ACIT 25(2), MUMBAI V. SANDEEP M. SHAH, MUMBAI

ITA 3453/MUM/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 8817 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-09-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 12-09-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 29-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V KRISHNAMOORTHY
• Section: 143(3); 133(6); 37(1); 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES E, MUMBAI BEFORE SHRI DINESH KUMAR AGARWAL (J.M.) AND SHRI N.K. BILLAIYA (A.M.) ITA NO. 3453/MUM /2011 ASSESSMENT YEAR : 2008-09 A.C.I.T. 25(2), BLDG. NO. C-11, IST FLOOR, R. NO. 108, PRATYAKSHKAR BHAVAN, BANDRA-KURLA COMPLEX, BANDRA (E), MUMBAI 400 051. VS. SHRI SANDEEP M. SHAH, 201/A, ANAND APARTMENT, CARTER ROAD NO. 4, BORIVALI (E), MUMBAI - 400 066. PAN AMYPS0018E (APPELLANT) (RESPONDENT) DEPARTMENT BY : SHRI V. KRISHNAMOORTHY ASSESSEE BY : SHRI VIJAY MEHTA & SHRI GOVIND JAVERI DATE OF HEARING 12-9-2012 DATE OF PRONOUNCEMENT 26-9-2012 O R D E R PER DINESH KUMAR AGARWAL, J.M. THIS APPEAL PREFERRED BY THE REVENUE IS DIRECTED A GAINST THE ORDER DTD. 28-2-2011 PASSED BY THE LD. CIT(A) 35, MUMBA I FOR THE A.Y. 2008- 09. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE AS SESSEE AN INDIVIDUAL IS PROPRIETOR OF M/S PANKTI ENTERPRISES ENGAGED IN THE BUSINESS OF CIVIL CONSTRUCTION. DURING THE COURSE OF ASSESSMENT PROC EEDING, FROM THE DETAILS FILED BY THE ASSESSEE, THE A.O. IN ORDER TO VERIFY THE GENUINENESS ITA NO. 3453/MUM/2011 2 OF THE TRANSACTION OF PAYMENTS TO SHRI NAGESH C. PU TPAK AMOUNTING TO RS. 26,82,505/- AND SHRI RAJABHAI GANESHBHAI PATEL AMOUNTING TO RS. 34,89,545/- AGGREGATING TO RS. 61,72,050/-, ISSUED NOTICES U/S 133(6) OF THE INCOME TAX ACT, 1961 (THE ACT) TO THE SAID PART IES. SINCE THE NOTICES HAVE BEEN RETURNED BACK AS UN-SERVED, THE ASSESSEE WAS ASKED TO PROVIDE NEW ADDRESSES OF THE SAID PARTIES, COPY OF RETURN OF INCOME AND ALSO TO PRODUCE THE SAID PARTIES FOR VERIFICATION. IN RESPONSE, THE ASSESSEE FILED CONFIRMATIONS AND STATED THAT THESE PERSONS ARE NOT FILING THE RETURN OF INCOME. THE A.O. AGAIN ISSUED SUMMON S U/S 131 OF THE ACT TO THESE PARTIES. IN RESPONSE, BOTH THE PARTIE S HAVE ATTENDED ON 15- 11-2010 AND 26-11-2010 AND THEIR STATEMENTS WERE RE CORDED WHICH HAS BEEN SUMMARISED BY THE A.O. AT PAGE 3 & 4 OF THE AS SESSMENT ORDER AS UNDER:- (I) THESE PERSONS ARE NOT DOING ANY WORK FOR ANYBODY AN D THEY ARE EXCEPTIONALLY WORKING