ACIT, Alwar V. SHRI NASSAR KHAN PROP., Alwar

ITA 533/JPR/2011

• Counselvise Citation: 53323114 RSA 2011
• Duration Of Justice: 3 year(s) 5 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-11-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 27-11-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 31-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S L PODDAR
• Keywords: Unexplained cash credit; Depreciation
• Section: 40A(3); 131; 68

Judgement Text

IN THE INCOME TAX APPELALTE TRIBUNAL: JAIPUR BENCH JAIPUR BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER, AND SHRI B. C. MEENA, ACCOUNTANT MEMBER. ITA.NO.533/JP/2011 (ASSESSMENT YEAR:2006-07) ASSISTANT COMMISSIONER OF INCOME TAX , CIRCLE-2, ALWAR APPELLA NT VS. SHRI NASSAR KHAN PROP. M/S NASSAR KHAN CONTRACTOR, VILLAGE-BAHADARI, TEHSIL- TIJARA DISTT. ALWAR (RAJ.) RESPONDENT PAN: AGOPK8192M /BY APPELLANT : SHRI RAJESH OJHA, D.R. /BY RESPONDENT : SHRI S. L. PODDAR, A.R. /DATE OF HEARING : 25.11.2014 /DATE OF PRONOUNCEMENT : 28 .11.2014 I.T.A. NO. 533/JP/2011 A.Y. 2006-2007 (ACIT VS. SHRI NASSAR KHAN) PAGE 2 ORDER PER SHAILENDRA KUMAR YADAV, J.M: THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST T HE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS), ALWA R, DATED 28.03.2011 FOR A.Y.2006-07 ON THE FOLLOWING GROUNDS : 1. THAT THE LD.CIT (A.) HAS ERRED IN LAW AS WELL AS ON THE FACTS AND CIRCUMSTANCES OF THE CASE IN DELETING THE ADDITION OF RS.1,25,03,910/- MADE ON A/C OF UNEXPLAINED CASH CREDIT U/S 68 OF THE I.T. ACT. 2. THAT THE LD.CIT (A.) HAS ERRED IN LAW AS WELL A S ON THE FACTS AND CIRCUMSTANCES OF THE CASE IN DELETING THE ADDITION OF DISALLOWANCE U/S 40A(3) OF RS.10,98,559 /- WITHOUT DECIDING THE ISSUE ON MERITS IGNORING THE DETAILED REMAND REPORT OF THE AO AND THE FACT THAT THE ASSESSEE HAS FAILED TO DISCHARGE HIS ONUS IN THIS REGARD. 3. THE LD. CIT(A) SHOULD HAVE CONFIRMED THE ABOVE ADDITIONS INSTEAD OF ESTIMATING THE N.P. RATE @8%. THIS GROUND IS WITHOUT PREJUDICIAL ON THE GROUND RAISED AT NO.1 & 2. 2. ASSESSEE IS A LABOUR CONTRACTOR. 3. FIRST ISSUE IS WITH REGARDS TO ADDITION OF RS.1, 25,03,910/- ON ACCOUNT OF UNEXPLAINED CASH CREDIT. ASSESSING O FFICER OBSERVED THAT ASSESSEE HAD SHOWN FOLLOWING SUNDRY C REDITORS: I. A-CLASS CARRIER RS.14,85,900/- II. BASIR KHAN BUILDING MATERIAL RS.70,53,790/- III. D.K. BUILDING MATERIAL RS. 3,88,320/- IV. MAHESH CHAND RS. 4,03,359/- V. NBR CONSTRUCTION CO. RS. 28,42,151/- VI. SAHU STONE SUPPLIER RS. 3,30,390/- TOTAL RS. 12503910/- I.T.A. NO. 533/JP/2011 A.Y. 2006-2007 (ACIT VS. SHRI NASSAR KHAN) PAGE 3 ASSESSING OFFICER VERIFIED ABOVE CASH CREDITORS. H E ISSUED SUMMONS U/S. 131 TO FOLLOWING CREDITORS: A. D.K. BUILDING MATERIAL, BYE PASS TAPUKARA (ALWAR ) B. MAHESH CHAND, M.S. TIMBER STONER, NR. PATEL AGEN CY, TIJARA-BHIWADI ROAD C. M/S NBR CONSTRUCTION COMPANY, CHOPANKI (BHIWADI) IN CASE OF D. K. BUILDING MATERIAL AND MAHESH CHAND , SUMMONS WERE SERVED BUT IN CASE OF NBR, CONSTRUCTIO N COMPANY, SUMMON COULD NOT BE SERVED. ASSESSING OFF ICER ASKED THE ASSESSEE TO GIVE ADDRESSES OF A CLASS CAR RIER, BASIR KHAN BUILDING MATERIAL AND SAHABU STONE SUPPLIER. THEREAFTER SUMMONS WERE ISSUED TO THESE PARTIES FOR VERIFICATION OF CREDITORS. ASSESSEE WAS ALSO ASKED TO PRODUCE THE CASH CREDITOR FOR VERIFICATION. IN SPITE OF AL L EFFORTS OF REVENUE, INSPECTOR OF INCOME TAX DEPARTMENT COULD N OT SERVE THE SUMMON ISSUED AND IT WAS FOUND THAT ADDRESSES P ROVIDED BY ASSESSEE, NO SUCH PERSONS WERE FOUND. ON THE BA SIS OF PHOTO COPY OF THE BILL, ASSESSING OFFICER CONCLUDED THAT THESE CASH CREDITORS WERE NO MEANS OF WORTH TO GIVE CREDI T OF HUGE AMOUNT TO ASSESSEE. ASSESSING OFFICER HAS ALSO PRO DUCED COPY OF ACCOUNTS IN CASE OF M/S. BASIR KHAN BUILDING MAT ERIAL, SH. MAHESH CHAND & M/S. NBR CONSTRUCTION COMPANY. IT W AS FOUND FROM THE COPY OF ACCOUNT THAT PURCHASES FOR E NTIRE YEAR HAS NOT BEEN PAID SO HE CONCLUDED THE SAME TO BE BO GUS AND ULTIMATELY TREATED THE CASH CREDITORS AS BOGUS AND MADE ADDITION OF RS.1,25,03,910/- AS UNEXPLAINED CASH CR EDIT. I.T.A. NO. 533/JP/2011 A.Y. 2006-2007 (ACIT VS. SHRI NASSAR KHAN) PAGE 4 3.1 MATTER WAS CARRIED BEFORE FIRST APPELLATE AUTHO RITY, WHEREIN VARIOUS CONTENTIONS WERE RAISED ON BEHALF O F ASSESSEE ON THIS ISSUE AT PAGE NOS. 10 TO 14 OF CIT(A) ORDER . HAVING CONSIDERED THE SAME CIT(A) FOUND THAT FOLLOWING FAC TS EMERGED: (I). THE ASSESSEE IS A CONTRACTOR. (II). THE RECEIPTS 3,15,93,096/-, NP 19,00,569/- AN D NP RATE 5.799% (III) THE ASSESSEE PURCHASED THE MATERIALS TO COMPL ETE THE CONTRACTS FROM A-CLASS CARRIER, BASIR KHAN BUILDING MATERIAL, D.K. BUILDING MATERIAL, MAHESH CHAND, NBR CONSTRUCTION CO. AND SAHBU STONE SUPPLIER. (IV). THE TOTAL CREDITORS WERE RS.1,25,03,910/-. (V). THERE IS NO PAYMENT IN BASIR KHAN BUILDING MAT ERIAL, AND NBR CONSTRUCTION CO. DURING THE YEAR BUT SOME PAYMENTS WERE MADE TO IN CASE OF MAHESH CHAND. (VI). CASH CREDITORS WERE ISSUED SUMMONS PARTLY SER VED AND PARTY NOT SERVED. CREDITORS SERVED SUMMONS, DI D NOT RESPOND. (VII). THE ASSESSEE WAS GIVEN REASONABLE OPPORTUNIT Y TO PRODUCE THE CASH CREDITORS. HE DID NOT PRODUCE THE CASH CREDITORS AND FINALLY ADMITTED THAT THEY COULD NOT BE PRODUCED. (VIII). THE ASSESSING OFFICER HAD TREATED THESE CAS H CREDITORS OWN UNDISCLOSED MONEY BUT HE HAD NOT DISCHARGED HIS ONUS THAT THIS WAS UNDISCLOSED OWN MONEY. (IX). OUT OF TOTAL CONTRACTS OF RS.3.15 CRORE, 1.25 CRORE CREDITORS ARE POSSIBLE AS DEBTORS WERE MORE THAN 1. 3 CRORE. (X). IF THE CASH CREDITORS TREATED BOGUS THAN NP RA TE WOULD BE @ 45.59% WHICH IS NOT POSSIBLE IN LINE OF CONTRA CT BUSINESS. (XI). THE ASSESSEE HAD PAID FULL AMOUNT TO THE CASH CREDITORS IN FOLLOWING YEAR I.E. AY 2007-08. (XII). THE ASSESSING OFFICER HAD ACCEPTED THE NP RA TE IN AY 2007-08 @ 4.5% AND IN AY 2008-09 5.07%. IN AY 2008-09 A LUMP SUM ADDITION MAD OF RS.50,000/- BY THE AO. (XIII). THE BOOKS OF ACCOUNT HAD BEEN IMPOUNDED BY THE AO. I.T.A. NO. 533/JP/2011 A.Y. 2006-2007 (ACIT VS. SHRI NASSAR KHAN) PAGE 5 (XIV). THE ASSESSEE COULD ALSO NOT PRODUCE THESE CA SH CREDITORS AT THE TIME OF REMAND REPORT FOR VERIFICA TION. IT WAS ALSO CONTENDED ON BEHALF OF ASSESSEE THAT IT AT ON BEHALF OF NP RATE IN CASE OF CONTRACTOR NEAR ABOUT 5% SUBJ ECT TO DEPRECIATION AND INTEREST. NP RATE HAD BEEN ACCEPT ED BY ASSESSING OFFICER IN SUBSEQUENT YEAR. IT WAS CONTE NDED ON BEHALF OF ASSESSEE THAT WHERE NP RATE APPLIED NO OT HER ADDITION LIKE CASH CREDITORS AND CASH PAYMENT COVERED U/S. 4 0A(3) CAN BE MADE AS HELD IN VARIOUS PRONOUNCEMENTS OF ITAT, JAIPUR BENCH. IN THIS BACKGROUND, IT WAS REQUESTED THAT N P RATE OF 8% ON DECLARED TURNOVER WILL MEET BOTH THE ENDS OF JUSTICE. ACCORDING TO THE CONTENTION OF ASSESSEE IN ABOVE BA CKGROUND, CIT(A) RESTRICTED THIS ADDITION AT NP RATE WHICH WO RKED OUT AT RS.25,27,448/-. NET ADDITION WAS CONFIRMED AT RS.6 ,26,879/-. THUS, ASSESSEE GOT RELIEF OF RS.1,18,77,031/- BECAU SE ASSESSEE PURCHASED MATERIAL TO COMPLETE CONTRACTS FROM ABOVE SAID PARTIES. ALL THE PAYMENTS HAVE BEEN CLAIMED TO BE MADE SUBSEQUENTLY. UNDER FACTS AND CIRCUMSTANCES, CIT(A ) WAS JUSTIFIED IN RESTRICTING ADDITION AT NP RATE OF 8%. THUS, RELIEF OF RS.1,18,77,031/- GRANTED BY CIT(A) IS UPHELD. 4. NEXT ISSUE IS WITH REGARDS TO ADDITION OF RS.10, 98,559/- ON ACCOUNT OF CASH PAYMENT U/S. 40A(3) OF THE ACT. ASSESSING OFFICER FOUND THAT ASSESSEE HAD MADE CASH PAYMENTS EXCEEDING RS. 20,000/- ON VARIOUS DATES. ASSESSEE WAS ASKED TO EXPLAIN THE SAME. HE CLAIMED THAT TOTAL CASH PA YMENTS WERE MADE BUT SAME WERE BELOW RS.20,000/-. ASSESSEE SUB MITTED PHOTOCOPY OF 160 PAGES OF PAYMENTS. ASSESSING OFFI CER TREATED I.T.A. NO. 533/JP/2011 A.Y. 2006-2007 (ACIT VS. SHRI NASSAR KHAN) PAGE 6 THESE VOUCHERS AS NON GENUINE AS THEY WERE SELF MAD E VOUCHERS PAID IN A SINGLE SITTING AND ALSO HAD NOT BEEN RECONCILED WITH CASH BOOK AND LEDGER. ASSESSING OF FICER FINALLY DISALLOWED 20% ON RS.54,92,799/- AT RS.10,98,559/-, WHICH WAS ADDED UNDER PROVISIONS OF SECTION 40A(3). 4.1 MATTER WAS CARRIED BEFORE FIRST APPELLATE AUTHO RITY, WHEREIN VARIOUS CONTENTIONS WERE RAISED ON BEHALF O F ASSESSEE. HAVING CONSIDERED THE SAME, CIT(A) HAS DELETED THE ADDITION MADE UNDER PROVISIONS OF SECTION 40A(3) OF THE ACT. 4.2 SAME HAS BEEN OPPOSED BEFORE US, INTER ALIA SUB MITTING THAT CIT(A) WAS NOT JUSTIFIED IN DELETING THE ADDIT ION OF DISALLOWANCE UNDER 40A(3) OF RS.10,98,559/- WITHOUT DECIDING THE ISSUE ON MERIT IGNORING THE DETAILED REMAND REP ORT OF ASSESSING OFFICER AND FACTS THAT ASSESSEE HAS FAILE D TO DISCHARGE HIS ONUS IN THIS REGARD. SO, REQUESTED T O SET ASIDE THE ORDER OF CIT(A) AND RESTORE THAT OF THE ASSESSI NG OFFICER ON THE ISSUE. ON OTHER HAND, LD. AUTHORIZED REPRESENT ATIVE SUPPORTED THE ORDER OF CIT(A) ON THE ISSUE. IN APP EAL, CIT(A) OBSERVED IN APPELLATE PROCEEDING THAT PAYMETS WERE CLAIMED TO BE BELOW RS.20,000/- AND ASSESSEE FILED COPY OF PAY MENT VOUCHERS BEFORE HIM. THESE PAYMENTS WERE MOSTLY FO R LABOURS FOR CIVIL WORK INCLUDING SOIL FILLING WORK. AS DIS CUSSED ABOVE, NP RATE @ 8% HAD BEEN APPLIED IN PRECEDING PARAS. IT HAS BEEN UPHOLD BY US. THEREFORE, IF ANY CASH PAYMENT MADE BY ASSESSEE THERE COULD NOT BE SEPARATE ADDITION. ACC ORDINGLY, SAME WAS RIGHTLY DELETED BY CIT(A). UNDER FACTS AND I.T.A. NO. 533/JP/2011 A.Y. 2006-2007 (ACIT VS. SHRI NASSAR KHAN) PAGE 7 CIRCUMSTANCES, WE ARE NOT INCLINED TO INTERFERE IN THE FINDING OF CIT(A) WHO HAS DELETED THE ADDITION MADE UNDER THE PROVISIONS OF 40A(3) AT RS.10,98,559/-. SAME IS UPHELD BECAUS E IN THIS CASE, NP RATE @ 8% HAS BEEN APPLIED AND SAME HAS BE EN APPROVED BY US IN PRECEDING PARA AS DISCUSSED ABOVE . 5. AS A RESULT, APPEAL FILED BY THE REVENUE IS DISM ISSED. PRONOUNCED IN THE OPEN COURT ON THIS THE 28 TH DAY OF NOVEMBER, 2014. SD/- SD/- (B. C. MEENA) (SHAILENDRA KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBE R TRUE COPY S.K.SINHA COPY FORWARDED TO: 1. THE APPELLANT- ACIT, CIRCLE-2, ALWAR. 2. THE RESPONDENT- SHRI NASSAR KHAN 3. THE CIT 4. CIT(APPEALS) 5. THE DR 6. GUARD FILE (ITA NO. 533/JP/2011) BY ORDER A.R., JAIPUR.