Shri Arjanbhai M. Khunti, JUNAGADH V. The Income Tax Officer, Ward-1(2), JUNAGADH

ITA 319/RJT/2015

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 5489 (ITAT-RAJKOT)
• Duration Of Justice: 3 year(s) 11 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-05-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 23-06-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: DM RINDANI
• Keywords: Principle of natural justice; Set aside
• Section: 40A(3); 133(6)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT [ CONDUCTED THROUGH E-COURT AT AHMEDABAD ] , !'#,!$! %& BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER & SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER ./ I.T.A. NO.319/RJT/2015 ( / ASSESSMENT YEAR : 2010-11) SHRI ARJANBHAI M. KHUNTI BLOCK NO.24, VISHNU COLONY ZANZARDA ROAD JUNAGADH / VS. THE ITO WARD-192) JUNAGADH )!$ ./ ./ PAN/GIR NO. AGCPK 1010 C ( )+ / APPELLANT ) .. ( ,)+ / RESPONDENT ) )+-! / APPELLANT BY : SHRI D.M. RINDANI, AR ,)+.-! / RESPONDENT BY : SHRI PRAVEEN VERMA, SR.DR /0.1$ / DATE OF HEARING 09/05/2019 23 .1$ / DATE OF PRONOUNCEMENT 27/05/2019 !/ O R D E R PER PRADIP KUMAR KEDIA - AM : THE CAPTIONED APPEAL HAS BEEN FILED AT THE IN STANCE OF THE ASSESSEE AGAINST THE APPELLATE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-3, RAJKOT [CIT(A) IN SHORT] DATED 16/04/2015 ARISING IN THE ASSESSMENT ORDER PASSED UNDER S.143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS 'THE ACT') DATED 08/03 /2013 RELEVANT TO ASSESSMENT YEAR (AY) 2010-11. ITA NO. 319/RJT /2015 SHRI ARJANBHAI M. KHUNTI VS. ITO ASST.YEAR 2010-11 - 2 - 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE R EAD AS UNDER:- 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-3 , RAJKOT ERRED IN CONFIRMING ADDITION OF RS.9,77,550/- U/S.69C OF THE ACT WHICH WAS ORIGINALLY MADE U/S.41(1) OF THE ACT BY THE A.O. AN D FURTHER ERRED IN TREATING THE SAME AS BOGUS LIABILITY. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) 3, RAJKOT ERRED IN UPHOLDING THE ADDITION TO THE EXTENT OF RS.3,78,337 /- OUT OF TOTAL ADDITION OF RS.12,24,419/- MADE BY THE ASSESSING OFFICER U/S .40A(3) OF THE ACT. 3. THE ASSESSEE FILED RETURN OF INCOME FOR AY 20 10-11 DECLARING TOTAL INCOME AT RS.4,42,027/-. THE CASE WAS SUBJECTED TO SCRUTINY ASSESSMENT. IN THE COURSE OF SCRUTINY ASSESSMENT, THE ASSESSING OFFICER INTER ALIA NOTICED THAT ASSESSEE HAS PURCHASED CEMENTS FROM A NJANI SEEDS & FERTILIZERS DEPOT, AMRELI (HEREINAFTER ASFD) OF RS.13,55,887/-. THE ASSESSEE STATED TO HAVE MADE A CASH PAYMENT OF RS.3 ,78,337/- TO THE AFORESAID SUPPLIER AND IN THE BALANCE-SHEET AT THE YEAR REMAINING AMOUNT OF RS.9, 77,550/- WAS SHOWN AS OUTSTANDING PAYABLE TO ASFD AS CREDITOR. IT WAS HOWEVER FOUND ON ENQUIRY UNDER S.133(6) OF T HE ACT BY THE ASSESSING OFFICER THAT THE SUPPLIER HAD NO OUTSTAN DING WITH THE ASSESSEE AND HAD RECEIVED ENTIRE CASH AGAINST OF ITS SUPPLIE S. THE ASSESSING OFFICER ACCORDINGLY ADDED RS.9,97,550/- UNDER S.41( 1) OF THE ACT ON ACCOUNT OF DENIAL OF THE LIABILITY OF ASSESSEE BY I TS CREDITOR. THE ASSESSING OFFICER ALSO ADDED RS.3,78,337/- IN THE H ANDS OF THE ASSESSEE BY INVOKING SECTION 40A(3) FOR CASH PAYMENTS IN EXC ESS OF THRESHOLD LIMIT. ITA NO. 319/RJT /2015 SHRI ARJANBHAI M. KHUNTI VS. ITO ASST.YEAR 2010-11 - 3 - 4. AGGRIEVED BY THE AFORESAID ADDITION, THE ASSESSE E APPROACHED THE FIRST APPELLATE AUTHORITY WITHOUT ANY SUCCESS. FU RTHER, AGGRIEVED THE ASSESSEE PREFERRED IN APPEAL BEFORE THE TRIBUNAL. 5. THE LD.AR FOR THE ASSESSEE CONTENDED THAT THE EN QUIRY MADE UNDER S.133(6) OF THE ACT IS WITHOUT CONFRONTING THE FACT S TO THE ASSESSEE AND, THEREFORE, ASSESSEE HAD NO OPPORTUNITY TO REBUT THE SAME. THE ASSESSEE RELIED UPON ITS BOOKS OF ACCOUNTS AND SUBMITTED THA T THE PURCHASES MADE FROM THE SUPPLIER HAVE BEEN DULY PAID IN INSTALLMEN TS OVER A PERIOD OF TIME AS RECORDED IN THE BOOKS AND THE SUPPLIER MAY HAVE ITS OWN REASONS FROM DECLARING A DIFFERENT ACCOUNT. 6. THE LD.DR, ON THE OTHER HAND, STRONGLY SUPPORTED THE ACTION OF THE REVENUE AUTHORITIES AND CONTENDED THAT IT IS VERY S TRANGE THAT IN A CONTRACT OF AMOUNT OF SUCH MAGNITUDE, A PERSON WILL PAY JUST BELOW THE THRESHOLD LIMIT OF RS.20,000/- OVER YEARS WITHOUT ANY ADDITIO NAL CHARGE. THE ACTION OF THE ASSESSEE DOES NOT RESONATE EITHER WIT H BUSINESS CONDUCT OR WITH THE STATEMENT OF SUPPLIER. 7. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS. THE DISPUTE RELATES TO PAYMENT ON ACCOUNT OF SUPPLY RECEIVED FR OM ASFD. IT IS AN UNDISPUTED FACT THAT THE RESULT OF ENQUIRY UNDER S. 133(6) OF THE ACT MADE BEHIND THE BACK OF THE ASSESSEE WAS NOT CONFRONTED TO THE ASSESSEE. ITA NO. 319/RJT /2015 SHRI ARJANBHAI M. KHUNTI VS. ITO ASST.YEAR 2010-11 - 4 - THEREFORE, THE ASSESSEE WAS NOT IN A POSITION TO PR ESENT ITS POINT BEFORE THE REVENUE AUTHORITIES FOR PAYMENT IN TRENCHES. 7.1. IN VIEW OF THE VIOLATION OF PRINCIPLE OF NATUR AL JUSTICE IN NOT FOLLOWING THE DUE PROCEDURE FOR GRANTING OPPORTUNIT Y, THE ENTRIES RECORDED IN THE BOOKS OF ACCOUNTS BY THE ASSESSEE R EQUIRES TO BELIEVED. THE ONUS WAS ON REVENUE TO DISLODGE THE STAND TAKEN BY THE ASSESSEE FOR PAYMENT IN TRENCHES, A PART OF WHICH WAS MADE IN SU BSEQUENT YEARS. THE CONDUCT OF THE ASSESSEE TOWARDS PATTERN OF PAYMENT DO INVOKE SUSPICIOUS. HOWEVER, OWING TO SERIOUS FLAW IN OVERLOOKING THE P RINCIPLES OF NATURAL JUSTICE AND IN THE ABSENCE OF ANY COGENT BASIS TO D ISBELIEVE DIVERSION OF THE ASSESSEE, THE BENEFIT OF DOUBT REQUIRES TO GO T O THE ASSESSEE. THEREFORE, THE ORDER OF THE CIT(A) IS SET ASIDE AN D THE ASSESSING OFFICER IS DIRECTED TO DELETE TO DISALLOWANCE ON BOTH THE S CORES. 8. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE COURT ON 27/05/2019 AT AHMEDABAD. SD/- SD/- () ( !'#) !$ (RAJPAL YADAV) ( PRADIP KUMAR KEDIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD ; DATED 27/05/2019 ../,./../ T.C. NAIR, SR. PS ITA NO. 319/RJT /2015 SHRI ARJANBHAI M. KHUNTI VS. ITO ASST.YEAR 2010-11 - 5 - / COPY OF THE ORDER FORWARDED TO : 1. )+ / THE APPELLANT 2. ,)+ / THE RESPONDENT. 3. 7 1 81 / CONCERNED CIT 4. 81 ( ) / THE CIT(A)-3, RAJKOT 5. :;<1/ , , /DR,ITAT,RAJKOT 6. <#G0 / GUARD FILE. / BY ORDER, ,:11 //TRUE COPY// / ( DY./ASSTT.REGISTRAR) %&, / ITAT, RAJKOT 1. DATE OF DICTATION .. 10.5.19 (DICTATION-PAD 1 0-PAGES ATTACHED AT THE END OF THIS FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER .. 13.5.19 3. OTHER MEMBER... 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S. 27.5.19 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 27.5.19 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER