M/s. Sri Sai Lakshmi Constructions & Co, Vijayawada V. The Dy. CIT, Vijayawada

CO 15/VIZ/2017

• Counselvise Citation: [2017] 123 COUNSELVISE.COM (IT) 3384 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 10 month(s) 3 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 20-12-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2012-2013
• Appeal Filed On: 17-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D J P ANAND
• Keywords: Rejection of books of accounts; Additional evidence; Corroborative evidences
• Section: 143(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . . , BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH , ACCOUNTANT MEMBER . / I . T .A.NO. 469 /VIZ/ 201 6 ( / ASSESSMENT YEAR: 2012 - 13 ) THE DCIT, CIRCLE - 2(1) VIJAYAWADA VS. M/S SRI SAI LAKSHMI CONSTRUCTIONS & CO., D.NO.60 - 16 - 6, SARVANI TOWERS SIDDHARTHA NAGAR VIJAYAWADA [PAN : AAOFS7183E] ( / APPELLANT) ( / RESPONDENT) CROSS OBJECTION NO.15/VIZ/2017 (ARISING OUT OF I.T.A.NO. 469 /VIZ/201 6 ) ( / ASSESSMENT YEAR: 2012 - 13 ) M/S SRI SAI LAKSHMI CONSTRUCTIONS & CO., D.NO.60 - 16 - 6, SARVANI TOWERS SIDDHARTHA NAGAR VIJAYAWADA [PAN : AAOFS7183E] VS. THE DCIT, CIRCLE - 2(1) VIJAYAWADA ( / APPELLANT) ( / RESPONDENT) / REVENUE BY : SHRI D.J.P.ANAND , D R / ASSESSEE BY : SHRI G.V.N.HARI, AR / DATE OF HEARING : 29 . 11 .2017 / DATE OF PRONOUNCEMENT : 20 .1 2 .2017 2 ITA NO . 469 /VIZ/2016 AND CO NO.15/VIZ/2017 M/S SRI SAI LAKSHMI CONSTRUCTINS & CO., VIJAYAWADA / O R D E R PER D.S. SUNDER SINGH , ACCOUNTANT MEMBER : THIS APPEAL IS FILED BY THE R EVENUE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS), [CIT(A)], VIJAYAWADA VIDE ITA NO.32/CIT(A)/VJA/2015 - 16 DATED 31.08.2016 FOR THE ASSESSMENT YEAR 2012 - 13 AND CROSS OBJECTION FILED BY THE ASSESSEE IN SUPPORT OF T H E ORDER OF THE CIT(APPEALS) FOR THE ASSESSMENT YEAR 2012 - 13. 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : - 1 . THE LD, CIT(A) ERRED BOTH IN LAW AND ON THE FACTS OF THE CASE; 2. THE CIT(A) IS NOT JUSTIFIED IN DELETING THE ENTIRE ADDITION MADE BY THE ASSESSING OFFICER WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE FAILED TO PRODUCE THE REQUISITE INF OR MATION CALLED FOR DURING ASSESSMENT PROCEEDINGS; 3. THE CIT(A) OUGHT NOT TO HAVE DELETED THE ADDITION MADE BY THE ASSESSING OFFICER WITHOUT APPRECIATING THE DISCREPANCIES NOTICED I N THE COURSE OF ASSESSMENT PROCEEDINGS AND A COMPLIANCE OF THE ASSESSEE WITHOUT ANY CORROBORATIVE EVIDENCES IN SUPPORT OF ITS CLAIMS ON THE OBSERVATIONS MADE BY THE AO; 4. THE CIT(A) OUGHT TO HAVE REMANDED THE MATTE R TO THE FILE OF THE ASSESSING OFFICER TO REBUTTAL OR THE EVIDENCES PRODUCED DURING APPELLATE PROCEEDINGS WHILE ALLOWING THE CLAIMS MADE BY THE ASSESSEE UNDER RULE 4 6 A OF THE IT RULES; 5. ANY O THER GROUND THAT MAY BE URGED AT THE TIME OF HEARING , 3. GROUND NO.1 AND 5 ARE GENERAL IN NATURE WHICH DOES NOT REQUIRE SPECIFIC ADJUDICATION. 