M/s Abhiram Caretaking & Expert Service, Bhubaneswar V. ITO, Bhubaneswar

ITA 301/CTK/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 4347 (ITAT-CUTTACK)
• Duration Of Justice: 1 year(s) 6 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2011
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 22-06-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 29-12-2009
• Court: TRIBUNAL
• Department Lawyers: A K PATRA
• Assessee Lawyers: P K MISHRA
• Section: 68; 2

Judgement Text

IN THE INCME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK BEFORE : HONBLE SHRI K.K.GUPTA, ACCOUNTANT MEMBER, AND HONBLE SHRI K.S.S.PRASAD RAO, JUDICIAL MEMBER. ITA NO. 301/CTK/2009 (ASSESSMENT YEAR 2005 - 06) M/S.ABHIRAM CARETAKING & EXPER SERVICE S, QR.NO.L/242/G.G.P.COLONY, RASUL GARH, BHUBANESWAR PAN: AAGFA 9437 K VERSUS INCOME - TAX OFFICER, WARD 2(2), BHUBANESWAR. (APPELLANT) (RESPONDENT) FOR THE APPELLANT: SHRI P.K.MISHRA, AR FOR THE RESPONDENT SHRI A.K.PATRA, DR ORDER SHRI K.K.GUPTA, ACCOU NTANT MEMBER : THIS APPEAL BY THE ASSESSE AGITATES THE ACTION OF THE LEARNED CIT(A) BY RAISING THE FOLLOWING GROUNDS. 1. THAT THE ORDER OF THE LEARNED CIT (A) II. BHUBANESWAR IS NOT JUST AND FAIR ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE. 2. THA T ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A SUM OF 15,18,000 ONLY PAID BY SRI B.K MOHANTY TO THE APPELLANT FOR HIS WORKS AS HAS BEEN ADDED WITH THE INCOME OF THE APPELLANT IS ILLEGAL AND ARBITRARY. 3. THAT THE RECEIPT OF 1,94,500 ONLY FROM THE SUNDRY DEBTORS DURING THE ABOVE YEAR AS HAS BEEN ADDED WITH THE INCOME OF THE APPELLANT IS ILLEGAL AND ARBITRARY ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE. 4. THAT THE RECEIPT OF RS.40.500/ - ONLY TOWARDS REFUND OF SECURITY DEPOSITS AS HAS BEEN ADDED WITH THE INCOME OF THE APPELLANT IS ILLEGAL AND ARBITRARY ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE . 2. THE BRIEF FACTS ON THE ISSUE IN DISPUTE ARE THAT THE ASSESSEE IS A FIRM DERIVING INCOME FROM CLEANING AND SANITATION WORK ON CONTRACT BASIS. IT FILED ITS RETURN OF INCOME OF 32,950 WHICH WAS TAKEN UP FOR SCRUTINY UNDER THE ITA NO.301/CTK/2009 2 PROVISIONS OF SECTION 143(3). THE ASSESSING OFFICER DURING THE COURSE OF HEARING PERUSED THE BANK ACCOUNT WHEN HE NOTED THAT THE GROSS RECEIPTS DECLARED BY THE ASSESSEE IN ITS PROFIT & LOSS ACCOUNT WAS 19, 61,500 WHEN THE TOTAL CREDIT SUMMATIONS IN THE BANK WAS 42,00,175. INSTEAD OF REQUIRING THE ASSESSEE TO PRODUCE A RECONCILIATION HE INSISTED THAT THE ASSESSEE OUGHT TO BE COVERED UNDER THE PROVISIONS OF SECTION 44AB. HE ADDED THE DIFFERENCE OF 22,38,675 AS THE INCOME CREATING DEMAND WHICH WAS APPEALED AGAINST BEFORE THE FIRST APPELLATE AUTHORITY. THE LEARNED CIT(A) PROCURED THE BANK STATEMENT AS SUBMITTED BY THE ASSESSEE APPELLANT AND DELIBERATED UPON THE ISSUE OF THE ASSESSEE AVAILING FUNDS FROM ONE SHRI B.K.MOHANTY WHO WAS EXECUTING CIVIL CONTRACT WORK AT BHUBANESWAR BUT HOLDING A BANK ACCOUNT IN GANAPATIPUR, P.O.KODARDAPUR IN THE DISTRICT OF JAJPUR. HE HAD BEEN ABLE TO ESTABLISH THAT A SUM OF 15, 18 ,000 WAS ROUTED THROUGH THE ASSESSEES BANK ACCOUNT FOR CONVENIENCE IN VIEW OF THE FACT THAT THE ASSESSEE HAD CONDUCTED HIS BUSINESS OF CLEANING AND SANITATION WORK AT BHUBANESWAR WAS ABLE TO WITHDRAW THE SAME FROM HIS ACCOUNT AND DISPERSE IT ON THE DIRECTION OF SHRI B.K.MOHANTY WHICH HE ALSO BY WAY OF A STATEMENT BEFORE THE ASSESSING OFFICER CONFIRMED. THIS AMOUNT WAS SQUARED OFF IN THE ASSESSEES BANK ACCOUNT LEAVING A RESIDUAL BALANCE OF 10,955 IN IDBI BANK AND 30,332 IN ING VAISYA BANK. NO AMOUN T WAS OWED TO SHRI B.K.MOHANTY AS ON THAT DATE INSOFAR AS THE REMAINING DIFFERENCE WAS EXPLAINED BEING AMOUNTS RECEIVED FROM THE CONTROLLER OF ACCOUNTS, ORISSA 53,985, DIRECTOR OF PERSONAL WORKS DEPARTMENT 75,090, SBI 9,000 AND NIRTAR 56,425 TOTALING T O 1,94,500 WHICH WERE HELD BY THE ASSESSEE AS SUNDRY DEBTORS. THERE WERE CASH DEPOSIT S OF 4,85,675 WHICH WAS ON ACCOUNT OF CASH INCOMES RENDERED TO TAX. THE LEARNED CIT(A) THEREFORE HELD THAT THE ASSESSEE HAS REASONABLY EXPLAINED SOURCE OF 4,85,675 BUT CONFIRMED THE OTHER SQUARED UP AMOUNT S AS ITA NO.301/CTK/2009 3 UNEXPLAINED HAVING BEEN RECEIVED FROM SHRI B.K.MOHANTY AT 15,08,000. THE ASSESSEE IS IN APPEAL BEFORE US AGITATING THIS AND THE ENCASHMENT OF THE SUNDRY DEBTORS. 3. THE LEARNED COUNSEL FOR THE ASSESSEE INITIATING HIS ARGUMENT FILED A PAPER BOOK WHICH INTERALIA INCLUDES THE CERTIFICATE OF SHRI B.K.MOHANTY, THE STATEMENT OF B.K.MOHANTY AND THE PAYMENT STATEMENTS OF THE TWO BANK ACCOUNTS HELD BY THE ASSESSEE TO CORRESPOND WITH THE ENTRY AS INDICATED IN THE BANK ACCOUN T OF SHRI B.K.MOHANTY. THE LEARNED COUNSEL FOR THE ASSESSEE ALSO ENCLOSED THE REMAND REPORT GIVEN BY THE ASSESSING OFFICER ON REQUISITION BY THE LEARNED CIT(A) DURING THE COURSE OF APPEAL PROCEEDINGS. HE POINTED OUT THAT THE ASSESSING OFFICER HAS CLEARLY