SUDERSHAN BHUYAN,BALASORE vs. JCIT, BALASORE RANGE, BALASORE, BALASORE

PDF · subscribers
ITA 425/CTK/2014Status: DisposedITAT Cuttack29 March 2017AY 2009-107 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal allowed the appeal regarding the disallowance of repair expenditure and the addition for unexplained cash credit, finding the assessee's explanations plausible. The penalty for accepting cash loans was also deleted, following jurisdictional High Court precedent.

What were the facts?

The assessee challenged the disallowance of depreciation and additions made by the Assessing Officer and confirmed by the CIT(A). The assessee also challenged the levy of penalty for accepting cash loans.

What were the issues?

Whether depreciation on assets with allegedly bogus purchase bills is allowable, and if cash deposits and cash loans are to be treated as unexplained income or valid business transactions.

Which sections of the Income-tax Act were involved?

Section 68,Section 271D,Section 269SS,Section 40A(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, CUTTACK

Before: SHRI N.S SAINI

For Appellant: Shri P.R.Mohanty
For Respondent: Shri D.K.Pradhan, DR
Pronounced: 29/03

These are appeals filed by the assessee against the order of CIT(A)-

1, Bhubaneswar dated 23.1.2014 & 20.8.2014, for the assessment year

2009-2010 .

2.

In ITA No.425/CTK/2014, Ground No.1 of the appeal is general in

nature and hence requires no separate adjudication by me.

3.

In Ground Nos.2 of the appeal, the grievance of the assessee is that

the CIT(A) erred in confirming the order of the Assessing Officer disallowing

depreciation on fixed assets of Rs.1,70,780/-.

2 Sri Sudarshan Bhuyan, Ranipatna, Balasore.

4.

I find that the CIT(A) has deleted the addition of Rs.1,70,780/- on

the ground that such amount was paid for acquisition of assets and not

claimed as expenditure in the profit and loss account. Therefore, the

assessee can have no grievance against the order of the CIT(A). Hence,

this ground of appeal is dismissed.

5.

In Ground No.3 of the appeal, the grievance of the assessee is that

the CIT(A) erred in confirming the disallowance of depreciation of

Rs.23,916/- claimed by the assessee.

6.

I have heard the rival submissions and perused the orders of lower

authorities and materials available on record. I find that the Authorised

Representative of the assessee has not controverted the findings of lower

authorities that the purchase bills furniture and machineries were found to

be false or bogus on an enquiry made by the Assessing Officer through

Inspector. As the very existence of the asset is not proved by evidence,

the question of allowing depreciation for the use of business does not arise.

Hence, I find no infirmity in the order of the CIT(A) in disallowing the claim

of depreciation of Rs.23,916/- and dismiss this ground of appeal.

7.

In Ground No.4 of the appeal, the grievance of the assessee is that

the CIT(A) erred in confirming the addition of Rs.9,906/- towards

expenditure against repair and maintenance of assets which is

proportionate to Rs.54,570/-.

8.

I have heard the rival submissions and perused the orders of lower

authorities and materials available on record. In the instant case, the

3 Sri Sudarshan Bhuyan, Ranipatna, Balasore.

Assessing Officer disallowed proportionate expenditure on repairs and

maintenance of assets of Rs.9,906/- as he has found that purchase of

machineries and furniture of Rs.1,70,780/- as bogus.

9.

On appeal, the CIT(A) confirmed the action of the Assessing Officer.

10.

Before me, ld Authorised Representative of the assessee submitted

that the proportionate disallowance of expenditure was not justified.

11.

Ld D.R. relied on the orders of lower authorities.

12.

I find that the Assessing Officer has disallowed proportionate

expenditure of Rs.9,906/- against repairs and maintenance of assets on the

ground that he has found the purchase of machineries and furniture of

Rs.1,70,780/- as bogus. I find that no material has been brought on record

by the lower authorities to show that the assessee in the expenditure of

Rs.54,570/- has claimed any expenditure on furniture and machineries

purchase of which it was found to be bogus. In absence of any such nexus,

in my considered view, adhoc disallowance out of genuine business

expenditure cannot be made. I, therefore, vacate the disallowance of

Rs.9,906/- made by the lower authorities and allow this ground of appeal

of the assessee.

13.

In Ground No.5 of the appeal, the grievance of the assessee is that

the CIT(A) erred in confirming the addition of Rs.8,00,000/- u/s.68 of the

Act.

4 Sri Sudarshan Bhuyan, Ranipatna, Balasore.

14.

I have heard the rival submissions and perused the orders of lower

authorities and materials available on record. The Assessing Officer found

from the saving bank account with Dena Bank Account No.113010000332

of the assessee that the assessee had made cash deposit of Rs.8,00,000/-

on 28.11.2008. The assessee explained the source of deposit to be out of

amounts withdrawn earlier for payment of cement advance and other

building materials. The Assessing Officer did not find the explanation of

the assessee to be satisfactory and added Rs.8 lakhs u/s.68 of the Act as

unexplained cash credit.

15.

On appeal before the CIT(A), the assessee reiterated the submissions

made before the Assessing Officer and submitted that the details of

withdrawals of Rs.8,15,000/- during the period 21.11.2008 to 27.11.2008,

which are recorded by the CIT(A) in his order as under:

Date Amount (Rs.) 21.11.2008 1,20,000/- 21.11.2008 15,000/- 24.11.2008 30,000/- 26.11.2008 5,50,000 27.11.2008 1,00,000/- Total : 8,15,000/-

The assessee explained that deposit of Rs.8 lakhs on 28.11.2008 was

out of previous withdrawals of Rs.8,15,000/-. The CIT(A) did not accept

the explanation of the assessee on the ground that when payment has to

be made it has to be made in cheque as section 40A(3) provides that no

cash payment in excess of Rs.20,000/- can be made by the assessee.

5 Sri Sudarshan Bhuyan, Ranipatna, Balasore.

15.

Before me, ld Authorised Representative of the assessee reiterated

the submissions made before the lower authorities.

16.

Ld Departmental Representative supported the orders of lower

authorities.

17.

I find that the explanation of the assessee that deposits of

Rs.8,00,000/- in the bank account maintained with Dena Bank on

28.11.2008 was out of his previous withdrawals during the period

21.11.2008 to 27.11.2008 of Rs.8,15,000/- as a plausible one. Further the

explanation of the assessee is that he had withdrawn this cash for payment

of cement and other building materials and when same was not necessary

for that purpose, the assessee re-deposited the amount in his bank

account. I find that no positive material has been brought on record by the

revenue to show that the assessee could not have made deposit of Rs.8

lakhs on 28.11.2008 out of his previous withdrawals of Rs.8,15,000/-made

during the period 21.11.2008 to 27.11.2008. I, therefore, set aside the

orders of lower authorities on this issue and delete the addition of Rs.8

lakhs and allow this ground of appeal of the assessee.

18.

In the result, the appeal filed by the assessee is partly allowed. 19. In ITA No.413/CTK/2014, the grievance of the assessee is that

the CIT(A) erred in confirming the levy of penalty u/s.271D of the Act of

Rs.2,90,000/-.

20.

Assessing Officer found that the assessee has accepted cash loan of

Rs.2,90,000/- from the following persons:

6 Sri Sudarshan Bhuyan, Ranipatna, Balasore.

1) Shri Shankar Dinda : Rs.70,000/- 2) Shri Abhimanyu Samal : Rs.80,000/- 3) shri Pankaj Behera : Rs.85,000/- 4) Smt. Minati De : Rs.55,000/-

Therefore, he levied penalty u/s.271D of the Act of Rs.2,90,000/- for

violation of provisions of section 269SS of the Act.

21.

On appeal, the CIT(A) confirmed the action of the Assessing Officer.

22.

Before me, ld Authorised Representative of the assessee submitted

that the loans were taken from close relatives and they have adequate

funds from agricultural sources to meet his business necessity. He

submitted that the Hon’ble Jharkhand High Court in the case of OMEC

Engineers vs CIT,(2008) 217 CTR Jharkhand 144, has held that when

there is no finding of assessing authority or appellate authority or the

Tribunal that the transaction made by the assessee in breach of provisions

of section 269SS was not a genuine transaction, the penalty u/s.269SS is

not leviable.

23.

Ld D.R. relied on the orders of lower authorities.

24.

I have heard the rival submissions and perused the orders of lower

authorities and materials available on record. In the instant case, I find

that there is no finding either by the Assessing officer or ld CIT(A) that the

transaction made by the assessee in breach of provisions of section 269SS

are not genuine transaction. I also find that the explanation of the assessee

before the lower authorities is that payment was received in cash from

7 Sri Sudarshan Bhuyan, Ranipatna, Balasore.

persons who are agriculturist staying in village where there is no banking

facility. Thus, it is not in dispute that the payments in cash were received

by the assessee out of commercial expediency in order to carry on his

business transaction. Therefore, the decision of Hon'ble’ Jurisdictional High

Court in the case of Omec Engineers (supra) squarely applies to the facts

of the assessee’s case. Respectfully following the same, I delete the

penalty of Rs..2,90,000/- and allow the grounds of appeal of the assessee.

25.

In the result, appeal filed by the assessee is allowed.

Order pronounced in the open court on 29/03/2017 in the presence of parties. Sd/- (N.S Saini) ACCOUNTANT MEMBER Cuttack; Dated 29/03/2017 B.K.Parida, SPS Copy of the Order forwarded to : 1. The Appellant : Sri Sudarshan Bhuyan, Ranipatna, Balasore. 2. The Respondent. JCIT, Balasore 3. The CIT(A)-1, Bhubaneswar 4. Pr.CIT1-, Bhubaneswar. 5. DR, ITAT, Cuttack 6. Guard file. //True Copy// BY ORDER,

SR.PRIVATE SECRETARY ITAT, Cuttack

More judgments on Section 68

All 29,931 judgments and leading authorities on Section 68 →

Recent GST High Court judgments

Search GST case law →