MESERS CONSTRUCTION ENGINEERS, JAMMU & KASHMIR V. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 3, SRINAGAR

ITA 129/ASR/2018

• Counselvise Citation: [2019] 111 COUNSELVISE.COM (IT) 9834 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 9 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-12-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 28-11-2019
• Assessment Year: 2011-2012
• Appeal Filed On: 09-03-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: M A MIR L D COST ACCOUNTANT
• Keywords: Earning of tax free income
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR BEFORE SH. N.K.CHOUDHRY, JUDICIAL MEMBER AND DR. A.L.SAINI, ACCOUNTANT MEMBER ITA NO.129/ASR/2018 ASSESSMENT YEAR: 2011-12 M/S. CONSTRUCTION ENGINEERS, 54-IE, BAGHAT BARZULLAH, SRINGAR. VS. ASST. CIT, CIRCLE-3, SRINAGAR. [PAN:AABFC 7715P] (APPELLANT) (RESPONDENT) APPELLANT BY: SH. M.A. MIR (LD. CO ST ACCOUNTANT) RESPONDENT BY: SH. CHARAN DASS (LD. DR) DATE OF HEARING: 28.11.2019 DATE OF PRONOUNCEMENT: 30.12.2019 ORDER PER N.K.CHOUDHRY, JM: THE INSTANT APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGA INST THE IMPUGNED ORDER DATED 30.06.2016 PASSED BY THE LD. CIT(A)- JAMMU U/S 250(6) OF THE I.T. ACT, 1961 (HEREINAFTER CALLED AS THE ACT). 2. AT THE OUTSET, IT WAS OBSERVED THAT THERE IS A DELAY OF 185 DAYS IN FILING OF THE INSTANT APPEAL. THE ASSESSEE HAS DEMONSTR ATED THAT THOUGH THE IMPUGNED ORDER WAS RECEIVED BY THE ASSESSEE ON 06.07.2016 AND THE SAME WAS HANDED OVER TO THE LD. CO UNSEL OF THE ASSESSEE ON DATED 07.07.2016, AGAINST WHICH, ADVICE WAS GI VEN FOR FILING OF APPEAL BY 5 TH SEP. 2016, HOWEVER, THE SITUATION IN THE JAMMU AND KASHMIR BECOME WORST AND A COMPLETE SHUTDOWN TAKEN P LACE AND THE ASSESSEE HAS ALSO RECEIVED GRIEVOUS INJURIES IN AN UNFOR TUNATE ITA N0.129/ASR/ 2018 (A.Y.2011-12) M/S. CONSTRUCTION ENGINEERS VS . ACIT 2 ACCIDENT, FOR WHICH THE ASSESSEE HAS UNDER GONE OPERATION IN EMERGENT SITUATION AND THEREAFTER ALSO REMAINED ON COM PLETE BED REST FOR AROUND SIX MONTH. THEREFORE, DUE TO AFORESAID CIRCU MSTANCES THE APPEAL COULD NOT BE FILED ON TIME. THE ASSESSEE AT LAST SU BMITTED THAT CONSIDERING THE DELAY IN FILING OF APPEAL, IS READY TO ACCEPT ANY CONDITION INCLUDING IMPOSITION OF COST, IF ANY AS REASONA BLE FOR THE ENDS OF JUSTICE. 3. THE LD. DR ON THE OTHER HAND, THOUGH DID NOT REFUT E THE CLAIM OF THE ASSESSEE, HOWEVER SUBMITTED THAT THE DELAY MAY HA VE OCCURRED DUE TO UNAVOIDABLE CIRCUMSTANCES BUT STILL CONDONATION CAN BE SUBJECTED TO CERTAIN CONDITIONS. 4. HAVING PERUSED THE APPLICATION FILED BY THE ASSESSEE AND THE REASONS STATED THEREIN, AS RECODED BY US IN THE AFORESAID PARAS, IT IS NOT IN CONTROVERSY THAT IN JAMMU & KASHMIR SPECIFICALLY I N SRINAGAR ANY TIME COMPLETE SHUTDOWN CAN HAPPEN AND THE LIFE IS N OT NORMAL AS COMPARED TO PEACEFUL PLACES, THEREFORE, REASONS STATED BY THE ASSESSEE SEEMS TO BE QUITE REASONABLE, HOWEVER, AS A CAUTION , WE INTENDS TO PUT CONDITION WHILE CONDONING THE DELAY FOR THE ENDS OF JUSTICE, CONSEQUENTLY THE DELAY OF 185 DAYS IN FILING OF THE INSTANT APPEAL IS CONDONED BUT SUBJECT TO DEPOSIT OF RS.10,000/- IN THE INCOME TAX DEPARTMENT WITHIN 30 DAYS OF THIS ORDER, AS THE ASSESSEE HAS VOLUNTARILY OFFERED AND AGREED. 5. THE FACTUAL MATRIX OF THE CASE IS THAT THE ASSESSEE B Y WAY OF THIS APPEAL CHALLENGED THE IMPUGNED ORDER ON FOLLOWING GR OUNDS . 1. THE LD. CIT(A) HAS ERRED IN LAW & FACTS BY DISALLOWING RS.7,00,000/- ON ACCOUNT OF SECTION 40( A) (IA) OF THE INCOME TAX ACT, 1961. THE DISALLOWANCE IS BAD IN LAW AND NEEDS TO BE DELETED. ( NOT PRESSED) ITA N0.129/ASR/ 2018 (A.Y.2011-12) M/S. CONSTRUCTION ENGINEERS VS . ACIT 3 2. THE LD. CIT(A) HAS ERRED IN LAW AND FACTS BY MAKING ADDITION OF RS.20,26,445/- U/S 14A OF INCOME TAX ACT, 1961. THE ADDITION IS BAD IN LAW AND LIABI LITY NEEDS TO BE DELETED. 3. THE LD. CIT(A) HAS ERRED IN LAW AND FACTS BY DISALLOWING RS.10,50,630/- ON ACCOUNT OF PRINTING A ND STATIONARY. THE DISALLOWANCE IS ADHOC IN NATURE AND LIABILITY NEEDS TO BE DELETED. 4. THE LD. CIT(A) HAS ERRED IN LAW AND FACTS BY DISALLOWING RS.2,29,930/- ON ACCOUNT OF TRAVELLING EXPENSES. THE DISALLOWANCE IS ADHOC IN NATURE AND LIABILITY NEEDS TO BE DELETED. 5. THE APPELLANT RESERVES ALL RIGHT TO AMEND ALTER ADD AND MODIFY THE GROUNDS OF APPEAL. 6. GROUND NO.1 AT THE TIME OF HEARING, THE ASSESSEE DID NOT RAISE THE G ROUND NO.1, HENCE, DOES NOT REQUIRE ANY ADJUDICATION. 7. GROUND NO.2 :- BY WAY OF GROUND NO.2, THE ASSESSEE HAS CHALLENGED THE ADDITION OF RS.20,26,445/- U/S 14A OF THE ACT. THE CONT ENTION OF THE ASSEEEE IS THAT THE ASSESSEE DURING THE YEAR RELEVANT YEAR DID NOT EARN ANY EXEMPT INCOME THEREFORE NO DISALLOWANCE U/S 14 A IS WARRANTED. THE LD. AR HAS SUBMITTED THAT AS PER BALANCE SHEET, THE ASSEEEE HAD TOTAL CURRENT ASSETS OF RS.30,20,56,533/-IN TH E ASST. YEAR 2011-12, LIABILITIES (CREDITORS) OF RS.1,18,69, 507/-, NET CURRENT ASSETS OF RS.29,01,87,026/-, BANK FINANCE OF RS.10,82,43, 456/- AND OWN CONTRIBUTION OF RS.18,19,43,570/-. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO THE DETERMINATION QUA INSTANT ISSUE BY THE LD. CIT(A) . V ARIOUS HIGH COURT INCLUDING DELHI HIGH COURT IN CHEMINVEST LTD. VS. CIT [2015] 378 ITR 33 (DELHI) HAS HELD THAT SEC.14A WILL NOT APPLY, IF N O EXEMPT INCOME ITA N0.129/ASR/ 2018 (A.Y.2011-12) M/S. CONSTRUCTION ENGINEERS VS . ACIT 4 IS RECEIVED OR RECEIVABLE DURING THE RELEVANT PREVIOUS YEAR. THE LD. DR RELIED UPON THE ORDER DATED 12.04.2018 PASSED BY T HE CO-ORDINATE BENCH IN ITA NO.218/ASR/2017 IN THE CASE OF LALLY MOTO RS INDIA (P.) LTD. VS. PR. CIT-2, JALANDHAR AND SUBMITTED THAT EVE N IF NO EXEMPT INCOME IS EARNED STILL THE ADDITION CAN BE MADE U/S 14A OF THE ACT. IT IS FACT THAT ORDER RELIED UPON BY THE LD. DR IS UNDER CHALLENGE IN MISC. APPLICATION NO.17/ASR/2018 AND HAS NOT ATTAINED FINALI TY AND EVEN OTHERWISE THERE ARE MANY JUDGMENTS OF THE HONBLE SUPR EME COURT AND THE HONBLE HIGH COURTS ON THE SAME ISSUE IN FAVOUR O F THE ASSESSEE. RECENTLY THE HONBLE APEX COURT IN THE CASE OF PRINCIPAL COMMISSIONER OF INCOME TAX VS. G.V. K PROTECT & TECHNICAL SERVICES LTD. [2019] 106 TAXMANN.COM 181 (SC) AFFIRMED THE VIEW OF THE HONBLE HIGH COURT TO THE EFFECT THAT IN THE ABSENCE OF ANY EXEMPT INCOME, DISALLOWANCE WAS IMPERMISSIBLE . HENCE, IN OUR VIE W AS THE ASSESSEE DID NOT EARN ANY EXEMPT INCOME, NO DISALLOWANCE IS CALLED FOR. CONSEQUENTLY THE ADDITION OF RS.20,26,445/- MADE U/S 14A OF THE ACT STANDS DELETED. RESULTANTLY GROUND NO.2 STANDS ALLOW ED. 8. GROUND NO.3, BY WAY OF GROUND NO.3 THE ASSESSEE HAS CHALLENGED THE DISALLOWANCE OF RS.10,50,630/- ON ACCOUNT OF PRINTING A ND STATIONARY CHARGES. THE ASSESSING OFFICER HAS OBSERVED THAT DURING TH E ASSESSMENT PROCEEDINGS, THE ASSESSEES COUNSEL FILED REPLY AND VOUCHERS IN SUPPORT OF THE EXPENDITURE, HOWEVER, IT CO ULD NOT PRODUCE THE EVIDENCE/SUPPORTING EXPENDITURE VOUCHERS TO THE TUN E OF RS.10,50,630/-. CONSEQUENTLY, THE ASSESSING OFFICER DISAL LOWED THE EXPENDITURE OF RS.10,50,630/- UNDER THE ACT. ON APPEA L, THE LD. ITA N0.129/ASR/ 2018 (A.Y.2011-12) M/S. CONSTRUCTION ENGINEERS VS . ACIT 5 CIT(A) AFFIRMED THE SAID DISALLOWANCE ON THE SAME FOOT ING AS OF THE AO. WE OBSERVE THAT THE ASSEEEE COULD NOT PRODUCE THE EVIDENCE/SUPPORTING EXPENDITURE VOUCHERS TO THE TUNE OF RS.10,50,630/-, CONSEQUENTLY, THE ASSESSING OFFICER DISAL LOWED THE EXPENDITURE OF RS.10,50,630/- WHICH STANDS AFFIRMED BY THE LD. CIT(A). WE DO NOT FIND ANY INFIRMITY OR IMPROPRIETY IN THE DECISION OF THE ISSUE IN HAND, HENCE THE SAME DOES NOT REQUIRES ANY I NFERENCE. CONSEQUENTLY GROUND NO.3 STANDS DISMISSED. 9. GROUND NO.4. BY WAY OF GROUND NO.4 THE ASSESSEE HAS CHALLENGED THE ADDITION OF RS.2,29,930/- ON ACCOUNT OF TRAVELLING EXP ENSES OUT OF TOTAL EXPENDITURE OF RS.15,32,873/-. BOTH THE AUTHOR ITIES BELOW HAVE OBSERVED THAT THE ASSESSEE HAS FAILED TO PRODUCE ALL THE B ILLS AND SOME OF THEM WERE SELF GENERATED. WE OBSERVE THAT THE AUTHORITIES BELOW HAVE POINTED OUT THAT THOUGH THE ASSESSEE HAS PROD UCED SOME BILLS BUT THE SAME WERE SELF GENERATED, HOWEVER, THE A SSESSEE COULD NOT BE PRODUCE ALL THE BILLS, THEREFORE, TRAVEL BY THE PARTNERS OF THE FIRM CANNOT BE RULED OUT. IN OUR CONSIDERED OPINION, T HE AUTHORITIES BELOW HAVE ADOPTED THE USUAL APPROACH AND DISALLOWED T HE EXPENDITURE @ 15% WHICH IS QUITE REASONABLE. AS THE A SSESSEE HAS FAILED TO PROVIDE ALL THE BILLS, HENCE, IN OUR CONSIDER ED VIEW THE ISSUE UNDER CONSIDERATION DOES NOT WARRANT ANY INTERFERENCE O F THIS COURT. CONSEQUENTLY GROUND NO.4 STANDS DISMISSED. ITA N0.129/ASR/ 2018 (A.Y.2011-12) M/S. CONSTRUCTION ENGINEERS VS . ACIT 6 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STANDS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 30/1 2/2019. SD/- SD/- (DR. A.L.SAINI) (N.K.CHOUDHRY) ACCOUNTANT MEMBER JUDIC IAL MEMBER DATED: 30/12/2019. /PK/ PS. COPY FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THEN CIT(APPEALS) 5. SR DR, I.T.A.T. AMRITSAR 6. GUARD FILE TRUE COPY BY ORDER