DCIT, Cuttack V. Dipendra Bahadur Singh, Keonjhar

ITA 413/CTK/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 3710 (ITAT-CUTTACK)
• Duration Of Justice: 1 year(s) 9 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-07-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2011-2012
• Appeal Filed On: 09-10-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D K PRADHAN
• Assessee Lawyers: S K AGARWAL
• Keywords: Unexplained investment; Earning of tax free income
• Section: 43B; 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK BEFORE S/SHRI N.S SAINI, ACCOUNTANT MEMBER AND PAVAN KUMAR GADALE, JUDICIAL MEMBER ITA NO.413/CTK/2015 ASSESSMENT YEAR : 2011 - 12 DCIT, CIRCLE - 1(1), CUTTACK VS. SRI DIPENDRA BAHADUR SINGH, HIDISAHI, JODA, KEONJHAR PAN/GIR NO. ADJPS 5869 D (APPELLANT ) .. ( RESPONDENT ) ITA NO.419/CTK/2015 C.O.NO.52/CTK/2015 (IN ITA NO.413/CTK/2015) ASSESSMENT YEAR :2011 - 12 SRI DIPENDRA BAHADUR SINGH, HIDISAHI, JODA, KEONJHAR VS. DCIT, CIRCLE - 1(1), CUTTACK PAN/GIR NO.ADJPS 5869 D (APPELLANT ) /CROSS OBJECTOR .. ( RESPONDENT ) ASSESSEE BY : SHRI S.K.AGARWAL, AR RE V ENUE BY : SHRI D.K.PRADHAN, DR DATE OF HEARING : 12/07 / 2017 DATE OF PRONOUNCEMENT : 13 /07 / 2017 O R D E R PER N.S.SAINI, AM THESE ARE CROSS APPEALS FILED BY THE REVENUE AND THE ASSESSEE AND CROSS OBJECTION FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) - CUTTACK, DATED 20.7.2015 , FOR THE ASSESSMENT YEAR 2010 - 2011 . 2 2. IN REVENUES APPEAL, THE SOLE ISSUE INVOLVE D IS THAT THE CIT(A) IS NOT JUSTIFIED IN DELETING THE ADDITION OF RS.1,20,30,933/ - MADE UNDER SECTION 43B IN RESPECT OF UNPAID SERVICE TAX LIABILITY. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAS SHOWN SERVICE TAX PAYABLE IN THE BALANCE SHEET AMOUNTING TO RS.1,20,30,933/ - . THE ASSESSEE FILED DETAILS OF PAYMENT CHALLANS OF SERVICE TAX AMOUNTING TO RS.78,26,412/ - ON DIFFERENT DATES IN THE MONTH OF JANUARY AND FEBRUARY, 2013. THE ASSESSING OFFICER OBSERVED THAT THE A SSESSEE RAISED HIS BILLS FOR THE FINANCIAL YEAR 2010 - 2011 IN WHICH SERVICE TAX AMOUNTS WERE INCLUDED. IT WAS CONTINGENT ON THE PART OF THE ASSESSEE TO PAY SERVICE TAX ON OR BEFORE THE DUE DATE OF FILING OF RETURN I.E. 30.9.2011, WHEREAS THE ASSESSEE HAS P AID THE SAME IN THE BEGINNING OF 2013. THEREFORE, HE DISALLOWED DEDUCTION FOR RS.1,20,30,933/ - UNDER SECTION 43B OF THE ACT. 4. THE ASSESSEE IN APPEAL BEFORE THE CIT(A) SUBMITTED THAT ON THE DATE OF BALANCE SHEET, THE ASSESSEE HAS SHOWN A SUM OF RS.1,20,3 0,933/ - AS LIABILITY TO BE DISCHARGED TOWARDS SERVICE TAX WHICH WAS DISALLOWED BY THE ASSESSING OFFICER AS THE SAME WAS NOT PAID BEFORE THE DUE DATE OF FILING OF RETURN OF INCOME . IT WAS SUBMITTED THAT SECTION 43B OF THE ACT SPECIFIES THAT CERTAIN DEDUCTIONS TO BE ALLOWED ONLY ON ACTUAL PAYMENT. THAT MEANS IF AN ASSESSEE CLAIMS ANY EXPENDITURE IN HIS PROFIT AND LOSS ACCOUNT AND THAT EXPENDITURE HAS NOT BEEN PAID AS PER THE PROVISIONS OF THE ACT, THEN, 3 THAT EXPENDITURE WILL BE DISALLOWED. BUT WHERE A PERSON DOES NOT CLAIM ANY EXPENDITURE/DEDUCTION IN HIS PROFIT AND LOSS ACCOUNT, THEN NO SUCH ADDITION OR DISALLOWANCE CAN BE MADE. IN THE INSTANT CASE , THE ASSESSEE HAS NOT CLAIMED ANY EXPENDITURE OR DEDUCTION TOWARDS SERVICE TAX IN HIS PROFIT AND LOSS AC COUNT, T HEREFORE NO SUCH EXPENDITURE COULD BE DISALLOWED. 5 . THE CIT(A) AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE HELD THAT FROM A PERUSAL OF THE PROFIT AND LOSS ACCOUNT AND THE BALANCE SHEET OF THE ASSESSEE , IT IS EVIDENT THAT THE ASSESSEE HAS NOT CLAIMED ANY DEDUCTION REGARDING PAYMENT OF SERVICE TAX. SINCE NO DEDUCTION HAS BEEN CLAIMED BY THE ASSESSEE ON THIS ACCOUNT AND THE ASSESSEE HAD ONLY SHOWN THE AMOUNT AS LIA BILITIES IN ITS BALANCE SHEET, T HERE IS NO REQUIREMENT OF DISALLOWING OF THE SAME U/S.43B OF THE ACT. 6. BEING AGGRIEVED BY THE SAID ORDER OF THE CIT(A), THE REVENUE IS IN APPEAL BEFORE US. 7. LD D.R. SUPPORTED THE ORDER OF THE ASSESSING OFFICER WHEREAS LD A.R. OF THE ASSESSEE SUPPORTED THE ORDER OF THE CIT(A) AND RELIED ON THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF JET LITE (INDIA) LTD VS CIT, 128 DTR (DEL) 91, WHEREIN, IT WAS HELD THAT SECTION 43B IS ONLY ATTRACTED WHEN THE ASSESSEE CLAIMS DEDUCTION OF ANY SUM PAYABLE BY WAY OF TAX OR DUTY UNDER ANY LAW FOR THE TIME BEING IN FORCE AND, WHERE, AS IN THE CASE OF THE ASSESSEE, NO CHARGE IS CLAIMED OR MADE TO THE PROFIT AND LOSS ACCOUNT, THERE 4 WAS NO QUESTION OF DISALLOWING THE AMOUNT TAKEN TO THE BALANCE SHEET ON THE LIABILITY SIDE. 8. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERUSING THE MATERIALS ON RECORD, WE FIND THAT THE UNDISPUTED FACTS OF THE CASE ARE THAT THE ASSESSING OFFICER FROM THE BALANCE SHEET OF THE ASSESSEE FOUND THAT THE ASSESSEE HAS SHOWN OUTSTANDING LIABILITY FOR SE RVICE TAX AT RS.1,20,30,933/ - . ACCORDING TO THE ASSESSING OFFICER, SINCE THIS AMOUNT WAS NOT PAID BY THE ASSESSEE BEFORE THE DUE DATE OF FILING OF RETURN OF INCOME U/S.139(1) OF THE ACT, WHICH WAS 30.9.2011, HE DISALLOWED THE SAME U/S.43B OF THE ACT AND A DDED TO THE INCOME OF THE ASSESSEE. 9. ON APPEAL BEFORE THE CIT(A), THE ASSESSEE CONTENDED THAT SERVICE TAX AMOUNT OF RS.1,20,30,933/ - WAS NOT CLAIMED AS DEDUCTION IN TH E PROFIT AND LOSS ACCOUNT BY THE ASSESSEE AND, THEREFORE, NO DISALLOWANCE U/S.43B OF TH E ACT OF THE SAID AMOUNT CAN BE MADE BY THE ASSESSING OFFICER. THE CIT(A) AFTER VERIFYING THE P&L ACCOUNT AND BALANCE SHEET OF THE ASSESSEE ARRIVED AT THE CONCLUSION THAT THE ASSESSEE HAS NOT CLAIMED ANY DEDUCTION ON ACCOUNT OF SERVICE TAX FOR RS.1,20,30, 933/ - IN ITS PROFIT AND LOSS ACCOUNT AND, ACCORDINGLY, HELD THAT THERE WAS NO QUESTION OF DISALLOWING RS.1,20,30,933/ - AND MAKING ADDITION OF THE SAID AMOUNT UNDER SECTION 43B OF THE ACT. 10. LD D.R. RELIED ON THE ORDER OF THE ASSESSING OFFICER. 11. LD A.R. SUPPORTED THE ORDER OF THE CIT(A) AND RELIED ON THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF JET LITE (INDIA) LTD(SUPRA). 5 12. IT IS NOT DISPUTE THAT NO DEDUCTION OF SERVICE TAX OF RS.1,20,30,933/ - WAS CLAIMED I N THE PROFIT AND LOSS ACCOUNT BY THE ASSESSEE, THEREFORE, THE QUESTION OF DISALLOWANCE OF THE SAME U/S.43B OF THE ACT DOES NOT ARISE. THE ORDER OF THE CIT(A) IS IN CONSONANCE WITH THE ORDER OF THE HONBLE DELHI HIGH COURT IN THE CASE OF JET LITE (INDIA) LTD (SUPRA). HENCE, WE CONFIRM THE ORDER OF THE CIT(A) AND DISMISS THE GROUND OF APPEAL OF THE REVENUE. 13. IN ASSESSEES APPEAL, IN GROUND NOS.1 & 2 OF THE APPEAL, THE GRIEVANCE OF THE ASSESSEE IS THAT THE CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE DISALLOWANCE OF INTEREST EXPENDITURE OF RS.15,47,511/ - U/S.14A OF THE ACT. 14. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE INVESTED A SUM OF RS.4.50 CRORES IN THE EQUITY SHARE CAPITAL OF A COMPANY, IN WHICH, HE IS MANAGING DIRECTOR. THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAS INCURR ED FINANCE CHARGES OF RS.79,10,139/ - , WHICH ARE MOSTLY INTEREST EXPENDITURE. THEREFORE, THE ASSESSING OFFICER BY INVOKING THE PROVISIONS OF SECTION 14A OF THE ACT MADE DISALLOWANCE OF RS.15,47,511/ - . 15. ON APPEAL, THE CIT(A) CONFIRMED THE ACTION OF THE ASSESSING OFFICER. 16. BEFORE US, LD A.R. HAS RELIED ON THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CHEMINVEST LIMITED VS CIT (2015) 378 ITR 33 (DEL), WHEREIN, IT HAS BEEN HELD THAT THE EXPRESSION 'DOES NOT FORM PART OF THE TOTAL INCOME' IN SECTION 14A OF THE ACT ENVISAGES THAT THERE SHOULD BE AN AC TUAL RECEIPT OF INCOME, WHICH WAS NOT INCLUDIBLE IN THE TOTAL INCOME, DURING THE RELEVANT PREVIOUS YEAR FOR THE PURPOSE OF DISALLOWING ANY 6 EXPENDITURE INCURRED IN RELATION TO THE SAID INCOME. IN OT HER WORDS, SECTION 14A WILL NOT APPLY IF NO EXEMPT INCOME IS RECEIVED OR RECEIVABLE DURING THE RELEVANT PREVIOUS YEAR. HE ALSO RELIED ON THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. CORRTECH ENERGY PVT LTD., (2014) 272 CTR 0252 (GUJ) , WHEREIN, IT WAS HELD THAT SUB - SECTION (1) OF SECTION 14A PROVIDES THAT FOR THE PURPOSE OF COMPUTING TOTAL INCOME UNDER CHAPTER IV OF THE ACT, NO DEDUCTION SHALL BE ALLOWED IN RESPECT OF EXPENDITURE INCURRED BY THE ASSESSEE IN RELATION TO INCOME WHICH DO ES NOT FORM PART OF THE TOTAL INCOME UNDER THE ACT. IN THE PRESENT CASE, ADMITTEDLY, THE ASSESSEE DID NOT MAKE ANY CLAIM FOR EXEMPTION. IN SUCH A SITUATION SECTION 14A COULD HAVE NO APPLICATION. FURTHER, HE