Appeal details
Counselvise Citation
[2018] 119 COUNSELVISE.COM (IT) 0440 (ITAT-RANCHI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
2 year(s) 8 month(s) 12 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
27-11-2018
Appeal Filed By
Department
Order Result
Dismissed
Bench Allotted
DB
Assessment Year
2010-2011
Appeal Filed On
15-03-2016
Judgement Text
1 ITA NO. 85 /RAN/20 1 6 IN THE INCOME TAX APPELLATE TRIBUNAL, RANCHI BENCH, RANCHI BEFORE SHRI N.S.SAINI , ACCOUNTANT MEMBER & SHRI PAVAN KUMAR GADALE , JUDICIAL MEMBER ITA NO. 85 / RAN/20 1 6 ASSESSMENT YEAR : 201 0 - 201 1 DCIT, CIRCLE - 1, RANCHI V S M/S C.K. CONSTRUCTION, H - 112, HARMU HOUSING COLONY, HARMU, RANCHI PAN NO. : AA GFC 4503 Q (APPELLANT ) .. RESPONDENT REVENUE BY SHRI A.K.MOHANTY, JCIT(JR. DR) ASSESSEE BY SHRI DEVESH PODDAR, ADV. DATE OF HEARING : 2 6 . 11 .201 8 DATE OF PRONOU NCEMENT : 27 . 11 .201 8 O R D E R PER PAVAN KUMAR GADALE, JM : THE REVENUE HAS FILED THIS APPEAL AGAINST THE ORDER OF CIT(A), RANCHI, DATED 10.12.2015 FOR THE ASSESSMENT YEAR 2010 - 2011 ON THE FOLLOWING GROUNDS OF APPEAL : - 1 WHETHER THE LD CIT( A) HAS ERRED ON FACT AND IN LAW IN DECIDING THAT THE IDENTITY, GENUINENESS AND THE CREDITWORTHINESS OF THE CASH CREDIT AMOUNTING TO RS.1,02,00,000/ - HAS BEEN PROVED BY THE ASSESSEE. 2. WHETHER THE LD. CIT(A) ERRED ON FACT AND IN LAW IN REDUCING THE DISALL OWANCE ON ACCOUNT OF CONTRACT EXPENDITURE FROM 10% TO 2%. 2 . BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A CONTRACTOR AND ENGAGED IN THE CONSTRUCTION BUSINESS. T HE ASSESSEE FILED RETURN OF INCOME ON 10.12.2012 DECLARING TOTAL INCOME OF RS. 7,51,760/ - . SUBSEQUENTLY VIDE ORDER U/S.263 OF THE ACT, THE CIT, RANCHI SET ASIDE 2 ITA NO. 85 /RAN/20 1 6 THE ORDER DIRECTING THE AO TO MAKE A FRESH ASSESSMENT. DURING THE PROCEEDINGS U/S.143(3) R.W.S.263 OF THE ACT. ACCORDINGLY, THE AO ISSUED NOTICES U/S.143(2)/142(1) OF THE ACT TO THE A SSESSEE . ON EXAMINATION OF BOOKS OF ACCOUNTS AD BANK DETAILS FILED BY THE ASSESSEE T HE AO MADE ADDITION OF RS.1,02,00,000/ - U/S.68 AS UNEXPLAINED CASH CREDITS. THE AO ALSO DISALLOWED 10% OF THE CONTRACT EXPENSES AND MADE AN ADDITION OF RS.25,88,576/ - . THE AO FURTHER MADE AN ADDITION OF RS.67,500/ - BY DISALLOWING EXPENSES CLAIMED UNDER THE HEAD SALARY AND WAGES @10% AND ASSESSED THE TOTAL INCOME OF THE ASSESSEE AT RS.1,34,34,400/ - AND PASSED ORDER U/S.143(3) R.W.S.263 OF THE ACT, DATED 28.03.2014. 3 . AGGRIEV ED BY THE ORDER OF AO, ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A). IN THE APPELLATE PROCEEDINGS, THE AR OF THE ASSESSEE APPEARED AND ARGUED THE GROUNDS AND REITERATED THE SUBMISSIONS MADE BEFORE THE AO. THE CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF T HE ASSESSEE AND THE FINDINGS OF AO, PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. 4 . AGGRIEVED BY THE ORDER OF CIT(A), THE REVENUE HAS FILED AN APPEAL BEFORE THE TRIBUNAL. 5. BEFORE US LD. DR SUPPORTED THE ORDER OF AO AND ARGUED THE FIRST GROUND OF APPEAL ONL Y AND PRAYED FOR ALLOWING THE APPEAL OF REVENUE. 6. ON THE OTHER HAND, LD. AR SUPPORTED THE ORDER OF CIT(A). 3 ITA NO. 85 /RAN/20 1 6 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. L D. DR BEFORE US SUBMITTED THAT THE AO AFTER PERUSAL OF BANK ACCOUNTS F OUND THAT THE UNSECURED LOAN IS ACTUALLY DIVERSION OF FUND AND THEREFORE, THE AO HAS RIGHTLY ADDED THE SAME TO THE INCOME OF THE ASSESSEE, WHEREAS THE CIT(A) DELETED THE ADDITION OVERLOOKING THE FACT THAT THE UNSECURED LOAN RECEIPTS AND PAYMENTS WERE ACTUA LLY BOGUS WITH AN INTENTION TO DELIBERATELY REDUCE THE TAXABLE INCOME. WE FIND THAT THE CIT(A) WHILE DEAL ING ON THE DISPUTED ISSUE HAS OBSERVED THAT THE AO HAS NOT BEEN ABLE TO PROVE THAT THE LOAN WAS UNEXPLAINED CASH CREDIT. ON THE OTHER HAND THE IDENTITY O F THE CREDITOR, GENUINENESS OF THE TRANSACTION AND CREDITWORTHINESS OF THE CREDITOR STAND PROVED. THE OBSERVATION S OF THE CIT(A) IN THIS REGARD ARE AS UNDER : - [6.6] I HAVE CONSIDERED THE SUBMISSIONS MADE BY THE APPELLANT AND HAVE ALSO GONE THROUGH THE ASS ESSMENT ORDER. IT IS NOT CLEAR AS TO WHY HAS THE LD.AO TREATED THE AMOUNT, AS UNEXPLAINED CASH CREDIT. THE REPLY OF THE APPELLANT EXTRACTED BY THE LD.AO IN THE ASSESSMENT ORDER ITSELF PROVES THE SOURCE OF THE LOAN. THIS ALSO DEMONSTRATES THAT THE MONEY WAS RETURNED BACK IN THE SUBSEQUENT YEAR. APPELLANT'S BALANCE SHEET ALSO SHOWS THAT IT HAD SHOWN THE AMOUNT AS OUTSTANDING LOAN FROM THE CREDITOR M/S C.K.CONSTRUCTION CO. ALL THESE DETAILS WERE AVAILABLE WITH THE LD.AO AND HAVE BEEN DULY NOTED [6.7] THE LD.A O GOES ON RECORD IN THE ASSESSMENT ORDER SLATING THAT 'THE ASSESSEE HIMSELF ADMITTED VIDE LETTER DATED 19,02,2014 THAT HE IS ONE OF AUTHORIZED SIGNATORY F OR OPERATION OF BANK ACCOUNT NO. 490120110000132 AT BANK OF INDIA, RATU ROAD, RANCHI. LT IMPLIES THA T THE UNSECURED LOAN AMOUNT RS. 1,02,00,000/ - WHICH THE ASSESSEE HAS SHOWN IN THE BOOKS OF ACCOUNTS THAT IT WAS OBTAINED FROM M/S. C. K. CONSTRUCTION & CO. SAMASTIPUR, BIHAR WAS NOT AT ALL TAKEN. THE ASSESSEE HIMSELF DIVERTED T HE FUND FROM THE BANK ACCOUNT OF M/S. C. K. CONSTRUCTION & CO., SAMASTIPUR, BIHAR TO THE BANK ACCOUNT OF HIS OWN FIRM. THE ASSESSEE HAS NOT BEEN PROVIDED ANY UNSECURED LOAN BY M/S. C. K. CONSTRUCTION & CO. THUS, IT WAS 4 ITA NO. 85 /RAN/20 1 6 ITS OWN CASH CREDIT AND HENCE HAS TO BE ADDED BACK TO ITS TOTAL INCOME AS DEEMED INCOME U/S.68 OF THE INCOME TAX ACT, 1961.' [6.8] THE LD.AO HAS MADE THE ADDITION ON ACCOUNT OF UNEXPLAINED CASH CREDIT BUT SEEMS TO HAVE BEEN INFLUENCED BY THE LETTER OF THE CREDITOR AND HAS GONE ON THE ASSUMPT ION OF A FRAUD / COMMITTED BY THE APPELLANT ON THE CREDITOR. BE THAT: AS IT MAY, HE DID NOT BOTHER TO INVESTIGATE AS TO HOW WAS THE FUND TRANSFERRED FROM ONE BANK TO THE OTHER. ON INVESTIGATION HE WOULD HAVE FOUND THAT THE CHEQUE HAD BEEN SIGNED BY AN AUTH ORISED SIGNATORY AND THEREFORE HONOURED BY THE BANK. ELEMENT OF FRAUD, THAT THE LD.AO IMPLIES IS EVIDENT WHEN HE WRITES 'HE ASSESSEE HIMSELF DIVERTED TH E FUND FR OM THE BANK ACCOUNT OF M/S. C. K.CONSTRUCTION & CO., SAMASTIPUR, BIHAR TO THE BANK ACCOUNT OF H IS OWN FIRM. THE ASSESSEE HAS NOT BEEN PROVIDED ANY UNSEATED LOAN BY M/S. C. K. CONSTRUCTION & CO.'', DOE; NOT GET PROVED ON THE FACE OF RECORD. ANY PRESUMED DISPUTE THAT THE TWO CONCERNS MAY HAVE HAD IS NOT THE CONCERN OF THE INCOME TAX DEPARTMENT UNLESS IT IMPACTS THE INCOME CHAR GEABLE TO TAX. IT IS A CIVIL DIS PUTE WHICH WOULD HAVE TO BE SORTED OUT IN THE APPROPRIATE FORUM. [6.9] ON THE FACTS AND CIRCUMSTANCES OF THE CASE I HOLD THAT THE LD.AO HAS NOT B E EN ABLE TO PROVE THAT THE LOAN WAS UNEXPLAINED CAS H CREDIT. ON THE OTHER HAND THE IDENTITY OF THE CREDITOR, GENUINENESS OF THE TRANSACTION AND CREDITWORTHINESS OF THE CREDITOR STAND PROVED. GROUND OF APPEAL IS ALLOWED. 8. DURING THE COURSE OF HEARING THE LD. DR HAS ONLY SUPPORTED THE ORDER OF ASSESSING OFFICER AND COULD NOT BRING ANY NEW COGENT EVIDENCE TO CONTROVERT THE ABOVE FINDINGS OF THE CIT(A). ACCORDINGLY, WE ARE OF THE OPINION THAT THE CIT(A) HAS PASSED A REASONED ORDER, WHICH WE UPHOLD THE SAME AND DISMISS TH E GROUND S OF APPEAL OF REVENUE. 9. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 27 / 11 /201 8 SD/ - SD/ - (N.S.SAINI) (PAVAN KUMAR GADALE) ACCOUNTANT MEMBER JUDICIAL MEMBER RANCHI , DATED 27 / 11 /2018 PRAKASH KUMAR MISHRA , SR. PS 5 ITA NO. 85 /RAN/20 1 6 COPY OF THE ORDER FORWARDED TO : BY ORDER, //TRUE COPY/ / SR.PS, ITAT, RANCHI 1. THE APPELLANT DCIT, CIRCLE - 1, RANCHI 2. THE RESPONDENT M/S C.K. CONSTRUCTION, H - 112, HARMU HOUSING COLONY, HARMU, RANCHI 3. THE CIT(A) CONCERNED 4. CIT , CONCERNED 5. DR, ITAT, RANCHI 6. GUARD FILE.
Mehul