Vijay Rao Johnson Sanda, Nizamabad, Hyderabad V. DCIT, Circle-1, Nizamabad, Nizamabad

ITA 1036/HYD/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 6118 (ITAT-HYDERABAD)
• Duration Of Justice: 5 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-01-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 12-01-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 10-08-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: M SITARAM
• Assessee Lawyers: P SESHAGIRI RAO
• Keywords: Condonation of delay
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A : HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER ITA.NO.1036/HYD/2015 ASSESSMENT YEAR 2008-09 MR.VIJAY RAO JOHNSON SANDA, NIZAMABAD. PAN ADKPS8656B VS. THE DCIT CIRCLE-1 NIZAMABAD. (APP EL LANT) (RESPONDENT) FOR ASSESSEE : MR. P. SESHAGIRI RAO FOR REVENUE : MR. M. SITARAM DATE OF HEARING : 1 2 .01.2016 DATE OF PRONOUNCEMENT : 20 .01.2016 ORDER PER SMT. P. MADHAVI DEVI, J.M. THIS IS ASSESSEES APPEAL FOR THE A.Y. 2008-09. AT THE OUTSET, IT IS NOTICED THAT THERE IS A DELAY OF 05 DAYS IN FILING OF THE APPEAL BEFORE THIS TRIBUNAL. THE A SSESSEE HAS FILED AN APPLICATION FOR CONDONATION OF DELAY A LONG WITH AN AFFIDAVIT EXPLAINING THE REASONS FOR THE DE LAY. IT IS STATED IN THE PETITION THAT THE ASSESSEE IS SUFFERI NG FROM SEVERE DIABETICS AND COULD NOT TRAVEL TO HYDERABAD TO INSTRUCT HIS COUNSEL/ADVOCATE AND IT IS ONLY AFTER RELIEF IN HIS HEATH CONDITION THAT HE COULD TRAVEL TO HYDERAB AD ON 09.08.2015 AND IMMEDIATELY GOT PREPARED THE APPEAL ON 09.08.2015 AND FILED ON 10.08.2015 WITH A DELAY OF 05 DAYS. CONSIDERING THE FACTS MENTIONED BY THE ASSESS EE 2 ITA.NO.1036/HYD/2015 MR. VIJAY RAO JOHNSON SANDA, NIZAMABAD. AND BEING SATISFIED THAT THE DELAY IS DUE TO REASON S BEYOND THE CONTROL OF THE ASSESSEE, WE CONDONE THE DELAY OF 05 DAYS AND PROCEED TO DISPOSE OFF THE APPEAL AS UNDER. 2. THE ONLY GRIEVANCE OF THE ASSESSEE IN THIS APPEAL IS THAT THE LD. CIT(A) HAS ERRED IN UPHOLDIN G THE DISALLOWANCE OF RS.5 LAKHS OUT OF THE EXPENDITURE D EBITED TO THE P & L ACCOUNT ON ADHOC BASIS REJECTING THE B OOK RESULTS OF THE ASSESSEE. 2.1. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE , WHO IS ENGAGED IN THE BUSINESS OF CIVIL CONTRACTS, FILED HIS RETURN OF INCOME ADMITTING INCOME OF RS.8,54,890. D URING THE ASSESSMENT PROCEEDINGS UNDER SECTION 143(3) OF THE I.T. ACT, THE ASSESSEE PRODUCED HIS BOOKS OF ACCOUN T, BILLS/VOUCHERS IN SUPPORT OF THE EXPENDITURE CLAIME D BY HIM. WHILE VERIFYING THE EXPENDITURE DEBITED TO THE P & L ACCOUNT, THE A.O. NOTICED THAT SOME OF THE PAYMENTS ARE NOT PROPERLY SUPPORTED WITH BILLS AND ARE SUPPORTED BY SELF-PREPARED VOUCHERS AND ARE PAID IN CASH BELOW RS.20,000. THE LD. COUNSEL FOR THE ASSESSEE EXPLAIN ED THAT BECAUSE OF ASSESSEES NATURE OF BUSINESS, SOME TIMES, IT IS NOT POSSIBLE TO GET THE VOUCHERS AND T HEREFORE, THE EXPENDITURE HAS TO BE BOOKED BY WAY OF SELF-MAD E VOUCHERS AND THIS IS THE GENERAL PHENOMENA FOLLOWED BY THE CONTRACTORS. THE A.O., THOUGH AGREED WITH THE ASSESSEE THAT SOME OF THE PAYMENTS ARE COVERED BY S ELF- MADE VOUCHERS, HELD THAT THE POSSIBILITY OF INFLATI ON OF EXPENDITURE CANNOT BE RULED OUT. HE THEREFORE, MADE AN 3 ITA.NO.1036/HYD/2015 MR. VIJAY RAO JOHNSON SANDA, NIZAMABAD. ADHOC DISALLOWANCE OF RS.5 LAKHS TO COVER THE INFLA TED CASH EXPENSES AND MADE THE ADDITION OF RS. 5 LAKHS TO THE RETURNED INCOME OF THE ASSESSEE AND BROUGHT IT TO T AX. 3. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A), WHO CONFIRMED THE ORDER OF THE A.O. AND THEREFORE, THE ASSESSEE IS IN SECOND APPEAL BEFORE US. 4. THE LD. COUNSEL FOR THE ASSESSEE, MR.P. RAVI SESHAGIRI RAO, SUBMITTED THAT ASSESSEE BEING A CIVI L CONTRACTOR WAS REQUIRED TO MAKE SOME PAYMENTS IN CA SH AND ALL THE PAYMENTS IN CASH WERE BELOW RS.20,000. HE HAS SUBMITTED THAT THE A.O. HAS NOT POINTED OUT ANY DEFECT IN THE BOOKS OF ACCOUNT MAINTAINED BY THE AS SESSEE AND THEREFORE, ADHOC DISALLOWANCE OF RS. 5 LAKHS FR OM THE EXPENDITURE WITHOUT REJECTION OF BOOKS OF ACCOUNT I S NOT SUSTAINABLE. THUS, ACCORDING TO HIM, THE INCOME RET URNED BY THE ASSESSEE OUGHT TO HAVE BEEN ACCEPTED. 5. THE LD. D.R., ON THE OTHER HAND, SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT THE A.O. HAS MADE A VERY REASONABLE DISALLOWANCE AND TH ERE WAS NO CAUSE FOR INTERFERENCE WITH THE ORDER OF THE LD. CIT(A). 6. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE MATERIAL ON RECORD, WE FIND THAT THE A.O. HIMSELF H AS STATED THAT THE CASH PAYMENTS ARE ALL BELOW RS.20,0 00. THE A.O. HAS ALSO AGREED THAT SOME OF THE PAYMENTS HAVE TO BE MADE IN CASH AND ARE SUPPORTED BY SELF-MADE 4 ITA.NO.1036/HYD/2015 MR. VIJAY RAO JOHNSON SANDA, NIZAMABAD. VOUCHERS OF THE ASSESSEE. THE ONLY REASON FOR MAKIN G THE DISALLOWANCE IS THAT THERE MIGHT BE INFLATED EXPEND ITURE. THE A.O. HAS NOT BROUGHT ON RECORD THE TOTAL QUANTU M OF SUCH PAYMENTS MADE IN CASH. THE LD. CIT(A) ALSO HAS NOT RECORDED AS TO WHAT IS THE QUANTUM OF CASH PAYMENTS MADE BY THE ASSESSEE BUT HAS ONLY TAKEN INTO CONSIDERATION THE TOTAL OF EXPENDITURE AT RS.296.19 LAKHS FOR JUSTIFYING THE DISALLOWANCE OF RS.5 LAKHS. SINC E NONE OF THE AUTHORITIES HAVE BROUGHT ON RECORD THE EXACT QU ANTUM OF CASH PAYMENTS, WE ARE OF THE OPINION THAT THOUGH INFLATION OF EXPENSES CANNOT BE RULED OUT, THE ADHO C DISALLOWANCE OF RS.5 LAKHS OUT OF THE SAME MIGHT BE EXCESSIVE. IN VIEW OF THE SAME, WE DEEM IT FIT AND PROPER TO RESTRICT ADHOC DISALLOWANCE TO RS.3 LAKHS ON ACC OUNT OF INFLATION OF EXPENSES. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 20.01.2016 SD/- SD/- (B. RAMAKOTAIAH) (SMT. P. MADHAVI DEVI) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED 20 TH JANUARY, 2016 VBP/- 5 ITA.NO.1036/HYD/2015 MR. VIJAY RAO JOHNSON SANDA, NIZAMABAD. COPY TO 1. MR. VIJAY RAO JOHNSON SANDA, NIZAMABAD. C/O. MR. S. RAMA RAO, ADVOCATE, FLAT NO.102, SHRIYAS ELEGANCE, 3-6-643, STREET NO.9, HIMAYATNAGAR, HYDERABAD 500 029. 2. THE DCIT, CIRCLE - 1, NIZAMABAD. 3. CIT(A) - 5 , 6A, I.T. TOWERS, A.C. GUARDS, HYDERABAD. 4. CIT - 5 , HYDERABAD. 5. D.R. ITAT A BENCH, HYDERABAD 6. GUARD FILE