M/s. MGCPL & VCBPL (JV), New Delhi V. ACIT, New Delhi

ITA 2577/DEL/2015

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 0051 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 11 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Assessment Year: 2010-2011
• Appeal Filed On: 01-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P V GUPTA
• Keywords: Set aside

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A, NEW DELHI BEFORE SH. R.K PANDA, ACCOUNTANT MEMBER AND MS. SUCHITRA KAMBLE, JUDICIAL MEMBER ITA NO.2577/DEL/2015 ASSESSMENT YEAR: 2010-11 M/S. MGCPL & VCBPL 1626/32, 2 ND FLOOR, NAIWALA, KAROL BAGH, NEW DELHI -110005 PAN NO. AAAAM8822B VS ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE 38 (1) NEW DELHI (APPELLANT) (RESPONDENT) ASSESSEE BY SH. P. C. YADAV, ADVOCATE REVENUE BY SH. P. V. GUPTA, SR. DR DATE OF HEARING: 2 8 /0 3 /201 9 DATE OF PRONOUNCEMENT: 01/04/2019 ORDER PER R.K. PANDA, AM: 1. THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER DATED 05.03.2015 OF THE CIT(A)-XX, NEW DELHI, RELAT ING TO A. Y. 2010- 11. 2. THE FACTS OF THE CASE, IN BRIEF, ARE THAT THE AS SESSEE IS AN AOP AND ENGAGED IN THE BUSINESS OF CIVIL CONTRACTORS CO MPRISING OF TWO JV PARTNERS. IT FILED ITS RETURN OF INCOME ON 26.07.20 10 DECLARING TOTAL INCOME OF RS.99,10,151/-. THE ASSESSEE HAS DECLARE D NET PROFIT OF RS.99,10,151/- ON GROSS RECEIPT OF RS.21,23,60,260/ -. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFI CER OBSERVED FROM THE VARIOUS DETAILS FILED BY THE ASSESSEE THAT THE LEDGER ACCOUNTS OF DIESEL & LUBRICANTS ALONG WITH THE SUPPORTING DOCUM ENTS SHOW THAT THERE ARE SEVERAL PAYMENTS MADE IN CASH FOR EXAMPLE ; CASH MEMO ITA NO.2577/DEL/2015 2 NO- 29611 DATED 20.04.2009 FOR RS.3,89,400/-. FURT HER IN RESPECT OF THE OTHER PARTIES THE ASSESSEE HAS ONLY GIVEN A SUM MARY OF THE PAYMENTS MADE TO THE PARTIES WHILE IT IS NOT CLEAR AS TO WHETHER THE PAYMENTS HAVE BEEN MADE BY CASH OR CHEQUE. FURTHER ON GOING THROUGH THE BILLS HE NOTED THAT MOST OF THEM ARE KA CHA BILLS EXCEPT FOR INVOICE FOR BPCL. WHEN THE ASSESEE WAS ASKED TO PROVIDE THE COMPLETE SUPPORTING DOCUMENTS FOR DIESEL & LUBRICAN TS FOR PURCHASES ABOVE RS.5 LACS AND WAS ALSO REQUIRED TO PROVIDE TH E CASH BOOK FOR VERIFICATION, THESE WERE NOT PROVIDED AND THE AVAIL ABLE RECORDS ARE NOT SUFFICIENT TO SUPPORT THE EXPENDITURE INCURRED BY T HE ASSESSEE DURING THE YEAR ON ACCOUNT OF DIESEL & LUBRICANTS TOTALING TO RS.1,98,20,813/-. HENCE, DUE TO LACK OF SUPPORTING DOCUMENTS LEAKAGE OF REVENUE ON ACCOUNT OF PAYMENTS MADE IN C ASH CANNOT BE RULED OUT. HE FURTHER OBSERVED FROM THE LEDGER ACCO UNTS OF THE EXPENSES SUBMITTED BY THE ASSESSEE THAT THE ASSESSE E HAS INCURRED EXPENSES ON ACCOUNT OF REPAIR & RENEWAL OF TYRES AM OUNTING TO RS.13,35,419/-. HOWEVER, AS PER THE SCHEDULE OF FI XED ASSETS THERE IS NO VEHICLE OWNED BY THE ASSESSEE EXCEPT ONE SCOOTER . HENCE, THE AMOUNT OF EXPENDITURE INCURRED ON ACCOUNT OF PURCHA SE OF TYRES IS NOT JUSTIFIED. ACCORDING TO THE ASSESSING OFFICER EVEN IF THE ASSESSEE HAD TAKEN THE MACHINERY ON HIRE THE AMOUNT INCURRED IS HIGHLY EXCESSIVE BECAUSE THE TOTAL HIRE CHARGES INCURRED W ERE ONLY RS.3,025/-. HENCE, 20% OF THE AMOUNT WAS DISALLOWE D BY HIM TO PREVENT LOSS OF REVENUE. HE ACCORDINGLY MADE ADDITI ON OF RS.19,82,000/-ON ACCOUNT OF DIESEL AND LUBRICANTS E XPENSES AND ADDITION OF RS.2,67,083/- ON ACCOUNT OF REPAIR AND RENEWAL EXPENSES. THE ASSESSING OFFICER HAD ALSO DISALLOWE D SALARY EXPENSES OF RS.2,60,923/-. ACCORDINGLY THE ASSESSING OFFICE R DETERMINED THE TOTAL INCOME OF THE ASSESSEE AT RS.1,24,122,157/-. ITA NO.2577/DEL/2015 3 3. IN APPEAL THE LD. CIT)A ALTHOUGH DELETED THE ADD ITION ON ACCOUNT OF SALARY EXPENSES, HOWEVER, SUSTAINED THE ADDITION OF RS.19,82,000/- ON ACCOUNT OF REPAIR AND RENEWAL AND ENHANCED THE D IESEL AND LUBRICANT EXPENSES FROM 19,82,000/- TO RS.99,10,406 /-. 4. AGGRIEVED WITH SUCH ORDER OF THE CIT(A), THE ASS ESSEE IS IN APPEAL BEFORE THE TRIBUNAL BY RAISING FOLLOWING GROUNDS OF APPEAL :- 1. THAT ON THE FACTS AND CIRCUMSTANCE OF THE CASE L D. CIT(A) XX, NEW DELHI HAS WRONGLY CONFIRMED THE ACTI ON OF THE LD. AO REGARDING DISALLOWANCE OF REPAIRS & RENEWALS OF TY ERS AT RS.267083/- ON ESTIMATE BASIS AND IN DISREGARD OF BIL LS AND VOUCHERS. 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE A N ARBITRARY AND UNJUSTIFIABLE HARSH ACTION HAS BEEN TA KEN BY LD. CIT(A) XX, NEW DELHI BY ENHANCING THE DISALLOWANCE OF DIESEL AND LUBRICANTS EXPENSES FROM 10% TO 50% (FROM RS.19820 00/- TO 9910406/-). 3. THAT THE APPELLANT PRAYS FOR DELETION OF THESE DISALLOWANCES. 4. THAT THE APPELLANT CRAVES LEAVE TO ADD, DELETE A ND MODIFY ANY GROUNDS OF APPEAL BEFORE DECISION. 5. THE LD. COUNSEL FOR THE ASSESSEE AT THE OUTSET SUBMITTED THAT THE BOOKS OF ACCOUNT OF THE ASSESSEE ARE AUDITED AN D NO DEFECTS WERE POINTED OUT BY THE ASSESSING OFFICER OR THE CIT(A) IN SUCH BOOKS OF ACCOUNTS. THEREFORE, THE AD-HOC ADDITIONS MADE BY THE ASSESSING OFFICER WHICH HAS BEEN ENHANCED BY THE CIT(A) CANNO T BE SUSTAINED. REFERRING TO PAGE 2 OF THE ASSESSMENT ORDER THE LD. COUNSEL FOR THE ASSESSEE DREW THE ATTENTION OF THE BENCH TO THE COM PARATIVE CHART OF TURNOVER AND NET PROFIT RATIO AND SUBMITTED THAT TH E ASSESSING OFFICER IN THE ASSESSMENT ORDER HIMSELF HAS ADMITTED THAT T HE NET PROFIT RATE OF 4.67% IS BETTER THAN THE NET PROFIT DECLARED IN THE TWO PRECEDING ASSESSMENT YEARS. REFERRING TO PAGE NO.76 OF THE P APER BOOK HE DREW ITA NO.2577/DEL/2015 4 THE ATTENTION OF THE BENCH TO CLAUSE NO.9 OF THE WO RK ORDER ACCORDING TO WHICH THE EXPENSES ON REPAIR AND RENEWAL, TYRES, DIESEL AND LUBRICANTS EXPENSES ETC OF MACHINERY USED FOR EXECU TION OF WORK WILL BE BORNE BY THE JV. 6. SO FAR AS THE ALLEGATION OF THE ASSESSING OFFICE R THAT THE ASSESSEE HAS MADE CASH PAYMENT OF RS.3,89,400/- VIDE MEMO NO .29611 DATED 20.04.2009 IS CONCERNED, THE LD. COUNSEL FOR THE A SSESSEE SUBMITTED THAT THE SAME IS FACTUALLY INCORRECT. REFERRING TO PAGE 79 OF THE PAPER BOOK, HE SUBMITTED THAT ONLY AN AMOUNT OF RS.52,425 /- WAS PAID IN CASH ON DIFFERENT DATES NOT EXCEEDING RS.20,000 AT A TIME AND THE BALANCE PAYMENTS WERE MADE BY CHEQUE. FURTHER THE LEDGER ACCOUNT AND CONFIRMATION OF THE PARTIES FROM WHOM DIESEL AN D PETROL ARE BEING PURCHASED WERE PRODUCED BEFORE THE LOWER AUTHORITIE S. THEREFORE, UNDER THESE CIRCUMSTANCES WHEN THE EXPENSES ARE GEN UINE AND THE PARTIES FROM WHOM PURCHASES HAVE BEEN MADE HAD CONF IRMED, THE PAYMENTS WERE MADE THROUGH BANKING CHANNELS AND THE ACCOUNTS ARE AUDITED AND NO DEFECTS WERE FOUND, AD-HOC ADDITION COULD NOT HAVE BEEN MADE. 7. RELYING ON VARIOUS DECISIONS HE SUBMITTED THAT T HE ADDITION MADE BY THE ASSESSING OFFICER WHICH HAS BEEN ENHANC ED BY THE CIT(A) SHOULD BE DELETED. 8. THE LD. DR ON THE OTHER HAND HEAVILY RELIED ON THE ORDER OF THE AO AND CIT(A). REFERRING TO THE FINDINGS GIVEN BY T HE CIT(A) HE SUBMITTED THAT THE OBSERVATIONS GIVEN BY THE CIT(A) WHILE ENHANCING THE INCOME SPEAKS IN VOLUMES, THEREFORE, THE ORDER OF THE CIT(A) SHOULD BE UPHELD. 9. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY B OTH THE SIDES AND PERUSED THE ORDERS OF THE AUTHORITIES BELOW. W E HAVE ALSO CONSIDERED THE VARIOUS DECISIONS CITED BEFORE US. WE FIND THE ITA NO.2577/DEL/2015 5 ASSESSING OFFICER IN ORDER PASSED U/S 143 (3) OF TH E ACT MADE ADDITION OF RS.19,82,000/- BEING 10% OF THE DIESEL EXPENSES ON THE GROUND THAT THERE ARE SEVERAL PAYMENTS MADE IN CASH AND AS SESSEE FAILED TO PROVIDE THE COMPLETE SUPPORTING DOCUMENT FOR PURCHA SE OF DIESEL/ LUBRICANT EXCEEDING RS.5 LACS. SIMILARLY THE ASSESS ING OFFICER MADE DISALLOWANCE OF RS.2,67,083/- BEING 20% OF THE EXPE NSES ON ACCOUNT OF REPAIR AND RENEWAL OF TYRES. WE FIND THE LD. CI T(A) UPHELD THE DISALLOWANCE OF RS.2,67,083/- OUT OF REPAIR AND REN EWAL OF TYRES AND ENHANCED THE DISALLOWANCE ON ACCOUNT OF DIESEL AND LUBRICANTS FROM 10% TO 50%. IT IS THE SUBMISSION OF THE LD. COUNSE L FOR THE ASSESSEE THAT THE BOOKS OF ACCOUNTS ARE AUDITED AND NO DEFEC TS WERE FOUND. IT IS ALSO HIS SUBMISSION THAT THE NET PROFIT DECLARED BY THE ASSESSEE FOR THE IMPUGNED YEAR IS BETTER THAN THE TWO PRECEDING ASSESSMENT YEARS AND THE OBSERVATIONS OF THE ASSESSING OFFICER AND C IT(A) REGARDING NON MAINTENANCE OF PROPER BILLS AND VOUCHERS AND PA YMENTS MADE IN CASH ARE IRRELEVANT OBSERVATIONS WITHOUT LOOKING IN TO THE DETAILS ALREADY FILED DURING THE ASSESSMENT PROCEEDINGS. 10. WE FIND MERIT IN THE ABOVE ARGUMENTS MADE BY LD . COUNSEL FOR THE ASSESSEE. A PERUSAL OF THE PAPER BOOK SHOWS TH AT ASSESSEE HAD FURNISHED NOT ONLY THE LEDGER ACCOUNT OF THE PARTIE S FROM WHOM PURCHASES WERE MADE ON ACCOUNT OF DIESEL AND PETROL BUT ALSO FILED THEIR CONFIRMATIONS. SO FAR AS ALLEGATIONS OF THE ASSESSING OFFICER THAT ASSESSEE HAS MADE CASH PAYMENT OF RS.2,89,400/- IS CONCERNED, A PERUSAL OF THE VARIOUS DETAILS FILED BY THE ASSESSE E SHOWS THAT EXCEPT AN AMOUNT OF RS.58,24,25/- PAID IN CASH THAT TO NOT EXCEEDING RS.20,000 AT A TIME, THE ASSESSEE HAS PAID THE BALA NCE AMOUNT BY CHEQUES. FURTHER A PERUSAL OF CLAUSE 9 OF WORK ORD ER SHOWS THAT THE EXPENSES ON REPAIR AND RENEWAL OF TYRES, DIESEL AND LUBRICANTS ETC OF MACHINERY USED FOR EXECUTION OF WORK WILL BE BORNE BY THE JV. WE ITA NO.2577/DEL/2015 6 FIND THE BOOKS OF ACCOUNT WERE AUDITED AND NO DEFEC TS HAVE BEEN POINTED OUT BY THE AUDITORS. EVEN THE ASSESSING OFF ICER OR THE CIT(A) HAS ALSO NOT POINTED OUT ANY DEFECTS IN THE BOOKS O F ACCOUNTS AND THE BOOKS WERE NOT REJECTED. WE FIND THE ASSESSING OFFI CER IN THE ASSESSMENT ORDER HAS ALSO ACCEPTED THE NET PROFIT D ECLARED BY THE ASSESSEE DURING THE YEAR AS BETTER THAN THE NET PRO FIT DECLARED IN THE TWO PRECEDING ASSESSMENT YEARS. UNDER THESE CIRCUM STANCES WE ARE OF THE CONSIDERED OPINION THAT WHEN THE ASSESSEE HA S FILED ALL THE REQUISITE DETAILS BEFORE THE LOWER AUTHORITIES INCL UDING CONFIRMATION OF THE PARTIES FROM WHOM PURCHASES HAVE BEEN MADE AND SUCH CONFIRMATIONS HAVE NOT BEEN PROVED TO BE FALSE OR U NTRUE AND SINCE BOOKS OF ACCOUNTS OR BOOK RESULTS WERE NOT REJECTED , THEREFORE, IN ABSENCE OF ANY CONTRARY MATERIAL BROUGHT TO OUR NOT ICE THE AD-HOC DISALLOWANCE MADE BY THE ASSESSING OFFICER WHICH HA S BEEN ENHANCED BY THE CIT (A) CANNOT BE SUSTAINED. WE, THEREFORE, SET ASIDE THE ORDER OF THE CIT(A) AND DIRECT THE ASSESESING OFFICER TO DELETE THE ADDITION. THE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED. 11. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 01.04.2019. SD/- SD/- (SUCHITRA KAMBLE) (R.K PANDA) JUDICIAL MEMBER ACCOUNTAN T MEMBER *NEHA* DATE:- 01.04.2019 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI ITA NO.2577/DEL/2015 7 DATE OF DICTATION 28.03.2019 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.PS/PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/ PS 02.04.2019 DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT 02.04.2019 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH FILE GOES TO THE HEAD CLERK. THE DATE ON WHICH FILE GOES TO THE ASSISTANT REGIST RAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER