Sh. Dharmendra Singh Tomar, Gwalior V. A.C.I.T., Circle-3, Gwalior

ITA 251/AGR/2013

• Counselvise Citation: 25120314 RSA 2013
• Duration Of Justice: 3 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-10-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 15-10-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 18-07-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: KK MISHRA
• Assessee Lawyers: NAVIN GARH

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, AGRA BENCH, AGRA BEFORE : SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER ITA NO. 251/AGRA/2013 ASSTT. YEAR : 2008-09 DHARMENDRA SINGH TOMAR, VS. A.C.I.T., CIRCLE 3, 101, TANSEN NAGAR, GWALIOR. GWALIOR. (PAN: ACTPT 0930 F) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI NAVIN GARH, ADVOCATE RESPONDENT BY : SHRI K.K. MISHRA, JR. D.R. DATE OF HEARING : 15.10.2013 DATE OF PRONOUNCEMENT OF ORDER : 18.10.2013 ORDER PER BHAVNESH SAINI, J.M.: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF LD. CIT(A), GWALIOR DATED 22.03.2013 FOR ASSESSMENT YEAR 2008-0 9, CHALLENGING THE ADDITIONS OF RS.1,50,000/- OUT OF LABOUR EXPENSES, ADDITION O F RS.1,50,000/- OUT OF MATERIAL CONSUMPTION AND SITE EXPENSES AND ADDITION OF RS.2, 00,000/- OUT OF GENERAL REPAIR AND MAINTENANCE, SALE PROMOTION, ADVERTISEMENT AND PUBLICITY EXPENSES, TELECOMMUNICATION EXPENSES, TRAVELING EXPENSES. THU S, ON ALL THE GROUNDS, THE ASSESSEE HAS CHALLENGED THE ADDITION OF RS.5,00,000 /- OUT OF DISALLOWANCE OF VARIOUS EXPENSES MENTIONED ABOVE. ITA NO. 251/AGRA/2013 2 2. BRIEFLY, THE FACTS OF THE CASE ARE THAT THE ASSE SSEE IS A CONTRACTOR AND FILED RETURN OF INCOME AT RS.23,76,500/-. THE AO NOTED TH AT THE ASSESSEE HAS DEBITED LABOUR CHARGES OF RS.1,78,26,678/-. THE ASSESSEE PR ODUCED SALARY AND WAGES SHEETS AND IT WAS FOUND THAT CERTAIN BILLS ARE MISSING AND VOUCHERS ARE NOT MAINTAINED. THE AO, ACCORDINGLY, DISALLOWED RS.2,50,000/- OUT O F LABOUR CHARGES. SIMILARLY, THE ASSESSEE HAS SHOWN MATERIAL PURCHASED AND SITE EXPENSES TO THE TUNE OF RS.1,23,33,375/-. HOWEVER, ON EXAMINATION OF THE DE TAILS, IT WAS FOUND THAT MANY BILLS WERE MISSING AND VOUCHERS WERE NOT PROPERLY M AINTAINED. THE AO, THEREFORE, DISALLOWED RS.2,50,000/-. THE ASSESSEE ALSO CLAIMED EXPENSES OUT OF VARIOUS EXPENSES MENTIONED ON GROUND NO. 3 ABOVE AND CLAIME D DEDUCTION OF RS.40,17,518/-. THE COUNSEL FOR THE ASSESSEE ADMITT ED BEFORE THE AO THAT COMPLETE VOUCHERS OUT OF THESE EXPENSES WERE NOT PRODUCED. T HEREFORE, FOR WANT OF PROPER VERIFICATION, RS.5,00,000/- WAS DISALLOWED. THE ASS ESSEE CHALLENGED THESE THREE ADDITIONS BEFORE THE LD. CIT(A) AND IT WAS SUBMITTE D THAT PROPER VOUCHERS, BILLS AND BOOKS OF ACCOUNT WERE PRODUCED. THEREFORE, ADHOC AD DITION IS NOT PERMISSIBLE. THE LD. CIT(A) RESTRICTED THE LABOUR EXPENSES TO RS.1,5 0,000/-. OUT OF MATERIAL CONSUMPTION AND SITE EXPENSES, THE ADDITION WAS ALS O RESTRICTED TO RS.1,50,000/- AND OUT OF VARIOUS EXPENSES DISALLOWED IN A SUM OF RS.5,00,000/-, THE ADDITION WAS RESTRICTED TO RS.2,00,000/-. THE ASSESSEE EXPLAINED BEFORE THE LD. CIT(A) THAT PERCENTAGE OF PROFIT IS HIGHER IN ASSESSMENT YEAR U NDER APPEAL AS COMPARED TO THE EARLIER ASSESSMENT YEAR. THEREFORE, THE ADDITION IS WHOLLY UNJUSTIFIED. THE LD. ITA NO. 251/AGRA/2013 3 CIT(A) CONSIDERING THE SUBMISSIONS OF THE ASSESSEE FOUND THAT DISALLOWANCES ARE ON HIGHER SIDE AND ACCORDINGLY RESTRICTED THE ABOVE ADDITIONS, WHICH WERE UNDER CHALLENGE BEFORE THE TRIBUNAL. 3. THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW. HOWEVER, HE HAS SUBMITTED THAT P ART DISALLOWANCE IS JUSTIFIED AND CONSIDERING THE HIGHER PROFIT RATE DISCLOSED BY THE ASSESSEE, THE ADDITIONS ARE STILL ON EXCESSIVE / HIGHER SIDE AND PRAYED THAT FU RTHER DISALLOWANCE MAY BE REDUCED TO WHICH THE LD. DR HAS NO OBJECTION. 4. WE HAVE CONSIDERED THE FACTS OF THE CASE AND THE SUBMISSIONS OF THE PARTIES. IT IS NOT IN DISPUTE THAT THE ASSESSEE IS A CONTRAC TOR AND HAS INCURRED VARIOUS EXPENSES FOR THE PURPOSE OF COMPLETING THE CONTRACT WORK. THE ASSESSEE CLAIMED HUGE EXPENSES AS DEDUCTION ON VARIOUS HEADS OF EXPE NSES AND THE AO PARTLY DISALLOWED THESE EXPENSES UNDER VARIOUS HEADS AS ME NTIONED ABOVE. THE LD. CIT(A) ON EXAMINATION OF THE HISTORY OF THE ASSESSE E REDUCED THE ADDITIONS IN ALL TO RS.5,00,000/- ON ALL THE EXPENSES. THE ASSESSEE IN THE PRECEDING ASSESSMENT YEAR 2007-08 HAS SHOWN THE NET PROFIT OF 5.18% ON THE GR OSS RECEIPTS OF RS.1,78,24,412/- AND IN ASSESSMENT YEAR UNDER APPEA L, I.E., 2008-09, THE GROSS RECEIPTS OF THE ASSESSEE HAVE EXCEEDED TO RS.3,84,8 0,531/-, ON WHICH NET PROFIT HAS BEEN SHOWN AT RS.6.17%. THUS, THE GROSS RECEIPTS AN D NET PROFIT RATE OF ASSESSEE ITA NO. 251/AGRA/2013 4 HAVE INCREASED CONSIDERABLY AS COMPARED TO THE EARL IER ASSESSMENT YEAR. THEREFORE, EVEN IN THE ABSENCE OF CERTAIN VOUCHERS AND BILLS A S NOTED BY THE AO, IT COULD NOT BE BELIEVED THAT THE ASSESSEE WOULD HAVE INFLATED E XPENSES UNREASONABLY. CONSIDERING THE HISTORY OF THE ASSESSEE AND THE SUB MISSIONS OF THE PARTIES, WE FIND IT APPROPRIATE TO REDUCE THE DISALLOWANCE OUT OF VA RIOUS EXPENSES FROM RS.5,00,000/- TO RS.2,00,000/- IN ALL ON ALL THE EX PENSES. WE ACCORDINGLY MODIFY THE ORDERS OF THE AUTHORITIES BELOW AND RESTRICT TH E ADDITIONS TO RS.2,00,000/- ON ALL THE DISALLOWANCE OF EXPENSES MENTIONED IN THE GROUN DS OF APPEAL OUT OF THE ADDITIONS RESTRICTED BY THE LD. CIT(A) TO RS.5,00,0 00/-. AS A RESULT, THE ASSESSEE WOULD GET RELIEF OF RS.3,00,000/- IN ALL ON ALL THE DISALLOWANCE OF EXPENSES. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (PRAMOD KUMAR) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER *AKS/- COPY OF THE ORDER FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A), CONCERNED BY ORDER 4. CIT, CONCERNED 5. DR, ITAT, AGRA 6. GUARD FILE SR. PRIVATE SECRETARY TRUE COPY