ACIT, Ranchi V. M/s Systematic & Advance Construction Pvt. Ltd., Ranchi

ITA 313/RAN/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 2181 (ITAT-RANCHI)
• Duration Of Justice: 1 year(s) 3 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-03-2016
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 14-11-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: S K PODDAR
• Section: 143(3)

Judgement Text

1 I.T.A. NO.313 /RAN/2014 ASSESSMENT YEAR : 2008-09 IN THE INCOME TAX APPELLATE TRIBUNAL, RANCHI BEFORE S/SHRI SHAMIM YAHYA (AM) & PARTHA SARATHI CHAUDHURY (JM) I.T.A. NO.313 /RAN/2014 ASSESSMENT YEAR : 2008-09 ASST. COMMISSIONER OF INCOME TAX, CIRCLE- 3, RANCHI V S M/S. SYSTEMATIC & ADVANCE CONSTRUCTION PVT LTD., H- 112, HARMU HOUSING COLONY, RANCHI PAN/GIR NO. : AAJCS 1255 M (APPELLANT ) .. RESPONDENT APPELLANT BY : SHRI ARVIND KUMAR, DR RESPONDENT BY : SHRI S.K.PODDAR, ADV. DATE OF HEARING : 02-03-2016 DATE OF PRONOUNCEMENT : 04- 3-2016 O R D E R PER PARTHASARATHI CHAUDHURY, JUDICIAL MEMBER: THIS IS AN APPEAL FILED BY THE REVENUE ARISING FRO M THE ORDER OF THE LD CIT(A), RANCHI DATED 12.8.2014. 2. THE ONLY SOLITARY GROUND RAISED BY THE REVENUE I S AGAINST DELETION OF ADDITION OF RS.32,85,000/- ON ACCOUNT OF UNSECURED LOAN TAKEN FROM DIFFERENT PERSONS. 3. BRIEF FACTS AS APPEARING IN THIS CASE ARE THAT T HE ASSESSEE IS ENGAGED IN THE WORK OF CIVIL CONTRACT. THE RETURN OF INCOME WAS FILED ON 2 I.T.A. NO.313 /RAN/2014 ASSESSMENT YEAR : 2008-09 29.11.2008 SHOWING A TOTAL INCOME OF RS.1,98,631/-. THE CASE WAS SELECTED FOR SCRUTINY AND ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) OF THE ACT DETERMINING TOTAL INCOME OF THE ASSESSEE AT RS.53,43,890/-, INTER ALIA, MAKING ADDITION OF RS.54,85,000/-. 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAD TAKEN UNSECURED LOAN FROM THE FOLLOWING PERSONS AS UNDER: I) SHRI NAWAL KISHORE : RS.15,00,000/- II) SHRI AVIRAM SHARMA : RS. 7,00,000/- III) SHRI AJAY KUMAR : RS.15,00,000/- IV) SHRI TAPESHWAR SHARMA : RS. 5,25,000/- V) SHRI OM PRAKASH : RS. 3,00,000/- VI) SHRI KANIHAIYA KUMAR : RS. 2,60,000/- VII) SHRI BAIJNATH SHARMA : RS. 5,00,000/- VIII) SHRI GANESH DUTT : RS. 2,00,000/- NO DETAILS REGARDING THE SAVINGS OF THE CREDITORS HAVE BEEN FILED BEFORE THE ASSESSING OFFICER. THE ASSESSING OFFICER OBSERV ED THAT THE ASSESSEE HAD NEVER SHOWN ITS WILLINGNESS TO PRODUCE THE IDEN TITY OF THE CREDITORS FOR EXAMINATION OR PAN OF THE CONCERNED PARTIES. THE A SSESSING OFFICER ALSO OBSERVED THAT THE GENUINENESS OF THE TRANSACTIONS C OULD NOT HAVE BEEN EXAMINED AS NONE OF THE TRANSACTION HAD BEEN MADE T HROUGH BANKING 3 I.T.A. NO.313 /RAN/2014 ASSESSMENT YEAR : 