GIRDHARI SINGH SHEKHAWAT,JAIPUR vs. ACIT, CIRCLE-2, JAIPUR

PER SHRI KUL BHARAT, JM.

This Appeal by the Assessee is directed against the order of Ld. CIT(A)-I,

Jaipur, dated 02.02.2015 pertaining to A.Y. 2011-12.

The Assessee has raised the following grounds of appeal :-

“1. That on the facts and in the circumstances of the case the Ld. CIT(A) is wrong, unjust and has erred in law in confirming addition of Rs. 22,50,284/- made to the income of the appellant by the Ld. Assessing Officer u/s 68 of the Income Tax Act, 1961 on account of alleged unexplained credit amount from Shri Ishwar Singh (R. 11,17,646) and Shri Izrail Khan (11,32,638). 2. That the appellant craves the permission to add to or amend to any of the above grounds of appeal or to withdrawn any of them.”

scrutiny assessment and the assessment was framed under section 143(3) of the

Income Tax Act, 1961 (hereinafter referred to as the Act) vide order dated

30.03.2014. While framing the assessment, the AO observed that the assessee had

2 ITA No. 365/JP/2015 Shri Girdhari Singh Shekhawat, Jaipur.

shown expense of excess sales tax paid over collections of Rs. 34,27,681/-. The

assessee had collected Rs. 2,24,52,072/-, but had actually paid Rs. 2,58,79,753 to

the Government Account. The AO noticed that this was in the form of penalty and

hence disallowed this expenditure. Further, he observed that the assessee had paid

Rs. 1,03,341/- as interest on sales tax installment. This was also treated as penalty

of disallowance as expenditure. Further, the AO disallowed the interest expenses

claim of Rs. 5,82,410/- and bank charges of Rs. 5,322/-, the AO also disallowed the

interest paid on excess bank guarantee commission. The AO obsereved that the

assessee had statutory and other liabilities from Shri Ishwar Singh of Rs. 11,17,646/-

and from Izrail Khan of Rs. 11,32,638/-. However, the AO did not accept the

contention of the assessee and made addition on these liabilities u/s 68 of the Act.

Further, the AO made addition on account of excess Commission not disclosed by

the assessee of Rs. 42,89,466/-.

after considering the submissions partly allowed the appeal. While disposing of the

appeal the Ld. CIT(A) deleted the addition made on account of Excess Commission

and allowed the claim of the assessee in respect of Excess Commission paid and

interest paid in respect of late payment of the commission. Further, the Ld. CIT(A)

also deleted the expenses on interest of Rs. 5,82,410/- and bank charges of Rs.

5,322/-.However, he sustained the addition made u/s 68 in respect of liability toward

Shri Ishwar Singh and Shri Izrail Khan.

made u/s 68 of the Act. The Ld. Counsel for the assessee reiterated the submissions

3 ITA No. 365/JP/2015 Shri Girdhari Singh Shekhawat, Jaipur.

as made in the written submission. It is contended that the assessee had entered

into an agreement on 10/11/2009 for collection of tax with Government of

Rajasthan, Commercial Tax Department. In pursuance of the execution of the term

of the agreement the assessee had provided security to the State Government in the

form of bank guarantees, from bank of Baroda for Rs. 1,19,84,000/-, and pledge of

FDR belonging to Shri Ihwar Singh of Punjab National Bank amounting to Rs. 11

lakhs and pledge of FDR belonging to Shir Izrail khan of Oriental Bank of Commerce

amounting to Rs. 11 lakhs. He contended that the AO made addition on the basis

and the assessee failed to furnish the supporting evidences and produce persons

namely Shri Ishwar Singh and Shri Izrail khan. He submitted that those persons

have not given confirmation but in that transaction is through bank challenge, the

bank has given a certificate it is enclosed at page no. 38 of the Paper Book. He

submitted that assessee had some dispute with those persons therefore they did not

give confirmation. Further, he submitted that the addition is made u/s 68 of the Act.

Admittedly, the FDR was made in the year, earlier to the year under consideration

and same ought to have not been tax in the year under appeal. Further, he

submitted that in the light of the evidences placed on record, matter may be

restored to the file of the AO for verification. He submitted that, in respect of these

liabilities the assessee cannot be made liable for tax, as the assessee discharged

primary onus.

submission and supported the orders of the authorities below.

record and gone through the order of the authorities below. We find that the

4 ITA No. 365/JP/2015 Shri Girdhari Singh Shekhawat, Jaipur.

assessee has placed on record evidences which demonstrate that the FDR belonging

to Shri Ishwar Singh and Izrail Khan was pledged as security and when the assessee

failed to fulfill the contractual obligation, Government of Rajasthan invoked the bank

guaranteed and also the security in the form of FDR. There is no evidence

suggesting that these FDR were made out of the funds of the assessee. Under

these facts, we accept the prayer of the assessee that matter to be restored to the

file of the AO to be decided in the light of the evidences placed on record.

this issue to the file of the AO for decision afresh. Needless to say, that AO would

provide sufficient opportunity to the assessee.

Order is pronounced in the open court on Friday, the 16th day of June 2017.

Sd/- Sd/- ( HkkxpUn ½ ( dqy Hkkjr) ( BHAGCHAND) ( KUL BHARAT ) ys[kk lnL;@Accountant Member U;kf;d lnL;@Judicial Member Jaipur Dated:- 16 /06/2017. Pooja/ आदेश की प्रतिलिपि अग्रेषित@ब्वचल वf जीम वतकमत वितूंतकमक जवरू

vkns'kkuqlkj@ By order,

सहायक पंजीकार@ Aेेपेजंदज. त्महपेजतंत

5 ITA No. 365/JP/2015 Shri Girdhari Singh Shekhawat, Jaipur.