Harshu Constructions Private Limited, Jabalpur V. Assistant Commissioner Of Income Tax, Circle1(1), Jabalpur

ITA 199/JAB/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 8402 (ITAT-JABALPUR)
• Duration Of Justice: 1 year(s) 3 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-01-2020
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Appeal Filed On: 05-10-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: DIRECTED AGAIN ST
• Keywords: Search and seizure; Question of law; Onus to prove
• Section: 37(1); 191

Judgement Text

I.T.A. NO.199/JAB/2018 ASSESSMENT YEAR:2014-15 1 IN THE INCOME TAX APPELLATE TRIBUNAL JABALPUR BENCH, JABALPUR BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI SANJAY ARORA, ACCOUNTANT MEMBER ITA NO.199/JAB/2018 ASSESSMENT YEAR: 2014-15 HARSHU CONSTRUCTION PVT. LTD. 903, M.H. HOUSE, GOLE BAZAR, JABALPUR- 482002 [PAN: AABCH 9808B] VS. ASST. COMMISSIONER OF INCOME TAX, CIRCLE 1(1), JABALPUR (APPELLANT) (RESPONDENT) O R D E R PER SANJAY ARORA, AM: THIS IS AN APPEAL BY THE ASSESSEE, DIRECTED AGAIN ST THE ORDER BY THE COMMISSIONER OF INCOME TAX (APPEALS)-1, JABALPUR ( CIT(A)) FOR SHORT) DATED 26.7.2018, PARTLY ALLOWING THE ASSESSEES APPEAL CO NTESTING ITS ASSESSMENT UNDER SECTION 143 OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER) DATED 26/8/2016 FOR ASSESSMENT YEAR (A.Y.) 2014-15. 2. THE ONLY ISSUE ARISING FOR ADJUDICATION IN THIS APPEAL IS THE MAINTAINABILITY OF THE DISALLOWANCE, IN LAW AND IN THE FACTS AND CIRCU MSTANCES OF THE CASE, OF A SUM OF RS.3,86,775, BEING 10% OF THE EXPENDITURE CLAIMED U NDER THE ACCOUNT HEAD LAND DEVELOPMENT EXPENSES. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE-COMPANY, IN CONSTRUCTION BUSINESS, CLAIMED LAND DEVELOPMENT EX PENSES IN THE SUM OF RS. 38,62,756 PER ITS RETURN OF INCOME FOR THE RELEVAN T YEAR. THE SAME, ON BEING SUBJECT APPELLANT BY SHRI ARUN GROVER, CA WITH SHRI ASHISH TARNEN, CA RESPONDENT BY SHRI I.B. KHANDEL, SENIOR DR DATE OF HEARING 13/12/2019 DATE OF PRONOUNCEMENT 20/01/2020 I.T.A. NO.199/JAB/2018 ASSESSMENT YEAR:2014-15 2 TO VERIFICATION DURING THE ASSESSMENT PROCEEDINGS, WERE FOUND BY THE ASSESSING OFFICER (AO) TO BE, TO SOME EXTENT INCURRED PER SEL F-MADE DEBIT VOUCHERS, WHILE SOME VOUCHERS WERE UNSIGNED, & SOME OTHERS WERE IDE NTIFIED AS PREPARED IN A HASTY MANNER WITH A VIEW TO APPEAR GENUINE. SOME OTHERS WERE NOT SUPPORTED BY PROPER BILLS AND VOUCHERS. HE, ACCORDINGLY, DISALLOWED THE EXPENDITURE CLAIMED TO THE EXTENT OF THE 20% THEREOF. IN APPEAL, THE LD. CIT(A ) WAS OF THE VIEW THAT THE OBJECTIONS RAISED BY THE AO BEING NOT DENIED OR REF UTED BY THE ASSESSEE, SOME DISALLOWANCE WAS CALLED FOR. HE, HOWEVER, RESTRICTE D IT TO 10%. AGGRIEVED, THE ASSESSEE IS IN SECOND APPEAL. 3. BEFORE US, THE LD. AR, THE ASSESSEES COUNSEL, S H. GROVER, WOULD SEEK TO EMPHASIZE, WITH REFERENCE TO CASE LAW, THAT NO DISA LLOWANCE COULD ARISE ON THE BASIS OF A SUSPICION, SURMISE OR CONJECTURE. TAKING US TH ROUGH THE CONCLUDING PART OF THE ASSESSMENT ORDER, HE WOULD DRAW OUR ATTENTION TO IT S LAST PARA WHEREBY THE AO HAD SOUGHT TO JUSTIFY THE DISALLOWANCE SO AS TO PROTECT POSSIBLE LEAKAGE OF PROFIT, SO THAT, AS ARGUED, IT WAS MERELY PROTECTIVE (IN NATURE). TH E LD. SR. DR, SH. KHANDEL, WOULD RELY ON THE ORDERS BY THE AUTHORITIES BELOW, STATIN G OF THEM BEING BASED ON DEFINITE, UNREBUTTED FINDINGS. 4. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD. 4.1 OUR FIRST OBSERVATION IN THE MATTER IS THAT THE PRIMARY ONUS TO PROVE ITS RETURN, AND THE CLAIMS PREFERRED THEREBY, IS ON THE ASSESSEE [ CIT VS. CALCUTTA AGENCY LTD . [1951] 19 ITR 191 (SC); CIT VS. R. VENKTASWAMY NAIDU [1956] 29 ITR 529 (SC)]. THIS ASPECT IS IN FACT NOT DISPUTED. IT IS TOWARD D ISCHARGE OF THIS OBLIGATION ON THE ASSESSEE THAT IT FURNISHES ITS B OOKS OF ACCOUNT ALONG WITH THE RELEVANT VOUCHERS IN SUBSTANTIATION OF ITS CLAIMS, WHICH WERE, UPON EXAMINATION BY THE AO, FOUND DEFICIENT IN-SO-FAR AS THE SAME RELAT ED TO LAND DEVELOPMENT EXPENSES, FOR THE FOLLOWING REASONS: A) LACK OF PROPER BILLS AND VOUCHERS; B) SELF-MADE DEBIT VOUCHERS; AND C) UNSIGNED VOUCHERS. I.T.A. NO.199/JAB/2018 ASSESSMENT YEAR:2014-15 3 4.2 IT IS ON ACCOUNT OF THESE OBSERVED DEFICIENCIES THAT THE AO REGARDED THE SAME AS NOT VERIFIABLE AND, THUS, AS NOT RELIABLE, FOR W HICH, AS WELL AS TOWARD LEAKAGE OF INCOME, HE EFFECTED A DISALLOWANCE AT 20% (OF THE C LAIMED EXPENDITURE). IT IS THIS CLEAR FINDING OF FACT WHICH THE ASSESSEE WAS REQUIR ED, AND WAS UNABLE, TO DISLODGE IN FIRST APPEAL, WHICH WAS ACCORDINGLY CONFIRMED, EVEN AS THE LD. CIT(A) REDUCED THE QUANTUM OF DISALLOWANCE BY HALF, REDUCING THE AOS ESTIMATE TO 10%. THE SAME POSITION, AS FAR AS THE ASSESSEES CASE GOES, OBTAI NS BEFORE US AS WELL. 4.3 THE LAW IN THE MATTER IS TRITE, AND NOT EITHER IN ISSUE OR UNDER QUARREL, OR COULD POSSIBLY BE. A DISALLOWANCE COULD ARISE ONLY ON THE EDIFICE OF CLEAR FINDING/S, ARRIVED AT ON PROPER EXAMINATION OF THE RELEVANT MA TERIAL, THE ONUS TO ADDUCE WHICH IS ON THE ASSESSEE. IT IS THE DEFINITE FINDING/S OF FACT THAT IS THE BASIS OF THE DISALLOWANCE IN THE INSTANT CASE, AND ON WHICH, THE REFORE, THE REVENUES CASE RESTS. A PART OF THE EVIDENCE OR MATERIAL FURNISHED BY THE ASSESSEE IN SUPPORT OF ITS CLAIM FOR THE IMPUGNED EXPENDITURE WAS, ON EXAMINATION, F OUND AS NOT RELIABLE, SO THAT ITS CLAIM COULD NOT BE ALLOWED IN FULL AND, ACCORDINGLY , A PART OF THE RELEVANT EXPENDITURE HAD TO BE DISALLOWED. THE ALLOWANCE OF AN EXPENDITURE U/S. 37(1) IS ON THE PREMISE OF IT BEING INCURRED WHOLLY AND EXCLUSI VELY WHICH ADVERTS TO THE QUANTUM AND THE PURPOSE OF THE EXPENDITURE , FOR BUSINESS PURPOSES, THE ONUS FOR WHICH, UNDISCHARGED IN THE INSTANT CASE, IS AGAIN O N THE ASSESSEE. THE AO FURTHER MAKES IT CLEAR THAT THIS WAS WITH A VIEW TO PROTECT THE REVENUES INTEREST, WHICH CANNOT BY ITSELF BE FAULTED WITH, I.E., AS LONG AS THE SAME IS BASED ON DEFINITE FINDINGS OF FACT. THE ASSESSEE HAS NOT IMPROVED ITS CASE ON FACTS IN ANY MANNER, EITHER BEFORE THE FIRST APPELLATE AUTHORITY OR EVEN BEFORE US. IT HAS NOT EXPLAINED AS TO WHY SOME VOUCHERS WERE SELF-MADE, OR SOME UNSIGNED, OR SOME OTHERS NOT BACKED BY PROPER BILLS OR VOUCHERS, RESULTING IN THE ENDORSEMENT OF THE DISALLOWANCE EFFECTED BY THE ASSESSING AUTHORITY IN PRINCIPLE. ESTIMATION IS INTEGRAL TO ASSESSMENT, EVEN AS THE S AME MUST HAVE AN OBJECTIVE BASIS, WITH A VIEW TO BE AS ACCURATE AS POSSIBLE UN DER THE CIRCUMSTANCES. THE PART RELIEF ALLOWED IN FIRST APPEAL IS, AS APPARENT, IN THE ABSENCE OF THE AO HAVING I.T.A. NO.199/JAB/2018 ASSESSMENT YEAR:2014-15 4 SPECIFIED ANY DEFINITE BASIS FOR THE QUANTUM OF THE DISALLOWANCE, WHICH WAS THEREFORE REDUCED BY THE LD. CIT(A) BY HALF. IN FAC T, THE AO HAVING NOT STATED ANY DEFINITE BASIS ( QUA THE QUANTUM OF THE DISALLOWANCE MADE), THE LD. CIT (A) OUGHT TO HAVE REQUIRED THE AO TO STATE THE SAID BASIS, OR OT HERWISE HIS POWERS BEING COTERMINOUS, CARRIED OUT THE VERIFICATION EXERCISE HIMSELF, AND WHICH ONLY WOULD HAVE ENTITLED HIM TO, IN THE ABSENCE OF ANY MATERIA L BEING LED BY THE ASSESSEE IN SUBSTANTIATION OF ITS CLAIM OF THE DISALLOWANCE MA DE BEING (IN ANY CASE) EXCESSIVE, MODIFY THE SAME TO WHATEVER EXTENT, INCLUDING INCRE ASING IT. REFERENCE IN THIS REGARD BE MADE, INTER ALIA , TO THE DECISION IN KAPURCHAND SHRIMAL V. CIT [1981] 131 ITR 451 (SC), WHEREIN THE APEX COURT HAS CLARIFIED THAT AN APPELLATE AUTHORITY IS LEGALLY OBLIGED TO CORRECT ALL ERRORS IN THE PROCEEDINGS UN DER APPEAL AND TO ISSUE, IF NECESSARY, APPROPRIATE DIRECTIONS TO THE AUTHORITY AGAINST WHOSE DECISION THE APPEAL IS PREFERRED TO DISPOSE OF THE WHOLE OR ANY PART OF THE MATTER AFRESH, UNLESS FORBIDDEN FROM DOING SO BY THE STATUTE. 4.4 IN THE FACTS OF THE INSTANT CASE, THE REVENUE I S NOT IN APPEAL, WHILE THE ASSESSEES WHICH HAS ALREADY BEEN ALLOWED SUBSTAN TIAL RELIEF, CLAIM CONTINUES TO BE A BALD CLAIM, I.E., AS WAS BEFORE THE FIRST APPELLA TE AUTHORITY. WE DO NOT, GIVEN THE VOLUME OF THE DISALLOWANCE AND THE TIME LAG INVOLVE D, THINK IT PROPER TO RESTORE THE MATTER BACK TO THE FILE OF EITHER THE LD. CIT(A) OR THE AO WITH SUITABLE INSTRUCTIONS. WE, ACCORDINGLY, DECLINE INTERFERENCE. THE DECISION IN PR. CIT V. R.G. BUILDWELL ENGINEERS LTD . (IN ITA NOS. 1183 & 1187/2017, DATED 22/12/2017), ALSO RELIED UPON, WE ARE AFRAID, WOULD NOT BE OF MUCH ASSISTANC E. APART FROM BEING DISTINGUISHABLE ON FACTS, THE HONBLE HIGH COURT, S IMILARLY, DECLINED INTERFERENCE AS NO SUBSTANTIAL QUESTION OF LAW THE ANSWER TO WHIC H WOULD BE THE RATIO OF THE DECISION, HAVING PRECEDENCE VALUE, AROSE, AND THE T RIBUNALS DECISION COULD NOT, IN VIEW OF THE HISTORICAL TREATMENT, BE TERMED UNREASO NABLE. WE DECIDE ACCORDINGLY. I.T.A. NO.199/JAB/2018 ASSESSMENT YEAR:2014-15 5 5. IN THE RESULT, THE ASSESSEES APPEAL IS DISMISSE D. ORDER PRONOUNCED ON JANUARY 20, 2020 SD/- SD/- (BHAVNESH SAINI) (SANJAY ARORA) JUDICIAL MEMBER ACCOUNT ANT MEMBER DATE: 20/01/2020 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT, HARSHU CONSTRUCTION PVT. LTD., 9 03, M.H. HOUSE, GOLE BAZAR, JABALPUR (M.P.) PIN 482002 2. THE RESPONDENT: ASST. COMMISSIONER OF INCOME TAX , CRICLE 1(1), JABALPUR 3. THE CIT CONCERNED 4. THE CIT(A)-1, JABALPUR 5. THE SR. D.R., I.T.A.T.