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Income Tax Appellate Tribunal, CUTTACK BENCH, CUTTACK
Before: S/SHRI N.S SAINI & PAVAN KUMAR GADALE
IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK
BEFORE S/SHRI N.S SAINI, ACCOUNTANT MEMBER AND PAVAN KUMAR GADALE, JUDICIAL MEMBER
ITA No.321/CTK/2012 Assessment Year : 2008-09
Mr Siba Narayan Rout, Prop. Vs. ACIT, Balasore Circle, Arpita Construction, Balasore Bimbalbar, Patuli, Barikpur Bazar, Bhadrak. PAN/GIR No. AGHPR 3192 D (Appellant) .. ( Respondent)
ITA No.387/CTK/2012 Assessment Year : 2008-09
ACIT, Balasore Circle, Vs. Mr Siba Narayan Rout, Prop. Balasore. Arpita Construction, Bimbalbar, Patuli, Barikpur Bazar, Bhadrak. PAN/GIR No. AGHPR 3192 D (Appellant) .. ( Respondent)
Assessee by : Shri P.R.Mohanty, AR Revenue by : Shri D.K.Pradhan, DR
Date of Hearing : 18/05/ 2017 Date of Pronouncement : /05/ 2017
O R D E R Per Bench:
These are cross appeals filed by the assessee and the revenue against
the order of CIT(A)-Cuttack, dated 23.3.2012, for the assessment year
2008-09.
ITA No. 321/CT K/ 2012 ITA No. 387/CT K/ 2012 Asse ssment Year : 20 08- 09
For the sake of convenience, we first take up the appeal of the
assessee in ITA No.321/CTK/2012 and the facts narrated therein.
Ground No.1 is general in nature and hence, requires no separate
adjudication by us.
At the time of hearing, ld A.R. of the assessee has not pressed Ground
Nos.3,4 & 5 and made an endorsement to the grounds of appeal and,
accordingly, they are dismissed as not pressed.
The only ground envisaged by the ld A.R. is that the CIT(A) was not
justified in confirming the addition of Rs.20 lakhs , which was made as fixed
deposits with Union Bank, Cuttack Branch, Cuttack due to contractual
obligations and accrued interest.
Brief facts of the case are that the assessee is an individual and in
the business of execution of works contract and filed the return of income
for the assessment year 2008-09 on 29.9.2008 disclosing total income of
Rs.8,01,254/- Subsequently, the case was selected for scrutiny and notice
under section 143(2) and 142(1) was issued to the assessee. In
compliance to the notices, ld A.R. appeared from time to time before the
Assessing Officer. The Assessing Officer also issued notice under section
133(6) to various parties calling for information on proposed additions in
show cause notice at pages 3 to 5 of the assessment order and ld A.R. filed
written submission in reply relied at pages 6 to 8 of the assessment order.
ITA No. 321/CT K/ 2012 ITA No. 387/CT K/ 2012 Asse ssment Year : 20 08- 09
The Assessing Officer on perusal of the Books of account and statement in
respect of fixed deposits of Rs.20 lakhs and the contention of the assessee
observed that this amount pertains to contractual work receipt and the
same is credited to profit and loss account and accordingly, the expenditure
has been claimed whereas the Assessing Officer was not satisfied with the
explanation and found that the assessee has not offered accrued interest
income, under income from other sources and in the assessment
proceedings accepted that the same as mistake and offered for taxation
and finally, the Assessing Officer has made an addition of fixed deposits
and interest on a presumption that the assessee is wilfully trying to avoid
tax.
Similarly, the Assessing Officer made an addition u/s. 69A of the Act
Rs.5,80,000/- as the said amount was not disclosed in the books of account
and no material evidence was filed.
Further, the assessee had made cash payments exceeding
Rs.20,000/- in violation of section 40A(3) of the Act, the Assessing Officer
disallowed 20% of total payment of Rs.47,91,700/- which works out to
Rs.9,58,340/-.
Similarly, the assessee has claimed expenditure of diesel & lubricants
of Rs.1,34,85,459/-. The Assessing Officer has issued notice u/s.142(1)
ITA No. 321/CT K/ 2012 ITA No. 387/CT K/ 2012 Asse ssment Year : 20 08- 09
and 133(6), whereas some of the parties have not accepted the claim and,
therefore, the Assessing Officer made an addition of Rs.1,34,85,459/-.
Similarly, the assessee has claimed depreciation @ 30% on WDV of
tippers and road rollers, which was used for less than 180 days and,
therefore, the Assessing Officer disallowed 50% of the depreciation and
Assessed total income at Rs.1,80,48,740/- and passed order under section
143(3) of the Act on 26.10.2010.
Subsequently, the Assessing Officer passed order under section
143(3) r.w.s 154 of the Act on 23.12.2010.
Aggrieved by the above additions, the assessee has filed an appeal
before the CIT(A).
In the first appellate proceedings, the assessee argued the grounds
and reiterated the submissions on the disputed issue of Rs.20 lakhs, which
was explained and emphasised that the amount has been already
considered in the books of account and the assessee has offered for
taxation and was credited to the profit and loss account whereas the CIT(A)
having considered the findings of the Assessing Officer and the fact that
the assessee has made investment by way of fixed deposit has observed
that this deposit was not disclosed in the financial statement and, therefore,
confirmed the addition of Rs.20 lakhs and interest accrued thereon.
ITA No. 321/CT K/ 2012 ITA No. 387/CT K/ 2012 Asse ssment Year : 20 08- 09
Aggrieved by the order of the CIT(A), the assessee has filed an appeal
before the Tribunal.
Before us, ld A.R. of the assessee argued that the said amount of
Rs.20 lakhs was disclosed in the financial statement and produced copy of
Audit report in Form 3CB and 3CD and Audited balance sheet and stated
that the amount of fixed deposits is disclosed and was offered for taxation
and prayed for allowing the appeal.
Contra, ld D.R. relied on the order of the CIT(A).
We heard the rival submissions and perused the orders of lower
authorities and materials available on record. The sole crux of the addition
of Rs.20 lakhs made by the Assessing Officer pertains to fixed deposits
made by the assessee in respect of contracts which is not in dispute. The
allegation of the lower authorities is that these amounts have not been
reflected and was not offered to tax, whereas the ld A.R. drew our attention
to the tax audit report u/s.44AB and profit and loss account where the
assessee has disclosed this income in the said financial year under gross
bills received and made the fixed deposit with Union Bank, Cuttack on
6.11.2007 of Rs.1,25,000/- each aggregating to Rs.20 lakhs. The assessee
has recorded the deposits in the financial statement and Books of accounts
are audited. The revenue’s sole allegation that the said amount has not
been reflected in the balance sheet. Ld A.R. drew our attention to the
ITA No. 321/CT K/ 2012 ITA No. 387/CT K/ 2012 Asse ssment Year : 20 08- 09
balance sheet to demonstrate that that the amount of Rs.20 lakhs is
disclosed under the security deposits with department of Rs.20,08,027/-,
which includes interest component of Rs.8,027/-. Prima facie, the assessee
has recorded the said amount in the books of account and complied with
the accounting system. We are of the opinion that the said transaction was
through banking channel and disclosed in the Audited balance sheet.
Therefore, we are inclined to set aside the order of the CIT(A) on this
disputed issue and direct the Assessing Officer to delete the addition of
Rs.20 lakhs. We also found that the assessee has not disclosed the interest
component of these fixed deposits as agreed in the assessment
proceedings. Therefore, we confirm the additions of Rs.69,957/- made by
the Assessing Officer.
In the result, appeal of the assessee is partly allowed.
Now we take up the appeal of the revenue in ITA No.387/CTK/2012.
The first ground relates to restriction of addition of Rs.31,167/- in
place of Rs.5,80,000/- made by the Assessing Officer for unexplained
investment u/s.69A in the SB A/c.
We considered the rival submissions and find that the CIT(A) was
reasonable in considering the reconciliation statement of the assessee’s
current bank account and saving bank account and the findings of the
Assessing Officer in the remand report that the closing balance of
ITA No. 321/CT K/ 2012 ITA No. 387/CT K/ 2012 Asse ssment Year : 20 08- 09
Rs.31,167/- was not disclosed in the financial statement. The CIT(A)
having satisfied with the reconciliation directed the Assessing Officer to
restrict the addition to Rs.31,167/-, which we found to be in order.
Accordingly, we are not inclined to interfere with the order of the CIT(A)
and dismiss this ground of appeal of the revenue.
The next issue relates to deletion of disallowance of Rs.9,58,340/-
made u/s.40A(3) of the Act.
Before us, ld D.R. contended that the CIT(A) was not justified in
deleting the addition u/s.40A(3) of the Act irrespective of the fact that the
assessee has cash payments exceeding Rs.20,000/- violating the provisions
of section 40A(3) of the Act whereas ld A.R. relied on the order of the
CIT(A).
We find that the CIT(A) has called for a remand report and has
furnished the copy of remand report to the assessee to file any objections
whereas the assessee has explained with reasons for the cash payments
and the circumstances in which such payments are made. The CIT(A) has
considered the findings of the Assessing Officer and objections of the
assessee and found that there was no material before the Assessing Officer
while passing order u/s.143(3) to make the disallowance of Rs.9,58,340/-
. Therefore, having satisfied with the explanations of the assessee, and
remand report, the CIT(A) has deleted the addition. In view of above, we
ITA No. 321/CT K/ 2012 ITA No. 387/CT K/ 2012 Asse ssment Year : 20 08- 09
do not find any infirmity in the order of the CIT(A), which is hereby
confirmed and dismiss this ground of appeal of the revenue.
The last ground of the revenue relates to deletion of disallowance of
Rs.1,34,85,459/- under the head expenditure towards “diesel and
lubricants”.
We heard the rival submissions and find that the Assessing Officer
has submitted the remand report in the appellate proceedings. After
examining the purchases made by the assessee, the CIT(A) found that the
assessee has identified the parties and expenditure has been properly
vouched and verified. The CIT(A) has elaborately discussed based on the
remand report and found that there was no material before the Assessing
Officer in the assessment proceedings except making the allegation as
bogus claims prima facie the CIT(A) has justified his action that the
department could not bring any facts and circumstances for sustaining the
addition. We are of the opinion that the powers of the CIT(A) are co-
terminus with that of the Assessing Officer and after verifying the facts on
record and the business activity carried on by the assessee, the CIT(A) has
deleted the addition. Accordingly, we confirm the order of the CIT(A) and
dismiss this ground of appeal of the revenue.
27 In the result, the appeal filed by the revenue is dismissed.
ITA No. 321/CT K/ 2012 ITA No. 387/CT K/ 2012 Asse ssment Year : 20 08- 09
In the result, the appeal of the assessee is partly allowed and the
appeal of the revenue is dismissed.
Order pronounced in the open court on 19 /05/2017 in the presence of parties. Sd/- sd/- (N.S Saini) (Pavan Kumar Gadale) ACCOUNTANT MEMBER JUDICIAL MEMBER Cuttack; Dated 19 /05/2017 B.K.Parida, SPS Copy of the Order forwarded to : 1. The Appellant /Assessee: Mr Siba Narayan Rout, Prop. Arpita Construction, Bimbalbar, Patuli, Barikpur Bazar, Bhadrak. 2. The Respondent/Revenue: ACIT, Balasore Circle, Balasore. 3. The CIT(A)Cuttack 4. Pr.CIT, Cuttack 5. DR, ITAT, Cuttack BY ORDER, 6. Guard file. //True Copy// SR.PRIVATE SECRETARY ITAT, Cuttack