The ITO, Ward-1, Bhuj V. Shri Gohil Rajesh Manmohansingh, Bhuj

ITA 1179/RJT/2010

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 3022 (ITAT-RAJKOT)
• Duration Of Justice: 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-09-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 29-09-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 27-09-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MK SINGH
• Assessee Lawyers: J C RANPURA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT BEFORE SHRI D.K. TYAGI (JM) AND SHRI A.L. GEHLOT (A M) I.T.A. NO.1179/RJT/2010 (ASSESSMENT YEAR 2005-06) ITO, WD.1 VS SHRI GOHIL RAJESH MANMOHANSINGH BHUJ 29, ANAND COLONY, BHUJ-KUTCH PAN : AFAPG0621A (APPELLANT) (RESPONDENT) DATE OF HEARING : 29-09-2011 DATE OF PRONOUNCEMENT : 30-09-2011 APPELLANT BY : SHRI MK SINGH RESPONDENT BY: SHRI JC RANPURA O R D E R PER BENCH THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST THE ORDER OF CIT(A)-II, RAJKOT DATED 28-06-2010 PERTAINING TO ASSESSMENT YE AR 2005-06. 2. THE SOLE EFFECTIVE GROUND OF APPEAL RAISED IN TH E APPEAL IS THAT THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN RESTRICTING THE AD DITION TO RS.2,00,000 A AGAINST THE TOTAL ADDITION OF RS.10,19,124 MADE ON ACCOUNT OF LABOUR EXPENSES. 3. THE ASSESSING OFFICER, IN THE COURSE OF ASSESSME NT PROCEEDINGS FOUND THAT THE ASSESSEE HAD CLAIMED LABOUR EXPENSES OF RS.14,9 5,090 AND THAT THE ASSESSEE DID NOT MAINTAIN THE VOUCHERS ON DAY-TO-DA Y BASIS AND ALL THE VOUCHERS WERE PREPARED IN ONE SITTING AND BY ONE PERSON AND THAT THE INK USED FOR PREPARING THE VOUCHERS WERE SAME. THEREFORE, FOR T HE DETAILED REASONS GIVEN IN ITA NO.1179/RJT/2010 2 THE ASSESSMENT ORDER THE ASSESSING OFFICER DISALLOW ED AN AMOUNT OF RS.10,19,124 OUT OF TOTAL EXPENDITURE OF RS.14,95,0 90. ON APPEAL THE CIT(A) ON FINDING THAT THE HUGE DISALLOWANCE CANNOT BE MADE S IMPLY ON THE GROUND THAT THE EXPENSES WERE PAID IN CASH AND THAT THE QUANTUM OF EXPENDITURE AS A PERCENTAGE OF TURNOVER WAS REASONABLE AS COMPARED T O IMMEDIATELY PRECEDING ASSESSMENT YEAR; THE ASSESSEE MAINTAINED PROPER REC ORD AND THE BOOKS OF ACCOUNTS WERE AUDITED; AND THAT THE DISALLOWANCE WA S, PRIMA FACIE MADE ON DOUBTS AND SUSPICION. IN THE SAME BREATH, THE CIT( A) OBSERVED THAT THE VOUCHERS WERE NOT FREE FROM DOUBTS REGARDING ITS GE NUINENESS OF THE EXPENSES CLAIMED. THEREFORE, THE CIT(A) APPROVED A DISALLOW ANCE OF RS.2 LAKHS. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE THE TRIB UNAL. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HAV E PERUSED THE MATERIAL PLACED BEFORE US. THE CASE OF THE ASSESSEE IS THAT THE WERE THREE SITES SIMULTANEOUSLY AND THE TOTAL CONTRACT RECEIPTS WERE AROUND RS.1.21 CRORES AND CORRESPONDING LABOUR PAYMENTS WERE RS.15,74,000 THR OUGH LABOUR CONTRACTORS AND RS.14,95,000 PAID DEPARTMENTALLY AGGREGATING TO RS. 30.69 LAKHS WHICH IN TERMS OF PERCENTAGE TO TOTAL RECEIPTS IS ONLY 25.26 % WHICH IS BELOW THE NORMAL AVERAGE IN THE LINE OF BUSINESS CARRIED ON BY THE A SSESSEE. THE CIT(A) FOUND THAT THE BOOKS THE ASSESSEE WERE DULY AUDITED AND T HAT SUCH HUGE DISALLOWANCE CANNOT BE MADE SIMPLY ON THE GROUND THAT THE EXPENS ES WERE PAID IN CASH. THE ASSESSING OFFICER WHILE MAKING THE DISALLOWANCE HAS FAILED TO BRING ON RECORD ANY MATERIAL TO SHOW THAT THE EXPENDITURE INCURRED WAS NOT FOR THE PURPOSE OF ITA NO.1179/RJT/2010 3 BUSINESS. WE FIND THAT THE ITAT, RAJKOT BENCH IN T HE CASE OF M/S KATIRA CONSTRUCTION LTD IN ITA NO.1000(RJT)/2010 VIDE ORDE R DATED 13-05-201 HAS UPHELD THE ORDER OF THE CIT(A) SUSTAINING AN ADDITI ON OF RS.2 LAKHS OUT OF DISALLOWANCE OF RS.19,77,729, UNDER SIMILAR SET OF FACTS AND CIRCUMSTANCES. SINCE IT IS A CASE OF ESTIMATION OF AMOUNT OF DISAL LOWANCE AND THERE IS NO MATERIAL ON RECORD OTHERWISE, WE DO NOT SEE ANY REA SON TO COME TO A DIFFERENT CONCLUSION THAN THE ONE ARRIVED AT BY THE CIT(A). WE CONFIRM THE ORDER OF THE CIT(A). 5. INA THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30-09-2011. SD/- SD/- (D.K.TYAGI) (A.L. GEHLOT) JUDICIAL MEMBER ACCOUNTANT MEMBER RAJKOT, DT : 30 TH SEPTEMBER, 2011 PK/- COPY TO: 1. ASSESSEE 2. REVENUE 3. THE CIT(A)-1I, RAJKOT 4. THE CIT-I, RAJKOT 5. THE DR, I.T.A.T., RAJKOT (TRUE COPY) BY ORDER ASSTT.REGISTRAR, ITAT, RAJKOT ITA NO.1179/RJT/2010 4