Sri. T. Shivakumar, Davangere V. CIT, Davangere

ITA 884/BANG/2014

• Counselvise Citation: 88421114 RSA 2014
• Duration Of Justice: 1 year(s) 5 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-12-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 23-12-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 30-06-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: CHANDRASHEKAR
• Keywords: Business expenditure
• Section: 40A(3)

Judgement Text

ITA.884/BANG/2014 PAGE - 1 IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH 'B', BANGALORE SHRI. ABRAHAM P. GEORGE, ACCOUNTANT MEMBER I.T.A NO.884/BANG/2014 (ASSESSMENT YEAR : 2009-10) SHRI. T. SHIVAKUMAR, PROP : LAXMI RANGANATHA TRANSPORT, 4 TH MAIN, 7 TH CROSS, YELLAMMA NAGAR, DAVANGERE .. APPELLANT PAN : ADEPT1819M V. COMMISSIONER OF INCOME-TAX, DAVANGERE .. RESPONDENT ASSESSEE BY : SHRI. CHANDRASHEKAR, ADVOCATE REVENUE BY : SMT. NEERA MALHOTRA, CIT - DR HEARD ON : 16.12.2015 PRONOUNCED ON : 28.12.2015 O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER : THIS APPEAL HAS BEEN FILED BY THE ASSESSEE WITH A DELAY OF 213 DAYS. ASSESSEE HAS FILED AN AFFIDAVIT IN WHICH HE SAYS TH AT HIS AUDITOR SHRI. B. P. VIJAYKUMAR HAD ADVISED HIM THAT NO PREJUDICE WAS CA USED DUE TO THE ORDER PASSED BY THE CIT U/S.263 OF THE INCOME-TAX ACT, 19 61 (THE ACT IN SHORT). ITA.884/BANG/2014 PAGE - 2 AS PER THE ASSESSEE, ONLY WHEN HE APPROACHED SHRI. VIRUPANNA AMEBERKAR, CA FOR FILING AN APPEAL AGAINST AN ASSESSMENT ORDER DT.24.04.2014, PASSED BY THE AO PURSUANT TO THE IMPUGNED REVISIONARY PROC EEDINGS, PROPER ADVICE WAS RECEIVED BY HIM. IN SUPPORT OF THE ABOV E, ASSESSEE HAS ALSO FILED AFFIDAVITS OF BOTH SHRI. B. P. VIJAYKUMAR AND SHRI. VIRUPANNA AMEBERKAR. 02. LD DR SUBMITTED THAT THE ASSESSEE WAS UNABLE TO SHOW GENUINE REASONS FOR THE DELAY AND THE DELAY SHOULD NOT BE C ONDONED. 03. I HAVE PERUSED THE AFFIDAVITS AND HEARD THE LD. DR. SHRI. B. P. VIJAYKUMAR, ITP, HAS GIVEN AN AFFIDAVIT STATING THA T HE HAD APPEARED BEFORE THE CIT IN THE REVISIONARY PROCEEDINGS U/S.263 OF T HE ACT AND HAD ALSO ADVISED THE ASSESSEE THAT THERE WAS NO NECESSITY TO FILE AN APPEAL AGAINST A REVISIONARY ORDER OF CIT. IN THE AFFIDAVIT FILED B Y SHRI. VIRUPANNA AMEBERKAR, CA, IT IS STATED THAT ASSESSEE HAD APPRO ACHED HIM FOR FILING AN APPEAL AGAINST THE ORDER OF ASSESSMENT PASSED PURSU ANT TO REVISIONARY PROCEEDINGS U/S.263 OF THE ACT. ACCORDING TO THIS AFFIDAVIT SHRI VIRUPANNA AMEBERKAR HAD ADVISED THE ASSESSEE TO FILE AN APPEA L AGAINST THE ORDER U/S.263 OF THE ACT. I FIND THAT ASSESSEE WAS EARNE STLY PURSUING THE PROCEEDINGS RELATING TO ITS ASSESSMENT FOR A. Y. 20 09-10, AND THE DELAY WAS ITA.884/BANG/2014 PAGE - 3 CAUSED DUE TO WRONG ADVISE RECEIVED BY THE ASSESSEE FROM SHRI. B. P. VIKAY KUMAR, ITP. DELAY WAS NOT ATTRIBUTABLE TO ANY FAIL URE OF THE ASSESSEE. LD. DR HAS NOT STATED WHY THE AFFIDAVIT FILED BY SHRI. B. P. VIJAYKUMAR, SHOULD BE DISBELIEVED. IN THE CIRCUMSTANCES, I AM OF THE OPINION THAT THE DELAY HAS TO BE CONDONED. THE DELAY IS CONDONED AND APPEAL I S ADMITTED. 04. GROUNDS TAKEN BY THE ASSESSEE IN ITS APPEAL IS REPRODUCED HEREUNDER : ITA.884/BANG/2014 PAGE - 4 05. FACTS APROPOS ARE THAT ASSESSEE A CONTRACTOR HA D FILED HIS RETURN DECLARING INCOME OF RS.4,05,830/- FOR THE IMPUGNED ASSESSMENT YEAR. CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY BY THE AO . ASSESSEE WAS REQUIRED TO PRODUCE BANK PASS BOOKS AND OTHER DETAILS. IT S EEMS ASSESSEE PRODUCED ONLY BANK PASS SHEETS AND DETAILS FOR VERIFICATION. AO DID A TEST-CHECK OF THE PARTICULARS FURNISHED. AS PER THE AO, VOUCHERS PRODUCED BY THE ASSESSEE WERE ALL SELF-MADE AND ASSESSEE COULD NOT PRODUCE BILLS FOR TRANSPORTATION CHARGES. AO ALSO VERIFIED THE BANK ACCOUNTS OF THE ASSESSEE WITH ING VYSYA BANK AND STATE BANK OF INDIA AND REA CHED A CONCLUSION THAT INTEREST OF RS.22/- CREDITED IN THE SAID ACCOU NT WAS NOT INCLUDED IN THE RETURN OF INCOME FILED BY THE ASSESSEE. AO THEREAF TER ESTIMATED INCOME OF THE ASSESSEE AT 10% OF THE GROSS CONTRACT RECEIPTS. GROSS CONTRACT RECEIPTS FOR THE RELEVANT PREVIOUS YEAR CAME TO RS.70,39,181 /-, 06. ON 01.07.2013 CIT ISSUED A LETTER TO THE ASSESS EE PROPOSING A REVISION U/S.263 OF THE ACT. AS PER THE CIT ASSESS EE HAD MADE SEVERAL CASH PAYMENTS IN EXCESS OF RS.20,000/- ON A SINGLE DAY A ND SECTION 40A(3) OF THE ACT STOOD ATTRACTED. CIT NOTED THAT THERE WERE TOTAL PAYMENTS OF RS.23,09,526/- WHICH ATTRACTED SECTION 40A(3) OF TH E ACT. ASSESSEE IN HIS REPLY STATED THAT THE PERSONS TO WHOM THE BEARER CH EQUES WERE ISSUED WERE ITA.884/BANG/2014 PAGE - 5 ALL HIS EMPLOYEES AND THE WITHDRAWALS OF THE MONEY WERE FOR MEETING VARIOUS BUSINESS EXPENDITURE. AS PER THE CIT, THIS CLAIM OF THE ASSESSEE COULD NOT BE ACCEPTED SINCE THE AMOUNTS DRAWN FROM THE BANK WERE BY A SINGLE PERSON THROUGH BEARER CHEQUES. HE SET ASIDE THE ORDER OF AO AND DIRECTED THE AO TO DO IT AFRESH AFTER CONSIDERING T HE APPLICABILITY OF SECTION 40A(3) OF THE ACT. 07. NOW BEFORE US, LD. AR STRONGLY ASSAILING THE OR DER OF LOWER AUTHORITY SUBMITTED THAT THE AO WAS HAVING THE BANK PASS SHEETS WITH HIM. IT WAS ONLY DUE TO THE INABILITY OF THE ASSESSEE TO EXPLAIN ALL THE DEFICIENCIES THAT AO RESORTED TO AN ESTIMATION OF INCOME. INCOM E WAS ESTIMATED AT 10% OF THE GROSS RECEIPTS. AS PER THE LD. AR BY VIRTUE OF JUDGMENT OF HONBLE HIGH COURT OF ANDHRA PRADESH IN THE CASE OF INDWELL CONSTRUCTION V. CIT [ 232 ITR 776], NO FURTHER ADDITION COULD BE MADE IN A CASE WHERE INCOME WAS ESTIMATED. RELIANCE WAS ALSO PLACED ON A DECIS ION OF COORDINATE BENCH IN THE CASE OF SRI. JAYARAM PATHAK V. ACIT [ITA NO.1332/BANG/2011,DT.21.12.2012]. 08. PER CONTRA, LD. DR SUBMITTED THAT AO HAD NEVER EXAMINED THE CASH PAYMENTS MADE BY THE ASSESSEE. ACCORDING TO HIM, S ECTION 40A(3) OF THE ACT STOOD CLEARLY ATTRACTED. NON-EXAMINATION OF TH IS ASPECT RENDERED THE ITA.884/BANG/2014 PAGE - 6 ORDER OF AO PREJUDICIAL TO THE INTERESTS OF REVENUE , ACCORDING TO THE LD. DR. 09. I HAVE PERUSED THE ORDERS AND HEARD THE RIVAL C ONTENTIONS. PARAS 3 TO 4.2 OF THE ORIGINAL ASSESSMENT ORDER DT.07.12.2011 IS REPRODUCED HEREUNDER: 10. IT IS CLEAR THAT AO WAS HAVING WITH HIM BANK AC COUNT EXTRACTS OBTAINED FROM ING VYSYA BANK, DAVANGERE AND STATE B ANK OF INDIA, DAVANGERE. AO HAD EVEN MADE AN ADDITION FOR INTERE ST OF RS.22 CREDITED IN ING VYSYA BANK ACCOUNT. PAYMENTS WHICH WERE CONSID ERED BY CIT FOR ITA.884/BANG/2014 PAGE - 7 APPLICATION OF SECTION 40A(3) OF THE ACT WERE MADE OUT OF ING VYSYA BANK ACCOUNT. THIS HAS BEEN CLEARLY MENTIONED BY H IM AT PARA 3 OF HIS ORDER U/S.263 OF THE ACT. THUS WHEN THE ORIGINAL A SSESSMENT ORDER WAS PASSED, AO HAD WITH HIM ALL THE DETAILS WITH REGARD TO THE BANK ACCOUNTS OF THE ASSESSEE. CONSIDERING VARIOUS DEFECTS IN THE D ETAILS AND EXPLANATION FURNISHED BY THE ASSESSEE, AO CAME TO A CONCLUSION THAT ESTIMATING THE INCOME OF THE ASSESSEE AT 10% OF HIS GROSS RECEIPTS WOULD SUFFICE. COORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF SR I. JAYARAM PATHAK (SUPRA) BY RELYING ON JUDGMENT OF HONBLE HIGH COUR T OF ANDHRA PRADESH IN THE CASE OF INDWELL CONSTRUCTION V. CIT [ 232 IT R 776] HELD THAT ONCE INCOME OF AN ASSESSEE WAS ESTIMATED ON GROSS SALES, RESORTING TO A DISALLOWANCE U/S.40(A)(IA) OF THE ACT WAS NOT WARRA NTED. IT CANNOT BE SAID THAT DISALLOWANCE U/S.40A(3) OF THE ACT STOOD WAS O N A DIFFERENT FOOTING. THUS, I AM OF THE OPINION THAT CIT WAS ONLY SUBSTIT UTING HIS OPINION FOR A LAWFUL VIEW TAKEN BY THE AO. AO HAVING ESTIMATED T HE INCOME OF ASSESSEE OBVIOUSLY DECIDED THAT THERE CAN BE NO FURTHER DISA LLOWANCE U/S40A(3) OF THE ACT. I ALSO CANNOT SAY THAT ORDER OF AO SUFF ERED FROM ANY ERROR, MUCH LESS ANY ERROR WHICH WAS PREJUDICIAL TO THE INTERES TS OF REVENUE. I THEREFORE SET ASIDE THE ORDER OF CIT. ITA.884/BANG/2014 PAGE - 8 11. IN THE RESULT, APPEAL OF THE ASSESSEE STANDS AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH DAY OF DECEMBER, 2015. SD/- (ABRAHAM P GEORGE) ACCOUNTANT MEMBER MCN COPY TO: 1. THE ASSESSEE 2. THE ASSESSING OFFICER 3. THE COMMISSIONER OF INCOME-TAX 4. COMMISSIONER OF INCOME-TAX(A) 5. DR 6. GF, ITAT, BANGALORE BY ORDER ASSISTANT REGISTRAR