TaxTMI 
TaxTMI 
2013 (5) TMI 895
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....ition of facts, we prefer to take appeal of Shri 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, MS....
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....e are the limbs of the Government only and mainly because it partakes the character of the business enterprises to some extent, does 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. Maharashtr....
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....he writ petition filed under Articles 226 and 227 alleging the violation of Articles 14 and 16 was allowed in respect of the service conditions of the respondent. When the 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 th....
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....w or not? In this connection, the following portion of the judgment of the Hon'ble Supreme Court is worthy of notice: "The statutory bodies in that case were Oil and Natural Gas 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 ....
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....ow concept. He also argues that every limb of Government, semi-Government, autonomous bodies and Government Undertakings come within the purview of the State and hence, MSRTC and MSEB are also part of the State, 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 ....
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....sue independently assessee-wise. We first take the case of Shri Manikchand G.Raisoni. In this case, in the A.Y. 2006-07, the Assessing Officer made the addition of Rs. 18,00,000/- u/s.68 of the Act. The Assessing Officer 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 right....
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....ance in the name of one Mr.Jakir M.Subedar which was to the extent of Rs. 15,50,000/-. No confirmation from the said party was filed by the assessee. Even before Ld. CIT(A), no confirmation or any evidence was filed to prove the identity of the creditor, genuineness of the transaction and 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 ....
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....ns given by the Ld. CIT(A). We find that assessee even at that stage did not file any confirmation from those creditors to prove any identity. The fact remains that the assessee is in the business of scrap and bidding the auctions of MSRTC. The payments are shown in the names of different persons but the auctions are taken by the 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,....