DCIT, BHILWARA V. M/s. Shree Mangi Lal Vishnoi, BHILWARA

ITA 196/JODH/2014

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 7808 (ITAT-JODHPUR)
• Duration Of Justice: 4 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-08-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 28-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH, JODHPUR BEFORE SHRI HARI OM MARATHA , JUDICIAL MEMBER AND SHRI N.K.SAINI, ACCOUNTANT MEMBER ITA NO. 196 / JU/ 20 1 4 ASSESSMENT YEAR: 200 1 - 11 THE DY . C.I.T VS. M/S SHREE MANGI LAL VISHNOI CIRCLE JAMBESHWAR COMPLEX BHILWARA . GROUND FLOOR, GANDHI NAGAR BHILWARA PAN NO. AADFM 6399 P (APPELLANT) (RESPONDENT) A SSESSEE B Y : NONE DEPARTMENT B Y : SHRI N.A. JOSHI , DR DATE OF H EARING : 0 4 . 0 8 .201 4 DATE OF PRONOUNCEMENT : 11 . 0 8 . 201 4 ORDER PER HARI OM MARATHA , J .M. TH IS APPEAL BY THE REVENUE IS DIRECTED A GAINST THE ORDER OF THE CIT (A) , AJMER DATED 2 1 . 0 1 .20 1 4 PERTAINING TO A.Y 20 10 - 11 . 2 2. FOLLOWING GROUNDS HAVE BEEN RAISED IN THIS APPE AL: ON THE FACTS AND IN THE PRESENT CIRCUMSTANCES OF THE CASE, THE ID. CIT(A) HAS ERRED IN 1. DELETING THE ADDITION OF RS. 15,74,506/ - MADE BY THE A.O ON ACCOUNT OF SUB - CONTRACT WORK EXPENSES , WITHOUT APPRECIATING THE FACTS OF THE CASES. 2. DELETING THE ADDITION OF RS. 3,00,000/ - MADE BY THE A.O ON ACCOUNT OF LABOUR AND WAGES PAYMENT WITHOUT APPRECIATING THE FACTS OF THE C A SES 3. DELETING THE ADDITION OF RS. 8 LAKHS MADE BY THE A.O ON ACCOUNT OF OTHER EXPENSES WITHOUT APPRECIATING THE FACTS OF THE CASES. 3. WE HAVE HEARD THE SUBMISSIONS OF THE LD. D.R AND HAVE CAREFULLY PERUSED THE RELEVANT MATERIAL ON RECORD. WE HAVE PROCEEDED EX PARTE QUA THE ASSESSEE AS EVEN AFTER DUE SERVICE OF NOTICE, NOBODY CAME TO REPRESENT THE RESPONDENTS CASE AND ALSO NO APPLI CATION FOR ADJOURNMENT WAS RECEIVED. 3 .1 THE FACTS OF GROUND NO 1 RELATING TO DELETION OF ADDITION OF RS. 15,74,506/ - MADE BY THE A.O ON ACCOUNT SUB - CONTRACT WORK EXPENSES CLAIMED BY THE ASSESSEE ARE THAT THE ASSESSEE IS A CIVIL CONTRACTOR AND 3 MATERIAL SUP PLIER. THE ASSESSEE IS A PARTNERSHIP FIRM AND IT HAS DEBITED EXPENSES OF RS. 1,57,45,058/ - MADE BY THE A.O ON ACCOUNT OF SUB - CONTRACT WORK. IT SUPPLIED DETAILS OF THESE EXPENSES ALONGWITH CONFIRMATIONS FROM THE SUB - CONTRACTORS. BUT AS PER THE A.O, IN TH E CONFIRMATIONS FILED BY THE ASSESSEE, THE NATURE OF WORK, RATE AND PERIOD OF SUB - CONTRACT ARE NOT MENTIONED. THE A.O WANTED THE ASSESSEE TO PROVIDE COPIES OF SUB - CONTRACT AGREEMENT. BUT IN REPLY, THE ASSESSEE SUBMITTED RELEVANT WORK ORDERS. ACCORDINGLY , BEING NOT SATISFIED, THE A.O HAS DISALLOWED 10% OF THE TOTAL EXPENSES SO CLAIMED AND HAS MADE ADDITION OF RS. 15,74,506/ - . IN APPEAL THE ASSESSEE WAS SUCCESSFUL IN GETTING THIS ENTIRE ADDITION DELETED. 3.2 BEFORE US IT WAS ARGUED BY THE LD. SR. D.R. SHR I N.A JOSHI THAT THE ASSESSEE WAS NOT ABLE TO SUBSTANTIATE THE ENTIRE EXPENSES SO CLAIMED TOWARDS PAYMENT TO SUB - CONTRACTORS. HE HAS ALSO SUBMITTED THAT THE ASSESSEE DID NOT FILE COPIES OF AGREEMENT EXECUTED WITH THE SUB - CONTRACTORS. THAT IS WHY HE HAS J USTIFIED THE IMPUGNED ADDITION MADE BY THE A.O. 4. AFTER CONSIDERING THE SUBMISSIONS OF THE LD. SR. DR IN THE LIGHT OF THE OBTAINING FACTS ON RECORD, WE HAVE FOUND THAT THE ASSESSEE HAD EXECUTED TOTAL CONTRACT OF RS. 6.58 CRORES AND OUT OF WHICH THE 4 CONTRA CT RECEIPTS OF RS. 4.58 CRORES ARE FROM GOVERNMENT DEPTT I.E. PHED. THE ONLY WORK TO THE EXTENT OF RS. 1,57,45,058/ - WAS EXECUTED THROUGH SUB - CONTRACTORS. THE ASSESSEE HAS CREDITED THE ENTIRE CONTRACT RECEIPTS OF RS. 6,85,68,890/ - IN ITS PROFIT AND LOSS ACCOUNT FILED ALON G WITH THE RETURN OF INCOME. THUS, THE ASSESSEE HAS BUSINESS INCOME FROM SUB CONTRACT WORKS AND THE SUB CONTRACTS HAVE CONFIRMED THEIR RESPECTIVE WORK EXECUTED BY THEM. SIMPLY BECAUSE NO WRITTEN AGREEMENT WAS FILED OR EXISTED BETWEEN THE ASSESSEE AND THE SUB CONTRACTORS, THE ASSESSEE HAS VERY WELL PRODUCED RELEVANT WORK ORDERS WHICH ARE ENOUGH PROOF OF EXECUTION OF SUB CONTRACT WORK. ACCORDINGLY, DISALLOWANCE OF 10% OUT OF ENTIRE WORK IS NOT AT ALL JUSTIFIED. MOREOVER, THE SUB - CONTRACT EXPENSES STAND PROVED ON RECORD. ACCORDINGLY THE LD. CIT(A) HAS CORRECTLY DELETED THIS ADDITION. WE APPROVE THE SAME AND DISMISS GROUND NO. 1 OF REVENUES APPEAL. 5. FACTS APROPOS GROUND NO. 2 PERTAINING TO DELETION OF ADDITION OF RS. 3 LAKH S MADE BY THE A.O ON ACCOUNT OF LABOUR AND WAGES PAYMENT AND GROUND NO. 3 PERTAINS TO DELETION OF ADDITION OF RS. 8 LAKHS MADE BY THE A.O ON ACCOUNT OF OTHER EXPENSES ARE THAT THE A.O MADE LUMPSUM DISALLOWANCES. THE ASSESSEE HAS CLAIMED EXPENSES OF RS. 33,46,660/ - ON ACCOUNT OF LABOUR AND WAGES PAYMENTS AND ONLY BECAUSE THERE IS NO MENTION OF WORK AGAINST WHICH THE LABOUR CHARGES 5 WERE PAID. THE A.O HAS FOUND THEM AS UNVERIFIABLE. ACCORDINGLY, HE HAS MADE LUMPSUM DISALLOWANCE OF RS. 3 LAKHS. IN THE SIMILAR MANNER, T HE ASSESSEE HAS CLAIMED PIPE AND FITTING EXPENSES AT RS. 1,41,54,171, CIVIL MATERIAL EXPENSES AT RS. 85,44,062/ - , DIESEL AND OIL EXPENSES AT RS. 17,87,447/ - AND PUMPS FITTING ACCESSORIES AT RS. 33,00,043/ - . ALL THESE EXPENSES ARE NOT FOUND TO BE FULLY VOU CHED AND SOME VOUCHERS ARE SELF - PREPARED. ACCORDINGLY, LUMPSUM DISALLOWANCE OF RS. 8 LAKHS HAS BEEN MADE OUT OF THESE EXPENSES. 6. DURING APPEAL, BOTH THESE DISALLOWANCES WERE CHALLENGED AND THE LD. CIT(A) HAS DELETED BOTH THESE ADDITIONS. 7. AFTER HEARIN G THE LD. SR. DR IN THE LIGHT OF THE FACTS AVAILABLE ON RECORD, WE HAVE NOTICED THAT EXPENSES ARE SUPPORTED BY BILLS AND VOUCHERS AND NONE OF THE EXPENSES HAVE BEEN PROVED BY THE A.O TO BE BOGUS, UNREASONABLE OR EXCESSIVE. THE A.O HAS NOT MENTIONED THAT A NY OF THESE EXPENSES CANNOT BE ALLOWED BECAUSE OF WHAT REASON. THEREFORE, IN SUCH CIRCUMSTANCES, ADHOC DISALLOWANCE, SIMPLICITER, WITHOUT ANY BASIS CANNOT BE APPROVED BY US. ACCORDINGLY, WE CONFIRM BOTH THESE DELETIONS AND CANNOT ALLOW GROUND NOS. 2 AND 3 OF REVENUES APPEAL. 6 8 . IN THE RESU LT, THE APPEAL OF THE REVENUE IN ITA NO. 196 /JU/2014 STANDS DISMISSED. ORDER PRON OUNCED IN THE COURT ON 11 TH AUGUST , 2014. SD/ - SD/ - (N.K.SAINI) [HARI OM MARATHA] ACCOUNTANT MEMBER JUDICIAL MEM B ER DATED : 11 TH AUGUST , 201 4 VL/ - COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT BY ORDER 4. THE CIT(A) 5. THE DR SENIOR PRIVATE SECRETARY ITAT, JODHPUR