SHRI SOURABH AGRAWAL, KORBA(CG) V. JCIT, KORBA RANGE, KORBA(CG)

ITA 85/BIL/2015

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 4890 (ITAT-RAIPUR)
• Duration Of Justice: 3 year(s) 3 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-10-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 30-06-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: D K JAIN
• Assessee Lawyers: G S AGRAWAL
• Keywords: Depreciation; Principle of natural justice; Additional evidence; Non-deduction of tax
• Section: 143(3); 131

Judgement Text

1 ITA NO. 85/BIL/2015 IN THE INCOME TAX APPE LLATE TRIBUNAL RAIPUR BENCH: RAIPUR BEFORE SHRI R. K. PANDA, ACCOUNTANT ME MBER AND MS SUCHITRA KAMBLE, JUDI CIAL MEMBER I.T.A .NO. 85/RPR/201 5 (A.Y 2010-11) SOURABH AGRAWAL PROP. M/S B. P. AGRAWAL AGRASEN MARG KORBA(CG) AFDPA6889A (APPELLANT) VS JCIT, KORBA RANGE KORBA (CG) (RESPONDENT) APPELLANT BY SH. G. S. AGRAWAL, CA RESPONDENT BY SH. D. K. JAIN, DR ORDER PER SUCHITRA KAMBLE, JM THE PRESENT APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER DATED 05/01/2015 PASSED BY CIT(A)-BILASPUR (CG) FOR ASSES SMENT YEAR 2010-11. 2. THE GROUNDS OF APPEAL ARE AS UNDER: 1. THAT UNDER THE FACTS & LAW, THE LEARNED COMMISS IONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING THE DISALLOWANCE OF D EPRECIATION @ 30% ON CARS MADE BY THE ASSESSING) OFFICER AMOUNTING TO RS. 1,0 4,230/- AND ALSO LUMPSUM DISALLOWANCE OF RS. 50,000/- MADE BY THE AS SESSING OFFICER ON ACCOUNT OF VARIOUS EXPENSES INCURRED ON CARS TREATI NG THE SAME FOR NON- COMMERCIAL PURPOSE . PRAYED THAT CARS WERE USED FOR THE PURPOSE OF BUSIN ESS AND EXPENSES WERE INCURRED FOR BUSINESS AND AS SUCH THE ABOVE DISALLO WANCE OF RS. 1,54,230/- BE DELETED. 2. THAT UNDER THE FACTS & LAW, THE LEARNED COMMISSI ONER OF INCOME TAX (APPEALS) FURTHER ERRED IN CONFIRMING THE ADDITION OF RS. 30,000/- MADE BY THE AO AS NOTIONAL INCOME FROM HOUSE REJECTING THE EXPL ANATION THAT THE SAME WAS USED FOR THE PURPOSE OF BUSINESS. DATE OF HEARING 14.08.2018 DATE OF PRONOUNCEMENT 25.10.2018 2 ITA NO. 85/BIL/2015 PRAYED TO DELETE THE ADDITION OF RS. 30,000/-. 3. THAT THE LEARNED CIT (APPEALS) ERRED IN CONFIRM ING THE OBSERVATION OF THE LEARNED ASSESSING OFFICER THAT THE BOOKS OF ACCOUNT S WERE NOT PRODUCED BEFORE THE LEARNED AO. PRAYED THAT THE ACCOUNTS ARE AUDITED AND THE BOOKS OF ACCOUNTS WERE PRODUCED BEFORE THE LEARNED AO. 4. THAT UNDER THE FACTS & LAW, THE LEARNED COMMISS IONER OF INCOME TAX (APPEALS) FURTHER ERRED IN DISALLOWING RS. 2,35,430 /- OUT OF INTEREST EXPENSES MADE BY THE LEARNED ASSESSING OFFICER WHICH IS UNJU STIFIED AND BE DELETED. 5. THAT UNDER THE FACTS & LAW, THE LEARNED COMMISSI ONER OF INCOME TAX (APPEALS) FURTHER ERRED IN CONFIRMING THE ADDITION OF RS. 5,00,000/- MADE BY THE ASSESSING OFFICER ON ESTIMATE BASIS OUT OF TRAN SPORTATION EXPENSES FOR NON-DEDUCTION OF TAX AT SOURCE, REJECTING THE EXPLA NATION WHICH IS UNJUSTIFIED AND BE DELETED. 6. THAT UNDER THE FACTS & LAW, THE LEARNED COMMISSI ONER OF INCOME TAX (APPEALS) FURTHER ERRED IN CONFIRMING THE ADDITION OF RS. 10,50,000/- MADE BY THE LEARNED ASSESSING OFFICER BEING LOAN TAKEN FROM SMT. RADHA DEVI AGRAWAL REJECTING THE EVIDENCES FILED. PRAYED THAT THE APPELLANT DISCHARGED THE BURDEN OF PROVING THE IDENTIFICATION, CREDIT- WORTHINESS OF THE CREDITOR AND GENUINENESS OF THE TRANSACTION, HENCE THE ADDITION OF RS. 10,50,000 - BE DELETED. 3. THE ASSESSEE IS AN INDIVIDUAL AND DERIVES INCOME FROM CONTRACTORSHIP BUSINESS THROUGH HIS PROPRIETORY CONCERN M/S B. P. AGARWAL, KORBA. THE ASSESSEE FILED INCOME TAX RETURN FOR AY 2010-11 AT RS. 38,58,195/- WHICH WAS ASSESSED BY THE ASSESSING OFFICER AT RS. 59,62,855/ - U/S 143(3) OF INCOME TAX ACT, 1961. THE ASSESSING OFFICER OBSERVED THAT THER E ARE 7 CAR/VEHICLES IN PROPRIETARY CONCERN HAVING TURNOVER OF LESS THAN 8 CRORES AND HELD THAT 30% OF THE TOTAL CLAIM UNDER DEPRECIATION OF RS. 3,47,452/- ON CARS AMOUNTING TO RS. 1,04,230/- WERE USED FOR NON COMMERCIAL PURPOSE, TH EREBY DISALLOWING RS. 1,04,230/-. THE ASSESSING OFFICER ALSO MADE ADDITIO N TOWARDS LUMP SUM DISALLOWANCE OF RS. 50,000/- ON ACCOUNT OF OTHER EX PENSES ON THESE VEHICLES TOWARDS REPAIRS AND MAINTENANCE, FUELS ETC. THE ASSESSING OFFICER FURTHER MADE ADDITION OF RS. 1,35,000 TOWARDS THE WITHDRAWALS FO R HOUSE HOLD EXPENSES ON ESTIMATION BASIS. THE ASSESSING OFFICER ALSO MADE A DDITIONS OF RS. 30,000/- AS 3 ITA NO. 85/BIL/2015 RENTAL INCOME, RS. 2,35,430/- TOWARDS INTEREST, RS. 5,00,000/- ESTIMATION TOWARDS TDS AND RS.10,50,000/- TOWARDS LOAN RECEIVE D FROM SMT. RADHA AGARWAL. 4. BEING AGGRIEVED BY THE ASSESSMENT ORDER, THE ASS ESSEE FILED APPEAL BEFORE THE CIT(A). THE CIT(A) DISMISSED THE APPEAL OF THE ASSESSEE. 5. THE LD. AR SUBMITTED THAT AS REGARDS TO GROUND N O. 1, THE ASSESSEE INHERITED THE BUSINESS FROM HIS LATE FATHER B. P. A GARWAL SINCE 2006-07 AFTER HIS DEATH. THE ASSESSEE BEING ALONE IN HIS FAMILY T O LOOK AFTER THE BUSINESS SCATTERED IN MANY PLACES, THEREFORE, NUMBER OF PERS ONS WERE ENGAGED TO SUPERVISE THE CONTRACT BUSINESS. THERE WERE 7 VEHIC LES USED FOR BUSINESS SINCE THE BEGINNING. IN EARLIER YEAR ALSO THE SAME VEHICL E WERE USED FOR BUSINESS. THE LD. AR SUBMITTED THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS SUBMITTED COPIES OF DIFFERENT WORK ORDER LOCATED IN DIFFERENT PLACES. THE LD. AR FURTHER SUBMITTED THAT THE VEHICLES WERE USED EXCLUSIVELY F OR THE BUSINESS PURPOSE ONLY. HENCE, THE ASSESSEE RIGHTLY CLAIMED DEPRECIAT ION OF 30% I.E. RS. 1,04,230/-. THE LD. AR FURTHER SUBMITTED THAT THE D ISALLOWANCE OF RS.50,000/- ON ESTIMATED BASIS BY THE ASSESSING OFFICER RELATIN G TO VARIOUS EXPENSES REGARDING THESE VEHICLES WAS NOT JUST AND PROPER. 6. THE LD. DR RELIED UPON THE ASSESSMENT ORDER AND THE ORDER OF THE CIT(A). 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED ALL T HE RELEVANT MATERIAL AVAILABLE ON RECORD. IT IS PERTINENT TO NOTE THAT T HE CIT(A) HAS GIVEN A CATEGORICAL FINDING THAT LOG BOOKS FOR EACH VEHICLE AND EVEN THE BOOKS OF ACCOUNT WERE NOT PRODUCED FOR VERIFICATION BEFORE T HE ASSESSING OFFICER AS WELL AS BEFORE HIM. BUT WHILE ARRIVING AT THE DISALLOWAN CE OF 30% DEPRECIATION AND RS. 50,000/- OUT OF MAINTENANCE EXPENSES THE SAME W AS NOT BASED ON ANY SPECIFIC BASIS BY THE ASSESSING OFFICER AS WELL AS BY THE CIT(A). BESIDES, THE LD. AR SUBMITTED THAT THE DOCUMENTS WERE PROVIDED BEFOR E THE REVENUE AUTHORITIES 4 ITA NO. 85/BIL/2015 BUT THE SAME WAS NOT PROPERLY CONSIDERED BY THE REV ENUE. THEREFORE, IT WILL BE APPROPRIATE TO REMAND BACK THIS ISSUE TO THE FILE O F THE ASSESSING OFFICER TO VERIFY THIS ISSUE IN LIGHT OF THE VARIOUS DOCUMENTS PRODUCED BY THE ASSESSEE BEFORE HIM. NEEDLESS TO SAY, THE ASSESSEE BE GIVEN OPPORTUNITY OF HEARING BY FOLLOWING PRINCIPLES OF NATURAL JUSTICE. GROUND NO. 1 IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. 8. AS REGARDS GROUND NO. 2, RELATING TO ADDITION OF RS. 30,000/- AS NOTIONAL INCOME FROM HOUSE PROPERTY, THE LD. AR SUBMITTED TH AT THE ASSESSEE HAD TO VISIT BILASPUR FROM TIME TO TIME FOR OBTAINING WORK ORDERS, FILING TENDERS AND OTHER DOCUMENTATION WORKS AT BILASPUR. THEREFORE, I T WAS THE NEED TO HAVE OFFICE AT BILASPUR AND THE ASSESSEE HAS USED THE PR EMISES FOR BUSINESS PURPOSE ONLY. THE LD. AR FURTHER SUBMITTED THAT ADMITTEDLY NO BENEFIT WAS DERIVED FROM THE HOUSE PROPERTY IN THE YEAR UNDER REFERENCE AND NO DEPRECIATION WAS CLAIMED ON THE PROPERTY. THE ASSESSING OFFICER HAS OBSERVED DURING SCRUTINY THAT THE ASSESSEE OWNS TWO HOUSE ONE AT KORBA FOR H IS RESIDENTIAL PURPOSE AND ONE FLAT AT BILASPUR. HE HAS ESTIMATED REASONABLE R ENTAL INCOME OF RS. 30000/- FROM FLAT U/S 23(4)(B) AND ADDED IN THE INCOME WITH OUT CONSIDERING THE FACT THAT THE FLAT AT BILASPUR WERE USED FOR BUSINESS PU RPOSE AS THE WORK WERE EXECUTED AT BILASPUR ALSO. THUS, THE ESTIMATION OF THIS ADDITION DOES NOT SUSTAIN AS PER THE LD. AR. 9. THE LD. DR RELIED UPON THE ASSESSMENT ORDER AND THE ORDER OF THE CIT(A). 10. WE HAVE HEARD BOTH THE PARTIES AND PERUSED ALL THE RELEVANT MATERIAL AVAILABLE ON RECORD. IT IS PERTINENT TO NOTE THAT ADMITTEDLY NO BENEFIT WAS DERIVED FROM THE HOUSE PROPERTY IN THE YEAR UNDER R EFERENCE BY THE ASSESSEE AND NO DEPRECIATION WAS CLAIMED ON THE PROPERTY. TH E BUSINESS EXIGENCY REQUIRED THE ASSESSEE TO VISIT BILASPUR WHICH WAS P OINTED AND DEMONSTRATED BY THE ASSESSEE. THEREFORE, THE ASSESSING OFFICER MERE LY ON ESTIMATE BASIS CANNOT MAKE THE ADDITION. THUS, ASSESSING OFFICER AS WELL AS CIT(A) WAS NOT CORRECT IN 5 ITA NO. 85/BIL/2015 MAKING THIS ADDITION ON ESTIMATED BASIS. GROUND NO. 2 IS ALLOWED. 11. AS REGARDS GROUND NO. 3 AND 4, THE SAME ARE NOT PRESSED BY THE LD. AR, HENCE DISMISSED. 12. AS REGARDS GROUND NO. 5, THE LD. AR SUBMITTED T HAT THE ASSESSING OFFICER OBSERVED THAT THERE WERE NO TDS MADE ON TRA NSPORTATION PAYMENT OF RS. 43,55,300/- AND DISALLOWED RS. 5,00,000/- U/S 4 0(A)(IA) OF IT ACT 1961. THE LD. AR SUBMITTED THAT THE ASSESSING OFFICER FAILED TO NOTE THAT THERE WAS AN AMENDMENT IN SECTION 194C(6) OF INCOME TAX ACT, 196 1, WHICH SPECIFIES THAT NO DEDUCTION SHALL BE MADE FROM THE AMOUNT OF SUCH SUMS CREDITED OR PAID DURING THE YEAR TO THE CONTRACTOR DURING THE COURSE OF BUSINESS OF PLYING, HIRING OR LEASING GOODS CARRIAGES, ON FURNISHING PAN, TO T HE PERSON PAYING OR CREDITING THE SUCH SUM. SINCE ALL THE TRANSPORT PAYMENT MADE AFTER NOV.2009, NO TDS WAS REQUIRED TO BE DEDUCTED AT SOURCE. THE LD. AR S UBMITTED THAT THE ASSESSEE COULD NOT PRODUCE THE RELEVANT DOCUMENTS AT THE TIM E OF THE ASSESSMENT PROCEEDINGS DUE TO NON-AVAILABILITY OF THE DOCUMENT S. THE LD. AR PRAYED THAT THE ASSESSING OFFICER MAY BE DIRECTED TO VERIFY THE SE DOCUMENTS AT THIS JUNCTURE. 13. THE LD. DR RELIED UPON THE ORDER OF THE CIT(A) AND THE ASSESSMENT ORDER. 14. WE HAVE HEARD BOTH THE PARTIES AND PERUSED ALL THE RELEVANT MATERIAL AVAILABLE ON RECORD. IT IS PERTINENT TO NOTE THAT T HE ASSESSING OFFICER WHILE MAKING ADDITIONS HAS NOT TAKEN PROPER COGNIZANCE OF THE DOCUMENTS PRODUCED AT THE TIME OF ASSESSMENT PROCEEDINGS BY THE ASSESS EE. THEREFORE, IT WILL BE APPROPRIATE TO ADMIT THE ADDITIONAL EVIDENCE AT THI S JUNCTURE AND REMAND BACK THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER TO VERIFY THIS ISSUE IN LIGHT OF THE VARIOUS DOCUMENTS PRODUCED BY THE ASSESSEE. NEEDLES S TO SAY, THE ASSESSEE BE GIVEN OPPORTUNITY OF HEARING BY FOLLOWING PRINCIPLE S OF NATURAL JUSTICE. GROUND NO. 5 IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. 15. AS REGARDS TO GROUND NO. 6, THE LD. AR SUBMITTE D THAT THE ASSESSEE AT 6 ITA NO. 85/BIL/2015 THE RELEVANT TIME WAS NOT HAVING SUFFICIENT TIME TO PROVE HIS CLAIM AS THE DOCUMENTS/EVIDENCE WERE NOT READILY AVAILABLE WITH THE ASSESSEE. THE LD. AR REQUESTED THAT THE SAME MAY BE VERIFIED BY THE ASSE SSING OFFICER AT THIS STAGE. THE LD. AR SUBMITTED THAT THE ASSESSING OFFICER OBS ERVED THAT THERE WAS UNSECURED LOANS OF RS. 10.50 LACS TAKEN FROM SMT. R ADHA AGRAWAL. TO VERIFY THE GENUINENESS, THE ASSESSING OFFICER ISSUED NOTIC E U/S 131 OF INCOME TAX ACT, 1961 FOR FURNISHING BANK ACCOUNT AND OTHER DETAILS BUT S MT. RADHA AGRAWAL COULD NOT APPEAR ON THE DATE OF HEARING. TH E ASSESSEE FURNISHED AN AFFIDAVIT IN SUPPORT OF THE UNSECURED LOAN AND REQU ESTED THE ASSESSING OFFICER TO VERIFY THE GENIUSES OF THE TRANSACTION FROM BANK WHICH WAS OTHERWISE TAKEN BY ACCOUNT PAYEE CHEQUE ONLY. BUT THE ASSESSING OFF ICER FAILED TO VERIFY THE SAME AND ADDED RS. 10,50,000 /- IN THE INCOME WHICH IS NOT CORRECT. THE LD. AR SUBMITTED THAT THE ASSESSEE COULD NOT PRODUCE TH E RELEVANT DOCUMENTS AT THE TIME OF THE ASSESSMENT PROCEEDINGS DUE TO NON-A VAILABILITY OF THE DOCUMENTS AS THE SAME WERE MISPLACED AT THE RELEVAN T TIME. THE LD. AR PRAYED THAT THE ASSESSING OFFICER MAY BE DIRECTED TO VERIF Y THESE DOCUMENTS AT THIS JUNCTURE. THE LD. DR RELIED UPON THE ASSESSMENT ORD ER AND THE ORDER OF THE CIT(A). 16. WE HAVE HEARD BOTH THE PARTIES AND PERUSED ALL THE RELEVANT MATERIAL AVAILABLE ON RECORD. IT IS PERTINENT TO NOTE THAT T HE RELEVANT DOCUMENTS WERE NOT PRODUCED BEFORE THE REVENUE AUTHORIZES, BUT AT THE SAME TIME THE ASSESSING OFFICER WHILE MAKING ADDITIONS HAS NOT TAKEN PROPER COGNIZANCE OF THE DOCUMENTS PRODUCED AT THE TIME OF ASSESSMENT PROCEE DINGS WHICH ARE NOT SUPPORTED BY THE ASSESSEE WITH THE OTHER DOCUMENTS. THEREFORE, IT WILL BE APPROPRIATE TO ADMIT THE ADDITIONAL EVIDENCE AT THI S JUNCTURE AND REMAND BACK THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER TO VERIFY THIS ISSUE IN LIGHT OF THE VARIOUS DOCUMENTS PRODUCED BY THE ASSESSEE. NEEDLES S TO SAY, THE ASSESSEE BE GIVEN OPPORTUNITY OF HEARING BY FOLLOWING PRINCIPLE S OF NATURAL JUSTICE. GROUND NO. 6 IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. 7 ITA NO. 85/BIL/2015 17. IN RESULT, APPEAL OF THE ASSESSEE IS PARTLY AL LOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 25 TH OCTOBER, 2018 . SD/- SD/- (R. K. PANDA) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEM BER DATED: 25/10/2018 *R.N COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT PRIVATE SECRETARY.. RAIPUR BENCH, RAIPUR. 8 ITA NO. 85/BIL/2015 DATE OF DICTATION 22.10.2018 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 22.10.2018 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. PS/PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/PS .10.2018 DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT .10.2018 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .10.2018 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER