TMI Blog2009 (2) TMI 487X X X X Extracts X X X X X X X X Extracts X X X X ..... than the charges paid to M/s. Mehta Construction Company for the same work to M/s. Satyen Enterprises. As noticed hereinabove, M/s. Satyen Enterprises was paid at the rate of Rs. 70 per truck. Thus viewed, it is not possible for us to accept that the Assessing Officer could have invoked section 40A(2)(b) of the Act. - Decided in favor of assessee Machinery Charges - The purchase of an excavator and to engage staff for its use and maintenance may or may not be a profitable / conceivable business venture. This would depend on the nature of contracts executed by an individual. The purchase of an excavator by itself is, in our view, an irrelevant consideration to determine the genuineness of the expenses incurred by the respondent-assessee. - - Decided in favor of assessee - 685 of 2008 - - - Dated:- 17-2-2009 - KHEHAR J. S., NAWAB SINGH, JJ. JUDGMENT J. S. Khehar J.- Through the instant appeal, the appellant has raised the following questions of law : "(i) Whether on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal is right in law in confirming the order of the learned Commissioner of Income-tax (Appeals) deleting the addition of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Income-tax Appellate Tribunal dated November 23, 2007. In so far as the third question is concerned, the Assessing Officer arrived at the conclusion, that a sum of Rs. 17,70,339 paid to M/s. Anuj Construction was a bogus liability created by the respondent-assessee at the end of the financial year. The aforesaid amount was deleted from the expense incurred by the respondent-assessee as the respondent-assessee had failed to produce the creditor or verifiable material to establish the aforesaid liability. 3. In so far as the first question is concerned, it would not be out of place to mention that a sum of Rs. 5,96,220 was alleged to have been paid as tractor charges to Sh. Dharminder. The aforesaid payments were made through normal banking channels except a sum of Rs. 1,29,316 which was paid by way of cash. The cash payment was not accepted as a genuine transaction, and as such, a sum of Rs. 1,29,316 shown as having been incurred by the respondent-assessee towards tractor charges were ordered to be deleted. The Income-tax Appellate Tribunal while dealing with the issue in hand arrived at the conclusion that the onus to establish that the aforesaid payment of Rs. 1,29,316 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dent obligation of the Assessing Officer to at least summon the aforestated Dharminder in furtherance of the communication dated March 26, 2004 addressed by the respondent-assessee. Having failed to discharge the aforesaid obligation, it does not lie in the mouth of the Revenue to press the instant claim of deduction of Rs. 1,29,316 which the respondent-assessee claims to have incurred as tractor charges. It is not possible for us to accept that the Assessing Officer could not have enforced the presence of Dharminder in the background of the fact that a substantial amount of the payment of Rs.5,96,220 as tractor charges was made by the respondent-assessee to the aforestated Dharminder by way of normal banking channel. There should therefore have been no difficulty either to ascertain his address or to summon him. 6. The second question raised by the appellant-Revenue pertains to the payment of Rs. 18,75,875 to M/s. Satyen Enterprises. Out of this amount, the Assessing Officer ordered the deduction of Rs. 4 lakhs alleging that excessive payments were made to M/s. Satyen Enterprises. In this behalf, the Assessing Officer placed reliance on section 40A(2)(b) of the Act. Undoubtedl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ame work to M/s. Satyen Enterprises. As noticed hereinabove, M/s. Satyen Enterprises was paid at the rate of Rs. 70 per truck. Thus viewed, it is not possible for us to accept that the Assessing Officer could have invoked section 40A(2)(b) of the Act. The aforesaid provision can be invoked in case, an assessee incurs ". . . excessive and unreasonable charges . . . " favouring a relative of the assessee. Since the charges paid to M/s. Satyen Enterprises were admittedly less than the charges paid to M/s. Mehta Construction Company. We are of the view that the Assessing Officer could not have validly invoked section 40A(2)(b) of the Act to order a deduction of a sum of Rs. 4 lakhs out of the truck charges/expenses incurred by the respondent-assessee favouring M/s. Satyen Enterprises. 9. The third question raised by the appellant pertains to deduction of machinery charges quantified as Rs. 20,91,369 allegedly having been paid to the account of M/s. Anuj Construction for a period of three months from January 2001 to March 2001 at the rate of Rs. 1,500 per hour. The claim of the Assessing Officer, in this behalf, was that the cost of the excavator engaged in the work under reference ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to determine the genuineness of the expenses incurred by the respondent-assessee. In any case, in so far as the present issue is concerned, it is apparent that the assessee had filed signed confirmation of the expenses to M/s. Anuj Construction by the manager/accountant of the said firm, confirming that the aforesaid expense had been incurred by the respondent-assessee for excavation work executed by M/s. Anuj Construction. The respondent- assessee had additionally also produced its account books which established that a sum of Rs. 20,91,369 was shown to have been credited in the account of M/s. Anuj Construction with a closing balance of Rs. 17,70,339 as on March 31, 2001. The Assessing Officer did not accept the material produced by the respondent-assessee merely on account of the fact that the confirmation in question produced by the respondent-assessee did not bear a date and further on account of the fact that the said confirmation had been signed merely by the manager/accountant of M/s. Anuj Construction. In our view, it was not open to the Assessing Officer to determine the matter without any further investigation so as to be able to repudiate the material relied upon by the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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