Medshinge Patil & Associates, Kolhapur V. Assistant Commissioner of Income-tax, Kolhapur

ITA 920/PUN/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 9464 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 8 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-01-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 14-11-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 05-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained expenditure
• Section: 69C; 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, PUNE . , , , BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO . 920 /P U N/201 6 / ASSESSMENT YEAR : 20 1 1 - 12 MEDSHINGE PATIL & ASSOCIATES, 101/E, SHARDA APARTMENTS, NAGALA PARK, KOLHAPUR - 416003 PAN : AAFFM8154L ....... / APPELLANT / V/S. ADDL. COMMISSIONER OF INCOME TAX, RANGE 2, KOLHAPUR / RESPONDENT ASSESSEE BY : S HRI NIKHIL PATHAK REVENUE BY : SHRI ACHAL SHARMA / DATE OF HEARING : 14 - 11 - 2017 / DATE OF PRONOUNCEMENT : 12 - 01 - 201 8 / ORDER PER VIKAS AWASTHY, JM : TH IS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF COMMI SSIONER OF INCOME TAX (APPEALS) - 2, KOLHAPUR DATED 07 - 03 - 2016 FO R THE ASSESSMENT YEAR 201 1 - 12. 2 ITA NO .920/PUN/2016, A.Y. 2011 - 12 2. THE APPEAL WAS DECIDED BY THE SMC BENCH OF THE TRIBUNAL VIDE ORDER DATED 14 - 10 - 2016. HOWEVER, GROUND NOS. 2 AND 3 RAISED IN THE APPEAL WERE INADVERTENTLY REMAINED UNADJUDICATED. THE TRIBUNAL VIDE ORDER DATED 08 - 08 - 2017 IN MA NO. 22/PUN/2017 RECALLED THE ORDER DATED 14 - 10 - 2016 FOR ADJUDICATION OF GROUND NOS. 2 AND 3 ONLY RAISED IN THE APPEAL. THUS, THE GROUNDS TO BE ADJUDICATED BY US IN THE APPEAL IN PRESENT PROCEEDINGS ARE AS UNDER : 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) IS NOT JUSTIFIED IN CONFIRMING THE ADDITION OF RS.4,00,000/ - U/S. 69C OF THE ACT WITHOUT APPRECIATING THAT THE AMOUNT RECEIVED FROM SUB CONTRACTOR IS TOWARDS THE REPAYMENT OF ADVANCE GIVEN TO HIM. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) FAILED TO APPRECIATE THAT THE EXPENDITURE MADE TOWARDS SUB CONTRACTOR CHARGES ARE GEN UINE AND PROPERLY EXPLAINED. 3. THE FACTS GERMANE TO THE ISSUE BEFORE US AS EMANATING FROM RECORD S ARE: THE ASSESSEE IS A CIVIL CONTRACTOR. DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAD MADE PAYMENTS TO SUB - CONTRACTORS TO THE TUNE OF RS. 1,51,11,927/ - . THE ASSESSING OFFICER GOT SUSPICIOUS ABOUT PAYMENTS OF RS.4,00,000/ - MADE TO ONE OF THE SUB - CONTRACTOR SHRI P.G. SHINDE. THE ASSESSEE SUMMONED THE SAID CONTRACTOR AND RECORDED HIS STATEMENT U/ S. 131(1) O F THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT ) WHEREIN HE ADMITTED THAT WHENEVER THE AMOUNTS WERE REQUIRED BY HIM DURING THE EXECUTION OF WORK, THE ASSESSEE USED TO PROVIDE HIM MONEY FROM TIME TO TIME . AT THE END OF YEAR , THE ASSESSEE WOULD ISSUE A CHEQUE OF THE LUMP SUM AMOUNT AND AFTER DEPOSITING THE SAID CHEQUE IN HIS BANK , HE WOULD RETURN THE CASH TO ASSESSEE AGAINST ADVANCE RECEIVED. THE ASSESSING OFFICER HELD THAT THERE IS NO EVIDENCE TO SUGGEST ADVANCES WERE GIVEN BY THE 3 ITA NO .920/PUN/2016, A.Y. 2011 - 12 ASSESSEE. THE ASSESSING OFFICER MADE ADDITION OF RS.4,00,000/ - U/S. 69C ON THE GROUND THAT THE ASSESSEE HAS FAILED TO FURNISH ANY RELEVANT DETAILS SUCH AS DEBIT VOUCHER ETC. RELATING TO ADVANCES MADE TO THE SUB - CONTRACTORS. THE ASSESSING OFFICER D ISBELIEVED THE ASSESSEES CONTENTIONS AND MADE ADDITION OF RS.4,00,000/ - U/S. 69C OF THE ACT. AGGRIEVED BY ASSESSMENT ORDER DATED 31 - 12 - 2013, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). THE COMMISSIONER OF I NCOME TAX (APPEALS) REJECTED THE SAME AND CONFIRMED THE FINDINGS OF ASSESSING OFFICER. 4. SHRI NIKHIL PATHAK APPEARING ON BEHALF OF THE ASSESSEE SUBMITTED THAT THE ASSESSING OFFICER HAS MADE ADDITION OF RS.4,00,000/ - U/S. 69C MERELY ON ASSUMPTIONS WITHOUT APPRECIATING THE FACT THAT ALL CASH TRANSACTIONS ARE ACCOUNTED. THE LEDGER ACCOUNT OF SHRI P. G. SHINDE IN THE BOOKS OF ASSESSEE IS AT PAGE 27 OF THE PAPER BOOK. DURING THE YEAR , THE ASSESSEE HAD MADE PAYMENT OF RS.4,00,000/ - TO SHRI P.G. SHINDE WHICH ARE DULY RECORDED IN THE BOOKS. THE ASSESSEE HAD ALSO GIVEN CASH ADVANCES TO SHRI P.G. SHINDE OVER A PERIOD OF TIME AGGREGATING TO RS.3,00,000/ - . THE S UB - CONTRACTO R A DVANCE A CCOUNT IN THE BOOKS OF ASSESSEE IS AT PAGE 26 OF THE PAPER BOOK. A PERUSAL OF THE SAME WOULD SHOW THAT THE ASSESSEE HAD GIVEN ADVANCES TO THE SUB - CONTRACTOR OVER A PERIOD OF TIME AGGREGATING TO RS.3,00,000/ - . THE ASSESSEE PAID AN AMOUNT OF RS.4,00,000/ - BY CHEQUE TO SHRI P.G. SHINDE ON 18 - 10 - 2010. ON THE SAME DATE SHRI P. G. SHINDE WITHDREW THE AMOUNT FROM HIS BANK AND REPAID RS.3,00,000/ - TO THE ASSESSEE. THIS RECEIPT OF RS.3,0 0,000/ - IS ALSO RECORDED IN THE BOOKS. THE ASSESSING OFFICER HAS ERRED IN MAKING ADDITION OF RS.4,00,000/ - U/S. 69C ON THE GROUND THAT THE ASSESSEE HAD ADVANCED 4 ITA NO .920/PUN/2016, A.Y. 2011 - 12 MONEY TO SHRI P.G. SHINDE FROM HIS UNACCOUNTED SOURCE. THE ASSESSEE HAD FURNISHED A COPY OF S UB - CONTRACTOR A DVANCE ACCOUNT BEFORE THE ASSESSING OFFICER. HOWEVER, THE ASSESSING OFFICER CONVENIENTLY IGNORE D THE SAME FOR MAKING ADDITION OF RS.4,00,000/ - . THE ASSESSEE HAS RECORDED AMOUNT ADVANCED IN CASH TO SHRI P.G. SHINDE IN THE BOOKS, THEREFORE, TO HOLD THAT THE CONTENTION S OF THE ASSESSEE IS AN AFTERTHOUGHT , IS NOT JUSTIFIED. SINCE, ALL THE TRANSACTIONS HAVE BEEN DULY RECORDED IN THE BOOKS , THERE IS NO BASIS BEFORE THE AUTHORITIES BELOW TO HOLD THAT THE ASSESSEE HA S MADE UNACCOUNTED EXPENDITURE AND MAKE ADDITION U/S. 69C OF THE ACT. THE LD. AR POINTED THAT THOUGH THE ASSESSEE HAD MADE PAYMENT OF RS.7,00,000/ - TO THE SUB - CONTRACTORS I.E. RS.3,00,000/ - PAID AS CASH ADVANCE AND RS.4,00,000/ - PAID BY WAY OF CHEQUE, THE ASSESSEE HAS CLAIMED EXPENDITU RE OF RS.4,00,000/ - ONLY AND HA S FAIRLY ADMITTED THAT RS.3,00,000/ - HAVE BEEN RECEIVED BACK. THE LD. AR CONTENDED THAT THE COMMISSIONER OF INCOME TAX (APPEALS) HAS ALSO FAILED TO APPRECIATE THE FACTS OF THE CASE IN THE RIGHT PERSPECTIVE. THE COMMISSIONER OF INCOME TAX (APPEALS) HAS MECHANICALLY APPROVED THE FINDINGS OF ASSESSING OFFICER. 5. ON THE OTHER HAND SHRI ACHAL SHARMA REPRESENTING THE DEPARTMENT VEHEMENTLY SUPPORTED THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) AND ASSESSING OFFICER. THE LD. DR SUBMITTED THAT DURING ASSESSMENT PROCEEDING AND EVEN AT FIRST APPELLATE STAGE, THE ASSESSEE HAD NOT FURNISHED ANY DOCUMENTARY EVIDENCE SUCH AS VOUCHERS ETC. TO SHOW CASH ADVANCES MADE BY ASSESSEE TO SHRI P.G. SHINDE. 6. W E HAVE HEARD THE SUBMISS IONS MADE BY THE REPRESENTATIVES OF RIVAL SIDES AND HAVE PERUSED THE ORDERS OF THE AUTHORITIES BELOW . THE ONLY ISSUE 5 ITA NO .920/PUN/2016, A.Y. 2011 - 12 BEFORE US IS WITH RESPECT TO ADDITION OF RS.4,00,000/ - U/S. 69C OF THE ACT CONFIRMED BY THE COMMISSIONER OF INCOME TAX (APPEALS). THE ASS ESSING OFFICER HAS MADE THE AFORESAID ADDITION PRIMARILY ON THE GROUND THAT THE ASSESSEE HAS NOT FURNISHED DEBIT VOUCHERS ETC. EVIDENCING ADVANCE PAYMENTS TO THE TUNE OF RS.3,00,000/ - MADE TO SHRI P.G. SHINDE. THE COMMISSIONER OF INCOME TAX (APPEALS) HAS CONFIRMED THE ADDITION WITHOUT MUCH DELIBERATING ON THE MERITS ON THE ISSUE. WE FIND THAT THE AUTHORITIES BELOW HAVE FAILED TO CONSIDER THE STATEMENT OF SHRI P.G. SHINDE RECORDED U/S. 131 (1) OF THE ACT. IN PARA 6.3 OF THE ASSESSMENT ORDER , THE ASSESSING OFFICER HAS MENTIONED THE CRUX OF HIS STATEMENT. THE STATEMENT OF SHRI P.G. SHINDE IS AT PAGES 28 TO 35 OF THE PAPER BOOK. IN HIS STATEMENT SHRI P.G. SHINDE HAS ADMITTED THAT HE HAS BEEN WORK ING AS LABOUR CONTRACTOR FOR THE ASSESSEE. IN R ESPONSE TO Q. NO. 8 HE HAS ADMITTED THE FACT THAT HE SOMETIMES USE TO ADVANCE FROM THE ASSESSEE. HE HAS FURTHER ADMITTED THAT WHEN THE PAYMENT OF RS.4,00,000/ - WAS CREDITED TO HIS ACCOUNT ON 08 - 10 - 2010 , HE HAS WITHDRAWN THE SAME AND RETURNED TO THE ASSESS EE AGAINST THE ADVANCE ALREADY TAKEN. THE ASSESSEE HAS NARRATED A SIMILAR VERSION BEFORE THE ASSESSING OFFICER AND BEFORE THE APPELLATE AUTHORITY. WE FIND THAT THE STATEMENT OF SHRI P.G. SHINDE IS CONSISTENT TO THE EXPLANATION FURNISHED BY THE ASSESSEE. WITH REGARD TO ISSUANCE OF CHEQUE RS.4,00,000/ - TO SHRI P.G. SHINDE FOR SUB - CONTRACT WORK AND RECEIVING BACK OF RS.3,00,000/ - IN CASH AGAINST THE CASH ADVANCES ALREADY MADE , T HE LD. AR OF THE ASSESSEE HAS DRAWN OUR ATTENTION TO THE LEDGER ACCOUNT AT PAGES 26 AND 27 OF THE PAPER BOOK . A PERUSAL OF THE S UB - CONTRACTOR A DVANCE A CCOUNT REVEAL THAT THE RECEIPT OF RS.3,00,000/ - HAS BEEN DULY REFLECTED. WE FIND MERIT IN THE SUBMISSIONS OF LD. AR. WE FIND NO REASON TO SUSTAIN THE ADDITION OF 6 ITA NO .920/PUN/2016, A.Y. 2011 - 12 RS.4,00,000/ - U/S. 6 9C OF THE ACT. ACCORDINGLY, GROUND NOS. 2 AND 3 RAISED IN THE APPEAL BY THE ASSESSEE ARE ALLOWED. 7. THE TRIBUNAL VIDE ORDER DATED 14 - 10 - 2016 HAS ALREADY ALLOWED GROUND NO. 1 RAISED IN THE APPEAL, THE GROUND NO. 4 IS GENERAL IN NATURE. 8. IN THE RES ULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON FRIDAY, THE 12 TH DAY OF JANUARY, 201 8 . SD/ - SD/ - ( . /D. KARUNAKARA RAO ) ( / VIKAS AWASTHY) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE; / DATED : 12 TH JANUARY, 2018 RK / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 2, KOLHAPUR 4. / THE CIT - II, KOLHAPUR 5. , , , / DR, ITAT, A BENCH, PUNE. 6. / GUARD FILE. / / // TRUE COPY// / BY ORDER, / PRIVATE SECRETARY, , / ITAT, PUNE