Shri Mukesh Agrawal, Indore V. The Income Tax Officer, Ward 3(1), Indore

ITA 546/IND/2010

• Counselvise Citation: 54622714 RSA 2010
• Duration Of Justice: 1 year(s) 1 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-10-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 24-08-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 18-08-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ARUN DEWAN
• Keywords: Business expenditure; Corroborative evidences; Onus to prove
• Section: 69C; 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, J.M. AND SHRI R.C.SHARM A, A.M. PAN NO. : ABDPA0422G I.T.A.NO.546/IND/2010 A.Y. : 2007-08 SHRI MUKESH AGRAWAL, ITO, 270, ANOOP NAGAR, VS WARD 3(1), INDORE. INDORE. APPELLANT RESPONDENT APPELLANT BY : SHRI SUBHASH CHAND JAIN, C. A. RESPONDENT BY : SHRI ARUN DEWAN, SR. DR DATE OF HEARING : 13.10.2011 DATE OF PRONOUNCEMENT : 17.10.2011 O R D E R PER R. C. SHARMA, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) DATED 12.05.2010 FOR THE ASSESSMENT YEAR 2007-08 IN THE MATTER OF ORDER PASSED U/S 143(3) DATED 10.10.2 009.4-05. 2. FOLLOWING GROUNDS OF APPEAL HAVE BEEN RAISED BY THE ASSESSEE :- -: 2: - 2 1. ON THE BASIS OF FACTS & RECORDS, LD. CIT(A)-I, INDO RE, HAS ERRED IN CONFIRMING THE ACTION OF AO REGARDING ADDITION OF DIFFERENCE BETWEEN BANK CREDIT ENTRY AN D RECEIPTS SHOWN IN THE AUDITED PROFIT AND LOSS ACCOUNT. WHILE SAID DIFFERENCE WAS PERTAINING TO LOAN TAKEN DURING THE YEAR AS WELL AS SOME ADVANCE REFUND TO THE ASSESSEE. THUS CONFORMING TO ADDITION OF RS. 6,09,868/- IS TOTALLY ILLEGAL, BAD IN LAW ARBITRARY THEREFORE KINDLY BE QUASHED. 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A)-I, INDORE, HAS ERRED IN LAW IN HOLDING T HE ADDITION OF DIFFERENCE BETWEEN BANK ENTRY AND RECEIPTS SHOWN IN THE PROFIT AND LOSS ACCOUNT WITHOUT CONSIDERING THE EXPLANATION SUBMITTED DURING THE APPEAL PROCEEDINGS. 3. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A)-I, INDORE HAS ERRED IN CONFIRM ING TO THE ACTION OF AO REGARDING ADDITION ON ACCOUNT O F NON-MATCHING SOME ENTRIES AMOUNTING RS. 5,88,496/- AS SHOWN IN THE AIR INFORMATION. -: 3: - 3 THOUGH ALL SUCH ENTRIES IS PERTAINING TO PAY FREIGH T PAYMENT TRANSACTION ON WHICH ASSESSEE HAS SHOWN THE COMMISSION AS PRACTICE FOLLOW IN SUCH TYPE TRANSACTION IN TRADE. HENCE CONFORMING TO THE ADDITION ON THE BASIS OF NON-RECORDING OF TRANSACTION IS TOTALLY ILLEGAL AND AGAINST OF FACTS . THEREFORE BE DELETED. 4. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A)-I, INDORE, HAS ERRED IN CONFIRMING THE ADDITION ON ACCOUNT OF NON- COMPILING THE AIR ENTRY IN THE BOOKS OF ACCOUNT, WHILE SAME WERE DULY CHECKED DURING THE ASSESSMENT PROCEEDING FROM THE BILTIES AND OTHER RECORDS. THUS THE CONFORMING OF ADDITION IS AGAINST OF LAW. 5. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A)-I, INDORE, HAS ERRED IN CONFIRMING THE ADDITION OF RS. 1,33,561/- FOR ALLEG ED LOW HOUSE HOLD WITHDRAWAL WITHOUT DISCHARGING THE INITIAL ONUS TO PROVE THE INCURRING OF EXPENDITURE -: 4: - 4 U/S 69C OF THE ACT AND ALTERNATIVELY AND SAME IS WHOLLY CONJECTURAL AGAINST FACTS OF THE CASE AND UNTENABLE. 6. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) I, INDORE, HAS GROSSLY ERRED I N CONFIRMING THE ADDITION OF RS. 1,33,561/- MADE BY THE ASSESSING OFFICER FOR LOW HOUSE HOLD WITHDRAWALS WITHOUT ANY BASIS OR IGNORING THE SUBMISSIONS MADE BEFORE HIM AS WELL AS CONFRONTING THE MATERIAL IF ANY IN HIS POSSESSION. 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORDS PERUSED. THE FACTS, IN BRIEF, ARE THAT THE ASSESSEE IS PROPRIETOR OF M/S. INDIAN GOODS CARRIER, MGC COMPOUND, DEWAS N AKA, INDORE, AND CARRYING TRANSPORTATION WORK ON CONTRAC T BASIS OF VARIOUS PARTIES AS IN THE PAST. MOREOVER, ASSESSEE IS ALSO DOING THE SERVICE WITH M/S. M.P. GUJARAT FREIGHT CARRIERS , PHOOLCHAND, KHAMAN CHAND AGARWAL, HUF & M/S. SAURAS HTRA CHEMICALS LIMITED, ON PART TIME BASIS. ASSESSEE IS ALSO PARTNER WITH M/S. RELIABLE CHEMICAL CORPORATION, IN DORE, FOR 33.34 % SHARE OF PROFIT/LOSS. DURING THE COURSE OF ASSESSMENT -: 5: - 5 PROCEEDINGS, THE AO NOTICED FROM THE TOTAL RECEIPTS AS PER AUDITED TRADING AND PROFIT AND LOSS ACCOUNT HAVE BE EN SHOWN AT RS. 49,83,119/- WHEREAS TOTAL RECEIPTS AS PER BA NK STATEMENT ARE SHOWN AT RS. 80,22,105/-, THEREFORE, THE ASSESSEE WAS ASKED TO FURNISH HIS EXPLANATION ON TH IS ACCOUNT. IN RESPONSE, THE ASSESSEE SHRI MUKESH AGRA WAL FILED A DETAILED STATEMENT SHOWING THEIR IN DETAILS OF PA RTY WISE RECEIPTS DURING THE F.Y. 2006-07 RELEVANT TO ASSESS MENT YEAR 2007-08 WHICH SHOWS TOTAL RECEIPTS FROM PARTIES AT RS. 55,92,987/-. BEING NOT SATISFIED WITH THE ASSESSEE S EXPLANATION, THE AO MADE AN ADDITION OF RS. 6,09,86 8/-, WHICH WAS CONFIRMED BY THE LD. CIT(A). 4. AGGRIEVED BY THE ABOVE ORDER, THE ASSESSEE IS IN FU RTHER APPEAL BEFORE US AND IT WAS CONTENDED BY LD. AUTHOR IZED REPRESENTATIVE THAT DETAILS OF TRUCK HIRE CHARGES W ERE PLACED BEFORE THE AO TO RECONCILE THE DIFFERENCE, BUT THE AO DID NOT CONSIDER THE SAME. OUR ATTENTION WAS ALSO DRAWN TO THE DETAILS PLACED ON RECORD, WHICH INDICATED THAT THE ASSESSE E COLLECTED HIRE CHARGES AS AGREED BETWEEN HIM AND THE PARTIES WHOSE GOODS ARE TO BE TRANSPORTED. SOME OF THE PARTIES DO NOT MAKE -: 6: - 6 PAYMENT OF ENTIRE HIRE CHARGES AND THEREFORE THE HI RE CHARGES TO BE RECOVERED FROM THEM ARE DEBITED TO THEIR ACCO UNTS AS THE ASSESSEE IS FOLLOWING MERCANTILE SYSTEM SINCE INCEP TION OF THE BUSINESS. THE ASSESSEE, THEREFORE, SHOWED THE ENTIR E HIRE CHARGES ( CASH OR CREDIT ) AS REVENUE. FREIGHT PAID TO THE TRUCK OWNERS AND OTHER BUSINESS EXPENDITURES ARE DEDUCTED FORM THE REVENUE AND THE BALANCE IS THE NET INCOME OF TH E ASSESSEE. IN THIS YEAR THE ASSESSEE RECEIVED FREIGHT CHARGE A T RS. 2473351/- BY CHEQUES AND RS. 180035/- IN CASH WHICH WAS CREDITED IN THE CASH BOOK. BESIDES THESE TWO AMOUNT RS. 23,29,733/- WAS TO BE RECEIVED FROM THE CUSTOMERS. THUS THE TOTAL REVENUE RECEIVED IS AS UNDER : RS. 24,73,351.00 BY CHEQUES CREDITED IN THE BANK ( FOR DETAILS VIDE PAPER BOOK PAGE NO.20-21) RS. 1,80,035.00 IN CASH, CREDITED IN THE REGULAR CASH BOOK. -: 7: - 7 RS. 23,29,733.00 OUTSTANDING IN THE ACCOUNT OF THE CUSTOMERS (FOR DETAILS VIDE PAPER BOOK PAGE NO.68). THUS TOTAL RECEIPTS WERE RS. 49,83,119/- WHICH WAS SHOWN BY THE ASSESSEE AS HIS INCOME RECEIPT. 5. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS AND FOUND FROM RECORD THAT AS PER THE BANK ACCOUNT, THE TOTAL RECEIPT OF ASSESSEE WAS RS. 55,92,987/-, WHEREAS TH E ASSESSEE HAD SHOWN REVENUE OF RS. 49,83,119/-. HOWEVER, WHIL E WORKING OUT THE DEPOSIT IN BANK ACCOUNT. THE AO DID NOT AT ALL LOOK INTO THE FACT THAT ALL THE CREDITS IN THE BANK ACCOUNT WAS NOT REVENUE RECEIPT. THE BANK ACCOUNT CONSISTED OF SEVERAL ITEMS AS DETAILED BELOW :- RS. 2089827/- ( PERTAINED TO THE RECOVERED FROM DEB TORS OF THE OLD ACCOUNT, ( FOR SUCH OLD DEBTORS DETAILS PLEASE REFER TO PAPER BOOK NO.43). RS. 9,10,000/- RELATED TO THE UNSECURED LOAN BORROW ED FROM DEPOSITORS. RS. 10,000/- WAS CREDITED AS CASH OUT OF CASH IN HA ND. -: 8: - 8 RS. 1,00,000/- WAS REFUND OF OLD DEPOSIT FROM YASHW ANT CLUB, INDORE( FOR SAID OUTSTANDING AMOUNTS PLEASE REFER TO PAPER BOOK NO.43). THUS THE TOTAL OF RS. 5592987/- CONSISTED OF RS. 24 73351/- AS THE REVENUE OF THE YEAR AND RS. 3109827/-PERTAINED TO THE RECOVERY FROM OLD DEBTORS AND BORROWING OF UNSECURE D LOANS AND RS. 9809/- AS OPENING BALANCE OF THE BANK ACCOU NTS. HOWEVER, NO DEFECT WAS POINTED OUT BY THE ASSESSING OFFICER IN THE BOOKS OF ACCOUNT AND ALSO DID NOT ANALYZE THE D ETAILS OF THE ENTRIES IN THE BANK ACCOUNT. IT WAS ALSO POINTE D OUT THAT THE AMOUNT OF RS. 4983119/- CONSIST THE OUTSTANDING RECEIPT OF RS. 2329733.00 BUT THE AO IGNORED ALL THESE PAPE RS AND MADE ADDITION OF RS. 6,09,868/- 6. IN THE INTEREST OF JUSTICE AND FAIR PLAY, WE RESTOR E THIS ISSUE TO THE FILE OF THE AO FOR DECIDING AFRESH IN TERMS OF OUR ABOVE OBSERVATION. NEEDLESS TO SAY THAT THE ASSESSE E SHOULD BE GIVEN FULL OPPORTUNITY TO PRODUCE THE REVISED RECON CILIATION STATEMENT IN RESPECT OF DIFFERENCE IN THE BANK STAT EMENT WITH SUPPORTING EVIDENCE IN RESPECT OF THE ADDITION MADE BY THE -: 9: - 9 ASSESSING OFFICER AMOUNTING TO RS. 6,09,868/-. WE D IRECT ACCORDINGLY. 7. THE AO HAS ALSO MADE AN ADDITION OF RS. 5,88,496/- ON THE BASIS OF AIR INFORMATION. FROM THE RECORD, W E FOUND THAT ON THE BASIS OF AIR INFORMATION ON COMPUTER, THE AO NOTED THAT DURING THE YEAR THE ASSESSEE HAD SHOWN T HE RECEIPT OF RS. 19,72,196/- BUT THE ASSESSEE DID NOT SHOW RE CEIPT OF RS. 5,88,496/- OUT OF THE ENTIRE AMOUNT OF RS. 19,72,15 6/-. HE HAS GIVEN THE DETAILS OF AMOUNT OF RS. 5,88,496/- A T PAGE 3 OF THE ASSESSMENT ORDER. IT WAS EXPLAINED TO THE AO TH AT THESE WERE NOT ACTUAL RECEIPTS BUT WAS THE AMOUNT OF FREI GHT STATED IN MTR ( MOTOR TRANSPORT RECEIPT ). COPIES OF THESE MTR WERE PRODUCED BEFORE HIM. BEFORE THE AO, IT WAS ALSO EXP LAINED THAT THIS WAS OTHER TYPE OF BUSINESS OF TRANSPORT OF THE ASSESSEE, NAMELY, THAT HE HIRED TRUCKS FROM THE MARKET AND TR ANSPORTED GOODS ON COMMISSION FOR BEING TAKEN TO DESTINATION. IN THIS TYPE OF BUSINESS HE DOES NOT COLLECT TRANSPORT CHAR GES BUT COLLECT ONLY HIS COMMISSION. TRANSPORT CHARGES ARE PAID BY THE CONSIGNEE AT THE DESTINATION. HE PREPARED MTR AND M ENTIONED THEREIN THE AMOUNT OF FREIGHT WITH THE REMARK TO P AY. SUCH -: 10: - 10 MTRS ARE KNOWN AS TO PAY BUILTIES. ALL THE MTR PR EPARED BY THE ASSESSEE AND GIVEN TO THE CARRIAGE TRUCKS ME NTION TO PAY. THE ASSESSEE HAD RECEIVED ONLY HIS COMMISSION WHICH HE ENTERED IN HIS BOOKS OF ACCOUNT TOTALLING TO RS. 28 ,650/- THOUGH LORRY CHALLANS. 8. SINCE THE ASSESSEE WAS ONLY IN RECEIPT OF COMMISSIO N, NO ENTRY FOR THE GROSS RECEIPT WAS MADE IN THE BOOK S OF ACCOUNT. IF THE AO HAD ANY DOUBT, HE COULD HAVE ENQ UIRED THE MATTER FROM M/S. SWATANTRA STEELS AGENCIES, TO FIND OUT WHO HAD ACTUALLY PAID THE TRANSPORTATION CHARGES AND TO WHOM. IN THE INTEREST OF JUSTICE AND FAIR PLAY, WE RESTORE T HIS ISSUE BACK TO THE FILE OF AO TO DECIDE AFRESH AFTER MAKING DUE ENQUIRY FROM SWATANTRA STEEL AGENCIES. WE DIRECT ACCORDINGL Y. 9. THE ASSESSEE IS ALSO AGGRIEVED FOR ADDITION OF RS. 1,33,561/- ON ACCOUNT OF HOUSE HOLD EXPENSES. FROM THE RECORD, WE FOUND THAT THE ASSESSEE HAD ALREADY SHOW N WITHDRAWAL OF RS. 2,85,800/- ON ACCOUNT OF HOUSE HO LD EXPENSES. WITHOUT ASSIGNING ANY REASON, THE AO ESTI MATED HOUSE HOLD EXPENSES AT RS. 2,40,000/- AND AFTER RED UCING THE AMOUNT SHOWN AS PAID FOR MEDI-CLAIM POLICY RS. 4723 /-, -: 11: - 11 TUITION FEES RS. 33,600/- AND LIC PREMIUM RS. 698, 116/-, THE BALANCE OF RS. 1,33,561/- WAS ADDED ON ACCOUNT OF H OUSE HOLD EXPENSES. THERE IS NO MERIT IN AOS ACTION IN SO FA R AS ASSESSEE HIMSELF HAD SHOWN WITHDRAWAL OF RS. 2,85,8 00/-, WHICH IS MUCH MORE THAN WHAT THE AO HAS ESTIMATED A T RS.2,40,000/-. WE, THEREFORE, REVERSE THE ORDER OF LOWER AUTHORITIES ON THIS ACCOUNT AND AO IS DIRECTED TO D ELETE THE ADDITION OF RS. 1,33,561/- MADE ON ACCOUNT OF HOUSE HOLD EXPENSES. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWE D IN PART IN TERMS INDICATED HEREINABOVE. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 17 TH OCTOBER, 2011. SD/- SD/- (JOGINDER SINGH) ( R.C.SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 17 TH OCTOBER, 2011. CPU* 1314