Manoj Kumar Aggarwal, V. ITO, Jeypore

ITA 518/CTK/2012

• Counselvise Citation: 51822114 RSA 2012
• Duration Of Justice: 3 year(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 28-10-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 30-10-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SUVENDU DUTTA
• Assessee Lawyers: R S AALAKHA
• Keywords: Unexplained cash credit
• Section: 143(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH, CUTTACK . . , & , BEFORE S/SHRI P.M.JAGTAP, ACCOUNTANT ME MBER & PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER ' ./ ITA NO.518/CTK/2012 ( # # # # $% $% $% $% / ASSESSMENT YEAR :2009-2010) MANOJ KUMAR AGARWAL, PROP. M/S. LAXMI TRADING CO. AT/PO: DABUGAON, NABARANGPUR. VS. ITO, WARD - 1, JEYPORE ' ./ & ' ./PAN/GIR NO. AFZPA 6941 A ( ' /APPELLANT ) .. ( ()' / RESPONDENT ) ' ./ ITA NO.566/CTK/2012 ( # # # # $% $% $% $% / ASSESSMENT YEAR :2009-2010) ITO, WARD - 1, JEYPORE. VS. MANOJ KUMAR AGARWAL, PROP. M/S. LAXMI TRADING CO. AT/PO: DABUGAON, NABARANGPUR ' ./ & ' ./PAN/GIR NO. AFZPA 6941 A ( ' /APPELLANT ) .. ( ()' / RESPONDENT ) # , , , , /ASSESSEE BY : SHRI R.S.AALAKHA $ , , , , /REVENUE BY : SHRI SUVENDU DUTTA #$- / DATE OF HEARING : 28 TH OCT. 2015 ./% /DATE OF PRONOUNCEMENT 30 TH OCT. 2015 0 0 0 0 / O R D E R 2 ITA NO.518/CTK/2012 ITA NO.566/CTK/2012 ASSESSMENT YEAR :2009-2010 ) PER PARTHA SARATHI CHAUDHURY, JM THE CROSS APPEALS FILED BY THE ASSESSEE AND REVENUE ARE DIRECTED AGAINST THE ORDER DATED 9.8.2012, PASSED BY THE CIT(A), BERHAMP UR FOR THE ASSESSMENT YEAR 2009-2010. AS THE APPEALS CALL INTO QUESTION SAME ORDER PASSED BY THE CIT(A) AND WERE HEARD TOGETHER, WE DEEM IT FIT AND PROPER TO D ISPOSE OF BOTH THE APPEALS BY WAY OF THIS CONSOLIDATED ORDER. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: 1.THAT THE CIT(A) WAS UNJUSTIFIED IN SUSTAINING AD DITION OF RS. 2,91,240/- OUT OF INWARD FREIGHT EXPENSES BY RESTRICTING THE D ISALLOWANCE TO 5% AGAINST 10% DISALLOWED BY THE A.O. 2.THAT CIT(A) WAS NOT CORRECT IN SUSTAINING ADDITIO N OF RS.2,70,431/- BY CONFIRMING DISALLOWANCE MADE BY THE A.O. ON OUTWARD FREIGHT EXPENSES OF RS. 27,04,312/-. 3.THAT THE TOTAL DISALLOWANCE SUSTAINED UNDER INWA RD AND OUTWARD FREIGHT EXPENSES AMOUNTING TO RS. 5,61,671/- IS TOT ALLY UNJUSTIFIED AND ARBITRARY. 4. THAT THE CIT(A) WAS UNJUSTIFIED IN SUSTAINING AD DITION OF RS. 1,94,788/- ON ACCOUNT OF LOADING AND UNLOADING EXPENSES. 5.THAT THE CIT(A) WAS NOT JUSTIFIED IN ENHANCING THE INCOME BY RS. 1,53,665/- BY APPLYING THE PROVISIONS OF SECTION 40 (A) (IA) ON THE RENT OF RS. 2,60,000/- ON WHICH NO TDS HAD BEEN DEDUCTED. 6.THAT THE ENHANCEMENT OF RS.2,60,000/- UNDER THE H EAD RENT PAID TO SHIV SHAKTI OIL MILLS (P) LTD. DO NOT ATTRACT THE P ROVISIONS OF SECTION 40(A) (IA) OF THE IT. ACT. 1961. 7. THAT THE ENHANCEMENT OF RS. 2,60,000/- UNDER THE HEAD RENT IS CONTRARY TO THE FACTS AND CIRCUMSTANCES OF THE CASE AS THE RENT WAS PAID AND THE SAME WAS NOT PAYABLE AT THE CLOSE OF THE YE AR I.E. ON 31.03.2009. 8.THAT NO DISALLOWANCE U/S 40(A) (IA) IS REQUIRED T O BE MADE WHERE THE PAYMENT WAS MADE DURING THE YEAR AND NO AMOUNT WAS PAYABLE AT THE CLOSE OF THE YEAR I.E. 31.03.2009. MERILYN SHIPPING AND TRANSPORT V. ACIT 136 ITD 23 (VISHAKAPATNAM) (SPECIAL BENCH). THAT TH E CIT(A) WAS NOT 3 ITA NO.518/CTK/2012 ITA NO.566/CTK/2012 ASSESSMENT YEAR :2009-2010 ) CORRECT IN SUSTAINING ADDITION OF RS. 85000/- U/S 6 8 ON ACCOUNT OF LOAN FROM SMT. BHAGYAWATI AGGARWAL. 9.THAT THE LD CIT(A) WAS NOT CORRECT IN SUSTAINING ADDITION OF RS.85,000/- U/S.68 ON ACCOUNT OF LOAN FROM SMT. BHAGYAWATI AGAR WAL. 3. THE REVENUE HAS TAKEN THE FOLLOWING GROUND IN ITS A PPEAL: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD CIT(A) IS NOT JUSTIFIED IN DELETING THE ADDITION OF RS.12,00,000/- MADE BY THE AO ON ACCOUNT OF UNEXPLAINED CASH CREDIT U/S.68 OF THE ACT IN RESPEC T OF THE UNSECURED LOAN CLAIMED TO HAVE BEEN RECEIVED BY THE ASSESSEE FROM M/S. SATYAM BALAJI RICE IND (P) LTD., 4. BRIEFLY STATED THE RELEVANT MATERIALS FACTS ARE LIKE THIS. THE ASSESSEE DERIVES INCOME FROM WHOLESALE TRADING IN MAIZE. THE ASSESSEE FILE D RETURN OF INCOME ON 22.9.2009 DISCLOSING TOTAL INCOME OF RS.4,71,800/- AND THE SAME WAS PROC ESSED U/S.143(1) OF THE ACT UNDER AST SYSTEM ON 20.8.2010. THEREAFTER, THE CASE WAS SELE CTED FOR SCRUTINY. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE FURNISHED COM PLETE BOOKS OF ACCOUNT, I.E. CASH BOOK, LEDGER AND VOUCHERS FOR EXAMINATION. THEREAFTER, THE ASSESSING OFFICER COMPLETED THE ASSESSMENT UNDER SECTION 143(3) OF THE ACT ON 23TH DECEMBER, 2011, DETERMINING THE TOTAL INCOME AT RS.34,62,607/-, INTER ALIA, MAKING THE FO LLOWING DISALLOWANCES: 1. OUTWARD & INWARD FREIGHT EXPENSES : RS.,13,47, 006/- 2. LOADING & UNLOADING EXPENSES : RS. 1,94,788/- 3. R.M.C. EXPENSES : RS. 2,77,956/- 4. OTHER EXPENSES : RS. 1,06,335/- 5. UNEXPLAINED LOAN CREDITORS : RS. 12, 85,000/ - 4 ITA NO.518/CTK/2012 ITA NO.566/CTK/2012 ASSESSMENT YEAR :2009-2010 ) 5. AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER, TH E ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY, WHO PA RTLY ALLOWED THE ASSESSEES APPEAL. BEING AGGRIEVED, BOTH THE SIDES ARE IN APPEAL BEFORE THE TRIBUNAL. 6. NOW WE TAKE UP THE APPEAL FILED BY THE ASSESSEE. 7. GROUND NOS.1 TO 3 IS ESTIMATION OF ADDITION IN R ESPECT OF INWARD AND OUTWARD FREIGHT EXPENSES. 8. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSE E HAS DEBITED A SUM OF RS.1,34,70,062/- I.E. UNDER THE HEAD OUTWARD EXPENS ES AT RS.76,46,267/- AND INWARD EXPENSES AT RS.58,24,795/- IN THE TRADING & PROFIT & LOSS AC COUNT. HOWEVER, ON VERIFICATION OF THE LEDGER COPY OF THE BANK STATEMENT FURNISHED BY THE ASSESSE E, THE AO NOTICED THAT THERE WAS HIGH VALUE OF CASH TRANSACTION EFFECTED ON PARTICULAR DA TES. IN VIEW OF THIS, THE AO WAS OF THE OPINION THAT THE INFLATION OF EXPENSES TO REDUCE TH E NET PROFIT CANNOT BE RULED OUT AND, ACCORDINGLY, DISALLOWED 10% OF SUCH EXPENSES OF RS .1,34,70,062/- ON ESTIMATE BASIS, WHICH WORKS OUT AT RS.13,47,006/-. AGGRIEVED, THE ASSESS EE CARRIED THE MATTER IN APPEAL BEFORE THE LD CIT(A). 9. BEFORE THE LD CIT(A), IT WAS SUBMITTED BY THE AS SESSEE THAT THE ASSESSEE PROCURE AGRICULTURAL PRODUCE I.E. MAIZE FROM THE FARMERS/SM ALL AGENTS FROM VILLAGES OF NABARANGPUR AND KORAPUT DISTRICTS. THE MATERIALS WERE CENTRALLY GO DOWN AT JEYPORE AND THEN THEY WERE PROPERLY STAKED IN THE GUNNY BAGS IN THE DESIRED QUANTITY OF THE BUYER AND TRANSPORTED OUTWARD FROM THE 5 ITA NO.518/CTK/2012 ITA NO.566/CTK/2012 ASSESSMENT YEAR :2009-2010 ) GODOWN TO THE DESTINATION OF THE PURCHASERS. DUE T O THE ABOVE EXERCISE, THE ASSESSEE PAID THE FREIGHT TO THE LORRY TRUCK/TRACTOR/BULLOCK CART DRI VERS UPON RECEIPT OF MATERIAL AND THE SAME IS RECORDED IN THE REGISTER MAINTAINED AT WAREHOUSE OF THE ASSESSEE. THESE TRANSPORTERS/VEHICLES HAVE PASSED THROUGH THE REGULATED MARKET COMMITTEE AND THEN REACH TO THE GODOWN OF THE ASSESSEE. THE SAME CAN BE VERIFIED FROM THE RMC PA YMENT RECEIPTS ISSUED BY THE RMC CHECK POST BARRIER. THE CONTENTION OF THE ASSESSEE IS TH AT THE FREIGHT INFLATED EXPENSES INCURRED ARE GENUINE. IT WAS FURTHER SUBMITTED THAT WHEN THE MA TERIALS ARE PROCURED FROM THE AGRICULTURALIST/VILLAGES AND BROUGHT BY TRUCKS/LORR IES/VEHICLES BULLOCK CARTS BY PAYING THE RMC CHARGES TO THE REGULATED MARKET COMMITTEE, NAVRANGP UR AND JEYPORE, THE FREIGHT PAID ARE BOOKED AS INWARD FREIGHT CHARGES AND WHEN THE MATER IALS ARE STACKED IN THE GUNNY BAGS AND DISPATCHED OUTWARD FROM THE GODOWN TO THE RAILWAY S IDING AND FROM THERE DISPATCHED BY RAILWAY WAGONS TO PURCHASERS DESTINATIONS LIKE KAKI NARA PORT/VISAKHAPATNAM PORT ARE TREATED AS OUTWARD EXPENSES. BEFORE THE LD CIT(A), THE ASSESSE E SUBMITTED FEW DOCUMENTS WHICH COULD NOT BE FILED BEFORE THE AO BECAUSE OF LACK OF CLARI TY. CONSIDERING THE SAME, THE LD CIT(A) CALLED FOR A REMAND REPORT FROM THE ASSESSING OFFICER AND THE AO SUBMITTED HIS REPORT. THE REMAND REPORT WAS FURNISHED TO THE ASSESSEE FOR COMMENTS A ND THE COMMENTS OF THE ASSESSEE HAVE BEEN REPRODUCED IN THE IMPUGNED ORDER. 10. UPON CONSIDERATION OF THE REMAND REPORT AND SUB MISSION OF THE ASSESSEE, THE LD CIT(A) HELD WITH REGARD TO INWARD EXPENSES OF RS.58,24,795 /- THAT THE AO IN HIS REMAND REPORT HAS STATED THAT THESE EXPENSES ARE ONLY SUPPORTED BY SE LF MADE VOUCHERS. HOWEVER, ON PERUSAL OF THE DETAILS OF THE PAPER BOOK FILED BY THE ASSESSEE , IN THE LEDGER THE EXPENSES HAVE BEEN BOOKED UNDER THE DESCRIPTION BEING AMOUNT PAID DUR ING THE DAY FOR FREIGHT FROM VILLAGES TO 6 ITA NO.518/CTK/2012 ITA NO.566/CTK/2012 ASSESSMENT YEAR :2009-2010 ) WAREHOUSE AS PER REGISTER FOR MAIZE QUINTALS =X T HE CIT(A)FURTHER OBSERVED THAT THE ENTIRE AMOUNT WAS PAID IN CASH AND NO RECEIPTS FROM ANY OF THE TRUCK DRIVERS ARE AVAILABLE OR EVEN THE SIGNATURES ON THE PAYMENT VOUCHERS ARE NOT AVAILABL E. THE LD CIT(A) HELD THAT ADMITTEDLY THE ASSESSEE MUST HAVE INCURRED EXPENDITURE TO CARRY GO ODS FROM VILLAGES TO THE GODOWN. HAVING OBSERVED SO AND IN THE ABSENCE OF ANY CORROBORATIN G SUPPORTING DETAILS AND CONSIDERING THE ARGUMENT THAT MAJOR EXPENSES IS ON TRUCK FREIGHT, W HICH HAVE ALSO PASSED THROUGH RMCS, THE LD CIT(A) RESTRICTED THE DISALLOWANCE TO 5% AS AGAINST 10% MADE BY THE AO WITH REGARD TO INWARD EXPENSES RESTRICTING THE DISALLOWANCE TO RS.2,91,24 0/-. 11. SO FAR AS OUTWARD FREIGHT EXPENSES OF RS.76,46, 267/- IS CONCERNED, THE LD CIT(A) HELD THAT THE AO IN HIS REMAND REPORT HAS STATED THAT OU T OF ABOVE AMOUNT, SATISFACTORY EVIDENCES ARE AVAILABLE IN RESPECT OF PAYMENTS, BULK OF WHICH IS TOWARDS RAIL FREIGHT AND DEMURRAGE CHARGES EXCEPT AN AMOUNT OF RS.27,04,312/- REPRESEN TING FREIGHT CHARGES FROM WAREHOUSE TO RACK POINT AMOUNTING TO RS.12,72,350/- AND LOADING & UNLOADING CHARGES AT THE WAREHOUSE AND RACK AMOUNTING TO RS.14,31,962/-. IN THE REMAND REP ORT, IT IS STATED THAT IN SUPPORT OF THE EXPENSES, THE ASSESSEE HAS PRODUCED SELF MADE DEBIT VOUCHERS. HE FURTHER OBSERVED THAT THE ENTIRE AMOUNT WAS PAID IN CASH AND EVEN THE BASIS D ETAILS LIKE TRUCK NUMBERS ARE ALSO NOT AVAILABLE. IN THE ABSENCE OF ANY SUPPORTING PAYMEN T VOUCHERS, THE LD CIT(A) CONFIRMED THE ADDITION AT 10% OF RS.27,04,312/- . 12. BEFORE US, THE LD A.R. SUBMITTED THAT THERE IS NO BASIS BY THE LD CIT(A) TO RESTRICT THE DISALLOWANCE TO 5% WITH REGARD TO INWARD FREIGHT EX PENSES EVEN THOUGH HE HAS ADMITTED THE EXPENSES TO BE GENUINE. LD A.R. FURTHER SUBMITTED THAT ALL THE DETAILS AS REQUIRED BY THE AO 7 ITA NO.518/CTK/2012 ITA NO.566/CTK/2012 ASSESSMENT YEAR :2009-2010 ) WERE PRODUCED INCLUDING THE GATE PASS FROM RMCS. T HEREFORE, THERE IS NO JUSTIFICATION OF ANY ADHOC ADDITION IN THIS REGARD. WITH REGARD TO OUTW ARD FREIGHT EXPENSES, LD A.R. SUBMITTED THAT SATISFACTORY EVIDENCES ARE PRODUCED BEFORE THE AO, THEREFORE, HE URGED FOR DELETION OF ADHOC DISALLOWANCE. 13. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PE RUSED THE RECORD OF THE CASE. WE FIND IN THIS CASE, THE ASSESSEE IS IN BUSINESS OF PROCUR ING AGRICULTURAL PRODUCE I.E. MAIZE BEING COLLECTED FROM VARIOUS VILLAGES OF REMOTE AREAS LIK E NABARANGPUR AND KORAPUT AND TRANSPORTED SAME TO THE CENTRALLY GODOWN AT JEYPORE. IT IS AN UNDISPUTED FACT THAT NEITHER OF THE AUTHORITIES BELOW HAS DENIED THE GENUINENESS OF THE ENTIRE TRAN SACTION. THE ONLY REASON FOR MAKING ADHOC DISALLOWANCE IS THAT THE AMOUNT WAS PAID IN CASH AN D NO RECEIPTS FROM ANY OF THE TRUCK DRIVERS ARE AVAILABLE. HOWEVER, THE DEPARTMENT HAS ADMITTE D THAT THE ASSESSEE MUST HAVE INCURRED EXPENDITURE TO CARRY GOODS FROM VILLAGES TO THE GOD OWN. BEFORE THE AUTHORITIES BELOW ALL THE DETAILS HAVE BEEN PRODUCED BY THE ASSESSEE. HOWEV ER, THEY HAVE ADMITTED THAT PAYMENT MIGHT HAVE BEEN MADE FOR CARRYING OUT THE