BPC Projects and Infrastructure Pvt.Ltd., Ahmedabad V. The Income tax Officer,Ward-1(2), Ahmedabad

ITA 3246/AHD/2010

• Counselvise Citation: 324620514 RSA 2010
• Duration Of Justice: 1 year(s) 9 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-09-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 07-08-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 07-12-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAHUL KUMAR
• Assessee Lawyers: S N SAPORKAR
• Keywords: Depreciation; Business expenditure; Opportunity of being heard; Non-deduction of tax; Bad and doubtful debts; Onus to prove
• Section: 43B; 143(3); 194C; 32; 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD A BENCH BEFORE: SHRI D.K. TYAGI, JUDICIAL MEMBER AND SHRI T.R. MEENA, ACCOUNTANT MEMBER I.T.A. NO.3246/AHD/2010 A.Y. 2007-08 WITH I.T.A. NO.1192/AHD/2012 A.Y. 2008-09 BCP PROJECTS & INFRASTRUCTURE PVT. LTD., 14A, DARSHAK, SWASTIK SOCIETY, NR. PUNJABI HALL LANE, NAVRANGPURA AHMEDABAD-380 009 PAN-AADCA0018L APPELLANTS VS. THE INCOME TAX OFFICER, WARD-1(2), AHMEDABAD RESPONDENTS DEPARTMENT BY : SHRI RAHUL KUMAR, SR. D.R. ASSESSEE BY : SHRI S.N. SAPORKAR, A.R. DATE OF HEARING : 07.08.2012 DATE OF PRONOUNCEMENT : 28.09.2012 / ORDER PER : D.K. TYAGI, JUDICIAL MEMBER THESE ARE ASSESSEES APPEAL AGAINST THE ORDER OF LD . CIT(A)-VI, AHMEDABAD DATED 19.10.2010 AND 10.05.2012. SINCE B OTH THE APPEALS RELATE TO THE SAME ASSESSEE AND THEY WERE HEARD TOGETHER, FOR THE SAKE OF CONVENIENCE THEY ARE BEING DISPOSED OF BY PASSING A CONSOLIDATED ORDER. I.T.A. NO.3246/AHD/2010, A.Y. 2007-08 WITH I.T.A. NO.1192/AHD/2012, A.Y. 2008-09 2 I.T.A. NO.3246/AHD/2010 2. THOUGH THE ASSESSEE HAS TAKEN FIVE GROUNDS, BUT THE ONLY EFFECTIVE GROUND IS AS UNDER:- 2. THE LD. CIT(A)-VI, AHMEDABAD HAS ERRED IN CONFI RMING THE FOLLOWING DISALLOWANCE MADE BY THE ASSESSING OFFICE R:- (A) DISALLOWANCE OF RS.13,832/- U/S 35D OF THE I.T. ACT . (B) DISALLOWANCE OF RS.10,908/- U/S 36(1)(VA) R.W.S. 2( 24)(X) OF THE I.T. ACT. (C) DISALLOWANCE OF OTHER BAD DEBTS OF RS.5,75,948/- (D) DISALLOWANCE OF DEPRECIATION OF RS.3,95,389/- ON MO TOR CARS. (E) DISALLOWANCE OF RS.5,21,618/- U/S 40(A)(IA) OF THE I.T. ACT. (F) DISALLOWANCE OF RS.30,252/- ON THE BASIS OF AIR DAT A. 3. AT THE TIME OF HEARING GROUND NO.2(A) WHICH IS R EGARDING DISALLOWANCE OF RS.13,832/- U/S 35D OF THE I.T. ACT WAS NOT PRES SED. ACCORDINGLY, THIS GROUND IS DISMISSED AS NOT PRESSED. 4. GROUND NO.2(B) RELATES TO DISALLOWANCE OF RS.10, 908/- U/S 36(1)(VA) R.W.S. 2(24)(X) OF THE I.T. ACT. THE A.O. HAS DEAL T THIS ISSUE AS UNDER:- AS PER AUDIT REPORT, YOUR COMPANY HAS PAID EPF AMO UNT OF RS.10,908/- AFTER THE STATUTORY DATE. THEREFORE, Y OUR COMPANY WAS REQUESTED TO EXPLAIN AS TO WHY THE SAME SHOULD NOT BE DISALLOWED U/S 36(1)(VA) R.W.S. 2(24)(X) OF THE I.T. ACT. IN REPLY, IT IS HOWEVER, STATED BY YOUR COMPANY THAT AS THE LIABILI TIES WERE PAID BEFORE THE DUE DATE OF FURNISHING THE RETURN OF INC OME HENCE PROVISIONS OF SECTION 43B IS NOT APPLICABLE AND NO DISALLOWANCE SHOULD BE MADE. IN THIS REGARD, IT IS TO MENTION H ERE THAT THE EPF OF RS.10,908/- PAID AFTER THE STATUTORY DATE WAS TH E EMPLOYEES CONTRIBUTION AND NOT THE EMPLOYERS CONTRIBUTION, T HEREFORE, DISALLOWANCE IS REQUIRED TO BE MADE U/S 36(1)(VA) R.W.S. 2(24)(X) OF THE I.T. ACT AND NOT U/S 43B OF THE I.T. ACT. P LEASE SUBMIT YOUR COMPANYS EXPLANATION IN THIS REGARD. IN RESPONSE TO THE SHOW CAUSE NOTICE, THE ASSESSEE COMPANY SUBMITTED ITS REPLY VIDE LETTER DTD. 13/5/2009 AS U NDER; SECONDLY, YOUR GOOD OFFICE HAS PROPOSE TO DISALLOW RS.10,908/- U/S 36(1)(VA) R.W.S. 2(24)(X) OF THE I.T. ACT BEING EPF . OF EMPLOYEES I.T.A. NO.3246/AHD/2010, A.Y. 2007-08 WITH I.T.A. NO.1192/AHD/2012, A.Y. 2008-09 3 CONTRIBUTION. IN THIS REGARD IT IS CLARIFIED THAT IN VIEW OF THE LATEST DECISION AS APPENDED HEREWITH, CLAIM MADE MAY PLEAS E BE ALLOWED. THE ASSESSEE COMPANY HAS IN FACT NOT SUBMITTED ANY LATEST DECISION IN SUPPORT OF THE CLAIM ALONG WITH REPLY DTD. 13.5.2009, THEREFORE, DECISION IS MADE ON THE MERITS OF THE CA SE. THEREFORE, AMOUNT OF RS.10,908/- IS DISALLOWED U/S 36(1)(VA) R.W.S. 2(24)(X) OF THE I.T. ACT. IN APPEAL THIS ACTION OF THE A.O. WAS CONFIRMED BY LD. CIT(A). 5. HOWEVER, THE ISSUE IS NOW COVERED BY THE ORDER O F THE TRIBUNAL IN THE CASE OF M/S GUJARAT CONTAINERS LTD. VIDE ITA NO.260 9/AHD/2008 WHEREIN FOLLOWING WAS HELD:- IN VIEW OF THE FOREGOING AND ESPECIALLY WHEN IT HA S NOT BEEN DISPUTED BY THE REVENUE BEFORE US THAT THE AFORESAI D CONTRIBUTIONS TOWARDS PF & ESI HAVE BEEN PAID BEFORE THE DUE DATE OF FILING OF RETURN U/S 139(1) OF THE ACT. IN THE LIGHT OF VIEW TAKEN BY THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. M. ELECTRONICS, 220 CTR (DEL) 635 AND THE DECISION OF HONBLE APEX COUR T IN THE CASE OF VINAY CEMENT LTD. (SUPRA), WE HAVE NO HESITATION IN HOLDING THAT THE EMPLOYEES CONTRIBUTION TOWARDS PF, HAVING BEEN MADE BY THE ASSESSEE WITHIN DUE DATE OF FILING OF THE RETURN FO R THE YEAR UNDER CONSIDERATION, THERE IS NO GROUND FOR DISALLOWING T HE SAME. THUS, GROUND NO.2 RAISED IN THE APPEAL IS ALLOWED. 6. FOLLOWING THE ABOVE, THE DISALLOWANCE MADE BY TH E A.O. OF RS.10,908/- U/S 36(1)(VA) R.W.S. 2(24)(X) OF THE I.T. ACT AND S USTAINED BY LD. CIT(A) IS HEREBY DELETED. THIS GROUND OF THE ASSESSEE IS ALL OWED. 7. GROUND NO.2(C) RELATES TO DISALLOWANCE OF OTHER BAD DEBTS OF RS.5,75,948/-. 8. THE A.O., WHILE DISALLOWING THE BAD DEBT CLAIM O F ASSESSEE OF RS.12,84,007/- U/S 36(1)(VII) R.W.S. 36(2) OF THE I .T. ACT HAS OBSERVED AS UNDER:- I.T.A. NO.3246/AHD/2010, A.Y. 2007-08 WITH I.T.A. NO.1192/AHD/2012, A.Y. 2008-09 4 'AFTER VERIFICATION OF THE REPLY AND DETAILS SUBMIT TED BY THE ASSESSES COMPANY, PARTY-WISE DISCUSSION IS AS UNDER: (A) INDUCTOTHERM (1)1 PVT LTD. - THE ASSESSES COMPANY HAS CARRIED OUT CONTRACT WORK OFRS.36,61,813/- WHEREAS AS PER. ANNEXURE-L SUBMITTED WITH THE REPLY THE WORK IS SHOWN AT RS.3, 91,85,100/- INCLUDING PREVIOUS YEAR'S CONTRACT WORK DONE SO FAR . THEREFORE, THE ASSESSES COMPANY STATED THAT BAD DEBTS AMOUNT OF RS .89,881/- IS 0.23% OF THE TURNOVER. THE REPLY OF THE ASSESSES CO MPANY IS NOT ACCEPTABLE ON THE GROUND THAT THE ASSESSES COMPANY FAILED TO PROVE THAT THE SAID AMOUNT HAS ACTUALLY BECOME BAD FOR RE COVERY. THE ASSESSEE'S ARGUMENT THAT THE BAD DEBTS IS ONLY 0.23 % OF THE TURNOVER IS NOT ACCEPTABLE AS PERCENTAGE OF BAD DEB TS WRITTEN OFF /S NOT A CONDITION TO BE FULFILLED FOR WRITE OFF BAD D EBTS. THE ASSESSEE COMPANY HAS WRITTEN OFF THE DEBT WITHOUT MAKING ANY EFFORT FOR RECOVERY IN THIS CASE. FURTHERMORE, IN CASE OF ANY DISPUTE REGARDING MEASUREMENT OF WORK DONE BY THE ASSESSEE COMPANY WI TH PARTY, THE ASSESSEE COMPANY FAILED TO SUBMIT ANY EVIDENCE TO S UBSTANTIATE ITS CLAIM OF BAD DEBT (B) TORRENT PHARMACEUTICALS LTD. - THE ASSESSEE COMPANY HAS SHOWN RECEIVABLE OPENING BALANCE OF RS.20,36,447.99. DURI NG THE YEAR, ASSESSEE HAS RECEIVED AN AMOUNT OF RS.11,29,757/- O N 17.4.2006 AND RS.5,90,250.06 ON 5.12.2006. THE ASSESSEE COMPA NY HAS WRITTEN OFF. BALANCE AMOUNT OF RS.3,16,440.93 ON 28 .2.2007 WITHOUT MAKING- ANY EFFORT FOR RECOVERY IN THIS CASE. FURTH ERMORE, IN CASE OF ANY REGARDING MEASUREMENT OF WORK DONE BY THE ASSES SEE COMPANY WITH PARTY, ASSESSEE COMPANY FAILED TO SUBMIT ANY E VIDENCE TO SUBSTANTIATE ITS CLAIM OF BAD. (C) KHS MACHINERY PVT. LTD. - THE ASSESSEE COMPANY HAS CARRIED OUT SUBSTANTIAL CONTRACT WORK WITH THIS PARTY AND RECEI VED PAYMENTS ON VARIOUS DATES. THEREAFTER, THE ASSESSEE COMPANY HAS WRITTEN OFF BALANCE AMOUNT OF RS.1,51,752.30 ON 30.3.2007 AS KA SAR. THEREAFTER, KASAR ACCOUNT HAS BEEN TRANSFERRED TO B AD DEBTS ACCOUNT. THEREFORE, BAD DEBTS HAVE ACTUALLY NOT BEEN WRITTEN OFF IN THE BOOKS. FURTHERMORE, IN CASE OF ANY DISPUTE REGARDING MEASU REMENT OF WORK DONE BY THE ASSESSEE COMPANY WITH PARTY, THE ASSESS EE COMPANY FAILED TO SUBMIT ANY EVIDENCE TO SUBSTANTIATE ITS C LAIM OF BAD DEBT. (D) INTAS PHARMACEUTICALS- LTD. - THE ASSESSEE COMPANY HAS SHOWN RECEIVABLE OPENING BALANCE OF RS.28,54,519/-. DURIN G THE YEAR, ASSESSEE HAS RECEIVED AMOUNT OF RS.26,75,059/- ON 2 8.4.2006 AND RS.7,00,000/- ON 18.7.2006. THE ASSESSEE COMPANY HA S A/SO CARRIED OUT CONTRACT WORK OF RS.7,00,000/- DURING THE YEAR UNDER CONSIDERATION. THE ASSESSEE COMPANY HAS WRITTEN OFF BALANCE AMOUNT OF RS.1,44,134/- ON 30.3.2007 WITHOUT ANY EFFORT FO R RECOVERY IN THIS I.T.A. NO.3246/AHD/2010, A.Y. 2007-08 WITH I.T.A. NO.1192/AHD/2012, A.Y. 2008-09 5 CASE. FURTHERMORE, IN CASE OF ANY DISPUTE REGARDING MEASUREMENT OF WORK DONE BY THE ASSESSEE COMPANY WITH PARTY, THE A SSESSEE COMPANY FAILED TO SUBMIT ANY EVIDENCE TO SUBSTANTIA TE ITS CLAIM OF BAD DEBT. (E) DINESHBHAI S. PATE - THE 'ASSESSEE COMPANY HAS SHOWN RECEIVABLE OPENING BALANCE OF RS.48,058/-. DURING T HE YEAR, THE ASSESSEE HAS GIVEN ADVANCE OF RS.10,000/- ON 3.12.2 006 AND RS.IO.000/- ON 14.1.2007. THEREAFTER, THE ASSESSEE COMPANY HAS WRITTEN OFF ADVANCE AMOUNT OF RS.68,058/- ON 31.3.2 007 ON THE GROUND THAT SHRI DINESHBHAI DID NOT ISSUE THE BILL FOR CONTRACT WORK DONE BY HIM TO THE ASSESSEE COMPANY. THE ASSESSEE C OMPANY HAS HOWEVER FAILED TO PRODUCE ANY EVIDENCE IN SUPPORT O F ITS EXPLANATION. FURTHER, SAID ADVANCE IS NOT THE PART OF THE COMPUT ATION OF INCOME OF THE ASSESSEE COMPANY IN THE PREVIOUS YEAR OR THE YE AR UNDER CONSIDERATION AS THE ASSESSEE COMPANY HAS FAILED TO PRODUCE ANY DETAIL IN RESPECT OF THE WORK DONE BY DINESHBHAI S. PATEL. (F) FARUKH IRON INDUSTRIES - THE ASSESSEE COMPANY HAS SHOWN RECEIVABLE OPENING BALANCE OF RS.67,5451-. DURING T HE YEAR, THE ASSESSEE HAS GIVEN ADVANCE ON VARIOUS DATES BY CASH AND CHEQUES AND RECEIVED CONTRACT BILLS ON. VARIOUS DATES. THER EAFTER, THE ASSESSEE COMPANY HAS WRITTEN OFF ADVANCE AMOUNT OF RS.87,795/- ON 31.3.2007 ON THE GROUND THAT THE FIRM DID NOT ISSUE BILL OF RS.87,795/- FOR CONTRACT WORK DONE BY IT TO THE ASS ESSEE COMPANY. THE ASSESSEE COMPANY HAS HOWEVER FAILED TO PRODUCE ANY EVIDENCE IN SUPPORT OF ITS EXPLANATION AND HAS NOT SUBMITTED ANY REASON FOR NOT ISSUING BILL OF RS.87,795/- BY THE SAID FIRM TO THE ASSESSEE COMPANY. FURTHER, SAID/ ADVANCE IS NOT THE PART OF THE COMPUTATION OF INCOME OF THE ASSESSEE COMPANY IN THE PREVIOUS Y EAR OR THE YEAR UNDER CONSIDERATION AS THE ASSESSEE COMPANY HAS FAI LED TO PRODUCE ANY DETAIL IN RESPECT OF THE WORK DONE BY FAROOQ IR ON INDUSTRIES. (G) SHANKERBHAI M. MAKWANA - THE ASSESSEE COMPANY HAS SHOWN RECEIVABLE OPENING BALANCE OF RS.9,723/-. DURING TH E YEAR, THE ASSESSEE HAS GIVEN ADVANCE ON VARIOUS DATES BY CASH AND CHEQUES AND RECEIVED CONTRACT BILLS ON VARIOUS DATES. THERE AFTER, THE ASSESSEE COMPANY HAS WRITTEN OFF ADVANCE AMOUNT OF RS.1,15,4 27/-ON 31.3.2007 ON THE GROUND THAT .SHRI SHANKERBHAI DID NOT ISSUE BILL OF RS.1,15,427/-FOR CONTRACT WORK DONE BY HIM TO THE A SSESSEE COMPANY. THE ASSESSEE COMPANY HAS HOWEVER FAILED TO PRODUCE ANY EVIDENCE IN SUPPORT OF ITS EXPLANATION AND HAS NOT SUBMITTED ANY REASON FOR NOT ISSUING BILL OF RS.1,15,427/- BY SHR I SHANKERBHAI TO THE ASSESSEE COMPANY. FURTHER, SAID ADVANCE IS NOT THE PART OF THE COMPUTATION OF INCOME OF THE ASSESSEE COMPANY IN TH E PREVIOUS YEAR OR THE YEAR UNDER CONSIDERATION AS THE ASSESSEE COM PANY HAS FAILED I.T.A. NO.3246/AHD/2010, A.Y. 2007-08 WITH I.T.A. NO.1192/AHD/2012, A.Y. 2008-09 6 TO PRODUCE ANY DETAIL IN RESPECT OF THE WORK DONE B Y SHANKERBHAI M. MAKWANA. (H) SARTANBHAI VELJIBHAI MAVI - THE ASSESSEE COMPANY HAS SHOWN RECEIVABLE OPENING BALANCE, OF RS. 82,3547-. DURING THE YEAR, THE ASSESSEE HAS GIVEN ADVANCE ON VARIOUS DATES BY CASH AND RECEIVED CONTRACT BILLS ON VARIOUS DATES. THEREAFTER, THE AS SESSEE COMPANY HAS WRITTEN OFF ADVANCE AMOUNT OF RS.59,653/- ON 31 .3.2007 ON THE GROUND THAT SHRI SARTANBHAI DID NOT ISSUE BILL OF R S.59,653/- FOR CONTRACT WORK DONE BY HIM TO .THE ASSESSEE COMPANY. THE ASSESSEE COMPANY HAS HOWEVER FAILED TO PRODUCE ANY EVIDENCE IN SUPPORT OF ITS EXPLANATION AND HAS NOT SUBMITTED ANY REASON FO R NOT ISSUING BILL OF RS.59,653/- BY SHRI SARTANBHAI TO THE ASSESSEE C OMPANY. FURTHER, SAID ADVANCE IS NOT THE PART OF THE COMPUTATION OF INCOME OF THE ASSESSEE COMPANY IN THE PREVIOUS YEAR OR THE YEAR U NDER CONSIDERATION AS THE ASSESSEE COMPANY HAS FAILED TO PRODUCE ANY DETAIL IN RESPECT OF THE WORK DONE BY SARTANBHAI VE LJIBHAI MAVI. (I) RUPSINGBHAI D. MAVI - THE ASSESSEE COMPANY HAS SHOWN RECEIVABLE OPENING BALANCE OF RS.76,8207-. DURING T HE YEAR, THE ASSESSEE HAS GIVEN ADVANCE ON VARIOUS DATES BY CASH AND RECEIVED CONTRACT BILLS ON VARIOUS DATES. THEREAFTER, THE AS SESSEE COMPANY HAS WRITTEN OFF ADVANCE AMOUNT OF RS.76,820/- ON 31 .3.2007 ON THE GROUND THAT SHRI RUPSINGH DID NOT ISSUE BILL OF RS. 76,8207- OR CONTRACT WORK DONE BY HIM TO THE ASSESSEE COMPANY. THE ASSESSEE COMPANY HAS HOWEVER FAILED TO PRODUCE ANY EVIDENCE IN SUPPORT OF ITS EXPLANATION AND HAS NOT SUBMITTED ANY REASON FO R NOT ISSUING BILL OF RS.76,820/- BY SHRI RUPSINGH TO THE ASSESSEE COM PANY. FURTHER, SAID ADVANCE IS NOT THE PART OF THE COMPUTATION OF INCOME OF THE ASSESSEE COMPANY IN THE PREVIOUS YEAR OR THE YEAR U NDER CONSIDERATION AS THE ASSESSEE COMPANY HAS FAILED TO PRODUCE ANY DETAIL IN RESPECT OF THE WORK DONE BY RUPSINGH D. M AVI. G) SAHJANAND TRANSPORT - THE ASSESSEE COMPANY HAS SHOWN RECEIVABLE OPENING BALANCE OF RS40,716/-. DURING TH E YEAR, THE ASSESSEE HAS GIVEN ADVANCE ON VARIOUS DATES BY CASH AND CHEQUES AND RECEIVED CONTRACT BILLS ON VARIOUS DATES. THERE AFTER, THE ASSESSEE COMPANY HAS WRITTEN OFF ADVANCE AMOUNT OF RS.89,794 1- ON 31.3 .2007 ON THE GROUND THAT THE FIRM DID NOT ISSUE BIL L OF RS.89,794/- FOR CONTRACT WORK DONE BY IT TO THE ASSESSEE COMPANY.' THE ASSESSEE COMPANY HAS HOWEVER FAILED TO PRODUCE ANY EVIDENCE IN SUPPORT OF ITS EXPLANATION AND HAS NOT SUBMITTED ANY REASON FO R NOT ISSUING BILL OF RS.89,794/- BY THE SAID FIRM TO THE ASSESSEE COM PANY. FURTHER, SAID ADVANCE IS NOT THE PART OF THE COMPUTATION OF INCOME OF THE ASSESSEE COMPANY IN THE PREVIOUS YEAR OR THE YEAR U NDER CONSIDERATION AS THE ASSESSEE COMPANY HAS FAILED TO PRODUCE ANY DETAIL IN RESPECT OF THE WORK DONE BY SAHJANAND TRA NSPORT. I.T.A. NO.3246/AHD/2010, A.Y. 2007-08 WITH I.T.A. NO.1192/AHD/2012, A.Y. 2008-09 7 (K) SHREE CHAMUNDA CARTING - THE ASSESSEE COMPANY HAS SHOWN RECEIVABLE OPENING BALANCE OF RS, 77,852/-. DURING THE YEAR, ASSESSEE HAS GIVEN ADVANCE OF RS.68,000/- ON 19.05. 2006 BY CHEQUE AND RECEIVED CONTRACT BILLS OF RS.69,300/- ON 1.9.2 006. THEREAFTER, THE ASSESSEE COMPANY HAS WRITTEN OFF ADVANCE AMOUNT OF RS.77,939/- ON 31.3.2007 ON THE GROUND THAT THE FIR M DID NOT ISSUE BILL OF RS.77,939/- FOR CONTRACT WORK DONE, BY IT T O THE ASSESSEE COMPANY. THE ASSESSEE COMPANY HAS HOWEVER FAILED TO PRODUCE ANY EVIDENCE IN SUPPORT OF ITS EXPLANATION AND HAS NOT SUBMITTED ANY REASON FOR NOT ISSUING BILL OF RS.77,939/- BY THE S AID FIRM TO THE ASSESSEE COMPANY. FURTHER, SAID ADVANCE IS NOT THE PART OF THE COMPUTATION OF INCOME OF THE ASSESSEE COMPANY IN TH E PREVIOUS YEAR OR THE YEAR UNDER CONSIDERATION AS THE ASSESSEE COM PANY HAS FAILED TO PRODUCE ANY DETAIL IN RESPECT OF THE WORK DONE B Y SHREE CHAMUNDA CARTING. (L) SHREE MULJIBHAI ATMARAM MAHERIA - THE ASSESSEE COMPANY HAS SHOWN PAYABLE OPENING BALANCE OF RS.6,542/-. DURING THE YEAR, ASSESSEE HAS GIVEN ADVANCE ON VARIOUS DATES BY CHEQ UES AND RECEIVED CONTRACT BILLS ON VARIOUS DATES. THEREAFTE R, ASSESSEE COMPANY HAS WRITTEN OFF ADVANCE AMOUNT OF RS.44,433 /- ON 31.3.2007 ON THE GROUND THAT SHREE MULJIBHAI DID NO T ISSUE BILL OF RS.44,433/- FOR CONTRACT WORK DONE BY HIM TO THE AS SESSEE COMPANY. THE ASSESSEE COMPANY HAS HOWEVER FAILED TO PRODUCE ANY EVIDENCE IN SUPPORT OF ITS EXPLANATION AND HAS NOT SUBMITTED ANY REASON FOR NOT ISSUING BILL OF RS.44,433/- BY SHREE MUTJIBHAI TO THE ASSESSEE COMPANY. FURTHER, SAID ADVANCE IS NOT THE PART OF T HE COMPUTATION OF INCOME OF THE ASSESSEE COMPANY IN THE PREVIOUS YEAR OR THE YEAR UNDER CONSIDERATION AS THE ASSESSEE COMPANY HAS FAI LED TO PRODUCE ANY DETAIL IN RESPECT OF THE WORK DONE BY SHREE MUL JIBHAI ATMARAM MAHERIA. (M) CONBOX - THE ASSESSEE COMPANY HAS SHOWN RECEIVA BLE OPENING BALANCE OF RS.1,,00,000/-. THE ASSESSEE COMPANY HAS STATED THAT THE SAID ADVANCE HAS BEEN GIVEN FOR JOB WORK OF CEMENT BLOCK. HOWEVER, THE SAID FIRM HAS NOT CARRIED OUT THE JOB WORK UP T O THE STANDARD AND QUALITY AS REQUIRED BY THE ASSESSEE COMPANY. THEREF ORE, IT IS REQUESTED THAT SAID AMOUNT OF RS.1,00,000/- MAY BE ALLOWED U/S.37 OF THE IT.ACT ON THE GROUND OF BUSINESS EXPENDITURE . HOWEVER, THE ASSESSEE COMPANY HAS WRITTEN OFF THE DEBT WITHOUT M AKING ANY EFFORT FOR RECOVERY IN THIS CASE AND FAILED TO FURNISH ANY EVIDENCE TO SUBSTANTIATE ITS CLAIM. IN VIEW OF THE ABOVE, IT IS CLEAR THAT THE CONDITIO NS LAID DOWN IN SECTION 36(2)OF THE IT. ACT FOR WRITE OFF THE BAD D EBTS ARE NOT FULFILLED IN THE CASE OF THE ASSESSEE COMPANY DURING THE YEAR UNDER I.T.A. NO.3246/AHD/2010, A.Y. 2007-08 WITH I.T.A. NO.1192/AHD/2012, A.Y. 2008-09 8 CONSIDERATION. FURTHER, IN THE CASE OF DHALL ENTERP RISES & ENGINEERS PVT. LTD V. CIT REPORTED IN (2007) 295ITR 481 (GUJ) , HON'BLE HIGH COURT OF GUJARAT HAS HELD THAT, 'ASSESSEE SHOULD PR OVE THAT DEBTS HAVE BECOME BAD IN THE ASSESSMENT YEAR. MERE DEBITI NG THE AMOUNT IS NOT SUFFICIENT. IN THIS CASE THE ASSESSEE COMPAN Y HAS NOT PROVED THAT DEBTS HAVE ACTUALLY BECOME BAD IN THE YEAR UND ER CONSIDERATION. THEREFORE, BAD DEBT CLAIM OF RS.12,84,007/- IS DISA LLOWED U/S 36(1)(VII) R.W.S. 36(2) OF THE IT.ACT AND ADDED TO THE TOTAL INCOME ASSESSEE COMPANY. PENALTY PROCEEDINGS U/S 271(1)(C ) OF THE ACT ARE INITIATED FOR FURNISHING INACCURATE PARTICULARS OF INCOME.' 9. DURING THE APPELLATE PROCEEDINGS THE AMOUNT WRIT TEN OFF AS BAD DEBTS OF RS.12,84,007/- WAS CLASSIFIED BY ASSESSEE INTO THRE E CATEGORIES AS UNDER:- PARTICULARS AMOUNT CATEGORY A 7,02,208 1 TO 4 AS PER ANN. 1 TO LETTER DT. 13.05.2009 CATEGORY B 6,19,919 1 TO 8 CATEGORY C 1,00,000 ONE PARTY BPC PROJECTS & INFRASTRUCTURE PVT. LTD. A.Y.2007-0 8 ANNEDURE 1: SUMMARIZED POSITION OF BAD DEBTS CATEGORY A: CUSTOMERS --------------------------------------------------- ----------------------------- SR. TOTAL BAD % OF NO. NAME OF THE CUSTOMER TURNOVER DEBTS TURN OVER REASONS DEDUCTION BY THE CUSTOMERS DUE DIFFERENCE IN MEASUREMENTS INVE THE CO. AND CERTIFIED BY CUSTOME ARCHITECTS. 1. INDUCTOTHERM (1) PVT. LTD. 39,185,100 89,881 0.23% I.T.A. NO.3246/AHD/2010, A.Y. 2007-08 WITH I.T.A. NO.1192/AHD/2012, A.Y. 2008-09 9 2. TORRENT PHARMACEUTICALS LTD. 19,697,761 316,441 1.61% -------- -DO------- 3. KHS MACHINERY PVT. LTD. 94,384,021 151,752 1.16% ---------DO------- 4. INTAS PHARMACEUTICALS LTD.35,766,207 144,134 0 .40% ---------DO------- 5. CLARIS LIFESCIENCE (RMC BILL) 5, 851 ---------DO------- TOTAL 189,033,08 708,059 CATEGORY B: SUPPLIER ACCOUNTS WORK DONE ANY PAID. TDS ALSO BUT NOT INVOICED BY CONTRACTOR 1. DINESHBHAI S. PATEL 896,855 68,058 2. FARUKH IRON INDUSTRIES 949,040 87,795 ------- --DO------- 3. SHANKARBHAI M. MAKWANA 724,785 115,427 -------- -DO------- 4. SARTANBHAI VELJIBHAI MAVI 1,528,308 59,653 ---- -----DO------- 5. RUPSINGH D. MAVI 751,804 76,820 ---------DO- ------ 6. SAHAJANAND TRANSPORT 1,141,466 89,794 ---------DO------- 7. SHREE CHAMUNDA CARTING 240,509 77,939 ---------DO------- 8. SHREE MULJIBHAI ATMARAM MAHERIA 1,342,664 44,433 ---------DO------- 9. IKRARBHAI LAKHAN CHISTIA 1,706,909 30,417 ---------DO------ CREDITS FOR RATE DIFFERENCE /QU DISCOUNT, DAMAGE GOODS ETC. 10.RAJ DECORATORS (7,610) ---------DO------ 11.RASULBHAI AHMEDABHAI (3,105) ---------DO------ 12.SURTI PEST CONTROL SERVICE (78,987) ---------DO------ 13. GUJARAT SIDDHI CEMENT LTD. (54,353) ---------DO------ 14. SHREE CONSTRUCTION CO. (CSE) (29,700) ---------DO------ TOTAL 9,282,340 476,581 CATEGORY C. MISC. AMOUNTS WRITTEN OFF ADVANCE GIVEN FOR JOB WORK OF BLOCKS EXCESS CERTIFICATE RECEIVED I.T.A. NO.3246/AHD/2010, A.Y. 2007-08 WITH I.T.A. NO.1192/AHD/2012, A.Y. 2008-09 10 1. CONBOX 100,000 1,00,000 IT RECEIVABLE (TDS 06-07) (633) ------------ 99,367 NET BAD DEBTS 1284007 10. LD. CIT(A) AFTER TAKING INTO CONSIDERATION ABOV E THINGS ALLOWED THE CLAIM OF THE ASSESSEE IN RESPECT OF CATEGORY A. TH US GIVING RELIEF TO THE ASSESSEE TO THE TUNE OF RS.7,08,059/- AND CONFIRMED THE ACTION OF THE A.O. IN RESPECT OF CATEGORY B AND C BY OBSERVING AS UNDER:- AS REGARDS DEBTS WRITTEN OFF IN RESPECT OF SUPPLIE RS AND JOB WORKERS ADVANCES, THE SAME DO NOT FULFILL THE CONDI TION REQUIRED UNDER SECTION 36(2) OF I.T. ACT BECAUSE THESE ADVAN CES HAVE NEVER BEEN CONSIDERED IN COMPUTATION OF INCOME. SINCE CONDITIONS OF SECTION 36(2) IS NOT FULFILLED THESE WRITE-OFFS DO NOT QUALIFY FOR DEDUCTION AS BAD DEBTS. COMING TO THE ALTERNATIVE ARGUMENT OF THE APPELLANT THAT THESE ARE BUSINESS ADVANCES A ND NON- RECOVERY QUALIFIES FOR DEDUCTION UNDER SECTION 37 O F IT ACT, ONUS TO PROVE THAT THESE ADVANCES WERE GIVEN FOR GENUINE BU SINESS REQUIREMENT AND THE SAME IS CLEARLY NOT RECOVERABLE IS ON THE APPELLANT. UNLIKE CLAIM OF BAD DEBTS WHERE THE REQ UIREMENT IS JUST WRITING OFF, FOR CLAIM OF DEDUCTION IN RESPECT OF A DVANCE, THE APPELLANT HAS TO ESTABLISH THAT HOW THE SAME WAS NO T RECOVERED FROM THESE PARTIES. APPELLANT HAS NOT PROVED BEYON D DOUBT THAT THESE ADVANCES WERE COMPLETELY NOT RECOVERABLE. TH E REASON GIVEN FOR WRITE-OFF IS THAT THESE PARTIES DID NOT ISSUE B ILLS FOR CONTRACT WORK DONE BY THEM. THIS IS NOT SUFFICIENT GROUND T O PROVE THAT BUSINESS ADVANCES HAVE BECOME BAD. CONSIDERING THE FACT THAT THE APPELLANT HAS NOT DISCHARGED ITS ONUS TO ESTABLISH THAT THE ADVANCES GIVEN TO SUPPLIERS ETC HAVE BECOME COMPLET ELY NON- RECOVERABLE OR NON-ADJUSTABLE. MERE WRITING OFF OF THESE ADVANCES CANNOT PROVE THAT THESE ARE NOT RECOVERABLE OR BECO ME BAD. CONSIDERING THIS, THE ADDITION MADE BY THE ASSESSIN G OFFICER IN RESPECT OF OTHER HAD DEBTS IS CONFIRMED. 11. AFTER HEARING BOTH THE PARTIES AND PERUSING THE RECORD WE FIND THAT OUT OF TOTAL DISALLOWANCE OF RS.12,84,007/- LD. CIT(A) HAS GIVEN RELIEF TO THE I.T.A. NO.3246/AHD/2010, A.Y. 2007-08 WITH I.T.A. NO.1192/AHD/2012, A.Y. 2008-09 11 ASSESSEE TO THE TUNE OF RS.7,08,059/-, THUS CONFIRM ED THE REMAINING AMOUNT OF RS.5,75,948/- ON THE GROUND THAT ASSESSEE HAS FAILE D TO DISCHARGE ITS ONUS TO ESTABLISH THAT THE ADVANCES GIVEN TO SUPPLIERS ETC. HAS BECAME COMPLETELY NOT RECOVERABLE OR NOT ADJUSTABLE, WE FEEL THAT ASSESSE E BE GIVEN ONE MORE OPPORTUNITY TO DISCHARGE THIS ONUS AND FOR THIS PUR POSE THE MATTER IS RESTORED BACK TO THE FILE OF THE A.O. FOR FRESH ADJUDICATION AFTER GIVING OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THIS GROUND OF THE AS SESSEE IS ALLOWED FOR STATISTICAL PURPOSE. 12. GROUND NO.2 (D) RELATES TO DISALLOWANCE ON DEPR ECIATION OF MOTOR CARS OF RS.3,95,389/-. 13. THE A.O. HAD DEALT THE ISSUE AS UNDER:- AFTER CONSIDERING THE ABOVE REPLY, IT IS NOTICED T HAT FOLLOWING THREE CARS ARE NOT ACTUALLY OWNED BY THE ASSESSEE COMPANY AS DISCUSSED BELOW, THEREFORE, DEPRECIATION CLAIMED ON SAME ARE NOT ALLOWED TO THE ASSESSEE COMPANY. FURTHER, THE DECISIONS REFER RED BY THE ASSESSEE COMPANY ARE NOT APPLICABLE AS FACTS OF THE CASE ARE DIFFERENT. SKODA CAR NO.GJ-24-A-8010 THE SAID CAR IS PURCHASED IN THE NAME OF PRAHLADBHA I S. PATEL, DIRECTOR OF THE COMPANY ON 7.6.2004 OF RS.12,51,159 /-. THE DEPRECIATION AND OTHER EXPENDITURE RELATED TO RUNN ING OF SAID CAR HAD BEEN DISALLOWED IN A.Y. 2005-06 IN THE ASSESSME NT ORDER DTD. 28.12.2007 PASSED U/S 143(3) OF THE I.T. ACT. THE SAID DISALLOWANCES OF DEPRECIATION HAVE BEEN CONFIRMED B Y LD. CIT(A) VIDE ORDER NO.CIT(A)-6/WD.1(2)1202/07-08 DTD.27.1.2 009. CONSIDERING THE FACT NARRATED IN SAID ASSESSMENT OR DER AND ORDER OF LD. CIT(A), THE DEPRECIATION CLAIMED ON THE SAID CA R OF RS.1,50,139/- IS DISALLOWED AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE COMPANY IN THIS YEAR ALSO. SONATA CAR NO.GJ-2-AC-8010 THE SAID CAR IS PURCHASED IN THE NAME OF KONAK CAST ON PRODUCT PVT. LTD. ON 14.12.2004 FOR RS.11,10,000/-. THEREAFTER, THE SAID CAR I.T.A. NO.3246/AHD/2010, A.Y. 2007-08 WITH I.T.A. NO.1192/AHD/2012, A.Y. 2008-09 12 HAS BEEN SHOWN IN THE BOOKS OF COMPANY BY PASSING A JOURNAL ENTRY IN THE BOOKS OF THE COMPANY ON 15.4.2006 OF R S.8,25,0001-. THE JOURNAL ENTRY PASSED IN THE NAME OF BABUBHAI R. PATEL, DIRECTOR OF THE COMPANY. THE AMOUNT IS SHOWN AS A LOAN RECEIVED FROM BABUBHAI R. PATEL, DIRECTOR OF THE COMPANY. T HEREFORE, IT IS CLEAR THAT THE SAID CAR PURCHASED BY EITHER KANAK C ASTON PRODUCT PVT. LTD. OR BY BABUBHAI R. PATEL. THE ACTUAL OWNE R OF THE CAR IS EITHER KANAK CASTON PRODUCT PVT. LTD. OR BY BABUBHA I R. PATEL AND NOT THE ASSESSEE COMPANY. THE SAID CAR IS ALSO NOT TRANSFERRED IN THE NAME OF THE COMPANY. THE JOURNAL ENTRY HAS BEE N PASSED FOR THE SAKE OF CLAIMING DEPRECIATION ON THE SAID CAR. THEREFORE, DEPRECIATION OF RS.1,23,750/- CLAIMED ON SAID CAR I S DISALLOWED AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE COMPANY. OPEL VECTRA GJ-2-AC-5010 THE SAID CAR IS PURCHASED BY SHRI BABUBHAI R. PATEL , DIRECTOR OF THE COMPANY ON 28.12.2004 FOR RS.11,00,000/-. THEREAFT ER, THE SAID CAR HAS BEEN SHOWN IN THE BOOKS OF COMPANY BY PASSI NG A JOURNAL ENTRY IN THE BOOKS OF THE COMPANY ON 15.4.2006 OF R S.8,10,000/-. THE JOURNAL ENTRY PASSED IN THE NAME OF BABUBHAI R. PATEL, DIRECTOR OF THE COMPANY. THE AMOUNT IS SHOWN AS A LOAN RECE IVED FROM BABUBHAI R PATEL, DIRECTOR OF THE COMPANY. THE ACT UAL OWNER OF THE CAR IS BABUBHAI R. PATEL AND NOT THE ASSESSEE C OMPANY. THE SAID CAR IS ALSO NOT TRANSFERRED IN THE NAME OF THE COMPANY. THE JOURNAL ENTRY HAS BEEN PASSED FOR THE SAKE OF CLAIM ING DEPRECIATION ON THE SAID CAR. THEREFORE, DEPRECIATION OF RS.1,2 1,500/- CLAIMED ON SAID CAR IS DISALLOWED AND ADDED TO THE TOTAL IN COME OF THE ASSESSEE COMPANY. THUS, TOTAL DEPRECIATION OF RS.3,95,389/- (RS.1,50,139+1,23,750+1,21,500) IS DISALLOWED AND A DDED TO THE TOTAL INCOME OF THE ASSESSEE COMPANY. IN APPEAL, THIS ACTION OF THE A.O. WAS CONFIRMED B Y LD. CIT(A). 14. AT THE TIME OF HEARING, LD. COUNSEL OF THE ASSE SSEE, AT THE OUTSET, SUBMITTED THAT THE ISSUE IS NOW COVERED BY THE DECI SION OF HONBLE ITAT IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2005-06 IN ITA NO.1274/AHD/2009 WHEREIN FOLLOWING WAS HELD:- WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH TH E FACTS OF THE CASE AS ALSO THE DECISIONS RELIED UPON. THE RELEVA NT PROVISIONS OF I.T.A. NO.3246/AHD/2010, A.Y. 2007-08 WITH I.T.A. NO.1192/AHD/2012, A.Y. 2008-09 13 SECTION 32 OF THE ACT STIPULATE DEPRECIATION IN RES PECT OF BUILDING, MACHINERY, PLANT OR FURNITURE OWNED BY THE ASSESSE E AND USED FOR THE PURPOSES OF THE BUSINESS OR PROFESSION. IN DISPUTABLY, THE INNOVA CAR WAS PURCHASED WITH THE FUNDS OF THE COMP ANY AND USED BY THE ASSESSEE FOR THE PURPOSES OF ITS BUSINESS. THE CONTROVERSY IS IN REGARD TO OWNERSHIP OF THE CAR. THE CONTENTI ON OF THE ASSESSEE IS THAT CAR BEING NOT REGISTERED UNDER THE MOTOR VEHICLES ACT IN THE NAME OF THE COMPANY, BY ITSELF IS NOT SU FFICIENT TO HOLD THE CONTRARY. THE FACTUAL POSITION AS STATED BY TH E ASSESSEE IS NOT DISPUTED BY THE REVENUE. THE CONTENTION OF THE REV ENUE IS THAT UNLESS THE CAR IS REGISTERED IN THE NAME OF THE ASS ESSEE UNDER THE MOTOR VEHICLES ACT, THE ASSESSEE WOULD NOT BE ENTIT LED TO DEDUCTION OF DEPRECIATION ALLOWANCE IN RESPECT THEREOF. WE A RE OF THE OPINION THAT THE ASSESSEE, WHO HAD PURCHASED THE CAR FOR VA LUABLE CONSIDERATION AND USED THE SAME FOR ITS BUSINESS, C ANNOT BE DENIED THE BENEFIT OF DEPRECIATION ON THE GROUND THAT THE TRANSFER WAS NOT RECORDED UNDER THE MOTOR VEHICLES ACT OR THAT THE V EHICLE STOOD IN THE NAME OF A DIRECTOR OF THE ASSESSEE COMPANY IN T HE RECORDS OF THE AUTHORITIES UNDER THE MOTOR VEHICLES ACT. THE AFORESAID VIEW IS SUPPORTED BY THE DECISION IN THE CASE OF CIT VS. NAVDURGA TRANSPORT CO., 235 ITR 150 (ALL), WHER EIN THE ISSUE WAS AS TO WHETHER FIRM WAS ENTITLED TO DEPRECIATION ON CARS, BROUGHT IN TO THE FIRM FOR USE OF BUSINESS OF THE F IRM, EVEN THOUGH CARS CONTINUED TO BE REGISTERED IN THE NAME PARTNER S. HONBLE ALLAHABAD HIGH COURT HELD THAT THE TRIBUNAL RIGHTLY REACHED THE CONCLUSION THAT THE ASSESSEE OWNED AND USED THE THR EE VEHICLES WITHIN THE MEANING OF S. 32 OF THE ACT. SIMILAR VI EW WAS TAKEN IN THE CASE OF CIT VS. MOHD. BUX SHOKAT ALI (NO.2), 25 6 ITR 357 (RAJ), CIT VS FAZILKA DABWALI TPT CO. LTD. (2004) 2 70 ITR 398 (P&H), CIT V. SALKIA TRANSPORT ASSOCIATES [1983] 14 3 ITR 39/13 TAXMAN 191 (CAL.), CIT V. NIDISH TRANSPORT CORPN. [ 1910] 185 ITR 669/[1989] 44 TAXMAN 351 (KER.), CIT V. DILIP SINGH SARDAR SINGH BAGGA [1993] 201 ITR 995/[1994] 77 TAXMAN 66 (BOM.) , AND CIT V. BASTI SUGAR MILLS CO. LTD. [2002] 257 ITR 88/123 TAXMAN 693 (DELHI) AS ALSO BY THE ITAT IN THEIR DECISION IN TH E CASE OF THE CURIOUS HOUSE (P) LTD. V. ITO (1980) 9 TTJ 348 (IND ORE) AND ITO VS. MODI AGENCY, ITA NO.198/GAU/1977-78 (GAUHATI). IN THE LIGHT OF VIEW TAKEN IN THE AFORESAID DECISIO NS, MERE NON- REGISTRATION OF A VEHICLE IN THE NAME OF THE COMPAN Y UNDER THE MOTOR VEHICLES ACT, CANNOT DISENTITLE THE ASSESSEE IN REGARD TO ITS CLAIM OF DEPRECIATION, WHEN THE FACTS ON RECORD ARE UNDISPUTED THAT THE ASSESSEE COMPANY HAS, IN FACT, MADE THE INVESTM ENT IN PURCHASE OF THE VEHICLE AND SUCH VEHICLE IS BEING U SED FOR ITS BUSINESS. THE REQUIREMENT OF SECTION 32 IS THAT TH E VEHICLE MUST BE OWNED BY THE ASSESSEE AND NOT THAT THE ASSESSEE MUST BE A I.T.A. NO.3246/AHD/2010, A.Y. 2007-08 WITH I.T.A. NO.1192/AHD/2012, A.Y. 2008-09 14 REGISTERED OWNER OF THE SAME UNDER THE MOTOR VEHI CLES ACT. THEREFORE, WE HAVE NO HESITATION IN VACATING THE FI NDINGS OF THE LD. CIT(A). THE AO IS DIRECTED TO ALLOW THE CLAIM OF T HE ASSESSEE FOR DEPRECIATION AND INTEREST ON FUNDS BORROWED FOR PUR CHASE OF CAR. CONSEQUENTLY, GROUND NOS.3 (A) & (B) RELATING TO DI SALLOWANCE OF DEPRECIATION ON MOTOR CAR AND INTEREST ON LOAN FOR PURCHASE OF CAR IS ALLOWED. RESPECTFULLY FOLLOWING THE SAME, THE DISALLOWANCE ON DEPRECIATION OF MOTOR CARS OF RS.3,95,389/- MADE BY THE A.O. AND SU STAINED BY LD. CIT(A) IS HEREBY DELETED. THIS GROUND OF THE ASSESSEE IS ALLO WED. 15. GROUND NO.2 (E) RELATES TO DISALLOWANCE OF RS.5 ,21,618/- U/S 40(A)(IA) OF THE ACT. 16. THE A.O., WHILE MAKING THIS DISALLOWANCE HAS OB SERVED AS UNDER:- ON VERIFICATION OF SUBMISSION AND OTHER DETAILS FI LED DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT IS FOUND THAT ASSESSEE COMPANY HAS NOT DEDUCTED TDS ON FOLLOWING PAYMENT/C REDIT OF LABOUR CHARGES AND TRANSPORTATION CHARGES- NAME OF THE PARTY TOTAL AMOUNT DEBITED AMOUNT ON WHICH TDS DEDUCTED AMOUNT OF TDS AMOUNT ON WHICH TDS NOT DEDUCTED BUILD AID COMN. 245704 193627 1975 52077 FARUKH IRON INDUSTRIES 156370 100000 1020 56370 FULSINGH DANSINGH BARIYA 1528231 1431078 14597 97153 NARENDRASINGH CHUNISING 476160 447548 4565 28612 RAMESHKUMAR SINGH 217462 210685 2149 6777 RB. FABRICATION 163248 160294 1635 2954 SARTANBHAI VELJIBHAI MAVI 684938 655588 6687 29350 SHREE MULJIBHAI 248325 0 0 248325 I.T.A. NO.3246/AHD/2010, A.Y. 2007-08 WITH I.T.A. NO.1192/AHD/2012, A.Y. 2008-09 15 ATMARAM MAHERIA TOTAL 521618 ABOVE PAYMENTS MADE ARE LABOUR CHARGES AND TRANSPOR TATION CHARGES PAID TO CONTRACTORS. IN VIEW OF PROVISIONS OF SECTION 194 C FOR PAYMENTS AGGREGATING MORE THAN RS.50,000/- DURI NG THE FINANCIAL YEAR TDS HAS TO BE DONE AND AMOUNT SO DED UCTED SHOULD HAVE BEEN PAID IN GOVERNMENT ACCOUNT WITHIN THE PRE SCRIBED TIME. IN THIS CASE PAYMENTS TO ALL THE ABOVE PARTIES EXCE EDS RS.50,000/- AND AMOUNT ON WHICH TDS IS NOT DEDUCTED IN TOTAL AM OUNTS TO RS.5,21,618/-. IN REPLY TO THE SHOW CAUSE NOTICE D TD. IS.4.2009, THE ASSESSEE COMPANY HAS EXPLAINED VIDE LETTER DTD. 13.S.2009 THAT THERE IS SHORT/EXCESS DEDUCTION OF IDS ON LABOUR CH ARGES AND TRANSPORTATION CHARGES OF RS.S,21,618/- MENTIONED A BOVE AND IF THE AMOUNT OF SHORT DEDUCTION OF TDS IS SET OFF AGA INST THE AMOUNT OF EXCESS DEDUCTION OF TDS, THERE IS NO SHORT DEDUC TION OF TDS. REPLY OF THE ASSESSEE COMPANY IS NOT ACCEPTABLE AS NO SET OFF BENEFIT IS AVAILABLE IN SECTION 194C AND 40(A)(IA) OF THE ACT. IN VIEW OF THIS, AMOUNT OF RS.5,21,618/- IS DISALLOWED U/S 40(A)(IA) OF THE ACT AND ADDED TO THE TOTAL INCOME OF THE ASSESS EE COMPANY. THIS ACTION OF THE A.O. WAS CONFIRMED BY LD. CIT(A ). BEING AGGRIEVED NOW THE ASSESSEE IS IN APPEAL BEFORE US. 17. AT THE TIME OF HEARING LD. COUNSEL OF THE ASSES SEE SUBMITTED THAT AS IT IS CLEAR FROM THE TABLE PREPARED BY THE A.O. THAT IN R ESPECT OF ONE PARTY NAMELY SHREE MULJIBHAI ATMARAM MAHERIA TAX WAS DEDUCTED AT SOURCE. IN SOME CASES THERE WAS SHORT DEDUCTION WHILE IN SOME CASES IT WA S EXCESS DEDUCTION MADE BY THE ASSESSEE. FOR SHORT DEDUCTION OF TAX NO DISALL OWANCE CAN BE MADE BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. FOR MAKING THIS SUBMISSION THE ASSESSEE PLACED RELIANCE ON THE DECI SION OF HONBLE ITAT, KOLKATA IN THE CASE OF M/S S.K. TEKRIWAL, REPORTED IN 48 SOT 515 (KOL). HE THEREFORE, SUBMITTED THAT THIS DISALLOWANCE CAN ONL Y BE SUSTAINED TO THE EXTENT OF RS.2,48,325/- IN THE CASE OF SHREE MULJIBHAI ATM ARAM MAHERIA IN WHOSE CASE I.T.A. NO.3246/AHD/2010, A.Y. 2007-08 WITH I.T.A. NO.1192/AHD/2012, A.Y. 2008-09 16 NO TDS WAS MADE. LD. D.R., ON THE OTHER HAND, RELI ED ON THE ORDER OF THE LOWER AUTHORITIES. 18. AFTER HEARING BOTH THE PARTIES AND PERUSING THE RECORD WE FIND FORCE IN THE CONTENTION OF LD. COUNSEL OF THE ASSESSEE THAT IN VIEW OF THE DECISION OF HONBLE ITAT, KOLKATA IN THE CASE OF M/S S.K. TEKRI WAL, REPORTED IN 48 SOT 515 (KOL) THE PROVISIONS OF SECTION 40(A)(IA) OF THE AC T CAN ONLY BE INVOKED IN THE EVENT OF NON-DEDUCTION OF TAX AND NOT FOR LESSER DE DUCTION OF TAX. THE RELEVANT PORTION OF THE DECISION READS AS UNDER:- BUT IN THE PRESENT CASE BEFORE US, THE ASSESSEE HA S DEDUCTED TAX, ALTHOUGH U/S 194C(2) OF THE AT AND IT IS NOT A CASE OF NON- DEDUCTION OF TAX OR NO DEDUCTION OF TAX AS IS THE I MPORT OF SECTION 40(A)(IA) OF THE ACT. EVEN OTHERWISE IF IT IS CONS IDERED THAT THIS PARTICULAR SUM FALLS UNDER SECTION194I OF THE ACT, IT MAY BE CONSIDERED AS TAX DEDUCTED AT A LOWER RATE AND IT C ANNOT BE CONSIDERED A CASE OF NON-DEDUCTION OR NO DEDUCTION. SIMILAR VIEW IS TAKEN BY C BENCH OF MUMBAI ITAT IN IT APPEAL N O.20(MUM.) 2010 IN THE CASE OF DY. CIT V. CHANDABHOY & JASSOBH OY DATED 8-7- 2011, WHEREIN IT IS HELD THAT THERE IS NO DISPUTE W ITH REFERENCE TO THE DEDUCTION OF TAX U/S 192 OF THE ACT WITH THE FA CT THAT THE ALLEGED CONSULTANTS, IN THEIR INDIVIDUAL ASSESSMENT S DECLARED THESE PAYMENTS AS SALARY PAYMENTS AND ACCEPTED BY REVENUE AS IT IS. FURTHER, IT IS HELD THAT THE ASSESSEE HAD DEDUCTED TAX U/S 192 OF THE ACT AS AGAINST THE ALLEGATION OF REVENUE THAT T HE PROVISIONS OF SECTION 194J OF THE ACT WOULD BE ATTRACTED AS THESE CONSULTANTS ARE IN THE CAPACITY OF PROFESSIONALS. THE BENCH HELD T HAT THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT WILL NOT APPLY AS T HE SAID PROVISION CAN BE INVOKED ONLY IN THE EVENT OF NON-DEDUCTION O F TAX BUT NOT FOR LESSER DEDUCTION OF TAX. IN THAT CASE THE ASSE SSEE HAS DEDUCTED TAX U/S 192 OF THE ACT AS AGAINST SECTION 194J OF T HE ACT AS AGAINST THE CLAIM OF REVENUE. AS THERE IS NO DISPUTE IN THIS CASE THAT TDS WAS N OT MADE ONLY IN THE CASE OF SHREE MULJIBHAI ATMARAM MAHERIA ON PAYMENT OF RS.2, 48,325/- AND IN RESPECT OF OTHER PARTIES THERE WAS A CASE OF LESSER DEDUCTI ON OF TAX, THEREFORE, FOLLOWING THE DECISION OF HONBLE ITAT, KOLKATA IN THE CASE O F M/S S.K. TEKRIWAL (SUPRA) I.T.A. NO.3246/AHD/2010, A.Y. 2007-08 WITH I.T.A. NO.1192/AHD/2012, A.Y. 2008-09 17 THIS DISALLOWANCE IS RESTRICTED TO RS.2,48,325/- AN D REST OF THE ADDITION IS DELETED. THIS GROUND OF THE ASSESSEE IS PARTLY AL LOWED. 19. GROUND NO.2(F) RELATES TO DISALLOWANCE OF RS.30 ,252/- ON THE BASIS OF AIR DATA. 20. THE A.O., WHILE MAKING THIS DISALLOWANCE HAS OB SERVED AS UNDER:- IN THIS CASE, VARIOUS INFORMATION RELATED TO THE C ONTRACT RECEIPTS IS AVAILABLE IN THE INCOME-TAX APPLICATION SOFTWARE. A COPY OF THIS INFORMATION RETRIEVED FROM THE COMPUTER WAS ALSO SU PPLIED TO THE ASSESSEE COMPANY AND THE ASSESSEE WAS ASKED TO RECO NCILE THE SAME WITH BOOKS OF ACCOUNTS. THE ASSESSEE PRODUCED COPY OF ACCOUNTS OF THE SAID PARTIES. ON VERIFICATION OF T HE SAID ACCOUNT, IT IS FOUND THAT FOLLOWING CONTRACT RECEIPTS ARE NOT R EFLECTED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE COMPANY: S.NO. DT. OF PAYMENT NAME OF PAYER AMT. OF PAYMENT (IN RS.) 1. 5/10/2006 ANSH DEVELOPERS PVT. LTD. 22,844 2. 10/9/2006 AJAY ENGINEERS 7,408 THE ASSESSEE WAS ASKED VIDE THIS OFFICE LETTER DTD. 15.4.2009 AS TO WHY THE RECEIPTS WHICH WERE NOT SHOWN IN THE BOOKS OF ACCOUNTS SHOULD NOT BE ADDED TO THE TOTAL INCOME OF THE ASSE SSEE COMPANY. THE ASSESSEE COULD NOT RECONCILE THE ABOVE CONTRACT RECEIPTS, THEREFORE, A SUM OF RS.30,252/- (RS.22,844 + 7,408) IS ADDED TO THE TOTAL INCOME OF THE ASSESSEE COMPANY. PENALTY PROCEEDINGS U/S 271 (1)(C) IS INITIATED FOR CONCEALMENT OF PART ICULARS OF INCOME. 21. LD. CIT(A) CONFIRMED THIS ACTION OF THE A.O. BY OBSERVING AS UNDER:- I HAVE CONSIDERED THE FACTS OF THE CASE, ASSESSMEN T ORDER AND APPELLANTS SUBMISSION. IT IS NOT IN DISPUTE THAT TWO ENTRIES STANDING IN THE NAME OF APPELLANT IN AIR DATABASE H AS NOT TALLIED WITH APPELLANTS RECORDS. THE INFORMATION IN THIS DATABASE IS NOT MANUALLY FED BUT TAKEN ELECTRONICALLY AND THEREFORE THERE SHOULD NOT BE ANY VARIATION. SINCE TWO ENTRIES APPEAR IN THE DATABASE IS NOT REFLECTED IN THE APPELLANTS ACCOUNTS, THE ONUS WAS ON THE APPELLANT TO PROVE THAT THESE DO NOT RELATE TO IT. IN ABSENCE OF ANY I.T.A. NO.3246/AHD/2010, A.Y. 2007-08 WITH I.T.A. NO.1192/AHD/2012, A.Y. 2008-09 18 EVIDENCE, GENERAL SUBMISSION CANNOT ABSOLVE APPELLA NT FROM THE RESPONSIBILITY. SINCE THE RECONCILIATION IS NOT DO NE BY THE APPELLANT, THE ADDITION MADE BY THE ASSESSING OFFICER IS CONFI RMED. 22. AFTER HEARING BOTH THE PARTIES AND PERUSING THE RECORD WE ARE OF THE CONSIDERED OPINION THAT MATTER REQUIRES TO BE SET A SIDE TO THE FILE OF THE A.O. FOR FRESH ADJUDICATION AFTER MAKING NECESSARY VERIFICAT ION FROM THE ACCOUNT OF THE CONCERNED PARTIES. WE HOLD ACCORDINGLY. THIS GROU ND IS ALLOWED FOR STATISTICAL PURPOSE. 23. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED FOR STATISTICAL PURPOSE. I.T.A. NO. 1192/AHD/2012 24. THOUGH THE ASSESSEE HAS TAKEN FIVE GROUNDS BUT THE ONLY EFFECTIVE GROUND IS GROUND NO.2 WHICH READS AS UNDER:- 2. THE LD. CIT(A)-VI, AHMEDABAD HAS ERRED IN CONFI RMING THE FOLLOWING DISALLOWANCE MADE BY THE ASSESSING OFFICE R:- A. DISALLOWANCE U/S 35D OF THE I.T. ACT OF RS.27,000/- B. DISALLOWANCE OF DEPRECIATION ON MOTOR CARS OF RS.3, 37,780/- C. DISALLOWANCE U/S 40(A)(IA) OF THE I.T. ACT OF RS.1, 67,426/- D. DISALLOWANCE U/S 40(A)(IA) OF THE I.T. ACT OF RS.1, 04,535/-. 25. GROUND NO.2(A) RELATING TO DISALLOWANCE U/S 35D OF THE ACT OF RS.27,000/- WAS NOT PRESSED AT THE TIME OF HEARING, ACCORDINGLY, THE SAME IS DISMISSED AS NOT PRESSED. 26. GROUND NO.2(B) RELATES TO DISALLOWANCE OF DEPRE CIATION ON MOTOR CARS OF RS.3,37,780/-. FOR THE REASONS GIVEN BY US IN ITA NO.3246/AHD/2010 THIS GROUND IS ALLOWED. I.T.A. NO.3246/AHD/2010, A.Y. 2007-08 WITH I.T.A. NO.1192/AHD/2012, A.Y. 2008-09 19 27. GROUND NO.2(C) RELATES TO DISALLOWANCE U/S 40(A )(IA) OF THE ACT OF RS.1,67,426/-. THIS GROUND IS FOR SHORT DEDUCTION OF TDS. SIMILAR ISSUE WAS DECIDED BY US IN ITA NO.3246/AHD/2010. FOR THE SAM E REASONS THIS GROUND IS ALLOWED. 28. GROUND NO.2(D) RELATES TO DISALLOWANCE U/S 40(A )(IA) OF THE ACT OF RS.1,04,535/-. WHILE DISALLOWING THIS SUM THE A.O. HAS OBSERVED AS UNDER:- DURING THE COURSE OF ASSESSMENT PROCEEDING FROM TH E DETAILS SUBMITTED IN RESPECT OF SECURITY CHARGES IT WAS NOT ICED THAT THE ASSESSEE HAD CREDITED THE AMOUNT ON VARIES DATES DU RING THE YEAR BUT HAS FAILED TO DEDUCT TDS AT THE TIME OF CREDIT AND PAY THE TDS IN THE NEXT MONTH. THE DETAILS ARE AS UNDER:- DATE OF CREDIT NAME OF PARTY TOTAL AMOUNT 1/11/2007 BIRENDRA DEFENCE CO. 13408 1/11/2007 BIRENDRA DEFENCE CO. 6061 1/12/2007 BIRENDRA DEFENCE CO. 23461 15/1/2008 BIRENDRA DEFENCE CO. 23966 31/8/2007 BIRENDRA DEFENCE CO. 7431 31/8/2007 BIRENDRA DEFENCE CO. 588 1/12/2007 BIRENDRA DEFENCE CO. 6061 1/12/2007 BIRENDRA DEFENCE CO. 6068 1/1/2008 BIRENDRA DEFENCE CO. 3134 1/2/2008 BIRENDRA DEFENCE CO. 2936 1/10/2008 BIRENDRA DEFENCE CO. 3031 1/11/2007 BIRENDRA DEFENCE CO. 3030 1/12/2007 BIRENDRA DEFENCE CO. 5360 104535 AS PER THE IT PAYABLE (TDS SECURITY) A/C IT IS SEEN THAT THE ASSESSEE HAD DEDUCTED TDS FOR ALL THE PAYMENTS IN M ARCH ONLY AND HAS PAID THE SAME BEFORE FILING OF THE RETURN. THE REFORE, AS PER PROVISION OF 40(A)(IA) THE ASSESSEE OUGHT TO HAVE D EDUCTED THE TDS AT THE TIME OF CREDIT OR PAYMENT AND NOT IN THE MONTH OF MARCH AS CLEARLY SEEN. THIS WAS POINTED OUT TO THE ASSESSEE REPRESENTATIVE DURING THE COURSE OF ASSESSMENT PROC EEDING WHO ADMITTED THAT TDS WAS WRONGLY DEDUCTED IN MARCH ONL Y AND SHOULD HAVE DEDUCTED REGULARLY AND PAID AND AGREED FOR DIS ALLOWANCE ADDITION. THE AMOUNT OF RS.1,04,535/- IS THEREFORE ADDED BACK TO THE INCOME U/S 40(A)(IA) OF THE I.T. ACT. I.T.A. NO.3246/AHD/2010, A.Y. 2007-08 WITH I.T.A. NO.1192/AHD/2012, A.Y. 2008-09 20 THIS ACTION OF THE A.O. WAS CONFIRMED BY LD. CIT(A) . 29. AFTER HEARING BOTH THE PARTIES AND PERUSING THE RECORD WE FIND THAT THERE IS NO DISPUTE ABOUT THE FACT THAT TDS WAS PAI D TO THE GOVERNMENT ACCOUNT BEFORE THE DUE DATE OF FILING OF RETURN. T HE LAW IS NOW SETTLED THAT IF TDS IS DEPOSITED BEFORE DUE DATE OF FILING OF RETUR N NO DEDUCTION U/S 40(A)(IA) CAN BE MADE IN VIEW OF THE DECISION OF HONBLE CALC UTTA HIGH COURT IN THE CASE OF CIT VS. VIRGIN CREATORS IN ITA NO.3200/2011 DATE D 23.11.2001 WHICH HAS BEEN FOLLOWED BY THIS BENCH OF THE TRIBUNAL IN THE CASE OF M/S ALPHA PROJECTS SECURITY (P) LTD. DATED 23.3.12 VIDE ITA NO. 2869/A HD/2011. IN VIEW OF THIS, THE ADDITION MADE BY THE A.O. BY INVOKING THE PROVI SION OF SECTION 40(A)(IA) AND SUSTAINED BY LD. CIT(A) IS HEREBY DELETED. THI S GROUND IS ALLOWED. 30. THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 31. IN THE COMBINED RESULT, ASSESSEEES APPEAL IN I TA NO.3246/AHD/2010 IS PARTLY ALLOWED FOR STATISTICAL PURPOSE AND IN ITA N O.1192/AHD/2012 IS PARTLY ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 28 .09.2012 SD/- SD/- (T.R. MEENA) (D.K. TYAGI) ACCOUNTANT MEMBER JUDICIAL MEMBER TRUE COPY N.K. CHAUDHARY, SR. P.S. COPY OF THE ORDER FORWARDED TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT (APPEALS) I.T.A. NO.3246/AHD/2010, A.Y. 2007-08 WITH I.T.A. NO.1192/AHD/2012, A.Y. 2008-09 21 5. THE DR, AHMEDABAD 6. THE GUARD FILE BY ORDER AR, ITAT, AHMEDABAD