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Income Tax Appellate Tribunal, RAJKOT BENCH, RAJKOT
Before: SHRI RAJPAL YADAV & SHRI PRADIP KUMAR KEDIA
आयकर अपील�य अ�धकरण, राजकोट �यायपीठ, राजकोट । IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT [ Conducted through E-Court at Ahmedabad ] सव�ी राजपाल यादव, �या�यक सद�य एवं �द�प कुमार के�डया, लेखा सद�य के सम�। BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER & SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER आयकर अपील सं./I.T.A. No.319/RJT/2015 (�नधा�रण वष� / Assessment Year : 2010-11) Shri Arjanbhai M. Khunti बनाम/ The ITO Block No.24, Vishnu Colony Ward-192) Vs. Zanzarda Road Junagadh Junagadh �थायी लेखा सं./जीआइआर सं./PAN/GIR No. AGCPK 1010 C .. (अपीलाथ� /Appellant) (��यथ� / Respondent)
अपीलाथ� ओर से / Appellant by : Shri D.M. Rindani, AR ��यथ� क� ओर से/Respondent by : Shri Praveen Verma, Sr.DR
सुनवाई क� तार�ख / Date of Hearing 09/05/2019 घोषणा क� तार�ख /Date of Pronouncement 27/05/2019 आदेश / O R D E R PER PRADIP KUMAR KEDIA - AM : The captioned appeal has been filed at the instance of the Assessee against the appellate order of the Commissioner of Income Tax(Appeals)-3, Rajkot [CIT(A) in short] dated 16/04/2015 arising in the assessment order passed under s.143(3) of the Income Tax Act, 1961 (hereinafter referred to as "the Act") dated 08/03/2013 relevant to Assessment Year (AY) 2010-11.
ITA No. 319/RJT/2015 Shri Arjanbhai M. Khunti Vs. ITO Asst.Year – 2010-11 - 2 - 2. The grounds of appeal raised by the Assessee read as under:-
The learned Commissioner of Income tax (Appeals)-3, Rajkot erred in confirming addition of Rs.9,77,550/- u/s.69C of the Act which was originally made u/s.41(1) of the Act by the A.O. and further erred in treating the same as bogus liability. 2. The learned Commissioner of Income – tax (Appeals) – 3, Rajkot erred in upholding the addition to the extent of Rs.3,78,337/- out of total addition of Rs.12,24,419/- made by the assessing officer u/s.40A(3) of the Act. 3. The assessee filed return of income for AY 2010-11 declaring total income at Rs.4,42,027/-. The case was subjected to scrutiny assessment. In the course of scrutiny assessment, the Assessing Officer inter alia noticed that assessee has purchased cements from “Anjani Seeds & Fertilizers Depot”, Amreli (hereinafter “ASFD”) of Rs.13,55,887/-. The assessee stated to have made a cash payment of Rs.3,78,337/- to the aforesaid supplier and in the balance-sheet at the year remaining amount of Rs.9, 77,550/- was shown as outstanding payable to ASFD as creditor. It was however found on enquiry under s.133(6) of the Act by the Assessing Officer that the supplier had no outstanding with the assessee and had received entire cash against of its supplies. The Assessing Officer accordingly added Rs.9,97,550/- under s.41(1) of the Act on account of denial of the liability of Assessee by its creditor. The Assessing Officer also added Rs.3,78,337/- in the hands of the assessee by invoking section 40A(3) for cash payments in excess of threshold limit.
ITA No. 319/RJT/2015 Shri Arjanbhai M. Khunti Vs. ITO Asst.Year – 2010-11 - 3 - 4. Aggrieved by the aforesaid addition, the assessee approached the first appellate authority without any success. Further, aggrieved the assessee preferred in appeal before the Tribunal.
The Ld.AR for the assessee contended that the enquiry made under s.133(6) of the Act is without confronting the facts to the assessee and, therefore, assessee had no opportunity to rebut the same. The assessee relied upon its books of accounts and submitted that the purchases made from the supplier have been duly paid in installments over a period of time as recorded in the books and the supplier may have its own reasons from declaring a different account.
The Ld.DR, on the other hand, strongly supported the action of the revenue authorities and contended that it is very strange that in a contract of amount of such magnitude, a person will pay just below the threshold limit of Rs.20,000/- over years without any additional charge. The action of the assessee does not resonate either with business conduct or with the statement of supplier.
We have carefully considered the rival submissions. The dispute relates to payment on account of supply received from ASFD. It is an undisputed fact that the result of enquiry under s.133(6) of the Act made behind the back of the assessee was not confronted to the assessee.
ITA No. 319/RJT/2015 Shri Arjanbhai M. Khunti Vs. ITO Asst.Year – 2010-11 - 4 - Therefore, the assessee was not in a position to present its point before the revenue authorities for payment in trenches.
7.1. In view of the violation of principle of natural justice in not following the due procedure for granting opportunity, the entries recorded in the books of accounts by the assessee requires to believed. The onus was on revenue to dislodge the stand taken by the assessee for payment in trenches, a part of which was made in subsequent years. The conduct of the assessee towards pattern of payment do invoke suspicious. However, owing to serious flaw in overlooking the principles of natural justice and in the absence of any cogent basis to disbelieve diversion of the assessee, the benefit of doubt requires to go to the assessee. Therefore, the order of the CIT(A) is set aside and the Assessing Officer is directed to delete to disallowance on both the scores.
In the result, assessee’s appeal is allowed.
Order pronounced in the Court on 27/05/2019 at Ahmedabad.
Sd/- Sd/- (राजपाल यादव) (�द�प कुमार के�डया) �या�यक सद�य लेखा सद�य (RAJPAL YADAV) ( PRADIP KUMAR KEDIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad ; Dated 27/05/2019 ट�.सी.नायर, व.�न.स./T.C. NAIR, Sr. PS
ITA No. 319/RJT/2015 Shri Arjanbhai M. Khunti Vs. ITO Asst.Year – 2010-11 - 5 - आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent. 3. संबं�धत आयकर आयु�त / Concerned CIT 4. आयकर आयु�त(अपील) / The CIT(A)-3, Rajkot 5. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण,राजोकट/DR,ITAT, Rajkot 6. गाड� फाईल / Guard file. आदेशानुसार/ BY ORDER, स�या�पत ��त //True Copy// उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपील�य अ�धकरण, राजोकट / ITAT, Rajkot 1. Date of dictation .. 10.5.19 (dictation-pad 10-pages attached at the end of this File) 2. Date on which the typed draft is placed before the Dictating Member .. 13.5.19 3. Other Member... 4. Date on which the approved draft comes to the Sr.P.S./P.S…………….. 5. Date on which the fair order is placed before the Dictating Member for pronouncement…… 6. Date on which the fair order comes back to the Sr.P.S./P.S……. 27.5.19 7. Date on which the file goes to the Bench Clerk…………………27.5.19 8. Date on which the file goes to the Head Clerk…………………………………... 9. The date on which the file goes to the Assistant Registrar for signature on the order…………………….. 10. Date of Despatch of the Order………………