3 ITA NO . 469 /VIZ/2016 AND CO NO.15/VIZ/2017 M/S SRI SAI LAKSHMI CONSTRUCTINS & CO., VIJAYAWADA 4. GROUND NO.4 IS RELATED TO THE ADDITIONAL EVIDENCES STATED TO BE PRODUCED BY THE ASSESSEE BEFORE THE LD.CIT(A) CHALLENGED UNDER RULE 46A OF IT RULES. IN THIS CASE, THE ASSESSMENT WAS COMPLETED U/S 143(3) ON TOTAL INCOME OF RS.6,29,63,166/ - . DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER ( AO) NOTICED THAT THE ASSESSEE HA S MADE THE PAYMENTS OF RS.19,68,91,298/ - TOW ARDS LABOUR AND PETTY PAYMENTS IN CASH AND DISALLOWED THE EXPENDITURE @ 12% RELATING TO CASH PAYMENTS. 5. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE WENT ON APPEAL BEFORE THE CIT (A) AND DURING THE APPELLATE PROCEEDINGS, THE ASSESSEE HAD PRODUCED BO OKS OF ACCOUNTS AND ORIGINAL INVOICES FOR VARIOUS WORKS UNDERTAKEN FOR SAMPLE VERIFICATION AS DIRECTED BY THE LD.CIT(A). THE LD.CIT (A) TEST CHECKED THE INVOICES PRODUCED BY THE ASSESSEE AND SATI SFIED REGARDING THE GENUINENESS OF EXPENSES. T HE AO IS OF THE VIEW THAT THE PRODUCTION OF ORIGINAL INVOICES AMOUNTS TO ADDITIONAL EVIDENCE AND THE LD. CIT(A) SHOULD HAVE CALLED FOR THE REMAND REPORT BEFORE ADMISSION OF THE SAID ADDITIONAL EVIDENCE S . IN THIS CASE, THE ASSESSEE HAS PRODUCED BOOKS OF AC COUNTS AND REL EVANT VOUCHERS WHICH WAS VERIFIED BY THE AO AND NO FRESH EVIDENCE OR MATERIAL WAS PLACED BEFORE THE LD.CIT(A) . RANDOM SAMPLE OF ORIGINAL INVOICES WERE PART OF THE BOOKS OF ACCOUNTS AND VOUCHERS WHICH 4 ITA NO . 469 /VIZ/2016 AND CO NO.15/VIZ/2017 M/S SRI SAI LAKSHMI CONSTRUCTINS & CO., VIJAYAWADA WERE ALREADY PRODUCED BEF ORE THE AO. THE LD.D R HAS BEEN ASKED TO CLARIFY THE NATURE OF ADDITIONAL EVIDENCES PRODUCED BEFORE THE CIT (A) WHICH CALLS FOR REMAND REPORT. THE LD.D R FAIRLY ACCEPTED THAT T HERE WAS NO ADDITIONAL EVIDENCE PRODUCED BEFORE THE CIT (A) . ON THE OTHER HAND THE LD.AR ARGUED THAT THE LD.CIT(A) HAS CALLED FOR THE ORIGINAL INVOICES AND VERIFIED THE SAME. T HE SAME INVOICES AND THE BOOKS OF ACCOUNTS WERE PRODUCED BEFORE THE AO , HENCE , THERE IS NO FRESH EVIDENCE SUBMITTED BEFORE THE CIT(A) AND NO CASE FOR CALLING FOR THE REMAND REPORT AND ARGUED THAT THIS GROUND REQUIRED TO BE DISMISSED AS INFRUCTUOUS. 6. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE ORDERS OF THE LOWER AUTHORITIES. DURING THE APPEAL HEARING, T HE LD.CIT(A) HAS CALLED FOR THE BOOK S OF ACCOUNTS AND THE VOUCHER S AND THE ASSESSEE HAD PRODUCED T HE SAME BOOKS OF ACCOUNTS AND THE VOUCHERS WHICH WERE ALRE A DY PRODUCED BY THE ASSESSEE BEFORE THE AO AT THE TIME OF ASSESSMENT PROCEDINGS . THE LD.CIT (A) RANDOMLY VERIFIED THE VOUCHERS UNDER VARIOUS HEADS AS PER THE DETAILS GIVEN IN THE ORDER. THE FACT THAT THE ASSESSEE HAD PRODUCED THE BOOKS OF ACCOUNTS AND EXAMINED THE SAME WAS RECORDED IN THE ASSESSMENT ORDER. THE DEPARTMENT COULD NOT ESTABLISH THAT THE ASSESSEE HAS PRODUCED THE ADDITIONAL EVIDENCE WHICH WAS NOT PRODUCED BEFORE THE AO. THEREFORE 5 ITA NO . 