DCIT, Meerut V. Sh. Ranjit Singh & Co., Meerut

ITA 2705/DEL/2016

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 6460 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 8 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-01-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2011-2012
• Appeal Filed On: 12-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: YOGESH SHARMA SENIOR
• Assessee Lawyers: RAVINDRA AGGARWAL
• Keywords: Rule of consistency
• Section: 40A(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCHES (CAMP AT MEERUT) BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NO.2705/DEL./2016 (ASSESSMENT YEAR : 2011-12) DCIT, CIRCLE 2, VS. M/S. RANJIT SINGH & COMPANY, MEERUT. 188/11, ABU PLAZA, ABU LANE, MEERUT. (PAN : AABFR5656G) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI RAVINDRA AGGARWAL, FCA REVENUE BY : SHRI YOGESH SHARMA, SENIOR DR DATE OF HEARING : 07.01.2019 DATE OF ORDER : 16.01.2019 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : THE APPELLANT, DCIT, CIRCLE 2, MEERUT (HEREINAFTER REFERRED TO AS THE REVENUE) BY FILING THE PRESENT APPEAL, SOUGHT TO SET ASIDE THE IMPUGNED ORDER DATED 26.02.2016 PASSED BY LD. C IT (APPEALS), MEERUT QUA THE ASSESSMENT YEAR 2012-13 O N THE GROUNDS INTER ALIA THAT :- 1. WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE C ASE, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AND FACT IN DELETING THE ADDITION OF RS.4,35,16,201/- M ADE BY THE AO DUE TO 30% DISALLOWANCE OF CERTAIN EXPENSES CLAIMED BY THE ASSESSEE IN P&L A/C IGNORING THE FACT THAT THE ASSE SSEE FAILED TO ITA NO.2705/DEL./2016 2 PRODUCE ANY DOCUMENTARY EVIDENCE TO SUBSTANTIATE CA SH PAYMENT IN RESPECT OF THE SAID EXPENSES AND IS MAINTAINING NEITHER ANY DOCUMENT OF MUSTER ROLL PAYMENT NOR ANY SELF MADE C ASH VOUCHER FOR THESE EXPENSES. 2. WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CA SE, THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEAL S) MAY BE SET ASIDE AND THAT OF THE AO RESTORED. 2. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDICAT ION OF THE CONTROVERSY AT HAND ARE : THE ASSESSEE IS INTO THE BUSINESS OF TURNKEY CONSTRUCTION OF HIGH VOLTAGE TRANSMISSION L INE FOR POWER GRID CORPORATION OF INDIA LTD., UP, POWER TRANSMISS ION CORPORATION LTD. & POWER TRANSMISSION CORPORATION O F UTTARAKHAND LTD. ETC. SINCE 1978. AO MADE ADDITION OF RS.4,35,16,201/- ON ACCOUNT OF BOGUS PAYMENT AND VI OLATION OF SECTION 40A(3) OF THE INCOME-TAX ACT, 1961 (FOR SHO RT THE ACT) BY DISALLOWING THE 30% DISALLOWANCE AMOUNTING TO RS.4, 35,16,201/- OUT OF CLAIMED EXPENSES OF RS.14,50,54,002/-. 3. ASSESSEE CARRIED THE MATTER BY WAY OF AN APPEAL BEFORE THE LD. CIT (A) WHO HAS DELETED THE ADDITION BY PARTLY ALLOWING THE APPEAL. FEELING AGGRIEVED, THE REVENUE HAS COME UP BEFORE THE TRIBUNAL BY WAY OF FILING THE PRESENT APPEAL. 4. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS R ELIED UPON AND ITA NO.2705/DEL./2016 3 ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN T HE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. 5. UNDISPUTEDLY, THE ASSESSEE HAS MADE CASH EXPENDI TURE OF RS.14,50,54,002/- ON THE BASIS OF MUSTER ROLL. AO DISALLOWED 30% OF THE EXPENDITURE TO COVER UP POSSIBLE LEAKAGE AS BOGUS PAYMENT IN VIOLATION OF SECTION 40A(3). 6. PERUSAL OF THE IMPUGNED ORDER PASSED BY THE LD. CIT (A) SHOWS THAT UNDISPUTEDLY, IT IS RIGHTLY OBSERVED THA T CASH EXPENSES INCURRED BY THE ASSESSEE DURING THE YEAR UNDER ASSE SSMENT ARE 65% AND NOT 80% AS HAS BEEN HELD BY AO. IT IS ALSO NOT IN DISPUTE THAT THE AO HAS IMPOUNDED THE BOOKS OF ACCOUNT OF THE AS SESSEE DURING THE ASSESSMENT PROCEEDINGS AND HAS NOT DISPUTED THE SAME RATHER PROCEEDED TO MAKE THE DISALLOWANCE ON ESTIMATE BASI S BY INVOKING THE PROVISIONS CONTAINED U/S 40A(3) OF THE ACT. 7. THE LD. CIT (A) HAS ALSO TAKEN INTO ACCOUNT THE FACT THAT IN THE PAST, NET PROFIT @ 7.5% HAS BEEN HELD TO BE FAI R BY THE REVENUE AUTHORITIES AND SIMILAR VIEW HAS BEEN TAKEN IN AYS 2004-05, 2005- 06, 2006-07 AND 2007-08 WHICH HAS ALSO BEEN CONFIRM ED BY THE COORDINATE BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR AY 2011-12 IN ITA NO.3985/DEL/2015 ORDER DATED 23.03.2 018 BY UPHOLDING THE FINDING RETURNED BY LD. CIT (A) WHO H AS CONSIDERED THE NET PROFIT RATE ON RECEIPT FROM ERECTION WORK @ 7.5%. EVEN ITA NO.2705/DEL./2016 4 OTHERWISE, WHEN BOOKS OF ACCOUNT HAVE NOT BEEN DISP UTED BY THE REVENUE AUTHORITIES AND LD. CIT (A) HAS DELETED THE ADDITION BY FOLLOWING THE RULE OF CONSISTENCY, THERE IS NO JUST IFICATION IN RESORTING TO GUESSWORK AND ESTIMATION. IN THESE CI RCUMSTANCES, DISALLOWANCE MADE ON AD HOC BASIS WITHOUT ASSIGNING ANY REASON AS TO WHY 30% DISALLOWANCE OF EXPENSES HAVE BEEN MADE, IS NOT SUSTAINABLE IN THE EYES OF LAW. SO, WE ARE OF THE CONSIDERED VIEW THAT LD. CIT (A) HAS RIGHTLY DECIDED THE ISSUE IN Q UESTION. SO, FINDING NO ILLEGALITY OR PERVERSITY IN THE FINDINGS RETURNED BY THE LD. CIT (A), THE PRESENT APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON THIS 16 TH DAY OF JANUARY, 2019. SD/- SD/- (N.S. SAINI) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 16 TH DAY OF JANUARY , 2019 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A), MEERUT. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.