M/S GOVINDAM CLEARING AGENCIES PVT. LTD., JAIPUR V. DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-3, JAIPUR

ITA 70/JPR/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 6942 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 7 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-09-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2016-2017
• Appeal Filed On: 21-01-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RUNI PAUL; DCIT
• Keywords: Business expenditure; Search and seizure; Onus to prove; TDS
• Section: 132; 143(3); 37(1); 13

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,B JAIPUR JH JESK LH-'KEKZ] YS[KK LNL; ,O LAANHI XKSLKBZ] U;KF;D LNL; DS LE{K BEFORE: SHRI RAMESH C SHARMA, AM & SHRI SANDEEP GOS AIN, JM VK;DJ VIHY LA-@ ITA NO.70/JP/2019 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2016-17 M/S. GOVINDAM CLEARING AGENCIES PVT. LTD., G-7, RATNASAGAR, MSB KA RASTA, JOHRI BAZAR, JAIPUR CUKE VS. THE DCIT CIRCLE-3, JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AAACG 8739 R VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI VIJAY GOYAL, CA JKTLO DH VKSJ LS@ REVENUE BY: SMT. RUNI PAUL , DCIT DR LQUOKBZ DH RKJH[K@ DATE OF HEARING : 19/08/2020 MN?KKS'K.KK DH RKJH[K@ DATE OF PRONOUNCEMENT: 01 /09/2020 VKNS'K@ ORDER PER SANDEEP GOSAIN, J.M. THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF LD.CIT (A)-4,JAIPUR DATED 01.11.2018 FOR THE A SSESSMENT YEAR 2016-17 PASSED UNDER SECTION 143(3) R.W.S. 153B(1)( B) OF THE INCOME TAX ACT, 1961 ON THE GROUNDS MENTIONED HEREINBELOW. 1. ON THE FACTS AND IN THE CIRCUMSTANCES AD IN LA W THE LD. CIT(A) ERRED IN SUSTAINING THE ADDITION OF RS. 3,51 ,470/- MADE BY THE AO ON ACCOUNT OF ALLEGED UNACCOUNTED CASH FOUND AT THE TIME OF SEARCH. ITA NO. 70/JP/2019 M/S. GOVINDAM CLEARING AGENCIES PVT. LTD VS DCIT, C IRCLE-3, JAIPUR 2 2. ON THE FACTS AND IN THE CIRCUMSTANCES AD IN LAW THE LD. CIT(A) ERRED IN SUSTAINING THE ADDITION OF RS. 18,3 15/- MADE BY THE AO ON ACCOUNT OF DISALLOWANCE OF INTEREST PAID ON L ATE DEPOSIT OF TDS OF RS. 18,315/-. 2.1 BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE I S ENGAGED IN THE BUSINESS OF CUSTOM HOUSE AGENT AND FILED ITS RETURN OF INCOME ON 23-09- 2016 FOR THE YEAR UNDER CONSIDERATION DECLARING TOT AL INCOME AT RS. 69,82,640/-. THE ASSESSEE BELONGS TO RAMESH CHAND M ANIHAR GROUP, JAIPUR ON WHOSE PREMISES A SEARCH U/S 132 OF THE AC T WAS CARRIED OUT ON 7-01-2016. VARIOUS ASSETS/BOOKS OF ACCOUNT AND DOCU MENTS WERE FOUND AND SEIZED AS PER ANNEXURE PREPARED DURING THE COUR SE OF SEARCH. FINALLY, THE AO COMPLETED THE ASSESSMENT U/S 143(3) R.W.S. 1 53B(1)(B) OF THE ACT VIDE ORDER DATED 28-12-2017 AT A TOTAL INCOME OF RS . 73,52,425/- AS AGAINST RETURNED INCOME OF RS. 69,82,640/-. THE AO ALSO MADE AN ADDITION OF RS. 18,315/- ON ACCOUNT OF DISALLOWANC E OF INTEREST ON TDS. 2.2 AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A) WHO AFTER CONSIDERING THE FA CTS AND CIRCUMSTANCES OF THE CASE, DISMISSED THE APPEAL FILED BY THE ASSE SSEE. 2.3 NOW AGGRIEVED BY THE ORDER OF THE LD. CIT(A), T HE ASSESSEE PREFERRED THE PRESENT APPEAL BEFORE US ON THE GROUN DS MENTIONED HEREINABOVE. ITA NO. 70/JP/2019 M/S. GOVINDAM CLEARING AGENCIES PVT. LTD VS DCIT, C IRCLE-3, JAIPUR 3 3.1 THE GROUND NO. 1 OF THE ASSESSEE RELATES TO CHA LLENGING THE ORDER OF THE LD. CIT(A) IN SUSTAINING THE ADDITION OF RS. 3,51,470/- MADE BY THE AO ON ACCOUNT OF UNACCOUNTED CASH FOUND AT THE TIME OF SEARCH. 3.2 THE LD.AR APPEARING ON BEHALF OF THE ASSESSEE R EITERATED THE SAME ARGUMENTS AS WERE RAISED BY HIM BEFORE THE LD. CIT( A) AND ALSO RELIED ON THE WRITTEN SUBMISSIONS SUBMITTED BEFORE US WHICH A RE REPRODUCED BELOW. I) TOTAL CASH FOUND DURING THE COURSE OF ASSESSMENT PROCEEDING THE CAS H AMOUNTING TO RS. 6,29,400/- PERTAINING TO ASSESSEE WAS FOUND FOLLOWI NG PREMISES: - S.NO PARTICULARS OF PREMISE PREMISES BELONGS TO TOTAL CASH FOUND FROM THE VARIOUS PREMISES AMOUNT OF CASH FOUND BELONGING TO ASSESSEE I. 311, RATNA SAGAR, MSB KA RASTA, JOHARI BAZAR, JAIPUR ASSESSEE 193200 193200 II. G-8, RATNA SAGAR, MSB KA RASTA, JOHARI BAZAR, JAIPUR THE CARGO 593700 150000 III B-2, RATNA SAGAR, MSB KA RASTA, JOHARI BAZAR, JAPUR ASSESSEE 286200 286200 TOTAL 1073100 629400 II) ASSESSEE'S CASH BALANCE AS PER BOOKS OF ACCOUNT :- AS PER SEIZED CASH BOOK, THE CASH BALANCE OF THE A SSESSEE WAS RS. 12,05,828/- AND THE CASH BALANCE OF THE ASSESSEE AS PER BOOKS SHOULD BE WORKED OUT AS UNDER:- TOTAL CASH BALANCE OF ASSESSEE AS ON SEARCH 12,05,828 LESS:- CASH PAID TO SANJAY PAREEK NOT RECORDED IN BOOKS FOUND AT THE TIME OF SEARCH 18,467 LESS:- CASH PAID TO SUNIL KUMAR SHARMA NOT RECORDED IN BOOKS FOUND AT THE TIME OF SEARCH 57,500 LESS :- CASH STOLEN AS STATED IN SEARCH STATEMENT 5,00,000 -5,75,967 CASH BALANCE RE WORKED OUT BY AO 6,29,861 ITA NO. 70/JP/2019 M/S. GOVINDAM CLEARING AGENCIES PVT. LTD VS DCIT, C IRCLE-3, JAIPUR 4 THEREFORE, THE CASH AS PER BOOKS OF THE ASSESSEE WA S RS. 6,29,861/- WHEREAS THE TOTAL CASH BELONGING TO THE ASSESSEE WA S FOUND BY THE SEARCH PARTY WAS RS. 6,29,400/-. THEREFORE, NO EXCE SS CASH WAS FOUND. III) THE LD AO MERGED THE CASH POSITION WITH ANOTHE R AND INDEPENDENT ASSESSEE M/S THE CARGO TO MAKE THE ADDI TION IN HANDS OF ASSESSEE THE LD AO MERGED THE PHYSICAL CASH FOUND FROM THE PREMISE OF M/S THE CARGO (G-8, RATNA SAGAR, MSB KA RASTA, JOHARI B AZAR, JAIPUR) (RS. 5,93,700/-) AND THE CASH BALANCE AS PER BOOKS OF ACCOUNT OF M/S THE CARGO COMPANY (RS. 91,769/-) WITH THE CASH BAL ANCE OF THE ASSESSEE. THE AO WORKED OUT THE EXCESS CASH AS UND ER:- TOTAL CASH BALANCE AS PER BOOKS OF ACCOUNT OF M/S GOVINDAM CLEARING AGENCIES PVT LTD (ASSESSEE) RS. 12,05,828/- + THE CARGO COMPANY RS. 91769/- AS ON SEARCH 12,97,597 LESS:- CASH PAID TO SANJAY PAREEK NOT RECORDED IN BOOKS FOUND AT THE TIME OF SEARCH 18,467 LESS:- CASH PAID TO SUNIL KUMAR SHARMA NOT RECORDED IN BOOKS FOUND AT THE TIME OF SEARCH 57,500 LESS :- CASH STOLEN AS STATED IN SEARCH STATEMENT 5,00,000 -5,75,967 COMBINED CASH BALANCE AS PER BOOKS OF ACCOUNT WORKED OUT BY AO 7,21,630 COMBINED PHYSICAL CASH ASSESSEE + THE CARGO 10,73,100 ADDITION MADE FOR EXCESS CASH 3,51,470 III) CASH OF RS. 5,93,700/- FOUND FROM G-8 RATAN SA GAR, IS NOT PREMISE BELONGING TO THIS ASSESSEE:- THE LD. AO TREATED THE WHOLE CASH FOUND I.E. RS. 5 ,93,700/- FROM G-8, RATAN SAGAR AS BELONGING TO ASSESSEE. IT IS RELEVAN T TO MENTION HERE THAT THE PREMISES G-8, RATAN SAGAR, MSB KA RASTA, JOHAR I BAZAR, JAIPUR DOES NOT BELONG TO THE ASSESSEE. THIS PREMISE BELON G TO ANOTHER SISTER CONCERN OF ASSESSEE M/S THE CARGO COMPANY. THE CO PY OF IMPOUNDING ORDER PREPARED BY THE SURVEY PARTY FOR T HIS PREMISES IS AT PB PAGE NO. 24-28 . IN THE ASSESSMENT ORDER THE LD. AO TREATED THE CA SH AMOUNTING TO RS. 5,93,700/- FOUND FROM THIS PREMISE S BELONGING TO THE ASSESSEE WHILE AS PER SEARCH STATEMENT OF DIRECTOR OF ASSESSEE (AS QUOTED BY LD. AO AT PAGE 3 OF THE ASSESSMENT ORDER) THAT OUT OF TOTAL CASH AMOUNTING TO RS. 5,93,700/- FOUND FROM THIS PR EMISES ONLY CASH AMOUNTING TO RS. 1,50,000/- PERTAINS TO THE ASSESSE E AND BALANCE CASH AMOUNTING TO RS. 4,43,700/- DOES NOT BELONGS TO THE ASSESSEE. ITA NO. 70/JP/2019 M/S. GOVINDAM CLEARING AGENCIES PVT. LTD VS DCIT, C IRCLE-3, JAIPUR 5 IV) EXPLANATION GIVEN FOR THE CASH FOUND FROM THE P REMISE OF THE CARGO HOWEVER, THE FOLLOWING EXPLANATION WAS GIVEN FOR T HE BALANCE CASH AMOUNTING TO RS. 4,43,700/- FOUND FROM PREMISES AT G-8, RATNA SAGAR, MSB KA RASTA, JOHARI BAZAR, JAIPUR:- BELONGING TO THE CARGO CO. 79,108 CASH BELONGING TO TEMPLE OF THE BUILDING (AS STATE D BY SHRI DEEPAK GUPTA IN HIS STATEMENT RECORDED DURING SEARCH IN REPLY TO Q. NO. 18) (PB PAGE NO. 35-36) 2,25,000 CASH KEPT BY PARTNERS OF THE FIRM WHICH WAS TAKEN B Y THEM FROM OTHER GROUP CONCERNS FOR INCURRING PETTY EXPENSES OR OWN SAVINGS OF THE PARTNERS. 1,39,592 TOTAL 4,43,700 THE LD AO REJECTED THIS EXPLANATION BUT IN SUCH CA SE THE ADDITION CANNOT BE MADE IN THE HANDS OF THE ASSESSEE. THE AS SESSEE HAS DISCHARGED IT PRIMARY ONUS AND PROVED THE SOURCE OF THE CASH FOUND FROM ITS POSSESSION. THE ASSESSEE CANNOT BE PUT UND ER THE LIABILITY TO EXPLAIN THE CASH FOUND FROM THE PREMISE WHICH DOES NOT BELONGS TO IT. (V) THE LD CIT(A) UPHELD THE ADDITION BY HOLDING T HAT THE CASH BELONG TO TEMPLE IN THE BUILDING IS DEVOID OF MERIT AS NOTHING LIKE THIS WAS DURING THE SEARCH OR BEFORE THE AO. FIRST OF AL L IN SUCH SITUATION ADDITION CANNOT BE HAND IN THE HANDS OF THE ASSESSE E AS SUCH CASH WAS NOT FOUND FROM THE POSSESSION OF THE ASSESSEE. IN T HIS REGARD YOUR HONOUR IS KINDLY REQUESTED TO DRAW ATTENTION TOWARD THE STATEMENT OF SHRI DEEPAK GUPTA (MANAGER OF THE CARGO CO.) STATED IN HIS STATEMENT RECORDED DURING SEARCH IN REPLY TO Q. NO. 18) (PB P AGE NO. 35-36) THAT THE CASH OF RS. 2,25,000/- IS PERTAINING TO TEMPLE IN THE BUILDING OF THE ASSESSEE AND TEMPLE IS NOT HAVING A BANK ACCOUNT TO DEPOSIT THE CASH. OTHERWISE ALSO THIS PREMISES DOES NOT PERTAINS TO T HE ASSESSEE, THEREFORE IF ANY EXCESS CASH FOUND FROM THIS PREMIS ES CANNOT BE ADDED AS INCOME OF THE ASSESSEE. THEREFORE, THE ASSESSEE HAD DULY RECONCILED THE CA SH FOUND FROM THE ASSESSEE WITH THE BOOKS OF ACCOUNT. YOUR HONOUR, IN VIEW OF ABOVE SUBMISSION ADDITION SUSTAINED BY LD CIT(A) DESERVE TO DELETED. 3.3 ON THE OTHER HAND, THE LD. DR RELIED ON THE ORD ERS PASSED BY THE REVENUE AUTHORITIES. ITA NO. 70/JP/2019 M/S. GOVINDAM CLEARING AGENCIES PVT. LTD VS DCIT, C IRCLE-3, JAIPUR 6 3.4 WE HAVE HEARD THE LD. COUNSEL FOR BOTH THE PART IES AND WE HAVE ALSO PERUSED THE MATERIALS PLACED ON RECORD, JUDGEMENTS CITED BY THE PARTIES AS WELL AS THE ORDERS PASSED BY THE REVENUE AUTHORITIE S. BEFORE WE DECIDE THE MERIT OF THIS GROUND, IT IS NECESSARY AND IMPER ATIVE TO ANALYZE THE ORDER PASSED BY THE LD. CIT(A). WHILE DECIDING THI S GROUND, THE LD. CIT(A) HAS DEALT WITH THIS GROUND IN PARA 6 TO PARA 8 OF THE IMPUGNED ORDER, HOWEVER, THE OPERATIVE PORTION IS CONTAINED IN PARA 8 OF HIS ORDER WHICH IS REPRODUCED BELOW. 8. WITH RESPECT TO ADDITION OF RS. 3,51,470/-, TH E AO HAS GIVEN CREDIT FOR THE CASH AS PER BOOKS INCLUDING CL AIM OF RS. 50 LAKHS STOLEN FROM THE PREMISES. THE SUBMISSIONS MADE BY T HE LD.AR THAT IT BELONGS TO 3 RD PARTY, BELONG TO TEMPLE IN THE BUILDING AND BEING KEPT BY PARTNER IS DEVOID OF MERIT AS NOTHING LIKE THIS WAS STATED DURING THE COURSE OF SEARCH OR BEFORE THE AO. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE ADDITION OF RS. 3,51 ,470/- IS CONFIRMED. APPELLANTS GROUND NO. 2 IS DISMISSED. AFTER HAVING HEARD THE PARTIES AT LENGTH AND PERUSA L OF THE FACTS OF THE CASE, WE NOTED THAT TOTAL CASH FOUND AS PER BOOKS OF ACCOUNT OF THE ASSESSEE IS AS UNDER:- I) TOTAL CASH FOUND DURING THE COURSE OF ASSESSMENT PROCEEDING THE CAS H AMOUNTING TO RS. 6,29,400/- PERTAINING TO ASSESSEE WAS FOUND FOLLOWI NG PREMISES: - S.NO PARTICULARS OF PREMISE PREMISES BELONGS TO TOTAL CASH FOUND FROM THE VARIOUS PREMISES AMOUNT OF CASH FOUND BELONGING TO ASSESSEE I. 311, RATNA SAGAR, MSB KA RASTA, JOHARI BAZAR, JAIPUR ASSESSEE 193200 193200 ITA NO. 70/JP/2019 M/S. GOVINDAM CLEARING AGENCIES PVT. LTD VS DCIT, C IRCLE-3, JAIPUR 7 II. G-8, RATNA SAGAR, MSB KA RASTA, JOHARI BAZAR, JAIPUR THE CARGO 593700 150000 III B-2, RATNA SAGAR, MSB KA RASTA, JOHARI BAZAR, JAPUR ASSESSEE 286200 286200 TOTAL 1073100 629400 II) ASSESSEE'S CASH BALANCE AS PER BOOKS OF ACCOUNT :- AS PER SEIZED CASH BOOK, THE CASH BALANCE OF THE A SSESSEE WAS RS. 12,05,828/- AND THE CASH BALANCE OF THE ASSESSEE AS PER BOOKS SHOULD BE WORKED OUT AS UNDER:- TOTAL CASH BALANCE OF ASSESSEE AS ON SEARCH 12,05,828 LESS:- CASH PAID TO SANJAY PAREEK NOT RECORDED IN BOOKS FOUND AT THE TIME OF SEARCH 18,467 LESS:- CASH PAID TO SUNIL KUMAR SHARMA NOT RECORDED IN BOOKS FOUND AT THE TIME OF SEARCH 57,500 LESS :- CASH STOLEN AS STATED IN SEARCH STATEMENT 5,00,000 -5,75,967 CASH BALANCE RE WORKED OUT BY AO 6,29,861 THEREFORE, THE CASH AS PER BOOKS OF THE ASSESSEE WA S RS. 6,29,861/- WHEREAS THE TOTAL CASH BELONGING TO THE ASSESSEE WA S FOUND BY THE SEARCH PARTY WAS RS. 6,29,400/-. THEREFORE, NO EXCE SS CASH WAS FOUND. THE AO HAS MERGED THE CASH POSITION WITH ANOTHER AN D INDEPENDENT ASSESSEE I.E. M/S. THE CARGO TO MAKE THE ADDITION I N THE HANDS OF THE ASSESSEE. IN THIS REGARD, WE NOTICED THAT PHYSICAL CASH FOUND FROM THE PREMISES OF M/S. THE CARGO AT G-8, RATNA SAGAR, MSB KA RASTA, JOHRI BAZAR, JAIPUR AMOUNTING TO RS. 5,93,700/- AND CASH BALANCE AS PER BOOKS OF ACCOUNTS OF M/S. THE CARGO COMPANY I.E. RS. 91, 769/- WAS MERGED WITH CASH BALANCE OF THE ASSESSEE AND THE WORKING O F THE AO WITH REGARD TO EXCESS CASH IS AS UNDER: ITA NO. 70/JP/2019 M/S. GOVINDAM CLEARING AGENCIES PVT. LTD VS DCIT, C IRCLE-3, JAIPUR 8 TOTAL CASH BALANCE AS PER BOOKS OF ACCOUNT OF M/S GOVINDAM CLEARING AGENCIES PVT LTD (ASSESSEE) RS. 12,05,828/- + THE CARGO COMPANY RS. 91769/- AS ON SEARCH 12,97,597 LESS:- CASH PAID TO SANJAY PAREEK NOT RECORDED IN BOOKS FOUND AT THE TIME OF SEARCH 18,467 LESS:- CASH PAID TO SUNIL KUMAR SHARMA NOT RECORDED IN BOOKS FOUND AT THE TIME OF SEARCH 57,500 LESS :- CASH STOLEN AS STATED IN SEARCH STATEMENT 5,00,000 -5,75,967 COMBINED CASH BALANCE AS PER BOOKS OF ACCOUNT WORKED OUT BY AO 7,21,630 COMBINED PHYSICAL CASH ASSESSEE + THE CARGO 10,73,100 ADDITION MADE FOR EXCESS CASH 3,51,470 THE AO TREATED THE WHOLE CASH FOUND I.E. RS. 5,93,7 00/- FROM G-8, RATNA SAGAR, WHEREAS IT WAS CATEGORICALLY SUBMITTED BY TH E ASSESSEE THAT THE ABOVE PREMISES DOES NOT BELONG TO HIM AND THE SAME BELONGS TO ANOTHER SISTER CONCERN OF THE ASSESSEE I.E. M/S. THE CARGO COMPANY. THE COPY OF THE IMPOUNDING ORDER PREPARED BY THE SURVEY PARTY F OR THIS PREMISES IS ALSO PLACED ON RECORD AT PB PAGE NO. 24 TO 28. HOWE VER, THE AO TREATED THE CASH OF RS. 5,93,700/- FOUND FROM THIS PREMISES BELONGING TO THE ASSESSEE WHEREAS AS PER SEARCH STATEMENT OF DIRECTO R OF ASSESSEE A SUM OF RS. 1.50 LACS OUT OF SUM OF RS. 5,93,700/- BELONGS TO THE ASSESSEE AND ACCORDING TO THIS CATEGORICAL STATEMENT THE BALANCE CASH AMOUNTING TO RS. 4,43,700/- DOES NOT BELONG TO THE ASSESSEE. IN OUR VIEW, THE ASSESSEE HAD DISCHARGED ITS PRIMARY ONUS TO PROVE THE SOURCE OF CASH FOUND FROM ITS ITA NO. 70/JP/2019 M/S. GOVINDAM CLEARING AGENCIES PVT. LTD VS DCIT, C IRCLE-3, JAIPUR 9 POSSESSION AS EXPLANATION HAS CATEGORICALLY BE GIVE N FOR THE CASH FOUND FROM THE PREMISES OF M/S. THE CARGO WHICH IS AT PBP PAGES 35 TO 36. THEREFORE, THE ASSESSEE CANNOT BE PUT UNDER THE LIA BILITY TO EXPLAIN THE CASH FOUND FROM THE PREMISES WHICH DOES NOT BELONG TO THE ASSESSEE. EVEN OTHERWISE, THE LD. CIT(A) HAD UPHELD THE ADDIT ION BY HOLDING THAT CASH BELONGS TO THE TEMPLE IN BUILDING IS DEVOID OF MERIT. THE ADDITION CANNOT BE MADE UNDER SUCH A SITUATION IN THE HANDS OF THE ASSESSEE. MORE PARTICULARLY, THE CASH WAS FOUND FROM THE POSSESSIO N OF THE ASSESSEE AND IN THIS REGARD CATEGORICAL STATEMENT WAS MADE BY SH RI DEEPAK GUPTA, MANAGER OF THE CARGO COMPANY WHEREIN HE HAS CATEGOR ICALLY MADE SUCH STATEMENT WHICH WAS RECORDED DURING THE SEARCH IN R EPLY TO QUESTION NO. 18.THE STATEMENT OF SHRI DEEPAK GUPTA, MANAGER OF T HE CARGO COMPANY HAS ALSO BEEN PERUSED BY US WHICH IS AT PB PAGE 35- 36. WE HAVE ALSO GONE THROUGH THE DECISION OF COORDINATE BENCH IN TH E CASE OF M/S. JAI AMARNATH ASSOCIATES VS DCIT (ITA NO. 1493/JP/2018 D ATED OF 2-09- 2019) AND THE OPERATIVE PORTION OF THE DECISION IS REPRODUCED BELOW:- WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS THE RELEVANT MATERIAL ON RECORD. WE FIND THAT DURING TH E SERCH AND SEIZURE ACTION ON 07-01-2016, THE CASH OF RS. 15,59,085/- W AS FOUND AT THE PREMISES OF THE ASSESSEE AT 303, RATNA SAGAR, MSB K A RASTA, JOHRI BAZAR, JAIPUR. THE ASSESSEE EXPLAINED THE SOURCE OF THE SAID CASH AND CONSEQUENTLY IN THE ASSESSMENT FRAMED BY THE AO UN DER SECTION 143(3) READ WITH SECTION 153B(1)(B) OF THE ACT, THE AO HAS NOT EVEN PROPOSED TO MAKE ANY ADDITION ON THAT ACCOUNT. HOWE VER, THE AO ITA NO. 70/JP/2019 M/S. GOVINDAM CLEARING AGENCIES PVT. LTD VS DCIT, C IRCLE-3, JAIPUR 10 PROPOSED TO MAKE AN ADDITION OF RS. 2,59,140/- ON A CCOUNT OF UNEXPLAINED CASH FOUND DURING THE SURVEY CONDUCTED AT 203, RATNA SAGAR, MSB KA RASTA, JOHRI BAZAR, JAIPUR. WE FURTHE R NOTE THAT THOUGH THE ENTIRE PROCEEDINGS OF SEARCH AND SEIZURE AS WEL L AS SURVEY WAS CONDUCTED SIMULTANEOUSLY AT BOTH THE PLACES, HOWEVE R, ASSESSEE WAS NOT CONFRONTED WITH THE CASH OF RS. 2,59,140/- FOUN D AT 203, RATNA SAGAR, MSB KA RASTA, JOHRI BAZAR, JAIPUR AT THE TIM E OF STATEMENT RECORDED UNDER SECTION 132(4) OF THE ACT. FURTHER, NO SUCH QUERY WAS RAISED BY THE DEPARTMENT EVEN TO SHRI RAHUL MAHESHW ARI AND MS. KHUSBOO SINGH WHOSE STATEMENTS WERE REFERRED BY THE AO IN THE ASSESSMENT ORDER. THEREFORE, THERE IS NO MATERIAL O N RECORD TO INDICATE THAT THE CASH OF RS. 2,59,140/- WAS FOUND AT 203, R ATNA SAGAR, MSB KA RASTA, JOHRI BAZAR, JAIPUR BELONGS TO THE ASSESSEE. IT IS ALSO NOT IN DISPUTE THAT THE PREMISES AT 203, RATNA SAGAR, MSB KA RASTA, JOHRI BAZAR, JAIPUR DOES NOT BELONG TO ASSESSEE BUT IT BE LONGS TO THE OTHER SISTER CONCERN OF THE ASSESSEE. THE ASSESSEE EXPLAI NED THE SOURCE OF CASH AS BELONGS TO M/S. ADVENTURE GLOBAL TOUR LLP A ND ALSO PRODUCED THE CASH BOOK OF THE SAID CONCERN TO SHOW THE AVAIL ABILITY OF CASH WITH THE SAID LLP. ONCE THERE IS NO INCRIMINATING MATERI AL TO SHOW THAT THE CASH OF RS. 2,59,140/- FOUND AT 203, RATNA SAGAR, M SB KA RASTA, JOHRI BAZAR BELONGS TO THE ASSESSEE AND THE SAID PREMISES WAS NOT THE BUSINESS PREMISES OF THE ASSESSEE AND THE ASSESSEE HAS EXPLAINED THE SOURCE OF CASH BELONGS TO M/S. ADVENTURE GLOBAL TOU R LLP WHOSE BUSINESS PREMISES IS SITUATED AT 203, RATNA SAGAR, MSB KA RASTA, JOHRI BAZAR, THEN IN THE ABSENCE OF ANY CONTRARY FACT OR MATERIAL, THE SAID EXPLANATION OF THE ASSESSEE CANNOT BE BRUSHED ASIDE . ACCORDINGLY, IN THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSEE HAS DISCHARGED ITS ONUS IN EXPLAI NING THE SOURCE OF CASH AND THE AO EVEN FAILED TO DISCHARGE HIS PRELIM INARY ONUS TO ESTABLISH THAT THE CASH FOUND AT A DIFFERENT PREMIS ES NOT BELONGING TO THE ASSESSEE, BELONGS TO THE ASSESSEE. THUS THE ADD ITION MADE BY THE AO IS DELETED. KEEPING IN VIEW THE FACTS OF THE PRESENT CASE AS WE LL AS THE DECISION OF COORDINATE BENCH IN THE CASE OF M/S. JAI AMARNATH A SSOCIATES VS DCIT (SUPRA), WE ARE OF THE VIEW THAT SINCE THE WHOLE CA SH AMOUNTING TO RS. 5,93,700/- WAS NOT FOUND FROM THE POSSESSION OF THE ASSESSEE AND THE PREMISES AT G-8, RATNA SAGAR, MSB KA RASTA, JOHRI B AZAR, JAIPUR IS NOT THE PREMISES BELONGING TO THE ASSESSEE AND THE ASSE SSEE HAD DULY ITA NO. 70/JP/2019 M/S. GOVINDAM CLEARING AGENCIES PVT. LTD VS DCIT, C IRCLE-3, JAIPUR 11 RECONCILED THE CASH FOUND FROM THE ASSESSEE'S BOOKS OF ACCOUNTS. THEREFORE, THE ADDITION MADE BY THE AO ON THIS GROU ND IS NOT SUSTAINABLE IN THE EYE OF LAW. THUS GROUND NO. 1 OF THE ASSESSE E IS ALLOWED. 4.1 THE GROUND NO. 2 OF THE ASSESSEE RELATES TO CHA LLENGING THE ORDER OF THE LD. CIT(A) IN SUSTAINING THE ADDITION OF RS. 18,315/- MADE BY THE AO ON ACCOUNT OF DISALLOWANCE OF INTEREST PAID ON L ATE DEPOSIT OF TDS OF RS. 18,315/-. 4.2 THE LD.AR APPEARING ON BEHALF OF THE ASSESSEE R EITERATED THE SAME ARGUMENTS AS WERE RAISED BY HIM BEFORE THE LD. CIT( A) AND ALSO RELIED ON THE WRITTEN SUBMISSIONS SUBMITTED BEFORE US WHICH A RE REPRODUCED BELOW. SUBMISSION OF ASSESSEE:- I) THE PROVISION OF SECTION 37(1) THAT ANY EXPENSES NO T BEING IN CAPITAL NATURE LAID OUT OR EXPENDED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS CARRIED SHALL BE ALLOWABLE TO THE ASSESSEE SUBJECT TO EXPLANATION 1 WHICH PROVIDE THAT EXPENDITURE WHICH IS OFFENCE OR PROHIBITED BY LAW SHALL NOT BE DEEMED TO HAVE BEEN INCURRED FOR BUSINESS AND NO DEDUCTION SHALL BE MADE. THE INTERE ST ON DELAY DEPOSIT OF TDS ARE INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS CARRIED ON BY THE ASSESSEE. THE INTEREST PAYMENT IS NEITHER AN OFFENCE OR NOR PROHIBITED UNDER INCOME TAX ACT, 1961. THE I NTEREST ON TDS IS NOT IN PENAL NATURE BUT ITS A COMPENSATING IN THE NATURE FOR DELAY DEPOSIT OF TDS TO THE CREDIT OF GOVT. II) THE HONBLE APEX COURT IN THE CASE OF LACHMANDAS MATHURA VS. CIT REPORTED IN 254 ITR 799 HELD THAT THE INTEREST ON ARREARS OF TAX IS COMPENSATORY IN NATURE AND NOT PENAL . THE RELEVANT EXTRACT OF THE JUDGMENT IS REPRODUCED BELOW:- THE HIGH COURT HAS PROCEEDED ON THE BASIS THAT THE INTEREST ON ARREARS OF SALES TAX IS PENAL IN NATURE AND HAS REJ ECTED THE CONTENTION OF THE ASSESSEE THAT IT IS COMPENSATORY IN NATURE. IN ITA NO. 70/JP/2019 M/S. GOVINDAM CLEARING AGENCIES PVT. LTD VS DCIT, C IRCLE-3, JAIPUR 12 TAKING THE SAID VIEW THE HIGH COURT HAS PLACED RELI ANCE ON ITS FULL BENCHS DECISION IN SARAYA SUGAR MILLS (P.) LT D. V. CIT [1979] 116 ITR 387 (ALL.) THE LEARNED COUNSEL APPEA RING FOR THE APPELLANT-ASSESSEE STATES THAT THE SAID JUDGMEN T OF THE FULL BENCH HAS BEEN REVERSED BY THE LARGER BENCH OF THE HIGH COURT IN TRIVENI ENGG. WORKS LTD. V. CIT [1983] 144 ITR 7 32 (ALL.) (FB), WHEREIN IT HAS BEEN HELD THAT INTEREST ON ARR EARS OF TAX IS COMPENSATORY IN NATURE AND NOT PENAL. THIS QUESTION HAS ALSO BEEN CONSIDERED BY THIS COURT IN CIVIL APPEAL NO. 8 30 OF 1979 TITLED SARAYA SUGAR MILLS (P.) LTD. V. CIT DECIDED ON 29-2- 1996. IN THAT VIEW OF THE MATTER, THE APPEAL IS ALL OWED AND QUESTION NOS. 1 AND 2 ARE ANSWERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. III) THE ABOVE PRINCIPLES CAN BE APPLIED TO THE INTEREST EXPENSES LEVIED ON ACCOUNT OF DELAYED PAYMENT OF TDS, THEREFORE THE SA ME IS ALLOWABLE TO THE ASSESSEE. IV) FURTHER HONBLE ITAT KOLKATA RELYING ON THE VERDICT OF HON BLE APEX COURT (SUPRA) IN THE CASE OF DCIT, CIRCLE-3(1) , KOLKATA VS M/S NARAYANI ISPAT PVT VIDE ITA NO. 2127/KOL/2014 HELD AS UNDER:- THUS, IN OUR CONSIDERED VIEW, THE PRINCIPLE LAID DO WN BY THE HON'BLE SUPREME COURT IN THE CASE OF BHARAT COMMERCE INDUST RIES LTD. (SUPRA) IS NOT APPLICABLE IN THE INSTANT FACTS OF THE CASE. THUS, WE HOLD THAT THE ASSESSING OFFICER IN THE INSTANT CASE HAS WRONGLY A PPLIED THE PRINCIPLE LAID DOWN BY THE HON'BLE SUPREME COURT IN THE CASE OF BHARAT COMMERCE INDUSTRIES LTD.(SUPRA). WE ALSO FIND THAT THE HON'BLE SUPREME COURT IN THE CASE OF LACHMANDAS MATHURA (SU PRA) HAS ALLOWED THE DEDUCTION ON ACCOUNT OF INTEREST ON LAT E DEPOSIT OF SALES TAX U/S 37(1) OF THE ACT. IN VIEW OF THE ABOVE, WE CONCLUDE THAT THE INTEREST EXPENSES CLAIMED BY THE ASSESSEE ON ACCOUN T OF DELAYED DEPOSIT OF SERVICE TAX AS WELL AS TDS LIABILITY ARE ALLOWABLE EXPENSES U/S 37(1) OF THE ACT . IN THIS VIEW OF THE MATTER, WE FIND NO REASON TO INTERFERE IN THE ORDER OF LD. CIT(A) AND WE UPHOLD THE SAME. HENCE, THIS GROUND OF REVENUE IS DISMISSED. THUS, IN VIEW OF ABOVE SUBMISSION THE INTEREST ON D ELAY PAYMENT OF TDS SHOULD BE ALLOWABLE TO THE ASSESSEE. THE PAYMEN T OF TDS IS NOT DIRECT TAX FOR THE ASSESSEE AND THE SAME IS PAID ON DEFERMENT OF LIABILITY AND AKIN TO THE INTEREST PAID TO THE CREDITORS. ITA NO. 70/JP/2019 M/S. GOVINDAM CLEARING AGENCIES PVT. LTD VS DCIT, C IRCLE-3, JAIPUR 13 4.3 ON THE OTHER HAND, THE LD. DR RELIED ON THE ORDERS PASSED BY THE REVENUE AUTHORITIES. 4.4 WE HAVE HEARD THE LD. COUNSEL FOR BOTH THE PART IES AND WE HAVE ALSO PERUSED THE MATERIALS PLACED ON RECORD, JUDGEMENTS CITED BY THE PARTIES AS WELL AS THE ORDERS PASSED BY THE REVENUE AUTHORITIE S. FROM THE FACTS AVAILABLE BEFORE US, WE NOTICED THAT THE AO HAD DIS ALLOWED THE INTEREST AND MADE AN ADDITION OF RS. 18,315/- ON ACCOUNT OF LATE DEPOSIT OF TDS BY THE ASSESSEE. WE HAVE GONE THROUGH THE JUDGEMENT S RELIED BY BOTH THE PARTIES AND ALSO WE ARE OF THE VIEW THAT THE FACTS PARA MATERIA CONTAINED IN THE PRESENT CASE ARE DISTINGUISHABLE FROM THE FACTS CONTAINED IN THE JUDGEMENTS/ ORDERS RELIED ON BY THE ASSESSEE. IN TH E CASE OF LACHMANDAS MATHURA VS CIT , 254 ITR 799 AND THE DECISION OF IT AT KOLKATA BENCH IN THE CASE OF DCIT, CIRCLE 3(1), KOLKATA VS NARAYA NI ISPAT PVT. LTD(ITA NO.2127/KOL2014) WHEREIN FACTS WERE RELATING TO LIA BILITIES OF INTEREST ON ARREARS OF SALES TAX, HOWEVER, ON THE CONTRARY WE R ELY ON THE DECISION OF ITAT MUMBAI BENCH IN THE CASE OF DNV GL AS (FORMERL Y KNOWN AS DET NORSKE VERITAS AS) VS ADIT (INTERNATIONAL TAXAT ION) (ITA NO.4687/MUM/2016 DATED 31-05-2017) WHEREIN IT WAS H ELD AS UNDER:- 3. WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE T HROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. BRIEF FACTS ARE THAT THE AO PERUSING THE PROFIT AND LOSS ACCOUNT NOTICED THAT THE ASSESSEE H AS PAID AN AMOUNT OF RS. 73,923/- BEING INTEREST ON DELAYED PAYMENT OF TDS AND HE ITA NO. 70/JP/2019 M/S. GOVINDAM CLEARING AGENCIES PVT. LTD VS DCIT, C IRCLE-3, JAIPUR 14 REQUIRED THE ASSESSEE TO EXPLAIN AS TO WHY THE SAME SHOULD NOT BE DISALLOWED. THE ASSESSEE CLAIMED THAT THE TDS RELAT ES TO PAYMENT TO VARIOUS TRADERS AND THE SAME IN CONNECTION AND FOR THE PURPOSE OF BUSINESS. THE AO NOTED THAT THIS AMOUNT IS INCURRED ON DELAYED PAYMENT OF TDS AND TDS BEING TAX ON INCOME AND SAME CANNOT BE ALLOWED AS BUSINESS EXPENDITURE UNDER SECTION 37(1) OF THE ACT. ACCORDINGLY, THE SAME WAS DISALLOWED. AGGRIEVED, TH E ASSESSEE PREFERRED THE APPEAL BEFORE CIT(A). THE CIT(A) CON FIRMED THE ACTION OF THE AO BY OBSERVING AS UNDER:- CONSIDERING THE SUBMISSIONS MADE BY THE ASSESSEE AND THE REASONS RECORDED BY THE AO & BASED ON THE A BOVE DISCUSSION AND FACTS OF THE CASE, I AM OF THE OPINI ON THAT THE SAID ADJUSTMENT RELATING TO INTEREST ON DELAYED PAY MENT OF TDS IS NOT DEDUCTIBLE AS AN EXPENSE UNDER THE ACT AND I S THEREFORE, DISALLOWED. THE EXPENSES IN THIS CASE WERE INCURRED FOR A VERY DIFFERENT PURPOSE. WHEN INTEREST IS PAID FOR COMMIT TING A DEFAULT IN RESPECT OF STATUTORY LIABILITIES, THE AM OUNT PAID AND THE EXPENDITURE INCURRED IN CONNECTION TO THIS ARE IN NO WAY CONNECTED TO PRESERVING OR PROMOTING THE BUSINESS O F THE APPELLANT. IN VIEW OF THE SAME, THE APPELLANT IS NO T ALLOWED TO TAKE THE BENEFIT OF INTEREST PAID ON DELAYED PAYMEN T OF TDS AN ELIGIBLE EXPENSE. 4. WE FIND THAT THE FACTS ARE UNDISPUTED THAT THE A SSESSEE HAS CLAIMED INTEREST AS EXPENSE INCURRED FOR DELAYED PA YMENT OF TDS. WE FIND THAT THIS INTEREST IS PAID FOR DEFAULT IN RESP ECT TO STATUTORY LIABILITIES AND THIS INTEREST CANNOT BE TREATED AS BUSINESS EXP ENDITURE UNDER SECTION 37(1) OF THE ACT. WE FIND NO INFIRMITY IN T HE ORDER OF CIT(A) AND HENCE THE SAME IS CONFIRMED. THE APPEAL OF ASSE SSEE IS DISMISSED. THEREFORE, KEEPING IN VIEW OF OUR ABOVE DISCUSSIONS AS WELL AS THE DECISION OF ITAT KOLKATA BENCH IN THE CASE OF DNV G L AS VS ADIT (INTERNATIONAL TAXATION), SUPRA, WE ARE OF THE VIEW THAT THE INTEREST PAID BY THE ASSESSEE FOR DELAYED PAYMENT OF TDS IN RESPE CT OF STATUTORY LIABILITIES AND THUS THIS INTEREST AMOUNT CANNOT BE TREATED AS BUSINESS ITA NO. 70/JP/2019 M/S. GOVINDAM CLEARING AGENCIES PVT. LTD VS DCIT, C IRCLE-3, JAIPUR 15 EXPENDITURE U/S 37(1) OF THE ACT. THEREFORE, WE FIN D NO INFIRMITY IN THE ORDER OF THE LD. CIT(A) WHICH IS CONFIRMED. THUS GR OUND NO. 2 OF THE ASSESSEE IS DISMISSED. 5.0 IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED WITH NO ORDER AS TO COST. ORDER PRONOUNCED IN THE OPEN COURT ON 01 /09/202 0. SD/- SD/- JESK LH-'KEKZ LANHI XKSLKBZ (RAMESH C. SHARMA) (SANDEEP GOSAI N) YS[KKLNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 01/09/2020. *MISHRA VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT - M/S. GOVINDAM CLEARING AGENCIES (P) LTD., JAIPUR 2. IZR;FKHZ@ THE RESPONDENT-THE DCIT, CIRCLE-3, JAIPUR 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR . 6. XKMZ QKBZY@ GUARD FILE {ITA NO. 70/JP/2019} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSTT. REGISTRAR