Income Tax Appellate Tribunal - Chandigarh
Sh. Bawa Pasricha, Kullu vs Dcit, Mandi on 29 November, 2018
आयकर अपील
य अ धकरण,च डीगढ़ यायपीठ "ए" , च डीगढ़
IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH "A", CHANDIGARH
ी संजय गग , या यक सद य एवं डा. बी.आर.आर, कुमार, लेखा सद य
BEFORE: Sh. SANJAY GARG, JM & DR. B.R.R. KUMAR, AM
आयकर अपील सं./ ITA NO. 714/Chd/2017
नधा रण वष / Assessment Years : 2012-13
Shri. Bawa Pasricha बनाम The DCIT
Prop. Smile Enterprises Circle,
Akhara Bazar, Kullu Mandi
थायी लेखा सं./PAN NO: ABCPP4219P
अपीलाथ /Appellant यथ /Respondent
नधा रती क! ओर से/Assessee by : Shri. Gaurav Sharma
राज व क! ओर से/ Revenue by : Smt. Chandrakanta
सन
ु वाई क! तार&ख/Date of Hearing : 04/09/2018
उदघोषणा क! तार&ख/Date of Pronouncement : 29/11/2018
आदे श/Order
PER DR. B.R.R. KUMAR, A.M
The present appeal has been filed by the Assessee against the order of the Ld. CIT(A) Palampur dt. 31/01/2017.
2. In the present appeal Assessee has raised following grounds:
1. The Ld. CIT (Appeals) failed to appreciate the fact that the addition of Rs.2599935/- being amount paid to stone suppliers is unjustified, illegal and arbitrary.
2. The Ld. CIT (Appeals) failed to appreciate the original vouchers and affidavits from suppliers which were ignored by the Ld. Assessing officer at the time of assessment proceedings.
3. The Ld. CIT (Appeals) failed to appreciate the fact that the contract was executed to construct base stations of transmission line towers.
4. The Ld. CIT (Appeals) failed to appreciate the fact that the manufacturing of cut stone comes within definition of cottage industry as specified in clause (f) of Rule 6DD of the Income Tax Rules, 1962.
5. The Ld. CIT (Appeals) failed to appreciate the written submissions and various case laws relied upon.
6. Without prejudice to the above the learned Ld. CIT(Appeals) ought to have considered the fact that the amount paid to stone suppliers comes within the definition forest produce as specified in clause ( e ) (i) of Rule 6DD of the Income Tax Rules, 1962.
7. Without prejudice to the above the learned Ld. CIT(Appeals) ought to have considered-the fact that the amount paid to stone suppliers through bearer cheques by 'Vicky" acting on behalf appellant falls under clause (k) of Rule 6DD of the Income Tax Rules, 1962.
8. Without prejudice to the above the learned Ld. CIT (Appeals) ought to have considered the fact that the amount paid to stone suppliers falls under clause (g) of Rule 6DD of the Income Tax Rules, 1962.
9. Without prejudice to the above the learned Ld. CIT (Appeals) ought to have considered the fact that all other expenses and purchase from stone suppliers throughout the year relating to execution of contract were allowed and only the amount paid to the stone suppliers on 16.03.2012 and 17.03.2012 were considered as bogus.
3. During assessment proceedings, while verifying the purchases, it was noticed that the assessee had made payments to various Stone Crushers namely M/s Amit Stone Crusher and 30 other persons, but no purchase bills/vouchers could be produced in respect of these purchases. The payments had been made through cheques drawn on his J&K Bank Ltd. Kullu. Information was called by the authorities from the bank u/s 133(6) of the Act as to how these payments had been made. In compliance, the bank furnished information vide letter dated 29.01.2015 and confirmed that these payments made on 16.03.2012 & 17.03.2012 amounting to Rs. 13,58,490/- were by way of bearer cheques. The bank also supplied copies of both sides of the cheques from which it was seen that all the above payments have been withdrawn by one person namely 'Vicky'. In view of the above facts, the A.O. held that the purchases shown to have been made from the above 31 persons were bogus, that is why the assessee had not produced any bills/ vouchers in respect of the above purchases, The purchases were therefore held as unexplained.
4. Extending the same conclusion and reasoning, the A.O. further held that the amount shown as payable to the above persons in the Balance Sheet as sundry creditors was also to be treated as unexplained and on account of bogus purchases. Accordingly, the outstanding credit balances in the name of six out of the above 31 persons amounting to Rs. 12,41,445/- was also disallowed. In total an addition of Rs. 25,99,935/- was made to the income of the assessee.
5. During appeal, the assessee filed written submissions stating that the payments in question were made to the cut-stones suppliers. During the year, the assessee had a contract with M/s A.D. Hydro, Manali, for construction of base stations for transmission line towers. The work sites were in extreme interior with no road connectivity. It was stated that 'Vicky' is an accountant working with the assessee. Cut stone manufacturing, is a manual and labour work involving hammering and chiseling. Each one of the suppliers (Mates) deployed 15-20 labourers (mostly Nepali and migrant) to cut stone. In order to avoid un- necessary labour unrest, cheques were made in the name of Mate (Supplier) and along with him appellant's accountant (Vicky) was sent to bank for withdrawal. Amount was withdrawn from bank and distributed to the labourers in front of our accountant. In some of the cases, the accountant signed on the back of the cheques as bank refused to pay the Mates who were strangers to it and also did not have necessary Id proofs. It was argued that even if the bearer cheques are treated as cash payments, the payments are covered under Rule 6DD, clause (f), which provides that no disallowance shall be made under section 40A(3) where the payment is made for the purchase of products manufactured or processed without the aid of power in a cottage industry.
6. The Ld. CIT(A) held that the assessee has not made the payments in question to a cottage industry or for a product manufactured or processed in a cottage industry and it is not the case of the assessee that the payments were made in cash at site under a circumstance falling under Rule 6DD. The assessee duly made the payments by cheques drawn on his bank which were upon investigation found to be bearer cheques. All the above amounts were withdrawn by one 'Vicky' acting on behalf of the assessee whom the assessee had given the bearer cheques. Rule 6D it would have come into play if the payments had been made in cash at sites of work, there is further no evidence or material on record that the cash withdrawn by 'Vicky' was given to any of the 31 persons in whose names the cheques had been issued. Thus the Ld. CIT(A) confirmed the addition on both the grounds of not proving the payment as genuine as well as on non applicability of Rule 8DD.
7. Before us, Ld. AR argued and filed written submission in support of his grounds. The brief synopsis of the arguments taken by the Ld. AR are as under:
Assessing Officer has never asked to produce books of account where as in the assessment order the Assessing Officer wrongly mentions that books of account were not produced.
7.1 All the purchase bills have been produced before the Assessing Officer. 7.2 Vicky Thakur the Accountant attended the proceedings before the Assessing Officer on 07/01/2015 as per the order sheet noting hence the Assessing Officer is well aware of the Accountant. 7.3 The bearer cheques were issued for convenience to facilitate the prompt payment to the labourers. The addition was made based on the evidences collected from the third party which is the J&K Bank . 7.4 The Affidavits of the various stone suppliers were furnished before the Assessing Officer whose genuineness was not questioned by the Assessing Officer during the proceedings.
7.5 It was strongly contended that the payment made only on 16/03/2012 and 17/03/2012 were disallowed whereas the practice of the assessee throughout the year and in the subsequent year is also same and no reasons has been brought on record to establish that payment made on 16/03/2012 and 17/03/2012 is bogus keeping in mind the fact that the other payments throughout the year has been accepted as genuine though through bearer cheques.
8. The Ld. DR on the other hand has argued that the genuinity of the assessment proceedings can be gauzed from the assessment order that not all the payments made by bearer cheques have been disallowed because they have been found to be genuine transactions.
9. We have gone through the facts of the case. The Assessing Officer is disallowed the amounts paid to the following suppliers.
