Bhola Sharan Singh, Aurangabad V. DCIT, Circle-3, Gaya

ITA 138/PAT/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 4675 (ITAT-PATNA)
• Duration Of Justice: 1 year(s) 2 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-07-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2014-2015
• Appeal Filed On: 25-05-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Principle of natural justice; Set aside

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PATNA BENCH , PATNA BEFORE SHRI CHANDRA MOHAN GARG, J M AND SHRI L .P. SAHU, AM ITA NO. 138 / PAT /20 18 ( ASSESSMENT YEAR :201 4 - 201 5 ) BHOLA SHARAN SINGH, SHAHPUR TOLA, PIPERDIH, AURANGABAD VS. DCIT, CIRCLE - 3, GAYA PAN NO. : A NTP S 1482 Q ( APPELLANT ) .. ( RESPONDENT ) AS SESSEE BY : SHRI NISHANT MAITIN , ADV REVENUE BY : SHRI AJAY KUMAR , CITDR DATE OF HEARING : 2 8 /06/2019 DATE OF PRONOUNCEMENT : 26 07/2019 O R D E R PER BENCH : THIS IS AN APPEAL FILED BY THE ASSE SSEE AGAINST THE ORDER OF CIT(A) - I, PATNA, DATED 26.03 .2018 FOR THE ASSESSMENT YEAR 201 4 - 201 5 ON THE FOLLOWING GROUNDS OF APPEAL : - 1. FOR THAT THE ORDER PASSED BY THE A.O AS WELL AS C.I.T APPEAL 1 IS BEST NOT AS PER THE NORMS OF THE ACCOUNTANCY AND LAW OF NATURAL JUSTICE. HENCE THE ORDERS ARE BAD IN LAW AND FACTS. 2. FOR THAT THE INCOMPLETE P.L ACCOUNT OR BALANCE SHEET WAS NOT JUST AND PROPER TO BE ACCOUNTED FOR ASSESSMENT AND APPELLATE MATTER RATHER THE A.O WOULD HAVE ESTIMATED THE INCOME ON ESTIMATION BASIS BECAUSE THE FULL FIGURE IN GROSS RECEIPT SIDE WAS NOT REFLECTED IN P.L ACCOUNT RATHER THE EXCESS PAYMENT RECEIVED WERE REFLECTED IN BALANCE SHEET AGAINST THE SECURITY REFUND HENCE THE P.L ACCOUNT AS WELL AS BALANCE SHEET WAS NOT TENABLE AS PER LAW AN D PROCEDURE. IN SUCH CIRCUMSTANCES THE A.O WOULD HAVE GONE ON THE BASIS OF TOTAL RECEIPT BY ESTIMATING THE NET PROFIT ON THE RATE APPLICABLE IN CONTRACTOR CASE. HENCE IN ALL FAIRNESS OF JUSTICE THE A.O MAY KINDLY BE DIRECTED THE MAKE ASSESSMENT ON ESTIMATE BASIS. SINCE THE BOOKS OF ACCOUNT WAS ERRONEOUS AND THERE WAS DIVERSION OF RECEIPT OF PAYMENT TO SECURITY REFUND HEADS. HENCE HE WOULD NOT HAVE ACCEPTED THE BOOK RESULT FORMING THE MERIT OF THE ASSESSMENT. SO THE ASSESSMENT IS FIT TO BE SET ASIDE FOR RECO NSIDERATION. 3. THAT THE DISALLOWANCE OF RS 382462/ - IS VERY EXCESSIVE HENCE IT SHOULD BE REDUCED REASONABLY. ITA NO . 138 / PAT /201 8 2 4. FOR THAT THE ANY OTHER GROUND WILL BE URGED AT THE TIME OF HEARING OF THE CASE. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A CIV IL CONTRACTOR AND DERIVES INCOME FROM CIVIL CONSTRUCTION WORK AND FILED RETURN OF INCOME ON 21.10.2014 FOR A.Y.2014 - 2015 DECLARING TOTAL INCOME OF RS.56,57,360/ - AFTER CLAIMING DEDUCTION UNDER CHAPTER VI - A OF THE INCOME TAX ACT, 1961. THE CASE WAS SELECTED FOR SCRUTINY AND STATUTORY NOTICES WERE ISSUED TO THE ASSESSEE. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO NOTICED THAT THE ASSESSEE HAS CLAIMED EXPENSES FOR TRAVELLING AND CONVEYANCE OF RS.2,89,441/ - . FROM THE ABOVE EXPENDITURE, THE AO NOTED VARI OUS SHORTCOMINGS I.E. NON - MAINTENANCE OF PROPER BILLS AND VOUCHERS, MOST OF THE VOUCHERS WERE PREPARED INTERNALLY, VOUCHERS NUMBERS ARE MISSING, ETC. ACCORDINGLY, THE AO AFTER RELYING MANY CASE LAWS, DISALLOWED RS.3,82,462/ - I.E. 10% OUT THE TOTAL EXPENSES OF RS. 38,24,616/ - U/S.37(1) OF THE ACT AND ADDED THE SAME TO T HE TOTAL INCOME OF THE ASSESSEE. 3. FURTHER, THE AO, ON CONSIDERATION OF GROSS RECEIPTS DECLARED BY THE ASSESSEE IN FORM 26AS DETAILS GENERATED THROUGH COMPUTER SYSTEM IN THE WEBSITE OF THE IN COME TAX DEPARTMENT, NOTED SOME DIFFERENCE. AS PER FORM 26AS, THE AO NOTICED THAT THE TOTAL RECEIPT BY THE ASSESSEE FROM THE EXECUTIVE ENGINEER, RURAL WORKS DEPARTMENT, WORK DIVISION, KAHALGAON WAS OF RS.95,77,154/ - AND FROM THE OFFICE OF THE EXECUTIVE ENG INEER, RWD WORKS DIVISION PIRO WAS OF RS.3,52,16,871/ - . THUS, THE TOTAL RECEIPT RECEIVED BY THE ASSESSEE WAS OF RS.4,47,94,025/ - DURING THE FINANCIAL YEAR 2013 - 2014 BUT ON VERIFICATION OF THE PAYMENT CERTIFICATE, THE ASSESSEE HAS SHOWN IN THE PROFIT AND LO SS ACCOUNT OF RS.50,26,055/ - ITA NO . 138 / PAT /201 8 3 RECEIVED FROM THE EXECUTIVE ENGINEER, RURAL WORKS DIVISION, KAHALGAON AND RS.2,66,85,779/ - FROM R.W.D. WORKS DIVISION, PIRO TOTALING TO RS.3,17,11,834/ - . ACCORDINGLY, THE AO FOUND THAT THERE IS A DIFFERENCE OF RS.1,30,82,191/ - . A MEMORANDUM OF PAYMENTS WAS ALSO SUBMITTED BEFORE THE AO BY THE ASSESSEE REGARDING DETAILS OF GROSS AMOUNT AND VARIOUS DEDUCTION FROM THE GROSS RECEIPTS, NUMBER OF CHEQUE AMOUNT AND DATE OF CREDIT ENTRY, BANK ACCOUNT ETC. FROM THE ABOVE CHART SUBMITTED B Y THE ASSESSEE THE AO NOTED THAT THERE WAS UNEXPLAINED MONEY U/S.69A OF THE ACT OF RS.1,04,71,401/ - AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 4. FEELING AGGRIEVED BY THE ORDER OF AO, THE ASSESSEE APPEALED BEFORE THE CIT(A) AND THE CIT(A) HAS DISMISS ED THE APPEAL OF THE ASSESSEE. AGAINST WHICH, THE ASSESSEE IS IN FURTHER APPEAL BEFORE THE INCOME TAX APPELLATE TRIBUNAL. 5. LD.AR BEFORE US FILED HIS WRITTEN SUBMISSION WHICH READS AS UNDER : - 1. THAT THE APPELLANT IN THIS CASE IS A CIVIL CONTRACTOR ENGAG ED IN THE WORK OF CONSTRUCTION OF ROADS UNDER VARIOUS CONTRACTEE AGENCIES. AFTER FILLING OF THE RETURN THE CASE WAS SELECTED FOR SCRUTINY ASSESSMENT AND SCRUTINY WAS COMPLETED BY THE D.C.I.T CIRCLE - 3 GAYA. 2. THAT THE APPELLANT'S BOOKS OF A/C WAS NOT A VAILABLE SINCE THE SAME WAS DESTROYED AND BURNT BY SHORT CIRCUIT FIRE IN THE OFFICE OF THE APPELLANT. THE APPELLANT CALCULATED THE GROSS CONTRACTUAL RECEIPT ON THE BASIS OF PAYMENT CERTIFICATES AS RECEIVED FROM. THE CONTRACTEE DEPARTMENT UNDER THE SEAL AND