M/s Loknath Engineering Co, Kolkata V. The ITO, Wd-31(1), Kolkata, Kolkata

ITA 1521/KOL/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 4957 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 1 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-12-2013
• Appeal Filed By: Assessee
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 19-10-2012
• Court: TRIBUNAL
• Department Lawyers: APURBA KR DAS L D
• Assessee Lawyers: SOMAK BASU LD AR
• Section: 143(3); 133(6)

Judgement Text

, B , , INCOME TAX APPELLATE TRIBUNAL, BENCH- B KOL KATA ( ) BEFORE . , SHRI R.C. SHARMA, ACCOUNTANT MEMBER !' /AND #$# 1 & ' , ) SHRI GEORGE MATHAN, JUDICIAL MEMBER '( / ITA NO. 1521/KOL/2012 A.Y 2009-10 M/S. LOKNATH ENGG. CO. PAN: AACFL 5118L - !' - - VERSUS - . I.T.O WARD 31(1), KOLKATA ( &* / APPELLANT ) ( +,&* / RESPONDENT ) &* /FOR THE APPELLANT //SHRI SOMAK BASU, ADVOCATE, LD.AR +,&* / FOR THE RESPONDENT: / SHRI APURBA KR. DAS, LD. JCIT, SR.DR .'!/ 0 1 /DATE OF HEARING : 10-12--2013 23 0 1 /DATE OF PRONOUNCEMENT: 13/12/2013 / ORDER . , SHRI R.C. SHARMA, ACCOUNTANT MEMBER THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER PASSED BY THE LD. CIT(A), DATED 27/08/2012 FOR THE ASSESSMENT YEAR 2009-10, IN THE MATTER OF ORDER PASSED U/S. 143(3) OF THE I.T ACT 1961. 2. FOLLOWING FOUR GROUNDS HAVE BEEN TAKEN BY THE AS SESSEE:- 1) FOR THAT, ON THE FACTS AND IN THE CIRCUMSTANC ES OF THE CASE, THE ASSESSMENT WAS NOT FAIR AND PROPER AND THE OTH ER HAND IT WAS MADE CONTRARY TO LAW AND PROCEDURE AND WAS AGAINST SOUND AND ADEQUATE PRINCIPLES OF LAW. 2) FOR THAT, ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. COMMISSIONER OF INCOME-TAX (APPEALS)-XIX HAS ERRED IN ITA NO.1521/KOL/12-B A.Y 09-10 M/S. LOKNATH ENGG.CO . 2 2 CONFIRMING THE ADDITION MADE BY THE LD. I.T.O WARD -31(1) AS BELOW: A) LABOUR CHARGES OUTSTANDING OF RS. 23,58,735/. B) SUNDRY CREDITORS OF M/S. MONDAL TRADERS RS. 33,8 20/ O) SUNDRY CREDITORS OF M/S.RUBINA BUILDING STORES OF RS.30,310/- D) SUNDRY CREDITORS OF M/S. ALI BUILDERS OF RS. 33, 590/-. E) SUNDRY CREDITORS OF M/S. RMCO OF RS. 36,133/ 3) FOR THAT HAVING REGARD TO THE FACTS OF THE CASE, THE LD. COMMISSION OF INCOME TAX(APPALS)XIX ERRED IN SUST AINING THE DISALLOWANCE OF RS.24,92,588/- AS ABOVE AND WITH OUT CONSIDER SURROUNDING CIRCUMSTANCES TO FIND OUT THE REALITY AND THE MATTER HA TO BE CONSIDERED. 4) FOR THAT HAVING REGARD TO THE FACTS AND THE CASE , THE LD. COMMISSIONER OF INCOME TAX (APPEALS) XIX ALSO ERR ED IN SUSTAINING T.D.S A SUM OF RS.2,56,093/- NOT ALLOWED BY THE LD. I.T.O DUE TO UPLOADED IN FORM NO.26AS AND IF ANY, WAS DEMONSTRABLY ERRONEOUS. 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND PERUSE D THE RECORD. FACTS IN BRIEF ARE THAT THE ASSESSEE IS CARRYING ON BUSINESS MAINLY AS A SUPPLY OF LABOUR FOR MAINTENANCE OF LIFT, WATER PUMP ETC. DURING THE SCRUTINY ASSES SMENT THE AO FOUND THAT THE ASSESSEE HAS DEBITED LABOUR CHARGES OF RS.68,09,858/-, WAGES OF RS. 13,67,822/-. THUS, THE TOTAL LABOUR CHARGES OF RS.81,77,680/- WAS DEBITED TO T HE P & L ACCOUNT, OUT OF WHICH RS.25,15,998/- WAS OUTSTANDING AS ON THE END OF THE YEAR I.E. 31-03-2009. IT WAS EXPLAINED THAT THE PAYMENT WAS OUTSTANDING DUE TO S HORTAGE OF FUND AND THE SAME WAS PAID IN THE NEXT YEAR. THE AO ISSUED NOTICES U/S. 133(6) OF THE I.T ACT 1961 TO THREE LABOURERS, BUT THE SAME WERE RETURNED UNSERVED . THE AO, THEREFORE, PRESUMED THAT ALL THE OUTSTANDING LABOUR CHARGES WERE BOGUS, ACCORDI NGLY, AN AMOUNT OF RS.23,58,735/- ADDED TO ASSESSEES INCOME. 4. VIDE THE IMPUGNED ORDER, THE LD.CIT(A) HAS CON FIRMED THE ACTION OF THE AO, AGAINST WHICH THE ASSESSEE IS IN FURTHER APPEAL BE FORE US. ITA NO.1521/KOL/12-B A.Y 09-10 M/S. LOKNATH ENGG.CO . 3 3 5. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND FOUND FROM THE RECORD THAT THE AO HAS MADE DISALLOWANCE OF LABOUR CHARGES ON THE P LEA THAT PART OF LABOUR EXPENSES DEBITED IN THE P & L ACCOUNT WERE NOT ACTUALLY PAID AND REMAINED OUTSTANDING AT THE END OF THE YEAR. THE AO HAS STATED THAT NOTICES IS SUED TO 3 LABOURERS WERE RETURNED UNSERVED, THEREFORE, HE DISBELIEVED THE OUTSTANDING AMOUNT OF LABOUR CHARGES AND ADDED THE SAME IN THE ASSESSEES INCOME. THE LD. CIT(A) HAS CONFIRMED THE ADDITION BY OBSERVING THAT THE ASSESSEE HAS FAILED TO ESTAB LISH THE IDENTITY OF THE CREDITORS. THE ASSESSEE HAS PAID OUTSTANDING LABOUR CHARGES IN THE NEXT YEAR. AS PER STATEMENT PLACED ON RECORD, THE ENTIRE OUTSTANDING LABOUR CHARGES AM OUNT WAS PAID IN THE CALENDAR YEAR 2009-10 ITSELF STARTING FROM APRIL 09 TO NOV.09 . DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE HAD SHOWN NET PROFIT (N.P)@ 6% ON TURN OVER OF RS.1,50,08,255/- AS AGAINST N.P @ 6.51% ON TURNOVER OF RS.56,80,613/- IN THE A SSESSMENT YEAR 2008-09. NET PROFIT WAS SHOWN @5.10% ON TURNOVER OF RS.73,73,017/- IN T HE A.Y 2007-08. LOOKING INTO SUBSTANTIAL INCREASE OF TURNOVER DURING THE YEAR U NDER CONSIDERATION, THE NET PROFIT AS SHOWN BY THE ASSESSEE APPEARS TO BE VERY REASONABLE . NO DEFECT WAS FOUND BY THE AO IN THE BOOKS OF ACCOUNT NOR THE SAME WAS NOT REJECTED . MERELY RETURN OF NOTICE ISSUED TO THREE LABOURERS, CANNOT BE MADE THE BASIS FOR MA KING DISALLOWANCE OF ENTIRE LABOUR EXPENSES, WHICH HAVE BEEN GENUINELY INCURRED BY THE ASSESSEE. THE LABOURERS SO ENGAGED BY THE ASSESSEE MIGHT HAVE CHANGED THEIR ADDRES SES AND ASSESSEE IS NOT SUPPOSED TO KEEP TRACK OF ADDRESSES OF THE LABOURERS, WHICH WERE ABOVE 330 IN NUMBERS. LABOUR CHARGES WERE PAID AFTER LABOURERS HAVE DONE TH EIR WORK, THEREFORE, THE LABOUR CHARGES PAID TO LABOURERS CANNOT BE DISALLOWED MERELY ON TH E PLEA THAT OUT OF 300 LABOURERS ONLY 3 WERE NOT TRACEABLE. KEEPING IN VIEW OF NATURE OF ASSESSEES BUSINESS VIS--VIS QUANTUM OF LABOUR CHARGES CLAIMED BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION AS COMPARED TO EARLIER YEARS AND ALSO THE NET PROF IT RATE DISCLOSED BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION, WE ARE INCLINED TO MODIFY THE ORDERS OF THE LOWER AUTHORITIES AND DIRECT THE AO TO RESTRICT THE DISA LLOWANCE TO THE EXTENT @5% OF LABOUR ITA NO.1521/KOL/12-B A.Y 09-10 M/S. LOKNATH ENGG.CO . 4 4 CHARGES OF RS. 81,71,680/- DEBITED TO THE P & L AC COUNT. ACCORDINGLY, THE DISALLOWANCE OF RS. 23,58,735/- IS REDUCED TO RS.4,08,884/-. 6. WITH REGARD TO ADDITION ON ACCOUNT OF TRADE CR EDITORS, WE FOUND THAT THE FOLLOWING PAYMENTS WERE PAID BY THE ASSESSEE IN THE IMMEDIATELY SUCCEEDING YEAR. THE DETAILS ARE AS UNDER :- S.NO. NAME OF CREDITORS AMOUNT DT. OF PAYMENT 01. M/S. MONDAL TRADERS 33,820/- 17-07-2009 & 31-07-2009 02. M/S. RUBINA BUILDING STORES 30,310/- 24-0 4-2009 & 8-5-2009 03. M/S. ALI BUILDERS 33,590/- 3-5-09,17- 07-09 & 31-07-09 04. M/S. RMCO 36,133/- - - - - 6.1 FROM THE RECORD, WE FOUND THAT ASSESSEE WAS HAV ING DISPUTED WITH ABOVE 3 PARTIES, THEREFORE, PART OF THE AMOUNT REMAINED O UTSTANDING AT THE END OF THE YEAR. AS PER ASSESSEE AMOUNT WAS ACTUALLY PAID TO THESE PAR TIES IN THE SUBSEQUENT YEAR ON THE DATES MENTIONED HEREIN ABOVE. IN THE INTEREST OF JUSTICE AND FAIR PLAY, WE RESTORE ALL THESE THREE GROUNDS TO THE FILE OF THE AO FOR DECID ING AFRESH AFTER GIVING DUE OPPORTUNITY TO THE ASSESSEE. IF THE AO FOUNDS ON V ERIFICATION OF THE BOOKS OF ACCOUNT OF THE ASSESSEE THAT OUTSTANDING BALANCE IN THESE THREE ACCOUNTS HAVE ACTUALLY BEEN PAID ON THE DATES MENTIONED HEREINABOVE, NO ADDITION IS WARRANTED. WE DIRECT ACCORDINGLY. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED IN PART AS STATED ABOVE. THIS ORDER IS PRONOUNCED IN OPEN COURT ON DT. 13/1 2/2013 SD/- SD/- ** PRADIP SPS ( #$# 1 & ' , ) ( GEORGE MATHAN, JUDICIAL MEMBER ( . , ) ( R.C. SHARMA, ACCOUNTANT MEMBER ( (( ( 1 1 1 1 ) )) ) DATE 13/12/2013 ITA NO.1521/KOL/12-B A.Y 09-10 M/S. LOKNATH ENGG.CO . 5 5 0 +4 5436 / COPY OF THE ORDER FORWARDED TO: 1. . &* / THE APPELLANT : M/S. LOKNATH ENGINEERING CO. 14 G.C AVENUE, KOL-13 2 +,&* / THE RESPONDENT- I.T.O W 31(1), 10B, MIDDLETON ROW, 4 TH FL., ROOM NO. 5, KOL-71. 3 4. . ' / THE CIT, ' ( )/ THE CIT(A) 5 . !78 +' / DR, KOLKATA BENCH 6 . GUARD FILE . ,4 +/ TRUE COPY, './ BY ORDER, 9 '# /ASSTT REGISTRAR