Shri Sanjaykumar Sarabhai Patel, Gandhinagar V. The Income Tax Officer, Ward-3(3), Ahmedabad

ITA 406/AHD/2016

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 2101 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 8 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-11-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2010-2011
• Appeal Filed On: 22-02-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RANJAN KUMAR SINGH
• Assessee Lawyers: S N DIVATIA
• Keywords: Unexplained cash credit; Business expenditure; Opportunity of cross examination
• Section: 143(3)

Judgement Text

, SMC IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD, JUDICIAL MEMEBR ./ I.T.A. NO. 406/AHD/2016 ( ASSESSMENT YEAR : 2010-11) SANJAYKUMAR SARABHAI PATEL 322, PARABADI VAS, CHILODA, GANDHINAGAR - 382355 / VS. ITO WARD 3(3), 103, B WING, PRATYAKSH KAR BHAVAN, AMBAWADI, AHMEDABAD ./ ./ PAN/GIR NO. : AFXPP7690B ( APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI S. N. DIVATIA, A.R. / RESPONDENT BY : SHRI RANJAN KUMAR SINGH, SR. D.R. DATE OF HEARING 28/09/2018 !'# / DATE OF PRONOUNCEMENT 14/11/2018 / O R D E R PER PRADIP KUMAR KEDIA - AM: THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTANCE OF THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF I NCOME TAX (APPEALS), GANDHINAGAR (CIT(A) IN SHORT), DATED 1 8.01.2016 ARISING IN THE ASSESSMENT ORDER DATED 26.03.2013 PASSED BY THE ASSESSING ITA NO. 406/AHD/16 [SANJAYKUMAR S. PATEL VS. ITO] AY 2010-11 - 2 - OFFICER (AO) UNDER S. 143(3) OF THE INCOME TAX ACT, 1961 (THE ACT) CONCERNING ASSESSMENT YEAR 2010-11. 2. THE ASSESSEE HAS RAISED SEVERAL GROUNDS BUT HOWE VER, IN ESSENCE, HAS IMPUGNED THE ACTION OF THE CIT(A) IN C ONFIRMING THE ADDITION/DISALLOWANCE MADE BY THE AO ON TWO GROUNDS ; (A) UNEXPLAINED CASH CREDIT OF RS.21,62,282/- & (B) TRA NSACTION CHARGES OF NMCX RS.24,67,435/-. 3. WHEN THE MATTER WAS CALLED FOR HEARING, THE LEA RNED AR FOR THE ASSESSEE SUBMITTED WITH REFERENCE TO THE ADDITION M ADE BY THE REVENUE AUTHORITIES TOWARDS UNEXPLAINED CASH CREDIT THAT THE SUNDRY CREDITORS OF THE ASSESSEE INCLUDED ONE M/S. NAVIN E NTERPRISE, PROPRIETOR SHRI NATWARBHAI GANPATBHAI VANZARA AMO UNTING TO RS.21,62,282/-. ADDITIONS WERE MADE IN THE HANDS O F THE ASSESSEE DESPITE ADDRESS, PAN NUMBER AND ALL OTHER RELEVANT INFORMATION ON THE GROUND THAT SAID MR. NATWARBHAI GANPATBHAI VANZ ARA DENIED TO HAVE ANY BANK ACCOUNT. THE LEARNED AR FOR THE ASSE SSEE REFERRED TO A COPY OF CHEQUE DATED 10.11.2009 ISSUED BY THE CREDI TOR AMOUNTING TO RS.12,12,282/- WHICH CLEARLY REBUTS THE ASSERTIONS MADE BY THE CREDITOR. THE AO HAS FAILED TO GRANT CROSS EXAMINA TION DESPITE REQUEST IN THIS BEHALF. IT WAS THUS CONTENDED THAT THE ADDITIONS MADE UNDER S.68 OF THE ACT IN VIOLATION OF NATURAL JUSTI CE IS CLEARLY NOT SUSTAINABLE IN LAW. AS REGARDS THE DISALLOWANCE OF TRANSACTION CHARGES, THE LEARNED AR SUBMITTED THAT THE EXPENSES HAVE BEEN INCURRED IN THE COURSE OF COMMODITY TRADING ON THE PLATFORM OF THE EXCHANGE AND THEREFORE, THERE WAS NO WARRANT FOR EX PENDITURE INCURRED TOWARDS TRANSACTION CHARGES IN THE ORDINAR Y COURSE OF COMMODITY TRADING. ITA NO. 406/AHD/16 [SANJAYKUMAR S. PATEL VS. ITO] AY 2010-11 - 3 - 4. THE LEARNED DR, ON THE OTHER HAND, RELIED UPON T HE ORDER OF THE CIT(A). 5. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS AND PERUSED THE ORDERS OF THE AUTHORITIES BELOW. 6. WITH REFERENCE TO ADDITIONS MADE UNDER S.68 OF T HE ACT TOWARDS M/S. NAVIN ENTERPRISE, WE FIND THAT THE ASSESSEE HA S BEEN ABLE TO DEMONSTRATE THE RECEIPT FROM THE AFORESAID CREDITOR AND HAS SUCCESSFULLY DEMOLISHED THE STAND OF REFUSAL TAKEN BY THE CREDITOR IN THIS REGARD. THUS, THE VERSION OF THE CREDITOR CAN NOT BE PRIMA FACIE TAKEN AS RELIABLE. THE CROSS EXAMINATION OF THE CR EDITOR DEMANDED HAS NOT BEEN GRANTED. THEREFORE, IN VIEW OF THE TR ITE LAW, NO ADDITION CAN BE MADE MERELY ON THE BASIS OF STATEMENT OF THI RD PERSON RECORDED AT THE BACK OF THE ASSESSEE WITHOUT OPPORTUNITY OF CROSS EXAMINATION THEREON. ONE COURSE OF ACTION WOULD BE TO REMIT TH E MATTER BACK TO THE AO FOR FRESH EXAMINATION ON THIS ASPECT. HOWEV ER, WE ARE NOT INCLINED TO DO SO AS APPARENTLY THE MATTER IS QUITE OLD AND THERE IS A LAPSE OF MORE THAN EIGHT YEARS SINCE THE EXECUTION OF TRANSACTION. HENCE, THE PROTRACTED LITIGATION REQUIRES TO BE AVO IDED IN VIEW OF THE TANGIBLE EVIDENCE PLACED ON BEHALF OF THE ASSESSEE AND LAPSE COMMITTED BY REVENUE. THEREFORE, THE ADDITIONS OF RS.21,62,282/- UNDER S.68 OF THE ACT REQUIRES TO BE DELETED. WE D IRECT THE AO TO DO SO. 7. IN THE RESULT, GRIEVANCE OF THE ASSESSEE ON THIS SCORE IS DECIDED IN ITS FAVOUR. 8. THE SECOND ISSUE PERTAINS TO ALLOWABILITY OF TRA NSACTION CHARGES. THE CLAIM OF THE ASSESSEE THAT TRANSACTION CHARGES PAID TO NATIONAL MULTI COMMODITY EXCHANGE OF INDIA (NMCE) REQUIRES T O BE ALLOWED AS ORDINARY BUSINESS EXPENDITURE IN THE COURSE OF C OMMODITY TRADING ITA NO. 406/AHD/16 [SANJAYKUMAR S. PATEL VS. ITO] AY 2010-11 - 4 - CARRIES GOOD DEAL OF FORCE. THE EXPENSE INCURRED I S CLEARLY IN THE COURSE OF COMMODITY BUSINESS AND THUS, THE ASSESSEE IS ENTITLED TO CLAIM SUCH EXPENDITURE AS BUSINESS EXPENDITURE. THE ACTION OF THE REVENUE AUTHORITIES IS ACCORDINGLY SET ASIDE AND IM PUGNED TRANSACTION CHARGES AMOUNTING TO RS.24,67,435/- IS ALLOWED. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . SD/- SD/- (MAHAVIR PRASAD) (PRADIP KUMAR KEDIA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: DATED 14/11/2018 S. K. SINHA !'#' / COPY OF ORDER FORWARDED TO:- &. / REVENUE 2. / ASSESSEE (. )*+ , / CONCERNED CIT 4. ,- / CIT (A) /. 012 33*+4 *+#4 56) / DR, ITAT, AHMEDABAD 7. 289 : / GUARD FILE. BY ORDER / 4 TRUE COPY /5 *+#4 56) 1.DATE OF DICTATION ON 05.11.2018 2.DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE TH E OTHER MEMBER 06.11.2018 3.DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S. 4.DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT 5.DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR .P.S./P.S 6.DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 7.DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8.THE DATE ON WHICH THE FILE GOES TO THE ASSTT. REG ISTRAR FOR SIGNATURE ON THE ORDER 9.DATE OF DESPATCH OF THE ORDER THIS ORDER PRONOUNCED IN OPEN COURT ON 14/11/201 8