M/s Prahlad Kumar Singh, V. I.T.O.,

ITA 123/PAT/2013

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 9643 (ITAT-PATNA)
• Duration Of Justice: 3 year(s) 10 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-04-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 23-05-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SURESH CHANDRA SHR
• Assessee Lawyers: T VARKEY JUDIC IA L M EMBER
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PA T N A BENCH , PATNA BEFORE SHRI ABY. T. VARKEY , JUDICIAL MEMBER AND SHRI WASEEM AHMED , ACCOUNTANT MEMBER ITA NO. 123 & 139 / PAT / 2013 ASSESSMENT YEAR: 2008 - 09 M/S PRAHALAD KUMAR SINGH, RAMPUR MADHO, SASA MUSA, GOPALGANJ [ PAN NO.AAIFP 1651 Q ] ACIT, CIRCLE - 2, MUAFFARPUR / V/S . / V/S . ITO WARD, SIWAN M/S PRAHLAD KUMAR SINGH, RAMPUR MADHO, SASA MUSA, GOPALGANJ /APPELLANT .. /RESPONDENT / BY ASSESSEE SHRI SURESH CHANDRA, ADVOCATE / BY RE V EN UE SHRI K.K. DAS, DR / DATE OF HEARING 10 - 04 - 2017 / DATE OF PRONOUNCEMENT 10 - 04 - 2017 /O R D E R PER BENCH : - TH E S E ARE CROSS - APPEAL S BY THE ASSESSEE AS WELL AS REVENUE DIRECTED AGAINST THE COMMON ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) - , ALLAHABAD DATED 28 .0 2 .2013. ASSESSMENT WAS FRAMED BY ITO WARD - SIWAN U/S 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) VIDE HIS ORDER DATED 3 0 .12.20 1 0 FOR AS SESSMENT YEAR 200 8 - 0 9 . SHRI SURESH CHANDRA, LD. ADVOCATE APPEARED ON BEHALF OF ASSESSEE AND SHRI K.K.DAS, LD. DEPARTMENTAL REPRESENTATIVE REPRESENTED ON BEHALF OF REVENUE. 2. AT THE OUTSET, THE LD. COUNSEL FOR THE ASSESSEE REQUESTED FOR THE WITHDRAWAL OF HIS APPEAL. THE LD. DR HAS ALSO NOT OBJECTED TO THE WITHDRAWAL OF THIS APPEAL BY THE ITA NO. 123 & 139/PAT/2013 A.Y. 2008 - 09 M/S PRAHLAD KR. SINGH VS. ITO WD, SIWAN PAGE 2 ASSESSEE. AS THE LD. DR HAS NO OBJECTION, WE PERMIT T HE WITHDRAWAL. ACCORDINGLY, THIS APPEAL OF THE ASSESSEE IS DISMISSED AS WITHDRAWN. COMING REVENUES APPEAL IN ITA NO.139/PAT/2013 FOR A.Y. 08 - 09 . 3. SOLITARY ISSUE RAISED BY REVENUE IN THIS APPEAL IS THAT LD. CIT( A) ERRED IN RESTRICTING THE DISALLOWANCE MADE BY ASSESSING OFFICER ON ACCOUNT OF LABOUR EXPENSE S FROM 47,42,200/ - TO RS.20 ,00,000.00 4. BRIEFLY STATED FACTS ARE THAT ASSESSEE IS A PARTNERSHIP FIRM AND ENGAGED IN THE BUSINESS OF CIVIL CON STRUCTIONS . THE A SSESSEE, IN THE YEAR UNDER CONSIDERATION HAS CLAIMED LABOUR EXPENSE FOR 2.52 CRORERS OUT OF THE SAID EXPENSE A SUM OF 47.42 LAKH WAS SHOWN OUTSTANDING ON THE DATE OF BALANCE - SHEET. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, AO CALLED UPON THE ASSESSEE TO SUBSTANTIATE THE CLAIM OF THE TOTAL LABOUR EXPENSE ON THE BASIS OF DOCUMENTARY EVIDENCE BUT ASSESSEE FAILED TO SUBMIT THE NECESSARY EVIDENCE IN SUPPORT OF LABOUR EXPENSE. IN THE ABSENCE OF SUCH DOCUMENTARY EVIDENCE, AO MADE THE DISALLOWANCE OF 47.42 L AKH AND ADDED TO THE TOTAL INCOME OF ASSESSEE. 5. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE LD. CIT(A). THE ASSESSEE BEFORE LD. CIT(A) SUBMITTED THAT THE PERSON WHO WAS MAINTAINING THE LABOUR REGISTER WAS NOT WELL AT THE TIME OF ASSESSMENT PROCEEDINGS , THEREFORE SAME WAS NOT SUBMITTED TO ASSESSING OFFICER FOR VERIFICATION. THE ASSESSEE ALSO CLAIMED TO HAVE MAINTAINED THE LABOUR REGISTER . THE LD. CIT(A) CALLED FOR REMAND REPORT FROM AO FOR THE DOCUMENTS SUBMITTED BY ASSESSEE WITH REGARD TO LABOUR EXPENS E. THE AO IN HIS REMAND REPORT SUBMITTED THAT DETAILS OF LABOUR EXPENSE FOR 35.04 LAKH WAS SUBMITTED IN THE FORM OF COMPUTER GENERATED SHEET BUT ASSESSEE FAILED TO FURNISH MUSTER ROLL IN RESPECT OF ITS ALL THE SITE S WHERE THE CIVIL CONTRACT ACTIVITIES WER E GOING ON. HOWEVER, LD. CIT(A) AFTER CONSIDERING THE SUBMISSION OF ASSESSEE AND THE REMAND REPORT OF AO GRANTED RELIEF IN PART TO ASSESSEE BY OBSERVING AS UNDER: - (IV) GROUND OF APPEAL NO. 4 IS AGAINST DISALLOWANCE OF RS.47,42,200/ - OUT OF LABOUR EXPENSE S. TOTAL EXPENDITURE DEBITED UNDER LABOUR IS RS.2,52,13,689/ - WHICH WAS 52% OF GROSS RECEIPTS. DISALLOWANCE WAS MADE BY AO BECAUSE ASSESSEE DID NOT PRODUCE EVIDENCE OF THE EXPENSE CLAIMED. DURING REMAND PROCEEDINGS, THE APPELLANT COULD PRODUCE SITE PAYMEN T SHEETS FOR TOTAL AMOUNT OF RS.35,14,840/ - ONLY, WHICH WERE PREPARED ON COMPUTER. IN ITA NO. 123 & 139/PAT/2013 A.Y. 2008 - 09 M/S PRAHLAD KR. SINGH VS. ITO WD, SIWAN PAGE 3 HIS COUNTER REPLY DATED 19.2.2013, THE /R STATED THAT HE PRODUCED LABOUR REGISTER IN ONE VOLUME BEFORE AO FOR HIS TEST CHECK AND THAT HE IS PRODUCING ALL THE VOLUMES OF L ABOUR REGISTERS. THE SAME WERE GOT TOTALED AND THEY AMOUNTED TO RS.66,65,970/ - ONLY. THUS THE APPELLANT HAD BEEN ABLE TO PRODUCE PART EVIDENCE OF LABOUR PAYMENT ONLY, AS NOT ALL THE MUSTER ROLLS / EVIDENCES OF LABOUR PAYMENT WERE PRODUCED. THEREFORE, SOME DISALLOWANCE OF PART OF THE CLAIM OF LABOUR EXPENSES IS CALLED FOR. HOWEVER TAKING INTO ACCOUNT THE NATURE OF BUSINESS OF THE APPELLANT, THE DISALLOWANCE IS REDUCED TO RS.20,00,000/ - BEING AGGRIEVED BY THIS ORDER OF LD. CIT(A) REVENUE IS IN APPEAL BEFOR E US ON THE FOLLOWING GROUND: - 1. WHETHER THE LD OSD CIT(A), ALLAHABAD, WAS CORRECT IN ALLOWING TOTAL LABOUR EXPENSES TO THE TUNE OF R S.2.32 CR, WHICH IS ROUGHLY 48% OF THE TOTAL CLAIMS OF EXPENSES; WHEREAS IN THE CASE OF THE ASSESSEE FOR THE A/Y 2007 08, THE LD. CIT(A) - 1, PATNA HAD MAINTAINED THAT AS PER THE N O RMS OF THE TRADE, THE EXPENSES UNDER THE HEAD LAB O UR MAY VARY FROM 25% TO 30% OF THE T O TAL TURNOVER? 2. ANY OTHER GROUND TO BE BROUGHT UP AT THE TIME OF HEARING. 6. BEFORE US LD. DR FOR THE REVENUE VEHEMENTLY RELIED ON THE ORDER OF ASSESSING OFFICER WHEREAS LD. AR FOR THE ASSESSEE RELIED ON THE ORDER OF LD. CIT(A) AND SUBMITTED THAT ALL NECESSARY DETAILS WERE FURNISHED BEFORE LD. CIT(A) . 7. WE HAVE HEARD RIVAL CONTEN TIONS OF BOTH THE PARTIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. THE ISSUE FOR OUR CONSIDERATION IN THE PRESENT CASE RELATES TO THE DISALLOWANCE MADE BY AO ON ACCOUNT OF NON - AVAILAB I LITY OF DOCUMENTARY EVIDENCE. HOWEVER, LD. CIT(A) HAS REDUCED THE DISALLOWANCE MADE BY AO FROM 47.20 LAKH TO RS.20 LAKH. ADMITTEDLY, IT IS THE DUTY OF ASSESSEE TO MAINTAIN SUFFICIENT EVIDENCE IN SUPPORT OF EXPENSES CLAIMED BY IT. IN THE INSTANT CASE, BEFORE US ASSESSEE FAILED TO FURNISH THE EVIDENCE AS DESIRED BY AUTHORI TIES BELOW THEREFORE THE DISALLOWANCE WAS MADE. HOWEVER, ON PERUSAL OF THE MATERIAL FACTS, WE FIND THAT THE ACTIVITY OF THE ASSESSEE AS CIVIL CONSTRUCTION IS NOT DISPUTED. IT IS ALSO ADMITTED FACT THAT THE ACTIVITY OF CIVIL CONSTRUCTION IS A LABOUR DRIVEN INDUSTRY, THUS THE CIVIL CONSTRUCTION ACTIVITY CANNOT BE CARRIED ON WITHOUT INVOLVEMENT OF LABOUR. THE CIVIL CONSTRUCTION ACTIVITY IS A LABOR IN TENSIVE INDUSTRY. THUS, IN OUR CONSIDERED VIEW, THE INVOLVEMENT OF LABOUR CANNOT BE NEGLECTED. IN THE CASE BEFOR E US LABOUR EXPENSE HAS NOT BEEN FOUND BY THE ITA NO. 123 & 139/PAT/2013 A.Y. 2008 - 09 M/S PRAHLAD KR. SINGH VS. ITO WD, SIWAN PAGE 4 AUTHORITIES BELOW UNREASONABLE OR EXCESSIVE IN COMPARISON TO THE VOLUME OF BUSINESS OF ASSESSEE. BUT THE DOCUMENTARY EVIDENCE IN SUPPORT OF LABOUR EXPENSE WHICH WAS SUPPOSED TO BE MAINTAINED CANNOT BE BRUSHED A SIDE. THE ASSESSEE HAS SHOWN ITS TURNOVER OF 4.84 CRORES WHICH WAS SIGNIFICANT ENOUGH. THEREFORE, NON PRODUCTION OF NECESSARY EVIDENCE CANNOT BE NEGLECTED AND LD. AR FOR THE ASSESSEE HAS NOT BROUGHT ANY COMPARISON CHART DEPICTING THE LABOUR EXPENSE CLAIME D IN EARLIER YEARS VIS - - VIS TOTAL CONTRACT RECEIPTS . T HIS CHART IS REQUIRED TO CHECK THE CONSISTENCY OF LABOUR EXPENSE AS CLAIMED BY ASSESSEE. WE ALSO OBSERVED THAT THE REVENUE HAS RAISED IN ITS GROUND OF APPEAL THAT LABOUR EXPENSE IN THE IMMEDIATE PRECED ING AY I.E. 2007 - 08 WAS RANGING BETWEEN 25% AND 30% OF THE TOTAL TURNOVER OF THE ASSESSEE. CONSIDERING THE FACTS IN TOTALITY AND IN THE ABSENCE OF DOCUMENTARY EVIDENCE, WE ARE NOT INTERESTED IN SENDING BACK THE MATTER TO THE AO TO AVOID FURTHER LITIGATION, THEREFORE IN THE INTEREST OF JUSTICE WE RESTRICT THE DISALLOWANCE TO 30 LAKH FOR THE YEAR UNDER CONSIDERATION AS ALL THE VOUCHERS WERE NOT PRODUCED IN THE AFORESAID FACTS AND CIRCUMSTANCES . THE ASSESSING OFFICER IS DIRECTED ACCORDINGLY. REVENUES APPEAL IS PARTY ALLOWED. 8. IN THE RESULT, APPEAL OF ASSESSEE STANDS DISMISSED AS WITHDRAWN AND THAT OF REVENUES APPEAL STANDS ALLOWED PARTLY. ORDER PRONOUNCED IN THE COURT AT THE CLOSE OF THE HEARING I.E. ON FRIDAY, 10 / 04 /20 1 7 SD/ - SD/ - ( ABY. T. VARKEY ) ( WASEEM AHMED ) JUDICIAL MEMBER ACCOUNTANT MEMBER *DKP , SR.P.S - 10 / 04 /201 7 PATNA COPY OF ORDER FORWARDED TO: - 1 . /ASSESSEE - M/SPRAHALAD KR SINGH, RAMPUR MADHO, SASA MUSA, GOPALGANJ 2 . / RE V EN UE - ITO WARD, SIWAN,/ACIT, CIRCLE - 2, MUZAFFARPUR 3 . CONCERNED CIT 4 . CIT (A) 5 . DR, ITAT, PATNA 6 . GUARD FILE. BY ORDER/ , /TRUE COPY/ SR.PS/PS, ITAT, PATNA