Shri Deepak Damji Poldiya, Jalgaon V. Dy. CIT, Jalgaon

ITA 893/PUN/2013

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 1119 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 4 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-09-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 13-07-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 23-04-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: B C MALAKAR
• Keywords: Unexplained cash credit; Corroborative evidences
• Section: 40A(3); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUN E , , !'#'' $ , % & BEFORE SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM / ITA NO. 893/PN/2013 %' ( ')( / ASSESSMENT YEAR : 2009-10 SHRI DEEPAK DAMJI POLDIYA, LAXMI NIWAS, GUJARATI GALI, GHEE BAZAR, AT POST FAIZAPUR, DISTRICT: JALGAON PAN : AAVPP2092E ....... / APPELLANT ' / V/S. DEPUTY COMMISSIONER OF INCOME TAX, JALGAON / RESPONDENT ASSESSEE BY : SHRI PRAMOD SHINGTE REVENUE BY : SHRI B.C. MALAKAR / DATE OF HEARING : 14-07-2015 / DATE OF PRONOUNCEMENT : 11-09-2015 * / ORDER PER VIKAS AWASTHY, JM : THE APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE OR DER OF COMMISSIONER OF INCOME TAX (APPEALS)-II, NASHIK DATED 19-0 2-2013 FOR THE ASSESSMENT YEAR 2009-10. 2. THE BRIEF FACTS OF THE CASE ARE : THE ASSESSEE IS ENG AGED IN THE BUSINESS OF GINNING AND PRESSING OF COTTON, MANUFACTURING OF COTTON 2 ITA NO. 893/PN/2013, A.Y. 2009-10 BALES, MANUFACTURING AND TRADING OF COTTON SEEDS, COTTON SEED CAKE, COTTON SEED OIL ETC. THE ASSESSEE FILED HIS RETURN OF INCOM E FOR THE ASSESSMENT YEAR 2009-10 ON 30-09-2009 DECLARING TOTAL INCOME OF RS.27,51,680/-. THE CASE OF THE ASSESSEE WAS SELECTED FO R SCRUTINY. ACCORDINGLY, NOTICE U/S. 143(2) WAS ISSUED TO THE ASSESSEE ON 18-08-2010. DURING THE COURSE OF SCRUTINY ASSESSMENT, T HE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAD MADE PAYMENTS T O THE FOLLOWING RELATED PERSONS AS COMMISSION/SALARY: SL. NO. NAME RELATION AMOUNT 1. SHRI AMISH DEEPAK POLDIYA SON RS.2,60,640/- 2. SHRI NIRAV DEEPAK POLDIYA SON RS.3,48,000/- 3. SHRI URMIL KANTILAL POLDIYA NEPHEW RS.2,10,000/- 4. MS. RUPAL NIRAV POLDIYA DAUGHER-IN-LAW RS.96,000/- NO DETAILS OF THE SERVICES RENDERED BY THE AFORESAID PERS ONS WERE FURNISHED BY THE ASSESSEE. THE ASSESSING OFFICER MADE DISA LLOWANCE OF THE PAYMENT OF AFORESAID COMMISSION/SALARY. FURTHER, THE A SSESSING OFFICER HELD THAT THE CREDIT BALANCES IN RESPECT OF FOLLOWING PERSONS WERE NOT EXPLAINED: NAME OF THE PERSON AMOUNT (RS.) RUPA B. MAHAJAN RS.1,38,472/- CHETAN PRABHAKAR MAHAJAN RS.1,31,212/- DNYANESHWAR R. HIRWADE RS.90,370/- GANESH G. NEHETE RS.1,29,150/- NITIN P. MAHAJAN RS.1,27,025/- PREMCHAND D. KURKURE RS.1,22,860/- _______________ TOTAL RS.7,39,089/- 3 ITA NO. 893/PN/2013, A.Y. 2009-10 NONE OF THE CREDITORS OR ANY SUPPORTING EVIDENCE WAS P RODUCED. THE ASSESSING OFFICER INVOKED THE PROVISIONS OF SECTION 68 A ND MADE ADDITION OF RS.7,39,089/-. APART FROM THE ABOVE, THE ASSESS ING OFFICER MADE ADDITION OF RS.12,74,825/- U/S. 40A(3) OF THE ACT FOR MA KING PAYMENTS IN EXCESS OF RS.20,000/- BY BEARER CHEQUES. TH E CHEQUES WERE PRESENTED IN THE BANK BY SON OF THE ASSESSEE SHR I NIRAV DEEPAK POLDIYA. THE ASSESSING OFFICER HELD THAT THE PAYMENTS ARE NOT ONLY HIT BY PROVISIONS OF SECTION 40A(3) BUT ARE TO BE REGARDED AS FICTIONS. AGGRIEVED BY THE ASSESSMENT ORDER DATED 14-12-2011, T HE ASSESSEE PREFERRED AN APPEAL BEFORE THE COMMISSIONER OF I NCOME TAX (APPEALS). THE COMMISSIONER OF INCOME TAX (APPEALS) PARTLY ACCEPTED THE CONTENTIONS OF THE ASSESSEE WITH REGARD TO PAYMENT S OF SALARY TO MS. RUPAL NIRAV POLDIYA AND IN RESPECT OF COMMISSION PAID TO OTHER PERSONS. THE COMMISSIONER OF INCOME TAX (APPEALS) CONFIRMED THE ADDITION IN RESPECT OF PAYMENT OF COMMISSION TO OTHER PERS ONS. FOR DISALLOWANCE IN RESPECT OF UNEXPLAINED CASH CREDITS AND DISA LLOWANCE U/S. 40A(3), THE COMMISSIONER OF INCOME TAX (APPEALS) REJECT ED THE CONTENTIONS OF THE ASSESSEE AND CONFIRMED THE FINDINGS OF T HE ASSESSING OFFICER. AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS), THE ASSESSEE HAS NOW COME IN SECOND APPEAL BEFORE THE TRIBUNAL. 3. SHRI PRAMOD SHINGTE APPEARING ON BEHALF OF THE ASSESS EE SUBMITTED THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF GINNING AND PRESSING OF COTTON IN VARIOUS MANNERS. THE ENTIRE FAMILY O F THE ASSESSEE IS INVOLVED IN THE BUSINESS FOR THE LAST 15 YEARS . THE COMMISSION IS PAID TO AMISH DEEPAK POLDIYA, NIRAV DEEPAK P OLDIYA AND URMIL KANTILAL POLDIYA ON SALE OF COTTON BALES. AS FAR AS RU PAL NIRAV POLDIYA IS CONCERNED THE COMMISSIONER OF INCOME TAX (APPE ALS) HAS 4 ITA NO. 893/PN/2013, A.Y. 2009-10 ALREADY GRANTED PART RELIEF. IN THE ASSESSMENT YEARS 20 06-07, 2007-08 AND 2008-09, THE REVENUE HAS ACCEPTED THE PAYMENT OF COMMISSION TO THE AFORESAID PERSONS. THE LD. AR REFERRED TO THE BROKER AGE BILL AT PAGES 78 AND 80 OF THE PAPER BOOK TO SHOW THE PAYMENT OF CO MMISSION TO THE AFORESAID PERSONS IS FOR PROCUREMENT OF SALES ORDER FOR COTTON BA LES. 3.1 IN RESPECT OF DISALLOWANCE U/S. 68, THE LD. AR SUBMITTED THAT THE PERSONS FROM WHOM THE ASSESSEE HAD PURCHASED COTTON HAD FILED THEIR CONFIRMATIONS WHICH WERE NOT ACCEPTED BY THE AUTHORITIES BELOW. ONE OF THE REASONS FOR REJECTING THE CONFIRMATIONS LETTERS IS THAT THE A SSESSEE HAS NOT PRODUCED CORROBORATIVE EVIDENCE. THE LD. AR PLA CED ON RECORD PHOTOCOPIES OF THE INVOICES ISSUED BY KRISHI UTPANN BAZAAR SAMITTEE, YAWAL, DISTRICT, JALGAON TO SHOW THAT THE ASSESSEE HAD IN FACT PURCHASED RAW COTTON FROM THE AFORESAID PERSONS. THE LD. AR FURTHER SUBMITTED THAT EVEN IN THE PAST THE ASSESSEE HAS BEEN PURCHASING COTTON FROM THE AFORESAID PARTIES ON CREDIT AND HAVE BE EN MAKING PAYMENT AFTER THE PERIOD OF 6-8 MONTHS. 3.2 WITH REGARD TO DISALLOWANCE U/S. 40A(3), THE LD. AR SUBMIT TED THAT THE PAYMENTS HAVE BEEN MADE TO FARMERS THROUGH BEARER CHEQUES. ALL THE PERSONS TO WHO PAYMENTS WERE MADE HAVE FILED CON FIRMATION, BUT THE SAME WERE REJECTED IN AN ARBITRARY AND UNJUST IFIED MANNER. THE SALES HAVE BEEN SUPPORTED BY RECEIPTS ISSUED BY TH E MARKET COMMITTEE WHICH ARE AT PAGES 96, 97 AND 98 OF THE PAPER BOOK. THE LD. AR PRAYED FOR SETTING ASIDE THE IMPUGNED ORDER AND ALLOW THE APPEAL OF ASSESSEE. 4. ON THE OTHER HAND SHRI B.C. MALAKAR REPRESENTING THE DEPARTMENT VEHEMENTLY SUPPORTED THE FINDINGS OF COMMISSIO NER OF 5 ITA NO. 893/PN/2013, A.Y. 2009-10 INCOME TAX (APPEALS). THE LD. DR CONTENTED THAT THE AS SESSEE COULD NOT FURNISH ANY DOCUMENT TO SHOW THAT THE COMMISSIONS W ERE IN FACT PAID FOR EXTRA SERVICES RENDERED BY THE PERSONS CLOSELY RELATED TO THE ASSESSEE. THERE IS NO EVIDENCE ON RECORD TO SHOW THAT THE SERVICES WERE AT ALL RENDERED BY AMISH DEEPAK POLDIYA, NIRAV DEEPAK POLD IYA AND URMIL KANTILAL POLDIYA. THE ASSESSEE HAS ALREADY PAID COMMIS SION TO ADATIYA (COMMISSION AGENT) ON SALE OF COTTON BALES. THE C OMMISSIONER OF INCOME TAX (APPEALS) HAS GIVEN SPECIFIC FINDINGS IN THIS REG ARD IN PARA 6.2.1 AT PAGE 8 OF THE ORDER. WITH RESPECT TO UNE XPLAINED CASH CREDITS, THE LD. DR SUBMITTED THAT THE TRANSACTIONS ARE N OT GENUINE. NOTICES WERE ISSUED BY THE ASSESSING OFFICER TO THE ALLEGE D CREDITORS BUT NO ONE APPEARED. THE ASSESSEE HAD ONLY FURNISHED ID P ROOF AND CONFIRMATIONS LETTERS WITHOUT ANY OTHER CORROBORATIVE EVID ENCE. THE LD. AR OF THE ASSESSEE HAS NOW PLACED ON RECORD THE COPIES OF THE INVOICES. NO REASON HAS BEEN GIVEN BY THE LD. AR FOR NOT FURNISHING THESE DOCUMENTS EITHER BEFORE THE ASSESSING OFFICER OR BEFORE TH E COMMISSIONER OF INCOME TAX (APPEALS). AT SECOND APPELLATE STAGE, FRESH DOCUMENTS CANNOT BE TAKEN ON RECORD. IN RESPEC T OF DISALLOWANCE U/S. 40A(3), THE LD. DR SUBMITTED THAT THE PAYMENTS WERE M ADE THROUGH BEARER CHEQUES ISSUED BY THE ASSESSEE. DURIN G SCRUTINY ASSESSMENT IT WAS FOUND THAT THE CHEQUES WERE WITHDRA WN BY THE SON OF THE ASSESSEE. THE ASSESSEE HAS NOT BROUGHT ON REC ORD ANY EVIDENCE THAT PAYMENTS WERE ACTUALLY MADE TO THE FARMERS. THE LD. DR PRAYED FOR DISMISSING THE APPEAL OF THE ASSESSEE. 5. WE HAVE HEARD THE SUBMISSIONS MADE BY THE REPRESEN TATIVES OF BOTH THE SIDES AND HAVE PERUSED THE ORDERS OF THE AUT HORITIES BELOW. WE HAVE ALSO EXAMINED THE DOCUMENTS FILED BY THE ASSESSE E IN THE FORM 6 ITA NO. 893/PN/2013, A.Y. 2009-10 OF PAPER BOOK. THE ADDITIONS MADE IN THE INCOME RETURNE D BY THE ASSESSEE HAVE BEEN ASSAILED BEFORE THE TRIBUNAL ON 3 GROUNDS: DISALLOWANCE OF COMMISSION: (I). THE ASSESSEE HAS PAID COMMISSION RS.8,18,640/-, ON SALE O F COTTON BALES TO AMISH DEEPAK POLDIYA, NIRAV DEEPAK POLDIY A (SONS OF THE ASSESSEE) AND URMIL KANTILAL POLDIYA (NEPHEW OF THE ASSE SSEE). THE STAND OF THE ASSESSEE IS THAT IN THE EARLIER ASSESSMENT YEARS I.E. ASSESSMENT YEARS 2006-07, 2007-08 AND 2008-09 THE PA YMENT OF COMMISSION HAS BEEN ALLOWED IN SCRUTINY ASSESSMENT PROCEE DINGS. THE ASSESSEE HAS PLACED ON RECORD THE ASSESSMENT ORDER FO R ASSESSMENT YEARS 2006-07 AND 2007-08 IN SUPPORT OF HIS CONTENTION S. THE COMMISSIONER OF INCOME TAX (APPEALS) IN HIS ORDER HAS GIVEN A FINDING THAT THE ASSESSEE HAS INFLATED ITS BROKERAGE EXPENSES B Y PAYING COMMISSION TO HIS SONS. THERE IS NO EVIDENCE ON RECORD O F RENDERING EXTRA SERVICES BY SONS/NEPHEW IN SALE OF COTTON BALES TO JUSTIFY RECEIPTS OF COMMISSION. THE SALE/PURCHASE OF COTTON BALES IS EFFECTED THROUGH ADATIYA TO WHOM A REASONABLE COMMISSION/BROKERAGE IS GIV EN. IN THE INTEREST OF JUSTICE, WE DEEM IT APPROPRIATE TO REMIT THIS ISSUE BACK TO THE ASSESSING OFFICER FOR FRESH ADJUDICATION. THE ASSESSEE SHALL FURNISH DOCUMENTARY EVIDENCE IN SUPPORT OF THE CONTENTIONS. ON FURNISHING OF THE SUBSTANTIVE EVIDENCE BY ASSESSEE, THE ASSESSING OFFICE R SHALL DECIDE THIS ISSUE DE-NOVO. ACCORDINGLY, THIS GROUND OF APPEAL O F THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. DISALLOWANCE U/S. 68 (II). THE SECOND GROUND IN APPEAL IS WITH RESPECT TO DISALLOW ANCE OF UNEXPLAINED CASH CREDIT. THE ASSESSEE HAD SHOWN CREDIT BALANCES IN RESPECT OF CERTAIN PERSONS/FARMERS FROM WHOM THE ASSES SEE HAS ALLEGEDLY PURCHASED RAW COTTON. DURING THE COURSE OF A SSESSMENT 7 ITA NO. 893/PN/2013, A.Y. 2009-10 PROCEEDINGS THE ASSESSEE WAS DIRECTED TO PRODUCE THE SAID CREDITORS. HOWEVER, NONE OF THE PERSONS (ALLEGED CREDITORS) APPEARED BEFORE THE ASSESSING OFFICER. THE ASSESSEE FILED CONFIRMATION LETTERS WIT HOUT ANY CORROBORATIVE EVIDENCE. BEFORE THE TRIBUNAL, THE ASSESSEE HAS PLA CED ON RECORD PHOTOCOPIES OF THE TRANSACTION RECEIPTS TO SHOW THAT THE ASSESSEE HAD DEALT WITH THE AFORESTATED PERSONS. IN VIEW OF THE ADDITIONAL DOCUMENTS PLACED ON RECORD, WE DEEM IT APPROPRIATE TO S END THE FILE BACK TO THE ASSESSING OFFICER FOR VERIFICATION OF SAME. THE ASSESSEE IS DIRECTED TO COMPLY WITH THE DIRECTIONS OF THE ASSESSING O FFICER TO PRODUCE THE ABOVE CREDITORS. IF THE ASSESSEE IS ABLE TO PRODUCE SOME OF THE CREDITORS AND IF THE ASSESSING OFFICER IS SATISFIED WITH TH E GENUINENESS OF THE DOCUMENTS PLACED ON RECORD BEFORE THE TRIBUN AL, THE RELIEF MAY BE GRANTED TO THE ASSESSEE. THIS GROUND OF APPEAL IS THUS ALLOWED FOR STATISTICAL PURPOSE. DISALLOWANCE U/S. 40A(3) (III). THE THIRD GROUND OF APPEAL OF THE ASSESSEE IS WITH RE SPECT TO DISALLOWANCE OF PAYMENTS RS.12,74,825/- U/S. 40A(3). THE ASSE SSEE HAD ISSUED BEARER CHEQUES DRAWN ON JANTA SAHAKARI BAN K LTD., JALGAON TOWARDS THE PAYMENT FOR PURCHASE OF RAW COTTON FROM FARMERS. THE COMMISSIONER OF INCOME TAX (APPEALS) IN THE IMPUGNED OR DER HAS GIVEN A SPECIFIC FINDING THAT THE EXAMINATION OF THE CHEQUES REVEALED THAT THE ASSESSEES SONS NIRAV DEEPAK POLDIYA HAS SIGN ED ON THE BACK SIDE OF THE CHEQUE SUGGESTING THAT HE RECEIVED THE CASH PAYMENTS. THE LD. AR HAS NOT BEEN ABLE TO CONTROVERT THIS FINDING OF THE COMMISSIONER OF INCOME TAX (APPEALS). THE LD. AR OF THE ASSESSEE HAS NO T BEEN ABLE TO SHOW AS TO HOW THE PAYMENT MADE TO THE PERSONS N AMED IN THE ASSESSMENT ORDER AS WELL AS THE ORDER OF COMMISSIONER O F INCOME TAX (APPEALS) TO WHOM THE ALLEGED PAYMENTS ARE MADE ARE COV ERED UNDER 8 ITA NO. 893/PN/2013, A.Y. 2009-10 THE EXCEPTIONS GIVEN IN RULE 6DD OF THE INCOME TAX RULES, 1961. WE DO NOT FIND ANY INFIRMITY IN THE FINDINGS OF THE COMMISSIONER OF INCOME TAX (APPEALS) IN CONFIRMING THE DISALLOWANCE U/S. 40A(3) OF THE A CT. THIS GROUND OF APPEAL OF THE ASSESSEE IS DISMISSED, ACCORDINGLY. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY A LLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED ON FRIDAY, THE 11 TH DAY OF SEPTEMBER, 2015. SD/- SD/- ( . . / R.K. PANDA) ( ! ' / VIKAS AWASTHY) #' / ACCOUNTANT MEMBER $ % #' / JUDICIAL MEMBER / PUNE; &# / DATED : 11 TH SEPTEMBER, 2015 RK *+,%-.#/#)- / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. ' () / THE CIT(A)-II, NASHIK 4. ' / THE CIT-II, NASHIK 5. !*+ %%,- , ,- , . ./0 , / DR, ITAT, B BENCH, PUNE. 6. + 1 23 / GUARD FILE. / // ! % // TRUE COPY// #4 / BY ORDER, %5 ,0 / PRIVATE SECRETARY, ,- , / ITAT, PUNE