SALIM JEEVANKHAN BHATI, MUMBAI V. ITO 25(3)(4), MUMBAI

CO 273/MUM/2014

• Counselvise Citation: [2015] 123 COUNSELVISE.COM (IT) 0577 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s) 9 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 08-05-2015
• Appeal Filed By: Assessee
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 29-12-2014
• Court: TRIBUNAL
• Department Lawyers: NEIL PHILIP
• Section: 194C

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL E , BENCH MUMBAI . . , , BEFORE SHRI R.C.SHARMA , A M & SHRI SANJAY GARG , J M ./ ITA NO . 6486 / MUM/20 13 ( / ASSESSMENT YEAR : 200 9 - 10 ) ITO 25(3)(4), MUMBAI VS. SHREE SALIM JEEVANKHAN BHATI, 1103, PARAMOUNT CHGS, SAHAKAR ROAD, BANIDVALI VILLAGE, JOGESHWARI (W), MUMBAI - 400102 ./ ./ PAN/GIR NO. : A AKPB 5730 C ( / APPELLANT ) .. ( / RESPONDENT ) CROSS OBJECTION NO. 273 / MUM/20 1 4 ( / ASSESSMENT YEAR :2009 - 10 ) SHREE SALIM JEEVANKHAN BHATI, 1103, PARAMOUNT CHGS, SAHAKAR ROAD, BANIDVALI VILLAGE, JOGESHWARI (W), MUMBAI - 400102 VS. IT O 25(3)(4), MUMBAI ./ ./ PAN/GIR NO. : A AKPB 5730 C ( / APPELLANT ) .. ( / RESPONDENT ) /REVENUE BY : SHRI NEIL PHILIP /ASSESSEE BY : SHRI ANUJ KISNADWALA / DATE OF HEARING : 25/03/ 2015 / DATE OF PRONOUNCEMENT 08/05 /2015 / O R D E R PER R.C.SHARMA (A.M) : THE REVENUE HAS FILED APPEAL AND THE ASSESSEE HAS FILED CROSS OBJECTION AGAINST THE ORDER OF CIT(A) , DATED 1 - 8 - 2013 FOR THE ASSESSMENT YEAR 200 9 - 10 IN THE MATTER OF ORDER PASSED U/S.14 4 OF THE I.T.ACT ITA NO. 6486 / 13 & CO NO.273/14 2 2. THE REVENUE IN ITS APPEAL HAS TAKEN FOLLOWING GROUNDS : - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD . CIT(A) ERRED IN DIRECTING TO REDUCE THE DISAL LOWANCE OUT OF WAGES CHARGES TO 5% INSTEAD OF 50%MADE BY THE AO ALTHOUGH NO PROPER RECORD FOR PAYMENT OF WAGES IS MAINTAINED BY THE ASSESSEE. 2. THE APPELLANT PRAYS THAT THE ORDER OF THE LD.CIT(A) ON THE ABOVE GROUND BE SET ASIDE AND THAT OF THE AO BE RE STORED. 3. IN CROSS OBJECTION THE ASSESSEE HAS TAKEN THE FOLLOWING GROUNDS : - 1. THE LEARNED CIT(A) HAS ERRED IN ~LAW AND ON FACTS IN CONFIRMING DISALLOWANCE OF RS. 12,73,333/ - (BEING 5% OF TOTAL EXPENDITURE OF RS. 2,54,66,660 / - ) OUT OF DISALLOWANCE OF RS. 1,27,33,330 / - (BEING 50% OF TOTAL EXPENDITURE OF RS. 2,54,66,660 / - ) MADE BY THE ASSESSING OFFICER ON ACCOUNT OF WAGES PAID TO THE WORKERS AT THE CONSTRUCTION SITE. THE LEARNED CIT(A) OUGHT TO HAVE DELETED THE ENTIRE DISALLOWANCE. 2. THE LEARNED CIT( A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING DISALLOWANCE OF RS. 1,26,358/ - (BEING 10% OF TRANSPORT EXPENDITURE OF RS. 12,63,581 / - ) OUT OF DISALLOWANCE OF RS. 8,07,054/ - (BEING 50% OF TOTAL EXPENDITURE OF RS. 16,14,108/ - ) MADE BY THE ASSESSING OFFICER ON ACCOUNT OF TRANSPORT CHARGES PAID BY THE ASSESSEE. THE LEARNED CIT(A) OUGHT TO HAVE DELETED THE ENTIRE DISALLOWANCE. 3. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING DISALLOWANCE OF RS. 22,677/ - (BEING 10% OF TOTAL EXPENDITURE OF RS. 2, 26,777 / - ) OUT OF DISALLOWANCE OFRS.1,13,3881 - (BEING 50% OF TOTAL EXPENDITURE OF RS. 2,26,777/ - ) MADE BY THE ASSESSING OFFICER ON ACCOUNT OF CONVEYANCE EXPENSES PAID BY THE ASSESSEE. THE LEARNED CIT(A) OUGHT TO HAVE DELETED THE ENTIRE DISALLOWANCE. 4 RIV AL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. FACTS IN BRIEF ARE THAT T HE ASSESSEE IS AN INDIVIDUAL AND FILED HIS RETURN OF INCOME ON 30 - 9 - 2009 DECLARING TOTAL INCOME OF RS.5,57,660/ - . IN THE ASSESSMENT FRAMED U/S.143(3), THE AO STATED THAT AS NO EVID ENCES WERE FILED BY THE ASSESSEE IN SUPPORT OF THE GENUINENESS OF THE EXPENSES CLAIMED OF RS. 2,73,07,545/ - IN THE PROFIT AND LOSS ACCOUNT, ACCORDINGLY 50% OF THE SAME AMOUNTING TO RS.1,36,53,772/ - WAS DISALLOWED AND ADDED TO THE TOTAL INCOME OF THE ASSESS EE. IN THE REMAND PROCEEDING, THE AO WAS DIRECTED TO VERIFY THE EXPENSES CLAIMED BY THE ASSESSEE ON ACCOUNT OF ITA NO. 6486 / 13 & CO NO.273/14 3 SALARIES AND WAGES, CONVEYANCE EXPENSES AND OTHER EXPENSES. HOWEVER, THE DETAILS FURNISHED BY THE ASSESSEE IN RESPECT TO TRANSPORT CHARGES ARE VE RIFIED AND IN THIS CONNECTION, THE AO STATED THAT IF THE ARGUMENT OF ASSESSEE IS ASSUMED TO BE CORRECT THE PROVISIONS O F TDS ARE NOT APPLICABLE AS THESE PAYMENTS ARE BELOW THE LIMIT PRESCRIBED IN THE PROVISIONS OF SECTION 194C OF THE ACT. HOWEVER, DURING T HE COURSE OF REMAND PROCEEDINGS ON VERIFICATION OF THE VOUCHERS PRODUCED, THE AO FOUND THAT SOME OF THESE VOUCHERS WERE EITHER NOT PROPER L Y VOUCHED OR DID NOT CONTAIN THE SIGNATURE OF THE RECIPIENTS. 5. BY THE IMPUGNED ORDER THE CIT(A) SUSTAINED DISALLOWA NCE OF 5% EXPENSES AFTER CONSIDERING THE REMAND REPORT AND THE REJOINDER FILED BY THE ASSESSEE WITH RESPECT TO THE SAME. THE PRECISE OBSERVATION OF THE CIT(A) WAS AS UNDER: - I HAVE CONSIDERED THE STAND OF THE A.O. AS WELL AS THE SUBMISSIONS OF THE APPELLA NT. 6A. AS REGARDS PAYMENT OF WAGES OF RS.2,54,66,660/ - , THERE IS NO DISPUTE THAT WORK HAS ACTUALLY BEEN CARRIED OUT BY THE APPELLANT AND THAT A WAGE REGISTER HAS BEEN MAINTAINED. HOWEVER, IT IS ALSO A FACT THAT THE APPELLANT COULD NOT FURNISH PRIMARY REC ORDS,I.E. DAILY ATTENDANCE CARDS. THE PROFIT RATIOS OF THE APPELLANT FOR THE LAST THREE YEARS HAVE ALSO BEEN STUDIED AND IT IS FOUND THAT IN FACT THE GP RATIO IN THE RELEVANT YEAR IS HIGHER THAN THE EARLIER TWO YEARS. HOWEVER, CONSIDERING THE FACT THAT THE RECORD MAINTENANCE OF WAGES IS NOT VERIFIABLE TO THE LAST POINT AND CONSIDERING THAT SOME LEAKAGES WOULD BE POSSIBLE, AN ADDITION OF 5% OF THE WAGES PAID I.E. 12,73,333/ - IS UPHELD AND THE APPELLANT GETS A RELIEF OF RS.1,23,80,439/ - . 