BLUECHIP FEBRICS PVT. LTD., Jaipur v. CIT-CENT., Jaipur

ITA 310/JPR/2014 | 2010-2011
Pronouncement Date: 21-11-2014 | Result: Allowed

Appeal Details

RSA Number 31023114 RSA 2014
Assessee PAN AABCB8923D
Bench Jaipur
Appeal Number ITA 310/JPR/2014
Duration Of Justice 6 month(s) 23 day(s)
Appellant BLUECHIP FEBRICS PVT. LTD., Jaipur
Respondent CIT-CENT., Jaipur
Appeal Type Income Tax Appeal
Pronouncement Date 21-11-2014
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted B
Tribunal Order Date 21-11-2014
Assessment Year 2010-2011
Appeal Filed On 28-04-2014
Judgment Text
IN THE INCOMETAX APPELLATE TRIBUNAL JAIPUR BENCH: JAIPUR (BEFORE SHRI R.P. TOLANI AND SHRI T.R. MEENA) I.T.A. NO. 310/JP/2014 ASSTT. YEAR- 2010-11 PAN NO. AABCB 8923 D BLUECHIP FABRICS PVT. LTD. THE C.I.T. R-400 401 INDUSTRIAL AREA VRS. (CENTRAL) JAIP UR. MANDIA ROAD PALI- MARWAR(RAJ.) (APPELLANT) (RESPONDENT) ASSESSEE BY :- SHRI P.C. PARWAL. DEPARTMENT BY :- SHRI SHUBHASH CHANDRA DATE OF HEARING : 14/10/2014 DATE OF PRONOUNCEMENT : 21/11/2014 O R D E R PER: T.R. MEENA A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER DATED 03/03/2014 OF THE LEARNED C.I.T. (CENTRAL) JAIPUR FOR THE A.Y. 2010-11. THE EFFECTIVE GROUNDS OF APPEAL ARE AS UNDER:- 1. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE THE ORDER PASSED BY THE LEARNED CIT HOLDING THE ORDER PASSED B Y THE A.O. U/S 143(3) DATED 25/11/2011 AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE IS ILLEGAL A ND BAD IN LAW AND BE QUASHED. 2. THE LEARNED COMMISSIONER OF INCOME TAX HAS ERRED O N FACTS AND IN LAW IN DIRECTING THE A.O. FOR DOING ENQUIRIES AND VERIFICATIONS IN RESPECT OF SHARE APPLICATION MONEY OF RS. 13 16 225/- RECEIVED BY THE ASSESSEE PRIOR TO 31/3/ 2006 ITA 310/JP/2014 BLUECHIP FABRICS PVT. LTD. VS CIT 2 WHICH WAS REFUNDED IN F.Y. 2006-07 BY MAKING IRRELEVA NT OBSERVATIONS IGNORING THAT AFTER MAKING SUCH VERIFI CATIONS ONLY THE A.O. HAS FRAMED THE ASSESSMENT ORDER U/S 143(3). 2.1 THE LEARNED COMMISSIONER OF INCOME TAX HAS FUR THER ERRED ON FACTS AND IN LAW IN MAKING THE SAID DIRECTION IGN ORING THAT WHEN THE ASSESSEE HAS NOT RECEIVED ANY SHARE APPLICA TION MONEY IN THE YEAR UNDER CONSIDERATION QUESTION OF VERIFICATION OF SAME DOES NOT ARISE FOR CONSIDERATI ON. 3. THE LEARNED COMMISSIONER OF INCOME TAX HAS ERRED O N FACTS AND IN LAW IN DIRECTING THE A.O. FOR DOING ENQUIRIES AND VERIFICATIONS BEFORE TAKING A DECISION ON THE ALLEG ED APPLICABILITY OF PROVISIONS OF SEC. 40A(3) IN RESPE CT OF CASH PAYMENT MADE TO CERTAIN PARTIES AND ON ACCOUNT OF L ABOUR CHARGES BY MAKING UNWARRANTED OBSERVATIONS IGNORING THAT THE A.O. HAS EXAMINED THE CASH BOOK AND AFTER MAKIN G SUCH VERIFICATION ONLY HE HAS FRAMED THE ASSESSMENT ORD ER U/S 143(3) BY NOT MAKING DISALLOWANCE U/S 40A(3) IN RESP ECT OF SAID PAYMENTS. 2. IN THIS CASE ORIGINAL ASSESSMENT WAS COMPLETED O N 25/11/2011. THE ASSESSEE COMPANY WAS INCORPORATED ON 08/9/1999 AN D WAS CARRYING ON THE BUSINESS OF MANUFACTURING AND JOB WORK OF SYN THETIC CLOTH DURING THE YEAR. SEARCH AND SEIZURE ACTION U/S 132 OF THE INCOME TAX ACT 1961 (IN SHORT THE ACT) WAS CONDUCTED ON 06/8/2009. IN TH IS CASE SCRUTINY ASSESSMENT U/S 143(3) OF THE ACT WAS CARRIED OUT ON 25/11/2011 BY MAKING FOLLOWING OBSERVATIONS: (I) REPAIR AND MAINTENANCE RS. 75 000/- AND ITA 310/JP/2014 BLUECHIP FABRICS PVT. LTD. VS CIT 3 (II) DISALLOWANCE U/S 40A(3) RS. 27 500/-. THE LEARNED CIT HAD INITIATED PROCEEDING U/S 263 OF T HE ACT ON FOLLOWING POINTS: (I) SOURCE OF SHARE APPLICATION MONEY OF RS. 13 16 225/- NOT EXAMINED (II) CERTAIN PAYMENTS IN CASH HIT BY SECTION 40A(3 ) OF THE ACT. THE LEARNED CIT GAVE REASONABLE OPPORTUNITY OF BEING HEARD BEFORE PASSING ORDER U/S 263 OF THE ACT. THE ASSESSEE SUBM ITTED BEFORE HER THAT SHARE APPLICATION MONEY WAS RECEIVED PRIOR TO 31/3/2 006 AND WAS REFUNDED BACK IN F.Y. 2006-07 MUCH EARLIER THAN A.Y . 2010-11 YEAR UNDER CONSIDERATION. DURING THE YEAR NO SHARE CAPITAL WAS RECEIVED BY THE APPELLANT. THE ASSESSEE ALSO SUBMITTED COPY OF LEDGE R ACCOUNT OF 8 PERSONS WHO HAD APPLIED FOR SHARES. THE LEARNED CIT HELD THAT DETAILS SUBMITTED BY THE APPELLANT HAD NOT GIVEN ANY ADDRES S ON WHICH VERIFICATION CAN BE MADE. IN LEDGER ACCOUNT OF DHAK ABHAI HIMMATLAL GANDHHI AND POOJA PRAKASH GUNDECHA PAYMENTS HAD BEE N MADE TO THEM BY THE ASSESSEE IN CASH. IN OTHER LEDGER ACCOUNTS PALI URBAN COOPERATIVE BANK HAD BEEN MENTIONED BUT NO CHEQUE NUMBER. ACCO RDINGLY HE RESTORED BACK THIS ISSUE TO THE ASSESSING OFFICER T O OBTAIN THE ADDRESSES MADE VERIFICATION AND VERIFIED THESE TRANSACTIONS. THE SECOND ISSUE ITA 310/JP/2014 BLUECHIP FABRICS PVT. LTD. VS CIT 4 AGAINST THIS PROCEEDING INITIATED WAS THAT CASH PAYM ENT MADE BY VIOLATING THE PROVISIONS OF SECTION 40A(3) OF THE ACT IN THE CASE OF M/S DHANVARSHA ART AND TO M/S ACCURATE AUTO INDUSTRIES. THE ASSESSE E HAD SUBMITTED COPY OF ACCOUNT OF BOTH THE CONCERNS BUT THE LEARNED CIT HAD HELD THAT ORIGINAL CONFIRMATION HAD NOT BEEN FURNISHED DURING 263 PROC EEDING. LEDGER ACCOUNT COPIES OF THESE TWO PARTIES HAD ALSO NOT FUR NISHED THEREFORE THE ASSESSING OFFICER WAS DIRECTED TO OBTAIN THE SAME AN D SEE WHETHER ON OTHER DATES ALSO HEAVY CASH PAYMENTS HAD BEEN MADE. THE ASSESSING OFFICER CAN CALL THE PROPRIETORS OF TWO CONCERNS AND VERIFY THE BUSINESS EXIGENCIES IF ANY. AS FAR AS THE LABOUR CHARGES WERE CONCERNED THE ASSESSING OFFICER WAS DIRECTED TO OBTAIN THE ADDRESS ES OF SOME LABOUR AND CROSS VERIFY THE TRUTH OF THE ASSESSEES CONTENTION . SIMILARLY CROSS VERIFY THE PAYMENTS MADE TO SANWARMAL AND HIS TWO SONS. THE A SSESSING OFFICER CAN THEN TAKE THE DECISION ON THE BASIS OF ENQUIRIE S AND VERIFICATIONS MADE BY HIM ABOUT APPLICABILITY OF THE PROVISIONS OF SEC TION 40A(3) IN THIS CASE. ACCORDINGLY SHE HELD THE ASSESSMENT ORDER DATED 25 /1/2011 ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE AND HAD BEEN SET ASIDE TO THE ASSESSING OFFICER TO FRAME AFRESH ON T HE BASIS OF VERIFICATION TO BE MADE BY HIM. ITA 310/JP/2014 BLUECHIP FABRICS PVT. LTD. VS CIT 5 3. BEING AGGRIEVED BY THE ORDER OF THE CIT THE ASS ESSEE CARRIED THE MATTER BEFORE US. WHO HAS SUBMITTED THAT THE ASSESS EE HAD SUBMITTED DETAILED REPLY BEFORE THE LEARNED CIT ON 25/2/2014 A ND CLAIMED AS UNDER:- 1. IN PARA NO. 1 OF THE NOTICE IT IS STATED THAT A.O. HAS NOT EXAMINED SOURCE OF SHARE APPLICATION MONEY OF R S. 13 16 225/- AS NOTED ON PAGE 48 AND 49 OF SEIZED AN NEXURE A- 1/17. IN THIS CONNECTION WE MAY SUBMIT THAT A.O. HAS EXAMINED AND VERIFIED ALL THE LOOSE PAPERS AS MENTI ONED IN FIRST PARA OF HIS ASSESSMENT ORDER AND FOUND NO DIS CREPANCIES. THE AMOUNT OF RS. 13 16 225/- REFERRED IN YOUR NOTIC E AND AS MENTIONED AT PAGE 48 OF SEIZED ANNEXURE IN FACT PER TAIN TO SHARE APPLICATION MONEY RECEIVED PRIOR TO 31/3/2006 . THE SAME WAS REFUNDED BACK IN F.Y. 2006-07. THE DETAILS REGARDING THE DATE OF REFUND OF SHARE APPLICATION M ONEY AND THE RELEVANT COPY OF ACCOUNT OF THE PERSON CONCERNE D IS ENCLOSED FROM WHICH IT CAN BE NOTED THAT THE SHARE A PPLICATION MONEY OF RS. 13 16 225/- DO NOT PERTAIN TO THE YEAR UNDER CONSIDERATION. SO FAR AS PAGE 49 IS CONCERNED IT I S ONLY A ROUGH PAPER. THE ASSESSEE HAS NOT RAISED ANY SHARE APPLICATION MONEY IN F.Y. 2009-10 AS MENTIONED IN T HAT PAPER. IN FACT THE TRIAL BALANCE FOR THE PERIOD 01/04/2009 TO 07/08/2009 (DATE OF SEARCH) AND BALANCE SHEET AS ON THAT DATE WAS GENERATED FROM COMPUTER AND SEIZED AS PAGE 23 AND 49 OF SAID ANNEXURE WHERE NO SUCH SHARE APPLICATION MONEY IS ITA 310/JP/2014 BLUECHIP FABRICS PVT. LTD. VS CIT 6 REFLECTED. THUS WHEN ASSESSEE HAS NOT RECEIVED ANY SHARE APPLICATION MONEY QUESTION OF VERIFICATION OF SAME DO NOT ARISE FOR CONSIDERATION. 2. IN PARA 2(A) OF THE NOTICE THE REFERENCE IS MADE TO CERTAIN LEDGER ACCOUNT FILED IN ASSESSMENT PROCEEDI NGS IN RESPECT OF CASH PAYMENT EXCEEDING RS. 20 000/- MADE TO FIVE PARTIES PER DAY. IT MAY BE NOTED THAT PAYMENT IS MA DE IN CASH TO THESE PARTIES AS THEY INSISTED FOR CASH PAYMENT TO MEET THEIR URGENT BUSINESS REQUIREMENT. PAYMENT MADE TO THESE PARTIES ARE GENUINE PAYMENT AND THEREFORE THE A.O. CONSIDERING THIS FACT HAS NOT APPLIED SECTION 40A( 3). FURTHER PAYMENT MADE ON 28/03/2010 TO M/S DHANVARSHA ART WAS MADE ON SUNDAY WHICH IS COVERED BY EXCEPTION PROVI DED IN RULE 6DD(J). THE CONFIRMATION OF THESE PARTIES INSIS TING FOR CASH PAYMENT IS ENCLOSED. IN PARA 2(B) REFERENCE I S MADE TO THE CASH BOOK WHERE CASH PAYMENT EXCEEDING RS. 20 00 0/- WERE RECORDED. THE PAYMENT WAS MADE TO M/S ACCURATE AU TO INDUSTRIES AND DHANVARSHA ART ON 01/4/2009 AS THEY INSISTED FOR CASH PAYMENT TO MEET THEIR URGENT BUSINESS NEED . IN CASE OF PAYMENT OF RS. 60 000/- MADE TO SANWARMAL JI ON 13/4/2009 IT MAY BE NOTED THAT HE ALONGWITH HIS TWO SONS NAMELY VIKRAM AND HEMANT ARE EMPLOYEES OF THE ASSES SEE. THEY WERE GIVEN ADVANCE TO RS. 20 000/- EACH BUT IN T HE CASH BOOK IT WAS MENTIONED IN THE NAME OF SHRI SANWARMAL I NSTEAD OF SHOWING PAYMENT OF RS. 20 000/- EACH TO THE THREE PERSONS. THUS THIS PAYMENT DO NOT EXCEED RS. 20 000 /-. SO ITA 310/JP/2014 BLUECHIP FABRICS PVT. LTD. VS CIT 7 FAR AS PAYMENT OF LABOUR CHARGES OF RS. 20 12 742/- BETWEEN 4/4/2009 TO 28/7/2009 IS CONCERNED THE PAYMENT IS NOT MADE TO ONE SINGLE PERSON BUT THE SAME IS MADE TO VARIOU S PERSON EACH BELOW RS. 20 000/- AS PER THE DETAIL ENCLOSED. HENCE THERE IS NO VIOLATION OF SECTION 40A(3) IN PAYMENT OF LABOUR CHARGES MADE IN CASH. ALSO IT IS RELEVANT TO POINT OUT THAT THE A.O. HAS EXAMINED THE CASH BOOK AND CONSIDERING THE EXPLANATION OF ASSESSEE AS ALSO THE FIRST PROVISO T O SECTION 40A(3) HAS NOT MADE DISALLOWANCE UNDER THIS SECTION AND THEREFORE SIMPLY BECAUSE HE HAS NOT MADE THE DISALL OWANCE HIS ORDER CANNOT BE TERMED AS ERRONEOUS OR PREJUDIC E TO THE INTEREST OF REVENUE. HE ALSO RELIED UPON THE FOLLOWING CASE LAWS:- (I) ANUPAM TELE SERVICES VS. ITO 2014 TIOL 161 (GUJ. H.C.). (II) R.C. GOEL VS. CIT 84 DTR 432/213 TAXMAN 305 (DEL . H.C.). (III) GIRDHARI LAL GOENKA VS. CIT 179 ITR 122 (CAL. H.C.). FURTHER HE ALSO FILED COPY OF ASSESSMENT ORDER MADE BY THE ASSESSING OFFICER IN PURSUANT TO ORDER U/S 263 OF THE ACT AND ARGUED THAT NO ADDITION WAS MADE BY THE ASSESSING OFFICER IN SUBSEQ UENT PROCEEDINGS ON ACCOUNT OF SHARE APPLICATION MONEY. UNDER THE HEAD CASH PAYMENT MADE AND VIOLATION OF SECTION 40A(3) OF THE ACT THE LEA RNED ASSESSING OFFICER FINALLY MADE THE ADDITION OF RS. 6 17 334/- IN THE INCOME OF THE ASSESSEE. HE FURTHER RELIED ON THE DECISION OF THE ITAT JAIPU R BENCH JAIPUR IN THE ITA 310/JP/2014 BLUECHIP FABRICS PVT. LTD. VS CIT 8 CASE OF SHRI PRIYANK SHARMA VS. CIT IN ITA NO. 347/J P/2013 FOR A.Y. 2009-10 ORDER DATED 28/2/2014 AND CLAIMED THAT 263 PROCEEDING HAS INITIATED ON THE BASIS OF LETTER RECEIVED FROM THE ASSESSING OFFICER THROUGH JCIT. IN IDENTICAL CASE THE HONBLE ITAT HAD HELD THAT AS PER SECTION 263 THE COMMISSIONER IS TO CALL RECORD FOR EXAMINATION OF ANY PROCEEDING UNDER THIS ACT BEFORE FRAMING HIS OPINION THAT THE ORDER PASSED BY THE ASSESSING OFFICER WAS ERRONEOUS IN SO FAR AS IT WAS PREJUDICIAL TO THE INTEREST OF THE REVENUE. THEREFORE HE PRAYED TO QUA SH THE ORDER PASSED BY THE LEARNED CIT U/S 263 OF THE ACT. 4. AT THE OUTSET THE LEARNED CIT DR SUPPORTED THE ORDER OF THE LEARNED CIT. 5. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. IT IS NOT EVI DENT FROM THE ORDER OF THE ASSESSING OFFICER THAT HE HAD ENQUIRED ON THESE ISS UES BEFORE COMPLETING THE ASSESSMENT PROCEEDINGS. THE APPELLANT IS ALSO NO T ABLE TO DEMONSTRATE THAT THE ASSESSING OFFICER HAD ISSUED Q UERY ON THESE ISSUES. HOWEVER IN SUBSEQUENT PROCEEDING HE HAD NOT ADDED SHARE APPLICATION MONEY IN THE INCOME OF THE ASSESSEE. HOWEVER HE MAD E ADDITION U/S 40A(3) OF THE ACT AFTER CONSIDERING THE ASSESSEES REPLY AS WELL AS SEIZED MATERIAL BUT IT IS EVIDENT THAT ASSESSING OFFICER H AD IN POSSESSION OF CASH ITA 310/JP/2014 BLUECHIP FABRICS PVT. LTD. VS CIT 9 BOOK SEIZED DURING THE COURSE OF SEARCH PROCEEDING WHO HAD MADE DISALLOWANCE U/S 40A(3) OF THE ACT AT RS. 27 500. IT APPEARS THAT THE LEARNED ASSESSING OFFICER HAS CONSIDERED THE SEIZE D MATERIAL AS WELL AS CASH PAYMENT MADE BY THE ASSESSING OFFICER BY VIOLA TING THE PROVISIONS OF SECTION 40A(3) OF THE ACT. FURTHER THE ASSESSEE HAS FILED THE CERTIFICATE FROM THE RECIPIENT THAT THEY COMPELLED THE ASSESSEE TO MAKE CASH PAYMENT AND THESE PAYMENTS MADE AS PER BUSINESS EXI GENCY (PAGE NOS. 18 TO 22 OF THE PAPER BOOK). THEREFORE WE FIND THAT THE LEARNED ASSESSING OFFICER HAD CONSIDERED THIS ISSUE IN ORIGINAL ASSES SMENT ON THE BASIS OF SAME MATERIAL. THE LEARNED CIT HAS DIFFERENT OPINION ON IT WHICH IS NOT PERMITTED TO REOPEN THE SETTLED ISSUE U/S 263 OF TH E ACT ACCORDINGLY WE QUASH THE ORDER OF THE LEARNED CIT. 6. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 21/11/2014. SD/- SD/- (R.P. TOLANI) (T.R. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER JAIPUR DATED : 21 ST NOVEMBER 2014 * RANJAN ITA 310/JP/2014 BLUECHIP FABRICS PVT. LTD. VS CIT 10 COPY FORWARDED TO :- 1. BLUECHIP FABRICS PVT. LTD. PALI. 2. THE CIT CENTRAL JAIPUR 3. THE CIT (A) 4. THE CIT 5. THE D/R GUARD FILE (I.T.A. NO. 310/JP/2014) BY ORDER AR ITAT JAIPUR.