Deputy Commissioner of Income-tax, V. Ayub Guilab Shaikh, Pune

ITA 295/PUN/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 1650 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 4 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-07-2016
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 16-02-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 14-02-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: POOJA RASTOGI
• Keywords: Corroborative evidences; Revised return
• Section: 40A(3); 37

Judgement Text

] ]] ] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE , !', $ % BEFORE SHRI VIKAS AWASTHY, JM AND SHRI PRADIP KUMAR KEDIA, AM ITA NO.295/PN/2014 ASSESSMENT YEAR : 2009-10 THE DY. COMMISSIONER OF INCOME TAX, CIRCLE 9, PUNE. .. APPELLANT VS. AYUB GULAB SHAIKH, ODC TRANSPORT COMPANY, PLOT NO.153A, SECTOR NO.23, TRANSPORT NAGAR, NIGDI, PUNE 411 044. PAN: ACNPS6869C ... RESPONDENT / APPELLANT BY : MS. POOJA RASTOGI / RESPONDENT BY : MR. KISHOR PHADKE / DATE OF HEARING : 11.05.2016 / DATE OF PRONOUNCEMENT: 04.07.2016 & / ORDER PER VIKAS AWASTHY, JM : THIS APPEAL BY THE DEPARTMENT IS DIRECTED AGAINST T HE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-V, PUNE DATED 27.11.2013 FOR THE ASSESSMENT YEAR 2009-10. 2. IN APPEAL, THE REVENUE HAS ASSAILED THE FINDINGS OF THE CIT(A) IN RESTRICTING THE DISALLOWANCE ON ACCOUNT OF PAYMENTS MADE TO OUT STANDING LORRY HIRING CHARGES. THE ASSESSING OFFICER HAD MADE DISALLOWANCE OF RS.9 9,51,646/- UNDER SECTION 37 OF THE ACT. IN THE FIRST APPEAL, THE CIT(A) RESTRI CTED THE DISALLOWANCE TO RS.9,95,165/- UNDER SECTION 40A(3) OF THE ACT. 2 ITA NO.295/PN/2014 3. THE BRIEF FACTS OF THE CASE AS EMANATING FROM RE CORDS ARE: THE ASSESSEE IS A TRANSPORTER AND IS PLYING HEAVY GOODS VEHICLE AND T RAILERS. THE ASSESSEE FILED HIS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2009-10 ON 30.10.2009 DECLARING TOTAL INCOME OF RS.1,09,20,310/-. THEREAFTER, THE ASSESS EE FILED REVISED RETURN ON 17.01.2011 DECLARING TOTAL INCOME AS NIL. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY UNDER CASS AND ACCORDINGLY NOTICE UNDE R SECTION 143(2) ISSUED TO THE ASSESSEE ON 18.08.2010. DURING THE COURSE OF ASSES SMENT PROCEEDINGS, THE ASSESSING OFFICER INTER-ALIA MADE DISALLOWANCE OF RS.99,51,646/- ON CASH PAYMEN TS MADE TO DIFFERENT PARTIES IN THE SUNDRY CREDITORS LORRY A/C. THE DISALLOWANCE WAS MADE BY THE ASSESSING OFFICER ON THE GROUND THAT TH E EXPENDITURE WAS NOT SUPPORTED BY ANY DOCUMENTARY EVIDENCE. 4. AGGRIEVED BY THE ASSESSMENT ORDER DATED 19.12.20 11, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A). THE CIT(A) WHILE DEALING WITH THE ISSUE OF DISALLOWANCE OF CASH PAYMENTS IN RESPECT OF OUTSTAN DING LORRY HIRE CHARGES, HELD THAT THE DISALLOWANCE IS MADE UNDER SECTION 40A(3) AS THE PAYMENTS WERE MADE IN CASH AND RESTRICTED THE DISALLOWANCE TO RS.9,95,165 /-, THEREBY GRANTING RELIEF OF RS.89,56,481/- TO THE ASSESSEE. AGAINST THESE FIND INGS OF THE CIT(A), THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 5. THE GROUNDS RAISED BY THE REVENUE IN APPEAL ARE AS UNDER :- 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C ASE AND IN LAW THE CIT(A) WAS JUSTIFIED IN HOLDING THAT THE PROVISIONS OF SEC TION 40A(3) WERE ATTRACTED WHEREAS THE DISALLOWANCE ON THIS ACCOUNT HAVE BEEN MADE UND ER THE GENERAL PROVISIONS OF SECTION 37 OF THE IT ACT, 1961 ? 