M/s. Tayal Concast (P) Ltd., Muzaffarnagar V. ITO, Muzaffarnagar

ITA 4693/DEL/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 6771 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 2 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-11-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC 1
• Next Hearing Date: 24-10-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 25-08-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K JAIN
• Assessee Lawyers: PREM PRAKASH; ASHISH
• Section: 133(6); 145

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC-1 NEW DELHI BEFORE SHRI S.V. MEHROTRA : ACCOUNTANT MEMBER ITA NO. 4693/DEL/2014 ASSTT. YR: 2010-11 M/S TAYAL CONCAST (P) LTD., VS. INCOME-TAX OFFICE R, 321, SANJAY MARG, WARD 2(3), MUZAFFARNAGAR. MUZAFFARNAGAR. PAN: AABCT 1327 P ( APPELLANT ) (RESPONDENT) APPELLANT BY : SHRI PREM PRAKASH ADV. & SHRI ASHISH ADVOCATE RESPONDENT BY : SHRI S.K. JAIN SR. DR DATE OF HEARING : 24/10/2016. DATE OF ORDER : 08/11/2016. O R D E R PER S.V. MEHROTRA, A.M: THIS APPEAL, BY THE ASSESSEE, IS DIRECTED AGAINST T HE ORDER DATED 25.06.2014 PASSED BY THE LD. CIT(A), MUZAFFARNAGAR, RELATING TO A.Y. 2010-11. 2. BRIEF FACTS OF THE CASE ARE THAT ASSESSEE, A PRI VATE LIMITED COMPANY, DERIVING INCOME FROM MANUFACTURING AND SALE OF CE MENT, FILED ITS E-RETURN OF INCOME DECLARING NIL INCOME. THE AO NOTICED THAT THE ASSESSEE HAD PURCHASED CEMENT AS RAW-MATERIAL FROM M/S SINGHAL S UPLAIRES, MEERUT AND THE TOTAL PURCHASES DURING THE YEAR WERE RS. 31,24, 250/-. HE NOTED THAT THESE PURCHASES WERE MADE IN CASH ONLY. THE AO HAS REPROD UCED A LEDGER A/C OF M/S SINGHAL SUPLAIRES FROM PAGES 3 TO 16 OF HIS ORD ER. THE AO OBSERVED THAT AFTER RECEIVING THE BILL COMPANY STARTED PAYMENT IN CASH AMOUNTING TO RS. 2 20,000/- ON DIFFERENT DATES ON MOST OF THE OCCASION S. HE OBSERVED THAT EACH TIME CASH ABOVE RS. 2 LAKHS WAS THERE IN THE BOOKS OF THE COMPANY BUT THE COMPANY WAS MAKING PAYMENT OF RS. 20,000/- ONLY TO M/S SINGHAL SUPLAIRES. HE REFERRED TO THE DECISION OF HONBLE M ADHYA PRADESH HIGH COURT IN THE CASE OF SH. RADHIKA PRAKASHAN (RAIPUR) VS. CIT 172 CTR MP 463 AND POINTED OUT THAT ASSESSEE HAD NOT GIVEN ANY EXCEPTIONAL REASON OR UNAVOIDABLE CIRCUMSTANCES FOR MAKING THE PAYMENT IN CASH IN PARTS OF EVERY BILL. HE, ACCORDINGLY, MADE A DISALLOWANCE OF RS. 3 1,24,250/- U/S 40A(3), INTER ALIA, OBSERVING THAT THE BOOKS OF A/C WERE RE JECTED U/S 145 OF THE INCOME-TAX ACT. 3. THE AO FURTHER NOTED THAT ASSESSEE HAD MADE CAS H PAYMENT ON DIFFERENT DATES TO CHACHA TRANSPORT CO. TOTALING TO RS. 9,94,234/- AGAINST FREIGHT DELIVERY CHARGES. THE AO POINTED OUT THAT T HESE WERE TRANSPORTATION CHARGES AND NOT PURCHASE BILLS AND, THEREFORE, THE AO REQUIRED THE ASSESSEE TO SHOW AS TO WHY THESE AMOUNTS WERE SHOWN IN PURCH ASE ACCOUNT. THE ASSESSEES EXPLANATION, AS OBSERVED BY AO, WAS AS U NDER: IN RESPONSE, COUNSEL OF THE ASSESSEE FILED WRITTEN EXPLANATION STATING THEREIN THAT IT TRANSPORTED SLAK THROUGH TR UCKS BOOKED THROUGH THE AGENCY CHACHA TRANSPORT COMPANY AND TRU CK FREIGHT WERE PAID DIRECTLY TO THE TRUCK OWNER THROU GH THE TRUCK DRIVERS. IT WAS FURTHER STATED THAT CHACHA TRANNPOR T PROVIDE TRUCKS ON COMMISSION RECEIVED FROM THE TRUCK OWNER AND THE ASSESSEE DID NOT PAY ANY AMOUNT OF PURCHASE FOR SLA K AS THESE WERE OBTAINED THROUGH THE FACTORY WHICH THROW SLAK ON THE ROADS AND ANYONE CAN TAKE SUCH SLAK FREE AND THUS T HERE IS NO BILL OF PURCHASE OF SLAK AND ONLY FREIGHT CHARGES A RE PAID TO THE TRUCK OWNERS AND THE SAME IS CLEAR FROM THE RAW MA TERIAL SLAK A/C TOTALING TO RS.9,94,234/-. 4. THE AO ISSUED NOTICE U/S 133(6) TO CHACHA TRANSP ORT CO. TO FIND OUT WHETHER ANY CASH PAYMENT AGAINST FREIGHT PAYMENT FR OM M/S CONTINENTAL 3 CEMENT CO. HAD BEEN RECEIVED BY THEM OR NOT. THE AO HAD ALSO ENCLOSED SOME BILLS OF CHACHA TRANSPORT CO. THE AO POINTED O UT THAT PROPRIETOR OF CHACHA TRANSPORT CO., SHRI PYARE MOHAMD, ATTENDED ON 22.3.2013 AND DENIED HAVING MADE ANY DEALING WITH M/S CONTINENTA L CEMENT CO. ( A UNIT OF TAYAL CONCAST PVT LTD.) DURING THE PERIOD 1.4.20 09 TO 31.3.2010. THE AO HAS NOTED IN THIS REGARD AS UNDER: SH. PYARE MOHAND, PROPRIETOR CHACHA TRANSPORT CO. ATTENDED THE OFFICE ON 22.3.2013 AND HIS' STATEMENT ON OATH WAS RECORDED. IN HIS STATEMENT HE CATEGORICALLY DENIED TO HAVE MA DE ANY DEALING WITH M/S CONTINENTAL CEMENT CO. ( A UNIT OF TAYAL CONCAST PVT LTD.) DURING THE PERIOD 1.4.2009 TO 31. 3.2010. ON BEING SPECIFICALLY ASKED TO STATE WHETHER CHACHA TR ANSPORT COMPANY HAD SUPPLIED ANY MATERIAL TO M/S CONTINENTA L CEMENT CO. ( A UNIT OF TAYAL CONCAST PVT. LTD.) AND HE WA S ALSO SHOWN THE BILLS/ BUILTY PRODUCED BY THE ASSESSEE BE FORE THE UNDERSIGNED, HE REPLIED THAT THEY HAD NOT SUPPLIED ANY GOODS/SLAK TO M/S CONTINENTAL CEMENT CO. ( A UNIT O F TAYAL CONCAST PVT LTD.) AND THE BILL SHOWN TO HIM ARE FOR GED ONE AS NO SUCH BILLS/BUILTY HAVE BEEN ISSUED BY THEIR TRAN SPORT COMPANY. THE RELEVANT PORTION OF THE STATEMENT ARE REPRODUCED BELOW: 5. RELEVANT PORTION OF STATEMENT IN HINDI HAS BEEN REPRODUCED AT PAGE 27 OF THE ASSESSMENT ORDER. THE AO, ACCORDINGLY, MADE ADDITION OF RS. 9,94,234/-. THE AO HAD MADE OTHER ADDITIONS ALSO. 6. LD. CIT(A), WHILE PARTLY ALLOWING THE ASSESSEE S APPEAL, CONFIRMED BOTH THE ABOVE ADDITIONS. BEING AGGRIEVED THE ASSES SEE IS IN APPEAL BEFORE US AND HAS TAKEN FOLLOWING GROUNDS OF APPEAL: 1. THAT THE ORDER IS AGAINST LAW & FACTS ON RECORD .THAT LD. CIT(A) WAS WRONG IN NOT ALLOWING PAYMENTS U/S 40A(3 ) WITHOUT ANY BASE. 4 2. THAT LD. CIT(A) WAS WRONG IN NOT ALLOWING FREIGH T OF RS. 9,94,234/-. 7. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT IN A Y 2009-10 TRIBUNAL HAS DELETED DISALLOWANCE VIDE ORDER DATED 3.9.2015 IN ITA NO. 5756/DEL/2012 IN ASSESSEES OWN CASE. LD. COUNSEL F URTHER REFERRED TO PAGE 22 OF PB TO POINT OUT THAT PURCHASES AGGREGATING TO RS. 21,25,303/- WERE ON BANK HOLIDAYS AND THIS CHART WAS FILED BEFORE LD. C IT(A). 8. I HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PA RTIES AND HAVE PERUSED THE RECORD OF THE CASE. THE FIRST ASPECT TO BE CONSIDERED IS WHETHER THE DECISION FOR AY 2009-10 IN ASSESSEES OWN CASE IS APPLICABLE TO THE FACTS OF THE PRESENT CASE OR NOT. IN THE YEAR UNDER CONSI DERATION ALSO THE AO HAS OBSERVED THAT THE BOOKS WERE REJECTED U/S 145 BUT I N SUBSTANCE AO HAS MADE SEPARATE ADDITION IN RESPECT OF VARIOUS ITEMS. ONCE BOOKS ARE REJECTED THEN AO CANNOT MAKE SEPARATE ADDITIONS IN RESPECT OF DIF FERENT ITEMS AND, THEREFORE, THIS OBSERVATION OF AO IS NOT LEGALLY SU STAINABLE IN VIEW OF THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CO MMISSIOENR OF SALES TAX VS. H.M. ESUFALI H.M. ABDULALI 90 ITR 271, WHER EIN IT HAS BEEN, INTER ALIA, HELD AS UNDER: THE DISTINCTION BETWEEN A BEST JUDGMENT' ASSESSME NT AND ASSESSMENT BASED ON THE ACCOUNTS SUBMITTED BY AN AS SESSEE MUST BE BORNE IN MIND. SOMETIMES THERE MAY BE INNOC ENT OR TRIVIAL MISTAKES IN THE ACCOUNTS MAINTAINED BY THE ASSESSEE. THERE MAY BE EVEN CERTAIN UNINTENDED OR UNIMPORTANT OMISSIONS IN THOSE ACCOUNTS; BUT YET THE ACCOUNTS M AY BE ACCEPTED AS GENUINE AND SUBSTANTIALLY CORRECT. IN S UCH CASES, THE ASSESSMENTS ARE MADE ON THE BASIS OF THE ACCOUNTS M AINTAINED EVEN THOUGH THE ASSESSING OFFICER MAY ADD BACK TO T HE ACCOUNTS PRICE OF ITEMS THAT MIGHT HAVE BEEN OMITTED TO BE I NCLUDED IN THE ACCOUNTS. IN SUCH A CASE, THE ASSESSMENT MADE I S NOT A ' BEST JUDGMENT' ASSESSMENT. IT IS PRIMARILY MADE ON THE B ASIS OF THE 5 ACCOUNTS MAINTAINED BY THE ASSESSEE. BUT, WHEN THE ASSESSING OFFICER COMES TO THE CONCLUSION THAT NO RELIANCE CA N BE PLACED ON THE ACCOUNTS MAINTAINED BY THE ASSESSEE, HE PROC EEDS TO ASSESS THE ASSESSEE ON THE BASIS OF HIS' BEST JUDGM ENT'. IN DOING SO, HE MAY TAKE SUCH ASSISTANCE AS THE ASSESSEE'S A CCOUNTS MAY AFFORD; HE MAY ALSO RELY ON OTHER INFORMATION GATHE RED BY HIM AS WELL AS THE SURROUNDING CIRCUMSTANCES OF THE CAS E. THE ASSESSMENTS MADE ON THE BASIS OF THE ASSESSEES ACC OUNTS AND THOSE MADE ON 'BEST JUDGMENT' BASIS ARE TOTALLY DIF FERENT TYPES OF ASSESSMENTS. 9. THEREFORE, THE DECISION IN AY 2009-10 CANNOT BE MADE APPLICABLE FOR THE CURRENT YEAR. HOWEVER, THE PLEA OF LD. COUNSEL THAT PAYMENTS WERE MADE ON BANK HOLIDAYS, AS NOTED AT PAGE 22 OF THE PAPER BOOK, HAVE NOT AT ALL BEEN CONSIDERED BY AO AND, THEREFORE, THE SAME IS TO BE EXAMINED BY AO AFRESH. FURTHER, LD. COUNSEL HAS REFERRED TO PAGE 12 OF PB WHEREIN DETAILS OF PAYMENT OVER RS. 20,000/- AND LESS THAN RS. 20,000/ - IS MADE AGGREGATING TO RS. 3,69,407/- AND THIS ALSO NEEDS TO BE EXAMINED B Y AO. THEREFORE, THIS GROUND IS ALLOWED FOR STATISTICAL PURPOSES IN RESPE CT OF AFOREMENTIONED OBSERVATION. 10. APROPOS GROUND NO. 2 LD. COUNSEL REFERRED TO PA GE 37 OF PB, WHEREIN THE STATEMENT OF ASSESSEE DATED 21.3.2013 IS CONTAI NED. IN THIS REGARD HE REFERRED TO PAGE 39 WHEREIN A QUESTION WAS PUT TO ASSESSEE THAT SHRI PYARE MOHAMAD DENIED ANY DEALINGS WITH ASSESSEE AND IN TH AT REGARD WHAT WAS ASSESSEES SUBMISSION. LD. COUNSEL REFERRED TO PAGE 35 OF PB, WHEREIN THE STATEMENT OF SHRI PYARE MOHAMAD IS CONTAINED AND PO INTED OUT THAT THE SAID STATEMENT WAS RECORDED ON 22.3.2013. HE, THEREFORE, SUBMITTED THAT IT WAS NOT POSSIBLE ON 21.3.2013 FOR AO TO PUT THE QUESTI ON AS NOTED EARLIER. HE POINTED OUT THAT THE STATEMENT WAS NOT PROVIDED TO ASSESSEE BUT OBTAINED 6 SUBSEQUENTLY. HE POINTED OUT THAT NO OPPORTUNITY TO CROSS-EXAMINE SHRI PYARE MOHAMAD WAS AFFORDED TO ASSESSEE. 11. HAVING HEARD BOTH THE PARTIES, I FIND THAT ASSE SSEE HAS NOT BEEN PROVIDED CROSS-EXAMINATION OF PROPRIETOR OF CHACHA TRANSPORT CO. AND, THEREFORE, THE MATTER IS RESTORED BACK TO THE FILE OF AO TO PROVIDE OPPORTUNITY TO CROSS-EXAMINE THE PROPRIETOR OF CHACHA TRANSPORT CO. ACCORDINGLY, THIS GROUND IS ALLOWED FOR STATISTICAL PURPOSES. 12. IN THE RESULT, ASSESSEES APPEAL STANDS ALLOWE D ACCORDINGLY. ORDER PRONOUNCEMENT IN OPEN COURT ON 08/11/2016. SD/- (S.V. MEHROTRA) ACCOUNTANT MEMBER DATED: 08/11/2016. *MP* COPY OF ORDER TO: 1. ASSESSEE 2. AO 3. CIT 4. CIT(A) 5. DR, ITAT, NEW DELHI.