The ITO, Ward-2, Surendranagar, Surendranagar V. Shri Kantilal Vithaldas Limbadiya, Prop. of Sunny Construction, Surendranagar

ITA 12/RJT/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 9039 (ITAT-RAJKOT)
• Duration Of Justice: 2 year(s) 4 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-05-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 15-05-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 06-01-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AVINASH KUMAR
• Assessee Lawyers: DM RINDANI
• Keywords: Audit objection; Additional evidence; Tax effect
• Section: 40A(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT [CONDUCTED THROUGH E-COURT AT AHMEDABAD] BEFORE SHRI MAHAVIR PRASAD, JUDICIAL MEMBER AND SHRI, MANISH BORAD, ACCOUNTANT MEMBER ./ ITA NO.12/RJT/2015 & CROSS OBJECTION NO. 33/RJT/2015 (IN ITA NO.12/RJT/2015) ( / ASSESSMENT YEAR: 2010-11) INCOME TAX OFFICE WARD-2, SURENDRANAGAR V/S SHRI KANTILAL VITHALDAS LIMBADIYA MUNI PROP. OF SUNNY CONSTRUCTION, 63, OLD HOUSING BOARD, NEAR MAHAKALI MANDIR, SURENDRANAGAR (APPELLANT) (RESPONDENT) & CROSS OBJECTOR PAN: AANPL 0932 D REVENUE BY : SHRI AVINASH KUMAR, SR. D.R. ASSESSEE BY : SHRI D.M. RINDANI, A.R. ( )/ ORDER DATE OF HEARING : 15/05/2017 DATE OF PRONOUNCEMENT : 26/05/2017 PER MAHAVIR PRASAD, JUDICIAL MEMBER: 1. THIS APPEAL BY THE REVENUE IS PREFERRED AGAINST THE ORDER OF LD. CIT(A)- XVI, AHMEDABAD DATED 10/10/2014 PERTAINING TO A.Y. 2010-11. ITA N O. 12/RJT/2015 & CO NO.33/RJT/2015 (IN ITA NO. 12/R JT/15) . A.Y. 2010-11 2 2. THE SUBSTANTIVE GRIEVANCE OF THE REVENUE READS AS U NDER:- (I) THE LEARNED CIT(A) HAS ERRED IN LAW AND ON THE FACT S IN DELETING THE ADDITION OF RS.12,24,000/- MADE U/S. 40A(3) OF THE ACT IGNORING THE FACT THAT THE ASSESSEE DID NOT FURNISH RELEVANT DET AILS AND CASH BOOK BEFORE THE ASSESSING OFFICER. (II) THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.12,38,178/- MADE ON ACCOUNT OF DISAL LOWANCE OUT OF LABOUR EXPENSES, AS THE ASSESSEE DID NOT FURNISH NE CESSARY DETAILS AND CASH BOOK BEFORE THE ASSESSING OFFICER. 3. AT THE OUTSET, THE LD. COUNSEL FOR THE ASSESSEE SUB MITTED THAT THE APPEAL OF THE REVENUE NEEDS TO BE DISMISSED ON ACCOUNT OF LOW TAX EFFECT IN VIEW OF THE CBDT CIRCULAR NO.21 OF 2015 DATED 10.12.2015. THE LEARNED. DEPARTMENTAL REPRESENTATIVE FAIRLY ADMITTED THAT TH E TAX EFFECT IS LESS THAN THE LIMIT PRESCRIBED BY THE AFORESAID CBDT CIRCULAR . 4. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATE RIAL AVAILABLE ON RECORD. WE FIND THAT PRIMA-FACIE THIS APPEAL OF THE REVENUE IS NOT MAINTAINABLE IN VIEW OF CBDT CIRCULAR NO. 21/2015 I N F.NO.279/MISC. 142/2007-ITJ (PT) DATED 10TH DECEMBER 2015, VIDE WH ICH IT HAS BEEN PROVIDED THAT IF THE TAX EFFECT BY VIRTUE OF THE CO MMISSIONER OF INCOME- TAX (APPEALS)S ORDER IS BELOW RS.10 LACS, THEN THA T ORDER WOULD NOT BE CHALLENGED BEFORE THE TRIBUNAL IN FURTHER APPEAL. THE BOARD HAS PROVIDED EXEMPTIONS AT CLAUSE (8) OF THE INSTRUCTIONS WHEREI N IT HAS BEEN PROVIDED THAT THESE INSTRUCTIONS WILL NOT BE APPLICABLE, IF VIRES OF ANY PROVISIONS HAS BEEN QUASHED BY IMPUGNED ORDER OR ADDITION WAS MADE ON SOME AUDIT OBJECTIONS OR THE ADDITION RELATES TO UNDISCLOSED F OREIGN ASSETS/BANK ACCOUNTS, ETC. WE FIND THAT THE PRESENT CASE DOES NOT FALL WITHIN THE ITA N O. 12/RJT/2015 & CO NO.33/RJT/2015 (IN ITA NO. 12/R JT/15) . A.Y. 2010-11 3 EXEMPTION CLAUSE AND THE TAX IS LESS THAN RS.10 LAC S. THEREFORE, THE PRESENT APPEAL IS NOT MAINTAINABLE AND HENCE DISMIS SED. 5. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS D ISMISSED IN LIMINE. ASSESSEES CROSS OBJECTION IN CO NO.33/RJT/2015 (IN ITA NO.12/RJT/2015) FOR THE A.Y.2010-11 6. ASSESSEE HAS BEEN TAKEN FOLLOWING OBJECTION: (I). THE LEARNED. CIT (APPEALS) ERRED IN LAW AND ON FACTS IN NOT ADMITTING THE ADDITIONAL EVIDENCE AND NOT ACCEPTING APPLICATION U NDER RULE 46A IN RESPECT OF EXPENSES OF RS. 25,64,304/- ON ACCOUNT O F TRANSPORT CHARGES. ON THE FACTS OF THE CASE AND IN VIEW OF THE REASONS FU RNISHED BY THE RESPONDENT, THE LEARNED CIT(APPEALS) OUGHT TO HAVE GOT THE CORRECT FACTS VERIFIED WHEN THE EVIDENCES REGARDING THE SAME WERE FURNISHED. IT BE SO HELD NOW. (II). THE LEARNED CIT(APPEALS) ALSO ERRED IN LAW AN D ON FACTS IN CONFIRMING DISALLOWANCE OF RS. 25,64,304/- ON MERITS IN RESPEC T OF GENUINE TRANSPORT CHARGES SUPPORTED BY THE RELEVANT VOUCHERS AND LEDG ER ACCOUNTS WITHOUT ANY VERIFICATION THEREOF. THE EXPENSES ON TRANSPORT CHARGES INCURRED FOR THE PURPOSES OF THE BUSINESS AND SUPPORTED BY THE E VIDENCES OUGHT TO HAVE BEEN ALLOWED BY VERIFYING THE SAME WHEN THE MISTAKE IN GROUPING WAS EXPLAINED BY THE RESPONDENT. IT BE SO HELD NOW AND EXPENSES BE ALLOWED AS CLAIMED. 7. THE APPELLANT HAD FILED RETURN OF INCOME ON 25/09/2 010 DECLARING TOTAL INCOME AT RS. 4,35,990/-. 8. THE APPELLANT DERIVES INCOME FROM THE BUSINESS OF C ONSTRUCTION CONTRACT. THE GP FOR THE YEAR UNDER APPEAL WORKED OUT AT 3.51 % ON TURNOVER OF RS. 3,15,79,789/-. ITA N O. 12/RJT/2015 & CO NO.33/RJT/2015 (IN ITA NO. 12/R JT/15) . A.Y. 2010-11 4 9. THE BOOKS OF ACCOUNT OF THE APPELLANT ARE MAINTAINE D CONSISTENTLY AND ARE TAX AUDITED AND REPORT UNDER SECTION 44AB IN FORM N O: 3CB/3CD OBTAINED. IT IS CERTIFIED BY AUDITORS AS REQUIRED B Y LAW THAT THE BOOKS OF ACCOUNT HAVE BEEN VERIFIED WHICH INCLUDED CASH BOOK , LEDGER, BANK BOOK AND SALES & PURCHASE REGISTER. 10. DURING THE COURSE OF HEARING, VARIOUS DETAILS WERE CALLED FOR REGARDING PURCHASES AND AS REGARDS PURCHASES FROM SHREE GANES H TRADERS ,THE LEARNED A.O. ALSO CALLED FOR DETAILS DIRECTLY FROM THE SUPPLIER. THE SAID SUPPLIER FURNISHED DETAILED ACCOUNT FROM THEIR BOOK S. A COPY OF SUCH LEDGER ACCOUNT ALONG WITH CONFIRMATION FROM THE BOO KS OF SHREE GANESH TRADERS WAS ALSO SUBMITTED. THIS THIRD PARTY EVIDEN CE DIRECTLY OBTAINED THE GOODS (CEMENT) SUPPLIED UNDER VARIOUS BILLS WER E DEBITED BY SUPPLIER TO THE ACCOUNT OF THE APPELLANT AS RETAIL INVOICE A ND THUS THE SAME WERE NOT CASH SALES. IT ALSO PROVES THAT ON VARIOUS DATE S, THE PAYMENTS WERE MADE BY APPELLANT WHICH WERE ALL BELOW RS.20,000/- AND WHEN THE SAME EXCEEDED RS.20,000/-, THE SAME WERE MADE BY CHEQUES ONLY. 11. THE CAPRICIOUS APPROACH OF LEARNED AO IS VISIBLE WH EN ONE LOOKS TO ANOTHER DISALLOWANCE OF RS.43,80,636/- OUT OF TRANS PORT CHARGES (BALANCE AMOUNT FROM RS.69,44,940/- AFTER DISALLOWING RS.25, 64,304/- DISALLOWED EARLIER) BY WRONGLY HOLDING THE SAME TO BE DISALLOW ABLE UNDER SECTION 40(A)(IA) IGNORING THE SUBMISSIONS REGARDING PAN BE ING RECEIVED, IGNORING LEGAL POSITION AND ALSO THE TAX AUDIT REPO RT. THUS THE ENTIRE TRANSPORT CHARGES ARE DISALLOWED. WITHOUT ANY TENAB LE GROUND OR REASON. ITA N O. 12/RJT/2015 & CO NO.33/RJT/2015 (IN ITA NO. 12/R JT/15) . A.Y. 2010-11 5 12. AT THE OUTSET, LEARNED AR REQUESTED THAT THIS CASE BE REMITTED BACK TO THE FILE OF THE CIT(A), WHO CAN VERIFY THE VOUCHERS, BI LLS ETC. IN THE INTEREST OF THE JUSTICE WE ACCEPT THE REQUEST OF THE LEARNED AR AND REMIT THIS MATTER BACK TO THE FILE OF THE CIT(A), WHO WILL VERIFY ALL BOOKS, VOUCHERS PERTAINING TO TRANSPORT AND OTHER EXPENDITURE ON WH ICH ADDITION WERE SUSTAINED. SO CROSS OBJECTION FILED BY THE ASSESSEE ARE ALLOWED. 13. IN THE RESULT, APPEAL FILED BY THE DEPARTMENT IN I TA NO.12/RJT/2015 IS DISMISSED AND CROSS OBJECTION NO.33/RJT/2015 (IN IT A NO.12/RJT/2015) FILED BY THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 26/05/2017 SD/- SD/- (MANISH BORAD) (MAHAVIR PRASAD) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD: 26/05/2017 PRITI COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) XVI, AHMEDABAD. 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,RAJKOT TRUE COPY