M/S BHILAI TOURS & TRAVELS, BHILAI(CG) V. THE INCOME TAX OFFICER 1(3), BHILAI(CG)

ITA 33/BIL/2016

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 4842 (ITAT-RAIPUR)
• Duration Of Justice: 2 year(s) 7 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-10-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 18-03-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RITUPARAN NAMDEO
• Assessee Lawyers: DR S R RAO
• Keywords: Unexplained cash credit; Business income; Depreciation; Principle of natural justice
• Section: 68

Judgement Text

1 ITA NO. 33/BIL/2016 IN THE INCOME TAX APPE LLATE TRIBUNAL RAIPUR BENCH: RAIPUR BEFORE SHRI R. K. PANDA, ACCOUNTANT ME MBER AND MS SUCHITRA KAMBLE, JUDI CIAL MEMBER I.T.A .NO. 33/RPR/201 6 (A.Y 2007-08) BHILAI TOURS & TRAVELS NO. 279, 1 ST FLOOR, CHOUHAN ESTATE, SUPELA, BHILAI BHILAI (CG) AAHFB1506B (APPELLANT) VS INCOME TAX OFFICER 1(3) AAYAKAR BHAWAN, NEW CIVIC CENTRE, BHILAI BHILAI(CG) (RESPONDENT) APPELLANT BY DR. S. R. RAO, ADV RESPONDENT BY SH. RITUPARAN NAMDEO, DR ORDER PER SUCHITRA KAMBLE, JM THE PRESENT APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER DATED 15/12/2015 PASSED BY CIT(A)-II, RAIPUR (CG) FOR ASS ESSMENT YEAR 2007-08. 2. THE GROUNDS OF APPEAL ARE AS UNDER: 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN CONFIRMING THE FO LLOWING DISALLOWANCES. (A) DISALLOWANCE OF ENTIRE EXPENSES OF RS. 1,83,76 3/- OUT OF SALES PROMOTION ( B ) DISALLOWANCE OF COMPENSATION OF RS.13,280/- PAI D TO A CUSTOMER (C) DISALLOWANCE OF RS.50,000/- BEING EX-GRATIA PAI D TO A STAFF MEMBER (D) DISALLOWANCE OF THE ENTIRE EXPENSES OF RS.39, 015/- INCURRED UNDER THE HEAD N REPAIR & MAINTENANCE DATE OF HEARING 14.08.2018 DATE OF PRONOUNCEMENT 24.10.2018 2 ITA NO. 33/BIL/2016 (E) DISALLOWANCE OF THE ENTIRE EXPENSES OF RS.76,8 59/- INCURRED UNDER THE HEAD TRAVELLING EXPENSES (VEHICLE) (F) DISALLOWANCE OF RS.13,455/- OUT OF TOTAL EXPEN SES OF RS.67,277/- INCURRED UNDER THE HEAD TELEPHONE EXPENSES. (G) DISALLOWANCE OF RS.9,530/- OUT OF TOTAL EXPENS ES OF RS.47,648/- INCURRED UNDER THE HEAD TRAVELLING ,CONVEYANCE (H) DISALLOWANCE OF DEPRECIATION OF RS.570/- CLAIM ED ON SCOOTY (I) DISALLOWANCE OF RS. 1900/- BEING DEPRECIATION ON FURNITURE 2. IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE L D. COMMISSIONER OF INCOME- TAX (APPEALS) HAS ERRED IN CONFIRMING THE ADDITIONS OF RS.9,76,259/- BEING BALANCE OF SUNDRY CREDITORS. A) M/S RAMAKRISHNA TRAVELS, BARODA, GUJRAT RS.2,62,52 1/- B) M/S NUTAN TRAVELS, AHMEDABAD, GUJRAT RS.3,16,633/- C) M/S BHARAT TRANSPORT, M. GANAPATI RAO RS.1,73,003/ - D) INDIAN AIRLINES, BHILAI RS.2,24,102/- TOTAL RS.9,76,259/- 3. IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE O RDER OF THE LD. COMMISSIONER OF INCOME-TAX (APPEALS) CONFIRMING ARB ITRARY ACTION OF THE LD. ASSESSING OFFICER IS BAD IN LAW AND ON FACTS. 