M/s. Friends Road Construction Company, Kashmir V. The Deputy Commissioner of Income Tax, Srinagar

ITA 495/ASR/2013

• Counselvise Citation: 49520914 RSA 2013
• Duration Of Justice: 6 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-01-2014
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 08-01-2014
• Assessment Year: 2010-2011
• Appeal Filed On: 15-07-2013
• Court: TRIBUNAL
• Assessee Lawyers: PADAM BAHL
• Keywords: Additional evidence
• Section: 40A(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER AND SH. B.P.JAIN, ACCOUNTANT MEMBER I.T.A. NO.495(ASR)/2013 ASSESSMENT YEAR:2010-11 PAN :AABFF5514F M/S. FRIENDS ROAD CONSTRUCTION VS. DY.COMMR. OF IN COME TAX COMPANY, SUMBERBUGH LASJAN, CIRCLE-3, SRINAGAR. KASHMIR. (APPELLANT) (RESPONDENT) APPELLANT BY:SH. PADAM BAHL, CA RESPONDENT BY:SH.MAHAVIR SINGH, DR DATE OF HEARING:08/01/2014 DATE OF PRONOUNCEMENT:17/01/2014 ORDER PER BENCH ; THIS APPEAL OF THE ASSESSEE ARISES FROM THE ORDER OF THE CIT(A), JAMMU DATED 14.05.2013 FOR THE ASSESSMENT YEAR 2010 -11. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1. THAT THE LD. CIT(A), JAMMU HAS GROSSLY ERRED IN CONFIRMING THE ADDITION OF RS.3,45,490/- MADE BY THE DCIT CIRCLE-3 , SRINAGAR ON ACCOUNT OF ADDITION FOR SUPPRESSION OF GROSS REC EIPTS. 2 2. THAT THE LD. CIT(A), JAMMU HAS GROSSLY ERRED IN CONFIRMING THE ADDITION OF RS.1,40,000/- MADE BY THE DCIT CIRCLE-3 , SRINAGAR ON ACCOUNT OF DISALLOWANCE U/S 40A(3) OF THE INCOME TAX ACT, 1961.S 3. THAT BOTH THE LD. CIT(A), JAMMU AND DCIT, CIRCLE -3, SRINAGAR HAVE FAILED TO APPRECIATE THAT THE ASSESSEE HAD TO MAKE THESE PAYMENTS IN CASH DUE TO COMPELLING CIRCUMSTANCES. 4. THAT THE LD. CIT(A), JAMMU HAS GROSSLY ERRED IN CONFIRMING THE ADDITION OF RS.6,61,687/- MADE BY THE DCIT CIRCLE-3 , SRINAGAR ON ACCOUNT OF ALLEGED INGENUINE PURCHASES. 5. THAT BOTH THE LD. CIT(A), JAMMU AND DCIT, CIRCLE -3, SRINAGAR HAVE FAILED TO APPRECIATE THAT THE PAYMENT FOR THE ALLEGED INGENUINE PURCHASES WERE ALL MADE BY CHEQUES AND TH E SAME WERE MADE FROM THE REGULAR SUPPLIERS. 6. THAT THE LD. CIT(A), JAMMU HAS GROSSLY ERRED IN CONFIRMING THE DISALLOWANCE OF RS.63,237/- UNDER THE HEAD CARRIAG E EXPENSES MADE BY THE DCIT CIRCLE-3, SRINAGAR @ 5% OF THE TO TAL EXPENSES. 2. THE LD. COUNSEL APPEARING ON BEHALF OF THE ASSES SEE, MR. PADAM BAHL, CA DID NOT PRESS GROUND NO.1 RAISED BY THE ASSESSEE . ACCORDINGLY, THE SAME IS DISMISSED AS NOT PRESSED. 3. AS REGARDS GROUNDS NO. 2 & 3, THE BRIEF FACTS AR E THAT THE ASSESSEE HAS DECLARED RS.24,43,662/- UNDER THE HEAD POI EXPENSES . THE ASSESSEE WAS ASKED TO FURNISH COMPLETE DETAILS OF THESE EXPENSES ALONGWITH SUPPORTED BILLS. THE ASSESSEE FURNISHED A BILL RAISED BY SADD A BAHAR SERVICE STATION, SRINAGAR, DECLARING A TOTAL DEBIT OF RS.24,43,662/- IN THE NAME OF THE ASSESSEE. THE AO OBSERVED FROM THE ACCOUNT OF M/S. SADDA BAHAR SERVICE 3 STATION THAT THE ASSESSEE HAD MADE CASH PAYMENTS E XCEEDING RS.20,000/- IN CONTRAVENTION OF SECTION 40A(3) OF THE INCOME TAX A CT, 1961 (IN SHORT, THE ACT) AS PER DETAILS BELOW: DATE BILL NO. DEBIT CREDIT 05.12.2009 PAID BY CASH 50000/- 10.12.2010 PAID BY CASH 50000/- 15.12.2011 PAID BY CASH 40200/- TOTAL 140200/- THE ASSESSEE WAS CONFRONTED ON 23.01.2013 AS TO WHY PROVISIONS OF SECTION 40A(3) MAY NOT BE INVOKED FOR THE CASH PAYMENTS MAD E EXCEEDING RS.20,000/- AS PER PARTY LEDGER. THE ASSESSEE SUBMI TTED THAT THE ASSESSEE HAS NOT MADE ANY PAYMENT EXCEEDING RS.20,000/- AS PER R ECORD OF THE ASSESSEE. THE AO FOUND THE REPLY AS NOT CONVINCING AND ADDED THE SAME TO THE INCOME OF THE ASSESSEE BEING A DISALLOWANCE MADE IN CONTRA VENTION TO THE PROVISIONS OF SECTION 40A(3) OF THE ACT. 4. THE LD. CIT(A) CONFIRMED THE ACTION OF THE ASSES SING OFFICER. 5. THE LD. COUNSEL FOR THE ASSESSEE, MR. PADAM BAHL , CA ARGUED AND INVITED OUR ATTENTION TO PAGE 18 OF ASSESSEES PAPE R BOOK, WHICH CONTAINS ACCOUNT OF SADDA BAHAR SERVICE STATION, WHERE THE P AYMENTS OF LESS THAN 4 RS.20,000/- HAVE BEEN SHOWN. MR. PADAM BAHL, CA AGR EED THAT IN ASSESSEES BOOKS THE PAYMENTS EXCEEDING RS.20,000/- HAVE BEEN RECORDED WHEREAS AS PER CONFIRMATION OF SADDA BAHAR SERVICE STATION, EACH PAYMENT IS LESS THAN RS.20,000/-. 6. THE LD. JCIT(DR), MR. MAHAVIR SINGH ARGUED THAT THE RECORDS OF THE ASSESSEE I.E. LEDGER ACCOUNT OF THE ASSESSEE, AS IS EVIDENT FROM PAGE 3 OF AOS ORDER DEPICTS THE PAYMENTS EXCEEDING RS.20,00 0/- IN CASH, WHICH IS IN VIOLATION OF PROVISIONS OF SECTION 40A(3) OF THE AC T. SECONDLY, THE LEDGER ACCOUNT FURNISHED BY THE ASSESSEE OF SADDA BAHAR S ERVICE STATION ALSO SHOWS PAYMENTS EXCEEDING RS.20,000/- IN CASH IN CON TRAVENTION OF PROVISIONS OF SECTION 40A(3) OF THE ACT. NOW, THE L D. COUNSEL FOR THE ASSESSEE HAS PLACED ON RECORD AT PB-18, A COPY OF A CCOUNT WHICH IS INITIALED BY SOMEONE WHOSE DESIGNATION IS NOT DECLARED AND T HE LD. COUNSEL FOR THE ASSESSEE CAN CLARIFY WHO IS THE PERSON WHO HAS SIG NED THE SAID COPY OF ACCOUNT. THE LD. COUNSEL FOR THE ASSESSEE ACCORDING LY ARGUED THAT THE SAID ACCOUNT AT PB-18 IS A SELF SERVING DOCUMENT AND CAN NOT BE TREATED AS AN EVIDENCE OR A DOCUMENT OR RECORD WHICH IS WITHOUT A NY AUTHENTICITY AND ACCORDINGLY PRAYED TO CONFIRM THE ORDER OF THE LD. CIT(A). 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. THERE IS NO DISPUTE TO THE FACT THAT ASSESSEES BOO KS OF ACCOUNT BY ALL MEANS 5 DEPICTS EACH PAYMENT EXCEEDING RS.20,000/- WHICH IS IN VIOLATION OF PROVISIONS OF SECTION 40A(3) OF THE ACT. THE COPY O F THE BILL RAISED BY SADDA BAHAR SERVICE STATION, DETAILS OF CASH RECE IVED BY SADDA BAHAR SERVICE STATION BEING THE EVIDENCE OF THE ASSESSEE ITSELF AND AS PER AOS ORDER ALSO DEPICTS PAYMENTS EXCEEDING RS.20,000/-, WHICH IS ALSO IN VIOLATION OF PROVISIONS OF SECTION 40A(3) OF THE AC T. THE COPY OF ACCOUNT PLACED BEFORE THE LD. CIT(A), WHICH IS SIGNED BY SO MEONE, NOT KNOWN TO THE LD. COUNSEL. EVEN, AS A MATTER OF FACT, IT IS A SEL F SERVING DOCUMENT WHICH DOES NOT HAVE ANY AUTHENTICITY AND CANNOT BE GIVEN A DUE NOTE BY US. ACCORDINGLY, WE FIND NO INFIRMITY IN THE ORDER OF T HE LD. CIT(A), WHO HAS RIGHTLY CONFIRMED THE ACTION OF THE A.O. THUS, GROU NDS NO. 2 & 3 OF THE ASSESSEE ARE DISMISSED. 8. AS REGARDS GROUNDS NO. 4 & 5, THE BRIEF FACTS AR E THAT THE ASSESSEE VIDE LETTER DATED 20.12.2012 HAS SUBMITTED LEDGER ACCOUN T OF THE PURCHASES ALONGWITH COPY OF CERTAIN BILLS AND VOUCHERS. THE A SSESSEE WAS CALLED UPON TO PRODUCE THE COMPLETE BILLS AND VOUCHERS IN SUPP ORT OF THE PURCHASES DECLARED IN THE P & L ACCOUNT. IT WAS NOTICED BY TH E AO THAT THE ASSESSEE HAS NOT FURNISHED 9 BILLS OF DIFFERENT PARTIES, THE DET AILS OF WHICH IS AVAILABLE AT PAGE 5 OF AOS ORDER AMOUNTING TO RS.6,61,687/-. T HE ASSESSEE IS NOT MAINTAINING ANY STOCK REGISTER FROM WHERE THESE PUR CHASES COULD BE CROSS 6 VERIFIED. IN THE ABSENCE OF ANY VERIFICATION OF THE PURCHASES OR ANY CORROBORATION OF THE SAID PURCHASES, THE AO OBSERVE D THAT THE ASSESSEE HAS NOT BEEN ABLE TO ESTABLISH THE GENUINENESS OF THE C LAIM OF THE PURCHASE EXPENSES DEBITED TO THE PURCHASE A/C AND ACCORDING LY DISALLOWED THE SAID PURCHASES OF RS.6,61,687/- AND ADDED TO THE INCOME OF THE ASSESSEE. 9. ON APPEAL, THE LD. CIT(A) CONFIRMED THE ACTION O F THE ASSESSING OFFICER. 10. THE LD. COUNSEL FOR THE ASSESSEE, MR. PADAM BAH L, CA ARGUED THAT THE ASSESSEE HAS PRODUCED BILLS WHICH ARE ON RECORD AT PB 19 TO 27 AND COPY OF ACCOUNT IN ASSESSEES BOOKS OF ACCOUNT AT PB 65 TO 70. THE AO HAS ALLOWED CERTAIN BILLS OF PARTY BUT HAS DISALLOWED O THER BILLS WHICH IS NOT FAIR. THE COPY OF ACCOUNT HAS TO BE ACCEPTED IN TOTO OR H AS TO BE REJECTED IN TOTO. 11. THE LD. JCIT(DR), MR. MAHAVIR SINGH, ON THE OTH ER HAND, ARGUED AND INVITED OUR ATTENTION TO THE COPIES OF THE BILLS SU BMITTED AT PB 19 TO 27. FIRSTLY, ALL THE BILLS HAVE BEEN PREPARED IN ONE-HA ND AND BILL NO.640 AT PB 21 IS WITHOUT ANY DATE AMOUNTING TO RS.1,12,000/-. SECONDLY, BILL NO.297 DATED 25.9.2009 FOR AN AMOUNT OF RS.1,10,000/- AT P B-22 WHEREAS AT PB-23, THE BILL NO.866 IS FOR AN AMOUNT OF RS.93,000/- AND IS DATED 26.09.2009. WILL IT BE POSSIBLE THAT THE SUPPLIERS HAD ISSUED A BOUT 568 BILLS ON 25.09.2009 ITSELF ?. THE LD. DR PRAYED THE BENCH T O GET CLARIFICATION FROM 7 THE LD. COUNSEL. BILL DATED 30.09.2009 BEARS NO.967 WHEREAS BILL DATED 2.11.2009 AMOUNTING TO RS.36,000/- IS AGAIN UN-NUM BERED AT PB-25. THE LD. DR ARGUED THAT THE SAID BILLS ARE FABRICATED BI LLS WHICH ARE INITIALED BY SOMEONE WHOSE DESIGNATION IS NOT ON RECORD AND THE LD. COUNSEL SHOULD CLARIFY THE SAME. ACCORDINGLY, THE LD. DR PRAYED TO CONFIRM THE ORDER OF THE LD. CIT(A). 12. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. THERE IS NO DISPUTE TO THE FACT THAT THE ASSESSEE H AS NOT PRODUCED COPY OF BILLS AMOUNTING TO RS.6,61,687/- BEFORE THE AO. BE FORE THE LD. CIT(A), COPIES OF CERTAIN BILLS, AS MENTIONED HEREINABOVE, WERE GIVEN, AS AN ADDITIONAL EVIDENCE WHICH IN FACT, WERE NOT ADMITTE D BY THE LD. CIT(A) SINCE THE ASSESSEE COULD NOT ESTABLISH SUFFICIENT CAUSE F OR NOT PRODUCING THE SAME BEFORE THE A.O. AT THE OUTSET, SUCH BILLS CANNOT BE TAKEN COGNIZANCE SINCE THE SAME HAVE NOT BEEN ADMITTED AS AN ADDITIONAL EV IDENCE BY THE LD. CIT(A). MOREOVER, THE ASSESSEE HAS NOT RAISED ANY G ROUND AGAINST NOT ADMITTING THE ADDITIONAL EVIDENCE BY THE LD. CIT(A) BEFORE US. THEREFORE, ON THIS ACCOUNT ALONE, WE FIND NO INFIRMITY IN THE OR DER OF THE LD. CIT(A), WHO HAS RIGHTLY CONFIRMED THE ACTION OF THE A.O. HOWEVE R, WE ARE ALSO CONVINCED WITH THE ARGUMENTS MADE BY THE LD. DR AND CIRCUMSTA NCES AS STATED BY THE LD. DR IN HIS ARGUMENTS CONVINCED US THAT THE SAID BILLS ARE NOT GENUINE AND 8 THE LD. CIT(A) HAS RIGHTLY CONFIRMED THE ACTION OF THE A.O. ACCORDINGLY, GROUNDS NO. 4 & 5 OF THE ASSESSEE ARE DISMISSED. 13. AS REGARDS GROUND NO.6 OF THE ASSESSEE, THE BRI EF FACTS OF THE CASE ARE THAT THE ASSESSEE HAS CLAIMED CARRIAGE EXPENSES ON THE BASIS OF SELF MADE VOUCHERS AND THE A.O. DISALLOWED RS.1,26,475/- ACCO RDINGLY. 14. THE LD. CIT(A) AFTER APPRECIATING THE SUBMISSIO NS OF THE ASSESSEE, REDUCED THE DISALLOWANCE TO 5% INSTEAD OF 10% DISA LLOWED BY THE AO AND RESTRICTED THE DISALLOWANCE AT RS.63,237/-. 15. THE LD. COUNSEL FOR THE ASSESSEE, MR. PADAM BAH L, CA ARGUED THAT THESE ARE ESTIMATION OF EXPENSES AND AO CANNOT DISA LLOW THE SAME UNLESS BOOKS OF ACCOUNT ARE REJECTED I.E. UNLESS THE AO IN VOKED THE PROVISIONS OF SECTION 145(3) OF THE ACT. BUT AT THE SAME TIME, TH E ASSESSEE HAS SUBMITTED COPIES OF BILLS WHICH ARE PART OF THE RECORD AT PB- 30 TO 56 IN WHICH NO DEFECT HAS BEEN POINTED OUT BY ANY OF THE AUTHORITIES BEL OW. 16. THE LD. DR, ON THE OTHER HAND, AT THE OUTSET TO OK US TO THE COPIES OF THE BILLS/RECEIPTS PLACED ON RECORD AT PB 30 TO 56 ESPECIALLY AT PB-32 WHERE THERE IS A CUTTING IN THE DATE. THE LD. DR VERY EMP HATICALLY INVITED OUR ATTENTION TO PB-34 BEING THE BILL/RECEIPT NO.10 WH ICH HAS BEEN DATED AS 22.11.2012 INSTEAD OF DATED 22.11.2009, WHICH SHOWS THAT THE BILL/RECEIPT PERTAINS TO THE ASSESSMENT YEAR 2013-14 WHEREAS THE IMPUGNED ORDER IS FOR 9 THE A.Y. 2010-2011 WHICH CLEARLY SHOWS THAT THE BI LLS HAVE BEEN PREPARED AFTER-THOUGHT IN A HURRIED MANNER AND ARE FABRICATE D. SUCH FABRICATED RECORD BEFORE THE COURT CANNOT BE PRODUCED AND THE HONBLE COURT SHOULD NOT TAKE/GIVE ANY CREDIT OF SUCH BILLS AND ALL SUCH BIL LS ARE PREPARED IN ONE HAND AND ONE GO. IDENTICALLY AT PB-46, OTHER BILL/RECEI PT WHICH IS NO.033 HAS BEEN DATED AS 23.11.2012 INSTEAD OF 23.11.2009. AT MANY OTHER PLACES, THERE ARE CUTTINGS IN THE BILLS WHICH HAVE BEEN PREPARED SPECIFICALLY TO MISLEAD THE AUTHORITIES. ACCORDINGLY, THE LD. DR ARGUED THO UGH THE LD. CIT(A) HAS RESTRICTED THE DISALLOWANCE @ 5% OF THE CLAIM OF TH E ASSESSEE WHEREAS THE SAME SHOULD HAVE BEEN DISALLOWED IN TOTO. IN ANY CA SE, THE LD. DR PRAYED TO CONFIRM THE ACTION OF THE LD. CIT(A). 17. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. THERE IS NO DISPUTE THAT THE AO HAS NOT REJECTED TH E BOOKS OF ACCOUNT AND HAS NOT INVOKED THE PROVISIONS OF SECTION 145(3) OF THE ACT. BUT AT THE SAME TIME, THE FACTS WHICH HAVE BEEN NARRATED BY THE LD. DR AS MENTIONED HEREINABOVE THAT ALL THE BILLS HAVE BEEN MADE IN A HURRIED MANNER IN ONE GO BY ONE PERSON WITHOUT ANY APPLICATION OF MIND, DATI NG FEW BILLS FOR THE FINANCIAL YEAR ENDING ON 31.03.2013 PERT AINING TO ASSESSMENT YEAR 2013-14. THIS CLEARLY SHOWS THAT THE BILLS A RE NOT GENUINE. ACCORDINGLY, THESE EVIDENCES I.E. PB 30 TO 56 CAN NOT BE TAKEN AS AN 10 EVIDENCE TO SUPPORT THE CLAIM OF THE ASSESSEE. IN FACT, THE DEPARTMENT IS NOT IN APPEAL AND ALSO AS ARGUED BY THE LD. DR SUCH PA YMENTS SHOULD HAVE BEEN DISALLOWED IN TOTO. IN THE INTEREST OF JUSTICE AND AS REFERRED HEREINABOVE, THE DEPARTMENT IS NOT IN APPEAL, WE CONFIRM THE ORDER O F THE LD. CIT(A), WHO HAS RIGHTLY CONFIRMED THE ACTION OF THE AO. THUS, GROU ND NO.6 OF THE ASSESSEE IS DISMISSED. 18. IN THE RESULT, THE APPEAL FILED BY THE ASSESSE E IN ITA NO.495(ASR)/2013 IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 17TH JANUARY, 2014. SD/- SD/- (H.S. SIDHU) (B.P. JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 17TH JANUARY, 2014 /SKR/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE:M/S. FRIENDS ROAD CONSTRUCTION COMPANY , SRINAGAR. 2. THE DCIT CIRCLE-3, SRINAGAR. 3. THE CIT(A), JAMMU 4. THE CIT, JAMMU. 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR