The ITO, Ward-7(3), Surat V. M/s. Mayur Construction, Surat

ITA 1185/AHD/2011

• Counselvise Citation: 118520514 RSA 2011
• Duration Of Justice: 4 year(s) 1 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-05-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 24-04-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 21-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ROOP CHAND
• Section: 143(3); 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH BEFORE: S H RI G.D. AGRAWAL, VICE PRESIDENT, AND SHR I RAJPAL YADAV , JUDICIAL MEMBER THE INCOME - TAX OFFICER WARD 7(3), ROOM NO. 624, AAYAKAR BHAVAN, MAJURA GATE, SURAT (APPELLANT) VS M/S. MAYUR CONSTRUCTION, 7/4672, PRAKASH TALKIES COMPOUND, STATION ROAD, SURAT PAN: AAEFM1982F (RESPONDENT) REVENUE BY : S H RI ROOPCHAND , SR. D . R. ASSESSEE BY: S H RI MEHUL SHAH , A.R. DATE OF HEARING : 24 - 04 - 2 015 DATE OF PRONOUNCEMENT : 22 - 05 - 2 015 / ORDER P ER : RAJPAL YADAV , JUDICIAL MEMBER : - REVENUE IS IN APPEAL BEFORE US AGAINST THE ORDER OF CIT(A) - V DATED 10 - 12 - 2010 PASSED FOR ASSESSMENT YEAR 2007 - 08. I T A NO . 1185 / A HD/20 11 A SSESSMENT YEAR 200 7 - 08 I.T.A NO. 1185/AHD/2011 A.Y. 2007 - 08 PAGE NO ITO VS. M/S. MAYUR CONSTRUCTION 2 2. THE ASSESSEE HAS F ILED ITS RETURN OF INCOME ON 3 1 - 10 - 2007 DECLARING INCOME AT RS . 3 ,33 ,740/ - . THE AS SESSEE AT THE RELEVANT TIME WAS WORKING AS CIVIL CONTRACTOR . THE CASE OF TH E ASSESSEE WAS SELECT ED FOR SCRUTINY ASSESSMENT AND A NOTICE U/S. 143(2) OF THE ACT WAS ISSUED AND SERVED UPON HIM . THE LD. ASSESSING OFFICER HAS PASSED AN ASSES SMENT ORDER U/S. 143(3) ON 31 - 12 - 2009. HE COMPUTED THE INCOME AS UNDER: - 11. SUBJECT TO THE ABOVE DISCUSSION, THE TOTAL INCOME OF THE ASSESSEE IS AS UNDER: - TOTAL IN COME AS PER RETURN OF INCOME RS. 3,33,740/ - ADD: 1. DISCUSSED ABOVE IN PARA NO. 6 RS. 3 ,20,079/ - 2. DISCUSSED ABOVE IN PARA NO. 7 RS. 76,111/ - 3. DISCUSSED ABOVE IN PARA NO. 8 RS. 2,05,364/ - 4. DISCUSSED ABOVE IN PARA NO. 9 RS. 11,32,422/ - 5. DISCUSSE D ABOVE IN PARA NO. 10 RS. 39,857/ - TOTAL INCOME RS. 21,07,573/ - I.E. RS. 21,07 ,570/ - ASSESSED U/S. 143(3) OF THE INCOME TAX ACT, 1961. CHARGED, INTEREST U/S. 234A, 234B & 234C AFTER GIVING CREDIT FOR PREPAID TAXES IF ANY AFTER DUE VERIFICATION. ISSUE, D CHALLAN/ACCORDINGLY. 3. ON APPEAL, LD. CIT(A) DELETED THE ADDITIONS AT S ERIAL NO. 1,3, & 4. THE LD . FIRST APPELLATE AUTHORITY DELETED THE 50% OF THE ADDITIONS AT SERIAL NO. 2 & 5. THE REVENUE DID NOT CHALLENGE THAT DELETION AT SERIAL NO. 2 & 5 IN APPEAL BEFORE US. THE REVENUE HAS CHALLENGED THE DELETION OF RS. 3,20,079/ - , R S. 2, 05,36 4/ - AND RESTRICTION OF ADDITION AT RS. 50,000/ - AGAINST RS. 11,32,422/ - . ALL THESE ADDITION ARE INTERCONNECTED WITH EACH OTHER, THEREFORE, WE TAKE ALL THREE GROUNDS OF APPEAL TOGETHER. 4. WITH THE ASSISTANCE OF LD. REPRESENTATIVES, WE HAVE GO NE THROUGH RECORD CAREFULLY. TH E FIRST AMOUNT IS DELETION OF R S. 3,20,079/ - . IT EMERGES I.T.A NO. 1185/AHD/2011 A.Y. 2007 - 08 PAGE NO ITO VS. M/S. MAYUR CONSTRUCTION 3 F R O M THE RE CORD THAT ASSSESSEE HAD DEBITED A SUM OF RS. 6,20,679/ - , RS. 19,37,399/ - AND RS. 6,42,716/ - UNDER THE HEADS (A) TRANSPORTATION AND CARTING EXPENSES; (B) M ISCELLANEOUS PURCHASES AND EXPENSES; AND (C) SUPERVISION CHARGES. THE LD. ASSESSING OFFICER WAS NOT SATISFIED WITH THE CORRECT NESS OF THE DETAILS SU BMITTED BY THE ASSESSEE AND MADE AN ADHOC DI SALLOWANCE AT 10% OF THE TOTAL EXPENSES CLAIMED BY THE ASSESSEE UNDER THESE THREE HEADS. IN THIS WAY, HE MADE AN ADDITION OF RS. 3,20,079/ - . 5 . THE NEXT CHALLENGE BY THE REVENUE IS , DELETION OF ADDITION OF RS. 2, 0 5,354/ - . THE ASSESSEE HAD CLAIMED DEDUCTION AT RS . 10,26,8 21/ - AS A SALARY TO LABOUR . THE ASSESSEE HAD CONTENDED THAT IT HAS BEEN DOING CONSTRUCTION WORK AT REMOTE PLACES. THE LABOURERS ARE ILLITERATE AND THEY DO NOT HAVE ANY BANK ACCOUNT, THEREFORE, ON THE SITE CERTAIN PAYMENTS WERE MADE IN CASH. THE ASSESSE COULD NOT PRODUCE ATTENDANCE REGISTER ETC. L D. ASSESSING OFFICER HAS DISALLOWED 20% OF THE CLAIM MADE B Y THE AS S ESSEE. 6 . ON APPEAL, LD. CIT(A) DELETED THE DISALLOWANCE ON THE GROUN D THAT THE LABOUR EXPENSES OF R S. 10,26,584/ - STANDS INCLUDED IN THE CLAIM OF TOTAL LABOUR CHARGES OF RS. 56,62,110 / - WHICH IS DEBIT ED TO THE PROFIT AND LOSS A CCOU N T BY THE AS SESSEE. 7 . NEXT ITEM OF CHALLENGE IS THAT ASSESSING OFFICER HAS MAD E A DISALLOWANCE OF RS. 11 ,32,422/ - WHICH IS 20% OF THE T OTAL LABOUR CHARGES DEBITED IN THE PROFIT AND LOSS A CCOUNT BY THE ASSES SEE. LD. COMMISSIO N ER RESTRICTED THIS DISALLOWANCE TO 50, 000/ - ON THE GROUND THAT ALL THE DETAILS ARE DULY MAINTAINED BY THE ASSESSEE. I.T.A NO. 1185/AHD/2011 A.Y. 2007 - 08 PAGE NO ITO VS. M/S. MAYUR CONSTRUCTION 4 8 . WE HAVE DULY CONSIDERED THE FACTS AND CIRCUMSTANCES. ACCORDING TO THE ASSESSING OFFICER, THE ASSESSEE FAILED TO PRO DUCE ORIGINAL BILLS AND VOUCHERS WITH CONFIRMATION OF PARTIES WITH REGARD TO TRANSPORTATION , CARTING EXPENSES AS WELL AS MISCELLANEOUS PURCHASES AND SUPERVISION CHARGES. THE LD. FIRST APPELLATE AUTHORITY WAS OF THE VIEW THAT IF A COM PARISON IS BEING MADE IN TE RMS OF RATIO TO TOTAL TURN - OVER BETWEEN THE EXPENDITURE INCURRED IN THIS YEAR AND IN THE PRECEDING YEAR , THEN , THE EXPENSES HAVE BEEN REDUCED. THE TRANSPORTATION AND CARTING EXPENSES ARE 1.7% OF THE TURN - OVER IN THIS YEAR , WHEREAS IN THE PRECEDING YE AR IT WAS 12.68% OF TURN - OVER . SIMILARLY , SUPERVISION CHARGE HAS GONE DOWN TO 1.76% F R O M 2.28%. THERE IS A SLIGHT INCREASE IN THE MISCELLANEOUS PURCHASES BUT ACCORDING TO THE LD. COMMISSIONER , THE ASSESSEE HAS SHOW N DETAILS BEFORE THE ASSESSING OFFICER , NO PERSONAL ELEMENT IS INVOLVED IN THESE EXPENSES. THE ASSESSING OFFICER COULD NOT PI N POI NT A SPECIFIC INSTANCE WITHIN THE DETAILS SUBMITTED BY THE ASSESSEE. AFTER TAKING INTO CONSIDERATION THE FINDING OF LD. COMMISSIONER OF INCOME TAX (APPEALS) ON THIS ISSUE, WE DO NOT FIND ANY ERROR IN IT. AS FAR AS DELETION OF RS. 10,26,821/ - IS CONCERNED, THE LD. COMMISSIONER HAS OBSERVED THAT PAYMENT IS MADE TO LABOUR ER S AT REMOTE PLACES AND IT IS KNOWN FACT THAT MAJORITY OF THEM ARE ILLITERATE. ADVERSE INFERENCE CANNOT BE DRAWN ON THE GROUND THAT PAYMENT IS MADE IN CASH. THE PAYMENT HAS ALREADY BEEN INCLUDED IN THE TOTAL LABOUR CHA RGES DEBITED IN THE PROFIT AND LOSS ACCOUNT . 9. AS FAR AS DISALLOWANCE OF 11,32,422/ - OUT OF TOTAL LABOUR PAYMENT DEBITED BY THE ASS ESSEE AT RS. 56,62,110/ - IS CONCERNED, WE FIND THAT THIS DISALLOWANCE HAS BEEN MADE ON THE GROUND THAT ASSESSEE FAILED TO PRODUCE LABOUR CONTRACTORS. ACCORDING TO THE ASSESSING OFFICER, THESE PAYMENT S MIGHT HAVE BEEN MADE TO THE LABOURERS WITHOUT TDS. TH US, HE I.T.A NO. 1185/AHD/2011 A.Y. 2007 - 08 PAGE NO ITO VS. M/S. MAYUR CONSTRUCTION 5 DISALLOWED 20% OF THE EXPENDITURE. LD. COMMISSIONER HAS OBSERVED THAT PAYMENTS HAVE MADE TO THE LABOUR CONTRACTORS AND TDS HAS BEEN DEDUCTED. THE DETAILS HAVE DULY BEEN MAINTAINED. LD. COMMISSIONER HAS UPHELD ADHOC DISALLOWANCE OF RS. 50,000/ - IN ORDER TO COVER ANY DISCREPANCY BETWEEN THE DETAILS. AFTER TAKING INTO CONSIDERATION, THE REASONED ORDER OF LD. COMMISSIONER, WE DO NOT FIND ANY ERROR IN IT. IN THE RESULT, WE DO NOT FIND ANY MERIT IN THIS APPEAL. IT IS DISMISSED. ORDER P RONOUNCED IN THE OPEN COURT ON 22 - 05 - 2015 S D/ - SD/ - ( G.D. ARAWAL ) ( RAJPAL YADAV ) ACCOUNTANT MEM BER JUDICIAL MEMBER AHMEDABAD : DATED 22 /05 /2015 AK / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,