Shri Kumud Kumar Jha, Ranchi V. ACIT, Ranchi

ITA 317/RAN/2014

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 0375 (ITAT-RANCHI)
• Duration Of Justice: 11 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-11-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2005-2006
• Appeal Filed On: 21-11-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: CHOUDHARY ORAON
• Assessee Lawyers: H L PATEL
• Section: 40A(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RANCHI CIRCUIT BENCH, RANCHI BEFORE SHRI N.S. SAINI, HONBLE ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, HONBLE JUDICIAL MEMBER ITA NO. 317/RAN/2014 (ASST. YEAR : 2005-06) SHRI KUMUD KUMAR JHA, 20, GEL CHURCH SHOPPING COMPLEX, MAIN ROAD, RANCHI. VS. ACIT, CIRCLE-1, RANCHI. PAN NO. AAIPJ 8214 H (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI H.L. PATEL ADV. DEPARTMENT BY : SHRI CHOUDHARY ORAON - DR DATE OF HEARING : 04/11/2015. DATE OF PRONOUNCEMENT : 04/11/2015. O R D E R PER N.S. SAINI, ACCOUNTANT MEMBER THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF COMMISSIONER OF INCOME TAX (APPEALS), RANCHI, DATED 12/08/2014. 2. IN GROUND NO.1 OF THE APPEAL, THE GRIEVANCE OF TH E ASSESSEE IS THAT THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING THE DISALLOWANCE OF RS. 1,23,000/- MADE UNDER SECTION 4 0A(3) OF THE ACT. 3 . WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE O RDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABLE ON RE CORD. IN THE INSTANT CASE, THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAS PURCHASED LAND AND FOR THAT HE HAS INCURRED EXPENSES IN CASH AS UN DER:- 2 ITA NO. 317/RAN/2014 SL.NO. DATE OF PAYMENT PAID TO AMOUNT (RS.) 1. 30/06/2004 SRI SHIVNATH MAHTO 70,000/- 2 30/06/2004 SMT. PHOOLWA DEVI 70,000/- 3 30/08/2004 SRI SHIVNATH MAHTO 2,25,000/- 4 19/09/2004 SMT. PHOOLWA DEVI 1,00,000/- 5 11/01/2005 SRI SHIVNATH MAHTO 1,50,000/- THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAS I NCURRED EXPENDITURE OF RS. 6,15,000/- FOR PAYMENT TO LAND OWNERS IN CAS H AND THE ASSESSEE IS ENGAGED IN THE BUSINESS OF DEVELOPING BUILDING A ND SELLING THEM AND LAND PURCHASED BY HIM WAS STOCK IN TRADE. THEREFOR E, THE EXPENDITURE IS TREATED AS REVENUE IN NATURE. THE PAYMENTS MADE IN CASH WAS IN CONTRAVENTION OF PROVISIONS OF SEC. 40A(3) OF THE A CT AND HENCE, THE ASSESSING OFFICER DISALLOWED 20% OF THE TOTAL EXPEN DITURE MADE IN CASH AND ADDED RS. 1,23,000/- TO THE INCOME OF THE ASSES SEE. 4. ON APPEAL, COMMISSIONER OF INCOME TAX (APPEALS) CO NFIRMED THE ACTION OF THE ASSESSING OFFICER ON THE GROUND THAT THE PROVISIONS OF SEC.40A(3) PROHIBIT ALLOWANCE OF EXPENDITURE UNDER THIS SUB-SECTION WHERE ANY PAYMENT IN A SUM EXCEEDING TWENTY THOUSAN D RUPEES IS MADE OTHERWISE THAN BY AN ACCOUNT PAYEE CHEQUE DRAW N ON A BANK OR ACCOUNT PAYEE BANK DRAFT, IN SUCH CASES AND UNDER S UCH CIRCUMSTANCES AS MAY BE PRESCRIBED. HE FURTHER OBSERVED THAT THE ASSESSEE HAS NOT PROVED THAT THE CASH PAYMENTS WERE MADE DUE TO BUSI NESS EXPEDIENCY AND OTHER RELEVANT FACTORS. THEREFORE, HE CONFIRME D THE ORDER OF THE ASSESSING OFFICER. 5. BEFORE US, AUTHORIZED REPRESENTATIVE OF THE ASSESS EE REITERATED THE SUBMISSIONS MADE BEFORE THE LOWER AUTHORITIES. 6 . DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES. 3 ITA NO. 317/RAN/2014 7 . WE FIND THAT THE ASSESSEE IS IN THE BUSINESS OF D EVELOPING BUILDING AND SELLING THEM AND FOR THAT PURPOSE HE PURCHASED THE LAND. THE PAYMENT FOR THE LAND TOTALLING TO RS. 6,15,000/- WA S MADE IN CASH. THE ASSESSEE COULD NOT PROVE THE BUSINESS EXPEDIENCY FO R MAKING THE PAYMENT IN CASH FOR PURCHASE OF LAND. THEREFORE, T HE ADDITION OF 20% OF THE EXPENSES MADE IN CASH WAS MADE BY THE ASSESS ING OFFICER BY INVOKING THE PROVISIONS OF SEC. 40A(3) OF THE ACT. BEFORE US ALSO, THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE COULD NOT POINT OUT ANY BUSINESS EXPEDIENCY WHICH COMPELLED THE ASSESSEE TO MAKE CASH EXPENSES FOR PURCHASING LAND. THEREFORE, WE DO NOT FIND ANY GOOD AND JUSTIFIABLE REASON TO INTERFERE WITH THE ORDERS OF THE LOWER AUTHORITIES. IT IS CONFIRMED AND GROUND OF APPEAL OF THE ASSESSEE I S DISMISSED. 8 . THE SECOND GRIEVANCE OF THE ASSESSEE IS THAT THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING THE ADDITI ON OF RS. 3,35,000/- ON ACCOUNT OF CASH DEPOSIT IN THE BANK ACCOUNT. 9. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE ORD ERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABLE ON RE CORD. IN THE INSTANT CASE, THE ASSESSING OFFICER OBSERVED THAT THE ASSES SEE HAD DEPOSITED CASH IN HIS BANK ACCOUNT WITH CORPORATION BANCH, RA NCH AS UNDER:- SL.NO. DATE AMOUNT (RS.) 1 16/11/2004 65,000 2 25/11/2004 30,000 3 15/12/2004 4,000 4 03/01/2005 2,75,000 5 14/01/2005 30,000 6 08/02/2005 30,000 TOTAL RS. 3,35,000 10 . THE ASSESSEE SUBMITTED BEFORE THE ASSESSING OFFI CER THAT OUT OF WITHDRAWAL THESE AMOUNTS WAS DEPOSITED AND MAJOR CA SH WITHDRAWAL HAD TAKEN DUE TO LABOUR PAYMENT. THE ASSESSING OFF ICER OBSERVED THAT 4 ITA NO. 317/RAN/2014 CONTENTION OF THE ASSESSEE CANNOT BE ACCEPTED SINCE THE CASH WITHDRAWN WAS USED FOR THE PAYMENT MADE UNDER THE HEAD LABOUR . ACCORDINGLY, HE TREATED THESE AMOUNTS AS INCOME, WHICH THE ASSES SEE RECEIVED FROM UNDISCLOSED SOURCES AND ADDED THE SAME TO THE INCOM E OF THE ASSESSEE. 11 . ON APPEAL, COMMISSIONER OF INCOME TAX (APPEALS) O BSERVED THAT IT IS NOTED THAT BETWEEN 16/11/2004 TO 08/02/2005 H AD DEPOSITED THE CASH IN THE BANK ACCOUNT MAINTAINED IN CORPORATION BANK, RANCHI, AGGREGATING TO RS. 3,35,000/- AND THE ASSESSEE TRIE D TO EXPLAIN BEFORE THE ASSESSING OFFICER THAT THE CASH WITHDRAWAL MADE EARLIER AND THESE AMOUNTS WERE DEPOSITED IN THE BANK ACCOUNT. THE AS SESSEE ALSO STATED BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) THA T MAJOR WITHDRAWAL WAS DUE TO PAYMENTS REQUIRED TO BE MADE UNDER THE HEAD LABOUR PAYMENT. THE COMMISSIONER OF INCOME TAX (AP PEALS) OBSERVED THAT THE ASSESSEE FAILED TO EXPLAIN WHY THE ASSESSE E IS WITHDRAWING SMALL AMOUNTS OF CASH TO MEET DAILY EXPENSES IN SPI TE OF HAVING CLAIMED CASH BALANCE IN BOOKS. THE ASSESSING OFFICER DURIN G THE COURSE OF ASSESSMENT PROCEEDINGS HAS ALSO FOUND THE SIMILAR P OSITION AND ADDED CASH DEPOSITED IN BANK TO THE INCOME OF THE ASSESSE E FROM UNDISCLOSED SOURCES AFTER NOTING THAT ASSESSEE WAS UNABLE TO EX PLAIN SATISFACTORILY SOURCE OF CASH DEPOSITED IN BANK. HE, THEREFORE, DISMISSED THE APPEAL OF THE ASSESSEE. 12 AUTHORIZED REPRESENTATIVE OF THE ASSESSEE FILED BEF ORE US COPY OF THE CASH BOOK FOR THE PERIOD 01/04/2004 TO 31/03/20 05. FROM THE SAID DETAILS, WE FIND THAT THE ASSESSEE HAD A OPENING CA SH BALANCE OF RS.11,49,791.98 AND FROM THIS, THE ASSESSEE HAS DEP OSITED THE AMOUNT OF RS. 3,35,000/- DURING THE PERIOD 16/11/2004 TO 0 8/02/2005 IN THE BANK ACCOUNT WITH CORPORATION BANK, RANCHI. THUS, THE SOURCE OF DEPOSIT WAS EXPLAINED BY THE ASSESSEE FROM THE CASH BALANCE, IT HAD IN THE CASH BOOK. BOTH THE LOWER AUTHORITIES HAVE NOT DISPUTED THIS FACT THAT THE REASON FOR MAKING THE ADDITION IS THAT WHY THE ASSESSEE WAS 5 ITA NO. 317/RAN/2014 MAKING WITHDRAWAL OF SMALL AMOUNTS IN CASH FOR MEET ING THE EXPENSES WHEN IT HAD HUGE AMOUNT OF CASH BALANCE. WE FIND T HAT BOTH THE LOWER AUTHORITIES HAVE NOT FOUND THE SOURCE OF DEPOSIT OF RS. 3,35,000/- COULD NOT BE SATISFACTORILY EXPLAINED BY THE ASSESSEE FRO M ITS CASH BOOK. THEREFORE, IN OUR CONSIDERED VIEW, JUST ON MERE SUR MISES AND CONJECTURES, NO ADDITION CAN BE MADE TO THE INCOME OF THE ASSESSEE. WE, THEREFORE SET ASIDE THE ORDERS OF THE LOWER AUT HORITIES ON THIS GROUND AND DELETE THE ADDITION OF RS. 3,35,000/-. THUS, THIS GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED. 13 IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY AL LOWED. ORDER PRONOUNCED IN THE COURT AT THE CLOSE OF THE H EARING ON WEDNESDAY, THE 4 TH DAY OF NOVEMBER, 2015 AT RANCHI. SD/- SD/- (GEORGE MATHAN) (N.S.SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 04 TH NOVEMBER, 2015. VR/- COPY TO: 1. THE ASSESSEE. 2. THE REVENUE. 3. THE CIT 4. THE CIT(A) 5. THE D.R. 6. GUARD FILE. BY ORDER ASSISTANT REGISTRAR I.T.A.T., RANCHI 6 ITA NO. 317/RAN/2014 DATE INITIAL ORIGINAL DICTATION PAD & DRAFT ARE ENCLOSED IN THE FILE 1. DRAFT DICTATED ON 04/11/2015 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 05/11/2015 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 05/11/2015 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER 05/11/2015 JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 05/11/2015 SR.PS 6. DATE OF PRONOUNCEMENT 04/11/2015 SR.PS 7. FILE SENT TO THE BENCH CLERK 05/11/2015 SR.PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER