Shankar Prasad Jain, Balangir V. ACIT Circle- 2(1), Sambalpur, Sambalpur

ITA 119/CTK/2020

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 0433 (ITAT-CUTTACK)
• Duration Of Justice: 9 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-12-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 09-03-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S C MOHANTY
• Assessee Lawyers: NAKUL AGARWAL
• Keywords: Business expenditure; Set aside
• Section: 201; 119; 22

Judgement Text

P A G E 1 | 5 IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK SMC BENCH, CUTTACK BEFORE SHRI CHANDRA MOHAN GARG , JUDICIAL MEMBER ITA NO S . 119 & 120 /CTK/20 20 ASSESSMENT YEAR S : 201 0 - 2011 & 2011 - 12 SHANKAR PRASAD JAIN, C/O NAKUL AGARWAL, ADV & CONSULTANT, AT: GANDHINAGAR PARA, PO/DIST : BOLANGIR VS. ACIT, CIRCLE - 2(1), SAMBALPUR PAN/GIR NO. ABLPJ 6867 E (APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY : SHRI NAKUL AGARWAL , AR REVENUE BY : SHRI S.C.MOHANTY , DR DATE OF HEARING : 18 / 1 2 / 20 20 DATE OF PRONOUNCEMENT : 22 / 1 2 /20 20 O R D E R BOTH THE APPEAL S FILED BY THE ASSESSEE ARE DIRECTED AGAINST THE SEPARATE ORDER S OF THE CIT(A) , SAMBALPUR DATED 1 6.12 .2019 FOR THE ASSESSMENT YEAR S 2010 - 11 & 2011 - 12, RESPECTIVELY. 2. SINCE GROUND TAKEN BY THE ASSESSEE IN BOTH THE APPEALS IS COMMON, THEREFORE, THEY ARE DISPOSED TOGETHER FOR THE SAKE OF CONVENIENCE. GROUND FOR A.Y. 2010 - 2011 IS AS UNDER: WHETHER THE LD CIT(A) IS JUSTIFIED IN UPHOLDING ADDITIO N OF RS.10,46,385/ - (TO 10%) ONLY OUT OF RS.20,92,770/ - (FROM 20%) DISALLOWED BY THE AO FOR THE PURCHASE FROM UNREGISTERED DEALER ON ITA NOS.119 & 120/CTK/2020 ASSESSMENT YEARS : 2010 - 2011 & 2011 - 12 P A G E 2 | 5 ESTIMATED BASIS WITHOUT ENTERTAINING THE SUBMISSION OF THE ASSESSEE AND ADDED BACK TO THE INCOME OF THE ASSESSEE 3. FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN EXECUTION OF CONTRACT WORKS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS DEBITED RS.95.75 LAKHS IN PROFIT AND LOSS ACCOUNT TOWARDS PURCHASE OF THE FOLLOW ING MATERIALS: I) BOULDER PURCHASE : RS. 7,51,816/ - II) PURCHASE OF CHIPS : RS.26,92,374/ - III) PURCHASE OF METAL : RS.26,80,727/ - IV) PURCHASE OF SAND : RS.26,46,385/ - V) PURCHASE STONE DUST : RS. 7,94,312/ - TOTAL : RS.95,65,614/ - THE ASSESSING OFFICER REQUIRED THE ASSESSEE TO FURNISH LEDGER COPIES OF PARTIES WITH WHOM THE ASSESSEE HAS MADE TRANSACTION IN RESPECT OF ABOVE PURCHASES ALONGWITH SUPPORTING BILLS AND VOUCHERS. THE ASSESSEE EXPLAINED THAT THE PARTIES FROM WHOM MATERIALS ARE PROCURED, THEY ARE UNREGISTERED DEALER AND EXPRESSED INABILITY TO FURNISH THE SAME. FROM THE ABOVE EXPLANATION, THE AO OBSERVED THAT THE PURCHASES ARE UNVERIFIED AND, THEREFORE, DISALLOWED RS.20,92,770/ - BEING 20% OF THE TOTAL PURCHASES AND ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE . THE ADDITION OF 20% IS RESTRICTED TO 10% BY THE LD CIT(A) AS THE SAME CONSIDERED AS EXCESSIVE. 4. LD A.R. OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE IS MAINTAINING PROPER BOOKS OF ACCOUNT AS REQUIRED U/S.44AA OF THE INCOME TAX ACT, 1961. THE ASSESSEE MAINLY UNDERTAKES CONTRACT WORKS EXECUTED BY DIFFERENT ITA NOS.119 & 120/CTK/2020 ASSESSMENT YEARS : 2010 - 2011 & 2011 - 12 P A G E 3 | 5 GOVERNMENT AGENCIES LIKE RURAL WORKS DEVELOPM ENT, PUBLIC WORKS DEPARTMENT OWNED BY GOVERNMENT OF ODISHA, ESPECIALLY IN BOLANGIR AND SONEPUR DISTRICTS. LD AR SUBMITTED THAT THE MATERIALS ARE PROCURED FROM THE IMMEDIATE LOCAL SUPPLIERS OF WORK SITE, WHO ARE REGISTERED SUPPLIERS. AS THE SUPPLIERS ARE NOT HAVING BANK ACCOUNTS, MATERIALS MOSTLY PROCURED ON CASH PAYMENTS. HE SUBMITTED THAT MATERIALS BEING SAND, MORRUM, BOLDER, STONE DUST, IT WAS PRACTICABLE NOT POSSIBLE TO COLLECT THE MATERIALS ON PAYMENT OF BANKING CHANNEL AND ALSO PAYMENTS TO LABOURER S. HE SUBMITTED THAT THE ASSESSEE HAS CORRECTLY REFLECTED THE EXPENDITURE IN PROFIT AND LOSS ACCOUNT ON ACCOUNT OF VARIOUS MATERIALS PROCURED AND THE LOWER AUTHORITIES HAVE DISBELIEVED THE EXPENDITURE ON SURMISES AND CONJECTURES. HE SUBMITTED THAT AS THE WORKS HAVE BEEN COMPLETED TO THE STATE GOVERNMENT AND BILLS HAVE BEEN SETTLED, THEREFORE, THE DISALLOWANCE ESTIMATED SHOULD BE DELETED. LD A.R. OF THE ASSESSEE REFERRED TO THE DECISION OF THIS BENCH IN THE CASE OF D.K. ENGINEERING & CONSTRUCTION IN ITA NO .73/CTK/2015. HE ALSO REFERRED TO THE DECISION OF ITAT KOLKATA IN THE CASE OF ANIMESH SANDHU VS ACIT IN ITA NO.11/KOL/2013 DATED 12.11.2014 TO SUBMIT THAT IF THE AO IS NOT SATISFIED WITH THE SUBMISSION OF THE ASSESSEE, THEN HE HAS TO MAKE THE DISALLOWANCE AFTER MAKING SPECIFIC REFERENCE TO SUCH DOCUMENTS/VOUCHERS AND CANNOT MAKE ADHOC DISALLOWANCE WITHOUT POINTING OUT ANY DEFECT/ERROR IN THE SUBMISSION OF THE ASSESSEE. HE, THEREFORE, THE ADHOC DISALLOWANCE CONFIRMED BY THE LD CIT(A) BE DELETED. ITA NOS.119 & 120/CTK/2020 ASSESSMENT YEARS : 2010 - 2011 & 2011 - 12 P A G E 4 | 5 5. ON CARE FUL CONSIDERATION OF THE RIVAL SUBMISSIONS, I AM UNABLE TO SEE ANY RATIONALE BASIS FOR THE IMPUGNED DISALLOWANCE. IN THE ASSESSMENT ORDER, IT HAS BEEN SPECIFICALLY STATED THAT THE PARTIES WITH WHOM THE TRANSACTIONS WERE MADE BY THE ASSESSEE ARE UNREGISTER ED DEALERS FOR SUPPLY OF DIFFERENT CIVIL CONSTRUCTION MATERIALS AND SINCE A DOUBT ARISES IN THE MIND OF THE ASSESSING OFFICER DUE TO NON - PRODUCTION OF BILLS AND VOUCHERS, THE DISALLOWANCE IS BEING DISTORTED ON ADHOC BASIS . THE ASSESSING OFFICER ALSO MENT IONED THAT THE GENUINENESS OF THE EXPENDITURE IS UNVERIFIED WITHOUT GIVING INDICATION . IN THE APPELLATE PROCEEDINGS, THE CIT (A) HAS RESTRICTED THE ADDITION ON THE GROUND THAT THE DISALLOWANCE IS EXCESSIVE. ALL THESE CLEARLY SHOW THAT THE IMPUGNED DISALLOWANCE HAS BEEN MADE AS WELL AS SUSTAINED WITHOUT ANY COGENT REASON AND WITHOUT APPLICATION OF MIND TO THE RELEVANT FACTS OF THE CASE THAT THE SUPPLIERS FROM WHOM THE MATERIALS ARE PROCURED ARE IN THE REMOTE PLACES AND THEY DID NOT HAVE ANY BILLS AND VOUCHERS IN SUPPORT OF THE SALES OF MATERIALS . IN THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE, IN MY CONSIDERED VIEW, GENUINE BUSINESS EXPENDITURE CANNOT BE DISALLOWED BY THE ASSESSING OFFICER ON ADHOC BASIS WITHOUT BRINGING ANY MATERIAL ON RE CORD TO SHOW THAT THE EXPENDITURE INCURRED BY THE ASSESSEE IS NOT GENUINE. IT IS NOT THE CASE OF THE REVENUE THAT THE ASSESSEE HAS NOT MAINTAINED PROPER BILLS AND VOUCHERS FOR THE EXPENSES CLAIMED BY THE ASSESSEE. HENCE, IN MY CONSIDERED VIEW, THE DISALL OWANCE MADE BY THE AO PARTLY SUSTAINED BY THE LD CIT(A) IS NOT ITA NOS.119 & 120/CTK/2020 ASSESSMENT YEARS : 2010 - 2011 & 2011 - 12 P A G E 5 | 5 JUSTIFIED. I, THEREFORE, SET ASIDE THE ORDERS OF THE LOWER AUTHORITIES ON THIS ISSUE AND DELETE THE DISALLOWANCE OF RS.20,92,770/ - AND ALLOW THIS GROUND OF APPEAL OF THE ASSESSEE. 6. IN ASSESS MENT YEAR 201 0 - 1 1 , THE ASSESSEE HAS SIMILAR GROUND. SINCE, UNDER SIMILAR FACTS, THE ADDITION MADE BY THE AO AND PARTLY SUSTAINED BY THE LD CIT(A) IS DELETED, THE ADDITION FOR THE ASSESSMENT YEAR 2011 - 12, I DIRECT THE AO TO DELETE THE ADDITION OF RS.7,38,4 10/ - AND ALLOW THE GROUND OF APPEAL OF THE ASSESSEE. 7. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED ON 22 /1 2 /20 20 . SD/ - ( CHANDRA MOHAN GARG) JUDICIAL MEMBER CUTTACK; DATED 22 / 1 2 /20 20 B.K.PARIDA, SPS (OS) COPY OF THE ORDER FORWARDED TO : BY ORDER SR . PVT. S ECRETARY ITAT, CUTTACK 1. THE APPELLANT : SHANKAR PRASAD JAIN, C/O NAKUL AGARWAL, ADV & CONSULTANT, AT: GANDHINAGAR PARA, PO/DIST: BOLANGIR 2. THE RESPONDENT. ACIT, CIRCLE - 2(1), SAMBALPUR 3. THE CIT(A) SAMBALPUR 4. PR.CIT , SAMBALPUR 5. DR, ITAT, CUTTACK 6. GUARD FILE. //TRUE COPY//