Vijaya Bhavani Constructions Private Limited , Hyderabad V. Income Tax Officer, Ward-17(4), Hyderabad

ITA 246/Hyd/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 1059 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 3 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-06-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-B
• Assessment Year: 2009-2010
• Appeal Filed On: 25-02-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: P MURALI MOHAN

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B - SMC BENCH : HYDERABAD BEFORE S HRI A. MOHAN ALANKAMONY , ACCOUNTANT MEMBER ITA NO. 2 46 /HYD./201 9 ASSESSMENT YEAR: 20 09 - 10 VIJAYA BHAVANI CONSTRUCTIONS P.LTD. VS. ITO WARD 17(4) C/O P.MURALI & CO., HYDERABAD CHARTERED ACCOUNTANTS 6 - 3 - 655/2/3, SOMAJIGUDA HYDERABAD 500 082 PAN: AAB CV6770A (APPELLANT) (RESPONDENT) FOR ASSESSE E : S H. P. MURALI MOHAN, A.R. FOR REVENUE : S H. SUNIL KUMAR PANDEY, D.R. DATE OF HEARING : 23 / 01/2020 DATE OF PRONOUNCEMENT : 03 / 06 / 2020 O R D E R THIS APPEAL IS FILED BY ASSESSEE AGAINST THE ORDER OF THE LD.CIT(A) - 5 DATED 13.03.2018 IN APPEAL NO. 0038/2015 - 16/CIT(A) - 5 FOR THE A.Y. 20 09 - 10. 2. THE ASSESSEE HAS RAISED SEVERAL GROUNDS IN ITS APPEAL. HOWEVER, THE CRUX OF THE ISSUE IS THAT THE LD.CIT(A) HAS ERRED IN UPHOLDING THE ORDER OF THE LD.AO WHO HAD MADE ADDITION OF RS.14,44,500/ - BY ESTIMATING 15% OF THE EXPENDITURE AMOUNTING TO RS.96,30,0 00/ - FOR WHICH PROPER VOUCHERS WERE NOT PRODUCED. 3. THE B RIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A PRIVATE LIMITED COMPANY ENGAGED IN THE BUSINESS OF CIVIL WORK CONTRACTS , FILED ITS RETURN OF INCOME FOR THE RELEVANT A.Y. 2009 - 10 ON 29.09.2009 BY ADMITTING LOSS (SIC) INCOME OF RS.20,80530/ - . THEREAFTER, THE CASE WAS TAKEN UP FOR SCRUTINY. ITA NO. 2 46 /HYD./201 9 AY 20 09 - 10 VIJAYA BHAVANI CONSTRUCTIONS PVT.LTD., HYD. VS. ITO WARD 17(4) HYD. 2 DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEEDINGS THE LD.AO OBSERVED THAT THE ASSESSEE HAD WITHDRAWN CASH FROM VARIOUS BANK ACCOUNTS OF THE COMPANY AGGRE GATING TO RS.96,30,000/ - . ON QUERY, IT WAS EXPLAINED THAT THE ASSESSEE HAD TO INCUR VARIOUS EXPENSES RELATING TO EXECUTI ON OF THE CONTRACT WORKS UNDERTAKEN BY THE ASSESSEE. ON FURTHER VERIFICATION IT WAS OBSERVED THAT THE ASSESSEE COULD NOT PRODUCE COGE NT EVIDENCE TO SUPPORT THE CLAIM OF EXPENDITURE FOR RS.96,30,000/ - BECAUSE ONLY SELF - MADE VOUCHERS WERE AVAILABLE. THEREFORE, THE LD.AO ESTIMATED 15% OF THE EXPENDITURE OF RS.96,30,000/ - CITING IT TO BE NON - VERIFIABLE WHICH WORKS OUT TO RS.14,44,500/ - A ND ADDED TO THE INCOME OF THE ASSESSEE. 3.1. ON APPEAL, THE LD.CIT(A) CONFIRMED THE ORDER OF THE LD.AO BY AGREEING WITH THE VIEW OF THE LD.AO AND ALSO BY FOLLOWING THE ORDER OF HIS PREDECESSOR IN THE ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2012 - 13. 4 . BEFORE ME THE LD.AR VEHEMENTLY ARGUED BY STATING THAT THE EXPENDITURE INCURRED BY THE ASSESSEE IS GENUINE. HE FURTHER SUBMITTED THAT WITH REGARD TO PAYMENT OF WAGES, THERE WAS NO OPTION FOR THE ASSESSEE OTHER THAN TO OBTAIN SIGNATURES FROM THE LABOUR ERS ON THE SELF - MADE VOUCHERS. IT WAS THEREFORE PRAYED THAT THE ADDITION MADE BY THE LD.AO WHICH ARE FURTHER UPHELD BY LD. CIT(A) MAY BE DELETED SINCE THE EXPENDITURE INCURRED BY THE ASSESSEE IS GENUINE. 5. LD.DR ON THE OTHER HAND RELIED ON THE ORDER SS OF LD. REVENUE AUTHORITIES. 6. I HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY PERUSED THE MATERIALS ON RECORD. FROM THE FACTS OF THE CASE IT IS APPARENT THAT THE LD. REVENUE AUTHORITIES HAS NOT DOUBTED THE NATURE OF EXPENDITURE INCURRED. THEY HAVE ONLY MADE THE ADDITION BECAUSE THE VOUCHERS WERE SELF - MADE AND NOT ITA NO. 2 46 /HYD./201 9 AY 20 09 - 10 VIJAYA BHAVANI CONSTRUCTIONS PVT.LTD., HYD. VS. ITO WARD 17(4) HYD. 3 VERIFIABLE. TH OUGH TH E LD. REVENUE AUTHORITIES HAVE SOME JUSTIFICATION FOR MAKING THE ADDITION, THEY HAVE NOT VENTURED TO LOOK INTO THE NET PROFIT EARNED BY THE ASSESSEE AND COMPARED IT WITH THE NET PROFIT OF THE COMPANIES ENGAGED IN SIMILAR BUSINESS TO ESTABLISH THAT THE EXPENDITURE ARE INFLATED. THEREFORE IT APPEARS THAT THE ADDITION MADE BY THE LD. REVENUE AUTHORITIES ARE BASED ON SURMISES AND CONJECTURES. IN THIS SITUATION, I D O NOT FIND MUCH MERIT IN THE ORDER OF THE LD. REVENUE AUTHORITIES FOR HAVING MADE THE ADDITION OF RS.14,44,500/ - BY ESTIMATING THE DISALLOWANCE AT 15% OF THE EXPENDITURE INCURRED OF RS.96,30,000/ - AND CONFIRMING THE SAME . HENCE I HEREBY DIRECT THE LD.AO T O DELETE THE ADDITION MADE BY HIM FOR RS.14,44,500/ - WHICH WAS FURTHER CONFIRMED BY THE LD.CIT(A). 6.1. BEFORE PARTING, IT IS WORTHWHILE TO MENTION THAT THIS ORDER IS PRONOUNCED AFTER 90 DAYS OF HEARING WHICH IS THOUGH AGAINST THE USUAL NORMS , I FIND IT APPROPRIATE TA KING INTO CONSIDERATION OF THE EXTRA - ORDINARY SITUATION IN THE LIGHT OF THE LOCK - DOWN DUE TO COVID 19 PANDEMIC. WHILE DOING SO I HAVE RELIED IN THE DECISION OF MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF DCIT VS. JSW LTD. IN ITA NO.6 264/M/2018 AND 6103/M/2018 FOR AY 2013 - 14 ORDER DATED 14 TH MAY, 2020. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON THE 03 RD JUNE, 2020 . SD/ - (A. MOHAN ALANKAMONY ) ACCOUNTANT MEMBER DATED: 03 RD JUNE, 2020 . *GMV COPY FORWARDED TO: 1. VIJAYA BHAVANI CONSTRUCTIONS PRIVATE LIMITED, C/O P.MURALI & CO., CAS, 6 - 3 - 655/2/3, SOMAJIGUDA HYDERABAD 500 082. 2. ITO , WARD 17(4), HYDERABAAD 3. ACIT, RANGE 17, HYDERABAD /CIT(A) - 5 HYDERABAD. 4. PR.CIT - 5 , HYDERABAD 5 . D.R. ITAT HYDERABAD 6 . GUARD FILE // C O P Y // ITA NO. 2 46 /HYD./201 9 AY 20 09 - 10 VIJAYA BHAVANI CONSTRUCTIONS PVT.LTD., HYD. VS. ITO WARD 17(4) HYD. 4 1. DRAFT DICTATED ON 2. DRAFT PLACED BEFORE THE AUTHOR 3. DRAFT PLACED BEFORE THE SECOND MEMBER 4. DRAFT APPROVED BY SECOND MEMBER 5. APPROVED DRAFT COMES TO SRPS 6. KEPT FOR PRONOUNCEMENT 7. FILE SENT TO BENCH CLERK