SHRI NEMCHAND GHIYA, Khandwa V. THE ITO, Khandwa

ITA 891/IND/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 5600 (ITAT-INDORE)
• Duration Of Justice: 2 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-11-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 26-08-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: BHARAT JHAVAR
• Keywords: Depreciation
• Section: 68

Judgement Text

SHRI NEMCHAND GHIYA ITA NO. 891/IND/2016 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE .., ..!', #$ # !% BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER AND SHRI O.P. MEENA, ACCOUNTANT MEMBER I.T.A. NO. 891/IND/2016 ASSESSMENT YEAR: 2010-11 NEMCHAND GHIYA KHANDWA PAN ACQPG-8062L :: APPELLANT VS ITO, KHANDWA :: RESPONDENT ASSESSEE BY SHRI BHARAT JHAVAR REVENUE BY SHRI R.P. MOURYA ! ' #$ DATE OF HEARING 6.10.2016 %&'( #$ DATE OF PRONOUNCEMENT 6.10.2016 * O R D E R PER SHRI D.T. GARASIA, JM THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LEARNED CIT(A)-II, INDORE, DATED 31.5.2 016. SHRI NEMCHAND GHIYA ITA NO. 891/IND/2016 2 2. GROUND NO. 1 RELATES TO THE ADDITION OF RS. 12 LACS IN THE NAMES OF THREE PERSONS U/S 68 OF THE ACT. 3. THE SHORT FACTS OF THE CASE ARE THAT THE ASSESSEE RUNS A COTTON SEED OIL MILL. THE ASSESSEE FILED THE R ETURN OF INCOME ON 8.10.2010 SHOWING TOTAL INCOME OF RS.5,10,310/-. DURING THE COURSE OF HEARING, THE AS SESSING OFFICER FOUND THAT THE ASSESSEE HAS TAKEN LOAN FROM THRE E PERSONS, SMT. TAMANNA SHUKLA RS. 1 LAC, SMT. SUNITA LUNAWAT RS. 5,00,000/- AND SMT. LALITA LUNAWAT RS.6,00,000/-. IN THE CASE OF SMT. TAMANNA SHUKLA, THE LOAN CREDITOR HAS GIVEN A SUM OF RS.1 LAKH TO THE ASSESS EE BY ACCOUNT PAYEE CHEQUE AND A CONFIRMATION LETTER WAS ALSO FILED. THE ASSESSING OFFICER DID NOT ACCEPT THE GENU INENESS OF THE TRANSACTION OR CREDITWORTHINESS OF THE LENDER FOR THE REASON THAT THE ASSESSEE SID NOT FILE COPY OF LOAN CRED ITORS PASSBOOK. IN THE CASE OF SMT. SUNITA LUNAWAT THE LOAN CREDITOR HAS GIVEN RS. 5 LACS TO THE ASSESSEE THROUGH RTGS. SHRI NEMCHAND GHIYA ITA NO. 891/IND/2016 3 THE CONFIRMATION LETTER, COPY OF PASSBOOK OF ORIENTAL BANK WHEREFROM THE CREDITOR HAS TRANSFERRED THE MONEY TO T HE ASSESSEE, WAS FILED BEFORE THE ASSESSING OFFICER. A COPY OF THE RETURN WAS ALSO FILED BEFORE THE ASSESSING OFFICE R. THE ASSESSING OFFICER AND THE LEARNED CIT(A) WERE OF THE VIEW THAT THE ASSESSEE HAS NOT PROVED THE CREDITWORTHINESS . HE, THEREFORE, THE DISALLOWED THE SAME. IN THE CASE O F SMT. LALITA LUNAWAT, SHE HAS GIVEN RS. 6 LACS THROUGH RTGS TO THE ASSESSEE. THE CONFIRMATION LETTER WAS FILED AND SHE HAS ALSO FILED COPY OF ACKNOWLEDGEMENT OF THE RETURN BUT THE ASSESSING OFFICER WAS OF THE VIEW THAT THE CREDITOR H AS NOT PROVED THE CREDITWORTHINESS. HE, THEREFORE, MADE THE ADDITION IN RESPECT OF THE ABOVE THREE PARTIES. AGGRI EVED, THE ASSESSEE WENT IN APPEAL BEFORE THE LEARNED CIT(A) AND THE LEARNED CIT(A) CONFIRMED THE ADDITION MADE BY THE SHRI NEMCHAND GHIYA ITA NO. 891/IND/2016 4 ASSESSING OFFICER. NOW THE ASSESSEE IS IN APPEAL BEFOR E THE TRIBUNAL. 4. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE SIDES. DURING THE COURSE OF HEARING, THE LEARNED CO UNSEL FOR THE ASSESSEE HAS DRAWN OUR ATTENTION TO THE WRITTE N SUBMISSIONS FILED BEFORE THE ASSESSING OFFICER AND T HE LEARNED CIT(A) WHICH ARE AT PAGE NOS. 1 TO 25 AND 26 TO 112 OF THE PAPER BOOK. THE LEARNED COUNSEL FOR THE ASSESSE E SUBMITTED THAT IN THE CASE OF SMT. TAMANNA SHUKLA, THE ASSESSEE HAS FILED CONFIRMATION LETTER. IN THE CASE OF SMT. SUNITA LUNAWAT AND SMT. LALITA LUNAWAT, BOTH THE CREDITORS HAD FILED THE EVIDENCE THAT THEY HAVE TRANSF ERRED THE AMOUNT THROUGH RTGS, CONFIRMATION LETTER AND COPY OF PASSBOOK OF ORIENTAL BANK OF COMMERCE WHEREFROM THE SAID CREDITOR HAS TRANSFERRED THE MONEY THROUGH RTGS. WE ARE, THEREFORE, OF THE VIEW THAT BOTH THE CREDITORS H AVE SHRI NEMCHAND GHIYA ITA NO. 891/IND/2016 5 DISCHARGED THE BURDEN LAY UPON THEM. MOREOVER, SMT. LALITA LUNAWAT AND SMT. SUNITA LUNAWAT HAVE FILED THEIR RETURN OF INCOME AND ALL THE EVIDENCE WAS BEFORE THE ASSESSING OFFICER AND THE LEARNED CIT(A). WE ARE, THER EFORE, OF THE VIEW THAT THE ASSESSEE HAS DISCHARGED THE BURDEN BY FILING CONFIRMATION LETTER AND THE BANK PASSBOOK AS WELL AS THE COPY OF RETURN OF INCOME FOR BOTH THE CREDITORS . WE, THEREFORE, HOLD THAT IN THESE CIRCUMSTANCES, NO ADDITI ON IS CALLED FOR. 5. DURING THE COURSE OF HEARING, THE LEARNED DR ARGUED THAT THE MATTER MAY BE RESTORED TO THE FILE OF THE AS SESSING OFFICER FOR VERIFICATION OF THE SAME, BUT WE ARE OF T HE VIEW THAT THE ASSESSEE HAS FILED ALL THE EVIDENCE BEFORE THE ASSESSING OFFICER AND THE LEARNED CIT(A), THEREFORE, AGAIN THIS MATTER CANNOT BE RESTORED TO THE FILE OF THE A SSESSING OFFICER BECAUSE THE REVENUE WAS GIVEN TWO CHANCES TO V ERIFY SHRI NEMCHAND GHIYA ITA NO. 891/IND/2016 6 THE SAME. THE REVENUE HAS NOT MADE ANY INQUIRY. WE ARE, THEREFORE, OF THE VIEW THAT THE ASSESSEE HAS DISCHARGED THE BURDEN LAY UPON HIM AND THE REVENUE HAS FAILED TO MAKE ANY INQUIRY. IN THIS VIEW OF THE MATTER, NO ADDITION IS CALLED FOR IN RESPECT OF TWO CREDITORS, I.E. SMT. SU NITA LUNAWAT AND SMT. LALITA LUNAWAT. IN RESPECT OF SMT. TAMANNA SHUKLA, NO EVIDENCE WAS FILED BEFORE THE AUTHORITIES BELOW AS WELL NOT BEFORE US TO PROVE THE CREDITWORTHINESS. WE, THEREFORE, SUSTAIN THE ACTION OF THE AUTHORITIES BELOW IN RESPECT OF SMT. TAMANNA SHUKLA. 6. GROUND NO. 2 RELATING TO ADDITION ON ACCOUNT OF INTEREST PAID/CREDITED TO ABOVE LOAN CREDITORS IS CONSEQUENTIAL IN NATURE. 7. GROUND NO. 3 RELATES TO CONFIRMATION OF ADDITION OF RS.51,540/- MADE BY THE ASSESSING OFFICER U/S 40A(2) (B) OF THE ACT. SHRI NEMCHAND GHIYA ITA NO. 891/IND/2016 7 8. THE SHORT FACTS OF THE CASE ARE THAT THE ASSESSING OFFICER MADE THE DISALLOWANCE OF RS. 51,540/- U/S 40A(2)(B) OF THE ACT ON THE GROUND THAT THE ASSESSEE HAS PURCHASED RAW MATERIAL AT COMPARATIVELY HIGHER PRICE FROM MOHANLAL RAJENDRA KUMAR, A FAMILY CONCERN. ON APPEAL, THE LEARNED CIT(A) CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICER. NOW THE ASSESSEE IS IN APPEAL BEFO RE THE TRIBUNAL. 9. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE SIDES. DURING THE COURSE OF HEARING THE LEARNED COUN SEL FOR THE ASSESSEE SUBMITTED WRITTEN SUBMISSIONS AND BROUGH T TO OUR NOTICE THAT AS PER PAPER BOOK PAGE 6 THE ASSESSEE HAS PURCHASED COTTON SEED FROM MOHANLAL RAJENDRA KUMAR, SISTER CONCERN OF THE ASSESSEE, AT THE AVERAGE RATE OF RS. 1249.22 PER QTL. WHEREAS THE AVERAGE RATE ON WHIC H THE ASSESSEE MADE PURCHASES FROM OTHER SUPPLIERS WORKS SHRI NEMCHAND GHIYA ITA NO. 891/IND/2016 8 OUT TO RS.1285.52 PER QUINTAL. THEREFORE, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSING OFFICER HAS WRONGLY MADE OUT A CASE OF PURCHASE OF COTTO N SEED AT HIGHER PRICE FROM MOHANLAL RAJEDNRA KUMAR. THE LEARNED COUNSEL FOR THE ASSESSEE FURTHER SUBMITTED TH AT THE LEARNED CIT(A) HAS NOT GIVEN ANY REASON FOR CONFIRMATION OF THE ADDITION MADE BY THE ASSESSING OFFICER AND SIMPLY SUSTAINED THE ADDITION. THE LEARNED COUNSEL FOR THE ASSESSEE, THEREFORE, PRAYED THAT THE ADDITION SUSTAINED BY THE LEARNED CIT(A) MAY KINDLY BE DELETED. 10. ON THE OTHER HAND, THE LEARNED DR SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 11. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE SIDES. AFTER CAREFUL CONSIDERATION OF THE MATERIAL ON RECORD IN VIEW OF THE SUBMISSIONS OF THE PARTIES, WE FIND T HAT THE ASSESSEE HAS MADE PURCHASES OF COTTON SEED FROM MOHANLAL RAJENDRA KUMAR, AT AVERAGE LOWER PRICE THAN THE PURCHASES SHRI NEMCHAND GHIYA ITA NO. 891/IND/2016 9 MADE FROM OTHER PARTIES. THE ASSESSEE HAS PURCHASED COTTON SEED FROM MOHANLAL RAJENDRA KUMAR, SISTER CONCER N OF THE ASSESSEE, AT THE AVERAGE RATE OF RS. 1249.22 PER QTL. WHEREAS THE AVERAGE RATE ON WHICH THE ASSESSEE MADE PURCHASES FROM OTHER SUPPLIERS WORKS OUT TO RS.1285. 52 PER QUINTAL. IN THIS VIEW OF THE MATTER, WE DIRECT THE ASSESSING OFFICER TO ALLOW THE CLAIM OF THE ASSESSEE. AS SUCH, THIS GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED. 12. GROUND NO. 4 RELATES TO CONFIRMATION OF ADDITION OF RS. 32,500/- CLAIMED BY THE ASSESSEE UNDER THE HEAD INTEREST TO BANK. 13. THE SHORT FACTS OF THE CASE ARE THAT THAT ASSESSING OFFICER DISALLOWED RS. 32,500/- OUT OF BANK INTEREST DEBITED TO PROFIT AND LOSS ACCOUNT. ON APPEAL, THE FINDING OF THE ASSESSING OFFICER WAS CONFIRMED BY THE LEARNED CIT(A) BY OBSERVING AS UNDER :- SHRI NEMCHAND GHIYA ITA NO. 891/IND/2016 10 8. THIS GROUND OF APPEAL HAS BEEN RAISED AGAINST DISALLOWANCE OF RS.32,500/- OUT OF BANK INTEREST DEBITED TO PROFIT AND LOSS ACCOUNT. PROFIT AND LOSS ACCOUNT. THE A.O. HAS DISCUSSED THE ISSUE AT PARA 5 OF THE ASSESSING OFFICER WHICH DEALS WITH THE ISSUE IN DETAIL. THE APPELLANT DURING THE COURSE OF APPEAL PROCEEDINGS, THOUGH HAS FILED THE WRITTEN SUBMISSIO N ON THE ISSUE YET HAD FAILED TO CONTROVERT THE FINDINGS OF A.O. THEREFORE, TAKING INTO ACCOUNT THE FACTS AND CIRCUMSTANCES OF THE CASE, ADDITION OF RS.32,500/- IS HEREBY CONFIRMED. THIS GROUND OF APPEAL IS DISMISSE D. NOW THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 14. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE SIDES. AFTER HEARING BOTH THE PARTIES, WE FIND THAT THE LEARNED CIT(A) WAS JUSTIFIED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER. WE, THEREFORE, CONFIRM THE SAME. SHRI NEMCHAND GHIYA ITA NO. 891/IND/2016 11 15. GROUND NO. 5 RELATES TO CONFIRMATION OF 50% OF THE AD HOC ADDITION MADE BY THE ASSESSING OFFICER TOWARDS TRANSPORTATION EXPENSES, HAMMALI EXPENSES, DEPRECIATION AND CONSULTANCY CHARGES. 16. WE HAVE HEARD BOTH THE SIDES. SO FAR AS TRANSPORTATION EXPENSES OF RS. 95,000/-, HAMMALI EXPENSES OF RS.50,000/- AND DEPRECIATION RS.6,210/- AR E CONCERNED, SINCE THESE ADDITIONS ARE IN THE NATURE OF AD HOC ADDITIONS, WE DO NOT FIND ANY INFIRMITY IN THE OR DER OF THE LEARNED CIT(A) AND ACCORDINGLY CONFIRM THE SAME. S O FAR AS CONSULTANCY CHARGES ARE CONCERNED, WE ARE OF THE VIE W THAT SINCE IT IS INCUMBENT UPON THE ASSESSEE TO PAY T HE CONSULTANCY CHARGES, WE DIRECT THE ASSESSING OFFICER TO ALLOW THE CONSULTANCY CHARGES. THIS GROUND OF APPEAL IS ACCORDINGLY PARTLY ALLOWED. 17. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS PARTLY ALLOWED. SHRI NEMCHAND GHIYA ITA NO. 891/IND/2016 12 THE ORDER HAS BEEN PRONOUNCED IN OPEN COURT ON 6 TH NOVEMBER, 2016. SD/- SD/- ( ..!') (..) #$ (O.P.MEENA) (D.T.GARASIA) ACCOUNTANT MEMBER J UDICIAL MEMBER (') / DATED : 17 TH NOVEMBER, 2016. DN/ SHRI NEMCHAND GHIYA ITA NO. 891/IND/2016 13