2008-09 CHANNEL. NO BILLS AND VOUCHERS HAVE BEEN PLACED TO SHOW THAT MATERIALS HAD BEEN PURCHASED BY THE PARTIES. IN VIEW OF THE ABOVE FACTS, THE ASSESSING OFFICER WAS OF THE VIEW THAT TOTAL AMOUNT OF RS.54,85,000/- WAS ASSESSEES OWN MONEY WHICH WAS INVESTED IN NSC/TD W ITH THE POST OFFICE AND THE INVESTMENT HAD BEEN MADE BY THE ASSESSEE OU T OF CASH CREDIT INTRODUCED BY IT DURING F.Y. 2007-08. SINCE THE AS SESSEE FAILED TO PROVE THE GENUINENESS OF THE TRANSACTION, THEREFORE, THE ASSESSING OFFICER TREATED THE SUM OF RS.54,85,000/- AS INCOME OF THE ASSESSEE U/S.69 OF THE I.T.ACT, 1961. BEING AGGRIEVED, THE ASSESSEE C ARRIED THE MATTER IN APPEAL BEFORE THE LD CIT (A). 5. DURING THE APPELLATE PROCEEDINGS, IT WAS ARGUED BY THE ASSESSEE THAT THE UNSECURED LOAN WAS INDIRECTLY RECEIVED FRO M SHRI NAWAL KISHORE RAM, SHRI AVIRAM SHARMA, SHRI AJAY KUMAR, SRI TAPES HWAR SHARMA, SHRI OM PRAKASH, SHRI KANHAIYA KUMAR, SHJRI BAIJNATH SHA RMA AND SHRI GANESH DUTT OF RS.15 LAKHS, RS.7 LAKHS, RS.15 LAKHS , RS.5,25,000/-, RS.3 LAKHS, RS.2 ,60,000/-, RS.5 LAKHS AND RS.2 LAKHS, R ESPECTIVELY AND THEY HAVE PAID ON BEHALF OF THE COMPANY FOR PURCHASE OF NSC AND TERM DEPOSITS IN POST OFFICE AND DIRECTLY PAID LABOUR CH ARGES FOR SOIL LEVELLING AND MATERIAL PURCHASE AND THESE UNSECURED LOAN HAVE BEEN SHOWN IN THE BOOKS OF ACCOUNT IN LIABILITIES SIDE AND SAME WAS S HOWN IN ASSET ASIDE UNDER THE HEAD SECURITY DEPOSIT AND EARNEST MONE Y WHICH IS ONLY PRESENTATION BY THE COMPANY BUT THIS NOT ACTUALLY A MOUNT RECEIVED BY THE 4 I.T.A. NO.313 /RAN/2014 ASSESSMENT YEAR : 2008-09 COMPANY BUT PAID INDIRECTLY OR ON BEHALF OF THE COM PANY BY ABOVE NAMED PERSONS. THEREFORE, AS PER THE ACCOUNTING PRINCIPL E AND INCOME TAX LAW, IT IS NOT VIOLATION U/S.269SS OF THE I.T.ACT, 1961. 6. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSE E, LD CIT(A) CALLED FOR A REMAND REPORT FROM THE ASSESSING OFFICER. ON PERUSAL OF THE SAME, LD CIT(A) OBSERVED THAT THE UNSECURED LOAN WAS RECE IVED BY THE ASSESSEE FROM ABOVE NAMED PERSONS, WHO HAVE PAID ON BEHALF O F THE COMPANY FOR PURCHASE OF NSC AND TERM DEPOSITS FROM THE POST OFF ICE, THE DETAILS OF WHICH HAVE BEEN REPRODUCED BY THE LD CIT(A) IN THE IMPUGNED ORDER. LD CIT(A) FURTHER STATED THAT SINCE THIS ISSUE OF UNSE CURED LOANS IN THE CASE OF SHRI NAWAL KISHORE RAM AND SHRI ABHIRAM SHARMA H AD ALREADY BEEN DECIDED IN THE APPEAL ORDER PASSED AGAINST THE ORDE R OF A.O. U/S 143(3) DATED 07.12.2010 VIDE APPEAL ORDER NO. 183/RAN/OTHR S/10-11, DATED 23.01.2014 IN WHICH GROUND OF THE ASSESSEE WAS ALLOWED I.E. THE ASSESSEE GOT RELIEF AND ACCORDINGLY, NO FURTHER CO MMENTS ARE REQUIRED ON THIS ISSUE. LD CIT (A) FURTHER