Sri Arefin Hussain, J.P. Nagar V. ITO, Moradabad

ITA 2568/DEL/2010

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 0347 (ITAT-DELHI)
• Duration Of Justice: 8 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-02-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 31-01-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 28-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B KISHORE

Judgement Text

I.T.A. NO.2568 /DEL/10 1/5 IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH A NEW DELHI) BEFORE SHRI R.P. TOLANI, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER I.T.A. NO.2568 /DEL/2010 ASSESSMENT YEAR : 2007-8 SRI AREFIN HUSSAIN, ITO, S/O SRI SHABBIR HUSSAIN, P.O. SAMBHAL, R/O MOH. CHILLA, P.O. AMROHA, MORADABAD. J.P. NAGAR. V. (APPELLANT) (RESPONDENT) PAN /GIR/NO. PAN /GIR/NO. PAN /GIR/NO. PAN /GIR/NO.AARPH AARPH AARPH AARPH- -- -4330 4330 4330 4330- -- -F FF F APPELLANT BY : NONE. (APPLICATION FOR ADJOURNMENT REJECTED IS ON RECORD). RESPONDENT BY : SHRI B. KISHORE, SR. DR. ORDER PER A.K. GARODIA, AM: THIS IS AN ASSESSEE'S APPEAL FILED AGAINST THE ORDER OF LD CIT(A), BAREILLY DATED 18.1.2010 FOR ASSESSMENT YEAR 2007-08. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER:- 1. THAT THE ORDERS PASSED BY BOTH THE LOWER AUTHORITIES A RE BAD IN LAW AS WELL AS ON THE FACTS. 2. THAT THE LD CIT(A) HAS ERRED IN NOT DELETING THE TOT AL ADDITION OF `.513389.00/- BUT IN REDUCING THE SAME UP TO `.60,00 0/- WITHOUT GIVING ANY COGENT REASON, WHICH IS QUITE ILLEGAL AND ARBITRARY. THE . I.T.A. NO.2568/DEL/10 2/5 LABOUR CHARGES ARE ON THE LOWER SIDE AND NOT ON THE H IGHER SIDE HENCE NO QUESTION ARISES OF THE EXCESS CLAIM OF THE LAB OUR CHARGES THEREFORE NO ADDITION WAS CALLED FOR. 3. THAT THE LD CIT(A) WAS NOT JUSTIFIED IN NOT DELETING THE TOTAL ADDITION OF `.38,939/- BUT IN REDUCING THE SAME UP TO `.15,00 0/- QUITE UNJUSTLY. THE STAFF WELFARE EXPENSES, MISC. EXPENSES, TRAV ELING AND CONVEYANCE EXPENSES AND THE TRANSPORTATION EXPENSES ARE DULY RECORDED IN THE ACCOUNT BOOKS AND ITS DETAILS HAVE ALR EADY BEEN FURNISHED AND GOT VERIFIED WITH THE REGULAR BOOKS OF ACCOUNT AND NOTHING WRONG WAS FOUND THEREIN. TILES PURCHASE VOUC HERS WERE PRODUCED BEFORE BOTH THE LOWER AUTHORITIES HENCE NO ADDITION WAS CALLED FOR AT ALL. 4. THAT THE TELEPHONE WAS USED ONLY FOR THE BUSINESS PURPOSE S. FOR THE PERSONAL PURPOSES ONLY, THE MOBILE WAS USED HENCE NO DISALLOWANCE WAS CALLED FOR. THAT LD ITO COULD NOT PO INT OUT EVEN A SINGLE INSTANCE OF THE PERSONAL USE. 3. NONE APPEARED ON BEHALF OF THE ASSESSEE ON THE APPO INTED DATE OF HEARING. ONE ADJOURNMENT APPLICATION WAS RECEIVED FROM ONE MR. JAIN, ADVOCATE BUT THE SAME WAS REJECTED AND THE APPE AL OF THE ASSESSEE WAS HEARD EX PARTE QUA THE ASSESSEE BECAUSE ON EARLI ER OCCASIONS ALSO I.E. ON 29.7.2010 AND 27.10.2010 ALSO, N ONE APPEARED ON BEHALF OF THE ASSESSEE. ON 27.10.2010 ALSO, AN ADJOUR NMENT APPLICATION WAS RECEIVED BY FAX FROM SAME ADVOCATE MR . JAIN AND HENCE ADJOURNMENT APPLICATION WAS REJECTED. 4. LD DR OF THE REVENUE SUPPORTED THE ORDERS OF THE A UTHORITIES BELOW. 5. WE HAVE CONSIDERED THE SUBMISSIONS OF THE LD DR OF TH E REVENUE AND HAVE GONE THROUGH THE ORDERS OF THE AUTHORITIES B ELOW. THE FACTS ARE THAT IT IS NOTED BY THE ASSESSING OFFICER IN THE ASSESSM ENT ORDER THAT THE ASSESSEE HAS CLAIMED PAYMENT OF LABOUR CHARGES O F . I.T.A. NO.2568/DEL/10 3/5 `.51,33,891/- AS AGAINST `.1,15,240/- CLAIMED IN THE JUST PRECEDING YEAR. IT IS FURTHER NOTED BY THE ASSESSING OFFICER THA T THE ASSESSEE WAS REQUIRED TO PRODUCE LABOUR REGISTER FOR VERIFICATION OF PAYMENT FOR LABOUR BUT THE ASSESSEE FAILED TO DO SO. ON THIS BASIS, TH E ASSESSING OFFICER MADE DISALLOWANCE OF `.5,13,389/- BEING 10% OF THE TOTAL PAYMENT ON ACCOUNT OF LABOUR CHARGES. SIMILARLY, REG ARDING OTHER EXPENSES UNDER THE HEAD STAFF WELFARE EXPENSES, MISC. EXP ENSES, TRAVELING AND CONVEYANCE EXPENSES, TILES PURCHASED AND TRANSPORTATION TOTALING `.1,94,695/-, IT IS NOTED BY THE ASSESSING OFFI CER IN THE ASSESSMENT ORDER THAT THE ASSESSEE HAS FURNISHED DETAILS OF A LL THESE EXPENSES WHICH ARE PLACED ON RECORD. IT IS ALSO NOTED BY THE ASSESSING OFFICER THAT THE ASSESSEE HAS FAILED TO PRODUCE EVIDENC E IN REGARD TO PAYMENT OF THESE EXPENSES AND ALL THESE EXPENSES ARE PAID IN CASH. AFTER MAKING THESE OBSERVATIONS, THE ASSESSING OFFICER MAD E DISALLOWANCE OF `.38939/- OUT OF THESE EXPENSES TO THE EXTENT OF 20%. ON BOTH THESE ISSUES, THE ASSESSEE PREFERRED AN APPEAL BEFO RE LD CIT(A). REGARDING PAYMENT OF LABOUR CHARGES, IT IS NO TED BY THE LD CIT(A) ON PAGE NO.5 OF HIS ORDER THAT IN THE PRECEDI NG YEAR, THE PAYMENT OF LABOUR CHARGES WAS OF `.11,52,420/- AND NO T `.1,15,140/-. IT IS FURTHER NOTED BY LD CIT(A) ON THE SAME PAGE OF HIS ORDER THAT PERCENTAGE OF LABOUR CHARGES PAYMENT TO GROSS RECEIPT WAS 36% IN THE PRECEDING YEAR AS AGAINST 31% IN THE PRESENT YEAR AND HENCE IT IS OBSERVED BY THE LD CIT(A) THAT THE PERCENTAGE OF LAB OUR CHARGES TO GROSS RECEIPT IS LOWER IN THE PRESENT YEAR AS COMPARED T O PRECEDING YEAR. IN SPITE OF THIS, HE HAS CONFIRMED THE DISALLOWAN CE OF `.60,000/- ON THIS BASIS THAT PART OF THE WAGES WERE PAID IN CASH A ND THEREFORE, SOME DISALLOWANCE IS TO BE MADE. WE ARE NOT IN AGREEM ENT WITH LD CIT(A) ON THIS ISSUE BECAUSE LABOUR CHARGES ARE GENERALL Y PAID IN CASH AND HENCE, FOR THIS REASON ALONE THAT THE LABOUR CHAR GES WERE PAID IN CASH, NO DISALLOWANCE CAN BE MADE UNLESS SOME ADVERSE M ATERIAL IS BROUGHT ON RECORD. THE ASSESSING OFFICER HAS NOT REFERRE D TO ANY . I.T.A. NO.2568/DEL/10 4/5 ADVERSE MATERIAL IN THIS REGARD IN THE ASSESSMENT ORDER A ND HE MADE THE DISALLOWANCE IN THE ASSESSMENT ORDER ON THE BASIS OF WRONG ASSUMPTION OF FACT THAT IN THE PRECEDING YEAR, THE PA YMENT OF LABOUR CHARGES WAS ONLY `.1,15,140/- WHEREAS IT IS NOTED BY TH E LD CIT(A) IN HIS ORDER THAT THE LABOUR CHARGES WERE PAID IN THE PR ECEDING YEAR TO THE EXTENT OF `.11,52,420/-. LD DR OF THE REVENUE C OULD NOT POINT OUT ANY MISTAKE IN THIS FINDING OF LD CIT(A) REGARDING Q UANTUM OF PAYMENT OF LABOUR CHARGES IN THE PRECEDING YEAR. SINCE THE P ERCENTAGE OF LABOUR CHARGES PAYMENT TO GROSS RECEIPT IS LOWER IN THE PRESEN T YEAR AS COMPARED TO THE PRECEDING YEAR AND THERE IS NO ADVER SE MATERIAL ON RECORD, WE ARE OF THE CONSIDERED OPINION THAT NO DISA LLOWANCE IS CALLED FOR OUT OF PAYMENT OF LABOUR CHARGES. 6. SIMILARLY OUT OF PAYMENT OF OTHER EXPENSES OF `.1, 94,695/-, THE ONLY OBJECTION OF THE AUTHORITIES BELOW IS THAT MOST O F THESE EXPENSES WERE INCURRED IN CASH AND THEREFORE, THE SAME WERE NO T OPEN FOR VERIFICATION. CONSIDERING THE NATURE OF EXPENSES INVOL VED, I.E. STAFF WELFARE EXPENSES, MISC. EXPENSES, TRAVELING AND CONVEYAN CE EXPENSES AND TRANSPORTATION ETC., WE WOULD LIKE TO OBSERVE THA T THESE EXPENSES ARE GENERALLY INCURRED IN CASH ONLY AND THEREFORE FO R THIS REASONS ALONE THAT EXPENSES WERE INCURRED IN CASH, NO DISALLOWANCE CA N BE MADE UNLESS THERE IS SOME ADVERSE MATERIAL ON RECORD. IN THE ABSENCE OF ANY ADVERSE MATERIAL ON RECORD, NO DISALLOWANCE IS JUSTIFI ED IN THE FACTS OF THE PRESENT CASE. WE, THEREFORE, DELETE THE SAME. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. 8. ORDER PRONOUNCED IN THE OPEN COURT ON THE DAY 11 TH FEBRUARY, 2011. SD/- SD/- (R.P. TOLANI ) (A.K. GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER DT. 11.2.2011. HMS . I.T.A. NO.2568/DEL/10 5/5 COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)-, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DEL HI. TRUE COPY. BY ORDER (ITAT, NEW DELHI).