Income-tax Officer, V. Shri Shivaji A. Pathade, Kolhapur

ITA 2242/PUN/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 2632 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 1 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-02-2016
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 16-06-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 30-12-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DHEERAJ KUMAR JAIN
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE , !, # $ BEFORE MS. SUSHMA CHOWLA, JM AND SHRI PRADIP KUMAR KEDIA, AM ITA NO.2242/PN/2013 ASSESSMENT YEAR : 2010-11 THE INCOME TAX OFFICER, WARD 1(3), KOLHAPUR. . APPELLANT VS. SHRI SHIVAJI ANNASAHEB PATHADE, A/P MURGUD, TAL. KAGAL, DIST. KOLHAPUR. PAN : AHEPP4553A . RESPONDENT / APPELLANT BY : SHRI DHEERAJ KUMAR JAIN / RESPONDENT BY : SHRI SUNIL GANOO / DATE OF HEARING : 27.01.2016 / DATE OF PRONOUNCEMENT: 26.02.2016 % / ORDER PER PRADIP KUMAR KEDIA, AM : THE CAPTIONED APPEAL FILED BY THE REVENUE IS AGAINS T THE ORDER OF CIT(A), KOLHAPUR DATED 18.10.2013 RELATING TO ASSES SMENT YEAR 2010-11 PASSED UNDER SECTION 143(3) OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT). 2. IN THIS APPEAL, THE REVENUE HAS RAISED THE FOLLO WING GROUNDS OF APPEAL :- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT (A) WAS NOT JUSTIFIED IN DELETING THE ADDITION OF RS. 3 0,66,500/- MADE BY AO ON ACCOUNT OF EXCESS LABOUR CHARGES PAYABLE AS SHOWN IN THE BA LANCE SHEET. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE CIT(A) ERRED IN DELETING THE ADDITION OF RS. 2,86,800/- WI THOUT PROPER APPRECIATION OF FACTS AND ACCOUNTS BEING EXCESS PAYABLE SHOWN ON ACCOUNT OF SAND STONE MURUM PURCHASE ACCOUNT. 3. ON THE FACTS IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) ERRED IN DELETING THE ADDITION MADE OF RS. 1,54,000/- WITHOU T PROPER APPRECIATION OF FACTS AND 2 ITA NO.2242/PN/2013 ACCOUNTS TOWARDS EXCESS TRANSPORTATION CHARGES PAYA BLE ACCOUNT. 4. THE APPELLANT CRAVE LEAVE TO ADD, ALTER AMEND OR MODIFY ANY OTHER GROUNDS OF APPEAL AT THE TIME OF HEARING. 3. IN THIS APPEAL, THE REVENUE HAS IMPUGNED THE ACT ION OF THE CIT(A) IN GRANTING RELIEF TOWARDS (I) EXCESS LABOUR CHARGES P AYABLE OF RS.30,66,500/-; (II) EXCESS PAYABLE ON ACCOUNT OF SAND STONE MURUM PURCH ASE ACCOUNT OF RS.2,86,800/- AND (III) EXCESS TRANSPORTATION CHARG ES PAYABLE OF RS.1,54,000/-. 4. THE RELEVANT FACTS CONCERNING THE ISSUES INVOLVE D ARE AS UNDER : 4.1 THE ASSESSEE IS A CIVIL CONTRACTOR CARRYING ON CONSTRUCTION OF ROAD ONLY. THE ASSESSEE HAS INCURRED EXPENSES TOWARDS PURCHASE OF SAND, MURUM, CEMENT, STONES, LABOUR CHARGES AND CONVEYANCE, ETC.. ON GO ING THROUGH THE LEDGER ACCOUNT EXTRACTS OF THE VARIOUS EXPENSES SUBMITTED BY THE ASSESSEE, THE ASSESSING OFFICER OBSERVED THAT IN RESPECT OF LABOU R EXPENSES, THE ASSESSEE HAS SHOWN TOTAL LABOUR PAYMENTS FROM 04.05.2009 TO 30.0 3.2010 AT RS.63,54,500/-. ON VERIFICATION OF THE EXTRACT OF LABOUR PAYMENT FI LED, IT WAS OBSERVED BY THE ASSESSING OFFICER THAT AN AMOUNT OF RS.53,10,600/- WERE PAID TO THE LABOURERS FROM 11.03.2010 TO 30.03.2010. THE ASSESSING OFFIC ER ALSO OBSERVED THAT THE ASSESSEE HAS SHOWN LABOUR CHARGES PAYABLE OF RS.41, 40,000/- AS OUTSTANDING IN THE BALANCE SHEET. HE NOTED THAT THE ASSESSEE HAS NOT OFFERED ANY COGENT EXPLANATION FOR THE AFORESAID LIABILITY TO THE EXTE NT OF RS.30,66,500/- OUT OF RS.41,10,400/-. HE ACCORDINGLY DISALLOWED THE LABO UR CHARGES TO THE EXTENT OF RS.30,66,500/- AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 4.2 THE ASSESSING OFFICER ALSO NOTED AS PER THE PRO FIT & LOSS ACCOUNT THAT THE ASSESSEE HAS SHOWN PURCHASED UNDER THE HEAD SA ND, STONE AND MURUM PURCHASES TO THE TUNE OF RS.5,45,700/-. HOWEVER, I N THE BALANCE SHEET, THE ASSESSEE HAS SHOWN SAND, MURUM, STONE PURCHASES PAY ABLE AT RS.8,32,500/- AND THEREFORE THERE IS EXCESS PAYABLE TO THE TUNE OF R S.2,86,800/-. HE ALSO NOTED THAT EXPENDITURE HAS BEEN BOOKED BY SELF-MADE VOUCH ER AND REQUISITE EVIDENCE 3 ITA NO.2242/PN/2013 IN THIS REGARD AS NOT BEEN PRODUCED FOR VERIFICATIO N. HE THUS INTER-ALIA MADE AN ADDITION OF RS.2,86,800/- WHICH IS SUBJECT-MATTER O F THE PRESENT APPEAL. 4.3 THE ASSESSING OFFICER FURTHER NOTED THAT AS PER THE PROFIT & LOSS ACCOUNT, THE TRANSPORTATION CHARGES OF RS.18,46,000 /- HAS BEEN INCURRED TOWARDS SAND, MURUM, STONE AND DIESEL, ETC. WHEREAS OUTSTANDING TRANSPORTATION CHARGES PAYABLE IS SHOWN AT RS.20,00,000/-. HE AC CORDINGLY TREATED ADDED EXCESS TRANSPORTATION CHARGES PAYABLE OF RS.1,54,00 0/- TO THE INCOME OF THE ASSESSEE. 5. IN THE FIRST APPEAL, THE CIT(A) OBSERVED THAT TH E ASSESSING OFFICER HAS NOT CORRECTLY APPRECIATED THE TRANSACTIONS RECORDED IN THE BOOKS OF ACCOUNT. HE PERUSED THE LABOUR PAYMENT AND LABOUR PAYMENT PAYAB LE ACCOUNT AND OBSERVED THAT RS.11,25,200/- IN THE LABOUR PAYMENT PAYABLE A CCOUNT RELATE TO THE EARLIER YEAR. DURING THE CURRENT YEAR, THE ASSESSEE HAS MA DE AN ACTUAL PAYMENT OF RS.21,69,100/- AND HE FOUND THAT THE OUTSTANDING BA LANCE OF RS.41,40,000/- IS PAYABLE AT THE END OF THE YEAR ON RECONCILIATION OF THE LABOUR CHARGES PAID AND LABOUR CHARGES PAYABLE ACCOUNT. ACCORDING TO HIM, THE ADDITION OF RS.30,66,500/- MADE BY THE ASSESSING OFFICER STANDS RECONCILED. THE RELEVANT OPERATIVE PARA OF THE ORDER OF THE CIT(A) IN THIS R EGARD IS EXTRACTED AS UNDER :- 4. FIRST GROUND IS REGARDING ADDITION OF RS.30,66, 500/- AS EXCESS LABOUR CHARGES PAYABLE SHOWN IN THE BALANCE SHEET. THE AS SESSING OFFICER HAS NOTED THAT ASSESSEE HAS SHOWN TOTAL LABOUR PAYMENT OF RS.63,54 ,500/- FROM 04/05/2009 TO 30/03/2010. AN AMOUNT OF RS.53,10,600/- WAS PAID T O LABOURERS FROM 11/03/2010 TO 30/03/2010. FURTHER, THE ASSESSEE HAS DEBITED TOTA L LABOUR CHARGES OF RS.63,54,500/- TO THE PROFIT AND LOSS ACCOUNT OUT O F WHICH AFTER PAYMENT MADE TO THE LABOURER THE ASSESSEE HAS SHOWN LABOUR CHARGES PAYA BLE OF RS.41,40,000/- TO THE BALANCE SHEET ALTHOUGH THE ASSESSEE HAS MADE PAYMEN T OF RS.53,10,600/- AS PER THE EXTRACT FILED BY HIM. IF THIS AMOUNT OF RS.53,10,6 00/- MADE TO LABOURERS IS DEDUCTED FROM THE TOTAL LABOUR CHARGES OF RS.63,54,500/-, TH E OUTSTANDING BALANCE PAYABLE TO THE LABOURERS COMES TO RS.10,43,900/-. HOWEVER, TH E OUTSTANDING BALANCE SHOWN IS RS.41,10,400/- AND THEREFORE, THERE IS EXCESS LABOU R CHARGES PAYABLE OF RS.30,66,500/-. THIS AMOUNT HAS BEEN ADDED BY THE ASSESSING OFFICER. 5. THE APPELLANT HAS SUBMITTED THAT THE ASSESSING O FFICER HAS NOT APPRECIATED THE RELATED ENTRIES. THE APPELLANT MAINTAINS LABOU R PAYMENT ACCOUNT IN A SEPARATE LABOUR PAYMENT PAYABLE ACCOUNT. THE LABOUR PAYMENT PAYABLE ACCOUNT CONTAINS NORMALLY THOSE ENTRIES WHICH ARE NOT PAID DURING TH E YEAR THAT IS WHY ON 01/04/2009 THERE IS OPENING BALANCE OF RS.11,25,200/- WHICH WA S THE LABOUR PAYMENT PAYABLE FROM LAST YEAR. THE CLOSING BALANCE IN THIS ACCOUN T IS RS.41,40,000/- WHICH HAS BEEN 4 ITA NO.2242/PN/2013 DULY SHOWN IN THE BALANCE SHEET. AS AGAINST THIS, THE LABOUR PAYMENT ACCOUNT CONTAINS THOSE ENTRIES IN WHICH PAYMENTS WERE EITHE R MADE OR WHEREVER PAYMENTS WERE NOT MADE THOSE WERE TRANSFERRED TO LABOUR PAYM ENT PAYABLE ACCOUNT. IF THE ASSESSING OFFICER HAD APPRECIATED THESE TWO ACCOUNT S, HE WOULD FOLLOW THE ASSESSEES ACCOUNTING PRACTICE AND NO ADDITION WOULD BE MADE. 6. ON GOING THROUGH THE LABOUR PAYMENT (LP) AND LAB OUR PAYMENT PAYABLE (LPP) ACCOUNTS I FIND THAT IF THESE TOW ACCOUNTS AR E RECONCILED, THERE WILL BE NO ISSUE FOR MAKING ADDITION. IN THE LP ACCOUNT, TOTA L DEBIT IS RS.63,54,500/- WHICH INCLUDES ACTUAL PAYMENT OF RS.21,69,100/- UPTO 26/0 1/2010 AND INCLUDING FIVE OTHER PAYMENTS OF RS.18,500/- (07/03/2010), RS.17,000/- ( 16/03/2010, RS.15,500/- (21/03/2010), RS.19,200/- (22/03/2010) AND RS.14,00 0/- (25/03/2010). THERE IS A BALANCE OF RS.41,85,400/-. IN THE LPP ACCOUNT THER E IS OPENING BALANCE OF RS.11,25,200/- AGAINST WHICH A TOTAL PAYMENT OF RS. 11,70,600/- HAS BEEN MADE ON VARIOUS DATES. HENCE, OUT OF TOTAL RS.53,10,600/- IN LPP ACCOUNT IF ACTUAL PAYMENT OF RS.11,70,600/- IS REDUCED, THE BALANCE OF RS.41, 40,000/-. WE CAN ALSO GET THIS FIGURE FROM LP ACCOUNT BY REDUCING RS.45,400/- PAID FROM THE BALANCE OF RS.41,85,400/- MENTIONED ABOVE. THIS EXPLANATION W ILL BE MORE CLEAR IN THE FOLLOWING PARAGRAPH :- TOTAL OF LP ACCOUNT RS.63,54,500/- LESS: PAID AS PER LP A/C RS.20,84,900/- ADD: RS. 84,200/- RS.21,69,100/- RS.41,85,400/- LESS: PAID AS PER LPP A/C RS. 45,400/- BALANCE RS.41,40,000/- THIS BALANCE IS ALSO THE CLOSING BALANCE OF LPP A /C. THEREFORE, THERE IS NO GROUND FOR ADDITION AND THE ADDITION IS DELETED. IN TERMS OF THE ABOVE NOTED FINDINGS, THE CIT(A) DE LETED THE ADDITION OF RS.30,66,500/- TOWARDS EXCESS LABOUR CHARGES PAYABL E MADE BY THE ASSESSING OFFICER. 6. AS REGARDS THE ADDITION OF RS.2,86,800/- TOWARDS EXCESS PAYABLE WITH SAND, STONE AND MURUM PURCHASE ACCOUNT, THE CIT(A) OBSERVED THAT THE RELEVANT EXPENSES ACCOUNT AND PAYABLE ACCOUNT IS RE CONCILED ON FACTS AND THERE IS NO SCOPE FOR ANY ADDITION. SIMILARLY, AS REGARD S THE ADDITION OF RS.1,54,000/- TOWARDS EXCESS TRANSPORTATION CHARGES PAYABLE ACCOUNT, THE CIT(A) ALSO OBSERVED THAT THE RELEVANT EXPENSES ACC OUNT AND THE PAYABLE ACCOUNT OUTSTANDING AT THE END OF THE YEAR IS STAND S RECONCILED ON FACTS AND THERE IS NO SCOPE FOR ANY ADDITION. HE ACCORDINGLY DELETED THE ADDITION OF RS.2,86,800/- TOWARDS EXCESS PAYABLE IN SAND, STONE AND MURUM PURCHASES ACCOUNT AS WELL AS RS.1,54,000/- TOWARDS EXCESS TRA NSPORTATION CHARGES PAYABLE ACCOUNT. 5 ITA NO.2242/PN/2013 7. AGGRIEVED BY THE ORDER OF THE CIT(A), THE REVENU E IS IN APPEAL BEFORE US. 8. THE LD. DEPARTMENTAL REPRESENTATIVE FOR THE REVE NUE RELIED UPON THE OBSERVATIONS MADE IN THE ASSESSMENT ORDER AND SUBMI TTED THAT THE CIT(A) HAS MISDIRECTED ITSELF IN GRANTING RELIEF TO THE ASSESS EE IN THE FACTS OF THE CASE. 9. THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESS EE, ON THE OTHER HAND, RELIED UPON THE VARIOUS LEDGER EXTRACTS, ETC. FILED AS PER PAPER BOOK AND SUBMITTED THAT THE CIT(A) HAS RIGHTLY APPRECIATED T HE FACTS IN PERSPECTIVE AND GRANTED RELIEF AS DESERVED BY THE ASSESSEE. 10. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS, ORDERS OF THE AUTHORITIES BELOW AND THE PAPER BOOK FILED BY THE A SSESSEE WAS ALSO PERUSED. AS REGARDS THE EXCESS ADDITION OF RS.30,66,500/- TO WARDS LABOUR CHARGES PAYABLE, WE NOTE THAT TOTAL LABOUR CHARGES INCURRED FOR THE FINANCIAL YEAR RELEVANT TO THE ASSESSMENT YEAR 2010-11 STANDS AT R S.63,54,500/-. THE OPENING OUTSTANDING IN THE LABOUR CHARGES PAYABLE ACCOUNT S TANDS AT RS.11,25,200/-. THE ASSESSEE HAS PAID RS.21,69,100/- ONLY OUT OF LA BOUR CHARGES OF RS.63,54,500/- STATED TO HAVE BEEN INCURRED FOR THE YEAR. ANOTHER PAYMENT OF RS.11,70,600/- HAS BEEN PAID PURPORTEDLY IN RELATIO N TO THE EARLIER YEAR. THEREFORE, THE LIABILITY OF RS.41,40,000/- BROADLY PERTAINS TO THE CURRENT ASSESSMENT YEAR IN APPEAL. IT APPEARS TO US THAT T HE ASSESSING OFFICER COULD NOT EXAMINE THE CORRECTNESS OF THE LIABILITY FOR WANT O F PROPER EXPLANATION WHILE THE ASSESSING OFFICER HAS OBSERVED THAT HAVING REGA RD TO THE NATURE OF EXPENSES, SUCH EXPENDITURE ARE PAYABLE IF NOT DAILY BUT WEEKLY. WE FEEL IN THE CIRCUMSTANCES THAT THE CORRECTNESS OF HUGE OUTSTAND ING PAYABLE QUA THE EXPENSES INCURRED UNDER THE HEAD LABOUR EXPENSES RE QUIRES PROPER ASCERTAINMENT TO ARRIVE AT LOGICAL CONCLUSION IN TH IS REGARD. ACCORDINGLY, WE SET-ASIDE THE ISSUE AND REMIT BACK TO THE FILE OF T HE ASSESSING OFFICER FOR DE NOVO EXAMINATION IN ACCORDANCE WITH LAW. THUS, APPEAL OF THE REVENUE IS ALLOWED ON THIS ISSUE FOR STATISTICAL PURPOSES. 6 ITA NO.2242/PN/2013 11. AS REGARDS THE ACTION OF THE CIT(A) IN DELETING THE ADDITION OF RS.2,86,800/- TOWARDS EXCESS PAYABLE ON ACCOUNT OF SAND, STONE AND MURUM PURCHASES ACCOUNT AND RS.1,54,000/- TOWARDS EXCESS TRANSPORTATION CHARGES PAYABLE ACCOUNT, WE ARE IN AGREEMENT WITH THE ORDER OF THE CIT(A). THE CIT(A) HAS CORRECTLY OBSERVED THAT THE ASSESSING OF FICER HAS FAILED TO APPRECIATE THE REVENUE (EXPENSES) ACCOUNT AND LIABI LITY (PAYABLE) ACCOUNT IN PERSPECTIVE. WE ALSO NOTICE THAT THE ASSESSING OFF ICER HAS ACCEPTED THE EXPENSES INCURRED IN PURCHASE ACCOUNT AS WELL AS IN THE TRANSPORTATION CHARGES ACCOUNT SUBJECT TO SOME DISALLOWANCES. THEREFORE, THE PAYABLE OUTSTANDING AT THE END OF THE YEAR IN THESE ACCOUNTS REQUIRES TO B E ACCEPTED. IN THIS VIEW OF THE MATTER, WE DECLINE TO INTERFERE WITH THE FINDIN GS OF THE CIT(A) OF THESE TWO ISSUES. THUS, THE REVENUE FAILS ON THESE TWO GROUN DS. 12. IN THE RESULT, THE APPEAL OF THE REVENUE IS PAR TLY ALLOWED. ORDER PRONOUNCED ON THIS 26 TH DAY OF FEBRUARY, 2016. SD/- SD/- ( SUSHMA CHOWLA ) ( PRADIP KUMAR KEDIA ) / JUDICIAL MEMBER # / ACCOUNTANT MEMBER PUNE ; DATED : 26 TH FEBRUARY, 2016. % & '() *)' ! COPY OF THE ORDER IS FORWARDED TO : 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A), KOLHAPUR; 4) THE CIT-II, KOLHAPUR; 5) THE DR A BENCH, I.T.A.T., PUNE; 6) GUARD FILE. %+ / BY ORDER , '# //TRUE COPY// $ %&# '( / SR. PRIVATE SECRETARY ) '* + / ITAT, PUNE