Shri Sunil Dhirubhai Patel, Ahmedabad V. The ITO, Ward-7(2)(3), Ahmedabad

ITA 1686/AHD/2019

• Counselvise Citation: [2024] 100 COUNSELVISE.COM (IT) 4022 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 2 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-02-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 24-01-2024
• Assessment Year: 2014-2015
• Appeal Filed On: 12-11-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHRIASHOKKUMARSUTHAR

Judgement Text

आयकरअपीलीयअधिकरण , अहमदाबादनयायपीी INTHEINCOMETAXAPPELLATETRIBUNAL, ‘’C’’BENCH,AHMEDABAD BEFORESHRIWASEEMAHMED,ACCOUNTANTMEMBER And SHRITRSENTHILKUMAR,JUDICIALMEMBER आयकरअपीलसं./ITANo.1686/AHD/2019 धििाधरणवरध / Asstt.Year:2014-2015 SunilDhirubhaiPatel, PlotNo.16, VikramPark, Nr.BajrangdasAshram, NHNo.8,Thakkarbapa, Ahmedabad-382350. PAN:AHXPP1195M Vs. IncomeTaxOfficer, Ward-7(2)(3), Ahmedabad. (Applicant)(Respondent) Assesseeby:ShriParinShah,AR Revenueby:ShriAshokKumarSuthar,Sr.DR सुिवाईकीतारीख/DateofHearing:25/01/2024 घोरणाकीतारीख/DateofPronouncement:02/02/2024 आदेश/ORDER PERWASEEMAHMED,ACCOUNTANTMEMBER: ThecaptionedappealhasbeenfiledattheinstanceoftheAssesseeagainst theorderoftheLearnedCommissionerofIncomeTax(Appeals)-7,Ahmedabad, arisinginthematterofassessmentorderpassedunders.143(3)r.w.s.147ofthe IncomeTaxAct,1961(here-in-afterreferredtoas"theAct")relevanttothe AssessmentYear2014-2015. ITAno.1686/AHD/2019 A.Y.2014-15 2 2.TheonlyeffectiveissueraisedbytheassesseeisthattheLd.CIT(A)erred inconfirmingtheadditionmadebytheAOforRs.1,74,00,000/-onaccountof bogusexpenses. 3.Thefactsinbriefarethattheassesseeinthepresentcaseisanindividual andderivinghisincomefromthebusinessofconstructionanddevelopmentof land.TheAOintheinstantcaseinitiatedtheproceedingsu/s147oftheActbased onthereportreceivedfromthePrincipalDIT(Investigation).Asperthereport therewerecertainpartiesengagedinprovidingboguslabourbills.Theassessee hastakenlabourexpensebillsfromthesepartiesdetailedasunder: S.No.NameAmount 1.TaskManagementCompany36,00,000/- 2.UmiyaContractorCompany36,00,000/- 3.LabhConstructionCompany36,00,000/- 4.PatelArvindbhaiBabaldas30,00,000/- 5.InfoworkSolutions36,00,000/- 3.1Thus,theAOtreatedthesameasbogusexpensesandaddedtothetotal incomeoftheassessee. 4.AggrievedassesseepreferredanappealtotheLd.CIT(A),whoalso confirmedtheorderoftheAO.BeingaggrievedbytheorderofthelearnedCIT(A), theassesseeisinappealbeforeus. 5.ThelearnedARbeforeusfiledapaperbookrunningfrompages71to202 andcontendedthattheexpensesindisputewereincurredintheearlieryearbut thepaymenttothateffectwasmadeintheyearunderconsideration.TheLd.AR insupportofhiscontentiondrewourattentiononpages55to59ofthepaper bookwheretheledgercopiesofthepartieswereplacedandthebankstatement demonstratingpaymenttosuchpartieswhichisplaceonpages60to64.Asper theLd.AR,sincetheexpenseswereincurredintheearlieryearandcapitalizedin ITAno.1686/AHD/2019 A.Y.2014-15 3 thevalueofthelandandnodeductionofwhatsoeverwasclaimedintheP&L account,thequestionofmakingthedisallowancedoesnotarise.AspertheLd. AR,thevalueofthelandwasstillshowninthebooksofaccountsevenasondate. Thus,theLd.ARsubmittedthatsincenodeductionhasbeenclaimedforthe impugnedexpenses,thequestionofmakingdisallowancedoesnotarise. Accordingly,theLd.ARprayedtodeletetheadditionmadebyhim. 