G.H NOTANI, MUMBAI V. ACIT CIR 19(2), MUMBAI

ITA 3716/MUM/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 59687 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-01-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: G
• Next Hearing Date: 29-11-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 10-05-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A K NAYAK
• Keywords: Unexplained investment; Additional evidence

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH G, MUMBAI BEFORE SHRI P.M. JAGTAP, A.M. AND SHRI V. DURGA RAO , J.M. ITA NO. 3716/MUM/2010 ASSESSMENT YEAR: 2006-07 G.H. NOTANI, APPELLANT 601, THE ARK, S.V. ROAD, SANTACRUZ (WEST), MUMBAI 400 054. (PAN AAEPN 9158 L) VS. ASSTT. COMMISSIONER OF INCOME-TAX, RESPONDEN T CENTRAL CIRCLE 19(2), MUMBAI. APPELLANT BY : MR. HARESH P. SHAH RESPONDENT BY : MR. A.K. NAYAK ORDER PER V. DURGA RAO, J.M.: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AG AINST THE ORDER OF CIT(A)-30, MUMBAI, PASSED ON 19/03/2010 FOR THE ASSESSMENT YEAR 2006-07. 2. GROUND NO. (I)(A) IS PERTAINING TO THE DISALLOWA NCE OF RS. 18,21,900/- U/S 40(A)(IA) ON ACCOUNT OF PAYMENTS TO SUB-CONTRACTORS. 3. THE AO HAD DISALLOWED PAYMENTS TO SUB-CONTRACTOR S OF RS. 28,24,574/- ( RS. 10,63,945/- TO SHANKAR, RS. 10,68 ,179 TO KARAN CONSTRUCTION) AND RS. 6,92,450/- TO HARSH INTERNATI ONAL) U/S 40(A)(IA) ON THE GROUND THAT THE ASSESSEE HAD NOT DEDUCTED TD S WHILE MAKING THE SAID PAYMENTS. ON APPEAL, THE CIT(A) HELD THAT THE ASSESSEE WAS REQUIRED TO DEDUCT TDS WHILE MAKING PAYMENTS. SINCE THE ASSESSEE ONLY DEDUCTED TDS ON PAYMENT OF RS. 10,02,674/-, TH E CIT(A) CONFIRMED THE DISALLOWANCE MADE BY THE AO U/S 40(A) (IA) TO THE EXTENT OF RS. 18,21,900/- (RS. 28,24,574-10,02,674), OUT O F TOTAL ITA NO. 3716/M/2010 G.H. NOTANI 2 DISALLOWANCE OF RS. 28,24,574/-. AGGRIEVED, THE ASS ESSEE CARRIED THE MATTER IN APPEAL BEFORE US. 4. BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAD ALREADY DEDUCTED TAX OF RS. 13,190 /- ON THE ALLEGED PAYMENTS TO THE CONTRACTORS AND DULY PAID ON 21/03/ 2006 VIDE CHEQUE NO. 352267, DRAWN ON UCO BANK, VILE PARLE (E ), MUMBAI VIDE CHALLAN NO. 20, BUT, DUE TO PRACTICAL DIFFICULTY IT WAS NOT TRACEABLE AND, THEREFORE, IT COULD NOT BE PLACED BEFORE THE L OWER AUTHORITIES. IT IS SUBMITTED THAT SINCE THE CHALLAN IS AVAILABLE, T HEREFORE, THE SAME WOULD BE ADMITTED AS ADDITINAL EVIDENCE, WHICH WILL RESULT IN FURTHER REDUCTION OF DISALLOWANCE BY 11,99,100/-. 5. ON THE OTHER HAND, THE LEARNED DR SUBMITTED THAT THIS ADDITIONAL EVIDENCE CAN BE REMITTED BACK TO THE FIL E OF THE AO FOR VERIFICATION. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUSE D THE RECORD AND ORDERS OF THE AUTHORITIES BELOW. THE ASSESSEE H AS FILED ADDITIONAL EVIDENCE IN RESPECT OF TDS PAYMENT OF RS. 13,190/- BY WAY OF BANK CHALLAN AND ALSO BANK ACCOUNT OF ORIENTAL BANK OF C OMMERCE AND PLEADED THAT THE SAID ADDITIONAL EVIDENCE CAN BE TA KEN INTO CONSIDERATION AS ADDITIONAL EVIDENCE AND REMIT THE MATTER BACK TO THE FILE OF THE AO FOR EXAMINATION. SINCE THE DR HAS AL SO NO OBJECTION TO THE SAID ADDITIONAL EVIDENCE FILED BY THE ASSESSEE, WE ADMIT THE SAME AND RESTORE THIS ISSUE TO THE FILE OF THE AO WITH A DIRECTION TO RE- COMPUTE THE DISALLOWANCE AFTER VERIFYING THE SAID ADDITIONAL EVIDENCE FILED BY THE ASSESSEE. ACCORDINGLY, THIS GROUND IS ALLOWED FOR STATISTICAL PURPOSES. 7. GROUND NO. (I)(B) IS PERTAINING TO THE DISALLOWA NCE OF RS. 2,22,900/- OUT OF TRANSPORT CHARGES. ITA NO. 3716/M/2010 G.H. NOTANI 3 8. THE AO NOTICED FROM THE LEDGER ACCOUNT OF THE TR ANSPORTATION CHARGES FURNISHED BY THE ASSESSEE THAT A SUM OF RS. 2,22,900/- WAS PAID TO ONE M/S RAJGURU ENTERPRISES AND THE REMAINI NG AMOUNT OF RS. 1,82,745/- HAD BEEN PAID IN CASH WITHOUT ANY NARRAT ION AS TO WHOM THE PAYMENTS WERE MADE. SINCE THE TDS HAD NOT BEEN MADE ON THE PAYMENT OF RS. 2,22,900/- THE SAME WAS DISALLOWED U /S 40(A)(IA) OF THE ACT. HE DISALLOWED 25% OF RS. 45,686/- ON THE A MOUNT OF RS. 1,82,745/- PAID IN CASH ON THE GROUND THAT THE SAME IS NOT VERIFIABLE. ON APPEAL, THE CIT(A) CONFIRMED THE DISALLOWANCE MA DE BY THE AO. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US. 9. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT THE TDS PROVISIONS ARE NOT APPLICABLE TO THE AMOUNTS PAID T O THE TRANSPORTS. FOR THIS SUBMISSION, HE RELIED ON THE DECISION IN T HE CASE OF CIT VS. UNITED RICE LAND LTD., [2010] 322 ITR 594 (P&H) WHE REIN IT WAS HELD THAT WHEN THERE WAS NO CONTRACT BETWEEN THE ASSESSE E AND TRANSPORTERS FOR CARRIAGE OF GOODS, ASSESSEE IS NOT LIABLE TO DEDUCT TDS WHEN SINGLE PAYMENT NOT EXCEEDING RS. 20,000/-. 10. ON THE OTHER HAND, THE LEARNED DR HAS RELIED UP ON THE ORDERS OF THE AUTHORITIES BELOW. 11. AFTER HEARING THE PARTIES, PERUSING THE RECORD AS WELL AS ORDERS OF AUTHORITIES BELOW, IT IS OBSERVED THAT FROM THE FACTS IT IS NOT CLEAR WHETHER THE PAYMENT MADE BY THE ASESSSEE EXCEEDED R S. 20,000/- OR NOT AND ANY AGREEMENT BETWEEN THE PARTIES ENTERED O R NOT ?. SINCE THE AO NOT EXAMINED THE SAID ISSUES, WE REMIT THE ISSUE TO THE FILE OF THE AO WITH A DIRECTION TO DECIDE THE ISSUE IN LIEU OF THE DECISION OF HONBLE P&H HIGH COURT IN THE CASE OF CIT VS. UNITE D RICE LAND LTD., (SUPRA). THUS, THIS GROUND IS ALLOWED FOR STATISTIC AL PURPOSES. ITA NO. 3716/M/2010 G.H. NOTANI 4 12. GROUND NO. (II) IS PERTAINING TO AD-HOC DISALLO WANCES OF RS. 5,34,997/- @ 10% OUT OF THE TOTAL CASH PAYMENTS ON ACCOUNT OF SUB- CONTRACTORS PAYMENT, TRANSPORT CHARGES, WAGES AND L ABOUR CHARGES. 13. THE AO MADE 25% OF THE DISALLOWANCE OUT OF THE TOTAL CASH PAYMENTS ON ACCOUNT OF SUB-CONTRACTORS PAYMENT, TRA NSPORT CHARGES, WAGES AND LABOUR CHARGES ON THE GROUND THAT THE DET AILS OF THESE PAYMENTS ARE NOT FULLY VERIFIABLE. ON APPEAL, THE C IT(A) RESTRICTED THE SAID DISALLOWANCE TO 10%. AGGRIEVED, THE ASSESSEE I S IN APPEAL BEFORE US. 14. AFTER HEARING THE PARTIES AND PERUSING THE RECO RD AS WELL AS THE ORDERS OF THE AUTHORITIES BELOW, THE CIT(A) RESTRIC TED THE DISALLOWANCE TO 10% OUT OF THE TOTAL CASH PAYMENTS ON ACCOUNT OF SUB-CONTRACTORS PAYMENT, TRANSPORT CHARGES, WAGES AND LABOUR CHARGE S, AS AGAINST 25% OF DISALLOWANCE MADE BY THE AO, ON THE GROUND T HAT THE EXPENSES INCURRED IN CASH ARE NOT FULLY VERIFIABLE. THEREFOR E, WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF THE CIT(A) AND THE SAME IS HEREBY UPHELD. THUS, THIS GROUND OF APPEAL OF THE ASSESSEE IS DISMISSED. 15. GROUND NO. (III) IS DIRECTED AGAINST THE ACTION OF THE CIT(A) IN CONFIRMING THE ADDITION OF RS. 6,00,000/-ON ACCOUNT OF UNEXPLAINED INVESTMENTS. 16. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, TH E ASSESSEE SUBMITTED THE DETAILS OF INVESTMENTS MADE DURING TH E YEAR VIDE LETTER DATED 06/09/08. ON PERUSAL OF THE SAID DETAILS, THE AO NOTICED THAT THE ASSESSEE HAD PAID RS. 27,00,000/- TO VINITA EST ATE PVT. LTD. FOR FLAT NO. 1102, SV ROAD, GOREGAON (W) DURING THE YEA R. THE AO NOTED THAT IT IS SEEN FROM THE BALANCE SHEET AS ON 31/03/ 2006 THE AMOUNT PAID TO VINITA ESTATE PVT. LTD. DURING THE YEAR IS NOT REFLECTED IN THE BALANCE SHEET. SINCE THE SAID INVESTMENT WAS NOT RE FLECTED IN THE PERSONAL BALANCE SHEET FILED, THE AO ADDED THE SAI D AMOUNT AS ITA NO. 3716/M/2010 G.H. NOTANI 5 UNEXPLAINED INVESTMENT. AGGRIEVED, THE ASSESSEE CAR RIED THE MATTER IN APPEAL BEFORE THE CIT(A). 17. BEFORE THE CIT(A), THE ASESSSEE SUBMITTED THAT THROUGH OVERSIGHT RS. 27,00,000/- WAS SHOWN AS PAYMENTS MADE TO VINIT A ESTATES PVT. LTD. TILL 03/03/08 AND IN FACT DURING THE PREVIOUS YEAR RELEVANT TO AY ONLY 11,00,000/- WAS PAID TO VINITA ESTATES PVT. LT D. IT WAS FURTHER SUBMITTED THAT RS. 11,00,000/- WAS OPENING BALANCE AS ON 01/04/05 IN THE ACCOUNTS OF VINITA ESTATES PVT. LTD. AFTER C ONSIDERING THE SUBMISSIONS OF THE ASSESSEE, THE CIT(A) OBSERVED TH AT FROM THE CONFIRMATION OF ACCOUNTS GIVEN BY VINITA ESTATES PV T. LTD., IT IS SEEN THAT THEY HAD CONFIRMED THE ACCOUNT OF THE ASSESSEE FOR RS. 21,00,000/- ONLY FOR THE PERIOD 01/04/05 TO 31/03/0 6 WHEREAS THE ASESSSEE HAD CLAIMED TO HAVE MADE PAYMENTS TO THE E XTENT OF RS. 27,00,000/-. THUS, THERE IS A DIFFERENT OF RS. 6,00 ,000/-, WHICH HAD NOT BEEN EXPLAINED BY THE ASESSSEE. THEREFORE, THE CIT(A) CONFIRMED THE ADDITION MADE BY THE AO TO THE EXTENT OF RS. 6, 00,000/- AND THE BALANCE ADDITION OF RS. 21,00,000/- IS DELETED OUT OF TOTAL ADDITION OF RS. 27,00,000/-. 18. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE REC ORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE AO MADE THE ADDITION ON ACCOUNT OF THE PAYMENT OF RS. 27,00,000/- MADE BY THE ASESSSEE TO VINITA ESTATE PVT. LTD. ON THE GROUND THAT THE S AID AMOUNT WAS NOT REFLECTED IN THE PERSONAL BALANCE SHEET FILED BY TH E ASSESSEE. THE CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASS ESSEE, RESTRICTED THE ADDITION TO RS. 6,00,000/- SINCE THE SAID VINIT A ESTATE PVT. LTD. CONFIRMED THE ACCOUNT OF THE ASSESSEE FOR RS. 21,00 ,000/- ONLY FOR THE PERIOD 01/04/05 TO 31/03/06 AS AGAINST THE CLAIM OF THE ASSESSEE THAT HE HAD PAID TO THE EXTENT OF RS. 27,00,000/-. THE ONLY DISPUTE TO BE ADJUDICATED BEFORE US IS WHETHER THE ASSESSEE PA ID RS. 27.00 LAKHS TO VINITA ESTATES PVT. LTD. OR RS. 21.00 LAKHS. ACC ORDING TO THE CIT(A) THE ASSESSEE ONLY FILED THE CONFIRMATION TO THE EXT ENT OF RS. 21.00 ITA NO. 3716/M/2010 G.H. NOTANI 6 LAKHS AND, THEREFORE, ALLOWED ONLY RS. 21.00 LAKHS. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED BEFORE US THAT T HE ASSESSEE HAD ACTUALLY PAID RS. 27.00 LAKHS AND HE IS READY TO PR ODUCE THE CONFIRMATION TO THE SAID AMOUNT. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND FACTS OF THE CASE, IN THE INTEREST OF JUSTICE, THE ISSUE NEEDS TO BE EXAMINED BY THE AO WHETHER THE ASSESSEE HAS PAID RS. 27.00 LAKHS OR RS. 21.00 LAKHS TO VINITA ESTATES P VT. LTD. WE, THEREFORE, REMIT THE ISSUE TO THE FILE OF THE AO FO R A LIMITED PURPOSE TO EXAMINE WHETHER THE ADDITION OF RS. 6,00,000/- SUST AINED BY THE CIT(A) IS CORRECT OR THE CLAIM OF THE ASSESSEE THAT HE HAS PAID RS. 27.00 LAKHS TO VINITA ESTATES PVT. LTD. IS CORRECT, AND DECIDE THE ISSUE IN ACCORDANCE WITH LAW AFTER PROVIDING REASONABLE O PPORTUNITY OF HEARING TO THE ASSESSEE. THE ASSESSEE IS DIRECTED T O SUBSTANTIATE HIS CLAIM BY WAY OF PRODUCING THE NECESSARY EVIDENCE IN THIS REGARD. 19. IN THE RESULT, APPEAL OF THE ASESSSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON THIS 13 TH DAY OF JANUARY, 2011. SD/- SD/- (P.M. JAGTAP) (V. DURGA RAO) ACCOUNTANT MEMBER JUDI CIAL MEMBER MUMBAI, DATED: 13 TH JANUARY, 2011 KV ITA NO. 3716/M/2010 G.H. NOTANI 7 COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A) CONCERNED. 4) THE CIT CONCERNED. 5) THE DEPARTMENTAL REPRESENTATIVE, G BENCH, I.T .A.T., MUMBAI. BY ORDER //TRUE COPY// ASST. REGISTRAR, I.T.A.T., MUMBAI.