ASSTT.C,I,.T, CENTRAL CIR, -2(3), Nagpur V. M/S GUPTA COAL(INDIA) ltd., Nagpur

ITA 428/NAG/2014

• Counselvise Citation: [2014] 117 COUNSELVISE.COM (IT) 8856 (ITAT-NAGPUR)
• Duration Of Justice: 1 month(s) 14 day(s)
• Appeal Type: Income Tax (Transfer Pricing) Appeal
• Pronouncement Date: 23-10-2014
• Appeal Filed By: Department
• Bench Allotted: DB
• Next Hearing Date: 30-05-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 09-09-2014
• Court: TRIBUNAL
• Department Lawyers: A R NINAWE
• Keywords: Search and seizure; Document seized; Documents seized; Set aside
• Section: 153A; 132; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL NAGPUR BENCH, NAGPUR BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER AND SHRI RAM LAL NEGI, JUDICIAL MEMBER ITA NO. 428/NAG./2014 ( ASSESSMENT YEAR: 2005 06 ) ASSTT. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 2 (3) , NAGPUR, ROOM NO. 312, 3 RD FLOOR, AAYAKAR BHAVAN, NAGPUR . APPELLANT V/S M/S. GUPTA COAL INDIA LTD. 7 TH , FLOOR, SHRIRAM TOWER, KINGSWAY, SDAR, NAGPUR - 440001 PAN AAACG4587B . RESPONDENT & CO NO.14/NAG./2014 A/W ITA NO.428/NAG./2014 ( ASSESSMENT YEAR: 2005 06 ) M/S. GUPTA COAL INDIA LTD. 7 TH , FLOOR, SHRIRAM TOWER, KINGSWAY, SDAR, NAGPUR - 440001 PAN AAACG4587B . RESPONDENT V/S ASSTT. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 2 (3), NAGPUR, ROOM NO. 312, 3 RD FLOOR, AAYAKAR BHAVAN, NAGPUR . APPELLANT REVENUE BY : SHRI A.R. NINAWE ASSESSEE BY : SHRI R.V.LOYA 2 SHRI GUPTA COAL INDIA LTD. DATE OF HEARING 31 .03.2017 DATE OF ORDER 31.03.2017 O R D E R PER RAM LAL NEGI, J.M. THE PRESENT APPEAL AND CROSS OBJECTION HA VE BEEN PREFERRED BY THE REVENUE AND THE ASSESSEE RESPECTIVELY AGAINST ORDER DATED 28 /03/2014 PASSED BY THE LD. CIT(A PPEALS ) - III , NAGPUR FOR THE ASST. YEAR 2005 - 06 , W HEREBY THE LD. CIT(A) HAS PARTLY ALLOWED THE APPE AL FILED BY THE ASSESSEE/APPELLANT AGAINST ORDER DATED 28 /12/2011 PASSED BY THE A.O U/S 14 3(3) R EAD W ITH S ECTION 153A OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). SINCE THE APPEAL AND CROSS OBJECTION PERTAIN TO THE SAME ASSESSEE FOR THE SAME ASSESSMEN T YEAR, BOTH WERE CLUBBED AND HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. ITA NO. 4 28/NAG /201 4 A.Y. 200 5 - 06 BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2005 - 06 UNDER SECTION 139 OF THE ACT, DECLARING THE TOTAL INCOME OF RS. 3,65,49,335/ - . SEARCH AND SEIZURE OPERATION UNDER SECTION 132 OF THE ACT WAS CONDUCTED IN THE BUSINESS PREMISES OF GUPTA COAL INDIA LTD. AND RESIDENTIAL PREMISES OF SHRI PADMESH GUPTA ON 29.7.2009. DURING THE COURSE OF SEARCH SEVERAL ITEMS OF BOOKS OF ACCOUNTS AND INCRIMINATING DOCUMENTS WERE FOUNDED SEIZED. THERE AFTER NOTICE UNDER SECTION 153A WAS ISSUED ASSESSING THE ASSESSEE TO FILED RETURN OF INCOME WITHIN 30 DAYS FROM THE DATE OF RECEIPT OF THE NOTICE. SINCE THE ASSESSEE DID NOT FILE RETURN OF INCOME IN RESPONSE TO THE SAID NOTICE, NOTICE S UNDER SECTION 142 (1) WERE ISSUED AND IN RESPONSE THEREOF THE ASSESSEE FILED ITS RETURN U/S 153A DECLARING TOTAL INCOME OF RS. 3,73,20,500/ - . 2 . NEGATIVE CASH BALANCE OF RS. 1,94,71,045/ - WAS NOTICED FROM THE SEIZED DOCUMENTS. AFTER HEARING THE ASSESSEE THE AO ADDED THE SAID AMOUNT 3 SHRI GUPTA COAL INDIA LTD. TO THE INCOME OF THE ASSESSEE AS UNDISCLOSED INCOME. IT WAS FURTHER NOTICED THAT THE ASSESSEE COMPANY PAID RS. 44000/ - TO SH. KRISHNA GUPTA . ACCORDINGLY, SH. KRISHNA GUPTA WAS ASKED TO PRODUCE EVIDENCE TO PROVE THE SAME. THE AO MADE ADDITION OF THE SAID AMOUNT TO THE INCOME OF THE ASSESSEE HOLDING THAT THE ASSESSEE AS WELL AS SH. KRISHNA GUPTA COULD NOT PRODUCE ANY EVIDE NCE. AO ALSO MADE SOME OTHER ADDITIONS (WHICH ARE NOT THE SUBJECT MATTER OF THE APPEAL) AND DETERMINED THE TOTAL INCOME OF THE ASSESSEE AT RS.5,69,61,550/ - ROUNDED OFF. 3 . THE ASSESSMENT ORDER WAS CHALLENGED BY THE APPELLANT/ASSESSEE BEFORE THE LD. CIT(A). TH E LD. CIT(A) AFTER HEARING THE ASSESSEE PARTLY ALLOWED THE APPEAL OF THE ASSESSEE . A GAINST THE SAID ORDER DEPARTMENT HAS FILED THE PRESENT APPEAL RAISING THE FOLLOWING EFFECTIVE GROUND OF APPEAL : - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, WHETHER THE LD. CIT(A) ERRED IN DELETING THE ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNDISCLOSED INCOME OF RS. 1,94,71,045/ - ON THE BASIS OF NEGATIVE CASH BALANCE, IGNORING THE FACT THAT DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE COULD NOT SPECIFICALLY EXPLAIN THE REASONS FOR NEGATIVE CASH BALANCE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, WHETHER THE LD. CIT(A) ERRED IN DELETING THE ADDITION ON ACCOUNT OF DISALLOWANCE OF RS. 44,000/ - TOWARDS SERVICE CHARGES, MADE BY THE ASSESSING OFFICER, IGNORING THE FACT THAT THE ASSESSEE COULD NOT SUBSTANTIATE THE SAME WITH ANY EVIDENCE. 4. VIDE FIRST GROUND OF APPEAL THE REVENUE HAS CHALLENGED THE ORDER OF THE LD . CIT(A) DELETING THE ADDITION OF RS. 1,94,71,045/ - MADE ON THE BASIS OF NEGATIVE CASH BALANCE FOUND IN THE DOCUMENTS SEIZED DURING THE SEARCH ACTION. THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE ASSESSEE HAS FAILED TO EXPLAIN THE NEGATIVE CASH 4 SHRI GUPTA COAL INDIA LTD. BALANCE TO THE SATISFACTION OF THE AO, THE LD. CIT( A) HAS WRONGLY DELETED THE ADDITION MADE BY THE AO THEREFORE, THE FINDINGS OF THE LD. CIT(A) IS LIABLE TO BE SET ASIDE. 5. ON THE OTHER HAND THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND FURTHER SUBMITTED THAT NEGATIVE BALANCE POINTED OUT IS IN THE INDIVIDUAL CASH BOOK AND NOT IN THE CONSOLIDATED CASH AMOUNT MAINTAINED BY THE COMPANY; THAT THE BOOKS OF ACCOUNT OF ALL THE BRANCHES ARE MAINTAINED IN THE HEAD OFFICE ONLY. THE BOOKS OF ACCOUNT ARE DUL Y AUDITED AND THE AO HAS NOT REJECTED THE SAME. UNDER THESE CIRCUMSTANCES THE LD. CIT(A) HAS RIGHTLY DELETED THE ADDITION, TAKING INTO CONSIDERATION THE SUBMISSIONS OF THE ASSESSEE DULY SUBSTANTIATED BY EVIDENCE ON RECORD. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. THE LD. CIT(A) HAS DELETED THE ADDITION IN QUESTION HOLDING AS UNDER: I HAVE CONSIDERED THE FACTS OF THE CASE, DOCUMENTS AVAILABLE ON RECORD AND THE SUBMISSIONS MADE BY THE AR. IN THE INSTAN T CASE, THE ASSESSING OFFICER OBSERVED THAT THERE WAS NEGATIVE CASH BALANCE OF RS. 1,94,71,045/ - IN THE CASH BOOKS OF SURAT AND SATNA BRANCHES AND BECAUSE THE ASSESSEE COULD NOT SATISFACTORILY EXPLAIN THE SOURCE OF NEGATIVE CASH BALANCES, HE TREATED THE SAME AS UNDISCLOSED INCOME OF THE ASSESSEE. ON THE OTHER SIDE, THE AR VEHEMENTLY CONTENDED THAT DURING THE ASSESSMENT PROCEEDINGS THE ASSESSEE HAD EXPLAINED THE REASONS FOR NEGATIVE CASH BALANCES AND HAD ALSO FURNISHED THE DOCUMENTARY EVIDENCES TO PROVE TH E SOURCE OF CASH PAYMENTS ON THE DATES ON WHICH THERE WAS NEGATIVE CASH BALANCES FIGURING. IT IS SUBMITTED THAT THE PRINT OUTS WERE TAKEN DURING THE COURSE OF THE SEARCH BY JUNIOR ACCOUNTANT WHO WAS NOT WELL VERSED WITH THE PROCEDURE OF THE RUNNING OF THE ACCOUNTING SOFTWARE AND THE SENIOR ACCOUNTANT AS WELL AS THE CONCERNED DIRECTORS WERE HELD UP AS THE SEARCH ACTION WAS GOING ON AT THE VARIOUS PREMISES OF THE ASSESSEE GROUP. THE MODUS OPERANDI OF TRANSFER OF CASH HAS BEEN EXPLAINED DURING 5 SHRI GUPTA COAL INDIA LTD. THE COURSE OF THE ASSESSMENT PROCEEDINGS. THE CASH BOOK OF THE HEAD OFFICE W HICH IS A CONSOLIDATED CASH BOOK WAS SUBMITTED BEFORE THE A.O. DURING THE COURSE OF THE ASSESSMENT AND NO NEGATIVE CASH BALANCE IS FOUND IN THE CONSOLIDATED CASH BOOK. ALL THE CASH OUTGOINGS IN THE FORM OF DEPOSITS IN BANK AND EXPENDITURES INCURRED ARE CLAIMED TO HAVE BEEN DULY FOUND RECORDED IN THE REGULAR BOOKS OF ACCOUNTS INCLUDING THE CONSOLIDATED CASH BOOK. THE SOURCE OF CASH IN THE CONSOLIDATED CASH BOOK IS EXPLAINED BY