VIJAY H JAISWAL, MUMBAI V. ACIT 21(2), MUMBAI

ITA 2617/MUM/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 3294 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-03-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: F
• Assessment Year: 2010-2011
• Appeal Filed On: 17-04-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Business expenditure; Corroborative evidences
• Section: 37(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH, MUM BAI BEFORE SHRI JASON P BOAZ, AM AND SHRI SANDEEP GOSAI N, JM ./ I.T.A. NO. 2617/MUM/2014 ( / ASSESSMENT YEAR: 2010-11) VIJAY H. JAISWAL: PROP M/S THREE CIRCLES 35, KANTA NIWAS, D. JOSHI ROAD, VILE PARLE (W), MUMBAI-400 056. / VS. ACIT,21(2), C-10/,5 TH FLOOR, PRATYAKSHAKAR BHAVAN, BANDRA KURLA COMPLEX, MUMBAI-400 051. ./ ./PAN/GIR NO. AABPJ 9355L ( /APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : SHRI NISHIT GANDHI / RESPONDENT BY : SHRI LOVISH KUMAR / DATE OF HEARING : 01/03/2016 !'# / DATE OF PRONOUNCEMENT : 16/03/2016 $% / O R D E R PER SANDEEP GOSAIN, J. M.: THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE A GAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)- 32, DATED 06. 02.2014 FOR A.Y. 2010-11 ON THE FOLLOWING GROUNDS OF APPEAL. 2 ITA NO. 2617/MUM/2014 (A.Y. 2010-11) VIJAY H. JAISWAL VS. ACIT 1. LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED COMM. OF INCOME TAX (APPEALS) ERRED IN CONFIRMING T HE A.O.S ACTION OF DISALLOWING THE ASSESSEES CLAIM THAT INCOME DERIVE D OF RS.2,50,450/- IS AGRICULTURAL INCOME AND INSTEAD TREATING THE SAME A S INCOME FROM OTHER SOURCES. 2. LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED COMM. OF INCOME TAX (APPEALS) ERRED IN CONFIRMING T HE A.OS ACTION OF DISALLOWING INTEREST ON DELAYED PAYMENT OF TDS RS.3 ,268/- AS NOT ALLOWABLE UNDER SECTION 37(1) OF THE I.T. ACT,1961 THOUGH THE SAME IS CLEARLY ALLOWABLE AS BUSINESS EXPENDITURE UNDER THE VERY SAID PROVISI ONS OF SECTION 37(1) OF THE I.T. ACT 1961AND 3. LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED COMM. OF INCOME TAX (APPEALS) ERRED IN CONFIRMING T HE A.OS ACTION OF DISALLOWING AN ADHOC AMOUNT OF RS.1,00,000/- OUT OF LABOUR CHARGES ON THE GROUND OF ABSENCE OF COMPLETE DETAILS, CONTROL OVER THE WORKERS AND THAT THE PAYMENTS ARE NOT FULLY VOUCHED FOR IN SPITE OF THE FACT THAT THE WORK IS CARRIED OUT THROUGH CONTRACTORS. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE RETURN OF INCOME WAS E-FIELD ON 1.10.10 DECLARING TOTAL INCOME AT RS.44,74, 900 WHI CH INCLUDED AGRICULTURAL INCOME 3 ITA NO. 2617/MUM/2014 (A.Y. 2010-11) VIJAY H. JAISWAL VS. ACIT AMOUNTING TO RS 2,50, 450. THE RETURN WAS PROCESSED UNDER SECTION 143 (1) OF THE INCOME TAX ACT 1961. SUBSEQUENTLY THE CASE WAS SELE CTED FOR SCRUTINY UNDER CASS AND ACCORDINGLY STATUTORY NOTICES WERE SERVED UPON THE ASSESSEE AND AFTER SEEKING HIS REPLY, THE ASSESSING OFFICER PASSED THE ORDER O F ASSESSMENT DATED 31.12.2012 THEREBY MAKING ADDITIONS IN THE TOTAL INCOME OF THE ASSESSEE. 3. AGGRIEVED BY THE ORDER OF ASSESSMENT, THE ASSESS EE FILED THE APPEAL BEFORE THE COMMISSIONER OF INCOME TAX I.E CIT (A) HOWEVER, THE CIT(A) AFTER CONSIDERING THE CASE OF THE ASSESSEE HAD DISMISSED THE APPEAL AND UPHOLD THE ORDER OF ASSESSING OFFICER. 4. AGGRIEVED BY THE ORDER OF COMMISSIONER OF INCOME TAX, THE ASSESSEE FILED THE PRESENT APPEAL BEFORE US ON THE GROUNDS MENTION ED HEREIN ABOVE. GROUND NO. 1 5. LD. AR REPRESENTING THE ASSESSEE SUBMITTED THAT THE INCOME OF RS.2,50,450/- HAS BEEN SHOWN AS AGRICULTURAL INCOME AT PAGE NO.22 &23 OF THE AUDIT REPORT. SITUATION OF THESE LANDS ARE MENTIONED AT PAGE NO.2 0 OF THE AUDIT REPORT. IT WAS FURTHER SUBMITTED BY THE AR THAT THE AFORE MENTIONE D AMOUNT HAS BEEN GENERATED BY HARVESTING YIELD LIKE NATURAL GRASS OR ALLOWING SEASONAL FARMER CUM WATCHMAN 4 ITA NO. 2617/MUM/2014 (A.Y. 2010-11) VIJAY H. JAISWAL VS. ACIT TO CULTIVATE LANDS IN SHARE WHICH IS VERY NOMINAL. LD. AR FURTHER SUBMITTED THAT SINCE AFORE MENTIONED AMOUNT HAS BEEN EARNED FROM A GRICULTURAL ACTIVITIES THEREFORE THE SAME OUGHT TO HAVE BEEN TREATED AS AG RICULTURAL INCOME. ON THE OTHER HAND, LD. DR RELIED UPON THE ORDERS PASSED BY THE R EVENUE AUTHORITIES. 6. WE HAVE HEARD THE COUNSELS FOR BOTH THE PARTIES AND WE HAVE ALSO PERUSED THE MATERIAL PLACED ON RECORD AS WELL AS THE ORDERS PASSED BY THE REVENUE AUTHORITIES. WE NOTICED THAT THIS GROUND HAS BEEN D EALT WITH BY LD. CIT(A) IN PARA 3.4 WHICH IS REPRODUCED AS UNDER: I HAVE CONSIDERED FACTS OF THE CASE, ORAL CONTENTI ONS OF THE APPELLANT AS AGAINST THE OBSERVATIONS/FINDINGS OF THE AO IN T HE ASSESSMENT ORDER. THE CONTENTIONS AND SUBMISSIONS OF THE APPEL LANT ARE BEING DISCUSSED AND DECIDED AS UNDER:- I. IT IS THE FACT OF THE CASE THAT THE APPELLANT HAS D ISCLOSED INCOME AT RS.2,50,450/- AS AGRICULTURAL INCOME. FURTHER TH IS IS ALSO THE FACT OF THE CASE THAT UPON BEING ASKED BY THE AO TO FURNISH DETAILS OF EXPENSES INCURRED, AGRICULTURAL PRODUCE TAKEN, LABOUR EMPLOYED ETC., NO DETAILS OR EVIDENCE WHATSO EVER COULD BE FURNISHED BY THE APPELLANT. 5 ITA NO. 2617/MUM/2014 (A.Y. 2010-11) VIJAY H. JAISWAL VS. ACIT II. THE APPELLANT ALSO HAS NOT BEEN ABLE TO PRODUCE ANY DOCUMENT IN RESPECT OF THE FACT THAT THERE WAS ANY AGRICULTU RE PRODUCE TAKEN FROM SUCH AGRICULTURAL LAND AND THEREFORE, CO ULD NOT ESTABLISH THAT THERE WAS ANY GENERATION OF INCOME T HERE FROM. III. THE APPELLANTS EXPLANATION THAT INCOME WAS GENERAT ED BY HARVESTING YIELD LIKE NATURAL GRASS OR ALLOWING SEA SONAL FARMER CUM WATCHMAN TO CULTIVATE LANDS IN SHARES