G IVEN A FINDING THAT SHRI B.K.MOHANTY WAS ADVANCING MONEY BY WAY OF CHEQUE IN THE BANK ACCOUNT OF THE ASSESSEE WHICH HAD BEEN WITHDRAWN IN CASH THEREFORE WAS PROPERLY ROUTED AND CHANNELIZED THROUGH THE BANK DID NOT REQUIRE FURTHER CONSIDERATION TO THE EXTEN T THAT HE WAS OF THE OPINION THAT UNLESS THE BOOKS OF ACCOUNT OF SHRI B.K.MOHANTY ARE PRODUCED FOR VERIFICATION IT WAS NOT POSSIBLE TO FIND OUT THE ACTUAL UTILIZATION OF THE AMOUNT. HE ARGUED THAT HOW THE DEPARTMENT COULD RELY ON THIRD PARTYS BOOKS OF ACC OUNT FOR THE PURPOSE OF ESTABLISHING THE SOURCE WHETHER WAS FROM THE MONEY DEPOSITED IN THE ASSESSEES BANK ACCOUNT HAD BEEN REPAID OR SQUARED OFF BY THE ASSESSEE. IT WAS NOBODYS CASE THAT AN INCOME HAS BEEN SIPHONED OFF BY THE ASSESSEE WHEN THE ASSESSING OFFICER HIMSELF AGREE D TO THE PROPOSITION THAT THE CREDIT SUMMATION IN THE BANK OF THE ASSESSEE HAVE BEEN DISCLOSED FOR THE PURPOSE OF TAXATION BEING A CONTRACTOR FOR CLEANING AND SCAVENGING. THE LEARNED CIT(A) ON THE OTHER HAND , EVEN AFTER OBTAINING AND FILING OF VARIOUS EVIDENCES CONTINUED TO HOLD THAT THE CASH CREDIT IF ANY, WAS NOT TO BE EXPLAINED BY THE ASSESSEE ANY MORE HAVING DISCHARGED THE ONUS THAT LIED UPON HIM BY ITA NO.301/CTK/2009 4 SUBMITTING THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTIONS BY PRODUCING THE I.T.RETURN, THE BANK STATEMENTS AND LENDER PERSONALLY APPEARING GIVING STATEMENT ON OATH . THE LEARNED CIT(A) SATISFIED HIMSELF ABOUT THE AVAILABILITY OF CASH AMOUNTING TO 4,85,675 DEPOSITED IN THE BANK WAS PLEASED TO DELETE THE SAME THEREFORE LEFT THE RESIDUAL AMOUNT OF 1,94,500 WHICH HE ACCEPTED WAS ON ACCOUNT OF MARGIN MONEY OR SECURITY HELD BY THE VARIOUS CONTRACTEES AND WERE REFUNDED TO THE ASSESSEE IN THE IMPUGNED A SSESSMENT YEAR. THEREFORE, HAVING EXPLAINED THE FULL AMOUNT OF CREDIT SUMMATIONS AS SOUGHT TO BE ADDED BY THE ASSESSING OFFICER 22,38,675 , THE LEARNED CIT(A) AFTER OBTAINING REMAND REPORT C OULD NOT HAVE FORMED AN OPINION EXPRESSED BY THE ASSESSING OFFICE R THAT THE SOURCE OF THE SOURCE WAS TO BE EXPLAINED WHEN THE UTILIZATION OF THE SAID CREDITS IN THE ASSESSEES BANK ACCOUNT ARE ACCEPTABLE TO IT ACEPTING THE BANK BALANCE AS ON THE LAST DAY OF THE WORKING YEAR STOOD RECONCILED WITH THE BANK STATEMENT. 4. THE LEARNED DR OPPOSED THE CONTENTION OF THE LEARNED COUNSEL FOR THE ASSESSEE BY INDICATING THAT AFTER HAVING SUBMITTED THE REMAND REPORT THE LEARNED COUNSEL FOR THE ASSESSEE HAS NOT BEEN ABLE TO SUBSTANTIATE AS TO WHETHER SHRI B.K.MOHANTY OBTAINED THE FUN DS TO BE DEPOSITED IN HIS BANK ACCOUNT OF THE ASSESSEE ONLY TO BE WITHDRAWN FOR HIS USE. THIS FRIENDLY LOAN GESTURE WAS TO BE EXPLAINED NOT FOR AS DISCHARGING THE ONUS UNDER THE PROVISIONS OF SECTION 68 INSOFAR AS THE LEARNED CIT(A) HAS HELD THAT THE ASSES SEE WAS NOT ABLE TO PRODUCE THE BOOKS OF ACCOUNT AND ONLY RELIED ON THE BANK STATEMENT FOR THE PURPOSE. HE FULLY SUPPORTED THE ORDER OF THE AUTHORITIES BELOW FOR HIS PART SUBMISSIONS. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABL E ON RECORD. ON OUR CAREFUL CONSIDERATION OF THE FACTS, WE ARE INCLINED TO FIND FAVOUR IN THE SUBMISSIONS OF THE LEARNED COUNSEL FOR THE ASSESSEE. AS ITA NO.301/CTK/2009 5 PER THE REQUIREMENTS OF LAW THE ASSESSEES ARE TO EXPLAIN THE CREDIT ROUTED THROUGH THEIR BOOKS OF ACCOUNTS WHETHER UTILIZED FOR THE PURPOSE OF BUSINESS OR SQUARED OFF WITHOUT INDICATING THEIR UTILIZATION THEREOF. THE ASSESSING OFFICER AS A THUMB RULE SOUGHT TO REQUIRE THE ASSESSEE TO EXPLAIN THE DIFFERENCE IN THE INCOME AS GROSS RECEIPTS FROM CLEANING AND SCAV ENGING WORK DECLARED IN THE PROFIT & LOSS ACCOUNT WAS LOWER TO THE EXTENT BY 22,38,675 AS CREDIT SUMMATION IN THE BANK. HE HELD THAT THE ASSESSEE OUGHT T O HAVE BEEN SUBJECTED TO AUDIT U/S.44AB. HOWEVER, WITHOUT VERIFYING THE BANK RECONCILIATION WHICH WOU LD HAVE LED TO THE FINDING THAT THE ASSESSEE HAD ROUTED DEPOSITS FROM ONE SHRI B.K.MOHANTY AND HAVING WITHDRAWN THE SAME BY CHEQUE OR CASH DULY ACKNOWLEDGED IN THE BANK ACCOUNT AND SQUARING UP THE ACCOUNT ,TOTALLING TO 15,18,000 COULD NOT BE SUBJECTED TO F URTHER SCRUTINY FOR EXPLAINING THE SOURCE OF SOURCE. THE FRIENDLY ACCOMMODATION DULY INCORPORATED IN THE BANK ACCOUNT , WHEN CASH HAS BEEN WITHDRAWN TO REPAY , CAN NOT BE TERM ED AS LOAN OR A DEPOSIT WAS SUBSTANTIATED BY THE ASSESSEE BY INDICATING THE BALANCE IN IDBI BANK 10,955 AND AT 30,332 IN ING VAISYA BANK STOOD EXPLAINED TO THE EXTENT THAT THE LEARNED CIT(A) CONFIRMED THE ADDITION OF 15,08,000 ONLY ON TH IS BASIS . THE ASSESSING OFFICERS OPINION THAT THE SAID SHRI B.K.MOAHTNY COULD NOT PRODUCE THE BOOKS OF ACCOUNT COULD BE CHALLENGED IN THE ASSESSMENT OF SHRI B.K.MOHANTY AND OUGHT TO HAVE BEEN TAKEN UP BY WAY OF A SEPARATE PROCEEDINGS AND NOT OPINING INSOFAR AS THE ASSESSEE IS CONCERNED THE SUMMATIONS INOBANK STOOD EXPLAINED., WE DO NOT FIND THIS OPINION AS FAIR IN THE EYES OF LAW TO THE EXTENT THAT THE ASSESSEE HAD INCURRED EXPENSES TO EARN THE INCOME TO EARN FROM SERVICE CHARGES AMOUNTING TO 19,61,500 AGAINST WHICH NO ADVERSITY HAS BEEN POINTED OUT EITHER BY THE ASSESSING OFFICER OR BY THE LEARNED CIT(A).. THE ASSESSEE BEING A PARTNERSHIP FIRM THEREFORE MAINTAINED THE ACCOUNT WHICH MATCHED THE ITA NO.301/CTK/2009 6 BALANCES IN THE BANK COULD NOT BE SUBJECTED TO TAX ON THE BASIS OF CREDIT SUMMATION ALONE ONLY. WE HAVE SEEN THE UTILIZATION OF CREDIT SUMMATIONS BY THE ASSESSEE WHICH DOES NOT SUGGEST PARKING OF THE FUND BY THE ASSESSEE OR SHRI B.K.MOHANTY TO INDICATE INCOME NOT RENDERED TO TAX EITHER BY THE ASSESSEE OR SHRI B.K.MOHANTY. THE REMAND REPORT THEREFORE RATHER LEANS IN FAVOUR OF THE ASSESSEE WHICH THE LEARNED CIT(A) OUGHT TO HAVE CONSIDERED FOR THE DELETION OF THE SAID SUM RATHER THAN UPHOLDING THE OPINION EXPRESSED BY THE ASSESSING OFFICER ON THE HESITAT ION IN THE PRODUCTION OF BOOKS OF ACCOUNT BY SHRI B.K.MOAHNTY. THE ASSESSEE COULD NOT HAVE PRODUCED THE BOOKS OF ACCOUNT OF SHRI B.K.MOHANTY WHICH THE AUTHORITIES BELOW COULD HAVE REQUISITIONED UNDER THE PROVISIONS OF THE I.T.ACT. IN ANY CASE THIS DIFFEREN CE CANNOT BE TAXED IN THE HANDS OF THE ASSESSEE FOR WANT OF EXPLANATION OF THE SOURCE OF SOURCE WHEN THE UTILIZATION HAS BEEN ACCEPTED BY BOTH THE AUTHORITIES. THIS CONFIRMATION OF ADDITION OF 15,08,000 IS THEREFORE DIRECTED TO BE DELETED. THE RESIDUAL AMOUNT ON THE BASIS OF ASSETS HELD BY THE ASSESSEE IN THE PRECEDING ASSESSMENT YEAR AND ENCASHED IN THE IMPUGNED ASSESSMENT YEAR IN THE BANK CANNOT BE TAXED AND IS DIRECTED TO BE DELETED. THE SUM OF 4,85,675 HAS ALREADY BEEN DELETED BY THE LEARNED CIT(A) AS REASONABLE CASH AVAILABLE TO THE ASSESSEE FOR DEPOSIT IN THE BANK WHICH BALANCE HAS ALREADY BEEN RECONCILED AND ACCEPTABLE TO THE ASSESSING OFFICER AND THE LEARNED CIT(A). 6. IN THE RESULT, TH E APPEAL FILED BY THE ASSESSEE IS ALLOWED. PRONOUNCED IN OPEN COURT ON DT. 30 TH JUNE, 2011 S D/ - S D/ - (K.S.S.PRASAD RAO) JUDICIAL MEMBER (K.K.GUPTA) ACCOUNTANT MEMBER DATE: 30 TH JUNE, 2011 H.K.PADHEE, SENIOR PRIVATE SECRETARY. ITA NO.301/CTK/2009 7 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT: M/S.ABHIRAM CARETAKING & EXPER SERVICES, QR.NO.L/242/G.G.P.COLONY, RASULGARH, BHUBANESWAR 2. THE RESPONDENT: INCOME - TAX OFFICER, WARD 2(2), BHUBANESWAR. 3. THE CIT, 4. THE CIT(A), 5. THE DR, CUTTACK 6. GUARD FILE (IN DUPLICATE) TRUE COPY, BY ORDER, SENIOR PRIVATE SECRETARY.