M/s. Gupta Bros. (India), New Delhi V. ACIT, New Delhi

CO 476/DEL/2012

• Counselvise Citation: [2013] 122 COUNSELVISE.COM (IT) 8691 (ITAT-DELHI)
• Duration Of Justice: 6 month(s) 2 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 21-06-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 20-05-2013
• Assessment Year: 2009-2010
• Appeal Filed On: 19-12-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SATPAL SINGH
• Assessee Lawyers: J C KAPOOR

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : C : NEW DELHI BEFORE SHRI S.V. MEHROTRA, ACCOUNTANT MEMBER AND SHRI A.D. JAIN, JUDICIAL MEMBER ITA NO.5674/DEL/2012 ASSESSMENT YEAR : 2009-10 ACIT, CIRCLE-38(1), NEW DELHI. VS. GUPTA BROS. (INDIA), 232, JOR BAGH, NEW DELHI. PAN : AAAFG4325Q C.O. NO.476/DEL/2012 (ITA NO.5674/DEL/2012) ASSESSMENT YEAR : 2009-10 GUPTA BROS. (INDIA), 232, JOR BAGH, NEW DELHI. PAN : AAAFG4325Q VS. ACIT, CIRCLE-38(1), NEW DELHI. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI J.C. KAPOOR, CA REVENUE BY : SHRI SATPAL SINGH, SR. DR ORDER PER A.D. JAIN, JUDICIAL MEMBER THE APPEAL BY THE ASSESSEE AND THE CROSS OBJECTIONS BY TH E DEPARTMENT IS FOR ASSESSMENT YEAR 2009-08 AGAINST THE ORD ER DATED 31.08.2012 PASSED BY THE CIT (A)-XXVIII, NEW DELHI. THE DEPARTMENT HAS TAKEN THE FOLLOWING GROUNDS:- ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW , THE LD. CIT (A) HAS ERRED IN: ITA NO.5674/DEL/2012 CO NO.476/DEL2012 2 (I) THE LD. CIT (A) ERRED IN DELETING THE ADDITION OF RS.2,00,000/- ON ACCOUNT OF LABOUR EXPENSES/WAGES IN THE ABSENCE OF PROPER EVIDENCE. (II) THE LD. CIT (A) GROSSLY ERRED IN DELETING THE ADDITIO N OF RS.8,00,000/- MADE BY THE ASSESSING OFFICER ON ACCOU NT OF UNVERIFIABLE PURCHASES. THE LD. CIT (A) HAS FAILED TO APPRECIATE THAT MERELY BECAUSE THE ASSESSEES ACCOUNTS ARE AUDITED , THE CLAIMS DOES NOT BECOME ADMISSIBLE, PARTICULARLY SO W HEN THE ASSESSEE FAILS TO SUBSTANTIATE HIS CLAIM. (III) THAT THE GROUNDS OF APPEAL ARE WITHOUT PREJUDICE TO EACH OTHER. 2. THE CROSS OBJECTIONS RAISED BY THE ASSESSEE ARE AS FOLLOW S:- 1. IN SPITE OF THE FACT THAT THE GROSS PROFIT OF THE ASSES SEE IS BETTER THAN THE PRECEDING YEAR, THERE IS NO REASON AND JUSTIFICATION OF MAKING AN ADDITION OF RS.11,00,000/- I.E., RS.3,00,000/- ON ACCOUNT OF DISALLOWANCE OF LABOUR E XPENSES AND RS.8,00,000/- ON ACCOUNT OF DISALLOWANCE OF MATER IAL EXPENSES. 2. DURING THE YEAR GROSS PROFIT RATE WAS 13.10% AS AGAINS T 12.90% IN THE PRECEDING YEAR. 3. IN THE PRECEDING YEAR 2008-09 THE ADDITION WAS ALSO M ADE ON THESE TWO COUNTS AND THE SAME WERE DELETED IN APPEAL AN D DELETION WAS ALSO CONFIRMED BY THE HONBLE TRIBUNAL. 3. THE LD. DR HAS SUBMITTED THAT THE LD. CIT (A) HAS ERRED IN DELETING THE ADDITION OF ` 2 LAC ON ACCOUNT OF LABOUR EXPENSES/WAGES, DESPITE THE FACT THAT NO PROPER EVIDENCE WAS FURNISHE D BY THE ASSESSEE IN SUPPORT OF SUCH CLAIM; THAT THE ADDITION OF ` 8 LAC MADE ON ACCOUNT OF UNVERIFIABLE PURCHASES HAS ALSO WRONGLY BEEN DELETED BY THE LD. CIT (A), FAILING TO APPRECIATE THAT THE CLAIM OF THE ASSE SSEE DID NOT BECOME ADMISSIBLE ONLY DUE TO THE FACT THAT THE ASSESSEES ACCOUN TS WERE AUDITED, WHEREAS THE CLAIM MADE BY THE ASSESSEE REMAINED ENTIRELY UNSUBSTANTIATED. 4. APROPOS THE CROSS OBJECTIONS, THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE ADDITION OF ` 11 LAC COMPRISING ` 3 LAC ON ITA NO.5674/DEL/2012 CO NO.476/DEL2012 3 ACCOUNT OF DISALLOWANCE ON LABOUR EXPENSES AND ` 8 LAC ON ACCOUNT OF DISALLOWANCE ON ACCOUNT OF MATERIAL EXPENSES, WAS WHOLL Y UNJUSTIFIED AND THE SAME HAS BEEN CORRECTLY DELETED BY THE LD. CI T (A); THAT THE GROSS PROFIT OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERAT ION IS BETTER THAN THAT SHOWN FOR THE PRECEDING YEAR, I.E., 13.10% THIS YEAR AS AGAINST 12.90% IN THE PRECEDING YEAR; THAT SIMILAR A DDITIONS MADE FOR ASSESSMENT YEAR 2008-09 WERE DELETED BY THE LD. CIT (A) AND SUCH DELETION HAS BEEN CONFIRMED BY THE TRIBUNAL. THE LD . COUNSEL FOR THE ASSESSEE HAS DRAWN OUR ATTENTION TO PAGES 25-32 OF THE ASSE SSEES PAPER BOOK, WHICH IS A COPY OF THE TRIBUNAL ORDER DA TED 15.06.2012, PASSED BY THE TRIBUNAL IN THE ASSESSEES CASE FOR ASSESSMENT Y EAR 2008-09, IN ITA NO.1313/DEL/2012 IN THE APPEAL PREF ERRED BY THE DEPARTMENT AGAINST THE CIT (A)S ORDER. 5. APROPOS THE LABOUR EXPENSES/WAGES CLAIMED BY THE ASSE SSEE, IT IS SEEN THAT THE ASSESSEE, WHO WAS CARRYING ON THE BUSINESS O F CIVIL CONSTRUCTION WORK DURING THE YEAR, HAD SHOWN A DECREA SE IN THE NET PROFIT RATE OF 4.09% TO 3.40% AS COMPARED TO THE EAR LIER YEAR. ON QUERY, THE ASSESSEE CONTENDED THAT ITS GROSS PROFIT HAD IN CREASED FROM 12.9% IN THE EARLIER YEAR TO 13.1% FOR THE YEAR UND ER CONSIDERATION. THE ASSESSEE HAD CLAIMED WAGES AT ` 6,94,22,689/-. THE ASSESSEE PRODUCED MUSTER ROLL CONCERNING OF FEW SITES. THE ASSES SING OFFICER OBSERVED THAT SOME OF THE BILLS WERE NOT VERIFIABLE, T HAT ALL THE MUSTER ROLLS WERE SELF-GENERATED AND PAYMENT HAD BEEN MADE I N CASH. AS SUCH, THE ASSESSING OFFICER MADE A DISALLOWANCE OF ` 3 LAC. THE CIT (A) RESTRICTED THE DISALLOWANCE TO ` 1 LAC, OBSERVING THAT AS CONTENDED BY THE ASSESSEE, THE MUSTER ROLL PAYMENTS WERE AUTHENTICATED BY THE RECIPIENTS AND THERE WAS NO OUTSTANDING PAYMENTS DUE TO THE LABOURERS. THE CIT (A) ALSO OBSERVED THAT ON A SIMILAR ISSUE FOR ASSESSMENT YEAR 2008-09 IN THE ASSESSEES CASE, THE CIT (A) H AD PARTLY ALLOWED THE ASSESSEES APPEAL. ITA NO.5674/DEL/2012 CO NO.476/DEL2012 4 6. THE ITAT, VIDE ITS ORDER DATED 15.06.2012 (SUPRA) FOR ASSESSMENT YEAR 2008-09 UPHELD THE CIT (A)S ACTION IN RESTRICTI NG A SIMILAR DISALLOWANCE TO ` 1 LAC. WHILE DOING SO, IT WAS OBSERVED THAT THE ASSESSING OFFICER HAD NOT RECORDED ANY SPECIFIC FINDING TO REACH THE FIGURE OF DISALLOWANCE OF ` 3 LAC, WHICH WAS AN AD HOC ADDITION MADE, IGNORING THE FACT THAT THE PERCENTAGE OF LABOUR WAG ES TO GROSS TURNOVER HAD COME DOWN TO 13.73% FOR THAT YEAR (ASSESSMENT YEAR 2008-09) AS AGAINST THAT OF 16.99% IN THE EARLIER YEAR. 7. THE ADDITION IN THE YEAR UNDER CONSIDERATION, IT IS SEEN, IS SIMILAR TO THAT MADE FOR ASSESSMENT YEAR 2008-09. UNDER SIMILAR FACTS AND CIRCUMSTANCES AS IN THAT YEAR, THE LD. CIT (A) HAS RESTR ICTED THE ADDITION TO ` 1 LAC WHICH, IN OUR CONSIDERED OPINION IS WELL JUSTI FIED. ACCORDINGLY, GROUND NO.1 RAISED BY THE DEPARTMENT IS REJECTED. 8. SO FAR AS REGARDS GROUND NO.2, THE ASSESSEE HAD CLAIM ED MATERIAL PURCHASED OF ` 32,33,17,184/-. THE ASSESSING OFFICER VERIFIED THE BOOKS OF ACCOUNT WITH VOUCHERS ON A TEST CHECK BASI S. IT WAS OBSERVED THAT SMALL PURCHASES OF ITEMS AT SITES WERE NOT SU PPORTED BY ADEQUATE PURCHASE BILLS. AN AD HOC DISALLOWANCE OF ` 8 LAC WAS MADE BY THE ASSESSING OFFICER, ALLEGEDLY TO COVER UP THE POSSI BILITY OF LOSS IN THE REVENUE ARISING OUT OF THE STATED UNVERIFIABLE NA TURE OF THE EXPENSES. THE CIT (A) DELETED THE ADDITION, OBSERVING THAT THE ACCOUNTS OF THE ASSESSEE WERE AUDITED AND THE ASSESSEE HAD SHOWN BETTER RESULTS THAN THE EARLIER YEAR. 9. THE TRIBUNAL, IN ITS ORDER (SUPRA) FOR ASSESSMENT YEAR 2008-09, HAS, UPHELD THE CIT (A)S ACTION IN RESTRICTING A SIMIL AR ADDITION OF ` 3 LAC TO ` 90,537/-. ITA NO.5674/DEL/2012 CO NO.476/DEL2012 5 10. THE ADDITION MADE BY THE ASSESSING OFFICER FOR THE YEAR UNDER CONSIDERATION, LIKE THAT MADE IN THE EARLIER YEAR, W AS ON AN AD HOC BASIS. UNDISPUTEDLY, THE ASSESSEE HAS SHOWN BETTER RESULTS D URING THE YEAR, OVER THOSE FOR THE EARLIER ASSESSMENT YEAR. THE GROSS PROFIT HAS GONE UP TO 13.10% AGAINST 12.90% IN THE EARLIER YEA R. IN VIEW THEREOF, THE LD. CIT (A) CANNOT BE SAID TO HAVE ERRED IN HOLD ING THE ADDITION MADE ON ESTIMATE BASIS TO BE UNJUSTIFIED. ACCORDINGLY, HERE ALSO, THE ORDER OF THE LD. CIT (A) IS UPHELD REJECTING GROUND NO.2 RAISED BY THE DEPARTMENT. 11. THE CROSS OBJECTIONS FILED BY THE ASSESSEE ARE SUPPORT IVE OF THE CIT (A)S ORDER. 12. IN THE RESULT, THE APPEAL FILED BY THE DEPARTMEN T IS DISMISSED AND THE COS FILED BY THE ASSESSEE ARE ALLOWED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 21.06.20 13. SD/- SD/- [S.V. MEHROTRA] [A.D. JAIN] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED, 21.06.2013. DK COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT, DELHI BENCHES