M/s Ramgopal Minerals., Hospet. V. Asst. Commissioner of Income Tax, Central Circle-1, Belgaum

ITA 399/PAN/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 88742 (ITAT-PANAJI)
• Duration Of Justice: 2 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-02-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 09-02-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 13-11-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B BALAKRISHNA
• Assessee Lawyers: K UMAPATI
• Keywords: Onus to prove
• Section: 133(6)

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH, PANAJI BEFORE SHRI P. K. BABNSAL, HONBLE ACCOUNTANT MEMBER AND SHRI D.T. GARASIA, HONBLE JUDICIAL MEMBER ITA NO. 39 9/PNJ/2014 (ASST. YEAR : 20 1 0 - 1 1 ) M/S. RAMGOPAL MINERALS, C/O M/S. VYSHNAVI MINERALS, COLLEGE ROAD, PEARL PLAZA, 2 ND FLOOR, HOSPET. VS. A CIT, CENT R AL CIRCLE - 1, BELGAUM . PAN NO. AAJFR 9407 P (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI K. UMAPATI A. R. DEPARTMENT BY : SHRI B. BALA KRISHNA - D.R. DATE OF HEARING : 09 / 0 2 /2015 . DATE OF PRONOUNCEMENT : 0 9 / 0 3 /201 5 . O R D E R PER D.T. GARASIA , J .M THIS APPEAL BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT (A) - VI , BANGALORE DATED 11 /0 9 /201 4 FOR THE A.Y. 20 1 0 - 1 1 . 2. THE FOLLOWING GROUNDS ARE RAISED BY THE ASSESSEE : 1. THE LEARNED CIT, APPEALS ERRED IN NOT CONSIDERING THAT, THE BUSINESS TRANSACTIONS IN RESPECT OF M/ S . SAI SHAKTHI MINERALS AND M/ S . DHANALAKSHMI LOGISTICS STOOD FROM ASSESSMENT YEAR 2007 - 08 AND THESE 2 CREDITORS WERE SUNDRY CREDITORS IN EARLIER YEARS WHICH NOT DISPUTED IN EARLIER ASSESSMENT YEARS. FURTHER THE LEARNED CIT, APPEALS ERRED NOT APPRECIATING THAT, THE SAME HAVE BEEN WRITTEN BACK AND OFFERED FOR TAX IN THE ASSESSMENT YEAR 2011 - 12 AND THE DECISI ON OF ASSESSING OFFICER IN BRINGING THESE TO TAX AMOUNTS TO DOUBLE TAXATION. 2. THE LEARNED CIT, APPEALS ERRED IN NOT APPRECIATING THAT, THE TRANSPORTATION BILLS WERE SETTLED IN APRIL, 2010 AND THAT THESE CREDITORS WERE OUTSTANDING AS ON 31 - 3 - 2010. THE L EARNED CIT ALSO FAILED TO APPRECIATE THAT, SIGNATURES DO V AR Y AND IT IS A HUMAN NATURAL PROCESS FOR ALL. PARTICULARLY WHEN THE PERSONS ARE UNEDUCATED THE VARIATION IS BOUND TO BE THERE. 3. THE LEARNED CIT, APPEALS FAILED TO TAKE NOTE OF THE PAYMENT THRO UGH BANK AND THE RETURN OF INCOME FILED BY THE CREDITORS. 4. IT IS PRAYED THAT, FOR THESE AND ANY ADDITIONAL GROUNDS THAT MAY BE RAISED AT THE TIME OF HEARING THE HONORABLE TRIBUNAL MAY KINDLY DELETE THE ADDITIONS CONFIRMED BY CIT, APPEALS. 3. SHORT FACTS OF THE CASE ARE THAT THE ASSESSEE HAS FILED THE E - RETURN OF INCOME DECLARING TOTAL INCOME OF RS. 34,47,72,830/ - . THE ASSESSEE IS DERIVING INCOME FROM T R ADING OF IRON - ORE . ON GOING THROUGH THE BALANCE SHEET OF THE ASSESSEE, IT WAS NOTICED THAT THE ASSESSEE HAS SHOWN THE FOLLOWING SUNDRY CREDITORS : - 1. SAI SHAKTHI MINERALS RS. 12,71,267/ - 2. DHANALAKSHMI LOGISTICS RS. 12,55,627/ - ASSESSING OFFICER DISALLOWED THE SUNDRY CREDITORS FOR THE REASON THAT THERE WAS NO RESPONSE FOR HIS LETTERS FROM THEM. VERIFICATION OF SUNDRY CREDITORS WAS NOT SUCCESSFUL, HENCE, HE MADE THE ADDITION. THE ASSESSING OFFICER ALSO MADE THE ADDITION ON ACCOUNT OF TRANSPORT CREDITORS VINAYAKA ENTERPRISES RS. 35 LAC., HANUMAN TRADERS RS. 65 3 LAC. , ANIKETH ENTERPRISES RS. 65 LAC. & VEERABHADRESHWARA ENTERPRISES RS. 35 LAC. 4 . THE MATTER WAS CARRIED TO THE LD. CIT(A) AND THE LD. CIT(A) HAS DISMISSED THE APPEAL OF THE ASSESSEE, THEREFORE ASSESSEE IS IN APPEAL BEFORE US. 5. LEARNED AR HAS FILED THE WRITTEN SUBMISSION , WHICH READ S AS UNDER: - I WRITE TO SUBMIT THAT M/S RAMGOPAL MINERALS, HOSPET, INCURRED EXPENDITURE TOWARDS TRANSPORTATION AS AND WHEN IT WAS REQUIRED AND THE TRANSPORT CONTRACTORS ISSUED BILLS IN THE MONTH OF MARCH AS THEY WERE INSISTED FOR ACCOUNTS PURPOSES THOUGHT THEY WERE PROMISED OF PAYMENT IN THE MONTH OF APRIL 2010. THESE CONTRACTORS WERE PAID THROUGH BANK IN THE MONTH OF APRIL.2010, CONFIRMATION LETTERS WERE OBTAINED FROM THEM, WHILE CLOSING TH E ACCOUNT AND COPIES OF THE SAME WERE PRODUCED AT THE TIME OF ASSESSMENT. THE AO ISSUED NOTICE U/S 133(6) BUT THEY WERE RETURNED BY THE POSTAL AUTHORITIES. DURING THE COURSE OF THE APPEAL THE COPIES OF SAME CONFIRMATION LETTERS WERE PRODUCED BEFORE THE LEA RNED CIT (APPEALS) VI. THE COMMISSIONER DESIRED THAT SOME MORE EVIDENCES MAY BE TRIED. AT THIS POINT OF TIME THE INCOME TAX OFFICE BELLARY, WAS APPROACHED AND COPIES OF THE ACKNOWLEDGEMENT OF RETURNS FILED BY THREE OF THESE PARTIES WERE OBTAINED AND IN RES PECT OF FOURTH PARTY THE ACKNOWLEDGEMENT COULD NOT BE DOWNLOADED, AND SAME WERE PRODUCED. THE LEARNED CIT (APPEALS) VI NOTICED THAT THE SIGNATURES IN THE CONFIRMATION LETTER AND THE RETURNS OF INCOME DO DIFFER. IT WAS SUBMITTED THAT THESE TRANSPORT CONTRAC TORS HAD LEFT HOSPET AND THEY WERE NOT TRACEABLE BUT IT WAS PROVED BEYOND DOUBT THAT THESE TRANSPORT CONTRACTORS EXISTED AND TRANSACTIONS HAVE BEEN CARRIED OUT AND EVIDENCE OF PAYMENT THROUGH BANK WERE PRODUCED, BUT THE LEARNED CIT (APPEALS) VI, FAILED TO APPRECIATE THAT THERE WAS NOTHING BEYOND THIS FOR THE ASSESSEE TO ESTABLISH. I SUBMIT THAT IN CONNECTION WITH SOME OTHER ASSESSMENTS I VISITED THE IT OFFICE BELLARY, IN THE LAST WEEK OF DECEMBER, 2014. INCIDENTALLY I MADE 4 ENQUIRIES WHETHER THE ASSESSMENT O F THESE CONTRACTORS HAD COME UP FOR SCRUTINY AND WHETHER THEY APPEARED BEFORE THE AUTHORITIES. THE OFFICERS OF BELLARY EXPRESSED THAT THESE CASES HAVE NOT COME UP FOR SCRUTINY BUT IN CASES OF OTHER TRANSPORT CONTRACTORS WHICH HAVE C A ME UP FOR SCRUTINY, THEY ARE NOT ABLE TO SERVE THE NOTICES BECAUSE MOST OF THE TRANSPORT CONTRACTORS ARE NOT AVAILABLE AS MOST OF THE TRANSPORT CONTRACTORS HAD COME FROM NEIGHBORING STATE, CARRIED OUT WORK AS TRANSPORT CONTRACTORS AND ONCE THE MINING BUSIN ESS CAME TO A HALT, THEY HAVE LEFT THE PLACE, AS THERE WAS NO WORK, AND THE AUTHORITIES ARE PUT TO INCONVENIENCE. THIS IS THE GENERAL SITUATION WHICH IS PREVAILING AT BELLARY AND HOSPET, WHICH AROSE AFTER THE STOPPAGE OF MINING BUSINESS AND BECAUSE OF THE SAME REASON WE ARE NOT ABLE TO FIND OUT THESE TRANSPORT CONTRACTORS WHO WORKED FOR US. THE EVIDENCE OF BILLS, BANK PAYMENTS, CONFIRMATION LETTERS, AND INCOME TAX RETURNS, HAVE NOT BEEN TAKEN INTO CONSIDERATION AND THE PREVAILING SITUATION OF PHYSICALLY NON AVAILABILITY OF THE PARTIES WHICH IS BEYOND THE ASSES S EE'S CONTROL HAS TO BE CONSIDERED IN THE RIGHT PROSPECTIVE. VARIATION IN SIGNATURES BETWEEN CONFIRMATION LETTER AND RETURN OF INCOME IS BEYOND ASSESSEE'S AREA OF JURISDICTION. WE HAVE TRACED OUT THE RE TURNS OF INCOME ON THE BASIS OF PAN GIVEN BY THE CONTRACTORS IN THE BILLS. THIS STRONG CORROBORATIVE EVIDENCE SHOULD HAVE BEEN CONSIDERED BY THE LEARNED CIT (APPEALS) VI. NOTWITHSTANDING THIS IT IS ALSO SUBMITTED THAT THE MOST OF THE TRANSPORT CONTRACTORS ARE ILLITERATES WHO LEARNT SIGNATURE WITH GREAT DIFFICULTY AND IT IS THE HUMAN PROBABILITY THAT SUCH PERSONS DO NOT MAINTAIN CONSISTENCY IN SIGNATURE. THE LEARNED CIT (APPEALS) VI FAILED TO CONSIDER THIS HUMAN PROBABILITY. COPIES OF ACKNOWLEDGEMENT OF RETURNS OF INCOME IN THE CASES OF R.ASHOK KUMAR , VEERABHADRESHWARA ENTERPRISES ; L.G.RAGHAVA REDDY, ANIKETH ENTERPRISES AND A. C HANDRASHEKHAR REDDY PROPRIETOR HANUMAN TRADERS, HAVE BEEN OBTAINED AND FURNISHED TO THE LEARNED CIT(APPEALS)VI WHICH ARE AVAILABL E IN THE APPEAL MEMO. IN RESPECT OF C.M.VEERESHAIAH PROPRIETOR VINAYAKA ENTERPRISES, COPY OF ACKNOWLEDGMENT COULD NOT BE OBTAINED BUT IT IS CONFIRMED BY THE OFFICE OF THE ACIT BELLARY THAT RETURN OF INCOME WAS E - FILED BY THE VINAYAKA ENTERPRISES, ON 15.10. 2010 UNDER THE ACKNOWLEDGEMENT NO 172808510151010. IN THE ABOVE CIRCUMSTANCES IT IS SUBMITTED THAT WITH EVIDENCES FURNISHED AS ABOVE THE EXPENDITURE DESERVES FAVORABLE CONSIDERATION AND FURTHER THAT THESE CONTRACTORS HAVING FILED THE RETURNS OF INCOME, TH E PAYMENTS MADE TO THEM HAVE SUFFERED TAX IN THEIR RETURNS OF INCOME. NOT ALLOWING THE EXPENDITURE IN OUR CASE WOULD RESULT IN DOUBLE TAXATION. IT IS HUMBLY REQUESTED THAT EXPENDITURE MAY KINDLY BE ALLOWED. 5 6. LEARNED DR HAS RELIED UP O N THE ORDERS OF THE REVENUE AUTHORITIES. 7. WE HAVE HEARD RIVAL CONTENTIONS OF BOTH THE PARTIES. LOOKING TO THE FACTS AND CIRCUMSTA NCES OF THE CASE, WE FIND THAT ASSESSEE WAS MADE PURCHASES FROM M/S. SAI SHAKTHI MINERALS, M/S. DHANALAKSHMI LOGISTICS IN THE YEAR ENDED 31/03 /2008 . A SMALL AMOUNT WAS PAID IN APRIL 2008 AND B ALANCE THEREOF AS OUTSTANDING CREDITORS SINCE THEN. THIS AMOUNT WAS WRITTEN OFF IN THE YEAR ENDED 31/03/2011 AND OFFERED TAXATION. LEARNED AR HAS PRODUCED COP IES OF LEDGER ACCOUNTS OF THESE TWO PARTIES AT PAGE NOS. 11 - 14 OF THE PAPER BOOK WHEREIN IN THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS WRITTEN OFF OF THIS AMOUNT IN HIS BOOKS OF ACCOUNTS. SIMILARLY, IN RESPECT OF DHANALAKSHMI LOGISTICS, THE ASSESSEE HAS WRITTEN OFF OF THIS AMOUNT AND TAX ON THAT AMOUNT HAS BEEN PAID . WE FIND THAT ASSESSEE HAS WRITTEN OFF OF THIS AMOUNT IN HIS BOOKS OF ACCOUNTS AND PAID DUE TAXES , THEREFORE, WE ARE OF THE VIEW THAT NO ADDITION CAN BE MADE. WE ALSO FIND SUPPORT FROM THE LD. CIT(A)S ORDER THAT ASSESSEE HAS WRITTEN OFF OF INCOME FOR THE A.Y. 2010 - 11 , HENCE, NO ADDITION IS REQUIRED. WE DELETE THE SAME . 8. IN RESPECT OF TRANSPORT CREDITORS M/S. VINAYAK ENTERPRISES, M/S. ANIKETH ENTERPRISES, M/S. HANUMAN TRADERS, M/S. VEERABHADRESHWARA 6 ENTERPRISES , WE FIND FROM THE PAPER BOOK WHEREIN THE ASSESSEE HAS SUBMITTED THE COPIES OF THE BANK ACCOUNT WHEREIN PAYMENT HAS BEEN MADE TO TRANSPORT CREDITORS THROUGH BANK . THE BALANCE OF SMALL AMOUNT HAS BEEN WRITTEN OFF . THE PAYMENT HAS BEEN MADE THRO UGH BANK, CONFIRMATION LETTE R S AND INCOME TAX RETURNS IN THIS REGARD HAVE NOT BEEN CONSIDERED BY THE LD. CIT(A) . LEARNED CIT(A) HAS DISALLOWED THE SAME ON THE GROUND THAT THERE WAS VARIATION IN SI GNATURES , CONFIRMATION LETTERS AND INCOME - TAX RETURNS, THEREFORE LD. CIT(A) HAS DISALLOWED THE SAME. WE HAVE GONE THROUGH THE PAGE NOS. 18 & 19 OF THE PAPER BOOK , WHICH ARE THE COPIES OF LEDGER ACCOUNT, WHEREIN THE AMOUNT HAS BEEN DEBITED BY JOURNAL ENTRY , WHICH W AS MADE BY RTGS TO VINAYAK ENTERPRISES , WHICH HAS ALSO GIVEN CONFIRMATION LETTER . IN RESPECT OF CONFIRMATION LETTER WHEN THE ASSESSEE PAID THIS AMOUNT THROUGH BANKING CHANNEL, WE ARE OF THE VIEW THAT THIS PARTY DO EXISTS AT A RELEVANT TIME. THE DEPARTMENT HAS ALSO ACCEPTED THE WRITTEN OFF FOR THE SAME PARTY. THEREFORE , IN OUR OPINION, NO ADDITION CAN BE MADE U/S. 41(1) OF THE ACT. 9. IN RESPECT OF ANIKETH ENTERPRISES , THE ASSESSEE HAS PRODUCED COPY OF LEDGER ACCOUNT AT PAGE NOS. 20 & 21, WHICH REVEALS THAT AMOUNT HAS BEEN PAID BY THE ASSESSEE THROUGH RTGS. THE ASSESSEE HAS FILED THE CONFIRMATION LETTER OF THE SAID PARTY AND ALSO FILED COPY OF INCOME TAX 7 RETURN . THEREFORE IN OUR OPINION, NO AD DITION CAN BE MADE. IN RESPECT OF HANUMAN TRADERS & VEERABHADRESHWARA ENTERPRISES , THE ASSESSEE HAS SUBMITTED THAT THESE ARE THE TRANSPORT CREDITORS AND PAYMENT HAS BEEN MADE TO BOTH THE PARTIES THROUGH RTGS . THE PARTIES DO EXIST WITH THE INCOME TAX DEPARTMENT AND THEY HAVE ALSO FILED THE RETURN OF INCOME . WE FIND THAT THE ASSESSEE HAS INCURRED THE EXPENDITURE TOWARDS TRANSPORTATION AND TRANSPORT CONTRACTORS RECEIVED THE BILLS IN THE MONTH OF MARCH AND PAYMENTS WERE MADE THROUGH BANKING CHANNEL IN 20 10 AND CONFIRMATION LETTERS WERE OBTAINED FROM THEM AND CLOSING ACCOUNT COPY OF THE SAME WAS PRODUCED AT THE TIME OF ASSESSMENT PROCEEDINGS. THE ASSESSING OFFICER HAS ISSUED NOTICE U/S. 133(6) OF THE ACT, WHICH W AS RETURNED BACK BY THE POSTAL AUTHORITIES . WE FIND THAT THE ASSESSING OFFICER SHOULD HAVE INSISTED THE ASSESSEE TO PRODUCE THESE PARTIES . THE ASSESSEE HAS MADE THE PAYMENT THROUGH RTGS, NECESSARY INFORMATION WAS GIVEN TO THE ASSESSING OFFICER AND THE LD. CIT(A) , THEREFORE IN OUR OPINION, NO ADDITION CAN BE MADE. THE ASSESSEE HAS ALSO FILED THE ACKNOWLEDGEMENT OF THE COPY OF THE RETURN FILED BY THOSE PARTIES . I F THE TRANSPORT CONTRACTOR HAD LEFT THE RESIDENCE AND THEY WERE NOT TRACEABLE , IT IS PROVED FROM THE R ECORD THAT THEY ARE TRANSPORT CONTRACTORS, THEREFORE IN OUR OPINION, NO ADDITION IS REQUIRED, HENCE, WE DELETE THE SAME. WE FIND THAT SEC. 8 41(1) OF THE ACT WHICH SAYS WHERE AN ALLOWANCE OR DEDUCTI O N HAS BEEN MADE IN THE ASSESSMENT FOR ANY YEAR IN RESPECT OF LOSS, EXPENDITURE OR TRADING LIABILITY INCURRED BY THE ASSESSEE AND SUBSEQUENTLY DURING ANY PREVIOUS YEAR , PERSON HAS OBTAINED WHETHER IN CASH OR IN ANY OTHER MANNER WHATSOEVER ANY AMOUNT IN RESPECT OF SUCH LOSS OR EXPENDITURE OR SOME BENEFIT IN RESPECT OF SUCH TRADING LIABILITY BY WAY OF REMISSION OR CESS A T ION THEREOF , THE AMOUNT OBTAINED BY SUCH PERSON OR THE VALUE OF BENEFIT ACCRUING TO HIM SHALL BE DEEMED TO BE PROFITS AND GAINS OF BUSINESS OR PROFESSION AND ACCORDINGLY CHARGEABLE TO INCOME AS THE INCOME OF THAT PREVIOUS YEAR . IF ANY EXPENDITURE ALLOWED AS A DEDUCTION IN ANY OF THE EARLIER YEARS AND IF THE AMOUNT CLAIMED IS RECOVERED SUBSEQUENTLY, IT IS CHARGEABLE TO TAX. THE RECOVERY OF SUCH EXPENDITURE, LOSS OR LIABIL ITY IS TAXABLE ON THE PRECONDITION THAT IT WAS ALLOWED AS A DEDUCTION IN EARLIER YEARS . SEC. 41(1) IS A DEEMING FICTION AND BURDEN TO PROVE THAT A PARTICULAR BENEFIT OR RECEIPT FALLS WITHIN THE FOUR CORNERS OF THE PROVISIONS OF SEC. 41(1) LIES UPON THE REVENUE. THE ASSESSING OFFICER HAS TO PROVE WITH THE HELP OF MATERIAL OR EVIDENCE THAT A DEDUCTION OR ALLOWANCE HAS BEEN ALLOWED TO THE ASSESSEE IN EARLIER YEARS AND AFTER SUCH DEDUCTION OR ALLOWANCE HAVING BEEN ALLOWED, THE ASSESSEE HAS OBTAINED ANY AMOU NT OR BENEFIT IN RESPECT OF THE SAME FOR WHICH DEDUCTION OR ALLOWANCE HAS BEEN 9 ALLOWED. THE ASSESSING OFFICER HAS TO PROVE THAT THE BENEFIT HAS BEEN RECEIVED BY THE ASSESSEE . IN THIS CASE, THE ASSESSEE HAS MADE THE PAYMENT TO TRANSPORT CREDITORS THROUGH BANKING CHANNEL AND ONCE THE ASSESSEE DISCHARGED HIS ONUS , IT IS ON THE REVENUE . IN THIS CASE, ALL THE RELEVANT DETAILS I.E NAMES OF THE CREDITORS AND THEIR ADDRESSES, PAN WAS AVAILABLE WITH THE ASSESSING OFFICER AND IT IS DUTY OF THE ASSESSING OFFICER T O PROVE THAT THOSE CREDITORS WERE FICTION. THEREFORE , IN OUR OPINION, ACTION OF THE ASSESSING OFFICER AS WELL AS LD. CIT(A) IS NOT JUSTIFIED , HENCE, WE ALLOW THE APPEAL. 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ( ORDER PRONOUNCED IN THE OPEN COURT ON 0 9 T H F E B R U A R Y , 201 5 ). S D / - S D / - (P.K. BANSAL) (D.T. GARASIA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 7 T H A P R I L , 201 5 . VR/ - COPY TO: 1 . THE APPELLANT 2 . THE RESPONDENT 3 . THE LD. CIT 4 . THE CIT(A) 5 . THE D.R 6 . GUARD FILE. BY ORDER ASSISTANT REGISTRAR I.T.A.T., PANAJI .