THE ASSESSEE ON THE BASIS OF WITHDRAWALS FROM BANK ACCOUNTS AND CASH AVAILABLE ON ACCOUNT OF SALE OF COAL. THE CASH ENTRIES BOTH INCOMING AND OUTGOING ARE AVAILABLE IN THE CONSOLIDATED CASH BOOK. THE AR FURTHER POINTED OUT FACTUAL INACCURACIES IN THE ASSESSMENT ORDER AND SUBM ITTED THAT AT PARA 8.3 PAGE 5 OF THE ASSESSMENT ORDER, THE OBSERVATION REGARDING SASTI BRANCH IS NOT RELEVANT TO THE ASSESSEE. AFTER CAREFULLY GOING THROUGH THE VARIOUS EVIDENCES AVAILABLE ON RECORD, I FIND THAT THERE IS NO DISPUTE ABOUT THE FACT THAT NO S EPARATE BOOKS OF ACCOUNTS ARE MAINTAINED AT THE BRANCH SITES. ALL THE BOOKS OF ACCOUNTS INCLUDING THAT OF HEAD OFFICE (HO) AND THE VARIOUS BRANCHES ARE MAINTAINED AT HEAD OFFICE AT NAGPUR ONLY IN THE SAME ERP PACKAGE. THE AR FURTHER SUBMITTED THAT THE SEPA RATE BOOKS OF ACCOUNTS IN THE ERP PACKAGE ARE MAINTAINED ON THE BASIS OF TRANSACTIONS OF EACH BRANCH OCCURRING EITHER AT BRANCH OR AT HO. THE TRANSACTIONS ARE RECORDED BY THE ACCOUNTANT AT THE HO. THE SEIZED DOCUMENTS ARE THE CASH BOOKS OF THE VARIOUS BRAN CHES, PRINTOUTS OF WHICH WERE TAKEN AT THE TIME OF SEARCH. ALTHOUGH THE AO IN PARA 8.3 HAS OBSERVED THAT THE ASSESSEE DID NOT POINT OUT THE REASONS FOR NEGATIVE CASH BALANCES DURING THE SEARCH PROCEEDINGS AND THE PLEA IS AN AFTER - THOUGHT; HOWEVER I FIND TH AT THE AO HIMSELF HAS OBSERVED IN PARA 8.1 OF THE ASSESSMENT ORDER THAT THE EXPLANATION REGARDING THE TRANSFER OF CASH FROM HO TO BRANCHES AND VICE VERSA AND BRANCHES INTER - SE, WAS ADVANCED AT THE TIME OF THE SEARCH. I THUS FOUND THAT THE ASSESSEE HAD EXPL AINED ABOUT THE TRANSFER OF FUNDS FROM HO TO BRANCH AND INTER - SE DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS AND HAS ALSO JUSTIFIED SUCH TRANSFER. CONSIDERING THE GEOGRAPHICAL DISTANCES BETWEEN THE BRANCHES AND THE HO AND THE MOVEMENT OF STAFF OF THE A PPELLANT, THE EXPLANATION OF THE ASSESSEE IS PLAUSIBLE, THAT SUCH TRANSFER OF FUNDS MAY NOT BE 6 SHRI GUPTA COAL INDIA LTD. ACCOMPANIED WITH THE DOCUMENTARY PROOFS AS THE COMPANY IS A 'CLOSELY HELD' COMPANY. IT IS INTERESTING TO NOTE THAT THE AO HAS ACCEPTED THE TRANSFER OF FUNDS WITHOUT DOCUMENTS IN ALL THOSE PERIODS IN WHICH THERE WAS A POSITIVE CASH BALANCE. IN SUCH CIRCUMSTANCES, THE SYSTEM PREVAILING IN THE CASE OF PARTICULAR ASSESSEE HAS TO BE ACCEPTED IN TOTO AND THE AO WAS UNJUSTIFIED IN ADOPTING PICK AND CHOOSE POLICY. I F IND THAT THE ASSESSEE HAS EXPLAINED SATISFACTORILY THE REASONS FOR NEGATIVE CASH BALANCES THAT THE PROPER SYSTEM WAS NOT FOLLOWED BY THE JUNIOR ACCOUNTANT WHILE TAKING OUT THE PRINTOUTS OF CASH BOOK AS DEMANDED BY THE AUTHORISED OFFICER. IN MY CONSIDERED O PINION, THE EXPLANATION OF THE ASSESSEE COULD NOT BE BRUSHED ASIDE AS THERE COULD BE ERROR IN FEEDING THE DATA IN COMPUTER OR WHILE TAKING OUT THE OUTPUT IF THE SYSTEM IS NOT PROPERLY OPERATED. BE THAT AS IT MAY, THE ISSUE TO BE DECIDED AND SHOULD BE LOOKE D INTO IS THAT WHETHER THERE WAS SUFFICIENT SOURCES OF CASH AVAILABLE ON THE DATE WHEN THERE WAS A NEGATIVE CASH BALANCE DUE TO ENTRIES OF EXPENDITURE. I FIND THAT THE ASSESSEE HAS EXPLAINED THE SOURCE OF EXPENDITURE WHICH HAS RESULTED INTO NEGATIVE CASH B ALANCE. THE ASSESSEE PRODUCED CONSOLIDATED CASH BOOK OF HO, REFERENCE OF WHICH IS FOUND IN PARA 2 OF THE LETTER OF THE ASSESSEE REPRODUCED AT PAGE 4 OF THE ASSESSMENT ORDER, AND THERE IS NO DISPUTE ABOUT THE FACT THAT THERE IS NO NEGATIVE CASH BALANCE IN T HE CONSOLIDATED HO CASH BOOK. ON CAREFUL EXAMINATION OF THE SEIZED DOCUMENTS I.E. CASH BOOK OF THE BRANCHES WITH THE CONSOLIDATED CASH BOOK, I FIND THAT ALL THE EXPENDITURE/OUTGOINGS IN THE BRANCH CASH BOOK WHICH HAVE RESULTED INTO NEGATIVE CASH BALANCE AR E ALSO FOUND ENTERED IN THE CONSOLIDATED CASH BOOK OF HO. THE SOURCE OF SUCH PAYMENTS IS FOUND FROM THE WITHDRAWALS FROM THE BANK ACCOUNT OF HDFC BANK, UCO BANK, SBI AND ING VYASA BANK AND ALSO FROM THE CASH SALES. THE WITHDRAWALS FROM THE BANK ARE SUPPORT ED BY THE BANK STATEMENTS AND THE CASH SALES ARE SUPPORTED BY THE CASH SALE MEMOS. THE BOOKS OF ACCOUNTS ARE AUDITED AND THE AO DID NOT REJECT THE BOOKS OF ACCOUNTS. FURTHER, I FIND FROM THE ASSESSMENT ORDER THAT THE AO DID NOT DISPUTE THE CREDITS IN THE C ONSOLIDATED CASH BOOK OF HO, IN THE FORM OF WITHDRAWALS FROM BANK AND CASH SALES. THE GENUINENESS OF THE CREDITS IS NOT DOUBTED AND THE ENTRIES IN THE BANK ACCOUNT AND THE SALES ARE ACCEPTED. NO CASE WAS 7 SHRI GUPTA COAL INDIA LTD. MADE OUT BY THE AO TO HOLD THAT THE ASSESSEE HAS INC URRED EXPENDITURE FROM UNEXPLAINED SOURCES NOR IS THERE ANY' EVIDENCE FOUND AS A RESULT OF THE SEARCH ACTION IN THIS REGARD. THUS, I HOLD THAT THE ASSESSEE HAS SUCCESSFULLY ESTABLISHED THE AVAILABILITY OF SOURCE OF CASH ON THE BASIS OF COGENT EVIDENCES FOR THE EXPENDITURES INCURRED WHICH HAS RESULTED INTO THE INFIRMITIES IN THE PRINTOUTS OF THE BRANCH CASHBOOKS. THE ADDITION OF RS. 1,94,71,0451 - IS THEREFORE UNWARRANTED AND UNJUSTIFIED AND IS DIRECTED TO BE DELETED. THE GROUND NO. 2 IS ALLOWED. 7. THE LD. CIT(A) HAS RIGHTLY POINTED OUT THAT THERE NO SEPARATE BOOKS OF ACCOUNT ARE MAINTAINED IN THE BRANCH SITES AND THE SAME ARE MAINTAINED IN THE HEAD OFFICE AT NAGPUR. THE AO HAS ADMITTED THAT EXPLANATION REGARDING TRANSFER OF CASH FROM HO TO BRANCHES, VICE V ERSA AND BRANCHES INTER - SE WAS GIVEN AT THE TIME OF SEARCH. THE LD. CIT(A) HAS FURTHER POINTED OUT THAT THE AO HAS ACCEPTED THE TRANSFER OF FUNDS IN WHICH POSITIVE BALANCE WAS THERE. THE BOOKS OF ACCOUNT ARE DULY AUDITED AND THE AO HAS NO T REJECTED THE SAM E. WE FIND THAT THE AO HAS NOT POINTED NEGATIVE BALANCE IN THE BOOKS OF ACCOUNT MAINTAINED AT THE HEAD OFFICE OF THE COMPANY. UNDER THESE CIRCUMSTANCES, WE FIND NO MERIT IN THE CONTENTION OF THE LD. DR. ON THE OTHER HAND THE FINDINGS OF THE LD. CIT(A) IS B ASED ON THE TRUE FACTS AND SOUND REASONS. HENCE WE, UPHOLD THE FINDINGS OF THE LD. CIT(A) AND DISMISS THIS GROUND OF APPEAL OF THE REVENUE. 8. VIDE GROUND NO. 2 THE REVENUE HAS CHALLENGED THE ACTION OF LD. CIT(A) IN DELETING RS.44000/ - MADE BY THE AO ON T HE GROUND THAT THE ASSESSEE HAS FAILED TO PROVE THAT THE SAID AMOUNT WAS PAID AS SERVICE CHARGES. THE LD. DR SUBMITTED BEFORE US THAT NEITHER THE ASSESSEE NOR SHRI KRISHNA GUPTA TO WHOM PAYMENT WAS MADE, COULD PROVE THE TRANSACTION ON THE BASIS OF DOCUMENT ARY EVIDENCE. NO AGREEMENT WAS PRODUCED BEFORE THE AO. UNDER THESE CIRCUMSTANCES, THE LD. CIT(A) HAS WRONGLY DELETED THE ADDITION IN QUESTION. ON THE OTHER HAND THE LD COUNSEL RELYING ON THE FINDINGS OF THE LD. CIT(A) REITERATED THE 8 SHRI GUPTA COAL INDIA LTD. SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND POINTED OUT THAT THE ASSESSEE COMPANY INCURRED EXPENDITURE OF RS.44000/ - ON SERVICE CHARGES AND COMMISSION PAID TO SHRI KRISHNA GUPTA AND DEBITED THE SAME IN THE BOOKS OF ACCOUNT. THE EXPENDITURE IS SUPPOR TED BY DULY ACKNOWLEDGED VOUCHERS AND THE SAME WERE PRODUCED BEFORE THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS. 9. WE HAVE GONE THROUGH THE ASSESSMENT ORDER AND THE ORDER PASSED BY THE LD. CIT(A) IN THE LIGHT OF THE RIVAL SUBMISSIONS. THE LD. CIT (A) HAS DELETED THE ADDITION IN QUESTION HOLDING AS UNDER: I HAVE CONSIDERED THE SUBMISSIONS MADE BY THE AR, DOCUMENTS AVAILABLE ON RECORD AND FACTS OF THE CASE. THE AO HAS MADE THE ADDITION HOLDING THAT THE EXPENDITURE IS NOT INCURRED FOR THE BUSINESS P URPOSES AND THE ASSESSEE HAD FAILED TO PROVIDE CONTRACT/AGREEMENT. THE AO POINTED OUT THAT THE CERTIFICATE PRODUCED BY THE COMPANY DID NOT MENTION THE NATURE OF SERVICES AND THE EDUCATIONAL QUALIFICATIONS OF SHRI KRISHNA GUPTA. THE AR OF THE APPELLANT FURN ISHED BEFORE ME THE LEDGER EXTRACTS, CERTIFICATE OF REMUNERATION ISSUED TO SHRI KRISHNA GUPTA BY THE APPELLANT COMPANY AND ALSO THE COPIES OF THE VOUCHERS. IT IS AN UNDISPUTED FACT THAT SHRI KRISHNA GUPTA IS A RELATIVE OF THE DIRECTORS OF THE APPELLANT AND WAS ALSO COVERED IN THE SEARCH OPERATIONS U/S.132 OF THE I T ACT. ON PERUSAL OF THE RETURN OF INCOME OF SHRI KRISHNA GUPTA, I FIND THAT, HE IS OF THE AGE OF 30 YEARS AND HAS RECEIVED SERVICE CHARGES/COMMISSION OF RS. 44,600/ - EACH FROM THE APPELLANT COMPA NY AND A GROUP COMPANY, GUPTA COALFIELD AND WASHERIES LTD. THE ASSESSEE FURNISHED THE CERTIFICATE OF SERVICE CHARGES/COMMISSION, ISSUED TO SHRI KRISHNA GUPTA AND ALSO SUPPORTED THE PAYMENTS BY THE VOUCHERS WHICH ARE DULY ACKNOWLEDGED BY SHRI KRISHNA GUPTA. I FIND THE CONTENTION OF THE APPELLANT REASONABLE AND ACCEPTABLE AS IT IS NOT PRACTICABLE TO EXECUTE CONTRACTS/AGREEMENTS FOR SUCH SMALLER PAYMENTS WHICH ARE FOUND TO HAVE BEEN MADE ON FORTNIGHT BASIS AND THAT TOO WITH THE PERSON WHO IS RELATED. THE AR HA S STATED THAT THE PAYMENTS TO OTHER PERSONS OF SUCH NATURE ARE ALSO WITHOUT ANY FORMAL AGREEMENT AND THE SAME HAVE BEEN ACCEPTED BY THE AO. I FIND THAT SHRI KRISHNA GUPTA IS GAINFULLY 9 SHRI GUPTA COAL INDIA LTD. EMPLOYED WITH ONLY TWO COMPANIES WHICH A NOMINAL INCOME OF APPROXIMATELY RS. 8,000/ - PER MONTH. THIS IS THE REASONABLE INCOME ONE CAN EARN AND IN THE INSTANT CASE, SHRI KRISHNA GUPTA HAS ALREADY ACKNOWLEDGED THE INCOME ON THE VOUCHERS AS WELL AS BY FILING THE RETURN OF INCOME. THE PAYMENTS MADE BY THE APPELLANT ARE QUITE MEAGE R I.E. RS.3,700/ - PER MONTH, WHICH ARE QUITE REASONABLE. THERE IS NO CONTRARY EVIDENCE IN THIS REGARD BROUGHT ON RECORD AS A RESULT OF THE SEARCH OR THEREAFTER IN THE ASSESSMENT PROCEEDINGS. THE DOUBT IN THE MIND OF THE AO COULD HAVE BEEN CLEARED BY THE AO BY EXAMINING SHRI KRISHNA GUPTA REGARDING SERVICES RENDERED WHICH HAS NOT BEEN DONE IN THIS CASE. IN SUCH CIRCUMSTANCES AND FACTS OF THE CASE, I HOLD THAT THE ASSESSEE HAS JUSTIFIED THE PAYMENTS MADE TO KRISHNA GUPTA AND THE VOUCHERS CATEGORICALLY SUPPORT THE NATURE OF PAYMENTS AND EXPENDITURE. I HOLD THAT THE EXPENDITURE IS INCURRED FOR THE PURPOSE OF BUSINESS AND IS ALLOWABLE. THE AO IS DIRECTED TO DELETE THE ADDITION OF RS.44,000/ - . T HE GROUND NO. 3 IS ALLOWED. 10. THE LD. CIT(A) HAS POINTED OUT THAT SHRI KRISHNA GUPTA HAS ACKNOWLEDGED THE INCOME IN QUESTION ON VOUCHERS AS WELL AS BY FILLING THE RETURN OF INCOME. WE FIND SUBSTANCE IN THE CONTENTION OF THE LD. CIT(A) THAT GENERALLY WRITTEN AGREEMENT S ARE EXECUTED IN THE CASES OF SMALL PAYMENTS. MOREOVER, AS POINTED OUT BY THE LD. COUNSEL THE AO HAS ACCEPTED THE PAYMENTS TO OTHERS IN SIMILAR SITUATION. AO HAS NOT POINTED OUT ANY COGENT REASON AS TO WHY THIS PARTICULAR PAYMENT WAS NOT ACCEPTED. IN OUR CONSIDERED OPIN ION, THE FINDINGS OF THE LD. CIT(A) IS BASED ON THE EVIDENCE ON RECORD AND IN ACCORDANCE WITH THE PRINCIPLES OF LAW. WE, THEREFORE, UPHOLD THE FINDING OF THE LD. CIT(A) AND DISMISS THIS GROUND OF THE APPEAL OF THE REVENUE. CO NO. 1 4 /NAG /201 4 A.Y. 200 5 - 0 6 THE ASSESSEE HAS FILED THE PRESENT CROSS OBJECTION AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (A) 34, MUMBAI, HAS RAISING THE FOLLOWING EFFECTIVE GROUNDS: 10 SHRI GUPTA COAL INDIA LTD. 1. THAT THE ORDER OF THE ASSESSING OFFICER IS BAD IN LAW AND WRONG ON FACTS AND TH E LEARNED CIT(A) ERRED IN CONFIRMING THE ACTION OF THE A.O. 2. THAT THE LEARNED ASSESSING OFFICER ERRED IN LAW AND ON FACTS IN ISSUING NOTICE U/S 153 A OF THE INCOME TAX ACT AND THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF THE A.O. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE ACTION IS ILLEGAL AND THE ASSESSMENT U/S 153A IS BAD IN LAW. 3. THAT THE LEARNED A.O ERRED IN LAW AND ON FACTS IN MAKING ADDITION IN THE ASSESSMENT PROCEEDINGS U/S 153A, EVEN - THOUGH NO MATERIAL OR EVIDENC E OF INCRIMINATING NATURE WAS FOUND AS A RESULT OF SEARCH. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) ERRED IN NOT HOLDING THE ORDER OF THE A.O AS BAD IN LAW. 4. THAT THE LEARNED A.O ERRED IN LAW AND ON FACTS IN MAKING THE ADDITION OF RS. 1,94,71,045/ - AS NEGATIVE CASH BALANCE AND CIT(A) WAS JUSTIFIED IN DELETING THE SAME. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ACTION OF THE AO IS BASED ON CONJECTURES AND SURMISES AND HIGHLY UNJUSTIFIED AND THE LEARNED CIT(A) WAS JUSTIFIED IN SETTING ASIDE THE SAME. 4 . AT THE OUTSET , THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE DOES NOT WANT PRESS THE CROSS OBJECTION FILED AGAINST THE ORDER OF THE LD. CIT(A). IN VIEW OF THE SUBMISSIONS, WE DISMISS THE CROSS OBJECTION FILED BY THE ASSESSEE AS NOT PRESSED. IN THE RESULT, APPEALS FILED BY THE REVENUE AS WELL AS CROSS OBJECTION FILED BY THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 31 .03.2017 SD/ - SHAMIM YAHYA ACCOUNTANT MEMBER SD/ - RAM LAL NEGI JUDICIAL MEMBER NAGPUR, DATED: 31 .03.2017 11 SHRI GUPTA COAL INDIA LTD. COPY OF THE ORDER FORWARDED TO : ( 1 ) THE ASSESSEE; ( 2 ) THE REVENUE; ( 3 ) THE CIT(A); ( 4 ) THE CIT, NAGPUR CITY CONCERNED; ( 5 ) THE DR, ITAT, NAGPUR; ( 6 ) GUARD FILE . TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY (DY./ASSTT. REGISTRAR) ITAT, NAGPUR