M/s Arshad Exports, Hospet V. DCIT, Bangalore

ITA 932/BANG/2015

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 6774 (ITAT-BANGALORE)
• Duration Of Justice: 6 year(s) 2 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-09-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 02-08-2021
• Assessment Year: 2011-2012
• Appeal Filed On: 12-06-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DILIP JUNIOR DEPT
• Assessee Lawyers: V SRINIVASAN
• Keywords: Set aside
• Section: 69C; 40A(3); 201

Judgement Text

ITA NO.932/BANG/2015 M/S. ARSHAD EXPORTS, HOSPET IN THE INCOME TAX APPELLATE TRIBUNAL CBENCH: BANGA LORE BEFORE SHRI N.V. VASUDEVAN, VICE PRESIDENT AND SHRI B.R. BASKARAN, ACCOUNTANT MEMBER ITA NO.932/BANG/2015 ASSESSMENTYEAR:2011-12 M/S. ARSHAD EXPORTS KHAN BUILDING COLLEGE ROAD BEHIND HDFC BANK HOSPET 583 201 PAN NO :AAOFA8098A VS. DEPUTY COMMISSIONER OF INCOME-TAX CENTRAL CIRCLE-2(3) BANGALORE APPELLANT RESPONDENT APPELLANT BY : SHRI V. SRINIVASAN, A.R. RESPONDENT BY : SHRI DILIP, JUNIOR STANDING COUNSEL FOR DEPT. DATE OF HEARING : 02.08.2021 DATE OF PRONOUNCEMENT : 06.09.2021 O R D E R PER B.R. BASKARAN, ACCOUNTANT MEMBER: THE ASSESSEE HAS FILED THIS APPEAL CHALLENGING THE ORDER DATED 13.2.2015 PASSED BY LD. CIT(A)-11, BENGALURU AND IT RELATES TO ASSESSMENT YEAR 2011-12. 2. THOUGH THE ASSESSEE HAS RAISED AS MANY AS 10 GRO UNDS OF APPEAL, THE LD. A.R. PRESSED ONLY GROUND NOS.7 & 8, WHICH READ AS UNDER: 7. WITHOUT PREJUDICE TO THE ABOVE, THE AUTHORITIES BELOW FAILED TO APPRECIATE THAT THERE COULD BE A DISALLOWANCE U/ S 40A(3) OF THE ITA NO.932/BANG/2015 M/S. ARSHAD EXPORTS, HOSPET PAGE 2 OF 4 ACT, ONLY WHEN THERE IS SPECIFIC CLAIM FOR ALLOWANC E AND SINCE THE APPELLANT HAS ESTIMATED THE INCOME, THERE CANNOT BE ANY DISALLOWANCE OF ANY EXPENDITURE U/S 40A(3) OF THE A CT AND THEREFORE, THE INVOCATION OF SECTION 40A(3) OF THE ACT IS MISCONCEIVED AND LIABLE TO BE DELETED. 8. THE AUTHORITIES BELOW FAILED TO APPRECIATE THAT THE APPELLANT ESTIMATED THE INCOME OF RS.75,00,000/-ON A TURNOVER OF RS.21,07,83,262/- FOR THE YEAR UNDER APPEAL AND CON SEQUENTLY, IS NOT JUSTIFIED IN MAKING ANY FURTHER ADDITIONS FOR T HE YEAR UNDER APPEAL BY WAY OF MAKING ADDITIONS U/S 69C TO THE EX TENT OF RS.28,79,883/-. ACCORDINGLY, REMAINING GROUNDS ARE DISMISSED AS NOT PRESSED. 3. IN THESE GROUNDS, THE ASSESSEE IS CHALLENGING TH E ADDITION OF RS.28,79,883/-MADE BY THE ASSESSING OFFICER U/S 69C OF THE INCOME-TAX ACT,1961 ['THE ACT' FOR SHORT]. 4. THE FACTS RELATING TO THE ADDITION OF RS.28,79,8 83/- ARE STATED IN BRIEF. THE REVENUE CARRIED OUT SEARCH & SEIZURE OPERATION IN THE HANDS OF SHRI B. NAGENDRA AND IN CONNECTION THERETO , THE ASSESSEES PREMISES WAS SEARCHED ON 25.10.2010. DURING THE COU RSE OF SEARCH, THE REVENUE SEIZED CERTAIN DOCUMENTS, WHICH REVEALE D THAT THE ASSESSEE HAS INCURRED EXPENSES IN CASH FOR PAYMENT OF TRANSPORT CHARGES. AS PER THE EVIDENCES, THE TRANSPORT CHARG ES PAID BY THE ASSESSEE FOR THE YEAR RELEVANT TO ASSESSMENT YEAR 2 011-12 WAS RS.28,79,883/-. 5. THE ASSESSEE FILED RETURN OF INCOME FOR THE ASSE SSMENT YEAR 2011-12 DECLARING A TOTAL INCOME OF RS.75.00 LAKHS ON ESTIMATED BASIS. THE RETURN OF INCOME WAS TAKEN UP FOR SCRUT INY AND DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE A.O. ASKE D THE ASSESSEE TO EXPLAIN THE DETAILS OF TRANSPORTATION CHARGES. THE ASSESSEE SUBMITTED THAT THE RECIPIENT OF TRANSPORT CHARGES H AS CONFIRMED THE RECEIPT OF THE SAME. IT WAS FURTHER SUBMITTED THAT THE EXPENSES WERE INCURRED OUT OF CASH WITHDRAWALS MADE FROM THE BANK ITA NO.932/BANG/2015 M/S. ARSHAD EXPORTS, HOSPET PAGE 3 OF 4 ACCOUNT. THE A.O. DID NOT ACCEPT THE EXPLANATIONS OF THE ASSESSEE AND OBSERVED THAT THE ASSESSEE HAS FAILED TO ESTABL ISH ONE TO ONE RELATIONSHIP BETWEEN THE CASH WITHDRAWALS AND THE P AYMENTS MADE. FURTHER, HE OBSERVED THAT THERE WAS VIOLATION OF SE C.40A(3) ALSO. ACCORDINGLY, HE ADDED THE TRANSPORTATION CHARGES OF RS.28,79,883/- HOLDING THAT THE SAME REPRESENT EXPENSES INCURRED O UTSIDE THE BOOKS. THE LD. CIT(A) ALSO CONFIRMED THE SAME. 6. THE LD. A.R. SUBMITTED THAT THE ASSESSEE HAS SUB MITTED BEFORE THE SEARCH OFFICIALS THAT IT DID NOT MAINTAI N BOOKS OF ACCOUNTS FOR ITS BUSINESS OPERATIONS. FURTHER, THE ASSESSEE ALSO FILED RETURN OF INCOME DECLARING TOTAL INCOME ON ES TIMATED BASIS. ACCORDINGLY, HE SUBMITTED THAT THE A.O., HAVING ACC EPTED THE RETURN DECLARED ON ESTIMATED BASIS COULD NOT HAVE MADE A S EPARATE ADDITION. HE FURTHER SUBMITTED THAT THE A.O. COULD NOT HAVE COME TO THE CONCLUSION THAT THE IMPUGNED PAYMENTS WERE M ADE OUTSIDE BOOKS OF ACCOUNTS WHEN NO BOOKS OF ACCOUNTS HAVE BE EN MAINTAINED BY THE ASSESSEE AND FOR THE SAME REASONI NG THERE IS NO SCOPE FOR MAKING ADDITION U/S 40A(3) OF THE ACT ALS O. 7. WE HEARD LD. D.R. AND PERUSED THE RECORD. WE FI ND MERIT IN THE SUBMISSIONS OF THE ASSESSEE. THE FACT THAT THE ASSESSEE DID NOT MAINTAIN BOOKS OF ACCOUNTS HAS BEEN ACCEPTED BY THE A.O. FURTHER, THE COPY OF RETURN OF INCOME FURNISHED IN THE PAPER BOOK WOULD SHOW THAT THE ASSESSEE HAS ESTIMATED THE INCOME OF RS.75 LAKHS WHILE FILING RETURN OF INCOME AND THE SAID ESTIMATE HAS ALSO BEEN ACCEPTED BY THE A.O. WHEN THE ASSESSEE DOES NOT MA INTAIN BOOK OF ACCOUNTS AND FURTHER WHEN THE INCOME DECLARED ON ES TIMATED BASIS HAS BEEN ACCEPTED, IT IS NOT POSSIBLE FOR THE A.O. TO COME TO THE CONCLUSION THAT THE IMPUGNED PAYMENT HAS BEEN MADE OUTSIDE THE BOOKS OF ACCOUNTS. ACCORDINGLY, WE DO NOT FIND ANY MERIT IN THE IMPUGNED ADDITION. ACCORDINGLY, WE SET ASIDE THE O RDER PASSED BY ITA NO.932/BANG/2015 M/S. ARSHAD EXPORTS, HOSPET PAGE 4 OF 4 LD. CIT(A) AND DIRECT THE A.O. TO DELETE THE IMPUGN ED ADDITION MADE IN THE ASSESSMENT YEAR 2011-12. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 6 TH SEPT 2021. SD/- (N.V. VASUDEVAN) VICE PRESIDENT SD/- (B.R. BASKARAN) ACCOUNTANT MEMBER BANGALORE, DATED 6 TH SEPT, 2021. VG/SPS COPY TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASST. REGISTRAR, ITAT, BANGALORE.