3. THE LD. AR SUBMITTED THAT GROUND NOS. 1(D) TO 1( I) ARE NOT PRESSED. HENCE, GROUND NOS. 1(D) TO 1(I) ARE DISMISSED. 4. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF OPERA TING A TRAVEL AGENCY. THE RETURN OF INCOME SHOWING TOTAL INCOME AT RS.2,88,46 0/- WAS FILED BY THE ASSESSEE ON 31.10.2007. THE CASE WAS SELECTED FOR T HE SCRUTINY. STATUTORY NOTICES WERE ISSUED AND SERVED AND COMPLIED WITH BY THE ASSESSEE. THE TOTAL INCOME FOR A.Y. 2007-08 WAS ASSESSED AT RS. 16,64,1 00/- AS AGAINST RETURNED INCOME OF RS. 2,88,460/-. THE ADDITION WAS MAINLY R ELATES TO ADDITION OF RS.9,76,259/- REPRESENTING AGGREGATE BALANCE IN THE ACCOUNTS OF FOUR SUNDRY CREDITORS MADE AS UNEXPLAINED CASH CREDIT U/S 68 AN D OTHER DISALLOWANCE OF 3 ITA NO. 33/BIL/2016 VARIOUS EXPENSES. 5. BEING AGGRIEVED BY THE ASSESSMENT ORDER, THE ASS ESSEE FILED APPEAL BEFORE THE CIT(A). THE CIT(A) PARTLY ALLOWED THE AP PEAL OF THE ASSESSEE. 6. THE LD. AR SUBMITTED THAT GROUND NO. 1(A) RELATE S TO DISALLOWANCE MADE OUT OF SALES PROMOTION EXPENSES. MOST OF THE PAYMEN TS WERE MADE THROUGH CHEQUE. THE ASSESSEE PRODUCED LEDGER ACCOUNT BEFORE THE ASSESSING OFFICER TO DEMONSTRATE THE SAME. GROUND NO. 1(B) RELATES TO DI SALLOWANCE OF COMPENSATION PAID TO CUSTOMER FOR FAILURE TO ARRANG E THE TOUR. SUCH PAYMENT IS ALLOWABLE BEING OF BUSINESS NATURE. THE LD. AR RELI ED UPON THE DECISION OF THE HONBLE RAJASTHAN HIGH COURT IN CASE OF CIT VS. SOH ANLAL KANWAR & SONS 164 ITR 129 (RAJ). GROUND NO. 1(C) RELATES TO DISALLOWA NCE OF RS.50,000/- PAID AS EXGRATIA TO MR. RAJIV ARYA EXECUTIVE ASSISTANT OF A SSESSEE PAID IN THE NAME OF HIS DAUGHTER. THE LD. AR SUBMITTED THAT THERE IS NO DISPUTE REGARDING PAYMENT OF EX-GRATIA BUT THE DEDUCTION WAS DENIED ON THE GR OUND THAT IT WAS PAID FOR CONSIDERATION NOT CONNECTED WITH BUSINESS. SHRI RAJ IV ARYA WAS PAID SALARY OF RS. 42,000/- @ RS.3500/- AND AFTER HIS SATISFACTORY PERFORMANCE HE WAS TO BE COMPENSATED ACCORDINGLY. THE BUSINESS RECEIPTS INCR EASED TO RS. 8.63 CRORES FROM RS. 72.83 LAKHS IN PRECEDING YEAR. THEREFORE, EX-GRATIA OF RS.50,000/- WAS PAID. THERE IS NO DISPUTE REGARDING GENUINENESS OF PAYMENT. THE RECIPIENT WAS NOT A RELATED PARTY. HENCE, THE DISALLOWANCE IS NOT CORRECT. GROUND NO. 2 RELATES TO AGGREGATE ADDITION OF RS.9,76,259/- REPR ESENTING SUNDRY CREDITORS BALANCE AND CONFIRMED BY THE CIT(A). THE BALANCE IN THE NAME OF RAMAKRISHNA TRAVELS, BARODA (RS.2,62,521/-) WAS SUBSEQUENTLY DI SCHARGED BY ISSUE OF TICKETS. THE ASSESSEE PRODUCED LEDGER ACCOUNT BEFOR E THE ASSESSING OFFICER TO DEMONSTRATE THE SAME.IN CASE OF M/S NUTAN TRAVELS A HMEDABAD (RS.3,16,333/-) WAS