M/s. L.G. Chaudhary, Ahmedabad V. The Dy.CIT.,Circle-9, Ahmedabad

ITA 2987/AHD/2008

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 73108 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 6 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 27-01-2014
• Assessment Year: 2005-2006
• Appeal Filed On: 22-08-2008
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: K C MATHEWS
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH BEFORE: SRI D.K TYAGI, JUDICIAL MEMBER AND SHRI ANIL CHATURVEDI, ACCOUNTAN T MEMBER M/S L.G. CHAUDHARY 6/64, GOKUL APPARTMENTS OPP: PARAS NAGAR, SOLA ROAD, AHMEDABADS PAN: AACFL5043J (APPELLANT) VS DCIT, CIR-9, VAUSPUJYA CHAMBERS, ASHRAM ROAD, AHMEDABD (RESPONDENT) DCIT, CIR-9, VAUSPUJYA CHAMBERS, ASHRAM ROAD, AHMEDABD (APPELLANT) VS M/S L.G. CHAUDHARY 6/64, GOKUL APPARTMENTS OPP: PARAS NAGAR, SOLA ROAD, AHMEDABADS PAN: AACFL5043J (RESPONDENT) DCIT, CIR-9, VAUSPUJYA CHAMBERS, ASHRAM ROAD, AHMEDABD (APPELLANT) VS M/S L.G. CHAUDHARY 6/64, GOKUL APPARTMENTS OPP: PARAS NAGAR, SOLA ROAD, AHMEDABAD PAN: AACFL5043J (RESPONDENT) ITA NO. 2987/AHD/2008 ASSESSMENT YEAR 2005-06 ITA NO. 3227/AHD/2008 ASSESSMENT YEAR 2005-06 ITA NO. 2736/AHD/2010 ASSESSMENT YEAR 2005-06 I.T.A NOS.2987,3227/AHD/2008 &2736/AHD/2010 A .Y. 2005-06 PAGE NO M/S L.G. CHAUDHARY VS. DCIT 2 REVENUE BY: SRI K.C. MATHEWS, SR.D.R. ASSESSEE BY: SRI S.N. SOPARKAR, A.R. DATE OF HEARING : 30-01-2014 DATE OF PRONOUNCEMENT : 28-02-20 14 / ORDER PER : D.K. TYAGI, JUDICIAL MEMBER:- ALL THESE APPEALS BELONG TO SAME ASSESSEE. ITA NO S . 2987/AHD/2008 & 3227/AHD/2008 ARE CROSS APPEALS AGAINST THE ORDE R OF LD. CIT(A)-XV DATED 9 TH JULY, 2008 IN QUANTUM PROCEEDINGS AND ITA NO. 2736 /AHD/2010 IS REVENUES APPEAL AGAINST THE ORDER OF LD. CIT(A)-XV DATED 19 TH JULY, 2010 IN PENALTY PROCEEDINGS. FIRST WE WILL TAKE UP ITA NO. 2987/AHD/2008 & 3227/ AHD/2008 (CROSS APPEALS) 2. ASSESSEE HAS TAKEN FOLLOWING GROUNDS OF APPEAL:- (1) THE LD. C.I.T. (A) HAS ERRED TO CONFIRM THE DISALLOWANCES OF RS. 50,000/-BEING LUMPSUM ADDITION OUT OF STAFF KITCHENS (AT SITE) EXPS., WITHOUT PROPERLY CONSIDERING THE FUELS/EVID ENCES OF THE CASE. THEREFORE YOUR APPELLANT PRAY TO DELETE THE SAID DI SALLOWANCES AFTER CONSIDERING THE FACTS AND EVIDENCES. (2) THE LD. C.I.T. (A) HAS ALSO ERRED TO CON FIRM THE DISALLOWANCES U/S. 40 (A) (IA) OF THE ACT OF RS. 3,34,60,181/- OU T OF SUB-CONTRACTOR EXPS., WITHOUT THE FACTS / EVIDENCES OF THE CASE. T HEREFORE YOUR APPELLANT PRAYS TO DELETE THE SAID DISALLOWANCES AF TER CONSIDERING THE FACTS AND EVIDENCES. I.T.A NOS.2987,3227/AHD/2008 &2736/AHD/2010 A .Y. 2005-06 PAGE NO M/S L.G. CHAUDHARY VS. DCIT 3 (3) THE LD. C.I.T. (A) HAS ALSO ERRED TO CONF IRM THE DISALLOWANCES U/S 40 (A) (IA) OF THE ACT OF RS. 1,05,15,792/- BEI NG FULL EXPS. ON A/C OF LABOUR AND TRANSPORTATION EXPS. PAID DURING THE YEA R, WITHOUT CONSIDERING THE FACTS/EVIDENCES OF THE CASE. THERE FORE, YOU APPELLANT PRAYS TO DELETE THE SAID DISALLOWANCES AFTER COSNDI RING THE FACTS AND EVIDENCES. (4). THE LD. CIT(A) HAS ALSO ERRED TO CONFIRM THE A DDITIONS U/S. 68 OF THE ACT FOR RS. 66,47,744/- BEING NON-GENUINE DE POSITORS, WITHOUT CONSIDERING THE FACTS AND EVIDENCES OF THE CASE. T HEREFORE YOUR APPELLANT PRAY TO DELETE THE SAID ADDITIONS AFTER C ONSIDERING THE FACTS AND EVIDENCES OF THE CASE. AND REVENUE HAS TAKEN ONLY ONE EFFECTIVE GROUND WHI CH READS AS UNDER:- 1. THE LD. CIT(A)-XV, AHMEDABAD HAS ERRED IN LAW A ND ON FACTS IN ALLOWING RELIEF TO RS. 40,84,005/- OUT OF ADDITI ON OF RS. 3,75,44,186/- MADE BY THE AO U/S. 40(A)(IA). 3. GROUND NO. 1 IN ASSESSEES APPEAL RELATES TO DIS ALLOWANCE OF RS. 50,000/- OUT OF STAFF KITCHEN EXPENSES. 4. DURING THE ASSESSMENT PROCEEDINGS AO FOUND THAT ASSESSEE HAS CLAIMED STAFF KITCHEN EXPENSES OF RS. 10,23,355/-. THE ASSESSEE WAS ASKED TO FURNISH COMPLETE DETAILS OF THESE EXPENSES. AS THE ASSESSEE COULD NOT FURNISH THE DETAILS ASKED FOR BY AO, HE DISALLOWED ABOUT 5% OUT OF SUCH EXPENSES FOR WANT OF FULL AND COMPLETE DETAILS AND ADDED A SUM OF RS. 50,000/- TO THE TOTAL INCOME OF THE ASSESSEE. THE SAME WAS CONFIRMED BY LD. CIT(A) AS NOTHING NEW WAS FURNISHED BY THE ASSESSEE DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE HIM. BEFORE US ALSO A SSESSEE HAS FAILED TO SUBSTANTIATE HIS CLAIM OF INCURRING THESE EXPENSES AND THEREFORE ADDITION MADE BY AO AND SUSTAINED BY LD. CIT(A) IS HEREBY CO NFIRMED. THIS GROUND OF ASSESSEES APPEAL IS DISMISSED. I.T.A NOS.2987,3227/AHD/2008 &2736/AHD/2010 A .Y. 2005-06 PAGE NO M/S L.G. CHAUDHARY VS. DCIT 4 5. GROUND NO. 2 OF ASSESSEES APPEAL AND ONLY GROUN D IN REVENUES APPEAL RELATE TO DISALLOWANCE OF RS. 3,75,44,186/- MADE BY AO U/S. 40(A)(IA) OF THE ACT OUT OF WHICH RELIEF OF RS. 40,84,005/- W AS GIVEN BY LD. CIT(A). 