Sapnay Sanjay Raisoni, Pune V. Income-tax Officer, Pune

ITA 8/PUN/2012

• Counselvise Citation: 824514 RSA 2012
• Duration Of Justice: 1 year(s) 4 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 03-01-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANN KAPTHUAMA
• Keywords: Onus to prove
• Section: 40A(3); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER I.T.A. NO. 08 AND 09/PN/2012 A.Y. 2006-07 & 2008-09 SAPNA SANJAY RAISONI PROP. MAHAVIR SALES CORPORATION C-102 GAGAN GALAXY, MARKET YARD PUNE-411 037 PAN ACDPR 0459 D APPELLANT VS. I.T.O. WARD 2(1) PUNE RESPONDENT APPELLANT BY: SHRI NIKHIL PATHAK RESPONDENT BY: MS. ANN KAPTHUAMA DATE OF HEARING: 1-4-2013 DATE OF PRONOUNCEMENT: 28-5-2013 ORDER PER R.S. PADVEKAR, JM THESE TWO APPEALS ARE FILED BY THE ASSESSEE CHALLEN GING THE RESPECTIVE IMPUGNED ORDERS OF THE LD. CIT(A)-II PUNE FOR A.Y. 2006-07 AND 2008-09. 2. THE FIRST COMMON ISSUE IN BOTH THE APPEALS RELAT ES TO DISALLOWANCE MADE BY THE A.O U/S 40A(3) OF THE ACT OF RS. 15,40,508/- AND RS . 1,12,95,005/- FOR A.Y. 2006-07 AND 2008-09 RESPECTIVELY. THE ASSESSED IS A PROPRIETO R OF M/S. MAHAVIR SALES CORPORATION AND IS ENGAGED IN TRADING IN FERROUS AND NON-FERROU S SCRAP MATERIALS. THE ASSESSEE BID THE AUCTION FOR PURCHASING THE SCRAP HELD BY MSRTC, MSEB, PMT AND GOVERNMENT ORGANIZATIONS. THE A.O HAS OBSERVED THAT THE ASSES SEE HAS MADE THE PAYMENT IN EXCESS OF RS. 20,000/- IN CASH IN VIOLATION OF THE PROVISIONS OF SEC. 40A(3) OF THE ACT. SO FAR AS THE ASSESSMENT YEAR 2006-07, THE AO HAS N OTED THAT THERE ARE AS MANY AS 20 ENTRIES APPEARING IN THE CASHBOOK FOR SUCH PAYMENTS /PURCHASES MADE. THE GROSS TOTAL OF THE SAID AMOUNT WORKED OUT TO RS. 77,02,542/- AG AINST THE PAYMENTS MADE TO MSRTC OF THEIR DIVISIONS OR DIFFERENT DEPOTS LIKE C HANDRAPUR, OSMANABAD, PARBHANI, BEED, SOLAPUR, NAGPUR, ETC. THE A.O THEREFORE, SOU GHT EXPLANATION OF THE ASSESSEE WHY THE DISALLOWANCE SHOULD NOT BE MADE AS PER THE PROVISIONS OF SEC. 40A(3) BY PAGE 2 OF 4 ITA NO. 08 AND 09/PN/2012 SAPNA SANJAY RAISONI A.Y. 2006-07 AND 2008-09 VIOLATING THE SAID PROVISIONS. THE ASSESSEE CONTEN DED THAT ALL THE PAYMENTS ARE TO THE AUTONOMOUS BODIES LIKE MSRTC. IT IS BINDING UPON T HE ASSESSEE TO PAY 25% CASH OF BIDDING WHEN HAMMER FALLS. THE ASSESSEE ALSO FILED A LETTER SHOWING THAT THE SAID PAYMENT IS MANDATORY FOR BIDDING IN LOT IN THE AUCT ION. THE ASSESSEE ALSO CONTENDED THAT THERE IS LIBERTY TO THE ASSESSEE TO MAKE PAYME NT AT 75% BY D.DS. BUT THE GOODS ARE GIVEN TO THE ASSESSEE ONLY AFTER 15 DAYS FROM T HE DATE OF WHICH DDS HAVE BEEN CREDITED TO THEIR ACCOUNTS. THE A.O MADE THE DISAL LOWANCE REJECTING THE EXPLANATION OF THE ASSESSEE AT 20% OF RS. 77,02,542/- AND MADE THE ADDITION OF RS. 15,40,508/-. 3. FOR THE A.Y. 2008-09, THE A.O MADE DISALLOWANCE TO THE EXTENT OF RS. 1,12,95,005/-. THE ASSESSEE HAS MADE CASH PAYMENT EXCEEDING RS. 20,000/- VIOLATING THE PROVISIONS OF SEC. 40A(3) OF THE ACT. THE A.O HAS ALSO NOTED THAT THE SAID PAYMENTS ARE MADE TO MSRTC SITUATED AT DIFFERENT PLACES AND IN THIS YEAR, THE A.O MADE THE DISALLOWANCE OF RS. 1,12,95,005/- WHICH WAS THE PA YMENT MADE IN CASH AT THE TIME OF BIDDING AUCTION OF THE MSRTC IN THEIR DEPOTS AT DIF FERENT PLACES. 4. THE ASSESSEE CARRIED THE ISSUE BEFORE THE LD. CI T(A) BUT WITHOUT SUCCESS. 5. WE HAVE HEARD THE PARTIES. IN ASSESSEES OWN CA SE FOR A.Y. 2007-08, WE HAVE ALREADY SET ASIDE THE ISSUE TO THE FILE OF THE LD. CIT(A) FOR DE-NOVO CONSIDERATION. WE THEREFORE, FOLLOWING THE REASONS GIVEN IN ASSESSEE S OWN CASE FOR A.Y 2007-08 (ITA NO. 1472/PN/2010 ORDER DATED 20-5-2013) SET ASIDE THIS ISSUE IN BOTH THESE ASSESSMENT YEARS TO THE FILE OF THE CIT(A) TO DECIDE THE SAME DE-NOVO IN THE LIGHT OF THE DIRECTIONS AND OBSERVATIONS IN A.Y. 2007-08. 6. ACCORDINGLY THE RESPECTIVE GROUNDS TAKEN BY THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. 7. THE NEXT ISSUE IS THE ADDITION ON ACCOUNT OF UNP ROVED LOAN CREDITORS. THE A.O MADE THE ADDITION OF RS. 1,05,000/- FOR THE A.Y. 20 06-07. THE A.O HAS OBSERVED THAT IN THE BOOKS OF ACCOUNTS, THERE ARE CREDIT BALANCES OF THE FOLLOWING PERSONS. SR.NO. IN THE NAME OF THE CREDITOR AMOUNT 1. AKSHAY V. ABAD 15,000/- 2. GAURAV V. ACHALIYA 15,000/- PAGE 3 OF 4 ITA NO. 08 AND 09/PN/2012 SAPNA SANJAY RAISONI A.Y. 2006-07 AND 2008-09 3. GIRISH V. BALDOTA 15,000/- 4. KUNAL ABAD 15,000/- 5. NIKHIL CHORDIYA 15,000/- 6. SANTOSH B. SURANA 15,000/- 7. SUBHAS B. SURANA 15,000/- 1,05,000/- 8. THE A.O REQUESTED THE ASSESSEE TO FILE CONFIRMAT ION LETTERS WITH THE PAN AND COPY OF BALANCE SHEET, ETC. THE A.O HAS NOTED THAT THOUGH THE ASSESSEE STATED THAT THE CREDITORS FOR A.Y. 2006-07 ARE HER CLOSE RELATIVES BUT THE ASSESSEE DID NOT FILE ANY CONFIRMATION LETTERS SHOWING THE IDENTITY AND CREDI T WORTHINESS OF THOSE CREDITORS. THE AO THEREFORE, MADE THE ADDITION OF RS. 1,05,000/- I N THE A.Y. 2006-07 U/S 68 OF THE ACT. THE ASSESSEE CARRIED THE ISSUE BEFORE THE CIT(A) BU T WITHOUT SUCCESS. 9. WE HAVE HEARD THE PARTIES. NOTHING HAS BEEN FIL ED BEFORE US ALSO TO PROVE THE IDENTITY, GENUINENESS OF THE TRANSACTIONS AND CREDI T WORTHINESS OF THOSE SUNDRY LOAN CREDITORS. LAW IS WELL SETTLED THAT THERE IS A PRI MARY BURDEN ON THE ASSESSEE U/S 68 OF THE ACT AND HE HAS TO DISCHARGE THE SAID BURDEN TO PROVE THE IDENTITY AND GENUINENESS OF THE TRANSACTION AND CAPACITY OF THE LOAN CREDITO R. APART FROM ORAL ARGUMENT AND THE EXPLANATION, NO EVIDENCE HAS BEEN FILED BEFORE US. WE THEREFORE, FIND NO REASON TO INTERFERE WITH THE ORDER OF THE CIT(A) ON THIS ISSU E AND ACCORDINGLY, THE SAME IS CONFIRMED. ACCORDINGLY THE GROUND NO. 2 RAISED IN A.Y. 2006-07 IS DISMISSED. 10. THE NEXT ISSUE IS THE DISALLOWANCE OF INTEREST FREE ADVANCES OF RS. 41,754/- IN THE A.Y. 2006-07 AND RS. 3,15,829/- IN THE A.Y. 2008-09 RESPECTIVELY. IN RESPECT OF THE A.Y. 2006-07, THE A.O HAS OBSERVED THAT THE ASSESSEE HAS DEBITED AN AMOUNT OF RS. 68,433/- WHICH WAS PAID TO ONE MR. KANTILAL JAIN AN D CITI BANK CAR LOAN OF RS. 26,529/- AND AN AMOUNT OF RS. 15,750/- IN THE NAME OF MINORS . HE HAS ALSO OBSERVED THAT ASSESSEE HAS ADVANCED RS. 23,00,000/- TO FOUR INDIV IDUALS. HOWEVER, INTEREST HAS BEEN RECEIVED ONLY FROM ONE PERSON AMOUNTING TO RS. 97,6 27/- AND NO INTEREST HAS BEEN CHARGED ON THE ADVANCE OF RS. 15,00,000/-. THE A.O MADE THE DISALLOWANCE OF RS. 41,754/- IN RESPECT OF INTEREST PAID ON THE TRUCK L OAN. SAME WAY IN THE A.Y. 2008-09, THE A.O HAS OBSERVED THAT THE ASSESSEE HAS DEBITED INTEREST OF RS. 3,52,029/- WHICH WAS PAID TO INDIVIDUALS, TRUCK LOAN AND OTHERS. TH E INTEREST IS PAID BY THE ASSESSEE ON PAGE 4 OF 4 ITA NO. 08 AND 09/PN/2012 SAPNA SANJAY RAISONI A.Y. 2006-07 AND 2008-09 UNSECURED LOAN OF RS. 1,19,000/- TAKEN BY AN INDIVI DUAL AND BALANCE INTEREST IS ON UNSECURED TAKEN FROM VARIOUS FINANCIAL INSTITUTIONS . THE A.O ALSO NOTED THAT IN THE BALANCE SHEET THE ASSESSEE HAS SHOWN ADVANCE TO THE EXTENT OF RS. 84,13,417/- ON WHICH THE ASSESSEE HAS CHARGED INTEREST OF RS. 3,37 ,696/-. THE A.O HAS ALSO OBSERVED THAT THE ASSESSEE HAS GIVEN INTEREST FREE ADVANCES. IN BOTH THE ASSESSMENT YEARS, THE A.O DISALLOWED THE INTEREST DEBITED TO P & L A/C BY THE ASSESSEE AND MADE THE ADDITION. THE LD. CIT(A) CONFIRMED THE SAID ADDITION. 11. WE HAVE HEARD THE PARTIES. IN ASSESSEES OWN C ASE, IN THE IDENTICAL SET OF FACTS, WE HAVE DECIDED THIS ISSUE IN THE A.Y. 2007-08 AND DELETED THE ADDITION. WE THEREFORE, FOLLOWING THE REASONS GIVEN IN THE A.Y. 2007-08 DEL ETE THIS ADDITION. ACCORDINGLY, THE RESPECTIVE GROUND TAKEN BY THE ASSESSEE IN BOTH THE ASSESSMENT YEARS IS ALLOWED. 12. IN THE RESULT, BOTH THE APPEALS ARE PARTLY ALLO WED FOR STATISTICAL PURPOSES. DECISION PRONOUNCED IN THE OPEN COURT ON 28 TH MAY 2013. SD/- SD/- (G.S. PANNU) (R.S. PADVEKAR) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE DATED THE 28 TH MAY 2013 ANKAM COPY OF THE ORDER IS FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A)-II PUNE 3. THE CIT- II PUNE 4. THE D.R, A BENCH, PUNE BY ORDER SR. PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL PUNE