DCIT 20(2), MUMBAI V. PRUTHVI GAURICHAND SHAH, MUMBAI

ITA 280/MUM/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 2115 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-11-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2010-2011
• Appeal Filed On: 12-01-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation; Wrong claim
• Section: 143(3); 133(6); 68

Judgement Text

ITA NO.280/M/2015 PRUTH VI GAURICHAND SHAH 1 IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH C, MU MBAI BEFORE SHRI R.C.SHARMA, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO.280/MUM/2015 FOR A Y : 2010-11) DCIT, 20 (2), ROOM NO. 217, 2 ND FLOOR, PIRAMAL CHAMBERS , LALBAUG, PAREL MUMBAI-400012 VS. SH. PRU THVI GAURICHAND SHAH 1/3, MODERN BUILDING, JAKARIA BUNDER ROAD, COTTON GREEN, MUMBAI-40001 5 PAN : AAFPS0757D (APPELLANT) (RESPONDENT) REVENUE BY SH. D.V. SINGH -DR ASSESSEE BY SH. ANIL THAKKER -AR DATE OF HEARING 22.08.2016 DATE OF PRONOUNCEMENT 04.11.2016 ORDER UNDER SECTION 254(1) OF INCOME TAX ACT PER PAWAN SINGH JUDICIAL MEMBER : 1. THIS APPEAL UNDER SECTION 253 OF THE INCOME TAX ACT (ACT) IS DIRECTED BY REVENUE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-29, MUMBAI DATED 13 TH OCTOBER 2014 FOR ASSESSMENT YEAR(AY) 2010-11. THE REVENUE HAS RAISED FOLLOWING GROUNDS OF APPEAL: (I) LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS.4 9,00,222/- ON ACCOUNT OF UNAPPROVED PAYMENT TO THE SUBCONTRACTORS/ LABOUR CH ARGES. (II) LD. CIT(A) IN RESTRICTING THE DISALLOWANCE OF MOTO R CAR EXPENSES TO 5% AS AGAINST 20%.. (III) LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS. 5, 71,3000/- UNDER SECTION 68 OF THE ACT . 2. BRIEF FACTS OF THE CASE ARE THAT ASSESSEE IS ENGAGE D IN CIVIL AND LABOUR CONTRACTS FROM GOVERNMENT AND LOCAL BODIES AND IS P ROPRIETOR OF M/S PRUTHVI CONSTRUCTION. THE ASSESSEE FILED HIS RETURN OF INCOME FOR RELEVANT ASSESSMENT YEAR ON 24 SEPTEMBER 2010 DECLARING TOTA L INCOME OF RS.32,73,470/-. THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) ON 13 TH MARCH 2013. THE ASSESSING OFFICER (AO) WHILE PASSIN G THE ASSESSMENT ITA NO.280/M/2015 PRUTH VI GAURICHAND SHAH 2 ORDER BESIDES THE OTHER ADDITION/DISALLOWANCE, DISA LLOWED A SUM OF RS. 49,00,222/- ON ACCOUNT OF PAYMENT TO SUBCONTRACTOR/ LABOUR CHARGES, DISALLOWED A SUM OF RS. 82,596/- BEING 20% OF MOTOR CAR EXPENSES AND ADDITION OF RS. 5,71,300/- ON ACCOUNT OF CASH LOAN UNDER SECTION 68 OF THE ACT. AGGRIEVED BY THE ORDER OF AO THE ASSESSEE FILE D APPEAL BEFORE THE CIT(A) AND SUCCEEDED THEREIN. THUS, BEING AGGRIEVED OF THE ORDER OF LD CIT(A) THE REVENUE HAS FILED PRESENT APPEAL BEFORE US. 3. WE HAVE HEARD LD DEPARTMENTAL REPRESENTATIVE (DR) F OR REVENUE AND THE LD AUTHORIZED REPRESENTATIVE (DR) FOR ASSESSEE AND PER USED THE MATERIAL AVAILABLE ON RECORD. FIRST GROUND OF APPEAL FOR OUR CONSIDERATION RELATES WITH DELETION OF PAYMENTS TO SUBCONTRACTOR /LABOUR CHARGES. THE LD. DR FOR THE REVENUE ARGUED THAT THE LD CIT(A) DELETED THE A DDITION WITHOUT ANY BASIS. IT WAS FURTHER ARGUED THAT THE PARTIES TO WH OM THE PAYMENTS WERE MADE WERE NOT GENUINE; NONE OF THE PARTIES TO WHOM THE PAYMENTS WERE ALLEGEDLY MADE APPEARED DURING THE ASSESSMENT. THE LD DR PRAYED THAT ORDER OF AO BE RESTORED AND THAT LD CIT(A) BE SET A SIDE. ON THE OTHER HAND THE LEARNED AR FOR ASSESSEE ARGUED THAT ALL THE PAY MENTS WERE MADE TO THE GENUINE PARTIES WHO HAD EXECUTED THE WORK. THE TDS WAS DEDUCTED FROM THE PAYMENTS MADE TO THE SUBCONTRACTOR. NO NOTICE F OR PERSONAL APPEARANCE WAS ISSUED BY AO AT THE TIME OF ASSESSMENT PROCEEDI NG. ALL THE FOUR PARTIES FILED THEIR REPLY BEFORE AO. BEFORE US THE LD AR FO R ASSESSEE FILED THE COPIES OF THE REPLY OF ALL THOSE PARTIES. 4. WE HAVE CONSIDERED THE RIVAL CONTENTION OF THE PART IES AND PERUSED THE ORDER OF AUTHORITIES BELOW. THE AO MADE THE DISALLO WANCE HOLDING THAT NOTICES UNDER SECTION 133(6) WERE ISSUED TO THE SUB CONTRACTOR WHICH HAVE BEEN RETURNED BY THE POSTAL AUTHORITIES AS UNDELIVE RED, THUS THE PARTIES ARE NOT GENUINE. THE AO ASKED TO THE ASSESSEE TO PRODU CE THE DOCUMENT RELATED WITH IDENTITY OF THE SUBCONTRACTOR, INCOME TAX RETU RNS, COMPUTATION OF INCOME, BANK STATEMENT. THE ASSESSEE FILED HIS REPL Y DATED 6 TH MARCH 2013 AND CONTENDED THAT THAT ALL THE PARTIES TO WHOM THE NOTICES WERE ISSUED HAVE ITA NO.280/M/2015 PRUTH VI GAURICHAND SHAH 3 FILED THEIR REPLY DATED 15 TH JAN 2013. IT WAS FURTHER CONTENDED THAT THE SUBCONTRACTOR HAD PROVIDED THE LABOUR FORCE ONLY AN D NOT THE BUILDING MATERIALS. THE TDS WAS DEDUCTED AS PER THE INCOME-T AX ACT, THE CERTIFICATE OF TDS WAS ISSUED. IT WAS FURTHER CONTENDED THAT MA RE RETURN OF NOTICE WOULD NOT PROVE THAT PARTIES ARE NON-EXISTENT OR NO T GENUINE. THE SUB- CONTRACTORS (LABOUR CONTRACTOR) ARE LIVING IN THE S LUM AREAS AND ARE TRAVELLING IN SEARCH OF WORK. THE CONTENTION OF ASS ESSEE WAS NOT ACCEPTED BY AO. THE AO CONCLUDED THAT PARTIES FURNISHED THEI R REPLY IS FACTUALLY INCORRECT. THE POSTAL AUTHORITIES HAVE RETURNED THE LETTERS ADDRESS TO THOSE PARTIES AS UNDELIVERED ON ACCOUNT OF INCOMPLETE ADD RESS AND THE ASSESSEE MUST HAVE HIMSELF PREPARED THE REPLIES ON BEHALF OF PARTIES UPON HIM THE NOTICES WERE NOT SERVED. THE REPLIES WERE FURNISHED IN THE RECEIPT COUNTER ONLY . THE LANGUAGE USED IN ALL REPLY IS AND PRINT IS APPARENTLY THE SAME. THE ASSESSEE FAILED TO PRODUCE ALL THE PERSONS, THUS TH E IDENTITY OF THE PARTIES WAS NOT ESTABLISHED AND HENCE, THE ASSESSEE FAILED TO PROVE THE GENUINENESS OF THE SUB-CONTRACTOR. THE LD. CIT(A) WHILE CONSIDE RING THIS GROUND CONCLUDED THAT THE ASSESSEE HAS PRODUCED ALL RELEVA NT DETAILS SHOWING THE PAYMENTS MADE TO THE CONTRACTOR IN THE SHAPE OF BIL LS RAISED FOR WORK DONE, LEDGER ACCOUNT OF THESE PARTIES, COPY OF COMPUTATIO N OF INCOME, ITR RETURNS FOR AY 2010-11 SHOWING THE INCOME RECEIVED FROM THE ASSESSEE, COPIES OF BANK STATEMENTS AND CONFIRMATION OF THESE PARTIES. LD. CIT(A) FURTHER CONCLUDED THAT MERELY RETURNED OF LETTER UNDELIVERE D DOES NOT LEAVES TO THE CONCLUSION THAT PAYMENTS MADE TO THESE PARTIES ARE NOT GENUINE. THE AO HAS NOT PROVED BY PLACING ANY OTHER EVIDENCE THAT S UCH PARTIES ARE ACTUALLY BOGUS AND DELETED THE DISALLOWANCES. WE HAVE SEEN T HAT VARIOUS SUB- CONTRACTOR HAVE FILED THEIR REPLY BEFORE THE AO ALO NG WITH THEIR COPY OF LEDGER ACCOUNT, BANK STATEMENT, ITR RETURN AND NATU RE OF PAYMENT. THE AO MERELY SUSPECTED THAT THE LINE OF REPLY BY ALL PART IES IS SIMILAR. THUS, WE DO NOT FIND ANY INFIRMITY OR ILLEGALITY IN THE ORDER O F LD. CIT(A). THUS, THIS GROUND OF APPEAL IS DISMISSED. ITA NO.280/M/2015 PRUTH VI GAURICHAND SHAH 4 5. GROUND NO.2 RAISED IN THE PRESENT APPEAL RELATES TO RESTRICTING THE DISALLOWANCE OF MOTORCAR EXPENSES TO 5% AGAINST 20% MADE BY AO. THE LD. DR FOR THE REVENUE RELIED UPON THE ORDER OF AO AND PRAYED TO RESTORE THE ORDER OF AO BY SETTING-ASIDE THE ORDER OF LD. C IT(A). ON THE OTHER HAND, THE LD. AR FOR ASSESSEE SUPPORTED THE ORDER OF LD. CIT(A). WE HAVE SEEN THAT ASSESSEE HAS SHOWN MOTORCAR EXPENSES OF RS. 4, 12,981/- WHICH CONSIST OF CAR EXPENSES (MAY BE FUEL EXPENSES) OF RS. 79,34 1/-, INSURANCE RS. 29,880/-, DEPRECIATION OF RS. 2,30,311/-. THE AO IS SUED THE SHOW-CAUSE NOTICE TO THE ASSESSEE THAT NO SEPARATE CAR IS MAIN TAINED FOR PERSONAL PURPOSE AND AS TO WHY THE DISALLOWANCE @ 20% OF MOT ORCAR EXPENSES SHOULD NOT BE DISALLOWED. THE ASSESSEE FILED HIS RE PLY AND CONTENDED THAT HE MAINTAINED THREE MOTORCAR WHICH ARE REFLECTING IN T HE BALANCE-SHEET AND ALL CARS ARE USED FOR RUNNING THE BUSINESS AS CONTRACTU AL OBLIGATION. TWO OF THE CAR OWNED BY ASSESSEE ARE PROVIDED TO HIS EMPLOYEE TO VISIT THE SITE ON REGULAR BASIS. THE CONTENTION OF THE ASSESSEE WAS N OT ACCEPTED BY AO, THE AO CONCLUDED THAT NO LOGBOOK HAVE BEEN MAINTAINED T O PROVE THAT CAR WAS NOT USED FOR PERSONAL PURPOSE AND DISALLOWED 20% OF THE EXPENSES. LD. CIT(A) WHILE CONSIDERING THIS GROUND CONCLUDED THAT USE OF MOTORCAR ALWAYS CONTAIN SOME PERSONAL ELEMENT AND IT IS DIFF ICULT TO MAINTAIN THE RECORD REGARDING PERSONAL USE AND USE FOR THE BUSIN ESS PURPOSE AND CONFIRMED THE ONLY 5% OF THE DISALLOWANCE. THE LD. DR FOR THE REVENUE WAS UNABLE TO CONVINCE US AS TO WHY THE 5% OF EXPEN SES IS NOT SUFFICIENT DUE TO PERSONAL ELEMENT FOR USE OF VEHICLE. MOREOVE R, WE HAVE SEEN THAT MORE THAN HALF OF THE AMOUNT (RS. 2,30,311/-) ON AC COUNT OF DEPRECIATION AND RS. 29,880/- WAS CLAIMED ON ACCOUNT OF INSURANC ES. THUS, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE FINDING OF LD . CIT(A). THUS, THIS GROUND OF APPEAL IS ALSO DISMISSED. 6. GROUND NO.3 RAISED IN THE PRESENT APPEAL RELATES TO DELETION THE ADDITION OF RS. 5,71,300/- MADE U/S 68 OF THE I.T. ACT. LD. DR FOR THE REVENUE ARGUED THAT THE ASSESSEE PURCHASED A FLAT IN KANDIVALI ON 01.07.2009 AND MADE THE ITA NO.280/M/2015 PRUTH VI GAURICHAND SHAH 5 PAYMENT OF RS. 9,00,000/- IN CASH, THE ASSESSEE WAS ASKED TO PROVE THE SOURCE OF PAYMENT AND AVAILABILITY OF FUND. THE ASS ESSEE FURNISHED THE CASHBOOK WHEREIN ASSESSEE HAS SHOWN TO HAVE RECEIVE D CASH LOAN FROM 30 PERSONS. THE ASSESSEE COULD NOT PROVE THOSE PARTIES TO PROVE THE IDENTITY, CAPACITY AND GENUINENESS OF TRANSACTION. ON THE OTH ER HAND, LD. AR FOR ASSESSEE ARGUED THAT ASSESSEE AVAILED THE LOAN FROM 30 PERSONS AND FILED THE COPY OF PAN CARD AND ITR FILED BY THE PARTIES FOR A Y 2010-11. SINCE A VERY MEAGER AMOUNT AS A LOAN WAS AVAILED, HENCE, TH ERE WAS NO OCCASION TO DOUBT THE CAPACITY OF PERSON. 7. WE HAVE CONSIDERED THE CONTENTION OF THE PARTIES AN D PERUSED THE RECORD. OUT OF OUT OF 30 PERSONS, FOUR PERSONS ATTENDED THE PROCEEDING BEFORE AO, BUT THE AO DISCARDED THEIR CAPACITY TO PAY CASH LOA N TO THE ASSESSEE. THE LD. CIT(A) WHILE CONSIDERING THIS GROUND EXAMINED THE S TATEMENT OF FOUR PERSONS RECORDED BY AO. THE LD. CIT(A) CONCLUDED TH AT IT IS NOT THE CASE OF AO THAT THE EVIDENCE PLACED ON RECORD SHOWS THE SAM E TRANSACTION OR THE PARTIES ARE NOT GENUINE. THE ESSENTIAL INGREDIENTS TO ESTABLISH A LOAN TRANSACTION AS GENUINE HAS BEEN FURNISHED BY THE AS SESSEE BY FILING EVIDENCE WHICH CONSIST OF CONFIRMATION OF CREDITORS, IDENTIT Y OF CREDITORS, THEIR PAN NUMBER AND EVEN BY PRODUCING THEM BEFORE THE AO, TH US THE ASSESSEE HAS DISCHARGED HIS PRIMARY ONUS THAT THE BOOKS OF ACCOU NTS AS UNSECURED LOAN ACTUALLY BELONG TO HIM AND NO ADDITION U/S 68 CAN B E MADE AGAINST HIM. THE ONUS SHIFT UPON THE AO, IF HE STATED THAT THE CLAIM OF ASSESSEE IS FALSE OR BOGUS CLAIM IS MADE. IT WAS FINALLY CONCLUDED THAT THAT AO WITHOUT BRINGING ANY EVIDENCE ON RECORD THAT UNSECURED LOAN ARE BOGUS OR NOT GENUINE HAS TREATED THE LOAN TAKEN FROM THE PARTIES AS UNEXPLAINED, WHICH IS NOT JUSTIFIED. WE HAVE SEEN THAT LD. CIT(A) HAVE EX AMINED THE IDENTITY OF THE PARTIES WHICH WAS NOT DISPUTED BY AO, CREDITWOR THINESS OF THE PERSONS WAS EXAMINED FROM THEIR STATEMENT RECORDED BY AO AN D GENUINENITY OF TRANSACTION AGAINST WHICH THE AO HAS NOT BROUGHT AN Y MATERIAL ON RECORD. ITA NO.280/M/2015 PRUTH VI GAURICHAND SHAH 6 THUS, IN THE PECULIARITY OF THE CASE, WE CONCUR WIT H THE FINDING OF LD. CIT(A), THUS, THIS GROUND OF APPEAL IS ALSO DISMISS ED. 8. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 4 TH NOVEMBER, 2016. SD/- SD/- ( R.C.SHARMA ) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED 04/11/2016 S.K.PS COPY OF THE ORDER FORWARDED TO : BY ORDER, (ASSTT.REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY/