SHRI RAKESH KUMAR PANDEY, RAIPUR (CG) V. THE DY. COMMISSIONER OF INCOME TAX 2(1), RAIPUR (CG)

ITA 108/BIL/2016

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 2535 (ITAT-RAIPUR)
• Duration Of Justice: 2 year(s) 10 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-03-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2011-2012
• Appeal Filed On: 09-05-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R M MAJUMDAR
• Assessee Lawyers: G S AGARWAL
• Keywords: Salary income
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, RAIPUR BENCH, RAIPUR BEFORE SHRI ANIL CHATURVEDI, AM AND SHRI PARTHA SARATHI CHAUDHU RY , JM . / I TA NO . 108 /RPR /20 1 6 / ASSESSMENT YEAR : 20 1 1 - 12 SHRI RAKESH KUMAR PANDEY, H. NO. 5, SHANKAR NAGAR WARD, ANUPAM NAGAR, RAIPUR, (C.G) PAN : AESPP2836D ....... / APPELLANT / V/S. THE DY. COMMISSIONER OF INCOME TAX - 2(1), RAIPUR , (C.G) / RESPONDENT A SSESSEE BY : SHRI G.S. AGARWAL REVENUE BY : S HRI R.M. MAJUMDAR / DATE OF HEARING : 1 7 .01.2019 / DATE OF PRONOUNCEMENT : 11 .0 3 .2019 2 ITA NO . 108 /RPR /20 1 6 / ORDER PER ANIL CHATURVEDI, AM : TH IS APPEAL FILED BY THE ASSESSEE EMANATE OUT OF THE ORDER OF COMMISSIONER OF INCOME - TAX (A) - I, RAIPUR DATED 05 - 02 - 2016 FOR A.Y. 201 1 - 12. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON RECORD ARE AS UNDER : - ASSESSEE IS A N INDIVIDUAL HAVING INCOME FROM SALARY AND OTHER SOURCES. ASSESSEE ELECTRONICALLY FILED HIS RETURN OF INCOME FOR A.Y. 20 1 1 - 12 ON 30 - 09 - 2011 DECLARING TOTAL INCOME AT RS. 1,16,71,780/ - . THE CASE WAS SELECTED FOR SCRUTINY AND THEREAFTER THE ASSESSMENT WAS FRAMED U/S 143( 3 ) VIDE ORDER DATED 25 - 03 - 2014 AND THE TOTAL INCOME WAS DETERMINED AT RS. 1,45,89,060/ - . AGGRIEVED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE LD.CIT(A), WHO VIDE ORDER DATE D 05 - 02 - 2016 (IN A PPEAL NO. 57/14 - 15) GRANTED PARTIAL RELIEF TO THE ASSESSEE. AGGRIEVED BY THE ORDER OF LD. CIT(A), ASSESSEE IS NOW IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUNDS : 1. THAT UNDER THE FACTS AND THE LAW, THE LEARNED COMMISSIONER O F INCOME TAX (APPEALS) ERRED IN CONFIRMING THE DISALLOWANCE OF RS.5,67,302/ - I.E. 20% OF RS.28,36,514/ - , OUT OF LABOUR EXPENSES MADE BY THE LD. AO ON ADHOC BASIS AND REJECTING THE EXPLANATION. 3 ITA NO . 108 /RPR /20 1 6 PRAYED TO DELETE ADHOC DISALLOWANCE AT RS. 5,67,302/ - . 2. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) FURTHER ERRED IN CONFIRMING THE DISALLOWANCE OUT OF MATERIAL PURCHASE @ 10% AS AGAINST 20% MADE BY THE ID. AO ON ADHOC BASIS AND REJECTING THE EXPLANATION. PRAYED TO DELETE ADHOC DISALLOWANCE MAINTAINE D AT RS. 11,13,403/ - . 3. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) FURTHER ERRED IN DIRECTING THE LEARNED ASSESSING OFFICER TO EXAMINE BROKERAGE EXPENSES CLAIMED AT RS. 1,23,715/ - . SUBMITTED THAT ALL THE EXPENSES ARE FOR BUSINESS PURPOSE. PRAYED TO ALLOW RS. 1,23,715 / - . 3 . BEFORE US, AT THE OUTSET THAT THE LD . AR SUBMITTED THAT THE ASSESSEE DOES NOT WISH TO PRESS GROUND NO. 3. IN VIEW OF THE AFORESAID SUBMISSION, GROUND NO. 3 OF THE ASSESSEE IS DISMISSED AS NOT PRESSED. 4 . GROUND NOS. 1 AND 2 BEING INTERCONNECTED ARE CONSIDERED TOGETHER . 5. DURING THE COURSE OF ASSESSMENT PROCEEDINGS , ASSESSING OFFICER ON PERUSING THE DETAILS NOTICES THAT THE ASSESSEE HAD DEBITED A SUM OF RS.1,70,66,556/ - TO TRADING ACCOUNT UNDER THE HEAD DEVELO PMENT CHARGES WHICH INCLUDED EXPENSES TOWARDS MATERIAL CHARGES RS.1,19,56,000/ - AND TOWARD LABOUR CHARGES OF RS.51,10,556/ - . WITH RESPECT TO THE LABOUR CHARGES , ON VERIFICATION OF LABOUR PAYMENT ROLLS ASSESSING OFFICER NOTICE D THAT MOST OF THE PAY ROLLS W ERE UNSIGNED OR WITHOUT LEFT THUMB IMPRESSIONS. THE TOTAL OF SUCH EXPENSES WAS NOTED AT RS.28,36,514/ - . 4 ITA NO . 108 /RPR /20 1 6 THE ASSESSING OFFICER WAS OF THE VIEW THAT POSSIBILITY OF CLAIMING EXPENSES AT HIGHER SIDE TO REDUCE THE INCOME WAS NOT RULED OUT. HE ACCORDINGLY DIS ALLOWED 20% OF SUCH LABOUR EXPENSES AND MADE ADDITION OF RS.5,67,302/ - . WITH RESPECT TO THE EXPENSES ON MATERIAL ETC. ASSESSING OFFICER NOTICED THAT BILLS AMOUNTING TO RS.58,07,630/ - DID NOT CONTAIN THE FULL NAME OF THE OWNER OR HIS BUSINESS ADDRESS, AND BILL NUMBER. HE FURTHER NOTICED THAT WITH RESPECT TO AGGREGATE BILLS OF RS.53,26,400/ - NO BILLS NUMBER OR SERIAL NUMBER WERE MENTIONED ON THE BILLS. HE ALSO NOTICED THAT THERE WAS NO EVIDENCE MENTIONED ON THE BILL ABOUT THE TRANSPORTATION OF MATERIAL TO THE DESTINATION. HE, THEREFORE, CONCLUDED THAT THE POSSIBILITY OF CLAIMING EXPENSES AT HIGHER SIDE WAS NOT RULED OUT. HE AFTER CONSIDERING THE FACT THAT MATERIAL PURCHASED WAS ESSENTIAL REQUIREMENT FOR DEVELOPMENT OF LAND AND BUILDING , DISALLOWED 20% OF THE EXPENSES AND TREATED IT AS NOT GENUINE AND MADE DISALLOWANCE OF RS.22,26,806/ - . AGGRIEVED BY THE ORDER OF ASSESSING OFFICER, THE ASSESSEE CARRIED THE MATTER BEFORE THE CIT(A). THE CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF ASSESSEE WITH RESPECT TO THE MATERIAL PURCHASED UPHELD THE DISALLOWANCE TO THE EXTENT OF 10% AND AS FAR AS LABOUR CHARGES EXPENSES ARE CONCERNED , HE UPHELD THE ORDER OF ASSESSING OFFICER. AGGRIEVED BY THE ORDER OF LD.CIT(A), ASSESSEE IS NOW IN APPEAL BEFORE US. 5 ITA NO . 108 /RPR /20 1 6 6. BEFORE US, LD. A.R. REITERATED THE SUBMISSIONS MADE BEFORE ASSESSING OFFICER AND LD. CIT(A) AND FURTHER SUBMITTED THAT THE DISALLOWANCE HAS BEEN MADE ON THE BASIS OF PRESUMPTION WITHOUT POINT ING OUT ANY INSTANCE OF THE PAYMENT BEING BOGUS. HE FURTHER POINTED TO THE LIST OF EXPENSES INCURRED ON PURCHASE OF MATERIAL WHICH IS PLACED AT PAGES 3 AND 4 OF THE PAPER BOOK AND FROM THE AFORESAID DETAILS HE POINTED TO THE FACT THAT ALL THE DETAILS ABOUT THE NAME OF SUPPLIERS, PURPOSE OF EXPENSES, AMOUNT AND QUA NTITY PURCHASED HAS BEEN MENTIONED. HE FURTHER POINTED THAT ALL THE AFORESAID PAYMENTS WAS MADE BY CHEQUE. IN SUCH A SITUATION HE SUBMITTED THAT THE ASSESSEE HAS FURNISHED FULL DETAILS AND MERELY ON THE BASIS OF PRESUMPTION , NO DISALLOWANCE IS CALLED FOR . HE FURTHER POINTED TO THE COMPARATIVE RESULTS FOR THE ASSESSEE AND POINTED THAT THE GROSS PROFIT SHOWN BY THE ASSESSEE IS HIGHER THAN THE EARLIER YEARS AND THE NET PROFIT FOR THE YEAR UNDER CONSIDERATION IS COMPARABLE WITH THAT OF EARLIER YEARS. HE FUR THER SUBMITTED THAT ASSESSEE BEING IN THE SAME LINE OF BUSINESS AND NO SUCH DISALLOWANCE HAVE BEEN MADE IN EARLIER YEARS IN THE ORDER PASSED U/S. 143(3) AND IN SUPPORT HIS CONTENTION HE POINTED TO THE ASSESSMENT ORDERS FOR ASSESSMENT YEARS 2007 - 08 AND 2010 - 11 PLACED IN THE PAPER BOOK. HE FURTHER SUBMITTED THAT THE ASSESSEE S ACCOUNTS ARE AUDITED AND NO DISCREPANCIES HAVE BEEN POINTED OUT BY THE AUDITORS. UNDER SUCH SITUATION NO DISALLOWANCE IS CALLED FOR. WITH RESPECT TO THE PAYMENTS OF LABOUR CHARGES HE REITERATED THE SUBMISSIONS MADE BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). 6 ITA NO . 108 /RPR /20 1 6 7. THE LD. D.R. ON THE OTHER HAND SUPPORTED THE ORDER OF LOWER AUTHORITIES. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ISSUE IN THE PRESENT CASE IS WITH RESPECT TO DISALLOWANCE OF EXPENSES FOR PURCHASE OF MATERIAL S A ND LABOUR EXPENSES. WITH RESPECT TO THE PURCHASE OF MATERIAL S, WE FIND THAT THE ASSESSING OFFICER IN THE ORDER HAS ACCEPTED THAT T HE MATERIAL PURCHASED W AS ESSENTIAL REQUIREMENT FOR DEVELOPMENT OF LAND AND BUILDING AND IN VIEW OF THE DISCREPANCIES NOTED H E MADE AN ADHOC DISALLOWANCE OF 20% WHICH WAS REDUCED TO 10% BY COMMISSIONER OF INCOME TAX (APPEALS). BEFORE US THE LD. AR HAS PLACED THE SUMMARY OF MATERIAL PURCHASED WHICH REVEALS THAT IT CONTAINS THE DETAILS OF SUPPLIERS, BILL NUMBER, MATERIAL AMOUNT A ND QUANTITY. WE FURTHER FIND THAT THE PAYMENTS HAVE BEEN MADE BY CHEQUES. BEFORE US REVENUE HAS NOT POINTED ANY EVIDENCE TO SHOW THAT THE PAYMENTS HAVE NOT BEEN MADE BY CHEQUE BUT HAVE ONLY PROCEEDED ON THE BASIS OF PRESUMPTION . CONSIDERING THE TOTALITY OF AFORESAID FACTS WE ARE OF VIEW THAT IN THE PRESENT CASE NO DISALLOWANCE OF EXPENSES ON ACCOUNT OF MATERIAL IS CALLED FOR. WE, THEREFORE, DIRECT TO DELETE THE DISALLOWANCE ON ACCOUNT OF MATERIAL PURCHASED OF RS. 11,13,403/ - . AS FAR AS THE DISALLOWANCE OF LABOUR CHARGES IS CONCERNED BEFORE US THE LD. AR HAS NOT POINTED OUT ANY FALLACY IN THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) AND 7 ITA NO . 108 /RPR /20 1 6 THEREFORE TO THE EXTENT OF DISALLOWANCE OF LABOUR EXPENSES, WE FIND NO REASON TO INTERFERE WITH THE ORDER OF COM MISSIONER OF INCOME TAX . THUS, THE GROUNDS OF APPEAL OF ASSESSEE ARE PARTLY ALLOWED. 9 . IN THE RESULT, THE APPEAL OF ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED ON 11 TH DAY OF MARCH, 2019. SD/ - SD/ - PARTHA SARATHI CHAUDHURY ANIL CHATURVEDI JUDICIAL MEMBER ACCOUNTANT MEMBER / RAIPUR ; / DATED : 11 TH MARCH, 2019 . RK / COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR, I.T.A.T., RAIPUR //TRUE COPY// / BY ORDER, / PRIVATE SECRETARY , / ITAT, RAIPUR . 8 ITA NO . 108 /RPR /20 1 6 DATE 1 DRAFT DICTATED ON SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR SR.PS/PS 3 DRAFT PROPOSED AND PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/JM 5 APPROVED DRAFT COMES TO THE SR. PS/PS SR.PS/PS 6 KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7 DATE OF UPLOADING OF ORDER SR.PS/PS 8 FILE SENT TO BENCH CLERK SR.PS/PS 9 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 10 DATE ON WHICH FILE GOES TO THE A.R 11 DATE OF DISPATCH OF ORDER