Bansal Exports, V. DCIT Circle 25(1),

ITA 1157/DEL/2008

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 8656 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 3 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-07-2009
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 08-07-2009
• Assessment Year: 2005-2006
• Appeal Filed On: 02-04-2008
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: P K PURUSTY
• Assessee Lawyers: S KRISHNAN
• Section: 40A(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH `A : NEW DELHI) BEFORE HONBLE SR. VICE PRESIDENT SHRI R.P. GARG A ND HONBLE JUDICIAL MEMBER, SHRI RAJPAL YADAV ITA NOS.634 & 1157/DEL./2008 (ASSESSMENT YEARS : 2004-05 & 05-06) M/S BANSAL EXPORTS, VS. DCIT, CIRCLE 25(1), DP-13, PITAM PURA, NEW DELHI. DELHI. (PAN/GIR NO.AAEFB7922J) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI S. KRISHNAN, CA REVENUE BY : SHRI P.K. PURUSTY, SR.(DR) ORDER PER R.P. GARG, SR.VP THESE TWO APPEALS BY THE ASSESSEE ARE AGAINST THE ORDERS OF THE CIT(A) FOR ASSESSMENT YEARS 2004-05 & 05-06. SINCE THE ISSUE INVOLVED IN THESE APPEALS IS COMMON I.E. AGAINST DISALLOWANCE OF RS.5 LACS AND RS.2 LA CS OUT OF LABOUR CHARGES FOR ASSESSMENT YEARS 2004-05 & 05-06 RESPECTIVELY, THEY ARE BEING DISPOSED OF BY THIS SINGLE ORDER. 2. THE ASSESSEE CLAIMED LABOUR CHARGES OF RS.1,57,5 6,380 IN THE FIRST YEAR AND RS.2,21,86,676 IN THE SECOND YEAR. THESE PAYMENTS WERE MADE TO THE LABOURERS HAVING MORE THAN 1000 WORKERS IN EACH OF THE YEAR. THE ASS ESSING OFFICER FOUND THAT 50 TO100 WORKERS WERE HAVING ONE PARTICULAR ADDRESS I.E. 44/ 4080, REGARPURA, KAROL BAGH, NEW DELHI. THE ASSESSING OFFICER REQUIRED THE ASSESSEE TO PRODUCE THESE WORKERS FOR VERIFICATION AND THE ASSESSEE FAILED TO PRODUCE THE M AND STATED THAT MOST OF THESE GOLDSMITHS BELONG TO WEST BENGAL AND WERE MOSTLY VI SITORS AND THEIR WHEREABOUTS WERE NOT KNOWN. IN THE ABSENCE OF ANY MATERIAL ON RECOR D, THE ASSESSING OFFICER DISALLOWED A SUM OF RS.10 LAKH IN THE FIRST YEAR. IN THE SECOND YEAR, HOWEVER, HE DISALLOWED A SUM OF RS.2 LAKH ON THE GROUND THAT THE PAYMENTS WERE MADE IN CASH. ON A VERIFICATION OF A ITA NOS.634 & 1157/DEL./2008 (A.YS. : 2004-05 & 05-06) 2 DETAILED INVESTIGATION CARRIED OUT AND FINDING THE POSSIBILITY OF THE LEAKAGE OF REVENUE ON ACCOUNT OF PAYMENT OF LABOUR CHARGES AND THE NON-VE RIFICATION OF THE TOTAL EXPENDITURE CLAIMED BY THE ASSESSEE, THE COMMISSIONER OF INCOME -TAX (APPEALS) AGREED WITH THE ASSESSING OFFICER THAT SOME DISALLOWANCE WAS CALLED FOR BY OBSERVING THAT THE PAYMENTS WERE MADE IN CASH AND BELIEVED THAT THE PAYMENTS WE RE SO STRUCTURED AS TO CIRCUMVENT THE LAW, NAMELY, THE PROVISIONS OF SECTION 40A(3) OF TH E ACT AND OBSERVING SOME MANIPULATION IN SOME PAYMENTS CANNOT BE RULED OUT, RESTRICTED THE DISALLOWANCE TO RS.5 LAKH IN THE FIRST YEAR AND UPHELD THE DISALLOWANCE OF RS.2 LAKH IN THE SECOND YEAR. 3. WE HAVE HEARD THE PARTIES AND CONSIDERED THE RIV AL SUBMISSIONS. IT IS A MATTER ON RECORD THAT LABOURS WERE OF CASUAL IN NATURE. THEY CAME FROM WEST BENGAL AND OTHER SURROUNDING AREAS AND COULD NOT BE PRODUCED FOR EXA MINATION BEFORE THE INCOME-TAX AUTHORITIES. THE FACT REMAINS THAT THE EXPENDITURE WAS NOT FULLY VERIFIABLE. LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE, IN OUR OPI NION, AND ALSO KEEPING UNDER CONSIDERATION THAT DETAILED ENQUIRIES HAVE BEEN MAD E BY THE ASSESSING OFFICER IN THE SECOND YEAR WHEREIN ONLY RS.2 LAKH WAS MADE OUT OF THE TOTAL PAYMENTS OF RS.2,21,86,676. WE, THEREFORE, IN THESE CIRCUMSTAN CES, ARE OF THE OPINION THAT IT WOULD MEET THE ENDS OF JUSTICE IF THE DISALLOWANCE IS RES TRICTED TO RS.1,50,000 IN THE FIRST YEAR AND DISALLOWANCE OF RS.2 LAKH IN THE SECOND YEAR IS UPHELD. WE ORDER ACCORDINGLY. 4. THE OTHER DISPUTE IS WITH REGARD TO THE TRAVELIN G EXPENSES OF RS.28,430. THE ASSESSEE CLAIMED A TOTAL SUM OF RS.2,84,317 UNDER T HE HEAD FOREIGN TRAVELING EXPENSES. TAKING INTO CONSIDERATION THE PERSONAL ELEMENT, THE ASSESSING OFFICER DISALLOWED 10% OF THE EXPENDITURE FOR NON-BUSINESS PURPOSES. IT WAS UPHELD BY THE COMMISSIONER OF INCOME-TAX (APPEALS). 5. BEFORE US, NOTHING HAS BEEN BROUGHT ON RECORD TO INTERFERE WITH THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS). THE DISALLOW ANCE OF 10% OF THE EXPENDITURE ON ACCOUNT OF PERSONAL ELEMENT INVOLVED IN THE FOREIGN TRAVELING IS JUSTIFIED. ITA NOS.634 & 1157/DEL./2008 (A.YS. : 2004-05 & 05-06) 3 6. IN THE RESULT, THE APPEALS ARE PARTLY ALLOWED. 7. ORDER PRONOUNCED IN OPEN COURT ON 17.07.2009. (RAJPAL YADAV) (R.P. GARG) JUDICIAL MEMBER SR. VICE PRESIDENT DATED: JULY 17, 2009. *SKB* COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A)-XXIV, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DELHI. AR/ITAT