Dy.CIT, Cir.3, Pune, Pune V. Mukund Jaishankar Dhariya, Pune

ITA 164/PUN/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 4325 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 2 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-04-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 30-01-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANN KAPTHUAMA
• Assessee Lawyers: SHREMIK GANDHI
• Keywords: Corroborative evidences

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE: SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER ITA NO.164/PN/2012 ASSESSMENT YEAR : 200 8 - 0 9 DY. CIT, CIRCLE-3 PUNE VS. MUKUND JAISHANKAR DHARIYA PLOT NO. 43, INDU NIVAS, SHIVAJI HOUSING SOCIETY, SHIVAJI NAGAR, PUNE (APPELLANT) (RESPONDENT) PAN NO. AAPDD8665F APPELLANT BY: MS. ANN KAPTHUAMA RESPONDENT BY: SHRI SHREMIK GANDHI DATE OF HEARING : 10-04-2013 DATE OF PRONOUNCEMEN T : 22-04-2013 ORDER PER R.S. PADVEKAR, JM:- IN THIS APPEAL, THE REVENUE HAS CHALLENGED THE IMPUGNED ORDER OF THE LD.CIT(A)-II, PUNE DATED 12-10-2011 FOR A.Y. 2008-09 . THE REVENUE HAS TAKEN FOLLOWING EFFECTIVE GROUNDS: 1. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) GROSSLY ERRED IN PARTLY ALLOWING THE ASSESSEE'S CLAIM OF EX PENDITURE INCURRED IN CASH MERELY BY RELYING ON THE ORDERS OF THE PRECEDING ASSESSMENT YEARS AND WITHOUT, IN ANY MANNER, EXAMIN ING THE FACTS OF THE PRESENT CASE. 2. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) GROSSLY ERRED IN PARTLY ALLOWING THE ASSESSEE'S CLAIM OF EX PENDITURE INCURRED IN CASH WHICH WAS SUPPORTED ONLY BY SELF-M ADE VOUCHERS AND NO OTHER EXTERNAL SUPPORTING EVIDENCES WERE PRO DUCED BY THE ASSESSEE TO SUBSTANTIATE THE SAME. 3. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) GROSSLY ERRED IN FAILING TO APPRECIATE THAT THE SELF-MADE V OUCHERS PRODUCED BY THE ASSESSEE HAD NO PARTICULARS ESSENTIALLY REQUIRED SUCH AS AMOUNT PAID AND SIGNATURE/ THUMB IMPRESSION OF THE PAYEE AND, THEREFORE, WERE LIABLE TO RAISE DOUBTS REGARDING THEIR GENUINENESS AS WELL AS THE GENUINENESS OF THE EXPENDITURE. 4. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) GROSSLY ERRED IN FAILING TO APPRECIATE THAT CONSIDERING THE ABOVE FACTS, THE ASSESSING OFFICER HAD DISALLOWED ONLY 20% OF THE TO TAL EXPENDITURE THEREBY ALLOWING 80% OF THE ASSESSEE'S CLAIM I.E. R S.1,13,13,272/- . IN THE CIRCUMSTANCES, THE COMMISSIONER OF INCOME- TAX (APPEALS) WAS NOT JUSTIFIED IN GRANTING ANY RELIEF TO THE ASS ESSEE. 2 ITA NO.164/PN/2012, MUKUND JAISHANKAR DHARIA, PUNE 2. THE FACTS WHICH ARE REVEALED FROM THE RECORD ARE AS UNDER. THE ASSESSEE IS A GOVERNMENT CONTRACTOR AND UNDERTAKES T HE CONTRACT FOR CONSTRUCTION OF DAMS AND CANALS THROUGH HIS PRINCIPAL CONT RACTOR. THE ASSESSEE FILED THE RETURN OF INCOME FOR THE A.Y. 2008-09, DE CLARING TOTAL INCOME AT RS.26,49,970/-. THE ASSESSING OFFICER HAS OBSERV ED THAT ON THE PERUSAL OF THE PROFIT AND LOSS ACCOUNT IT WAS SEEN TH AT THE ASSESSEE HAS DEBITED RS.7,32,64,342/- TOWARDS DIRECT LABOUR ACCOUN T. THE DETAILS OF THE SAID EXPENDITURE ARE AS UNDER: SL. NO. PARTICULARS AMOUNT 1 BLASTING CHARGES 2.53,868.00 2 LABOUR CHARGES 10,393,072 3 SECONDARY BREAKING OF BOLDER 34,94,649.00 4 SUB CONTRACT WAGES 59,122,753.00 TOTAL 73,264,342 3. THE ASSESSING OFFICER HAS FURTHER OBSERVED THAT ON TH E PERUSAL OF THE LEDGER ACCOUNTS, IT IS SEEN THAT THE ASSESSEE HAS C LAIMED TO HAVE INCURRED ALMOST ALL THE EXPENSES IN CASH. THE SAID PAYME NTS WERE SUPPORTED BY SELF MADE VOUCHERS NARRATING MAINLY NAMES OF PAYEE , NAME OF VILLAGE BUT NO DETAIL ADDRESSES OR NATURE OF PAYMENT A ND AMOUNT PAID WITH SIGNATURE/THUMB IMPRESSION HAVE BEEN PRODUCED BEFOR E THE ASSESSING OFFICER. THE ASSESSING OFFICER PROCEEDED TO MAKE S 20% DISALLOWANCE OUT OF THE EXPENDITURE CLAIMED UNDER DIRECT L ABOUR ACCOUNT. THE ASSESSEE FILED THE REPLY WHICH IS REPRODUCE D BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER AS UNDER: 'ARYAN CONSTRUCTION HAS EXECUTED THE WORK WORTH OF RS. 8,21,87,155/- DURING FY.2007- 08. THE SAID WORK IS A SUB CONTRACT, UNDER THE MAIN WORK OF CONSTRUCTION OF KU MBHE DAM UNDER KAL - KUMBHE HYDRO ELECTRIC PROJECT, ORIGINALLY ENT RUSTED TO M/S ARYAN PANDHE CONSTRUCTION PVT LTD FROM THE GOVT. OF MAHARASHTRA, IRRIGATION DEPARTMENT. THE WORK EXECUTED BY 'ARYAN' IS 'SECONDARY BREAKING ' OF DULY BLASTED ROCK AND CONSTRUCTION OF EARTHEN DAM. THE NATURE OF WORK REQ UIRES MAXIMUM MANUAL LABOR. THE WORDING OF ITEMS ITSELF I S SELF EXPLANATORY. CONSIDERING THE QUANTUM OF WORK, IT IS VERY LOGICAL THAT SECONDARY BREAKING OF ROCK WHICH IS DULY BLASTED WITH THE HEL P OF BIG BLASTING 3 ITA NO.164/PN/2012, MUKUND JAISHANKAR DHARIA, PUNE OPERATIONS, DONE BY THE PRINCIPLE COMPANY AND THE O NLY WORK OF RE BREAKING THE SAME WITH MANUAL LABOR TO SUITABLE SIZE WHICH CAN BE HANDLED MANUALLY FOR RE USING THE SAME FOR OTHER ACTIVITY OF CONSTRUCTION, CANNOT BE EXECUTED MECHAN ICALLY, WILL NATURALLY ATTRACT MANUAL LABOR. SIMILARLY, THE CONSTRUCTION OF 'HEARTING' AND 'GASS ING' FOR THE DAM IS NOTHING BUT SPREADING OF SOIL AND MURUM OF SELECTED QUALITY, RE MOVING VEGETATION AND BIG BOULDERS, DRESSING THE SAME TO REQUIRED DESIGN AND SLOP, SPREADING WATER AND COMPACTING THE SAME BY COMPACTOR, WHICH ALSO REQUIRES MAXIMUM MANUAL WORK. THE CONSTRUCTION OF EARTHEN DAM IS TOTALLY CONSTRUC TED FROM THE AVAILABLE EARTH MATERIAL FROM THE VICINITY OF THE D AM SITE AND DOES NOT REQUIRE ANY OTHER MATERIAL SUCH AS CEMENT OR STEEL. THE WORK IS MAINLY EXECUTED BY EARTH MOVING MACHINERY AND MAXIM UM MANUAL LABOUR. THE FACTS CAN BE EASILY VERIFIED FROM THE ORIGINAL TENDER DOCUMENT WHICH IS A PART OF THE GREEMENT AND ITSELF IS SELF EXPLANATORY. THE REPLY OF THE ASSESSEE IS CONSIDERED CAREFULLY, IT CANNOT BE DENIED THAT THE ASSESSEE HAS EARNED INCOME OUT OF THE CARRYING OUT THE CONTR ACT WORK. THE FACT OF THE CASE IS THAT ALL THE EXPENSES UNDER THE HEADS OF THE BLASTING CHARGES, LABOUR CHARGES AND SECONDARY BREA KING OF BOLDER, HAVE BEEN MADE IN CASH. DURING THE COURS E OF ASSESSMENT PROCEEDINGS, ONLY SELF MADE VOUCHERS HAVE BEEN PROD UCED. NEITHER EXTERNAL SUPPORTING EVIDENCES NOR THIRD PARTY EVIDE NCES HAVE PRODUCED BY THE AR. SINCE, ALMOST ALL THE EXPENSES INCURRED IN CASH AND BELOW RS. 20.000/-, THE GENUINENESS OF ENTIRE EXPENSES AS WEL L AS IMMEDIATE AND DIRECT NEXUS WITH THE ACTIVITY OF THE BUSINESS FROM WHICH ASSESSEE HAS EARNED INCOME AND OFFERED FOR TAX CANNOT BE ESTABLISHED. HOWEVER, IT CANNOT BE DENIED THAT WITHOUT INCURRING THE EXPENSE S/PROVIDING THE GOODS OR SERVICES, NO ONE CAN GENERATE THE INCOME T HEREFORE, KEEPING IN VIEW THE TOTALITY OF THE CIRCUMSTANCES OF THE CASE, 20% OF RS. 1.41,41,590/- WHICH COMES TO RS. 28,28,318/- IS HER EBY DISALLOWED AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 4. THE ASSESSING OFFICER WAS NOT IMPRESSED WITH THE EXPLAN ATION OF THE ASSESSEE AND MADE DISALLOWANCE OF RS.28,28,318/-. THE ASSESSEE CHALLENGED THE DISALLOWANCE BEFORE THE LD.CIT (A). THE LD.CI T (A) SUSTAINED A DISALLOWANCE TO 10% IN PLACE OF 20% MADE BY TH E ASSESSING OFFICER BY FOLLOWING HIS DECISIONS IN THE A.YS. 2006-07 & 2007-08. 5. NOW THE REVENUE IS IN APPEAL BEFORE US. WE HAVE HEA RD THE PARTIES. LEARNED COUNSEL SUBMITS THAT SO FAR AS A.Y. 2006 -07 IS CONCERNED, THE DISALLOWANCE SUSTAINED BY THE LD.CIT (A) WA S DELETED BY THE TRIBUNAL AND SUBSEQUENTLY IN A.YS. 2007-08 & 2008-09 THE SAID ORDER WAS FOLLOWED BY THE TRIBUNAL AND DELETED THE ENTIRE ADDITION SUSTAINED BY THE LD.CIT (A). THE LEARNED COUNSEL HAS FILED THE COPIES OF 4 ITA NO.164/PN/2012, MUKUND JAISHANKAR DHARIA, PUNE THE TRIBUNAL ORDER IN ASSESSEE OWN CASE FOR THE A.YS. 2 006-07 & 2007- 08 WHICH ARE PLACED ON RECORD. WE HAVE ALSO HEARD THE LD. DR. SO FAR AS THE PRESENT APPEALS ARE CONCERNED, IT IS A CROSS APP EAL BY THE REVENUE FOR THE A.Y. 2008-09 WHICH WAS NOT DISPOSED OF ALONGWITH TH E ASSESSEES APPEAL FOR THE SAME ASSESSMENT YEAR. WE FURTHER FIND THA T FOR THE A.Y. 2008-09 THE LD.CIT(A) HAS FOLLOWED HIS ORDER FOR THE PRECED ING 2 YEARS I.E. A.YS. 2006-07 & 2007-08 AND RESTRICTED THE DISALLOWANC E TO 10% IN PLACE OF 20% MADE BY THE ASSESSING OFFICER. 6. SO FAR AS A.Y. 2006-07 IS CONCERNED THE ASSESSEE CA RRIED THE ISSUE BEFORE THE TRIBUNAL AND ENTIRE ADDITION WAS DELETED. THE ORDER FOR THE A.Y. 2006-07 WAS FOLLOWED BY THE TRIBUNAL IN SUBSEQUENT 2 Y EARS I.E. A.YS. 2007-08 & 2008-09. AS THE ENTIRE DISALLOWANCE IS DELE TED WHICH WAS PARTLY SUSTAINED BY THE LD.CIT(A), THE REVENUE HAS TO FAIL IN THIS APPEAL. ACCORDINGLY, THE ALL GROUNDS ARE DISMISSED. 6. IN THE RESULT, THE REVENUES APPEAL IS DISMISSED. PRONOUN CED IN THE OPEN COURT ON 22-04-2013 SD/- SD/- (G.S. PANNU) (R.S. PADVEKAR) ACCOUNTANT MEMBER JUDICIAL MEMBER RK/PS PUNE, DATED: 22 ND APRIL, 2013 COPY TO 1 DEPARTMENT 2 ASSESSEE 3 THE CIT(A) - II, PU NE 4 THE C C IT , PUNE 5 THE DR, ITAT, A BENCH, PUNE . 6 GUARD FILE. //TRUE COPY// BY ORDER PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL PUNE