2014 (11) TMI 651 - AT - Income Tax

Disallowance u/s 40(a)(ia) Held that - The assessee is only an agent, who would arrange trucks and freight in directly paid by the consignees to the transporter - There is no sub contract while can attract the provisions of Section 194C of the Act - The building is on to pay basis in CIT vs. United Rice Land Ltd. 2008 (5) TMI 142 - PUNJAB AND HARYANA HIGH COURT the same has been decided - the provisions of Section 194C and 40(a)(ia) are not attracted the order of the CIT(A) is upheld Decided against revenue. Addition u/s 69A - cash payments to M/s. Shekhawati Filling Station Held that - CIT(A) was rightly of the view that the AO has made the addition purely on the basis of ledger account of the appellant as appearing in the books of account of M/s. Shekhawati Filling station account of purchase of diesel / petrol - there is no such entries in the books of account of the appellant - It is also not a case of the AO that he has obtained copy of some of the bills of purchase of diesel/petrol by the appellant and he has made payments to such bill out of his undisclosed income and the same has not been reflected in the books of account - As per the books of account of the assessee, there is no violation of section 40A(3) of the Act, as payment were by different vehicles to the filling station - All the payments are fully verifiable and all the expenses are held as genuine the order of the CIT(A) is upheld Decided against revenue. Unexplained cash credits u/s 68 Held that - CIT(A) rightly recorded that there is difference on the dates of withdrawal from the bank account of the appellant and in the cash book of the appellant - The AO treated the entry of cash u/s 68 of the Act as the appellant could not give evidence for the source of such deposits - there is sufficient cash balance before all the dates on which the appellant shown cash deposits - the accountant of the appellant as inadvertently has shown the cash deposits before the date of withdrawal from the bank cannot be ruled out - there is also no evidence that the cash withdrawn from the bank has been expended for some other purposes the order of the CIT(A) is upheld Decided against revenue. Addition u/s 68 - Cash receipts on sale of trucks Held that - The party from whom the assessee has received ₹ 5 lakhs against sale of the Truck has confirmed the date of payment - The sale of truck is not in dispute - The AO has not brought any evidence on record to prove that the amount received by assessee was utilized same where else the order of the CIT(A) is upheld Decided against revenue.

Summary

Issues:
1. Disallowance under section 40(a)(ia) of the Income Tax Act.
2. Addition on account of cash payments to a filling station.
3. Addition under section 68 of the Income Tax Act for various transactions.
4. Addition on account of cash receipts from the sale of trucks.

Issue 1: Disallowance under section 40(a)(ia) of the Income Tax Act:
The appeal was against the deletion of an addition of Rs. 20,39,121 made by the Assessing Officer (AO) under section 40(a)(ia). The AO disallowed the amount as transportation expenses, citing discrepancies in the ledger account entries. The Commissioner of Income Tax (Appeals) (CIT(A)) deleted the addition, stating that the provisions of Section 194C and 40(a)(ia) were not applicable. The Tribunal upheld the CIT(A)'s decision, emphasizing that the assessee was merely an agent arranging transport and the expenses were directly paid by consignees, not attracting the said provisions.

Issue 2: Addition on account of cash payments to a filling station:
The AO had added Rs. 14,36,740 under section 69A, alleging cash payments to a filling station not recorded in the books. The CIT(A) deleted this addition, noting the lack of corresponding entries in the assessee's books and the reliance on third-party accounts. The Tribunal affirmed the CIT(A)'s decision, as the payments were verifiable, genuine, and not in violation of the Act.

Issue 3: Addition under section 68 of the Income Tax Act for various transactions:
The AO added Rs. 12,00,400 under section 68 for discrepancies in bank transactions and cash book entries. The CIT(A) deleted this addition, citing sufficient cash balances before the deposit dates and lack of evidence of diversion. The Tribunal upheld this decision, finding no basis for the addition and dismissing the AO's concerns regarding cash balances and dates.

Issue 4: Addition on account of cash receipts from the sale of trucks:
The AO added Rs. 5,00,000 under section 68 for discrepancies in the sale of a truck and receipt dates. The CIT(A) deleted this addition, supported by evidence confirming the payment date and lack of proof of diversion. The Tribunal concurred with the CIT(A)'s findings, dismissing the addition based on suspicion and lack of substantiated claims.

In conclusion, the Tribunal dismissed the revenue's appeal, upholding the CIT(A)'s deletions of various additions made by the AO. The Tribunal found no merit in the revenue's contentions and confirmed the decisions based on the lack of evidence, verifiability of transactions, and absence of violations of relevant tax provisions.