M/s. Phaloudi Constructions., Rajgarh V. The ACIT, Ujjain

CO 58/IND/2009

• Counselvise Citation: [2010] 122 COUNSELVISE.COM (IT) 4650 (ITAT-INDORE)
• Duration Of Justice: 9 month(s) 15 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 11-05-2010
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 11-05-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 27-07-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S C GOYAL
• Assessee Lawyers: APARNA KARAN
• Keywords: Business expenditure
• Section: 40A(3); 68

Judgement Text

PAGE 1 OF 5 -.INO 326/IND/2009 AND C.O.NO.58/IND/2 009 M/S. PHALOUDI CONSTRUCTION, NARSINGHGARH, DIST. RAJ GARH. IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH : INDORE BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI V.K. GUPTA, ACCOUNTANT MEMBER PAN NO. : AAFFP9523Q I.T.A.NO. 326/IND/2009 A.Y. : 2005-06 ACIT, M/S.PHALOUDI CONSTRUCTION, 2(1), VS NARSINGHGARH UJJAIN DISTRICT RAJGARH APPELLANT RESPONDENT PAN NO. : AAFFP9523Q C.O.NO.58/IND/2009 (ARISING OUT OF I.T.A.NO. 326/IND/2009) A.Y. : 2005-06 M/S.PHALOUDI CONSTRUCTION, ACIT, NARSINGHGARH VS 2(1), DISTRICT RAJGARH UJJAIN CROSS OBJECTOR RESPONDENT ASSESSEE BY : SMT.APARNA KARAN, SR. DR DEPARTMENT BY : SHRI S. C. GOYAL, ADV DATE OF HEARING : 11.05.2010 O R D E R PER BENCH THIS APPEAL FILED BY THE REVENUE AND CROSS OBJECTIO N FILED BY THE ASSESSEE ARISE OUT OF ORDER OF THE LD. CIT(A), UJJA IN, DATED 22.04.2009, FOR THE ASSESSMENT YEAR 2005-06. PAGE 2 OF 5 -.INO 326/IND/2009 AND C.O.NO.58/IND/2 009 M/S. PHALOUDI CONSTRUCTION, NARSINGHGARH, DIST. RAJ GARH. 2. WE HAVE HEARD BOTH THE PARTIES AND HAVE ALSO PERUSE D THE MATERIAL AVAILABLE ON RECORD. 3. FIRST, WE SHALL TAKE UP REVENUES APPEAL IN I.T.A.N O. 326/IND/2009. 4. IN GROUND NO.1, THE REVENUE IS AGGRIEVED BY THE DEC ISION OF THE LD. CIT(A) IN RESTRICTING THE DISALLOWANCE MADE BY THE ASSESSING OFFICER AT RS. 6 LAKHS OUT OF LABOUR CHARGES TO RS. 50,000/ -. 5. THE FACTS, IN BRIEF, ARE THAT THE AO BASED UPON THE FINDINGS GIVEN IN ASSESSMENT YEAR 2004-05 ALLOWED A SUM OF R S. 6 LAKHS OUT OF LABOUR/WAGES PAYMENT. 6. ON APPEAL, THE LD. CIT(A), AFTER TAKING INTO CONSID ERATION THE TRADING RESULT AS WELL AS THE FACT THAT MAJORITY OF THE PAYMENTS WERE MADE THROUGH CHEQUE AND THE PERCENTAGE OF LABOUR CHARGES TO NET CONTRACT RECEIPTS WAS LESS AS COMPARED TO EARLIER YEARS REST RICTED THE DISALLOWANCE ONLY TO RS. 50,000/- AS SOME OF VOUCHERS WERE NOT A VAILABLE. AGGRIEVED BY THIS, THE REVENUE IS IN APPEAL BEFORE US AND THE ASSESSEE HAS FILED A CROSS OBJECTION AGAINST THE PART DISALLOWANCE CONFI RMED BY THE LD. CIT(A). 7. THE LEARNED COUNSEL, AT THE VERY OUT-SET, SUBMITTED THAT THIS ISSUE AROSE BEFORE THE TRIBUNAL IN THE EARLIER ASSE SSMENT YEAR ALSO AND THE TRIBUNAL DISMISSED THE REVENUES APPEAL AND SUSTAIN ED ONLY 50 % OF PART PAGE 3 OF 5 -.INO 326/IND/2009 AND C.O.NO.58/IND/2 009 M/S. PHALOUDI CONSTRUCTION, NARSINGHGARH, DIST. RAJ GARH. DISALLOWANCE CONFIRMED BY THE LD. CIT(A). IN THIS R EGARD, HE REFERRED TO THE OBSERVATIONS OF THE TRIBUNAL AT PAGE 7 OF THE O RDER IN I.T.A.NO. 782/IND/2007, ORDER DATED 16.4.2004. 8. THE LEARNED SENIOR DEPARTMENTAL REPRESENTATIVE, ON THE OTHER HAND, PREFERRED TO RELY ON THE ORDER OF AO. 9. ON DUE CONSIDERATION OF FACT AND CIRCUMSTANCES AND HAVING REGARD TO THE EARLIER ORDER OF THE TRIBUNAL, WE FIN D NO MERIT IN THIS GROUND OF THE REVENUE AS NO SPECIFIC CASE OF BOGUS EXPENDI TURE HAS BEEN MADE OUT BY THE ASSESSING OFFICER. THUS, THIS GROUND OF THE REVENUE IS DISMISSED. 10. IN GROUND NO.2, THE REVENUE IS AGGRIEVED BY THE DEC ISION OF LD. CIT(A) IN DELETING THE DISALLOWANCE OF RS. 1,68,111 /- MADE BY THE ASSESSING OFFICER U/S 40A(3) OF THE ACT. THE AO MAD E DISALLOWANCE ON THE BASIS OF AGGREGATE PAYMENTS MADE IN CASH EXCEED ED RS. 20,000/-. 11. ON APPEAL, THE LD. CIT(A) FOUND THAT IN THE YEAR UN DER CONSIDERATION THE AMENDED PROVISIONS WERE NOT APPLI CABLE. HENCE, IF EACH TRANSACTION WAS LESS THAN RS. 20,000/-, THEN NO DIS ALLOWANCE COULD BE MADE U/S 40A(3). THE LD. CIT(A) ALSO RELIED ON THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CI T VS. TRIVENIPRASAD PANNALAL, (1997) 228 ITR 680. AGGRIEVED BY THIS, TH E REVENUE IS IN APPEAL BEFORE US. PAGE 4 OF 5 -.INO 326/IND/2009 AND C.O.NO.58/IND/2 009 M/S. PHALOUDI CONSTRUCTION, NARSINGHGARH, DIST. RAJ GARH. 12. DURING THE COURSE OF HEARING, THE LD. SR. DR RELIED ON THE ORDER OF THE A.O., WHEREAS THE LD. COUNSEL FOR THE ASSESS EE RELIED ON THE ORDER OF THE LD. CIT(A). 13. WE HAVE CONSIDERED THE SUBMISSIONS MADE BY BOTH THE SIDES, MATERIAL ON RECORD AND THE ORDERS OF THE AUTHORITIE S BELOW. 14. IT IS NOTED THAT IN THE YEAR UNDER CONSIDERATION, T HE RATIO OF THE AFORESAID DECISION OF THE JURISDICITONAL HIGH COURT THAT PROVISIONS OF SECTION 40A(3) WERE NOT APPLICABLE AS EACH PAYMENT WAS LESS THAN RS. 20,000/- IS APPLICABLE. IT IS ALSO NOTED THAT AMEND ED PROVISIONS OF SECTION 40A(3) ARE ALSO NOT APPLICABLE. HENCE, WE HOLD THAT THE VIEW OF THE AO IS NOT CORRECT IN LAW. ACCORDINGLY, WE CONFIRM THE FI NDING OF THE LD. CIT(A). THUS, THIS GROUND OF THE REVENUE IS ALSO DI SMISSED. 15. IN RESPECT OF ISSUE RAISED IN GROUND NO.3, THE LEAR NED COUNSEL, AT THE VERY OUT-SET, SUBMITTED THAT ADDITION MADE BY T HE ASSESSING OFFICER IN ASSESSMENT YEAR 2004-05 U/S 68 HAD BEEN DELETED AND HENCE, THIS ADDITION COULD NOT BE MADE IN THE YEAR UNDER CONSIDERATION. IN THIS REGARD, HE REFERRED TO THE ORDER OF THE TRIBUNAL. THE LD. SR. DR COULD NOT CONTROVERT THIS CLAIM OF THE ASSESSEE. ACCORDINGLY, WE HOLD TH AT ONCE THE CASH CREDIT HAS BEEN FOUND TO BE GENUINE, HENCE, THE INTEREST P AID THEREON IS TO BE ALLOWED AS A BUSINESS EXPENDITURE. THUS, THIS GROUN D OF THE REVENUE IS ALSO DISMISSED. PAGE 5 OF 5 -.INO 326/IND/2009 AND C.O.NO.58/IND/2 009 M/S. PHALOUDI CONSTRUCTION, NARSINGHGARH, DIST. RAJ GARH. 16. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS D ISMISSED. 17. NOW, WE SHALL TAKE UP CROSS OBJECTION FILED BY THE ASSESSEE, WHEREIN THE PART DISALLOWANCE OF RS. 50,000/- OUT O F LABOUR/WAGES PAYMENT IS AGITATED, WHICH THE LEARNED COUNSEL PREF ERRED NOT TO PRESS. HENCE, THE SAME IS DISMISSED, AS WITHDRAWN. THUS, C ROSS OBJECTION FILED BY THE ASSESSEE IS DISMISSED. 18. TO SUM UP, BOTH REVENUE AS WELL AS ASSESSEES CROSS OBJECTIONS ARE DISMISSED. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 24 TH MAY, 2010. SD/- SD/- (JOGINDER SINGH) (V. K. GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 24 TH MAY, 2010. CPU* 11135