6. DURING THE ASSESSMENT PROCEEDINGS AO FOUND THAT ASSESSEE MADE PAYMENT TO 12 PARTIES UPTO FEBRUARY,2005 AMOUNTING TO RS. 3,75,44,186/- ON WHICH NO TDS WAS DEDUCTED, THEREFORE INVOKING THE P ROVISIONS OF SECTION 40(A)(IA) ADDITION OF THIS WAS MADE TO THE INCOME O F THE ASSESSEE. BEFORE LD. CIT(A) DETAILS OF TAX DEDUCTED AT SOURCE AND PA YMENT THEREOF TO THE GOVERNMENT TREASURY WERE FILED WHICH SHOWS THAT TDS WAS DEPOSITED ON 29- 10-2005. HOWEVER LD. CIT(A) UPHELD THIS ADDITION T O THE EXTENT OF RS. 3,34,60,181/- THEREBY CORRECTING AN ARITHMETIC MIST AKE OF 40,84,005/- MADE BY AO WHILE MAKING THIS ADDITION. 7. AT THE TIME OF HEARING BOTH THE PARTIES AGREED T HAT ISSUE BE RESTORED BACK TO THE FILE OF AO FOR FRESH ADJUDICATION IN TH E LIGHT OF HONBLE CALCUTTA HIGH COURT DECISION IN THE CASE OF VIRGIN CREATOR O R OF THE JURISDICTIONAL HIGH COURT ON THIS ISSUE WHICH MAY COME IN THE MEAN WHILE. FOR THIS PURPOSE, THE MATER IS RESTORED BACK TO THE FILE OF AO. WHILE DOING SO AO WILL ALSO ASCERTAIN AS TO WHAT IS THE CORRECT FIGUR E OF PAYMENT TO THESE 12 PARTIES. GROUND NOS 2 OF ASSESSEES APPEAL AND ONL Y GROUND OF REVENUES APPEAL ARE THUS ALLOWED FOR STATISTICAL PURPOSE. 8. GROUND NO. 3 OF ASSESSEES APPEAL RELATES TO DIS ALLOWANCE OF RS. 1,05,15,792/- ( LABOUR EXPENSES RS. 47,55,379/- + C ARTING EXPENSES OF RS. 57,60,413/-) U/S. 40(A)(IA) OF THE ACT. I.T.A NOS.2987,3227/AHD/2008 &2736/AHD/2010 A .Y. 2005-06 PAGE NO M/S L.G. CHAUDHARY VS. DCIT 5 9. AT THE TIME OF HEARING FOLLOWING SUBMISSION WAS MADE ON BEHALF OF THE ASSESSEE. (I) NO DISALLOWANCE OF EXPENDITURE BELOW RS. 20,00 0/- (II) NO DISALLOWANCE OF EXPENDITURE BELOW RS. 20,00 0/- INCURRED PRIOR TO 10/09/2004 EVEN IF AGGREGATE TO INDIVIDUAL PARTY CROSSES RS. 50,000/- THE FINANCE ACT (NO. 2) 2004 OBTAINED THE PRESIDENT IAL APPROVAL ON 10/09/2004. HENCE EXPENSES INCURRED BELOW RS. 20,0 00/- PRIOR TO THE 10/09/2004 EVEN IF AGGREGATING TO RS. 50,000/- SINC E PROVISION OF SEC. 40(A)(IA) WILL NOT BE APPLICABLE. RELIANCE PLACED ON ORDER ITA/2306/2009 (III) NO DISALLOWANCE WHEN TDS DEPOSITED BEFORE DUE DATE OF FILING OF RETURN. CHALLAN OF ADHOC TAX DEPOSIT PLACED @ P AGES 2 TO 4 OF P/B II THAT SHOULD COVER DISALLOWANCE OF AROUND RS. 40 LACS AT LEAST (TDS IS TO BE MADE 2%) THEREFORE AFTER ALLOWING EXPENDITURE BELOW 20,000/- FOR BALANCE AMOUNT CREDIT IS AVAILABLE OF THE ADHOC TAX DEPOSIT ED BEFORE DUE DATE OF FILING OF RETURN. SINCE THIS SUBMISSION OF THE ASSESSEE REQUIRES VERI FICATION BY AO, THE MATTER IS RESTORED BACK TO THE FILE OF AO FOR FRESH ADJUDI CATION. THIS GROUND IS ALLOWED FOR STATISTICAL PURPOSE. 10. GROUND NO. 4 OF ASSESSEES APPEAL RELATES TO A DDITION OF RS. 66,47,744/- U/S. 68 OF THE ACT WHICH HAS BEEN CONFI RMED BY LD. CIT(A). 11. BEFORE US ASSESSEES SUBMISSION WAS AS UNDER:- AMOUNT AS PER THE LIST ON PAGE 7 OF THE APPELLATE ORDER AGAINST NAMES OF THE SUB CONTRACTORS WERE SECURITY DEPOSIT RETAINED BY THE APPELLANT TILL COMPLETION OF THE WORK GIVEN TO THEM . THE AMOUNT RETAINED WAS CREDITED IN UNSECURED LOANS ACCOUNT IN THE BOOKS OF THE APPELLANT. THIS WAS DONE THROUGH PASSING JOURNAL E NTRIES. THE PAYMENT OF SECURITY DEPOSIT WAS MADE IN SUBSEQUENT YEARS VIDE A/C I.T.A NOS.2987,3227/AHD/2008 &2736/AHD/2010 A .Y. 2005-06 PAGE NO M/S L.G. CHAUDHARY VS. DCIT 6 PAYEE CHEQUE. THIS AMOUNT RETAINED WAS NOT CASH CR EDIT RECEIVED DURING THE YEAR BUT SECURITY DEPOSIT RETAINED. THE REFORE THERE IS NO CASE FOR MAKING ADDITIONS U/S. 68 OF THE ACT. FOLLOWING ARE THE DETAILS OF PERSONS WHERE LEDGER A /C COPIES SUBMITTED SHOWED MENTIONED AMOUNTS DEBITED ON 30-03 -2005 ALONG WITH RELEVANT DOCUMENTS FILED IN THE PAPER BOOKS ON RECORD. 1.BHUPATBHAI PATEL (SUB CONTRACTOR) RS. 6,02,500 DEPOSIT A/C PG 68(P/B I) CONFIRMATION (WITH PAN) PG44(P/B II) LEDGER A/C PG 32(P/BII) REPAYMENT DETAILS PG 41(B/BII) 2.CHAUDHARY KESHARBHAI (SUB CONTRACTOR) RS. 1,21,4 55/- DEPOSIT A/C PG 68(P/B I) CONFIRMATION (WITH PAN) PG 48(P/B II) LEDGER A/C PG 40(P/BII) REPAYMENT DETAILS PG 41(P/BII) 3.DEV NARAYAN ENGINEERING (SUB CONTRACTOR) RS. 20,5 6,638/- DEPOSIT A/C PG 68(P/B I) CONFIRMATION (WITH PAN) PG 43(P/B II) LEDGER A/C PG 28(P/B II) REPAYMENT DETAILS PG 41(P/B II) 4.EVEREST INFRASTRUCTURE (SUB CONTRACTOR) RS. 4,52 ,000/- DEPOSIT A/C PG 68(P/B I) CONFIRMATION (WITH PAN) PG 46(P/B II) LEDGER A/C PG 34(P/B II) REPAYMENT DETAILS PG 41(P/B II) 7.M/S RAJAK & CO (SUB CONTRACTOR) RS. 5,50,000/- DEPOSIT A/C PG 69(P/B II) LEDGER A/C PG 38(P/B II) REPAYMENT DETAILS PG 41(P/B II) 8. MUKESH PARMAR (SUB CONTRACTOR) RS. 5,35326/- DEPOSIT A/C PG 69(P/B I) CONFIRMATION (WITH PAN) PG 47(P/B II) LEDGER A/C PG 37(P/B II) REPAYMENT DETAILS PG 42(P/B II) 10. SANGATH CONSTRUCTION CO (SUB CONTRACTOR) RS. 5 ,17,500/- DEPOSIT A/C PG 70(P/B I) I.T.A NOS.2987,3227/AHD/2008 &2736/AHD/2010 A .Y. 2005-06 PAGE NO M/S L.G. CHAUDHARY VS. DCIT 7 CONFIRMATION (WITH PAN) PG 45(P/B II) LEDGER A/C PG 33(P/B II) REPAYMENT DETAILS PG 41(P/B II) FOLLOWING ARE IN RESPECT OF DEPOSITORS/ LABOUR CONT RACTORS 5. KALURAM F PATIDAR (LABOUR CONSTRACTOR) RS. 2,00, 000/- DEPOSIT A/C PG 69(P/B I) CONFIRMATION (WITH PAN) PG 50(P/B II) LEDGER A/C PG 49(P/B II) REPAYMENT DETAILS PG 41(P/B II) 9. RV PAKHALAWALA (LABOUR CONTRACTOR) RS. 6,53,800 /- DEPOSIT A/C PG 70(P/B I) CONFIRMATION (WITH PAN) PG 25(P/B II) LEDGER A/C PG 51(P/B II) REPAYMENT DETAILS PG 42(P/B II) 6. MILAN GANDHI (DEPOSITOR) RS. 2,00,000/- DEPOSIT A/C PG 53(P/B II) CONFIRMATION (WITH PAN) PG 54(P/B II) REPAYMENT DETAILS PG 42(P/B II) 11. VISHAL C DHAKKAR (DEPOSITOR) RS. 7,58,525/- DEPOSIT A/C PG 55(P/B II) CONFIRMATION (WITH PAN) PG 56(P/B II) LEDGER A/C PG 42(P/B II) BANK ACCOUNTS TALLYING DETAILS OF REPAYMENT OF SECU RITY DEPOSIT/DEPOSIT IN SUBSEQUENT YEAS IN PLACED AS ADD ITIONAL EVIDENCE @ PAGES 47 TO 83. 12. THIS SUBMISSION OF THE ASSESSEE ALSO REQUIRES V ERIFICATION AT THE END OF AO. FOR THIS PURPOSE THE MATTER IS RESTORED BACK T O THE FILE OF AO. THIS GROUND OF REVENUE IS ALSO ALLOWED FOR STATISTICAL P URPOSE. 13. IN THE RESULT, CROSS APPEALS ARE PARTLY ALLOWED FOR STATISTICAL PURPOSE. ITA NO. 2736/AHD/2010 I.T.A NOS.2987,3227/AHD/2008 &2736/AHD/2010 A .Y. 2005-06 PAGE NO M/S L.G. CHAUDHARY VS. DCIT 8 14. THIS IS REVENUES APPEAL AGAINST THE ORDER OF L D. CIT(A)-XV, AHMEDABAD DATED 19 TH JULY, 2010 DELETING THE PENALTY IMPOSED BY AO U/S. 271(1)(C) OF THE ACT, ON THE ADDITION MADE BY HIM I NVOKING THE PROVISIONS OF 10(A)(IA) OF THE ACT. SINCE IN THE QUANTUM PROCEED INGS THE MATTER HAS BEEN RESTORED BACK TO THE FILE OF AO, THE PENALTY PROCEE DINGS ARE ALSO RESORTED BACK TO THE FILE OF AO FOR FRESH ADJUDICATION IF RE QUIRED. 15. REVENUES APPEAL IS ALLOWED FOR STATISTICAL PUR POSE. 16. IN THE COMBINED RESULT, ASSESSEES APPEAL AS WE LL AS REVENUES APPEALS ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE AT CAPTION PAGE SD/- SD/- (ANIL CHATURVEDI) ( D.K. TYAGI) ACCOUNTANT MEMBER J UDICIAL MEMBER AHMEDABAD : DATED 28/02/2014 AK / COPY OF ORDER FORWARDED TO:- 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,