GEE KAY ENGINERING INDUSTRIES, BATAALA V. INCOME TAX OFFICER WARD-1, BATALA

ITA 715/ASR/2017

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 3765 (ITAT-AMRITSAR)
• Duration Of Justice: 4 year(s) 4 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-04-2022
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: DB
• Assessment Year: 2013-2014
• Appeal Filed On: 26-11-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR BEFORE DR. M. L. MEENA, ACCOUNTANT MEMBER AND SH. ANIKESH BANERJEE, JUDICIAL MEMBER I.T.A. No. 715/Asr/2017 Assessment Year: 2013-14 Gee Kay Engineering Industries G.T. Road, Batala [PAN: AAAFG 6852C] Vs. Income Tax Officer Ward-1, Batala (Appellant) (Respondent) Appellant by : Sh. Rajiv Kumar O/O Sh. Ashwani Kalia, CA Respondent by: Sh. Anupam Kant Garg, CIT DR Date of Hearing: 01.03.2022 Date of Pronouncement: 26.04.2022 ORDER Per Anikesh Banerjee, JM: The instant appeal was filed against the order passed by the Ld. Commissioner of Income Tax (Appeals)-1, Amritsar [in brevity the CIT(A)], bearing Appeal No. 747/2015-16 dated 11.08.2017 u/s 250(6) of the Income Tax Act, 1961 [in brevity the Act], in respect of Assessment Year 2013-14. 2. The grounds of appeal is as follows: “1. That the Ld.CIT(A)-l, Amritsar has erred in law in law and on facts confirming the addition of Rs.371000 by treating the amount of unsecured loan received by the assessee as income of the assessee from undisclosed sources. ITA No. 715/Asr/2017 Gee Kay Engineering Industries v. ITO 2 2. That the Ld.CIT(A)-l, Amritsar has erred in law in law and on facts in confirming the order of the AO that assessee and his counsel had admitted before the AO that the unsecured loan received by the assessee was not a genuine transaction. 3. That the Ld. CIT(A)-l, Amritsar has erred in confirming the disallowance of Rs.100000 out of Coupla Expenses and shop Moulder Expenses. 4. That the Ld. CIT(A)-l, Amritsar has erred in confirming the disallowance of Rs.2420 out of Travelling expenses. 5. That the Ld. CIT(A)-l, Amritsar has erred in confirming the disallowance of Rs.1708 out of Telephone expenses. 6. That the order is bad in law and on facts. 7. That the appellant craves leave to add or amend the ground of appeal before the appeal is heard and disposed off.” 3. Brief fact is that the assessee took a loan from Sh. V. M. Goel, HUF amount of Rs.1,85,300/- and from Sh. Ankur Goel, HUF amount of Rs. 1,86,450/-. The total amount of Rs. 3,71,000/- for Fy 12-13. 3.1. During assessment proceedings the ld. Assessing Officer find out that the two loan creditors of assessee received the cheques from M/s Divine Commodity Traders who paid to both loan creditors of the assessee amount of Rs.1,85,000/- and 1,86,000/- related to Sh. V. M. Goel, HUF and Sh. Ankur Goel, HUF respectively. The nature of payment is commodity profit. For veracity of the bills submitted by the assessee, the ld. AO made verification to M/s Divine Commodity Traders and the notice was returned back as (not found). Considering this verification the ld. AO added back at Rs.3,71,000/- with total income of the assessee. 3.2. In other cases, the following additions were concluded by the ld AO, out of travelling expenses Rs. 2420/-, out of the Coupla Expenses and Shop Moulder ITA No. 715/Asr/2017 Gee Kay Engineering Industries v. ITO 3 Expenses amount to Rs.1,00,000/-, out of car & scooter expenses used for personal expenses amount to Rs. 25,495/- & out of Telephone expenses amount to Rs 1708/-. 4. The ld. counsel of the assessee relied on the judicial pronouncements which are as follows: (i) CIT v. Jeeta Khan [2007] 292 ITR 597 (P&H) (ii) CIT v. Shri Ram Narain Goel [1997] 224 180 (P&H) (iii) Dwarikadhish Sugar Industries v. ITO [2012] 137 ITD 200 (iv) Commissioner of Income Tax v. Orissa Corporation (P) Ltd. [1986] 159 ITR 78 (SC). As per the ld. Counsel, the ld. AO made the verification the source of the source, without proper verification of the loan creditors of the assessee. The verification was not focused on the assessee’s creditor but to the source of creditors. Issuance of single notice by the ld. AO which was unserved, showing ‘not found’ is not taking the cognizance of verification. Once the cheques were issued by M/s Divine Commodity Traders the onus is over. Its genuineness was automatically proved and returning a single letter by postal authority does not make any sense. As per the ld. counsel, the new address of M/s Divine Commodity Traders was produced but the AO had not considered the same. 5. Related to addition of his expenses, the ld. AO made the addition of Rs. 1,00,000/- out of Coupla Expenses and Shop Moulder Expenses. Further, the other expenses was reduced by the ld. CIT(A) related to Rs.18,933/- related to car and scooter expenses on account of personal expenses, amount of Rs.2,420/- on account of travelling expenses amount to Rs.1708/- for telephone expenses, all the expenses are upheld by the ld CIT(A). The ld. counsel also pointed out that there is no specific finding or lacunae only in arbitrary manner the addition was made. ITA No. 715/Asr/2017 Gee Kay Engineering Industries v. ITO 4 6. The ld. DR vehemently argued and relied on the order of both the Revenue authorities. 7. We have heard both the parties. The ld. AO made the verification of the source of loan creditors. But the ld. AO much more interested to complete the verification of the source of the source. The verification was not get a holistic view. This is partial verification was completed by the ld AO. A proper verification should be done to loan creditors only. Accordingly, the mater is remanded back to the ld. AO for further verification of loan creditors of assessee with the factual matrix and reasonable opportunity should be given to the assessee for its argument. 8. Related to disallowance of expenses, there is no specific lacunae was found only the gross deduction was made both the Revenue authorities so expenses which are disallowed by the ld. CIT(A) are deleted. 9. In the result, the appeal of the assessee is partly allowed. Order pronounced in the open court on 26.04.2022 Sd/- Sd/- (Dr. M. L. Meena) (Anikesh Banerjee) Accountant Member Judicial Member Date: 26.04.2022 *GP/Sr. PS* Copy of the order forwarded to: (1) The Appellant: (2) The Respondent: (3) The CIT(A), (4) The CIT concerned (5) The Sr. DR, I.T.A.T (6) The Guard File ITA No. 715/Asr/2017 Gee Kay Engineering Industries v. ITO 5 True Copy By Order