The ITO, Ward-1(1), Visakhapatnam V. M/s Eskaytech Projects and Property Developers, Visakhapatnam

ITA 249/VIZ/2010

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 2717 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 6 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-11-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 08-11-2010
• Assessment Year: 2006-2007
• Appeal Filed On: 13-04-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D S SUNDER SINGH
• Section: 44AD; 133A

Judgement Text

ITA 249, 266/VIZ/ 2010 ESKAYTECH PROJECTS,VSKP IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI BR BASKARAN, ACCOUNTANT MEMBER ITA NO. 249 /VIZAG/ 20 10 ASSESSMENT YEAR : 2006 - 07 ITO, WARD - 1(1) VI SAKHAPATNAM ESKAY HE TECH PROJECTS & PROPERTY DEVELOPERS VISAKHAPATNAM (APPELLANT) VS. (RESPONDENT) PAN NO.AAEFT 6556E ITA NO. 266 /VIZAG/2010 ASSESSMENT YEAR : 2006 - 07 ESKAY HE TECH PROJECTS & PROPERTY DEVELOPERS VISAKHAPATNAM ITO, WARD - 1(1) V ISAKHAPATNAM (APPELLANT) VS. (RESPONDENT) APPELLANT BY: SHRI D.S. SUNDER SINGH, DR RESPONDENT BY: SHRI G.V.N. HARI, CA ORDER PER SHRI S.K. YADAV, JUDICIAL MEMBER : - THESE CROSS APPEALS ARE PREFERRED BY THE ASSESSEE AS WELL AS THE REVENUE ON COMMON ISSUES WITH REGARD TO THE PERCENTAGE OF DISALLOWANCE OF THE EXPENDITURE CLAIMED BY THE ASSESSEE. 2. THE ASSESSEE IS ENGAGED IN THE CONSTRUCTION ACTIVITY AND SALE OF FLATS. A S URVEY U/S 133A WAS CONDUCTED IN THE BUSINESS PREMISES OF THE ASSESSEE FIRM ON 29.11.2006. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS ASKED TO PRODUCE SOME VOUCHERS FOR THE EXPENSES CLAIMED BY IT BUT THEY WERE NOT PRODUCED. AS SEEN FROM THE PAYMENT ACCOUNT, THE ITA 249, 266/VIZ/2010 ESKAYTECH PROJECTS,VSKP 2 ASSESSEE FIRM DEBITED RS.28,92,175/ - TOWARDS PURCHAS E ACCOUNT AND RS.18,62,437/ - TOWARDS INDIRECT EXPENSES. THIS TOTAL DEBIT OF RS.47,54,612/ - WAS NOT VERIFIABLE AS NO VOUCHERS WERE PLACED BEFORE THE A.O. IN THE ABSENCE OF EVIDENCE . FOR NON - VERIFICATION OF THESE EXPENSES, THE A.O. HAS DISALLOWED 25% OF EX PENDITURE WHICH RESULTED INTO AN ADDITION OF RS.12 LAKHS. 3. THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A) WITH THE SUBMISSIONS THAT THE BOOK RESULTS SUBMITTED BY THE ASSESSEE SHOULD HAVE BEEN ACCEPTED. IN THE ABSENCE OF THE PROPER VERIFICATION OF T HE VOUCHERS, THE BOOKS OF THE ASSESSEE COULD ONLY BE REJECTED AND PROFITS COULD BE ESTIMATED AS PER PROVISIONS OF SECTION 44AD OF THE ACT. 4. THE CIT(A) RE - EXAMINED THE ISSUE BUT WAS NOT CONVINCED WITH THE EXPLANATIONS OF THE ASSESSEE. HE HOWEVER DIRECTE D THE A.O. TO RESTRICT THE DISALLOWANCE FROM 25% TO 10% OF TOTAL EXPENDITURE TO COVER UP THE EXPENDITURE INCURRED FOR NON - BUSINESS PURPOSE. 5. THIS ORDER OF THE CIT(A) IS CHALLENGED BY THE ASSESSEE AS WELL AS THE REVENUE THROUGH THESE IMPUGNED APPEALS. 6 . WE HAVE CAREFULLY EXAMINED THE ORDER OF THE LOWER AUTHORITIES IN THE LIGHT OF RIVAL SUBMISSIONS AND WE ARE OF THE VIEW THAT WHERE THE EXPENDITURE CLAIMED BY THE ASSESSEE ARE NOT OPEN FOR VERIFICATION, THE REVENUE AUTHORITIES HAVE RIGHT EITHER TO REJECT T HE BOOKS OF ACCOUNT OR TO DISALLOW THE EXPENDITURE CLAIMED BY THE ASSESSEES. IN THE INSTANT CASE, THE REVENUE HAS DISALLOWED A PARTICULAR PERCENTAGE OF EXPENDITURE FOR WANT OF PROPER VERIFICATION OF THE SAID EXPENDITURE INSTEAD OF REJECTING THE BOOKS OF T HE ASSESSEES. THE MODE OF CALCULATING THE PROFIT OF THE ASSESSEE BY THE REVENUE AUTHORITIES DOES NOT APPEAR US TO BE UNREASONABLE. SO FAR AS THE QUESTION OF PERCENTAGE OF DISALLOWANCE IS CONCERNED , WE ARE OF THE VIEW THAT CIT(A) HAS ALREADY ITA 249, 266/VIZ/2010 ESKAYTECH PROJECTS,VSKP 3 GRANTED THE R EASONABLE RELIEF TO THE ASSESSEES AND RESTRICTED THE DISALLOWANCE FROM 25% TO 10% OF THE TOTAL CLAIM OF THE EXPENDITURE. WE THEREFORE FIND NO INFIRMITY IN HIS ORDER. ACCORDINGLY, WE CONFIRM THE SAME. 7. IN THE RESULT, THE APPEAL OF THE REVENUE AS WELL AS THE ASSESSEE ARE DISMISSED. PRONOUNCED IN THE OPEN COURT ON 12.11 .20 10 SD/ - SD/ - (BR BASKARAN) (SUNIL KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER VG/SPS VISAKHAPATNAM, DATED 12 TH NOVEMBE R , 20 10 COPY TO 1 THE ITO WARD - 1(1), VISAKHAPATNAM 2 THE ES KAY HE TECH PROJECTS & PROPERTY DEVELOPERS, D.NO.7 - 5 - 78, PANDURANGAPURAM, VISAKHAPATNAM 3 THE CI T, VISAKHAPATNAM 4 THE CIT (A) , VISAKHAPATNAM 5 THE DR, ITAT, VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM