ACIT, Mangalore V. Shri. G. Balraj, Mangalore

ITA 35/BANG/2014

• Counselvise Citation: 3521114 RSA 2014
• Duration Of Justice: 1 year(s) 5 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 22-06-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 09-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR K SHANKAR PRA SAD
• Assessee Lawyers: RAMASUBRAMANIAN
• Keywords: Additional evidence
• Section: 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : BANGALORE BEFORE SMT. P. MADHAVI DEVI , JUDICIAL MEMBER A ND SHRI JASON P.BOAZ, ACCOUNTANT MEMBER ITA NO. 35 / BANG/20 14 (ASSESSMENT YEAR: 20 1 0 - 11 ) ASST. COMMISSIONER OF INCOME - TAX, CIRCLE 1(1), M ANGALORE. APPELLANT VS. SHRI G.BALRAJ, PWD CONTRACTOR, 6 - 112 - 81, NETHRAVATHI NAGAR LAYOUT, NAAGORI, KANKANADY, MANGALORE - 575002. RESPONDENT PAN: ABZPB5464B APPELLANT BY: DR.K.SHANKAR PRASAD, JCIT. RESPONDENT BY: SHRI RAMASUBR AMANIAN, CA. DATE OF HEARING : 22/06/2015 DATE OF PRONOUNCEMENT: 30 /06/2015 O R D E R PER SMT. P. MADHAVI DEVI, JM: THIS APPEAL BY THE REVENUE IS AGAINST THE ORDER OF THE CIT(A), MYSORE, DATED 12/11/2013 FOR THE ASSESSMENT YEAR 2010 - 11. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THE ORDER OF THE LEARNED CIT(A) IS OPPOSED TO LAW AND FACTS OF THE CASE. 2. THE LEARNED CIT(A) OUGHT TO HAVE UPHELD THE DECISION OF THE ASSESSING OFFICER IN RESPECT OF ITA NO . 35 /BANG/2 0 1 4 SHRI G.BALARAJ. PAGE 2 OF 7 THE ADDITION OF RS.20,00,00 0/ - ON ACCOUNT OF DISALLOWANCE OF URD PURCHASE OF GRANITE AND JELLY AS NO ADDITIONAL EVIDENCE WAS FURNISHED TO PROVE THE IDENTITY OF PARTIES TO WHOM PAYMENTS WERE MADE. 3. THE LEARNED CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.17,45,470/ - MADE ON AC COUNT OF DISALLOWANCE OF LORRY, ROAD ROLLER, HOT MIX PLANT AND JCB MAINTENANCE AS SUFFICIENT OPPORTUNITY HAS BEEN GIVEN TO THE ASSESSEE TO PRODUCE THE NECESSARY EVIDENCE AND HE HAS NOT STATED ANY SUFFICIENT CAUSE THAT PREVENTED HIM FROM PRODUCING THE EVIDE NCE BEFORE COMPLETION OF THE ASSESSMENT. 4. THE LEARNED CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.2,43,900/ - MADE ON ACCOUNT OF DISALLOWANCE IN RESPECT OF AMOUNT PAID FOR JELLY PURCHASE TO M/S.PAD MAMBIKA GRANITES AS THE ASSESSEE HAS NOT FURNISHED EVIDENCE SUPPORTING THE PAYMENT AND HE HAS NOT STATED ANY SUFFICIENT CAUSE THAT PREVENTED HIM FROM PRODUCING THE EVIDENCE BEFORE COMPLETION OF THE ASSESSMENT. 