Income Tax Appellate Tribunal - Chandigarh
Income Tax Officer, Bilaspur vs M/S Austee Hydro Power & Construction ... on 21 August, 2018
IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH 'B', CHANDIGARH BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA No.729/Chd/2017 (Assessment Year : 2012-13) M/s Austees Hydro Power & Vs. The Income Tax Officer, Construction Company (P) Ltd., Bilaspur Distt. Bilaspur VPO Bahot Kasol, Tehsil Sadar, (HP).
Distt Bilaspur (HP), Through its Authorised Signatory PAN: AAFCA8697M & ITA No.837/Chd/2017 (Assessment Year : 2012-13) The Income Tax Officer, Vs. M/s Austees Hydro Power & Bilaspur Distt. Bilaspur Construction Company (P) Ltd., (HP). VPO Bahot Kasol, Tehsil Sadar, Distt Bilaspur (HP), Through its Authorised Signatory PAN: AAFCA8697M (Appellant) (Respondent) Assessee by : None Department by : Dr.Gulshan Raj, CIT(DR) Date of hearing : 24.05.2018 Date of Pronouncement : 21.08.2018 O RDE R PER ANNA PURNA GUPTA, A. M. :
The i mpugned C ross appeal s, by the assessee and the Revenue, have been fi l ed agai nst the order of Learned Commi ssi oner of I ncome Ta x ( Appeal s) , Pal ampur dated 09.02.2017, rel ati ng to assessment year 2012-13.
At the outset i t i s stated that the case was fi xed for heari ng on sever al occasi ons, an d adjournment was sought ti me and agai n by the Ld. coun sel for assessee ,on most 2 ITA No.729/Chd/2017 & ITA No.837/Chd/2017 A.Y.2012-13 occasi ons on the i denti cal ground that he i s bus y i n the Hi gh Court, despi te the fact that the assessee had al so fi l ed appeal . On 23.5.2018, when the case was fi xed for heari ng and adjournment sought agai n by the Ld. counsel for assessee ci ti ng the same reason, the Bench took note of the repeated adjournments sought by the Ld. c ounsel for assessee and noted that i t appeared that the assessee i s not i nterested i n prosecuti ng i ts appeal . Ho wever, i n the i nterest of justi ce another opportuni t y was gi ven to the assessee to present i ts case, fi xi ng the heari ng of the same f or the ne xt da y i .e. 24.05.2018, whi ch was conve yed to the pro xy counsel who app eared on behal f of the assessee Shri Jaspal Sharma, Advocat e i n the open co urt. The order s heet entr y on the sai d date reads as under:
23.05.2018 Present f or assessee Sh.Jaspal Sh arma, Adv.
(Proxy Counsel) Present f or Deppt. Dr.Gu ls h an R aj, C IT (D R ) Adjournment Applicati on has been moved by the assessee's counsel stating th at he has to appe ar in the High Court of Himach al Pradesh at Shi ml a. Earlier als o on 22.6.2017 none appe ared on behalf of the assessee and notice was issued to the assessee. On 5.9.2017 Bench did not f unction and the matter was adjourned to 7.11.2017. On 7.11.2017 Bench did not f unction and th e matter is adjourned to 16.11.2017. On 16.11.2017, assessee's counsel appeared bef ore the Be n ch an d s o u gh t ad jo u rn me n t. T h e matte r was ad jo u rn ed f o r 8.1.2018. The adjournment was sought by assessee's counsel on the simil ar grounds on 8.1.2018. The matter ` was adjourned to 14.3.2018 and none appe ared on 14.3.2018. Then notice th rough De p ar tme n t was is s ue d f or 9 .4 .2 0 18 . On 9 .4 .2 0 18 , the h e arin g was adjourned on the request of the assessee's counsel on similar gro unds f or 23.5.2018. Though it is the appe al of the assessee and the a s s e s s e e i s s u p p o s e d t o p u r s u e i t , h o we v e r , t i m e a n d a g a i n n o t i c e i s i s s u e d t o t h e a s s e s s e e t o c o m e p r e s e n t . H o we v e r , r e p e a t e d adjournment applications have been received f rom counsel citing ide n tic al gro u n d th at h e is bus y in High Co u rt. In v ie w of abo v e f acts , it appe ars th at the assessee is not inte rested in prosecuting his appe al.
H o we v e r , o n t h e r e q u e s t o f P r o x y c o u n s e l t h a t t h e c a s e b e adjourned to to morrow and in the interest of justice a l as t and f inal opportunity given to the assessee and the hearing ad journed to 24.5.2018.
Sd/- Sd/- (AG) (SG) (AM) (JM) 3 ITA No.729/Chd/2017 & ITA No.837/Chd/2017 A.Y.2012-13
2. On the ne xt date al so i .e. 24.5.2018, none appeared on behal f of the assessee, nor any appl i cati on was moved for adjournment. Th e case was, therefore, proceeded to be heard wi th.
We shal l fi rst be taki ng up the appeal of the assessee i n ITA No.729/Chd/2017 for A.Y 2012-13.
3. Grounds of appeal rai sed by the assessee are as under:
"A T he Ld. Assessing Of f icer has e rred in l a w and f ac ts of th e c ase b y no t dec id ing the matte r in v ie w o f the d if f erent judg men ts of the cour t th at ev en if the ch ar i tab l e soc ie ty is mak ing prof it eve n then it qu al if ie s f or var ious exe mp tions under the prov is ions of the IT Ac t. T he orders of the Ld. Assess in g Of f icer is con tr ar y to the l a w, equ i ty an d jus tice and f acts and mate r ial on record, devo id of jur isd ic tion arb itr ar y b ased on con junc tions and sur mises.
B T hat the i mpug ned order ( Annexure A- 2) p assed b y the R es ponden t No. 5 is arb i tr ar y, unre ason abl e, il l eg al , b ad in l a w and f ac ts of the c ase and hen ce is l i abl e to be se t as ide.
C T hat the i mp ugned order is ag ains t th e prov is ions of the Ac t and no pro per procedure as is prescr ibe d under the Ac t h as been f ol l o wed wh il e i ssu ing the i mp u gned orders. Hence, on th is ground al one, th e i mpugned order deserve to be qu ashed and s e t as ide.
D T hat orders of the Ld A. O. d ate d 27. 02. 2015 is il l eg al , wr ong, nul l an d vo id b e ing p assed wi th ou t appl ic ation of l egal mind, hence deserve to se t b e as ide. T hat Re s ponden t is no t jus tif ied in o rders by mak ing add i tions on accoun t of diese l tr ans ac tions wi th Mr A jay Ku mar Rs. l , 70, 2 0, 367/- and Rs. 55, 00, 000/- wi th Surender Ku mar. Ld A. O. orders p ar a wi s e con tr ad ic ts in pr inc ipl e of ju s tice, f al se, concoc ted s tor y and b ad in l a w. Ld A. O. d id no t ver if y the tr ans ac tion jus tif ic ation to end user/ tr ans por ter s wh o used th e d iesel . Ld A. O. tre ated it as ex penses wh er e as i t was no t an ex pense s of co mp an y bu t jus t a f acil i tation to the T rans por ters to i ncre ase the 4 ITA No.729/Chd/2017 & ITA No.837/Chd/2017 A.Y.2012-13 wo r k ing ef f ic ienc y and incre ase the targe ts of AH. PC. It was th e need of the business. Hence f inding of the Res ponden t ar e b ased on sur mises and con jec ture & as such no t sus tain abl e in th e eyes of l a w.
E T hat the Ld A. O. h as no t f oll o we d the prov is ions of l aw in th e proce ed ings of the c ase no o ppor tun i ty of cross examin ation of wi tn esses. Hen ce, the ex ami n ation no t jus tif ied in orde rs by mak ing add itions on accoun t of unex pl ained ex pend i tu re taken b y Rs. 1, 15, , 65, 717/-. Appel l an t d id no t cl ai me d an y such amou n t as ex pend iture of Rs. 1, 15, 66717/-. But was b ased on a s tate men t of Mr An il Ku mar i. e N ikh il f il l in g s tation. Ld A. O. in p ar a 4. 7 of its order s tate d th at " wh ic h in an y f in anc i al ye ar an Ap pel l an t h as incurred an y ex pend iture and h e of f ers no ex pl an ation abou t of such ex pend iture or p ar t there of or the e x pl an ation, if an y of f ered by h i m is no t, in the o p in ion of th e ( Assess ing Of f icer ) satisf ac tory, the amoun t covered such ex pend iture or p ar t thereof , as the c ase may be, dee med to b e inco me of the Appel l an t f or such f in anc i al ye ar. " Appel l an t h ad mad e tr ans ac tion f or tr ans por ters wi th N ikh il f il l ing s tation of Rs. 11, 01, 150/- wh ic h was acce p ted b y the Ld A. O. Add ition mad e b y the Ld A. O. was no t cl ai me d b y the Appel l an t, i t was taken Rs. 1, 15, 65, 717/- ( i. e Rs. 1, 26, 66, 867- Rs. 11, 01, 150) f ro m Mr An i l Ku mar s tate men t. No th ing to do wi th i t b y the Appel l an t. Kee p i ng in v ie w the o rders shoul d be se t as ide. Ord er of Ld. Res ponden t No. 5 is self contr ad ic tor ) and is resul ted conf usion, hence s ame is l i abl e to be se t as id e.
F T hat the Ld. A. O. is no t jus tif ied i n orders b y mak ing add i tion s on accoun t of diesel ex penses Rs. 1, 39, 452/- s ince af f id av i t of Mr. S ad a R am wa s no t f urther ver if ied b y the Le i. A. O. S ince the Le arned A O d id no t gone through f or f urther ver if ic ation of af f id av i t".
Hence f ail ed to apprec i ate the re cord and i ts ev idence. It is al s o suppor ted b y c ase l a ws -- ho wk ch and B al abux vs. C IT , ( 1961) 41 IT R 465 ( Ass am) AND Meh ta P arekh & Co. vs. C IT , ( 1956) 30 IT R 181 ( SC).
G T hat th e Ld A. O. is no t jus tif ied b y d is al l o win g ex pe nses of Rs. 87, 650/- tre ating i t as don ation. It was cons ider ed R s. 87, 650/- ins te ad ac tu al amo un t was Rs . 85, 550/-. S ince the p ay men t was of the n ature of 5 ITA No.729/Chd/2017 & ITA No.837/Chd/2017 A.Y.2012-13 Adver tise men t/S ouven ir. P ay me n ts made to N al war i F air ( B i l as pur &, S, n ag ar ) to De pu ty Co mmis s ioner B i l as pur & M and i of f ice and l oc al mel as. Al al l the pl aces wr es tl ing's, bul l / buf f al o exhib i tio n, agr icul ture s ponsorsh ip progr amme s, e tc done by s tate go v t agenc ies. Hence d is al l o wance of ex penses is no t jus tif ied.
H T he Ld. Assessing Of f icer has e rred in l a w and f ac t of the c ase b y ch arg ing / i mpos ing in teres t under se c tion 244-A and 234-B. 234-
1) of the IT Act, wi th ou t appr ec iating the c ircu ms tances and f ac t of the case and no t g iv ing an y re ason on wh at grounds the in teres t h as been ch arged / i mpos ed. On th is ground al so th e appe al deserves to be al l o we d.
I T hat the orders of the Ld. Co mmis s ioner of Inco me T ax ( Appeal s ), Sh i ml a as wel l as LD IT AT " are con tr ar y to the l a w, equ ity ar. cl jus tice and f ac ts and mater i al on record, devo id of jur is d ic tion, arb i tr ar y b ased on con jec tures and sur mises. T he in f erence and concl us ions as d r a wn b y the Ld. Cour t bel o w are ne i ther supp or ted b y the f ac ts and recor d ne ither of the c ase nor b y an y p rov is ions of l a w as such does the order deserves to be se t as ide. "
4. The i ssue rai se d i n Ground 'A', we fi nd rel ates to chari tabl e soci et y and i t was poi nted out to us by the Ld. DR that the assessee was carr yi ng on busi ness and was nei ther a chari tabl e societ y nor had ever cl ai med to be so. I t was poi nted out that the i ssue rai sed i n the i mpugned ground therefore di d no t ari se from the order of the CI T( A) and needed to be di smi ssed for thi s reason al one. Nothing to the contrar y was brought to our notice. I n vi e w of the same we di smi ss thi s ground rai sed before us
5. Ground 'B' & 'C' are general i n nature and need no adjudi cati on.
6. I n Ground 'D' & 'E' the i ssue relates to addi ti on made to the i ncome of the assessee on account of p urchase of 6 ITA No.729/Chd/2017 & ITA No.837/Chd/2017 A.Y.2012-13 di esel . The Assessi ng Offi cer made ad di ti on of Rs.2,25,18,367/- treati ng the pa yment made by the assessee for purchase of di esel to be bogus and further of Rs.1,15,65,717/-, by hol di ng that di esel was purchased outsi de the book s of the assesse e thereby maki n g addi ti on u/s 69C of the Act ,of the same. The CI T( Appeal s) in turn, deal t wi th both t he addi ti ons tog ether and del ete d the sai d addi ti on to the e xtent of Rs.1,26,66,867/- out of the addi ti on made of Rs.2,25,18,367/- uphol di ng the balance of Rs.98,51,500/-. The addi ti on made u/s 69C of Rs.1,15,65,717/- was al so del eted by the CI T( Appeals) .
Agai nst the di sal l o wance uphel d by the CI T( Appeal s), the assessee has come up i n appeal before us .
7. The facts rel ati n g to the i ssue a re that the Asse ssi ng Offi cer observed that duri ng the year the assessee company di d sub-contract work for M/s I tal i an Thai Devel opment Publ i c Company Ltd. (in short I TD Ltd.) , havi ng been a warded contract for suppl y of cl a y and l abour to the Kol Dam Pro ject. Th e Assessi ng Offi cer noted that the assessee had debi ted e xpenses on account of hi ri ng of vehi cles amounti ng to R s.6,49,93,168 /- in i ts Profi t and Loss account whi ch was e xpl ai ned by the assessee as compri si ng the fol l o wi ng:
SI. No. Name of item Amount (Rs.)
1. Diesel 2,36,21,517/-
2. TDS 6,63,841/-
3. Retention 31,87,298/-
4. Water Tank 2,38,284/-
5. To sub-contractors/ Transporters 3,72,82,228/-
Total 6,49,93,168/-
7 ITA No.729/Chd/2017
&
ITA No.837/Chd/2017
A.Y.2012-13
8. The Di rector of the company Sh. Jogi nder Si ngh Thakur was asked to f urni sh documentar y evi dence i . e. bi l ls & vouchers for purchase of di esel . I n response, i t was stated that the di esel w as purchased an d got fi l l ed i n th e vehi cl es of the sub-contr actors/ transporters, transporti ng cl a y for the assessee company. It was contended that as only one or two petrol pumps existed near the project site, diesel was not easily available. Hence, to achieve the monthly targets of the contract work and to avoid penalty, the transporters/drivers of vehicles had requested the assessee company to arrange diesel for the vehicles and deduct the cost of diesel from their bills.
The assessee company accordingly purchased diesel and made payments for diesel directly to the suppliers and deducted it from the bills of the transporters alongwith other costs and TDS. It was stated that this was done to facilitate the transporters and the amount was deducted from their bills.
The assessee contended that the amount so paid for purchase of diesel was neither an expense of the company nor had been claimed as such in the P&L account. Diesel was stated to be purchased from the following persons:
SI. Name & address of the person who diesel Amount of No. supplied for the F.Y. 201 1-12 to the diesel supplied
1. Nikhil Filling Station, NH-21, Slapper, 11,01,150/-
Sundernagar, Mandi
2. Sh. Ajay Kumar S/o Sh. Lachman Dass, 1,70,20,367/-
Vill, Chamyoun, P.O. Harnora, Sadar,
3. Sh. Surender Kumar Thakur S/o Sh. L.R. 55,00,000/-
Thakur, Vill. Chamyoun, P.O. Harnora, Total diesel supplied 2,36,21,517
9. The A.O. issued summons u/s 131 to the above three persons from whom the diesel was stated to have been 8 ITA No.729/Chd/2017 & ITA No.837/Chd/2017 A.Y.2012-13 purchased and after e xami nati on hel d the purchases to be not genui ne on the fol l o wi ng grounds :
i) Sh. Suri nder Kumar Thakur
10. I n hi s statement recorded u/s 131 , Sh. Surender K umar stated that he was engaged i n the busi ness of LI C duri ng F.Y. 2011-12 be si des havi ng i nt erest i ncome fro m FDRs. It was stated by hi m that he had r ecei ved pa yments through cheque for su ppl y of di esel to the Aust ees H ydro Constructi on Co. Pvt. Ltd. during F.Y. 2011-12 and had recei ved pa yment of Rs.55,00,000/-appro xi matel y. He produced Sal e B i l l s for suppl y o f di esel to Aust ees H ydro Po wer Constructi on Pvt. Ltd. as under :
For Rs. 31,68,120/- on 08.06.2011, For Rs. 22,74,644/- on 25.05.2011 and For Rs. 57,240/-on 01.07.2011.
11. Ho wever, when asked by the A.O. as to from where di esel was purchased by hi m for bei ng sol d to the appel l ant, and to produce c opi es of the bi l l s of purchase of di esel and copy of the l i cense for sal e of the petrol eum product, Sh. Surender Kumar stated that he had no purcha se bi l l s of di esel or any oth er documentar y evi dence wi th hi m to sho w the purchase of di esel by hi m. The AO noted that Sh. Surender Kumar was the real brother of Sh. Joginder Si ngh Thakur, Di rector of the assessee company.
ii) Sh. Aja y Kumar 12. In response to summon u/s 131, Sh. Aja y Kumar
attended on 18.02.2015 and agai n appeared on 25.02. 2015 9 ITA No.729/Chd/2017 & ITA No.837/Chd/2017 A.Y.2012-13 and stated that he was havi ng i ncome from t wo heav y commerci al vehi cl es ( Truc ks) , s al ar y i ncome & was al so engaged i n purchase and sal e of di esel duri ng F.Y. 2011-12. Duri ng the year, he recei ved Rs. 17.33 l acs appro ximatel y through cheque on account of "Hiri ng of Vehi cl es" to Austees H ydro Constructi on Co. Pvt. Ltd. Apart from thi s, he recei ved a pa yment of Rs.170.18 l acs appro xi matel y on account of "Sal e of Di esel " from Austees H y dro Constructi on Co. Pvt. Ltd. The sai d pa yments for work done and for sal e of di esel recei ved from Austees H ydro Constructi on Pvt. Ltd. were deposi ted by hi m i n hi s four bank accounts. Ho wever, upon perusal of the sal e bi l l s i ssued by hi m to the assessee company, i t was noti ced by Ld. A.O. that there was no VA T No. on the bi l l s. When confronted , Sh. Aja y Kumar admi tted that he had not obtai ned any sal es ta x number and was not fi l i ng any VA T r eturns. When as ked by the A.O. to produce copi es of the bi l l s of purchase of di esel and copy of the l i cense for sal e of petrol eum product for about Rs. 170.18 l acs, he stated t hat he had no b i l l s for purchase of di esel . Ho wever, he confi rmed that he h ad i ssued bi l l s f or sal e of di esel to the ass essee company. I t was al so stated that he had purchased di esel from Ni khi l Fi l l i ng Stati on and Murari Fi l l i ng Stati on. Copy of I TR of Sh. Aja y Kumar for A.Y. 2012- 13 was generate d from AS T whi ch sho wed i nco me of Rs. 1,20,000/- from t wo commerci al vehi cl es and Rs.60,000/- from sal ar y onl y.
10 ITA No.729/Chd/2017 & ITA No.837/Chd/2017 A.Y.2012-13 iii) Sh. Ani l Kumar
13. Statement of Sh. Ani l Kumar, Manager of Ni khi l Fi l l i ng Stati on was reco rded u/s 131 on 11.02.2015, 13. 02.2015 of the Act. He fur ni shed copy of l edger account of Austees H ydro Po wer Constructi on Co. Pvt. Ltd., detai l s of pa yments recei ved from i t, and bank account statement of Ni khi l Fi l l i ng Stati on. A s per these, di es el of Rs.1,26,66, 867/- was stated to have been sol d to th e assessee out of which pa yment of Rs. 1,24,85,111/- was stated to h ave been recei ved by cheque and cash duri ng F.Y. 2011-12. On 23.02.2015, Sh. Ani l Kumar fi l ed a wri tten repl y stati ng that di rect sal e of di e sel to the assess ee was of Rs. 11 ,01,150/- and that Aja y Kumar and Surender Kumar al so fi l l ed di esel for the vehi cl e s attached wi t h Austeese H y dro Po wer Constructi on Co.( AHPC) i n the year 2011-12. At the petrol pump a consol i dated account for vehi cl es attached wi th AHPC was kept. The val ue of sal e of di esel i s for al l three duri ng the year . No books of account for Ni k hi l Fi ll i ng Stati on were produced. Pa yments of Rs.11,54,901/- marked i n the l edger to have been made by RTGS/cheq ue by the assessee to Ni khi l Fi l l i ng Stati on were not found credi ted i n the bank account statement of Ni khi l Fi l l i ng Stati on.
14. After consi deri ng the e xpl anati on of the assessee and the statements of the above pers ons, Ld. A.O. hel d that the bi l l s submi tted by the assessee to substanti ate purchase of di esel by hi m from Surender Kumar & Aja y Kumar were bogus bi l l s. Both the above persons had no VAT number and 11 ITA No.729/Chd/2017 & ITA No.837/Chd/2017 A.Y.2012-13 no l i cense for s al e of a petrol e um product. Both of them fai l ed to produce any purchase bi l l s or any other e vi dence to sho w the purchase of di esel by them out of whi ch sal e coul d have been made to the assessee. Nei ther of the t w o persons coul d produce any books of accounts or the bi l l books from where the bi l l s were i ssued by them to the assessee. No i ncome from the purchase/sal e of di esel was sho w n by them i n thei r I TRs. Pl aci ng rel i ance upon a seri es of judgments as menti oned i n para-3.11 of the assessment order, Ld. A.O. therefore, hel d t hat even i f pa ym ents were made by cheque and TDS was d educted therefrom, sti l l the transactions coul d be treated as une xpl ai ned i n vi e w of the fa cts of the case. The Assess i ng Offi cer hel d that the assessee had fi l ed the purchase bi ll s of di esel purchased from the above t wo persons onl y to cover up e xpenses booked under the head "Operati ng & other e xpenses" in the P&L account. The e xpendi ture booked on account of "di esel purch ased" from the sai d t wo persons was, therefore, di sal l o wed and addi ti ons of Rs.1,70,18,367/- and Rs.55,00,000/- were made to the i ncome of the assessee company.
15. Further the Assessi ng Offi cer noted that the Manager of Ni khi l Fi l l i ng Stati on Sh. Ani l Kumar, had stated to have sol d di esel of Rs.1,26,66,867/- to the assessee and recei ved a total amount of Rs.1,24,85,111/- on account of the same duri ng the i mpugned year, ho wever, di esel of Rs.11,01,150/- onl y was sho wn by the assessee as purchased fr om Ni khi l Fi l l i ng Stati on. Thus, di fference of Rs.1,15,65,7 17/- was 12 ITA No.729/Chd/2017 & ITA No.837/Chd/2017 A.Y.2012-13 hel d by Ld. Asses si ng Offi cer, to b e e xpendi ture i nc urred out of the books of accounts of the company and ad ded to the i ncome of the assessee u/s 69C as une xpl ai ned e xpenses.
16. The matter was carri ed in appeal before the CI T( Appeal s) where the assessee contended that no di sal l o wance coul d be made of the pa yment made on purchase of di e sel si nce thi s w as not the e xpe nse of the assessee but was onl y a mode of pa yment of hi ring charges of vehi cl es hi red by getti ng di esel fi l l ed i n the same on behal f of the contractors. The Ld. CI T( Appeal s) di smi ssed the sai d contenti on, hol di ng that the di sal l o wance had been ri ghtl y made si nce out of the e xpenses cl ai med on account of hi ri ng of vehi cl es, the assesse e was found to have not actual l y pai d to the transporter s/sub contractors but had retai ned the same. The Ld.CI T( A) further accepted the purchases stated to have been made by the assessee from the three parti es to the e xtent of Rs. 1,26,66,867/-, bel i evi ng the statement of the manager of Ni khi l Fi l l i ng Stati on, Shri Ani l Kumar who had stated to have sol d di esel of Rs. 1,26,66,867/- to the assessee attri buti ng di rect sal e out of the same to the e xtent o f Rs.11,01,150/- whil e the rest through Shri Surender Kumar and Sh.Aja y Kuma r. As for the assessee's cl ai m for bal ance pa yment made to Shri Surender Kumar and Shri Aja y Kumar, amounti ng i n al l to Rs.98,51,500/- the same was re jected stati ng that the sai d part y coul d not demonstrate that the y had made purchase of di esel to the ass essee to thi s e xt ent si nce the y h ad fai l ed to 13 ITA No.729/Chd/2017 & ITA No.837/Chd/2017 A.Y.2012-13 produce purcha se bi l l s, nor h ad any l i cence of sal e of petrol eum produ ct, nor had any VAT regi strati o n number. The Ld.CI T( Appe al s) al so noted that no i ncome from the same was returned by them i n thei r return of i ncome fi l ed. He, therefore, tr eated purchases made from the sai d t wo persons to the e xtent of Rs.98,5 1,500- as bogus purchases. The r el evant fi n di ngs of the Ld. CI T( Appeal s) at para 5.3 of i ts order are as under:
"5. 3 I h ave cons idered the f ac ts of the c ase an d wr i tte n sub miss i ons of the appel l an t. T he appel l an t is eng aged in do i ng sub-con tr ac t wo r k of suppl y of cl ay & l abour f or M/s Ital i an T hai Devel o p men t Publ ic Co mp an y L td. ( in shor t IT D L td. ) wh ic h is ref erred to in the Le tter of In ten t as the Con tr ac tor . T he appel l an t is men tioned in th e Le tter of In ten t as sub-con tr ac to r. Dur ing the ye ar, the appel l an t h as done wo rk of Rs. 7, 57, 51, 534/- ou t of wh ic h Rs. 6, 77, 11, 058/- is f ro m Cl ay wo rk and Rs. 80, 40, 476/- f ro m rece ip t of wages to wo rkers. Bes ides, inco me of Rs. 1, 38, 272/- is rece ived o n accoun t of in tere s t e tc. Re turn of inco me h as bee n f il ed decl ared inco me of Rs. 8, 45, 396/-. T he appel l an t h as th us sho wn ne t pro f it of abou t 1. 13 % onl y wh ich is app aren tl y ver y l o w.
T he argu men t of the app el l an t th at R s. 2, 36, 21, 577/- is no t an ex pend i ture cl ai me d b y i t in i ts P&L accou n t and hence no add i tion coul d be mad e of the s ame is no t ten abl e. T he appel l an t h as cl ai me d an ex pen d iture of Rs. 6, 49, 93, 168/- under the he ad "H ir ing of Vehicl es". Ho we v er, dur ing th e course of examin ation of books of accoun ts dur ing assess men t proc eed ings, i t was f ound by Ld. A. O. th at ou t of the above ex pend iture of Rs. 6, 49, 93, 168/-, Rs. 2, 36, 21, 517/- h ad no t bee n ac tu al l y p aid to the tr ans por ters /sub-con tr ac tors. T he amoun t was re tained b y th e appel l an t wi th i tself . T he ex pl an ation of the ap pel l an t bef ore th e A. O. was th at th i s amoun t was re tained on accoun t of diesel ex p ens es as the d iesel in the ve h icl es o f the tr ans por ters eng aged in c arr ying cl ay we re go t f il l ed by the app el l an t on beh alf of the tr ans por ters. T he appel l an t f urthe r s tated th at the d iesel was go t f il l ed f ro m three pe rsons, i. e. N ikh il F il l ing S tation, Sh. A jay Ku mar & Sh. Surender Ku mar. As men ti oned in de tail in p ar a-5. 1 above, bo th Surender Ku mar wh o is al s o bro ther of the 14 ITA No.729/Chd/2017 & ITA No.837/Chd/2017 A.Y.2012-13 appel l an t and A jay Ku mar, in the ir s tate men ts recorded u/s 131 of the Ac t, ad mi tted s al e of diesel to the appel l an t and even pro duced s al e b il l s issued b y the m. Ho we ver, wh en r equ ired to produc e purch ase b il l s s ho win g the d ies el purch ased b y the m, the y coul d no t produce an y purch ase b il l s. Ne ither of the m h ad a l icense f or the s al e o f pe trol eu m produc t and ne i ther of the m h ad an y VAT reg is tr ation nu mber. No prof it f rom s al e of vehicl e s was f ound to h ave been sho wn by the m in the ir IT Rs. In v ie w of the above, Ld. A. O . h as r igh tl y hel d th at the appel l an t h as booked bog us ex pend iture o n accoun t of dies el purch ased f ro m Sh. Surende r Ku mar & Sh. A jay Ku mar f or veh icl es of th e tr ans por ters.
It was s tated b y Sh. Surender Ku mar & A jay Ku mar th at the d iesel was go t f il l ed by the m in th e veh icl es attached wi th Aus tees H ydro Po we r Cons t. Pv t. L td. ( AHPC) f ro m N ikh il F il l in g S tation & M ata Mur ar i F il l ing S tation. In suc h a s tation, th e p ay men ts co ul d h ave be en made by the appel l an t d irec tl y to N ikh i l F il l ing S tation or M ata Mur ar i F il l ing S tation. T he p ay men ts we r e made ins te ad to Sh. A jay Ku mar wh o h ad al so prov ided veh icl es to AHPC and to Sur ender Ku mar, brother of a D irec tor of the Co mp an y. It was sl ated th at p ay me n ts we re mad e b y cheque. Ho we ver, the appel l an t f ail ed to produce an y ev idence in th is reg ard th at the p ay men ts we re made by c heque. Al so no docu men tar y ev i dence was f il ed sho win g p ay me n ts mad e b y Surender Ku mar & A jay Ku mar f or purch ase of diese l to the v ar ious f il l ing s tations.
T he appel l an t h as f urther rel ied upon the assess men ts made u/s 143( 3) / 147 in the h and s of Surender Kumar and A jay K u mar. No inco me f ro m bus iness of s al e of diesel was sho wn b y Sh. Surender Ku mar & Ajay Ku mar in the ir or ig in al re turns of inc o me. Subseque n tl y, af ter th e co mpl e tion of assess men t in the c ase of the appel l an t, inf ormatio n was p assed to the A. O. exerc is ing jur isd ic tion over Sh. Surender Ku mar and A jay Ku mar reg ard ing the s al e of diesel ad mi tted b y the m in the ir s tate me n ts u/s 131 of the Ac t. In res p onse to no tice u /s 148, the y s til l s tated th at the re turns or ig in al l y f il ed by the m may be tre ated as re turns f il ed in res p onse to no tice u/ s
148. Dur ing the ir assess men t pro ceed ings, bo th of the m s tated th at veh icl es we re f uel l ed by the m on beh alf of the A HPC f ro m the pe trol pu mps o n co mmis s ion b as is . Ho we ver, the assess men ts we re co mpl e ted in bo th c ases in an adhoc and cursor y man ner b y appl ying ne t prof it r ate @ 2. 17% to the amo un ts f ound de pos ited in the ir b ank accoun ts . T here is no mate r ial on record to es tabl ish th at th e 15 ITA No.729/Chd/2017 & ITA No.837/Chd/2017 A.Y.2012-13 amo un ts d e pos i te d by the m in the ir b ank accoun ts we r e rece ived b y the m f ro m the appel l an t f or s al e of diesel . S i mil ar l y there is no evidence on record th at the y made pay me n ts to N ikh il F il l ing S tatio n or an y o ther f il l ing s tation f or f il l ing up diesel f or the veh icl es of the tr ans por ters do ing con tr ac t wo rk f or the appel l an t ( AH PC).
Dur ing assess men t proceed ings, s tate men t was al so recorded u/s 131 of the Ac t of Sh. Anil Ku mar, M an ager of N ikh il F il l ing S tation o n 11. 02. 2015 an d then on 13. 02. 2015. He f urnish ed co py of the Ledger accou n t of Austees H ydro Cons truc tio n Co mp an y Pv t. L td. ( Appel l an t) f or F. Y. 2011-12 an d the b ank acco un t s tate men t of Nikh il F il l in g S tation. No boo ks of accoun ts of Nikh il F il l in g S tation we re pro duced. Ho we ver, it was s tated b y h i m in h is s tate me n t and in h is wr i tte n re pl y f il e d bef ore Ld. A. O. th at d iesel of Rs.1, 26, 66, 867/- wa s sol d by N ikh il F il l ing S tation to the appel l an t dur ing F. Y. 2011 -12 ou t of wh ich p ay men t of Rs. 1, 24, 85, 111/- was al so rece ived e ither by chequ e or through c ash. Rs. 11, 54, 901/- was s tated to be rece ived b y che que / RT GS. Howe v er, the s ame coul d no t be go t ver if ied b y h i m. It was cl ar if ied b y h i m through h is wr i tten re pl y d ated 23. 02. 2015 th at "...... . . I wis h to e x pl ain th at at our pe trol pu mp, AHPC, A jay Ku mar & Surender Ku mar f il l ed the d iesel f or vehicl e s attached wi th AHPC in the ye ar 2 011-12. B i l l s issued to al l these p ar ties se p ar atel y and p ay men ts rece iv ed se p ar atel y on the b as is of d iesel f il l ed of veh icl es f or AHPC. So at pe tr ol pu mp we ke p t one accoun t ( consol id ated) f or veh icl es attach ed to AHPC. T he val ue of sal e of diesel is f or al l three dur ing the ye ar. Ac tu al tr ans ac tion of AHPC d irec tl y f or F. Y. 2011-12 was R s. 11, 01, ISO/- ...... . . ".
T he state men ts o f Sh. Surender Ku mar, A jay Ku mar & An il Ku mar recorded by Ld . A. O. are no t concl us ive. Boo ks of accoun ts h ave no t bee n produced and ex amin ed in onl y o f the three c ases . Ld. A. O. h as al so no t ver if ie d the p ay me n ts mad e/rece ived b y cheque in the b ank accoun ts of the appel l an t an d the above thre e persons though so me of these cl e arl y be ar a n ar r ation men tion in g the ir n ame s. Eve n the assess men t orders u/s 147/ 143( 3) of Sh. Surender Ku mar & S h. A jay K u mar do no t record an y f inding of f ac t th at the amo un ts rece ived in the i r b ank accoun ts we re rece ived , ( mos t of wh ich are rece ived in c ash), f ro m th e appel l an t ou t of the amo un ts re tained b y h i m / deduc ted b y h i m f ro m the b il l s of the tr ans por ters 16 ITA No.729/Chd/2017 & ITA No.837/Chd/2017 A.Y.2012-13 as cl ai me d b y it. S i mil arl y, there is no docu men tar y ev idence on recor d th at Sh. Surender Ku mar & A jay Ku mar made c as h p ay men ts or any p ay me n ts b y cheque to the v ar ious pe trol pu mps. T he onl y s tate men t / re pl y th at h as co me on record in th i s reg ard is of Sh. An il Ku mar, M an ger of the N ikh il F il l ing S tation, wh o attended in res ponse to su mmo ns u/s 131 of the Ac t. In the absence of an y o ther ev idence on record, his s tate men t th at a consol id ated acc oun t was ke p t at the pe trol pu mp f or f il l ing d iesel in the veh icl es attached wi th AHPC and th at the s al e of diesel of Rs. 1, 26, 66, 867/- as per the l edger accoun t was mad e to al l the thre e persons ( p ar ties ) c an be acce p ted as a re ason abl e and pl aus ibl e ex p l an ation.
In the presen t c ase, Ld. A. O. h as no t re jec ted th e books of accoun ts u/s 145( 3) of the Ac t. Ho we ver, the N. P. r ate of 1. 13% sho wn b y the appel l an t is app aren tl y ver y l o w. Kee p ing in v ie w the to tal i ty of above f ac ts, i t woul d be re ason ab l e if the purch as e of diesel f or the veh icl es of the tr ans por ters b y th e appel l an t is acce p ted to the ex ten t of Rs. 1, 26, 66, 867/-. Af ter conf irmin g the abov e add i tion of Rs. 98, 51, 500/-, the ne t prof it wo rks ou t to 14. 14%. T he appel l an t ge ts a rel ief of Rs. 1, 26, 66, 867/-. T he add i tion o f Rs. 98, 51, 500. /- ( Rs. 2, 25, 18, 367 ( - ) Rs. 1, 26, 66, 867) is uphel d. T he ground of appe al is p ar tl y al l o we d. "
17. As for the addi t i on made on ac count of une xpl ained e xpendi ture amounti ng to Rs.1,15,65,717/- the Ld.CI T( Appeal s) hel d that si nce h e had accepted t he pa yment made to Ni khi l Fi l l i ng Stati on as genui ne, the re was no reason to uphol d the sai d addi ti o n. The rel evant f indi ngs of the CI T( Appeal s) at para 6.3 of hi s order are as under:
"6. 3 I h ave cons idere d the f ac ts of the c ase and wr i tte n sub miss ions of the ap pel l an t. As d iscussed in de tail in p ar a-5. 2 & 5. 3 above, the p ay me n t of Rs. 11, 01, 150/- was sho wn to h ave been made by the appel l an t d irec tl y to N ikh il F il l ing S tation. Ld. A. O. has acce p ted th is p ay men t as genu in e. Ho we ver, he h as made an add i tion of Rs. 1,15, 65, 717/- wi th ref erence to the to tal cos t of d iesel purch ased f ro m N ikh il F il l ing S tation, i. e. , Rs. 1, 26, 66, 867/- as per the s tate men t of Sh. An il Ku mar. As the add ition of Rs. 98, 51, 500/- has al re ad y been uphel d ou t 17 ITA No.729/Chd/2017 & ITA No.837/Chd/2017 A.Y.2012-13 of the amo un t of Rs. 2, 25, 18, 367/- the add i tion f or Rs. 1, 15, 65, 717/- wh i ch amoun ts to doubl e ad d itio n c anno t b e sus tained and is accord ingl y del e ted. "
18. Before us, vi s-à- vi s the di sal l o wa nce of di esel e xp enses uphel d of Rs.98,51,500/- the Ld. DR rel i ed heavi l y on the order of the CI T( Appeal s) stati ng that i n the absence of any evi dence of purchase of di esel by the persons who had suppl i ed di esel t o the assessee, t he sai d e xpenses had been ri ghtl y di sal l o wed. As for the di e sel e xpenses del eted by the Ld.CI T( Appeal s) amounti ng to Rs.1,26,66,867/-, bei ng the di esel purchased from Ni khi l Fi l l i ng Stati on as per the statement of th e manager of t he Fi l l i ng Stati on, i t was contended that s i nce the CI T( App eal s) had hi msel f found the purchase made from the sai d parti es to be bogus i n the absence of l i cense to sel l di esel , VAT regi strati o n number and bi l l s of purc hases of the sam e and no evi denc e of ei ther pa yment recei ved by them from the assessee for the same or the y havi ng pai d to the suppl i ers of di esel , and a l so havi ng found to have not returned a ny i ncome from the sai d transacti on to ta x, there was no reason to accept the genui neness of t he i mpugned pu rchase merel y o n the basi s of the statement and copy of account of Ni khi l Fi l li ng Stati on. The Ld. DR rel i ed upon the fi ndi ngs of the Assessi ng Offi cer vi s-à-vi s the i ngenui neness of purchase made from Shri Aja y Kumar a nd Shri Surend er Kumar, whi ch he poi nted out had been uphel d by the CI T( Appeal s) al so at para 5.3 of hi s order as reproduced above. The Ld. DR, therefore, stated that there was no reason to del ete the 18 ITA No.729/Chd/2017 & ITA No.837/Chd/2017 A.Y.2012-13 di sal l o wance made of purchases sho wn to have been made from Shri Aja y Kumar and Shri Surender Kumar.
19. The submi ssi ons of the assessee, as can be gathered from the statement of facts fi l ed before us, i s that the di sal l o wance made of pa yment made on account of purchase of di esel was not the e xpenses of the assessee and was made on behal f of the transporters from whom vehi cl es were hi red by the assessee for cl a y work. I t was stated that the amount so pai d was by wa y of settl ement of the ul ti mate pa yment to be made to th e transporters of Rs.6,49,93,1 68/-. The contenti on of the assessee was th at the pa yment was i n fact i n the nature of hi re charges pai d and there bei ng no questi on rel ati ng to the genuineness of the same, no di sal l o wance coul d be made. The assessee al so contended that even otherwi se the pa yme nt made on ac count of purchase of di esel on behal f of the transporters had been wrongl y hel d to be bogus si nce t he suppl i ers had confi rmed the sai d fact i n thei r statements recorded, had al so fi l ed copi es of bi l l s i ssued to the assessee i n thi s regard and had stated that pa ym ents had been re cei ved through c heque and or deposi ted i n thei r bank accounts. Thus i t was contended that al l necessar y documents provi ng the genui neness of the sai d transacti on had been fi l ed b y the assessee. I t was al so submi tted that i n the case of purchase of di esel made from one Shri Aja y Kumar, the copy of bi l l book had al so been produced before the I TO who had i mpounded the same but the Assessi ng Offi cer had omi tted to menti on thi s fact. Th e 19 ITA No.729/Chd/2017 & ITA No.837/Chd/2017 A.Y.2012-13 assessee has further contended that there was no requi rement of a ny l i cence for m aki ng the sai d p urchases of di esel by the su ppl i ers of the s ame si nce the s ai d parti es were onl y suppl i ers who had arranged for the di esel from authori sed petro l pump o wners to fi l l the di e sel i n the transporters' veh i cl es. I t has further been conten ded i n the statements of fa cts that the CI T( Appeal s) whi l e uphol di ng the di sal l o wance of di esel p urchased amounti ng to Rs.98,51,500/- had accepted the statement of t h e manager of Ni khi l Fi l l i ng Stati on even when no books of account were produced by hi m. The contenti on of the assessee al so i s that assessment of t he t wo suppl i er s had been com pl eted and i ncome from thi s transacti on h ad been assesse d i n thei r hands. The asse ssee has al so contended that i n any case, the provi si ons of secti on 69C of the Act appl y onl y to une xpl ai ned e xp enses and si nce the sai d amou nt di d not pertai n to any e xpenses i ncurred, there was no q uesti on of maki ng any addi ti on u/s 69C of the Act at al l .
20. We have consi dered the contenti ons of both the parti es and gone through the orders of the authori ti es bel ow. The i ssue before us rel ates to the ad di ti on made on account of purchases made of di esel by the assessee hol di ng the same to be bogus a mounti ng in al l to Rs.2,25,18, 367/- and addi ti on made on account of purchase of di esel made out of books of the as sessee u/s 69C of the Act am ounti ng to Rs.1,15,65,717/- by the Asses si ng Offi cer. O ut of the addi ti on made on account of bogus purchases, the 20 ITA No.729/Chd/2017 & ITA No.837/Chd/2017 A.Y.2012-13 CI T( Appeal s) del eted the same to the e xtent of Rs.1,26,66,867/- and uphel d the bal ance of Rs.98,51 ,500/-. As for the addi ti on made on account of e xpendi ture i ncurred out of the book s of the assess ee, the same w as entirel y del eted by the CI T( Appeal s) .
21. Comi ng to the facts of the case, it i s not i n di spute that the di esel e xpenses of Rs. 2,36,21,257/- were i n fact part of hi ri ng charges pai d by the assessee amounti ng i n all to Rs.6,49,93,168/-and debi ted to the Profi t & Loss Account of the assessee. The break-up of the Hi ri ng Charges i s as under:
Di esel = Rs.2,36,21,257/-
TDS = Rs.6,63,841/-
Retenti on = Rs.31,87,298/-
Water Tank = Rs.2,38,284/-
To Sub Contracto rs/
Transporters = Rs.3,72,82,228/-
Total = Rs.6,49,93,168/-
22. The contenti on a nd the e xpl anati on of the assessee vi s- à-vi s the same i s that i t was i n the busi ness of contract work and supply/transportati on of cl a y to Kol dam pro ject and had hi red vehi cl es of transporters for cl a y work. That the total cost of hi ri ng was Rs.6,49,93,168/- whi ch was accordi ngl y debi ted under the head 'vehi cl e hi ring charges' whi ch was pai d to the transpor ters di rectl y am ounting to Rs.3.72 crores as above and i ndi rectl y by get ti ng di esel fi l l ed i n thei r vehi cl es, on i ncurri ng water tank e xpenses, deducti ng TDS o n the pa yment made and retai n i ng certai n amount for any mi stake or fa i l i ng of contrac t by the 21 ITA No.729/Chd/2017 & ITA No.837/Chd/2017 A.Y.2012-13 transporters. Th e above contenti on of the assessee has not been controverted by the Revenu e at any stage e ven before us. Therefore, i t i s cl ear and we agree wi th the Ld. counsel for assessee tha t the pa yment made by the as sessee for purchase of di esel was not the e xpenses of the assessee at al l . The e xpense of the assessee i n fact was hi ri ng charges. Therefore, the q uesti on of di sal l o wance, i f any, whi ch ari ses can be onl y of hi ri ng charges pai d. We fi nd that vis-à-vi s the hi ri ng charges no enqui r y or i nvesti gati on has been done by the Revenue at al l . No effort has been made by the Revenue to fi nd out whether the cl ai m of the assessee that i t had i ncurred e xpendi ture of Rs.6.49 crores on account of hi ri ng of vehi cl es was correct or not. There i s no whi s per i n the enti re order of the Assessi ng Offi cer of any enqui ry or i nvesti gati on conducted in thi s regard e xcept from one contractor Sh Nari nder Si ngh, to whom the assessee had cl ai med to have pai d Rs.6,70,4 23/- whi l e the sai d person stated that he had recei ved onl y Rs.1,16,569/-. Thi s ,by any standards cannot be sai d to be a suffi ci ent i nqui r y so as to arri ve at a conclusi on that the expenses cl ai med on account of hi ri ng charges were not enti rel y genui ne, consi deri ng the quantum of hi ri ng charges book of Rs.6.49 crores and the i nqui r y done of Rs.6.70 l acs onl y. Wi thout, therefore, questi oni ng the genui neness of the cl ai m of the assessee of hi ri ng charges pai d, we fai l to understand ho w the Revenue coul d have hel d a porti on of the pa yment cl ai med to have been made by the assessee by way of purchase of di esel on behal f of the tr ansporters to be bogus or not g enuine. B y 22 ITA No.729/Chd/2017 & ITA No.837/Chd/2017 A.Y.2012-13 maki ng addi ti on/hol di ng the di esel charges pai d by the assessee on beh al f of the transp orters of Rs.2.36 crores as bei ng bogus, the Revenue's cl ai m, i n effect, i s that the hi ri ng charges cl ai med by the assessee to thi s e xtent were bogus. I n our vi e w, the l i ne of enqui r y and i nvesti gati on of the Revenue, therefore, shoul d have been fi rst and foremost regardi ng genui neness of the cl aim of hi ri ng charges of the assessee, whi ch shoul d have been suppl anted by the subsequent enqui r y regardi ng the di esel e xpenses i ncurred by the assessee. Wi thout fi rst establ i shi ng that the cl ai m of hi ri ng charges was not genui n e and wi thout maki ng any di rect enqui r y and i nvesti gati on i n thi s regard, the Revenue was wrong i n disal l o wi ng hi ri ng charges to thi s e xtent by wa y of i ndi rect enqui ri es conducted vi s-à-vi s pa yment of any di esel charges made by the assessee or not. Therefore, i n our vi e w, the enqui r y and i nvesti gati on conducted by the Revenue i s total l y fl a wed and the enti re e xerci se has not been approached correctl y by the Revenue.
23. Further even vi s-à-vi s enqui r y conducted reg ardi ng pa yment made on account of di esel charges, we find that the authori ti es bel o w have not properl y appreci ated the evi dences col l ected. Undi sputedl y the di esel was suppl i ed by the fol l o wi ng three parti es to the assessee:
1) Ni khi l Fi l l i ng Stati on = Rs.11,01,150/-
2) Shri Aja y Kumar = Rs.1,70,20,367/-
3) Shri Surender Kumar
Thakur = Rs.55,00,000/-
Total = Rs.2,36,21,517/-
23 ITA No.729/Chd/2017
&
ITA No.837/Chd/2017
A.Y.2012-13
24. The assessee had cl ai med the pa y ments to the afor esai d parti es to have b een made by che ques and or dep osi ti ng the enti re recei pts i n bank and even b i l l s rel ati ng to p urchase of di esel were subm i tted. Al l the thr ee parti es state ments were recorded and the y had admi tted sel l i ng of di esel to the assessee and recei vi ng pa yment by cheque. The p arties had cl ai med to have purchased the di esel from Ni khi l Fil l i ng stati on and Murari Fi l l i ng stati on. What turned the tabl e agai nst the asse ssee was the fac t that Shri Aja y Kumar and Shri Surender Kumar Thakur from whom ma jor i t y of the purchases were made to the e xtent of Rs.2.25 crores out of total purchase of Rs.2.36 crores, fai l ed to expl ai n or substanti ate the source from where the y had purchased the di esel for supp l yi ng to the as sessee by prod uci ng any documentar y evi dence i n thi s regard i n the form of purchase bi l l s. I t was al so noted by the Assessi ng Offi cer that the y had no l i cence to sel l di esel , nor were regi stered under VAT for the same. At the same ti me, we fi nd that the thi rd part y Ni khi l Fi l l i ng Stati on had admi tted maki ng sal es of Rs.1.26 cores to the assessee, whi l e the assessee has cl ai med to have purchased di esel of onl y Rs.11 l a cs from hi m. The Assessi ng Offi cer on the basi s of thi s fa ct has presume d that the assessee has made purchases of di esel outsi de the books whi l e the CI T( Appeal s) has read i t other wi se and has hel d that the actual purchase of di esel by the assessee can be taken onl y to the e xtent purchased from Ni khi l Fi l li ng Stati on to the e xtent of Rs.1. 26 crores and, therefore, del eted the addi ti on made to thi s e xtent. The pi ct ure whi ch 24 ITA No.729/Chd/2017 & ITA No.837/Chd/2017 A.Y.2012-13 emerges i s that the Assessi ng Offi cer had hel d the purchases made from Shri Aja y Kumar and Shri Surender Kumar to be bogus whi l e i n t he same breath he has hel d th at from Ni khi l Fi l l i ng Stati on t he assessee has made purchase s of di esel outsi de the books. The sai d co ncl usi on of the Assessi ng Offi cer, in our vi e w, does n ot appear to be l ogi cal concl usi on. The Assessi ng Offi cer appears to be b l owi ng hot and col d at the same ti me. I t i s diffi cul t to comprehend as to why the assesse e on cl ai mi ng to have purchased di esel on behal f of i ts transporters woul d at the same time make a bogus cl ai m and al so purchase di esel outsi de hi s books of account. Theref ore, it appears that the enq ui r y and i nvesti gati on conducted by the Revenue is i nconcl usi ve.
Further we fi nd that the CI T( Appeal s) has bel i eved the versi on of Ni khi l Fi l l i ng Stati on of havi ng sol d diesel to the assessee of Rs.1.26 crores merel y on the basi s of statement of the manager despi te the fact that no books of account were produced b y the manager to corroborate hi s statement. The CI T( A) has, we fi nd, at the same ti me hel d that the purchases from Suri nder Kum ar and Aja y K umar to be bogus, but has a l so accepted that purchases to th e e xtent of Rs.1.24 crores w ere made by the m from Ni khi l Fi l l i ng stati on for suppl yi ng to the assessee, bel i evi ng the versi on /statement of t he manager of the fi l l i ng st ati on. The concl usi on deri ved by the L d.CI T( A) is cl earl y not sustai nabl e. Th erefore, i n our vi e w, the enti re e xerci se of the Revenue and the enti re enqui r y and i nvesti gati on conducted i s i nconcl usi ve and i ncompl ete and the matter 25 ITA No.729/Chd/2017 & ITA No.837/Chd/2017 A.Y.2012-13 needs to be consi dered afresh. We fi nd that even the Ld.CI T( Appeal s) has made i dentical observati ons about the i nconcl usi ve nature of the i nqui r y i n hi s order w hil e stati ng so at pages 13 and 14 of hi s order as under:
"T he state men ts of Sh. Surender Ku mar, A jay Ku mar & An il Ku mar recorded by Ld. A. O. are no t concl us ive. Boo ks of accoun ts h ave no t bee n produced and ex amin ed in onl y o f the three c ases . Ld. A. O. h as al so no t ver if ie d the p ay me n ts mad e/rece ived b y cheque in the b ank accoun ts of the appel l an t an d the above thre e persons though so me of these cl e arl y be ar a n ar r ation men tion in g the ir n ame s. Eve n the assess men t orders u/s 147/ 143( 3) of Sh. Surender Ku mar & S h. A jay K u mar do no t record an y f inding of f ac t th at the amo un ts rece ived in the i r b ank accoun ts we re rece ived , ( mos t of wh ich are rece ived in c ash), f ro m th e appel l an t ou t of the amo un ts re tained b y h i m / deduc ted b y h i m f ro m the b il l s of the tr ans por ters as cl ai me d b y it. S i mil arl y, there is no docu men tar y ev idence on recor d th at Sh. Surender Ku mar & A jay Ku mar made c as h p ay men ts or any p ay me n ts b y cheque to the v ar ious pe trol pu mps. T he onl y s tate men t / re pl y th at h as co me on record in th i s reg ard is of Sh. An il Ku mar, M an ger of the N ikh il F il l ing S tation, wh o attended in res ponse to su mmo ns u/s 131 of the Ac t. In the absence of an y o ther ev idence on record, his s tate men t th at a consol id ated acc oun t was ke p t at the pe trol pu mp f or f il l ing d iesel in the veh icl es attached wi th AHPC and th at the s al e of diesel of Rs. 1, 26, 66, 867/- as per the l edger accoun t was mad e to al l the thre e persons ( p ar ties ) c an be acce p ted as a re ason abl e and pl aus ibl e ex p l an ation.
In the presen t c ase, Ld. A. O. h as no t re jec ted th e books of accoun ts u/s 145( 3) of the Ac t. Ho we ver, the N. P. r ate of 1. 13% sho wn b y the appel l an t is app aren tl y ver y l o w. Kee p ing in v ie w the to tal i ty of above f ac ts, i t woul d be re ason ab l e if the purch as e of diesel f or the veh icl es of the tr ans por ters b y th e appel l an t is acce p ted to the ex ten t of Rs. 1, 26, 66, 867/-. Af ter conf irmin g the abov e add i tion of Rs. 98, 51, 500/-, the ne t prof it wo rks ou t to 14. 14%. T he appel l an t ge ts a rel ief of Rs. 1, 26, 66, 867/-. T he add i tion o f Rs. 98, 51, 500. /- ( Rs. 2, 25, 18, 367 ( - ) Rs. 1, 26, 66, 867) is uphel d. T he ground of appe al is p ar tl y al l o we d. "26 ITA No.729/Chd/2017
& ITA No.837/Chd/2017 A.Y.2012-13
25. Therefore, we consi der i t fi t to restore the i ssue back to the Assessi ng Offi cer to conduct proper enqui ries in the present case beg i nni ng wi th fi rst e xami ni ng the cl ai m of the assessee vi s-à-vi s the genui neness of e xpenses cl aimed of hi re charges and further maki ng compl ete enqui ri es regardi ng the pu rchases of di ese l from the afore said three parti es so as to arri ve at proper concl usi on thereafter i n accordance wi th l a w. Grounds 'D' & 'E' rai sed by the assessee therefore, wi th regard to the di esel e xpenses i ncurred and addi ti on made u/s 69C on account of the same stand al l o wed for stati sti cal purposes
26. Ground 'F' rai sed by the assessee rel ates to di sal l o wance of di esel e xpenses cl ai med by the assessee amounti ng to Rs.1,39,452/-.
27. The A.O. made the above addi ti on of Rs.1,39,452/- on account of di esel e xpenses cl ai med by the assessee i n P&L account whi ch was e xpl ai ned to be i ncurred to run a generator set at the work si te. Ld. A.O. noted that there was no generator set appeari ng i n th e schedul e of fi x ed assets. The e xpl anati on of the assessee that the generat or set was arranged by the Di rector of company from one of hi s fri end Shri Sada Ram a nd the affi davi t o f Shri Sada Ram submi tted i n thi s regard were re jected by Ld. A.O. on ground that no purchase bi l l or any other documentar y evi dence regardi ng the purchase of generator by Shri Sada Ram coul d be produced. Hence , the di esel e xpe nses of Rs.1,39, 452/- was di sal l o wed u/s 69C of the Act.
27 ITA No.729/Chd/2017
& ITA No.837/Chd/2017 A.Y.2012-13
28. Duri ng appel l ate proceedi ngs the assessee contended that the Assessi ng Offi cer had re jected the affi davi t of Shri Sada Ram wi thout any veri fi cation or wi thout summoni ng Shri Sada Ram and i n the abse nce of any adver se materi al brought on recor d i n thi s regard, the Assessi ng Off i cer coul d not have re jected the affi davi t i n a summar y m anner. The Ld.CI T( Appeal s) re jected the ass essee's contenti on stati ng that the assessee had onl y produced an affi davi t from hi s fri end and had fai l ed to establ i shed the veraci t y of the reci tal i n the affi davi t by produci ng any affi davi t regardi ng purchase of gene rator by Shri Sad a Ram or by prod uc i ng hi m for cross e xami nati on.
29. On perusi ng the statement of facts fi l ed before us we fi nd that the con tenti on of the as sessee i s the sa me as that before the l o wer authori ti es, being that the e xpenses were i ncurred to run generator at pro ject si te and that the assessee di d not have any generat or, the same was arranged by the Di rector of the assessee company from hi s fri end Shri Sada Ram free of cost whose affi davi t to thi s effect had al so been fi l ed before the l o wer auth ori ti es. The co ntenti on of the assessee was that i f no effort i s made to cont rovert the contents of the affi davi t, the same has to be accepted as true. The assessee has ci ted the deci si on of the Hon'bl e Hi gh Court of Gauhati i n the case of Chowkchand Balabux V s. CIT (1961) 41 I TR 465 and the deci si on of the H on'bl e Ape x Court i n the case of Mehta Parekh & Co. Vs. CI T ( 1956) 30 I TR 181 i n thi s regard.
28 ITA No.729/Chd/2017
& ITA No.837/Chd/2017 A.Y.2012-13
30. The Ld. DR, on the other hand, has rel i ed upon the order of the CI T( Appeal s) .
31. We have consi dered the ri val contenti ons and find meri t in the contenti on of the Ld. counsel for assessee. The assessee's e xpl anati on of hav i ng purchased di esel for runni ng i ts generator set whi ch was o wned by the fri end of the Di rector of t he company from whom i t was bor ro wed, has been dul y evi denced by the affi davi t of the sai d person Shri Sada Ram. Wi t hout controverti ng the content s of the affi davi t or wi thout maki ng any effort to veri f y the same, the Revenue coul d not have doubted the veraci t y of the same. Further havi ng f i l ed the affi davi t i t was for the Revenue to make further enqui ri es vi s-à-vi s the veraci t y of the same, the onus i n thi s regard had been wrongful l y shi fted on the assessee. Al so si nce we have restored the i ssue of di esel e xpenses to the Assessi ng Offi cer i n the absence o f adequate enqui r y conducted and noti ng that on the present i ssue al so compl ete and ad equate enqui r y has not been co nducte d by the Revenue, we restore thi s i ssue al so back to the Assessi ng Offi cer for con ducti ng proper enqui r y and thereafter adjudi cate the same i n accordance wi th l a w. Ground.F rai sed by the assessee i s, therefore, al so al l o wed for stati sti cal purposes.
32. Ground 'G' ra i sed by the assessee rel ates to di sal l o wance of e xpenses of Rs.87,650/- as donati on e xpenses.
29 ITA No.729/Chd/2017
& ITA No.837/Chd/2017 A.Y.2012-13
33. A perusal of the order of the CI T( Appeal s) reveal s that the sai d e xpense s cl ai med by the assessee had be en al l o wed by hi m. Therefor e, we fi nd no m eri t i n the prese nt ground rai sed by the assessee, the assessee not bei ng aggri eved by the order of the CI T( Appeal s) on thi s i ssue. Ground G rai sed by the assessee i s, therefore, di smi ssed.
34. Ground No. 'H' rai sed by the assessee rel ati ng to chargi ng/i mposi ng i nterest u/ss 244-A, 234B & 2 34D of the Act are conseque nti al and, theref ore, needs no ad judi cati on. Ground No. 'H' rai sed by the assessee i s di smi ssed.
35. Ground No. 'I ' rai sed by the assessee i s general and no adjudi cati on i s requi red.
In the resul t the appeal of the assessee is partl y al l o wed for stati sti cal purposes.
36. We shal l no w be taki ng up the appeal of the Revenue i n ITA No.837/Chd/2017 for A.Y 2012-13.
37. The Revenue has rai sed fol l o wi ng grounds:
"1. On the facts and in the circumstances, the Ld. CIT(A) has erred in deleting the addition of Rs. 1,26,66,867/- made by the A.O. on account of expenditure allegedly booked in operating and other expenses in the name of Sh. Ajay Kumar and Sh. Surender Kumar as the assesses company could not produce documentary evidences and could not satisfactorily prove purchases of diesel from both the persons.
2. On the facts and in the circumstances, the Ld. CIT(A) has erred in deleting the addition of Rs.1,15,65,717/- as the assessee company could not justify the difference of Rs.1,15,65,717/- occurred in diesel ledger account of Austee Hydro Power & Construction Company Pvt Ltd (assessee ) and Nikhil Filling Station (Saler).30 ITA No.729/Chd/2017
& ITA No.837/Chd/2017 A.Y.2012-13
3. On the facts and in the circumstances, the Ld. CI-T(A) has erred in deleting the addition of Rs.87,650/-made on account of donation paid as the assessee company paid donation to such persons who do not come under the preview of Section 80G.
38. Ground Nos.1 and 2, i t was poi nted out and we have al so noted, are on the i ssue of diesel e xpenses di sal l o wed by the Assessi ng Offi cer whi ch was parti al l y del eted by the CI T( Appeal s) . Si nce thi s i ssue has al ready been deal t wi th by us i n ground 'D' and 'E' of the assessee's appeal wherei n we have restored the enti re i ssue back to the Assessi ng Offi cer for conducti ng proper enqui r y at paras 20 to 25 of our order above, The i ssue rai sed by the Revenue stands covered by the same and th us restored to th e Assessi ng Offi c er. I n vi e w of the above, ground Nos.1 and 2 rai sed by the Revenue are al l o wed for stati sti cal purposes.
39. Ground No.3 rel ates to the i ssue of donati on e xpenses di sal l o wed by th e Assessi ng Offi cer on the grou nd that the assessee had fai l ed to establ i sh that the persons to whom donati ons were gi ven were regi stered u/s 80G of the Act.
40. Before the Ld.CI T( Appeal s) , the a ssessee had cont ended that the amount s pai d were not donati ons but we re made i n connecti on wi th festi val , mel as, tournaments, etc. sponsored by Deput y Commi ssi oner, Mandi /Pancha yat and were adverti sement e xpenses i nci dental to the busi ness of the assessee. The C I T( Appeal s) found the e xpl anati on of the assessee to be plausi bl e and, therefore, al l o wed the cl ai m of the assessee.
31 ITA No.729/Chd/2017
& ITA No.837/Chd/2017 A.Y.2012-13
41. Before us, the Ld. DR rel i ed upon the order of the Assessi ng Offi cer.
42. We have gone through the or der of the Ass essi ng Offi cer. We fi nd that the i mpugn ed e xpenses of R s.87,650/- were i ncurred on the fol l o wi ng:
Detisl of Staff Welfare Exp. [fair & festivals office expenses] for the F.Y. 2011-12 Date Particulars Total Return cheque 04/04/2011 Guga Mela committee 2100/-
Barmana 13/06/2011 Guga Mela committee 5200/-
Barmana 23/08/2011 Guga Mela committee 5100/-
Barmana 25/08/2011 Guga Mela committee 5100/-
Barmana Jay Shri Ram Yuvak Mandal 14/09/2011 Slapper HP Basket Ball 5000/-
Association 29/11/2011 Paddal Ground Mandi 11000/-
02/12/2011 Jay Shri Ram Yuvak 10000/-
Mandal Slapper 09/01/2012 Lohari Utsav Committee 11000/-
Bahot Kasol Kasol 06/03/2012 State Level Nalwari Fair 250/-
Bilaspur 15/03/2012 State Level Nalwari 35000/-
Fairsunder nagar
Total 87650 2100
43. There i s no evi d ence on record t o sho w the natu re of the e xpenses, whether donati ons, as cl ai med by the Revenue or adverti sements, as cl ai med by the assessee. The Assessi ng Offi cer has gi ven no basi s for hol di ng the sai d e xpenses to be donati ons , wh i l e the CI T( App eal s) has accepted the assessee's cl ai m of the same bei ng adverti sements stati ng i t to be a pl ausi bl e e xpl anati on. None has cared to veri f y the facts rel ati ng to the sai d e xpenses.32 ITA No.729/Chd/2017
& ITA No.837/Chd/2017 A.Y.2012-13 We, therefore, restore thi s i ssue al so back to the Assessi ng Offi cer to veri f y the e xact nat ure of the e xp enses and thereafter adjudi cate the i ssue in accordance wi th l a w. Ground No.3 rai sed by the Revenue i s al l o wed for stati sti cal purposes.
The appeal of the Revenue i s al l o wed for stati sti cal purposes.
44. I n t h e r e s u l t , th e a p p ea l o f t he a s s e ss e e i s pa r t l y allowed for s t at i s t i c a l p u rp o s es and the appeal of the R e v e n u e i s a l l o we d f o r st a t i s ti c a l p u r p o s e s.
O r d e r p r on o u n c ed i n t h e O p e n Cou r t .
Sd/- Sd/-
(SANJAY GARG) (ANNAPURNA GUPTA)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated : 21 s t August, 2018
*Rati*
Copy to:
1. The Appellant
2. The Respondent
3. The CIT(A)
4. The CIT
5. The DR
Assistant Registrar,
ITAT, Chandigarh