Dwarkes Infrastructure Pvt. Ltd., Ahmedabad V. DCIT, Circle-1(1)(2), Ahmedabad

ITA 2283/AHD/2017

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 5219 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 4 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-02-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 03-02-2020
• Assessment Year: 2014-2015
• Appeal Filed On: 12-10-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: L P JAIN
• Assessee Lawyers: P B PARMAR
• Keywords: TDS
• Section: 143(3); 37(1); 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER & MS. MADHUMITA ROY, JUDICIAL MEMBER ./ I.T.A. NO. 2283/AHD/2017 ( ASSESSMENT YEAR : 2014-15) DWARKESH INFRASTRUCTURE PVT. LTD. S-1, NEELKANTH APARTMENTS, B/H VISHRAM NAGAR, MEMNAGAR, AHMEDABAD - 3800 52 / VS. DCIT CIRCLE 1(1)(2), AHMEDABAD ./ ./ PAN/GIR NO. : AACCD0020C ( APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI P. B. PARMAR, A.R. / RESPONDENT BY : SHRI L. P. JAIN, SR. D.R. DATE OF HEARING 03/02/2020 !'# / DATE OF PRONOUNCEMENT 20/02/2020 O R D E R PER MS. MADHUMITA ROY - JM: THE INSTANT APPEAL AT THE INSTANCE OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 31.08.2017 PASSED BY THE COMMISSIONER OF INCO ME TAX (APPEALS) 1, AHMEDABAD ARISING OUT OF THE ORDER DATED 28.10.20 1 6 PASSED BY THE LEARNED DCIT, CIRCLE-1(1)(2), AHMEDABAD UNDER SECTION 143(3) OF T HE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED AS TO THE ACT) FOR ASSESSME NT YEAR 2014-15. ITA NO.2283/AHD/2017 DWARKESH INFRASTRUCTURE PVT. LTD. VS. DCIT ASST.YEAR 2014-15 - 2 2. THE BRIEF FACTS LEADING TO THE CASE IS THAT THE ASSESSEE ENGAGED IN THE ROAD CONSTRUCTION BUSINESS FILED ITS RETURN OF INCOME ON 26.11.2014 THROUGH ELECTRONIC MEDIA DECLARING INCOME AT 98,60,000/-. DURING THE COURSE OF ASSESSMENT PROCEEDING IT WAS FOUND THAT THE ASSESSEE HAS DEBIT ED AN AMOUNT OF 7,00,44,022/- BEING EXPENDITURE TOWARDS LABOUR CHARGES. FURTHER VERIFICATION OF THE RECORDS AVAILABLE BEFORE THE LEARNED ASSESSING OFFICER , IT WAS FOUND THAT THE ASSESSEE HAD INCURRED EXPENSES ON ACCOUNT OF LABOUR CHARGES AMOU NTING TO 33,43,053/- AND 36,82,753/- IN RESPECT OF ONE M/S. B A PAVAGADHI LA BOUR CONTRACTORS AND M/S. SHAH LABOUR CONTRACTORS; RESPECTIVELY. THOUGH CLARIFICA TION WAS MADE BY THE ASSESSEE BEFORE THE LEARNED ASSESSING OFFICER, THE LEARNED A SSESSING OFFICER ULTIMATELY FINALISED THE ASSESSMENT HOLDING THE SAID CONTRACTO RS AS DUMMY, MANIPULATIVE BY THE ASSESSEE TO INFLATE THE EXPENDITURE IN THE FORM OF LABOUR PAYMENTS. FURTHER THAT HE RELIED UPON THE OBSERVATION MADE IN THE ORDER PASSE D BY THE LEARNED CIT(A) DATED 