M/S Krishan Pal Singh Shekhawat, Gwalior V. A.C.I.T., Circle-3, Gwalior

ITA 105/AGR/2013

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 0669 (ITAT-AGRA)
• Duration Of Justice: 6 year(s) 1 month(s) 4 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 16-05-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 20-06-2013
• Assessment Year: misc
• Appeal Filed On: 11-04-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: KK MISHRA
• Assessee Lawyers: B D GIRI ITP
• Section: 44AD

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, AGRA BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI A.L. GEHLOT, ACCOUNTANT MEMBER ITA NO. 105/AG/ 2013 ASSESSMENT YEAR 2008-09 M/S KRISHNAPAL SINGH SHEKHAWAT, VS. ASSTT. COMMISS IONER OF INCOME TAX QUICK INFRASTRUCTURE, CIRCLE-3 B-24, TANSEN NAGAR, GWALIOR GWALIOR . (PAN AQTPS5557K) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI B.D. GIRI, ITP RESPONDENT BY : SHRI K.K. MISHRA, JR. D.R. DATE OF HEARING : 20.06.2013 DATE OF PRONOUNCEMENT : 28.06.2013 ORDER PER BHAVNESH SAINI, JUDICIAL MEMBER THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LD. CIT(A), GWALIOR DATED 29.01.2013 FOR A.Y. 2008-09, CHALLENG ING THE DISALLOWANCE OF EXPENSES OF RS.7,69,722/- OUT OF VARIOUS EXPENSES L IKE WAGES AND LABOUR, MATERIAL PURCHASE, MACHINERY JOB WORK, SITE EXPENSE S, TELEPHONE, TRAVELLING ETC. THE DETAILS OF THE SAME ARE NOTED IN GROUNDS OF APP EAL BY THE ASSESSEE. ITA NO.105/AG/2013 A.Y.2008-09 2 2. THE ASSESSEE IS A CONTRACTOR AND FILED RETURN OF INCOME AT RS.10,90,900/-. THE A.O. DISCUSSED VARIOUS EXPENSES IN THE BODY OF THE ASSESSMENT ORDER AND FOUND THAT OUT OF WAGES AND LABOUR EXPENSES, THE BI LLS ARE MISSING AND VOUCHERS ARE NOT MAINTAINED AND PAYMENTS ARE MADE IN CASH. T HE MUSTER ROLL FOUND THUMB IMPRESSIONS IDENTICALLY PUT BY ONE PERSON, 5% EXPEN SES WERE THEREFORE DISALLOWED. ON ISSUE OF MATERIAL CONSUMED MOSTLY PU RCHASE BILLS WERE MISSING AND VOUCHERS NOT MAINTAINED. LD. COUNSEL FOR THE AS SESSEE COULD NOT PRODUCE ANYTHING BEFORE THE A.O. TO EXPLAIN THE EXPENDITURE . 10% OF THE EXPENSES WERE ACCORDINGLY DISALLOWED. SIMILARLY ON MACHINE JOB WO RK EXPENSES, MAXIMUM BILLS WERE MISSING AND VOUCHERS NOT MAINTAINED. THE ASSES SEE DID NOT PRODUCE ANYTHING BEFORE THE A.O. THEREFORE, 10% OF THE EXPE NSES WAS DISALLOWED. ON SAID EXPENSES SAME IS THE POSITION. THEREFORE, 10% OF THE EXPENSES WAS DISALLOWED. ON ACCOUNT OF VARIOUS EXPENSES, LIKE TE LEPHONE/MOBILE EXPENSES, TRAVELLING, OFFICE EXPENSES AND STATIONARY AND PRIN TING COMPLETE VOUCHERS OF THE EXPENSES WERE NOT PRODUCED, THEREFORE, THE SAME COU LD NOT SUBJECTED TO VERIFICATION. THE A.O., THEREFORE, DISALLOWED 25% O F THE EXPENSES. THE ASSESSEE CHALLENGED ALL THE ADDITION BEFORE LD. CIT(A) AND W RITTEN SUBMISSION OF THE ASSESSEE IS REPRODUCED IN THE APPELLATE ORDER IN WH ICH THE ASSESSEE TRIED TO JUSTIFY EXPENSES BECAUSE ASSESSEE HAS UNDERTAKEN CONTRACT W ORK AT DIFFERENT PLACES AND ITA NO.105/AG/2013 A.Y.2008-09 3 WAS FACED WITH DISADVANTAGEOUS POSITION TO COMPLETE THE WORK. IT WAS THEREFORE SUBMITTED THAT DISALLOWANCE SHOULD NOT BE MADE AND HISTORY OF THE ASSESSEE WAS EXPLAINED THAT IN ASSESSMENT YEAR UNDER APPEAL THE NET PROFIT OF THE ASSESSEE WAS 5.04% AND IN PRECEEDING ASSESSMENT YEAR 2007-08 NET PROFIT WAS 4.01%. IT WAS ALSO SUBMITTED THAT IN DIFFERENT TYPES OF CASES OF IDENTICAL NATURE, THE NET PROFIT RATE WAS APPLIED IN STEAD OF MAKING DISALLOWANCE OU T OF VARIOUS EXPENSES. THE LD. CIT(A) DID NOT ACCEPT THE CONTENTION OF THE ASSESSE E BECAUSE SPECIFIC ADDITION IS MADE OUT OF VARIOUS EXPENSES, THEREFORE, PROFIT RAT E WOULD NOT HAVE BEEN APPLIED IN THE CIRCUMSTANCES. APPEAL OF THE ASSESSEE WAS AC CORDINGLY DISMISSED. 3. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND MATE RIAL ON RECORD, WE ARE OF THE VIEW THAT ADDITION IS STILL ON EXCESSIVE SIDE. IT IS NOT IN DISPUTE THAT THE ASSESSEE DID NOT MAINTAIN PROPER BILLS AND VOUCHERS OF VARIOUS EXPENSES NOTED ABOVE. WHEN SPECIFIC NOTICE WAS GIVEN TO THE ASSESS EE TO EXPLAIN THE SAME EXPENSES, THE COUNSEL FOR ASSESSEE COULD NOT EXPLAI N THESE EXPENSES SATISFACTORILY AND NO EVIDENCE WAS PRODUCED IN SUPPORT OF ANY OF T HE CONTENTION. THEREFORE, IN PRINCIPLE, DISALLOWANCE OF OUT OF VARIOUS EXPENSES IS WHOLLY JUSTIFIED. HOWEVER, CONSIDERING THE HISTORY OF THE ASSESSEE, WE FIND IT THAT DISALLOWANCE OUT OF VARIOUS EXPENSES IN SUM OF RS.7,69,722/- IS STILL ON EXCESS IVE SIDE. IN ASSESSMENT YEAR ITA NO.105/AG/2013 A.Y.2008-09 4 UNDER APPEAL I.E. 2008-09 ASSESSEE HAS SHOWN NET PR OFIT OF 5.04% ON THE TOTAL GROSS RECEIPT OF RS.2,09,29,602/-. HOWEVER, IN PREC EEDING A.Y. 2007-08 THE GROSS RECEIPT WAS IN A SUM OF RS.71,76,107/- SHOWING NET PROFIT AT 4.01%. IN A.Y. 2006-07 THE TOTAL TURNOVER OF THE ASSESSEE WAS RS.2 3,35,600/- ON WHICH NET PROFIT WAS DECLARED AT 8% UNDER SECTION 44AD OF THE I.T. A CT. THUS, AS COMPARED TO THE PRECEEDING A.Y. 2007-08, THE TURNOVER OF THE ASSESS EE HAS ENHANCED CONSIDERABLY SEVERAL TIMES AND PROFIT RATE HAS ALSO INCREASED, T HEREFORE, IT IS DIFFICULT TO BELIEVE THAT ASSESSEE WOULD HAVE INFLATED THE EXPENSES TO S UPPRESS THE PROFIT. HOWEVER, IT IS ALSO TRUE THAT THE ASSESSEE COULD NOT PRODUCE TH E SUPPORTING DOCUMENT IN SUPPORT OF CLAIM OF DEDUCTION OF THE EXPENDITURE. T HEREFORE, CONSIDERING THE HISTORY OF THE ASSESSEE AS NOTED ABOVE AND THAT THE RE IS INCREASE IN THE TURNOVER AND PERCENTAGE OF THE PROFIT IT WOULD BE REASONABLE AND PROPER TO RESTRICT THE ADDITION OF RS.7,69,722/- TO RS.3,00,000/- IN ALL I N ORDER TO DO JUSTICE BETWEEN BOTH THE PARTIES CONSIDERING THE OBJECTION OF THE A .O. WE ALSO NOTE HERE THAT AS COMPARED TO THE INCOME DECLARED IN RETURN OF THE IN COME, THE ADDITION MADE BY THE A.O. IS VERY EXCESSIVE AND EXORBITANT. LD. COUN SEL FOR THE ASSESSEE CITED CERTAIN DECISIONS OF THE TRIBUNAL. HOWEVER, HE WAS NOT ABLE TO EXPLAIN, HOW THESE ARE APPLICABLE IN THE FACTS AND CIRCUMSTANCES OF TH E CASE. FURTHER NO PROFIT RATE ITA NO.105/AG/2013 A.Y.2008-09 5 COULD BE APPLIED ONCE A.O. HAS MADE SPECIFIC DISALL OWANCE OUT OF VARIOUS EXPENSES. 4. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE C ASE, IN THE LIGHT OF THE ABOVE DISCUSSIONS, WE MODIFY ORDERS OF AUTHORITIES BELOW AND RESTRICT THE ADDITION TO RS.3,00,000/- IN ALL AS AGAINST ADDITION MADE BY A.O. IN A SUM OF RS.7,69,722/- 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. (ORDER PRONOUNCED IN THE OPEN COURT) SD/- SD/- (A.L. GEHLOT) (BHAV NESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER AMIT/ COPY OF THE ORDER FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT (APPEALS) CONCERNED 4. CIT CONCERNED 5. D.R., ITAT, AGRA BENCH, AGRA 6. GUARD FILE. BY ORDER SR. PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL, AGRA TRUE COPY