6B. IN THE CASE OF O THER EXPENSES OF RS.16,14,108/ - OUT OF WHICH THE LARGE PART OF THE EXPENDITURE INCURRED IS ON ACCOUNT OF TRANSPORT CHARGES AMOUNTING TO RS.12,63,581/ - , SINCE THE APPELLANT HAS HIMSELF AGREED TO AN ADDITION OF 10% OF THE SAID CHARGES AS SUBMITTED BY THE AO, THE SAME ADDITION IS UPHELD TO THE EXTENT OF RS.1,26,358/ - . 6C. IN THE CONVEYANCE EXPENSES OF RS.2,26,777/ - ALSO SINCE THE APPELLANT HAS NOT BEEN ABLE TO FULLY SUBSTANTIATE AND VOUCH THE EXPENSES, HE HAS ON ITS OWN AGREED TO 10% OF THE ABOVE CONVEYANCE E XPENSES AND, THEREFORE, ADDITION OF RS.2,26,777/ - IS UPHELD. ITA NO. 6486 / 13 & CO NO.273/14 4 6. AGAINST THE ABOVE ORDER OF CIT(A), REVENUE IS IN APPEAL BEFORE US AND ASSESSEE HAS ALSO FILED CROSS OBJECTION WITH RESPECT TO THE ADDITION SUSTAINED BY THE CIT(A). 7. WE HAVE CONSIDERED RIV AL CONTENTIONS AND CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FOUND THAT IN RESPECT OF WAGES EXPENDITURE DEBITED BY THE ASSESSEE THERE IS NO DISPUTE THAT WORK HAS ACTUALLY BEEN CARRIED OUT FOR WHICH PROPER WAGES REGISTER WAS MAINTAINED. BY CONSIDERING THE GP RATE FOR THE LAST THREE YEARS THE CIT(A) FOUND THAT G.P. RATE OF THE YEAR UNDER CONSIDERATION IS HIGHER THAN THE G.P. RATE OF EARLIER TWO YEARS. HENCE, CIT(A) HAS SUSTAINED DISALLOWANCE OF 5% , WHICH APPEARS TO BE QUITE REASONABLE . SI NCE THE ASSESSEE DID NOT PRODUCE PRIMARY RECORDS IN THE FORM OF DAILY ATTENDANCE REGISTER, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT(A) IN SUSTAINING THE DISALLOWANCE OF 5%. 8. WITH REGARD TO DISALLOWANCE OF TRANSPORT EXPENSES, THE ASSESSEE HIMSELF AGREED FOR RETAINING THE DISALLOWANCE OF 10% OF THE SAID CHARGES. WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT(A) FOR SUSTAINING THE SAME. 9. WITH REGARD TO CONVEYANCE EXPENSES, THE AO ON ADHOC BASIS HAS DISALLOWED 10%. KEEPING IN VIEW NATURE OF ASSES SEES BUSINESS VIS - - VIS TOTALITY OF FACTS AND CIRCUMSTANCES OF THE CASE, WE DIRECT FOR UPHOLDING DISALLOWANCE ON ACCOUNT OF CONVEYANCE EXPENSES. WE DIRECT ACCORDINGLY. 10 . IN THE RESULT, APPEAL OF THE REVENUE AS WELL AS CROSS OBJECTION OF THE ASSESSEE A RE DISMISSED . ITA NO. 6486 / 13 & CO NO.273/14 5 O RDER PRONOUNCED IN THE OPEN COURT ON THIS 08/05 / 201 5 . SD/ - SD/ - ( ) ( SANJAY GARG ) ( . . ) ( R.C.SHARMA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED 08/05 /201 5 . . /PKM , . / PS / COPY OF THE ORDER FORWARDED TO : / BY ORDER, / ( ASSTT. REGISTRAR) , / ITAT, MUMBAI 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A), MUMBAI. 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. //TRUE COPY//