M/s.Silver Builders, Cochin V. The DCIT, Thiruvalla

ITA 254/COCH/2016

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 8472 (ITAT-COCHIN)
• Duration Of Justice: 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-06-2016
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 05-09-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 01-06-2016
• Court: TRIBUNAL
• Department Lawyers: A DHANARAJ
• Assessee Lawyers: JOSEPH MATHEW
• Section: 145

Judgement Text

ITA NO.254/COCH/2016 1 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI B P JAIN, AM ITA NO.254/COCH/2016 (ASST YEAR : 2006-07) M/S. SILVER BUILDERS, P.C. KAVALA P.O., PAIPPAD, CHANGANACHERRY, (PRESENT ADDRESS: PULIMITTATHU BUILDINGS, RAMANCHIRA, MUTHOOR P.O. THIRUVALLA. THE DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-1, THIRUVALLA. ( ASSESSEE APPELLANT) VS (REVENUE -RESPONDENT) PAN NO. AAVFJ 3797F ASSESSEE BY SHRI JOSEPH MATHEW, CA REVENUE BY SHRI A. DHANARAJ, SR. DR DATE OF HEARING 28/06/2016 DATE OF PRONOUNCEMENT 28/06/2016 ORDER PER B.P. JAIN, AM: THIS APPEAL OF THE ASSESSEE ARISES FROM THE O RDER OF THE LD. CIT(A), KOTTAYAM DATED 24/03/2016 FOR THE ASSESSMENT YEAR 2 008-09. 2. THE ASSESSEE HAS RAISED AS MANY AS 10 GROUNDS OF APPEAL BUT ONLY ON TWO ISSUES I.E., DISALLOWANCE OF 2. 8 1 % OF EXPENSES AND DISALLOWANCE OF INTEREST AMOUNTING TO RS.2,84,684/- . ITA NO.254/COCH/2016 2 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSES SEE IS A CIVIL CONTRACTOR AND RETURNED INCOME OF RS.10,21,050/- FO R THE YEAR UNDER CONSIDERATION. THE ASSESSING OFFICER NOTED TH AT ALL PAYMENTS WERE THROUGH SELF MADE VOUCHERS. HENCE INVOKED THE PROVISIONS OF SECTION 145 AND DISALLOWED 2% OF THE EXPENSES CLAIM ED, WHICH AMOUNTS TO RS.86,000/-. FURTHER IT IS SEEN THAT THE PARTNERS HAD USED THE BORROWED FUND TO PURCHASE RESIDENTIAL PLOT AND CONSTRUCTED A HOUSE USING THE BORROWED FUNDS. THE ASSESSING OFFI CER DISALLOWED THE INTEREST AMOUNT OF RS.2,84,684/-. 4. I HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. AS REGARDS THE FIRST ISSUE, THE ASSESSING OF FICER INVOKED THE PROVISIONS OF SECTION 145 OF THE ACT SINCE ALL THE PAYMENTS MADE BY THE ASSESSEE ARE THROUGH SELF MADE VOUCHERS AND NONE OF THE PAYMENTS IS EVIDENCED BY ANY BILL OR PROPER VOUCHER S. THE LD. CIT(A) MADE THE DISALLOWANCE OF 2% OF THE EXPENSES SO CLAIMED WHICH IS QUITE REASONABLE TO THE EXTENT OF RS.86,00 0/-. ACCORDINGLY, I CONFIRM THE ORDER OF THE LD. CIT(A) ON THIS ISSUE AND I FIND NO INFIRMITY IN HIS ORDER. THUS GROUND NO. 3 OF THE ASSESSEE IS DISMISSED. ITA NO.254/COCH/2016 3 5. AS REGARDS THE SECOND ISSUE, THE LD. COUNSEL F OR THE ASSESSEE INVITED MY ATTENTION TO THE BALANCE SHEET OF THE AS SESSEE WHERE THE AMOUNT OF RS.1,46,66,866/- HAS BEEN DIVERTED T O THE PARTNERS FOR CONSTRUCTION OF THEIR HOUSE AND AT THE SAME TIM E, THE ASSESSEE HAS RAISED MANY LOANS ON THE LIABILITY SIDE. THERE FORE, THERE IS A CLEAR DIVERSION OF FUNDS. AS REGARDS ARGUMENTS OF T HE LD. COUNSEL FOR THE ASSESSEE THAT THE ASSESSEE HAD GIVEN THESE FUNDS IN THE PRECEDING YEAR WHEN THE ASSESSEE WAS HAVING SUFFICI ENT MONEY AVAILABLE, THIS CANNOT BE OF HELP TO THE ASSESSEE I N SUCH CIRCUMSTANCES AND FACTS OF THE CASE FOR THE REASON THAT DURING THE YEAR, THERE IS LIABILITIES OF SECURED AND UNSECURED LOANS OF RS.12,513,890/- AND RS.1,390,000/- RESPECTIVELY APA RT FROM THE LIABILITIES OF RS.1.87 CRORES. THEREFORE, I FIND N O INFIRMITY IN THE ORDER OF THE LD. CIT(A) WHO HAS CORRECTLY CONFIRMED THE O RDER OF THE ASSESSING OFFICER BY DISALLOWING THE INTEREST TO TH E EXTENT OF RS.2,84,684/-. THUS THE SECOND ISSUE OF THE ASSESS EE IS ALSO DISMISSED. ITA NO.254/COCH/2016 4 6. IN THE RESULT THE APPEAL OF THE ASSESSEE IS D ISMISSED. ORDER PRONOUNCED IN THE OPEN COURT O N 28-06-2016. SD/- (B.P. JAIN) ACCOUNTANT MEMBER PLACE : COCHIN DATED: 28TH JUNE , 2016 GJ COPY TO: 1. M/S. SILVER BUILDERS, P.C. KAVALA P.O., PAIPPAD , CHANGANACHERRY, (PRESENT ADDRESS: PULIMITTATHU BUILDINGS, RAMANCHIR A, MUTHOOR P.O. THIRUVALLA. 2. THE DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-1, THIRUVALLA. 3. THE COMMISSIONER OF INCOME-TAX(APPEALS), KOTTAYA M. 4. THE COMMISSIONER OF INCOME-TAX, KOTTAYAM. 5. THE DR/ITAT, COCHIN BENCH. 6. GUARD FILE. BY ORDER ASSISTANT REGISTRAR ITAT, COCHIN