FOR M/S PANKTI ENTERPRISES (P ROP.: SHRI SANDEEP M. SHAH) FOR THE LAST FOUR TO FIVE YEARS. (II) THE AMOUNTS HAVE BEEN RECEIVED IN THEIR BANK A CCOUNTS IN LUMP- SUM WHICH WERE WITHDRAWN SUBSEQUENTLY. THE BALANCE S IN THE BANK ACCOUNT IS VERY NOMINAL. (III) THEY HAVE NO WRITTEN AGREEMENT WITH M/S PANKT I ENTERPRISES (PROP: SHRI SANDEEP M. SHAH) FOR THE WORK SAID TO B E CARRIED OUT. (IV) THEY ARE NOT IN A POSITION TO PROPERLY EXPLAIN THE TRANSACTIONS APPEARING IN THE BANK STATEMENT. (V) ON PERUSAL OF ACCOUNT NO. 504701011001064 (SHRI NAGESH C. PUTPAK) & NO. 504701011000695 (SHRI RAJABHAI G. PAT EL) AND OPENING FORMS OF THESE PERSONS, IT IS NOTICED THAT BOTH THE SE PERSONS ARE MAINTAINING THEIR ACCOUNTS WITH VIJAYA BANK, BORIVA LI (W), MUMBAI IN WHICH THE ASSESSEE IS ALSO HAVING ACCOUNT AND AS PE R BANK RECORDS, THE INTRODUCER OF THESE BANK ACCOUNTS IS M/S PANKI ENTE RPRISES (PROP: SHRI SANDEEP M. SHAH). ITA NO. 3453/MUM/2011 3 (VI) THEY HAVE NO PROOF TO SHOW THAT THEY HAVE DEPL OYED SUBSTANTIAL MANPOWER AT THE SITE OF THE ASSESSEE WHICH IS EVIDE NT FROM THE FACT THEY DO NOT HAVE MANPOWER WITH THEM. (VII) THEY ARE NOT FILING THEIR RETURNS OF INCOME A ND THEY ARE MAN OF NO MEANS. (VIII) THEY ARE NOT MAINTAINING ANY BOOKS OF ACCOUN T OR ANY WAGES REGISTER TO PROVE THAT THEY HAVE EMPLOYED LABOUR AT THE SITES OF THE ASSESSEE. FROM THE ABOVE FACTS, THE A.O. OBSERVED THAT THE AB OVE PERSONS ARE ONLY EMPLOYEES OF THE ASSESSEE WORKING FOR MORE THAN FOU R YEARS. THE ASSESSEE IS USING THEIR BANK ACCOUNT AS AN INSTRUME NT TO CLAIM EXPENSES AND GENERATING CASH WHICH IS EVIDENT FROM THE FACT THAT THE ASSESSEE HAS INTRODUCED THESE PERSONS. THE A.O. WHILE OBSERVING THAT MERE PAYMENT BY ACCOUNT PAYEE CHEQUE IS NOT SUFFICIENT FOR CLAIM ING THE GENUINENESS OF THE EXPENDITURE HELD THAT SINCE THE ASSESSEE HAS FA ILED TO ESTABLISH THE GENUINENESS OF THE EXPENSES AS PROVIDED U/S 37(1) O F THE ACT, DISALLOWED THE PAYMENT OF RS. 61,72,050/- AND ADDED THE SAME T O THE TOTAL INCOME OF THE ASSESSEE. THE A.O. AFTER MAKING SOME OTHER DISALLOWANCES COMPLETED THE ASSESSMENT AT AN INCOME OF RS. 1,04,0 1,093/- VIDE ASSESSMENT ORDER DTD. 27-12-2010 PASSED U/S 143(3) OF THE ACT. ON APPEAL, THE LD. CIT(A) WHILE OBSERVING THAT SINCE T HE PAYMENTS WERE MADE BY A/C PAYEE CHEQUES AND IN THE ABSENCE OF ANY MATE RIAL TO SHOW THAT SUCH PAYMENTS AFTER WITHDRAWAL BY THE RECIPIENTS CA ME BACK TO THE ASSESSEE AS HELD BY THE TRIBUNAL IN THE CASE OF ADD L. CIT VS. RAM MANOHAR SINGH (178 TAXMAN 047) (JAB.)