Income Tax Appellate Tribunal - Patna
M/S Akash Ganga Homes Pvt Ltd, Patna vs Dcit, Central Circle-1, Patna on 19 September, 2019
आयकर अपीलीय अधिकरण,पटना न्यायपीठ,पटना IN THE INCOME TAX APPELLATE TRIBUNAL PATNA BENCH, PATNA श्री चन्द्र मोहन गगग, न्द्याययक सदस्य एवं श्री एल.पी.साहु, लेखा सदस्य के समक्ष। BEFORE SHRI CHANDRA MOHAN GARG, JM & SHRI L.P. SAHU, AM IT(SS)A No.31/PAT/2016 (ननिाारण वर्ा / Assessment Year :2007-2008) M/s Akash Ganga Homes Pvt. Ltd Vs. DCIT, Central Circle-1, 3rd Floor, Ashiana Towers, Patna-800001 Exhibition Road, Patna स्थायी ले खा सं . /PAN No. : AAECA 8030 F (अपीलाथी /Appellant) .. (प्रत्यथी / Respondent) निर्धा रिती की ओर से /Assessee by : Shri Nishant Maitin, CA राजस्व की ओर से /Revenue by : Shri Inderjit Singh, CIT-DR सुनवाई की तारीख / Date of Hearing : 18/09/2019 घोषणा की तारीख/ : 19/09/2019 Date of Pronouncement आदे श / O R D E R Per Bench:
This appeal is filed by the assessee against the order passed by learned CIT(A)-3, Patna, dated 23.09.2016 for the assessment year 2007-2008 on the following grounds of appeal :-
1. For that the Commissioner of Income-tax (Appeals) -3, Patna has erred in confirming the proceeding u/s 153C/153A of the income Tax Act.
2. For that the Commissioner of Income-tax (Appeals) -3, Patna has erred in not holding that the order passed u/s 153C is barred by limitation.
3. For that the Commissioner of Income-tax (Appeals) -3, Patna has erred in not holding the special audit u/s 142(2A) as ab-initio void, arbitrary, illegal and contrary to the provisions of law. 2
IT(SS)A No.31/PAT/2016
4. For that the Commissioner of Income-tax (Appeals) -3, Patna has erred in not holding that special audit conducted u/s 142 (2A) by the special auditor is barred by limitation.
5. For that the Commissioner of Income-tax (Appeals) -3, Patna has erred in sustaining disallowance of Rs.19,320/- by invoking section 40(a)(ia) on account of expenses incurred for labour charges.
6. For that the Commissioner of Income-tax (Appeals) -3, Patna has erred in sustaining addition of Rs 14,36,173/- u/s 69D on account of cash loans received from SKC (HUF).
7. For that the Commissioner of Income-tax (Appeals) -3, Patna has erred in not holding that the order passed by Id AO is bad both in law and on facts.
8. For that the Commissioner of Income-tax (Appeals) -3, Patna has erred in not holding that order of learned Assessing Officer is based on presumptions, surmises and conjectures.
9. For any other ground that may be urged at the time of hearing.
2. Out of the above nine grounds, ld. AR at the time of hearing did not press ground Nos.1 to 4, accordingly, these grounds are dismissed as not pressed. Further ground Nos. 7 to 9 are general in nature, therefore, the same are not necessary for adjudication. Now, the grounds remained i.e. ground Nos.5 & 6 with regard to sustenance of addition made by the Assessing Officer on account of expenses incurred for labour charges by invoking section 40(a)(ia) of the Act and addition made on account of cash loans received from SKC(HUF) u/s.69D of the Act.
Ground No.5:
3. Ld. AR submitted that since the assessee has already offered total receipts to be taxed under presumptive taxation u/s.44AD of the act, 3 IT(SS)A No.31/PAT/2016 therefore, the addition made u/s.40(a)(ia) of the Act for non-deduction of TDS on the said expenses may kindly be deleted.
4. Replying to the above, ld. DR relied on the orders of both the authorities below.
5. On careful consideration of the above rival submissions of both the parties as well the material available on record of the Tribunal, we find that the Assessing Officer himself in para 9.1 noted that the contention of the assessee that the payment of rs.19,320/- does not attract TDS provisions and, thus, provision of Section 40(a)(ia) of the Act are not applicable and, therefore, the addition is not sustainable. However, the Assessing Officer in the same para at sub-para (b) stated that there was a typographical error in the questionnaire issued to the assessee but lastly in sub-para(c) made addition of Rs.19,320/- which, in our opinion, is not sustainable as provisions of TDS does not apply to the amount less than Rs.20,000/-. Accordingly, ground No.5 of the assessee is allowed.
Ground No.6:
6. Ld. AR submitted that the amount of Rs.14,36,873/- received from S.K.Choudhary(HUF) is not loan but the said amount was provided to the assessee for carrying out specific repairs and maintenance work as desired by the pair (HUF). Ld.AR vehemently pointed out that in the corresponding debit side of Annexure-C for 4 IT(SS)A No.31/PAT/2016 A.Y.2006-2007 and Annexure-F for A.Y.2007-2008 to the report of the Special Auditor clearly reflects that there was work-in-progress/assets and this work-in-progress represents the amount of expenditure incurred by the assessee for carrying out specific work for which the said amount was received by the assessee and provided by S.K.Choudhary (HUF). Ld.AR further submitted that the authorities below have not considered this explanation of the assessee supported by documentary evidence contained in the special auditor report and proceeded to make addition u/s.69D of the Act treating the same as hundi transaction on erroneous basis, therefore, addition is not correct, justified and sustainable.
7. Replying to the above, ld. DR, in all fairness, admitted that there is no iota of allegation that during the relevant previous year either the assessee borrowed or repaid any amount in hundi transaction. However, he supported the action of the Assessing Officer as well as first appellate order by stating that the impugned amount was not reflected in the books of accounts of the assessee, therefore, the addition was made by the Assessing Officer and confirmed by the CIT(A). He further submitted merely because addition has been made in wrong provision the same cannot be held as unsustainable.
8. On careful perusal of the assessment order, we find that the Assessing Officer has made addition u/s.69D of the Act. For the sake of 5 IT(SS)A No.31/PAT/2016 convenience we would like to reproduce the provisions of Section 69D of the Act, which read as under :-
Section 69D. Where any amount is borrowed on a hundi from, or any amount due thereon is repaid to, any person otherwise than through an account payee cheque drawn on a bank, the amount so borrowed or repaid shall be deemed to be the income of the person borrowing or repaying the amount aforesaid for the previous year in which the amount was borrowed or repaid, as the case may be :
Provided that, if in any case any amount borrowed on a hundi has been deemed under the provisions of this section to be the income of any person, such person shall not be liable to be assessed again in respect of such amount under the provisions of this section on repayment of such amount.
Explanation.-For the purposes of this section, the amount repaid shall include the amount of interest paid on the amount borrowed. Thus, from the above provisions of Section 69D, it is clear that where the amount is borrowed on a hundi from, or any amount due thereon is repaid to, any person otherwise than an account payee cheque, then the amount borrowed or repaid should be deemed to be the income of the person borrowing or repaying the aforesaid amount. From observation of ld. CIT(A) at pages 14 & 15 of first appellate order, we are unable to see any finding of facts that the assessee borrowed or repaid any amount under hundi transaction during relevant previous year/financial year. At top para at page 15, the ld.CIT(A) noted that "this contention is not acceptable in view of the introduction of cash of Rs.14,36,873/- from undisclosed sources". There is no iota of allegation that the assessee borrowed or repaid amount of hundi transaction 6 IT(SS)A No.31/PAT/2016 which attracts provision of Section 69D of the Act. Thus, the addition made u/s.69D of the Act is not sustainable.
9. On careful consideration of above rival submissions, we are of the view that in the earlier part of this order, we observed that there was no transaction of borrowing or repaying under hundi transaction and impugned amount is not pertaining to any hundi transaction, therefore, provision of Section 69D of the Act does not attract to the impugned transactions and allegation of authorities below in this regard and basis taken for making addition is not as per scheme of provision of Section 69D of the Act. Further, when we consider the explanation of the assessee that the amount was received from S.K.Choudhary (HUF) for carrying out specific repair and maintenance work as desired by the person concerned i.e. payee S.K.Choudhary (HUF). Annxure-C and Annexure-F pertaining to A.Y.2006-2007 & 2007-2008, respectively annexed to the Special Auditors Report clearly reflects work-in-progress on the assets side, which represents expenditure incurred by the assessee for carrying out specific work for which the assessee has received the impugned amount from S.K.Choudhary(HUF). Therefore, the purpose of receipt of the impugned amount is explained and no addition is called for on this count. Consequently, the addition made by theAO and sustained by the ld.CIT(A) under irrelevant provisions of Section 69D of the Act on 7 IT(SS)A No.31/PAT/2016 wrong appreciation of the facts, being devoid of merits, is deleted. Accordingly, ground No.6 of the assessee is allowed.
10. In the result, the appeal of the assessee is partly allowed.
Order pronounced in the open court on 19/09/2019.
Sd/- Sd/-
(L.P.SAHU) (C.M.GARG)
लेखा सदस्य / ACCOUNTANT MEMBER न्यानयक सदस्य / JUDICIAL MEMBER
पटना /Patna; ददनांक Dated 19/09/2019
Prakash Kumar Mishra, Sr.P.S.(on tour)
आदे श की प्रनिललपप अग्रेपर्ि/Copy of the Order forwarded to :
1. अपीलाथी / The Appellant-
2. प्रत्यथी / The Respondent-
3. आयकि आयु क्त(अपील) / The CIT(A),
4. आयकर आयक् ु त / CIT
5. निभधगीय प्रनतनिनर्, आयकि अपीलीय अनर्किण, पटना / DR, ITAT, Patna
6. गार्ग फाईल / Guard file. आदे शानुसार/ BY ORDER, सत्यापपत प्रयत //True Copy// (Senior Private Secretary) आयकर अपीलीय अधिकरण, पटना / ITAT, Patna