TRANSPORT ATION. IN FACT, NOTHING HAS BEEN POINTED OUT TO SUPPORT THAT ANY SINGLE INSTANCE OF EXPENSE S WHICH WAS NOT INCURRED FOR THE PURPOSE OF ASSESSEE'S BUSINESS. MERELY STATING THAT THESE EXPE NSES ARE NOT VERIFIABLE FROM ANY VOUCHERS IS NOT SUFFICIENT TO MAKE ADHOC DISALLOWANCE. IN FACT, BOTH THE AUTHORITIES BELOW HAVE NOT GIVEN ANY COGENT REASONS IN SUPPORT OF ADHOC DISALLOWANCE . WE, THEREFORE, DO NOT SEE ANY JUSTIFICATION IN MAKING THE DISALLOWANCE IN RESPECT OF INWARD AND OUTWARD FREIGHT EXPENSES. WE, ACCORDINGLY, DELETE THE ADHOC ADDITION MADE BY BOTH THE AUTHORITIES BELOW. HENCE, GROUND NOS.1 TO 3 ARE ALLOWED. 8 ITA NO.518/CTK/2012 ITA NO.566/CTK/2012 ASSESSMENT YEAR :2009-2010 ) 14. THE NEXT ISSUE IS WITH REGARD TO LOADING AND UN LOADING CHARGES OF 1,94,788/-. 15. BEFORE THE AO, IT WAS SUBMITTED BY THE ASSESSEE THAT THIS EXPENDITURE WAS INCURRED FOR LOADING AND UNLOADING CHARGES ON THE TOTAL MATERIAL S PROCURED AND SOLD DURING THE YEAR. HOWEVER, THE AO MADE DISALLOWANCE OF RS.1,94,788/- BEING 10% OF RS.19,47,880/- ON ACCOUNT OF NON-PRODUCTION OF BOOKS OF ACCOUNT AND OTHER DET AILS. WHEN THE MATTER WAS CARRIED ON TO THE LD CIT(A), A REMAND REPORT WAS CALLED FOR FROM THE ASSESSING OFFICER. IN THE REMAND REPORT, THE AO SUBMITTED AS UNDER: AS REGARDS THE DISALLOWANCE OF RS.1,94,788/- UNDER THIS HEAD I.E. 10% OUT OF RS.19,47,880/-, IT IS SUBMITTED THAT THE EXPENDITUR E INCLUDES BOTH LOADING IN THE VEHICLE AT SITE AND UNLOADING AT THE GODOWN. ALTHO UGH THE ASSESSEE HAS PASSED THE RELEVANT ENTRY IN THE BOOKS OF ACCOUNT BUT THE SUPPORTED EVIDENCES KEPT BY HIM IN THE SHAPE OF ONLY SELF MADE DEBIT VOUCHERS A RE ALSO NOT PROPERLY AND FULLY VERIFIABLE IN THE ABSENCE OF THE DETAILS OF THE PAY EE. THEREFORE, INFLATION OF EXPENDITURE UNDER THIS HEAD CANNOT BE RULED OUT. TH EREFORE, THE DISALLOWANCE MADE IN THE ASSESSMENT ORDER IS JUSTIFIED. 16. WHEN THE ABOVE REPORT OF THE AO WAS MADE AVAILA BLE TO THE ASSESSEE FOR COMMENTS, IT WAS SUBMITTED AS UNDER: IN THIS REGARD, WE HAVE PLACED LEDGER ACCOUNTS OF LOADING & UNLOADING EXPENSES AT SERIAL NO.5(PAGE NO.49 TO 73) OF THE PAPER BOOK SUBMITTED ON 4 TH JUNE, 2012, HOWEVER THE EXPENSES INCURRED BY THE ASSESSEE WERE WHOLLY & EXCLUSIVELY REQUIRED FOR LOADING & UNLOADING OF MAIZE BAGS IN T HE TRUCKS/LORRY RAILWAY WAGONS WERE NECESSARY INCIDENTAL TO CARRY OUT THE B USINESS. ALL THE EXPENSES ARE REGULARLY VOUCHED, REGISTER MAINTAINED RECORDED IN REGULAR BOOKS OF ACCOUNT DULY AUDITED U/S.44AB OF THE INCOME TAX ACT. THE L D AO HAS ESTIMATED ONLY ON THE BASIS OF HIS SUSPICIOUS FINDING WITHOUT HAVING ANY REASONS THEREOF. IT IS SUBMITTED THAT THE LD AO HAS MADE THE ADDITION WRON GLY & LIABLE TO BE DELETED. 17. UPON CONSIDERATION OF THE REMAND REPORT AND THE SUBMISSIONS OF THE ASSESSEE, THE LD CIT(A) CONFIRMED THE ACTION OF THE AO HOLDING THAT THE ENTIRE AMOUNT IS PAID IN CASH AND THERE IS NO SUPPORTING PAYMENT VOUCHERS OR ANY ACKNOWLEDG EMENT FROM THE PAYEE. 