INCOME TAX OFFICER 25(3)(1), MUMBAI V. SHRI. MITESH GOPAL ARORA, MUMBAI

ITA 5733/MUM/2010

• Counselvise Citation: 573319914 RSA 2010
• Duration Of Justice: 1 year(s) 8 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-04-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 14-07-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 40A(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'B' BENCH, MUMBAI BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI RAJENDRA, ACCOUNTANT MEMBER ITA NO. 5733/MUM/2010 (ASSESSMENT YEAR: 2007-08) INCOME TAX OFFICER - 25(3)(1) SHRI MITESH GOPAL ARO RA C-11, PRATYAKSHAKAR BHAVAN A/401, PRANAY VIDYA BANDRA KURLA COMPLEX VS. OPP. POISAR GYMKHANA BANDRA (E), MUMBAI 400051 KANDIVALI (W), MUMBAI 40 0067 PAN - ADDPA 6482 C APPELLANT RESPONDENT APPELLANT BY: NONE RESPONDENT BY: NONE DATE OF HEARING: 04.04.2012 DATE OF PRONOUNCEMENT: 04.04.2012 O R D E R PER D. MANMOHAN, V.P. THIS APPEAL FILED BY THE ASSESSEE ARISE OUT OF THE ORDER PASSED BY THE CIT(A) XXXV, MUMBAI DATED 10.05.2010 AND IT PERTAIN S TO A.Y. 2007-08. 2. WHEN THE CASE WAS CALLED UPON FOR HEARING THE CONCE RNED DEPARTMENTAL REPRESENTATIVE WAS NOT AVAILABLE AND S HRI MAURYA, ANOTHER DEPARTMENTAL REPRESENTATIVE, SUBMITTED THAT THE FIL E IS NOT AVAILABLE WITH HIM SINCE IT IS ALLOTTED TO ANOTHER DEPARTMENTAL RE PRESENTATIVE. 3. THE ASSESSING OFFICER RAISED THE FOLLOWING GROUNDS BEFORE US:- (I) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE DISALLOWANCE MADE BY A.O. U/S 40A(3) OF RS.5,66,000/- ON ACCOUNT OF CASH PAYMENT WITHOUT APPRECIATING THE FACT THAT WHAT WAS THE REASON FOR MAKING PAYMENTS IN CASH OF ` 28.30 LAKH WHEN SOME PAYMENT TO THE EXTENT OF ` 6.64 LAKH WAS PAID THROUGH VARIOUS CHEQUES AND WHETHER THE PAYMENT BELOW RS.20,000/- IN A DAY WAS MADE WITH REGARD TO AN INDIVIDUAL TRANSACTION OR IT WAS PAYMENT OF ONE TRANSACTION SPLIT INTO PARTS TO EVADE THE APPLI CABILITY OF PROVISIONS OF SECTION 40A(3) OF THE ACT. (II) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITIONS MADE BY A.O. ON ITA NO. 5733/MUM/2010 SHRI MITESH GOPAL ARORA 2 ACCOUNT OF CASH LIABILITY OF RS.22,12,633/- WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE HAS CLAIMED TO HAVE PAID RS.6.64 LAKH BY CHEQUE AND RS.28.30 LAKH IN CASH AND SHOWN CASH LIABILITY OF RS.22.12 LAKH TO SINGLE PURCHASE PARTY. (III) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED D.R. CIT(A) ERRED IN DELETING THE DISALLOWA NCE OF DIESEL EXPENSES OF RS.7,75,349/- MADE BY A.O. AND TO ADOPT NET PROFIT @8% WITHOUT APPRECIATING THE FACTS THAT THE ASSESSE E HAS FAILED TO SUBMIT COMPLETE DETAILS OF DIESEL EXPENSES CLAIM ED. 4. THE CASE OF THE ASSESSEE WAS THAT EACH CASH PAYMENT WAS LESS THAN ` 20,000/- AND HENCE PROVISIONS OF SECTION 40A(3) IS NOT APPLICABLE. NO MATERIAL WAS FILED BEFORE US BY THE REVENUE TO CONT RADICT THE FINDINGS OF THE CIT(A). THE LEARNED CIT(A) FOLLOWED THE LONE DECISI ON OF THE HON'BLE ORISSA HIGH COURT IN THE CASE OF CIT VS. ALOO SUPPLY CO. 1 21 ITR 680. IT IS NOT THE CASE OF THE REVENUE THAT IDENTICAL ISSUE WAS CONSID ERED BY ANY OTHER HIGH COURT, INCLUDING THE HON'BLE JURISDICTIONAL HIGH CO URT. HAVING REGARD TO THE CIRCUMSTANCES OF THE CASE WE DO NOT FIND ANY MERIT IN THE GROUND RAISED BY THE REVENUE. 5. VIDE GROUND NO. 2 REVENUE CONTENDS THAT THE ASSESSE E FAILED TO FILE CONFIRMATION FROM M/S. GIRIRAJ STONE CRUSHER AND HE NCE THE AMOUNT SHOWN AS OUTSTANDING LIABILITY DESERVES TO BE ADDED AS IN COME. THE COMMISSIONER (APPEALS), ON THE OTHER HAND, OBSERVED THAT THE ASS ESSEE MADE PAYMENT TO M/S. GIRIRAJ STONE CRUSHER IN THE NEXT YEAR AND THE AMOUNT OUTSTANDING AS ON 31.03.2008 WAS ONLY ` 4,55,760/- WHICH SHOWS THAT THE LIABILITY IS GENUINE. AS MENTIONED HEREINBEFORE, THE LEARNED D.R . WAS NOT PRESENT IN THE COURT. AT ANY RATE, AS IS THE PRACTICE FOLLOWED BY THE REVENUE IN MAJORITY OF CASES, NO MATERIAL WAS FURNISHED TO CONTRADICT THE FINDINGS OF THE LEARNED CIT(A). WE THEREFORE DO NOT FIND ANY MERIT IN THE G ROUND URGED BY THE REVENUE. ACCORDINGLY GROUND NO. 2 IS REJECTED. 6. THIS LEAVES US WITH GROUND NO. 3 WHEREIN THE REVENU E CONTENDS THAT THE LEARNED CIT(A) ERRED IN DELETING THE DISALLOWAN CE OF DIESEL EXPENSES. THE CASE OF THE ASSESSEE IS THAT HE USED HIS OWN TRUCKS AS WELL AS HIRED TRUCKS FOR THE PURPOSE OF SUPPLYING GOODS TO THE CUSTOMERS AND COMPLETE DETAILS IN RESPECT OF THE TRIPS WERE VERIFIED BY THE A.O. THE A.O. MISCONSTRUED THAT ALL THE TRIPS WERE UNDERTAKEN BY ASSESSEES OWN TRUCKS. HE FURTHER CONTENDED ITA NO. 5733/MUM/2010 SHRI MITESH GOPAL ARORA 3 THAT CONSUMPTION OF DIESEL DEPENDS ON VARIOUS FACTO RS WHICH ARE NOT PROPERLY CONSIDERED BY THE A.O. 7. THE LEARNED CIT(A) OBSERVED THAT THE A.O. DID NOT C ONSIDER THE REPLY GIVEN BY THE ASSESSEE. THE A.O. PROCEEDED ON THE AS SUMPTION THAT THE TOTAL TRIPS WERE 1682 BASED ON THE TOLL TAX EXPENSES. FUR THER THE A.O. DID NOT POINT OUT ANY DEFECT IN THESE ENTRIES. SINCE THE AS SESSEE HAS ADMITTED NET PROFIT OF ` 2,26,844/- ON A TOTAL TURNOVER OF ` 1.17 CRORES THE LEARNED CIT(A) WAS OF THE OPINION THAT THE NET PROFIT DECLARED BY THE ASSESSEE IS LOW. CONSIDERING THE DEFECTS POINTED OUT BY THE A.O., TH E LEARNED CIT(A) WAS OF THE OPINION THAT ESTIMATION OF NET PROFIT AT 8% WOU LD MEET THE ENDS OF JUSTICE INSTEAD OF MAKING SEPARATE ADDITIONS TOWARD S ALLEGED DIESEL EXPENSES, ETC. HE DIRECTED THE A.O. ACCORDINGLY. 8. AGAIN NO MATERIAL WAS PLACED BEFORE US BY THE REVEN UE TO SHOW THAT THE METHOD FOLLOWED BY THE LEARNED CIT(A), IN THE C IRCUMSTANCES OF THE CASE, IS CONTRADICTORY TO THE RULES. WE THEREFORE UPHOLD THE ORDER OF THE CIT(A) AND REJECT GROUND NO.3 OF THE REVENUE. 9. IN THE RESULT, AS PRONOUNCED IN THE OPEN COURT, APP EAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 4 TH APRIL 2012. SD/- SD/- (RAJENDRA) (D. MANMOHAN) ACCOUNTANT MEMBER VICE PRESIDENT MUMBAI, DATED: 4 TH APRIL 2012 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) XXXV, MUMBAI 4. THE CIT XXV, MUMBAI CITY 5. THE DR, B BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.