30.08.2016 FOR ASSESSMENT YEAR 2013-14 ON THE DISPU TE RELATING TO THE SAME PARTIES HOLDING THE SAME IS BOGUS AND INFLATED ONE. TOTAL ADDITION TO THE TUNE OF 70,25,806/- UNDER SECTION 37 OF THE ACT WAS MADE W HICH WAS, IN TURN, CONFIRMED BY THE FIRST APPELLATE AUTHORITY. HENCE, THE INSTA NT APPEAL BEFORE US. 3. AT THE TIME OF HEARING OF THE INSTANT APPEAL, TH E LEARNED ADVOCATE APPEARING FOR THE ASSESSEE SUBMITTED BEFORE US THAT THE VERY ISSUE WAS DECIDED BY THE COORDINATE BENCH IN ASSESSEES OWN CASE IN FAVOUR O F THE ASSESSEE IN RESPECT OF THE SAME PARTIES WHICH HAS BEEN REFERRED BY THE ASSESSI NG OFFICER IN ITS ORDER DATED 28.10.20 16. A COPY OF THE SAME WAS ALSO HANDED OV ER TO US. HE THEREFORE PRAYS FOR SIMILAR RELIEF OF DELETION OF ADDITION MADE BY THE AUTHORITIES BELOW AS HAS BEEN DONE BY THE COORDINATE BENCH IN THE IDENTICAL CASE BEFOR E US FOR ASSESSMENT YEAR 2013- 2014. THE LEARNED DR WITH ALL HIS FAIRNESS SUBMITT ED BEFORE US THAT THE ISSUE IS IDENTICAL AND ALREADY BEEN DECIDED BY THE COORDINAT E BENCH IN ASSESSEES FAVOUR. HOWEVER, HE RELIES UPON THE ORDERS PASSED BY THE AU THORITIES BELOW. ITA NO.2283/AHD/2017 DWARKESH INFRASTRUCTURE PVT. LTD. VS. DCIT ASST.YEAR 2014-15 - 3 4. HEARD THE PARTIES. WE HAVE ALSO PERUSED THE RE LEVANT MATERIALS AVAILABLE ON RECORD INCLUDING THE ORDER PASSED BY THE COORDINATE BENCH IN ITA NO. 2813/AHD/2016 FOR ASSESSMENT YEAR 2013-2014 . WHILE ALLOWING THE ISSUE IN FAVOUR OF THE ASSESSEE BY DELETING UNDER S.37 OF THE ACT, THE COORDINATE BENCH HAS BEEN PLEASED TO OBSERVE AS FOLLOWS SET OUT PARAGRAPH 6 O F PAGE 4 AND 5 OF THE JUDGMENT: 6. WE HAVE DULY CONSIDERED RIVAL SUBMISSIONS AND G ONE THROUGH THE RECORD CAREFULLY. IT IS PERTINENT TO OBSERVE THAT IN ORDER TO CLAIM E XPENDITURE UNDER SECTION 37(1) OF THE ACT, THE ASSESSEE IS REQUIRED TO FULFILL CERTAIN CO NDITIONS VIZ. (A) THERE MUST BE AN EXPENDITURE, (B) SUCH EXPENDITURE MUST NOT BE OF NA TURE DESCRIBED IN SECTIONS 30 TO 36, (C) EXPENDITURE MUST NOT BE IN THE NATURE OF CAPITA L EXPENDITURE OR PERSONAL EXPENDITURE OF THE ASSESSEE, AND (D) EXPENDITURE MUST BE LAID O UT OR EXPENDED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS OR PROFESSI ON. EXPRESSION 'WHOLLY' EMPLOYED IN SECTION 37 RELATES TO QUANTIFICATION OF THE EXPENDI TURE, WHILE EXPRESSION 'EXCLUSIVELY' REFERS TO THE MOTIVE, OBJECTS AND PURPOSE OF THE EX PENDITURE. IF WE MAKE AN ANALYSIS OF THE RECORD, THEN IT WOULD REVEAL THAT THE ASSESSEE HAS DEMONSTRATED THE INCURRENCE OF THE ABOVE EXPENDITURE FOR THE PURPOSE OF BUSINESS. IT HAS SUBMITTED CONTRACT DETAILS FROM AUDA OR AMC HOW THESE CONTRACTS COMPLETED BY I T WITH HELP OF LABOUR CONTRACTOR. IT HAS SUBMITTED THAT LABOUR BILLS AND CONTRACT INDICATING THE WORKING ASSIGNED BY IT TO DIFFERENT LABOUR CONTRACTORS. IT HAS SUBMITTED BANK STATEMENT SHOWING PAYMENT THROUGH BANKING CHANNEL TO LABOUR CONTRACTO RS. IT HAS PRODUCED INCOME TAX RETURN OF THE CONTRACTOR SHOWING INCOME OF THESE RE CEIPTS RECEIVED FROM THE ASSESSEE. IT HAS PRODUCED TDS DETAILS. IT HAS PRODUCED COMPARATI VE ANALYSIS OF THE GP AS WELL AS NP OF EARLIER YEARS VIS--VIS THIS YEAR. IT HAS ALS O DEMONSTRATED HOW PROFIT WILL ABNORMALLY RISE IF THESE DISALLOWANCES ARE BEING IN CLUDED IN THE INCOME OF THE ASSESSEE. THUS, COMPLETE CIRCUMSTANTIAL EVIDENCE PRODUCED BY THE ASSESSEE WOULD INDICATE THAT IT HAS INCURRED THESE EXPENDITURE FOR COMPLETING THE W ORK. THE ONLY CIRCUMSTANCES WITH THE AO IS THAT PROPRIETORSHIP CONCERN OF THE LABOUR CONTRACTORS WERE IN THE NAMES OF LADIES AND ACTUAL WORK WERE BEING LOOKED AFTER BY T HEIR HUSBANDS, HENCE, THEY ARE NOT HAVING KNOWLEDGE OF THEIR BUSINESS. TO OUR MIND THE SE CIRCUMSTANCES, OUGHT NOT TO BE LOOKED INTO IN ISOLATION FOR DISBELIEVING THE CLAIM OF THE ASSESSEE. RECEIPTS HAVE ALREADY SUFFERED TAX IN THE HANDS OF THE RECIPIENTS. WORK H AS BEEN DONE. THERE ARE NO DOUBT WITH REGARD TO THE CONTRACTS OBTAINED FROM AUDA OR AMC AND COMPLETION OF WORK. THUS, ACTUAL EXPENDITURE MUST HAVE BEEN INCURRED ON SUCH WORK. CAN THE CLAIM OF THE ASSESSEE BE BELIED SIMPLY FOR THE REASONS THAT SOME OF THE LABOUR CONTRACTORS WERE NOT HAVING COMPLETE KNOWLEDGE OF THE CONTRACT WHICH IS BEING LOOKED AFTER BY THEIR HUSBAND ? TO OUR MIND, THE LD.REVENUE AUTHORITIES HAVE FAIL ED TO APPRECIATE ACTUAL CIRCUMSTANCES OF THE DISPUTE. CONSIDERING THE ABOVE DETAILS, WE ALLOW THIS GROUND OF APPEAL AND DELETE THE IMPUGNED DISALLOWANCE. 5. IT APPEARS THAT THE ISSUE ALREADY BEEN DECIDED I N FAVOUR OF THE ASSESSEE WHERE THE PARTIES ARE ALSO IDENTICAL AND THEREFORE RESPEC TFULLY RELYING UPON THE ORDER PASSED ITA NO.2283/AHD/2017 DWARKESH INFRASTRUCTURE PVT. LTD. VS. DCIT ASST.YEAR 2014-15 - 4 BY THE COORDINATE BENCH WE DO NOT HESITATE TO DELET E THE ADDITION MADE UNDER SECTION 37 OF THE ACT BY THE AUTHORITIES BELOW. HENCE ASSES SES APPEAL IS ALLOWED 6. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 20/02/2020 SD/- SD/- (WASEEM AHMED) (MADHUMITA ROY) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 20/02/2020 TRUE COPY S. K. SINHA / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. $%& ' / CONCERNED CIT 4. '() / THE CIT(A)- 5. *+, --%&. %&#. /01$1 / DR, ITAT, AHMEDABAD 6. ,23 4 / GUARD FILE. / BY ORDER, (DY./ASSTT. REGISTRAR) $%& / ITAT, AHMEDABAD