Guru Amarjit Singh(HUF), V. The ACIT, Jalandhar

ITA 80/ASR/2011

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 1652 (ITAT-AMRITSAR)
• Duration Of Justice: 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-03-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 21-03-2012
• Assessment Year: 2004-2005
• Appeal Filed On: 10-03-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: AMRIK CHAND
• Assessee Lawyers: Y K SUD
• Keywords: Accommodation entries
• Section: 40A(3); 143(3); 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER AND SH. B.P.JAIN, ACCOUNTANT MEMBER I.T.A. NO.80(ASR)/2011 ASSESSMENT YEAR:2004-05 PAN;AADHG0559H GURU AMARJIT SINGH (HUF) VS. ASSTT. COMMR. OF INCOM E-TAX, THE FORT, KARTARPUR. RANGE IV, JALANDHAR. (APPELLANT) (RESPONDENT) APPELLANT BY:SH. Y.K. SUD, CA RESPONDENT BY:SH. AMRIK CHAND, DR DATE OF HEARING :21/03/2012 DATE OF PRONOUNCEMENT:22/03/2012 ORDER PERBENCH; THIS APPEAL OF THE ASSESSEE ARISES FROM THE ORDER OF THE CIT(A), JALANDHAR, DATED 30.11.2010 FOR THE ASSESSMENT YEAR 2004-05. 2. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APP EAL: 1. THAT THE CIT(A) WAS NOT JUSTIFIED IN SUSTAINING THE DISALLOWANCE OF RS.890203/- MADE BY THE A.O. ON ACCOUNT OF UNSUB STANTIATED PURCHASES MADE FROM A.S. TRADING CO. 2. THAT WHILE SUSTAINING THE ADDITION THE CIT(A) HA S CLEARLY GIVEN A CONTRADICTORY FINDING IN HIS ORDER. 3. THAT THE CIT(A) WAS ALSO NOT JUSTIFIED IN SUSTAI NING THE ADDITION OF RS.85000/- MADE BY THE A.O. ON ACCOUNT OF PAYMEN TS MADE 2 TO MAIRI VIKAS SAMITI, UMB FOR THE EXPENSES INCURRE D ON HOLA MOHALLA FAIR. 4. THAT THE CIT(A) WAS NOT JUSTIFIED IN SUSTAINING AN ADDITION OF RS.6000/- OUT OF ADDITION OF RS.134000/- MADE U/S 4 0A(3). 5. THAT THE ORDER OF THE CIT(A) AS WELL AS THE A.O. IS AGAINST THE LAW AND FACTS OF THE CASE. 3. THE LD. COUNSEL FOR THE ASSESSEE, SH. Y.K. SUD,C A DID NOT PRESS GROUND NO.4 AND THE SAME IS DISMISSED HAS NOT PRESS ED. 4. GROUND NO.5 IS GENERAL IN NATURE AND THEREFORE, DO NOT REQUIRE ANY ADJUDICATION. 5. AS REGARDS GROUNDS NO.1 & 2, THE BRIEF FACTS AS PER AOS ORDER ARE AS UNDER: 5. FURTHER, IT WAS NOTICED DURING THE COURSE OF EX AMINATION OF ACCOUNT BOOKS OF THE ASSESSEE THAT TOTAL PURCHASE O F SAROPA CLOTH TO THE TUNE OF RS.8,90,203/- HAVE BEEN MADE BY THE ASSESSE E FROM M/S. A.S. TRADING CO., BAZAR BANSAWALA, JALANDHAR. IT WAS FUR THER NOTICED THAT THE ENTIRE PAYMENTS HAVE BEEN MADE TO THIS PARTY IN CASH INSTALMENT OF RS.20,000/- EACH ON ONE DAY AND THAT TOO WITH A GAP OF ONE TO THREE/FOUR DAYS CONSECUTIVELY. THE ASSESSEE WAS CAL LED UPON TO EXPLAIN AS TO WHY THESE PAYMENTS WERE MADE IN CASH OF RS.20,000/- EACH TIME AND WHY THESE PAYMENTS MAY NOT BE TREATED AS ACCOMMODATION ENTRIES AND TO PRODUCE THE PARTY FOR EXAMINATION, VIDE ORDER SHEET ENTRY 14.11.2006. THE ASSESSEE, VIDE HI S REPLY DATED 21.11.2006 HAS SUBMITTED EXPLANATION ON THIS ISSUE AS UNDER: AS REGARDS PAYMENT OF RS.20,000/- MADE IN CASH TO M/S. A.S. TRADING CO. ON DAY TO DAY BASIS IN THIS REGARD IT I S INFORMED THAT IT IS NOT FOR THE DEPARTMENT TO LOOK INTO THE HOW THE ASSESSEE RUNS HIS BUSINESS. IT IS THE PREROGATIVE O F THE ASSESSEE TO MAKE SUCH PAYMENTS. MOREOVER, ALL SUCH PAYMENTS MADE IN CASH ARE AGAINST PURCHASES MADE COPIES OF WHICH ARE ALREADY ON RECORD AND HENCE IT WOULD BE WRONG TO YOUR PART TO TREAT IT AS ACCOMMODATION ENTRIES. 3 A COPY OF ACCOUNT OF M/S. KARTARPUR ESTATE, KARTARP UR IN THE BOOKS OF M/S. A.S. TRADING CO. JALANDHAR HAS BEEN O BTAINED. ON THIS COPY OF ACCOUNT THE ADDRESS OF THE SAID CON CERN I.E. A.S. TRADING CO. IS AS 96 ROSE PARK, GULAB DEVI ROAD, JA LANDHAR AND NOT THAT OF BAZAR BANSANWALA , JALANDHAR AS ON THE BILLS PRODUCED BY THE ASSESSEE DURING THE COURSE OF EXAMI NATION OF BILLS AND VOUCHERS/ACCOUNT BOOKS. THEREFORE, THE VE RY IDENTITY OF THE SAID CONCERN IS NOT FREE FROM DOUBT. IN SUCH A SITUATION, THE CONCERNED PARTY SHOULD HAVE BEEN PRODUCED IN P ERSON FOR EXAMINATION. INSPECTOR OF THIS OFFICE WAS DEPUTED TO MAKE ENQUIRIES AND IT IS REPORTED BY HIM THAT NO CONCERN IN THE NAME OF M/S. A.S. TRADING CO. EVER EXISTED IN BAZAR BANS AWALA OR GURU BAZAR AND THAT AT 96 ROSE PARK ALSO NO SHOP IS SITUATED FOR SALE OF CLOTH, AS CLAIMED BY THE ASSESSEE. IN V IEW OF THIS, IT IS ESTABLISHED THAT THE PURCHASES OF CLOTH SHOWN FROM THIS PARTY BY THE ASSESSEE AT RS.8,90,203/- ARE NOT GENUINE AND H ENCE THE SAME ARE REJECTED AND ADDITION OF THE EQUAL AMOUNT IS MADE IN THE TAXABLE INCOME OF THE ASSESSEE. 6. THE LD. CIT(A) CONFIRMED THE ACTION OF THE ASSES SING OFFICER. 7. THE LD. COUNSEL FOR THE ASSESSEE SH. Y.K. SUD, C A, ARGUED THAT THE ASSESSEE HAD MADE THE PURCHASES OF SAROPA CLOTH FRO M M/S. A.S. TRADING CO. PROP. SUBHASH CHANDER (HUF). THE SAID SUPPLIER IS R EGULARLY ASSESSED TO TAX. THE SUPPLIER M/S. A.S. TRADING CO. HAS ISSUED BILLS FOR THE SAID PURCHASES MADE, WHICH ARE AVAILABLE AT PAGES 11 TO 16 OF THE PAPER BOOK. THE DECLARATION FORM UNDER HIMACHAL PRADESH SALES T AX RULES 1970 DATED 15.02.2004 WITH REGARD TO THE SAID GOODS PURCHASED IS ALSO ON RECORD AT PAGE 18 OF THE PAPER BOOK. A COPY OF ACCOUNT IN THE BOOK S OF THE ASSESSEE AND COPY OF CONFIRMATION FROM M/S. A.S. TRADING CO. ARE AVAILABLE AT PAGES 19 TO 22 OF THE PAPER BOOK. AS REGARDS REPORT OF THE I NSPECTOR DURING THE 4 ASSESSMENT PROCEEDINGS THAT M/S. A.S. TRADING CO. I S NOT EXISTING AT THE GIVEN ADDRESS, THE LD. COUNSEL FOR THE ASSESSEE, SH . Y.K. SUD, ARGUED THAT THE LD. CIT(A), HAS DIRECTED THE A.O. TO SUBMIT THE REP ORT ON THE BASIS OF THE WRITTEN SUBMISSION PRODUCED BEFORE THE CIT(A). IN V IEW OF THE SAID DIRECTIONS, THE AO ISSUED THE LETTER TO THE ASSESSE E AVAILABLE AT PAGE 24 OF THE PAPER BOOK. THE ASSESSEE VIDE LETTER DATED 09.07.20 09 SUBMITTED ON 10 TH JULY, 2009 AVAILABLE AT PAGE 27 OF THE PAPER BOOK A ND REQUESTED TO THE AO TO SUMMON SH. SUBHASH CHANDER, PROP. M/S. A.S. TRADING CO. UNDER SECTION 131 OF THE ACT AND THE PERMANENT ACCOUNT NUMBER OF THE SUPPLIER M/S. A.S. TRADING CO. ALONGWITH ADDRESS WERE GIVEN TO THE A.O . THE REPORT OF THE AO IS NOT AVAILABLE ON RECORD AND HAS NOT BEEN FILED B Y EITHER OF THE PARTY. HOWEVER, AS REGARDS THE CORRECTNESS OF THE ADDRESSE S, A COPY OF THE RATION CARD, ASSESSMENT PARTICULARS, PAN AND TELEPHONE BIL LS WERE ALSO FILED BEFORE THE LD. CIT(A) AND ARE PART OF THE RECORD AT PAGES 28 TO 37 OF THE PAPER BOOK. THE LD. COUNSEL FOR THE ASSESSEE, SH. Y.K. SUD, ARG UED THAT THE ASSESSEE HAD MADE PAYMENTS WITHIN THE PURVIEW OF PROVISIONS OF T HE INCOME TAX AND THE SAME HAS NOT BEEN CONTRAVENED. IF THE PARTY IS NOT PRODUCED BY THE ASSESSEE, INSPITE OF THE FACT, THE REQUEST MADE TO THE AO TO SUMMON THE PARTY U/S 131 OF THE ACT, THE ASSESSEE CANNOT BE PENALISED. THE M AIN ALLEGATION OF THE AO WAS THAT PARTY WAS NOT PRODUCED AND NO OTHER DEFECT HAS BEEN POINTED OUT IN 5 THE PURCHASES MADE EXCEPT DOUBTING THE SAME AND CON CLUDING THE MATTER ON SURMISES AND CONJECTURES. 8. THE LD. DR, ON THE OTHER HAND, RELIED UPON THE O RDERS OF THE AUTHORITIES BELOW. 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. THERE IS NO DISPUTE TO THE FACT THAT THE ASSESSEE H AD PURCHASED THE SAROPA CLOTH VIDE VARIOUS BILLS FROM M/S. A.S. TRADING CO. THE PURCHASE BILLS, SALES TAX DECLARATION, COPY OF ACCOUNT IN ASSESSES BOOKS AND CONFIRMATION IN THE BOOKS OF THE SUPPLIER AND VARIOUS EVIDENCES WITH RE GARD TO THE ADDRESS OF THE SUPPLIERS ARE ON RECORD IN THE PAPER BOOK BEFORE US . THE ASSESSEE HAD REQUESTED THE AO TO SUMMON THE SUPPLIER UNDER SECTI ON 131 OF THE ACT AND ON PERUSAL OF THE RECORD, WE FIND THAT THE SAME HAS NOT BEEN DONE FOR THE REASONS BEST KNOWN TO THE A.O. THE POWER TO SUMMON THE PARTY VESTS WITH THE INCOME TAX DEPARTMENT AND NOT WITH THE ASSESSEE . THE ASSESSEE HAS DISCHARGED ITS ONUS BY PLACING VARIOUS DOCUMENTARY EVIDENCES TO PROVE THE PURCHASES AS GENUINE AND THE IDENTITY OF THE SUPPLI ER. AS REGARDS THE PAYMENT OF RS.20,000 ON VARIOUS DATES, THE SAME IS WITHIN THE PURVIEW OF SECTION 40A(3) OF THE ACT, IN THE IMPUGNED YEAR WHI CH HAS BEEN CONFIRMED BY THE SUPPLIER. THEREFORE, IN THE CIRCUMSTANCES AN D FACTS OF THE CASE, THE ASSESSEE HAS DISCHARGED ITS ONUS AND SHIFTED THE SA ME ON THE REVENUE. AFTER 6 THE ONUS IS DISCHARGED BY THE ASSESSEE, IT IS FOR T HE REVENUE TO PROVE THE DOCUMENTARY EVIDENCE PRODUCED BY THE ASSESSEE, ARE NOT GENUINE WHICH HAS NOT BEEN DONE BY THE REVENUE, AS DISCUSSED HEREINAB OVE. IT APPEARS THAT THE A.O. HAS MADE THE ADDITIONS ONLY ON SURMISES AND CO NJECTURES, WHICH IS NOT PERMITTED IN LAW. IN THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE, WE DIRECT THE A.O. TO ALLOW THE CLAIM OF THE ASSESSEE AND ACCORDINGLY THE ORDER OF THE CIT(A) IS REVERSED ON THE ISSUE. THUS, GROUN D NOS. 1 & 2 OF THE ASSESSEE ARE ALLOWED. 10. AS REGARDS GROUND NO.3, THE BRIEF FACTS AS PER AOS ORDER ARE AS UNDER: 4. DURING THE COURSE OF EXAMINATION OF ACCOUNT BOO KS OF THE ASSESSEE, IT WAS NOTICED THAT THE ASSESSEE MADE PAYMENT OF RS .85,000/- TO MAIRI VIKAS SAMITI, AMB FOR WHICH NO VOUCHERS/RECEIPTS WE RE AVAILABLE. THE ASSESSE VIDE ORDER SHEET ENTRY DATED 14.11.2006 WAS SPECIFICALLY ASKED TO PRODUCE EVIDENCES AS TO FOR WHICH THIS PAYMENT WAS MADE AND ALSO WAS CALLED UPON AS TO WHY THIS PAYMENT MAY NOT BE TREAT ED AS DONATION PAID TO THE SAID SAMITI AND DISALLOWED. THE ASSESSEE VIDE H IS REPLY DATED 21.11.2006 HAS EXPLAINED THAT THESE EXPENSES ARE IN CURRED ON ACCOUNT OF HOLA FAIR AND HENCE CANNOT BE TREATED AS DONATION. PHOTOCOPIES OF THE FAX MESSAGE RECEIPT FROM THE SAID SAMITI HAVE BEEN FILED AND THAT THESE RECEIPTS ARE SIGNED BY SOME UNAUTHORIZED PERSON AS THE SIGNATORY HAS SIGNED FOR AND ON BEHALF OF THE SECRETARY. THESE RE CEIPTS DENOTES THE PURPOSE OF THE PAYMENT AS UNDER: PAYMENT PURPOSE/NATURE OF PAYMENT 45,000/- FOR PURCHASE OF MEDICINES 10,000/- FOR RECOVERY VAN 30,000/- FOR REPAIR OF STREET LIGHT 7 THUS, THE PURPOSE FOR WHICH THE SAID PAYMENT HAS BE EN MADE IS CERTAINLY IN THE NATURE OF DONATION. AS NOTHING HAS BEEN MENT IONED ON THE PHOTOCOPIES OF THE RECEIPTS WHETHER THIS SAMITI WAS REGISTERED U/S 12A/80G OF THE ACT, ENTIRE PAYMENT MADE TO THAT SAM ITI IS DISALLOWED AS HAVING PAID FOR THE PURPOSE OF DONATION AND ANY PAY MENT OF DONATION IS NOT AN ALLOWABLE EXPENSE. 11. THE LD. CIT(A) CONFIRMED THE ACTION OF THE ASSE SSING OFFICER. 12. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. IT WAS ARGUED BY THE LD. COUNSEL FOR THE ASSESSEE, SH. Y.K. SUD, THAT THE ASSESSEE HAS MADE THE PAYMENTS FOR HOLDING HOLA MOH ALLA FAIR. THE SAID PAYMENTS WERE MADE THROUGH A/C PAYEE DRAFT AND THE COPY OF RECEIPTS FOR THE SAME ARE AVAILABLE AT PAGES 8 TO 10 OF THE PAPE R BOOK. THE ASSESSEE HAS BEEN MAKING SUCH PAYMENTS IN THE PRECEDING YEARS AN D IN THE FOLLOWING YEARS WHERE THE DEPARTMENT ITSELF HAS ACCEPTED SUCH PAYMENTS IN THE ASSESSMENT MADE UNDER SECTION 143(3) OF THE ACT. TH E SAID DETAIL IS AVAILABLE AT PAGE 6 OF THE PAPER BOOK. 13. THE LD. DR, ON THE OTHER HAND, RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 14. AFTER PERUSING THE RECORD AND HEARING BOTH THE PARTIES, WE ARE OF THE VIEW THAT THE ASSESSEE HAD PLACED ON RECORD THE REC EIPTS FOR THE PAYMENTS MADE. THE A.O. NEITHER HAS DISAPPROVED THE SAID REC EIPTS NOR HAS BROUGHT ON RECORD THE SAID EXPENDITURE OR THE PAYMENT AS NON-G ENUINE. THEREFORE, IN THE 8 CIRCUMSTANCES AND FACTS OF THE CASE, THE AO IS NOT JUSTIFIED IN DISALLOWING THE SAID AMOUNT. ACCORDINGLY, WE DIRECT THE A.O. TO ALLOW THE CLAIM OF THE ASSESSEE. THUS, GROUND NO.3 OF THE ASSESSEE IS ALLO WED. 15. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 22ND MARCH, 2012. SD/- SD/- (H.S. SIDHU) (B.P. JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 22ND MARCH , 2012 /SKR/ COPY OF THE ORDER IS FORWARDED TO : 1. THE ASSESSEE:GURU AMARJIT SINGH (HUF), KARTARPUR. 2. THE ACIT, RANGE-IV, JALANDHAR. 3. THE CIT(A), 4. THE CIT, 5. THE SR DR, ITAT, ASR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH : AMRITSAR.