The ACIT, Circle-5(1), Visakhapatnam v. M/s Raghavendra Constructions, Visakhapatnam

ITA 72/VIZ/2005 | 2002-2003
Pronouncement Date: 28-01-2010 | Result: Partly Allowed

Appeal Details

RSA Number 7225314 RSA 2005
Assessee PAN AAEFR6254P
Bench Visakhapatnam
Appeal Number ITA 72/VIZ/2005
Duration Of Justice 4 year(s) 11 month(s) 24 day(s)
Appellant The ACIT, Circle-5(1), Visakhapatnam
Respondent M/s Raghavendra Constructions, Visakhapatnam
Appeal Type Income Tax Appeal
Pronouncement Date 28-01-2010
Appeal Filed By Department
Order Result Partly Allowed
Bench Allotted DB
Tribunal Order Date 28-01-2010
Assessment Year 2002-2003
Appeal Filed On 03-02-2005
Judgment Text
1 IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH: VISAKHAPATNAM BEFORE: SRI SUNIL KUMAR YADAV JUDICIAL MEMBER AND SRI B.R. BASKARAN ACCOUNTANT MEMBER ITA NO.72 /VIZAG/2005 ASSESSMENT YEAR : 2001-02 ACIT CIR-5(1) VISAKHAPATNAM VS RAGHAVENDRA CONSTRUCTIONS VISAKHAPATNAM (APPELLANT) (RESPONDENT) PAN NO. AAEFR 6254 P APPELLANT BY : SHRI G.S.S.S. GOPINATH DR RESPONDENT BY : C. SUBRAMANYAM CA O R D E R PER B..R. BASKARAN ACCOUNTANT MEMBER : THE APPEAL OF THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 10-11-2004 PASSED BY LD CIT (A) VISAKHAPATNAM AND IT RELATES T O THE ASSESSMENT YEAR 2001- 02. 2. THE FOLLOWING TWO ISSUES ARE CONTESTED IN THESE APPEALS: A) WHETHER THE LD CIT(A) IS JUSTIFIED IN GRANTING A RELIEF OF RS. 17 68 753/- OUT OF THE ADDITION MADE U/S 40A(3) OF THE ACT. B) WHETHER LD CIT (A) IS JUSTIFIED IN DELETING THE ADDITION OF RS.2 13 658/- RELATING TO BOGUS EXPENDITURE. 3. THE FACTS OF THE CASE ARE STATED IN BRIEF. THE A SSESSEE A PARTNERSHIP FIRM IS IN THE BUSINESS OF CIVIL CONSTRUCTION WORK. DURI NG THE COURSE OF SCRUTINY PROCEEDING THE ASSESSING OFFICE NOTICED THAT MOST OF THE VOUCHERS ARE SELF-MADE AND CONTAINED THUMB IMPRESSIONS. IT WAS ALSO NOTICE D THAT THE CREDITORS NUMBERING 14 FROM WHOM THE ASSESSEE OBTAINED CONFI RMATION LETTERS HAD PUT 2 THEIR SIGNATURE ON THE CONFIRMATION LETTER WHILE IN THE CASH VOUCHERS RELATED TO THOSE PERSONS ONLY THUMB IMPRESSIONS WERE FOUND AF FIXED. THE AO OBTAINED BANK STATEMENTS OF THE ASSESSEE AND FROM THAT THE A O NOTICED THAT THE ASSESSEE HAD ISSUED NUMBER OF BEARER CHEQUES TO VARIOUS PERS ONS AND BOOKED EXPENDITURE IN DIFFERENT HEADS. HENCE THE AO ASKED THE ASSESSEE TO PRODUCE EVIDENCE TO PROVE THE GENUINENESS OF THE PAYMENT MA DE. THE ASSESSEE SUBMITTED THAT THOUGH THE BOOKS OF ACCOUNTS RELATIN G TO THE INSTANT YEAR ARE AVAILABLE THE BILLS AND VOUCHERS WERE FOUND MISSIN G AND COULD NOT BE TRACED. HENCE THE ASSESSEES ACCOUNTANT PREPARED THE MANUAL SELF MADE VOUCHERS AND THEY WERE PRODUCED BEFORE THE AO. THE AO COLLATED THE DETAILS OF CHEQUES ISSUED BY THE ASSESSEE FIRM AND ARRIVED INITIALLY A T A FIGURE OF RS.1 01 54 971/-. AT THE TIME OF FINALIZING THE ASSESSMENT THE AO AR RIVED AT THE AGGREGATE VALUE OF PAYMENT MADE BY WAY OF BEARER CHEQUES AT RS.1 09 21 848/- AND DISALLOWED 20% THEREOF AMOUNTING TO RS.21 84 369/- U/S 40A(3). 