S.No. Name of the person/ Date of issue Total Parties whose Affidavits filed party to Amount before the Assessing Officer whom bearer cheque issued 1 Amit Stone Supplier 16-03-2012 32310/- Bhikam Ram 2 Ashu Stone Supplier 16-03-2012 49500/- Chaman 3 Bhag Singh Stone Supplier 17-03-2012 48210/- Dawa Lamba 4 Bunty Stone Supplier 17-03-2012 48120/- Dola Ram Thakur 5 Des Raj Stone Supplier 16-03-2012 42100/- Dot Ram 6 Guddu Stone Supplier 16-03-2012 45640/- Karam Chand 7 Hari Chand Stone Supplier 16-03-2012 49500/- Khekh Ram 8 Hira Lai Stone Supplier 16-03-2012 25900/- Mani Ram 9 Kaku Stone Supplier 17-03-2012 43910/- Pravin Kumar 10 Kararn Chand Stone 17-03-2012 46220/- Purkh Chand Supplier 11 Mani Ram Sione Supplier 16-03-2012 49210/- Ramesh Kumar 12 Nokhu Ram Stone 16-03-2012 48210/- Tota Ram Supplier 13 Om Dutt Stone Supplier 16-03-2012 47800/-
14 Pawan Stone Supplier 16-03-2012 48400/-
15 Preetam Stone Supplier 16-03-2012 47900/-
16 Prem Chand Stone 16-03-2012 35600/-
Supplier 17 Rahui Stone Supplier 16-03-2012 47210/-
18 Raj Kumar 16-03-2012 34000/-
19 Rajesh 16-03-2012 43000/-
20 Rajness Stone Supplier 17-03-2012 39110/-
21 Raku Stone Supplier 16-03-2012 48210/-
22 Ram Singh Stone Supplier 17-03-2012 38700/-
23 Ram Singh Stone Supplier 17-03-2012 45410/-
24 Ravinder Kumar Stone 16-03-2012 36400/-
Supplier 25 Sanjay Stone Supplier 16-03-2012 42520/-
26 Sanjay Stone Supplier 17-03-2012 40800/-
27 Shiv Ram 17-03-2012 40900/-
28 Tek Rom 17 03-2012 47800/-
29 Tikkarn Stone Supplier 17-03-2012 49100/-
30 Tule Ram 16-03-2012 48210/-
31 Vijay Stone Supplier 16-03-2012 48500/-
1358490/-
10. On going through the facts of the case we are unable to accept with the arguments of the Ld. AR that the Assessing Officer has not asked for production of books of Accounts hence not produced and also the main argument that the amounts have been paid by bearer cheques so that the prompt wages can be paid to the labourers cannot be accepted as we find that all the purchases were ledgered in the months of January and February where as the payments have been made only on 16th & 17th March 2012. It is also cannot be accepted that all the payments have been made to suppliers only on two days with whom hardly one or two transactions have been entered. The Assessing Officer was well justified in accepting the payments made to other suppliers from whom the stone was purchased throughout the year on a regular basis. Similarly the argument of the Ld. AR that the enquiries conducted from the Bank amounts to third party enquiries cannot be accepted as the Assessing Officer has only obtained the copies of the Cheques issued by the Assessee himself and determined that the payments have been made by the assessee through a bearer cheque and en cashed by his Accountant namely Vicky. However, keeping in view the circumstances that the Assessing Officer has not conclusively enquired into the genuinity of the transactions and the assessee has also not proved the genuineness of the purchase and utilization of the material before the Assessing Officer, in order to have a fair view pertaining to allowability of this expenditure the matter is restored back to the file of Assessing Officer to give due opportunity to the Assessee and determine the taxability as per the provisions of the Income Tax Act,1961. We hereby also hold that the Rule 6DD(f), 6DD(g) and 6DD(k) cannot be applied to the payments made to stone suppliers. Hence, the alternate plea taken by the assessee at Ground No. 7 and 8 are treated as dismissed.
11. In the result, appeal of the Assessee is partly allowed for statistical purposes.
Order pronounced in the Open Court.
Sd/- Sd/-
संजय गग डा. बी.आर.आर, कुमार,
(SANJAY GARG ) ( DR. B.R.R. KUMAR, AM)
या यक सद य/ Judicial Member लेखा सद य/ Accountant Member
AG
Date: 29/11/2018
आदे श क! त,ल-प अ.े-षत/ Copy of the order forwarded to :
1. अपीलाथ / The Appellant ,2. यथ / The Respondent , 3.आयकर आयु/त/ CIT, 4. आयकर आयु/त (अपील)/ The CIT(A), 5. -वभागीय त न4ध, आयकर अपील&य आ4धकरण, च7डीगढ़/ DR, ITAT, CHANDIGARH, 6. गाड फाईल/ Guard File