ACIT, Gwalior V. Shri Jagdish Prasad Sharma (Cont), Bhind

ITA 613/AGR/2008

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 6701 (ITAT-AGRA)
• Duration Of Justice: 1 year(s) 10 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-07-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 22-06-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 23-09-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SEEMA RAJ
• Assessee Lawyers: RAJENDER SHARMA
• Keywords: Unexplained cash credit; Capital expenditure
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, AGRA BEFORE SHRI R.K. GUPTA, JUDICIAL MEMBER AND SHRI P.K. BANSAL, ACCOUNTANT MEMBER ITA NO.613/AGR/2008 ASST. YEAR: 2005-06 ASSTT. C.I.T., CIRCLE 2, VS. SHRI JAGDISH PR ASAD SHARMA, GWALIOR. (CONTRACTOR), NAVADA BAGH, BHIND. (PAN : AADFJ 8620 N). (APPELLANT) (RESPONDENT) APPELLANT BY : SMT. SEEMA RAJ, CIT D.R. RESPONDENT BY : SHRI RAJENDER SHARMA, ADVOCATE ORDER PER P.K. BANSAL, A.M.: THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST T HE ORDER OF THE CIT(A) DATED 16.06.2008 BY TAKING THE FOLLOWING EFFECTIVE GROUND S OF APPEAL :- (1) ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE THE LD. COMMISSIONER OF INCOME TAX (A) HAS ERRED IN LAW AND FACTS IN DELETI NG AN ADDITION MADE ON ACCOUNT OF UNEXPLAINED CASH CREDITS U/S 68/69 OF RS .88,70,748/-. (2) ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. COMMISSIONER OF INCOME-TAX (A) HAS ERRED IN LAW AND FACTS IN DELETI NG THE ADDITION OF RS.21,63,785/- MADE ON ACCOUNT OF EXPENSES DISALLOW ED. 2. THE GROUND NO.1 RELATES TO THE DELETION OF ADDIT ION OF RS.88,70,748/- MADE UNDER SECTION 68 OF THE INCOME-TAX ACT, 1961 (THE ACT HEREINAFT ER). 2 3. THE FACTS RELATING TO THIS GROUND ARE THAT THE A .O. HAS NOTED THAT THE ASSESSEE HAS SHOWN SUNDRY CREDITORS AMOUNTING TO RS.1,05,87,585/- IN H IS BALANCE SHEET. BUT THE ASSESSEE NEITHER FILED THEIR CONFIRMATIONS NOR FURNISHED THEIR FULL NAME AND ADDRESSES WITH COPY OF THEIR LEDGER EXCEPT M/S. GAUR BANDHU CONSTRUCTION COMPANY OF RS. 13,66,837/-AND SRI DEEWAN SINGH MEENA, CONTRACTOR OF RS.3,50,000/-. HE ACCORDINGLY REDUCED RS.17,16,837/- AND ADDED RS.88,70,748/- UNDER SECTION 68 OF THE ACT. WHEN T HE MATTER WENT BEFORE THE CIT(A), THE CIT(A) DELETED THE ADDITION BY OBSERVING AS UNDER : - AS REGARDS THE REASONABLENESS OF THE QUANTUM OF TR ADE CREDITS SHOWN BY THE APPELLANT, AFTER CONSIDERING ENTIRE FACTS AND C IRCUMSTANCES OF THE CASE, IT EMERGES THAT THE TRADE CREDITORS IN THE BALANCE SHE ET FOR THE YEAR UNDER CONSIDERATION ARE SHOWN FOR RS.1,05,87,585/-. THE APPELLANTS TOTAL CONTRACT RECEIPTS FOR THE YEAR UNDER CONSIDERATION ARE RS.5, 88,10,198/- (RS.5,76,84,937 + RS.11,25,261) AND THE PURCHASES OF MATERIAL SHOWN A T RS.3,35,85,851/-. CONSIDERING THE MAGNITUDE OF THE BUSINESS AND VOLUM E OF PURCHASES, THE SUNDRY CREDITORS, SHOWN ARE REASONABLE. THE ASSESSING OFF ICER HAS ALSO NOT POINTED OUT ANYTHING CONTRARY IN THIS REGARD AND HAS NOT MADE O UT ANY CASE, IF SUNDRY TRADE CREDITORS WERE BOGUS OR NON-EXISTENT OR WERE DOUBTF UL. THE ADDITION MADE BY THE ASSESSING OFFICER ON THIS ACCOUNT IS, THEREFORE, NO T WELL BASED AND THE SAME IS HEREBY DELETED. 4. LD. A.R. BEFORE US VEHEMENTLY CONTENDED THAT THE AMOUNT REPRESENTED THE SUNDRY CREDITORS IN THE BALANCE SHEET OF THE ASSESSEE. TH E ASSESSEE MADE THE PURCHASES DURING THE YEAR FOR THE MATERIAL FROM TIME TO TIME TO BE CONSUMED I N THE BUSINESS. THE ASSESSEE HAS NOT TAKEN ANY LOAN OR ADVANCE FROM THESE PARTIES. AS SOON TH E PAYMENT BECOMES DUE, THE PAYMENT HAS BEEN MADE TO EACH OF THE PARTY IN THE SUCCEEDING YE AR. IN THE EARLIER YEAR ALSO THE CREDIT HAS ARISEN AND HAS BEEN PAID BY THE ASSESSEE. THE PROV ISIONS OF SECTION 68 OF THE ACT ARE NOT APPLICABLE IN THE CASE OF THE ASSESSEE. THE CREDIT HAS ARISEN NOT BY RECEIVING ANY CASH OR DEPOSIT 3 BUT BY PURCHASING THE MATERIAL. LD. A.R. RELIED ON THE ORDER OF THE CIT(A) AND THE LD. D.R., ON THE OTHER HAND, RELIED ON THE ORDER OF THE A.O. 5. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS AND PERUSED THE MATERIAL ON RECORD. WE NOTED FROM THE RECORD THAT THE AMOUNT REPRESENTE D SUNDRY CREDITORS IN THE BALANCE SHEET OF THE ASSESSEE. THE A.O. HAS MADE THE ADDITION UNDER SECTION 68 OF THE ACT WITHOUT LOOKING TO THE FACTS THAT THE AMOUNT HAS NOT ARISEN FROM THE DEPOS IT OR AMOUNT BEING RECEIVED BY THE ASSESSEE SO THAT IT MAY FALL WITHIN THE DEFINITION OF CASH CRED IT. THE AMOUNT HAS BEEN PAID BY THE ASSESSEE IN DUE COURSE WHICH HAS NOT BEEN DENIED BY THE LD. D.R . UNDER THESE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND NO INFIRMITY IN THE ORDER OF THE CIT( A). THE CIT(A) HAS RIGHTLY DELETED THE ADDITION. THUS, GROUND NO.1 STANDS DISMISSED. 6. GROUND NO.2 RELATES TO THE DELETION OF DISALLOWA NCE OF RS.21,63,785/-. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULL Y CONSIDERED THE SAME. WE NOTED THAT THE A.O. HAS MADE THE ADHOC DISALLOWANCE @ 5% OF TH E TOTAL EXPENSES CLAIMED BY THE ASSESSEE IN HIS BOOKS OF ACCOUNTS. WITHOUT LOOKING INTO THE DE TAILS OF THE EXPENSES, HE MADE THE DISALLOWANCE. THE ASSESSEE HAS MAINTAINED THE REGU LAR BOOKS OF ACCOUNTS WHICH WAS DULY PRODUCED. EVEN THE BUSINESS CARRIED OUT BY THE ASS ESSEE HAS SHOWN THE N.P. @ 5.16%. THE A.O. HAS NOT POINTED OUT ANY SPECIFIC EXPENDITURE WHICH CAN BE DISALLOWED. THE CIT(A) ALTHOUGH REDUCED THE ADHOC DISALLOWANCE TO RS.5,00,000/- BUT THE ASSESSEE HAS NOT COME IN APPEAL. THE LD. A.R. AGREED BEFORE US THAT NO APPEAL WAS FILED BY THE ASSESSEE. IT IS ONLY REVENUE WHO HAS COME IN APPEAL IN RESPECT OF THE RELIEF GIVEN BY TH E CIT(A). WE ARE, THEREFORE, OF THE VIEW THAT 4 NO DISALLOWANCE CAN BE MADE ON ADHOC BASIS WITHOUT POINTING OUT THAT THE EXPENSES INCURRED BY THE ASSESSEE ARE NOT FOR THE PURPOSE OF BUSINESS OR IS A PERSONAL EXPENSE OR A CAPITAL EXPENDITURE AND NO SUCH FINDING WAS BROUGHT ON RECORD AND EVEN THIS IS NOT THE CASE OF THE REVENUE. UNDER THESE FACTS AND CIRCUMSTANCES, IN OUR OPINION, NO I NTERFERENCE IS CALLED FOR IN THE ORDER OF THE CIT(A). ACCORDINGLY, WE CONFIRM THE ORDER OF THE C IT(A). 8. IN THE RESULT, APPEAL FIELD BY THE REVENUE STAND S DISMISSED. (ORDER PRONOUNCED IN THE OPEN COURT ON 23.07.201 0). SD/- SD/- (R.K. GUPTA) (P.K. BANSAL) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: AGRA DATE: 23 RD JULY, 2010. PBN/* COPY OF THE ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT BY ORDER 3. CIT CONCERNED 4. CIT (APPEALS) CONCERNED 5. DR, ITAT, AGRA BENCH, AGRA 6. GUARD FILE ASSIST ANT REGISTRAR INCOME-TAX APPELLATE TRIBUNAL, AGRA TRUE COPY