(MAG.), DELETE D THE DISALLOWANCE MADE BY THE A.O. ITA NO. 3453/MUM/2011 4 3. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A) T HE REVENUE IS IN APPEAL BEFORE US CHALLENGING IN BOTH THE GROUNDS TH E DELETION OF DISALLOWANCE OF RS. 61,72,050/-. 4. AT THE TIME OF HEARING THE LD. D.R. SUBMITS THAT FOR THE REASONS AS DISCUSSED IN THE ASSESSMENT ORDER, THE LD. CIT(A) W AS NOT JUSTIFIED IN DELETING THE ADDITION OF RS. 61,72,050/- MADE BY TH E A.O. ON ACCOUNT OF BOGUS TRANSACTIONS. HE, THEREFORE, SUBMITS THAT THE DISALLOWANCE OF THE EXPENSES MADE BY THE A.O. BE RESTORED. 5. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSES SEE AFTER REFERRING TO THE COPY OF CONFIRMATION LETTER, COPY OF PAN CAR D, BANK PASS BOOK AND BILLS OF SHRI NAGESH C. PUTPAK FILED BEFORE THE A.O . AND COPY OF AFFIDAVIT OF SHRI NAGESH C. PUTPAK, COPY CONFIRMATION LETTER, COPY OF PAN CARD, BANK PASS BOOK AND BILLS OF SHRI RAJABHAI GANESHBH AI PATEL AND COPY OF AFFIDAVIT OF SHRI RAJABHAI PATEL CONFIRMING THE WOR K CARRIED OUT FOR THE ASSESSEE APPEARING AT PAGE 25 TO 65 OF THE ASSESSEE S PAPER BOOK SUBMITS THAT THE ASSESSEE HAS FILED ALL THE DOCUMEN TARY EVIDENCES TO SHOW THAT THE PAYMENTS WERE MADE TO THE ABOVE PARTI ES BY A/C PAYEE CHEQUES. HE FURTHER SUBMITS THAT FROM THE BANK ACC OUNT OF SHRI NAGESH C. PUTPAK APPEARING AT PAGE 27 AND THE BANK ACCOUNT OF SHRI RAJABHAI PATEL APPEARING AT PAGE 43 TO 47 OF THE ASSESSEES PAPER BOOK, THERE IS NO EQUIVALENT/IMMEDIATE AMOUNT OF WITHDRAWAL OF THE CH EQUES DEPOSITED BY THEM IN THEIR BANK ACCOUNTS INASMUCH AS THE ABOVE P ERSONS ARE HAVING ITA NO. 3453/MUM/2011 5 SUFFICIENT BALANCE IN THEIR BANK ACCOUNTS ON THE RE SPECTIVE DATES, THEREFORE, THE ALLEGATION OF THE A.O. IN THIS REGAR D IS DEVOID OF ANY MERIT. HE FURTHER SUBMITS THAT THE LABOUR CHARGES PAID DUR ING THE YEAR UNDER CONSIDERATION, COMPARED TO THE EARLIER YEARS ARE LO WER AS UNDER:- ASST. YEAR GROSS TURNOVER (RS) TOTAL LABOUR CHARGES AMOUNT PERCENTAGE OF LABOUR TO GROSS TURNOVER. 2006-07 1,06,10,823.00 53,49,713.00 50.42% 2007-08 2,83,82,846.00 1,17,98,991.00 41.57% 2008-09 5,97,81,254.00 1,85,00,774.00 31% HE FURTHER SUBMITS THAT IN THE SUBSEQUENT ASSESSMEN T YEAR I.E. A.Y. 2009-10 THE A.O. AFTER CALLING FOR INFORMATION U/S 133(6) FROM THE SAME PERSONS HAS ACCEPTED THE PAYMENT MADE BY THE ASSESS EE AND IN SUPPORT REFERENCE WAS ALSO MADE TO PAGE 101 TO 120 OF THE A SSESSEES PAPER BOOK. HE, THEREFORE, SUBMITS THAT IN VIEW OF THE ABOVE DO CUMENTARY EVIDENCE, THE ADDITION MADE BY THE A.O. IS NOT SUSTAINABLE AN D, HENCE, THE ORDER PASSED BY THE LD. CIT(A) IN DELETING THE DISALLOWAN CE BE UPHELD. 6. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE RIVAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FI ND THAT THE FACTS ARE NOT IN DISPUTE INASMUCH AS IT IS ALSO NOT IN DISPUT E THAT THE ASSESSEE HAS MADE THE PAYMENT OF RS. 26,82,505/- TO SHRI NAGESH C. PUTPAK AND RS. 34,89,545/- TO SHRI RAJABHAI GANESHBHAI PATEL TOWAR DS LABOUR CHARGES AND IN SUPPORT THE ASSESSEE HAS FILED CONFIRMATIONS , COPY OF INVOICES WITH ITA NO. 3453/MUM/2011 6 FULL PARTICULARS OF WORK DONE, PAN CARDS, DETAILS O F TDS DEDUCTED FROM THE ABOVE PAYMENTS, BANK STATEMENTS OF ABOVE PARTIE S REFLECTING THE RECEIPT OF PAYMENTS, BANK STATEMENT OF THE ASSESSEE REFLECTING THE PAYMENTS, AFFIDAVITS FROM ABOVE PARTIES CONFIRMING ABOUT THE WORK THEY HAVE DONE, CORRESPONDING WORK ORDER COPIES WHERE TH ESE PARTIES HAVE WORKED ETC. WE FURTHER FIND THAT THE PARTIES HAVE A LSO ATTENDED BEFORE THE A.O. IN RESPONSE TO SUMMONS ISSUED U/S 131 OF THE A CT AND HAVE CONFIRMED THE RECEIPT OF PAYMENTS. WE FURTHER FIND THAT IN SUBSEQUENT A.Y. I.E. 2009-10, THE A.O. HAS ACCEPTED THE PAYMEN TS MADE TO ABOVE PARTIES AS GENUINE PAYMENT AFTER CONSIDERING THE RE PLY FILED BY THE PARTIES IN RESPONSE TO NOTICE ISSUED U/S 133(6) OF THE ACT. THIS BEING SO AND IN THE ABSENCE OF ANY MATERIAL TO SHOW THAT THE PARTIES ARE NOT GENUINE OR THERE IS DENIAL BY THE PARTIES OR NO SUC H WORK HAS BEEN DONE OR THE PAYMENT MADE BY THE ASSESSEE IS NOT FOR BUSI NESS PURPOSES, WE ARE OF THE VIEW THAT THE A.O. WAS NOT JUSTIFIED IN DISALLOWING THE PAYMENT OF RS. 61,72,050/- MADE BY THE ASSESSEE TO THE ABOV E TWO PARTIES AND, HENCE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A) IN DELETING THE SAME. THE GROUNDS TAKEN BY THE REVENU E ARE, THEREFORE, REJECTED. ITA NO. 3453/MUM/2011 7 7. IN THE RESULT, REVENUES APPEAL STANDS DISMISSED . ORDER PRONOUNCED ON 26-9-2012. SD/- (N.K. BILLAIYA) ACCOUNTANT MEMBER SD/- (DINESH KUMAR AGARWAL) JUDICIAL MEMBER MUMBAI, DATED : 26-9-2012 RK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. COMMISSIONER OF INCOME TAX (APPEALS)- 35, MUMBA I 4. COMMISSIONER OF INCOME TAX CENTRAL - 25 MUMBA I 5. DEPARTMENTAL REPRESENTATIVE, BENCH E, MUMBAI //TRUE COPY// BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI