M/s Garg Construction Co., Bareilly V. Income Tax Officer, Bareilly

ITA 194/LKW/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 2808 (ITAT-LUCKNOW)
• Duration Of Justice: 1 year(s) 5 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-08-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2013-2014
• Appeal Filed On: 22-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: ABHINAV MEHROTRA SHRI R K
• Keywords: Principle of natural justice; Corroborative evidences

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH SMC , LUCKNOW BEFORE SHRI. T.S. KAPOOR, ACCOUNTANT MEMBER AND SHRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER ITA NO. 194/LKW/2017 ASSESSMENT YEAR: 2013 - 14 M/S GARG C ONSTRUCTION CO. NEAR GURUNG GAS G ODOWN PILIBHIT BYPASS ROAD BAREILLY V. INCOME TAX OFFICER WARD 1(2) BAREILLY T AN /PAN : AAJFG9889N (APP ELL ANT) (RESPONDENT) APPELLANT BY: SHRI ABHINAV MEHROTRA, ADVOCATE RESPONDENT BY: SHRI R. K. VISHWAKRAMA, D.R. DATE OF HEARING: 10 08 201 8 DATE OF PRONOUNCEMENT: 24 08 201 8 O R D E R PER P ARTHA SARATHI CHAUDHURY, J.M : THIS APPEAL PREFERRED BY THE ASSESSEE EMANATES FROM THE ORDER OF THE LD. CIT(A), BAREILLY DATED 19/12/2016 ON THE FOLLOWING GROUNDS OF APPEAL: - 1. BECAUSE ON THE FACTS AND IN THE C IRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN NOT DEALING WITH THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE AND IN DISMISSING THE APPEAL IN - LIMINE. 2. BECAUSE ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) FURTHER ERRED IN CONFIRMING THE ORDER OF ASSESSMENT WITHOUT DEALING THE MERITS OF ADDITION MADE BY THE ASSESSING OFFICER. 3. THE HUMBLE ASSESSEE, CRAVES FOR LEAVE TO ADD/AMEND ANY OTHER GROUND WITH THE PRIOR PERMISSION OF THE HON'BLE TRIBUNAL. ITA NO.194/LKW/2017 PAGE 2 OF 4 2 . ONLY GRIEVANCE OF THE ASSESSEE IS AGAIN ST THE ADDITION OF RS.71,270/ - UNDER THE HEAD LABOUR AND OTHER CHARGES WHICH WAS CONFIRMED BY THE LD. CIT(A). 3 . FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSEE IS A CIVIL CONTRACTOR AND ENJOYS INCOME AS MES CONTRACTOR. DURING THE YEAR UNDER CONSIDERATION, ASSESSEE HAS SHOWN GROSS RECEIPTS OF RS.90,04,300/ - ON WHICH GROSS PROFIT OF RS.3,02,390/ - HAS BEEN WORKED OUT WHICH GIVES THE G.P. RATE OF 3.36%. ASSESSEE WAS ASKED TO PRODUCE SUPPORTING EVIDENCE OF FREIGHT AND CARTAGE EXPENSES, PURCHASE EXPENSES, RETA B AJRI EXPENSES AND IT WAS FOUND THAT PROPER BILLS HAVE BEEN MAINTAINED BY THE ASSESSEE WHICH HAVE BEEN OBTAINED AND PLACED ON RECORD. THE ASSESSEE HAS ALSO MAINTAINED LABOUR REGISTER BUT MOST OF THE PAYMENTS TO LABOUR HAVE BEEN MADE IN CASH AND NOT OPEN TO VERIFICATION. ASSESSEE HAS CLAIMED RS.14,25,383/ - UNDER THE HEAD LABOUR AND OTHER CHARGES. AS PROPER VOUCHERS HAS NOT BEEN MAINTAINED BY THE ASSESSEE, ASSESSING OFFICER DISALLOWED 5% OF THESE EXPENSES ON ESTIMATE BASIS WHICH COMES TO RS.71,270/ I.E. 5% O F RS. 14,25,385/ - AND ADD ED IT TO TOTAL INCOME OF THE ASSESSEE . 4 . LD. CIT(A) , AFTER CONSIDERING THE FACTS OF THE CASE, ASSESSMENT ORDER AND THE SUBMISSION OF THE ASSESSEE , HELD AS FOLLOWS: - I HAVE TAKEN INTO CONSIDERATION THE SUBMISSION THE AR FOR THE APPELL ANT. PERUSAL OF THE ASSESSMENT ORDER SHOWS THAT THE ASSESSING OFFICER HAS MENTIONED HIS OBSERVATIONS IN PARA 3 OF THE ASSESSMENT ORDER. THE ASSESSING OFFICER HAS MAINTAINED THAT THE APPELLANT HAS NOT MAINTAINED PROPER VOUCHERS FOR LABOUR AND OTHER CHARGE S. THIS FACT HAS NOT BEEN REBUTTED BY THE APPELLANT THROUGH ANY EVIDENCE IN THIS PROCEEDING. THIS BEING SO, I AM OF NOT IN AGREEMENT WITH THE SUBMISSION OF THE AR FOR THE APPELLANT. ITA NO.194/LKW/2017 PAGE 3 OF 4 THE DISALLOWANCE AS MADE BY THE ASSESSING OFFICER IS CONFIRMED. THIS G ROUND OF APPEAL FAILS. 5 . WE HAVE PERUSED THE CASE RECORDS, ANALYSED THE FACTS OF THE CASE AND WE FIND THAT THE FIRST APPELLATE AUTHORITY HAS NOT AT ALL PASSED A SPEAKING ORDER ON THE ISSUE. LD. CIT(A) HAS JUST REITERATED THE OBSERVATIONS MADE BY THE ASSESS ING OFFICER AND HAS SIMPLY STATED THAT HE ACCEPTS THE VERSION OF THE ASSESSING OFFICER, BUT HE IS NOT IN AGREEMENT WITH THE SUBMISSIONS OF THE LD. A.R. OF THE ASSESSEE. THIS ENTIRE DECISION IS BEYOND THE SCOPE OF NATURAL JUSTICE COMING OUT FROM A QUASI JU DICIAL AUTHORITY SIMPLY BECAUSE THERE IS NO ADJUDICATION ON THE ISSUE AND WHY A PARTICULAR DECISION IS TAKEN IS ALSO NOT CLEAR IN THE ORDER. AT THE TIME OF HEARING BEFORE US, LD. A.R. OF THE ASSESSEE SUBMITTED THAT ASSESSING OFFICER HAS FAILED TO MENTION WHICH OF THE LABOUR EXPENSES WERE NOT VERIFIABLE AND HAD MADE ADDITION ON AD - HOC BASIS. EVEN LD. CIT(A) HAS NOT CONDUCTED ANY INDEPENDENT ENQUIRY TO VERIFY THE LABOUR EXPENSES INCURRED BY THE ASSESSEE. LD. A.R. OF THE ASSESSEE VEHEMENTLY ARGUED THAT THE SUBORDINATE AUTHORITIES HAVE FAILED TO CONSIDER THE PRACTICAL ASPECT THAT THE LABOURS ARE ILLITERATE AND THEY RECEIVE PAYMENTS IN CASH ONLY. LABOUR REGISTER WAS PRODUCED FOR VERIFICATION OF PAYMENTS AND BOOKS OF ACCOUNT WERE ALSO DULY AUDITED. DISALLOWAN CES ARE IN THE NATURE OF AD - HOC BASIS , WHICH SHOULD NOT BE SUSTAINED. 6 . LD. D.R., ON THE OTHER HAND, RELIED ON THE ORDERS OF THE AUTHORITIES BELOW. 7 . A FTER GOING THROUGH THE ENTIRE FACTS AND CIRCUMSTANCES OF THE CASE , AS OBSERVED EARLIER , WE ARE OF THE VIEW TH AT IN THE ABSENCE OF PROPER ADJUDICATION BY THE REVENUE AUTHORITIES AND WITHOUT ANY BASIS FOR DISALLOWANCE , IT ACQUIRES THE NATURE OF BEING ARBITRARY, INJUDICIOUS ITA NO.194/LKW/2017 PAGE 4 OF 4 AND PERVERSE AND TH IS KIND OF AD - HOC DISALLOWANCE I S NOT PERMISSIBLE WITHIN THE REALM OF TAX LEGISLATION. WE, THEREFORE, SET ASIDE THE ORDER OF THE LD. CIT(A) ON THIS ISSUE AND DIRECT DELETION OF THIS AD - HOC DISALLOWANCE ALLOWING THE APPEAL OF THE ASSESSEE. 8 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 2 4 / 0 8 / 201 8 . SD/ - SD/ - [ T.S. KAPOOR ] [PARTHA SARATHI CHAUDHURY ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 24 TH AUGUST , 201 8 JJ: 1308 COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT(A) 4 . CIT 5 . DR