ITO, BHARATPUR V. ANAND SHARMA, BHARATPUR

ITA 384/JPR/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 54103 (ITAT-JAIPUR)
• Duration Of Justice: 3 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-08-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 29-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VINOD JOHARI
• Keywords: Unexplained cash credit; Unexplained investment

Judgement Text

1 ITA 384(2)-11 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH B JAIPUR BEFORE SHRI R.K. GUPTA AND SHRI N.L. KALRA ITA NO. 384/JP/2011 ASSTT. YEAR : 2006-07. THE INCOME-TAX OFFICER, VS. SHRI ANAND SHARMA, WARD-1, PROP. M/S. QUERRYTECH ENGINEERS, BHARATPUR. RAJENDRA NAGAR, BHARATPUR. (APPELLANT) (RESPONDENT) C.O. NO. 59/JP/2011 ( ARISING OUT OF ITA NO. 384/JP/2011 ) ASSTT. YEAR : 2006-07. SHRI ANAND SHARMA, VS. THE INCOME-TAX OFFICER, BHARATPUR. WARD-1, BHARATPUR. (CROSS OBJECTOR) (RESPONDENT) APPELLANT BY : SHRI VINOD JOHARI RESPONDENT BY : SHRI RAJENDRA AGARWAL DATE OF HEARING : 17.8.2011 DATE OF PRONOUNCEMENT : 19.8.2011. ORDER DATE OF ORDER : 19/08/2011. PER R.K. GUPTA, J.M. THIS IS AN APPEAL DEPARTMENT AND CROSS OBJECTION B Y ASSESSEE AGAINST THE ORDER OF LD. CIT (A) RELATING TO ASSESSMENT YEAR 2006-07. 2. FIRST ISSUE RELATES TO RESTRICTING THE DISALLOWA NCE OF RS. 7,15,530/- TO RS. 1,50,000/- MADE BY AO OUT OF EXPENSES CLAIMED IN TR ADING AND PROFIT & LOSS ACCOUNT. 2 3. IN ASSESSEES CROSS OBJECTION, THE ONLY ISSUE IS AGAINST SUSTAINING THE ADDITION OF RS. 1,50,000/- IN THE TRADING ADDITION. 4. SINCE THESE GROUNDS ARE INTER-LINKED, THEREFORE, THEY ARE BEING DISPOSED OFF TOGETHER. 5. THE LD. COUNSEL OF THE ASSESSEE HAS STATED THAT ENTIRE DETAILS WERE MAINTAINED AND BOOKS OF ACCOUNT WERE NOT REJECTED, THEREFORE, EXPE NSES IN THE TRADING ACCOUNT DISALLOWED BY THE AO WAS NOT JUSTIFIED. FURTHER, RELIANCE WAS PLACED ON THE BRIEF WRITTEN NOTE FILED DURING THE COURSE OF APPELLATE PROCEEDINGS. 6. ON THE OTHER HAND, THE LD. D/R SUPPORTED THE ORD ER OF AO. CERTAIN PORTIONS OF THE ORDER OF AO WERE READ ALSO. 7. THE BRIEF FACTS IN THIS REGARD ARE THAT THE ASSE SSMENT IN THIS CASE WAS COMPLETED UNDER SECTION 144. SPECIFIC GROUND WAS TAKEN BEFORE LD. CIT (A) THAT NO PROPER OPPORTUNITY WAS GIVEN BEFORE COMPLETING ASSESSMENT UNDER SECTION 144. THE LD. CIT (A) HAS DISCUSSED THIS GROUND IN DETAIL AND FOUND THAT SO MANY OPPORTUNITIES WERE GIVEN BY THE AO AND THEY HAVE NOT BEEN AVAILED. THEREFORE, T HE LEGAL GROUND WAS DISMISSED BY THE LD. CIT (A). ASSESSEE HAS NOT CHALLENGED THIS GROU ND HERE BEFORE THE TRIBUNAL. 8. DURING THE ASSESSMENT PROCEEDINGS, THE AO HAS NO TICED THAT TOTAL EXPENSES DEBITED UNDER VARIOUS HEADS AND IN ABSENCE OF DETAI LS ON THESE EXPENSES, THE AO DISALLOWED A SUM OF RS. 7,15,530/-. DETAILS WERE F ILED BEFORE LD. CIT (A). THEY WERE SENT TO THE AO FOR REMAND REPORT AND THE AO SENT TH E REMAND REPORT. IN THE REMAND REPORT IT WAS STATED THAT AMPLE OPPORTUNITY WAS GIV EN, HOWEVER, THE ASSESSEE NOT FILED ANY DETAILS. ON MERIT, IT WAS SUBMITTED THAT EACH AND EVERY VOUCHER IS PREPARED ON ACCOUNT OF EXPENDITURE. MAJOR PORTION OF THE EXPENSES WERE INCURRED BY CHEQUE. COPY OF BANK 3 STATEMENT WAS ALSO FILED. IT WAS ALSO SUBMITTED TH AT COMPLETE BOOKS OF ACCOUNT INCLUDING BALANCE SHEET WERE PRODUCED BEFORE AO AT THE TIME O F REMAND REPORT. THE RECEIPTS ARE MATCHING WITH TDS CERTIFICATES AND ARE IN ORDER. A FTER CONSIDERING THE SUBMISSIONS AND PERUSING THE MATERIAL ON RECORD, THE LD. CIT (A) FO UND THAT BOOKS OF ACCOUNT CONSISTING OF CASH BOOK, BANK BOOK, JOURNAL BOOK AND LEDGER BOOK HAD BEEN MAINTAINED BY THE ASSESSEE ON COMPUTER SYSTEM AND BILLS & VOUCHERS HAVE BEEN M AINTAINED MANUALLY AND THEY WERE PRODUCED BEFORE AO AS MENTIONED IN THE REMAND REPOR T ALSO. TOTAL RECEIPTS SHOWN IN PROFIT & LOSS ACCOUNT WERE MATCHING WITH TDS CERTIF ICATE. THE LD. CIT (A) FURTHER NOTED THAT MOST OF THE EXPENDITURE CLAIMED IN THE PROFIT & LOSS ACCOUNT ARE EITHER VOUCHED OR PAID VIDE ACCOUNT PAYEE CHEQUE AND ALL THE RELEVAN T COMPLETE PARTICULARS OF EXPENDITURE ARE AVAILABLE IN THE BOOKS OF ACCOUNT. HOWEVER, CE RTAIN EXPENDITURES WERE CLAIMED THROUGH SELF MADE VOUCHERS. THEREFORE, HE RESTRICTE D THE DISALLOWANCE OF EXPENDITURE TO RS. 1,50,000/- LAND DELETED THE REMAINING DISALLOWA NCE OF RS. 5,65,530/-. 9. AFTER GOING THROUGH THE FINDINGS OF LD. CIT (A), WE SEE NO UNREASONABLENESS IN THE ORDER OF LD. CIT (A). THE AO HAS NOT MADE ANY TRADING ADDITION BUT HAS DISALLOWED CERTAIN EXPENSES, THEREFORE, THE CONTENTION OF THE ASSESSEE THAT BOOKS OF ACCOUNT WERE NOT REJECTED, THEREFORE, NO DISALLOWANCE CAN BE POSSIBL E, IS NOT ACCEPTABLE. SINCE CERTAIN VOUCHERS WERE SELF MADE VOUCHERS AND LD. CIT (A) HA S DISALLOWED ONLY RS. 1.50 LACS, THEREFORE, WE CONFIRM THIS DISALLOWANCE. THE GROUND OF THE DEPARTMENT AND ONLY GROUND OF THE ASSESSEE IN HIS CROSS OBJECTION, IS THEREFOR E, DISMISSED. 10. SECOND GROUND IN THE APPEAL OF THE DEPARTMENT I S AGAINST DELETING THE ADDITION OF RS. 28,86,868/- ON ACCOUNT OF RECEIPTS FROM UNEXPLA INED SOURCES. 4 11. IN PARA 2 OF THE ASSESSMENT ORDER, THE AO OBSER VED THAT AS PER BANK ACCOUNT THE TOTAL RECEIPTS WERE OF RS. 1,21,98,000/- WHEREAS TH E ASSESSEE HAS SHOWN RS. 93,11,132/- IN THE PROFIT & LOSS ACCOUNT. THE DIFFERENCE OF RS . 28,86,868/- WAS ADDED AS NO DETAILS COULD BE FILED BEFORE THE AO. 12. THE MATTER WAS REMANDED BACK TO THE AO BY LD. C IT (A) IN THE REMAND PROCEEDINGS TO ALLOW OPPORTUNITY TO THE ASSESSEE. IT WAS EXPLAINED THAT RS. 21,66,868/- PERTAIN TO AMOUNT REIMBURSED BY THE MAIN CONTRACTOR M/S. TECVALLY ENGINEERS PVT. LTD. TOWARDS EXPENSES/PAYMENTS MADE BY THE ASSESSEE ON B EHALF OF THE MAIN CONTRACTOR. PHOTOCOPY OF THE CONFIRMATION LETTER ISSUED BY THE MAIN CONTRACTOR WAS ALSO FILED. 12.1. REGARDING REMAINING AMOUNT OF RS. 7,20,000/-, IT WAS STATED THAT A CHEQUE OF RS. 5 LAC DEPOSITED WAS DISHONOURED. THEREFORE, THIS AM OUNT HAS TO BE EXCLUDED FROM THE TOTAL AMOUNT OF RS. 1,21,98,000/- AND RS. 1,00,000/- WAS DEPOSITED IN CASH OUT OF THE OWN SOURCE OF ASSESSEE, THEREFORE, THEY ARE NOT PART OF CONTRACT RECEIPT. IN THIS WAY THE TOTAL DIFFERENCE OF RS. 28,86,868/- WAS EXPLAINED. RECON CILIATION CHART ALONG WITH COPY OF BANK ACCOUNT OF ICICI BANK WAS VERIFIED DURING THE REMAND REPORT ALSO. ACCORDINGLY, THE LD. CIT (A) FOUND THAT THIS IS NOT A CASE OF AD DITION ON ACCOUNT OF DIFFERENCE. THEREFORE, HE DELETED THE ENTIRE ADDITION. 13. FACTS ARE VERY CLEAR AND FINDINGS OF LD. CIT (A ) COULD NOT BE CONTROVERTED. DIFFERENCE HAS ALREADY BEEN EXPLAINED SUCCESSFULLY DURING THE REMAND REPORT. AO HAS NOT COMMENTED ADVERSE, THEREFORE, WE SEE NO UNREASONABL ENESS IN THE FINDING OF LD. CIT (A) WHO DELETED THE ADDITION OF RS. 28 LACS OR ODD. ACC ORDINGLY THE SAME IS CONFIRMED. 14. THE NEXT ISSUE IS AGAINST DELETING THE ADDITION OF RS. 2,82,320/- ON ACCOUNT OF UNEXPLAINED INVESTMENT. 5 15. THE AO NOTED IN HIS ORDER THAT ASSESSEE PURCHAS ED ONE PLOT AT MEERAN ROAD, MADHUVAN BIHAR COLONY, BAYANA, DISTRICT BHARATPUR A T RS. 2,68,000/- ON WHICH RS. 40,320/- WERE SPENT ON REGISTRATION CHARGES. THE AO ASKED TO SUBMIT EVIDENCES WITH SOURCE OF INVESTMENT, WHICH WERE NOT FILED. THEREFO RE, ADDITION OF RS. 2,82,320/- WAS MADE UNDER SECTION 68. 16. IT WAS CONTENDED BEFORE LD. CIT (A) THAT INVEST MENT IN PLOT HAS ALREADY BEEN SHOWN IN BALANCE SHEET AS ON 31.3.2006 IN THE FIXED ASSETS AS SHOP WHICH INCLUDED THE COST OF LAND AS WELL AS CONSTRUCTION MADE THEREON O UT OF WITHDRAWAL OF RS. 2,75,000/- FROM HIS BANK ACCOUNT IN PUNJAB NATIONAL BANK AND E NTERED THE SAME IN HIS BOOKS OF ACCOUNT. AFTER VERIFYING THIS FACT DURING THE REMA ND REPORT THE AO DID NOT COMMENT ADVERSE. ACCORDINGLY, THE LD. CIT (A) DELETED THIS ADDITION. 17. SINCE THE AO WAS SATISFIED AS THE DETAILS WERE FILED DURING THE REMAND REPORT, WE HOLD THAT LD. CIT (A) WAS JUSTIFIED IN DELETING THI S ADDITION ALSO. 18. REMAINING GROUND IS AGAINST DELETING THE ADDITI ON OF RS. 4,02,000/- ON ACCOUNT OF UNEXPLAINED CASH CREDITORS. 19. THE AO OBSERVED HIS ORDER THAT THERE WERE SIX C ASH CREDITORS AND CAPACITY OF THE CASH CREDITORS WAS NOT EXPLAINED AS NO PERSON WAS P RODUCED. ACCORDINGLY, ADDITION OF RS. 4,02,000/- WAS MADE. 20. AFFIDAVIT OF ALL THE PERSONS WERE FILED BEFORE LD. CIT (A) AND DURING REMAND REPORT, OUT OF SIX CASH CREDITORS, FOUR WERE EXAMIN ED BY THE AO AND THEY HAVE ADMITTED THAT THEY HAVE ADVANCED MONEY TO THE ASSESSEE AND F ROM THE STATEMENT RECORDED THAT IDENTITY, GENUINENESS AND CREDITWORTHINESS OF THE P ERSONS WERE PROVED. IN RESPECT OF SHRI 6 RAVINDRA LOKHANDE, THE ASSESSEE FILED COPY OF HIS D RIVING LICENCE AND COPY OF HIS JAMABANDI OF HIS AGRICULTURAL LAND IN SUPPORT OF HI S CREDITWORTHINESS. 21. REGARDING REMAINING CREDITOR SMT. SUSHANSHU VAS IST WHO IS THE WIFE OF THE ASSESSEE WHO WAS EMPLOYED WITH GOVERNMENT OF RAJAST HAN AS TEACHER, PHOTOCOPY OF HER RETURN OF INCOME AS WELL AS HER BANK STATEMENT WAS ALSO FILED SHOWING AMOUNT OF LOAN GIVEN TO THE ASSESSEE. IN THIS WAY THE ASSESSEE EX PLAINED ALL THE LOANS CREDIT IN HIS BOOKS OF ACCOUNT AND AO HAS ALSO ACCEPTED THE CASH CREDIT OR AS GENUINE DURING REMAND PROCEEDINGS. ACCORDINGLY, THE LD. CIT (A) DELETED THIS ADDITION ALSO. SINCE AO HIMSELF HELD THAT CASH CREDITORS ARE GENUINE DURING THE REM AND PROCEEDINGS, THEREFORE, THE LD. CIT (A) WAS JUSTIFIED IN DELETING THIS ADDITION ALSO. 22. IN THE RESULT, APPEAL OF THE DEPARTMENT AS WELL AS CROSS OBJECTION OF THE ASSESSEE ARE DISMISSED. 23. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 19 .8.2011. SD/- SD/- ( N.L. KALRA ) ( R.K. GUPTA ) ACCOUNTANT MEMBER JUDICIAL MEMBER JAIPUR, D/- COPY FORWARDED TO :- THE ITO WARD-1, BHARATPUR. SHRI ANAND SHARMA, BHARATPUR. THE CIT (A) THE CIT THE D/R GUARD FILE (ITA NO. 384(2)/JP/2011) BY ORDER, AR ITAT JAIPUR. 7