DCIT, Sambalpur V. M/s. Tarini Loading Contractors, Keonjhar

ITA 33/CTK/2015

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 3451 (ITAT-CUTTACK)
• Duration Of Justice: 3 year(s) 7 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-08-2018
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 15-06-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 15-01-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: D K PRADHAN
• Assessee Lawyers: N GUPTA S NANDA
• Keywords: Unexplained expenditure; Depreciation; Deemed to accrue or arise in india; Corroborative evidences
• Section: 69C; 143(3); 142(1)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH CUTTACK BEFORE SHRI N.S.SAINI, AM & SHRI PAV AN KUMAR GADALE, JM ./ ITA NO. 33 / CTK /20 1 5 ( / ASSESSMENT YEAR : 20 10 - 20 1 1 ) D CIT, CIRCLE - 1(1), SAM BALPUR VS. M/S TARINI LOADING CONTRACTORS, AT:JURUDI, PO - JAJANG, JODA, KEONJHAR ./ ./ PAN/GIR NO. : A ACFT 7408 D ( / APPELLANT ) .. ( / RESPONDENT ) /AS SESSEE BY : SHRI N.GUPTA / S. NANDA, AR /REVENUE BY : SHRI D.K.PRADHAN ,CITDR / DATE OF HEARING : 21 / 0 8 /201 7 / DATE OF PRONOUNCEMENT 24 / 0 8 /201 7 / O R D E R PER SHRI PAV AN KUMAR GADALE, JM : TH E REVENUE HAS FILED AN APPEAL AGAINST T HE ORDER OF CIT (A) , BHUBANESWAR , DATED 14.11.2014 , PASSED IN I.T.APPEAL NO. 0513 / 201 3 - 1 4 , U/S. 143(3) OF THE INCOME TAX ACT, 1961 FOR THE ASSESSMENT YEAR 20 10 - 2011 , WHEREIN THE REVENUE HAS RAISED THE FOLLOWING GROUNDS : - 1. WHETHER IN THE FACTS AND CIRCUMSTA NCES OF THE CASE, THE LD.CIT(A) IS CORRECT IN LAW AND FACTS IN DELETING THE ADDITION OF RS.1,80,75,879/ - MADE BY THE ASSESSING OFFICER, WHEN THE EXPENDITURE IN CASH OF RS.6,84,36,292/ - IS MORE THAN THE AMOUNT OF RS.5,30,60,413/ - AVAILABLE IN CASH AND THE D IFFERENCE OF RS.1,80,75,879/ - WAS TREATED BY THE AO AS UNEXPLAINED EXPENDITURE U/S.69C OF THE I.T.ACT, 1961. 2 . BRI EF FACTS OF THE CASE ARE THAT THE ASSESSEE IS IN BUSINESS OF TRANSPORT CONTRACT S AND FILED THE RETURN OF INCOME ELECTRONICALLY ON 06.10.2010 WITH TOTAL INCOME OF RS. 33,05,720/ - AND THE RETURN OF INCOME WAS PROCESSED U/S.143(1) OF THE ACT. SUBSEQUENTLY NOTICE U/S.143(2) AND 142(1) OF THE ACT WERE ISSUED TO THE ASSESSEE ALONG WITH QUESTIONNAIRE . IN COMPLIANCE, THE LD. AR APPEARED FROM TIME TO TIME AND CASE WAS ITA NO. 33 /CTK/201 5 2 DISCUSSED. THE AO ON PERUSAL OF THE PROFIT AND LOSS ACCOUNT FOUND THAT THE ASSESSEE HAS CLAIMED EXPENDITURE OF RS.6,94,18,753/ - UNDER VARIOUS HEADS, WHEREAS THE TURNOVER WAS RS.7,27,24,475/ - . FURTHER, OUT OF THE SAID EXPENSES, NON - CASH EX PENDITURE OF DEPRECIATION WAS RS.9,82,463/ - , THEREFORE, THE AO CALCULATED CASH EXPENSES DEBITED TO THE PROFIT AND LOSS ACCOUNT AT RS. 6,84,36,292/ - . 3. THE AO FOUND THAT THERE IS NO OUTSTANDING EXPENSES DISCLOSED IN THE BALANCE SHEET AND TOTAL EXPENDITURE WAS PAID DURING THE CURRENT YEAR AND ALSO THE CREDITORS OF THE EARLIER YEAR A.Y.2009 - 2010 WERE PAID DURING THE CURRENT YEAR THEREFORE TOTAL CASH OUTFLOW AS PER THE AUDITED ACCOUNTS WORKED OUT TO RS. 6.96,24,323/ - . THE ASSESSEE IS MAINTAINING BANK ACCOUNT WI TH INDUSIND BANK AND THERE ARE CASH WITHDRAWAL S OF RS.3,75,76,552/ - . SIMILARLY THE PARTNERS HAVE ALSO WITHDRAWN MONEY FROM THE BANK TO THE EXTENT OF RS. 1,39,62,972/ - , CONSIDERING THESE FACTS AND FIGURES , THE AO FOUND AVAILABILITY OF CASH WITH THE ASSESSEE TO THE EXTENT OF RS. 5,03,60,413/ - ONLY , WHEREAS THE EXPENDITURE CLAIMED BY THE ASSESSEE IS RS.6,84,36,292/ - , SINCE THERE ARE NO SATISFACTORY EXPLANATION S PROVIDED BY THE ASSESSEE ON THE DIFFERENCE OF THE CASH BALANCE THE AO CONSIDERED UNEXPLAINED EXPENDITUR E AS DEEMED INCOME UNDER THE PROVISIONS OF SECTION 69C OF THE ACT RS. 1,80,75,879/ - AND ASSESSED THE TOTAL INCOME OF RS.2,13,81,599/ - AND PASSED THE ORDER U/S.143(3) OF THE ACT, DATED 26.3.2013 . 4 . AGGRIEVED BY THE ORDER, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A). IN THE APPELLATE PROCEEDINGS THE LD. AR ARGUED THE GROUNDS AND ITA NO. 33 /CTK/201 5 3 REITERATED THE SUBMISSIONS MADE BEFORE THE AO AND MADE ELABORATE SUBMISSIONS ON GROUNDS OF APPEAL AND THE FACTS , WHEREAS THE CIT(A) DEALT ON SUBMISSIONS OF THE ASSESSEE ON CASH R ECONCILIATION AT PAGE 7 PARA 7 OF THE ORDER. THE LD. CIT(A) ALSO DEALT ON THE JUDICIAL DECISIONS AND SUBMISSION OF THE ASSESSEE AND OBSERVED THAT THERE IS NO DEFICIT AND ALLOWED THE APPEAL OF THE ASSESSEE. 5 . AGGRIEVED BY THE ORDER OF CIT(A), REV ENUE HAS FILED AN APPEAL BEFORE THE TRIBUNAL. BEFORE US, LD. DR SUBMITTED THAT THE LD. CIT(A) HAS ERRED IN DELEING THE ADDITION IRRESPECTIVE OF THE FACT THAT THERE IS CASH DEFICIT AS PER THE FINANCIAL STATEMENTS IN THE ASSESSMENT PROCEEDINGS AND THERE IS N O SUPPORTING EVIDENCE FILED BY THE ASSESSEE TO RECONCILE THE DIFFERENCE AND PRAYED FOR RESTORING THE ORDER OF AO. 6 . CONTRA, LD. A R SUPPORTED THE ORDER OF CIT(A) AND SUBMITTED THAT THE ASSESSEE IS A TRANSPORT CONTRACTOR AND MAINTAINING THE BOOKS AND ACCOU NTS AND ARE AUDITED. THE AO HAS MADE ASSESSMENT WITHOUT REJECTING THE BOOKS OF ACCOUNTS AND FURTHER THE AO HAS IGNORED THE FACT THAT THE ASSESSEE IS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING AND FILED PAPER BOOK TO SUBSTANTIATE THE ARGUMENTS AND PRAYED FOR DISMISSAL OF REVENUES APPEAL . 7 . WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE SOLE MATRIX OF THE DISPUTED ISSUE THAT THE CIT(A) ERRED IN DELETING THE ADDITION BY THE AO DUE TO DEFICIT CASH BALANCE AND THE ASSES SEE HAS INCURRED THE EXPENDITURE MORE THAN THE SOURCE AS PER THE FINDINGS OF THE AO. THE L D.AR VEHEMENTLY ARGUED THAT THE AO ITA NO. 33 /CTK/201 5 4 ACCEPTED THE METHOD OF ACCOUNTING AS MERCANTILE AND FAILED TO ACCEPT THAT SOME OF THE PAYMENTS ARE PERTAINING TO EARLIER YEARS AND ASSESSEE HAS ADEQUATE CASH BALANCE AND SUBSTANTIATE WITH RECONCILIATION . THE LD. AR DREW ATTENTION TO THE PAPER BOOK WHERE THE LEDGER ACCOUNT, COPIES OF VARIOUS EXPENSES INCURRED BY THE ASSESSEE ARE FILED. 8. WE HAVE PERUSE D THE ASSESSMENT ORDER AND THE F INDINGS OF AO AND FOUND THAT THE ADDITION WAS DUE TO UNEXPLAINED EXPENDITURE. O N THE QUERY OF THE BENCH WHETHER RECONCILIATION STATEMENT WAS FILED BEFORE THE ASSESSING AUTHORITY BY THE ASSESSEE IN RESPECT OF DEFICIT BALANCE AND EXPENSES WITH SUPPORTING EVI DENCE , THE L D. ARS EXPLANATION S COULD NOT CONVINCE US AND PRIMA FACIE WE ARE OF THE OPINION THAT THE ASSESSEE IS FOLLOWING THE MERCANTILE ACCOUNTING SYSTEM BUT IN THE PRESENT CASE THE ADDITION WAS DUE TO DIFFERENCE OF EXCESS CLAIM OF EXPENDITURE THAN ACTUA L CASH AVAILABILITY, T HEREFORE, IN THE INTEREST OF SUBSTANTIAL JUSTICE WE REMIT THIS DISPUTED ISSUE FOR LIMITED PURPOSE TO FILE OF THE AO TO VERIFY AND EXAMINE THE CORRECTNESS OF THE CLAIM FILED BEFORE US AND RECONCILIATION OF CASH BALANCE AND THE ASSESSEE SHOULD BE PROVIDED ADEQUATE OPPORTUNITY OF HEARING BEFORE PASSING THE ORDER ON MERITS. ACCORDINGLY, THE GROUNDS OF APPEAL OF THE REVENUE ARE ALLOWED FOR STATISTICAL PURPOSES. 9 . IN THE RESULT, APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. O RDER PRONOUNCED IN THE OPEN COURT ON THIS 24 / 08 /201 7 . SD/ - ( N. S. SAINI ) SD/ - ( PA V AN KUMAR GADALE ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER CUTTACK ; DATED 24 / 0 8 /201 7 . . / PKM , SENIOR PR IVATE SECRETARY ITA NO. 33 /CTK/201 5 5 / COPY OF THE ORDER FORWARDED TO : / BY ORDER, ( SENIOR PRIVATE SECRETARY ) , / ITAT, CUTTACK 1. / THE APPELLANT - DCIT, CIRCLE - 1(1), SAMBALPUR 2. / THE RESPONDENT - M/S TARINI LOADING CONTRACTORS, AT:JURUDI, PO - JAJANG, JODA, KEONJHAR 3. ( ) / THE CIT(A), 4. / CIT 5. , , / DR, ITAT, CUTTACK 6. / GUARD FILE. //TRUE COPY//