TIO, Dhule V. Manish hitanshu Patel., Nandurbar

ITA 67/PUN/2013

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 9369 (ITAT-PUNE)
• Duration Of Justice: 4 year(s) 4 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2017
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 20-07-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 07-01-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ANIL CHAWARE
• Assessee Lawyers: SUNIL PATHAK
• Keywords: Gross profit estimation; Business income; Depreciation; Transactions in derivatives; Additional evidence; Corroborative evidences
• Section: 40A(3); 194C; 131; 68; 145; 6; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, PUNE , , , , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI , AM . / I TA NO. 67 /PUN/20 13 / ASSESSMENT YEAR : 2008 - 09 THE INCOME TAX OFFICER, WARD - 3(4), DHULE - 424 001 / APPELLANT / V/S. MANISH HITANSHU PATEL, 53, GIRIVIHAR HOUSING SOC., TALODA ROAD, NANDURBAR. / RESPONDENT PAN : ACOPP4376L / APPELLANT BY : SHRI ANIL CHAWARE / RESPONDENT BY : S HRI SUNIL PATHAK / DATE OF HEARING : 0 4 .04.2017 / DATE OF PRONOUNCEMENT: 31 .05 .201 7 / ORDER PER SUSHMA CHOWLA, JM: T HIS APPEAL FILED BY THE REVENUE IS AGAINST THE ORDER OF CIT(A) - I, NASHIK DATED 25.10.2012 RELATING TO ASSESSMENT YEAR 2008 - 09 AGAINST ORDER PASSED UNDER S ECTION 144 OF THE INCOME - TAX ACT, 1961 (IN SHORT THE ACT). 2 ITA NO. 67 /PUN/2013 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN ADMITTING ADDITIONAL EVIDENCES EVEN THOUGH ASSESSEE WAS NOT PREVENTED BY SUFFICIENT CAUSE IN SUBMITTING THE SAME DURING ASSESSMENT PROCEEDING S . 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN NOT APPRECIATING THE FACT THAT THE ASSESSEE FAILED TO DEDUCT TAX AT SOURCE AS PER THE PROVISIONS OF SECTION 194C AND IN DELETING THE DISALLOWANCE OF RS. 14,00,480/ - MADE BY A.O. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN NOT ENHANC ING THE DISALLOWANCE U/S 40 (A) (IA) TO RS.1,23,23,02 8/ - AN D IN HOLDING THAT SECTION 40(A) (IA) IS NOT APPLICABLE IF AMOUNT HAS BEEN PAID DURING THE PREVIOUS YEAR. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, WHEN LD. CIT(A) ALLOWED THE AO TO EXAMINE ADDITIONAL EVIDENCES, HE ERRED IN NOT ENHANCING THE INCOME BY DISALLOWING RS. 1,09,31,587/ - U/S 40A(3) WHICH WAS BASED ON THE ADDITIONAL EVIDENCES FILED BEFORE THE A.O DURING REMAND REPORT PROCEEDINGS. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN NOT APPRECIATING THE FACTUAL FINDINGS GIVEN BY THE A.O IN HER REMAND REPORT BASED ON ADDITIONAL EVIDENCES, WHICH WERE NOT SUBMITTED BY THE ASSESSEE DURING ASSESSMENT PROCEEDINGS, DESPITE SPECIFIC QUERIES WERE RAISED. 6. ON THE FACTS AND IN THE CIRCUMSTA NCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS. 5,29,830/ - MADE BY THE A.O. ON ACCOUNT OF GROSS PROFIT. 7. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN NOT APPRECIATING THE FACT T HAT THE ASSESSEE HAD FAILED TO ESTABLISH LOSS FROM F. & O EVEN DURING REMAND REPORT PROCEEDINGS AND IN DELETING THE ADDITION OF RS. 21,07,630/ - MADE BY THE A.O. 8. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN NOT APPRECIATING THE FACT THAT THE ASSESSEE HA D FAILED TO ESTABLISH LOAN/ADVANCE OUTSTANDING AGAINST SHRI M.H PATEL EVEN DURING REMAND REPORT PROCEEDINGS AND IN DELETING THE ADDITION OF RS. 3,12,417/ - MADE BY THE A.O. 9. THE ORDER OF CIT(A), NASHIK MAY BE V ACATED AND THAT OF THE A.O BE RESTORED. 10. THE APPELLANT, CRAVES, LEAVE TO ADD/AMEND/ALTER ANY GROUNDS OF APPEAL. 3 ITA NO. 67 /PUN/2013 3. BRIEFLY, IN THE FACTS OF THE CASE, THE ASSESSEE HAD FILED THE RETURN OF INCOME DECLARING TOTAL INCOME OF RS.3,76,970/ - . THE ASSESSEE WAS WHOLESALE DISTRIBUTOR OF COAL AND HAD ALSO SHOWN INCOME FROM SHARE TRADING AND TRANSPORT. DESPITE SEVERAL NOTICES ISSUED TO THE ASSESSEE, THERE WAS TOTA L NON - COMPLIANCE OF THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS. NO BOOKS OF ACCOUNT AND SUPPORTING DOCUMENTS WERE PRODUCED FOR VERIFICATION. DESPITE ISSUE OF SHOW CAUSE NOTICE, THE ASSESSEE FAILED TO APPEAR AND ALSO DID NOT FURNISH ANY EXPL ANATION BEFORE THE ASSESSING OFFICER. THE ASSESSING OFFICER WAS THUS, COMPELLED TO COMPLETE THE ASSESSMENT UNDER SECTION 144 OF THE ACT. ON VERIFICATION OF TRADING AND PROFIT & LOSS ACCOUNT, THE ASSESSING OFFICER NOTED CERTAIN ISSUES AND WAS OF THE VIEW THAT THE CORRECTNESS OF PROFIT AND LOSS ACCOUNT OF F&O COULD NOT BE RELIED UPON. FURTHER, IN THE BALANCE SHEET, ON THE LIABILITY SIDE, THERE WERE SUNDRY CREDITORS SHOWN AT RS.1.09 CRORES AND IN THE ABSENCE OF THE DETAILS, THE CORRECTNESS OF LIABILITY COUL D NOT BE RELIED UPON. THE ASSESSEE HAD CLAIMED EXPENSES UNDER THE HEAD HIRE CHARGES PAID AT RS.1 , 40 , 0 4 , 804 / - . SINCE NO EVIDENCE WAS FURNISHED, THE ASSESSING OFFICER OBSERVED THAT THE ISSUE OF TDS COULD NOT BE VERIFIED. IN THE AUDIT REPORT, THE CA HAD NOT GIVEN THE TDS DETAILS, THEREFORE, THE ASSESSING OFFICER HELD THAT THE POSSIBILITY OF DISALLOWANCE UNDER SECTION 40(A)(IA) OF THE ACT COULD NOT BE RULED OUT. CONSIDERING THE NATURE OF BUSINESS, EXPENSES TO THE TUNE OF RS.14,00,480/ - I.E. 10% OF THE TOT AL EXPENSES WERE DISALLOWED BY THE ASSESSING OFFICER AND ADDED BACK TO THE TOTAL INCOME. THE ASSESSING OFFICER ALSO NOTED THAT THE GP SHOWN BY THE ASSESSEE AT 7.40% AS AGAINST GP SHOWN IN THE PRECEDING Y EAR OF 8.92% WAS LESS BY 1.52% AND REJECTING THE BOO K RESULTS UNDER SECTION 145 OF THE ACT, IN THE ABSENCE OF ANY BOOKS OF ACCOUNT BEING PRODUCED, THE ASSESSING 4 ITA NO. 67 /PUN/2013 OFFICER ESTIMATED THE GP AT 8.92% AND MADE AN ADDITION OF RS.5,29,830/ - . FURTHER, THE LOSS FROM F&O SHARE ACCOUNT AT RS.21,07,630/ - , IN THE ABSENC E OF ANY DETAILS, WAS DISALLOWED AND ADDED BACK. CERTAIN OTHER DISALLOWANCES WERE MADE OUT OF EXPENSES DEBITED I.E. PETROL EXPENSES OF RS.10,295/ - AND OTHER EXPENSES ON ACCOUNT OF ADVERTISEMENT, REPAIRS, TRAVELLING, ETC. AT RS.25,000/ - AND DEPRECIATION ON CAR AT RS.28,998/ - . FURTHER, THE ASSESSEE HAD SHOWN SECURED ADVANCE OF RS.3,12,417/ - TO NANDURBAR URBAN. THE ASSESSING OFFICER RECEIVED INFORMATION FROM NANDURBAR URBAN THAT NO SUCH LOAN WAS OUTSTANDING AGAINST THE ASSESSEE, HENCE, SUM OF RS.3,12,417/ - WAS TREATED AS UNEXPLAINED LOAN UNDER SECTION 68 OF THE ACT. 4. BEFORE THE CIT(A), THE ASSESSEE FILED WRITTEN SUBMISSIONS INCLUDING ADDITIONAL EVIDENCE WHICH WAS FORWARDED TO THE ASSESSING OFFICER, WHO IN TURN, FILED HIS REMAND REPORT AND THE ASSESSEE FILED COUNTER COMMENTS. THE CIT(A) ADMITTED THE ADDITIONAL EVIDENCE SINCE THOUGH THE ASSESSING OFFICER HAD STATED THAT THE AS SESSEE WAS NOT PREVENTED BY SUFFICIENT CAUSE TO FILE ADDITIONAL EVIDENCE DURING THE COURSE OF ASSESSMENT PROCEEDINGS, BUT HE HAD EXAMINED THE SAID ADDITIONAL EVIDENCE AND SUBMITTED THE REPORT. THE CIT(A) HELD THAT THE ADDITIONAL EVIDENCE FILED BY THE ASSE SSEE WAS NECESSARY FOR ADJUDICATING THE APPEAL. THE ASSESSING OFFICER BEFORE THE CIT(A) REQUESTED THAT THE ASSESSMENT ORDER BE ENHANCED AND THE DISALLOWANCE UNDER SECTION 40(A)(IA) OF THE ACT SHOULD BE MADE AT RS.1,23,23,028/ - . HE ALSO MADE THE PLEA THAT SUM OF RS.81,08,709/ - FORMING PART OF IMPUGNED AMOUNT OF RS.1.40 CRORES, ASSUMED TO BE PAID IN CASH EXCEEDING RS.20,000/ - SHOULD ALSO BE DISALLOWED UNDER SECTION 40A(3) OF THE ACT. THE EXPLANATION OF ASSESSEE WAS THAT THERE WAS AN AGREEMENT BETWEEN THE P ARTIES THAT THE ASSESSEE WOULD SUPPLY COAL TO THE 5 ITA NO. 67 /PUN/2013 FACTOR IES WHICH WOULD COVER UP HIS COST OF COAL, PROFIT AND TRANSPORTATION CHARGES. HE CLAIMED THAT THE TRANSPORT CHARGES WERE DEBITED BY FACTORIES TO THE ASSESSEES ACCOUNT BY HAWALA ENTRY. HE STRESSED T HAT WHERE THE RESPONSIBILITY OF PAYMENT AND DEDUCTING TAX WAS ON THE FACTORY TO WHOM THE COAL WAS SUPPLIED, THERE WAS NO RESPONSIBILITY ON ASSESSEE TO DEDUCT THE TAX AT SOURCE OUT OF TRANSPORT CHARGES. THE ASSESSEE ALSO DENIED HAVING DONE ANY TRANSPORT BU SINESS AND STATED THAT THERE WAS NO MERIT IN THE PLEA OF ASSESSING OFFICER TO DISALLOW 10% OF THE SAID EXPENDITURE. THE CIT(A) VIDE PARA 6.5 NOTED THAT THE ASSESSEE WAS ENGAGED IN THE WHOLESALE TRADING OF COAL WHERE IT SUPPLIED COAL TO TWO FACTORIES AND T HE TRANSPORTATION CHARGES WERE PAID BY THE FACTORIES ON BEHALF OF THE ASSESSEE AND TAX WAS ALSO DEDUCTED ON BEHALF OF THE ASSESSEE. THE CIT(A) REFERRED TO FORM 16A FILED BY THE ASSESSEE THAT THE TAX HAD BEEN DEDUCTED BY SHR EE SATPUDA TAPI PARISAR SASHAKAR SAKHAR KARKHANA LTD. WHILE CREDITING THE TRANSPORTATION CHARGES TO THE ASSESSEE. THE CIT(A) FURTHER HELD THAT THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT WOULD APPLY WHERE THE PAYMENTS REMAINS PAYABLE AND NOT TO THE PAYMENTS WHICH HAVE BEEN PAID. FUR THER, WHERE THE ASSESSING OFFICER HAD DISALLOWED 10% OF HIRE CHARGES WHICH DISALLOWANCE WAS PURELY ON ESTIMATION BASIS WITH NO REGARD TO THE PROVISIONS OF THE ACT AND THE CONTENTION OF ASSESSEE TO DISALLOW THE ENTIRE EXPENDITURE WAS HELD TO BE WITHOUT ANY BASIS. IT WAS ALSO HELD BY THE CIT(A) THAT THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT WERE NOT APPLICABLE TO DISALLOW PART OF TRANSPORTATION CHARGES. 5. WITH REGARD TO SECOND ADDITION MADE ON ACCOUNT OF LOW GP RATE, THE CIT(A) ADMITTED THAT THE ASS ESSEE HAD NOT PRODUCED THE BOOKS OF ACCOUNT BEFORE THE ASSESSING OFFICER BUT HAD FURNISHED THE AUDIT REPORT UNDER SECTION 6 ITA NO. 67 /PUN/2013 44AB ALONG WITH RETURN OF INCOME AND THE SAME HAS NOT BEEN TAKEN NOTE OF. THE CIT(A) FURTHER GOES ON TO SAY THAT THE RE IS A PRESUMPTI ON IN FAVOUR OF CORRECTNESS OF THE BOOKS OF ACCOUNT REGULARLY MAINTAINED IN THE COURSE OF BUSINESS UNLESS THERE ARE STRONG AND SUFFICIENT REASONS TO INDICATE THAT THEY ARE UNRELIABLE. THE CIT(A) OBSERVED THAT THE ASSESSING OFFICER HAD REJECTED THE BOOKS O F ACCOUNT WITHOUT EXAMINING THEM ONLY ON THE GROUND THAT THE QUANTITATIVE DETAILS OF OPENING AND CLOSING STOCK WERE NOT MAINTAINED. SINCE THE ASSESSING OFFICER HAD NOT POINTED OUT ANY SPECIFIC MISTAKE AND DISCREPANCIES IN BOOKS OF ACCOUNT AND WHERE NO COM PARABLE PROFIT RATE HAD BEEN GIVEN BY THE ASSESSING OFFICER, THE CIT(A) OBSERVED THAT THE ASSESSING OFFICER HAS REJECTED THE BOOK RESULTS UNDER SECTION 145 OF THE ACT ONLY BECAUSE THE ASSESSEE HAD NOT SUBMITTED DOCUMENTARY EVIDENCE AND BOOKS OF ACCOUNT AND HELD THAT THE ADDITION OF RS.5,29,830/ - WAS MADE ON ASSUMPTION BASIS AND THE SAME WAS DELETED BY THE CIT(A). 6. WITH REGARD TO THE LOSS IN RESPECT OF F&O SHARE ACCOUNT, WHERE THE ASSESSEE HAD FAILED TO PRODUCE ANY DETAILS OF LOSS BEFORE THE ASSESSING OFF ICER AND THE ADDITION WAS MADE, THE CIT(A) NOTED THAT THE ASSESSEE HAD DONE TRANSACTIONS THROUGH ENTITIES WHICH WERE REGISTERED WITH SEBI AND FURNISHED RELEVANT BILLS ALONG WITH DATES AND STATEMENT OF SETTLEMENT THROUGH BANK DEPOSITORY . THE PAYMENTS WERE ALSO MADE THROUGH CHEQUE S AND TRANSACTIONS WERE THROUGH DEPOSITORY SYSTEM. IN VIEW OF THE SAID EVIDENCE, THE CIT(A) ACCEPTED THE LOSS DECLARED BY THE ASSESSEE. 7. THE NEXT ADDITION MADE BY THE ASSESSING OFFICER WAS OF THE LOAN OUTSTANDING IN THE NAME O F NANDURBAR OF RS.3,12,417/ - , WHEREIN THE SAID ENTITY 7 ITA NO. 67 /PUN/2013 HAD REPORTED THAT NO SUCH LOAN WAS OUTSTANDING. THE CIT(A) CONSIDERED THE STATEMENTS OF ASSESSEE AND THE EVIDENCE FILED THAT THE SAID LOAN WAS IN RESPECT OF VEHICLE LOAN TAKEN ON 30.03.2007 OF RS.10 LA KHS AND AFTER PART PAYMENT AND INTEREST , BALANCE AS ON 31.03.2008 WAS RS.3,12,417/ - . THE CIT(A) IN VIEW THEREOF, ACCEPTED THE PLEA OF ASSESSEE WHERE PART OF LOAN AMOUNT WAS REPAID IN MAY, 2008 AND REMAINING PORTION WAS DISCOUNTED. 8. THE REVENUE IS IN A PPEAL AGAINST THE ORDER OF CIT(A). 9. THE FIRST ISSUE RAISED BY THE REVENUE IS AGAINST THE ADMISSION OF ADDITIONAL EVIDENCE WHERE THE ASSESSEE WAS NOT PREVENTED BY SUFFICIENT CAUSE IN SUBMITTING THE SAME IN ASSESSMENT PROCEEDINGS. WE SHALL DEAL WITH THIS GROUND OF APPEAL RAISED BY THE REVENUE ALONG WITH RELATED GROUND OF APPEAL, WHERE THE ISSUE OF ADDITIONAL EVIDENCE HAS BEEN RELIED UPON TO DECIDE THE GROUND OF ADDITION. IT MAY BE POINTED OUT HEREIN ITSELF THAT THE CIT(A) AFTER RECEIVING THE ADDITIONAL E VIDENCE HA D FORWARDED THE SAME TO THE ASSESSING OFFICER, WHO IN TURN, HAD OBJECTED TO ITS ADMISSION BUT HAD ALSO COMMENTED ON VARIOUS CONTENTIONS RAISED BY THE ASSESSEE WITH REGARD TO ADDITIONAL EVIDENCE. THE QUESTION WHICH ARISES IS WHETHER IN THE GIVEN FACTS AND CIRCUMSTANCES, THERE IS VIOLATION OF RULE 46A OF THE INCOME TAX RULES, 1962 AND THE SAME CAN BE CONDONED OR NOT. 10. THE ISSUE IN GROUND OF APPEAL NO.2 IS AGAINST THE DELETION OF ADDITION MADE AT RS. 14,00,480/ - . THE GROUND OF APPEAL NO.3 IS LIN KED WHEREIN THE REVENUE IS AGGRIEVED BY THE ORDER OF CIT(A) IN NOT ENHANCING THE DISALLOWANCE 8 ITA NO. 67 /PUN/2013 UNDER SECTION 40(A)(IA) OF THE ACT TO RS. 1,23,23,028/ - . THE GROUNDS OF APPEAL NO.4 AND 5 RAISED BY THE REVENUE ARE AGAINST THE PROPOSAL OF ASSESSING OFFICER TO E NHANCE THE INCOME BY MAKING DISALLOWANCE UNDER SECTION 40A(3) OF THE ACT ON ACCOUNT OF CASH PAYMENTS WHICH WAS BASED ON ADDITIONAL EVIDENCE FILED BEFORE THE ASSESSING OFFICER DURING REMAND PROCEEDINGS. 11. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THERE WAS TOTAL NON - COMPLIANCE BY THE ASSESSEE, CONSEQUENT TO WHICH, NO DETAILS WERE FILED. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE FAILED TO PRODUCE BOOKS OF ACCOUNT NOR ANY SUPPORTING EVIDENCES. THE ASSESSING OFFICER ISSUED NOTICE TO THE ASSESSEE AS TO WHY HIS BOOKS OF ACCOUNT SHOULD NOT BE REJECTED UNDER SECTION 145 OF THE ACT. THE ASSESSING OFFICER THEREAFTER ALSO SHOW CAUSED TH E ASSESSEE AS TO WHY THE ASSESSMENT SHOULD NOT BE COMPLETED UNDER SECTION 144 OF THE ACT. THE ASSESSEE HAS FAILED TO COMPLY WITH ANY OF THE NOTICES. BEFORE THE CIT(A), THE ASSESSEE FURNISHED ADDITIONAL EVIDENCE IN RESPECT OF VARIOUS ADDITIONS, WHICH HAS BEEN ADMITTED BY THE CIT(A). THE REVENUE IS IN APPEAL AGAINST THE ADMISSION OF SAID ADDITIONAL EVIDENCE. THE FIRST ADDITION MADE BY THE ASSESSING OFFICER WAS ON ACCOUNT OF DISALLOWANCE UNDER SECTION 40(A)(IA) OF THE ACT @ 10% OF FREIGHT CHARGES. THE ASS ESSEE HAD DEBITED FREIGHT CHARGES AT RS.1,40,04,804/ - . IN THE ABSENCE OF ANY DETAILS, THE ASSESSING OFFICER OBSERVED THAT THE ISSUE OF TDS THEREON COULD NOT BE VERIFIED, SINCE THE AUDITOR HAD ALSO NOT GIVEN THE DETAILS OF TDS IN THE AUDIT REPORT. THE ASS ESSING OFFICER THEREAFTER, DISALLOWED 10% OF THE TOTAL EXPENSES TO THE TUNE OF RS.14,00,480/ - . DURING THE COURSE OF REMAND PROCEEDINGS, THE ASSESSING OFFICER VERIFIED THE DETAILS AND MADE A PROPOSAL OF ENHANCEMENT TO THE EFFECT THAT AS AGAINST 9 ITA NO. 67 /PUN/2013 RS.14,00,48 0/ - , TOTAL FREIGHT EXPENSES OF RS. 1,40,04,804/ - , SHOULD BE DISALLOWED AND HENCE ENHANCEMENT OF RS.1,23,23,028/ - , SINCE EXPENSES WERE NOT ESTABLISHED TO BE GENUINE. ANOTHER LINK ED ISSUE RAISED WAS THAT THE ASSESSEE HAD PAID TRANSPORTATION CHARGES IN CASH E XCEEDING RS.20,000/ - AND SUM OF RS.81,08,709/ - SHOULD BE DISALLOWED UNDER SECTION 40A(3) OF THE ACT. 1 2 . THE FIRST ASPECT OF ISSUE IS WHETHER THE TRANSPORTATION EXPENSES WE RE ALLOWABLE IN THE HANDS OF ASSESSEE FOR THE ALLEGED NON - DEDUCTION OF TAX AT SOURCE. THE ASSESSEE POINTED OUT THAT THE TDS WAS BEING DEDUCTED AND PAID BY THE RECIPIENT OF GOODS, WHO IN TURN, WOULD CHARGE TO THE ACCOUNT OF ASSESSEE. THE ASSESSEE WAS SUPP LYING COAL TO TWO PARTIES AND THE SAID FACTORIES DEDUCTED THE TAX AT SOURCE. THE ASSESSEE FURTHER CLAIMS THAT THE CREDIT FOR TDS IN THIS ACCOUNT HAS BEEN GIVEN BY THE ASSESSING OFFICER. WHERE THE ASSESSEE WAS MAKING SUPPLY OF COAL TO TWO FACTORIES AND WH ERE THE TRANSPORTATION CHARGES WERE PAID BY THE FACTORIES ON BEHALF OF THE ASSESSEE AND TAX WAS ALSO DEDUCTED ON BEHALF OF THE ASSESSEE, THEN THERE IS NO LIABILITY UPON THE ASSESSEE TO FURTHER DEDUCT THE TAX AT SOURCE. THE ASSESSEE HAD FILED FORM NO.16A I N WHICH TAX WAS DEDUCTED BY SHREE SATPUDA TAPI PARISAR SASHAKAR SAKHAR KARKHANA LTD. WHILE CREDITING THE TRANSPORTATION CHARGES TO THE ASSESSEE. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE IN THIS REGARD POINTED OUT THAT THE ASSESSING OFFICER H AD ESTIMATED THE DISALLOWANCE AT 10% FOR NON - DEDUCTION OF TAX AT SOURCE OUT OF TRANSPORTATION CHARGES WITHOUT ANY BASIS, WHERE THE LIABILITY WAS OF THE SOCIETY TO MAKE PAYMENTS FOR TRANSPORT AND DEDUCT THE SAME. WE FIND MERIT IN THE PLEA OF ASSESSEE. THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT ARE ATTRACTED WHERE THERE IS VIOLATION IN PAYMENT OF TAX DEDUCTION AT SOURCE WHETHER DURING THE YEAR OR AT THE CLOSE OF THE YEAR. THE FINDINGS OF CIT(A) THAT THERE IS 10 ITA NO. 67 /PUN/2013 NO VIOLATION OF PROVISIONS OF SECTION 40(A)( IA) OF THE ACT, WHERE THE AMOUNTS HAVE BEEN PAID IS NOT CORRECT , BECAUSE OF THE SETTLED POSITION AND THE RATIO LAID DOWN BY THE HON'BLE SUPREME COURT IN THIS REGARD. ACCORDINGLY, THIS FINDING OF CIT(A) IS REVERSED. HOWEVER, THE ASSESSING OFFICER HAD MADE ADHOC DISALLOWANCE OF 10% OUT OF TRANSPORTATION CHARGES WITHOUT COMING TO A FINDING AS TO THE AMOUNT OF TRANSPORTATION CHARGES AGAINST WHICH, TAX HAS NOT BEEN DEDUCTED OR AFTER DEDUCTION, HAS NOT BEEN PAID. IN THE ABSENCE OF THE SAME, WE FIND NO MERIT IN THE ORDER OF ASSESSING OFFICER AND THE SAME IS REVERSED. 13. THE SECOND ASPECT OF THE ISSUE IS WHERE THE REVENUE HAS RAISED THE ISSUE OF ENHANCEMENT OF DISALLOWANCE UNDER SECTION 40(A)(IA) OF THE ACT, WHICH IS BEYOND THE POWERS OF TRIBUNAL. SIMILARLY, THERE IS NO MERIT IN THE DISALLOWANCE PROPOSED BY THE ASSESSING OFFICER IN THE REMAND PROCEEDINGS UNDER SECTION 40A(3) OR 40(A)(IA) OF THE ACT. IN ANY CASE, WHERE THE ASSESSING OFFICER HAD PROPOSED GP ADDITION, THEN NO FURTHER DISALLOWANCE IS M ERITED UNDER SECTION 40A(3) OF THE ACT. IN ANY CASE, THE ASSESSING OFFICER HAD NOT MADE ANY SUCH DISALLOWANCE IN THE ASSESSMENT ORDER AND THE TRIBUNAL HAS NO POWER OF ENHANCEMENT. THE GROUNDS OF APPEAL NO.3, 4 AND 5 RAISED BY THE REVENUE, ARE THUS, DISMI SSED. 14. NOW, COMING TO THE GROUND OF APPEAL NO.6, WHERE THE GP ADDITION OF RS. 5,29,830/ - HAS BEEN DELETED BY THE CIT(A). 15. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE REFERRED TO THE QUANTITATIVE DETAILS PLACED AT PAGE 48 OF THE PAPER BOOK AND POINTED OUT THAT ALL THE PURCHASES AND SALES WERE THROUGH CHEQUES. HE FAIRLY ADMITTED THAT BEFORE 11 ITA NO. 67 /PUN/2013 THE ASSESSING OFFICER, THE ASSESSEE COULD NOT APPEAR BECAUSE OF CERTAIN FAMILY CIRCUMSTANCES AND AN EXPARTE ASSESSMENT WAS MADE , WHEREIN ADDITION WAS MADE BECAUSE OF FALL IN GROSS PROFIT RATE DURING THE YEAR. 16. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE ON THE OTHER HAND, POINTED OUT THAT WHERE THE ASSESSEE HAS FAILED TO PRODUCE THE BOOKS OF ACCOUNT, THEN THERE IS N O MERIT IN THE ORDER OF CIT(A) IN DELETING THE ADDITION. 17. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION HAD SHOWN TOTAL SALES OF RS.3,51,82,987/ - . THE COPY OF TRADING ACCOUNT IS PLACED AT PAGE 43 OF THE PAPER BOOK AND THE PERUSAL OF THE SAME REFLECTS THE ASSESSEE TO HAVE DEBITED PURCHASES AND ALSO DEBITED DIRECT EXPENSES ON ACCOUNT OF HIRE EXPENSES. ON THE CREDIT SIDE, THE ASSESSEE HAD SHOWN DIRECT INCOME FROM TRANSPORT BILLS. THE GP RATE DECLARED BY THE ASSESSEE DURING THE Y E AR IS RS.34,20,135/ - ; CLOSING STOCK HAS BEEN DECLARED AT RS.18,18,924/ - . THE CA IN THE AUDIT REPORT IN FORM NO.3CD IN PARA 28(A) AT PAGE 7 HAS HELD THAT NO QUANTITATIVE DETAILS HAVE BEEN MAINTAINED BY THE ASSESSEE AND STOCK IS VALUED AT MARKET PRICE. ON THE OTHER HAND, THE ASSESSEE BEFORE US CLAIMS THAT THE ASSESSEE HAS MAI NTAINED QUANTITATIVE DETAILS. THE DISPARITY BETWEEN REPORTING OF THE AUDIT REPORT AND THE CLAIM OF ASSESSEE IS NOT EXPLAINABLE. FURTHER, THE CLOSING SOCK HAS NOT BEEN VALUED AT MARKET PRICE, SINCE THE VALUE OF CLOSING STOCK WORKS OUT TO RS.2,339/ - PER TO NNE AS AGAINST THE LAST PURCHASES MADE BY THE ASSESSEE AT RS.2800/ - PER TONNE ON 21.03.2008 AND 29.03.2008 . THE ASSESSEE HAS UNDER - VALUED THE CLOSING STOCK BY RS.3,57,950/ - AS MENTIONED IN THE STATEMENT OF FACTS FILED BY THE ASSESSING OFFICER. ANOTHER AS PECT WHICH IS TO BE KEPT IN MIND IS THAT THE 12 ITA NO. 67 /PUN/2013 ASSESSEE AT NO POINT OF TIME, HAD FURNISHED THE BOOKS OF ACCOUNT OR SUPPORTING BILLS AND VOUCHERS BEFORE THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS OR DURING THE COURSE OF REMAND PROCEEDIN GS. IN THE ABSENCE OF THE SAME, THE GP RATE DECLARED BY THE ASSESSEE AT 7.40% CANNOT BE ACCEPTED IN ENTIRETY. THE ASSESSEE HAD DECLARED GP RATE AT 8.92% IN THE PRECEDING YEAR AND THE ASSESSING OFFICER HAD MADE THE ADDITION BY APPLYING THE SAID GP RATE. IN THE ABSENCE OF THE ASSESSEE HAVING PRODUCED BOOKS OF ACCOUNT AND FAILING TO MAINTAIN PROPERLY OTHER DETAILS, TRADING RESULTS SHOWN BY THE ASSESSEE CANNOT BE ACCEPTED. ACCORDINGLY, WE SET - ASIDE THE ORDER OF CIT(A) IN THIS REGARD AND UPHELD THE ADDITION MADE BY THE ASSESSING OFFICER. WE FIND NO MERIT IN THE OBSERVATIONS OF CIT(A) THAT WHERE THE ACCOUNTS ARE BACKED BY AUDIT REPORT, THEN THE SAME SHOULD BE ACCEPTED . THE ACCOUNTS ARE BASED ON BOOKS OF ACCOUNT AND IT IS INCUMBENT UPON THE ASSESSEE TO PRODUC E THE SAME AND ALSO SUPPORTING EVIDENCE . IN THE ABSENCE OF PRODUCING THE SAME, BOOK RESULTS CANNOT BE ACCEPTED AS SUCH AND SOME ESTIMATION IS REQUIRED TO BE MADE IN THE HANDS OF ASSESSEE IN ORDER TO PLUG LOOPHOLES. ACCORDINGLY, WE UPHOLD THE ORDER OF ASS ESSING OFFICER AND ALLOW THE GROUND OF APPEAL NO.6 RAISED BY THE REVENUE. 18. THE ISSUE IN GROUND OF APPEAL NO.7 IS AGAINST THE ADDITION MADE ON ACCOUNT OF LOSSES FROM F&O ACCOUNT. THE ASSESSEE IN THE FIRST ROUND HAD NOT PRODUCED ANY EVIDENCE BUT DURING THE COURSE OF REMAND PROCEEDINGS, CLAIMS TO HAVE PRODUCED COPIES OF LEDGER ACCOUNTS OF SHARES OF F&O AND MOTILAL OSWAL SECURITIES LTD. THE ASSESSEE FAILED TO PRODUCE THE BILLS OF SHARES P URCHASED . HOWEVER, THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE BEFORE US POINTED OUT THAT THE DETAILS ARE AVAILABLE AT PAGES 49 TO 54 OF THE PAPER BOOK AND THE ASSESSING OFFICER MAY VERIFY THE SAME. HENCE, W E SET ASIDE THIS ISSUE 13 ITA NO. 67 /PUN/2013 BACK TO THE FILE OF A SSESSING OFFICER, WHO SHALL VERIFY THE EVIDENCES AVAILABLE WITH THE ASSESSEE, WHO IN TURN, IS DIRECTED TO FILE NECESSARY EVIDENCES. THE ASSESSING OFFICER SHALL DECIDE THE ISSUE DE NOVO IN ACCORDANCE WITH LAW. THE GROUND OF APPEAL NO.7 IS THUS, ALLOWED FO R STATISTICAL PURPOSES. 19. NOW, COMING TO THE LAST GROUND OF APPEAL I.E. IN RESPECT OF ADDITION MADE ON ACCOUNT OF LOAN OUTSTANDING AT RS.3,12,417/ - . THE SAID ADDITION WAS MADE AS NANDURBAR URBAN HAD REPORTED THAT NO SUCH LOAN WAS OUTSTANDING. THE CIT( A) HOWEVER, DELETED THE ADDITION SINCE PART OF THE LOAN WAS REPAID AND THE BALANCE WAS WRITTEN OFF IN THE SUCCEEDING YEAR. 20. THE REVENUE IS AGGRIEVED BY THE ORDER OF CIT(A) , WHERE FOR CROSS - EXAMINATION, SUMMONS UNDER SECTION 131 OF THE ACT WERE ISSUED TO THE MANAGER OF BANK, WHO WAS REQUESTED TO PRODUCE THE STATEMENT OF ALL ACCOUNTS INCLUDING THE LOAN ACCOUNT IN RESPECT OF ASSESSEE . H OWEVER, THE MANAGER OF THE BANK FAILED TO ATTEND OR FURNISH IN WRITING INFORMATION CALLED FOR. IT MAY BE POINTED OUT HEREIN ITSELF THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE SAID BANK HAD INFORMED THAT NO LOAN WAS OUTSTANDING IN THE NAME OF ASSESSEE. IN VIEW OF THESE CONTRADICTORY STATEMENT S, WE REMIT THIS ISSUE ALSO BACK TO THE FILE OF ASSESSING OFFICER FOR PROPER VERIFICATION. IN CASE THE ASSESSEE IS ABLE TO PRODUCE THE NECESSARY CONFIRMATION OF THE LOAN, THEN NO ADDITION IS TO BE MADE IN THE HANDS OF ASSESSEE. HOWEVER, IF THE INFORMATIO N COLLECTED BY THE ASSESSING OFFICER IS THAT NO SUCH LOAN IS OUTSTANDING, THEN THE BALANCE SHOWN BY ASSESSEE IS TO BE ADDED IN THE HANDS OF ASSESSEE. ACCORDINGLY, WE DIRECT THE ASSESSING OFFICER TO DECIDE THE ISSUE AFTER AFFORDING REASONABLE OPPORTUNITY O F 14 ITA NO. 67 /PUN/2013 HEARING TO THE ASSESSEE. THE GROUNDS OF APPEAL RAISED BY THE REVENUE ARE THUS, PARTLY ALLOWED. 21. IN THE RESULT, APPEAL OF REVENUE IS PARTLY ALLOWED. ORDER PRO NOUNCED ON THIS 31 ST DAY OF MA Y , 201 7 . SD/ - SD/ - (ANIL CHATURVEDI) ( SUSHMA CHOWLA) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE; / DATED : 31 ST MAY , 2017 . GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT (A) - I, NASHIK ; 4. / THE CIT - I, NASHIK ; 5. , , / DR A , ITAT, PUNE; 6. / GUARD FILE . / BY ORDER , // TRUE COPY // / ASSISTANT REGISTRAR, , / ITAT, PUNE