IT: Where no evidence had been filed by assessee to substantiate claim of vehicle running expenses, addition in respect of same was confirmed
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[2013] 38 taxmann.com 87 (Agra - Trib.)
IN THE ITAT AGRA BENCH
Transcend Infosystem (P.) Ltd.
v.
Deputy Commissioner of Income-tax, Circle-5, Firozabad*
BHAVNESH SAINI, JUDICIAL MEMBER
AND A.L. GEHLOT, ACCOUNTANT MEMBER
AND A.L. GEHLOT, ACCOUNTANT MEMBER
IT APPEAL NO. 238 (AGRA) OF 2012
[ASSESSMENT YEAR 2007-08]
[ASSESSMENT YEAR 2007-08]
JANUARY 29, 2013
Section 37(1) of the Income-tax Act, 1961 - Business expenditure - Allowability of [Vehicle running expenses] - Assessment year 2007-08 - Assessee claimed vehicle running expenses - Assessing Officer added same on ground that part of expenditure was related to earlier year and part of expenditure was not entered into books of account produced at assessment stage - Whether since no evidence had been filed by assessee to substantiate claim of vehicle running expenses, addition in respect of same was confirmed - Held, yes [Para 4][In favour of revenue]
Section 68 of the Income-tax Act, 1961 - Cash credit [Unsecured loans] - Assessment year 2007-08 - Assessee had raised unsecured loans - It could not produce confirmation and other evidence before Assessing Officer in respect of 27 creditors - Assessing Officer made addition on account of unexplained cash credit - Assessee filed application for admission of additional evidence and stated that since creditors were scattered geographically, same could not be collected at assessment stage - Whether since no sufficient time was available to assessee to produce these additional evidences before Assessing Officer, same should be admitted - Held, yes - Whether since these additional evidence were not filed before Assessing Officer, matter was restored to file of Assessing Officer to examine same in order to finalize assessment order - Held, yes [Para 7.1] [In favour of assessee]
FACTS-I
| ■ | The assessee claimed expenses amounting to 56.84 lakhs under the head operational expenditure which includes expenditure of Rs. 2.1 lakh under the head vehicle running and maintenance. | |
| ■ | The Assessing Officer found that the entire expenditure under the head vehicle running expenses was reimbursed in cash to one of the directors of the assessee-company and that Rs. 50,000 was debited on 31-3-2007 in cash and Rs. 7,876 was paid for reimbursement of petrol bill in respect of earlier year March, 2006. The Assessing Officer further found that the assessee had not entered said details into the computer generated books of account produced at the assessment stage. Accordingly, the Assessing Officer disallowed the vehicle running expenses of Rs. 57,856. | |
| ■ | On appeal, the Commissioner (Appeals) confirmed the order of the Assessing Officer. | |
| ■ | On second appeal: |
HELD-I
| ■ | On consideration of the rival submissions, there is no justification to interfere with the order of the authorities below in making or confirming the addition. The fact remains same, no evidence have been filed to substantiate the claim of vehicle running expenses. In the absence of any evidence on record, there is no justification to interfere with the order of the Commissioner (Appeals). Resultantly, the addition is confirmed, particular when part of the expenditure relate to the earlier year and part of the expenditure was not entered into the books of account of the assessee based on computer generated books of account produced at the assessment stage. [Para 4] |
FACTS-II
| ■ | The Assessing Officer found that the assessee had raised substantial unsecured loans and asked the assessee to furnish confirmations and complete details to support the unexplained credits. | |
| ■ | The assessee could not file any confirmation and other evidences in respect of 27 creditors to prove the genuine credits. | |
| ■ | Accordingly, the Assessing Officer made the addition of Rs. 5.2 lakh on account of unexplained cash credit in respect of 27 persons. | |
| ■ | On appeal, the Commissioner (Appeals) confirmed the order of the Assessing Officer. | |
| ■ | On second appeal the assessee filed application for admission of additional evidences in respect of 27 creditors and stated that since the creditors were scattered geographically, therefore, the same could not be collected at the assessment stage and the assessment order was passed in haste without giving reasonable opportunity. |
HELD-II
| ■ | It is settled law that burden is upon the assessee under section 68 to prove the identity of the creditors, their creditworthiness and genuineness of the transaction. The additional evidence filed above would throw light on the unexplained credits in which additions have been made and these additional evidences are necessary to enable to pass appropriate order in the matter in doing substantial justice between the parties. Further, since no sufficient time was available to the assessee to produce these additional evidences before the Assessing Officer, such additional evidences should be admitted for substantial cause in order to do justice between the parties. The matter could have been remanded to the Assessing Officer for re-examination of the evidences and in that event, the revenue would not have been at loss at all. Considering the above discussion and in the interest of justice and for substantial cause, all the additional evidences filed for the purpose of disposal of appeal is admitted. Since these additional evidences were not filed before the Assessing Officer, therefore, opportunity shall have to be granted to the Assessing Officer to examine these additional evidences in order to finalize the assessment order on this issue. Accordingly, the orders of the authorities is set aside on this issue and this issue is restored to the file of the Assessing Officer with the direction to re-decide the issue by examining the additional evidence by giving reasonable and sufficient opportunity of being heard to the assessee. The assessee is directed to file all these original evidences before the Assessing Officer for finalization of the matter. [Para 7.1] |
CASE REVIEW - II
Ram Prasad Sharma v. CIT [1979] 119 ITR 867, Vimal Kumar Anant Kumar v. CIT [2009] 288 ITR 278 (para 7.1) distinguished.
CASES REFERRED TO
Ram Prasad Sharma v. CIT [1979] 119 ITR 867/2 Taxman 469 (All.) (para 6), Bimal Kumar Anant Kumar v. CIT [2007] 288 ITR 278/159 Taxman 402 (All) (para 6), Akshay Finance & Trading Co. v. ITO [1993] 46 TTJ 630 (Delhi) (para 7) and CIT v. Text Hundred India (P.) Ltd.[2013] 351 ITR 57/[2011] 197 Taxman 128/9 taxmann.com 149 (Delhi) (para 7).
Gaurav Goyal for the Appellant. K.K. Mishra for the Respondent.
ORDER
Bhavnesh Saini, Judicial Member - This appeal by the assessee is directed against the order of ld. CIT(A)-II, Agra dated 29.02.2012 for the assessment year 2007-08.
2. We have heard the ld. Representatives of both the parties and perused the findings of the authorities below.
3. On ground No.1, the assessee challenged the addition of Rs.57,876/- on account of disallowance of vehicle running expenses. The AO noticed that the assessee has disclosed income in the trading of computer hardware and software. The assessee claimed expenses amounting to R.56,84,208/- under the head operational expenditure which includes expenditure of Rs.2,10,921/- under the head vehicle running and maintenance. The assessee was asked to explain the above expenditure. The details indicated that the entire expenditure under this head was reimbursed in cash to one Shri Shobhit Verma who is one of the directors of the assessee company. Rs.50,000/- was debited on 31.03.2007 in cash. It was also noticed that on the same very day, account was debited through cash by Rs.7876/-which was paid to the same person for reimbursement of petrol bill in respect of earlier year March, 2006.The assessee was asked to substantiate the claim through supporting evidence and the commercial expediency to incur the expenses. It was also found by the AO that the assessee has not entered into the above details on the relevant date in computer generated print out of cash book produced in the assessment proceedings. Therefore, the source of the expenditure was also found to be unexplained. The assessee could not substantiate the claim before the AO. The source of expenditure remained unexplained. In the absence of any material on record, Rs.50,000/- was added to the income of the assessee and since Rs.7,856/-was also found to be pertained to preceding assessment year March, 2006, therefore, it was also added and total addition was made of Rs.57,856/- on account of disallowance of vehicle running expenses. The assessee remained exparte before the ld. CIT(A) and in the absence of any evidence or material on record, the ld. CIT(A) also confirmed the addition.
4. On consideration of the rival submissions, we do not find any justification to interfere with the order of the authorities below in making or confirming the addition. The fact remains that even before us, no evidences have been filed to substantiate the claim of vehicle running expenses. In the absence of any evidence on record, we do not find any justification to interfere with the order of the ld. CIT(A). Resultantly, the addition is confirmed, particular when part of the expenditure relate to the earlier year and part of the expenditure was not entered into the books of account of the assessee based on computer generated books of account produced at the assessment stage. Ground No.1 of the appeal of the assessee is, accordingly, dismissed.
5. On ground No. 2 & 3, the assessee challenged the addition of Rs.5,20,250/-on account of unexplained deposits. The AO found that the assessee has raised substantial unsecured loans during the assessment year under appeal. The assessee was asked to furnish confirmations and complete details to support the unexplained credits. Though, the assessee submitted some of the confirmations, but in respect of 27 creditors, the details of which are noted at page 5 & 6 of the assessment order, the assessee could not file any confirmation and other evidences to prove the genuine credits. Therefore, the addition of Rs.5,20,250/- was made against the assessee on account of unexplained cash credits in respect of 27 persons. The ld. CIT(A) confirmed the addition because the assessee did not appear before him and did not file any evidence and the appeal of the assessee was, accordingly, dismissed.
6. The assessee filed application for admission of additional evidences in respect of same 27 creditors and it is stated in the application that during the course of assessment proceedings, the assessee was asked to submit evidences and confirmations of these 27 unsecured loans, but the same could not be produced as they were scattered geographically in the business, therefore, the same could not be filed. It is therefore, submitted that since these additional evidences are crucial and decisive of the case of the assessee and it was beyond the control of assessee to produce the same at the assessment stage. The same may be admitted for hearing. The details of additional evidences are filed from page 1 to 73 of the paper book, which are mainly confirmations from the creditors, copy of their PAN card, evidences of their identity or copy of filing of IT returns. On the other hand, the ld. DR submitted that since these evidences could not be filed at the assessment stage, therefore, the same may not be admitted and relied upon the decision of Hon'ble Allahabad High Court in the case of Ram Prasad Sharma v. CIT [1979] 119 ITR 867/2 Taxman 469 (All.) and Bimal Kumar Anant Kumarv. CIT [2007] 288 ITR 278/159 Taxman 402 (All).
7. We have considered the rival submissions and the material on record. It is not in dispute that the assessee could not produce the confirmations and other evidences before the AO in respect of 27 creditors. However, the assessee has now produced the confirmation letters, PANs of the creditors, their identity proofs and filing of return by the creditors in the paper book. These additional evidences are filed for the first time before the Tribunal with the prayer that the same may be admitted for hearing. The assessee in the application for admission of additional evidences stated that since the creditors were scattered geographically, therefore, the same could not be collected at the assessment stage and the assessment order was passed in haste without giving reasonable opportunity. The assessee in the paper book filed copies of the order sheet of the AO. The AO in the assessment order also noted that vide order sheet dated 17.09.2009, the assessee was asked to produce the evidences in support of these unsecured loans. Copy of the order sheet dated 17.09.2009 is filed in the paper book whereby the case of the assessee was adjourned to 15.10.2009, but there is no noting on 15.10.2009 and the matter is taken up on 11.11.2009 in which it is noted by the AO that in respect of 27 depositors, no evidences could be filed because the same are not readily available with the assessee and thereafter, the assessment proceedings were concluded and the assessment order is passed on 20.11.2009. It would, therefore, show that the assessee was making efforts to collect the evidences in respect of these 27 creditors because these were scattered differently. The AO gave opportunity only on 11.11.2009. Thus, the assessee did not have any sufficient time to produce these evidences before the AO. The ld. Counsel for the assessee relied upon the order of the ITAT, Delhi Bench in the case of Akshay Finance & Trading Co. v. ITO [1993] 46 TTJ 630, in which the additional evidences were admitted and the matter was remanded to the ld. CIT(A) to decide the issue afresh. Such additional evidences were admitted because there was infighting amongst the various groups of assessee and documents could not be filed before the authorities below. The ld. Counsel for the assessee relied upon unreported decision of Delhi High court in the case of CIT v. Text Hundred India (P.) Ltd. [2013] 351 ITR 57/[2011] 197 Taxman 128/9 taxmann.com 149, in which the Hon'ble High Court observed in para 13 as under :
"13. The aforesaid case law clearly lays down a neat principle of law that discretion lies with the Tribunal to admit additional evidence in the interest of justice once the Tribunal affirms the opinion that doing so would be necessary for proper adjudication of the matter. This can be done even when application is filed by one of the parties to the appeal and it need not to be a suo motto action of the Tribunal. The aforesaid rule is made enabling the Tribunal to admit the additional evidence in its discretion if the Tribunal holds the view that such additional evidence would be necessary to do substantial justice in the matter. It is well settled that the procedure is handmade of justice and justice should not be allowed to be choked only because of some inadvertent error or omission on the part of one of the parties to lead evidence at the appropriate stage. Once it is found that the party intending to lead evidence before the Tribunal for the first time was prevented by sufficient cause to lead such an evidence and that this evidence would have material bearing on the issue which needs to be decided by the Tribunal and ends of justice demand admission of such an evidence, the Tribunal can pass an order to that effect."
7.1 Hon'ble High Court considering Rule 29 of the Income-tax Appellate Tribunal Rules, confirmed the order of the Tribunal in allowing the documents to be produced at the appellate stage for substantial cause. It is settled law that burden is upon the assessee u/s. 68 of the IT Act to prove the identity of the creditors, their creditworthiness and genuineness of the transaction. The additional evidence filed above would throw light on the unexplained credits in which additions have been made and these additional evidences are necessary to enable to pass appropriate order in the matter in doing substantial justice between the parties. Further, since no sufficient time was available to the assessee to produce these additional evidences before the AO, therefore, in our view such additional evidences should be admitted for substantial cause in order to do justice between the parties. The matter could have been remanded to the AO for re-examination of the evidences and in that event, the Revenue would not have been at loss at all. On the other hand, the ld. DR relied upon the decision in the case of Ram Prasad Sharma (supra), in which the assessee did not produce any evidence to prove the genuineness of the cash credits despite opportunities given by the Income-tax Officer. It was held that the Tribunal was justified in refusing to admit the additional evidence. In this case also, the Tribunal did not accept the oral assertions made before it for admission of additional evidence. In the case of Bimal Kumar Anant Kumar (supra), it was held that Tribunal had found that no application was filed by the assessee and therefore, it had declined to permit the assessee to file / produce the stock register before it. It was held to be valid order. Both the above decisions cited by the ld. DR would not support the case of the Revenue in view of the facts noted above. Considering the above discussion and in the interest of justice and for substantial cause, we admit all the additional evidences filed in the paper book from pages 1 to 73 as noted above for the purpose of disposal of appeal. Since these additional evidences were not filed before the AO, therefore, opportunity shall have to be granted to the AO to examine these additional evidences in order to finalize the assessment order on this issue. We, accordingly, set aside the orders of the authorities below on this issue and restore this issue to the file of AO with the direction to re-decide the issue by examining the additional evidence by giving reasonable and sufficient opportunity of being heard to the assessee. The assessee is directed to file all these original evidences before the AO for finalization of the matter. We may clarify here that in these additional evidences, except in case of one creditor, where copy of pay slip of the creditor is filed, no evidence of creditworthiness of the creditors have been filed. Therefore, the assessee is directed to file evidence of creditworthiness in respect of the creditors before the AO also because mere filing of confirmations may not be sufficient for the purpose of considering the genuineness of the credit in the mater. With these observations, grounds No. 2 & 3 of appeal of the assessee are allowed for statistical purposes.
8. On ground No. 4, the assessee challenged the charging of interest, which is mandatory and consequential and since no arguments have been made on this ground, therefore, this ground fails and is dismissed. In the result, the appeal of the assessee is partly allowed for statistical purposes.
9. In the result, the appeal of the assessee is partly allowed for statistical purposes.
Regards
Prarthana Jalan
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