The DCIT, Circle-1, Bhavnagar V. P.D. Construction Co., Bhavnagar

ITA 2689/AHD/2011

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 9671 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 3 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-02-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 31-12-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 01-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business expenditure; Corroborative evidences

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD , , BEFORE SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER ./ I.T.A. NO. 2689/AHD/2011 ( / ASSESSMENT YEAR : 2007-08) THE DCIT CIRCLE-1 BHAVNAGAR / VS. PD CONSTRUCTION CO. 302, TURNING POINT WAGHAWADI ROAD BHAVNAGR-364 002 ./ ./ PAN/GIR NO. : AACFP 5998 A ( ' / APPELLANT ) .. ( #' / RESPONDENT ) AND CO NO.271/AHD/2011 AY 2007-08 (IN ITA NO.2689/AHD/2011 AY 2007-08) PD CONSTRUCTION CO. VS. THE DCIT BHAVNAGAR-364 001 CIRCLE-1, B HAVNAGAR (CROSS OBJECTOR) .. (RESPOND ENT) REVENUE BY : SHRI DINESH SINGH, SR.DR ASSESSEE B Y : SHRI S.N. SOPARKAR, AR $%& ' ( / DATE OF HEARING 31/12/2015 )*+ ' ( / DATE OF PRONOUNCEMENT 04/02/2016 / O R D E R PER SHRI KUL BHARAT, JUDICIAL MEMBER : THE REVENUE AND THE ASSESSEE HAVE CHALLENGED THE ORDER OF THE LD.COMMISSIONER OF INCOME TAX(APPEALS)-GANDHINAGAR CIT(A) IN ITA NO.2689/AHD/2011(REVENUE) AND CO NO.271/AHD/2011 (ASSESSEE) DCIT VS. PD CONSTRUCTION CO. ASST.YEAR 2007-08 - 2 - SHORT] DATED 04/08/2011 BY FILING THE APPEAL AND C ROSS OBJECTION RESPECTIVELY PERTAINING TO ASSESSMENT YEAR (AY) 200 7-08. 2. FIRST, WE TAKE UP THE REVENUES APPEAL IN ITA NO .2689/AHD/2011 FOR AY 2007-08. THE REVENUE HAS RAISED THE FOLLOWI NG GROUNDS OF APPEAL: 1. THE LD.CIT(A)-XX, AHMEDABAD HAS ERRED IN LAW AN D ON FACTS IN GRANTING RELIEF OF RS.56,93,429/- OUT OF THE ADDITI ONS MADE BY THE ASSESSING OFFICER TOWARDS PAYMENT OF LABOUR CHARGES . 1.2. THE LD.CIT(A) HAS NOT APPRECIATED THE EVIDENCE OBTAINED ON RECORD AND THE ADDITIONS SUSTAINED IS TOO MEAGER AN D NOT ACCEPTABLE. 2. IT IS THEREFORE, PRAYED THAT THE ORDER OF THE CI T(A) BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED TO THE ABOVE EXTENT. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE RE TURN OF INCOME FOR AY 2007-08 WAS FILED ON 31/10/2007 SHOWING NET TAXABLE INCOME AT RS.9,97,170/-. THE ASSESSMENT WAS FINALIZED U/S.14 3(3) OF THE IT ACT, 1961 ON 16.12.2009 DETERMINING TOTAL INCOME AT RS.1 1,99,660/-. THE ASSESSMENT WAS SET ASIDE BY THE CIT-VI AHMEDABAD U/ S.263 OF THE INCOME TAX ACT,1961 (HEREINAFTER REFERRED TO AS TH E ACT) VIDE ORDER DATED 31/03/2010. IN PURSUANCE TO THE ORDER OF THE CIT, THE ASSESSING OFFICER (AO IN SHORT) MADE AN ASSESSMENT ORDER VIDE DATED 23/12/2010, THEREBY THE AO MADE DISALLOWANCE OF LABOUR CHARGES OF RS.57,36,154/- & ITA NO.2689/AHD/2011(REVENUE) AND CO NO.271/AHD/2011 (ASSESSEE) DCIT VS. PD CONSTRUCTION CO. ASST.YEAR 2007-08 - 3 - ALSO THE DISALLOWANCE OUT OF LABOUR CHARGES OF RS.4 ,57,275/- AND DISALLOWANCE OUT OF JCB/TRACTOR RENT HIRE EXPENSES OF RS.64,960/-. THE TOTAL DISALLOWANCE MADE BY THE AO OF RS.62,58,389/- AND THE SAME WAS ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE. THE ASSESSEE BEING AGGRIEVED BY THE ASSESSMENT ORDER, PREFERRED AN APP EAL BEFORE THE LD.CIT(A), WHO AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE PARTLY ALLOWED THE APPEAL. WHILE PARTLY ALLOWING THE APP EAL, THE LD.CIT(A) CONFIRMED THE ADDITION OF RS.5 LACS (OUT OF RS.57,3 6,154/- + RS.4,57,275/-). THE LD.CIT(A) ALSO CONFIRMED THE A DDITION MADE ON ACCOUNT OF JCB/TRACTOR RENT HIRE EXPENSES OF RS.64, 960/-. AGAINST THE ORDER OF THE LD.CIT(A), NOW THE REVENUE AND THE ASS ESSEE ARE IN APPEAL AND CROSS-OBJECTION RESPECTIVELY BEFORE US. 3. THE ONLY EFFECTIVE GROUND IN THIS REVENUES APPE AL IS AGAINST RESTRICTING THE DISALLOWANCE OF LABOUR CHARGES TO R S.5 LACS AND GRANTING RELIEF OF RS.56,93,429/-. THE LD.SR.DR SHRI DINESH SINGH VEHEMENTLY ARGUED THAT THE LD.CIT(A) WAS NOT JUSTIFIED IN DELE TING THE ADDITION AND HE PLACED STRONG RELIANCE ON THE ORDER OF THE AO. HE SUBMITTED THAT THE AO HAS POINTED OUT VARIOUS DEFECTS INTO THE EXPLANATIO N AS GIVEN BY THE ASSESSEE. HE TOOK US THROUGH THE ASSESSMENT ORDER AT PARAS-7 TO 9 TO BUTTRESS THE ARGUMENT THAT THE DISALLOWANCE IS MADE BY THE AO IS JUSTIFIED AND THE LD.CIT(A) WAS NOT JUSTIFIED IN DELETING THE SAME. ITA NO.2689/AHD/2011(REVENUE) AND CO NO.271/AHD/2011 (ASSESSEE) DCIT VS. PD CONSTRUCTION CO. ASST.YEAR 2007-08 - 4 - 3.1. ON THE CONTRARY, LD.SR.COUNSEL FOR THE ASSESSE E SHRI S.N.SOPARKAR SUBMITTED THAT THE AO HAD MADE DISALLOWANCE ON THE BASIS OF CONJECTURES AND SURMISES WITHOUT BEING CONFRONTING THE ASSESSEE AND ALSO THE AO OVERLOOKED THE MATERIAL EVIDENCE WHICH WERE PLACED BEFORE HIM. UNDER THESE FACTS, THE AO WAS NOT JUSTIFIED IN MAKING THE DISALLOWANCE. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERU SED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE ONLY ISSUE TO BE ADJUDICATED IN THE REVENUES A PPEAL IS WHETHER THE LD.CIT(A) WAS JUSTIFIED IN DELETING THE DISALLOWANC E MADE ON ACCOUNT OF PAYMENT OF LABOUR CHARGES. THE AO IN THE ASSESSMEN T ORDER OBSERVED THAT THE ASSESSEE AS ON 31/03/2007 HAS SHOWN UNPAI D LABOUR CHARGES- BHUJ OF RS.30,99,830/- AND LABOUR CHARGES PAYABLE OF RS.26,36,324/- OUT OF TOTAL LABOUR CHARGES OF RS.1,61,80,924/-. IN ORDER TO VERIFY THE SAME, THE AO CALLED UPON THE ASSESSEE TO EXPLAI N THE SAME. IN RESPONSE THERETO, THE ASSESSEE PLACED VARIOUS EVIDE NCES BEFORE THE AO IN THE FORM OF LEDGER ACCOUNT, MONTHLY LABOUR-SHEETS, SUMMARY OF UNPAID LABOUR OF 2006-07 PAID IN 2007-08, WITH JOURNAL VOU CHER. THE ASSESSEE ALSO FILED A COMPARATIVE CHART SHOWING PERCENTAGE O F LABOUR EXPENSES/LABOUR PAYABLE, SUB-CONTRACTOR EXPENSES A ND TRACTOR/JCB RENT HIRE CHARGES FOR AYS 2004-05, 2005-06, 2006-07, 200 7-08 & 2008-09 BEFORE THE AO. THE LD.CIT(A) GRANTED RELIEF TO T HE ASSESSEE IN PARAS 4.3 TO 4.5 OF HIS ORDER, BY OBSERVING AS UNDER:- ITA NO.2689/AHD/2011(REVENUE) AND CO NO.271/AHD/2011 (ASSESSEE) DCIT VS. PD CONSTRUCTION CO. ASST.YEAR 2007-08 - 5 - 4.3. AO'S OBSERVATIONS FOR DISALLOWING LABOUR CHAR GES OF RS.57,36,1547- ARE AS FOLLOW. IT IS SEEN FROM THE B ALANCE SHEET THAT LABOUR CHARGES AT BHUJ RS.30,99,830/- AND LABOUR CH ARGES AT BHAVNAGAR OF RS.26,36,324/- WERE FOUND OUTSTANDING OUT OF THE TOTAL LABOUR CHARGES CLAIMED OF RS. 1,61,80,9247-; 'LABOU R SHEETS' WERE MAINTAINED ON A4 SIZE COMPUTER PAPERS AND NOT IN AN Y REGISTER; MOST OF THE THUMB IMPRESSIONS WERE MADE BY A FEW PERSONS; T HEREFORE, THE LABOUR SHEETS PRODUCED WERE NOTHING BUT AN AFTERTHO UGHT TO INFLATE THE LABOUR EXPENSES, THE OUTSTANDING WAGES WERE PAID AL MOST A YEAR AFTER THE END OF THE PREVIOUS YEAR; AND AS MOST OF THE PA YMENTS WERE MADE IN CASH, IT IS NOT POSSIBLE TO ASCERTAIN THE LIABILITY TO MAKE TDS. AO CAME TO THE FINDING THAT EITHER THE APPELLANT INFLATED T HE LABOUR EXPENDITURE OR HIRED THE LABOURERS THROUGH THE LABOUR CONTRACTORS AND FAILED TO DEDUCT THE TAX. ACCORDINGLY, SHE HELD THAT THE IMPUGNED AM OUNT OF OUTSTANDING LABOUR CHARGE OF RS. 57,36,154/- WAS EITHER DISALLO WABLE AS BOGUS OR DISALLOWABLE U/S.40(A)(IA). AO DISALLOWED FURTHER S UM OF RS.4,57,275/-, BEING 10% OF THE TOTAL LABOUR CHARGES MINUS OUTSTAN DING LABOUR CHARGES MINUS LABOUR CHARGES ON WHICH TAX WAS DEDUC TED. 4.4 THE CONTENTIONS OF THE LEARNED AR ON THE IS SUE IN BRIEF ARE AS FOLLOW: THE LEARNED AO FAILED TO APPRECIATE THE SYSTEM OF M AKING PAYMENTS TO LABOURERS; THE LABOUR USED TO RECEIVE PAYMENTS ON S PECIFIED DATES EITHER BY THEMSELVES OR THROUGH THEIR COLLEAGUES OR RELATI VES. NONE OF THE PERSONS TO WHOM THE PAYMENTS WERE MADE