Shri Ivan Singh, Panaji V. ACIT, Circle - 1(1), Panaji

ITA 75/PAN/2012

• Counselvise Citation: 7524114 RSA 2012
• Duration Of Justice: 7 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-05-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 01-10-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: K M MAHESH
• Assessee Lawyers: DR P DANIEL
• Keywords: Depreciation; Principle of natural justice; Additional evidence; Revenue expenditure; Capital expenditure
• Section: 234B; 131

Judgement Text

1 ITA NO. 75/PNJ/2012 (ASST. YEAR 200 9 - 1 0) IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH, PANAJI BEFORE SHRI P. K. BANSAL, HONBLE ACCOUNTANT MEMBER AND SHRI D.T. GARASIA, HONBLE JUDICIAL MEMBER ITA NO. 75 /PNJ/20 12 : (ASST. YEAR 20 09 - 10 ) SHRI IVAN SINGH S - 6, GROUND FLOOR, THE LANDSCAPE GRAND, BEHIND MAHALAXMI TEMPLE, PANAJI, GOA. PAN : AVTPS4888C ( APPELLANT ) VS. THE ASST. COMMISSIONER OF INCOME TAX, CIRCLE 1(1) , PANAJI ( RESPONDENT ) APPELLANT BY : DR. P. DANIEL, ADV. RESPONDENT BY : K.M. MAHESH, DR DATE OF HEARING : 18 /04/2013 DATE OF ORDER : 17 /05/2013 O R D E R PER D.T. GARASIA : 1. THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) DT. 28.9.2012 FOR A.Y. 2009 - 10. THE FOLLOWING GROUNDS OF APPEAL ARE RAISED BY THE APPELLANT : 1. THE LEARNED CIT(A) HAS ERRED IN LAW AND IN FACTS IN PASSING ORDER WITHOUT COMPLYING WITH THE PRINCIPLES OF NATURAL JUSTICE, AND WITHOUT APPLICATION OF MIND. 2. THE LEARNED CIT(A) ERRED IN LAW AND IN FACTS IN CONFIRMING THE EXPENSES UNDER THE HEAD PLOT/SITE DE VELOPMENT EXPENSES TREATING THE SAME AS CAPITAL EXPENDITURE INSTEAD OF TREATING THE SAME AS REVENUE EXPENDITURE. 3. THE LEARNED CIT(A) ERRED IN LAW AND IN FACTS DIRECTING THE A.O. TO CONSIDER THE TRANSACTION OF ADVANCE AGAINST SUPPLY IN THE YEAR IN WHICH TRANSACTION WAS TAKEN PLACE WHEN SUCH ASSTT. YEAR WAS NOT BEFORE THE CIT(A) FOR CONSIDERATION. 2 ITA NO. 75/PNJ/2012 (ASST. YEAR 200 9 - 1 0) 4.1 THE LEARNED CIT(A) ERRED IN PASSING AN ORDER AFTER ADMITTING THE EVIDENCES AND SENDING THE SAME FOR REMAND REPORT AND AT THE TIME OF APPELLATE ORDER NOT ADM ITTING THE SAME AND CONFIRMING THE ADDITIONS MADE OF RS.10,90,82,621/ - WITHOUT ANY VALID REASONS WHATSOEVER, AND HENCE THE ORDER IS ILLEGAL. THE ACTION OF THE LEARNED CIT(A) IS SELF CONTRADICTORY AND WITHOUT APPLICATION OF MIND. 4.2 THE LEARNED CIT(A) ER RED IN NOT ACCEPTING THE CONTENTION OF THE ASSESSEE THAT THE ADDITION MADE BY THE A.O. U/S. 68 OF THE IT ACT, 1961 IS BAD IN LAW AND ON THIS GROUND, THE ADDITION REQUIRES TO BE DELETED, AS SEC. 68 IS NOT APPLICABLE IN THE CASE OF THE ASSESSEE. 5.1 THE LEA RNED CIT(A) ERRED IN LAW AND IN FACTS IN CONFIRMING THE SUNDRY CREDITORS BALANCES AMOUNTING TO RS.62,24,163/ - AS ADDITION TO THE INCOME OF THE ASSESSEE U/S. 68 OF THE INCOME TAX ACT, 1961. 5.2 THE LEARNED CIT(A) ERRED IN REJECTING THE ADDITIONAL EVIDENCES WHEN NO ADDITIONAL EVIDENCES WERE SUBMITTED BUT ONLY LEGAL ARGUMENTS WERE ADVANCED. HENCE THE DISALLOWANCE MADE BY THE LEARNED CIT(A) IS BAD IN LAW. 6. THE LEARNED CIT(A) ERRED IN LAW AND IN FACTS IN CONFIRMING THE DISALLOWANCE OF 1/10 TH OF THE VOUCHER EXPENSES AS EXPENSES FOR NON - BUSINESS PURPOSES AND AS NON - GENUINE AND ADDING THE SAME TO THE INCOME OF THE ASSESSEE WITHOUT EVEN STATING A SINGLE VOUCHER AS INVALID OR IMPROPER, OR NON - GENUINE. 