LD CIT(A) WAS NOT CORRECT IN CONFIRMING THE SAME. HOWEVER, I MAY STATE THAT IF THE ASSESSEE HAS PAID AMOUNT IN NEXT FINANCIAL YEAR, THE AO IS DIRECTED TO EXAMINE THE ISSUE IN THE SAID FINANCIAL YEAR WHILE MAKING THE ASSESSMENT. WITH THESE OBSE RVATIONS, THE AO IS DIRECTED TO DELETE THE ADDITION. ITA NO.281/CTK/2018 ASSESSMENT YEAR : 2015 - 2016 P A G E 8 | 8 9. IN THE RESULT, APPEAL IS ALLOWED. ORDER PRONOUNCED ON 31 / 1 2 /201 9 . S D/ - ( CHANDRA MOHAN GARG) JUDICIAL MEMBER CUTTACK; DATED 31 / 1 2 /20 1 9 B.K.PARIDA, SPS COPY OF THE ORDER FORWARDED TO : BY ORDER SR . PVT. S ECRETARY ITAT, CUTTACK 1. THE APPELLANT : /S. CHANDAKA MEADOWS, PLOT NO.300, KHARVEL NAGAR, UNIT - III, BHUBANESWAR 2. THE RESPONDENT. ITO, WARD 4(2), BHUBANESWAR 3. THE CIT(A) - 2 , BHUBANESWAR 4. PR.CIT - 2 , BHUBANESWAR 5. DR, ITAT, CUTTACK 6. GUARD FILE. //TRUE COPY//