The DCIT, Circle-1(1), Baroda V. M/s. Checkmate Services Pvt.Ltd., Baroda

ITA 3489/AHD/2010

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 80278 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 7 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-08-2014
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 05-08-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 30-12-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SHI V K SINGH
• Assessee Lawyers: ANIL R SHAH

Judgement Text

, , , , , , , , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD , ! ' #$ #$ #$ #$ %, ' BEFORE SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER $./ I.T.A. NO.3489/AHD/2010 ( ( )( ( )( ( )( ( )( / / / / ASSESSMENT YEAR : 2006-07) THE DCIT CIRCLE-1(1) BARODA / VS. M/S.CHECKMATE SERVICES PVT.LTD. GF, AMAN TOWERS FATEHGUNJ, BARODA '* ! $./+, $./ PAN/GIR NO. : AAACC 8465 A ( *- / // / APPELLANT ) .. ( ./*- / RESPONDENT ) AND CROSS OBJECTION NO.22/AHD/2011 AY 2006-07 (IN ITA NO.3489/AHD/2010 A.Y.2006-07) CHECKMATE SERVICES PVT.LTD. VS. DCIT BARODA CIRCLE-1(1), BARODA (CROSS OBJECTOR) .. (RESPONDENT ) REVENUE BY : SHI V.K.SINGH SR.DR ASSESSEE BY : SHRI ANIL R.SHAH, AR 0 1 ! / / / / DATE OF HEARING 05/08/2014 23) 1 ! / DATE OF PRONOUNCEMENT 22/08/2014 4 / O R D E R PER SHRI KUL BHARAT, JUDICIAL MEMBER : THE REVENUE AND THE ASSESSEE BOTH HAVE CHALLENGED T HE ORDER OF THE COMMISSIONER-OF INCOME TAX (APPEALS)-I, BARODA (CIT(A) IN SHORT) DATED 27/10/2010 BY WAY OF APPEAL AND CROSS- OBJECTION RESPECTIVELY. BOTH THE APPEAL AND THE CROSS OBJECT ION ARE TAKEN UP ITA NO.3489/AHD/2010 (BY REVENUE)& CO NO.22/AHD/2011 (BY ASSESSEE) DCIT VS. M/S.CHECKMATE SERVICES PVT.LTD. ASST.YEAR 2006-07 - 2 - TOGETHER AND ARE BEING DISPOSED OF BY A CONSOLIDATE D ORDER FOR THE SAKE OF CONVENIENCE. 2. FIRST, WE TAKE UP THE APPEAL FILED BY THE REVENU E, I.E. ITA NO.3489/AHD/2010 FOR AY 2006-07. THE REVENUE HAS R AISED THE FOLLOWING GROUNDS OF APPEAL:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD.CIT(APPEALS) ERRED IN DELETING ADDITION OF ` 77,90,879/- OUT OF TOTAL ADDITION OF ` 78,12,187/- WITHOUT APPRECIATING THE THAT THE ASSESSEE FAILED TO ESTABLISH THE GENUINENESS OF THE CLAIM WITH SUPPORTING DOCUMENTARY EVIDENCE LIKE REGISTERS/VOUC HERS FOR VERIFICATION OF DETAILS OF NAME OF THE PARTY/EMPLOY EE TO WHOM THE PAYMENTS WERE MADE, AMOUNT OF PAYMENT, PERIOD FOR W HICH PAYMENTS WERE MADE AND RULES AND REGULATIONS FRAMED BY THE ASSESSEE GOVERNING THE PAYMENT OF LEAVE ENCASHMENT TO ITS EMPLOYEES. THE LD.CIT(APPEALS) OUGHT TO HAVE APPRE CIATED THAT IT IS EVIDENCE FROM THE LEDGER ACCOUNT OF LEAVE ENCASHME NT EXPENDITURE THAT ALL THE EXPENSES HAVE BEEN INCURRED BY PAYMENT MADE IN CASH AND NOT BY ACCOUNT PAYEE CHEQUES. EXPENSES OF VARI OUS BRANCH OFFICES PERTAINING TO