SIGNATURE OF EXECUTIVE ENGINEERS. THE GROSS RECEIPTS AS PER PAYMENT CERTIFICATES ISSUED BY EXECUTIVE ENGINEERS WAS RS. 145549115/ - AND HE HAS RECEIVED PETTY WORK PAYMENT AT RS. 949500/ - . THE TOTAL RECEIPTS SHOWN IN THE P.L A/C WAS RS. 146498615/ - . THE BAN K A/C OF THE ASSESSEE REFLECTED MORE RECEIPTS THAN THE CHEQUE VALUE OF THE PAYMENT CERTIFICATES WHICH WAS SUPPOSED BY THE APPELLANT TO BE THE SECURITY REFUND HENCE THE APPELLANT SHOWED THE EXCESS PAYMENT IN THE BANK ACCOUNT AS SECURITY REFUND AND SHOWED TH E SAME IN THE BALANCE SHEET AS SECURITY REFUND . THE APPELLANT HAS SHOWN SECURITY REFUND AT RS 12930906/ - . HENCE THE APPELLANT ONLY MISDIVERTED EXCESS PAYMENT RECEIVED IN THE BANKS INSTEAD OF SHOWING THE SAME AS AGAINST RECEIPT IN THE COLUMN OF SECURITY RE FUND IN THE BALANCE SHEET. ITA NO . 138 / PAT /201 8 4 3. THAT IN COURSE OF ASSESSMENT PROCEEDING THE APPELLANT OBTAINED FORM NO: - 26 A.S ACCORDING TO WHICH THERE WAS A VAST DIFFERENCE BETWEEN FIGURES OF PAYMENT CERTIFICATES AND REPORTED IN FORM NO - 26 A.S. THERE WAS DIFFERENCE I N THE CERTIFICATES ISSUED BY EXECUTIVE ENGINEERS R.W.D KAHALGOAN AND R.W.D PIRO SASARAM. THE CHART WILL REFLECT DIFFERENCE - : NAME OF DEPT PAYMENT CERTIFICATES AS PER 26 AS D IFFERENCE AMOUNT R.W.D KAHALGAON 5026055/ - 9577154/ - 4551099/ - R.WDPIRO 26685779/ - 35216871/ - 8531092/ - 13082191/ - 4. THE APPELLANT BOOKS OF A/C WAS NOT AVAILABLE AT THE TIME OF AUDIT HENCE THE AUDIT WAS COMPLETED ON THE BASIS OF PAYMENT CERTIFICATES ISSUED FROM EXECUTIVES ENGINEERS AND BANK A/C STATEMENT AS WELL AS DAY BOOK OF MISSCELLOUS EXPENSES. IN COURSE OF ASSESSMENT THE A.O. POINTED OUT THAT THERE IS A DIFFERENCE OF 13082191/ - BETWEEN FIGURES OF PAYMENT CERTIFICATES OF R.W.D KAHALGOAN AND R.W.D PIRO IN COMPARISON TO FIGURES OF 26 A.S . THE APPELLANT REQUESTED THE A.O THAT THE BOOKS OF A/C OF THE APPELLANT BE REJECTED U/S 145(3) OF IT ACT AND PROFIT BE ESTIMATED BY ADDING 13082191/ - WITH THE FIGURES OF SHOWN IN THE ALLEGED P.L A/C AT RS. 145549115/ - . WHICH WOULD HAVE BEING TOTALLED AT 145549115 + 13082191/ - =158631306/ - . THE CASE WAS COVERED U/S 145(3)OF THE IT ACT FOR REJECTION OF THE BOOKS OF ACCOUNT. BECAUSE THERE WAS NO BOOK AVAILABLE AND ALSO WAS NOT PRODUCED AT ASSESSMENT STAGE. THE LEARNED A.O FAILED TO ACCEPT THE REQUEST OF THE APPELLANT AND COMPLETED THE ASSESSMENT. BEING AGGRIEVED BY THE ASSESSMENT ORDER THE APPELLANT PREFERRED APPEAL BEFORE C.IT APPEAL - 1, PATNA AND IN THE GROUNDS OF APPEAL IT WAS PRAYED THAT THE BALA NCE SHEET WAS PREPARED ON THE BASIS OF PAYMENT CERTIFICATES, BANK STATEMENTS AND DAY BOOK OF EXPENSES. HENCE IT IS PRESUMED THAT NO REGULAR BOOKS OF A/C WAS THERE MAINTAINED AT THE TIME OF AUDIT AND ALSO AT THE TIME OF SCRUTINY ASSESSMENT HENCE THE PROVISI ONS OF SECTION 145(3) THE INVOKED AND A DIRECTION BE ISSUED TO A.O TO RECOMPUTED THE ORDER ON THE BASIS OF ESTIMATION OVER THE AMOUNT OF RS - 158 631306/ - (145549115/ - [phone]/ - COMMISSIONER APPEAL FAILED TO CONSIDER THE CONTENTION OF THE APPELLANT AND DISMI SSED THE CASE . BEING AGGRIEVED BY THE ORDER OF THE C.IT APPEAL - 1, PATNA AND A.O APPELLANT HAS PREFERRED APPEAL BEFORE . YOUR HONOUR THE APPELLANT HAS REQUESTED BEFORE YOUR HONOUR IN HIS GROUNDS OF APPEAL TO CONSIDER THAT INCOMPLETENESS AND INCORRECTNESS O F P.L ACCOUNT AS WELL AS THE BALANCE SHEET TO INVOKED THE PROVISION OF 145 (3) AND HAS ALSO REQUESTED YOUR HONOUR EITHER TO SET A SIDE THE CASE OR TO DIRECT THE A.O TO ASSESSED THE APPELLANT ON ESTIMATION BASIS IN WHICH THE PROFIT ESTIMATION MAY KINDLY BE M ADE RANGING FROM OF 6 TO 8% OF GROSS CONTRACTUAL RECEIPT OF RS 158631306/ - . THIS WOULD PREVAIL JUSTICE TO APPELLANT AS PER PROVISIONS OF LAW WHERE NO REGULAR BOOKS OF ACCOUNT IS MAINTAINED. IT IS REQUESTED THEREFORE THAT SUBMISSION MADE BEFORE YOU MAY K INDLY BE CONSIDERED AND LAW OF NATURAL JUSTICE BE ALLOWED TO THE APPELLANT SINCE THE A.O HAS PASSED THE ASSESSMENT ORDER WITHOUT ANY REGULAR BOOKS OF ACCOUNT EXAMINATION AND IN SUCH A CASE PROVISIONS OF LAW U/S 145(3) IS ATTRACTED ITA NO . 138 / PAT /201 8 5 FURTHER, THE LD. AR SU BMITTED THAT THE AO HAS WRONGLY CONSIDERED THE SECURITY DEPOSITS AND OTHER DEDUCTIONS WHICH WERE RELEASED BY THE CONTRACTEE AS TURNOVER. LD. AR ALSO SUBMITTED THAT IN RESPECT OF ADHOC DISALLOWANCE OF 10% OF THE EXPENSES, THE AO HAS NOT SPECIFICALLY POINTED OUT THAT WHICH EXPENDITURE DOES NOT RELATE TO THE BUSINESS OF THE ASSESSEE AND HE HAS LUMPSUM DISALLOWED 10% OF THE EXPENDITURE WHICH IS NOT JUSTIFIED. 6. ON THE OTHER HAND, LD. DR RELIED ON THE ORDER OF AO AND OBJECTED TO THE SUBMISSIONS OF THE ASSESSEE FOR SETTING ASIDE AND SUBMITTED THAT IN RESPECT OF 10% DISALLOWANCE, THE LOWER AUTHORITIES HAVE RIGHTLY DISALLOWED THE LUMP SUM EXPENDITURE AS PER SECTION37(1) OF THE ACT. THEREFORE, LD. DR PRAYED THAT THE APPEAL OF THE ASSESSEE DESERVES TO BE DISMISSED. 7 . AFTER HEARING BOTH THE SIDES AND PERUSING THE ENTIRE MATERIALS AVAILABLE ON RECORD AND CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT A S PER PAYMENT CERTIFICATE RECEIVED FROM VARIOUS CONTRACTEE DEPARTMENT RECEIVED PAYMENT AT RS 14,55,4 9,115/ - . THE ASSESSEE ALSO RECEIVED RS 9,42,500/ - BY MINOR REPAIR ETC ON LOCAL BASIS. BEFORE US, LD. AR OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE PAYMENT CERTIFICATES WERE ISSUED UNDER THE SEAL & SIGNATURE OF EXECUTIVE ENGINEERS. IT WAS ALSO THE ARGUMENT OF LD.AR THAT UNFORTUNATELY ON 26AS PAYMENTS FROM EXECUTIVE ENGINEER R.W.D KAHALGAON AND FROM EXECUTIVE ENGINEER R.W.D PIROO CREDITED EXCESS PAYMENT THAN THE AMOUNT MENTIONED IN THE PAYMENT CERTIFICATE HENCE THERE WAS A DIFFERENCE OF RS . 1,30,81,391/ - EXCE SS REFLECTED OVER 26AS IN COMPARISON TO PAYMENT ITA NO . 138 / PAT /201 8 6 CERTIFICATES ISSUED FROM THE CONCERNED EXECUTIVE ENGINEERS. THE ASSESSEES BANK ACCOUNT ALSO CREDITED MORE CHEQUE VALUES THAN THE PAYMENT CERTIFICATES FROM THE ABOVE MENTIONED CONCERNS. LD. AR FURTHER SUBMITT ED THAT THE ASSESSEE THOUGHT THAT THE EXCESS PAYMENT CREDITED IN THE BANK ACCOUNT MIGHT HAVE BEEN SECURITY REFUND AND DEDUCTED THE AMOUNT UNDER THE HEAD SECURITY REFUND WHICH WAS RS . 1,29,30,900/ - . IN THE FIRST APPELLATE PROCEEDINGS THE ASSESSEE PLEADED THA T NO AUTHENTIC FIGURES WERE MADE A SUBJECT OF AUDIT RATHER THE ACCOUNTANT OF THE ASSESSEE PREPARED THE ACCOUNT ON THE BASIS OF PAYMENT CERTIFICATE BANK STATEMENT AND DAY BOOK. HOWEVER, THE CIT(A) DID NOT CONSIDER THE SUBMISSIONS OF THE ASSESSEE RESULTING I NTO DISMISSAL OF APPEAL OF THE ASSESSEE. FROM THE ABOVE, WE ARE OF THE OPINION THAT THE A.O WOULD HAVE GONE ON THE BASIS OF TOTAL RECEIPT BY ESTIMATING THE NET PROFIT ON THE RATE APPLICABLE IN CONTRACTOR CASE. HENCE , LOOKING TO THE FACTS OF THE CASE AND IN THE INTEREST OF JUSTICE, THE ISSUE REQUIRES FURTHER VERIFICATION ON THE PART OF THE AO WITH REGARD TO THE FACT AS TO WHETHER THERE WAS ANY DIVERSION OF RECEIPT OF PAYMENT TO SECURITY REFUND HEADS . ACCORDINGLY, WE RESTORE THIS ISSUE TO THE FILE OF AO TO DE CIDE THE ISSUE ON THE ABOVE TERMS AND ASSESSEE IS DIRECTED TO PRODUCE RELEVANT DOCUMENTS FOR VERIFICATION BY THE AO AS STATED ABOVE. NEEDLESS TO SAY, THE ASSESSEE SHALL BE GIVEN REASONABLE OPPORTUNITY OF HEARING. TH EREFORE , THIS GROUND OF APPEAL OF THE ASS ESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 8. WITH REGARD TO DISALLOWANCE 10% OUT OF THE TOTAL EXPENSES ON ACCOUNT OF EXCESSIVE AND ALSO NOT WHOLLY AND EXCLUSIVELY UTILIZED FOR THE ITA NO . 138 / PAT /201 8 7 BUSINESS PURPOSES , WE FIND THAT THE AO IN THE ASSESSMENT ORDER HAS POINTED OUT VARIOUS DISCREPANCIES IN THE VOUCHERS PRODUCED BY THE ASSESSEE AND THE ASSESSEE HAS PRODUCED SOME INTERNAL VOUCHERS. THEREFORE, CONSIDERING THE FACT AND THE DISCREPANCIES NOTED BY THE AO, WE ARE OF THE VIEW THAT THE CIT(A) HAS RIGHTLY UPHELD THE ACTION OF AO, TO WHICH OUR INTERFERENCE IS NOT CALLED FOR. ACCORDINGLY, THIS GROUND OF APPEAL OF THE ASSESSEE IS DISMISSED. 9 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES . ORDER PRONOUNCED IN PURSUANCE WITH RULE 34/4 O F ITAT RULES, 1963 BY PUTTING THE COPY OF THE SAME ON NOTICE BOARD ON 26 /07/2019 AT PATNA. SD/ - ( C.M.GARG ) SD/ - ( L.P.SAHU ) JUDICIAL MEMBER ACCOUNTANT MEMBER PATNA ; DATED 26 / 0 7 /201 9 PKM , S R.P.S. COPY OF THE ORDER FORWARDED TO : / BY ORDER, ( SENIOR PRIVATE SECRETARY ) INCOME TAX APPELLATE TRIBUNAL , PATNA 1. THE APPELLANT - . BHOLA SHARAN SINGH, SHAHPUR TOLA, PIPERDIH, AURANGABAD 2. THE RESPONDENT - DCIT, CIRCLE - 3, GAYA 3. THE CIT(A), 4. CIT 5. DR, ITAT, PATNA 6. GUARD FILE. //TRUE COPY//