469 /VIZ/2016 AND CO NO.15/VIZ/2017 M/S SRI SAI LAKSHMI CONSTRUCTINS & CO., VIJAYAWADA WE DO NOT FIND ANY MERIT OR BASIS IN THE GROUND RAISED BY THE REVENUE UNDER RULE 46 OF I.T. RULES , HENCE DISMISSED. 7 . GROUND NO.2 AND 3 ARE RELATED TO THE ESTIMATED DISALLOWANCE OF EXPENDITURE ALLEGEDLY PAID IN CASH @12% ON RS.19,68,91,298/ - CLAIMED UNDER THE HEAD LABOUR PAYMENTS, PETTY PURCHASES AND OTHER EXPENSES. THE AO HELD THAT 1 2 % OF THE CASH EXPENDITURE WAS UNVERIFIABLE AND ACCORDINGLY DISALLOWED AND ADDED BACK TO THE INCOME. THE AO ALSO STATED THAT THE AR OF THE ASSESSEE HAS NOT EXPRESSED ANY OBJECTION FOR THE DISALLOWANCE, HOWEVER, SUBSEQUENTLY, THE AO PASSED ORDER U/S 154, MODIFYING THE ASSESSMENT ORDER STATING THAT DURING THE COURSE OF HEARING, THE ASS ESSEE HAD PLACED WRITTEN SUBMISSIONS OBJECTING THE PROPOSED ADDITION AND THE OBJECTIONS RAISED BY THE ASSESSEE DO NOT FIND MERIT FOR CONSIDERATION. THUS THE ACCEPTANCE OF ASSESSEE FOR THE DISALLOWANCE IS INCORRECT. 8 . AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE WENT ON APPEAL BEFORE THE CIT (A) AND THE LD. CIT (A) CALLED FOR THE COPIES OF SAMPLE INVOICES IN ORIGIANL , FOR THE VARIOUS WORKS UNDERTAKEN BY THE ASSESSEE. THE ASSESSEE IS ENGAGED IN THE EXCAVATION OF CANALS AND DAM CONSTRUCTIONS WHICH IS MAINLY 6 ITA NO . 469 /VIZ/2016 AND CO NO.15/VIZ/2017 M/S SRI SAI LAKSHMI CONSTRUCTINS & CO., VIJAYAWADA L ABOUR ORIENTED WORKS. LD.CIT (A) TEST CHECKED THE INVOICES WITH THE BOOKS OF ACCOUNTS WHICH WERE FOUND TO BE IN ORDER. THEREFORE, THE LD. CIT (A) OBSERVED THAT THE AO DID NOT FIND ANY DEFEC S T IN THE BOOKS OF ACCOUNTS, NOT OBSERVE D ANY EXPENDITURE NOT R ELATED TO THE BUSINESS AND HAS NOT GIVEN ANY BASIS FOR ESTIMATING THE DISALLOWANCE OF EXPENDITURE, HENCE, PLACING RELIANCE ON THE DECISION OF HONBLE HIGH COURT OF PUNJAB AND HARYANA IN THE CASE OF CIT VS. S.S.P.LTD.(2011) 202 TAXMAN 0386 HELD THAT THE AD DITION MADE ON MERELY SUSPICI ON AND SURMISES AND CONJECTURES AND A CCORDINGLY DELETED THE ADDITION AND ALLOWED THE APPEAL OF THE ASSESSEE. 9 . AGGRIEVED BY THE ORDER OF THE CIT (A) , THE REVENUE CARRIED THE MATTER TO THE TRIBUNAL. DURING THE APPEAL HEARING, THE LD.DR ARGUED THAT THE ASSESSEE FAILED TO FURNISH THE DETAILS AND PROPER EXPLANATION FOR TRANSFER OF HUGE FUNDS IN CASH WITHOUT ROUTING THROUGH BANKING CHANNELS. FURTHER, THE BILLS AND VOUCHERS BEING DEFECTIVE, THE SAME IS NOT AMENABLE FOR VERIFICATIO N, HENCE, ARGUED THAT THE AO HAS RIGHTLY MADE THE DISALLOWANCE WHICH REQUIRED TO BE UPHELD. 10 . ON THE OTHER HAND, LD.AR SUPPORTED THE ORDERS OF THE LD. CIT (A) . 7 ITA NO . 469 /VIZ/2016 AND CO NO.15/VIZ/2017 M/S SRI SAI LAKSHMI CONSTRUCTINS & CO., VIJAYAWADA 1 1 . WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL PLACED ON RECORD. THE AO DISALLOWED THE CASH PAYMENTS AMOUNTING TO RS.2,36,26,956/ - SUSPECTING THE GENUINENESS OF THE PAYMENT, WHICH IS WORKED OUT TO 12% OF THE TOTAL CASH PAYMENTS. THE AO HAS NOT G IVEN ANY BASIS FOR ESTIMATING THE DISALLOWANCE @ 12%. THE AO DID NOT QUANTIFY THE UNVERIFIABLE EXPENDITURE ITEM - WISE AND DID NOT HIGHLIGHT THE PAYMENT WHICH WA S NOT GENUINE. THE LD. CIT (A) HAS MADE THE SAMPLE VERIFICATION OF EXPENDITURE WITH THE BOOKS OF ACCOUNTS AND THE ORIGINAL INVOICES AND FOUND TO BE IN ORDER. THE AO HAS NOT REJECTED THE BOOKS OF ACCOUNTS AND DID NOT RAISE ANY SPECIFIC SUSPI CIOUS PAYMENTS. IN CASE, D URING THE AS SESSMENT PROCEEDINGS, THE AO FI ND S THE BOGUS EXPENDITURE , THE SAME REQUI RED T O BE QUANTIFIED ITEM WISE AND THE REPRESENTING BOGUS EXPENDITURE SHOULD BE DISALLOWED INSTEAD OF MAKING THE DISALLOW ANCE ON ESTIMATION BAS IS . THE AO HAS ALSO DID NOT GIVE ANY BASIS FOR SUCH DISALLOWANCE. IN THIS CASE, WE FIND THAT AS RIGHTLY OBSERVED BY THE LD.CIT(A), THE AO HAS DISALLOWED THE EXPENDITURE MERELY ON SUSPICION WITHOUT ANY BASIS WHICH CANNOT BE SUSTAINED. THEREFORE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A) AND THE SAME IS UPHELD. THE APPEAL OF THE REVENUE IS DISMISSED. 8 ITA NO . 469 /VIZ/2016 AND CO NO.15/VIZ/2017 M/S SRI SAI LAKSHMI CONSTRUCTINS & CO., VIJAYAWADA 1 2 . THE ASSESSEE HAS FILED THE CROSS OBJECTION SUPPORTING THE ORDER OF THE LD. CIT (A) . SINCE WE HAVE DISMISSED THE APPEAL OF THE REVENUE, THE CROSS OBJECTION FILED BY THE ASSESSEE STANDS ALLOWED. 1 3 . IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED AND THE CROSS OBJECTIONS OF THE ASSESSEE ARE ALLOWED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 20 TH D EC 20 17 . SD/ - SD/ - ( . ) ( . . ) (V. DURGA RAO) ( D.S. SUNDER SINGH ) /JUDICIAL MEMBER /ACCOUNTANT MEMBER /VISAKHAPATNAM /DATED : 20 . 1 2 .2017 L. RAMA, SPS 9 ITA NO . 469 /VIZ/2016 AND CO NO.15/VIZ/2017 M/S SRI SAI LAKSHMI CONSTRUCTINS & CO., VIJAYAWADA / COPY OF THE ORDER FORWARDED TO: - 1. THE A SSESSEE - M/S SRI SAI LAKSHMI CONSTRUCTIONS & CO.,D.NO.60 - 16 - 6, SARVANI TOWERS, SIDDHARTHA NAGAR, VIJAYAWADA 2. THE RE VENUE - THE DCIT, CIRCLE - 2(1), VIJAYAWADA 3 . THE PR.CIT, VIJAYAWADA 4. THE COMMISSIONER OF INCOME - TAX(APPEALS), VIJAYAWADA 4 . , , / DR, ITAT, VISAKHAPATNAM 5 . / GUARD FILE / BY ORDER // TRUE COPY // SR. PRIVATE SECRETARY ITAT, VISAKHAPATNAM