ASSESSMENT YEAR 2007-08 HAS B EEN CLAIMED UNDER THE HEAD LEAVE ENCASHMENT EXPENSES. ADVANCES AGAINST EARNED LEAVE HAVE ALSO BEEN CLAIMED AS LEAVE ENCASH MENT. 2. THE APPELLANT CRAVES LEAVE TO ADD TO AMEND OR ALTER THE ABOVE GROUNDS AS MAY BE DEEMED NECESSARY. RELIEF CLAIMED IN APPEAL THE ORDER OF THE CIT(APPEALS) ON THE ABOVE ISSUE MA Y BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 2. BRIEFLY STATED FACTS ARE THAT THE CASE OF THE AS SESSEE WAS PICKED UP FOR SCRUTINY ASSESSMENT AND THE ASSESSMENT U/S.143( 3) OF THE INCOME TAX ACT,1961 (HEREINAFTER REFERRED TO AS THE ACT) WAS FRAMED VIDE ORDER ITA NO.3489/AHD/2010 (BY REVENUE)& CO NO.22/AHD/2011 (BY ASSESSEE) DCIT VS. M/S.CHECKMATE SERVICES PVT.LTD. ASST.YEAR 2006-07 - 3 - DATED 30.12.2008, THEREBY THE ASSESSING OFFICER (AO IN SHORT) MADE VARIOUS ADDITIONS ON ACCOUNT OF LEAVE ENCASHMENT EX PENDITURE, EXPENDITURE ON DRESS MATERIAL, EXPENDITURE ON PURCH ASE OF DRESS MATERIAL, CLAIM OF BAD DEBT AND CLAIM OF BOGUS EXPENDITURE. AGAINST THIS, THE ASSESSEE FILED AN APPEAL BEFORE THE LD.CIT(A), WHO AFTER CONSIDERING THE SUBMISSIONS PARTLY ALLOWED THE APPEAL. WHILE ALLOW ING THE APPEAL BY THE LD.CIT(A), CONFIRMED THE ADDITION TO THE EXTENT OF RS.10,800/- ON ACCOUNT OF LEAVE ENCASHMENT AND THE CLAIM OF RS.10,45,060/- ON ACCOUNT OF DRESS MATERIAL AND OTHER ADDITIONS WERE DELETED. NOW, TH E REVENUE IS IN APPEAL AND THE ASSESSEE IS IN CROSS-APPEAL BEFORE US. 3. THE ONLY EFFECTIVE GROUND OF REVENUES APPEAL IS AGAINST THE DELETION OF ADDITION OF RS.77,90,879/- OUT OF TOTAL ADDITION OF RS.78,12,187/- ON ACCOUNT OF LEAVE ENCASHMENT CLAIM ED BY THE ASSESSEE. 4. THE LD.SR.DR SHRI V.K.SINGH VEHEMENTLY ARGUED TH AT THE ORDER OF THE LD.CIT(A) IS NOT JUSTIFIED IN DELETING THE ADDI TION. HE SUBMITTED THAT BEFORE THE AO THE ASSESSEE COULD NOT PROVE THE EXPE NDITURE OF LEAVE ENCASHMENT. HE SUBMITTED THAT THE REQUISITE DETAIL S WERE NOT FILED. THEREFORE, THE AO HAD NO OPTION BUT TO MAKE THE ADD ITION. EVEN BEFORE THE LD.CIT(A), COMPLETE DETAILS WERE NOT FILED BY T HE ASSESSEE. HE ALSO POINTED OUT THAT IN SOME OF THE CASES IN FULL AND F INAL SETTLEMENT-SHEET NO SIGNATURE OF THE RECEIVER WAS APPENDED AND EVEN THE NAME WAS MENTIONED AS CHECKMATE DETECTIVE AGENCY. ITA NO.3489/AHD/2010 (BY REVENUE)& CO NO.22/AHD/2011 (BY ASSESSEE) DCIT VS. M/S.CHECKMATE SERVICES PVT.LTD. ASST.YEAR 2006-07 - 4 - 4.1. ON THE CONTRARY, THE LD.COUNSEL FOR THE ASSESS EE SUBMITTED THAT THE REQUISITE DETAILS WERE FILED BEFORE THE AUTHORITIES BELOW AND LD.CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION. HE SUBMITT ED THAT WHERE THE SIGNATURES WERE NOT APPENDED, THE LD.CIT(A) HAS CON FIRMED THE ADDITION. HE SUBMITTED IN OTHER ASSESSMENT YEARS CLAIM OF THE ASSESSEE PERTAINING TO LEAVE ENCASHMENT HAS BEEN ACCEPTED BY THE REVENU E. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT THE LD.CIT(A) IN PARA-4.3 OF HIS ORDER HAS OBSERVED THAT THE CONTENTION OF THE APPELLANT IN RESPECT OF LEAVE ENC ASHMENT EXPENDITURE IS FOUND TO BE CORRECT EXCEPT FOR THE TWO PAYMENTS WIT H REGARD TO THE CHECKMATE DETECTIVE AGENCY. ALTHOUGH THE TWO PAY MENTS OF CHECKMATE DETECTIVE AGENCY OF RS.5993/- AND RS.4807 /- COMPRISED OF ITEMS OTHER THAN LEAVE ENCASHMENT BUT THE FACT THAT IT IS CLEARLY STIPULATED IN THE SETTLEMENT SHEET THAT THE PAYMENT HAD BEEN R ECEIVED FROM CHECKMATE DETECTIVE AGENCY, APPARENTLY THE SAID EX PENDITURE IS NOT RELATABLE TO THE APPELLANT. THEREFORE, THE LD.CIT( A) CONFIRMED THE ADDITION TO THE EXTENT OF RS.10,800/- OUT OF TOTAL ADDITION OF RS.78,12,187/-. DURING THE COURSE OF HEARING, LD. COUNSEL FOR THE ASSESSEE POINTED OUT THAT IN SUBSEQUENT ASSESSMENT YEARS FR OM 2004-05 TO 2010- 11 UNDER THE SCRUTINY ASSESSMENT THE CLAIM OF THE A SSESSEE WAS ALLOWED BY THE DEPARTMENT. HE CONTENDED THAT THERE IS NO C HANGE IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THEREFORE, THERE IS NO O CCASION TO TAKE A DIFFERENT VIEW. WE HAVE CONSIDERED THE TOTALITY OF THE FACTS AND THE SUBMISSIONS OF THE PARTIES AT BAR. WE FIND THAT LD .CIT(A) IN HIS ORDER HAS ITA NO.3489/AHD/2010 (BY REVENUE)& CO NO.22/AHD/2011 (BY ASSESSEE) DCIT VS. M/S.CHECKMATE SERVICES PVT.LTD. ASST.YEAR 2006-07 - 5 - GIVEN A FINDING THAT ALL THE FULL AND FINAL SETTLEM ENT PAYMENTS TO THE EMPLOYEES WERE THROUGH ACCOUNT PAYEE CHEQUES. HO WEVER, THE AO HAS GIVEN A FINDING THAT THE PAYMENT HAS BEEN MADE IN C ASH. THE CONTENTION OF COUNSEL FOR THE ASSESSEE IS THAT UNDER THE IDENT ICAL FACTS, CLAIM OF THE ASSESSEE REGARDING LEAVE ENCASHMENT HAS BEEN ALLOWE D BY THE AO IN SUCCEEDING AND PRECEDING YEARS. THEREFORE, THESE A SPECTS ARE REQUIRED TO BE VERIFIED. ACCORDINGLY, WE RESTORE THIS ISSUE TO THE FILE OF AO TO DECIDE IT AFRESH AFTER VERIFYING WHETHER THE PAYMENTS HAVE BEEN MADE BY THE ASSESSEE IN CHEQUE OR IN CASH AND ALSO VERIFY WHETH ER THE FACTS ARE IDENTICAL AS THOSE WERE IN PRECEDING AND SUCCEEDING ASSESSMENT YEARS. IF THE FACTS ARE IDENTICAL AND THE ASSESSEE HAS BEEN R EFLECTING THESE LEAVE ENCASHMENT IN HIS BOOKS OF ACCOUNTS PROPERLY, THEN THE AO WOULD NOT MAKE ADDITION. THUS, THIS GROUND OF REVENUES APPE AL IS ALLOWED FOR STATISTICAL PURPOSES. 6. NOW, WE TAKE UP THE CROSS-OBJECTION NO.22/AHD/20 11 FOR AY 2006-07 FILED BY THE ASSESSEE. THE ASSESSEE HAS RA ISED THE FOLLOWING GROUNDS IN ITS CROSS-OBJECTION. 1) THE LEARNED CIT(A) HAS RIGHTLY DELETED THE ADDIT ION OF RS.77,9,879 OUT OF TOTAL ADDITION OF RS.78,12,187 BEING LEAVE E NCASHMENT TO EMPLOYEE BY PASSING A SPEAKING ORDER AND TO THAT EX TENT THE ORDER OF CIT(A) IS REQUIRE TO BE SUSTAINED AND APPEAL FILED BY THE DY.CIT BE DISMISSED. 2) THE CIT(A) HAS ERRED IN CONFIRMING THE DISALLOWA NCE OF RS.10,45,060 BEING EXPENDITURE OF DRESS MATERIAL INCURRED BY YOU R RESPONDENT DURING COURSE OF BUSINESS AND FOR PURPOSE OF BUSINE SS. IT IS SUBMITTED THAT FULL DETAILS OF PAYMENT LIKE B ILLS, MATCHING VOUCHERS, RECEIPTS ETC. WERE MADE AVAILABLE TO THE ASSESSING OFFICER AS WELL AS TO THE LEARNED CIT(A) AND THE EXPENDITURE H AVING BEEN INCURRED DURING COURSE OF BUSINESS AND FOR BUSINESS EXPEDIENCY THE ITA NO.3489/AHD/2010 (BY REVENUE)& CO NO.22/AHD/2011 (BY ASSESSEE) DCIT VS. M/S.CHECKMATE SERVICES PVT.LTD. ASST.YEAR 2006-07 - 6 - LEARNED CIT(A) OUGHT TO HAVE DELETED THE SAID ADDIT ION OF RS.10,45,060. IT IS THEREFORE SUBMITTED THAT RELIEF CLAIMED ABOVE BE ALLOWED AND THE ORDER OF THE ASSESSING OFFICER BE MODIFIED ACCORDIN GLY. YOUR APPELLANT RESERVES RIGHT TO ADD, ALTER, AMEND TO WITHDRAW ANY OR ALL GROUND OF APPEAL. 7. AT THE OUTSET, LD.COUNSEL FOR THE ASSESSEE SUBMI TTED THAT THE ISSUE HAS BEEN FILED IN SUPPORT OF THE ORDER OF LD.CIT(A) . HOWEVER, WE FIND THAT IN CROSS OBJECTION, ONE OF THE GROUNDS (I.E. G ROUND NO.2) HAS BEEN RAISED AGAINST THE CONFIRMATION OF ADDITION OF RS.1 0,45,060/-. IN RESPECT OF THE DRESS MATERIAL. 8. WE HAVE HEARD THE PARTIES. AFTER CONSIDERING TH E FACTS AND THE MATERIAL AVAILABLE ON RECORD, WE ARE OF THE VIEW TH AT THIS ISSUE IS TO BE RESTORED TO THE FILE OF AO FOR DECISION AFRESH. AC CORDINGLY, GROUND NO.2 OF RAISED IN THE ASSESSEES CROSS-OBJECTION IS ALLO WED FOR STATISTICAL PURPOSES. 9. IN THE COMBINED RESULT, REVENUES APPEAL (ITA NO.3489/AHD/2010 FOR AY 2006-07) AS WELL AS ASSESSE ES CROSS OBJECTION (CO NO.22/AHD/2011 FOR AY 2006-07) BOTH A RE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN COURT ON THE DATE MENTIONED HER EINABOVE AT CAPTION PAGE SD/- SD/- ( ) ( %) ! ' ' ( ANIL CHATURVEDI ) ( KUL BHARAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 22/ 08/2014 ITA NO.3489/AHD/2010 (BY REVENUE)& CO NO.22/AHD/2011 (BY ASSESSEE) DCIT VS. M/S.CHECKMATE SERVICES PVT.LTD. ASST.YEAR 2006-07 - 7 - 7.., .../ T.C. NAIR, SR. PS 4 1 .8 9 8) 4 1 .8 9 8) 4 1 .8 9 8) 4 1 .8 9 8)/ COPY OF THE ORDER FORWARDED TO : 1. *- / THE APPELLANT 2. ./*- / THE RESPONDENT. 3. $$ : / CONCERNED CIT 4. :() / THE CIT(A)-I, BARODA 5. 8%; . , , / DR, ITAT, AHMEDABAD 6. ;<( =0 / GUARD FILE. 4 4 4 4 / BY ORDER, /8 . //TRUE COPY// > >> >/ // / $+ $+ $+ $+ ( DY./ASSTT.REGISTRAR) , , , , / ITAT, AHMEDABAD 1. DATE OF DICTATION .. 8.8.14 (DICTATION-PAD 10-PA GES ATTACHED AT THE END OF THIS FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 8.8.14 OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 5. DATE ON WHICH THE FAIR ORDER COMES BA CK TO THE SR.P.S./P.S.22.8.14 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 22.8.14 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 9. DATE OF DESPATCH OF THE ORDER