9 ITA NO.518/CTK/2012 ITA NO.566/CTK/2012 ASSESSMENT YEAR :2009-2010 ) 18. BEFORE US, LD COUNSEL FOR THE ASSESSEE SUBMITT ED THAT THE DEPARTMENTAL AUTHORITIES HAVE MADE THE ADHOC ADDITION WITHOUT ANY BASIS. TH E ASSESSEE HAS INCURRED THE LOADING AND UNLOADING CHARGES ON THE TOTAL MATERIALS PROCURED A ND SOLD DURING THE YEAR. HE RELIED ON THE FOLLOWING JUDICIAL PRONOUNCEMENTS WHEREIN, IT IS HE LD THAT WHEREVER INCOME IS ESTIMATED, SUCH INCOME IS OF NET INCOME: I) INDWELL CONSTRUCTIONS VS CIT (232 ITR 776 )(AP) II) AMARJOTHI PICTURES VS CIT (69 ITR 775( (MAD) 19. ON THE OTHER HAND, LD D.R. RELIED ON THE ORDERS OF AUTHORITIES BELOW. 20. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND AL SO THE PRACTICALITY INVOLVED IN THIS TRANSACTION. ONCE WE HAVE ACCEPTED THAT THE ASSESS EE HAS INCURRED INWARD & OUTWARD FREIGHT EXPENSES THAT ALSO ESSENTIALLY INVOLVED LOADING & U NLOADING GOODS FROM SUCH TRUCKS/VEHICLES. THE LABOURERS WERE ENGAGED TO DO THAT WORK AND FOR WHICH THEY WERE PAID. SOMETIMES, THERE MAY BE VOUCHERS AND SOMETIMES THERE MAY NOT BE VOUC HERS AVAILABLE. IN SOME CASES, THE LABOURERS ARE ILLITERATE AND MAY NOT SIGN IN THE VO UCHERS. CONSIDERING THE ABOVE ASPECT, ONE CANNOT PRESUME THAT THE TRANSACTION IS NOT GENUINE. IN ORDER TO DO THIS AGRICULTURAL BUSINESS, THIS PRACTICAL ELEMENT HAS TO BE TAKEN INTO CONSIDE RATION. THEREFORE, THE DISALLOWANCE ON THIS SCORE IS NOT JUSTIFIABLE AND IN THE INTEREST OF JUS TICE, WE DELETE THE ADHOC ADDITION OF 10% MADE BY THE AO AND CONFIRMED BY THE LD CIT(A). HENCE, G ROUND NO.4 IS ALLOWED. 10 ITA NO.518/CTK/2012 ITA NO.566/CTK/2012 ASSESSMENT YEAR :2009-2010 ) 21. THE NEXT DISALLOWANCE RELATES TO ENHANCEMENT OF RS.2,60,000/- UNDER THE HEAD RENT PAID BY APPLYING PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. 22. WE HAVE HEARD THE RIVAL CONTENTIONS. ON PERUSA L OF THE ORDER OF THE LD CIT(A), WE FIND THAT BEFORE THE LD CIT(A), THE ASSESSEE IN HIS WRI TTEN SUBMISSION AS WELL AS DURING THE COURSE OF FIRST APPELLATE PROCEEDINGS ON 26.7.2012 HAD FAIRLY SUBMITTED THAT THE RENT OF RS.2,60,000/- ON WHICH NO TDS HAS BEEN DEDUCTED AND, THEREFORE, SAME IS TO BE DISALLOWED U/S.40(A)(IA) OF THE ACT. WE FIND IN THIS ISSUE THERE ARE CONFLICTING D ECISIONS OF VARIOUS HIGH COURTS. HOWEVER, THE INTENTION OF THE LEGISLATURE IS QUITE CLEAR AS PUTF ORTH UNDER SECTION 40(A)(IA) OF THE ACT. SINCE NO TDS WAS DEDUCTED AS ADMITTED BY THE ASSESSEE BEFORE THE LD CIT(A), WE FIND NO INFIRMITY TO INTERFERE IN THE ORDER OF THE LD CIT(A). HENCE, TH E ENHANCEMENT MADE BY THE LD CIT(A) OF RS.2,60,000/- IS SUSTAINED. GROUND NOS.5,6, 7 & 8 IS ACCORDINGLY, REJECTED. 23. THE NEXT ISSUE AGITATED BY THE ASSESSEE IN GROU ND NO.9 IS AGAINST ADDITION OF RS.85,000/- U/S.68 ON ACCOUNT OF LOAN FROM SMT. BHA GYAWATI AGGARWAL. THE REVENUE HAS ALSO RAISED IN ITS APPEAL AGAINST DELETION OF RS.12,00,0 00/- MADE U/S.68 OF THE ACT ON ACCOUNT OF LOAN FROM SATYAM BALAJI RICE IND (P) LTD., RAIPUR. 