ITO, New Delhi V. Shri Krishna Bansal, Prop, Gurgaon

ITA 1184/DEL/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 81970 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 7 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 15-09-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 07-03-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: ARE AS UNDER WHETHER IN FACTS; C
• Section: 10

Judgement Text

INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D : NEW DELHI BEFORE SHRI S. V. MEHROTRA , ACCOUNTANT MEMBER AND SHRI A. T. VARKEY, JUDICIAL MEMBER ITA NO. 1184 /DEL/ 2012 (ASSESSMENT YEAR: 2008 - 09 ) ITO, WARD - 33(2), ROOM NO.206B, C.R. BUILDING, IP ESTATE, NEW DELHI VS. KRISHNA BANSAL, PROP, M/S. SH. GANESH TRADERS, 404, 4 TH FLOOR, WELDON TECH PARK, SECTOR - 48, SOHNA ROAD, GURGAON PAN:AHTPB3655Q (APPELLANT) (RESPONDENT) O R D E R PER A. T. VARKEY, JUDICIAL MEMBER THIS IS AN APPEAL PREFERRED BY THE REVENUE AGAINST THE ORDER OF THE LD CIT(A), XXVI, DELHI - 92 RELATES FOR THE ASSESSMENT YEAR 2008 - 09. 2. THE GROUNDS RAISED BY THE REVENUE ARE AS UNDER: - 1. WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE U/S 40(A)(IA) ON THE CONTRACTUAL AND PROFESSIONAL PAYMENTS MADE BY THE ASSESSEE AMOUNTING TO RS.84,23,289/ - ON THE GROUND THAT FROM THE SO CAL LED DETAILS SUBMITTED BY ASSESSEE, THE SAID EXPENSES ERE BELOW RS.20,000/ - WHEN ACTUALLY THE ASSESSEE FAILED TO PRODUCE BOOKS OF ACCOUNTS/ BILLS/ VOUCHERS AND DID NOT FURNISH NAMES AND ADDRESSES OF THE PARTIES TO WHOM PAYMENTS WERE MADE AND THE AMOUNTS OF PAYMENTS MADE TO EACH PARTY WERE NOT FURNISHED FROM WHERE IT WAS CLEAR THAT THE ASSESSEE HAS NOT MAINTAINED BOOKS OF ACCOUNTS AND OTHER DOCUMENTS AND THUS THERE IS NO BASIS FOR CIT(A) HOLDING THAT THE SAID EXPENSES WERE BELOW RS.20,000/ - . 2. WHETHER IN TH E FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE U/S 40(A)(IA) ON THE CONTRACTUAL AND PROFESSIONAL PAYMENTS MADE BY THE ASSESSEE AMOUNTING TO RS.84,23,269/ - ON THE GROUND THAT ONCE PROFIT IS APPELLANT BY : MS. SULEKHA VERMA, CIT DR RESPONDENT BY : NONE PAGE 2 OF 4 ESTIMATED, EXPENDITURE CA NNOT BE ADDED BACK, WHEN THE REJECTION OF BOOKS OF ACCOUNT AND ESTIMATE OF THE INCOME IS DIFFERENT FROM INVOKING PROVISIONS OF SECTION 40(A)(IA), AND THESE TWO ARE ENTIRELY, MUTUALLY EXCLUSIVE AND THERE IS NO BAR IN INVOKING THE PROVISIONS U/S 40(A)(IA) AF TER ESTIMATING THE INCOME OF THE ASSESSEE? 3. THE SOLITARY DISALLOWANCE CHALLENGED IN THE INSTANT APPEAL PERTAINS TO DISALLOWANCE OF RS.84,23,269/ - U/S 40(A)(IA) OF THE INCOME TAX ACT, 1961 (HEREIN AFTER THE ACT). 4. BRIEF FACTS OF THE CASE IS THAT THE ASSESSEE IS A PROPRIETOR OF M/S GANESH TRADERS , WHICH IS ENGAGED IN THE BUSINESS OF SALE AND PURCHASE AND CONSTRUCTION, HOWEVER, IN THE AUDIT REPORT IT HAS BEEN SHOWN AS TRADING CONCERN. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HA D SHOWN SALES AT AN AMOUNT OF RS.5,46,72,496/ - WITH GP OF RS.55,21,724/ - AT 10.11% AND NP OF RS.7,62,413/ - AT 1.39% AS COMPARED TO LAST YEAR WHERE A GP OF RS.7,09,736/ - @ 17.19% AND NP OF RS.2,22,684/ - @5.39% ON SALES OF RS.41,28,730/ - WAS DECLARED BY THE AS SESSEE. SINCE THE AR OF THE ASSESSEE DID NOT FURNISH THE BOOKS OF ACCOUNTS, THE ASSESSING OFFICER CAME TO THE CONCLUSION THAT THE AUDIT U/S 44AB OF THE ACT IN CASE OF ASSESSEE HOLDS NO GOOD. THEREAFTER, AFTER CONSIDERING ALL THE FACTS, THE ASSESSING OFFICE R MADE THE FOLLOWING ADDITIONS: - A) 5% OF NET PROFIT ON GROSS TURNOVER :RS.27,33,623/ - B) DISALLOWANCE U/S 40(A)(IA) :RS.84,23,269/ - C) DISALLOWANCE U/S 24(A) :RS.3,86,738/ - D) 1/10 TH OF THE EXPENSES BEING PERSONAL IN NATURE :RS.1,06,465/ - E) INCOME FROM OTHER SOURCES :RS.43,924/ - 5. THE LD CIT(A), DELETED THE ADDITION BY OBSERVING THAT SINCE THE INCOME HAS BEEN ESTIMATED, NO FURTHER DISALLOWANCE NEED TO MADE WHILE DELETING THE ADDITION . SHE HAS HELD AS UNDER: - PAGE 3 OF 4 ON PERUSAL OF THE ASSESSMENT ORDER IT IS SEEN THAT THE ASSESSING OFFICER DISALLOWED AN EXPENDITURE OF RS.84,23,269/ - ON THE GROUND THAT SOME OF THE EXPENSES OUT OF RS.84,23,269/ - ARE LIABLE TO BE CHARGED TO PROVISIONS U/S 194 OF THE IT ACT 1961. AGAIN, HE ALSO ADMITTED THAT FROM THE DETAILS FURNISHED BY THE APPELLANT EXPENSES FOUND RECORDED WERE BELOW RS.20,OOO/ - . IN THE ABSENCE OF THE BOOKS OF ACCOUNTS, THE ASSESSING OFFICER WAS NOT ABLE TO SEGREGATE OR IDENTIFY THE EXACT NATURE AND QUANTUM OF EXPENDITURE INCURRED BY THE AP PELLANT, TDS IS A MODE OF COLLECTING THE TAX AT SOURCE IN ADVANCE IN RELATION TO THE INCOME EARNED DURING THE YEAR ON ACCOUNT OF EXPENSES INCURRED. MOREOVER, THE ASSESSING OFFICER HAS ESTIMATED THE PROFITS IN THE ABSENCE OF THE BOOKS OF ACCOUNTS IN THE PRE SENT CASE, RELIANCE IS PLACED ON VARIOUS CASE LAWS BY THE AR OF THE APPELLANT TO PROVE HIS POINT IN THIS REGARD IN HIS SUBMISSIONS. THE ASSESSING OFFICER HAS NOT BROUGHT OUT ANY MATERIAL ON RECORD TO THE CONTRARY. I ALSO PLACE RELIANCE IN THE JUDICIAL PRON OUNCEMENT IN THE CASE OF CIT VS. INDWELL CONSTRUCTIONS 232 ITR 76 (AP) WHERE IT WAS HELD THAT 'ONCE PROFIT IS ESTIMATED , EXPENDITURE CANNOT BE ADDED BACK'. REFERENCE IS ALSO MADE TO THE JUDGMENT IN THE CASE OF CIT VS. YAGGINA V & M.S. 62 ITR 528 (AP) WHERE IT WAS HELD THAT 'FOR ESTIMATING THE GROSS PROFITS ALLOWANCE OF PART OF THE ACCOUNTS AND DISALLOWANCE OF ANOTHER PART IS NOT PERMISSIBLE'. ALSO, SINCE THE APPELLANT HAD ALSO BOOKED EXPENSES BELOW RS.20,OOO/ - WHICH WAS ALSO ADMITTED BY THE ASSESSING OFFICE R , THE PROVISIONS OF SECTION 194 CANNOT BE INVOKED. IN VIEW OF THE ABOVE DISCUSSION, THE ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF DISALLOWANCE OF RS.84,23,269/ - IS HEREBY DELETED. 6. HAVING CONSIDERED THE RIVAL SUBMISSION, WE FIND NO INFIRMITY IN THE CONCLUSION OF THE LD CIT(A) AS IT IS WELL - SETTLED PRINCIPLE OF LAW THAT ONCE THE BOOKS OF ACCOUNTS HAS BEEN REJECTED AND PROFIT HAS BEEN ESTIMATED, THEN NO FURTHER DISALLOWANCE CAN BE MADE IN RESPECT OF EXPENDITURE DEBITED IN THE PROFIT AND LOSS AC COUNT. IN THE INSTANT CASE THE AO APPLIED A RATE OF 5% ON THE GROSS - TURN OVER TO COMPUTE/ ESTIMATE THE INCOME. HAVING DONE SO, HE CANNOT GO BACK TO THE PROFIT AND LOSS ACCOUNT AND MAKE ANY FURTHER STATUTORY DISALLOWANCE. WE FURTHER FIND THAT LD DR COULD NO T REBUT THE SPECIFIC FINDING OF THE LD CIT(A) THAT THE PROVISION OF SECTION 194 WERE IN APPLICABLE AS EXPENSES WERE BELOW RS.20,000/ - . THE CASE LAW CITE D BY THE LD DR. , SMT. J. PAGE 4 OF 4 RAMA VS. C IT (KAR) 236CTR105 IS NOT APPLICABLE TO THE F A CTS & CIRCUMSTANCE OF T HE INSTANT CASE. 7. IN THE RESULT THE GROUNDS RAISED ARE REJECTED AND THE APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 3 1 . 10 .2014. - S D / - - S D / - ( S. V. MEHROTRA ) (A. T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 3 1 / 10 / 2014 A K KEOT COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI