M/s. Krupanidhi Construction, Ahmedabad V. The Jt.CIT.,Range-5, Baroda

ITA 2526/AHD/2010

• Counselvise Citation: 252620514 RSA 2010
• Duration Of Justice: 1 year(s) 9 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 17-08-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S P TALATI
• Assessee Lawyers: ANIL R SHAH
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD B BENCH BEFORE: SHRI D.K. TYAGI, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTAN T MEMBER I.T.A. NO.2526/AHD/2010 A. Y. 2007-08 M/S KRUPANIDHI CONSTRUCTION 7, KALYANNAGAR SOCIETY-1 NEAR VITTHAL NAGAR WADI, KARELIBAUG, BARODA PAN-AAGFK7000E APPELLANT VS. JT. COMMISSIONER OF INCOME TAX RANGE-5 BARODA RESPONDENT DEPARTMENT BY : SHRI S.P. TALATI, SR. D.R. ASSESSEE BY : SHRI ANIL R. SHAH DATE OF HEARING : 23.05.2012 DATE OF PRONOUNCEMENT : 31.05.2012 / ORDER PER : D.K. TYAGI, JUDICIAL MEMBER THIS IS ASSESSEES APPEAL AGAINST THE ORDER OF LD. CIT(A)-V, BARODA DATED 08.06.2010, PASSED IN APPEAL NO.CAB(A) /V/15/09-10. 2. THE ASSESSEE HAS TAKEN TWO GROUNDS OF APPEAL. G ROUND NO.1 RELATES TO DISALLOWANCE OF RS.3,57,885/- BY THE A.O . OUT OF TRACTOR HIRE CHARGES, LABOUR PURCHASE AND SALARY EXPENSES WHICH HAS BEEN RESTRICTED TO RS.1,00,000/- BY LD. CIT(A). DURING THE ASSESSMENT PROCEEDINGS THE A.O. OBSERVED THAT ASSESSEE HAD DEBITED AN AMOUNT OF RS. 11,67,266/- TOWARDS I.T.A. NO.2526/AHD/2010 A. Y. 2007-08 2 TRACTOR HIRE CHARGES, RS.83,350/- TOWARDS LABOUR EX PENSES AND RS.5,38,800/- TOWARDS MUSTER SALARY EXPENSES. HE F URTHER NOTICED THAT MOST OF THE EXPENSES WERE MADE THROUGH CASH AND THR OUGH VOUCHER AND ONLY SOME VOUCHERS WERE SUPPORTED BY BILLS. THE A. O., THEREFORE, WAS OF THE VIEW THAT IT IS NOT PROVED THAT THESE EXPENSES WERE INCURRED FULLY AND EXCLUSIVELY FOR THE BUSINESS PURPOSE AND THUS THE A .O. MADE LUMP SUM DISALLOWANCE @ 20% OF THE TOTAL EXPENSES THAT COMES TO RS.3,57,885/-. 3. BEFORE LD. CIT(A) THE ASSESSEES CONTENTION WAS THAT ASSESSEE WAS IN THE BUSINESS OF CIVIL CONSTRUCTION AND CIVIL MAINTENANCE FOR GOVERNMENT AND PRIVATE ORGANIZATIONS AND ITS ACCOUN TS WERE DULY AUDITED. IT WAS ALSO SUBMITTED THAT THE A.O. VERIFIED THE VO UCHERS ON SAMPLE BASIS AND MADE HUGE DISALLOWANCE WITHOUT FINDING ANY DEFE CTS IN THE BOOKS OF ACCOUNTS AND THEREFORE THE DISALLOWANCE DESERVE TO BE DELETED. LD. CIT(A), AFTER TAKING INTO CONSIDERATION OF THE ASSESSEE, WA S OF THE VIEW THAT IN CIVIL CONSTRUCTION BUSINESS VOUCHERS BASED CASH PAYMENTS ARE AT FAR OFF SITES BUT THIS ASPECT ALSO DOES NOT OBVIATE THE POSSIBILITY O F MANIPULATION AND INFLATION IN VOUCHER EXPENSES. HE, THEREFORE, RESTRICTED THE SE DISALLOWANCES TO RS.1,00,000/- TO COVER UP UNVERIFIED PORTION OUT OF CASH PAYMENT THROUGH VOUCHERS. 4. AFTER HEARING BOTH THE PARTIES AND PERUSING THE RECORD WE FIND THE ORDER PASSED BY LD. CIT(A) TO BE QUITE REASONAB LE IN RESTRICTING THIS ADDITION TO RS.1,00,000/- FOR WANT OF SUPPORTING EV IDENCE FOR INCURRING THESE EXPENSES FOR BUSINESS PURPOSES AND THE SAME IS HERE BY UPHELD. THIS GROUND OF THE ASSESSEE IS DISMISSED. I.T.A. NO.2526/AHD/2010 A. Y. 2007-08 3 5. SECOND GROUND RELATES TO ADDITION OF RS.3,75,69 5/- U/S 68 OF THE I.T. ACT. DURING THE ASSESSMENT PROCEEDINGS THE A. O. NOTICED THAT ASSESSEE HAD SHOWN UNSECURED LOAN OF RS.3,45,000/- FROM SHRI RAJENDRA C. SHAH. ON VERIFICATION OF HIS BANK ACCOUNT IT WAS FOUND THAT THIS AMOUNT SHOWS CREDIT BALANCE ONLY OF RS.1,00,000/- ON 16.5.2006 AND THUS ENTRY AND CASH DEPOSITS FROM THE PERIOD 30.5.2006 TO 26.6.2006 EAC H IS OF RS.20,000/- OR MORE TOTALING RS.2,10,000/- AGAINST WHICH CHEQUE OF RS.2,00,000/- WAS ISSUED IN THE NAME OF THE ASSESSEE ON 26.6.2006. T HEREAFTER THERE ARE TWO CASH DEPOSITS OF RS.45,000 EACH ON 14.07.2006 AND 1 5.7.2006 AND CHEQUE OF RS.1,00,000/- WAS ISSUED ON 15.7.2006 TO ASSESSE E. AGAIN THE CASH DEPOSIT OF RS.45,000/- WAS MADE ON 19.7.2006 AND ON THE SAME DAY A CHEQUE OF SAME AMOUNT WAS ISSUED TO THE ASSESSEE. FROM THESE DETAILS IT WAS CLEAR TO THE A.O. THAT THE CHEQUES WERE ISSUED TO ASSESSEE AGAINST CASH DEPOSITS AND THE CREDITOR WAS ONLY EARNING GROSS SA LARY OF RS.82,240/- FOR THE YEAR WHICH AMOUNTS TO LESS THAN RS.7,000/- PER MONTH. THE A.O. WAS, THEREFORE, OF THE VIEW THAT THE CREDITOR SHRI RAJEN DRA C. SHAH CANNOT HAVE SO MUCH OF SAVINGS WITHIN A PERIOD OF LESS THAN TWO MONTHS TO ADVANCE RS.3,45,000/- TO THE ASSESSEE. THE A.O., THUS, DOU BTING THE CREDITWORTHINESS OF SHRI RAJENDRA C. SHAH, ADDED RS .3,45,000/- U/S 68 AND ALSO DISALLOWED THE INTEREST OF RS.30,695/- ON FIXE D DEPOSIT AND MADE TOTAL ADDITION OF RS.3,75,695/- TO THE INCOME OF THE ASSE SSEE. 6. BEFORE LD. CIT(A) IT WAS SUBMITTED ON BEHALF OF ASSESSEE THAT THE DUTY OF THE ASSESSEE WAS ONLY TO PROVE THE SOURCE O F THE CREDITOR AND HE WAS NOT SUPPOSED TO PROVE THE SOURCE OF THE SOURCE AND ASSESSEE HAS DISCHARGED I.T.A. NO.2526/AHD/2010 A. Y. 2007-08 4 HIS ONUS BY FURNISHING THE COPIES OF CONFIRMATION F ROM THE CREDITOR AND BY GIVING THE COPY OF RETURN OF THE CREDITOR AND THE P ASS BOOK OF THE CREDITOR TO THE A.O. FOR MAKING THIS SUBMISSION RELIANCE WAS P LACED ON THE DECISION IN THE CASE OF CIT VS. KISHORILAL 216 ITR 9 . THE ASSESSEE ALSO TOOK ALTERNATIVE PLEA BEFORE LD. CIT(A) STATING THAT IN GROUND NO.1 EXPENSE OF RS.3,57,585/- WAS DISALLOWED BY THE A.O. AND HERE A GAIN A SUM OF RS.3,75,695/- WAS ADDED U/S 68 AND THAT BOTH THE AD DITIONS CANNOT BE MADE AND THAT THE BENEFIT OF TELESCOPING BE ALLOWED. LD . CIT(A), HOWEVER, AFTER TAKING INTO CONSIDERATION THE SUBMISSION OF THE ASS ESSEE, CONFIRMED THE ACTION OF THE A.O. FURTHER AGGRIEVED, NOW THE ASSES SEE IS IN APPEAL BEFORE US. 10. AT THE TIME OF HEARING LD. COUNSEL OF THE ASSE SSEE REITERATED THE SUBMISSIONS MADE BEFORE THE LD. CIT(A). LD. DR, ON THE OTHER HAND, RELIED ON THE ORDER OF THE A.O. 11. AFTER HEARING BOTH THE PARTIES AND PERUSING TH E RECORD WE FIND THAT ASSESSEE RECEIVED A SUM OF RS.3,45,000/- FROM SHRI RAJENDRA C. SHAH. WHEN THE A.O. EXAMINED THE CREDITWORTHINESS OF SHRI RAJENDRA C. SHAH, HE FOUND THAT SHRI RAJENDRA C. SHAH WAS A SALARIED PER SON AND DURING THE YEAR UNDER APPEAL HE EARNED GROSS SALARY OF RS.82,240/-. THE A.O. FURTHER FOUND THAT DURING THE SPAN OF TWO MONTHS ONLY SHRI RAJEND RA C. SHAH DEPOSITED RS.3,45,000/- IN CASH IN HIS BANK ACCOUNT BEFORE IS SUING CHEQUE OF THIS AMOUNT TO THE ASSESSEE. THEREFORE, HE OBSERVED THA T A PERSON EARNING SALARY OF RS.82,240/- CANNOT SAVE THIS MUCH AMOUNT DURING A SHORT SPAN OF TWO MONTHS. HE, THEREFORE, DOUBTED THE CREDITWORTH INESS OF THE CREDITOR AND I.T.A. NO.2526/AHD/2010 A. Y. 2007-08 5 IGNORED THE CONFIRMATION IN RESPECT OF THIS CREDIT FILED BY THE ASSESSEE BEFORE HIM. LD. CIT(A) ON THESE FACTS, DID NOT INTERFERE WITH THE ORDER PASSED BY LD. A.O. BEFORE US ALSO NOTHING WAS BROUGHT ON RECORD TO DEVIATE US FROM THE FINDINGS OF THE LOWER AUTHORITIES AND THEREFORE, TH E LD. CIT(A) WAS JUSTIFIED IN UPHOLDING THE ACTION OF THE A.O. IN ADDING A SUM OF RS.3,45,000/- AND ALSO THE INTEREST OF RS.30,695/- ON THIS DEPOSIT TO THE INCOME OF THE ASSESSEE. 12. AS FAR AS THE ALTERNATIVE GROUND OF THE ASSESS EE IS CONCERNED, WE FIND THAT LD. CIT(A) WAS JUSTIFIED IN NOT ACCEPTING THE ALTERNATIVE GROUND AS THE DISALLOWANCE OF EXPENSES IN GROUND NO.1 WERE FO R THE REASON THAT THE ENTIRE EXPENSES WERE NOT COMPLETELY VERIFIABLE AND THEREFORE IT COULD NOT BE SAID WITH CERTAINTY THAT THE EXPENSES WERE INCURRED WHOLLY AND EXCLUSIVELY FOR BUSINESS PURPOSES AND NOT ON THE GROUND THAT TH E EXPENDITURE WAS BOGUS AND THEREFORE, THIS DISALLOWED AMOUNT WAS NOT AVAIL ABLE FOR INTRODUCTION AS CASH CREDITS IN THE BOOKS OF ACCOUNTS. THEREFORE, WE UPHOLD THE ACTION OF LD. CIT(A) IN DISMISSING THIS ALTERNATE GROUND ALSO. T HIS GROUND OF THE ASSESSEE IS ALSO DISMISSED. 13. IN THE RESULT, THE ASSESSEES APPEAL IS DISMIS SED. ORDER WAS PRONOUNCED IN OPEN COURT ON 31.05.2012 SD/- SD/- (A. MOHAN ALANKAMONY) ( D.K. TYAGI) ACCOUNTANT MEMBER JU DICIAL MEMBER I.T.A. NO.2526/AHD/2010 A. Y. 2007-08 6 N.K. CHAUDHARY, SR. P.S. / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT 2. / RESPONDENT 3. / CONCERNED CIT 4. - / CIT (A) 5. ! , ' , #$ / DR, ITAT, AHMEDABAD 6. %& '( / GUARD FILE. BY ORDER/ , ) / # * ' , #$ +