Bhag Singh, Mohali V. ITO, Mohali

ITA 146/CHANDI/2012

• Counselvise Citation: 14621514 RSA 2012
• Duration Of Justice: 1 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-03-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 06-02-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: N K SAINI
• Assessee Lawyers: PRIKSHIT AGGARWAL
• Section: 144; 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH A, CHANDIGARH BEFORE MS. SUSHMA CHOWLA, JUDICIAL MEMBER AND SHRI MEHAR SINGH, ACCOUNTANT MEMBER ITA NO.146/CHD/2012 (ASSESSMENT YEAR : 2007-08) BHAG SINGH, VS. THE INCOME TAX OFFICER, GURU NANAK METAL WORKS, WARD 6(2), H.NO.159, SHAKTI MARKET, MOHALI. PHASE I, MOHALI. PAN: ABRPS0767J (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI PRIKSHIT AGGARWAL RESPONDENT BY : SHRI N.K.SAINI DATE OF HEARING : 20.03.2012 DATE OF PRONOUNCEMENT : 22.03.2012 O R D E R PER SUSHMA CHOWLA, J.M, : THE APPEAL FILED BY THE ASSESSEE IS AGAINST THE ORD ER OF THE COMMISSIONER OF INCOME-TAX (APPEALS), CHANDIGARH DA TED 25.11.2011 RELATING TO ASSESSMENT YEAR 2007-08 AGAINST THE ORD ER PASSED U/S 143(3) OF THE INCOME TAX ACT, 1961(IN SHORT THE ACT). 2. THE GROUNDS RAISED BY THE ASSESSEE READ AS UNDER : 1. THAT THE IMPUGNED ORDER IS AGAINST FACTS AND LA W. 2. THAT THE LD. AO HAS ERRED IN MAKING ASSESSMENT AT A TOTAL INCOME OF RS.7,11,160/- AS AGAINST CORRECTLY DECLARED INCOME OF RS.3,37,880/-. 3. THAT THE ASSESSMENT FRAMED BY LD. AO IS A NULLI TY SINCE THE STATUTORY NOTICE REQUIRED TO BE SERVED ON THE APPELLANT ON OR BEFORE 30.09.2008 WAS NOT SERVED ON THE APPELLANT. 4. THAT THE LD. AO HAS ERRED IN MAKING AN ESTIMATED ADDITION OF RS.3,73,382/-, BEING 10% OF TOTAL WAGES PAID BY THE APPELLANT, EVEN WHEN THE MAJO0R EXPENDITURE OF THE APPELLANT IS WAGES AS HE IS A LABOUR CONTRACTOR. THE LD. AO FAILED TO APPRECIATE THE COMPLETE RECORDS MAINTAINED BY 2 THE APPELLANT IN THIS REGARD AND ALSO THAT PROPER PF AND ITS RETURNS HAVE BEEN FILED. 5. THAT THE LD. AO HAS ERRED IN CALCULATING 10% OF TOTAL WAGES OF RS.33,73,825/-. HE CALCULATED THE SAID DISALLOWANCE FIGURE AT RS.3,73,382/- WHEREAS THE CORRECT CALCULATION IS RS.3,37,382/-. 6. THAT THE LD. ASSESSING OFFICER HAS ERRED IN MAKING ASSESSMENT U/S 144 WHEN COMPLETE DETAILS INCLUDING AUDITED RECORDS WERE DULY PRODUCED AND VERIFIED BY LD. AO. 7. THE LD. ASSESSING OFFICER ACTED WITH BIASED AND PREJUDICE MIND, DID NOT AFFORD PROPER OPPORTUNITY, DID NOT CONFRONT ANY BAD INFERENCE DRAWN BY HIM, ACTED IN HASTE AND ILLEGAL MANNER. 8. THAT THE LD. AO WAS NOT JUSTIFIED IN CHARGING INTEREST UNDER 234B/234D OF THE INCOME TAX ACT, 1961 AND THE APPELLANT DISPUTES THE VERY LEVY OF THE SAME. 9. THAT THE LD. AO WAS NOT JUSTIFIED IN INITIATING PENALTY PROCEEDINGS U/S 271(1)(B)/271(1)(C) OF THE INCOME TAX ACT, 1961 AND THE APPELLANT DISPUTES THE VERY INITIATION OF THE SAME. 3. THE GROUND NO.1 IS GENERAL IN NATURE AND HENCE T HE SAME IS DISMISSED. 4. THE ISSUE RAISED IN THE PRESENT APPEAL IS AGAINS T THE ESTIMATED ADDITION MADE ON ACCOUNT OF DISALLOWANCE OF WAGES P AID BY THE ASSESSEE. 5. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS A LABOUR CONTRACTOR AND IS PROVIDING LABOUR IN THE UPPER HIL LS OF HIMACHAL PRADESH. DURING THE YEAR UNDER CONSIDERATION THE A SSESSEE HAD SHOWN TOTAL RECEIPTS OF RS.44,38,809/-, AGAINST WHICH IT HAD CLAIMED EXPENDITURE ON ACCOUNT OF WAGES AND SALARY AMOUNTIN G TO RS.33,73,825/-. THE ASSESSING OFFICER DISALLOWED 10% OUT OF THE SAI D EXPENDITURE ON WAGES AND SALARY AS THE ASSESSEE THOUGH PRODUCED TH E BOOKS OF ACCOUNT BUT COULD NOT FURNISH SUPPORTING BILLS/VOUCHERS. THE CIT (APPEALS) UPHELD THE ORDER OF THE ASSESSING OFFICER. 3 6. THE ASSESSEE IS IN APPEAL AGAINST THE ORDER OF T HE CIT (APPEALS). THE LEARNED A.R. FOR THE ASSESSEE POINTED OUT THAT THE ASSESSEE IS A PETTY LABOUR CONTRACTOR AND IS WORKING IN UPPER HILLS OF HIMACHAL PRADESH, WHERE CONDITIONS ARE VERY HARD. THE LEARNED A.R. F OR THE ASSESSEE DREW OUR ATTENTION TO THE INCOME AND EXPENDITURE ACCOUNT PLACED AT PAGE 11 OF THE PAPER BOOK AND POINTED OUT THAT ONLY EXPENDITUR E BOOKED BY THE ASSESSEE WAS IN RESPECT OF WAGES AND SALARY/PF/SERV ICE TAX. IT WAS FURTHER POINTED OUT THAT COMPLETE BILLS AND VOUCHER S ARE BEING MAINTAINED BY THE ASSESSEE. HOWEVER, DUE TO INSUFF ICIENT OPPORTUNITY ALLOWED BY THE ASSESSING OFFICER THE SAME COULD NOT BE PRODUCED DURING THE ASSESSMENT PROCEEDINGS. 7. THE LEARNED D.R. FOR THE REVENUE PLACED RELIANCE ON THE ORDERS OF THE AUTHORITIES BELOW. 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION HAD FU RNISHED AUDITED ACCOUNTS UNDER WHICH IT HAD DECLARED ITS INCOME FRO M LABOUR CONTRACT. GROSS RECEIPTS SHOWN BY THE ASSESSEE IN THE FINANCI AL YEAR 2006-07 WERE RS.44,38,809/-, AGAINST WHICH THE ASSESSEE HAD CLAI MED THE EXPENDITURE ON WAGES AND SALARY AT RS.33,73,825/-. THE ASSESSE E HAD DEBITED PF PAID TO THE WORKERS AT RS.6,00,284/- AND SERVICE TAX AT RS.2,05,008/- IN ADDITION TO CERTAIN OTHER PETTY EXPENSES. THE COPY OF THE INCOME AND EXPENDITURE ACCOUNT IS PLACED AT PAGE 11 OF THE PAP ER BOOK. THE BOOKS OF ACCOUNT OF THE ASSESSEE ARE AUDITED AND ARE SUPP ORTED BY THE AUDIT REPORT PLACED AT PAGES 5 TO 9 OF THE PAPER BOOK. A S NOTED BY THE CIT (APPEALS) UNDER PARA 4.2 OF THE APPELLATE ORDER, TH IS IS FIRST YEAR OF THE BUSINESS OF THE ASSESSEE AS LABOUR CONTRACTOR. OUT OF THE WAGES ACCOUNT, PARTIAL DISALLOWANCE WAS MADE FOR NON-MAINTENANCE O F PROPER VOUCHERS. THE ASSESSEE CLAIMS TO HAVE MAINTAINED PROPER VOUCH ERS. IN THE TOTALITY 4 OF THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE, WE DEEM IT FIT TO RESTORE THE ISSUE OF ALLOWABILITY OF EXPENDITURE ON WAGES AND SALARY BACK TO THE FILE OF ASSESSING OFFICER TO DECIDE THE SAME IN ACCORDANCE WITH LAW. THE ASSESSEE IS DIRECTED TO PRODUCE THE NECES SARY EVIDENCE/RECORD BEFORE THE ASSESSING OFFICER IN SUPPORT OF ITS CLAI M OF EXPENDITURE ON WAGES AND SALARY. THE ASSESSING OFFICER IS DIRECTE D TO AFFORD A REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. IN VIEW THEREOF, WE REMIT THIS ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER. IN VIEW OF SETTING ASIDE THE ISSUE BACK TO THE FILE OF ASSESSI NG OFFICER WE FIND NO MERITS IN THE ISSUE RAISED VIDE GROUND NO.3 BY THE ASSESSEE. GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE THUS ALLOWED FOR STATISTICAL PURPOSES. GROUND NOS.2 TO 7 ARE THUS ALLOWED FOR STATISTICAL PURPOSES. 9. THE ISSUE IN GROUND NO.8 IS AGAINST CHARGING OF INTEREST UNDER SECTION 234B/234D OF THE ACT AND THE SAME BEING CON SEQUENTIAL, THE GROUND OF APPEAL IS THUS DISMISSED. 10. GROUND NO.9 RAISED BY THE ASSESSEE IS AGAINST I NITIATION OF PENALTY PROCEEDINGS, WHICH IS PREMATURE AND HENCE THE SAME IS DISMISSED. 11. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND DAY OF MARCH, 2012. SD/- SD/- (MEHAR SINGH) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 22 ND MARCH, 2012 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/TH E CIT/THE DR. TRUE COPY BY ORDER ASSISTANT REGISTRAR, ITAT, CHANDIGARH 5