6.Onthecontrary,theLd.DRsubmittedthattheexpensesincurredbythe assesseewerebogusinnature.AspertheLd.DR,thelabourcontractorwillnot waitforthepaymenttilltheyearunderconsideration.Itwasalsopointedoutby theLd.DRthatsurprisingly;thelabourexpenseswereincurredbytheassesseein thenameof5partiesandthepaymenttoallofthemweremadeintheyear underconsiderationwhichishighlyimprobable.Accordingly,theLd.DR vehementlysupportedtheorderoftheauthoritiesbelow. 7.Wehaveheardtherivalcontentionsofboththepartiesandperusedthe materialsavailableonrecord.Admittedly,theimpugnedexpensesincurredbythe assesseewerenotclaimedasdeductionintheprofitandlossaccountintheyear indispute.Assuchtheexpensesincurredintheearlieryearwerecapitalizedby addinginthevalueoftheland.This,undisputedfactcanbeverifiedfromthe findingsofLd.CIT(A),whichisextractedbelow. Itisobservedthatappellanthasobtainedthebogusbillsfromabovereferred partiesandexpenditureiscapitalizedundertherelevantlandaccountwhichis formingpartofinvestmentinbalancesheet.Thisaspectisfurtherexplainedfrom oneofthebillstakenbyAppellantfromTaskmanagementservicesfor Rs.6,28,866andsameiscapitalisedaspartoflandPethapur56Bwhichis apparentfromgroupingoflandaccountreproducedhereinabove.Thisfactclearly provesthatAppellanthasnotclaimedanyexpenditureinearlieryearsbutsameis capitalisedaspartoflandcost. 7.1Firstly,onperusalofthecopiesoftheledger,wenotethatnoneofthe labourexpenseswasincurredbytheassesseeintheyearunderconsideration whichcanbeverifiedfromthecopiesoftheledgerofthecontractor,placedon ITAno.1686/AHD/2019 A.Y.2014-15 4 pages55to59ofthepaperbook.Secondly,alltheseexpenseswerecapitalized inthevalueofland,meaningthereby,nodeductionwasclaimedbytheassessee quatotheimpugnedexpenditure.Thirdly,thereisnoallegationoftherevenue suggestingthattheexpenseswereincurredbytheassesseeoutofthebooksof accountsmeaningthereby,theexpenseswereincurredbytheassesseeoutof disclosedcashavailablewithhim. 7.2Regardingthefactthattheexpenditurewasincurredbytheassesseeinthe earlieryear,wenotethattheAOinhisorderhasalsoobservedasunder: Therefore,incomechargeabletotaxhasfoundescapedassessmentforA.Y2011- 12withinthemeaningofprovisionsofsection148oftheIncomeTaxAct,1981. 7.3FromtheabovefindingsoftheAO,thereremainsnoambiguitytothefact thattheimpugnedexpenseswereincurredintheearlieryearandthereforeno additionofwhatsoevercanbemadeintheyearindisputedespitewithoutgoing intotheissuewhethersuchexpenditurewerebogusinnatureornot.Regarding theissuethattheexpenseswerecapitalizedinthevalueofland,wenotethatthe questionofmakingdisallowanceariseswhentheassesseeclaimedthededuction. Inthepresentcase,undeniablytheassesseehasnotclaimedanydeductioninthe yearindisputeandthereforeonthiscountaswellassuchexpensescannotbe disallowedintheyearunderconsideration. 7.4Movingfurther,thereisalsonodisputetothefactthattheexpenseswere incurredoutofdisclosedcashavailablewiththeassesseeandthereforeno deemingprovisionprovidedu/s69/69AoftheActcanbeattracted.Inviewofthe above,afterconsideringthefactintotality,weareoftheviewthatnoadditionis warrantedonaccountofimpugnedbogusexpense.Accordingly,weset-asidethe findingofLd.CIT(A)anddirecttheAOtodeletetheadditionmadebyhim.Hence, thegroundofappealoftheassesseeisherebyallowed. ITAno.1686/AHD/2019 A.Y.2014-15 5 8.Intheresult,theappealfiledbytheassesseeisherebyallowed. OrderpronouncedintheCourton02/02/2024atAhmedabad. Sd/-Sd/- (TRSENTHILKUMAR)(WASEEMAHMED) JUDICIALMEMBERACCOUNTANTMEMBER (TrueCopy) Ahmedabad;Dated02/02/2024 Manish