M/S. BILLETS ELEKTRO WERKE LTD, MUMBAI V. THE ITO WD 9(1)(2), MUMBAI

ITA 2286/MUM/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 5707 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-05-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 12-04-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: AMIT MOHAN MITTAL
• Keywords: Unexplained expenditure; Additional evidence; TDS
• Section: 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH B, MUMBAI BEFORE SHRI SANDEEP GOSAIN, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NO.2286/M/2018 ASSESSMENT YEAR: 2010-11 M/S. BILLETS ELEKTRO WERKE LTD., 42, 2 ND FLOOR, JAGAT SATGURU INDUSTRIAL ESTATE, OFF. AAREY ROAD, GOREGAON (E), MUMBAI 400 064 PAN: AAACB20279 VS. CIT(A)-20, 5 TH FLOOR, EARNEST HOUSE, NARIMAN POINT, MUMBAI - 400020 (APPELLANT) (RE SPONDENT) PRESENT FOR: ASSESSEE BY : MS. DINKLE HARIYA, A.R. REVENUE BY : SHRI AMIT MOHAN MITTAL, D.R. DATE OF HEARING : 07.05.2019 DATE OF PRONOUNCEMENT : 14.05.2019 O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSES SEE AGAINST THE ORDER DATED 22.04.2013 OF THE COMMISSIO NER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS TH E CIT(A)] RELEVANT TO ASSESSMENT YEAR 2010-11. 2. THE VARIOUS GROUNDS RAISED BY THE ASSESSEE ARE A S UNDER: 1. THE GROUNDS OF APPEAL THAT FOLLOW ARE ALL IND EPENDENT AND WITHOUT PREJUDICE TO EACH OTHER. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LEARNED CIT (A) HAS ERRED IN REJECTING ADDITIONAL EVIDENCES PRODUCE D BY THE APPELLANT DURING THE CIT (A) PROCEEDINGS. 3. THAT ON THE FACTS ANA IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW, THE LEARNED CIT (A) ERRED IN NON-CONSIDERATION OF REAL INCOME AND D ENIAL OF SUBSTANTIAL JUSTICE BY NOT DECIDING THE ALLOWABILITY OF THE LABOUR CHARGES PAID OF RS 23,54,367/- ON MERIT. 4. THAT, ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW, THE LEARNED AO IN THE REMAND REPORT ERRED IN CONSIDERING THE LABOU R CHARGES PAID TO RAJ PRODUCTS ITA NO.2286/M/2018 M/S. BILLETS ELEKTRO WERKE LTD. 2 OF RS 3,84,027/- AND M/S J K ENGINEERING OF RS 2,43 ,265/- INCURRED AS UNEXPLAINED EXPENDITURE ON THE GROUNDS OF NON-COMPLIANCE OF NOT ICES ISSUED TO THOSE PARTIES' U/S 133(6) WITHOUT APPRECIATING THE FACT THAT THE S AID LABOUR CHARGES WERE SUPPORTED BY PROPER DOCUMENTATION AND PROPER TDS WA S DEDUCTED ON THE SAME. ABOVE CAN BE SUMMARIZED AS UNDER: ASSESSING OFFICER CIT (A) OUT OF THE TOTAL LABOUR CHARGES CONSIDERED AS BOGUS OF RS 23,54,367/- DURING THE ASSESSMENT PROCEEDINGS RS 17,27,075 RS 6,27,292 GENUINESS ACCEPTED BY THE AO AS PER REMAND REPORT NOT ACCEPTED BY THE AO REJECTED ON BASIS OF ADDITIONAL EVIDENCE NOT ACCEPTED 5. THAT, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, YOUR APPELLANTS PRAY THAT THE LEARNED CIT(A) BE DIRECTED TO EXAMINE THE EVIDENCE SUBMITTED FOR CLAIM OF LABOUR CHARGES AND DECIDE AL LOWABILITY ON BASIS OF MERIT. 6. YOUR APPELLANT CRAVES LEAVE TO ADD, ALTER, AME ND OR VARY ALL OR ANY OF THE ABOVE GROUNDS AS AND WHEN THE OCCASION ARISES. 3. THE ONLY EFFECTIVE GROUND RAISED BY THE ASSESSEE IS GROUND NO.2, 3, & 4 AND REMAINING ARE GENERAL IN NATURE AN D NEED NO ADJUDICATION. 4. THE ISSUE RAISED IN 1 ST GROUND OF APPEAL IS AGAINST THE ORDER OF LD. CIT(A) REJECTING THE ADDITIONAL EVIDENCES PR ODUCED BY THE ASSESSEE DURING THE APPELLATE PROCEEDINGS. 5. THE FACTS IN BRIEF ARE THAT THE ASSESSEE COULD N OT PRODUCE SOME EVIDENCES IN THE ASSESSMENT PROCEEDINGS AND AO MADE THE ADDITION FOR THE WANT OF EVIDENCES ON ACCOUNT OF LA BOUR CHARGES TO THE TUNE OF RS.23,54,367/-. THE SAID LABOUR CHA RGES WERE TREATED AS UNEXPLAINED BY THE AO ON ACCOUNT OF THE NOTICES UNDER SECTION 133(6) OF THE ACT BEING RETURNED UNSE RVED. ITA NO.2286/M/2018 M/S. BILLETS ELEKTRO WERKE LTD. 3 6. IN THE APPELLATE PROCEEDINGS, ASSESSEE FILED THE COPIES OF THE INVOICES OF THE LABOUR CHARGES WHICH WERE SENT BY THE LD. CIT(A) TO AO FOR VERIFICATION. THE AO IN THE REMA ND PROCEEDINGS CALLED UPON THE ASSESSEE TO PROVIDE ALL THESE EVIDE NCES BESIDES ISSUING NOTICES UNDER SECTION 133(6) DATED 14.12.2 015 AND 10.03.2016 TO SIX PARTIES. OUT OF THE SIX PARTIES, FOUR PARTIES DULY COMPLIED WITH THE NOTICES ISSUED UNDER SECTION 133(6) AND FURNISHED ALL THE DETAILS LIKE COPIES OF FORM NO.1 6, CONFIRMATION OF ACCOUNTS, ITRS, P&L ACCOUNTS ETC. AND AO FOUND T HE PAYMENTS MADE BY THE ASSESSEE WERE IN ORDER. HOWEV ER, IN RESPECT OF TWO PARTIES RAJ PRODUCTS AND J.K. ENTERP RISES THE NOTICES ISSUED UNDER SECTION 133(6) WERE RETURNED U NSERVED AND THE ASSESSEE COULD NOT PROVIDE THE CORRECT ADDRESSE S TO THESE PARTIES. HOWEVER, THE LD. A.R. VIDE LETTER DATED 3 0.05.2016 FURNISHED THE FORM NO.16A, LEDGER ACCOUNTS OF THE A SSESSEE, ITRS, COPIES OF TWO PARTIES ALONG WITH COPIES OF BA NK STATEMENTS OF M/S. J.K. ENGINEERING AND FINALLY SUBMITTED REMA ND REPORT ON 03.10.2017. THE LD. CIT(A) DISMISSED THE APPEAL OF THE ASSESSEE DESPITE THE FACT THAT AO HAS DULY STATED THAT THE S OME PART OF THE LABOUR CHARGES TO THE TUNE OF RS.17,27,075/- WE RE VERIFIED AND FOUND IN ORDER. 7. AFTER HEARING BOTH THE PARTIES AND PERUSING THE MATERIAL ON RECORD AND THE REMAND REPORT, WE OBSERVE THAT THE A O HAS VERIFIED THE LABOUR CHARGES AS GENUINE TO THE EXTEN T OF RS.17,27,075/- IN THE REMAND REPORT SUBMITTED BEFOR E THE LD. CIT(A) DATED 03.10.2017. THUS, IN OUR OPINION, THE RE IS NO DISPUTE AT ALL WITH RESPECT TO RS.17,27,075/- BEING LABOUR CHARGES PAID TO FOUR PARTIES AND ACCORDINGLY SAME W ERE ORDERED ITA NO.2286/M/2018 M/S. BILLETS ELEKTRO WERKE LTD. 4 TO BE DELETED. SO FAR AS THE PAYMENT TO TWO PARTIE S ARE CONCERNED I.E. RS.3,84,027/- TO RAJ PRODUCTS AND RS .2,43,265/- TO J.K. ENGINEERING, WE OBSERVE THAT THE SAME COULD NOT BE VERIFIED AS THE ASSESSEE COULD NOT PROVIDE THE CORR ECT ADDRESSES OF THE SAID PARTIES AND THEREFORE THE NOTICES UNDER SECTION 133(6) WERE NOT SERVED. HOWEVER, WE NOTE THAT THE AO HAS PROVIDED THE COPIES OF INVOICES, TDS CERTIFICATE IN FROM 16A, LE DGER COPY OF RAJ PRODUCTS, ITRS, BALANCE SHEET P&L ACCOUNT, HOWEVER, COULD NOT PROVIDE THE DETAILS IN RESPECT OF J.K. ENTERPRISES AS THE PARTY HAS SHIFTED THE ADDRESS AND NEW ADDRESS WAS NOT AVA ILABLE WITH THE ASSESSEE. UNDER THESE CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE ENTIRE LABOUR PAYMENT CAN NOT BE DISALLOWE D. YES, WE DO AGREE WITH THE CONTENTIONS OF THE REVENUE AUTHOR ITIES THAT SAID PAYMENTS COULD NOT BE VERIFIED BUT INDELIBLE F ACT AS IS COMING OUT OF THE RECORDS BEFORE US IS THAT THE SA ID PARTIES WERE LABOUR CONTRACTOR AND WERE PAID LABOUR FOR EXECUTIN G THE WORKS. UNDER THESE CIRCUMSTANCES, WE ARE OF THE VIEW THAT A LUMP SUM DISALLOWANCE OF 30% OF TOTAL PAYMENTS TO THESE PART IES I.E. RAJ PRODUCTS RS.3,84,027/- AND J.K. ENGINEERING RS.2,43 ,265/- WOULD BE REASONABLE DISALLOWANCE. ACCORDINGLY, WE DIRECT THE AO TO ADD RS.1,88,188/- TO THE INCOME OF THE ASSESS EE AND THE REMAINING ADDITION IS ORDER TO BE DELETED. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 14.05.2019. SD/- SD/- (SANDEEP GOSAIN) (RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 14.05.2019. * KISHORE, SR. P.S. ITA NO.2286/M/2018 M/S. BILLETS ELEKTRO WERKE LTD. 5 COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY /ASSTT. REGISTRAR, ITAT, MUMBAI.