4. THE ASSESSING OFFICER ALSO DISALLOWED A SUM OF RS.2 16 350/- AS BOGUS EXPENDITURE SINCE THERE WAS DIFFERENCE IN THE SIGNA TURES OF THE PERSONS TO WHOM THE CHEQUES WERE ISSUED. IN THE APPEAL PREFERRED BY THE ASSESSEE THE LD CIT (A) GRANTED A RELIEF OF RS.17 68 753/- OUT OF THE ADDIT ION MADE U/S 40A(3) AND ALSO DELETED THE ADDITION OF RS.2 13 .650/- RELATING TO THE BOGUS EXPENDITURE. AGGRIEVED BY THE ORDER OF THE LD CIT (A) THE REVENU E IS IN APPEAL BEFORE US. 5. WE HAVE HEARD THE PARTIES AND CAREFULLY PERU SED THE RECORD. SECTION 40A(3) THAT STOOD AT THE RELEVANT POINT OF TIME STATES TH AT WHERE THE ASSESSEE INCURS ANY EXPENDITURE IN RESPECT OF WHICH PAYMENT IS MADE IN A SUM EXCEEDING RS.20 000/- OTHERWISE THAN BY A CROSSED CHEQUE DRAW N ON A BANK OR BY A CROSSED BANK DRAFT 20% OF SUCH EXPENDITURE SHALL N OT BE ALLOWED AS A DEDUCTION. THE PROVISIONS OF SECTION 40A(3) ARE EXPLAINED BELO W: A. THE ASSESSEE SHOULD INCUR ANY EXPENDITURE. B. IN RESPECT OF THE SAID EXPENDITURE THE ASSESS EE SHOULD MAKE PAYMENT EXCEEDING RS.20 000/-. C. SUCH PAYMENT SHOULD HAVE BEEN MADE OTHERWISE THA N BY A CROSS CHEQUE OR CROSSED BANK DRAFT. 3 5.1 THE ASSESSING OFFICER HAS CULLED OUT THE DE TAILS OF PAYMENTS MADE BY WAY OF BEARER CHEQUES FROM THE BANK ACCOUNT OF THE ASSE SSEE. THE CONDITION STIPULATED IN SECTION 40A(3) IS THAT THE PAYMENT EXCEEDING RS.20 000/- SHOULD HAVE BEEN MADE IN RESPECT OF ANY EXPENDITURE INCURRED BY THE ASSESSEE. THE NATURAL COROLLARY IS THAT A PERSON MAY MAKE PAYMENT EXCEEDING RS.20 000/- IN RESPECT OF ANY EXPENDITURE ONLY IF THE AMOUNT OF RE LEVANT EXPENDITURE EXCEEDS RS.20 000/-. HENCE THERE ARE TWO CRUCIAL POINTS TO BE SATISFIED IN ORDER TO INVOKE SECTION 40A(3) VIZ. EXPENDITURE AND PAYMENT. BOT H THE POINTS HAVE TO BE TAKEN INTO CONSIDERATION TO VERIFY THE APPLICABILITY OF S ECTION 40A(3). IN THE INSTANT CASE THE AO HAS TAKEN INTO CONSIDERATION ONLY THE PAYMEN T SINCE HE HAS MADE THE DISALLOWANCE ONLY ON THE BASIS OF ENTRIES IN THE BA NK ACCOUNT. THE AO HAS NOT VERIFIED THAT WHETHER THE IMPUGNED PAYMENTS ARE IN RESPECT OF ANY EXPENDITURE EXCEEDING RS.20 000/-. THE RELEVANT EXPENDITURE COU LD BE ASCERTAINED FROM THE BOOKS OF ORIGINAL ENTRY THAT WERE PRODUCED BEFORE T HE AO. IT IS QUIET POSSIBLE THAT THE ASSESSEE COULD HAVE WITHDRAWN A LUMP SUM FROM T HE BANK FOR MEETING DIFFERENT KIND OF EXPENDITURE. THE AO HIMSELF HAS ADMITTED THAT THE WITHDRAWALS HAVE BEEN BOOKED AS EXPENDITURE UNDER VARIOUS HEADS . HENCE THE AO HAS INVOKED SECTION 40A(3) WITHOUT VERIFYING THE EXPEND ITURE RELATED TO THE WITHDRAWAL. BEFORE LD CIT(A) THE ASSESSEE HAS GIV EN THE BREAK UP DETAILS OF SUCH PAYMENTS IN VARIOUS GROUPS. THE ASSESSEE HAS ALSO ASKED FOR EXEMPTION UNDER RULE 6DD OF THE ACT. WE NOTICE THAT THE LD C IT(A) HAS RENDERED HIS DECISION WITHOUT CONFRONTING THE DETAILS WITH THE A O. IN VIEW OF THE ABOVE IN OUR OPINION THE MATTER REQUIRES RE-EXAMINATION IN THE LIGHT OF THE PRINCIPLES STATED ABOVE. HENCE WE SET ASIDE THIS ISSUE TO THE FILE O F THE AO WITH A DIRECTION TO CONSIDER THE ISSUE AFRESH IN ACCORDANCE WITH LAW A FTER GIVING NECESSARY OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 6. THE NEXT ISSUE RELATES TO THE DISALLOWANCE O F RS.2 13 650/- AS BOGUS EXPENDITURE ON ACCOUNT OF DIFFERENCE IN SIGNATURES. THE ASSESSEE HAS EXPLAINED THE REASONS FOR THE DIFFERENCE IN THE SIGNATURE AND THE CIRCUMSTANCES SURROUNDING THAT ISSUE. HENCE WE DO NOT FIND ANY INFIRMITY IN THE DECISION OF LD CIT(A) AND ACCORDINGLY UPHOLD THE SAME. 4 7. IN THE RESULT THE APPEAL OF THE REVENUE IS TREATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED ACCORDINGLY ON 28-01-2010 SD/- SD/- (SUNIL KUMAR YADAV) (B.R. BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PVV/SPS VISAKHAPATNAM DATE:28 TH JANUARY 2010 A COPY OF THIS ORDER IS FORWARDED TO : 01 THE ACIT CIRCLE-5(1) VISAKHAPATNAM 02 M/S RAGHAVENDRA CONSTRUCTIONS 10-183 VISALAKSHI NAGAR VISAKHAPATNAM 43 03 THE VIT(A)-1 VISAKHAPATNAM 04 THE CIT VISAKHAPATNAM 05 DR ITAT VISAKHAPATNAM 06 GUARD FILE BY ORDER SR. PRIVATE SECRETARY ITAT VISAKHAPATNAM BENCH