ITO 24(3)(4), MUMBAI V. BHASKAR A VINZANEKAR, MUMBAI

ITA 3757/MUM/2011

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 3806 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 11 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-04-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 23-10-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 09-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: P K PARIDA
• Keywords: Unexplained cash credit; Additional evidence
• Section: 194C; 68

Judgement Text

ITA NO.3757 OF 2011 BHASKAR A VIZANEKAR MUMBAI PAGE 1 OF 7 IN THE INCOME TAX APPELLATE TRIBUNAL 'B' BENCH, MUMBAI BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER & DR. S.T.M. PAVALAN, JUDICIAL MEMBER ITA NO.3757/MUM/2011 (ASSESSMENT YEAR: 2007-08) INCOME TAX OFFICER 24(3)(4) ROOM NO.706, C-11 7 TH FLOOR BKC BANDRA (E) MUMBAI 400051 VS. MR. BHASKAR A. VINZANEKAR, PROP. M/S. SHRINI INDUSTRIES, G-2 CAMA INDUSTRIAL ESTATE, WALBHAT ROAD, GOREGAON (E) MUMBAI 400051 PAN: AAAPV 5677 Q (APPELLANT) (RESPONDENT) DEPARTMENT BY: SHRI MOHIT JAIN, DR ASSESSEE BY: SHRI P.K. PARIDA DATE OF HEARING: 03/04/2013 DATE OF PRONOUNCEMENT: 10/04/2013 O R D E R PER B. RAMAKOTAIAH, A.M. THIS IS A REVENUE APPEAL AGAINST THE ORDERS OF THE CIT (A)-34 MUMBAI DATED 15.03.2011. THE REVENUE HAS RAISED THE FOLLOWING FOUR GROUNDS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LEARNED CIT (A) ERRED IN DELETING THE DISALLOWANCE UNDER SECTION 40(A)(IA) TO THE TUNE OF ` .7,73,462 BY IGNORING THE FACT THAT THE CONTRACT NE ED NOT BE WRITTEN AND ORAL CONTRACT IS ALSO A CONTRACT AND ALSO BY ADMITTING ADDITIONAL EVIDENCES IN CONTRAVENTION TO PROVISIONS OF RULE 46A OF THE I.T. RULES. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED CIT (A) ERRED IN DELETING THE A DDITION OF ` .2,50,000 ON ACOCUNT OF DIFFERENCE IN CAPITAL A/C B Y ADMITTING ADDITIONAL EVIDENCES WITHOUT REMANDING TH E MATTER BACK TO THE FILE OF AO FOR VERIFICATION IN CONTRAVENTION TO THE PROVISIONS OF RULE 46A OF THE I.T. RULES. ITA NO.3757 OF 2011 BHASKAR A VIZANEKAR MUMBAI PAGE 2 OF 7 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED CIT (A) ERRED IN DELETING AN AD DITION OF ` .2,98,582 ON ACCOUNT OF UNEXPLAINED CASH CREDITS BY ADMITTING LOAN CONFIRMATIONS FROM ASSESSEE WITHOUT CALLING FOR REMAND REPORT FROM AO IN CONTRAVENTION TO THE PROVISIONS OF RULE 46A OF THE I.T. RULES. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED CIT (A) ERRED IN DELETING AN AD DITION OF ` .50,000 MADE BY AO BY ADMITTING ADDITIONAL EVIDENCE IN THE FORM OF OCNFIRMATION IN CONTRAVENTION OF RULE 4 6A OF I.T.RULES. 2. WE HAVE HEARD THE LEARNED DR AND THE LEARNED COUNSE L IN DETAIL. 3. GROUND NO.1 IS WITH REFERENCE TO DISALLOWANCE UNDER SECTION 40(A)(IA) TO THE TUNE OF ` .7,73,462. AO NOTICED THAT ASSESSEE PAID THE ABOVE AMOUNT AS PART OF CONTRACTUAL AMOUNT AND SINC E THE TDS WAS NOT DEDUCTED THE SAME IS DISALLOWABLE UNDER SECTION 40(A)(IA). BEFORE THE CIT (A) IT WAS SUBMITTED THAT THE MAJOR EXPENSES OF PURCHASE OF MATERIAL FROM M/S ALKA INDUSTRIES FOR W HICH THERE IS NO NEED FOR DEDUCTION OF TAX OUT OF THE BALANCE OF ` .4,79,026 AGAIN THE AMOUNT INVOLVES PURCHASE TO THE TUNE OF ` .3,56,095 AND THE BALANCE OF ` .1,22,931 PERTAINS TO THE LABOUR CHARGES PAID. AFTE R CONSIDERING THE EXPLANATION OF ASSESSEE THE LEARNED CIT (A) DEL ETED THE SAME BY STATING AS UNDER: 3.3 I HAVE GONE THROUGH THE CONTENTS OF THE IMPUGN ED ASSESSMENT ORDER AS WELL AS ARGUMENTS AND SUBMISSIO NS OF THE LEARNED COUNSEL OF THE APPELLANT. I FIND THA T ASSESSEE HAS PAID TRANSPORT CHARGES TO FOUR PARTIES OF ` .25,000 EACH MENTIONED IN PARA 5.1 IN THE TABLE AT SR. NO. FROM 1 TO 4 AND LABOUR CHARGES TO M/S ALKA INDUSTRIES TO THE TUNE OF ` .4,79,026 AT SR.NO.5. I FURTHER FIND THAT AO HAS NOT GIVEN ANY FINDING OF FACT AS T O WHETHER THESE PAYMENTS ARE PURSUANT TO A CONTRACT BETWEEN THE APPELLANT AND THESE PARTIES. THE LEARNE D AR ARGUED AND SUBMITTED BEFORE ME THAT NO WRITTEN OR O RAL CONTRACT IS MADE WITH THESE PARTIES. THEREFORE, THE PROVISIONS OF SECTION 194C ARE NOT ATTRACTED AT ALL . BESIDES THIS, THE LABOUR CHARGES OF ` .4,79,026 INCLUDES ITA NO.3757 OF 2011 BHASKAR A VIZANEKAR MUMBAI PAGE 3 OF 7 THE MAJOR CHUNK OF PURCHASES ALSO. THEREFORE, IN TH E ABSENCE OF CLEAR FINDING OF FACT, IT CANNOT BE PRES UMED THAT THE PAYMENTS TO FIRST FIVE PARTIES MENTIONED I N THE TABLE IN PARA 5.1 OF THE IMPUGNED ASSESSMENT ORDER ARE MADE IN PURSUANCE OF A CONTRACT BETWEEN THE CONTRAC TOR AND THE APPELLANT. HENCE IT IS HELD THAT NO TDS IS REQUIRED IN THE HANDS OF THE APPELLANT WHILE PAYING THESE AMOUNTS. ACCORDINGLY THE IMPUGNED ADDITION OF ` .5,79,026 IS DELETED OUT OF ` .7,73,462. AS FAR AS PAYMENT TO M/S BHARAT PETROLEUM CORPORATION IS CONCERNED, I FIND THAT TDS HAS BEEN DONE BY THE APPELLANT BUT NOT PAID WITHIN THE STIPULATED TIME. HENCE THE IMPUGNED ADDITION OF ` .1,94,436 IS UPHELD UNDER SECTION 40(A)(IA) OF THE I.T. ACT 1961 TO BE ALLOWE D ONLY IN THE YEAR THE TDS IS MADE AND PAID. (RELIEF: 5,79,02 6). SINCE THE CIT (A) HAS EXAMINED THE ISSUE BOTH ON FA CTS AND ALSO ON LAW, THERE IS NO REASON TO INTERFERE WITH THE ORDER . ACCORDINGLY GROUND IS REJECTED. 4. GROUND NO.2 PERTAINS TO THE DELETION OF AN AMOUNT O F ` .2,50,000 ON ACCOUNT OF DIFFERENCE IN CAPITAL A/C. AO NOTICED THAT THERE IS A DIFFERENCE BETWEEN PROPRIETARY CONCERN A ND OTHER ACCOUNTS AND ACCORDINGLY BROUGHT TO TAX AN AMOUNT O F ` .2,50,000. IT WAS SUBMITTED BEFORE THE CIT (A) THAT ASSESSEE H AD TAKEN LOAN FROM HIS PROPRIETARY CONCERN M/S ALKA INDUSTRIES DU RING THE YEAR. THE SAID CONCERN HAVE REFLECTED THE SAME IN SUNDRY LOAN A/C. IN HE CAPITAL A/C OF ASSESSEE, THE BALANCE WERE SHOWN AS ` .14,86,569 WHEREAS IN THE CAPITAL A/C OF THE PROPRIETARY CONCE RN, THE SAME IS SHOW AS ` .12,36,569 BECAUSE OF MISTAKE IN NOT POSTING THE EN TRIES. ASSESSEE AFTER RECTIFYING THE ENTRIES THROUGH JOURN AL ENTRIES FURNISHED THE DETAILS TO THE CIT (A) ALONG WITH LED GER A/C WHICH WAS ALSO FURNISHED BEFORE AO EARLIER. IT WAS FURTHER S UBMITTED THAT THE LOAN AMOUNT WAS SQUARED OFF DURING THE YEAR, ACCORD INGLY THE ADDITION MAY BE DELETED. 5. AFTER CONSIDERING THE SUBMISSIONS, THE CIT (A) DELE TED THE SAME STATING AS UNDER: ITA NO.3757 OF 2011 BHASKAR A VIZANEKAR MUMBAI PAGE 4 OF 7 5.3 I HAVE GONE THROUGH THE IMPUGNED ASSESSMENT ORDER AS WELL AS ARGUMENTS AND SUBMISSIONS OF THE LEARNED COUNSEL OF THE APPELLANT. I FIND FORCE IN T HE ARGUMENTS AND SUBMISSIONS OF LEARNED AUTHORIZED REPRESENTATIVE THAT THERE CANNOT BE MADE ANY ADDITI ON BECAUSE ONLY THE BALANCE WAS REFLECTED IN THE FIRMS CAPITAL A/C WHEREAS IN THE PROPRIETARY CAPITAL ACCO UNT TWO SEPARATE ENTRIES SHOWN. THESE COPIES WERE FURNISHED BY APPELLANT DURING THE COURSE OF ASSESSMENT PROCEEDINGS TOO. HENCE I AM OF THE CONSIDERED OPINION THAT THE EXPLANATION FURNISHED B Y THE APPELLANT IS CORRECT AND THE MISTAKES ARE BONAF IDE AND FEASIBLE ONE. THUS, THE IMPUGNED ADDITION IS DELETED IN VIEW OF THE FACTS AND CIRCUMSTANCES OF T HE INSTANT CASE. 6. AFTER CONSIDERING THE RIVAL CONTENTIONS AND EXAMINI NG THE FACTS, WE FIND THAT NO CASE IS MADE OUT BY THE REVE NUE TO DIFFER FROM THE ABOVE FINDINGS. ACCORDINGLY THE GROUND IS REJEC TED. 7. GROUND NO.3 PERTAINS TO ADDITION ON ACCOUNT OF ALLE GED UNEXPLAINED CASH CREDIT UNDER SECTION 68 TO THE TUN E OF ` .2,98,582. AO NOTICED THAT ASSESSEE INFUSED CAPITAL OF ` .3,08,473 INTO THE BANK ACCOUNT AND ASKED FOR THE SOURCE OF THE SAME. ASSES SEE EXPLAINED THAT THE LOAN OF ` .2,50,000 WAS TAKEN FROM PROPRIETARY CONCERN OF ` .54,618 WAS OUT OF THE OPENING BALANCE AND ` .48,582 WAS FROM OTHERS. AO ACCEPTED THE OPENING BALANCE BUT DID NOT ACCEPT THE BALANCE OF THE AMOUNT AND ADDED THE TOTAL AS UNEXPL AINED CASH CREDIT. 8. IT WAS SUBMITTED BEFORE THE CIT (A) THAT THE AMOUNT OF ` .2.50 LAKHS WAS PART OF THE AMOUNT TAKEN FROM THE PROPRIE TARY CONCERN ON WHICH AO HAD ALREADY MADE THE ADDITION (GROUND NO.2 ) AND FURTHER CAPITAL A/C SHOWS OPENING BALANCE OF ` .6,54,618. IT WAS ALSO FURTHER SUBMITTED THAT ASSESSEE HAS DISCHARGED ITS ONUS AND AO ON A MISCONCEPTION MADE THE ADDITION. THE LEARNED CIT (A ) ACCEPTED THE CONTENTIONS AND DELETED THE SAME BY STATING AS UNDE R: 6.3 I HAVE GONE THROUGH THE CONTENTS OF THE IMPUGN ED ASSESSMENT ORDER AS WELL AS ARGUMENTS AND SUBMISSIO N ITA NO.3757 OF 2011 BHASKAR A VIZANEKAR MUMBAI PAGE 5 OF 7 OF THE LEARNED COUNSEL OF THE APPELLANT. I FIND FOR CE IN THE ARGUMENTS AND SUBMISSIONS OF THE LEARNED AUTHORIZED REPRESENTATIVE THAT THE IMPUGNED ADDITION IS NOT JU STIFIED IN THE FACTS AND CIRCUMSTANCES OF THE INSTANT CASE. SINCE THE AMOUNT STANDS EXPLAINED AS IN PARA 5.2 AND 6.2 ABOVE, THE IMPUGNED ADDITION IS DELETED IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE INSTANT CASE. (RELIE F: ` .2,98,582). HERE ALSO WE DO NOT SEE ANY REASON TO DIFFER FROM T HE FINDINGS OF THE CIT (A) AS THE SAME AMOUNT WAS BROUGHT TO TAX BY AO UNDER DIFFERENT A/C. SINCE THESE FACTS WERE EXAMINED BY T HE CIT (A), WE REJECT THE GROUND. 9. THE LAST GROUND IS WITH REFERENCE TO THE ADDITION O F ` .50,000. ASSESSEE HAS SHOWN A LOAN OF ` .3.00 LAKHS FROM ONE MR.SANJAY SURANA WHEREAS THE LOAN CONFIRMATION SUBMITTED BY A SSESSEE WAS ONLY FOR ` .2,50,000. AO BROUGHT THE DIFFERENCE OF ` .50,000 TAXED AS UNEXPLAINED CASH CREDIT. IT WAS EXPLAINED THAT THE UNSECURED LOAN WAS MORE THAN 3 YEARS OLD AND SHRI SANJAY SURANA HA S CONFIRMED THE LOAN OF ` .2,50,000 AND BALANCE OF ` .50,000 WAS ALSO CONFIRMED TO AO SUBSEQUENTLY, WHO DID NOT ACCEPT THE SAME. SI NCE THE SAID SHRI SANJAY SURANA SHIFTED HIS PREMISES THERE WAS D ELAY IN OBTAINING CONFIRMATION AND SINCE THE ENTIRE LOAN LI ABILITY WAS CONFIRMED, THERE IS NO NEED FOR MAKING ANY ADDITION . THE LEARNED CIT (A) CONSIDERED THE DETAILED SUBMISSIONS OF ASSE SSEE AND DELETED THE ADDITION BY STATING AS UNDER: 7.3 I HAVE GONE THROUGH THE CONTENTS OF THE IMPUGN ED ASSESSMENT ORDER AS WELL AS ARGUMENTS AND SUBMISSIO NS OF THE LEARNED AUTHORIZED REPRESENTATIVE OF THE APP ELLANT ALONG WITH THE MATERIAL AVAILABLE ON RECORD. AO HAS MADE IMPUGNED ADDITION OF ` .50,000 FOR THE ABOVE CREDITOR SIMPLY BECAUSE THE CONFIRMATION ONLY TO THE EXTENT OF ` .2,50,000 OUT OF TOTAL ` .3,00,000 COULD BE FILED AND THE REST COULD NOT BE EXPLAINED IN TIME BEFORE AO. HOWE VER, AO MADE THE IMPUGNED ADDITION UNDER SECTION 4191) O F THE I.T. ACT, 1961 WHICH IS TOTALLY UNJUSTIFIED IN THE FACTS AND CIRCUMSTANCES OF THE INSTANT CASE. CESSATION OF LIABILITY IS NOT AN UNILATERAL ACT. THERE IS NO ADV ERSE ITA NO.3757 OF 2011 BHASKAR A VIZANEKAR MUMBAI PAGE 6 OF 7 MATERIAL AVAILABLE ON RECORD TO SUGGEST THAT THE CR EDITOR HAS DENOUNCED HIS RIGHT TO RECEIVE THE IMPUGNED AMO UNT DUE FROM THE APPELLANT. NEITHER THE APPELLANT HAS W RITTEN BACK THESE AMOUNTS IN THE PROFIT & LOSS A/C TREATIN G IT THE LIABILITY NOT PAYABLE ANY MORE. IN THE CASE OF CIT VS.T.V.S. SUNDERAM IYENGAR 222 ITR 344 (SC), THE TR ADE LIABILITIES WERE WRITTEN BACK BY ASSESSEE IN THE PR OFIT & LOSS A/C AND THAT IS HOW THE HON'BLE SUPREME COURT HELD THE SAME TO BE TAXABLE WHEREAS IN THE INSTANT CASE, NO SUCH ACTION HAS BEEN TAKEN BY THE APPELLANT. THUS, BY NO STRETCH OF IMAGINATION, THE IMPUGNED LIABILITIES CA N BE TREATED TO HAVE BEEN CEASED WITHIN THE MEANING OF SECTION 4191) OF THE I.T. ACT. HENCE I FIND FORCE I N THE ARGUMENTS AND SUBMISSIONS OF THE LEARNED COUNSEL TH AT NO ADDITION COULD HAVE BEEN MADE UNDER SECTION 4191 ) OF THE I.T. ACT, 1961 IN THE CASE OF THE APPELLANT. ACCORDINGLY, THE SAME IS DELETED IN THE FACTS AND CIRCUMSTANCES OF THE INSTANT CASE. (RELIEF: ` .50,000) . 10. AFTER CONSIDERING THE RIVAL SUBMISSIONS, WE UPHOLD THE ORDER OF THE CIT (A). AS RIGHTLY NOTICED BY THE CIT (A), THE CREDIT DOES NOT PERTAIN TO THE YEAR AND THERE IS NO CESSATION OF LI ABILITIES DURING THE YEAR SO AS TO BRING THE AMOUNTS UNDER THE PROVISION S OF SECTION 41(1). THE REVENUE HAS NOT MADE OUT ANY CASE WHY TH E SAME IS TAXABLE AS INCOME. ACCORDINGLY, THE GROUND IS REJEC TED. 11. BEFORE PARTING, IT IS ALSO NOTICED THAT THE GROUNDS RAISED BY THE REVENUE ARE MAINLY FOCUSED ON CONTRAVENTION OF PROVISIONS OF RULE 46A. AS CAN BE SEEN FROM THE ORDER OF THE CIT (A), IT DOES NOT SPECIFY ANY ADMISSION OF ADDITIONAL EVIDENCE NOR TH ERE IS ANY MENTION ANYWHERE ABOUT THE FURNISHING OF ADDITIONAL EVIDENCE BY ASSESSEE. BEFORE US, ASSESSEE FURNISHED A PAPER BOO K RUNNING PAGES 1 TO 44 DULY CERTIFIED THAT EXCEPT THE SUBMISSIONS MADE BEFORE THE CIT (A), ALL OTHER DOCUMENTS WERE FILED BEFORE AO, WHICH WAS ALSO NOT OBJECTED TO BY THE REVENUE. THEREFORE, WE ARE U NABLE TO UNDERSTAND HOW THERE IS VIOLATION OF RULE 46A WHEN IN FACT THERE IS NO ADDITIONAL EVIDENCE ADMITTED BY THE CIT (A). PRI MA FACIE, THE GROUNDS ITSELF ARE NOT MAINTAINABLE. HOWEVER, AFTER EXAMINING THE ITA NO.3757 OF 2011 BHASKAR A VIZANEKAR MUMBAI PAGE 7 OF 7 MERITS OF VARIOUS ADDITIONS MADE BY AO, WE FIND THA T THE LEARNED CIT (A)S ORDER IS JUSTIFIED ON THE FACTS. 12. IN THE RESULT APPEAL FILED BY THE REVENUE IS DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT ON 10 TH APRIL, 2013 SD/- SD/- (DR. S.T.M. PAVALAN) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED 10 TH APRIL, 2013. VNODAN/SPS COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. THE DR, B BENCH, ITAT, MUMBAI BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCHES, MUMBAI