5. FOR THESE AND SUCH OTHER GROUNDS IT IS URGED THAT THE ORDER OF THE CIT(A), ON THE ABOVE POIN TS MAY BE SET ASIDE AND THE ORDER OF THE ASSESSING OFFICER BE RESTORED. 6. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEND ALL OR ANY OF THE GROUNDS OF APPEAL BEFORE OR AT THE TIME OF THE HEARING OF THE APPEAL . 2. BRIEF FACTS OF THE CASE ARE THAT T HE ASSESSEE IS AN INDIVIDUAL CARRYING ON BUSINESS AS CIVIL CONTRACTOR. HE FILED HIS RETURN OF INCOME FOR THE RELEVANT ASSESSMENT YEAR ON 13/10/2010 DECLARING A LOSS OF RS.81,32,085/ - AFTER CLAIMING DISALLOWANCE OF RS.2,45,94,732/ - WHICH WAS MADE IN THE AS SESSMENT YEAR 2007 - 08 U/S 40(A)(IA) OF THE INCOME - TAX ACT, 1961 [HEREINAFTER REFERRED TO AS 'THE ACT' IN SHORT]. DURING THE ASSESSMENT ITA NO . 35 /BANG/2 0 1 4 SHRI G.BALARAJ. PAGE 3 OF 7 PROCEEDINGS U/S 143(3), THE ASSESSING OFFICER (AO) PERUSED THE PROFIT AND LOSS ACCOUNT THAT THE ASSESSEE AND OBSERVED T HAT THE ASSESSEE HAS DEBITED A SUM OF RS.41,20,782/ - AS URD PURCHASES OF GRANITE AND JELLY. THE ASSESSEE WAS ASKED TO FURNISH DETAILS OF THE EXPENSE CLAIMED AND ON VERIFICATION OF THE SAME, IT WAS NOTICED THAT THE ASSESSEE HAD PAID A SUM OF RS.10,00,000/ - EACH TO S/SHRI K.T.KHALEEL AND K.RASHEED OF MEDIKERI. TO VERIFY THE VERACITY OF THE TRANSACTION, LETTERS WERE ISSUED TO THE ABOVE PERSONS AND INFORMATION WAS CALLED FOR U/S 133(6). THE LETTERS WERE RETURNED UN - SERVED . T HEREFORE , HOLDING THAT THE ASSESS EE HAS NOT BEEN ABLE TO PROVE THE IDENTITY OF THE RECIPIENTS, THE AO DISALLOWED THE SAID EXPENDITURE. FURTHER, THE AO NOTICED THAT THE ASSESSEE HAS DEBITED CERTAIN EXPENSES ON ACCOUNT OF LORRY MAINTENANCE, ROAD ROLLER MAINTENANCE, HOTMIX PLANT MAINTENANCE AND JCB MAINTENANCE. IN ORDER TO VERIFY THE SAME , NOTICES WERE ISSUED TO M/S. ADITYA ENTERPRISES, UPPINANGADY. SINCE NO REPLY WAS RECEIVED FROM THERE , THE AO CAME TO THE CONCLUSION THAT THE ASSESSEE HAS NOT BEEN ABLE TO PROVE THE IDENTITY OF THE RECIPIEN TS. SIMILARLY, THE AO CALLED FOR THE DETAILS OF RECEIPTS FROM M/S.PADMAMBIKA GRANITES FOR AN AMOUNT OF RS.2,46,900/ - FOR PURCHASE OF JELLY AND SINCE NO REPLY WAS RECEIVED IN RESPONSE TO NOTICE ISSUED U/S 133(6) OF THE ACT, HE DISALLOWED THE SAME. 3. AGGRIEVED BY THE ABOVE DISALLOWANCE S , ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A) WHO ALLOWED THE SAME AND THE REVENUE IS IN APPEAL BEFORE US. ITA NO . 35 /BANG/2 0 1 4 SHRI G.BALARAJ. PAGE 4 OF 7 4. WE FIND THAT GROUND NOS.1, 5 & 6 ARE GENERAL IN NATURE AND NEED NO ADJUDICATION. AS REGARDS GROU ND NO.2, WE FIND THAT THE ASSESSEE HAD FILED THE DETAILS OF EXPENSES PAID TO S/SHRI K.T.KHALEEL AND K.RASHEED AND IT WAS ALS O SUBMITTED THAT SINCE THEY WERE NOT REGISTERED DEALERS , THE ASSESSEE HAS MADE PAYMENTS OF VAT. A COPY OF THE VAT ORDER WAS ALSO FURNISHED BEFORE THE CIT(A) ON THE BASIS OF WHICH THE CIT(A) HAS GRANTED RELIEF TO THE ASSESSEE. THE LEARNED DEPARTMENTAL REPRESENTATIVE, RELIED UPON THE ORDER OF THE AO , WHILE THE LEARNED COUNSEL FOR THE ASSESSEE PLACED RELIANCE UPON THE ORDER OF THE CIT(A) AND ALSO PLACED RELIANCE UPON THE FOLLOWING JUDGMENTS IN SUPPORT OF HIS CONTENTION THAT MERELY BECAUSE THE PERSON TO WHOM SUMMONS WERE ISSUED DID NOT RESPOND OR THAT THE ASSESSEE DID NOT FURNISH THE CORRECT ADDRESSES OF THOSE P ERSONS TO BE SUMMONED, IT DOES NOT LEAD TO AN INFERENCE THAT THE IDENTITY OF THE SAID PERSONS IS NOT PROVED: I. PRAKASH LEASING LTD. VS. DCIT (2013) 356 ITR 179(KAR), II. CIT VS. PUNJAB LEASING (P) LTD. (2010) 325 ITR 24(P&H) AND III. DCIT VS. ROHINI BUILDERLS (2002) 256 ITR 360)(GUJ.) 5. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE MATERIAL ON RECORD, WE FIND THAT THE NOTICES SENT BY THE AO WERE RETURNED UNSERVED. AS HELD BY THE HON BLE HIGH COURT IN THE DECISIONS RELIED UPON BY THE LEARNED COUNSEL FOR THE ASS ESSEE, MERELY ITA NO . 35 /BANG/2 0 1 4 SHRI G.BALARAJ. PAGE 5 OF 7 BECAUSE THE NOTICES HAVE BEEN RETURNED UNSERVED, IT CANNOT BE PRESUMED THAT SUCH PERSONS WERE NOT RESIDING AT TH OSE PLACES OR THAT THE IDENTITY OF SUCH PERSONS IS NOT PROVED. FURTHER, WE FIND THAT BEFORE THE CIT(A), ASSESSEE HAD FILED VAT PA PERS AND ALSO THAT PAYMENT WAS MADE BY CHEQUE AND THE CIT(A) HAS ACCEPTED THE SAID CONTENTION OF THE ASSESSEE FOR ALLOWING RELIEF TO THE ASSESSEE. EXCEPT PLACING RELIANCE UPON THE ORDER OF THE AO, THE LEARNED DEPARTMENTAL REPRESENTATIV E HAS NOT BEEN ABLE TO REBUT THE FINDING OF FACT BY THE CIT(A) WITH EVIDENCE TO THE CONTRARY. IN VIEW OF THE SAME, WE DO NOT SEE ANY REASON TO INTERFERE WITH THE ORDER OF THE CIT(A) ON THIS ISSUE. 6. WITH REGARD TO OTHER DISALLOWANCES, WHILE THE LEARNED DEPARTMENTAL REP RESENTATIVE SUPPORTED THE ORDER OF THE AO, THE LEARNED COUNSEL FOR THE ASSESSEE SUPPORTED THE ORDER OF THE CIT(A). WE FIND FROM THE ORDER OF THE CIT(A) THAT THE RECIPIENT S OF THE PAYMENTS VIZ. M/S.ADITYA ENTERPRISES AND M/S.PADMAMBIKA GRANITES HAD SENT TH E CONFIRMATION LETTERS DIRECTLY TO THE AO WHICH WERE RECEIVED BY THE AO AFTER COMPLETION OF THE ASSESSMENT. ON THE BASIS OF THE SAID CONFIRMATION S ONLY , THE CIT(A) HAD GRANTED RELIEF TO THE ASSESSEE. FOR READY REFERENCE, PARAS.4 & 5 OF THE CIT(A) S ORDER ARE REPRODUCED HEREUNDER: 4. DISALLOWANCE OF LORRY, ROAD ROLLER, HOT - MIX PLANT & JCB MAINTENANCE RS.17,45,470/ - . DURING THE ASSESSMENT PROCEEDINGS, THE AO NOTICED THAT AN AMOUNT OF RS.17,45,470/ - WAS PAID TO M/S.ADITYA ENTERPRISES, TO WHOM LETTERS WER E ISSUED BY THE AO AND THERE WAS NO ITA NO . 35 /BANG/2 0 1 4 SHRI G.BALARAJ. PAGE 6 OF 7 RESPONSE. IN RESPONSE TO SHOW CAUSE LETTER DT.21.12.2012, THE APPELLANT FILED ALONG WITH LETTER DT.31.12.2012 ENCLOSING COPY OF CONFIRMATION DT.20.10.2012 ENCLOSING LEDGER EXTRACTS STATING THE TOTAL PAYMENTS IS ACTUALLY RS.23,13,047/ - WHILE THE ADDITION PROPOSED IN THE SHOW CAUSE NOTICE IS RS.15,45,470/ - . THIS CONFIRMATION WAS RECEIVED BY THE AO AFTER THE CONCLUSION OF ASSESSMENT ON 27.12.2012. THE AO ADDED RS.17,45,470/ - BASED ON THE APPELLANT S LETTER DT.18.07.2012. IN VIEW OF THE CONFIRMATION, I FIND THAT THERE WAS NO SCOPE FOR ADDITION. THE SAME IS DIRECTED TO BE DELETED. 5. DISALLOWANCE OF AMOUNT PAID FOR JELLY PURCHASE RS.2,43,900 THERE IS ANOTHER ADDITION OF RS.2,43,900/ - BEING AMOUNT PAID FOR JELLY PURCHASE TO M/S.PADMAMBIKA GRANITES. IN THIS CASE ALSO AO RECEIVED DIRECTLY CONFIRMATION DT.23.12.2012 ON 28.12.2012 AFTER COMPLETION OF THE ASSESSMENT FROM M/S.PADMAMBIKA GRANITES FURNISHING THE LEDGER EXTRACTS OF THE APPELLANT AS APPEARING IN THEIR BOOKS. IT IS A RGUED BY THE APPELLANT THAT AS COULD BE SEEN FROM THE LEDGER EXTRACTS ALL THE PAYMENTS ARE MADE THROUGH BANKING CHANNEL. IN VIEW OF THE ABOVE FACTS, I FIND THAT THERE IS NO SCOPE FOR ADDITION ON THIS ISSUE AND ACCORDINGLY DIRECT THE AO TO DELETE THE SAME. WE FIND THAT THE CIT(A) HAS APPLIED HIS MIND TO THE MATERIAL FURNISHED BY THE RESPECTIVE PARTIES BEFORE THE AO , THOUGH AFTER COMPLETION OF THE ASSESSMENT , IN GRANTING RELIEF TO THE ASSESSEE. AS THE RELIEF IS GIVEN ON THE BASIS OF MATERIAL FURNISHED DIREC TLY TO THE AO, WE DO NOT SEE ANY REASON TO INTERFERE WITH THE ORDER OF THE CIT(A) AND THE GROUNDS OF APPEAL ARE REJECTED. 7. IN THE RESULT, THE REVENUE S APPEAL IS DISMISSED. PRON OUNCED IN THE OPEN COURT ON 30 TH JUNE , 201 5 . SD/ - SD/ - (JASON P BOAZ ) ( SMT. P.MADHAVI DEVI ) ACCOUNTANT MEMBER JUDICIAL MEMBER EKSRINIVASULU ITA NO . 35 /BANG/2 0 1 4 SHRI G.BALARAJ. PAGE 7 OF 7 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME - TAX APPELLATE T RIBUNAL BANGALORE