Sh. Kirpal Singh, Chandigarh V. ITO, Chandigarh

ITA 148/CHANDI/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 9085 (ITAT-CHANDIGARH)
• Duration Of Justice: 6 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-09-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Next Hearing Date: 13-07-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 29-02-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S K MITTALDR

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER ITA NO. 148/CHD/2016 ASSESSMENT YEAR: 2009-10 SHRI KIRPAL SINGH, VS THE ITO, SHOP NO. 156, WARD 4(4), SECTOR 35-D, CHANDIGARH. CHANDIGARH. PAN: ARTPS8523L (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI TEJ MOHAN SIN GH RESPONDENT BY : SHRI S.K.MITTAL,DR DATE OF HEARING : 10.08.2016 DATE OF PRONOUNCEMENT : 14.09.2016 O R D E R THIS APPEAL BY ASSESSEE HAS BEEN DIRECTED AGAINST T HE ORDER OF LD. CIT(APPEALS)-2 CHANDIGARH DATED 29.12. 2015 FOR ASSESSMENT YEAR 2009-10. 2. WE HAVE HEARD LD. REPRESENTATIVES OF BOTH THE PA RTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. 3. THE LD. COUNSEL FOR THE ASSESSEE DID NOT PRESS G ROUND NO.2, THE SAME IS DISMISSED AS NOT PRESSED. 4. ON GROUND NO.1, ASSESSEE CHALLENGED THE ADDITION OF RS. 3,25,000/- ON ACCOUNT OF DISALLOWANCE OF LABOUR 2 EXPENSES. THE ASSESSEE IS WORKING AS ELECTRICAL CON TRACTOR AND AT THE END OF FINANCIAL YEAR, LABOUR CHARGES OF RS. 3,25,000/- HAVE BEEN SHOWN AS PAYABLE IN THE BALANC E SHEET. THE ASSESSING OFFICER NOTED THAT THE LIABILITY OUTS TANDING IS NOT VERIFIABLE AND THAT ASSESSEE HAS NOT SHOWN ANY WORK IN PROGRESS, THEREFORE, LABOUR CHARGES OUTSTANDING WER E DISALLOWED. THE ASSESSEE EXPLAINED THAT HE IS FOLL OWING MERCANTILE SYSTEM OF ACCOUNTING AND HAD CLAIMED EXP ENSES OF LABOUR CHARGES OF 12 MONTHS. THE LABOUR CHARGES OF RS. 3,25,000/- ARE EQUIVALENT TO 15 DAYS LABOUR CHARGES OF MARCH,2009 WHICH HAVE BEEN PAID IN NEXT FINANCIAL Y EAR. 5. THE LD. CIT(APPEALS) FROM THE LABOUR ACCOUNT NOT ED THAT IT IS TRUE THAT ASSESSEE IS INCURRING LABOUR EXPENS ES EVERY MONTH. SINCE WORK-IN-PROGRESS WAS NOT SHOWN AND EX PENSES WERE NOT VERIFIABLE THEREFORE, ADDITION WAS CONFIRM ED AND APPEAL OF THE ASSESSEE HAS BEEN DISMISSED. 6. AFTER CONSIDERING RIVAL SUBMISSIONS, I AM OF THE VIEW THAT ADDITION IS WHOLLY UNJUSTIFIED. THE LD. COUNS EL FOR THE ASSESSEE FILED COPY OF THE AUDITED ACCOUNTS IN THE PAPER BOOK TO SHOW THAT CONTRACT PAYMENT RECEIVED BY THE ASSESSEE WAS RS. 2.90 CR AGAINST WHICH VARIOUS EXPENSES HAVE BEEN INCURRED INCLUDING LABOUR CHARGES OF RS. 1.02 CR. THE NATURE OF BUSINESS OF THE ASSESSEE IS SUCH THAT LAB OUR CHARGES IS MAIN COMPONENT FOR EARNING OF THE INCOME . THE ASSESSEE PRODUCED BOOKS OF ACCOUNT AND OTHER REGIST ERS BEFORE ASSESSING OFFICER IN WHICH NO SPECIFIC DEFEC TS HAVE BEEN POINTED OUT. EVEN THE LOWER PROFIT HAVE NOT B EEN 3 DISPUTED BY THE ASSESSING OFFICER. THE ASSESSING O FFICER HAS NOT GIVEN ANY SPECIFIC REASON AS TO WHICH OF THE EX PENDITURE IS NOT VERIFIABLE. IT, THEREFORE, APPEARS TO BE AD HOC ADDITION IN NATURE. IT IS FURTHER STATED THAT ASSESSEE DID NOT MAINTAIN DETAILS OF WORK IN PROGRESS. THE LD. COUN SEL FOR THE ASSESSEE, HOWEVER, SUBMITTED THAT ACCOUNTS HAVE BEE N MAINTAINED ON MERCANTILE SYSTEM AND EVEN ASSESSEE H AS NOT SHOWN ANY OPENING WORK IN PROGRESS AND SAME ACCOUNT ING SYSTEM HAVE BEEN ACCEPTED BY THE REVENUE EVEN IN EA RLIER YEARS. THEREFORE, THESE STANDS WOULD NOT BE VALID FOR DISALLOWING THE EXPENDITURE. 7. CONSIDERING THE ABOVE DISCUSSION IN THE LIGHT OF THE FACT THAT NO SPECIFIC REASONS HAVE BEEN GIVEN FOR DISALL OWING THE LABOUR CHARGES PAYABLE/OUTSTANDING, NO DISALLOWANCE COULD BE MADE. I, ACCORDINGLY, SET ASIDE THE ORDERS OF A UTHORITIES BELOW AND DELETE THE ADDITION OF RS. 3,25,000/-. G ROUND NO. 1 OF APPEAL OF THE ASSESSEE IS ALLOWED. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- (BHAVNESH SAINI) JUDICIAL MEMBER DATED : 14 TH SEPT., 2016. POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT, DR ASSISTANT REGISTRAR, ITAT CHANDIGARH