Sri. Kempaiah Vinay, Bangalore V. Assistant Commissioner Of Income Tax ,Circle- 6(2)(1), Bangalore

ITA 410/BANG/2020

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 8950 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 2 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-08-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 04-08-2021
• Assessment Year: 2014-2015
• Appeal Filed On: 20-05-2020
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SHASHIDHAR N S CIT BENGALURU
• Assessee Lawyers: PRATIBHA
• Keywords: Unexplained cash credit; Unexplained expenditure; Depreciation; TDS
• Section: 234B; 43; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : BANGALORE BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI GEORGE GEORGE K., JUDICIAL MEMBER IT A NO. 410/ BANG / 2020 ASSESSMENT YEAR: 2014 - 15 SRI KEMPAIAH VINAY, NO.67, GELERAYA BALAGA COLONY, 1 ST PHASE, MAHALAKSHMIPURAM, BANGALORE 560 086. PAN : AEBPV 1933J VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 6(2)(1), BANGALORE. APPELLANT RESPONDENT APPELLANT BY : S MT. PRAT IBHA, ADVOCATE RESPONDENT BY : SHR I SHASHIDHAR N.S., ADDL.CIT (DR)(ITAT ), BENGALURU. DATE OF HEARING : 04.08 .202 1 DATE OF PRONOUNCEMENT : 04 .0 8 .202 1 O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF CIT(APPEALS) DATED 31.01.2020 FOR THE ASSESSMENT YE AR 2014-15 ON THE FOLLOWING GROUNDS :- 1. THE LEARNED CIT(A) ERRED IN PASSING THE ORDER IN THE MANNER HE DID. 2. THE LEARNED CIT(A) ERRED IN CONFIRMING THE DISA LLOWANCE OF RS.48,33,200/- AS UNEXPLAINED EXPENDITURE WITHOU T APPRECIATING THE SUBMISSIONS OF THE APPELLANT. 3. THE LEARNED CIT(A) OUGHT TO HAVE APPRECIATED TH E FACT THAT THE APPELLANT HAD FURNISHED BANK STATEMENTS WH EREIN IT ITA NO. 410/BANG/2020 PAGE 2 OF 6 SHOWED SELF WITHDRAWALS AND PAYMENTS MADE TO TAXI H IRE CHARGES, FOOD, STAFF & DRIVER WAGES ETC. AND ACCORDINGLY HE OUGHT TO HAVE ALLOWED THE EXPENDITURES INCURRED FOR BUSINESS PURP OSE OF THE APPELLANT. 4. THE LEARNED CIT(A) ERRED IN ADDING RS.15,00,000 /- TOWARDS LOW DRAWINGS WITHOUT APPRECIATING THE SUBMI SSION OF THE APPELLANT. 5. THE LEARNED CIT(A) OUGHT TO HAVE APPRECIATED T HAT THE APPELLANT HAS SHOWN 12,00,000/- DRAWING FOR THE AY 2013-14 AND FOR THE RELEVANT ASSESSMENT YEAR SHOWN RS.18,00 ,000/- AND THE LD. AO HAS DISALLOWED THE RS. 15,00,000/- ON TH E GROUND THAT THE APPELLANT HAS NOT SHOWN THE DRAWINGS. 6. THE LEARNED CIT(A) ERRED IN ADDING RS.9,00,000/ - TOWARDS CASH DEPOSIT INTO THE BANK ACCOUNT UNDER SECTION 68 OF THE ACT WITHOUT APPRECIATING THE SUBMISSION OF THE APPELLAN T. 7. THE LD CIT(A) OUGHT TO HAVE APPRECIATED THAT TH E APPELLANT HAS FILED RECONCILE STATEMENT OF CASH BOOK AS WELL AS THE BANK BOOK AND FILED THE CONFIRMATION LETTERS ALSO. THUS THE ADDITION CONFIRMED IS BAD IN LAW. 8. THE LEARNED CIT(A) ERRED IN UPHOLDING THE INTER EST U/S 234B AND 234C OF THE ACT. 9. WITHOUT PREJUDICE THE DISALLOWANCES AS CONFIRME D BY THE LEARNED CIT (A) ARE ARBITRARY EXCESSIVE AND OUGHT T O BE REDUCED SUBSTANTIALLY. 10. FOR THESE AND SUCH OTHER GROUNDS THAT MAY BE U RGED AT THE TIME OF HEARING THE APPELLANT PRAYS THAT THE APPEAL MAY BE ALLOWED. 2. THE FIRST GROUND IS WITH REGARD TO DISALLOWANC E OF RS.48,33,200 AS UNEXPLAINED EXPENDITURE. DURING THE COURSE OF ASSE SSMENT PROCEEDINGS, THE DETAILS OF EXPENDITURE WITH BILLS AND VOUCHERS AS EVIDENCE FOR CASH EXPENSES OF RS.74,42,095 WAS CALLED FOR WHICH THE A SSESSEE FAILED TO PRODUCE. HOWEVER, THE AO ALLOWED AN EXPENDITURE OF RS.26,08,895 NOT INCURRED IN CASH TOWARDS SERVICE TAX, VEHICLE INSUR ANCE, CAR LOAN INTEREST, ITA NO. 410/BANG/2020 PAGE 3 OF 6 TELEPHONE EXPENSE AND DEPRECIATION. THE BALANCE OF RS.48,33,200 WAS DISALLOWED WHICH WAS NOT AT ALL SUPPORTED BY ANY BI LLS AND VOUCHERS. ON APPEAL, THE CIT(APPEALS) CONFIRMED THE SAME. AGAIN ST THIS, THE ASSESSEE IS IN APPEAL BEFORE US. 3. THE CONTENTION OF THE LD. AR IS THAT ASSESSEE HA S RECEIVED A SUM OF RS. 2 CRORES AS COMMISSION FROM ESS AND ESS INFRAST RUCTURE PVT. LTD. OUT OF WHICH RS.20 LAKHS HAS BEEN DEDUCTED AS TDS. THE ASSESSEE EXECUTED PROJECT AT MYSORE, WHICH IS SITUATED 150 KMS. FROM BANGALORE. HENCE THE ASSESSEE FREQUENTLY VISITED MYSORE WHEREIN THE ASSE SSEE MET PROSPECTIVE CUSTOMERS TO WHOM THE ASSESSEE PROVIDED TRAVELLING, FOOD AND LODGING EXPENSES AMOUNTING TO RS.48,33,200. ACCORDING TO T HE LD. AR IT IS VERY REASONABLE COMPARED TO THE EARNING OF INCOME BY THE ASSESSEE. 4. THE LD. DR RELIED ON THE ORDER OF THE CIT(APPEAL S). 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL ON RECORD. IN THIS CASE, THE ASSESSEE CLAIMED CAR HIRING CHARG ES ON 53 OCCASIONS WHICH HAS BEEN PAID BY CASH. THE AMOUNT OF CAR HIR ING CHARGES IS RS.8,25,640. THE ASSESSEE PLACED ORAL ARGUMENTS TH AT IT IS INCURRED TOWARDS TRAVELLING FROM BANGALORE TO MYSORE FOR BUS INESS PURPOSE. HOWEVER, NO EVIDENCE HAS BEEN FURNISHED IN THE FORM OF BILLS, VOUCHERS AND RECEIPTS. THE ASSESSEE ALSO CLAIMED DRIVERS SALARY OF PARAMESHA AT RS.1,63,800 AND PRAVEEN AT RS.1,67,000. WHEN THE A SSESSEE IS HAVING CAR AND DRIVERS, THE NECESSITY OF HIRING CARS IS NO T EXPLAINED. THE EXPLANATION OF ASSESSEE IS CONTRADICTORY IN NATURE. 6. FURTHER IT WAS SUBMITTED THAT ON 43 OCCASIONS TH E ASSESSEE PROVIDED BOARDING AND LODGING FACILITIES TO HIS CUSTOMERS, E ACH PAYMENT OF WHICH IS MORE THAN RS.10,000 AND INCURRED IN CASH ONLY. NO HOTEL BILLS FOR LODGING ITA NO. 410/BANG/2020 PAGE 4 OF 6 AND BOARDING HAS BEEN PRODUCED. FOR CLAIMING ALL T HESE EXPENDITURE, ASSESSEE HAS NOT MAINTAINED BOOKS OF ACCOUNT AND PR ODUCED NECESSARY BILLS, VOUCHERS AND RECEIPTS. THE ASSESSEE SUPPORT S THIS CLAIM STATING THAT THE AMOUNT HAS BEEN WITHDRAWN FROM THE BANK ACCOUNT . EVEN BEING SO, IT CANNOT BE PROVED WHETHER IT WAS SPENT TOWARDS MEETI NG THIS EXPENDITURE. HENCE, IN THE ABSENCE OF REQUISITE EVIDENCE TO PROV E THAT EXPENDITURE HAS BEEN INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOS E OF BUSINESS, WE ARE NOT IN A POSITION TO ALLOW THE CLAIM OF THE ASSESSE E. ACCORDINGLY, THIS GROUND OF APPEAL OF THE ASSESSEE IS DISMISSED. 7. GROUND NO.2 IS WITH REGARD TO ADDITION OF RS.50 LAKHS TOWARDS LOW DRAWINGS. IN THIS ASSESSMENT YEAR, THE ASSESSEE H AS NOT SHOWN ANY DRAWINGS IN ITS BOOKS OF ACCOUNT. THE ASSESSEE MAD E A PLEA THAT HE HAS BEEN STAYING WITH PARENTS AND NO EXPENDITURE HAS BE EN INCURRED. HOWEVER, IN THE EARLIER AY 2013-14, THE ASSESSEE HA S SHOWN DRAWINGS OF RS.12 LAKHS. PROPORTIONATELY THE AO FOR THIS ASSES SMENT YEAR HAS ESTIMATED IT AT RS.15 LAKHS. EVEN BEFORE US, THE A SSESSEE IS NOT ABLE TO PLACE ANY REASONABLE EXPLANATION REGARDING NON-INCU RRING OF ANY EXPENDITURE TOWARDS PERSONAL. HENCE, WE ARE OF THE OPINION THAT THAT AT LEAST THE ASSESSEE INCURRED EXPENDITURE AS IN THE E ARLIER YEAR. ACCORDINGLY, WE DIRECT THE AO TO DISALLOW ON THE ISSUE OF LOW DR AWINGS AT RS.12 LAKHS INSTEAD OF RS.15 LAKHS. THIS GROUND IS PARTLY ALLO WED. 8. THE NEXT GROUND IS REGARDING SUSTAINING THE ADDI TION OF RS.9 LAKHS U/S. 68 OF THE ACT. THE ASSESSEE HAS DEPOSITED A S UM OF RS.9 LAKHS IN THE BANK ACCOUNT OF JANATHA SEVA CO-OPERATIVE BANK. TH E ASSESSEE HAS NOT EXPLAINED THE SOURCE FOR THE DEPOSITS. HENCE THE S AME WAS CONSIDERED AS UNEXPLAINED CREDIT U/S. 68. 9. BEFORE US THE LD. AR SUBMITTED THAT THE ASSESSEE IS HAVING ENOUGH EARLIER WITHDRAWALS TO DEPOSIT INTO THE BANK. FURT HER, IT WAS SUBMITTED THAT ITA NO. 410/BANG/2020 PAGE 5 OF 6 THE ASSESSEE HAD TAKEN AMOUNT IN CASH FOR INVESTMEN T FROM ONE SH. M. NAGRAJU RS. 5,00,000/-ON 13.04.2013, SH. G. B. CHIK KONA RS. 2,40,000/- ON 15.04.2013 AND SH. H. N. RAVI. RS. 4,Q0,000/- ON 28.04.2013. THE CONFIRMATION LETTERS FROM THE ABOVE PERSONS FOR THE AMOUNT RECEIVED WAS FILED BEFORE THE AO. THE WHOLE AMOUNT OF RS. 31,40, 000/- WAS DEPOSITED FOR PURCHASE OF A SITE BUT SINCE IT DID NOT MATERIA LIZE, THE WHOLE AMOUNT WAS RECEIVED BACK BY HIM AND A PART OF IT WAS SUBSEQUEN TLY UTILIZED FOR INCURRING EXPENDITURE FOR BUSINESS PURPOSES. AS ON 18.09.2013 , THE ASSESSEE WAS LEFT WITH CASH OF ONLY RS. 9 LAKHS FROM THIS ORIGIN AL RS. 31.40 LAKHS AND THIS WAS SUBSEQUENTLY DEPOSITED INTO THE BANK. THE CASH DEPOSITS WERE THUS OUT OF THE AMOUNT AVAILABLE WITH HIM. 10. THE LD. DR RELIED ON THE ORDER OF THE CIT(APPEA LS) AND SUBMITTED THAT EXPLANATION OF ASSESSEE WAS REJECTED FOR THE F OLLOWING REASONS:- (I) THE OPENING CASH BALANCE IN THE BOOKS AS ON 1.4 .2013 IS ONLY RS.235388/-. IT SHOULD HAVE INCLUDED RS. 20 LA KHS WITHDRAWN FROM THE BANK DURING MARCH 2013 ( FY 12-1 3). (II) NO PROOF HAS BEEN FURNISHED REGARDING THE PROP OSAL FOR PURCHASE OF THE ABOVE REFERRED SITE, AND ITS SUBSEQ UENT CANCELLATION. (III) THOUGH THE CONFIRMATION LETTERS FROM SH. M. N AGRAJU (FOR RS. 5,00,000/- ON 13.04.2013), SH. G. B. CHIKKONA ( FOR RS. 2,40,000/- ON 15.04.2013) AND SH. H. N. RAVI (FOR R S. 4,00,000/- ON 28.04.2013) HAVE BEEN FURNISHED, YET THE BALANCE SHEET FILED FOR 31.03.2014 DOES NOT SHOW AN Y LIABILITY AGAINST THE SAID NAMES. (IV) THERE IS NO ENTRY IN THE CASH BOOK TO INDICAT E THAT LOAN AMOUNT HAS BEEN RETURNED TO THE LENDERS. 11. WE HAVE GONE THROUGH THE CASE LAWS RELIED ON BY THE ASSESSEE. IN OUR OPINION, THE ASSESSEE HAS TO EXPLAIN THAT THE E ARLIER WITHDRAWALS WERE AVAILABLE TO REDEPOSIT INTO BANK ACCOUNT. ACCORDI NGLY, WE REMIT THIS ISSUE ITA NO. 410/BANG/2020 PAGE 6 OF 6 TO THE FILE OF AO FOR FRESH CONSIDERATION. THE ASS ESSEE HAS TO FILE NECESSARY EVIDENCE BY RECONCILING THE AVAILABLE CAS H AND DEPOSITS INTO BANK ACCOUNT. ORDERED ACCORDINGLY. 12. IN THE RESULT, THE APPEAL BY THE ASSESSEE IS PA RTLY ALLOWED. PRONOUNCED IN THE OPEN COURT ON THIS 04 TH DAY OF AUGUST, 2021. SD/- SD/- ( GEORGE GEORGE K. ) ( CHANDRA POOJARI ) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE, DATED, THE 04 TH AUGUST, 2021. / DESAI S MURTHY / COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. BY ORDER ASSISTANT REGISTRAR ITAT, BANGALORE.