7. THE LEARNED CIT(A) SHOULD HAVE GIVEN THE BENEFIT OF TELESC OPING TO THE ADDITIONS MADE AND THEREBY NOT GRANTING TELESCOPING DEDUCTIONS THE APPELLATE ORDER IS BAD IN LAW AND REQUIRES TO BE CANCELLED. 8. THE LEARNED CIT(A) ERRED IN NOT MENTIONING ANY THING ABOUT CHARGING INTEREST U/S. 234A, 234B AND 234C, WHEN A SP ECIFIC GROUND WAS RAISED BY THE ASSESSEE BEFORE THE HON. CIT(A) AND HENCE THE INTEREST CHARGED SHOULD BE CANCELLED/DELETED. 2. GROUND NO. 1 IS GENERAL IN NATURE. 3 . GROUND NO. 2 : THE ASSESSEE IS MAINLY DOMESTIC TRADER IN IRON ORE AND INVOLVED IN THE BUSINESS OF IRON ORE CARGO HANDLING AND TRANSPORTATION. THE ASSESSEE HAS SHOWN INCOME FROM TWO CONCERNS RUNNING IN THE NAME AND STYLE OF M/S. WARRIOR MINERALS AND M/S. ACTION GROUP ASS OCIATES. DURING THE YEAR UNDER CONSIDERATION, THE AO VERIFIED FROM THE PROFIT & LOSS ACCOUNT 3 ITA NO. 75/PNJ/2012 (ASST. YEAR 200 9 - 1 0) THAT THE ASSESSEE HAS DEBITED AN AMOUNT OF RS.6,28,83,990/ - AS SITE DEVELOPMENT EXPENSES. STATEMENT WAS RECORDED UNDER SECTION 131 OF THE INCOME TAX ACT REGARDIN G PLOT DEVELOPMENT EXPENSES AND A QUESTION WAS PUT TO THE ASSESSEE TO EXPLAIN THE NATURE OF SITE DEVELOPMENT EXPENSES. THE ASSESSEE REPLIED THAT ASSESSEE IS A LOGISTICS SERVICE PROVIDER WHEREIN HE HAS TO STOCKPILE IRON ORE OF VARIOUS EXPORTERS AT VARIOUS STOCKYARDS IN A PROFESSIONAL MANNER SO THAT THE SAME IS NOT WASHED AWAY BY RAINS, NATURAL CALAMITIES AND GRADES DO NOT GET DILUTED BECAUSE OF WANT OF PROPER STOCKING ARRANGEMENTS. THEREFORE, THEY HAVE TO BE EXTRA CAUTIOUS TO ENSURE THE MAINTENANCE OF THIS STOCKYARDS LEST TO AVOID SUCH WASHING AWAY FROM RAINS RESULTING IN HUGE LOSSES TO THE EXPORTERS THEREBY INCURRING HUGE PENALTIES ON THE ASSESSEE. THEREFORE, IT WAS MANDATORY ON THE PART OF THE ASSESSEE TO MAINTAIN THE STOCKYARD WHICH WILL NOT JEOPARDISE THESE LOSSES THEREBY IF INCURRED WOULD AMOUNT TO HUGE LOSSES TO THE TUNE OF CRORES OF RUPEES TO THE EXPORTERS WHO ARE EXPORTING SAME TO CHINA. AFTER CONSIDERING THE REPLY OF THE ASSESSEE, THE AO WAS OF THE VIEW THAT THE ASSESSEE IS INVOLVED IN THE BUSINES S OF IRON LOGISTIC SERVICES THAT INCLUDED IRON ORE HANDLING, TRANSPORTATION, STOCKPILING. THE ASSESSEE HAS ENTERED INTO LEASE AGREEMENT WITH VARIOUS PARTIES FOR USING THE STAND - ALONE IRON ORE STOCKYARD, STORAGE PLOTS IN THE VICINITY OF JETTY AND OPERATION OF JETTY AND THE NEARBY PLOT - JETTY FROM WHERE MATERIAL COULD BE TRANSPORTED BY BARGES. HOWEVER, THE ASSESSEE HAD INCURRED EXPENSES RELATING TO DEVELOPMENT OF THE PLOTS AND MAKING THEM SUITED FOR THE LOGISTIC BUSINESS. THE ASSESSEE HAS INCURRED MAJOR POR TION OF DEVELOPMENT EXPENSES ON LEVELLING OF THE LAND, CLEARING THE AREA, FILLING UP THE TRENCHES, MAKING AND STRENGTHENING OF APPROACH ROADS, CREATING BOUNDARIES, CREATING DRAINAGE SYSTEM. THEREFORE, ASSESSEE HAS INCURRED THESE EXPENSES AND THESE EXPENSE S ARE MAINLY OF LOGISTICS BUSINESS. RELYING UPON THE DECISION OF 224 ITR 414 BALLIMAL NAVAL KISHORE VS. COMMISSIONER OF INCOME TAX , THE A.O HAS DISALLOWED THE CLAIM. 4 ITA NO. 75/PNJ/2012 (ASST. YEAR 200 9 - 1 0) 3.1 THE MATTER CARRIED TO CIT(A) AND CIT(A) HAS CONFIRMED THE ADDITION BY OBSERVING AS UNDER : AFTER GOING THROUGH THE FACTS OF THE CASE, CONTENTS IN THE ASSESSMENT ORDER, REMAND REPORT OF THE AO AND THE WRITTEN SUBMISSIONS OF THE ASSESSEE IT IS UNDERSTOOD THAT THERE IS NO DISPUTE REGARDING THE BUSINESS ACTIVITY OF THE ASSESSEE AND THE PREMISES TAKEN BY THE ASSESSEE FOR LEASE. AS PER THE LEASE AGREEMENT DT: - 02.02.2008 THE ASSESSEE HAS TAKEN PREMISES FOR LEASE FOR A PERIOD OF 5 YEARS COMMENCING FROM 02.02.2008 TILL 01.02.2013. THE ONLY DISPUTE BETWEEN THE ASSESSEE AND THE DEPARTMENT IS , WHETHER THE EXPENDITURE INCURRED FOR DEVELOPMENT OF SITE IS CAPITAL OR REVENUE IN NATURE. THE ASSESSEE IN WRITTEN SUBMISSIONS IT IS MENTIONED THAT WHAT THE ASSESSEE HAS DONE IS LOT OF LAND WHICH IS TAKEN ON SHORT TERM LEASE I.E. LEASE FOR 5 YEARS AND THEN THIS LAND IS PREPARED IN A WORKABLE CONDITION FOR THE BUSINESS OF THE ASSESSEE. IT MEANS ONLY A PLOT OF LAND WAS TAKEN AND WORKABLE CONDITIONS WERE MADE. HENCE THE EXPENDITURE IS INCURRED IS IN THE NATURE OF CAPITAL BUT NOT REVENUE. THE CASE LAWS RELIED BY THE ASSESSEE ARE DISTINGUISHABLE. HENCE THE AO TREATING THE EXPENDITURE FOR SITE DEV ELOPMENT IS CAPITAL IN NATURE AND THE DISALLOWANCE MADE BY THE AO IS SUSTAINED AND THE ASSESSEE IS ENTITLED FOR DEPRECIATION . 3 . 2 THE LEARNED AR SUBMITTED THAT THE ASSESSEE HAS ENTERED INTO LEASE AGREEMENT WITH VARIOUS PARTIES FOR USING STAND - ALONE IRON STOCKYARD STORING PLOTS IN THE VICINITY OF JETTY AND OPERATION OF JETTY AND NEARBY PLOT - JETTY FROM WHERE MATERIALS COULD BE TRANSPORTED BY BARGES. THE ASSESSEE HAS INCURRED THESE EXPENSES RELATED TO DEVELOPMENT OF PLOT AND MAKING THEM SUITED FOR LOGISTIC BUSINESS. T HE ASSESSEE HAS TAKEN LEASE OF LAND FOR 5 YEARS. LEASE AGREEMENT IS ON PG. 103 TO 105 OF THE PAPER BOOK. THE LEASE EXPIRED ON 1.2.2013 AND LAND WAS HANDED BACK TO THE LESSOR. THE LETTER AND LESSOR S AFFIDAVIT WERE FILED . THE EXPENSES HAVE BEEN INCURRED JUST TO MAKE LAND USABLE FOR THE PURPOSE OF THE BUSINESS AND WITHOUT INCURRING THE EXPENDITURE, THE LAND COULD NOT BE USED FOR PILING UP ETC. OF IRON ORE. THE ASSESSEE SUBMITTED A LETTER FROM PREVIOUS LESSEE OF LAND HAVING OBTAINED 5 ITA NO. 75/PNJ/2012 (ASST. YEAR 200 9 - 1 0) PERMISSION FROM VILLAGE PANCHAYAT FOR BUILDING BASIC REQUIREMENT OF LEVELLING OF APPROACH ROAD ETC. THE ASSESSEE DOES NOT GET ANY ENDURING BENEFIT FROM THE AFORESAID LAND. THE ASSESSEE RELIED UPON THE FOLLOWING DECISIONS : - I) ALLIED METAL PRO DUCTS VS. CIT (1982) 137 ITR 689 (P&H) II) CIT VS. KUSUM PRODUCTS LTD. (1989) 175 ITR 557 (CAL) III) CIT VS. JAY ENGINEERING WORKS (1988) 172 ITR 341 (DELHI) IV) CIT VS. LAXMI TALKIES (2005) 275 ITR 125 (GUJ) V) CIT VS. DR. A.M. SINGHAVI (2008) 302 IT R 26 (RAJ) VI) CIT VS. MADRAS AUTO SERVICES (P) LTD. (1998) 233 ITR 468 (SC) VII) MALI FOREX LTD. VS. DY. CIT (2012) 19 ITR 791 (HYD.) VIII) CIT VS. TALATHI AND PANTHAKY ASSOCIATES P. LTD. (2012) 343 ITR 309 (BOM.) IX) SMT. NAYANA P. DEDHIA VS. ACIT (2 003) 86 ITD 398 (HYD.) X) CIT VS. HOECHST PHARMACEUTICALS 113 ITR 877 XI) CIT VS. BOMBAY CYCLE & MOTORS AGENCIES 118 ITR 42 HE CLAIMED THAT IT MUST BE TREATED AS REVENUE EXPENDITURE. 3 . 3 THE LEARNED DR RELIED UPON THE ORDER OF CIT(A) AND HE SUBMITTED THAT THE ASSESSEE HAS TAKEN THIS PLOT ON LEASE FOR ONLY 5 YEARS AND THEREAFTER IT WAS HANDED OVER TO THE OWNER OF THE PROPERTY. THE ASSESSEE HAS INCURRED THESE EXPENSES WHICH IS CAPITAL EXPENDITURE IN NATURE. THEREFORE, A.O AND CIT(A) ARE JUSTIFIED IN HOLDING THA T THE AMOUNT WAS SPENT FOR THE PURPOSE OF BRINGING INTO EXISTENCE NEW ASSET. THEREFORE, IT WOULD BE A CAPITAL EXPENDITURE. 3 . 4 WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES. LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT IT I S AN ADMITTED FACT ON THE RECORD THAT THE ASSESSEE HAS TAKEN THE LAND ON LEASE FOR 5 YEARS. THE 6 ITA NO. 75/PNJ/2012 (ASST. YEAR 200 9 - 1 0) LEASE AGREEMENT DT. 2.2.2008 IS IN THE PAPER BOOK AT PG. 103 TO 105. THE LEASE EXPIRED ON 1.2.2013 AND IT WAS HANDED BACK TO THE LESSOR. THE ASSESSEE HAS SUB MITTED LETTER AND LESSORS AFFIDAVIT THAT THE LAND HAS BEEN HANDED BACK TO THE LESSOR. THE ONLY DISPUTE REMAINS BEFORE US IS WHETHER THE EXPENSES INCURRED BY THE ASSESSEE FOR MAKING THE LAND IN WORKABLE CONDITION IS CAPITAL OR REVENUE. WE FIND THAT CIT(A ) IN HIS ORDER HAS HELD THAT IT IS NOT IN DISPUTE FROM A.O, REMAND REPORT AND WRITTEN SUBMISSION OF THE ASSESSEE THAT THE ASSESSEE IS CARRYING OUT BUSINESS ACTIVITIES ON THE PREMISES TAKEN BY HIM ON LEASE. IN VIEW OF THE FINDINGS OF THE AUTHORITIES BELOW, THERE IS NO DISPUTE THAT THE LAND TAKEN BY THE ASSESSEE ON LEASE WAS FOR BUSINESS PURPOSE. THE LEASE WAS FOR 5 YEARS AND AFTER THE EXPIRY OF THE 5 YEARS, ASSESSEE HAS HANDED OVER THE POSSESSION OF THE LAND TO THE LESSOR. THE LAND TAKEN FOR THE BUSINESS PURPOSE WAS NOT IN USABLE CONDITION AND THE ASSESSEE HAD TO INCUR EXPENDITURE FOR LEVELLING APPROACH ROAD ETC. FOR MAKING THE LAND IN WORKABLE CONDITION FOR STORAGE OF IRON ORE. THE EXPENDITURE AS SUCH AS BEEN INCURRED FOR THE PURPOSE OF BUSINESS AND DURI NG THE COURSE OF THE BUSINESS. THE EXPENSES WERE NOT PERSONAL EXPENDITURE OF THE ASSESSEE. THE HONBLE BOMBAY HIGH COURT IN CIT VS. HOECHST PHARMACEUTICALS, 113 ITR 877 HAS CLEARLY LAID DOWN THAT SHORT PERIOD OF 5 YEARS CANNOT BE SAID TO BE LONG PERIOD A ND THAT THE ASSESSEE COULD BE SAID TO HAVE ACQUIRED OR BROUGHT INTO EXISTENCE AN ADVANTAGE OF AN ENDURING CHARACTER. SIMILARLY, THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. TALATHI AND PANTHAKY ASSOCIATES P. LTD., 343 ITR 309 TOOK THE VIEW THAT TH E ASSESSEE, TENANT IN A PREMISES CONTRIBUTED FOR THE RECONSTRUCTION OF THE PREMISES IN LIEU OF CONTINUING AS TENANT AT THE SAME RENT, THE EXPENDITURE SO INCURRED BY THE ASSESSEE WERE NOT HELD TO BE EXPENDITURE OF CAPITAL NATURE. IN OUR OPINION, NO ENDURIN G BENEFIT HAS BEEN DERIVED BY THE ASSESSEE BY INCURRING THE EXPENDITURE FOR SITE DEVELOPMENT AS WITHOUT INCURRING THESE EXPENSES, THE ASSESSEE WOULD NOT HAVE BEEN ABLE TO CARRY ON ITS BUSINESS. THE EXPENDITURE, IN FACT, WAS NECESSARY AND THE COMMERCIAL EX PEDIENCY 7 ITA NO. 75/PNJ/2012 (ASST. YEAR 200 9 - 1 0) DEMANDS SUCH EXPENDITURE TO BE INCURRED. THE FACT THAT THE ASSESSEE HAS HANDED OVER THE POSSESSION OF THE LAND AFTER THE EXPIRY OF 5 YEARS ITSELF PROVES THAT THE ASSESSEE HAS NOT DERIVED ANY ENDURING BENEFIT OUT OF THIS. THE EXPENDITURE SO INCUR RED, IN OUR OPINION, CANNOT BE REGARDED TO BE A CAPITAL EXPENDITURE. WE HAVE ALSO GONE THROUGH THE DECISIONS OF BALLIMAL NAVAL KISHORE VS. COMMISSION OF INCOME TAX, 224 ITR 414. IN THIS DECISION, WE NOTED THAT THE ISSUE RELATES TO WHETHER THE EXPENDITURE INCURRED ON EXTENSIVE REPAIRS TO THE STRUCTURE OF THE CINEMA BUILDING IS CURRENT REPAIRS OR NOT. WHILE INTERPRETING THE WORD CURRENT REPAIRS, THE HONBLE SUPREME COURT HELD THAT CURRENT REPAIRS MEANS EXPENDITURE ON BUILDING, MACHINERY, PLANT OR FURNITU RE WHICH IS NOT FOR THE PURPOSE OF RENOVATION OR RESTORATION BUT WHICH IS ONLY FOR THE PURPOSE OF PRESERVING OR MAINTAINING AN ALREADY EXISTING ASSET AND WHICH DOES NOT BRING A NEW ASSET INTO EXISTENCE OR DOES NOT GIVE TO THE ASSESSEE A NEW AND DIFFERENT A DVANTAGE. THE QUESTION WHETHER THE EXPENDITURE IS REVENUE EXPENDITURE OR CAPITAL EXPENDITURE WAS NOT BEFORE THE HONBLE SUPREME COURT. EVEN THE EXPENDITURE DOES NOT RELATE TO THE DEVELOPMENT OF THE LAND FOR FACILITATING THE BUSINESS. THIS DECISION, IN OUR OPINION, IS NOT APPLICABLE TO THE FACTS OF THE CASE. 3.5 IN VIEW OF THE AFORESAID DISCUSSION, WE ARE OF THE VIEW THAT THE AUTHORITIES BELOW WERE NOT CORRECT IN HOLDING THAT THE EXPENDITURE INCURRED BY THE ASSESSEE WAS CAPITAL EXPEN DITURE. WE, ACCORDINGLY, SET ASIDE THE ORDER OF CIT(A) AND DELETE THE DISALLOWANCE. IN THE RESULT, THIS GROUND OF APPEAL IS ALLOWED. 4. GROUND NO. 3 : GROUND NO. 3 RELATES TO ADDITION OF RS.38,14,727/ - . THE FACTS RELATING TO THIS ISSUE ARE THAT THE A O NOTED THAT THE ASSESSEE HAS SHOWN A SUM OF RS.3,15,72,376/ - UNDER LIABILITIES AS ADVANCES AGAINST SUPPLY. WHEN ASKED FOR, THE ASSESSEE SUBMITTED THAT RS. 1 LAC RELATES TO F.Y. 2005 - 06 AND THEY ARE UNABLE TO TRACE THE ADDRESS OF THE PARTY AND FOR 8 ITA NO. 75/PNJ/2012 (ASST. YEAR 200 9 - 1 0) RS.34 ,83,371/ - IT WAS SUBMITTED THAT IT IS BEING CARRIED FORWARD SINCE 2006 - 07 AND BREAK - UP IS NOT AVAILABLE. FOR THE SUM OF RS.2,31,356/ - , IT WAS SUBMITTED THAT IT IS LIABILITY TOWARDS NAV BHARAT EXPORTS P. LTD. AND THE PARTY IS NOT TRACEABLE. THE AO MADE AD DITION IN THE RETURNED INCOME AS, IN HIS OPINION, THE LIABILITY DOES NOT EXIST ANYMORE. 4.1 THE ASSESSEE WENT IN APPEAL BEFORE CIT(A). BEFORE CIT(A), THE ASSESSEE CONTENDED THAT RS. 1 LAC WAS PAYABLE TO MINI MINERALS, RS.34,83,371/ - WAS ADVANCES FROM C USTOMERS AND RS.2,31,356/ - WAS PAYABLE TO M/S. NAV BHARAT EXPORTS P. LTD. DUE TO THE HUGE EXPENSES BEING INCURRED ON DEVELOPMENT OF SITE . IT WAS ALSO CONTENDED THAT THE DEBTS WERE NOT TIME BARRED AND IT CANNOT BE TREATED AS INCOME OF THE ASSESSEE. CIT(A) DIRECTED THE AO TO CONSIDER IT TO BE THE INCOME OF THE ASSESSEE OF THE YEAR IN WHICH THE ADVANCE WAS RECEIVED. 4.2 WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY CONSIDERED THE SAME. WE NOTED THAT CIT(A) HAS DELETED THE ADDITION DURING THE YEAR. N O INTERFERENCE IS BEING CALLED TO THE DELETION OF THE ADDITION AS THE REVENUE IS NOT IN APPEAL BUT WE AGREE WITH THE LEARNED AR THAT CIT(A) WAS NOT CORRECT IN LAW IN DIRECTING THE AO TO TREAT THE SAID ADDITION TO BE THE INCOME OF THE CONCERNED YEAR WH EN THE ADVANCE WAS RECEIVED. IN OUR OPINION, CIT(A) DOES NOT HAVE ANY JURISDICTION TO GIVE A FINDING IN RESPECT OF ASSESSMENT YEAR WHICH IS NOT UNDER APPEAL BEFORE HIM. THE JURISDICTION OF CIT(A) RELATES TO THE YEAR FOR WHICH THE APPEAL HAS BEEN FILED. THUS, CIT(A), IN OUR OPINION, HAS EXCEEDED HIS JURISDICTION. WE, ACCORDINGLY, DELETE THE DIRECTION GIVEN BY CIT(A). THUS, THIS GROUND IS ALLOWED. 5 . GROUND NOS. 4.1 & 4.2 : THE SHORT FACTS OF THE CASE ARE AS UNDER : 5 .1 THE AO HAS VERIFIED SUNDRY CREDITORS. TWO MAJOR SUNDRY CREDITORS OF THE ASSESSEE WERE M/S. PENINSULA MINERALS & OVERSEAS (OUTSTANDING PAYABLE 9 ITA NO. 75/PNJ/2012 (ASST. YEAR 200 9 - 1 0) OF RS.7,73,64,664/ - ) AND M/S. NATASHA MINERALS (OUTSTANDING PAYABLE OF RS.3,17,17,957/ - ). M/S. PENINSULA MINERAL S & OVERSEAS HAS RAISED BILL FOR PLOT DEVELOPMENT, EXCAVATION AND LEVELLING OF GROUND ETC. M/S. NATASHA MINERALS HAS RAISED BILL FOR RS.3,24,53,350/ - FOR TRANSPORTATION IN MINING AREA, 10500 TRIPS. THE ADDRESS OF M/S. PENINSULA MINERALS & OVERSEAS AS PER THE INVOICE WAS FLAT NO. 2B, UG - 1, MODEL MILLENNIUM VISTA, CARANZALEM, TISWADI - GOA WHILE THAT OF M/S. NATASHA MINERALS WAS HOUSE NO. 382, FLAT NO.1, TONY NAGAR, SANVORDEM - GOA. THE ASSESSEE STATED THAT BOTH THE CONCERNS ARE OWNED BY MR. SALEEM AHMED. SUR VEY WAS CONDUCTED AND DURING THE SURVEY, SOME DOCUMENTS WERE IMPOUNDED AND FROM THE IMPOUNDED DOCUMENTS, SUMMONS UNDER SECTION 131 WAS ISSUED TO BOTH THE PARTIES AND IT WAS RETURNED UNSERVED. ON THE DATE OF SURVEY, SPOT INSPECTION OF THE ADDRESSES OF THES E TWO CREDITORS WAS DONE. HOWEVER, THE SAID OFFICES DID NOT EXIST IN THE ADDRESSES. THE ASSESSEE WAS NOT ABLE TO PRODUCE THE TWO CREDITORS. IN THE OFFICE ADDRESS OF M/S. PENINSULA MINERALS & OVERSEAS IT WAS FOUND THAT THERE WAS NO COMMERCIAL ESTABLISHME NT OPERATING FROM THE ADDRESS. FROM THE INQUIRY, IT WAS FOUND THAT THE PROPRIETOR OF M/S. PENINSULA MINERALS & OVERSEAS WAS ONE MR. SALIM HANFI AMIR HANFI WHILE IN THE BANK RECORDS, PROPRIETOR WAS MR. SALEEM AHMED. FROM THE INFORMATION FROM THE BANK, IT WAS PROVES THAT MR. SALEEM AHMED HAS OPENED TWO BANK ACCOUNTS IN TWO DIFFERENT NAMES. FROM THE INQUIRY, IT WAS HELD THAT MR. SALIM HANFI AMIR HANFI WAS THE ONLY OWNER. THEREFORE, ALL THESE DISCREPANCIES. SHOW CAUSE NOTICE WAS GIVEN. FROM THE INQUIRY IT WAS HELD THAT THE SUNDRY CREDITORS, M/S. PENINSULA MINERALS & OVERSEAS AND M/S. NATASHA MINERALS DID NOT EXIST IN REALITY. THEREFORE, RELYING UPON THE DECISION OF THE HONBLE SUPREME COURT , THE A.O ADDED RS.10,90,82,621/ - UNDER SECTION 68 OF THE ACT. 5 . 2 MATTER CARRIED TO CIT(A) AND CIT(A) HAS CONFIRMED THE SAME. 10 ITA NO. 75/PNJ/2012 (ASST. YEAR 200 9 - 1 0) 5 .3 THE LEARNED AR SUBMITTED THAT THE ASSESSEE WAS ASKED TO PRODUCE THE SUNDRY CREDITOR, MR. SALIM AHMED BUT ASSESSEE COULD NOT PRODUCE BECAUSE OF WANT OF TIME. THE ASSESSEE HAS PRODUCED MR. S ALIM AHMED AND HIS STATEMENT WAS RECORDED WHICH IS APPEARING ON PG. 102 TO 104 OF THE PAPER BOOK. CIT(A) HAS CONFIRMED THE ADDITION THOUGH CREDITORS WERE EXAMINED AND THE ASSESSEE HAS SUBMITTED COPY OF RETURN ON THE GROUND THAT IT CANNOT BE ADMITTED. THE LEARNED AR SUBMITTED THAT WHEN BOTH THESE CREDITORS WERE EXAMINED, NO ADDITION CAN BE MADE. THE ASSESSEE HAS PRODUCED DOCUMENTARY EVIDENCE TO SHOW THAT THESE SUNDRY CREDITORS, M/S. PENINSULA MINERALS & OVERSEAS AND M/S. NATASHA MINERALS HAD CARRIED OUT T HE WORK AND THEY HAVE ALREADY PAID THE TAXES AND THE DEPARTMENT HAS ALREADY COLLECTED THE TAXES ON THE SAID AMOUNT. THEREFORE, WHEN THE CONTRACTOR HAS ALREADY PAID THE TAXES, NO TAX CAN BE RECOVERED FOR THE SAME FROM THE ASSESSEE. THE LEARNED AR RELIED U PON THE DECISION OF GEM PALACE VS. CIT 168 ITR 543 AND SUBMITTED THAT DOUBLE ADDITION IS NOT PERMITTED. THE CIT(A) IN HIS ORDER HAS STATED THAT IDENTITY OF THE CREDITOR IS PROVED BUT CREDIT - WORTHINESS OF THE CREDITOR IS VERY MUCH IN DOUBT. THE LEARNED AR SUBMITTED THAT BOTH M/S. PENINSULA MINERALS & OVERSEAS AND M/S. NATASHA MINERALS ARE CONTRACTORS OF ASSESSEE AND ASSESSEE HAS MADE PAYMENTS. THEREFORE, NO ADDITION CAN BE MADE. M/S. PENINSULA MINERALS & OVERSEAS HAD ALREADY INCURRED SITE DEVELOPMENT EXP ENSES OF RS. 6,06,46,640/ - AND TRANSPORTATION OF MATERIALS OF RS.4,84,35,981/ - FOR WHICH HE HAS ALREADY FILED RETURN OF INCOME AND PAID TAXES ACCORDINGLY. LEARNED AR SUBMITTED THAT WHEN HIS ACCOUNTS ARE SHOWING TRANSPORT CHARGES AND EXPENSES ARE ACCEPTED, THEN CONTRACT SHOULD NOT BE DOUBTED. 5.4 THE LEARNED DR ON THE OTHER HAND RELIED ON THE ORDER OF AUTHORITIES BELOW. 11 ITA NO. 75/PNJ/2012 (ASST. YEAR 200 9 - 1 0) 5. 5 WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES. WE FIND THAT THE ASSESSEE HAS PRODUCED THE RETURN OF INCOME OF M/S. PENINSULA MINERALS & OVERSEAS AND M/S. NATASHA MINERALS. CIT(A) HAS NOT ADMITTED THESE EVIDENCE, BUT, IN OUR OPINION, THIS IS NOT ADDITIONAL EVIDENCE BUT THIS IS A PUBLIC DOCUMENT. THEREFORE, IT CAN BE ADMITTED AT ANY STAGE. THEREFORE, WE ADMIT THIS EVI DENCE. WE HAVE ALREADY HELD IN OUR ORDER THAT ASSESSEE HAS INCURRED THE EXPENDITURE OF RS.6,28,83,990/ - FOR SITE DEVELOPMENT EXPENSES CARRIED OUT BY M/S. PENINSULA MINERALS & OVERSEAS. WE FIND THAT THE ASSESSEE HAS INCURRED THESE EXPENSES AND WE HAVE HEL D IT IS REVENUE EXPENDITURE, THEREFORE, SITE DEVELOPMENT EXPENSES HAS BEEN CARRIED OUT BY THE ASSESSEE. WE HAVE ALREADY HELD THAT THE ASSESSEE HAS FILED COPY OF RETURN OF MR. SALIM AHMED, PROPRIETOR OF M/S. PENINSULA MINERALS & OVERSEAS AND M/S. NATASHA M INERALS AND IN THE RETURN OF INCOME, THEY HAVE ALREADY SHOWN THAT THEY HAVE CARRIED OUT THIS WORK AND THE DEPARTMENT HAS ACCEPTED THE RETURN AND MR. SALIM AHMED HAS ALREADY PAID THE TAXES ON THE SAME. WHEN THE CONTRACTOR HAS ALREADY PAID THE TAXES, NO ADD ITION CAN BE MADE IN THE HANDS OF THE ASSESSEE. WE FIND THAT THESE ARE SUNDRY CREDITORS AND THEY HAVE CARRIED OUT THE WORK ON BEHALF OF THE ASSESSEE. THEREFORE, WE ARE OF THE VIEW THAT SECTION 68 IS NOT APPLICABLE TO THE FACTS OF THIS CASE. THESE TWO CR EDITORS ARE NOT BOGUS SUNDRY CREDITORS BUT THEY ARE CONTRACTORS AND NO ADDITION CAN BE MADE. THEREFORE, WE DELETE THIS AMOUNT IN THE HANDS OF THE ASSESSEE. 6 . GROUND NOS. 5.1 & 5.2 : THIS GROUND RELATES TO UNCLAIMED SUNDRY CREDITOR AMOUNTING TO RS.62,24,163/ - . THE SHORT FACTS OF THE CASE ARE AS UNDER : 6 .1 THE AO HAS VERIFIED THE PROFIT & LOSS ACCOUNT AND BALANCE SHEET AND IN THE BALANCE SHEET SUNDRY CREDITORS WERE SHOWN AS OLD APPEARING SINCE 2006 - 07. THE ASSESSEE HAS TAKEN THE CONTENTION THA T THE STAFF IN ACCOUNTS DEPT. 12 ITA NO. 75/PNJ/2012 (ASST. YEAR 200 9 - 1 0) DURING F.Y 2006 - 07 ARE NO MORE EMPLOYED WITH THE ASSESSEE, HENCE THE DETAILS OF OTHER SUNDRY CREDITORS ARE NOT AVAILABLE ON RECORD DUE TO SHIFTING FROM OLD OFFICE TO NEW OFFICE. THEREFORE, THEY HAVE OFFERED THIS AMOUNT AS TAX . THE LEARNED AR SUBMITTED THAT THE ASSESSEE HAD OFFERED THIS AMOUNT FOR ADDITION BUT NOW THE ASSESSEE CAN FILE THE BALANCE CONFIRMATION LETTER. THEREFORE, IT MAY BE ALLOWED. THE LEARNED DR RELIED, ON THE OTHER HAND, RELIED ON THE ORDER OF THE AUTHORITI ES BELOW. 6 .2 WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES. LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT THE ASSESSEE HAS NOT SUBMITTED ANY LETTER BEFORE US TO SHOW THAT THEY ARE WILLING TO PRODUCE THE BALANCE CONFIRMATION LETTER FOR THE AFORESAID PARTIES. WE FIND THAT WHEN ASSESSEE HAS NOT PRODUCED ANY EVIDENCE BEFORE US, THERE IS NO REASON FOR SENDING THIS MATTER BACK TO THE FILE OF AO. CIT(A) HAS NOT ADMITTED THIS CLAIM. WE FIND THAT ASSESSEE HAS NO EVIDENCE. THEREFOR E, WE CONFIRM THE ADDITION SUSTAINED BY A.O. HENCE, THIS GROUND OF APPEAL IS DISMISSED . 7 . GROUND NO. 6 : THIS GROUND RELATES TO PAYMENT ON VOUCHERS. THE ASSESSEE HAS DEBITED AN AMOUNT OF RS.2,65,41,580/ - UNDER THE HEAD LABOUR CHARGES AND THESE ARE DAY - TO - DAY EXPENSES INCURRED FOR CLEANING AND SHIFTING AT SITE. PAYMENTS WERE IN THE NATURE OF CASH TO LABOURERS. THE AO HAS DISALLOWED 1/10 TH OF SUCH EXPENDITURE AS NOT GENUINE. SAME WAS DISALLOWED IN A.Y. 2008 - 09, THEREFORE, THE AO DISALLOWED THE SAME . 7 .1 THE MATTER CARRIED TO CIT(A) AND CIT(A) HAS ALSO CONFIRMED THE SAME BY OBSERVING AS UNDER : I HAVE GONE THROUGH THE FACTS OF THE CASE, CONTENTS OF THE ASSESSMENT ORDER AND WRITTEN SUBMISSIONS OF THE ASSESSEE. IT IS QUIET COMMON IN SUCH NATURE OF BUSINESSES SOME EXPENDITURE MAY NOT BE PROPERLY ACCOUNTED, OR SOME EXPENDITURE MAY BE PERSONAL IN NATURE AND FOR ALL EXPENSES FULL DETAILS MAY NOT 13 ITA NO. 75/PNJ/2012 (ASST. YEAR 200 9 - 1 0) BE AVAILABLE. ON ACCOUNT OF ALL THESE THINGS THAT ONE TENTH OF THE EXPENDITURE WAS DISALLOWED BY THE AO. THE SAME DISALLOWANCE WAS MADE WHILE COMPLETING THE SCRUTINY ASSESSMENT FOR THE PRECEDING YEAR I.E. 2008 - 09 BUT THE ASSESSEE DID NOT PREFER APPEAL. IN VIEW OF THE DETAILED DISCUSSION OF THE FACTS THAT THE THIS GROUND OF ASSESSEE APPEAL IS DISALLOWED AND ADDITION MADE BY THE AO SUSTAINED. 7 .2 WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES. WE FIND THAT THE AO HAS DISALLOWED 1/10 TH OF THE EXPENDITURE ON THE GROUND THAT THE ASSESSEE HAD MADE CASH PAYMENT TO THE LABOURERS. THE AO HAS DISALLOWED F OLLOWING THE PRECEDING YEAR I.E. 2008 - 09. THEREFORE, WHEN THE ASSESSEE HAS NOT DISPUTED THIS AMOUNT IN PRECEDING YEAR, THEREFORE, FOLLOWING THE SAME ANALOGY IN THIS YEAR, WE CONFIRM THE ORDER OF CIT(A) ON THIS GROUND. IN THE RESULT, APPEAL OF THE ASSESSE E ON THIS GROUND IS DISMISSED. 8 . GROUND NO. 7 : WE HAVE ALREADY ALLOWED GROUND NOS. 2, 4.1 AND 4.2 AND T HEREFORE THIS GROUND BECOMES INFRUCTUOUS AND ACCORDINGLY , WE DISMISS THIS GROUND AS SUCH . 9 . GROUND NO. 8 : INTEREST UNDER SECTION 2 34A , 234 B AND 234 C IS CONSEQUENTIAL IN NATURE AND ACCORDINGLY, AO IS DIRECTED TO RE - COMPUTE THE INTEREST AFTER GIVING EFFECT TO THIS ORDER . 10 . IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED . 1 1 . ORDER PRONOUNCED IN THE OPEN COURT ON 1 7 .0 5 .2013. S D / - (P.K. BANSAL) ACCOUNTANT MEMBER SD/ - (D.T.GARASIA) JUDICIAL MEMBER PLACE : PANAJI / GOA DATED : 1 7 .0 5 .2013 *SSL* 14 ITA NO. 75/PNJ/2012 (ASST. YEAR 200 9 - 1 0) COPY TO : ( 1 ) APPELLANT ( 2 ) RESPONDENT ( 3 ) CIT, PANAJI ( 4 ) CIT(A), PANAJI ( 5 ) D.R ( 6 ) GUARD FILE BY ORDER SR. PRIVATE SECRETARY ITAT, PANAJI, GOA