TaxTMI 
TaxTMI 
TaxTMI 
2013 (5) TMI 895
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....hri Manikchand for A.Y. 2006-07 being ITA.No.835/PN/2010. The facts which are revealed from the record are as under. All the assessees are in the trading of scrap and they are regularly participating in the auctions held by MSRTC, MSEB, PMT and other Government organizations. It was noticed by the Assessing Officer that these assessees have made the payments in different auctions in cash in violation of the provisions of section 40A(3) of the Act. The Assessing Officer sought the explanation of these assessees why the provisions of section 40A(3) should not be applied. The assessees submitted before the Assessing Officer that the payments are made to the autonomous bodies and the mandatory requirement is to pay 25% cash on bidding when the hammer falls. It was further submitted that the balance 75% amount can be paid in Demand Drafts but goods are handed in their possession only on the 7th day of the Demand Draft has been credited to their account. Due to that, assessees' business interests suffer since they cannot wait for seven days for delivery. Assessees also relied on Rule 6DD. The Assessing Officer was of the opinion that MSRTC, MSEB, are not Government authorities and those ....
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....oes not make them away from the Government. He submits that there are plethora of decisions in Article 12 of the Constitution of India in which it is held that the Corporations established under specific enactment are State. All the local Governments are part of the Government. He submits that the definition of the Government is not given in the Income Tax Act and we have to take the liberal interpretation considering the fact that this is a fiscal legislation and the limited purpose to introduce the provisions of section 40A(3) is to curb and keep check on the circulation of black money. If there is a genuine hardship or there is a business or commercial expediency and if otherwise recipient is Government, that will not bring the payment into the harsh provisions like section 40A(3). The Ld. Counsel relied on the following precedents: 1. Rajasthan State Electricity Board Jaipur vs. Mohanlal & Others 1967 AIR 1857 SC. 2. Ramana Dayaram Shetty vs. International Airports Authority of India and Others 279 AIR 1628 SC. 3. Maharashtra State Warehousing Corporation, Pune vs. ACIT, Circle-1(2), Pune in ITA.No.382, 794 and 1372/PN/2007 order dated 31.08.2011. 4. CIDCO Ltd. vs. ACIT....
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....matter reached before the Hon'ble Supreme Court, their Lordships held that the appellant Board is other authority within the meaning of Article 12 and, therefore, it is State to which the appropriate directions can be given under Articles 224 and 227 of the Constitution. The term 'State' is very important so far as the Constitution of India is concerned as the fundamental rights can be enforced only against the State if there is a violation by way of a writ remedies either under Article 226 or Article 32 of the Constitution of India. 7. In the case of Ramana Dayaram Shetty vs. International Airports Authority of India (supra), again the question posed before the Hon'ble Supreme Court was whether the International Airports Authority of India is a State within the Article 12 of the Constitution. The Hon'ble Supreme Court examined the provisions of International Airports Authorities Act, 1971, and held that the test laid down by the Hon'ble Supreme Court in deciding whether the statutory authority comes within the purview of Article 12 of the Constitution is satisfied in the case of International Airports Authority of India as it is an instrumentality or agency of Central Government ....
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.... Commission, Industrial Finance Corporation and Life Insurance Corporation. All the three bodies were created under separate statutes enacted by the Central Legislature. It was clear from the Oil and Natural Gas Commission Act, 1954, that the commission created by it, acts as an agency of the Central Government. Similarly, by virtue of the Industrial Finance Corporation Act, 1948, the Finance Corporation is under the control and management of the Central Government. The Life Insurance Corporation is similarly owned and managed by the government and can be dissolved only by the government in view of the provisions of the Life Insurance Act, 1956. All the three statutes constitution the three statutory corporations enabled them to make regulations which provide, inter alia, for the terms and conditions of employment and services of their employees. Questions arose, (i) whether the regulations have the force of law, and (ii) whether the statutory corporations are 'State' within the meaning of Article 12 of the Constitution? Ray, C.J., speaking for himself and Chandrachud and Gupta, JJ., held that the regulations framed by these statutory bodies for the purpose of defining the ....
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....tate, but they are not the Government as contemplated in Rule 6DD(b) of the I.T. Rules. 10. We are unable to accept the argument canvassed by the Ld. DR. The Article 12 of the Constitution reads as under: "the state includes the Government and Parliament of India and Government and the Legislature of the states and all local or other authorities within the territory of India or under the control of the Government of India." 11. The definition of the State under Article 12 has come for the consideration on number of occasions before the Hon'ble Supreme Court. The State consists of three departments, the Legislature, the Executive and the Judiciary. We need not go into all the limbs of the State as only the limited issue before us is whether the term Government used in clause (b) to Rule 6DD includes even the autonomous bodies which partakes the character of instrumentalities of the Government. The core test to be applied whether a particular Corporation which is autonomous body is a part of Government, to be seen in the context of degree of control over management and policy decisions. We find that in the case of MSRTC as per the certificate of the share capital filed befo....
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....has observed that the assessee was showing the debtors having credit balances, and he accordingly requested the assessee to file the confirmations and PANs of the concerned debtors. The assessee merely informed that confirmations from those persons/debtors are awaited. The Assessing Officer accordingly invoked the provisions of section 68 and made the addition of Rs. 18,00,000/-. The assessee carried the issue before the Ld. CIT(A) but without success. 14. We have heard the parties and perused the record. Law is well settled that the burden is on the assessee to prove the identity of the creditor, genuineness of the transaction and capacity of the creditor. Nothing has been placed before us to controvert the findings given by the authorities below. It appears that assessee only filed receipts from MSRTC and taken contention that from the said receipts it is evident that the said persons have made the payment. In our opinion, both the authorities below have rightly held that the amount to the extent of Rs. 18,00,000/- was unproved and assessee failed to discharge the burden. In our opinion, no interference is called for in the order of the authorities below. Accordingly, the relev....
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....nd capacity of the said creditor. The Ld. CIT(A) also confirmed the addition. In our opinion, the assessee has failed to discharge the burden put on him u/s.68 and both the authorities below have rightly added the said income u/s.68 of the Act. 18. Now we take up the case of Shri Santosh M.Raisoni in ITA.No.834/PN/2010 for A.Y. 2006-07. In this case, the Assessing Officer made the addition of Rs. 27,94,713/- u/s.68 of the Act. The Assessing Officer has observed that the assessee has shown the credit balances in the names of the following persons: 1. Shri Amjad Ali Khan Rs.15,60,000/- 2. Shri Ranjit Singh Rajpal Rs.12,34,713/- 19. As noted by the Assessing Officer, the assessee did not file any confirmations or PANs of those persons during the course of assessment. Assessee challenged the addition before the Ld. CIT(A). Except filing the receipt issued by MSRTC which were in the names of those persons, as well as the delivery vouchers issued for goods delivered, no other evidence was filed by the assessee for discharging the burden put on him u/s.68 of the Act. Before us also nothing has been filed and argument made before the Ld. CIT(A) was reiterated. In our opinio....
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.... assessee. Assessee also claimed that the said payments are made by those unidentified persons, then the burden is on the assessee to prove who those persons are and the genuineness of the transactions. In our opinion, assessee has failed to discharge the burden cast on him u/s.68 as even before us nothing has been placed to controvert the findings of the Ld. CIT(A). We accordingly confirm the additions made by the Assessing Officer u/s.68 of the Act. 23. The next issue is disallowance in respect of interest-free advances. The said disallowance is made in respect of these assessees as under: 1. Shri Manikchand G.Raisoni 2007-08 Rs.4,39,797 2. Shri Sanjay M.Raisoni 2006-07 Rs. 63,144 3. Shri Sanjay M.Raisoni 2007-08 Rs.2,50,147 4. Shri Santosh M.Raisoni 2006-07 Rs. 14,080 5. Shri Santosh M.Raisoni 2007-08 Rs.3,59,598 6. Smt.Sapna S.Raisoni 2007-08 Rs.1,23,728 24. In respect of Shri Manikchand in the A.Y. 2006-07 it was noticed by the Assessing Officer that the assessee has advanced Rs. 53,23,709/- but assessee has charged the interest only on the three parties consisting the amount of Rs. 12,70,150/-. Hence, the assessee did not charge the interest on the....