IS AN ASS ERTION WITHOUT ANY SUPPORTING EVIDENCE AND WITHOUT ANY CORROBORATION. IV. UNDER SUCH FACTS AND CIRCUMSTANCES OF THE CASE, IT CANNOT BE ARRIVED AT THE INCOME SO DISCLOSED BY THE ASSESSEE IN THE RETURN OF INCOME FALLS WITHIN THE MEANING OF THE DEFINITIO N GIVEN IN SECTION 2(1A) OF THE AC. V. ACCORDINGLY, THE TREATMENT GIVEN TO SUCH INCOME BY THE AO AS INCOME FROM OTHER SOURCES IS FOUND TO BE JUSTIFIED. VI. THIS GROUND OF APPEAL IS ACCORDINGLY, DISMISSED. 6.1 AFTER ANALYZING THE AFORE MENTIONED ORDER AND A FTER HEARING THE PARTIES WE ARE OF THE CONSIDERED VIEW THAT SINCE THE ASSESSEE HAS FAILED TO FURNISH ANY DETAILS IN RESPECT OF EXPENSES INCURRED, AGRICULTURAL PROD UCE TAKEN, LABOUR EMPLOYED ETC., 6 ITA NO. 2617/MUM/2014 (A.Y. 2010-11) VIJAY H. JAISWAL VS. ACIT AND IN THIS RESPECT NO EVIDENCE WAS FURNISHED BY TH E ASSESSEE BEFORE THE ASSESSING OFFICER. NOT ONLY, THIS THE ASSESSEE HAS ALSO NOT B EEN ABLE TO PRODUCE ANY DOCUMENT IN ORDER TO SHOW THAT THERE WAS ANY AGRICULTURAL PR ODUCE TAKEN FROM SUCH AGRICULTURAL LAND AND THEREFORE THE ASSESSEE COULD NOT ESTABLISH THAT THERE WAS ANY GENERATION OF INCOME THERE FROM. THE ONLY EXPLANATI ON PUT FORTH BY THE ASSESEE IS THAT THE INCOME WAS GENERATED BY HARVESTING YIELD L IKE NATURAL GRASS OR ALLOWING SEASONAL FARMER CUM WORKMEN TO CULTIVATE LANDS IN S HARES. THE SAID EXPLANATION ITSELF IS NOT SUFFICIENT ENOUGH, THEREFORE THE LD. CIT(A) AFTER CONSIDERING THE PLEA TAKEN BY THE ASSESSEE HAS RIGHTLY HELD THAT THE INC OME SO DISCLOSED BY THE ASSESSEE IN THE RETURN OF INCOME CANNOT BE TREATED AS AGRICU LTURAL INCOME AS DEFINED U/S 2(1A ) OF THE ACT. EVEN BEFORE US NO DETAILS HAVE B EEN FURNISHED BY THE LD. AR, THEREFORE WE SEE NO REASONS TO DEVIATE FROM OR INTE RFERE IN THE FINDINGS RECORDED BY THE CIT(A). HENCE, THIS GROUND TAKEN BY THE ASSESSE E IS DISMISSED. GROUND NO.2 7. LD. AR SUBMITTED THAT A SUM OF RS.3,268/- WAS PA ID ON ACCOUNT OF INTEREST ON DELAYED PAYMENT OF TDS AND IT WAS SUBMITTED THAT SINCE THE AMOUNT WAS PAID AS INTEREST ON THE DELAYED PAYMENT OF TDS THEREFORE TH E SAME IS ALLOWABLE AS PER PROVISIONS OF SECTION 37(1) OF THE I.T. ACT. WHERE AS, ON THE CONTRARY, LD. DR RELIED UPON THE ORDERS PASSED BY THE REVENUE AUTHORITIES. 7 ITA NO. 2617/MUM/2014 (A.Y. 2010-11) VIJAY H. JAISWAL VS. ACIT 8. WE HAVE HEARD COUNSELS FOR BOTH THE PARTIES AND WE HAVE ALSO PERUSED THE MATERIAL PLACED ON RECORD AS WELL AS THE ORDERS PAS SED BY THE REVENUE AUTHORITIES. WE ARE OF THE CONSIDERED VIEW THAT AFORE MENTIONED AMOUNT WAS PAID AS INTEREST ON PAYMENT OF TDS WHICH WAS BEYOND DUE DATE AND HENCE, THE SAID PAYMENT WAS PENAL IN NATURE AND THEREFORE THE SAME IS NOT ALLOW ABLE AS PER THE PROVISION OF SECTION 37(1) OF THE ACT. WE FIND SUPPORT FROM THE DECISION OF CO-ORDINATE BENCH OF ITAT (AHMEDABAD) IN ITA NO. 1363/AHD/2010. THE DECI SION OF CO-ORDINATE BENCH IS BASED ON THE DECISION RENDERED BY THE HONBLE SU PREME COURT IN CASE OF BHARAT COMMERCE & INDUSTRIES VS. CIT 230 ITR 733 (SC) WHER EIN SIMILAR ISSUE WAS INVOLVED AND IT WAS HELD THAT INTEREST FOR LATE PAY MENT OF DIRECT TAXES IS NOT DEDUCTIBLE. THEREFORE, FOLLOWING THE PRINCIPLES OF CONSISTENCY AND RESPECTFULLY FOLLOWING THE JUDGEMENT RENDERED BY THE CO-ORDINATE BENCH WE DISMISS THIS GROUND OF APPEAL. GROUND NO.3 9. LD. AR SUBMITTED THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF CIVIL CONTRACTOR AND THEREFORE HAD INCURRED EXPENSES OF R S.53,34,958/- ON WAGES TO LABOURERS, MISCELLANEOUS EXPENSES ETC., AND THE SAI D AMOUNT WAS RIGHTLY DEBITED IN THE P&L A/C. IT WAS SUBMITTED THAT ON THE BASIS OF ESTIMATION THE AO DISALLOWED A 8 ITA NO. 2617/MUM/2014 (A.Y. 2010-11) VIJAY H. JAISWAL VS. ACIT SUM OF RS.1,00,000/- OUT OF TOTAL EXPENSES WHEREAS IN FACT THE ASSESSEE HAD SPENT ACTUAL AMOUNT OF RS.53,34,958/- ON DISBURSEMENT OF WAGES ETC. ON THE OTHER HAND, LD. DR RELIED UPON THE ORDERS PASSED BY THE REVENUE AUTHORITIES. 10. WE HAVE HEARD COUNSELS FOR BOTH THE PARTIES AND WE HAVE ALSO PERUSED THE MATERIAL PLACED ON RECORD AS WELL AS THE ORDERS PAS SED BY THE REVENUE AUTHORITIES. WE ARE OF THE CONSIDERED VIEW THAT IT IS AN UNDISPU TED FACT THAT THE ASSESSE IS ENGAGED IN THE BUSINESS OF CIVIL CONTRACTOR AND THE SE EXPENSES ARE INCURRED AT VARIOUS SITES FOR PAYMENT OF WAGES TO LABOURERS AND THE LABOURERS ENGAGED IN THIS BUSINESS ARE NOT OF PERMANENT NATURE AND DO NOT HAV E ANY PERMANENT ADDRESS AND BANK ACCOUNTS AND THEREFORE IN THIS NATURE OF BUSIN ESS THE CHARGES ARE USUALLY PAID IN CASH BUT LD. AO DISALLOWED A SUM OF RS.1,00,000/ - ON ESTIMATION BASIS. 11. AFTER CONSIDERING THE FACTS OF THE CASE AND WHI LE KEEPING IN MIND THE NATURE OF THE BUSINESS I.E. CIVIL CONTRACTOR, WE ARE OF TH E OPINION THAT IT WOULD BE JUST AND FAIR TO DISALLOWED AN AMOUNT OF RS.50,000/- IN PLAC E OF 1,00,000/- AS DISALLOWED BY THE AO FOR WANT OF VERIFICATION AND THEREFORE, THE AO IS DIRECTED TO RE-COMPUTE THE INCOME AFTER MAKING DISALLOWANCE OF RS.50,000/- ONL Y. THIS GROUND OF APPEAL IS PARTLY ALLOWED. 9 ITA NO. 2617/MUM/2014 (A.Y. 2010-11) VIJAY H. JAISWAL VS. ACIT 12. IN THE RESULT, THE ASSESSEES APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 16 TH MARCH, 2016 SD/- SD/- (JASON P. BOAZ) (SANDEEP GOSAIN) $ / ACCOUNTANT MEMBER &' $ / JUDICIAL MEMBER ( ) MUMBAI; *$ DATED : 16.03.2016 PS. ASHWINI / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. + ( ) / THE CIT(A) 4. + / CIT - CONCERNED 5. ./0 ''12 , 12# , ( ) / DR, ITAT, MUMBAI 6. 045 6 / GUARD FILE / BY ORDER, / !'# (DY./ASSTT. REGISTRAR) #$ %, ( ) / ITAT, MUMBAI