Shri Dharmendrasinh R.Vaghela, Baroda V. The ACIT.,Cent.Circle-2, Baroda

ITA 653/AHD/2011

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 6052 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 3 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-06-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 12-06-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 01-03-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: O P BATHEJA
• Keywords: Business expenditure

Judgement Text

, , , , , , , , IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH A BENCH, AHMEDABAD , !' # $ $ $ $ %, # BEFORE SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER 1. $./ I.TA. NO.653/AHD/2011 A.Y.2006-07 2. $./ I.TA. NO.1160/AHD/2011 A.Y.2006-07 1.DHARMENDRASINH R.VAGHELA PROP.NARENDRA ROADLINES OPP.HEAVY WATER PLANT CHHANI, BARODA 2. THE ACIT CENTRAL CIRCLE-2 BARODA / VS. 1. THE ACIT CENTRAL CIRCLE-2 BARODA 2. DHARMENDRASINH R.VAGHELA, BARODA #( !' $./)* $./ PAN/GIR NO. : AAHPV 2633B ( (+ / // / APPELLANTS ) .. ( ,-(+ / RESPONDENTS ) ASSESSEE BY : SHRI MUKUND BAKSHI, A.R. REVENUE BY: SHRI O.P. BATHEJA, SR.DR . / ' / / / / DATE OF HEARING : 12/06/2014 012 / ' / DATE OF PRONOUNCEMENT : 27/06/2014 !3 / O R D E R PER SHRI KUL BHARAT, JUDICIAL MEMBER : THESE TWO APPEALS; ONE BY THE ASSESSEE AND THE AN OTHER BY THE REVENUE ARE DIRECTED AGAINST THE ORDER OF THE LD.CO MMISSIONER OF INCOME TAX(APPEALS)-IV, AHMEDABAD (CIT(A) IN SHORT) DATED 27/01/2011 PERTAINING TO ASSESSMENT YEAR (AY) 2006- 07. THESE APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY WAY OF THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. ITA NO.653/AHD/2011 (BY ASSESS EE) AND ITA NO.1160/AHD/2011 (BY REVENUE) SHRI DHARMENDRASINH R.VAGHELA VS. ACIT ASST.YEAR 2006-07 - 2 - 2. FIRST, WE TAKE UP THE REVENUES APPEAL IN ITA NO .1160/AHD/2011 FOR AY 2006-07. THE REVENUE HAS RAISED THE FOLLOW ING GROUNDS OF APPEAL:- 1(I). ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(APPEALS), FOLLOWING THE HONBLE SUPREME COUR T DECISION IN THE CASE OF TRF LTD. VS. CIT 230 CTR 14 (SC)/35 DTR 156 (SC), ERRED IN DELETING THE ADDITION AMOUNTING TO ` 39,22,599/- ON ACCOUNT OF DISALLOWANCE OF CLAIM OF SHORTAGE/LOSS OF MATERIAL AS BAD DEBT BY THE ASSESSEE. THE LD.CIT(A) ERRED IN NOT APPRECIATING THAT FACT THAT THE ASSESSEE COULD HAVE CLAIMED THE BUSINESS LOSS IN TH E YEAR IN WHICH SUCH SHORT PAYMENT WAS RECEIVED ON ACCOUNT OF SHORTAGE A ND THE SAME WAS ALLOWABLE DEDUCTION CONSIDERING THE NATURE OF BUSIN ESS. 1(II). THE LD.CIT(A) ERRED IN NOT APPRECIATING THAT THE FACT THAT THE SHORTAGE WAS MUCH BEYOND THE ACCEPTED LIMIT, AND TH EN THE ONUS IS ON THE ASSESSEE TO PROVE THE SAME, AND THE ASSESSEE FA ILED TO BRING ANY EVIDENCE DURING THE COURSE OF ASSESSMENT PROCEEDING S AND EVEN AT THE APPELLATE STAGE. 1(III). THE LD.CIT(A) ERRED IN NOT APPRECIATING T HAT IN THE CASE OF THE ASSESSEE THE AMOUNT WAS NOT RECEIVABLE OUT OF ANY S ALE, SERVICE OF MERCHANDISE, ADVANCE OF ANY AMOUNT WHICH HAS BECOME IRRECOVERABLE BECAUSE OF INSOLVENCY, WILLFUL NON-PAYMENT ETC. IT IS NOT BAD DEBT, BECAUSE HAD THE ASSESSEE BEEN PAID ITS FULL FREIGHT , THEN HE WAS LIABLE TO PAY THE DAMAGES FOR LOSS INCURRED BY HIM. FURTHER, THE AMOUNT DEBITED TO THE ACCOUNT OF SHORTAGE ACCOUNT DOES NOT REPRESE NT EITHER BAD DEBT OR BUSINESS EXPENDITURE AND EVEN OTHERWISE ALSO IT WAS NOT INCURRED DURING THE YEAR UNDER REPORT. 2. THE APP CRAVES LEAVE TO ADD TO AMEND OR ALTER THE ABOVE GROUNDS AS MAY BE DEEMED NECESSARY. RELIEF CLAIMED IN APPEAL THE ORDER OF THE CIT(APPEALS) ON THE ABOVE ISSUE MA Y BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. ITA NO.653/AHD/2011 (BY ASSESS EE) AND ITA NO.1160/AHD/2011 (BY REVENUE) SHRI DHARMENDRASINH R.VAGHELA VS. ACIT ASST.YEAR 2006-07 - 3 - 3. BRIEFLY STATED FACTS ARE THAT A SEARCH U/S.132 O F THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) W AS CARRIED OUT IN THE CASES OF SHRI DHARMENDRASINGH WAGHELA GROUP. SUBSE QUENTLY, THE CASE OF THE ASSESSEE WAS PICKED UP FOR SCRUTINY ASSESSME NT AND THE ASSESSMENT U/S.143(3) OF THE ACT WAS FRAMED VIDE ORDER DATED 3 1/12/2007, THEREBY THE ASSESSING OFFICER (AO IN SHORT) MADE ADDITION O F RS.30,27,987/- ON THE BASIS OF SEIZED PAPERS FROM THE PREMISES OF THE ASSESSEE AND RS.3,05,766/- ON ACCOUNT OF CASH DEPOSITED IN THE H DFC BANK. THE AO ALSO MADE ADDITION IN RESPECT OF LOW HOUSE-HOLD EXP ENSES. THE AO ISSUED NOTICE U/S.274 R.W.S. 271(1)(C) OF THE ACT. IN QUANTUM PROCEEDINGS, THE MATTER REACHED UPTO THE TRIBUNAL A ND THE TRIBUNAL DELETED THE ADDITION OF RS.30,27,987/- AND IN RESPE CT OF THE ADDITION OF RS.3,05,766/- THE GROUND WAS NOT PRESSED BY THE AUT HORIZED REPRESENTATIVE OF THE ASSESSEE. THE AO IMPOSED PE NALTY ON ADDITION OF RS.30,27,970/- AND ADDITION OF RS.3,05,766/-. THE ASSESSEE FILED AN APPEAL BEFORE THE LD.CIT(A) AGAINST THE IMPOSITION OF PENALTY AND THE LD.CIT(A) DIRECTED THE AO TO DELETE THE PENALTY LEV IED ON THE ADDITION OF RS.30,27,970/- AND CONFIRMED THE PENALTY LEVIED ON RS.3,05,766/-. AGAINST THIS, BOTH THE REVENUE AND THE ASSESSEE ARE IN APPEALS BEFORE US. 4. THE LD.SR.DR SUPPORTED THE ORDER OF THE AO. ON THE CONTRARY, LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ADDI TION HAS BEEN DELETED BY THE HONBLE TRIBUNAL, THEREFORE THE PENALTY DOES NOT SURVIVE. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. ITA NO.653/AHD/2011 (BY ASSESS EE) AND ITA NO.1160/AHD/2011 (BY REVENUE) SHRI DHARMENDRASINH R.VAGHELA VS. ACIT ASST.YEAR 2006-07 - 4 - WE FIND THAT THE COORDINATE BENCH OF THIS TRIBUNAL (ITAT C BENCH AHMEDABAD) IN QUANTUM PROCEEDINGS IN IT(SS)A NO.80/ AHD/2009 & ORS. FOR AY 2006-07 IN ASSESSEES OWN CASE VIDE ORDER D ATED 30/06/2011 HAS ALLOWED THE GROUND OF ASSESSEES APPEAL BY OBSERVIN G AS UNDER:- 17. WE HAVE HEARD BOTH THE SIDES. WE HAVE PERUSED THE MATERIAL PLACED BEFORE US. AS PER THE DOCUMENT PLACED ON PAGE NO. 179 OF THE COMPILATION, IT HAD REFLECTED SOME BUSINESS TRANSACTION IN RESPECT OF OIL AND KEROSENE OIL. AS PER THIS TYPED DOCUMENT, THERE WAS A MENTION OF PAR TIES FROM WHOM A BUSINESS ACTIVITY WAS PERFORMED. THE FIGURES HAVE MENTIONED THE RATES APPLIED FOR THE SAID COMMODITY AND THE DETAILS OF THE AMOUNT RECEIV ED. THIS DOCUMENT IN FACT APPEARS TO BE IN RESPECT OF SOME OIL-BUSINESS BUT THERE IS NO DENIAL OF THIS ADMITTED FACT THAT THE ASSESSEE IS IN THE BUSINESS OF TRANSPORT. HENCE, A VEHEMENT CONTENTION IS THAT BY THE VERY NATURE OF D OCUMENT IT DID NOT RELATE TO THE BUSINESS ACTIVITY OF THE ASSESSEE. HOWEVER, THE RE WAS NO FINDING OR EVEN AN ALLEGATION OF THE REVENUE THAT THERE WAS SUCH T YPE OF BUSINESS AT ALL RUN BY THE ASSESSEE. IT WAS NOT THE CASE OF THE REVENUE TH AT AN UNDISCLOSED BUSINESS WAS UNEARTHED WHICH WAS NOT FOUND RECORDED IN THE B OOKS OF ACCOUNT. BARRING THIS PAPER, THERE IS NO MATERIAL IN POSSESS ION OF THE REVENUE TO CORROBORATE THAT THE SAID PAPER HAD ANY CONNECTION WITH THE ACCOUNTED OR UNACCOUNTED BUSINESS ACTIVITY OF THE ASSESSEE. FRO M THE SIDE OF THE REVENUE EVEN NO SUCH ATTEMPT WAS EVER MADE TO MAKE AN ENQUI RY FROM THOSE PARTIES WHOSE NAMES WERE PRINTED ON THE SAID PAPER. BECAUS E OF THESE REASONS, LD.AR MR. MUKUND BAKSHI HAS EMPHASIZED THAT THE SAID DOC UMENT WAS NOTHING BUT A BALD DOCUMENT . FOR THIS LEGAL PROPOSITION, CASE LAWS CITED ARE :- SL.NO(S) DECISION IN THE CASE OF REPORTED IN 1. ACIT VS. SATYAPAL VASAN 295 ITR (AT) 352 [ITAT JABALPUR] 2. CIT VS. GIRISH CHAUDHARY (2008) 296 ITR 619 (MAD.) 3. CIT VS. S.M. AGGARWAL (2007) 293 ITR 43 (DEL.) 4. JAYA S.SHETTY VS. ACIT (1999) 69 ITD 336 (MUM.) 5. BANSAL STRIPS P.LTD. VS. ACIT (2006) 99 ITD 177 (DEL.) 18. FROM THESE DECISIONS, IT TRANSPIRES THAT IF AN ADDITION IS TO BE MADE ON THE BASIS OF A SEIZED DOCUMENT, THEN IT MUST BE SUP PORTED BY SOME IDENTIFICATION HAVING ANY NEXUS WITH THE UNACCOUNTED BUSINESS ACTI VITY OF THE ASSESSEE. THE NATURE OF TRANSACTION SHOULD REFLEC T SOME DIRECT OR INDIRECT ITA NO.653/AHD/2011 (BY ASSESS EE) AND ITA NO.1160/AHD/2011 (BY REVENUE) SHRI DHARMENDRASINH R.VAGHELA VS. ACIT ASST.YEAR 2006-07 - 5 - CONNECTION WITH THE ACCOUNTED OR UNACCOUNTED ACTIVI TY OF THE ASSESSEE. IF A DOCUMENT IS SILENT OR THE INGREDIENTS COULD NOT BE LINKED, THEN THE SAID DOCUMENT WAS CONSIDERED AS A DUMB DOCUMENT. PLACING RELIANCE ON THESE DECISIONS, INTER-ALIA WE ARE OF THE VIEW THAT THE R EVENUE DEPARTMENT HAD NOT MADE SUFFICIENT ENQUIRY SO AS TO ESTABLISH THAT IN FACT THE SAID DOCUMENT HAD UNEARTHED A CONCEALED BUSINESS ACTIVITY OF THE ASSE SSEE. IN THE ABSENCE OF ANY SUCH EVIDENCE, THE ADDITION SO MADE BY THE AO REMAI NED UN-CORROBORATED, HENCE, WE HEREBY REVERSE THE FINDINGS AND ALLOW THIS GROUND. 5.1. SINCE THE ADDITION IN QUANTUM PROCEEDINGS HAS BEEN DELETED BY THE COORDINATE BENCH IN IT(SS)A NO.80/AHD/2009(SUPRA), THE PENALTY DOES NOT SURVIVE, THEREFORE WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD.CIT(A), SAME IS HEREBY UPHELD. THUS, GROUNDS OF REVENUES APPEAL ARE REJECTED. 6. NOW, WE TAKE UP THE ASSESSEES APPEAL IN ITA NO. 653/AHD/2011 FOR A.Y.2006-07. THE ASSESSEE HAS RAISED THE FOLLO WING GROUND(S) OF APPEAL:- 1. THE LD.COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERR ED IN FACTS AND IN LAW IN CONFIRMING THE ACTION OF THE LD.A.O. IN LEVYING PENALTY ON THE ADDITION MADE OF RS.3,05,766/- ON AC COUNT OF ALLEGED UNEXPLAINED CASH DEPOSITS. THE PENALTY SO LEVIED BEING ERRONEOUS IN FACTS AND IN LAW IS PRAYED TO BE DIREC TED TO BE DELETED. 2. YOUR APPELLANT CRAVES LIBERTY TO ADD, ALTER, AMEND OR DELETE ANY OR ALL THE GROUNDS OF APPEAL STATED ABOVE. 6.1. THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT AS PER PARA-11 OF THE PENALTY ORDER, THE AO HAS NOT GIVEN A CLEAR FINDING WHETHER THE ASSESSEE IS GUILTY OF CONCEALING THE PARTICULARS OF INCOME O R FURNISHING OF INACCURATE PARTICULARS OF INCOME. HE SUBMITTED THA T THE AO HAS OBSERVED THAT THE PENALTY U/S.271(1)(C) OF THE ACT IS REQUIR ED TO BE LEVIED FOR ITA NO.653/AHD/2011 (BY ASSESS EE) AND ITA NO.1160/AHD/2011 (BY REVENUE) SHRI DHARMENDRASINH R.VAGHELA VS. ACIT ASST.YEAR 2006-07 - 6 - CONCEALING THE PARTICULARS OF INCOME AND FURNISHING INACCURATE PARTICULARS OF INCOME. IN SUPPORT OF THIS CONTENTION, LD.COUNS EL FOR THE ASSESSEE HAS RELIED ON THE JUDGEMENT OF HONBLE JURISDICTIONAL H IGH COURT RENDERED IN THE CASE OF NEW SORATHIA ENGG.CO. VS. CIT REPORTED AT (2006) 282 ITR 642::155 TAXMAN 513 (GUJ.) AND VARIOUS DECISIONS OF HONBLE ITAT AHMEDABAD, WHEREIN THE COORDINATE BENCHES OF THIS T RIBUNAL HAS FOLLOWED THE JUDGEMENT OF HONBLE HIGH COURT OF GU JARAT RENDERED IN THE CASE(S) OF NEW SORATHIA ENGG.CO.VS. CIT(SUPRA) AND OF CIT VS. MANU ENGINEERING WORKS REPORTED AT (1980) 122 ITR 306. 6.2. ON THE CONTRARY, LD.SR.DR SUBMITTED THAT THE J UDGEMENT OF HONBLE HIGH COURT OF GUJARAT AS FOLLOWED BY THE VARIOUS BE NCHES OF THIS TRIBUNAL IS NOT APPLICABLE IN THE PRESENT CASE. H E SUBMITTED THAT IN THE PRESENT CASE, THE AO HAS GIVEN A CLEAR FINDING THAT THE ASSESSEE IS GUILTY OF FURNISHING INACCURATE PARTICULARS OF INCOME AND CONCEALING THE PARTICULARS OF INCOME. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AS WELL AS THE JUDGEMENT/DECISIONS RELIED UPON BY T HE LD.COUNSEL FOR THE ASSESSEE. WE FIND THAT THE FACTS BEFORE THE HONBL E HIGH COURT OF GUJARAT IN THE CASE OF CIT VS. WHITEFORD INDIA LTD. REPORTED AT (2013) 38 TAXMANN.COM 15 (GUJARAT) :: TAX APPEAL NO.498 OF 20 13, DATED 24 TH JUNE, 2013 WERE THAT THE AO USED THE WORDS INACCUR ATE PARTICULARS OF INCOME/CONCEALMENT OF INCOME AND SIMILARLY IN THE CASE OF CIT VS. MANU ENGINEERING WORKS(SUPRA) THE AO HAS USED THE L ANGUAGE OF ITA NO.653/AHD/2011 (BY ASSESS EE) AND ITA NO.1160/AHD/2011 (BY REVENUE) SHRI DHARMENDRASINH R.VAGHELA VS. ACIT ASST.YEAR 2006-07 - 7 - AND/OR. THIS IS NOT THE CASE IN THE PRESENT CA SE. IN THE PRESENT CASE, THE AO HAS GIVEN A CLEAR FINDING THAT THE ASSESSEE IS GUILTY OF CONCEALING THE PARTICULARS OF INCOME AND FURNISHING INACCURATE PARTICULARS OF INCOME. THEREFORE, THE DECISIONS RELIED UPON BY THE LD.COUN SEL FOR THE ASSESSEE DO NOT HELP TO THE ASSESSEE AND WE DO NOT FIND ANY MER IT IN THE ARGUMENTS ADVANCED BY THE LD.COUNSEL FOR THE ASSESSEE. THUS, THE GROUND OF ASSESSEES APPEAL IS HEREBY REJECTED. 8. IN THE RESULT, THE APPEAL OF THE REVENUE AS WELL AS THE APPEAL OF THE ASSESSEE BOTH ARE DISMISSED. ORDER PRONOUNCED IN COURT ON THE DATE MENTIONED HER EINABOVE AT CAPTION PAGE SD/- SD/- ( ) ( %) !' # # ( ANIL CHATURVEDI ) ( KUL BHARAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 27/ 06 /2014 6 .., .../ T.C. NAIR, SR. PS !3 / ,7 8!72 !3 / ,7 8!72 !3 / ,7 8!72 !3 / ,7 8!72/ COPY OF THE ORDER FORWARDED TO : 1. (+ / THE APPELLANT 2. ,-(+ / THE RESPONDENT. 3. $$ 9 / CONCERNED CIT 4. 9() / THE CIT(A)-IV, AHMEDABAD 5. 7%: , , , / DR, ITAT, AHMEDABAD 6. :;< =. / GUARD FILE. !3 !3 !3 !3 / BY ORDER, -7 , //TRUE COPY// > >> >/ // / $) $) $) $) ( DY./ASSTT.REGISTRAR) , , , , / ITAT, AHMEDABAD