Shivshankar G. Lature, Latur V. Income-tax Officer, Ward - 1, Latur

ITA 1649/PUN/2017

• Counselvise Citation: [2018] 123 COUNSELVISE.COM (IT) 0723 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 3 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-10-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 29-06-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: M K VERMA
• Section: 14A

Judgement Text

- IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH SMC, PUNE . , , BEFORE SHRI D. KARUNAKARA RAO, AM . / ITA NO. 1649/PUN/2017 !' # $# / ASSESSMENT YEAR : 2012-13 SHRI SHIVSHANKAR G. LATURE SUYOG APARTMENT, SIGNAL CAMP, LATUR-413 512 PAN : AAIPL4745P ....... / APPELLANT %' / V/S. THE INCOME TAX OFFICER, WARD-1, LATUR. / RESPONDENT APPELLANT BY : SHRI S.N. PURANIK RESPONDENT BY : SHRI M.K. VERMA / DATE OF HEARING : 01.10.2018 / DATE OF PRONOUNCEMENT : 03.10.2018 & / ORDER PER D. KARUNAKARA RAO, AM THIS IS THE APPEAL FILED BY ASSESSEE IS DIRECTED AGAINST THE ORDER OF CIT(APPEALS)-2, AURANGABAD DATED 03.05.2017 FOR THE ASSESSMENT YEAR 2012- 13. 2 ITA NO.1649/PUN/2017 A.Y.2012-13 2. BRIEFLY STATED RELEVANT FACTS INCLUDE, THE ASSESSEE IS A N INDIVIDUAL AND IS ENGAGED IN THE BUSINESS IN PROVIDING TELECOM INFRASTRUCTU RE UNDER THE NAME AND STYLE OF SUYOG TELEMATICS AND PROVIDING CONSULT ANCY UNDER THE NAME M/S. SAVYASACHI CONSULTANTS. ASSESSEE FILED RETURN OF INCOME DECLARING TOTAL INCOME OF RS.12,45,220/-. IN THE ASSESSMENT PROCEEDINGS U/S.143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT), ASSESSING OFFICER ASSESSED TOTAL INCOME OF ASSESSEE AT RS.2 2,37,078/- AFTER MAKING THE ADDITION OF RS.9,99,858/-. THE ASSESSING OFFICER MA DE AD-HOC DISALLOWANCE @5% OF THE LABOUR CHARGES (RS.3,18,444/-) AS WE LL AS THE TRANSPORT EXPENSES (RS.7,195/-). THE ASSESSING OFFICER ALSO M ADE DISALLOWANCE U/S. 14A OF THE ACT WHICH IS NOT SUBJECT MATT ER OF APPEAL FILED BEFORE ME. 3. DURING FIRST APPELLATE PROCEEDINGS BEFORE THE CIT(A) IN CONNECTION WITH THE AD-HOC DISALLOWANCE ON LABOUR AND TRANSPORT EXPENSE S (@5% OF THE CLAIM), ASSESSEE SUBMITTED VARIOUS CONTENTIONS AGAINST THE SAID AD-HOC DISALLOWANCE. AT THE END OF THE FIRST APPELLATE PROCEEDINGS, THE CIT(A) CONFIRMED THE ASSESSING OFFICERS MANNER OF DISALLOWANCE APPL YING FLAT RATE @5% CLAIMED WITH RESPECT TO LABOUR AND TRANSPORTATION E XPENDITURE. CONTENTS OF PARA 23 ARE RELEVANT. THE CIT(A) DELETED THE DISALLOWANCE U/S.14A OF THE ACT ALSO. FOR THE SAKE OF COMPLETENESS, CON TENTS OF PARA 23 ARE EXTRACTED AS UNDER: 23. I HAVE GIVEN A CAREFUL THOUGHT TO THE SUBMISSIO NS MADE BY THE ASSESSEE AND THE MANNER IN WHICH THE DISALLOWANCE H AS BEEN MADE. I FIND THAT THIS KIND OF DISALLOWANCE WAS ALSO MADE I N THE ASSESSMENT FOR THE A.Y.2013-14 AND IN THE APPELLATE ORDER KEEPING IN VIEW THE TOTALITY OF FACTS AND CIRCUMSTANCES OF THE ASSESSEE'S CASE I HAD DIRECTED THE ASSESSING OFFICER TO REDUCE THE QUANTUM OF ADDITION TO 5% OF THE EXPENSES CLAIMED. SINCE IN THIS YEAR THE ASSESSING OFFICER HAS RESTRICTED THE ADDITION TO 5% OF THE TOTAL EXPENSES CLAIMED IN RESPECT OF LABOUR CHARGES AND TRANSPORT CHARGES, THERE IS NO NEED TO INTERFERE WITH THE ACTION OF THE ASSESSING OFFICER KEEPING IN MIND THE FINDING GIVEN BY THE ASSESSING OFFICER THAT QUITE A FEW EXPENSES WERE MA DE ON SELF-MADE 3 ITA NO.1649/PUN/2017 A.Y.2012-13 VOUCHERS AND HENCE THEIR VERACITY AND CONSEQUENTLY THE GENUINENESS OF EXPENSES COULD NOT BE PROVED. GROUND NO.2 IS DECIDE D AGAINST THE ASSESSEE . 4. AGGRIEVED WITH THE DECISIONS OF CIT(A) IN PARA 23, ASSESS EE RAISED FOLLOWING GROUNDS: 1.COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING ARBITRARY AD-HOC DISALLOWANCE RS.3,25,639/- I.E. 5% OF EXPENSES CLAIMED. APPELLANT PRAYS TO DELETE THE WHOLE OF THE DISALLOWANCE. 2. APPELLANT PRAYS FOR JUST EQUITABLE RELIEF . 5. SHRI S. N. PURANIK, LD. COUNSEL FOR THE ASSESSEE FAIRLY SU BMITTED AND CONTESTED THE MANNER OF MAKING DISALLOWANCE BY THE ASSES SING OFFICER AND THE MANNER OF CONFIRMING THE ADDITION BY THE CIT(A). LD. COU NSEL FOR THE ASSESSEE RAISED OBJECTION NOT ONLY ON THE AD-HOC DISALLO WANCE BUT ALSO FLAT RATE OF 5% ADOPTED BY THE OFFICERS. FURTHER, HE RELIED ON T HE SUBMISSIONS MADE BY THE ASSESSEE BEFORE ASSESSING OFFICER & CIT(A). 5.1 DURING THE COURSE OF ARGUMENT, LD. COUNSEL FOR THE ASS ESSEE FILED A LETTER SUBMITTING AS UNDER: APPELLANT IS IN THE BUSINESS OF SECURING AND EXECUT ING CONTRACTS IN THE LINE OF INFRASTRUCTURE FOR TELECOM. THIS CONTRACTS ARE SPREAD OVER IN DIFFERENT AREA OF MAHARASHTRA AND PARTICULARLY RURA L AREAS, AS TO DIGGING AND LAYING CABLES, ETC. ASSESSING OFFICER IN PARA 3 OF THE ORDER HAS STATED THAT AGAINST THE TURNOVER OF RS.1,36,57,376/ - APPELLANT HAS DEBITED LABOUR CHARGES RS.63,68,883/-,MATERIAL PURCHASES RS.22,49,889/- AN D TRANSPORT OF RS.1,49,900/- AND HAS DISALLOWED 5% OF THESE EXPENS ES ARE NOT FULLY VERIFIABLE FOR THE REASON THAT ON SOME OF THE VOUCH ERS COMPLETE NAME AND ADDRESS OF RECIPIENT LABOUR AND NATURE OF WORK DONE, IS NOT APPEARING , THUMB IMPRESSION AND SIGNATURES ON SOME VOUCHERS IS ILLEGIBLE. HENCE HE MADE ESTIMATED DISALLOWANCE OF 5% I.E. RS.3,18,444/-. IN PARA.22 OF THE ORDER HONOURABLE CIT(A), FOR THE SAME REASONS AS STATED BY ASSESSMENT YEAR HAS CONFIRMED THE DISALLO WANCE. APPELLANT SUBMITTED THAT ASSESSEE HAS DECLARED 9% N ET PROFIT, ACCOUNT OF THE ASSESSEE ARE AUDITED. 4 ITA NO.1649/PUN/2017 A.Y.2012-13 ASSESSMENT OFFICER AND CIT(A), HAS POINTED OUT SOME IRREGULARITY IN VOUCHERS, BUT HAS NOT DOUBTED THAT EXPENDITURE HAVI NG INCURRED. ASSESSING OFFICER HAS MADE ABOVE DISALLOWANCE THOUG H BOOKS AND VOUCHERS ARE PRODUCED BEFORE HIM. AD-HOC. APPELLANT PRAYS FOR DELETION OF DISALLOWANCE, OR AL TERNATIVELY RESTRICTING THE DISALLOWANCE TO NOMINAL AMOUNT OF SAY 30,000-35 ,000. FROM THE ABOVE SUBMISSION, LD. COUNSEL SUBMITTED WITHOUT P REJUDICE THAT DISALLOWANCE MAY BE RESTRICTED TO THE NOMINAL AMOUNT OF RS.30,000/- TO RS.35,000/-. 6. ON THE OTHER HAND, SHRI M.K. VERMA, LD. DR FOR THE REV ENUE RELIED HEAVILY ON THE ORDERS OF ASSESSING OFFICER AND THE CIT(A). 7. BOTH SIDES ARE HEARD ON THE LIMITED ISSUE OF DISALLOWANC E @5% OF LABOUR AND TRANSPORTATION EXPENDITURE. I FIND THAT ASSESS ING OFFICER HAS RESORTED AD-HOC DISALLOWANCE MERELY FOR THE REASONS OF CASH VOUCH ERS, LACK OF THIRD PARTY EVIDENCE, LACK OF COMPLETE ADDRESS OF RECIPIENTS OF EXPENDITURE, ASSESSEES FAILURE TO DEMONSTRATE THE PURPOSE OF EXPEND ITURES. THE ASSESSING OFFICER ALSO NOTICED SOME IMPERFECTIONS IN THE MATTERS OF THE QUALITY OF THE VOUCHERS IN RESPECT OF LABOUR CHARGES FILED BEFORE THE AS SESSING OFFICER. CONSIDERING THE SAID DISCREPANCIES IN THE MANNER OF FURNISHI NG EVIDENCES BY ASSESSEE, I FIND, IN PRINCIPLE, THERE IS REQUIREMENT OF MAKING SOME DISALLOWANCE. I ALSO CONSIDER THE LD.A.R.S SUBMISSIONS FOR RE STRICTING THE DISALLOWANCE TO THE EXTENT OF RS.30,000/- TO RS.35,000/-. 8. FURTHER I FIND THE ASSESSING OFFICER ADOPTED 5% ON FLAT RATE AND HAS NOT GIVEN ANY REASON FOR THE SAID RATE OF 5%. THEREFORE, ALL IS NOT WELL WITH THE DOCUMENTATION FURNISHED BY THE ASSESSEE AND ALSO TH E DECISION OF THE ASSESSING OFFICER IN RESORTING TO AD-HOC DISALLOWANCE ADOPTIN G THE FLAT RATE OF 5%. THEREFORE, I AM OF THE OPINION THAT MAKING DISALLOWANCE A ROUND SOME 5 ITA NO.1649/PUN/2017 A.Y.2012-13 FIGURE OF RS.1,00,000/- WOULD MEET THE ENDS OF JUSTICE ON ES TIMATION BASIS. ACCORDINGLY, GROUNDS RAISED BY ASSESSEE ARE PARTLY ALLOWED. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED ON 03 RD DAY OF OCTOBER, 2018. SD /- ( . / D. KARUNAKARA RAO ) / ACCOUNTANT MEMBER / PUNE; ! ' / DATED : 3 RD OCTOBER, 2018. SB &'(!)*+,+$) / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT(APPEALS)-2, AURANGABAD. 4. THE PR. CIT-2, AURANGABAD. 5. %&' (( )* , + )* , - ,-. , / DR, ITAT, SMC BENCH, PUNE. 6. '/ 01 / GUARD FILE. // TRUE COPY // +2 / BY ORDER, ( 3 ). /PRIVATE SECRETARY + )* , / ITAT, PUNE.