OBSERVED THAT THE A.O. HAD FAILED TO VERIFY THAT THE UNSECURE LOAN SHOWN IN THE BOOKS OF ACCOUN TS IN LIABILITIES SIDE AND SAME ARE ALSO SHOWN IN ASSETS SIDE UNDER THE HE AD SECURITY DEPOSIT AND EARNEST MONEY WHICH IS ONLY THE PRESENTATION BY THE COMPANY BUT THIS IS NOT ACTUALLY AMOUNT RECEIVED BY THE COMPANY BUT PAID INDIRECTLY OR ON BEHALF OF THE COMPANY BY ABOVE NAMED PERSONS A S SECURITIES TO GET CONTRACT AND, ACCORDINGLY, AS PER ACCOUNTING PRINC IPLE AND AS PER THE 5 I.T.A. NO.313 /RAN/2014 ASSESSMENT YEAR : 2008-09 INCOME TAX ACT, 1961 ARE NOT IN VIOLATION OF PROVIS ION OF SECTION 269SS OF THE I. T. ACT, 1961. IT IS ALSO NOTED THAT THE A.O . HAD ALSO FAILED TO VERIFY THAT THE AMOUNT OF RS. 15,00,000/-, RS.3,00,000/-, RS.5,25,000/-, RS.2,00,000/-AND RS.2,60,000/- HAS BEEN PAID BY S HRI AJAY KUMAR, SHRI BAIJNATH SHARMA, SHRI OM PRAKASH, SHRI TAPESHW AR SHARMA, SHRI GANESH DUTT, SHRI KANHAIYA KUMAR RESPECTIVELY BY WA Y OF PURCHASE OF NSC AND TERM DEPOSIT AND THESE PARTIES HAD ALSO DIR ECTLY PAID LABOUR CHARGE FOR SOIL LEVELLING AND MATERIAL ETC., AND IT IS A BALANCE SHEET ITEM WHICH IS THE NATURE OF EARNEST MONEY. LD CIT (A) FU RTHER STATED THAT THE EVIDENCE REGARDING CONFIRMATION OF LOAN FROM THESE PARTIES HAVE BEEN FURNISHED BEFORE HIM. IT IS FURTHER STATED THAT THE MATTER WAS ALSO REFERRED FOR FURTHER ENQUIRY TO THE A.O. WHO AFTER VERIFICA TION OF THE DOCUMENTARY EVIDENCE FILED BY THE ASSESSEE VIDE R EMAND REPORT F. NO.ACIT/CIR-3/RAN/REMAND REPORT/SCPL/2014-15/398 DA TED 10.6.2014 HAS REPORTED THAT THE LOAN TRANSACTIONS WERE GENUI NE AND THERE IS NO VIOLATION OF PROVISIONS OF SECTION 269SS IN THE CAS E AS LOANS WERE IN THE FORM OF NSCS WHICH WERE GIVEN AS SECURITY DEPOSITS. IN VIEW OF THIS DISCUSSION, THE LD CIT(A) DELETED THE ADDITION MADE BY THE ASSESSING OFFICER. HENCE, THE REVENUE HAS FILED APPEAL BEFOR E THE TRIBUNAL. 7. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PER USED THE MATERIAL ON RECORD. WE ARRIVE AT THE CONSIDERED VIEW THAT T HE ASSESSING OFFICER HAS OBSERVED THE GENUINENESS OF THE TRANSACTION WAS NOT EXAMINED SINCE NONE OF THE TRANSACTION WAS MADE THROUGH BANKING CH ANNEL. THE 6 I.T.A. NO.313 /RAN/2014 ASSESSMENT YEAR : 2008-09 ASSESSING OFFICER HAS ALSO STATED THAT NO BILLS AND VOUCHERS HAVE BEEN PLACED TO SHOW THAT MATERIALS HAVE BEEN PURCHASED BY THE PARTIES AND BEFORE THE ASSESSING OFFICER, THE ASSESSE HAS NEVER SHOWN ITS WILLINGNESS TO PRODUCE THE IDENTITY OF THE CREDITORS FOR EXAMIN ATION ALONGWITH THEIR PAN. HOWEVER, LD CIT(A) IN HIS ORDER STATED THAT EV IDENCE REGARDING THE CONFIRMATION OF LOANS FROM THE PARTIES HAVE BEEN FU RNISHED BEFORE HIM AND EVEN IN THE REMAND REPORT