24. FACTS IN BRIEF ARE THAT DURING THE COURSE OF AS SESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS TAKEN A LOAN OF RS.12,85,000/- FROM THE FOLLOWING TWO PARTIES: I) M/S. SATYAM BALAJI RICE IND (P) LTD., RAIPUR : RS.12,00,000/- II) SMT. BHAGABAI AGARWAL, DABUGAON, NABARANGPUR : RS. 85,000/- 11 ITA NO.518/CTK/2012 ITA NO.566/CTK/2012 ASSESSMENT YEAR :2009-2010 ) SINCE CONFIRMATIONS IN RESPECT OF THESE TRANSACTION S WERE NOT FURNISHED BY THE ASSESSEE, THE AO ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE FIRST APPELLATE AUTHORI TY. 25. BEFORE THE LD CIT(A), IN RESPECT OF LOAN OF RS. 12,00,000/- TAKEN FROM M/S. SATGYAM BALAJI RICE IND (P) LTD., IT WAS SUBMITTED THAT THE AMOUNT WAS RECEIVED BY ACCOUNT PAYEE CHEQUE AND SUBSEQUENTLY SAID AMOUNT WAS PAID BACK T O THE CREDITOR ALONGWITH INTEREST IN SUBSEQUENT YEAR. IN RESPECT OF LOAN OF RS.85,000/- , IT WAS SUBMITTED THAT THE ADVANCE WAS ALSO RECEIVED BY WAY OF ACCOUNT PAYEE CHEQUE. CONSIDERI NG THE SAME, THE LD CIT(A) CALLED FOR A REMAND REPORT FROM THE ASSESSING OFFICER, WHEREIN, THE AO STATED AS UNDER: AS REGARDS THE ADDITION OF RS.12,85,000/- THE ASSE SSEE HAS FURNISHED THE LOAN CONFIRMATION LETTERS FROM THE ALLEGED TWO CREDITORS WHICH ARE VERIFIED WITH REFERENCE TO THE BOOKS OF ACCOUNT, BANK ACCOUNTS, E TC. THE GENUINENESS OF THE TRANSACTION IS ESTABLISHED. 26. THE ABOVE REPORT WAS MADE AVAILABLE TO THE ASSE SSEE FOR HIS COMMENTS. THE ASSESSEE SUBMITTED THE FOLLOWING DETAILS BEFORE THE LD CIT(A ). I) COPY OF AUDITED BALANCE SHEET OF M/S. SATYAM BA LAJEE RICE INDUSTRIES PVT LTD., DT.31.3.2009 SHOWING LOANS & ADVANCES TO THE ASSESSEE OF RS.12,00,000/-. II) COPY OF STATEMENT OF BANK STATEMENT WITH DENA BANK OF THE LENDER OUT OF WHICH RS.12,00,000/- PAYMENT WERE ADVANCED TO THE A SSESSEE. 27. AFTER CONSIDERING THE REMAND REPORT AND FURTHER SUBMISSION OF THE ASSESSEE, THE LD CIT(A) HELD THAT AS FAR AS THE LOAN ADVANCE OF RS.1 2,00,000/- FROM M/S. SATYAM BALAJI RICE IND PVT LTD., IS CONCERNED, THE AO EXAMINED THE STATEM ENT OF LEDGER DULY CONFIRMED BY THE CREDITOR AND COPY OF THE INCOME TAX RETURN OF THE CREDITOR A LONGWITH THE COPY OF AUDIT REPORT AND BANK STATEMENT AND NOTICED THAT THE CREDITOR HAS A PROFI T BEFORE TAX OF RS.2,22,85,938/- FOR THE YEAR 12 ITA NO.518/CTK/2012 ITA NO.566/CTK/2012 ASSESSMENT YEAR :2009-2010 ) ENDING 2009 AND HAS A RESERVE OF RS.12,90,88,827/-. THE LOAN WAS RECEIVED BY ACCOUNT PAYEE CHEQUE AND ALSO REPAID BACK IN THE SUBSEQUENT YEAR ALONGWITH INTEREST. HENCE, THE LD CIT(A) DELETED THE ADDITION OF RS.12,00,000/-. HOWEVER, I N RESPECT OF RS.85,000/- RECEIVED FROM SMT. BHAGAWATI AGARWAL, MOTHER OF THE ASSESSEE, THE LD CIT(A), ON PERUSAL OF THE BANK ACCOUNT, WAS OF THE VIEW THAT THE AMOUNT WAS DEPOSITED IN C ASH IN HER ACCOUNT BEFORE GIVING CHEQUE TO THE ASSESSEE. WHEN THIS WAS CONFRONTED TO THE AR O F THE ASSESSEE BY THE LD CIT (A), HE COULD NOT EXPLAIN THE SOURCE OF DEPOSIT. HENCE, THE LD C IT(A) DID NOT AGREE WITH THE REMAND REPORT IN RESPECT OF LOAN ADVANCE OF RS.85,000/- AND SUSTAINE D THE ADDITION OF RS.85,000/- U/S.68 OF THE ACT. HENCE, THE DEPARTMENT IS IN APPEAL IN RESPECT OF DELETION OF RS.12,00,000/- AND THE ASSESSEE IS IN APPEAL IN RESPECT OF SUSTENANCE OF A DDITION OF RS.85,000/- BEFORE US. 28. BEFORE US, THE LD A.R. REITERATED THE SUBMISSIO NS MADE BEFORE THE LD CIT(A) AND LD D.R. RELIED ON THE BOARD CIRCULAR NO.10 DT.16.12.2013. 29. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND AL SO THE ORDERS OF THE AUTHORITIES BELOW. AS FAR AS THE ADDITION OF RS.85,000/- SUSTAINED BY THE LD CIT(A) IS CONCERNED, WE FIND THAT ALTHOUGH THE AO HAS ADMITTED THE AMOUNT EXPLAINED T O BE GENUINE, HOWEVER, BEFORE THE LD CIT(A), THE LD A.R. COULD NOT EXPLAIN THE SOURCE OF DEPOSIT OF AMOUNT IN BANK BEFORE ISSUE OF CHEQUE TO THE ASSESSEE. AS PER DECISION OF HONBLE SUPREME COURT IN THE CASE OF SUMATI DAYAL, 214 ITR 801(SC), THE ASSESSEE HAS TO PROVE THE THRE E INGREDIENTS I.E. IDENTITY, GENUINENESS AND THE CREDITWORTHINESS OF THE CREDITOR. SINCE THE CR EDITWORTHINESS OF THE CREDITOR IS NOT SATISFACTORILY EXPLAINED BEFORE THE LD CIT(A) AS WE LL AS BEFORE US, WE DO NOT FIND ANY INFIRMITY IN 13 ITA NO.518/CTK/2012 ITA NO.566/CTK/2012 ASSESSMENT YEAR :2009-2010 ) THE ORDER OF THE LD CIT(A) IN SUSTAINING THE ADDITI ON OF RS.85,000/-. HENCE, GROUND NO.9 TAKEN BY THE ASSESSEE IS REJECTED. 30. AS FAR AS DELETION OF RS.12,00,000/- IS CONCERN ED, WE FIND THAT THE ADDITION HAS BEEN DELETED BY THE LD CIT(A) AFTER CALLING A REMAND REP ORT, WHEREIN, THE AO HAS ACCEPTED THAT RS.12,00,000/- WAS RECEIVED BY THE ASSESSEE FROM M/ S. SATYAM BALAJI RICE IND PVT LTD., BY ACCOUNT PAYEE CHEQUE AND THE CREDITOR HAD RESERVE O F RS.12,90,88,827/- IN HIS ACCOUNT DURING THE RELEVANT PERIOD. THIS FACT HAS NOT BEEN DISPUT ED BY THE LD D.R. SINCE IN THIS CASE THE IDENTITY, GENUINENESS OF THE TRANSACTION AND CREDIT WORTHINESS OF THE LOAN IS ESTABLISHED, WE DO NOT SEE ANY REASON TO INTERFERE WITH THE ORDER OF T HE LD CIT(A). HENCE, WE REJECT THE GROUND TAKEN BY THE REVENUE. 31. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY AL LOWED WHEREAS THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 /10/2 015 SD/- SD/- . . ,/P.M.JAGTAP PARTHA SARATHI CHAUDHURY /ACCOUNTANT MEMBER 1111 / JUDICIAL MEMBER CUTTACK; #' DATED 30/10/2015 B.K.PARIDA, SPS 1 11 1 14 ITA NO.518/CTK/2012 ITA NO.566/CTK/2012 ASSESSMENT YEAR :2009-2010 ) 0 0 0 0 ( ( ( ( 4% 4% 4% 4% / COPY OF THE ORDER FORWARDED TO : 0# 0# 0# 0# / BY ORDER, SR. PRIVATE SECRETARY, , / ITAT, CUTTACK 1. ' / THE ASSESSEE : MANOJ KUMAR AGARWAL, PROP. M/S. LAXMI TRADING CO. AT/PO: DABUGAON, NABARANGPUR 2. ()' / THE REVENUE: ITO, WARD-1, JEYPORE 3. 5 ( ) / THE CIT(A), BERHAMPUR 4. 5 / CIT , BHUBANESWAR 5. $6 (# , / DR, ITAT, CUTTACK 6. 7 8- / GUARD FILE. ) ( //TRUE COPY//