M/s.Kerala Transport Co.,, Calicut v. The ACIT, Calicut

ITA 331/COCH/2014 | 2006-2007
Pronouncement Date: 14-11-2014

Appeal Details

RSA Number 33121914 RSA 2014
Assessee PAN AADFK0173H
Bench Cochin
Appeal Number ITA 331/COCH/2014
Duration Of Justice 4 month(s) 5 day(s)
Appellant M/s.Kerala Transport Co.,, Calicut
Respondent The ACIT, Calicut
Appeal Type Income Tax Appeal
Pronouncement Date 14-11-2014
Appeal Filed By Assessee
Bench Allotted DB
Tribunal Order Date 14-11-2014
Date Of Final Hearing 21-10-2014
Next Hearing Date 21-10-2014
Assessment Year 2006-2007
Appeal Filed On 09-07-2014
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH COCHIN BEFORE S/SHRI N.R.S.GANESAN JM AND CHANDRA POOJ ARI AM I.T.A. NOS.331&332/COCH/2014 ASSESSMENT YEARS : 2006-07 & 2010-11 M/S. KERALA TRANSPORT COMPANY YMCA ROAD KOZHIKODE. [PAN: AADFK 0173H] VS. THE ASSISTANT COMMISSIONER OF INCOME-TAX CIRCLE-1(1) KOZHIKODE. (ASSESSEE -APPELLANT) (REVENUE-RESPONDEN T) ASSESSEE BY SHRI T.M. SREEDHARAN SR. COUNSEL REVENUE BY SHRI K.K.JOHN SR. DR DATE OF HEARING 21/10/2014 DATE OF PRONOUNCEMENT 14/11/2014 O R D E R PER CHANDRA POOJARI ACCOUNTANT MEMBER: THESE TWO APPEALS FILED BY THE ASSESSEE IS DIRECTE D AGAINST THE COMMON ORDER DATED 27-05-2014 PASSED BY THE CIT(A) KOZHIKODE FOR THE ASSESSMENT YEARS 2006-07 AND 2010-11. 2. THE FIRST GROUND IN I.T.A. NO.331/COCH/2014 IS W ITH REGARD TO THE ADDITION OF RS.16 17 000/- BEING UNEXPLAINED CREDIT S U/S. 68 OF THE I.T. ACT. 3. THE BRIEF FACTS OF THE CASE ARE THAT DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR 2006-07 THE ASSESSEE HAD RE CEIVED AN AMOUNT OF I.T.A. NOS.331&332/COCH/2014 2 RS.23 25 928/- ON HAND LOAN FROM VARIOUS PARTIES. SINCE THE ASSESSEE COULD NOT FURNISH ANY CONFIRMATION IN RESPECT OF THESE HA ND LOANS THE ASSESSING OFFICER DISALLOWED THIS AMOUNT AS UNEXPLAINED CASH CREDIT U/S. 68 AND ADDED THIS AMOUNT TO INCOME RETURNED. 4. IN THE APPELLATE PROCEEDINGS THE CIT(A) CALLED FOR REMAND REPORT FROM THE ASSESSING OFFICER. IN THE REMAND REPORT THE ASSESSEE EXPLAINED THAT OUT OF RS.23 25 928/- RS. 16 17 000/- WAS NOT CONSIDERED IN THE BOOKS OF ACCOUNTS PERTAINING TO THE ASSESSMENT YEAR UNDER CONSIDERATION AND IT IS RELATING TO EARLIER ASSESSMENT YEARS. BEING SO IT CANNOT BE CONSIDERED AS UNEXPLAINED CREDITS U/S. 68 OF THE I.T. ACT IN THIS ASSESSMENT YEAR (2006-07) AND HENCE TO BE DELETED. FOR THIS THE LD. AR RELI ED ON THE JUDGMENT OF THE RAJASTHAN HIGH COURT IN THE CASE OF CIT VS. PARAMES HWAR BORA (301 ITR 404) WHEREIN IT WAS HELD T HAT ONLY CREDITS MADE DU RING THE FINANCIAL YEAR IS SUBJECT TO ADDITION U/S. 68. 5. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSE E AND THE REMAND REPORT OF THE ASSESSING OFFICER THE CIT(A) OBSERVE D THAT OUT OF THE HANDLOANS AMOUNTING TO RS.23 25 928/- ONLY AN AMOU NT OF RS.7 08 928/- PERTAINED TO ASSESSMENT YEAR 2006-07 AND THE BALANC E AMOUNT OF RS.16 17 000/- PERTAINED TO EARLIER YEARS. ACCORDI NG TO THE CIT(A) THOUGH THE ASSESSEE FURNISHED CONFIRMATION LETTERS FROM CR EDITORS THE ASSESSING I.T.A. NOS.331&332/COCH/2014 3 OFFICER COULD NOT VERIFY THE GENUINENESS AND CREDIT WORTHINESS OF THESE PERSONS AS ALL OF THEM BELONG TO OTHER STATES. SIN CE THE ASSESSEE HAS FURNISHED CONFIRMATION FROM CREDITORS IN RESPECT OF LOANS AVAILED DURING THE YEAR AMOUNTING TO RS.7 08 928/- THE CIT(A) DIRECTE D THE ASSESSING OFFICER TO ALLOW THE CLAIM OF THE ASSESSEE TO THAT EXTENT. REGARDING THE BALANCE AMOUNT OF LOAN OF RS.16 17 000/- AVAILED BY THE ASS ESSEE DURING THE PREVIOUS YEARS THE CIT(A) OBSERVED THAT MOST OF TH E LOANS WERE TAKEN BY THE ASSESSEE ABOUT 8-9 YEAR BACK AND NO PRUDENT CR EDITOR WOULD KEEP LOANS PENDING FOR SUCH A LONG TIME. SINCE THE ASSES SEE HAS ENJOYED THE BENEFIT OF THESE LOANS AND ALSO CONSIDERING THE AGI NG FACTOR OF THESE LOANS THE CIT(A) UPHELD THE ADDITION TO THE EXTENT OF RS. 16 17 000/- OUT OF THE TOTAL ADDITION OF RS.23 25 928/-. AGAINST THIS TH E ASSESSEE IS IN APPEAL BEFORE US. 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE R ECORD. WE FIND MERIT IN THE ARGUMENT OF THE LD. AR THAT IF THE CRE DIT OF RS.16 17 000/- IS NOT RELATING TO THE ASSESSMENT YEAR UNDER CONSIDERA TION THIS CREDIT CANNOT BE CONSIDERED AS UNEXPLAINED CREDIT U/S. 68 OF THE ACT SO AS TO BE ADDED TO THE INCOME OF THE ASSESSEE. BEING SO WE ARE INCLI NED TO REMIT THIS ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER TO VERIFY THE LEDGER ACCOUNT TO SEE WHETHER THIS CREDIT HAS APPEARED IN THE PRESENT ASS ESSMENT YEAR OR NOT. IF IT IS CARRIED FORWARD BALANCE FROM THE EARLIER ASSE SSMENT YEARS THEN NO I.T.A. NOS.331&332/COCH/2014 4 ADDITION COULD BE MADE. WITH THIS OBSERVATION WE REMIT THIS ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER TO DECIDE THE ISS UE AFRESH AFTER GIVING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. ACCORDINGLY THIS ISSUE IS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER FOR FRESH CONSIDERATION. ACCORDINGLY THIS GROUND IS PARTLY ALLOWED FOR STAT ISTICAL PURPOSES. 7 THE NEXT GROUND IN I.T.A. NO.331/COCH/2014 IS WIT H REGARD TO ADDITION OF RS.11 40 400/- BEING RECEIPTS NOT ACCOU NTED FOR BY THE ASSESSEE. 8. THE CIT(A) OBSERVED THAT THE ASSESSING OFFICER AFTER VERIFICATION OF THE RECEIPTS FOUND THAT OUT OF THE AMOUNT OF RS.12 78 430/- THE ASSESSEE HAS ACCOUNTED RS.1 38 0245/- (1 08 247+9 650+20 127 ) IN ITS ACCOUNTS. THE CIT(A) ALSO OBSERVED THAT THE ASSESSEE COULD NO T GIVE ANY PLAUSIBLE EXPLANATION NEITHER BEFORE THE ASSESSING OFFICER NO R BEFORE HIM AS TO WHY THE BALANCE AMOUNT OF RS.11 40 400/- SHOULD NOT BE ADDED. IN VIEW OF THE ABOVE POSITION THE CIT(A) DIRECTED THE ASSESSING O FFICER TO RESTRICT THE ADDITION TO RS.11 40 400/- BEING THE RECEIPTS NOT A CCOUNTED FOR BY THE ASSESSEE. AGAINST THIS THE ASSESSEE IS IN APPEAL B EFORE US. 9. WE HAVE HEARD BOTH PARTIES AND PERUSED THE RECOR D. THE LD. AR SUBMITTED THAT IT HAS OCCURRED BECAUSE OF LAPSE WHI LE ENTERING IN THE BOOKS OF ACCOUNT AND IT IS RELATING TO THE EARLIER ASSESS MENT YEARS. THE LOWER I.T.A. NOS.331&332/COCH/2014 5 AUTHORITIES HAS GIVEN AMPLE OPPORTUNITY TO EXPLAIN THE ENTRY RELATING TO THIS TRANSACTION. INSPITE OF GIVING ADEQUATE OPPORTUNIT Y TO THE ASSESSEE THE ASSESSEE FAILED TO EXPLAIN THE SAME. EVEN BEFORE US THE ASSESSEE HAS NOT FURNISHED ANY EVIDENCE TO EXPLAIN THE SOURCE OF THE SE RECEIPTS. BEING SO IN THE ABSENCE OF ANY POSITIVE MATERIAL TO EXPLAIN THE SOURCE OF THESE CREDITS WE ARE INCLINED TO CONFIRM THE ADDITION OF RS.11 40 400/- MADE BY THE CIT(A). 10. THE ONLY GROUND IN I.T.A. NO.332/COCH/2014 IS W ITH REGARD TO DISALLOWANCE OF RS.5 98 597/- BEING THE INTEREST PA ID TO M/S. KTC AUTOMOBILES (P) LTD. ON ACCOUNT OF NON-DEDUCTION OF TAX AND INVOKING THE PROVISIONS OF SEC. 40(A)(IA) OF THE ACT. 11. BEFORE THE CIT(A) THE LD. AR SUBMITTED THAT SI NCE THE DEDUCTEE HAS FILED RETURN OF INCOME SHOWING THE RECEIPT OF INTER EST AND PAID TAX THEREON THE DISALLOWANCE OF INTEREST PAID TO M/S. KTC AUTOM OBILES (P) LTD. IS NOT JUSTIFIED. FOR THIS THE LD. AR RELIED ON THE DECIS ION OF THE CALCUTTA HIGH COURT IN THE CASE OF M/S. HINDUSTAN COCO COLA BEVER AGE PVT. LTD. VS. CIT DATED 16-08-2007 WHEREIN IT WAS STATED THAT ..THE TRIBUNAL UPON REHEARING THE APPEAL HELD THAT THOUGH THE APPELLANT -ASSESSEE WAS RIGHTLY HELD TO BE AN ASSESSEE IN DEFAULT THERE COULD BE NO RECOVERY OF THE TAX ALLEGED TO BE IN DEFAULT ONCE AGAIN FROM THE APPELL ANT CONSIDERING THAT I.T.A. NOS.331&332/COCH/2014 6 PRADEEP OIL CORPORATION HAD ALREADY PAID TAXES ON T HE AMOUNT RECEIVED FROM THE APPELLANT. THE LD. AR ALSO SUBMITTED THAT THE AMENDMENT AFFECTED IN SEC. 201(1) AND 40(A)(IA) IN 2012 BEING CLARIFICATORY IN NATURE IT IS RETROSPECTIVE IN OPERATION AND AS SUCH THE DISAL LOWANCE OUGHT TO HAVE BEEN DELETED. 12. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESS EE THE CIT(A) OBSERVED THAT THE ASSESSEE HAD MADE PAYMENT TO M/S. KTC AUTOMOBILES PVT. LTD. WITHOUT DEDUCTING TAX. THE CIT(A) FURTHE R OBSERVED THAT THE JUDGMENT OF THE APEX COURT RELIED UPON BY THE ASSES SEE IN THE CASE OF M/S. HINDUSTAN COCO COLA BEVERAGE PVT. LTD. VS. CIT (293 ITR 226) DOES NOT HAVE ANY RELEVANCE TO THE PRESENT CASE AS IN THAT C ASE THE APEX COURT WAS DEALING WITH THE ASSESSEE IN DEFAULT UNDER SECTION 201(1) AND NOT ABOUT DISALLOWANCE UNDER SECTION 40(A)(IA) OF THE ACT. IN VIEW OF THIS THE CIT(A) UPHELD THE ADDITION MADE BY THE ASSESSING OFFICER. AGAINST THIS THE ASSESSEE IS IN APPEAL BEFORE US. 13. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RECORD. WE ARE OF THE OPINION THAT THIS ISSUE WAS CONSIDERED BY THE J URISDICTIONAL HIGH COURT IN THE CASE OF PRUDENTIAL LOGISTICS AND TRANSPORTS VS . ITO IN I.T.A. NO. 01 OF 2014 DATED 13 TH JAN. 2014 WHEREIN THE HIGH COURT IN PARAS 5 & 6 HA S OBSERVED AS UNDER: I.T.A. NOS.331&332/COCH/2014 7 5. READING OF SECTION 40(A)(IA) ALONG WITH 2 ND PROVISO AND SEC. 201(1) ALONG WITH PROVISO IT WOULD MEAN THAT THE MANDATE OR REQUIREMENT ON THE PART OF THE PAYER TO DEDUCT TAX AT SOURCE IS NO T SO STRICT IF THEY ARE ABLE TO SHOW THAT THE PAYEE OR THE RECIPIENT OF THE AMOUNT HAS PAID TAX IN ACCORDANCE WITH THE PROVISIONS OF SECTION 201(1) AND THE PROVISO. 6. THIS WAS NOT THE CLAIM MADE BY THE ASSESSEE BEF ORE THE ASSESSING OFFICER. THE CLAIM WAS ON A DIFFERENT STAND INITI ALLY REFLECTING THE AMOUNTS AS LOAN IN THE ACCOUNT BOOKS THOUGH SHOWN A S FREIGHT CHARGES IN THE RETURNS AND LATER EXPLAINED THAT IT WAS NOT THE LOAN AMOUNT BUT FREIGHT CHARGES. IT WAS NEVER THE CASE OF THE ASSE SSEE THAT THERE WAS NO MANDATE SUBSEQUENT TO AMENDMENT TO DEDUCT TAX A S TDS IN THE LIGHT OF ABOVE PROVISIONS. THE ASSESSMENT YEAR IN QUESTION IS 2007-08 AND THE AMENDMENT GIVING BREATHING SPACE TO PAYER O F AMOUNTS IS WITH EFFECT FROM 1.4.2013. THEREFORE THE SAID BENEFIT IS NOT APPLICABLE TO THE ASSESSEE. EVEN OTHERWISE ON FACTUAL SITUATION THE VERY FACT THAT THESE AMOUNTS WERE CLAIMED AS LONG INITIALLY TILL THE SE CURITY CAME UP FOR CONSIDERATION BEFORE ASSESSING AUTHORITY WOULD ONLY INDICATE THE REAL INTENTION OF THE ASSESSEE FIRM I.E. NOT TO DISCLOS E THIS AMOUNT AS FREIGHT CHARGES BUT SOMETHING ELSE AS REPAYMENT OF LOAN. 14. IN VIEW OF THE ABOVE JUDGMENT OF THE JURI SDICTIONAL HIGH COURT WE ARE INCLINED TO DECIDE THE ISSUE AGAINST THE ASS ESSEE AND IN FAVOUR OF THE DEPARTMENT. ACCORDINGLY THIS GROUND IN I.T.A. NO. 332/COCH/2014 IS DISMISSED. 15. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IN I.T.A. NO. 331/COCH/2014 IS PARTLY ALLOWED FOR STATISTICAL PUR POSES AND THE APPEAL FILED I.T.A. NOS.331&332/COCH/2014 8 BY THE ASSESSEE IN 332/COCH/2014 IS DISMISSED. PRONOUNCED ACCORDINGLY ON 14/11/2014. SD/- SD/- (N.R.S.GANESAN) (CHANDRA POOJARI) JUDICIAL MEMBER ACC OUNTANT MEMBER PLACE: KOCHI DATED: 14 TH NOVEMBER 2014 GJ COPY TO: 1. M/S. KERALA TRANSPORT COMPANY YMCA ROAD KOZHIK ODE. 2. THE ASSISTANT COMMISSIONER OF INCOME-TAX CIRCLE -1(1) KOZHIKODE. 3. THE COMMISSIONER OF INCOME-TAX(APEALS) KOZHIKOD E. 4. THE COMMISSIONER OF INCOME-TAX KOZHIKODE. 5. D.R. I.T.A.T. COCHIN BENCH COCHIN. 6. GUARD FILE. BY ORDER (ASSISTANT REGISTRAR) I.T.A.T. COC HIN