V Seetharaman, Villupuram V. ACIT, Villupuram Circle, Villupuram

ITA 228/CHNY/2019

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 2738 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 8 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-10-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2015-2016
• Appeal Filed On: 31-01-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Principle of natural justice

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: CHENNAI , , $ BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER AND SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ./ ITA NO.228/CHNY/2019 /ASSESSMENT YEAR: 2015-16 SHRI V. SEETHARAMAN, NO.5, KAPPIYAMPULIYUR, MAIN ROAD, VILLUPURAM 605 601. [PAN: AACPR 0873L] VS. THE ASST. COMMISSIONER OF INCOME TAX, VILLUPURAM CIRCLE, VILLUPURAM. ( /APPELLANT) ( &'( /RESPONDENT) ( / APPELLANT BY : MR. S. SRIDHAR, ADVOCATE &'( /RESPONDENT BY : MR. AR.V. SREENIVASAN, ADDL. CIT /DATE OF HEARING : 06.10.2021 / DATE OF PRONOUNCEMENT : 06.10.2021 / O R D E R PER V. DURGA RAO, JUDICIAL MEMBER : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS), P UDUCHERRY IN I.T.A NO.62/CIT(A)-PDY/2017-18 DATED 15.11.2018 REL EVANT TO THE ASSESSMENT YEAR 2015-16. I.T.A NO.228/CHNY/2019 :- 2 -: 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE AR E REPRODUCED AS UNDER: 1. THE ORDER OF THE COMMISSIONER OF INCOME TAX (AP PEALS), PUDUCHERRY DATED 15.11.2018 IN I.TANO.62/CIT(A)-PDY /2017-18 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 DISALL OWANCE OF EXPENSES OF RS.24,35,542/- AT 5% OF SUCH EXPENSES B OOKED/CLAIMED AGGREGATING TO RS.4,87,76,8457- FOR WANT OF FURTHER EVIDENCE IN THE COMPUTATION OF TAXABLE TOTAL INCOME WITHOUT ASSIGNI NG PROPER REASONS AND JUSTIFICATION. 3. THE CIT (APPEALS) FAILED TO APPRECIATE THAT THE ESTIMATED DISALLOWANCE OF SUCH EXPENSES WAS WRONG, ERRONEOUS, UNJUSTIFIED, INCORRECT AND NOT SUSTAINABLE IN LAW AND OUGHT TO H AVE APPRECIATED THAT HAVING NOT EXAMINED THE RELEVANT MATERIALS WHI LE FURTHER HAVING NOT EXAMINED THE PATTERN OF INCOME AND EXPENDITURE REPORTED, THE SUSTENANCE OF ESTIMATED DISALLOWANCE OF SUCH EXPENS ES WAS WHOLLY UNJUSTIFIED. 4. THE CIT(APPEALS) FAILED APPRECIATE THAT THERE WA S NO PROPER OPPORTUNITY GIVEN BEFORE PASSING THE IMPUGNED ORDER AND OUGHT TO HAVE APPRECIATED THAT ANY ORDER PASSED IN VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE SHOULD BE RECKONED AS NULLITY IN LAW. 5. THE APPELLANT CRAVES LEAVE TO FILE ADDITIONAL GR OUNDS/ARGUMENTS AT THE TIME OF HEARING. 3. GROUNDS OF APPEAL NO.1 & 5 ARE GENERAL IN NATURE , NO ADJUDICATION IS REQUIRED HENCE, DISMISSED. GROUNDS OF APPEAL NO.2 TO 4 ARE RELATING TO ONLY ONE ISSUE RELATING TO DISALLOW ANCE OF EXPENSES AT RS. 24,35,542/-. 4. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS A GOVT. CIVIL CONTRACTOR AND HE HAS NOT MAINTAINING REGULAR BOOKS OF ACCOUNTS AND ESTIMATED THE INCOME @ 4% OF THE GROSS RECEIPTS. TH E ASSESSEE CLAIMED EXPENSES OF RS.4,87,76,845/- FOR PURCHASE, WAGES, ETC. I.T.A NO.228/CHNY/2019 :- 3 -: REGARDING THE ABOVE MENTIONED EXPENDITURE, HE DID N OT SUBMIT ANY PROOF TO SUBSTANTIATE THE CLAIM OF THE EXPENSES AND ALSO NOT FILED ANY PROOF REGARDING PAYMENT FOR EXPENSES. ACCORDINGLY, THE A.O HAS DISALLOWED 5% OF THE TOTAL PURCHASES, WAGES AND EXP ENSES OF RS. 24,35,542/- AND ADDED TO THE TOTAL INCOME OF THE AS SESSEE. 5. ON APPEAL, THE LD. CIT(A) HAS CONFIRMED THE ORDE R PASSED BY THE A.O. 6. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE ASSESSEE IS NOT MAINTAINING THE PROPER BOOKS OF ACCOUNTS AND THE PAYMENT MADE BY THE ASSESSEE IN RESPECT OF PURCHASE OF SAND, GRAVEL AND OTHER MATERIAL ON DAY TO DAY BASIS IT IS DIFFIC ULT TO MAINTAIN THE BOOKS OF ACCOUNTS. IN RESPECT OF WAGES, IT IS SUBM ITTED THAT DAY TO DAY BASIS WAGES HAS TO BE PAID BY THE ASSESSEE TO THE C OOLIES. THEREFORE, IT IS NOT POSSIBLE TO SUBMIT BILLS AND VOUCHERS FOR THIS DAY TO DAY EXPENDITURE INCURRED BY THE ASSESSEE AND THUS, THE DISALLOWANCE OF 5% IS VERY EXCESSIVE AND REASONABLE DISALLOWANCE MAY B E RESTRICTED TO 2% INSTEAD OF 5%. 7. ON THE OTHER HAND, THE LD. D.R STRONGLY SUPPORTE D THE ORDERS PASSED BY THE A.O AS WELL AS LD. CIT(A). I.T.A NO.228/CHNY/2019 :- 4 -: 8. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATE RIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHOR ITIES BELOW. THE ASSESSEE IS A CIVIL CONTRACTOR AND THE EXPENDITURE INCURRED BY THE ASSESSEE MAINLY FOR THE PURPOSE OF PURCHASE OF SAND AND GRAVEL AND THE WAGES HAS TO BE PAID DAY TO DAY BASIS TO THE CO OLIES. THEREFORE, HE WAS UNABLE TO SUBSTANTIATE THE EXPENDITURE WITH THE HELP OF BILLS AND VOUCHERS. UNDER THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE OPINION THAT THE DISALLOWANCE HAS TO BE RESTRICTED TO 3% INSTEAD OF 5%. ACCORDINGLY, WE DIRECT THE A.O TO CA LCULATE THE DISALLOWANCE 3%. THUS, THE GROUNDS OF APPEAL NO.2 T O 4 RAISED BY THE ASSESSEE IS PARTLY ALLOWED. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED ON 06 TH OCTOBER, 2021 IN CHENNAI. SD/- SD/- ( ) (G. MANJUNATHA) /ACCOUNTANT MEMBER ( ) (V. DURGA RAO) /JUDICIAL MEMBER /CHENNAI, /DATED: 06 TH OCTOBER, 2021 . EDN/- /COPY TO: 1. /APPELLANT 2. /RESPONDENT 3. ( )/CIT(A) 4. /CIT 5. /DR 6. /GF