National Security and Personal Services, Vapi v. The Income tax Officer,Ward-2,, Vapi

ITA 2873/AHD/2009 | 2005-2006
Pronouncement Date: 29-01-2010 | Result: Partly Allowed

Appeal Details

RSA Number 287320514 RSA 2009
Bench Ahmedabad
Appeal Number ITA 2873/AHD/2009
Duration Of Justice 3 month(s) 13 day(s)
Appellant National Security and Personal Services, Vapi
Respondent The Income tax Officer,Ward-2,, Vapi
Appeal Type Income Tax Appeal
Pronouncement Date 29-01-2010
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted SMC
Tribunal Order Date 29-01-2010
Date Of Final Hearing 28-01-2010
Next Hearing Date 28-01-2010
Assessment Year 2005-2006
Appeal Filed On 16-10-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH 'SMC' (BEFORE SHRI N S SAINI ACCOUNTANT MEMBER) ITA NO.2873/AHD/2009 (ASSESSMENT YEAR:- 2005-06) NATIONAL SECURITY AND PERSONAL SERVICES PLOT NO.728 1 ST FLOOR 40 SHED AREA GIDC VAPI V/S THE INCOME-TAX OFFICER WARD-2 VAPI [APPELLANT] [RESPONDENT] APPELLANT BY :- SHRI RAJESH M UPADHYAY AR RESPONDENT BY:- SHRI MAHESH KUMAR SR. DR O R D E R THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINS T THE ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX (AP PEALS) DATED 29-05-2009 FOR ASSESSMENT YEAR 2005-06. 2 GROUND NO.1 RAISED BY THE ASSESSEE IN THIS APPEA L READS AS UNDER: 1. LD. AO HAS ERRED IN LAW AND ON FACTS TO ADD AN AMOUNT OF RS.2 42 509/- APPLYING PROVISIONS U/S 68 OF I.T. AC T 1961 WHICH ARE OPENING BALANCES OF AY 2005-06. LD. CIT(A) HAS ALSO ERRED IN CONFIRMING ADDITION . 3 THE FACTS OF THE CASE ARE THAT THE LEARNED ASSES SING OFFICER OBSERVED THAT THE ASSESSEE HAS SHOWN UNSECU RED LOANS WORTH RS.2 42 509/- OUT OF WHICH RS.1 40 000/- HAS BEEN SHOWN AS SUNDRY LOANS AND SUNDRY LOANS WERE NOT SHOWN IN THE GROUPI NGS IN THE AUDITED STATEMENTS. THE DETAILS OF LOAN OF RS.1 40 000/- ARE AS UNDER: 1 GOREKHNATH PANDEY : RS.19 000/- 2 ISHNARAYYAN CHOUBEY : RS.18 500/- 3 MUNNA TIWARI : RS.18 500/- 4 RAM AKBAL DUBEY : RS.18 500/- 5 RAM SEVAK TIWARI : RS.18 500/- 2 6 RAM SURAT PANDEY : RS.18 500/- 7 UMASHANKAR MAURIYA : RS.19 500/- 8 VIDYAVACHASPATI DUBEY: RS.10 000/- --------------- RS.1 40 000/- THE LEARNED ASSESSING OFFICER FURTHER OBSERVED THAT THE ASSESSEE DID NOT FURNISH ANY CONFIRMATION AND EVEN IN RESPECT OF UNSECURED LOANS FROM AZAD SECURITY SERVICES AND NOBLE SECURITY SERV ICES RS.50 000/- AND RS.52 509/- RESPECTIVELY. THE ASSES SEE DID NOT FURNISH ANY CONFIRMATION. HE FURTHER OBSERVED THAT SINCE THE ASSESSEE DID NOT OFFER ANY EXPLANATION ABOUT THE NATURE AND SOURCE OF THE CREDITS HE FAILED TO COMPLY WITH THE CONDITIONS U/ S 68 OF THE ACT. RELYING UPON THE FOLLOWING DECISIONS THE LEARNED A SSESSING OFFICER HAS MADE AN ADDITION U/S 68 OF THE ACT: (I) CIT VS. DURGA PRASAD MORE (1971) 82 ITR 540 (SC) (II) SUMATI DAYAL VS. CIT (1995) 214 ITRE 801/80 TAXMAN 89 (SC) (III) CIT VS. PRECISION FINANCE (P) LTD. (1994) 208 ITR 4 65 4 ON APPEAL BEFORE THE LEARNED COMMISSIONER OF INC OME- TAX (APPEALS) THE LEARNED AUTHORISED REPRESENTATIV E OF THE ASSESSEE CONTENDED THAT THE CREDITS WERE OBTAINED I N THE EARLIER YEARS AND THEREFORE IN THE CASE OF OLD CREDITS TH E PROVISIONS OF SECTION 68 ARE NOT APPLICABLE. HE REQUESTED TO GIVE TIME TO PROVE THE GENUINENESS OF THE CREDITS UNDER DISPUTE. 5 THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) AFTER CONSIDERING THE SUBMISSIONS HELD AS UNDER: 4.3 CONSIDERING THE RIVAL CONTENTIONS I FOUND AO TO BE JUSTIFIED IN MAKING AN ADDITION U/S 68 OF THE ACT FOR THE COUPLE OF REASONS THAT IRRESPECTIVE OF THE CONDITIONS STIPULATED U/S 68 OF THE ACT THE APPELLANT HAS MALA FIDE INTENTION TO HIDE THE FACTS OF THE CREDIT S UNDER DISPUTE AS EVEN IN THE AUDITED BOOKS OF ACCOUNTS THE CREDITS UNDER DI SPUTE ARE NOT SHOWN AS 3 LOANS. SINCE ALL THE CONDITIONS STIPULATED U/S 68 SEEMS TO BE NOT COMPLIED WITH I FOUND AO TO BE JUSTIFIED IN MAKING THE ADDI TION U/S 68 OF THE ACT. THEREFORE THE ADDITION IS UPHELD . 6 THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASS ESSEE REITERATED THE SUBMISSION MADE BEFORE THE LEARNED C OMMISSIONER OF INCOME-TAX (APPEALS). 7 THE LEARNED DEPARTMENTAL REPRESENTATIVE SUPPORTE D THE ORDER OF THE LOWER AUTHORITIES. 8 I HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED T HE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABL E ON RECORD. IN THE INSTANT CASE THE LEARNED ASSESSING OFFICER OBSERVED THAT RS.2 42 509/- WAS APPEARING ON THE CREDIT SIDE OF T HE BALANCE SHEET OF THE ASSESSEE AND THEREFORE THE LEARNED ASSESSING OFFICER BY APPLYING PROVISIONS OF SECTION 68 R.W.S. 41(1) BEIN G NOT SATISFIED WITH THE EXPLANATION OF THE ASSESSEE ADDED THE SAME TO THE INCOME OF THE ASSESSEE. ON APPEAL THE LEARNED COMMISSIONER O F INCOME TAX(APPEALS) CONFIRMED THE ADDITION ON THE GROUND T HAT THE LEARNED ASSESSING OFFICER WAS JUSTIFIED IN INVOKING PROVISI ONS OF SECTION 68 OF THE ACT. I FIND THAT THE CONSISTENT PLEA OF THE ASSESSEE BEFORE THE LOWER AUTHORITIES WAS THAT AS THE CREDITS IN QUESTI ON ARE BROUGHT FORWARD BALANCES OF EARLIER YEARS THE SAME CANNOT BE ADDED TO THE INCOME OF THE ASSESSEE BY INVOKING PROVISIONS OF SE CTION 68 OF THE ACT. I FIND THAT THE LOWER AUTHORITIES HAVE NOT DE ALT WITH THIS CONTENTION OF THE ASSESSEE. THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE REITERATED THE ABOVE CONTENTION BEF ORE ME AND SUBMITTED A STATEMENT IN RESPECT OF THE CREDITORS I N QUESTION AT PAGE NO.3 OF THE PAPER BOOK WHICH SHOWS THAT NO FRESH LO AN WAS ACCEPTED FROM THEM DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION. THE LEARNED DEPARTMENTAL REPR ESENTATIVE DID NOT DISPUTE THE ABOVE CLAIM OF THE ASSESSEE. THUS I FIND THAT THE AMOUNTS IN APPEAL WERE BROUGHT FORWARD BALANCES FOR THE YEAR UNDER 4 CONSIDERATION AND ARE NOT FRESH CREDITS OF THE YEAR UNDER CONSIDERATION. ON THE ABOVE FACTS IN MY CONSIDERE D VIEW PROVISIONS OF SECTION 68 ARE NOT ATTRACTED IN THE I NSTANT CASE AND ADDITION OF THE AMOUNT CANNOT BE LEGALLY MADE IN TH E ASSESSMENT OF THE ASSESSMENT YEAR OF THE APPEAL. MY ABOVE VIEW F INDS SUPPORT FROM THE DECISION OF THE HON'BLE DELHI HIGH COURT I N THE CASE OF COMMISSIONER OF INCOME TAX VS. USHA STUD AGRICULTUR AL FARMS LTD. (2008) 5 DTR (DEL) 335: (2008) 301 ITR 384 : (2009) 183 TAXMAN 277 WHEREIN IT WAS HELD AS UNDER: THE CIT(A) HAS DELETED THE ADDITION OF RS. 15 LACS MAINLY ON THE GROUND THAT THIS CREDIT BALANCE OF RS. 15 LACS IS BEING REFLECTED IN THE ACCOUNTS OF THE ASSESSEE OVER THE PAST FOUR TO FIVE YEARS OR SO AND HENCE THIS WAS NOT A FRESH CRE DIT ENTRY OF THE PREVIOUS YEAR UNDER CONSIDERATION AND THESE CRE DIT ENTRIES WERE ALREADY MADE AND ACCOUNTED FOR IN THE ASST. YR S. 1995-96 AND 1997-98 WHICH WERE INTRODUCED IN THE FORM OF AD VANCE AGAINST BREEDING STALLIONS OWNED BY THE ASSESSEE AN D THUS THESE CREDIT ENTRIES DID NOT RELATE TO THE YEAR UNDER CON SIDERATION FOR BEING CONSIDERED UNDER S. 68. SINCE IT IS A FINDING OF FACT RECORDED BY THE CIT(A) THAT THIS CREDIT BALANCE APP EARING IN THE ACCOUNTS OF THE ASSESSEE DOES NOT PERTAIN TO TH E YEAR UNDER CONSIDERATION UNDER THESE CIRCUMSTANCES THE AO WA S NOT JUSTIFIED IN MAKING THE IMPUGNED ADDITION UNDER S. 68 AND AS SUCH NO FAULT CAN BE FOUND WITH THE ORDER OF THE TR IBUNAL WHICH HAS ENDORSED THE DECISION OF THE CIT(A). THE ABOVE BEING THE POSITION NO FAULT CAN BE FOUND WITH THE VIEW TAKEN BY THE TRIBUNAL. THUS THE ORDER OF THE TRIBUNAL DO ES NOT GIVE RISE TO A QUESTION OF LAW MUCH LESS A SUBSTANTIAL QUESTION OF LAW TO FALL WITHIN THE LIMITED PURVIEW OF S. 260A WHICH IS CONFINED TO ENTERTAINING ONLY SUCH APPEALS AGAINST THE ORDER WHICH INVOLVE A SUBSTANTIAL QUESTION OF LAW. 9 IN VIEW OF THE ABOVE I DELETE THE ADDITION OF RS.2 42 509/-. THUS THE GROUND OF APPEAL OF THE A SSESSEE IS ALLOWED. 10 GROUND NO.2 IN THIS APPEAL READS AS UNDER: 2 LD. AO HAS ERRED IN LAW AND ON FACTS TO DISALLOW ADVERTISEMENT EXPENSES WHICH IS NOT FOUND BY AO FOR NON-BUSINESS PURPOSE OR PERSONAL ONE. LD. CIT(A) HAS CONFIRMED DISALLOWANCE WITHOUT ANY REASON . 5 11 THE FACTS OF THE CASE ARE THAT THE AO OBSERVED THAT THE ASSESSEE COULD NOT PROVE THE EXPENSES FOR ADVERTISE MENT PUBLISHED AND HE THEREFORE DISALLOWED THE SAME. 12 BEFORE THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) THE ASSESSEE CONTENDED THAT SIMPLY FOR O NE OF THE PROOF OF ADVERTISEMENT THE EXPENSES MAY NOT BE DISALLOWED. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HELD AS UNDER: 5.3 CONSIDERING THE RIVAL CONTENTIONS I FOUND AO T O BE JUSTIFIED IN MAKING DISALLOWANCE AS THE ASSESSEE FAILED TO PROD UCE AN EVIDENCE IN RESPECT OF THE EXPENSES CLAIMED. THEREFORE THE ADD ITION IS UPHELD. 13 THE LEARNED AUTHORISED REPRESENTATIVE OF THE AS SESSEE REITERATED THE SUBMISSION MADE BEFORE THE LEARNED C OMMISSIONER OF INCOME-TAX (APPEALS). 14 THE LEARNED DEPARTMENTAL REPRESENTATIVE SUPPORT ED THE ORDER OF THE LOWER AUTHORITIES. 15 I HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABL E ON RECORD. IN THE INSTANT CASE THE ADVERTISEMENT EXPENSES OF RS.11 5 00/- WAS DISALLOWED BY THE LEARNED ASSESSING OFFICER AS THE ASSESSEE COULD NOT FILE PROOF OF PUBLISHING SUCH ADVERTISEMENT IN ANY FORM WHICH WAS CONFIRMED IN APPEAL BY LEARNED COMMISSIONER OF INCOME TAX(APPEALS). EVEN BEFORE ME NO SUCH PROOF OF ADV ERTISEMENT MADE BY THE ASSESSEE HAS BEEN FILED. HENCE I DO NOT FI ND ANY GOOD REASON TO INTERFERE WITH THE ORDER OF THE LOWER AUTHORITIE S WHICH IS CONFIRMED AND THE GROUND OF APPEAL OF THE ASSESSEE IS DISMISSED. 16 GROUND NO.3 AND 4 IN THIS APPEAL READS AS UNDER : 3 LD. AO ADDED AN AMOUNT OF RS.2 811/- AS ESIC NO T PAID WITHIN STATUTORY LIMIT BUT PAID U/S 43B IS WRONGLY DISALLO WED. LD. CIT(A) HAS NOT COMMENTED ON THIS ISSUE . 6 4 LD. AO ON AD HOC BASIS DISALLOWED 15% OF EXPENS ES OF RS.5 07 153/- ON PRESUMPTIVE GROUND OF PERSONAL ELE MENT. LD. LEARNED COMMISSIONER OF INCOME TAX(APPEALS) HAS ALSO ERR5ED IN CONFIRMING 10% AS AGAINST 15% WITHOUT ANY REASON FOR SUCH A FI NDING . 17 AT THE TIME OF HEARING THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE SUBMITTED THAT HE IS NOT PRESSING THE ABOVE GROUNDS OF APPEAL. THEREFORE THE ABOVE GROUN DS OF APPEAL ARE DISMISSED AS NOT PRESSED. 18 IN THE RESULT THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT TODAY ON 29-01- 2010 SD/- (N S SAINI) ACCOUNTANT MEMBER DATE : 29-01-2010 COPY OF THE ORDER FORWARDED TO : 1. NATIONAL SECURITY AND PERSONAL SERVICES PLOT NO .728 1 ST FLOOR 40 SHED AREA GIDC VAPI 2. THE ITO WARD-2 VAPI 3. CIT CONCERNED 4. CIT(A)-VALSAD 5. THE DR ITAT AHMEDABAD 6. GUARD FILE BY ORDER DEPUTY REGISTRAR ASSISTANT REGISTRAR ITAT AHMEDABA