M.S HIMANCHAL CONSTRUCTION CO. PVT. LTD., JAMSHEDPUR V. INCOM3E TAX OFFICER, WARD-1(5), JAMSHEDPUR, JAMSHEDPUR

ITA 46/RAN/2020

• Counselvise Citation: [2021] 104 COUNSELVISE.COM (IT) 7198 (ITAT-RANCHI)
• Duration Of Justice: 1 year(s) 3 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-11-2021
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 04-08-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit
• Section: 68; 133A

Judgement Text

1 ITA No. 46/Ran/2020 Himanchal Construction Co. Pvt. Ltd. AY 2012-13 IN THE INCOME TAX APPELLATE TRIBUNAL RANCHI BENCH, “VIRTUAL HEARING” AT KOLKATA (सम ) ी ए.ट .वक , या यक सद य) [Before Shri A. T. Varkey, JM] I.T.A. No. 46/RAN/2020 Assessment Year: 2012-13 Himanchal Construction Co. Pvt. Ltd. (PAN: AAACH5415K) Vs. Income Tax Officer, Ward-1(5), Jamshedpur Appellant Respondent Date of Hearing 09.11.2021 Date of Pronouncement 30.11.2021 For the Appellant Shri Devesh Poddar, AR For the Respondent Shri Narsingh Kumar Kholkho, Sr. DR ORDER This appeal has been preferred by the assessee against the order of Ld. CIT(A), Jamshedpur dated 20.02.2020 for Assessment Year 2012-13. 2. Ground No. 1 of the appeal reads as under: “1. For that Ld. CIT(A) was not justified in confirming the addition of cash deposit of Rs.15,81,100/-. The appellant had a total turnover of Rs.4,26,25,229/- which included the cash deposits in bank account. The assessee filed complete details to explain the source of same which was not considered by authorities below. As such, the addition confirmed of Rs.15,81,100/- being alleged cash deposit in bank account is unjustified, illegal and fit to be deleted.” 3. Brief facts of the case as noted by the AO are that a survey u/s. 133A of the Income Tax Act, 1961 (hereinafter referred to as the “Act”) was conducted in the business premises of the assessee company. During the survey proceedings certain loose sheets and registers were impounded which are marked as SNK-01 to SNK-24. According to the AO, from a perusal of SNK-11 it revealed that it was self withdrawal and deposit registers and that cash deposit of Rs.1,66,23,145/- have been made in the bank on various dates. However, 2 ITA No. 46/Ran/2020 Himanchal Construction Co. Pvt. Ltd. AY 2012-13 according to the AO, from the cash book as submitted by the assessee during the course of assessment proceedings it has been found that in the cash book the assessee company has not disclosed cash deposit of Rs.15,81,100/- and thereafter he prepared a chart which shows that an amount ranging from Rs.1000 to Rs.4,50,000/- was deposited on various dates total amounting to Rs.15,81,100/- which has not been allegedly entered in the cash book of the assessee. The AO issued notice to the assessee as to why this amount of Rs.15,81,100/- should not be added to the total income. According to the AO, assessee submitted its reply, however, has failed to substantiate its claim that the amount has been disclosed in its books of account, therefore, he added the same u/s. 68 of the Act. Aggrieved, the assessee preferred an appeal before the Ld. CIT(A) who confirmed the same. Aggrieved, the assessee is before this Tribunal. 4. At the outset, the Ld. AR of the assessee submitted that the assessee is a government contractor and has in this year withdrawn a cash of Rs.3,12,65,043/- and deposited cash to the tune of Rs.1,66,28,453/- and the AO has made addition of only Rs.15,81,100/- alleging that it has not been disclosed in the cash book. According to the assessee, since it is being a government contractor it has projects going on in various sites in the length and breadth of the State of Jharkhand. The managers at the assessee’s project sites has to make the weekly payments to the labourers at the weekend and at times it happens that the managers after disbursing the wages has surplus cash in their hands which they deposit in the various branches of the bank in assessee’s bank account, which might have missed the assessee’s accountant’s eyes, however, the amount is reflected any way in the bank statement and the amount (Rs.15,81,100/-) is part of the withdrawn/deposited cash and is not undisclosed credit of the assessee. According to the Ld. AR, from the chart drawn by the AO it can be seen that the sum of Rs.15,81,100/- consists of a paltry amount of Rs.1000/-, Rs.5,000/-, Rs.7,000/-, 14,000/-, Rs.20,000/- etc. leaving aside the amount of Rs.4,50,000/- which was deposited once only on 31.03.2012. According to the Ld. AR, when the assessee has withdrawn an amount of Rs.3,12,65,403/- and had deposited cash of Rs.1,66,28,453/- this amount should not have been separately taxed as the unexplained credit of the assessee u/s. 3 ITA No. 46/Ran/2020 Himanchal Construction Co. Pvt. Ltd. AY 2012-13 68 of the Act. According to Ld. AR, the entire amount has been deposited in the bank account of the assessee, so the bank statement was filed before the AO and so it cannot be said that it was undisclosed deposit. It is noted that the bank statement was also before the AO. Due to the oversight of the Accountant certain entries have not been entered because the managers have deposited the surplus amounts which could not be disbursed to labourers at various working sites/projects. So just because these deposits could not be entered in the cash book cannot be the sole ground for making addition u/s. 68 of the Act, when the bank statement duly reflected the same. Be that as it may be, the Ld. AR alternatively suggested that at the most the income embedded in the said amount of Rs.15,81,100/- may be taxed. It has been brought to my notice that the AO has accepted the NP @ 0.85% of the assessee’s business, therefore, for the interest of both the parties, I direct the AO to restrict the addition to 1% of Rs.15,81,100/- and balance amount to be deleted. This ground of appeal of assessee is partly allowed. 5. The next ground of appeal of the assessee reads as under: “2. For that Ld. CIT(A) was not justified in confirming the addition of Rs.3,50,942/- being interest paid to contractees. Ld. CIT(A) failed to consider the agreement from different government departments with whom the assessee works wherein the interest clause @ 13% has been clearly mentioned. Moreover Ld. CIT(A) even did not accept and appreciate that in assessee’s own case for previous years, relief has been duly allowed on this issue by them Ld. CIT(A) adjudicating upon it. As such, Ld. CIT(A) was not justified in confirming the said addition.” 6. At the outset, the Ld. AR of the assessee brought to my notice that this issue is no longer res integra because in assessee’s own case for AY 2013-14 in ITA No. 47/Ran/2020 this Tribunal vide order dated 30.04.2021 has decided this issue in favour of the assessee by holding as under: “2. The impugned issue raised by the assessee in this appeal relating to the confirmation of addition of Rs.3,50,942/- which was made by the Assessing Officer on account of disallowance of claim of provision of interest expenditure payable to contractees. The Assessing Officer disallowed the aforesaid claim of provision of expenditure stating that the same is contingent liability. He, therefore, observed that the assessee has not produced the necessary evidences to show that the same was an ascertained liability. 3. Before the ld. CIT(A), the assessee pleaded that the assessee had a contract with Water Resources Department and for that the assessee has executed a bank guarantee to the 4 ITA No. 46/Ran/2020 Himanchal Construction Co. Pvt. Ltd. AY 2012-13 Water Resources Department for which it created a provision of interest payable of Rs.3,50,942/-. However, the ld. CIT(A) did not get satisfied with the above contention of the assessee observing that the assessee has not furnished necessary details like copy of bank guarantee, the amount/advance if any and other documents to show that the aforesaid interest expenditure was an ascertained liability of the assessee. 4. Before this Tribunal, the ld. counsel for the assessee has invited my attention to the impugned assessment order to show that the Assessing Officer has noted that the assessee has submitted a statement regarding interest payable to the contractee. However, the Assessing Officer has made the disallowance only on the ground that the interest expenditure was a contingent liability. The ld. counsel has further brought to my attention to a copy of the order of the ld. CIT(A) dated 10.05.2016 relevant to the assessment year 2011-12 wherein, under similar circumstances, the ld. CIT(A) relied upon the order of the predecessor in the case of the assessee in Appeal No.223/JSR/2009-10 for A.Y 2004-05 and observed that the assessee follows mercantile system of accounting wherein the assessee was ascertained his liability of expenses as per terms of agreement and that the said ascertained liability of the assessee should be allowed as expenditure. As per the nature of the business of the assessee, the assessee has ascertained liability on interest expenditure and the Assessing Officer has not pointed out that the same was not ascertained, therefore, I do not find any justification on the part of the CIT(A) in confirming the impugned disallowance of interest expenditure. The same is ordered to be deleted. 5. The assessee vide ground no.2 has agitated its interest liability u/s 234A/234B which is consequential in nature and does not require any adjudication.” 7. Since the Ld. DR could not point out any change in facts or law respectfully following the order of the Tribunal in assessee’s own case for AY 2013-14 (supra) I direct deletion of the addition on this count. Therefore, this ground of appeal of assessee is allowed. 7. In the result, the appeal of assessee is partly allowed. Order is pronounced in the open court on 30 th November, 2021 Sd/- Dated: 30.11.2021 (Aby. T.Varkey) Judicial Member JD(Sr.P.S.) 5 ITA No. 46/Ran/2020 Himanchal Construction Co. Pvt. Ltd. AY 2012-13 Copy of the order forwarded to: 1. Appellant – M/s. Himanchal Construction Co. Pvt. Ltd., 11, HIG, Adarsh Nagar, Sonari, Jamshedpur, Jharkhand-831011 2 Respondent – ITO, Ward-1(5), Jamshedpur 3. 4. 5. CIT(A), Jamshedpur CIT- DR, ITAT, Ranchi /True Copy, By order, Senior Pvt. Secy.