Appeal details
Counselvise Citation
[2019] 117 COUNSELVISE.COM (IT) 0516 (ITAT-AGRA)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
6 year(s) 7 month(s) 6 day(s)
Appellant
Respondent
Appeal Type
Cross Objection
Pronouncement Date
16-05-2019
Appeal Filed By
Department
Order Result
Dismissed
Bench Allotted
DB
Next Hearing Date
13-05-2013
Assessment Year
2009-2010
Appeal Filed On
10-10-2012
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, AGRA BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI A.L. GEHLOT, ACCOUNTANT MEMBER ITA NO. 474 AGRA/ 2012 ASSESSMENT YEAR 2009-10 ASSTT. COMMISSIONER OF INCOME TAX VS. M/S KATYANE C ONSTRUCTION PVT. LTD. CIRLCE-2, KUSHWAH COLONY, ETAWAH ROAD, GWALIOR. BHIND. (PAN AADCK3101A) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K.K. MISHRA JR. D.R. RESPONDENT BY : NONE DATE OF HEARING : 13.05.2013 DATE OF PRONOUNCEMENT : 17.05.2013 ORDER PER BHAVNESH SAINI, JUDICIAL MEMBER THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF LEARNED CIT(A), GWALIOR DATED 05.07.2012 FOR A.Y. 2009-10. 2. WE HAVE HEARD LEARNED D.R. AND PERUSED THE FINDI NGS OF AUTHORITIES BELOW. THIS APPEAL WAS FIXED FOR HEARING ON 25.03.2013 AND ON THAT DATE IT WAS ADJOURNED TO 13.05.2013, ON THE REQUEST OF LEARNED COUNSEL FOR THE ASSESSEE. ITA NO.474/AGRA/2012 A.Y.2009-10 2 HOWEVER, ON THE DATE OF HEARING ON 13.05.2013, NONE APPEARED ON BEHALF OF THE ASSESSEE, THEREFORE, THE ASSESSEE IS PROCEEDED EX-P ARTE. 3. THE REVENUE ON GROUND NO.1, CHALLENGED THE ORDER OF LEARNED CIT(A) IN DELETING THE ADDITION ON ACCOUNT TO ESTIMATING NET PROFIT @ 5% OF THE TOTAL TURNOVER AND ON GROUND NO.2 THE ORDER OF LEARNED CI T(A) HAS BEEN CHALLENGED IN DELETING THE ADDITION OF RS.8,03,040/- MADE BY A.O. UNDER SECTION 40A(3) OF THE INCOME TAX ACT. 4. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSES SEE COMPANY IS A CIVIL CONTRACTOR AND SHOWN TOTAL RECEIPTS AT RS.1.96 CROR E. AUDIT REPORT WAS FILED ALONG WITH RETURN OF INCOME. THE A.O. ON GOING THROUGH TH E BANK ACCOUNT FOUND THAT THERE ARE SEVERAL PAYMENTS FROM THE BANK WITH NOTAT ION CAS , CASH CHEQUE. THE AUDITOR DID NOT CLARIFY THIS POSITION IN THE AUDIT REPORT, THEREFORE, THE MANAGER OF THE SBI, BHIND WAS SUMMONED WHO HAS CLARIFIED THAT THE ABOVE TERM USED MEANS PAYMENT THROUGH BEARER CHEQUE. THIS FACT WAS CONFRO NTED TO THE ASSESSEE. THE A.O. FURTHER FOUND THAT TOTAL PAYMENTS OF RS.11,40, 458/- HAVE BEEN MADE THROUGH BEARER CHEQUES CONTRAVENING THE PROVISIONS OF SECTI ON 40A(3) OF THE ACT. IT WAS ALSO FOUND THAT VARIOUS EXPENSES ARE NOT VERIFIABLE . THEREFORE, THE RESULT OF BOOKS OF ACCOUNTS IS REJECTED UNDER SECTION 145 OF I.T. A CT AND PROFIT AT 5% WAS APPLIED ITA NO.474/AGRA/2012 A.Y.2009-10 3 AGAINST THE TURNOVER AND INCOME WAS ESTIMATED AT RS .9,80,000/-. THE A.O. FURTHER DISALLOWED RS.11,40,458/- UNDER SECTION 40A(3) OF T HE ACT. BOTH THE ADDITION WERE CHALLENGED BEFORE LEARNED CIT(A) AND IT WAS SU BMITTED THAT RESULT OF BOOKS OF ACCOUNT HAVE BEEN REJECTED WITHOUT ANY REASONS. NO DETAILS HAVE BEEN GIVEN BY A.O. AS TO WHICH OF THE EXPENSES ARE NOT VERIFIABLE . NO MATERIAL HAS BEEN BROUGHT ON RECORD IF ASSESSEE HAS NOT ACTUALLY INCURRED THE EXPENSES OR THE EXPENSES WERE INCURRED OUT SIDE THE BOOKS OF ACCOUNT. IT WAS FURT HER SUBMITTED THAT PAYMENTS WERE MADE TO SEVERAL PARTIES FOR PURCHASING OF BLAN KETING MATERIAL, DIESEL EXPENSES, TRUCK HIRE CHARGES, PAYMENT MADE ON BEHAL F OF SUB CONTRACTOR AND TRANSPORTATION ETC. AND ALL THE EXPENSES ARE FULLY VOUCHED AND INCURRED FOR BUSINESS PURPOSES THROUGH BEARER CHEQUE NOT BY CASH . ALL PAYMENT THROUGH BANKING CHANNEL WERE MADE THROUGH BEARER CHEQUE AND THE SAME HAVE BEEN GENUINELY RECEIVED BY THE PARTIES HAVING THEIR SIGN ATURE ON REVERSE OF CHEQUE. THESE EXPENSES ARE INCURRED AT AGRA WHERE THE SITE OF WORK CARRIED. THE ASSESSEES OFFICE AND DIRECTORS RESIDENCE ARE IN BH IND. AS THE ASSESSEES COMPANY WANTS TO RUN THEIR SITE OF CONSTRUCTION AT AGRA THE N THEY HAVE TO PAY AS BEARER CHEQUE BECAUSE THE THIRD PARTIES ARE RELUCTANT TO A CCEPT CHEQUE AND INSIST ON CASH PAYMENTS. THIS IS EXCEPTIONAL OR UNAVOIDABLE CIRCUM STANCES BECAUSE PAYEES ARE INSIST FOR CASH PAYMENT AS THE PARTY IS NEW IN THE AREA OF AGRA. IF THOSE PAYMENTS ITA NO.474/AGRA/2012 A.Y.2009-10 4 WERE MADE FOR BANK DRAFT OR ISSUE OF CHEQUE WOULD H AVE RESULTED IN A MISSED OPPORTUNITY OR FAILURE OF WORK TO BE CARRIED TO EXE CUTE AS PER THE CONTRACT. 5. IT WAS SUBMITTED THAT ASSESSEE INCURRED LEGITIMA TE AND GENUINE BUSINESS EXPENDITURE, THEREFORE, ADDITION IS WHOLLY JUSTIFIE D. THE LEARNED CIT(A) ACCEPTED THE CONTENTION OF THE ASSESSEE BECAUSE THERE WAS NO BASIS FOR REJECTING THE BOOKS OF ACCOUNT WITHOUT BRINGING ANY SUPPORTING MATERIAL ON RECORD. THE A.O. HAS NOT BROUGHT ANYTHING ON RECORD TO JUSTIFY THE REJECTION OF THE BOOKS OF ACCOUNT, THEREFORE, PROFIT RATE OF 5% ESTIMATED BY THE A.O. WAS FOUND UNJUSTIFIED AND ADDITION OF RS.9,80,000/- WAS ACCORDINGLY DELETED. 6. AS REGARDS THE ADDITION OF RS.11,40,458/- IS CON CERNED, LEARNED CIT(A) FOUND THAT IT WAS FIRST YEAR OF OPERATIONAL BUSINES S OF THE ASSESSEES COMPANY AND THE ASSESSEES COMPANY AND ITS DIRECTOR ARE BASED A T BHIND, M.P., WHEREAS MOST OF THE CONTRACT WORK AND PAYMENTS WERE MADE IN PURS UANCE THEREOF PERTAINED TO PARTIES BASED AT AGRA AND ETAWAH EXCEPT THE AMOUNT OF RS.2,12,160/-,RS.60,458/- AND RS.64,800/- TOTALING RS.3,37,418/- FOR PARTIES BASED AT GWALIOR/BHIND. THE LEARNED CIT(A) APPLIED PROVISO TO SECTION 40A(3) OF THE ACT IN FAVOUR OF THE ASSESSEE WHICH PROVIDES THE EXCEPTION TO THE RULE H AVING REGARD TO THE NATURE AND ITA NO.474/AGRA/2012 A.Y.2009-10 5 EXTENT OF BUSINESS FACILITIES AVAILABLE, CONSIDERAT ION OF BUSINESS EXPEDIENCY AND OTHER RELEVANT FACTORS. 7. THE LEARNED CIT(A) ON PERUSAL OF THE BILLS PERTA INING TO CASH PAYMENTS FOUND THAT THEY HAVE BEEN MADE TO PETROL PUMPS, RET AIL OUTLETS IN RESPECT OF VARIOUS VEHICLES USED FOR TRANSPORTATION, FOR EARTH WORK AT VARIOUS CONSTRUCTION SITES ON DIFFERENT DATES DURING THE YEAR. SINCE IT WAS FIRST YEAR OF ITS BUSINESS TOWARDS OUTSTATION PARTIES, THEREFORE, BUSINESS EXP EDIENCY WAS CONSIDERED IN FAVOUR OF THE ASSESSEE. THE LEARNED CIT(A) ACCORDIN GLY FOUND THAT EXCEPT THE PAYMENT OF RS.3,37,418/- REMAINING PAYMENTS HAVE BE EN MADE FOR BUSINESS EXPEDIENCY AND ACCORDINGLY ADDITION OF RS.3,37,418/ - WAS CONFIRMED AND THE REST OF THE ADDITION WAS DELETED. 8. LEARNED D.R. RELIED UPON THE ORDER OF THE A.O. A ND THE DECISION OF THE HONBLE ANDHRA PRADESH HIGH COURT IN THE CASE OF LA TE SMT. JYOTHI CHELLARAM VS. COMMISSIONER OF INCOME-TAX (1988) 173 ITR 358 I N WHICH ISSUE WAS DECIDED IN FAVOUR OF THE REVENUE BECAUSE THE ASSESS EE COULD NOT PRODUCE CORROBORATIVE EVIDENCES AND THE ASSESSEE WAS ALSO F OUND TO HAVE MAINTAINED BANK ACCOUNT AT MADRAS WHERE BUSINESS OPERATIONS WERE GO ING ON AND THE RECIPIENTS WERE ALSO HAVING BANK ACCOUNT AT MADRAS. IT WAS ALS O FOUND THAT ASSESSEE WAS NOT ITA NO.474/AGRA/2012 A.Y.2009-10 6 NEW EITHER TO THE BUSINESS OR TO THE PROVISIONS OF THE INCOME TAX ACT. THEREFORE, IT WAS HELD THAT TRIBUNAL WAS JUSTIFIED IN CONFIRMI NG THE DISALLOWANCE OF SUCH PAYMENTS MADE BY THE ASSESSEE TO THIRD PARTIES. HE HAS ALSO RELIED UPON THE DECISION OF THE HONBLE GAUHATI HIGH COURT IN THE C ASE OF COMMISSIONER OF INCOME TAX VS. ASSAM TRIBUNE (1996) 221 ITR 488 IN WHICH IT WAS HELD THAT IT IS ALSO NECESSARY TO ENQUIRE WHETHER THERE EXISTED EXCEPTIONAL AND UNAVOIDABLE CIRCUMSTANCES FOR MAKING PAYMENT UNDER SECTION 40A( 3) OF THE ACT. 9. WE HAVE CONSIDERED THE SUBMISSION OF LEARNED D.R . AND PERUSED THE FINDINGS OF AUTHORITIES BELOW AND DO NOT FIND ANY J USTIFICATION TO INTERFERE WITH THE ORDER OF LEARNED CIT(A) IN DELETING BOTH THE ADDITI ONS. 10. THE A.O. FOR THE PURPOSE OF REJECTION OF THE BO OKS OF ACCOUNT CONSIDERED CASH PAYMENT MADE THROUGH BEARER CHEQUES UNDER SECT ION 40A(3) OF THE ACT BUT DID NOT POINT OUT WHETHER THOSE PAYMENTS WERE NOT G ENUINE AND WERE NOT MADE FOR THE PURPOSE OF BUSINESS OF THE ASSESSEE. THE A. O. HAS VERY VAGUELY OBSERVED THAT VARIOUS EXPENSES ARE NOT VERIFIABLE. THE A.O. HAS NOT POINTED OUT ANY SPECIFIC DEFECT IN MAINTAINING OF THE BOOKS OF ACCO UNT BY THE ASSESSEE. THE ASSESSEE HAS MAINTAINED COMPLETE RECORDS WHICH ARE AUDITED ALSO, THEREFORE, IN THE ABSENCE OF ANY SPECIFIC POINT FOUND AGAINST THE ASSESSEE, A.O. WAS NOT ITA NO.474/AGRA/2012 A.Y.2009-10 7 JUSTIFIED IN REJECTING THE BOOK RESULT OF THE ASSES SEE. GROUND NO.1 OF DEPARTMENTAL APPEAL IS ACCORDINGLY DISMISSED. 11. ON SECOND GROUND OF APPEAL WITH REGARD TO PAYME NTS MADE THROUGH BEARER CHEQUES, IT WAS FOUND THAT THE EXPENSES WERE INCURR ED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. IT WAS ALSO FOUND THAT IT WAS A FIRST YEAR OF OPERATIONAL BUSINESS OF THE ASSESSEE. IT WAS ALSO FOUND THAT AS SESSEE COMPANY AND ITS DIRECTORS ARE BASED AT BHIND, M.P. WHEREAS MOST OF THE CONTRACTS AND PAYMENTS WERE MADE TO THE PARTIES BASED AT AGRA AND ETAWAH. THE LEARNED CIT(A) CONFIRMED THE DISALLOWANCE OF PAYMENT UNDER SECTION 40A(3) OF THE ACT IN RESPECT OF THE PAYMENT MADE TO THE PARTIES BASED AT GWALIOR/BHIND. THE A.O. HAS NOT BROUGHT ANY MATERIAL ON RECORD TO PROVE THAT TH E RECIPIENT WERE HAVING BANK ACCOUNT AT BHIND/M.P. WHERE ASSESSEE MAINTAINED BAN K ACCOUNT. IT WAS ALSO FOUND THAT ASSESSEE WAS NEW TO BUSINESS AND WAS ALS O NEW TO PARTIES/RECIPIENT OF THE AMOUNT IN QUESTION. NO EVIDENCE WAS ALSO FOUND, IF ASSESSEE MAINTAINED ANY BANK ACCOUNT AT AGRA AND EAWAH WHERE PAYMENTS HAVE BEEN MADE AT THE CONSTRUCTION WORK. THE WORK IS TO BE CARRIED AT REM OTE PLACES AND ACCORDING TO ASSESSEE SINCE THE PARTIES INSISTS FOR PAYMENT IN C ASH, THEREFORE, BEARER CHEQUES ITA NO.474/AGRA/2012 A.Y.2009-10 8 WERE GIVEN TO THEM. THE ASSESSEE FILED COMPETE DETA ILS OF THE PAYMENTS MADE TO VARIOUS PARTIES THROUGH BEARER CHEQUES FOR BLANKETI NG MATERIAL, DIESEL EXPENSE AND TRANSPORTATION EXPENSES ETC. 12. THE ASSESSEE, THEREFORE, SUBMITTED THAT IT IS A CASE OF EXCEPTIONAL AND UNAVOIDABLE CIRCUMSTANCES FOR MAKING SUCH PAYMENTS THROUGH BEARER CHEQUES. LEARNED CIT(A), THEREFORE, ON PROPER APPRECIATION O F FACTS AND AVAILABLE MATERIAL ON RECORD AND CONSIDERING NATURE OF BUSINESS OF ASS ESSEE AND THAT ASSESSEE WAS NEW TO THE BUSINESS AT REMOTE PLACES, RIGHTLY ALLOW ED BENEFIT IN FAVOUR OF THE ASSESSEE AS PER PROVISO TO SECTION 40A(3) OF THE AC T FOR PAYMENTS MADE AT AGRA AND ETAWAH. THE ASSESSEE WAS, THEREFORE, ABLE TO PR OVE BUSINESS EXPEDIENCY AND RELEVANT FACTORS AS MENTIONED ABOVE, THE ASSESSEE H AD EXCEPTIONAL AND UNAVOIDABLE CIRCUMSTANCES FOR MAKING SUCH PAYMENTS AT AGRA AND ETAWAH THROUGH BEARER CHEQUES. IT IS A DEPARTMENTAL APPEAL AND NO ADVERSE MATERIAL PRODUCED ON RECORD TO REBUT THE FINDINGS OF LEARNED CIT(A). WE, THEREFORE, DO NOT FIND ANY JUSTIFICATION TO INTERFERE WITH THE ORDER OF LEARNED CIT(A) IN DELETING THE ADDITION. GROUND NO.2 OF APPEAL OF THE REVENUE IS A LSO DISMISSED. ITA NO.474/AGRA/2012 A.Y.2009-10 9 13. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. (ORDER PRONOUNCED IN THE OPEN COURT) SD/- SD/- (A.L. GEHLOT) (BHAV NESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER AMIT/ COPY OF THE ORDER FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT (APPEALS) CONCERNED 4. CIT CONCERNED 5. D.R., ITAT, AGRA BENCH, AGRA 6. GUARD FILE. BY ORDER SR. PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL, AGRA TRUE COPY
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