Asstt.Commissioner of Income Tax ,Circle-1, Nagpur V. M/s Ganpati Builders, Nagpur

ITA 279/NAG/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 93399 (ITAT-NAGPUR)
• Duration Of Justice: 1 year(s) 11 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-05-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 19-06-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAMESH DAWANDE
• Section: 143(3)

Judgement Text

1 ITA NO. 279/NAG/2013 IN THE INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR. BEFORE SHRI MUKUL K. SHRAWAT, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER. I.T.A. NO.279/NAG/2013 ASSESSMENT YEAR :2008-09. ASSTT. COMMISSIONER OF INCOME-TAX, M/S GANPATI BUILDERS, CIRCLE-1, NAGPUR. V/S. 3, NKY TOWERS, AJNI CHOWK, NAGPUR-440015. PAN AAGFG 6652F APPELLANT. RESPONDENT. APPELLANT BY : SHRI RAMESH DAWANDE RESPONDENT BY : SH RI K.P. DEWANI. DATE OF HEARING - 14-05-2015 DATE OF PRONOUNCEMENT: 27 TH MAY,2015 O R D E R PER SHRI MUKUL K. SHRAWAT, J.M. THIS IS AN APPEAL FILED BY THE REVENUE ARISING FR OM THE ORDER OF LEARNED CIT(APPEALS)-II, NAGPUR DATED 14-03-2013. THE GR OUNDS RAISED BY THE REVENUE ARE REPRODUCED BELOW: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE CIT(A) ERRED IN DELETING THE DISALLOWANCE OF EXPENDITURE OF ` .30,30,000/-. 2 ITA NO. 279/NAG/2013 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE CIT(A) ERRED IN DELETING THE DISALLOWANCE OF EXPENDITURE OF ` .41,62,000/- IN RESPECT OF SITE DEVELOPMENT EXPENSES. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE CIT(A) ERRED IN DELETING THE DISALLOWANCE OF COMMISSION P AYMENT OF ` .18,11,100/- 2. AN ASSESSMENT WAS MADE UNDER SECTION 143(3) DATE D 31-12-2010 IN THE STATUS OF A FIRM STATED TO BE IN THE BUSINESS OF RE AL ESTATE. IN THE BEGINNING OF THE ASSESSMENT ORDER THE ASSESSING OFFICER HAS NOTED TH AT A RETURN OF INCOME WAS FILED DECLARING INCOME OF ` .2,11,19,400/- WHICH WAS ACCOMPANIED BY A TAX AUDIT REPORT AND CONNECTED FINANCIAL STATEMENTS. THE ASSE SSING OFFICER HAS ALSO NOTED THAT THE BOOKS OF ACCOUNT HAVE BEEN PRODUCED WHICH WERE TEST CHECKED. 3. WE HAVE EXAMINED THE IMPUGNED ADDITIONS WHICH WE RE CHALLENGED IN THE GROUNDS OF APPEAL. THE ASSESSEE HAD SHOWN PURCHASE OF MATERIAL. HOWEVER, THE ASSESSING OFFICER HAS PRESUMED THAT IT WAS NOT FULL Y USED FOR THE PURPOSE OF THE BUSINESS. THEREFORE, AN ADHOC 15% WAS DISALLOWED. 4. LIKEWISE IN RESPECT OF SITE DEVELOPMENT EXPENSE S THE ASSESSING OFFICER HAS GIVEN THE SAME REASONING AND DISALLOWED 15% OF THE EXPENDITURE. 5. THE ASSESSEE HAD CLAIMED PAYMENT OF COMMISSION W HICH WAS ALSO SUBJECTED TO TDS. HOWEVER, THE ASSESSING OFFICER WAS OF THE VIEW THAT MERELY DEDUCTION OF TDS HAS NOT PROVED THAT THE EXPENDITU RE WAS GENUINE OR THE PAYEES WERE IN EXISTENCE , THEREFORE, 25% OF THE COMMISSIO N PAYMENT WAS DISALLOWED. BEING AGGRIEVED BY THESE ADDITIONS, AN APPEAL WAS F ILED. 6. BEFORE THE FIRST APPELLATE AUTHORITY IT WAS CONT ESTED THAT THE IMPUGNED ADDITIONS WERE MERELY ON AN ESTIMATION SPECIALLY WH EN THE ASSESSING OFFICER HAS 3 ITA NO. 279/NAG/2013 NOT POINTED OUT ANY DEFECT IN THE BOOKS OF ACCOUNT WHICH WERE ALSO DULY AUDITED. ACCEPTING THE PLEA OF THE ASSESSEE LEARNED CIT(APPE ALS) HAS HELD THAT ADHOC DISALLOWANCE SHOULD NOT HAVE BEEN MADE BY THE ASSES SING OFFICER SPECIALLY WHEN THE ASSESSEE HAS SUFFICIENT EVIDENCE IN SUPPORT OF THE CLAIM. 7. WITH THIS BRIEF FACTUAL BACKGROUND, WE HAVE HEAR D BOTH THE SIDES AND PERUSED THE MATERIAL PLACED BEFORE US. AT THE OUTSE T, WE HAVE NOTED THAT THE NET PROFIT DECLARED BY THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION WAS BETTER THAN THE IMMEDIATE PRECEDING ASSESSMENT YEAR. WE HAVE AL SO NOTED THAT THE ASSESSING OFFICER HAS NOT GIVEN ANY COGENT REASONING FOR SUCH ADHOC DISALLOWANCES. RATHER THE ASSESSING OFFICER HAS NOT CONFRONTED THE ASSESS EE ABOUT ANY DEFECT IN THE BOOKS OF ACCOUNT OR HIS INTENTION SUGGESTING PROPOR TIONATE DISALLOWANCE ON ADHOC BASIS. NATURALLY THIS TYPE OF ADHOC ADDITIONS ARE N OT TO BE SUSTAINED IN THE EYES OF LAW. THEREFORE, WE HEREBY AFFIRM THE REASONING GIVE N BY THE LEARNED CIT(APPEALS) WHICH WAS BASED UPON THE FACTS OF THE CASE. RESULTA NTLY, WE FIND NO FORCE IN THE GROUNDS OF THE REVENUE AND THE SAME ARE HEREBY DISM ISSED. 8. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 27 TH DAY OF MAY, 2015. SD/- SD/- (SHAMIM YAHYA) (MUKUL K. SHRAWAT) ACCOUNTANT MEMBER JUDICIAL MEMBER. NAGPUR, DATED: 27 TH MAY, 2015. 4 ITA NO. 279/NAG/2013 COPY OF ORDER FORWARDED TO : 1. THE ASSESSEE. 2. REVENUE. 3. THE CIT(A) 4. THE CIT, NAGPUR. 5. THE D.R., ITAT, NAGPUR. 6. GUARD FILE. T RUE COPY. BY ORDER ASSISTANT REGISTRAR, ITAT, N AGPUR WAKODE.