Chitra Earth Movers, Kolkata V. ITO, Ward - 46(1), Kolkata, Kolkata

ITA 406/KOL/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 62141 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 4 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-07-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 10-03-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SUSANTA KR SINHA
• Assessee Lawyers: P K AGARWAL
• Keywords: Corroborative evidences; Reassessment proceedings
• Section: 131; 143(3)

Judgement Text

I.T.A. NO.:406/ KOL. / 2011 ASSESSMENT YEAR : 2005-06 PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA A BENCH, KOLKATA BEFORE SHRI PRAMOD KUMAR (ACCOUNTANT MEMBER), AND SHRI GEROGE MATHAN (JUDICIAL MEMBER) I.T.A. NO.: 406/ KOL. / 2011 ASSESSMENT YEAR : 2005-06 CHITRA EARTH MOVERS, ..APPELLANT 21, HEMANTA BASU SARANI, 4 TH FLOOR, ROOM NO. 405, KOLKATA-700 001 [PAN : AAEFC 1855 F] -VS.- INCOME TAX OFFICER, .....RESPONDENT, WARD-46(1), KOLKATA 3, GOVT. PLACE WEST, KOLKATA-700 001 APPEARANCES BY: SHRI P.K. AGARWAL, A.R. FOR THE APPELLANT SHRI SUSANTA KR. SINHA, DR. FOR THE RESPONDENT DATE OF CONCLUDING THE HEARING : JULY 10, 2012 DATE OF PRONOUNCING THE ORDER : JULY 10, 2012 O R D E R PER PRAMOD KUMAR: 1. BY WAY OF THIS APPEAL, THE ASSESSEE-APPELLANT HA S CHALLENGED CORRECTNESS OF THE ORDER DATED 12 TH JANUARY, 2010, PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) IN THE MATTER OF ASSESSMENT U/S. 143(3) R.W.S. 147 OF THE INCOME TAX ACT, 1961, FOR THE ASSESSMENT YEAR 2005-06, ON THE FOLLOWING GROUNDS :- (1) THAT THE LEARNED CIT(APPEALS) ERRED IN LAW AS W ELL AS IN FACTS IN SUSTAINING ENTIRE ADDITION OF RS.28,36,442 /-. (2) THAT THE LEARNED CIT(APPEALS) ERRED IN LAW AS W ELL AS IN FACTS IN APPLYING PROVISIONS OF SECTION 41(1) (BY M ISTAKE MENTIONED 4(1) IN THE APPELLATE ORDER) TO THE FACTS OF THIS CASE. I.T.A. NO.:406/ KOL. / 2011 ASSESSMENT YEAR : 2005-06 PAGE 2 OF 5 (3) THAT THE LEARNED CIT(APPEALS) HAS ERRED IN LAW AS WELL AS IN FACTS IN HOLDING THREE NON-EXISTENCE CREDITO RS AND ALSO HOLDING THE BROUGHT FORWARD LIABILITY OF RS.14,58,164/- APPEARED AGAINST THE NAMES OF THOSE THREE BOGUS CREDITORS IN THE BOOKS OF APPELLANT HAD CEASE D TO EXIST IN THE RELEVANT YEAR AS THE SAME ARE SELF CONTRADI CTORY. (4) THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE , ADDITION OF RS.28,36,442/- OUGHT TO BE DELETED FOR 3 PARTIES DUE TO NATURE OF WORK AND PASSAGE OF TIME. 2. BRIEFLY STATED, MATERIAL FACTS ARE LIKE THIS. TH E ASSESSEE IS STATED TO BE IN CONSTRUCTION BUSINESS, AND IT IS A CASE OF REOPENED ASSESSMENT. DURING THE COURSE OF THESE REASSESSMENT PROCEEDINGS , AND IN RESPONSE TO THE REQUISITIONS MADE BY THE ASSESSING OFFICER, IT WAS EXPLAINED BY THE ASSESSEE THAT CASH PAYMENTS OF RS.28,36,442/- W ERE MADE TO THREE PARTIES NAMELY SHIVAM ASSOCIATES, SIDDHI VINAYAK CONSTRUCTION AD SURAJ TRANSPORT. HOWEVER, WHEN ASSESSEE WAS ASKED T O PRODUCE BILLS AND SUPPORTING EVIDENCES IN RESPECT OF PAYMENTS DUE TO THESE PARTIES, THE ASSESSEE COULD NOT PRODUCE THE SAME. IT WAS IN THIS BACKDROP THAT NOTICES U/S. 131 WERE ISSUED TO THESE THREE PARTIES , BUT NONE APPEARED IN RESPONSE TO THE SAME. THE ASSESSING OFFICERS EF FORTS TO ASCERTAIN WHEREABOUT OF THESE PARTIES, BY REFERRING THE MATTE R TO DIT (INVESTIGATION), BHUBANESWAR, DID NOT YIELD ANY RES ULTS EITHER. AS PER INFORMATION RECEIVED FROM THE OFFICE OF THE DIT (IN VESTIGATION), BHUBANESWAR, NONE OF THE STATED ADDRESSES ARE IN AN Y WAY CONNECTED TO THE THREE CONCERNS, AND TRANSACTIONS WITH THE SAID PARTIES WERE BOGUS. WHEN ASSESSEE WAS CONFRONTED WITH ALL THESE FACTS, AND ONCE AGAIN ASKED TO PRODUCE BILLS AND VOUCHERS, THE ASSESSEE S UBMITTED THAT BOOKS OF ACCOUNTS, BILLS AND VOUCHERS WERE LOST IN A TAXI AT HOWRAH STATION BY I.T.A. NO.:406/ KOL. / 2011 ASSESSMENT YEAR : 2005-06 PAGE 3 OF 5 A STAFF MEMBER ON 15.01.2009. IT WAS ALSO STATED TH AT THE BUSINESS CONCERNS MAY HAVE SHIFTED FROM THE GIVEN ADDRESSES AND, THEREFORE, IT CANNOT BE SAID THAT THESE BUSINESS CONCERNS NEVER E XISTED AT THE GIVEN ADDRESSES. EVEN THOUGH ASSESSEE WAS CONFRONTED WITH SPECIFIC FACTUAL POINTS, THE ASSESSEE COULD NEITHER GIVE ANY SPECIFI C EXPLANATION NOR PRODUCE ANY EVIDENCE OF BILLING BY OR WORK DONE BY THESE PARTIES. IT WAS IN THIS BACKDROP THAT THE ASSESSING OFFICER CON CLUDED THAT FROM THE ABOVE DISCUSSIONS, IT IS CLEAR THAT ABOVE MENTI ONED THREE CREDITORS WERE BOGUS AND TRANSACTIONS WERE ALSO BOGUS, AND PROCEEDED TO ADD BACK ENTIRE CASH PAYMENT OF RS.28,36,442/- AS BOGUS EXPE NDITURE. AGGRIEVED, ASSESSEE WAS IN APPEAL BEFORE THE CIT(APPEALS) BUT WITHOUT ANY SUCCESS. LEARNED CIT(APPEALS) UPHELD THE ACTION OF THE ASSESSING OFFICER, AND, WITH REGARD TO ASSESSEES PLEA THAT A PART OF THESE PAYMENTS RELATED TO OPENING BALANCES IN RESPECTIVE ACCOUNT, OBSERVED THAT IT REPRESENTED A FICTITIOUS LIABILITY, IT COUL D BE TAXED U/S. 41(1). NOT SATISFIED, THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 3. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTUAL MATRIX OF THE CA SE AS ALSO THE APPLICABLE LEGAL POSITION. 4. WE FIND THAT THERE IS NO EVIDENCE WHATSOEVER FOR ANY SERVICES HAVING BEEN CARRIED OUT BY THE PERSONS TO WHOM THES E PAYMENTS HAVE BEEN MADE. THE DETAILS GIVEN BY THE ASSESSEE ARE IN SUFFICIENT AND INCORRECT. THE ONUS IS ON THE ASSESEE TO DEMONSTRAT E THE BONAFIDES OF EXPENSES, AND THIS ONUS IS NOT AT ALL DISCHARGED. T HE CIRCUMSTANTIAL EVIDENCE ALSO DEMONSTRATES THAT THE EXPENSES ARE BO GUS AND PARTIES TO WHOM PAYMENTS ARE MADE UNTRACEABLE. THE BILLS AND V OUCHERS HAVE ALSO VANISHED DURING THE COURSE OF ASSESSMENT PROCE EDINGS. WHEN ALL I.T.A. NO.:406/ KOL. / 2011 ASSESSMENT YEAR : 2005-06 PAGE 4 OF 5 THESE FACTORS ARE TAKEN TOGETHER, AND IN THE ABSENC E OF ASSESSEE HAVING DISCHARGED HIS ONUS, THE DISALLOWANCE INDEED DESERV ES TO BE UPHELD, TO THE EXTENT CLAIM FOR EXPENSES HAVE BEEN MADE IN THI S YEAR. HOWEVER, AS REGARDS THE PAYMENTS FOR OPENING BALANCES IN THE RE SPECTIVE ACCOUNTS, THE DISALLOWANCE CAN ONLY BE MADE IN THE ASSESSMENT YEAR IN WHICH DEDUCTION FOR EXPENSES IS CLAIMED. IT IS OPEN TO TH E REVENUE AUTHORITIES TO TAKE SUCH ACTION AS THEY DEEM FIT FOR APPROPRIAT E REMEDIAL MEASURES; WE DO NOT WISH TO DEAL WITH THAT ASPECT OF THE MATT ER. SINCE IT IS A JUDICIAL FINDING THAT IMPUGNED DISALLOWANCE CANNOT BE MADE IN THE PRESENT YEAR, BECAUSE IT CAN ONLY BE MADE IN THE YE AR IN WHICH DEDUCTION IS CLAIMED, THE EXCEPTIONS TO TIME BARRIN G PROVISIONS, AS SET OUT IN SECTION 153(3), WILL COME INTO PLAY. THAT BE ING THE SITUATION, CESSATION OF LIABILITY IS WHOLLY IRRELEVANT IN THE PRESENT CONTEXT. SUFFICE TO SAY THAT DISALLOWANCE IS CONFIRMED IN PRINCIPLE BUT RESTRICTED TO THE DEDUCTION CLAIMED FOR EXPENDITURE, AND THAT IT IS N OT A CASE OF CESSATION OF LIABILITY ON THE BASIS OF MATERIAL ON RECORD. IN ANY CASE, WE NEED NOT GO INTO THIS ASPECT OF THE MATTER, WHICH WAS NEITHE R THE CASE OF THE ASSESSING OFFICER NOR HAS IT BEEN MADE OUT BEFORE U S SUCCESSFULLY BY THE REVENUE. 5. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES IN THE TERMS INDICATED ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 10 TH JULY, 2012. SD/- SD/- GEORGE MATHAN PRAMOD KUMAR (JUDICIAL MEMBER) (ACC OUNTANT MEMBER) KOLKATA, THE 10 TH DAY OF JULY, 2012 I.T.A. NO.:406/ KOL. / 2011 ASSESSMENT YEAR : 2005-06 PAGE 5 OF 5 COPIES TO : (1) THE APPELLANT (2) THE RESPONDENT (3) CIT (4) CIT(A) (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ETC ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.