ACIT, Faridabad V. M/s O K Auto Engg. Works, Faridabad

ITA 3447/DEL/2008

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 2232 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-12-2009
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: F
• Next Hearing Date: 07-12-2009
• Assessment Year: 2003-2004
• Appeal Filed On: 18-11-2008
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: H K LAL
• Keywords: Unexplained cash credit; Opportunity of being heard; TDS; Set aside

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F : NEW DELHI BEFORE SHRI C.L.SETHI, JM AND SHRI A.K.GARODIA, AM ITA NO.3447/DEL/2008 ASSESSMENT YEAR : 2003-04 ASSTT.COMMISSIONER OF INCOME TAX, RANGE-II, FARIDABAD. VS. M/S O.K.AUTO ENGG.WORKS, A-131, SGM NAGAR, NIT, FARIDABAD. PAN NO.AAAFO4812A. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI H.K.LAL, SR.DR. RESPONDENT BY : SHRI GURJEET SINGH, ADVOCATE. ORDER PER A.K.GARODIA, AM : THIS IS A REVENUES APPEAL DIRECTED AGAINST THE OR DER OF LEARNED CIT(A), FARIDABAD DATED 9.9.2008 FOR THE AY 2003-04. 2. GROUND NO.1 OF THE REVENUES APPEAL READS AS UND ER:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD.CIT(A) HAS ERRED ON FACTS AND IN LAW IN DELETING THE ADDITION OF RS.2,80,000/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNEXPLA INED CASH EVEN THOUGH THE SOURCES OF CASH INTRODUCED IN BOOKS ON T HE SAID DATES REMAIN UNEXPLAINED. 3. BRIEF FACTS ARE THAT IT IS NOTED BY THE AO IN TH E ASSESSMENT ORDER THAT WHILE EXAMINING THE ASSESSEES CASH BOOK AND BANK STATEME NT, IT WAS NOTICED THAT ON TWO DATES I.E. ON 10.10.2002 AND 10.12.2002, THE ASSESS EE IS SHOWING CASH WITHDRAWAL FROM BANK OF RS.1.30 LAKHS AND RS.1.50 LAKHS RESPEC TIVELY BUT AS PER BANK STATEMENT, THE DATE OF WITHDRAWAL IS 11.10.2002 FOR RS.1.30 LAKHS AND 11.11.2002 FOR RS.1.50 LAKHS. ON BOTH THESE DATES I.E. ON 10. 10.2002 AND 10.12.2002, THE ASSESSEE HAS SHOWN EXPENSES MAINLY ON ACCOUNT OF PA YMENT OF WAGES TO THE ITA-3447/DEL/2008 2 LABOURERS. WHEN THE AO CONFRONTED THE ASSESSEE WIT H THIS DISCREPANCY IN THE DATE OF CASH WITHDRAWAL AS PER CASH BOOK AND AS PER BANK BOOK, IT WAS SUBMITTED BY THE ASSESSEE BEFORE THE AO THAT THERE IS A MISTAKE COMM ITTED BY THE ACCOUNTANT WHILE ACCOUNTING FOR THE CASH WITHDRAWALS AND ALSO FOR SH OWING PAYMENT OF WAGES AND SALARY EXPENSES ON THESE TWO DATES AND INSTEAD OF 1 1.10.2002 AND 11.12.2002, HE HAD MADE ENTRIES IN THE CASH BOOK ON 10.10.2002 AND 10.12.2002. THE AO WAS NOT SATISFIED WITH THE REPLY OF THE ASSESSEE AND HE MADE ADDITION OF RS.2.80 LAKHS ON ACCOUNT OF UNEXPLAINED CASH CREDITED BY THE ASSE SSEE IN THE CASH BOOK ON 10.10.2002 AND 10.12.2002. BEING AGGRIEVED, THE AS SESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A) WHO HAS DELETED THIS ADDIT ION ON THE BASIS THAT BY MISTAKE, THE ACCOUNTANT OF THE ASSESSEE COMPANY HAS SHOWN BANK WITHDRAWAL FROM THE BANK ONE DAY PRIOR TO THE DATE OF ACTUAL WITHDR AWAL. IT IS ALSO HELD BY HIM THAT IF THE CASH WITHDRAWAL AND PAYMENT OF WAGES AND SAL ARIES BOTH ARE CONSIDERED ON THE NEXT DATE I.E. 11.10.2002 AND 11.12.2002, THERE IS NO IMPACT AND THERE IS NO CASE FOR MAKING ANY ADDITION. NOW THE REVENUE IS I N APPEAL BEFORE US. 4. LEARNED DR FOR THE REVENUE SUPPORTED THE ASSESSM ENT ORDER WHEREAS LEARNED AR OF THE ASSESSEE SUPPORTED THE ORDER OF L EARNED CIT(A). 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND GON E THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE AO HAS NOT DOUBTED THE WITHDRAWAL OF CASH FROM BANK ON 11.10.2002 AND 11.12.2002. ONLY BECAUSE SUCH WI THDRAWAL FROM BANK HAS BEEN WRONGLY RECORDED BY THE ACCOUNTANT OF THE ASSE SSEE ON ONE DAY PRIOR TO THE DATE OF ACTUAL WITHDRAWAL, NO ADDITION CAN BE MADE ON THE BASIS OF SUCH WRONG ENTRY ONLY WITHOUT POINTING OUT THAT THERE WAS ACTU AL EXISTENCE OF UNEXPLAINED CASH. IT IS NOTED BY THE AO IN THE ASSESSMENT ORDE R THAT ON BOTH THESE DATES, THE ASSESSEE HAS BOOKED EXPENSES IN CASH OF RS.1,35,015 /- ON 10.10.2002 AND OF RS.1,57,951/- ON 10.12.2002. IT IS THE CLAIM OF TH E ASSESSEE THAT THESE EXPENSES ARE MAINLY INCURRED ON ACCOUNT OF SALARIES AND WAGES AN D THE SAME WERE ALSO PAID ON 11.10.2002 AND 11.12.2002 RESPECTIVELY BEING ACTUAL DATES OF CASH WITHDRAWAL ITA-3447/DEL/2008 3 FROM THE BANK. REGARDING THE DATE OF PAYMENT OF WA GES AND SALARIES, IT IS NOTED BY THE AO IN PARA 4 OF THE ASSESSMENT ORDER THAT THE W AGES SHEET ENCLOSED DOES NOT CARRY DATE BENEATH THE SIGNATURE OF ANY WORKER. IT IS ALSO NOTED BY HIM THAT THE VOUCHER FOR THE MONTH OF OCTOBER CARRIES 11.10.2002 AS DATE AND IN THE WAGES SHEET, THE DATE 11.10.2002 HAS BEEN SHOWN IN THE CA SE OF ONE WORKER. THESE NOTINGS OF THE AO SHOW THAT THE CLAIM OF THE ASSESS EE THAT ACTUAL PAYMENT OF SALARY AND WAGES IS 11.10.2002 AND NOT 10.10.2002 IS NOT W ITHOUT ANY BASIS. CONSIDERING ALL THESE FACTS, WE ARE OF THE CONSIDERED OPINION T HAT NO INTERFERENCE IS CALLED FOR IN THE ORDER OF CIT(A) ON THIS ISSUE AND HENCE, WE UPH OLD THE SAME. THIS GROUND OF THE REVENUE IS REJECTED. 6. GROUND NO.2 OF THE APPEAL READS AS UNDER:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD.CIT(A) HAS ERRED ON FACTS AND IN LAW IN DELETING THE ADDITION OF RS.5,53,296/- MADE ON ACCOUNT OF COMMISSION PAID DISREGARDING THE FACTS THAT THE ASSESSEE FIRM HAD FAILED TO DISCHARGE ITS ONUS OF P ROVING THAT THE COMMISSION WAS PAID WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. 7. BRIEF FACTS ARE THAT IT IS NOTED BY THE AO THAT THE ASSESSEE HAS CLAIMED COMMISSION EXPENDITURE OF RS.5,53,296/-. THIS COMM ISSION HAS BEEN PAID BY THE ASSESSEE TO THREE DIFFERENT PERSONS I.E. M/S AMAN E NTERPRISES, PROP. RANVIR MADAN RS.1,71,706/-, TO MR.MANISH KATARIA RS.2,32,960/- A ND TO MR.ANIL KUMAR AHUJA RS.1,48,630/-. WHEN THE AO ENQUIRED ABOUT THE SERV ICES RENDERED BY THESE PERSONS, IT WAS SUBMITTED BY THE ASSESSEE THAT THE SERVICES RENDERED BY THESE PERSONS ARE ON ACCOUNT OF GETTING THE PURCHASE ORDE RS FROM THE CUSTOMERS. IT WAS SUBMITTED BY THE ASSESSEE BEFORE THE AO THAT COMMIS SION WAS PAID TO SHRI MANISH KATARIA FOR SALE TO ENDURANCE SYSTEM, AURANGABAD. REGARDING COMMISSION PAID TO SHRI ANIL KUMAR AHUJA, IT WAS SUBMITTED THAT THE SAME WAS FOR SALE TO M/S GABRIAL INDIA LTD., HOSUR, TAMIL NADU AND REGARDING COMMISSION PAYMENT TO RANVIR MADAN PROP. AMAN ENTERPRISES, IT WAS SUBMITT ED THAT THE SAME IS FOR SALE ITA-3447/DEL/2008 4 TO ENDURANCE SYSTEM INDIA PVT.LTD., AURANGABAD. TH E AO WAS NOT SATISFIED AND IT IS HELD BY HIM THAT THE ASSESSEE HAS FAILED TO DISC HARGE ITS ONUS OF PROVING THAT THE COMMISSION WAS PAID WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. HE DISALLOWED ENTIRE COMMISSION PAYMENT OF RS.5,53,296 /-. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CI T(A) WHO DELETED THE DISALLOWANCE ON THE BASIS THAT THE AO HAS NOT CHALL ENGED THE HARD FACT ABOUT THE EXISTENCE OF THE PARTIES WHO ARE REGULAR INCOME TAX PAYEES AND FROM WHOM VALID TDS HAS BEEN EFFECTED AND WHICH ARE AUTHENTIC DOCUM ENTS WHICH HAVE NOT BEEN ENQUIRED INTO OR INVESTIGATED BY THE AO AT ALL. NO W THE REVENUE IS IN APPEAL BEFORE US. 8. IT IS SUBMITTED BY THE LEARNED DR FOR THE REVENU E THAT THE ASSESSEE HAS NOT ESTABLISHED THE BASIC REQUIREMENT REGARDING RENDERI NG OF SERVICES BY THE COMMISSION AGENTS. HE SUPPORTED THE ASSESSMENT ORD ER WHEREAS LEARNED AR OF THE ASSESSEE SUPPORTED THE ORDER OF CIT(A). IT WAS ENQ UIRED BY THE BENCH AS TO WHETHER THE ASSESSEE HAS FURNISHED CONFIRMATIONS FR OM THE BUYERS ON WHOSE ACCOUNT IT IS THE CLAIM OF THE ASSESSEE THAT THE AS SESSEE HAS RECEIVED PURCHASE ORDERS FROM THEM ON THE BASIS OF THE EFFORTS OF THE SE COMMISSION AGENTS. LEARNED AR OF THE ASSESSEE SUBMITTED THAT THE SAME IS NOT A VAILABLE ON RECORD BUT ALL THESE PERSONS TO WHOM COMMISSION WAS PAID BY THE ASSESSEE HAVE GIVEN THEIR CONFIRMATIONS AND TDS WAS ALSO DEDUCTED AND HENCE T HE ORDER OF LEARNED CIT(A) SHOULD BE UPHELD. 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FI ND THAT THE DECISION OF CIT(A) IS ON THE BASIS THAT ALL THESE COMMISSION AG ENTS HAVE CONFIRMED THE COMMISSION RECEIVED BY THEM AND TDS IS ALSO DEDUCTE D FROM THEM BUT THERE IS NO FINDING OF THE CIT(A) REGARDING RENDERING OF SERVIC ES. WE ALSO FIND THAT COMMISSION IS PAID TO SHRI MANISH KATARIA ON ACCOUN T OF SALE TO ENDURANCE SYSTEM, AURANGABAD AND COMMISSION WAS PAID TO SHRI RANVIR MADAN PROP. AMAN ENTERPRISES ON ACCOUNT OF SALE TO ENDURANCE SYSTEM INDIA PVT.LTD., AURANGABAD. ITA-3447/DEL/2008 5 WE DO NOT KNOW WHETHER ENDURANCE SYSTEM, AURANGABAD AND ENDURANCE SYSTEM INDIA PVT.LTD., AURANGABAD IS ONE AND THE SAME PART Y OR NOT. IF THESE ARE ONE AND SAME PARTY OR ARE PARTIES OF SAME GROUP, THEN WE FA IL TO UNDERSTAND AS TO HOW TWO DIFFERENT PERSONS ARE NEGOTIATING AND RENDERING SER VICES TO THE ASSESSEE FOR SALES TO THESE TWO PARTIES. WE FEEL THAT IT IS RELEVANT IN THE FACTS OF THE PRESENT CASE TO OBTAIN CONFIRMATION FROM THE BUYERS AS TO WHETHER T HEY HAVE PLACED PURCHASE ORDERS TO THE ASSESSEE THROUGH THESE COMMISSION AGE NTS AS CLAIMED BY THE ASSESSEE. WE THEREFORE SET ASIDE THE ORDER OF CIT(A) ON THIS ISSUE AND RESTORE THIS MATTER BACK TO THE FILE OF THE AO FOR FRESH DECISION AS PE R ABOVE DISCUSSION. THE ASSESSEE SHOULD FURNISH CONFIRMATIONS FROM THESE PARTIES STA TING THAT PURCHASE ORDERS WERE PLACED BY THESE PARTIES ON THE ASSESSEE ON THE BASI S OF SERVICES RENDERED BY THESE PERSONS. IF THE ASSESSEE CAN SATISFY THE AO ON THI S ASPECT, THEN NO DISALLOWANCE IS CALLED FOR. OTHERWISE THE AO SHOULD DECIDE THE ISS UE AFRESH AFTER CONSIDERING ALL ASPECTS. THE AO SHOULD PASS NECESSARY ORDERS AS PE R LAW AFTER PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THIS G ROUND OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. 10. GROUND NO.3 OF THE APPEAL READS AS UNDER:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD.COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN DE LETING THE ADDITION OF RS.1,64,021/- ON ACCOUNT OF EMPLOYEES CONTRIBUTION, WHICH IS AN INCOME U/S 2(24)(X) AND CAN BE ALLOWED UNDER SECTION 36(1)(VA) OF THE INCOME TAX ACT, 1961 ONLY IF THE P AYMENT THEREOF IS MADE WITHIN THE DUE DATE AS DEFINED IN EXPLANATION BELOW SECTION 36(1)(VA) OF THE INCOME TAX ACT, 1961. 11. BRIEF FACTS ARE THAT IT IS NOTED BY THE AO AT P AGE 7 OF THE ASSESSMENT ORDER THAT FOR VARIOUS MONTHS, PF HAS BEEN DEPOSITED LATE BY THE ASSESSEE AND THE DATE OF DEPOSIT OF PF IS ALSO NOTED BY THE AO IN THE ASSESS MENT ORDER AND WE FIND THAT LAST SUCH DEPOSIT WAS ON 18.4.2003 WHEREAS THE RETURN OF INCOME IN THE PRESENT CASE WAS FILED BY THE ASSESSEE ON 25.11.2003. THE AO DI SALLOWED RS.1,64,021/- ON ACCOUNT OF LATE DEPOSIT OF PF CONTRIBUTION. BEING AGGRIEVED, THE ASSESSEE CARRIED ITA-3447/DEL/2008 6 THE MATTER BEFORE THE CIT(A) WHO DELETED THE DISALL OWANCE ON THE BASIS THAT ALL THESE DEPOSITS ARE WITHIN GRACE PERIOD OF FIVE DAYS AND HENCE, THERE IS NO DELAY IN DEPOSIT OF PF. NOW THE REVENUE IS IN APPEAL BEFORE US. 12. LEARNED DR SUPPORTED THE ASSESSMENT ORDER WHERE AS LEARNED AR SUPPORTED THE ORDER OF CIT(A). 13. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE F IND THAT A CLEAR FINDING IS GIVEN BY THE CIT(A) IN PARA 15 OF HIS ORDER THAT AL L THESE DEPOSITS OF PF WERE MADE BY THE ASSESSEE WITHIN THE GRACE PERIOD OF FIVE DAY S. FROM THE DATE OF DEPOSITS MENTIONED BY THE AO ON PAGE 7 OF THE ASSESSMENT ORD ER ALSO, WE FIND THAT NO DEPOSIT IS AFTER EXPIRY OF GRACE PERIOD OF FIVE DAY S. IT IS A SETTLED POSITION BY NOW THAT DEPOSIT OF PF DURING GRACE PERIOD IS DEPOSIT W ITHIN DUE DATE AND HENCE, NO DISALLOWANCE IS CALLED FOR. IN THESE FACTS, WE FIN D NO REASON TO INTERFERE WITH THE ORDER OF CIT(A) ON THIS ISSUE. THIS GROUND OF THE REVENUE IS REJECTED. 14. IN THE RESULT, THE APPEAL OF THE REVENUE IS PAR TLY ALLOWED FOR STATISTICAL PURPOSES. DECISION PRONOUNCED IN THE OPEN COURT ON CONCLUSIO N OF HEARING ON 7 TH DECEMBER, 2009. SD/- SD/- (C.L.SETHI) (A.K.GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 07.12.2009. VK. COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT DEPUTY REGISTRAR ITA-3447/DEL/2008 7