M/s. Bhaiya Transport P. Ltd., Rajkot, RAJKOT-GUJARAT V. The Assistant Commissioner of IncomeTax, Circle-5, RAJKOT-GUJARAT

ITA 152/RJT/2014

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 8232 (ITAT-RAJKOT)
• Duration Of Justice: 5 year(s) 1 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 04-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRAVEEN KUMAR VERMA
• Assessee Lawyers: R D MANEK
• Keywords: Rejection of books of accounts

Judgement Text

M/S. BHAIYA TRANSPORT PVT. LTD. VS. ACIT CIR- 5 /I. T.A. NO. 152/RJT/2014/A.Y.2008-09 PAGE 1 OF 6 IN THE INCOME TAX APPELLATE TRIBUNAL, RAJKOT RAJKOT BENCH BEFORE SHRIO. P. MEENA, ACCOUNTANT MEMBER AND MRS. MADUMITA ROY, JUDICIAL MEMBER I.T.A. NO. 152/RJT/2014:ASSESSMENT YEAR: 2008-09 M/S. BHAIYA TRANSPORT PVT. LTD. CHARBHUJA MARBLE STREET, NEAR OCTROI NAKA, GONDAL ROAD, RAJKOT PAN: AACCB9950B VS. ACIT CIRCLE-5 RAJKOT APPELLANT RESPONDENT ASSESSEE BY SHRI R. D. MANEK, ADVOCATE REVENUE BY SHRI PRAVEEN KUMAR VERMA, SR. DR DATE OF HEARING 11.04.2019 DATE OF PRONOUNCEMENT 12.04.2019 ORDER PER O. P. MEENA, AM 1. THIS APPEAL BY THE ASSESSEEIS DIRECTED AGAINST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-IV,RAJKOT(IN S HORT THE CIT (A)) DATED 02.01.2014PERTAINING TO ASSESSMENT YEAR 2008-09, WH ICH IN TURN HAS ARISEN FROM THE ASSESSMENT ORDER PASSED UNDER SECTION 143 (3) D ATED 28.12.2010 OF INCOME TAX ACT,1961 (IN SHORT THE ACT) BY THE ACIT, CIRCLE-5 RAJKOT(IN SHORT THE AO). 2. THE GROUNDS NO. 1 RELATES TO CONFIRMING THE DISALLO WANCE OF RS. 9,96,625 MADE BY THE AO BEING 30% OF THE SALARY AND WAGES EX PENSES OUT OF RS. 33,18,750/-. 3. ON VERIFICATION OF BOOKS OF ACCOUNTS AND VOUCHERS C OPIES IN THE ASSESSMENT PROCEEDING THE AO OBSERVED THAT THE ASSESSEE HAS DE BITED SALARIES AND WAGES M/S. BHAIYA TRANSPORT PVT. LTD. VS. ACIT CIR- 5 /I. T.A. NO. 152/RJT/2014/A.Y.2008-09 PAGE 2 OF 6 EXPENSES AT RS. 33,18,750/- WHEREAS THE VOUCHERS PR ODUCED ARE NOT FOUND TO BE GENUINE AS THE SAME IS PERTAINS TO SAME HANDWRITING AND HENCE 30% OF THE SAME WAS DISALLOWED AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 4. THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT( A) WHO CONFIRM THE ADDITION MADE BY THE AO BY OBSERVING THAT THE VOUCH ERS MAINTAINED ARE DEFECTIVE IN NATURE AND ASTHE SAME BEARING SIGNATURE IN THE S AME HANDWRITINGAS PER THE VOUCHERS IN RECEIPT SALARIES AND WAGES. 5. BEING AGGRIEVED THE ASSESSEE FILED THIS APPEAL BEFO RE THE TRIBUNAL. 6. THE LD. COUNSEL FOR THE ASSESSEE CONTENDED THAT TH E ASSESSEE IS A PRIVATE LIMITED COMPANY AND DISALLOWANCE OUT OF SALARY AND WAGES EXPENSES ARE MADE ON ESTIMATED BASIS WITHOUT POINTING OUT ANY DEFECTS OF THE BOOKS OF ACCOUNTS ANY REJECTION OF THE SAME. THE LD. COUNSEL REFER PAGE 2 OF PAPER BOOK WHICH IS THE CASH BOOK, WHICH GIVES THE DETAILS OF EACH PAYMENT AND SALARY PAYMENTS THEREFORE IT WAS CONTENDED THAT THE DISALLOWANCE MADE BY THE AO ARE WITHOUT BASIS AND DISALLOWANCE TO BE DELETED. 7. PER CONTRA THE LD. SENIOR DR RELIED ON THE ORDER O F THE LOWER AUTHORITIES AND SUBMITTED THAT THE ASSESSEE HAS PRODUCED SELF-MADE VOUCHERS AND LOWER AUTHORITIES ARE JUSTIFIED IN THEIR ACTION. M/S. BHAIYA TRANSPORT PVT. LTD. VS. ACIT CIR- 5 /I. T.A. NO. 152/RJT/2014/A.Y.2008-09 PAGE 3 OF 6 8. WE HAVE CONSIDERED THE FACTS AND RIVAL SUBMISSIONS . WE FIND THAT THE ASSESSEE IS A PRIVATE LIMITED COMPANY, AND THE EXPE NSES ON ACCOUNT OF SALARY AND WAGES ARE DULY DEBITED AND REFLECTED IN THE CASH BO OKS PLACE IN THE PAPER BOOK PAGE 2 ONWARDS THE AO HAS NOT POINTED OUT ANY SPECI FIC DE FACTS DEFECTS IN THE BOOKS OF ACCOUNTS,NOR HAS REJECTED BOOKS OF ACCOUNT S U/S. 145(3) OF THE ACT. THE AO HAS ONLY DUE TO SOME LACUNA AND CLERICAL ERRORS AND OBSERVING THAT SIGNATURE ARE IN THE SAME HANDWRITING HAS ESTIMATED THE DISAL LOWANCE @ 30%. HOWEVER, WE NOTE THAT THIS IS THE FIRST YEAR OF THE BUSINESS OF THE ASSESSEE AND BOOKS OF ACCOUNTS ARE DULY AUDITED. THEREFORE, THE AO WAS NOT JUSTIF IED IN MAKING AD HOC DISALLOWANCE OUT OF SALARY AND WAGES EXPENSES WITHO UT REJECTION OF BOOKS OF ACCOUNTS AS PER PROVISION OF THE ACT. ACCORDINGLY, WE DEEMED IT FIT AND TO DELETE THE DISALLOWANCE MADE BY THE AO. CONSEQUENTLY, THIS GROUND OF APPEAL IS ALLOWED. 9. GROUND NO. 2 RELATES TO CONFIRMING THE DISALLOWANC E MADE BY THE AO OF RS. 2,22,000/- U/S. 40A(2)(B) OF THE ACT. 10. ON VERIFICATION OF SALARY BILLS AND VOUCHERS, THE AO NOTED THAT THE ASSESSEE HAS DEBITED SALARY PAID TO THE RELATIVE OF THE DIRE CTORS AMOUNTING OF RS. 2,22,000/- IN RESPECT OF FIVE PERSONS. THESE PERSONS ARE COVER ED U/S. 30A(2)(B) OF THE ACT FOR WHICH NO EXPLANATION WAS SUBMITTED, HENCE THE SAME WERE DISALLOWED. M/S. BHAIYA TRANSPORT PVT. LTD. VS. ACIT CIR- 5 /I. T.A. NO. 152/RJT/2014/A.Y.2008-09 PAGE 4 OF 6 11. AGGRIEVED THE ASSESSEE CARRIED THE MATTER BEFORE T HE CIT(A). HOWEVER, THE CIT(A) CONFIRMED THE DISALLOWANCE BY OBSERVING THAT THE SALARIED PASSED TO THE APPELLANTS RELATIVES HAS NOT BEEN SUBSTANTIATED OF ANY EXPLANATION. 12. BEING AGGRIEVED THE ASSESSEE HAS FILED THIS APPEAL BEFORE THE TRIBUNAL. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE SAL ARY AMOUNTING TO RS. 2,22,000/- HAS BEEN PAID TO THE COUSIN SON OF THE DIRECTORS WH O ARE NOT COVERED BY THE PROVISIONS OF 40A(2)(B) OF THE ACT. THEREFORE, THE DISALLOWANCE MADE BY THE AO ARE NOT JUSTIFIED AS THE ASSESSEE HAS FURNISHED COM PLETE BILLS OF PAYMENTS OF SALARIES WHICH HAVE PLACED AT PAPER BOOK PAGE 28. HOWEVER, THE SALARY REMUNERATION PAID TO THE PERSONS ARE RANGING BETWEEN RS. 13,400/- TO 1,11,800/-. THE AVERAGE PER PERSON SALARY COMES TO RS. 2,5000/- PER MONTH WHICH NOT AT ALL EXCESSIVE AND HENCE REASONABLE. THEREFORE, THE LOWER AUTHORITIES ARE NOT JUSTIFIED IN THEIR ACTION IN MAKING THE ADDITION AND CONFIRMING THE SAME. 13. PER CONTRA THE LD. SENIOR DR SUBMITTED THAT THE AS SESSEE HAS NOT FURNISHED DETAILS OF THE PERSONS HENCE THE DISALLOWANCE MADE BY THE AO ARE JUSTIFIED. 14. WE HAVE HEARD THE RIVAL SUBMISSIONS ARE PERUSED TH E MATERIAL AVAILABLE ON RECORD.WE FIND THAT THE SALARY TO 5 PERSONS HAS BEE N MADE PAID WHICH HAS BEEN RANGING RS. 3,400/- TO 1,11,800/- THE AVERAGE PAYME NT OF SALARY IN RESPECT OF VARIOUS PERSONS OF WHICH AVERAGE COMES TO RS. 2,500 /- TO 3,000/- PER MONTH. THE M/S. BHAIYA TRANSPORT PVT. LTD. VS. ACIT CIR- 5 /I. T.A. NO. 152/RJT/2014/A.Y.2008-09 PAGE 5 OF 6 DETAILS OF SALARY PAID BY THE ASSESSEE IS AVAILABLE AT PAPER BOOK PAGE 28. CONSIDERING THESE FACTS, WE FIND THAT THERE IS NO E XCESSIVE PAYMENTS MADE BY THE ASSESSEE HENCE THE DISALLOWANCE MADE BY THE AO ARE THEREFORE DELETED. THIS GROUND OF APPEAL IS THEREFORE DELETED. 15. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. 16. THE ORDER PRONOUNCED IN THE OPEN COURT ON 12.0 4.2019 SD/- SD/- (MADHUMITA ROY) ( O.P.MEENA) JUDICIAL MEMBER ACCOUNTA NT MEMBER TRUE COPY AHMEDABAD: DATED: 12 TH APRIL, 2019/OPM COPY OF ORDER SENT TO- ASSESSEE/AO/PR. CIT/ CIT (A) / ITAT (DR)/GUARD FILE OF ITAT. TANMAY BY ORDER ASSISTANT REGISTRAR, AHMEDABAD