DATED 10.6.2014, THE ASSESSING OFFICER HAS REPORTED THAT THE LOAN TRANSACTIONS ARE GENUINE AND THERE IS NO VIOLATION OF PROVISIONS OF SECTION 269SS OF THE ACT . ACCORDINGLY, WE HAVE ALSO PERUSED THE REPORT , WHEREIN, THE ASSESSING OF FICER, INTER ALIA, STATED AS UNDER: THE AUTHORISED REPRESENTATIVE OF THE APPELLANT STA TED IN HIS SUBMISSION THAT THE ASSESSING OFFICER HAS DISALLOWE D RS.54,28,890/- AS UNSECURED LOAN RECEIVED FROM 6 PE RSONS, SHRI AJAY KUMAR, SHRI BAIJNATH SHARMA, SHRI OM PRAKASH, TAPESHWAR SHARMA, GANESH DUTT AND KANHAIYA KUMAR. THE ABOVE UNSECURED LOAN HAS BEEN RECEIVED BY THE ABOVE MENTI ONED PERSONS INDIRECTLY ON BEHALF OF THE COMPANY FOR PUR CHASE OF NSC AND TERM DEPOSIT ON POSTAL OFFICE WHICH WAS PAID AS LABOUR CHARGE FOR SOIL LEVELLING AND MATERIAL ETC. THE RE LEVANT DOCUMENTS WERE BEING ASKED VIDE THIS OFFICE LETTER NO.388 DATED 6.6.2014. ON PERUSAL OF DOCUMENTS SUBMITTED ON 10. 6.2014 REVEALS THAT THESE AMOUNT WAS BEING PAID INDIRECTLY TO ABOVE NAMED PERSONS WHICH WAS IN THE NATURE OF EARNEST MO NEY, THUS A BALANCE SHEET ITEM. ON PERUSAL OF REMAND REPORT, NO WHERE IT IS WRITTEN THAT THE LOAN TRANSACTIONS ARE GENUINE AND THERE IS NO VIOLATION OF PROVISIONS OF SECTION 269SS OF THE ACT. IT ESSENTIALLY HINTS THAT THESE AMOUNTS WERE BEING PAID INDIRECTLY TO ABOVE NAMED PERSONS IN THE NATURE OF EARNEST MONEY, THUS A 7 I.T.A. NO.313 /RAN/2014 ASSESSMENT YEAR : 2008-09 BALANCE SHEET ITEM BUT THERE IS NO CLEAR-CUT DECLAR ATION AS TO THE GENUINENESS OF THE LOAN TRANSACTION AS HAS BEEN CLA IMED IN THE ORDER OF THE LD CIT(A). THEREFORE, THERE IS A LEGAL AMBIGUI TY AND LACUNA AS TO THE ACTUAL FACTS AS REPORTED IN THE REMAND REPORT VIS-A -VIS CIT(A)S ORDER WITH REGARD TO DELETION OF ADDITION OF RS.32,85,000/-. THEREFORE, IN THE INTEREST OF JUSTICE, WE SET ASIDE THE ORDER ON THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER TO VERIFY WITH REGARD TO MATERIAL S ON RECORD AND IF REQUIRED, TO SUMMON FOR MORE DOCUMENTATION AND REDO THE ASSESSMENT AFTER AFFORDING REASONABLE OPPORTUNITY OF BEING HEA RD TO THE ASSESSEE. 8. IN THE RESULT, APPEAL FILED BY THE REVENUE IS TR EATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 04 /3/2016 . SD/- SD/- (SHAMIM YAHYA) (PA RTHA SARATHI CHAUDHURY) ACCOUNTANT MEMBER JUDICIAL MEMBER RANCH I , DATED 04 / 03/2016 PARIDA , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT : ASST. COMMISSIONER OF INCOME TA X, CIRCLE-3, RANCHI 2. THE RESPONDENT: M/S. SYSTEMATIC & ADVANCE CONSTRUCTION PVT LTD., H-112, HARMU HOUSING COLONY, RANCHI 3. THE CIT(A)-RANCHI 4. CIT , RANCHI 5. DR, ITAT, RANCHI 6. GUARD FILE. BY ORDER, //TRUE COPY// SR.PRIVATE SECRETARY ITAT, RANCHI