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE AND IN LAW, THE CIT(A) WAS JUSTIFIED IN OVERLOOKING THE FACT THAT THE DISA LLOWANCE WAS MADE DUE TO NON- PRODUCTION OF DOCUMENTARY AND SUPPORTING EVIDENCE A ND NOT DUE TO VIOLATION OF PROVISIONS OF SECTION 40A(3)? 3. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE AND IN LAW, THE CIT(A) WAS JUSTIFIED IS RESTRICTING THE DISALLOWANCE AT 10 % WITHOUT AFFORDING AN OPPORTUNITY TO THE AO TO VERIFY THE SAME AT HIS LEVEL? 4. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE AND IN LAW, THE CIT(A) WAS JUSTIFIED IN MAKING ADHOC DISALLOWANCE OF 10% U /S 40A(3), WITHOUT SUBSTANTIATING THE SAME WITH NECESSARY EVIDENCE. 3 ITA NO.295/PN/2014 5. THE APPELLANT CRAVES LEAVE TO ADD, AMEND OR ALTE R ANY OF THE ABOVE GROUNDS OF APPEAL. 6. SMT. POOJA RASTOGI APPEARING ON BEHALF OF THE DE PARTMENT SUBMITTED THAT DURING THE ASSESSMENT PROCEEDINGS THE ASSESSING OFF ICER NOTICED FROM THE AUDIT REPORT THAT PAYMENT OF RS.99,51,646/- IS MADE IN CA SH ON ACCOUNT OF SUNDRY CREDITORS FOR LORRY HIRE CHARGES AND THE SAID EXPEN DITURE WAS NOT SUPPORTED BY ANY DOCUMENTARY EVIDENCE. THE ASSESSEE COULD NOT FURNI SH SATISFACTORY EVIDENCE OR EXPLANATION IN RESPECT OF THE AFORESAID EXPENDITURE . THEREFORE, THE ASSESSING OFFICER MADE ADDITION ON THE SAID AMOUNT TO THE TOT AL INCOME OF THE ASSESSEE. IN THE FIRST APPELLATE PROCEEDINGS, THE STAND OF THE A SSESSEE WAS THAT THE SAID PAYMENTS PERTAIN TO BROUGHT FORWARD AMOUNT OF LORRY HIRE CHARGES WHICH WERE OUTSTANDING AS ON 01.04.2008 AND PAID DURING THE YE AR RELEVANT TO THE ASSESSMENT YEAR 2009-10. THE CIT(A) OBSERVED THAT SINCE PAYME NTS WERE MADE IN CASH, THE PROVISIONS OF SECTION 40A(3) OF THE ACT ARE ATTRACT ED. THE CIT(A) ESTIMATED THE DISALLOWANCE @ 10% OF THE TOTAL EXPENDITURE DISALLO WED. THE LD. DR CONTENDED THAT THE CIT(A) HAS ERRED IN RESTRICTING THE DISALL OWANCE UNDER SECTION 40A(3). NOWHERE IN THE ASSESSMENT ORDER IT IS MENTIONED THA T THE SAID DISALLOWANCE HAS BEEN MADE IN VIEW OF THE PROVISIONS OF SECTION 40A( 3) OF THE ACT. A PERUSAL OF THE ASSESSMENT ORDER WOULD SHOW THAT THE DISALLOWANCE I S MADE UNDER THE PROVISIONS OF SECTION 37 OF THE ACT. THE ASSESSING OFFICER HA S CATEGORICALLY STATED THAT THE PAYMENTS OF RS.99,51,646/- MADE IN CASH ARE NOT SUP PORTED BY ANY DOCUMENTARY EVIDENCE AND HENCE THE SAME IS DISALLOWED. THE CIT (A) HAS ERRED IN GRANTING AD- HOC RELIEF WITHOUT LOOKING AT THE FACTS OF THE CASE. FURTHER, THE CIT(A) HAS NOT GRANTED ANY OPPORTUNITY TO THE ASSESSING OFFICER TO VERIFY THE ASSESSEES CLAIM OF EXPENDITURE UNDER THE PROVISIONS OF SECTION 40A(3) OF THE ACT. THE LD. DR VEHEMENTLY SUPPORTED THE FINDINGS OF THE ASSESSING OFFICER AND PRAYED FOR REVERSING THE FINDINGS OF CIT(A) ON THE ISSUE. 4 ITA NO.295/PN/2014 7. ON THE OTHER HAND, SHRI KISHOR PHADKE APPEARING ON BEHALF OF THE ASSESSEE STRONGLY SUPPORTED THE ORDER OF THE CIT(A). THE LD . AR CONTENDED THAT THE ORDER OF THE CIT(A) IS WELL REASONED. THE ASSESSING OFFICER HAD MADE DISALLOWANCE OF RS.99,51,646/- MERELY ON THE BASIS OF REMARKS IN TH E AUDIT REPORT. THE LD. AR CONTENDED THAT THE BOOKS OF ACCOUNT WERE AVAILABLE BEFORE THE ASSESSING OFFICER FOR VERIFICATION, HOWEVER, NO EFFORT WAS MADE BY TH E ASSESSING OFFICER TO VERIFY THE PAYMENTS. ALL THE PAYMENTS IN RESPECT OF LORRY HIR E CHARGES ARE BONA-FIDE AND THERE WAS NO OCCASION TO MAKE ANY DISALLOWANCE ON THAT AC COUNT. THE CIT(A) HAS RESTRICTED THE DISALLOWANCE TO RS.9,95,165/- AFTER APPRECIATING THE FACTS OF THE CASE AND DOCUMENTS ON RECORD. THE LD. AR PRAYED FOR DIS MISSING THE APPEAL OF THE REVENUE AND UPHOLDING THE ORDER OF THE CIT(A). 8. BOTH SIDES HEARD. ORDERS OF THE AUTHORITIES BEL OW PERUSED. THE ONLY ISSUE IN PRESENT APPEAL IS WITH RESPECT TO DISALLOWANCE M ADE ON ACCOUNT OF CASH PAYMENTS FOR LORRY HIRE CHARGES. THE ASSESSING OFF ICER IN HIS ORDER MADE DISALLOWANCE OF RS.99,51,646/- ON THE GROUND THAT T HE CASH PAYMENTS FOR LORRY HIRING CHARGES ARE NOT SUPPORTED BY DOCUMENTARY EVI DENCE. THE ASSESSING OFFICER HAS REFERRED TO THE REMARKS MADE BY THE TAX AUDITOR S REPORT IN FORM NO.3CB. IN FIRST APPELLATE PROCEEDINGS, THE CIT(A) RESTRICTED THE DISALLOWANCE TO RS.9,95,165/- UNDER SECTION 40A(3) OF THE ACT. AFTER PERUSAL OF THE ORDERS OF THE AUTHORITIES BELO W, WE FIND THAT BOTH THE AUTHORITIES ARE INCOHERENT IN APPLYING THE PROVISIO NS OF THE ACT, FOR MAKING DISALLOWANCE. OSTENSIBLY, THE ASSESSING OFFICER HA S MADE DISALLOWANCE UNDER SECTION 37 OF THE ACT ON THE GROUND THAT THE EXPEND ITURE CLAIMED BY THE ASSESSEE IS NOT VERIFIABLE, AND IN THE FIRST APPEAL THE CIT(A) HAS MADE DISALLOWANCE UNDER SECTION 40A(3) IN RESPECT OF SAME EXPENDITURE. IN OUR CONSIDERED OPINION, THIS ISSUE NEEDS A RE-VISIT TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSING OFFICER SHALL RE-CONSIDER THIS ISSUE AND DISALLOW THE EXPEN DITURE, IF REQUIRED BY APPLYING THE 5 ITA NO.295/PN/2014 CORRECT PROVISIONS OF THE ACT. THE ASSESSING OFFIC ER SHALL DECIDE THIS ISSUE AFRESH AFTER AFFORDING AN OPPORTUNITY OF HEARING TO THE AS SESSEE, IN ACCORDANCE WITH LAW. THE GROUNDS OF APPEAL RAISED BY THE REVENUE ARE ALL OWED FOR STATISTICAL PURPOSES. 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALLO WED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON MONDAY, THE 04 TH DAY OF JULY, 2016. SD/- SD/- ( PRADIP KUMAR KEDIA ) ( VIKAS AWASTHY ) $ / ACCOUNTANT MEMBER / JUDICIAL MEMBER PUNE ; DATED : 04 TH JULY, 2016. & ' () *+( / COPY OF THE ORDER IS FORWARDED TO : 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A)-V, PUNE; 4) THE CIT-V, PUNE; 5) THE DR B BENCH, I.T.A.T., PUNE; 6) GUARD FILE. &, / BY ORDER , ' # //TRUE COPY// $ %& # '( / SR. PRIVATE SECRETARY ) '* , / ITAT, PUNE