OPENING BALANCES, HENCE NO ADDI TION IS CALLED FOR U/S 68. THE ASSESSEE PRODUCED LEDGER ACCOUNT BEFORE THE ASS ESSING OFFICER TO DEMONSTRATE THE SAME. THE LD. AR RELIED UPON THE DE CISIONS IN THE CASE OF CIT VS. USHA STUD AGRICULTURAL FARM LTD. (2008) 5 DTR 3 35 (DEL), CIT VS. 4 ITA NO. 33/BIL/2016 PARMESHWAR BOHRA (2000) 208 CTR 218 (RAJ) AND NUCHE M LTD. VS. CIT (2004) 87 TTJ 166 (ITAT) DEL. THE LIABILITY OF RS. 1,73,00 3/- OF M/S BHARAT TRANSPORT WAS DISCHARGED IN THE SUBSEQUENT ASSESSMENT YEAR TH ROUGH SALE OF TICKETS AND BY BANK. THE ASSESSEE PRODUCED LEDGER ACCOUNT BEFOR E THE ASSESSING OFFICER TO DEMONSTRATE THE SAME. THE BALANCE OF INDIAN AIRLINE S OF RS.2,24,102/- WAS PAID ON 10.04.2017 THROUGH CHEQUE NO. 130569. THE A SSESSEE PRODUCED BANK STATEMENT BEFORE THE ASSESSING OFFICER TO DEMONSTRA TE THE SAME. THEREFORE, THE LD. AR SUBMITTED THAT THE ADDITIONS MADE BY THE ASSESSING OFFICER WAS NOT JUSTIFIED. 7. THE LD. DR RELIED UPON THE ASSESSMENT ORDER AND THE ORDER OF THE CIT(A). 8. WE HAVE HEARD BOTH THE PARTIES AND PERUSED ALL T HE RELEVANT MATERIAL AVAILABLE ON RECORD. AS REGARDS GROUND NOS. 1(A), 1 (B) AND 1(C) OF THE APPEAL, THE ASSESSEE HAS SUBMITTED THE RELEVANT DOCUMENTS T O SUPPORT THE EXPENSES INCURRED BY THE ASSESSEE BEFORE THE ASSESSING OFFIC ER. BUT THE ASSESSING OFFICER AS WELL AS THE CIT(A) HAS NOT TAKEN PROPER COGNIZAN CE OF THE EVIDENCES PRODUCED BY THE ASSESSEE. IT WILL BE APPROPRIATE AT THIS JUNCTURE THAT THESE THREE ISSUES HAVE TO BE REMANDED BACK TO THE FILE O F THE ASSESSING OFFICER. NEEDLESS TO SAY, THE ASSESSEE BE GIVEN OPPORTUNITY OF PRINCIPLES OF NATURAL JUSTICE. AS REGARDS GROUND NO. 2, THE ASSESSEE PROD UCED THE RELEVANT DOCUMENTS BEFORE THE REVENUE AUTHORITIES, BUT THE S AME WAS NOT TAKEN INTO CONSIDERATION BY THE ASSESSING OFFICER AS WELL AS T HE CIT(A). THEREFORE, THIS ISSUE ALSO NEEDS TO BE REMANDED BACK TO THE FILE OF THE ASSESSING OFFICER. NEEDLESS TO SAY, THE ASSESSEE BE GIVEN OPPORTUNITY OF PRINCIPLES OF NATURAL JUSTICE. 5 ITA NO. 33/BIL/2016 9. IN RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 24 TH OCTOBER, 2018 . SD/- SD/- (R. K. PANDA) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEM BER DATED: 24/10/2018 *R.N COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT PRIVATE SECRETARY.. RAIPUR BENCH, RAIPUR. 6 ITA NO. 33/BIL/2016 DATE OF DICTATION 22.10.2018 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 22.10.2018 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. PS/PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/PS .10.2018 DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT .10.2018 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .10.2018 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER