SIBA NARAYAN ROUT,BHADRAK vs. ACIT, BALASORE

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.

assessee in ITA No.321/CTK/2012 and the facts narrated therein.

adjudication by us.

Nos.3,4 & 5 and made an endorsement to the grounds of appeal and,

accordingly, they are dismissed as not pressed.

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.

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.

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.

Rs.5,80,000/- as the said amount was not disclosed in the books of account

and no material evidence was filed.

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/-.

of Rs.1,34,85,459/-. The Assessing Officer has issued notice u/s.142(1)

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/-.

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.

143(3) r.w.s 154 of the Act on 23.12.2010.

before the CIT(A).

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.

before the Tribunal.

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.

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 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.

place of Rs.5,80,000/- made by the Assessing Officer for unexplained

investment u/s.69A in the SB A/c.

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 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.

made u/s.40A(3) of the Act.

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).

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 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.

Rs.1,34,85,459/- under the head expenditure towards “diesel and

lubricants”.

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.

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