ACIT, Rewari V. M/s. Narnaul Yadav Co- Op Labour & Construction Society Ltd., Haryana

ITA 2361/DEL/2012

• Counselvise Citation: 236120114 RSA 2012
• Duration Of Justice: 3 year(s) 6 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-12-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 27-11-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 17-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P DAM KANUNJNA
• Section: 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO. 2361/DEL/2012 ASSESSMENT YEAR: 2008-09 ASSISTANT COMMISSIONER OF VS. M/S NARNAUL YADAV CO -OP INCOME TAX, LABOUR & CONSTRUCTION SOCIETY REWARI CIRCLE, AAYAKAR LTD., 280-LIG, BHAWAN, MODEL TOWN, REWARI HOUSING BOARD COLONY, NA RNAUL DISTT. MOHINDERGARH (PAN: AAATN2825G)) (APPELLANT) (RESPONDENT) APPELLANT BY : SH. P. DAM KANUNJNA, SR. DR RESPONDENT BY : NONE DATE OF HEARING : 27-11-2015 DATE OF ORDER : 04-12-2015 ORDER PER H.S. SIDHU, J.M. THIS APPEAL BY THE DEPARTMENT IS DIRECTED AGAINST THE ORDER DATED 7.3.2012 OF LD. CIT(A), ROHTAK PERTAINING TO ASSESS MENT YEAR 2008-09. 2. THE GROUNDS RAISED IN THE APPEAL OF THE DEPARTME NT READ AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITIONS MADE BY THE AO AMOUNTING TO RS. 3,14,499/- ON ACCOUNT OF WITHDRAWI NG THE DEDUCTION U/S. 80P. 2. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE, T HE LD. CIT(A) HAS ERRED IN DELETING THE ADDITIONS MADE BY THE AO AMOUNTING TO RS. 21,30,907/- ON ACCOUNT OF WAGES. 3. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE, T HE LD. CIT(A) HAS ERRED IN DELETING THE ADDITIONS MADE BY THE AO AMOUNTING TO RS. 18,000/- ON ACCOUNT OF RENT. ITA NO.2361/DEL/2012 2 4. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE, T HE LD. CIT(A) HAS ERRED IN DELETING THE ADDITIONS MADE BY THE AO AMOUNTING TO RS. 45,810/- ON ACCOUNT OF OTHER EXPEN SES. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS A CO-OPERATIVE LABOUR & CONSTRUCTION SOCIETY AND FILED RETURN OF I NCOME DECLARING NIL INCOME AFTER CLAIMING 100% DEDUCTION OF INCOME U/S. 80P(2)(A)(VI) OF THE ACT. IN THE ABSENCE OF ANY EVIDENCE LED BY THE ASSE SSEE, THE AO DISALLOWED THE DEDUCTION U/S. 80P(2)(A)(VI) OF RS. 3,14,499/- AND ONLY ALLOWED DEDUCTION OF RS. 50,000/- U/S. 80P(2)(C) VI DE HIS ASSESSMENT ORDER DATED 21.12.2010 PASSED U/S. 144 OF THE I.T. ACT, 1961. 3.1 AS THE ASSESSEE DID NOT PRODUCE THE BOOKS OF ACCOUNTS, THE AO MADE THE FOLLOWING DISALLOWANCES OUT OF THE VARIO US EXPENSES CLAIMED IN THE P&L A/C. (I) AN AMOUNT OF RS 71,03,025/- WAS CLAIMED AS SAL ARY AND WAGES PAYMENTS BUT NO DOCUMENTS WERE PRODUCED IN SUPPORT OF THE CLAIM. SINCE THE WORK CARRIED OUT BY THE APPELLANT SOCIETY BEING LABOUR INTENSIVE, THE AO ALLOWED ONLY 70% OF THE EXPENSES THEREBY MAKING AN ADDITION' OF RS 21,30,907/- (II) PAYMENT ON ACCOUNT OF RENT OF RS 18,000/- HAS ALSO BEEN DISALLOWED IN THE ABSENCE OF EVIDENCE. (III) OUT OF THE OTHER EXPENSES OF RS 1,52,697/-, THE AO SIMILARLY DISALLOWED 30% OF EXPENSES AMOUNTING TO RS 45,810/- . THE AO MADE AN ADDITION OF RS 21,94,717/- AS DISPUT ED IN GROUND NO. 2, 3 & 4 VIDE HIS ORDER DATED 21.12.2010 PASSE D U/S. 144 OF THE I.T. ACT, 1961. 4. AGAINST THE ABOVE ASSESSMENT ORDER, ASSESSEE AP PEALED BEFORE THE LD. CIT(A) WHO VIDE HIS IMPUGNED ORDER DATED 7.3. 2012 HAS PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. 5. AGGRIEVED, REVENUE IS IN APPEAL BEFORE THE TRIB UNAL. 6. LD. DR SUPPORTED THE ORDER OF THE AO AND REITERA TED THE CONTENTIONS RAISED IN THE GROUNDS OF APPEAL. ITA NO.2361/DEL/2012 3 7. IN THIS CASE, NOTICE OF HEARING TO THE ASSESSEE WAS SENT BY THE REGISTERED AD POST, IN SPITE OF THE SAME, ASSESSEE, NOR HIS AUTHORIZED REPRESENTATIVE APPEARED TO PROSECUTE THE MATTER IN DISPUTE, NOR FILED ANY APPLICATION FOR ADJOURNMENT. KEEPING IN VIEW THE F ACTS AND CIRCUMSTANCES OF THE PRESENT CASE AND THE ISSUE INV OLVED IN THE PRESENT APPEAL, WE ARE OF THE VIEW THAT NO USEFUL PURPOSE W OULD BE SERVED TO ISSUE NOTICE AGAIN AND AGAIN TO THE ASSESSEE, THERE FORE, WE ARE DECIDING THE PRESENT APPEAL EXPARTE QUA ASSESSEE, AFTER HEAR ING THE LD. DR AND PERUSING THE RECORDS. 8. WE HAVE HEARD THE LD. DR AND PERUSED THE RECORDS AVAILABLE WITH US, ESPECIALLY THE ORDERS OF THE REVENUE AUTHORITIE S. 8.1 WITH REGARD TO ISSUE INVOLVED IN GROUND NO. 2, 3 & 4 RELATING TO ADDITION OF RS. 21,30,907/- ON ACCOUNT OF WAGES; AD DITION OF RS. 18,000/- ON ACCOUNT OF RENT; AND ADDITION AMOUNTING TO RS. 45,810/- ON ACCOUNT OF OTHER EXPENSES, THUS TOTALING TO RS. 21, 94,717/- ARE CONCERNED. WE FIND THAT THE ASSESSEE DID NOT PRODU CE THE BOOKS OF ACCOUNTS, THE AO MADE THE FOLLOWING DISALLOWANCES O UT OF THE VARIOUS EXPENSES CLAIMED IN THE P&L A/C. (I) AN AMOUNT OF RS 71,03,025/- WAS CLAIMED AS SAL ARY AND WAGES PAYMENTS BUT NO DOCUMENTS WERE PRODUCED IN SUPPORT OF THE CLAIM. SINCE THE WORK CARRIED OUT BY THE APPELLANT SOCIETY BEING LABOUR INTENSIVE, THE AO ALLOWED ONLY 70% OF THE EXPENSES THEREBY MAKING AN ADDITION' OF RS 21,30,907/- (II) PAYMENT ON ACCOUNT OF RENT OF RS 18,000/- HAS ALSO BEEN DISALLOWED IN THE ABSENCE OF ANY EVIDENCE. (III) OUT OF THE OTHER EXPENSES OF RS 1,52,697/-, THE AO DISALLOWED 30% OF EXPENSES AMOUNTING TO RS 45,810/-. 8.2 THE AO MADE AN ADDITION OF RS 21,94,717/- AS DI SPUTED IN GROUND NO. 2, 3 & 4 RAISED IN THE PRESENT APPEAL, VIDE ORD ER DATED 21.12.2010 PASSED U/S. 144 OF THE I.T. ACT. WE NOTE THAT DURI NG THE APPEAL PROCEEDINGS, THE AR SUBMITTED THAT THE BOOKS OF THE ASSESSEE WERE LYING ITA NO.2361/DEL/2012 4 WITH THE CO-OPERATIVE DEPARTMENT, GOVT. OF HARYANA FOR THEIR AUDIT AND THEREFORE THE ASSESSEE COULD NOT PRODUCE THEM BEFOR E THE AO DURING THE ASSESSMENT PROCEEDINGS. THE AR MOVED AN APPLICATION U/R 46A TO PRODUCE THE BOOKS OF ACCOUNTS BEFORE THE AO. HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ADDITIONAL EVIDE NCE WAS ADMITTED IN TERMS OF THE PROVISIONS OF RULE 46A. THE REMAND REP ORT OF THE AO ALONG WITH HIS COMMENTS ON THE WRITTEN SUBMISSIONS OF THE ASSESSEE AND THE REJOINDER OF THE ASSESSEE HAVE BEEN TAKEN ON RECORD . IN THE REMAND REPORT THE AO STATED THAT THE ASSESSEE HAS PRODUCED THE DULY AUDITED BOOKS OF ACCOUNTS. HE HAS HOWEVER STATED THAT THE C ORRECTNESS OF THE BOOKS OF ACCOUNTS IS DOUBTFUL AND THE GENUINENESS C ANNOT BE ACCEPTED IN TOTO. THE AR SUBMITTED BEFORE THE LD. CIT(A) THAT THE DULY AUDITED BOOKS HAVE BEEN PRODUCED BEFORE THE AO WHICH HAVE BEEN TE ST CHECKED BY HIM. LD. CIT(A) HAS OBSERVED THAT IT IS NOT PROPER ON TH E PART OF THE AO TO DOUBT THE CORRECTNESS AND GENUINENESS OF AUDITED BO OKS OF ACCOUNTS WITHOUT POINTING ANY DEFECT/DISCREPANCY IN THE ENTR IES OR THE BILLS/VOUCHERS PRODUCED BEFORE HIM. THE REPORT OF T HE AO THAT THE BOOKS OF ACCOUNTS CANNOT BE ACCEPTED IN TOTO HAS NO MEANI NG. 8.3 WE FURTHER FIND THAT THE AO DISALLOWED PART OF THE EXPENSES AMOUNTING TO RS.21,94,717/- IN THE ABSENCE OF BOOKS OF ACCOUNTS. THE BOOKS OF ACCOUNTS HAVE SINCE BEEN PRODUCED BEFORE T HE AO AND THE AO HAS NOT POINTED ANY SPECIFIC DEFECT/ DISCREPANCY EI THER IN THE BOOKS OR IN THE BILLS/VOUCHERS. WITHOUT ANY SUCH FACTUAL FINDIN G, THE STATEMENT OF THE AO THAT THE BOOKS OF ACCOUNTS ARE DOUBTFUL AND GENUINENESS CANNOT BE ACCEPTED IN TOTO HAS NO MEANING. IN VIEW OF THE ABOVE, THE DISALLOWANCE MADE BY THE AO OF RS. 21,94,717/- WAS RIGHTLY DELETED BY THE LD. CIT(A). THEREFORE, WE ARE OF THE CONSIDERE D VIEW THAT THE LD. CIT(A) HAS PASSED A WELL REASONED ORDER ON THE ISSU ES IN DISPUTE, WHICH DOES NOT NEED ANY INTERFERENCE ON OUR PART, HENCE, THE GROUND NOS. 2, 3 & 4 RAISED BY THE REVENUE STAND DISMISSED. ITA NO.2361/DEL/2012 5 9. WITH REGARD TO ISSUE INVOLVED IN GROUND NO. 1 RE LATING TO DELETION OF ADDITION AMOUNTING TO RS. 3,14,499/- ON ACCOUNT OF WITHDRAWING THE DEDUCTION U/S. 80P IS CONCERNED, WE FIND THAT THE A O SUBMITTED IN THE REMAND REPORT THAT LEDGER COPY OF LABOUR REFLECTS T HAT PAYMENTS HAVE BEEN MADE TO BOTH MEMBERS AND NON MEMBERS OF THE SO CIETY. IN THIS REGARD THE AR SUBMITTED THAT OUT OF THE TOTAL EXPEN DITURE OF RS 70,31,025/-, AN AMOUNT OF RS 54,73,025/- WAS INCURR ED ON PURCHASE OF MATERIAL AND RS 15,58,000/- WAS INCURRED ON THE SAL ARY AND WAGE PAYMENT. OUT OF THE TOTAL WAGE PAYMENTS OF RS 15,58 ,000/- ONLY RS 1,54,000/- WAS PAID TO NON MEMBERS AND THE REMAININ G AMOUNT OF RS 14,04,000/- HAS BEEN PAID TO THE MEMBERS. IN THE CA SE OF THE ASSESSEE FOR THE AY 2005-06 WHEREIN PROCEEDINGS U/S 147/148 WERE DROPPED AS IT WAS SEEN FROM THE WAGE REGISTER THAT THE ENTIRE LAB OUR PAYMENTS OF RS 16,61,135/- WAS MADE TO THE MEMBERS ONLY. THE AR FU RTHER FURNISHED A COPY OF THE ASSESSMENT ORDER U/S 143 (3) OF THE ASS ESSEE FOR THE AY 2007-08 WHEREIN DEDUCTION U/S 80P (2) (A) (VI) WAS CALCULATED ON PROPORTIONATE BASIS ON THE WAGES PAID TO NON MEMBER S. THE AR THEREFORE REQUESTED THAT DEDUCTION U/S 80P (2) (A) (VI) FOR T HE YEAR UNDER CONSIDERATION MAY ALSO BE CALCULATED ON PROPORTIONA TE BASIS ON THE WAGES PAID TO NON MEMBERS. THE DISALLOWANCE OF DEDU CTION U/S 80P (2) (A) (VI) COMES TO RS 31,100/- AS PER THE WORKING GI VEN BELOW: NET PROFIT X WAGES PAID TO NON-MEMBER S= 314499 X 154000 = 31,100/- TOTAL WAGES PAID 1558000 9.1 FOR THE PURPOSE OF EXECUTION OF WORKS CONTRACT , WHILE THE COLLECTIVE DISPOSAL OF MEMBERS OF THE SOCIETY HAS BEEN UNDERTA KEN, A NOMINAL AMOUNT HAD TO BE PAID TO NON-MEMBERS IN VIEW OF THE NATURE OF THE WORKS CONTRACT. IN VIEW OF THE ABOVE, LD. CIT(A) HA S RIGHTLY HELD THAT ASSESSEE IS ENTITLED FOR DEDUCTION U/S 8OP (2) (A) (VI). HOWEVER, AS SOME PART OF THE WAGES HAVE BEEN PAID TO NON-MEMBERS, DE DUCTION U/ S 8OP ITA NO.2361/DEL/2012 6 (2) (A) (VI) REQUIRES TO BE CALCULATED ON PROPORTIO NATE BASIS ON THE WAGES PAID TO NON-MEMBERS, AS DONE IN THE ASSESSMENT ORDE R U/S. 143 (3) FOR THE AY 2007-08. THE TAXABLE INCOME OF THE ASSESSEE FOR THE YEAR THEREFORE COMES TO RS 31,100/-. IN THE BACKGROUND OF THE A FORESAID DISCUSSIONS, WE ARE OF THE VIEW THAT THE LD. CIT(A) HAS PASSED A WELL REASONED ORDER ON THE ISSUE IN DISPUTE, HENCE, WE UPHOLD HIS FINDI NG ON THE ISSUE IN DISPUTE AND DISMISS THE GROUND NO. 1 RAISED BY THE REVENUE. 10. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON 04/12/2015. SD/- SD/- (PRASHANT MAHARISHI) (H.S. SIDHU) ACCOUNTANT MEMBER JUDICIA L MEMBER DATED: 04/12/2015 *SR BHATNAGAR* COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR