THE ITO 26(1)(2), MUMBAI V. MRS. ANUSHRI A. BHIDE, MUMBAI

ITA 1153/MUM/2008

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 7295 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-03-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2004-2005
• Appeal Filed On: 15-02-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T T JACOB
• Assessee Lawyers: BHARAT PATEL

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH D: MUMBAI BEFORE SHRI J. SUDHAKAR REDDY (AM) AND SHRI R.S. PADVEKAR (JM) ITA NO. 1153/MUM/2009 (ASSTT. YEAR : 2005-06) INCOME TAX OFFICER, WARD 9(3)(4) APPELLANT ROOM NO. 219, 2 ND FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI-2- V/S. M/S. RUSHI HOUSECON PVT. LTD., RESPONDENT 101, SHIV ARCHANA, UPPER GOVIND NAGAR, CHINCHOLI CROSS ROAD, MALAD (EAST), MUMBAI 400 097 PAN : AABCR8701K APPELLANT BY : MR. T.T. JACOB RESPONDENT BY :SHRI BHARAT PATEL : O R D E R : PER R.S. PADVEKAR, J.M THE REVENUE HAS CHALLENGED THE IMPUGNED ORDER OF TH E LD CIT(A)- CENTRAL I, MUMBAI DATED 31.12.2008 FOR THE A.Y. 2005-06. 2. THE REVENUE HAS TAKEN THE FOLLOWING EFFECTIVE GROUN D : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS. 8, 96,828/- MADE BY THE A.O. ON ACCOUNT OF LABOUR CHARGES AND WAGES CLAIMED BY THE ASSESSEE IGNORING THAT THE ASSESSEE COULD NOT OFFER ANY EXPL ANATION NOR FURNISH DETAILS/DOCUMENTARY EVIDENCES TO PROVE THE GENUINEN ESS OF INCREASE OF LABOUR CHARGES AND WAGES. 3. THE FACTS WHICH REVEAL FROM THE RECORD ARE AS UN DER : ITA NO. 1153/MUM/2009 2 THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS O F CIVIL CONSTRUCTION WORK AT DIFFERENT SITES OF THE BUILDERS/DEVELOPERS. THE ASSESSEE FILED THE RETURN OF INCOME ON 17.10.2005 FOR THE A.Y. 2005-06 DECLARING THE TOTAL INCOME AT RS.14,97,440/-. THE ASSESSEES CASE WAS SELECTED FOR SCRUTINY AND ASSESSMENT WAS COMPLETED U/S. 143(3). THE ONLY ADD ITION MADE BY THE A.O WAS IN RESPECT OF THE LABOUR CHARGES AND WAGES WHIC H WAS TO THE TUNE OF RS. 8,96,828/-. THE A.O HAS NOTED THAT THE ASSESSEE HA S CLAIMED THE LABOUR CHARGES AND WAGES AMOUNTING TO RS. 1,71,29,768/- AN D RS. 52,90,935/- RESPECTIVELY, AGGREGATING TO RS. 2,24,20,703/-. AS NOTED BY THE A.O, IN THE IMMEDIATE PRECEDING YEAR I.E. A.Y. 2004-05, THE A SSESSEE HAD CLAIMED THE EXPENDITURE OF THE LABOUR CHARGES OF RS. 1,07,44,66 0/- AND WAGES OF RS. 45,60,800 AGGREGATING TO RS. 1,53,05,460/-. THE A .O. WORKED OUT THE RATIO OF THIS EXPENDITURE PROBABLY WITH THE RECEIPT. THE A.O HAS OBSERVED THAT COMPARING RATIO OF THE SAID EXPENDITURE FOR BOTH TH E ASSESSMENT YEARS I.E. A.Y. 2004-05 AND 2005-06, WORKED OUT AT 82% AND 86% RESPECTIVELY, AND HENCE, IN THE OPINION OF THE A.O, THE SAID EXPENDIT URE WAS INCREASED BY 4% IN THE CURRENT YEAR. THE A.O HAS MERELY STATED THAT T HE EXPLANATION WAS SOUGHT ALONG WITH THE NECESSARY DOCUMENTARY EVIDENCE, BUT THE ASSESSEE COMPANY COULD NOT COMPLY WITH THE SAID REQUIREMENT. THE A. O., THEREFORE, MADE THE ADDITION TO THE EXTENT OF 4% OF RS. 2,24,20,703/- WHICH WAS WORKED OUT BY THE A.O. AT RS. 8,96,828/-. THE ASSESSEE CHALLENGE D THE SAID ADDITION BEFORE THE CIT(A), WHO DELETED THE SAME BY GIVING FOLLOWIN G REASONS : 2.3 I HAVE CAREFULLY CONSIDERED THE REASONING OF T HE ASSESSING OFFICER AS WELL AS THE SUBMISSION OF THE APPELLANT AS MADE BEFORE ME. AS SEEM FROM THE RELEVANT PARA OF ASSESSMENT ORDER, THE ASS ESSING OFFICER HAS JUST COMPARED THE LABOUR CHARGES AND WAGES PAYMENT WITH FIGURES OF EARLIER YEAR AND FOUND THAT THE EXPENSES AS DEBITED IN THE YEAR UNDER APPEAL ARE MORE IN COMPARISON TO EARLIER YEARS EXP ENSE. THE ASSESSING OFFICER HAS NOT MADE OUT ITS CASE THAT THE EXPENSES ARE EITHER UNVOUCHED OR UNVERIFIABLE. THE DISALLOWANCE IS MAI NLY BASED ON THE FOOTING THAT THE EXPENSES IN TERMS OF RATIO ARE MOR E IN THE YEAR UNDER APPEAL AS COMPARED TO IN THE EARLIER YEAR. WITH RE GARD TO LABOUR CHARGES AND WAGES, WHEN THE APPELLANT IS MAINTAININ G THE VOUCHERS FOR LABOUR CHARGES AND WAGE SHEETS, THE ASSESSING OFFIC ER OUGHT TO HAVE ITA NO. 1153/MUM/2009 3 GIVEN THE SPECIFIC FINDING AS TO HOW THE VOUCHERS AS MAINTAINED ARE NOT RELIABLE OR VERIFIABLE. UNDER THESE CIRCUMSTANCES, I AM OF THE CONSIDERED VIEW THAT THE ASSESSING OFFICER IS NOT J USTIFIED TO MAKE DISALLOWANCE JUST ON AD HOC BASIS WITHOUT SPECIFYIN G ANY SPECIFIC REASONS AND JUST BECAUSE THERE IS AN INCREASE IN EX PENSES AS COMPARED TO EARLIER YEAR, IT DOES NOT WARRANT DISALLOWANCE. ACCORDINGLY, THE ADDITION ON ACCOUNT OF DISALLOWANCE OF EXPENSES AS MADE IS HEREBY DELETED. THE APPELLANT SUCCEEDS ON ITS GROUNDS OF APPEAL. 1 4. NOW THE REVENUE IS IN APPEAL BEFORE US. WE HAVE HEARD THE PARTIES. WE HAVE ALSO CAREFULLY CONSIDERED THE REASONS GIVE N BY BOTH THE AUTHORITIES. THE A.O HAS NOT GIVEN ANY DETAILS IN RESPECT OF THE RECEIPT SIDE AND MERELY STATED THAT THIS YEAR, THERE IS AN INCREASE IN THE PAYMENT OF LABOUR CHARGES AND WAGES BY 4% COMPARING TO EARLIER YEAR. OTHER TH AN THE SAID OBSERVATION, NOTHING IS DISCUSSED BY THE A.O AND VERY CRYPTIC RE ASONS ARE GIVEN. THERE IS NO QUARREL IN RESPECT OF THE PROPOSITION THAT THE A.O HAS SUFFICIENT POWER TO VERIFY THE CLAIM MADE BY THE ASSESSEE, BUT AT THE SAME TIM E, MAKING THE DISALLOWANCE, PROPER FACTS AND DATA SHOULD BE PUT O N RECORD. BUT, IN THE PRESENT CASE, ONLY THE AD HOC DISALLOWANCE IS MADE, WHICH, IN OUR OPINION, THE LD CIT(A) HAS RIGHTLY DELETED. WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE LD CIT(A) AND UPHOLD THE SAME. 5. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 25TH DAY OF MARCH, 2010. SD/- SD/- (J. SUDHAKAR REDDY) (R.S. PADVEKAR) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, ON THIS 25TH DAY OF MARCH, 2010. :US COPY TO: ITA NO. 1153/MUM/2009 4 1. APPELLANT 2. RESPONDENT , 3.THE CIT(A)- CENTRAL I, MUMBAI 4.THE CIT (CENTRAL)- 1, MUMBAI 5.THE DR, D BENCH, MUMBAI 6.GUARD FILE BY ORDER TRUE COPY ASSTT..REGISTRAR, ITAT, MUMBAI. ITA NO. 1153/MUM/2009 5 US DATE INITIALS 1. DRAFT DICTATED ON 23/3/10 --------------- SR.P.S . 2. DRAFT PLACED BEFORE AUTHORITY 24/1/10 -------- ------ SR.P.S. 3. DRAFT PROPOSED & PLACED ----------- ---------- --- JM BEFORE THE SECOND MEMBER 4. DRAFT DISCUSSED/APPROVED ----------- ----------- -- JM/AM BY SECOND MEMBER 5. APPROVED DRAFT COMES TO ----------- ------------ - SR.P.S. THE SR. P.S./P.S 6. KEPT FOR PRONOUNCEMENT ON --------- ----------- -- SR.P.S. 7. FILE SENT TO THE BENCH CLERK --------- --------- ---- SR.P.S. 8. DATE ON WHICH FILE GOES TO THE ------- --------- ---- 9. DATE OF DISPATCH OF ORDER --------- --------- ----