Shri Ashok M. Thakker, Prop. M/s. Kalyan Transport Co., GANDHIDHAM V. The Assistant Commissioner of Income Tax, Gandhidham Circle, GANDHIDHAM

ITA 113/RJT/2011

• Counselvise Citation: 11324914 RSA 2011
• Duration Of Justice: 1 year(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-04-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 18-04-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 05-04-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MK SINGH
• Assessee Lawyers: J C RANPURA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL: RAJKOT BENCH, RAJKOT BEFORE SHRI T.K. SHARMA, JM AND SHRI D.K. SRIVASTAV A, AM ITA NO 113/RJT/2011 (ASSESSMENT YEAR 2005-06) ASHOK M THAKKER , V. ACIT PROPRIETOR OF M/S. KALYAN TRANSPORT CO. GANDHI DHAM CIRCLE, SHOP NO.19, WARD-12A GANDHIDHAM. NEAR RISHI CORNER,GANDHIDHAM. PAN: ADNPT4831E DATE OF HEARING : 18-04-2012. DATE OF PRONOUNCEMENT : 27 -04-2012. ASSESSEE BY: SHR I J. C. RANPURA, C.A. REVENUE BY: SHR I M. K. SINGH, D.R. . O R D E R D K SRIVASTAVA: THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER PASSED BY THE COMMISSIONER OF INCOME-TAX (APP EALS)-XX, AHMEDABD ON 10- 02-2011 BY WHICH HE HAS CONFIRMED DISALLOWANCE OF R S.11.21.454/- BEING 5% OF THE TOTAL UNPAID HANDLING CHARGES. 2. .THE ASSESSEE IS ENGAGED IN THE BUSINESS OF TRAN SPORTATION AND HANDLING WORK. HE FILED HIS RETURN OF INCOME ON 31-10-2005 D ECLARING TOTAL INCOME AT RS.10,03,670/-. AFTER PROCESSING, THE RETURN WAS S ELECTED FOR SCRUTINY AS A RESULT OF WHICH, A SUM OF RS.1,21,454/- BEING 5% OF TOTAL LAB OUR EXPENSE AMOUNTING TO RS.2,24,29,071/- WAS DISALLOWED FOR WANT OF VERIFIC ATION AND OTHER REASONS GIVEN IN THE ASSESSMENT ORDER. 3. ON APPEAL, THE LD. CIT(A) HAS CONFIRMED THE IMPU GNED DISALLOWANCE WITH THE FOLLOWING OBSERVATIONS:- 4.3 I HAVE GONE THROUGH THE ASSESSMENT ORDER AND T HE SUBMISSIONS OF THE AR OF THE APPELLANT CAREFULLY. IT IS SEEN THAT THE AO HAS OBSERVED FOR MAKING THE DISALLOWANCE THAT THE VOUCHERS ARE NOT MAINTAIN ED PROPERLY, THE APPELLANT WAS UNABLE TO PRODUCE THE CREDITORS FOR VERIFICATIO N, THE CREDITORS WERE SQUARED OFF BY MAKING CASH PAYMENTS TO THEM NEXT YE AR, IT APPEARED FROM THE VOUCHERS THAT THUMB IMPRESSIONS WERE NOT GENUIN E. IT IS SEEN THAT THE AE OF THE APPELLANT HAS ONLY STATED THAT THE ADDITI ON HAS BEEN MADE ON SURMISES AND CONJECTURE HE HAS NOT BEEN ABLE TO EXP LAIN WHY THE DETAILS ABOUT THE OUTSTANDING CREDITS WAS NOT MADE AVAILABL E TO THE AO. IT IS ALSO SEEN THAT THE ALLEGED CREDITS ARE OUTSTANDING AGAIN ST LABOURERS WHO HAVE LEFT THE EMPLOYMENT OF THE APPELLANT AND HAVE GONE TO NO RTHERN GUJARAT OR RAJASTHAN. BECAUSE THE COMPLETE DETAILS ABOUT THE CREDITORS AND ADDRESSES WAS NOT MADE AVAILABLE TO THE AO, HENCE NO FURTHER VERIFICATION COULD BE POSSIBLY BE MADE BY THE AO. IN THE ABSENCE OF ANY SCOPE OF VERIFICATION, THE AO COULD NOT BE EXPECTED TO ACCEPT THE ENTIRE CLAIM LOOKING AT THE FACT THAT ITA NO 113/RJT/2011. 2 THE VOUCHERS WERE PREPARED BY THE APPELLANT HIMSELF AND THE THUMB IMPRESSIONS DID NOT APPEAR GENUINE. FURTHER NO TDS WAS MADE ON THE PAYMENTS PRESUMABLY BECAUSE THE PAYMENTS WERE FOR S MALL SUMS BELOW RS.20,000/-. IT IS EXTREMELY IMPROBABLE TO EXPECT LABOURERS WHO GET SMALL WAGES THAT THEY WOULD LEAVE SUCH HUGE AMOUNTS OUTST ANDING. FURTHER THE PAYMENTS MADE TO SQUARE OFF THE ACCOUNTS HAS ALSO B EEN MADE IN CASH. IN VIEW OF THE ABOVE THE ADDITION MADE BY THE AO IS JU STIFIED. THE SAME IS CONFIRMED. 4. IN SUPPORT OF APPEAL, THE LD. AUTHORIZED REPRESE NTATIVE FOR THE ASSESSEE SUBMITTED THAT NO SUCH DISALLOWANCE WAS MADE BY THE AO EITHER IN THE PRECEDING OR IN SUCCEEDING ASSESSMENT YEARS. HE SUBMITTED THAT A LL THE RECORDS IN SUPPORT OF THE IMPUGNED EXPENSES WERE MAINTAINED BY THE ASSESSEE. HIS ALTERNATIVE SUBMISSION WAS THAT THE DISALLOWANCE MADE BY THE AO AND CONFIR MED BY THE CIT(A) WAS EXCESSIVE. 5. IN REPLY, THE LD. DEPARTMENTAL REPRESENTATIVE SU PPORTED THE ORDER PASSED BY THE CIT(A). 6. WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY CON SIDERED THEIR SUBMISSIONS. BOTH AO AND CIT(A) HAVE GIVEN DETAILED REASONS TO J USTIFY THEIR FINDING THAT THE IMPUGNED EXPENSES WERE NOT FULLY AMENABLE TO VERIFI CATION. NO MATERIAL HAS BEEN PLACED ON RECORD TO REBUT THEIR FINDING IN THIS BEH ALF. AT THE SAME TIME, THE SUBMISSION OF THE ASSESSEE THAT NO SUCH DISALLOWANC E WAS MADE IN ANY OF THE SUCCEEDING OR PRECEDING ASSESSMENT YEARS ON IDENTIC AL SET OF FACTS AND RECORD CANNOT BE COMPLETELY IGNORED. ON OVERALL CONSIDERAT ION OF ALL THE FACTS AND CIRCUMSTANCES OF THE CASE INCLUDING THE NATURE OF B USINESS OF THE ASSESSEE, THE IMPUGNED DISALLOWANCE MADE BY THE AO AND CONFIRMED BY THE CIT(A) IS HELD TO BE EXCESSIVE AND ON HIGHER SIDE. THE AO IS DIRECTED TO RESTRICT THE DISALLOWANCE TO 2.5% OF LABOUR EXPENSE. APPEAL FILED BY THE ASSESS EE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 27-04-2012 SD/- SD/- (T K SHARMA) (D K SRIVASTAVA) JUDICIAL MEMBER ACCOUNTANT M EMBER RAJKOT, DT: 27-04-2012. NVA/- COPY TO: 1. ASHOK M. THAKKER, PROP.M/S. KALYAN TRANPORT CO., GANDHIDHAM. 2. THE ASSTT. C. I.T., GANDHIDHAM CIRCLE, GANDHIDHA M. 3. THE CIT., RAJKOT-I, RAJKOT. 4. THE CIT (A)-XX, AHMEDABAD.. 5. THE DR, I.T.A.T., RAJKOT 6. THE GUARD FILE. (TRUE COPY) BY ORDER ASSTT.REGISTRAR, ITAT, RAJKOT