VIKAS GARG, Jaipur V. ITO, Jaipur

ITA 664/JPR/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 4929 (ITAT-JAIPUR)
• Duration Of Justice: 5 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-11-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2008-2009
• Appeal Filed On: 15-06-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R A VERMA DHK
• Assessee Lawyers: K L MOOLCHANDAN I
• Section: 40A(3); 147

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES (SMC), JAIPUR JH HKKXPUN] YS[KK LNL; DS LE{K BEFORE: SHRI BHAGCHAND, ACCOUNTANT MEMBER VK;DJ VIHY LA-@ ITA NO. 664/JP/2016 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2008-09 SHRI VIKAS GARG A-31, JANTA COLONY, JAIPUR CUKE VS. THE ITO WARD 5(2), JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: AEOPG 3681 F VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY: SHRI K.L. MOOLCHANDANI, ADVOCATE JKTLO DH VKSJ LS@ REVENUE BY: SHRI R.A. VERMA, ADDL.CIT-DR LQUOKBZ DH RKJH[K@ DATE OF HEARING : 21/11/2016 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 23 /11/2016 VKNS'K@ ORDER PER BHAGCHAND, AM THE ASSESSEE HAS FILED AN APPEAL AGAINST THE ORDER OF THE LD. CIT(A)-2 , JAIPUR DATED 11-04-2016 FOR THE ASSESS MENT YEAR 2008-09 RAISING FOLLOWING GROUND OF APPEAL. 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS FACTUALLY AND LEGALLY ERRED IN HOLDING THAT THE AO IS JUSTIFIED IN REOPENING THE ASSESSMEN T AND DISMISSING THIS GROUND OF APPEAL WITHOUT ANY COGENT REASON. THUS, THE APPEAL ORDER SO PASSED IS NOT WELL REASON ED ORDER TO THIS EXTENT AND THE SAME DESERVES TO BE QUASHED SUMMARILY. ITA NO. 664/JP/2016 SHRI VIKAS GARG VS. ITO , WARD- 5(2), JAIPUR 2 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE AUTHORITIES BELOW HAVE FACTUALLY AND LEGAL LY ERRED IN MAKING AND UPHOLDING THE ADDITION OF RS. 1,64,607/- MADE ON ACCOUNT OF DISALLOWANCE OF EXPENDITURE U/S 40A( 3) OF THE I.T. ACT, 1961 WITHOUT APPRECIATING THE FACTS OF TH E CASE IN RIGHT PERSPECTIVE. THE AUTHORITIES BELOW HAVE ALSO FAILED TO APPRECIATE THE RELEVANT PROVISIONS OF LAW AS APPLIC ABLE AT THE RELEVANT POINT OF TIME AND WITHOUT ADDRESSING THE O BJECTIONS OF THE APPELLANT TO THIS EFFECT. THUS, THE ADDITION SO MADE AND CONFIRMED BY THE AUTHORITIES BELOW IS FACTUALLY AND LEGALLY INCORRECT AND THE SAME DESERVES TO BE DELETED SUMMA RILY. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE AUTHORITIES BELOW HAVE FACTUALLY AND LEGAL LY ERRED IN MAKING AND UPHOLDING THE ADDITION TO THE EXTENT OF RS. 25,000/- MADE ON ACCOUNT OF DISALLOWANCE OF EXPEND ITURE FOR PERSONAL ELEMENT IN LUMP SUM FIGURES ON ADHOC B ASIS WITHOUT APPRECIATING THE FACTS OF THE TURNOVER AND REASONABLENESS OF SUCH EXPENSES IN RIGHT PERSPECTIV E. THUS, THE ADDITION SO CONFIRMED BY THE LD. CIT(A) DESERVE S TO BE DELETED SUMMARILY. 2.1 THE GROUND NO. 1 OF THE ASSESSEE IS REGARDING R EOPENING THE ASSESSMENT U/S 147 OF THE ACT BY THE AO WHICH HAS BEEN REJECTED BY THE LD. CIT(A) TAKING INTO CONSIDERATION ALL THE FACTS AND CIRCUMSTANCES OF THE CASE INCLUDING THE WRITTEN SUBMISSION OF THE ASSESS EE. I FIND NO MERIT IN THE ARGUMENTS ADVANCED BY THE LD. AR OF THE ASSESSE E AT THE TIME OF HEARING BEFORE THE BENCH. HENCE, THE SAME IS DISMIS SED. 3.1 APROPOS GROUND NO. 2 OF THE ASSESSEE, THE AO OB SERVED FROM THE BOOKS OF ACCOUNT OF THE ASSESSEE THAT THE ASSESSEE HAD MADE FOLLOWING CASH PAYMENTS AMOUNTING TO RS. 1,64,607/- IN A SING LE DAY I.E. ON ITA NO. 664/JP/2016 SHRI VIKAS GARG VS. ITO , WARD- 5(2), JAIPUR 3 11-10-2007 TO M/S. BALAJI FINRE, JAIPUR ON ACCOUNT OF PURCHASES WHICH IS VIOLATION OF PROVISIONS OF SECTION 40A(3) OF THE AC T. S.N. DATE AMOUNT (IN RS.) 1. 11-10-2007 19,000 2. 11-10-2007 19,000 3. 11-10-2007 19,000 4. 11-10-2007 19,000 5. 11-10-2007 19,000 6. 11-10-2007 19,000 7. 11-10-2007 19,000 8. 11-10-2007 19,000 9. 11-10-2007 12,607 TOTAL 1,64,607 THE AO ASKED THE ASSESSEE TO EXPLAIN THE REASON AS TO WHY THE CASH PAYMENTS MADE BY THE ASSESSEE AMOUNTING TO RS. 1,64 ,607/- ON 11-10- 2007 TO M/S. BALAJI FIBRE, JAIPUR ON ACCOUNT OF PU RCHASE SHOULD NOT BE DISALLOWED AS PER PROVISION OF SECTION 40A(3) OF TH E ACT. HOWEVER, THE LD. AR OF THE ASSESSEE VIDE HIS LETTER DATED 29-11- 2003 REPLIED THAT THE ASSESSEE HAS NOT MADE ANY VIOLATION OF PROVISIONS O F SECTION 40A(3) RELATING TO PAYMENTS MADE TO M/S. BALAJI FIBRE AS T HE PAYMENT MADE WAS BELOW RS. 20,000/-. FURTHER THE LD. AR OF THE ASSES SEE EXPLAINED THAT THE ASSESSEE HAD PURCHASED GOODS ON 2-10-2007 AND AS PE R THE TERMS OF THE PAYMENT THE ASSESSEE HAD TO MAKE PAYMENT WITHIN 7 D AYS BUT THE ASSESSEE FAILED TO MAKE PAYMENT IN TIME AND DUE TO BUSINESS EXPEDIENCY THE ASSESSEE HAD TO MAKE PAYMENT TO SELLERS ON 11-10-20 07 AFTER BANKING ITA NO. 664/JP/2016 SHRI VIKAS GARG VS. ITO , WARD- 5(2), JAIPUR 4 HOURS AND EACH PAYMENT WAS BELOW RS. 20,000/-. HOWE VER, THE AO WAS NOT SATISFIED WITH THE EXPLANATION OF THE LD. AR OF THE ASSESSEE THAT THE ONE SINGLE PAYMENT OF RS. 1,64,607/- WAS MADE BY TH E ASSESSEE ON 11-10- 2007 VIDE VOUCHER NO. 36 WHICH ATTRACTS THE VIOLATI ON OF PROVISIONS OF SECTION 40A(3) OF THE ACT. THUS THE AO DISALLOWED T HE CASH PAYMENT OF RS. 1,64,607/- AS MADE BY THE ASSESSEE ON 11-10-20 07 TO M/S. BALAJI FIBRE ON ACCOUNT OF PURCHASE, IN VIOLATION OF THE PROVISIONS OF SECTION 40A(3) OF THE ACT AND MADE THE ADDITION OF RS. 1,64 ,607/- IN THE HANDS OF THE ASSESSEE. 3.2 IN FIRST APPEAL, THE LD. CIT(A) HAS CONFIRMED T HE ACTION OF THE AO WITH THE OBSERVATION THAT THE PAYMENTS MADE BY THE ASSESSEE TO M/S. BALAJI FIBRE IN THE FORM OF NINE CASH RECEIPTS RELA TE TO A SINGLE INVOICE AND THE PAYMENTS HAD ALSO BEEN MADE ON A SINGLE DAY WHI CH IS A VIOLATION OF PROVISIONS OF SECTION 40A(3) OF THE ACT. 3.3 I HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD INCLUDING THE WRITTEN SUBMISSIO N OF THE ASSESSEE. IT IS NOTED FROM THE RECORDS THAT THE ASSESSEE HAD MADE C ASH PAYMENTS AMOUNTING TO RS. 1,64,607/- ON 11-10-2007 TO M/S. BALAJI FIBRE, JAIPUR VIDE VOUCHER NO. 36 WHICH INDICATES THAT THE PAYMEN TS HAD BEEN MADE FOR A SINGLE INVOICE TO M/S. BALAJI FIBRE, JAIPUR. ALTH OUGH, THE ASSESSEE HAD ITA NO. 664/JP/2016 SHRI VIKAS GARG VS. ITO , WARD- 5(2), JAIPUR 5 TRIED TO CAMOUFLAGE THE PAYMENTS TO SHOW IT BELOW R S. 20,000/- EACH BY SHOWING EIGHT PAYMENTS OF RS. 19,000/- EACH AND ONE PAYMENT OF RS. 12,607/-. BUT THE FACTS CLEARLY ESTABLISHES THA T THE PAYMENT WAS FOR ONE INVOICE IN ONE DAY AND IT WAS DEFINITELY VIOLAT ION OF SECTION 40A(3) OF THE ACT. IT ATTRACTS PROVISIONS OF SECTION 40A( 3) OF THE ACT. IN VIEW OF THE ABOVE DELIBERATIONS, I FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A) WHICH IS SUSTAINED. THUS GROUND NO. 2 OF THE ASSESS EE IS DISMISSED. 4.1 APROPOS GROUND NO. 3 OF THE ASSESSEE, THE AO OB SERVED FROM THE PROFIT AND LOSS ACCOUNT OF THE ASSESSEE THAT THE A SSESSEE HAD INCURRED EXPENSES TO THE EXTENT OF RS. 2,99,651/- UNDER VARI OUS HEADS AS MENTIONED AT PAGE 4 IN THE ASSESSMENT ORDER. ON PERUSAL OF TH E VOUCHERS, THE AO NOTICED THAT THESE ARE SELF MADE VOUCHERS AND THE E XPENDITURES INCURRED ON THE ABOVE EXPENSES ARE ALSO IN CASH. THE AO FURT HER OBSERVED THAT PERSONAL ELEMENT IN EXPENDITURES ON CONVEYANCE, TEL EPHONE AND TRAVELING CANNOT BE DENIED. HENCE, THE AO DISALLOWED A SUM OF RS. 75,000/- OUT OF THESE EXPENSES AND ADDED THE SAME TO THE TOTAL INCO ME OF THE ASSESSEE WHICH HAS BEEN RESTRICTED BY THE LD. CIT(A) TO THE TUNE OF RS. 25,000/-. 4.2 AFTER HEARING BOTH THE PARTIES AND PERUSING THE MATERIALS AVAILABLE ON RECORD INCLUDING THE WRITTEN SUBMISSION OF THE A SSESSEE, IT IS NOTICED THAT THE ADDITION IS MADE BY THE AO PURELY ON ADHOC BASIS AND THERE IS NO ITA NO. 664/JP/2016 SHRI VIKAS GARG VS. ITO , WARD- 5(2), JAIPUR 6 SPECIFIC FINDING WITH REGARD TO THE PERSONAL EXPEND ITURE DEBITED IN THE PROFIT AND LOSS ACCOUNT OF THE ASSESSEE. THE LD. C IT(A) HAS RESTRICTED THE SAME TO THE EXTENT OF RS. 25,000/-. LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE, IT WILL NOT BE DESIRABLE TO MAKE ADHOC ADDITION WITHOUT GIVING ANY SPECIFIC FINDINGS ON THE ISSUE IN QUESTION IN T HE CASE OF THE ASSESSEE WHICH IN MY CONSIDERED VIEW IS DIRECTED TO BE DELET ED. THUS GROUND NO. 3 OF THE ASSESSEE IS ALLOWED. 5.0 IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED ORDER PRONOUNCED IN THE OPEN COURT ON 23 /11 /2016. SD/- HKKXPUN ( BHAGCHAND) YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 23/11/ 2016 *MISHRA VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- SHRI VIKAS GARG, JAIPUR 2. IZR;FKHZ@ THE RESPONDENT- THE ITO, 5(2), JAIPUR 3. VK;DJ VK;QDRVIHY@ CIT(A). 4. VK;DJ VK;QDR@ CIT, 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO. 664/JP/2016) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ @ ASSISTANT. REGISTRAR