WAS EXAMINED ; NO FURTHER EXPLANATION WAS SOUGHT BY THE AO FROM THE APPELLANT BEFORE TAKING ADVERSE DECISION; THE SUB-CONTRACT LABOUR EXPENSES AND THE OUTSTANDING LABOUR EXPENSES ARE COMPARABLE WITH THE FIGURES OF THE IMMEDIATELY PRECEDING 3 YEARS; IN THE ASSESSMENT ORDERS U/S. 14 3(3) FOR THE IMMEDIATELY PRECEDING ASSESSMENT YEARS 2005-06 AND 2006-07, ONLY LUMPSUM DISALLOWANCE OF RS.50,000/- WAS MADE OUT OF LABOUR EXPENSES AND THEREFORE, IMPUGNED DISALLOWANCE OF RS. 57,36,1 547- IS UNWARRANTED. REGARDING FURTHER DISALLOWANCE OF RS.4 ,57,275/-, HE CONTENDED THAT IT WAS BASED ON MERE SUSPICION AND W ITHOUT ANY EVIDENCE. ITA NO.2689/AHD/2011(REVENUE) AND CO NO.271/AHD/2011 (ASSESSEE) DCIT VS. PD CONSTRUCTION CO. ASST.YEAR 2007-08 - 6 - 4.5 THE APPELLANT IS CARRYING ON CONTRACT WORK AT T HE SITES AT BHUJ AND BHAVNAGAR. AS CONTENDED BY THE LEARNED AR, THE AMOU NT OF LABOUR EXPENSES AND THE OUTSTANDING LABOUR EXPENSES COMPAR E WELL WITH THE PRECEDING 3 YEARS. IN THE PRECEDING TWO ASSESSMENT ORDERS U/S. 143(3), IT IS SEEN THAT ONLY LUMPSUM DISALLOWANCE OF RS.50, 000/- AND RS.45,000/- WAS MADE. KEEPING IN VIEW THE NATURE OF EXPENDITURE BEING LABOUR PAYMENT MADE AT TWO DIFFERENT SITES, I AM OF THE VIEW THAT NO SERIOUS ADVERSE INFERENCE CAN BE DRAWN FROM THE FAC T THAT SOME OF THE THUMB IMPRESSION TALLY. AS CONTENDED BY THE LEARNED AR, THERE IS NOTHING SURPRISING THAT THE SOME LABOUR MAY BE RECE IVING PAYMENT ON BEHALF OF SOME OF HIS FRIENDS AND RELATIVES. THE AO HAS NOT CONDUCTED ANY ENQUIRIES WITH ANY OF THE LABOURERS TO DISPROVE THE CONTENTION OF THE APPELLANT. IT IS PERTINENT TO NOTE THAT THE SAMPLE OF FINGER-PRINTS TAKEN BY AO IS TOO SMALL TO MAKE SUCH HUGE DISALLOWANCE AND THE APPELLANT VIDE GROUND NOS. 4 & 6 PLEADED FOR REDUCING THE DISALLOW ANCES TO A REASONABLE EXTENT. THEREFORE, KEEPING IN VIEW THE D ISCREPANCIES POINTED OUT BY THE AO IN THE LABOUR SHEETS AND THE FACTS OF THE MATTER, I AM OF THE VIEW THAT THE LUMPSUM DISALLOWANCE OF RS. 5 LAK HS OUT OF THE LABOUR EXPENSES WOULD MEET THE ENDS OF JUSTICE. ACCORDING LY, DISALLOWANCE OF THE SAID SUM IS UPHELD AND THE BALANCE DISALLOWANCE OF RS.56,93,429/- (RS.57,36,154/- + RS.4,57,275 5,00,000/-) IS DELE TED. THESE GROUNDS OF APPEAL ARE PARTLY ALLOWED. 4.1. NOW THE QUESTION BEFORE US TO DECIDE IS WHETHE R THE ABOVE OBSERVATION OF THE LD.CIT(A) IS JUSTIFIED AND IS IN CONSONANCE WITH THE PRINCIPLES OF LAW. IT IS WELL SETTLED NOW THAT IN RESPECT OF ANY EXPENDITURE CLAIMED BY THE ASSESSEE, THE AO IS REQUIRED TO VERI FY WHETHER THE ASSESSEE HAD CARRIED OUT CERTAIN WORK OR NOT FOR WH ICH SUCH EXPENDITURE IS CLAIMED. IN CASE, IF HE SATISFIED, THAT NO SU CH WORK WAS CARRIED OUT, THEN IT WOULD GIVE RISE TO SUSPICION ABOUT THE GENU INENESS OF THE CLAIM OF ITA NO.2689/AHD/2011(REVENUE) AND CO NO.271/AHD/2011 (ASSESSEE) DCIT VS. PD CONSTRUCTION CO. ASST.YEAR 2007-08 - 7 - THE ASSESSEE. THEREFORE, IN OUR CONSIDERED VIEW, FOR VERIFYING THE VERACITY OF CLAIM OF EXPENDITURE, THE AO HAS TO FIN D OUT THE ACTIVITY FOR WHICH EXPENDITURE WAS MADE, NATURE OF EXPENDITURE, PERSONS TO WHOM THE PAYMENT WAS MADE AND ALSO THE MODE OF PAYMENT. FUR THER, IF THE AO ON THE BASIS OF SUCH VERIFICATION IS NOT SATISFIED ABO UT THE VERACITY OF THE CLAIM OF THE EXPENDITURE, IN THAT EVENT, HE IS REQU IRED TO CONFRONT THE ASSESSEE IN THE INTEREST OF PRINCIPLES OF NATURAL J USTICE. IN THE CASE IN HAND, THE AO DID NOT ACCEPT THE CLAIM OF THE ASSESS EE ON THE GROUND THAT THUMP IMPRESSION OF TWO DIFFERENT PERSONS TALLY EXA CTLY THE SAME, THE LABOURERS HAVE BEEN PAID WAGES RANGING FROM RS.500 TO RS.5000 FOR A SINGLE DAY. THESE PAYMENTS CANNOT BE FOR THE DAILY WAGES OF UNSKILLED LABOUR HIRED ON DAILY BASIS AND MOST OF THE PAYMENT S WERE MADE IN CASH, THEREFORE, HE COULD NOT VERIFY AS TO WHOM THE PAYME NTS WERE MADE. UNDISPUTEDLY, THE AO HAS NOT CONFRONTED WITH THE AS SESSEE ABOUT THE SIMILARITY OF FINGER PRINTS, ETC. MOREOVER, IT IS OBSERVED THAT THE ASSESSEE HAD CLAIMED LABOUR CHARGES IN THE EARLIER YEARS AND SUBSEQUENT YEARS, WHICH HAS BEEN ACCEPTED BY THE REVENUE. UNDER THES E FACTS, WE ARE OF THE VIEW THAT THE AO WAS NOT JUSTIFIED IN MAKING TH E DISALLOWANCE WITHOUT CONFRONTING THE ASSESSEE AND ALSO GIVING A FINDING ON FACT WHETHER THE ASSESSEE HAD CARRIED OUT SOME WORK OR N OT FOR WHICH THE EXPENDITURE HAD BEEN CLAIMED. THEREFORE, THE GROUN D RAISED BY THE REVENUE IS REJECTED. AS A RESULT, REVENUES APPE AL IS DISMISSED. ITA NO.2689/AHD/2011(REVENUE) AND CO NO.271/AHD/2011 (ASSESSEE) DCIT VS. PD CONSTRUCTION CO. ASST.YEAR 2007-08 - 8 - 5. NOW, WE TAKE UP THE CROSS OBJECTION NO.271/AHD/2 011 FOR AY 2007-08 FILED BY THE ASSESSEE (ARISING OUT OF ITA N O.2689/AHD/2011 FOR AY 2007-08-REVENUES APPEAL). THE ASSESSEE HAS RAI SED FOLLOWING GROUNDS IN ITS CROSS-OBJECTION:- 1. LD.CIT(A) ERRED IN LAW AND ON FACTS IN CONFIRM ING LUMPSUM DISALLOWANCE OF RS.5,00,000/- OUT OF LABOUR CHARGES EXPENDED AS WELL FROM LABOUR EXPENSES MADE WITHOUT DEDUCTION OF TDS. LD.CIT(A) DESPITE HOLDING THE CLAIM OF THE APPELLAN T TO BE GENUINE CONFIRMED LUMPSUM DISALLOWANCE OF LEGITIMAT E BUSINESS EXPENSE WITHOUT GIVING ANY COGENT REASONS. LD.CIT( A) OUGHT TO HAVE DELETED DISALLOWANCE BY AO OF PAYMENT OF LABOU R CHARGES IN TOTO. 2. LD.CIT(A) ERRED IN CONFIRMING ADHOC DISALLOWAN CE OF RS.64,960/- MADE BY AO @ 10% OF TOTAL JCB HIRE CHAR GES WITHOUT TAKING INTO CONSIDERATION SUBMISSIONS MADE BY THE APPELLANT. LD.CIT(A) OUGHT TO HAVE DELETED SUCH A DHOC DISALLOWANCE OF LEGITIMATE BUSINESS EXPENSES. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, EDIT, DEL ETE, CHANGE OR MODIFY ALL OR ANY OF THE GROUND BEFORE OR AT THE TI ME OF HEARING. 5.1. APROPOS TO GROUND NO.1, THE LD.SR.COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE LD.CIT(A) WAS NOT JUSTIFIED IN C ONFIRMING LUMPSUM DISALLOWANCE OF RS.5,00,000/-, DESPITE HAVING COME TO THE CONCLUSION THAT IN PRECEDING YEARS CLAIM OF THE ASSESSEE WAS ACCEPT ED. HE SUBMITTED THAT THE AUTHORITIES BELOW HAVE BASED THEIR FINDING ON T HE MERE BASIS OF CONJECTURES AND SURMISES. ITA NO.2689/AHD/2011(REVENUE) AND CO NO.271/AHD/2011 (ASSESSEE) DCIT VS. PD CONSTRUCTION CO. ASST.YEAR 2007-08 - 9 - 5.2. ON THE CONTRARY, LD.SR.DR OPPOSED THE SUBMISSI ON OF THE LD.SR.COUNSEL FOR THE ASSESSEE AND SUBMITTED THAT T HE ASSESSEE FAILED TO EXPLAIN THE DISCREPANCIES AS POINTED OUT BY THE AO. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE ASSESSEE HAS BEEN CLAIMING THE LABOUR EXPENSES, ADHOC DISALLOWANCE OF RS.50,000/- AND RS.45,000/- WAS ALSO MADE IN THE PRECEDING YEAR. IN THE YEAR UNDER APPEAL, THE LD.CIT(A) HAS SUSTAINED THE DISALLOWANCE TO THE EXTENT OF RS.5,00,000/- TO COVER UP THE DISCREP ANCIES AS POINTED OUT IN THE ASSESSMENT ORDER. IT IS SETTLED POSITION OF LA W THAT THE ASSESSEE IS REQUIRED TO SATISFACTORILY EXPLAIN THE EXPENDITURE WHICH IS BEING CLAIMED AS LABOUR EXPENDITURE. IN THE PRESENT CASE, THE L .CIT(A), AFTER CONSIDERING THE PRECEDING YEAR AS WELL AS THE FACTS OF THE PRESENT CASE, HAS ESTIMATED THE DISALLOWANCE AT RS.5,00,000/- AS THERE ARE INSTANCES WHEN THE ASSESSEE HAS NOT GIVEN ANY PLAUSIBLE EXPLA NATION IN RESPECT OF EXPENDITURE SO CLAIMED. UNDER THESE FACTS, NO INTE RFERENCE IS CALLED FOR FROM THE IMPUGNED ORDER. ACCORDINGLY, THIS GROUND OF CROSS-OBJECTION IS REJECTED. 7. GROUND NO.2 OF ASSESSEES CROSS-OBJECTION RELATE S TO SUSTAINING THE EXPENDITURE OF RS.64,960/- OF JCB HIRE CHARGES. TH E LD.SR.COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE AUTHORITIES BELOW W ERE NOT JUSTIFIED IN MAKING AND SUSTAINING THE DISALLOWANCE. HE SUBMITT ED THAT AUTHORITIES ITA NO.2689/AHD/2011(REVENUE) AND CO NO.271/AHD/2011 (ASSESSEE) DCIT VS. PD CONSTRUCTION CO. ASST.YEAR 2007-08 - 10 - BELOW FAILED TO APPRECIATE THE FACT THAT IN EARLIER YEAR, SUCH EXPENDITURE WAS ALLOWED. HE SUBMITTED THAT THE ASSESSEE HAS IN CURRED LEGITIMATE BUSINESS EXPENDITURE. 7.1. ON THE CONTRARY, LD.SR.DR OPPOSED THE SUBMISSI ON OF THE LD.SR.COUNSEL FOR THE ASSESSEE AND SUBMITTED THAT T HE AUTHORITIES BELOW HAVE GIVEN FINDING ON FACT THAT THE ASSESSEE FAILED TO GIVEN JUSTIFICATION OF EXPENDITURE WITH SUPPORTING EVIDENCE. THE LD.SR.DR SUBMITTED THAT IT IS INCUMBENT UPON THE ASSESSEE TO PROVE THAT EXPENDITU RE WAS, IN FACT, INCURRED. IN THE ABSENCE OF SUPPORTING EVIDENCE, T HE CLAIM OF THE ASSESSEE HAS RIGHTLY BEEN REJECTED. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE LD.CIT(A) HAS GIVEN A FINDING ON FACT IN PARA-5 .2 OF HIS ORDER BY OBSERVING AS UNDER:- 5.2. THE AO OBSERVED THAT OUT OF THE TOTAL JCB H IRE CHARGES OF RS.17,37,382/- A SUM OF RS.6,49,602/- WERE PAID IN CASH ON WHICH NO TAX WAS DEDUCTED; AND THE VOUCHERS PRODUCED WERE SE LF MADE AND DID NOT CONTAIN THE DETAILS LIKE THE SITE, ADDRESS OF P ERSON ETC. THEREFORE, AO DISALLOWED 10% OF THE EXPENSES INCURRED IN CASH WHICH WORKED OUT TO RS.64,960/-. THE CONTENTIONS OF THE LEARNED AR IN THIS REGARD ARE GENERAL, VAGUE AND DO NOT CONTROVERT THE OBSERVATIO NS OF THE AO. THE IMPUGNED DISALLOWANCE IS UPHELD. THESE GROUNDS OF APPEAL ARE DISMISSED. 8.1. THE ABOVE FINDING OF LD.CIT(A) IS NOT CONTRO VERTED BY THE ASSESSEE BY PLACING ANY CONTRARY MATERIAL ON RECORD. THEREF ORE, WE DO NOT SEE ANY ITA NO.2689/AHD/2011(REVENUE) AND CO NO.271/AHD/2011 (ASSESSEE) DCIT VS. PD CONSTRUCTION CO. ASST.YEAR 2007-08 - 11 - REASON TO INTERFERE WITH THE ORDER OF THE LD.CIT(A) , SAME IS HEREBY UPHELD AS IT WAS INCUMBENT UPON THE ASSESSEE TO PROVE THE EXPENDITURE WITH SUPPORTING EVIDENCE WHEN PAYMENT IS MADE IN CASH AN D NO TAX WAS DEDUCTED THEREON. THUS, THIS GROUND OF ASSESSEES CROSS-OBJECTION IS ALSO REJECTED. 9. IN THE COMBINED RESULT, THE APPEAL OF THE REVENU E AND THE CROSS OBJECTION FILED BY THE ASSESSEE BOTH ARE DISM ISSED. ORDER PRONOUNCED IN THE COURT ON THURSDAY, THE 4 TH DAY OF FEBRUARY, 2016 AT AHMEDABAD. SD/- SD/- ( ) ( ) ( PRAMOD KUMAR ) ( KUL BHARAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 04/ 02 /2016 /(..$ , %.$../ T.C. NAIR, SR. PS !'#$%&%# / COPY OF THE ORDER FORWARDED TO : 1. ' / THE APPELLANT 2. #' / THE RESPONDENT. 3. 012 3 / CONCERNED CIT 4. 3 ( ) / THE CIT(A)-XX, AHMEDABAD 5. 4%5 $12 , ( 12 + , 0 / DR, ITAT, AHMEDABAD 6. 578 9& / GUARD FILE. / BY ORDER, #4 //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD