Sakthi Engineering Contractors, Karur V. ACIT Circle 2(1), Trichy

ITA 2881/CHNY/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 4144 (ITAT-CHENNAI)
• Duration Of Justice: 6 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-05-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2012-2013
• Appeal Filed On: 10-10-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AMOL B KIRTANE

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH: CHENNAI , , BEFORE SHRI GEORGE MATHAN, JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBE R ./ ITA NO. 2881 /CHNY/2018 / ASSESSMENT YEAR: 201 2 - 1 3 M/S. SAKTHI ENGINEERING CONTRACTORS, NO.4/72, THALIYAPATI, VELLIYANAI POST, KA RUR 639 118. VS. THE ASST . COMMISSIONER OF INCOME TAX, SALARY CIRCLE - 2(1) , RANGE - 2, TRICHY. [PAN : AABFS 9246H ] ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : SHRI QUADIR HOSEYN , CA /RE SPONDENT BY : SHRI AMOL B. KIRTANE , ADDL. C IT / DATE OF HEARING : 09 .0 5 .2019 / DATE OF PRONOUNCEMENT : 09 .0 5 .2019 / O R D E R PER SHRI S. JAYARAMAN, ACCOUNTANT MEMBER : THE ASSESSEE FILED THIS APPEAL AGAINST THE ORDER O F THE COMMISSI ONER OF INCOME TAX (APPEALS) - 1 , TIRUCHIRAPALLI IN ITA NO. 33 / 2015 - 16 / CIT(A - 1 ) /TRY , DATED 1 1 .0 9 .2018 FOR THE ASSESSMENT YEAR ( AY ) 20 1 2 - 1 3 . 2. M/S. SAKTHI ENGINEERING CONTRACTORS, THE ASSES SEE, IS A GOVERNMENT CONTRACTOR FOR ROADS, CANALS AND B UILDINGS. WHILE MAKING THE ASSESSMENT FOR AY 2012 - 13, THE ASSESSING OFFICER (AO) FOUND THAT ITA NO. 2881/ CHNY /201 8 : - 2 - : CERTAIN EXPENSES LIKE BRICKS PURCHASE, CENTERING MATERIALS PURCHASE, SAND AND GRAVEL PURCHASE, WATER PURCHASES , LABOUR CHARGES ETC. AMOUNTING TO RS. 61.76 LAKHS W ERE SUPPORTED BY SELF MADE VOUCHERS AND THE PAYMENTS WERE MADE BY CASH. THEREFORE, OUT OF SUCH CLAIM T HE AO DISALLOWED A SUM OF RS. 40 LAKHS AND COMPLETED THE ASSESSMENT. AGGRIEVED AGAINST THAT ORDER , THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A) . T HE L D. CIT(A) TE S T CHECKED THE CLAIM THROUGH HIS INSPECTOR AND RESTRICTED THE DISALLOWANCE TO RS. 20 LAKHS. A GGRIEVED, AGAINST TH AT ORDER OF THE LD.CIT(A), THE ASSESSEE FILED THIS APPEAL WITH THE FOLLOWING GROUNDS: 1. THE ORDER OF THE COMMISSIONER OF INCOM E TAX (APPEALS), IN SO FAR AS IT IS AGAINST THE ASSESSEE, IS CONTRARY TO LAW, ERRONEOUS AND UNSUSTAINABLE ON THE FACTS OF THE CASE. 2. THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN SUSTAINING AN ADDITION OF RS.20,00,000/ - (BEING 33%) OUT OF RS.40,00,0 00/ - (BEING 65%) MADE BY THE ASSESSING OFFICER. 3. THE COMMISSIONER OF INCOME TAX (APPEALS) FAILED TO APPRECIATE THAT THE ASSESSING OFFICER HAD NOT POINTED OUT ANY SERIOUS DEFECTS IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE AND HAVING FOUND THAT PURCHASE AND PAYMENT WERE BY WAY OF BILLS AND CHEQUE PAYMENTS, THE ADDITION MADE BY THE ASSESSING OFFICER FOR A DEFICIENCY WITHOUT REGARD TO THE CIVIL CONTRACT BUSINESS WAS TOTALLY UNWARRANTED AND UNJUSTIFIABLE. 4. THE COMMISSIONER OF INCOME TAX (APPEALS) FURTHER FAI LED TO APPRECIATE THERE WAS NO BASIS OR MATERIAL TO SUSTAIN THE ADDITION OF RS.20,00,000/ - ESPECIALLY CASH BOOK, SAMPLE VOUCHERS AND BANK STATEMENTS TEST - CHECKED BY INSPECTOR AT THE INSTANCE OF THE COMMISSIONER OF INCOME TAX (APPEALS). 5. THE COMMISSIONER OF INCOME TAX (APPEALS) FURTHER FAILED TO APPRECIATE THAT HAVING FOUND NO DEFECTS AFTER TEST - CHECKED BY INSPECTOR, THE COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO HAVE BEEN DELETED THE ENTIRE ADDITION. ITA NO. 2881/ CHNY /201 8 : - 3 - : 6. THE COMMISSIONER OF INCOME TAX (APPEALS) FURTHE R FAILED TO APPRECIATE THAT EVEN THOUGH SUPPORTED BY SELF - MADE VOUCHERS THEY WERE DULY ACKNOWLEDGED BY THE RECIPIENTS AND HENCE THE ADDITION SUSTAINED WAS NOT ONLY UNJUSTIFIABLE BUT ALSO UNSUSTAINABLE ON THE FACTS OF THE CASE. 7. THE ADDITION SO SUSTAINED WAS WITHOUT ANY BASIS OR MATERIAL, HAVING DUE REGARD TO THE CIVIL CONTRACT BUSINESS AND PURCHASE OF MATERIALS LIKE BRICK, SAND, GRAVEL, WATER, LABOUR AND BONUS CHARGES OF THE UNORGANIZED SECTOR. 3. THE LD. AR PRESENTED THE CASE ON LINES OF GROUNDS OF AP PEAL , SUPRA, AND PLEADED THAT THE ADDITIONS SUSTAINED BY THE LD. CIT(A) BE DELETED . PER CONTRA, THE LD. DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDER OF THE L D. CIT(A). 4. WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT THE AO COULD NOT POINT OUT ANY SPECIFIC DEFECT OR DOUBT WITH REGARD TO ANY OF THE IMPUGNED EXPENDITURE ON WHICH HE MADE THE ADHOC DISALLOWANCE. ON APPEAL, THE AR HAD PRODUCED HIS CASH BOOK, SAMPLE VOUCHERS, BANK STATEMENTS ETC BEFORE THE L D CIT(A ), WHICH WERE TEST CHECKED BY THE INSPECTOR POSTED IN THE OFFICE OF THE L D. CIT(A ). THE L D. CIT(A) ALSO FOUND THAT THESE PAYMENTS WERE MADE THROUGH SELF MADE VOUCHERS AND HE HELD THAT THESE EXPENDITURE S WAS MADE FOR THE BUSINESS PURPOSE S ONLY. HOWEVER, HE RESTRICTED THE DISALLOWANCE TO RS. 20 LAKHS WITHOUT ANY REASON OR BASIS . THEREFORE, WHEN THE AO HAS NOT POINT ED OUT ANY SPECIFIC DEFECT OR DOUBT ABOUT THE IMPUGNED CLAIM AND THE L D. CIT(A) HAVING SATISFIED THAT TH OS E EXPENSES ITA NO. 2881/ CHNY /201 8 : - 4 - : WERE INCURRED FOR THE B USINESS PURPOSE S, THEN T HE LD CIT(A) CANNOT RESTRICT THE DISALLOWANCES AT RS. 20 LAKHS WITHOUT ANY REASON OR BASIS OR MATERIAL AND HENCE WE DIRECT THE AO TO DELETE THE QUANTUM OF DISALLOWANCES SU S TAINED BY THE L D. CIT(A) . THEREFORE, WE ALLOW THE ASSESSEE S APPEAL. 5 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 09TH MAY , 2019 IN CHENNAI. SD/ - SD/ - ( ) (GEORGE MATHAN) /JUDICIAL MEMBER ( . ) ( S. JAYARAMAN ) / ACCOUNTANT MEMBER / CHENNAI, / DATED: 09TH MAY , 2019 . EDN, SR. P.S / COPY TO: 1. / APPELLANT 2. / RESPONDENT 3. ( ) / CIT(A) 4. / CIT 5. / DR 6. / GF