Sh. Anil Kumar Sharma, Gwalior V. I.T.O., Ward-3(2), Gwalior

ITA 155/AGR/2013

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 0730 (ITAT-AGRA)
• Duration Of Justice: 6 year(s) 3 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 16-05-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 26-07-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 13-05-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S D SHARMA
• Assessee Lawyers: NAVIN GARGH
• Section: 40A(3); 234B; 250

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, AGRA BENCH, AGRA BEFORE : SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI A.L. GEHLOT, ACCOUNTANT MEMBER ITA NO. 155/AGRA/2013 ASSTT. YEAR : 2008-09 ANIL KUMAR SHARMA, VS. INCOME-TAX OFFICER, PROP. M/S. NEHA ENTERPRISES, WARD 3(2), GWALIOR . 79, SHARDA VIHAR, NEW HIGH COURT ROAD, CITY CENTRE, GWALIOR. (PAN: ATTPS 6072 L) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI NAVIN GARGH, ADVOCATE RESPONDENT BY : SHRI S.D. SHARMA, JR. D.R. DATE OF HEARING : 26.07.2013 DATE OF PRONOUNCEMENT OF ORDER : 31.07.2013 ORDER PER BHAVNESH SAINI, J.M.: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE LD. CIT(A), GWALIOR DATED 20.02.2013 FOR THE ASSESSMENT YEAR 20 08-09. 2. WE HAVE HEARD THE LD. REPRESENTATIVES OF BOTH TH E PARTIES, PERUSED THE FINDINGS OF AUTHORITIES BELOW AND CONSIDERED THE MA TERIAL AVAILABLE ON RECORD. ITA NO. 155/AGRA/2013 2 3. ON GROUND NO. 1, THE ASSESSEE CHALLENGED THE ADD ITION OF RS.4,06,440/- ON ACCOUNT OF ADHOC DISALLOWANCE OF LABOUR AND WAGES E XPENSES. THE ASSESSEE IS PROPRIETOR OF M/S. NEHA ENTERPRISES AND HAS SHOWN E XPENSES OF RS.20,32,200/- ON ACCOUNT OF LABOUR AND WAGES. ALL THE EXPENSES ARE P AID BY WAY OF CASH ONLY. THE ASSESSEE WAS DIRECTED TO PRODUCE VOUCHERS OF THE PA YMENTS. THE ASSESSEE ON REPEATED DEMAND PRODUCED XEROX COPY OF PAYMENT REGI STER TO TEMPORARY AND REGULAR EMPLOYEES BOTH, WHICH WAS TEST CHECKED ON R ANDOM BASIS. THIS REVEALED THAT ALL THE REGISTERS WERE PREPARED AFTERTHOUGHT W ITHOUT MENTIONING VARIOUS SITES WHERE WORK WAS TAKEN UP. THE RATE OF SALARY PAYMENT WAS IDENTICAL. THE NUMBER OF TEMPORARY EMPLOYEES ROSE AND FATHERS NAME IN PAYME NT IN ATTENDANCE REGISTER IS NOT MAINTAINED. ALL SUCH SHEETS WERE PREPARED IN ON E DAY WITH SINGLE PEN. IT WAS ALSO NOTED THAT WORKERS DO NOT ATTEND ON AMAVAS DAY , BUT THEY WERE FOUND PRESENT AS PER LABOUR LAW. 20% OF THE EXPENSES WERE , THEREFORE, DISALLOWED. THE LD. CIT(A) WITHOUT GIVING REASONS FOR DECISION CONFIRME D THE ADDITION. 4. ON CONSIDERATION OF THE RIVAL SUBMISSIONS, WE AR E OF THE VIEW THAT THE ADDITION IS STILL ON EXCESSIVE SIDE. THE ASSESSEE H AS FILED DETAILS IN THE PAPER BOOK, WHICH WERE EXAMINED BY THE AO AND THE ASSESSEES CO UNSEL TRIED TO JUSTIFY THAT ATTENDANCE REGISTERS WERE PROPERLY MAINTAINED AND S INCE THE ASSESSEE IS DOING WORK IN REMOTE AREA, THEREFORE, SOMETIMES, SPECIFIC DETA ILS COULD NOT BE MAINTAINED AND ITA NO. 155/AGRA/2013 3 CASH PAYMENT HAS BEEN MADE. HISTORY OF THE ASSESSEE IS MENTIONED AT PAGE 29 OF THE PAPER BOOK, IN WHICH THE ASSESSEE HAS STATED TO HAVE SHOWN GP RATE OF 12% IN THE ASSESSMENT YEAR UNDER APPEAL ON GROSS RECEIPTS OF RS.70,15,683/-. IN THE PRECEDING ASSESSMENT YEAR, GROSS RECEIPTS WERE APPR OXIMATELY RS.62.58 LACS AND GP WAS 15.6%. IN THE ASSESSMENT YEAR 2006-07, GROSS RECEIPTS WERE APPROXIMATELY RS.31.62 LACS SHOWING GP OF 11.9%. ACCORDING TO THE LD. COUNSEL FOR THE ASSESSEE, THE NATURE OF BUSINESS OF THE ASSESSEE IS SAME. THE REFORE, CONSIDERING THE HISTORY OF THE ASSESSEE AND NATURE OF BUSINESS, AND THAT RETUR N OF INCOME WAS FILED AT RS.2,64,030/-, WE ARE OF THE VIEW THAT THE ADDITION ON ACCOUNT OF DISALLOWANCE OF LABOUR AND WAGES IS EXCESSIVE. THE ORDERS OF THE AU THORITIES BELOW ARE, THEREFORE, MODIFIED TO THE EXTENT THAT DISALLOWANCE IS RESTRIC TED TO 10% OF THE TOTAL CLAIM MADE BY THE ASSESSEE. THE ADDITION IS, THEREFORE, M AINTAINED AT RS.2,03,220/-. IN THE RESULT, GROUND NO. 1 OF APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 5. ON GROUND NO.2 THE ASSESSEE CHALLENGED THE ADDIT ION OF RS.89,265/- BY TREATING THE ENTIRE AGRICULTURAL INCOME AS INCOME F ROM OTHER SOURCES. THE ASSESSEE HAS EARNED AGRICULTURAL INCOME OF RS.89,265/- NET A S AGAINST GROSS RECEIPTS OF RS.1,18,225/- AND INCURRED RS.28,960/- AS EXPENSES. THE ASSESSEE FAILED TO PRODUCE SINGLE VOUCHER/BILL IN RESPECT OF EXPENDITURE. THE ASSESSEE PRODUCED XEROX COPY OF MANDI PRAMANAK, REGARDING WHICH HE FAILED TO PRODUC E ORIGINAL ONE AND ADDRESS OF ITA NO. 155/AGRA/2013 4 SUCH TRADER WITH DATES ON WHICH SUCH PAYMENTS WERE MADE. IN THE ABSENCE OF ANY EVIDENCE, ENTIRE AGRICULTURAL INCOME WAS TREATED AS INCOME FROM OTHER SOURCES AND ADDITION WAS ACCORDINGLY MADE. THE ASSESSEE SUBMITT ED BEFORE THE LD. CIT(A) THAT WEIGHTAGE SHOULD BE GIVEN TO THE AGRICULTURE LAND R ECORDS AND MANDI CERTIFICATE. IT WAS STATED THAT ALL THE AGRICULTURAL PRODUCE ARE SO LD THROUGH MANDI UNDER THE SUPERVISION OF MANDI COMMITTEE ON AUCTION BASIS AND THUS, MANDI CERTIFICATE IS ONE OF THE AUTHENTIC AND CONCLUSIVE CERTIFICATE FOR ACCEPTING AGRICULTURAL INCOME. DURING THE COURSE OF PROCEEDINGS, THE ASSESSEE PROV IDED EVIDENCES OF HOLDING THE AGRICULTURAL LAND BY WAY OF LOAN PASSBOOK AND COPY OF REGISTRY AND THE ASSESSEE HELD APPROXIMATELY 8 BIGHAS OF HIGHLY IRRIGATED LAN D AND EARNING AGRICULTURAL INCOME IN PAST ALSO. THE AGRICULTURAL INCOME IN PAS T HAS BEEN ACCEPTED. THEREFORE, WHOLE OF THE ADDITION IS UNJUSTIFIED. THE LD. CIT(A ) SUMMARILY REJECTED THE CLAIM OF ASSESSEE AND DISMISSED THE APPEAL OF THE ASSESSE E WITHOUT GIVING ANY REASONS. 6. ON CONSIDERATION OF THE RIVAL SUBMISSIONS, WE AR E OF THE VIEW THAT THE ADDITION OF ENTIRE AGRICULTURAL INCOME IS WHOLLY UN JUSTIFIED. THE LD. CIT(A) DID NOT DISPUTE THE AGRICULTURAL LAND HELD BY THE ASSESSEE AND THE AGRICULTURAL INCOME ACCEPTED IN THE PAST BY THE DEPARTMENT. THE ASSESSE E HAS FILED COPIES OF PAYMENTS RECEIVED FROM MANDI SAMITI GWALIOR AT PAGES 23, 24 AND 25 OF THE PAPER BOOK, WOULD PROVE THAT THE ASSESSEE HAS IN FACT EARNED AG RICULTURAL INCOME. HOWEVER, IN ITA NO. 155/AGRA/2013 5 THE ABSENCE OF SPECIFIC AND COMPLETE EVIDENCE ON RE CORD, ENTIRE CLAIM OF ASSESSEE COULD NOT HAVE BEEN ACCEPTED. THEREFORE, CONSIDERIN G THE TOTALITY OF FACTS AND CIRCUMSTANCES ABOVE, WE MODIFY THE ORDERS OF AUTHOR ITIES BELOW AND ACCEPT THE AGRICULTURAL INCOME OF ASSESSEE AT RS.50,000/- IN A LL AS AGAINST CLAIM OF RS.89,265/- . THE AO IS DIRECTED ACCORDINGLY. GROUND NO. 2 OF A PPEAL OF THE ASSESSEE IS ACCORDINGLY, PARTLY ALLOWED. 7. ON GROUND NO. 3, THE ASSESSEE CHALLENGED ADDITIO N OF RS.73,859/- ON ACCOUNT OF DISALLOWANCE U/S. 40A(3) OF THE IT ACT BEING 20% OF PAYMENT OF RS.3,69,299/-. DURING THE RELEVANT YEAR, THE ASSESSEE HAS MADE PUR CHASES TO THE TUNE OF RS.40,91,575/- AS PER LEDGER. ON EXAMINATION, IT WA S FOUND THAT THE ASSESSEE HAS PAID CASH IN SIX CASES, THE DETAILS OF SAME ARE NOT ED AT PAGE 5 OF THE ASSESSMENT ORDER WHERE CASH PURCHASES HAVE BEEN MADE ABOVE RS. 20,000/- TOTALING TO RS.3,69,299/-. THE AO ACCORDINGLY DISALLOWED 20% OF THE SAME AND MADE ADDITION OF RS.73,859/-. THE ASSESSEE SUBMITTED BEFORE THE L D. CIT(A) THAT THE PURCHASES WERE MADE IN EMERGENCY OUTSIDE GWALIOR WHERE NO BAN K ACCOUNTS ARE MAINTAINED AND THE CIRCUMSTANCES WERE EXPLAINED FOR MAKING CAS H PURCHASES, WHICH IS REPRODUCED IN THE APPELLATE ORDER. THE LD. CIT(A), HOWEVER, CONFIRMED THE ADDITION AND HELD THAT NONE OF THE CASH PAYMENTS MADE BY THE ASSESSEE IS COVERED BY THE EXCEPTION GRANTED UNDER ANY CLAUSE OF RULE 6DD. ITA NO. 155/AGRA/2013 6 8. ON CONSIDERATION OF THE RIVAL SUBMISSIONS, WE DO NOT FIND ANY MERIT IN THIS GROUND OF APPEAL OF THE ASSESSEE. THE LD. COUNSEL C OULD NOT SPECIFY AS TO UNDER WHICH RULE, THE ASSESSEES CASE WOULD BE EXEMPTED F OR OPERATION OF SECTION 40A(3) OF THE IT ACT. HE HAS ADMITTED THAT EVEN IF THE ASS ESSEE PLEADED THE CASE OF EMERGENCY TO MAKE PURCHASE, BUT NO CONFIRMATION OF ANY PARTY IS FILED ON RECORD. HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF AGGARWAL STEEL TRADERS VS. CIT, 250 ITR 738 (109 TAXMAN 283) CONSIDERING THE B OARDS CIRCULAR ON RULE 6DD HELD AS UNDER : HELD, (I) THAT THE EXPLANATION RENDERED BY THE ASSESSEE I N RESPECT OF THE PAYMENTS OF RS.24,000 AND RS.40,000 WOULD BE COVERED BY THE EXCEPTIONAL CIRCUMSTANCES AS PROVIDED IN THE BOARDS CIRCULAR, YET THAT BY ITSELF WOULD NOT ENTITLE THE ASSESSEE T O CLAIM THE RELIEF. THERE IS A FURTHER REQUIREMENT PROVIDED IN THE BOAR DS CIRCULAR ITSELF OF FURNISHING A CONFIRMATORY LETTER FROM THE CONCER NED PARTIES. ADMITTEDLY, NO SUCH LETTER IN THE ABOVE TERMS HAD B EEN FURNISHED BY THE ASSESSEE. HENCE, THE TRIBUNAL WAS JUSTIFIED IN SUSTAINING THE ADDITION OFRS.64,000 IN VIEW OF THE PROVISIONS OF S ECTION 40A(3) READ WITH RULE 6DD OF THE INCOME-TAX RULES, 1962. SINCE NO CONFIRMATORY LETTERS HAVE BEEN FILED AND T HE ASSESSEE FAILED TO PROVE ANY EXCEPTION CLAUSE IN THIS CASE, THEREFORE, WE DO NOT FIND ANY INFIRMITY IN THE ORDERS OF THE AUTHORITIES BELOW IN MAKING AND CONFIRMING T HE ADDITION. GROUND NO. 3 OF APPEAL OF THE ASSESSEE IS, ACCORDINGLY, DISMISSED. ITA NO. 155/AGRA/2013 7 9. ON GROUND NO. 4, THE ASSESSEE CHALLENGED THE DIS ALLOWANCE OUT OF VEHICLE RUNNING EXPENSES, MISC. EXPENSES, TRAVELING EXPENSE S, TELEPHONE AND MOBILE EXPENSES AND DIWALI EXPENSES TOTALING TO RS.17,116/ -. THE AO DISALLOWED 20% OUT OF VEHICLE RUNNING AND MAINTENANCE EXPENSES FOR PER SONAL USER, MISCELLANEOUS EXPENSES WERE DISALLOWED 100% FOR WANT OF VOUCHERS, TRAVELING EXPENSES WERE DISALLOWED @ 20%, TELEPHONE AND MOBILE EXPENSES WER E DISALLOWED @ 10% FOR PERSONAL PURPOSE AND DIWALI EXPENSES WERE DISALLOWE D 100%, WHICH ARE CAPITAL IN NATURE. THE LD. CIT(A) CONFIRMED ALL THE ADDITIONS. 10. ON CONSIDERATION OF THE RIVAL SUBMISSIONS, NATU RE OF BUSINESS OF ASSESSEE AND MEAGER INCOME SHOWN BY THE ASSESSEE IN THE RETURN O F INCOME, WE ARE OF THE VIEW THAT THE ASSESSEE HAS NOT INFLATED THESE EXPENSES I N ALL. THE AO HAS ALREADY GIVEN SUBSTANTIAL BENEFIT TO THE ASSESSEE OUT OF THREE EX PENSES ABOVE, THEREFORE, CONSIDERING THE TOTALITY OF FACTS AND CIRCUMSTANCES , THE ADDITION OUT OF DISALLOWANCE OF THESE EXPENSES IS FURTHER REDUCED BY RS.5,000/- AND THE REMAINING ADDITION OF RS.12,116/- IS CONFIRMED. IN THE RESULT, GROUND NO. 4 OF APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ITA NO. 155/AGRA/2013 8 11. CHARGING OF INTEREST U/S. 234B IS CONSEQUENTIAL AND MANDATORY AND THIS GROUND IS ACCORDINGLY DISMISSED. 12. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (A.L. GEHLOT) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER *AKS/- COPY OF THE ORDER FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A), CONCERNED BY ORDER 4. CIT, CONCERNED 5. DR, ITAT, AGRA 6. GUARD FILE SR. PRIVATE SECRETARY TRUE COPY