Poongothai Srinivasan, CHENNAI V. ITO Non Corporate Ward 22(3), CHENNAI

ITA 1878/CHNY/2018

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 3641 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 4 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-10-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2013-2014
• Appeal Filed On: 06-06-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S SRIDHAR
• Section: 44AD

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , D B ENCH, CHENNAI , . , & BEFORE SHRI MAHAVIR SINGH, VICE-PRESIDENT AND SHRI G.MANJUNATHA, ACCOUNTANT MEMBER ./ I.T.A.NO.1878/CHNY/2018 ( / ASSESSMENT YEAR: 2013-14) MRS. POONGOTHAI SRINIVASAN, 1, SAROJINI DEVI STREET, EMANATHA PILLAI AVENUE, CHEMMAN NAGAR, ISSA PALLAVARAM, CHENNAI-600 043. VS INCOME TAX OFFICER, NON-CORPORATE WARD-22(3), CHENNAI. PAN:AHIPP8002G ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MR. S.SRIDHAR, ADVOCATE /RESPONDENT BY : MR. AR.V.SREENIVASAN , ADDL.CIT /DATE OF HEARING : 28.10.2020 /DATE OF PRONOUNCEMENT : 28.10.2020 / O R D E R PER G.MANJUNATHA, ACCOUNTANT MEMBER: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AG AINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS)-10, CHENNAI DATED 23.04.2018 AND IT PERTAINS TO ASSESS MENT YEAR 2013-14. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1. THE ORDER OF THE COMMISSIONER OF INCOME TAX ( APPEALS) - 10, CHENNAI DATED 23.04.2018 IN I.T.A.NO.11 0/15-1 6/CIT(A)-10 FOR THE ABOVE MENTIONED ASSESSMENT YEAR IS CONTRARY TO LAW, FACTS, AND IN THE CIRCUMSTANCES OF THE CASE. 2. THE CIT (APPEALS) ERRED IN SUSTAINING THE ORDER OF THE ASSESSING OFFICER IN MAKING THE ESTIMATED ADDITION IN COMPUTING 2 ITA NO.1878/CHNY/2018 THE ASSESSABLE CONTRACT RECEIPTS UNDER THE HEAD 'IN COME FROM OTHER SOURCES' IN THE COMPUTATION OF TAXABLE TOTAL INCOME WITHOUT ASSIGNING PROPER REASONS AND JUSTIFICATION. 3. THE CIT (APPEALS) FAILED TO APPRECIATE THAT THE RESTRICTION OF THE CLAIM OF EXPENSES FOR EARNING CONTRACT INCOME WAS W RONG, ERRONEOUS, UNJUSTIFIED, INCORRECT AND NOT SUSTAINAB LE IN LAW. 4. THE CIT (APPEALS) FAILED TO APPRECIATE THAT HAVI NG NOT CARRIED OUT COMPARABLE STUDY AND FURTHER HAVING NOT NOTICED THE FACT OF THE GROSS PROFIT REPORTED AT 11.97%, THE PARTIAL SUSTEN ANCE OF DISALLOWANCE OF EXPENSES FOR EARNING THE CONTRACT R ECEIPTS/INCOME WITHIN THE SCOPE OF SECTION 57 OF THE ACT WAS WRONG , ERRONEOUS, UNJUSTIFIED, INCORRECT AND NOT SUSTAINABLE IN LAW. 5. THE CIT (APPEALS) WENT WRONG IN RECORDING THE FI NDINGS IN THIS REGARD IN PARAS 6.4 & 6.5 OF THE IMPUGNED ORDER WIT HOUT ASSIGNING PROPER REASONS AND JUSTIFICATION. 6. THE CIT (APPEALS) FAILED TO APPRECIATE THAT THERE WAS NO PR OPER OPPORTUNITY GIVEN BEFORE PASSING OF THE IMPUGNED O RDER AND ANY ORDER PASSED IN VIOLATION OF THE PRINCIPLES NATURA L JUSTICE WOULD BE NULLITY IN LAW. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE I S AN INDIVIDUAL ENGAGED IN THE BUSINESS OF SUPPLYING OF MANPOWER FOR EXCAVATION OF EARTH AND BOULDERS FROM THE QUARRY OWNED BY M/ S. VENKATESWARAR ENGINEERING & CONSTRUCTIONS (I) P.LT D. THE ASSESSEE HAS OFFERED RECEIPTS FROM M/S. VENKATESWA RAR ENGINEERING & CONSTRUCTIONS (I) P.LTD., UNDER THE HEAD INCOME FROM OTHER SOURCES AND AS AGAINST THIS CLAIMED EXPENDITURE OF ` 21,83,024/- UNDER SECTION 57 OF INCOME TAX ACT, 19 61 (HEREINAFTER REFERRED TO AS THE ACT). DURING THE COURSE OF A SSESSMENT PROCEEDINGS, THE ASSESSING OFFICER WAS OF THE OPI NION THAT ASSESSEE IS NOT ABLE TO SUBSTANTIATE THE EXPENDIT URE CLAIMED 3 ITA NO.1878/CHNY/2018 U/S.57 OF THE ACT TO THE EXTENT OF ` 21,83,024/- WITH NECESSARY SUPPORTING BILLS AND VOUCHERS AND ACCORDINGLY REW ORKED THE INCOME UNDER THE HEAD INCOME FROM OTHER SOURCES AND HAS ALLOWED TOTAL EXPENDITURE OF ` 19,83,400/- OUT OF THE TOTAL EXPENDITURE CLAIMED BY THE ASSESSEE AT ` 21,83,024/- AND BALANCE AMOUNT HAS BEEN DISALLOWED FOR WANT OF BI LLS AND VOUCHERS. 4. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY, BUT COULD NOT SUCCEED. THE L EARNED CIT(A) FOR THE REASONS STATED IN HIS APPELLATE ORDER CONFIRME D THE ADDITIONS MADE BY THE ASSESSING OFFICER ON THE GROUND THAT EVEN THE ASSESSEES CASE FALLS WITHIN THE AMBIT OF SECT ION 44AD OF THE ACT, BUT NOTHING PREVENTED HIM FROM FURNISHING THE DET AILS TO SUBSTANTIATE THE CLAIM OF EXPENDITURE. AGGRIEVED BY THE LEARNED CIT(A) ORDER, THE ASSESSEE IS IN APPEAL BEFORE U S. 5. THE LEARNED A.R FOR THE ASSESSEE SUBMITTED THA T THE LEARNED CIT(A) HAS ERRED IN SUSTAINING THE ADDITIONS MADE BY THE ASSESSING OFFICER TOWARDS DISALLOWANCE OF EXPEN DITURE AGAINST INCOME COMPUTED UNDER THE HEAD INCOME FROM OTH ER SOURCES WITHOUT ASSIGNING PROPER REASONS AND JUSTIFICATI ON. THE LEARNED AR 4 ITA NO.1878/CHNY/2018 FURTHER SUBMITTED THAT THE ASSESSEE HAS DECLARE D GROSS PROFIT OF 11.97% ON TOTAL RECEIPTS, WHICH IS ABOVE THE NOR MAL PROFIT DECLARED UNDER THIS LINE OF BUSINESS AND HENCE DISALLOWANC E OF EXPENDITURE ON ADHOC BASIS IS INCORRECT. 6. THE LEARNED DR, ON THE OTHER HAND, STRONGLY SU PPORTED THE ORDER OF THE LEARNED CIT(A). 7. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATE RIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. IT IS NOT IN DISPUTE THAT THE ASSESSEE HAS N OT MAINTAINED BOOKS OF ACCOUNTS. THE ASSESSEE HAS ESTIMATED THE NET PROFIT FROM CONTRACT RECEIPTS AND HAS DECLARED 11.97% OF GROSS PROFITS FROM CONTRACT RECEIPTS. ONCE INCOME DECLARED BY THE A SSESSEE IS MORE THAN OR EQUAL TO 8% OF CONTRACT RECEIPTS , THEN A S PER PROVISIONS OF SECTION 44AD OF THE ACT, THE ASSESSEE DOES NOT REQU IRE TO MAINTAIN BOOKS OF ACCOUNTS. FURTHER, WHEN THE INCOME IS ESTI MATED UNDER THE PROVISIONS OF SECTION 44AD OF THE ACT, THEN THE ASSESSING OFFICER HAS NO ROLE TO EXAMINE THE EXPENDITURE CLAIM AGA INST SAID INCOME AND ALSO CANNOT DISALLOW THE EXPENDITURE FOR WANT OF BILLS AND VOUCHERS. THEREFORE, WE ARE OF THE CONSIDERED VIE W THAT THE ASSESSING OFFICER AS WELL AS THE LEARNED CIT(A) WE RE ERRED IN 5 ITA NO.1878/CHNY/2018 MAKING AD-HOC DISALLOWANCE OF EXPENDITURE WITHOUT ASSIGNING PROPER REASONS FOR NOT FURNISHING BILLS AND VOUC HERS, WHEN THE ASSESSEE HAS SPECIFICALLY MADE OUT A CASE THAT H ER CASE FALLS UNDER SECTION 44AD OF THE ACT. HENCE, WE DIRECT THE ASSESSING OFFICER TO DELETE THE ADDITION MADE TOWARDS DISALLO WANCE OF EXPENDITURE. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH OCTOBER, 2020 SD/- SD/- ( ) ( . ) (MAHAVIR SINGH) (G. M ANJUNATHA ) / VICE-PRESIDENT $ / ACCOUNTANT MEMBER & /CHENNAI, ' /DATED 28 TH OCTOBER, 2020 DS )* +* /COPY TO: 1. APPELLANT 2. RESPONDENT 3. , () /CIT(A) 4. , /CIT 5. * 1 /DR 6. /GF .