Sh. Kamal Kishore Mahajan, Chamba V. ITO, Dalhousie at , Banikhet

ITA 1214/CHANDI/2017

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 4944 (ITAT-CHANDIGARH)
• Duration Of Justice: 9 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-05-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 05-03-2018
• Assessment Year: 2011-2012
• Appeal Filed On: 08-08-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CHANDRA KANTA
• Assessee Lawyers: P N ARORA
• Keywords: Capital expenditure
• Section: 40A(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCHA, CHANDIGARH BEFORE SMT. DIVA SINGH, JUDICIAL MEMBER AND DR. B.R.R. KUMAR, ACCOUNTANT MEMBER ITA NO.1214/CHD/2017 ASSESSMENT YEAR: 2011-12 SHRI KAMAL KISHORE MAHAJAN VS. THE ITO NEAR BUS STAND TISSA DALHOUSIE AT BANIKHET TEHSIL BHURAHA, CHAMBA CHAMBA, H.P. HIMACHAL PRADESH PAN NO. AFXPM9245B (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. P.N. ARORA REVENUE BY : SMT. CHANDRAKANTA DATE OF HEARING : 05/03/2018 DATE OF PRONOUNCEMENT : 22/05/2018 ORDER PER DR. B.R.R. KUMAR A.M. THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE A GAINST THE ORDER OF LD. CIT(A), PALAMPUR (H.P.) DT. 30/05/2017. 2. IN THE PRESENT APPEAL ASSESSEE HAS RAISED FOLLOW ING EFFECTIVE GROUNDS: 5. THAT THE WORTHY CIT(A) HAS ERRED IN CONFIRMING T HE FOLLOWING DISALLOWANCES MADE BY THE A.O.:- (I) WAGES AND LABOUR EXPENSES RS. 440133/- (II) MISC. EXPENDITURE & REPAIR & MAINTENANCE RS. 5567/- (III) TELEPHONE TRAVELLING & VEHICLE EXPENDITURE. RS. 41,784/- ALL THESE EXPENSES ARE RELATED TO BUSINESS AND SHOU LD HAVE BEEN ALLOWED IN TOTO. ALTERNATIVELY, THE DISALLOWANCE MADE BY THE ASSESSI NG OFFICER AND CONFIRMED BY THE WORTHY CIT(A) IS VERY HIGH & EXCESSIVE. 6. THAT AGAIN THE LD. CIT(A) HAS GROSSLY ERRED IN C ONFIRMING THE ADDITION OF RS. 278741/- UNDER THE HEAD SHUTTERING MATERIAL EXPENSE S MADE BY THE A.O. ALL THE EXPENSES ARE RELATED TO BUSINESS AND SHOULD HAVE BE EN ALLOWED IN TOTO. ALTERNATIVELY, THE DISALLOWANCE MADE IS VERY HIGH & EXCESSIVE. 7. THAT AGAIN THE WORTHY CIT(A) HAS GROSSLY ERRED I N CONFIRMING THE ADDITION OF RS. 217441/- ON ACCOUNT OF SO-CALLED LOW HOUSEHO LD EXPENSES. THE EXPENSES SHOWN ARE QUITE ADEQUATE AND REASONABLE AND SHOULD HAVE BEEN ACCEPTED BY THE AUTHORITIES BELOW. ALTERNATIVELY THE ADDITION M ADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE LD. CIT(A) IS VERY HIGH & EXCE SSIVE. 2 8. THAT AGAIN THE CIT(A) HAS ERRED IN CONFIRMING TH E ADDITION OF RS. 30,28,065/- ON ACCOUNT OF SO CALLED CASH PAYMENTS E XCEEDING RS. 20,000/- IN A DAY. THE AUTHORITIES BELOW DID NOT APPRECIATE THAT ALL THE PAYMENTS MADE TO SINGLE PERSON IN A DAY WERE BELOW RS. 20,000/- AND THERE WAS NO VIOLATION OF PROVISION OF SECTION 40A(3) AND THIS POINT WAS MADE CLAR VIDE OUR REPLY DT. 10/03/2014 BEFORE THE ASSESSING OFFICER IN WHICH IT WAS MADE CLEAR THAT NO PAYMENT EXCEEDING RS. 20,000/- WAS MADE TO SINGLE P ERSON IN A DAY. ALTERNATIVELY THE ADDITION MADE IS VERY HIGH & EXCE SSIVE. 3. THE ASSESSEE HAS FILED AMENDED GROUNDS OF APPEAL WHICH ARE CONSIDERED FOR DISPOSAL HEREIN. 4. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A CIVIL CONTRACTOR FILED RETURN OF INCOME DECLARING TAXABLE INCOME OF RS. 9, 69,110/- . THE HEARINGS / ADJOURNMENTS WERE HELD ON 31/10/2013 , 06/11/2013 , 12/11/2013, 28/11/2013, 06/12/2013, 16/12/2013, 20/12/2013, 26/12/2013, 15/ 01/2014, 28/01/2014 AND 31/01/2014 BEFORE THE ASSESSING OFFICER. HEARINGS W ERE FIXED ON 05/07/2016, 26/07/2016, 06/09/2016, 15/12/2016, 10/03/2017, 19/ 04/2017 AND 26/05/2017 BEFORE THE LD. CIT(A). 5. DISALLOWANCE WAGES, REPAIR AND MAINTENANCE, TELEPH ONE AND TRAVELLING EXPENSES. 5.1 THE ASSESSING OFFICER DISALLOWED 10% OF EXPENDI TURE OWING TO NON PRODUCTION OF COMPLETE BOOKS OF ACCOUNTS FROM WHICH VOUCHERS / MUSTER ROLLS. THE LD. CIT(A) HAS CONFIRMED THE ORDER OF THE ASSES SING OFFICER AS BOOKS OF ACCOUNTS AND BILLS WERE NOT PRODUCED. 5.2 BEFORE US, THE LD. AR CONTESTED THAT NO DISALLO WANCE CAN BE MADE WITHOUT REJECTING THE BOOKS OF ACCOUNTS UNDER SECTI ON 145(3). HE FURTHER ARGUED THAT WAGES AND LABOUR EXPENSES, REPAIR AND MAINTENA NCE, TELEPHONE AND TRAVELLING EXPENSES ARE RELATED TO BUSINESS AND THE EXPENSES WERE FULLY VOUCHED. SINCE THE DISALLOWANCE WAS MADE AS ASSESS EE COULD NOT PRODUCE THE BILLS / VOUCHERS BEFORE THE ASSESSING OFFICER, THE ASSESSEE IS HEREBY DIRECTED TO PRODUCE THE BILLS / VOUCHERS SO AS TO ALLOW THE EXP ENDITURE. IT IS HEREBY DIRECTED THAT THE EXPENSES MAY BE ALLOWED AS PER THE LAW AFT ER VERIFICATION OF THE VOUCHERS SUBMITTED BY THE ASSESSEE. 5.3 THE APPEAL OF THE ASSESSEE ON THIS GROUND IS AL LOWED FOR STATISTICAL PURPOSES. 6. DISALLOWANCE SHUTTERING MATERIAL EXPENSES 3 6.1 THE ASSESSING OFFICER DISALLOWED THE SHUTTERING MATERIAL EXPENSES TREATING THE SAME AS CAPITAL EXPENDITURE. SHUTTERING MATERIA L IS USED FOR ERECTION AND EXECUTION OF CONCRETE WORKS AND THE MATERIAL CANNOT BE REUSED. IT IS THE EXPENSES INCURRED WHILE EXECUTING THE CONTRACT WORK S ON A REGULAR BASIS. HENCE IT CANNOT BE TREATED AS A CAPITAL EXPENDITURE. THE ADDITION MADE IS HEREBY DELETED. 6.2 THE APPEAL OF THE ASSESSEE ON THIS GROUND IS AL LOWED. 7. DISALLOWANCE- HOUSE HOLD EXPENSES 7.1 THE ASSESSING OFFICER MADE ADDITION BY OBSERVIN G THAT THE TOTAL EXPENSES INCURRED BY THE ASSESSEE WERE RS. 3,20,000/- OUT OF WHICH PAYMENT OF RS. 1,97,530/- TO SREI FINANCE RS. 41,000/- TO M&M AND RS. 58,866/- PAID TO LIC. THE ASSESSING OFFICER HELD THAT THE ASSESSEE WAS LEFT W ITH ONLY RS. 22,500/- WITH WHICH HE CANNOT MEET THE HOUSEHOLD EXPENSES. THE LD. AR A RGUED THAT THE WIFE OF THE ASSESSEE IS ASSESSED TO INCOME TAX AND WITHDREW AN AMOUNT OF RS. 1,80,000/- FOR HOUSEHOLD EXPENSES. THE ASSESSEE IS ALSO RESIDING I N SELF OCCUPIED HOUSE HENCE THERE WERE NO RENTAL EXPENDITURE. KEEPING IN VIEW T HE FACTS AND CIRCUMSTANCES PECULIAR TO THIS CASE NO ADDITION ON THIS GROUND IS CALLED FOR. 7.2 THE APPEAL OF THE ASSESSEE ON THIS GROUND IS AL LOWED. 8. CASH PAYMENTS UNDER SECTION 40A(3): 8.1 THE ASSESSING OFFICER HAS DISALLOWED THE AMOUNT S UNDER SECTION 40A(3) ON ACCOUNT OF MATERIAL PURCHASES AS THE ASSESSEE DID N OT PRODUCE RELEVANT ACCOUNTS BEFORE HIM. 8.2 BEFORE THE LD. CIT(A) THE ASSESSEE CONTESTED TH AT NO AMOUNT EXCEEDING RS. 20,000/- WAS PAID ON A SINGLE DAY TO A SINGLE P ERSON. THE LD. CIT(A) HELD THAT THE ASSESSEE HAS FILED ONLY A COPY OF THE LEDGER AC COUNT FOR THE MATERIAL PURCHASED WHICH DO NOT DEPICT THE DETAILS OF THE PE RSONS TO WHOM THE PAYMENTS HAVE BEEN MADE AND ALSO HELD THAT NO BILLS AND VOUCHERS FOR THE MATERIAL EXPENSES WERE PRODUCED AND ACCORDINGLY C ONFIRMED THE ADDITION. 8.3 HAVING GONE THROUGH THE FACTS OF THE CASE AND H EARING THE ARGUMENTS, WE FEEL THAT INTEREST OF JUSTICE WOULD BE MET IF AN OTHER OPPORTUNITY BE GIVEN TO THE ASSESSEE. HENCE WE DIRECT THE ASSESSEE TO PRODU CE THE BILLS AND VOUCHERS 4 ALONG WITH COPY OF THE LEDGER ACCOUNT FOR VERIFICAT ION. THE ASSESSING OFFICER IS DIRECTED TO EXAMINE THE DETAILS SUBMITTED AND ALLOW THE EXPENDITURE AS PER LAW. 8.4 THE APPEAL OF THE ASSESSEE ON THIS GROUND IS AL LOWED FOR STATISTICAL PURPOSES. 9. AS A RESULT, APPEAL OF THE ASSESSEE IS ALLOWED F OR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (DIVA SINGH) (DR. B.R.R.KU MAR) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 22/05/2018 AG COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT, TH E CIT(A), THE DR