ITO, CHENNAI V. K.S.Mohan Kumar, CHENNAI

ITA 169/CHNY/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 9305 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 3 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-05-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 22-01-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P RADHAKRISHNAN
• Assessee Lawyers: G BASKAR

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : CHENNAI . . . , . ! , ' # $ [ BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ] ./ I.T.A.NO.169/MDS/2015 / ASSESSMENT YEAR : 2011-12 THE INCOME TAX OFFICER NON-CORPORATE WARD 13(5) CHENNAI VS. SHRI K.S MOHAN KUMAR FLAT NO.13/1 ALARCITY JYOSTSNA COLONY PADMAVATHY NAGAR EXTN 2 ND STREET VELACHERY, CHENNAI 42 [PAN AIBPM 4728 Q ] ( %& / APPELLANT) ( '(%& /RESPONDENT) / APPELLANT BY : SHRI P. RADHAKRISHNAN, JCIT /RESPONDENT BY : SHRI G . BASKAR, ADVOCATE / DATE OF HEARING : 28 - 03 - 2016 ! / DATE OF PRONOUNCEMENT : 12 - 05 - 2016 / O R D E R PER N.R.S.GANESAN, JUDICIAL MEMBER THIS APPEAL OF THE REVENUE WAS DISPOSED OF EARLI ER BY AN ORDER DATED 1.5.2015. THE REVENUE HAS FILED A MISC ELLANEOUS PETITION IN M.P.NO.182/MDS/2015 ON THE GROUND THAT GROUND NO .3 RAISED IN THE GROUNDS OF APPEAL WAS NOT DISPOSED OF. AFTER HEAR ING BOTH PARTIES, THIS TRIBUNAL FOUND THAT GROUND NO.3 RAISED BY THE REVENUE WAS NOT DISPOSED OF. THEREFORE, THE APPEAL OF THE REVENUE WAS REOPENED AND ITA NO.169/15 :- 2 -: FIXED FOR HEARING ONLY FOR THE PURPOSE OF DISPOSING OF GROUND NO.3. ACCORDINGLY, THE APPEAL WAS TAKEN UP TODAY. 2. SHRI P. RADHAKRISHNAN, LD. DEPARTMENTAL REPRESENTAT IVE SUBMITTED THAT THE ASSESSEE CLAIMED AN EXPENDITURE OF ` 7,20,000/- TOWARDS COST OF IMPROVEMENT. ACCORDING TO THE LD. DR, THE ASSESSEE HAS PURCHASED A NEW HOUSE AND INCURRED EXPENDITURE TOWARDS INTERIOR DECORATION, FLOOR TILES REPLACEMENT, PIPELINE REPLA CEMENT ETC. THE ASSESSEE HAS NOT PRODUCED ANY MATERIAL TO SUPPORT T HE CLAIM OF EXPENDITURE INCURRED, THEREFORE, THE ASSESSING OFFI CER DISALLOWED THE CLAIM OF THE ASSESSEE. HOWEVER, ON APPEAL BY THE ASSESSEE, THE CIT(A) FOUND THAT NON-PRODUCTION OF PROOF OF EXPEN DITURE DOES NOT DISENTITLE THE ASSESSEE TO CLAIM DEDUCTION TOWARDS INFRASTRUCTURE DEVELOPMENT. ACCORDING TO THE LD. DR, WHEN THE AS SESSEE CLAIMS AN EXPENDITURE, IT HAS TO BE SUBSTANTIATED BY FILING N ECESSARY MATERIAL BEFORE THE ASSESSING OFFICER. IN THE ABSENCE OF AN Y MATERIAL, THE CIT(A) OUGHT NOT TO HAVE ALLOWED THE CLAIM OF THE ASSESSEE. 3. ON THE CONTRARY, SHRI G. BASKAR, LD. COUNSEL FOR TH E ASSESSEE SUBMITTED THAT THE COST OF INFRASTRUCTURE INCLUDES IMPROVEMENT MADE TO THE NEW HOUSE PURCHASED BY THE ASSESSEE TOWARDS INTERIOR WOOD WORK, REPLACEMENT OF FLOOR TILES, REPLACEMENT OF PI PELINES ETC. ACCORDING TO THE LD. COUNSEL, THE ASSESSEE INCURRE D EXPENDITURE IN A ITA NO.169/15 :- 3 -: STAGE BY STAGE MANNER BY UTILIZING THE LABOUR FROM THE UNORGANIZED SECTOR, THEREFORE, THE ASSESSEE COULD NOT HAVE PRO DUCED ANY MATERIAL TO SUBSTANTIATE THE EXPENDITURE INCURRED. HOWEVER, IT IS NOT IN DISPUTE THAT THE ASSESSEE HAS INCURRED EXPENDITURE, THEREF ORE, MERELY BECAUSE THE MATERIAL TO SUPPORT THE CLAIM WAS NOT PRODUCED, THAT WOULD NOT DISENTITLE THE ASSESSEE TO CLAIM EXPENDITURE TOWAR DS INFRASTRUCTURE DEVELOPMENT. ACCORDING TO THE LD. COUNSEL FOR THE ASSESSEE, THE CIT(A) AS RIGHTLY ALLOWED THE CLAIM OF THE ASSESSE E. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. THE ASSESSEE CLAIMS THE COST OF INFRASTRUCTURE WHICH INCLUDES THE IMPRO VEMENT MADE TO NEW HOUSE TOWARDS WOOD WORK, REPLACEMENT OF TILES A ND PIPELINES ETC. THE LABOUR IN THE CONSTRUCTION INDUSTRY IS FROM THE UNORGANIZED SECTOR, THEREFORE, EXPECTING REGULAR BILLS AND VOUCHERS FOR INCURRING EXPENDITURE MAY NOT BE CORRECT. HOWEVER, WHILE INC URRING SUCH EXPENDITURE THE ASSESSEE MIGHT HAVE PURCHASED CERT AIN MATERIALS FROM THE MARKET LIKE TILES, WOOD, PIPES ETC. THE ASSESSEE CAN VERY WELL PRODUCE THE PURCHASE BILLS BEFORE THE AUTHORIT IES BELOW FOR VERIFICATION. HOWEVER, NO MATERIAL WAS PRODUCED BE FORE THE AUTHORITIES BELOW. THE CIT(A) SIMPLY ALLOWED THE CLAIM OF THE ASSESSEE ON THE GROUND THAT NON-PRODUCTION OF PROOF OF EXPENDITURE DOES NOT DISENTITLE THE ASSESSEE TO CLAIM DEDUCTION TOWARDS INFRASTRUC TURE DEVELOPMENT. ITA NO.169/15 :- 4 -: THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT WHE N THE ASSESSEE PURCHASES MATERIALS, THE ASSESSEE IS EXPECTED TO P RODUCE BILLS BEFORE THE AUTHORITIES BELOW FOR VERIFICATION. THERE MAY BE A JUSTIFIABLE CAUSE FOR NON-PRODUCTION OF PROPER VOUCHERS/BILLS FOR PAY MENT OF SALARY TO THE LABOURERS WHO ARE FROM UNORGANIZED SECTOR. HOW EVER, THERE IS NO JUSTIFICATION FOR NON-PRODUCTION OF PURCHASE BILLS FOR PURCHASING MATERIAL. IN THOSE CIRCUMSTANCES, INFLATION OF EXP ENDITURE CANNOT BE RULED OUT. THEREFORE, BY TAKING INTO CONSIDERATION THE FAILURE OF THE ASSESSEE IN PRODUCING THE PURCHASE BILLS, THIS TRI BUNAL IS OF THE CONSIDERED OPINION THAT DISALLOWANCE OF ` 1 LAKH ON ESTIMATE BASIS WOULD MEET THE ENDS OF JUSTICE. ACCORDINGLY, THE E XPENDITURE TOWARDS INFRASTRUCTURE DEVELOPMENT IS DISALLOWED ON ESTIMAT E BASIS AT ` 1 LAKH. HOWEVER, THE ADDITION MADE BY THE ASSESSING OFFICER TO THE EXTENT OF ` 6,20,000/- IS DELETED. ACCORDINGLY, THE ORDERS OF THE LOWER AUTHORITIES ARE MODIFIED AND THE ASSESSING OFFICER IS DIRECTED TO DISALLOW ONLY A SUM OF ` 1 LAKH INSTEAD OF ` 7,20,000/-. 5. THE OTHER PART OF THE ORDER OF THIS TRIBUNAL DATED 1.5.2015 SHALL REMAIN AS SUCH. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS PARTLY ALLOWED. ITA NO.169/15 :- 5 -: ORDER PRONOUNCED IN THE OPEN COURT ON 12 TH MAY, 2016, AT CHENNAI. SD/- SD/- ( . ! ) (A. MOHAN ALANKAMONY) ' / ACCOUNTANT MEMBER ( . . . ' ) (N.R.S. GANESAN) / JUDICIAL MEMBER #$ / CHENNAI %& / DATED: 12 TH MAY, 2016 RD &' ()*) / COPY TO: 1 . / APPELLANT 4. + / CIT 2. / RESPONDENT 5. ),- . / DR 3. +/' / CIT(A) 6. -01 / GF