RELIED ON THE DECISION OF HONBLE ALLAHABAD HI GH COURT IN THE CASE OF CIT VS. SHIVAM MOTORS (P) LTD., (2014) 89 CCH 0059 (ALL), WHEREIN, IT WAS HELD THAT IN ABSENCE OF ANY TAX FREE INCOME, CORRESPONDING EXPENDITURE COULD NOT BE WORKED OUT FOR DISALLOWANCE U/S.14A. 17. AFTER CONSIDERING THE RIVAL SUBM ISSIONS AND PERUSING THE MATERIALS AVAILABLE ON RECORD, WE F IND THAT THE UNDISPUTED FACTS IN THE PRESENT APPEAL OF THE ASSESSEE ARE THAT THE ASSESSEE HAS NOT CLAIMED ANY TAX FREE INCOME DURING THE YEAR. THEREFORE, NO DISALLOWANCE OF CORRESPONDING EXPENDIT URE COULD BE WORKED OUT FOR DISALLOWANCE U/S.14A OF THE ACT IN VIEW OF THE DECISION OF HONBLE HIGH COURT OF DELHI, GUJARAT AND ALLAHABAD QUOTED ABOVE. HENCE, RESPECTFULLY FOLLOWING THE SAME, WE SET ASIDE THE ORDERS OF LOWER AUTHORITIES AND DELETE THE ADD ITION OF RS.15,47,511/ - MADE BY THE A SSESSING OFFICER AND ALLOW THE GROUND OF APPEAL OF THE ASSESSEE. 7 18. IN GROUND NO.3 OF THE APPEAL, THE GRIEVANCE OF THE ASSESSEE IS THAT THE CIT(A) WAS NOT JUSTIFIED IN TREATING RS.2,07,861/ - AS UNEXPLAINED INVESTMENT. 19. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSING OFFICER OBSERVED THAT DURING THE YEAR, THE AS SESSEE HAS PURCHASED ONE APARTMENT FROM ONE VASUDHA HOMES IN RANCHI. THE ASSESSEE, AS PER AUDIT REPORT, HAS SHOWN AN ADVANCE OF RS.14,66,000/ - TO VASUDHA HOMES AS ON 31.3.2010. THE LAND TRANSACTION DOCUMENT WAS OBTAINED FROM THE SUB - REGISTRAR, RANCHI FROM WHICH IT IS REVEALED THAT THE ASSESSEE HAS PURCHASED THE FLAT ON 31.3.2010 AS A PRICE OF RS.16,73,861/ - . THEREFORE, THE ASSESSING OFFICER TREATED THE DIFFERE NCE OF RS.2,07,861/ - AS UNEXPLAINED INVESTMENT AND ADDED THE SAME TO THE INCOME OF THE ASSESSEE. 20. ON APPEAL BEFORE THE CIT(A), THE ASSESSEE SUBMITTED THAT ON 24.12.2010 THE ASSESSEE PAID AN AMOUNT OF RS. 1,75,000/ - TO THE COMPANY FROM ITS C URRENT ACCOUNT MAINTAINED IN STATE BANK OF INDIA . SUCH AMOUNT WAS WRONGLY DEBITED TO THE DRAWINGS ACCOUNT OF THE ASSESSEE. THE TOTAL AMOUNT OF RS. 1,75,000/ - PAID FROM THE ACCOUNT OF M/S. BRAJ MINING CORPORATION PVT. LTD AS AN ADVANCE TO THE COMPANY. HE FILED COPY OF THE BALANCE SHEET IN SUPPORT OF THE SAME. IT WAS SUBMITTED THAT SUCH ENTRY WAS RECTIFIED IN THE BOOKS OF ACCOUNT BY TRANSFERRING SUCH ADVANCE ACCOUNT TO THE ASSESSEE IN THE FINANCIAL YEAR 2012 - 13. IN THIS MANNER , THE ASSESSEE HAD PAID RS.18,16,000 / - IN TOTAL TO THE SAID COMPANY. 8 21. THE CIT(A) DID NOT ACCEPT THE EXPLANATION OF THE ASSESSEE AS CONVINCING SINCE THE AMOUNT PAID BY THE ASSESSEE HIMSELF WAS TO BE RS.14,66,000/ - AND THE VALUE OF THE ASSET AS PER THE SUB - REGISTRAR WAS RS.16,73,861/ - . HENCE, HE CONFIRMED THE ADDITION OF RS.2,07,861/ - MADE BY THE ASSESSEE AS UNEXPLAINED INVESTMENT. 22. BEFORE US, LD A.R. REITERATED THE SUBMISSIONS MADE BEFORE THE LOWER AUTHORITIES AND LD D.R. SUPPORTED THE ORDERS OF LOWER AUTHORITIES. 23. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD. THE UNDISPUTED FACTS OF THE CASE ARE THAT THE ASSESSING OFFIC ER FOUND THAT THE ASSESSEE HAS PURCHASED A FLAT FROM VASUDHA HOMES, RANCHI AND HAS SHOWN THE AMOUNT PAID AS ADVANCE TO VASUDHA HOMES AS ON 31.3.2010 AT RS.14,66,000/ - . THE ASSESSING OFFICER FROM THE DOCUMENTS OBTAINED FROM THE SUB - REGISTRAR, RANCHI OBSERV ED THAT THE ASSESSEE HAS PUR CHASED THE FLAT FOR RS.16,73,861/ - . THEREFORE, HE MADE ADDITION OF DIFFERENTIAL AMOUNT OF RS.2,07,861/ - AS UNEXPLAINED INVESTMENT IN FLAT BY THE ASSESSEE. 24. ON APPEAL BEFORE THE CIT(A), THE ASSESSEE EXPLAINED THAT ON 24.12.20 10, AN AMOUNT OF RS.1,75,000/ - WAS PAID FOR THE PURCHASE OF FLAT FROM THE CURRENT ACCOUNT MAINTAINED WITH SBI, WHICH WAS WRONGLY DEBITED TO THE DRAWING ACCOUNT OF THE ASSESSEE. IT WAS SUBMITTED THAT THIS AMOUNT OF RS.1,75,000/ - WAS PAID FROM THE ACCOUNT O F M/S. BRAJ MINING CORPORATION 9 PVT LTD., AS ADVANCE TO THE COMPANY AND SUCH ENTRY WAS RECTIFIED IN THE BOOKS OF ACCOUNT IN THE FINANCIAL YEAR 2012 - 13. THE CIT(A) FOUND T HE EXPLANATION OF THE ASSESSEE AS NOT CONVINCING AND HENCE, CONFIRMED THE ADDITION MAD E BY THE ASSESSING OFFICER. 25. WHEN QUESTIONED BY THE B ENCH THAT THE ADDITION WAS MADE OF RS.2,07,861/ - AND THE ASSESSEES EXPLANATION IS FOR RS.1,75,00 0 / - ONLY, HOW THE BALANCE AMOUNT OF RS.32,861/ - WAS PAID, LD A.R. OF THE ASSESSEE COULD NOT GIVE ANY EX PLANATION FOR THE SAME. HENCE, WE FIND THAT THE CIT(A) HAS RIGHTLY CONFIRMED THE ADDITION AS UNEXPLAINED INVESTMENT IN FLAT OF RS.2,07,861/ - . ACCORDINGLY, WE CONFIRM THE ADDITION AND DISMISS THIS GROUND OF APPEAL OF THE ASSESSEE. 26. THE CROSS OBJECTION FILED BY ASSESSEE IS IN SUPPORT OF THE ORDER OF THE CIT(A) IN DELETING THE ADDITION OF RS.1,20,30,933/ - U/S.43B OF THE ACT. 27. SINCE, WE HAVE CONFIRMED THE ACTION OF THE CIT(A) IN DELETING THE ADDITION OF RS.1,20,30,933/ - U/S.43B, THE CROSS OBJECTION FILE D BY THE ASSESSEE HAS BECOME INFRUCTUOUS AND HENCE DISMISSED. 28. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DISMISSED, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED AND CROSS OBJECTION FILED BY THE ASSESSEE IS DISMISSED AS INFRUCTUOUS. ORDER PRONO UNCE D IN THE OPEN COURT ON 13 /07 /2017 IN THE PRESENCE OF PARTIES. SD/ - SD/ - ( PAVAN KUMAR GADALE) ( N.S SAINI) JUDICIALMEMBER A CCOUNTANT MEMBER CUTTACK; DATED 13 /07 /2017 B.K.PARIDA, SPS 10 COPY OF THE ORDER FORWARDED TO : BY ORDER, SR.PRIVATE SECRETARY ITAT, CUTTACK 1. THE APPELLANT : DCIT, CIRCLE 1(1), CUTTACK 2. THE RESPONDENT/ASSESSEE: DIPENDRA BAHADUR SINGH, JODA, KEONJHAR. 3. THE CIT(A) CUTTACK 4. PR.CIT , CUTTACK 5. DR, ITAT, CUTTACK 6. GUARD FILE. //TRUE COPY//