M/s Power Max (India ) Pvt Ltd, Kolkata V. J.C.I.T (OSD),Cir - 8,kolkata, Kolkata

ITA 819/KOL/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 4669 (ITAT-KOLKATA)
• Duration Of Justice: 4 year(s) 1 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-06-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 29-04-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 16-04-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAJAT KR KUREEL JCIT SRDR
• Assessee Lawyers: A N CHATTERJEE
• Keywords: Unexplained investment; Corroborative evidences
• Section: 143(3); 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH A KOLKATA BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND SHRI S.S.VISWANETHRA RAVI, JUDICIAL MEMBER ITA NO. 819 / KOL / 2013 ASSESSMENT YEAR :2009-10 M/S POWER MAX (INDIA) PVT. LTD., 19A, J.L.NEHRU ROAD, KOLKATA -700 087 [ PAN NO.AABCP 9559 R ] V/S . JCIT(OSD), CIRCLE-8, AAYAKRA BHAWAN, P7, CHOWRINGHEE SQUARE, KOLKATA-700 069 /APPELLANT .. / RESPONDENT /BY APPELLANT SHRI A.N.CHATTERJEE, FCA /BY RESPONDENT SHRI RAJAT KR. KUREEL, JCIT,SR-DR /DATE OF HEARING 29-04-2016 /DATE OF PRONOUNCEMENT 01-06-2016 / O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER:- THIS APPEAL BY THE ASSESSEE IS AGAINST THE ORDER O F COMMISSIONER OF INCOME TAX (APPEALS)-VIII, KOLKATA DATED 07.01.2013 . ASSESSMENT WAS FRAMED BY JCIT(OSD), CIRCLE-8, KOLKATA U/S 143(3) O F THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) VIDE HI S ORDER DATED 21.11.2011 FOR ASSESSMENT YEAR 2009-10. SHRI A.N.CHATTERJEE, LD. AUTHORIZED REPRESENTATIVE APPEARING ON BEHALF OF ASSESSEE AND SHRI RAJAT KR. KUREEL, LD. DEPARTMENTA L REPRESENTATIVE APPEARING ON BEHALF OF REVENUE. ITA NO.819/KOL/2013 A.Y. 2009-10 M/S POWER MAX (I) PVT. LTD. V. JCIT(OSDS), CIR-8 KOL. PAGE 2 2. GROUNDS NO. 3 & 4 RAISED BY THE ASSESSEE IN ITS APPEAL HAVE NOT BEEN PRESSED BY LD. AR FOR THE ASSESSEE AT THE TIME OF H EARING BEFORE US. THE SAME ARE, THEREFORE, DISMISSED AS NOT PRESSED. 3. THE FIRST ISSUE RAISED BY ASSESSEE IN THIS APPEA L IS THAT LD. CIT(A) ERRED IN RESTRICTING THE DISALLOWANCE OF 4,84,500/- MADE BY AO ON ACCOUNT OF VIOLATION OF TAX DEDUCTED AT SOURCE (TDS FOR SHORT) FOR THE PAYMENT OF VARIOUS EXPENSES. THE FACTS OF THE CASE ARE THAT ASSESSEE IN THE PRES ENT CASE IS A PRIVATE LIMITED COMPANY ENGAGED IN BUSINESS OF CONSTRUCTION AND SERVICING OF BOILERS, ERECTION AND PIPE LINES. DURING THE YEAR, ASSESSEE HAS CLAIMED CERTAIN EXPENSES OF RS. 16,55,66,189/- WHICH ARE SUBJECT TO THE PROVISIONS OF TDS. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE REC ONCILED ALL THE EXPENSES ON WHICH THE PROVISIONS OF TDS WERE APPLIC ABLE EXCEPT FOR A SUM OF 19,38,017/-. THE ASSESSEE CLAIMED THAT THESE PAYME NTS WERE MADE TO THE PARTIES WHICH WERE DID NOT CROSS THE THRESHOLD LIMI T OF TDS, SO THESE WERE OUT OF THE PURVIEW OF TDS. THE ASSESSEE ALSO SUBMITTED THAT OUT OF ALL EXPENSES, ONLY 1.17% WAS NOT MADE SUBJECT TO TDS PROVISION. H OWEVER, ASSESSING OFFICER DISREGARDED THE CLAIM OF ASSESSEE BY HOLDIN G THAT ASSESSEE FAILED TO FURNISH SUFFICIENT DOCUMENTARY EVIDENCE IN SUPPORT OF ITS CLAIM WITH REGARD TO THE EXPENSES FOR RS. 19,38,017/-. ACCORDINGLY, THE AO IN THE ABSENCE OF DOCUMENTARY EVIDENCE DISALLOWED 50% OF SUCH EXPENSE S INCURRED BY ASSESSEE WHICH IS AMOUNTING TO 9,69,009/- AND ADDED TO THE TOTAL INCOME OF ASSESSEE. 4. AGGRIEVED ASSESSEE PREFERRED AN APPEAL BEFORE LD . CIT(A) WHO HAS PARTLY ALLOWED THE APPEAL OF THE ASSESSEE BY OBSERV ING AS UNDER:- (II) BEFORE ME, THE A/R HAS SUBMITTED THAT THE DIF FERENCE OF RS.19,38,017/- IS ONLY 1.17% OF TOTAL EXPENSE AND T HIS DIFFERENCE MAY BE ON ACCOUNT OF NON-DEDUCTION OF TDS ON THE PAYME NT ON WHICH TDS PROVISION IS NOT APPLICABLE. HOWEVER, THE A/R WAS N OT ABLE TO GIVE THE ITA NO.819/KOL/2013 A.Y. 2009-10 M/S POWER MAX (I) PVT. LTD. V. JCIT(OSDS), CIR-8 KOL. PAGE 3 DETAIL OF SUCH PAYMENT BECAUSE THE RECORD OF THE CO MPANY HAS BEEN DESTROYED IN FIRE. AS PER THE A.R. THE APPELLANT HA S COLLECTED THE INFORMATION FROM THIRD PARTIES AND BANK FOR RE-CONS TRUCTION OF ITS ACCOUNT AND IF SO THE APPELLANT COULD HAVE EASILY COLLECTED THE INFORMATION REGARDING THE PARTIES ON WHOSE PAYMENT NO TDS WAS D EDUCTED. THE LD. AR HAS NO REPLY TO THIS QUERY OF MINE. HOWEVER, TAK ING THE LIBERAL VIEW I AM OF THE OPINION THAT DISALLOWANCE OF 25% OF DIFFE RENCE OF RS.19,38,017/- I.E. DISALLOWANCE OF RS.4,84,500/- W ILL MEET THE END OF JUSTICE. ACCORDINGLY THE DISALLOWANCE IS REDUCED BY RS.3,87,600/- (RS.9,69,009/- - RS.4,84,500/-). THIS GROUND IS PAR TLY ALLOWED. BEING AGGRIEVED BY THIS ORDER OF LD. CIT(A) ASSESSE E CAME IN SECOND APPEAL BEFORE US. 5. BEFORE US LD. AR SUBMITTED WRITTEN SUBMISSION WH ICH IS RUNNING PAGES 1 TO 66 AND STATED THAT A FIRE BROKE OUT AT THE BUI LDING PREMISES OF ASSESSEE ON 24.03.2010. AS A RESULT ALL THE RECORDS WERE DES TROYED, SO THE ASSESSEE FACED A LOT OF DIFFICULTIES TO CULL OUT THE DESIRED INFORMATION FROM DIFFERENT SOURCE SUCH AS FROM TDS RETURN, PARTIES ETC. TO SUB STANTIATE ITS CLAIM. ONLY A MEAGRE 1.17% OF THE TOTAL EXPENSES WHICH WERE SUBJE CT TO TDS WERE NOT FURNISHED OWING TO ABOVE STATED PROBLEM. ON THE OTH ER HAND, LD. DR RELIED ON THE ORDERS OF AUTHORITIES BELOW. 6. WE HAVE HEARD RIVAL CONTENTION AND PERUSED THE M ATERIALS AVAILABLE ON RECORD. WE FIND THAT ASSESSEE HAS CLAIMED SEVERAL E XPENSES IN ITS PROFIT AND LOSS ACCOUNT WHICH WERE SUBJECT TO PROVISIONS OF TD S AND THE ASSESSEE WAS ABLE TO RECONCILE ALL THE EXPENSES WITH SUPPORTING EVIDENCE EXCEPT FOR A SUM OF 19,38,017/-. SO THE AO DISALLOWED 50% OF SUCH EXPEN SE ON AD HOC BASIS. AGAINST THIS ASSESSEE CAME IN APPEAL BEFORE LD. CIT (A) WHO PARTLY ALLOWED RELIEF FROM 50% TO 25% OF TOTAL UN-RECONCILED EXPEN SES. NOW THE QUESTION BEFORE US ARISES AS TO WHETHER THE CLAIM OF EXPENSE SHOULD BE DISALLOWED ON ACCOUNT OF NON-DEDUCTION OF TDS. FROM THE FACTS OF THE CASE WE FIND THAT THERE WAS A FIRE BROKE OUT AT THE BUSINESS PLACE OF ASSES SEE WHERE RECORDS WERE DESTROYED. IN SUCH SITUATION, WE UNDERSTAND THAT RE LEVANT RECORDS RELATING TO ITA NO.819/KOL/2013 A.Y. 2009-10 M/S POWER MAX (I) PVT. LTD. V. JCIT(OSDS), CIR-8 KOL. PAGE 4 SUBJECT-MATTER WILL NOT BE AVAILABLE. SO UNDER THIS SITUATION, WE RELY UPON OTHER MATERIALS MAINLY AUDITORS REPORT, PAST RECORDS ETC . AND THE LD. DR HAS NOT BROUGHT ANY DEFECT IN THE AUDITORS REPORT FILED BY ASSESSEE AS WELL AS ANY NEGATIVE REMARK ON THE PAST RECORDS WERE SUBMITTED BEFORE US. WE FIND THAT ASSESSEE FAILED TO RECONCILE ONLY 1.17% OF EXPENSE WHICH IS THE SUBJECT- MATTER TO THE PROVISION OF TDS. WE FURTHER FIND THA T IN SIMILAR CIRCUMSTANCE HON'BLE DELHI HIGH COURT IN THE CASE OF ACIT V. JAY ENGINEERING WORKS LTD. (1978) ITR 113 389 (DEL) WHEREIN HEAD-NOTE:- WHILE THE WORDS EVIDENCE MAY RECALL THE ORAL AND DOCUMENTARY EVIDENCE AS MAY BE ADMISSIBLE UNDER THE INDIAN EVID ENCE ACT, 1872, THE USE OF THE WORD MATERIAL IN SECTION 143(3) OF THE INCOME-TAX ACT, 1961, SHOWS THAT THE INCOME-TAX OFFICER, NOT BEING A COURT, CAN RELY UPON MATERIAL WHICH MAY NOT BE STRICTLY EVIDENCE AD MISSIBLE UNDER THE EVIDENCE ACT FOR THE PURPOSE OF MAKING AN ORDER OF ASSESSMENT. COURTS OFTEN TAKE JUDICIAL NOTICE OF CERTAIN FACTS WHICH N EED NOT PROVED, WHILE ADMINISTRATIVE AND QUASI-JUDICIAL AUTHORITIES CAN T AKE OFFICIAL NOTICE OF WIDER VARIETIES OF FACTS WHICH NEED NOT BE PROVED B EFORE THEM. THUS, NOT ONLY IN RESPECT OF THE RELEVANCY BUT ALSO IN RE SPECT OF PROOF, THE MATERIAL WHICH CAN BE TAKEN INTO CONSIDERATION BY T HE INCOME-TAX OFFICER AND OTHER AUTHORITIES UNDER THE ACT IS FAR WIDER TH AN THE EVIDENCE WHICH IS STRICTLY RELEVANT AND ADMISSIBLE UNDER THE EVIDE NCE ACT. INCOME-TAX OFFICERS HAVE TO DEAL WITH SUCH NUMEROUS CASES OF A SSESSMENT THAT THEY CAN ACCEPT AS CORRECT BOOKS OF ACCOUNT MAINTAI NED IN REGULAR COURSE OF BUSINESS WITHOUT SUCH A FORMAL PROOF. IT IS QUITE COMPETENT FOR THE INCOME-TAX AUTHORITIE S NOT ONLY TO ACCEPT THE AUDITORS REPORT, BUT ALSO TO DRAW THE PROPER INFER ENCE FROM THE SAME. THE INCOME-TAX AUTHORITIES CAN, THEREFORE, COME TO THE CONCLUSION THAT, SINCE THE AUDITORS WERE REQUIRED BY THE STATUTE TO FIND OUT IF THE DEDUCTIONS CLAIMED BY THE ASSESSEE IN THEIR BALANCE -SHEETS AND PROFIT AND LOSS ACCOUNTS WERE SUPPORTED BY THE RELEVANT EN TRIES IN THEIR ACCOUNT BOOKS, THE AUDITORS MUST HAVE DONE SO AND M UST HAVE FOUND THAT THE ACCOUNT BOOKS SUPPORTED THE CLAIMS FOR DED UCTIONS. WHERE THE ORIGINAL ACCOUNT BOOKS OF THE ASSESSEE HA D BEEN DESTROYED IN A FIRE IT WAS HELD THAT THE APPELLATE TRIBUNAL, IN ALLOWING A DEDUCTION, COULD RELY UPON OTHER MATERIAL MAINLY CONSISTING OF THE AUDITORS REPORTS FROM WHICH IT COULD BE INFERRED THAT THE DEDUCTIONS WERE PROPERLY SUPPORTED BY THE RELEVANT ENTRIES IN THE ACCOUNT BO OKS. ITA NO.819/KOL/2013 A.Y. 2009-10 M/S POWER MAX (I) PVT. LTD. V. JCIT(OSDS), CIR-8 KOL. PAGE 5 IN THE INSTANT CASE, THE RECORDS WERE DESTROYED AS A RESULT OF FIRE. SO THE ASSESSEE FAILED TO PRODUCE THE DOCUMENTARY EVIDENCE IN SOME OF THE CASES. NOW UNDER SUCH SITUATIONS THE AO NEEDS TO RELY ON T HE EXTERNAL EVIDENCES LIKE AUDITORS REPORT ETC. WE IN THE INSTANT CASE FIND T HAT THE LOWER AUTHORITIES HAVE NOT BROUGHT ANY DEFECT IN THE AUDIT REPORT. AFTER H AVING RELIANCE ON THE OTHER MATERIALS FOR VERIFICATION OF FACTS AND THE RELEVAN T EXTRACT OF THE JUDGMENT OF HON'BLE DELHI HIGH COURT IN THE CASE OF JAY ENGINEERING WORKS LTD. (SUPRA) WE ARE INCLINED TO TAKE A LIBERAL VIEW AND ACCORDINGLY DECIDE TO REDUCE THE DISALLOWANCE TO 10% OF THE DISALLOWANCE MADE BY AO TO MEET THE ENDS OF JUSTICE. AO IS DIRECTED ACCORDINGLY. THIS GROUND OF ASSESSEE IS PARTLY ALLOWED. 7. SECOND ISSUE RAISED BY ASSESSEE IS THAT LD. CIT( A) ERRED IN CONFIRMING THE ACTION OF AO BY SUSTAINING THE ADDITION OF RS.2 0 LAKH AS UNDISCLOSED INVESTMENT IN THE MUTUAL FUND. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, AO COL LECTED INFORMATION FROM INDIVIDUAL TRANSACTIONS STATEMENT FOR ANNUAL INFORM ATION REPORT THAT ASSESSEE HAS MADE AN INVESTMENT OF 20 LAKH IN RELIANCE MUTUAL FUND WHICH WERE NOT DISCLOSED IN ITS ANNUAL ACCOUNT. ACCORDINGLY, AO SO UGHT CLARIFICATION FROM ASSESSEE. IN COMPLIANCE THERETO IT WAS SUBMITTED TH AT ASSESSEE HAS NEVER MADE ANY INVESTMENT IN RELIANCE MUTUAL FUND. ON GET TING THE CONTRARY REPLY FROM ASSESSEE, THE AO MADE THE ADDITION OF 20 LAKH AS UNEXPLAINED INVESTMENT IN TERMS OF PROVISION U/S. 69 OF THE ACT . 8. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE L D. CIT(A) WHO UPHELD THE ACTION OF AO BY OBSERVING AS UNDER:- (I) DURING THE ASSESSMENT PROCEEDING THE APPELLANT HAS DENIED TO HAVE MADE INVESTMENT OF RS.20,00,000/- IN RELIANCE MUTUA L FUND FROM THE APPELLANTS STANDARD AND CHARTERED BANK. HOWEVER BEF ORE ME, THE APPELLANT HAS ADMITTED THE TRANSACTIONS AND HAS SUB MITTED THAT THE INVESTMENT WAS MADE ON 24.4.2008. AND HAS FURTHER S UBMITTED THAT STANDARD & CHARTERED BANK ACCOUNT IS DISCLOSED BANK ACCOUNT HENCE NO ADDITION BE MADE. ITA NO.819/KOL/2013 A.Y. 2009-10 M/S POWER MAX (I) PVT. LTD. V. JCIT(OSDS), CIR-8 KOL. PAGE 6 (II) AS PER THE A/R THE STANDARD & CHARTERED BANK I S SPARINGLY USED BY THE APPELLANT AND INVESTMENT OF RS.20,00,000/- IS N OT A SMALL INVESTMENT PARTICULARLY BECAUSE THE APPELLANT HAS NOT BEEN MAKING REGULAR INVESTMENT IN MUTUAL FUND. EVEN BEFORE ME T HE APPELLANT HAS NOT EXPLAINED THE SOURCE OF DEPOSIT IN STANDARD & C HARTERED BANK ACCOUNT FROM WHERE THE INVESTMENT IN RELIANCE MUTUA L FUND WAS MADE. SINCE THERE IS CHANGE IN THE STAND OF THE APPELLANT BEFORE ME AND AO AND THE APPELLANT HAS NOT DISCHARGED ONUS CAST ON I T IN RESPECT OF INVESTMENT OF RS.20,00,000/- HENCE THE ADDITION OF RS.20,0,000/- S CONFIRMED AND THIS GROUND OF APPEAL OF THE APPELLAN T IS DISMISSED. BEING AGGRIEVED BY THIS ORDER OF LD. CIT(A) ASSESSE E CAME IN SECOND APPEAL BEFORE US. 9. BEFORE US LD. AR SUBMITTED THAT AS THERE WAS NO RECORD AVAILABLE TO ASSESSEE AS A RESULT OF FIRE BROKE OUT IN ASSESSEE S BUSINESS PREMISES. THEREFORE, A GENUINE TRANSACTION WAS DENIED UNKNOWI NGLY BY ASSESSEE AT THE TIME OF ASSESSMENT STAGE. LD. AR FURTHER SUBMITTED THAT INVESTMENT WAS NOT REFLECTING IN ANNUAL ACCOUNT OF ASSESSEE AS SUCH IN VESTMENT MADE IN MUTUAL FUND WAS REDEEMED WITHIN THE SAME FINANCIAL YEAR. T HE INVESTMENT WAS MADE ON APRIL 08 AND SAME WAS REDEEMED ON 22.05.2008. I N THIS REGARD, LD. DREW OUR ATTENTION AT PAGE 53 OF THE PAPER BOOK WHERE TH E PAYMENT FOR THE PURCHASE OF RELIANCE MUTUAL FUND FROM THE STANDARD CHARTERED BANK ACCOUNT OF ASSESSEE WAS REFLECTING. SAME WAS REDEEMED ON 22 .05.2008 AS EVIDENCED FROM THE RELEVANT DETAILS OF THE BANK STATEMENT WHI CH IS PLACED ON PAGE 54 OF THE PAPER BOOK. ON THE OTHER HAND, LD. DR RELIED ON THE ORDERS OF AUTHORITIES BELOW. 10. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. WE FIND THAT ASSESSEE MADE INVESTMENT DURIN G THE YEAR FOR AN AMOUNT OF 20 LAKH AND WHICH WAS REDEEMED DURING THE SAME FINA NCIAL YEAR. THEREFORE, SAME WAS NOT REFLECTING IN THE FINANCIAL YEAR STATEMENT OF ASSESSEE. WE FURTHER FIND THAT THE BANK STATEMENT W AS DULY DISCLOSED IN ITS BOOKS OF ACCOUNT AND THERE WAS NO NEGATIVE MARK IN AUDITORS REPORT. IN ITA NO.819/KOL/2013 A.Y. 2009-10 M/S POWER MAX (I) PVT. LTD. V. JCIT(OSDS), CIR-8 KOL. PAGE 7 REJOINDER, LD. DR HAS ALSO FAILED TO BRING ANYTHING CONTRARY TO THE ADVANCE ARGUMENT OF LD. AR. IN THIS VIEW OF THE MATTER, WE DO NOT FIND ANY REASON TO UPHOLD THE TRANSACTION OF MAKING THE INVESTMENT IN MUTUAL FUND AS UNDISCLOSED INVESTMENT. ACCORDINGLY, THE PROVISION OF SEC.69 OF THE ACT WILL NOT BE ATTRACTED TO THIS TRANSACTION OF ASSESSEE. THEREFORE, AFTER C ONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE WE REVERSE THE ORDERS OF AUTHORITIES BELOW AND DELETE THE ADDITION MADE BY AO. THIS GROUND OF ASSE SSEES APPEAL IS ALLOWED. 11. IN THE RESULT, ASSESSEES APPEAL STANDS PARTLY ALLO WED. ORDER PRONOUNCED IN THE OPEN COURT 01/ 06/2016 SD/- SD/- (S.S.VISHWANETHRA RAVI) (WASEEM AHMED) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) KOLKATA, *DKP !- 01 / 06 /201 6 / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-M/S POWER MAX (INDIA) PVT. LTD. 19A, J.L .NEHRU ROAD, KOL-87 2. /RESPONDENT-JCIT(OSD), CIRCLE-8, AAYAKAR BHAWAN, P7 , CHOWRINGHEE SQ., KOL-69 3. ) *+ , , - / CONCERNED CIT KOLKATA 4. , , -- / CIT (A) KOLKATA 5. 012 33*+, , *+ , / DR, ITAT, KOLKATA 6. 267 89 / GUARD FILE. BY ORDER/ , , /TRUE COPY/ / , *+ ,