Income Tax Officer 5 (1), Bhopal V. Shri Prabhakar Colonizers & Developers Pvt. Ltd. , Bhopal

ITA 305/Ind/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 6288 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 3 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-07-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2014-2015
• Appeal Filed On: 12-04-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VINEET A D UB E
• Keywords: Assessment record
• Section: 143(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ITA NO.305/IND/2018 ASSESSMENT YEAR: 2014-15 ITO 5(1) BHOPAL / VS. SHRI PRABHAKAR COLONIZERS & DEVELOPERS PVT. LTD., 152 1 ST FLOOR ZONE-I NEAR CITI BANK, M.P. NAGAR, BHOPAL-462011 ( APPELLANT ) (RE VENUE) PAN: AAOCS8689N REVENUE BY SMT. VINEET A D UB E, SR. DR RESPONDENT BY NONE DATE OF HEARING: 22.07.2019 DATE OF PRONOUNCEMENT: 26.07.2019 / O R D E R PER MANISH BORAD, A.M: THIS APPEAL BY REVENUE PERTAINING TO A.Y. 2014-15 I S DIRECTED AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-2, BHOPAL, (IN SHORT CIT(A)), DATED 29.01.2018 WHICH IS ARISING OUT OF THE ORDER U/S 143(3) OF THE INCOME TAX ACT 1961(HER EINAFTER CALLED AS THE ACT) FRAMED ON 30.12.2016 BY ITO, BHOPAL. SHRI PRABHAKAR COLONIZERS & DEVELOPERS PVT. LTD. ITANO.305/IND/2018 2 2. THE REVENUE HAS RAISED FOLLOWING GROUNDS OF APP EAL: ON THE FACT AND IN THE CIRCUMSTANCES OF THE CASE, THE COMMISSIONER OF INCOME TAX (APPEAL-II) HAS ERRED IN ; THE LD. CIT(A)-2, BHOPAL HAS ERRED IN ALLOWING 90% OF WAGES EXPENSES CLAIMED BY THE ASSESSEE RELATED TO T WO PROJECTS. 3. WHEN THE CASE WAS CALLED, NON-APPEARED ON BEHALF OF THE ASSESSEE THEREFORE, THE CASE WAS HEARD WITH THE ASS ISTANCE OF LEARNED DEPARTMENTAL REPRESENTATIVE (LD.DR) AND AV AILABLE RECORDS ON FILE. 4. THE SOLE GRIEVANCE OF THE REVENUE IS AGAINST THE FINDING OF LD. CIT(A) ALLOWING 90% OF WAGES EXPENSES CLAIMED BY TH E ASSESSEE RELATED TO TWO PROJECTS. 5. BRIEF FACTS AS CULLED OUT FROM THE RECORDS ARE T HAT THE ASSESSEE IS A PRIVATE LIMITED COMPANY ENGAGED IN CONSTRUCTION O F BUILDING. NIL INCOME WAS DECLARED IN THE RETURN OF INCOME FILED O N 11.12.2015 FOR A.Y. 2014-15. CASE WAS SELECTED FOR SCRUTINY ASSESS MENT AS PER CASS, FOLLOWED BY SERVING OF NOTICES U/S 143(2) & 1 42(1) OF THE ACT. WHILE EXAMINING THE SUBMISSIONS FILED BY THE ASSESS EE LEARNED ASSESSING OFFICER (IN SHORT LD. AO) OBSERVED THAT I N SCHEDULE-16 OF PROFIT AND LOSS ACCOUNT VARIOUS EXPENSES WERE CLAIM ED TOWARDS LABOUR CHARGES, WAGES EXPENSES AND SALARY. ON THE P ERUSAL OF MUSTER ROLL. LD. AO NOTICED THAT THEY WERE INCOMPLE TE ON VARIOUS ASPECTS AS NAMES OF THE WORKERS, THEIR SIGNATURE WE RE MISSING ON SOME OF THE PAPER. MOST OF THE PAYMENTS WERE MADE B Y CASH. THERE SHRI PRABHAKAR COLONIZERS & DEVELOPERS PVT. LTD. ITANO.305/IND/2018 3 WAS NO CONTRACT AGREEMENT FOR THE LABOUR WORK. THER E WAS NO LICENCE FOR LABOUR CONTRACTOR WITH THE ASSESSEE. L D. AO ACCORDINGLY DISALLOWED VARIOUS EXPENDITURE OF RS.1,74,12,042/- (WAGES EXPENSES OF GIRNAR HILLS PROJECT OF RS.83,58,440/- WAGES EXPENSES OF GIRNAR VALLEY PROJECT OF RS.90,53,602/-) 6. AGAINST THE ALLEGED DISALLOWANCE ASSESSEE PREFER RED AN APPEAL BEFORE THE LD. CIT(A) AND PARTLY SUCCEEDED. LD. CIT (A) AFTER CONSIDERING THE DOCUMENTS PLACED ON RECORD WAS OF T HE VIEW THAT IT WILL NOT BE FAIR TO DISALLOW 100% OF WAGES PAYMENT HOWEVER FOR INCOMPLETE DETAILS MAINTAINED BY ASSESSEE, MINOR DI SALLOWANCE OF 10% OF THE ALLEGED WAGES WAS MADE, THEREBY MAKING D ISALLOWANCE OF RS.17,41,205/- (10% FOR RS.1,74,12,042/-). 7. AGGRIEVED REVENUE IS IN APPEAL BEFORE THE TRIBUN AL. 8. LD. DR VEHEMENTLY ARGUED SUBMITTING THAT THE DET AILS FILED BY THE ASSESSEE WERE INCOMPLETE AND MOST OF THE PAYMENT IS MADE IN CASH FOR THE PURPOSE OF CLAIMING EXPENDITURE. ASSESSEE H AS NOT MAINTAINED PROPER SUPPORTING. LD. DR ALSO CONTENDED THAT THE ASSESSEE HAS NOT FILED ANY DETAILS ABOUT THE TOTAL TURNOVER AND PROFITS EARNED SINCE THE INCOME AS PER THE RETURN H AS BEEN SHOWN AS LOSS OF RS.76,26,149/- (AS MENTIONED IN THE ASSE SSMENT ORDER). 9. WE HAVE HEARD LD. DR AND PERUSED THE RECORDS PLA CED BEFORE US.ONLY ISSUE RELATES TO DISALLOWANCE OF WAGES EXPE NSES INCURRED BY THE ASSESSEE ON TWO PROJECTS AT GIRNAR HILLS & GIRN AR VALLEY AT SHRI PRABHAKAR COLONIZERS & DEVELOPERS PVT. LTD. ITANO.305/IND/2018 4 RS. 83,58,440/- & RS. 90,53,602/-. LD. CIT(A) RESTR ICTED THE DISALLOWANCE TO 10% OF THE TOTAL WAGES EXPENSES INC URRED FOR THE TWO PROJECTS OBSERVING AS FOLLOWS: I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE. THE APPELLANT IS A BUILDER AND DURING THE PERIOD, IT HAS UNDERTAK EN HOUSING PROJECT UNDER THE NAME OF GIRNAR VALLEY & GIRNAR HILLS AT BHOPAL. DURING THE YEAR, THE APPELLANT HAS EMPLOYED DAILY WAGES WORKERS FOR EXECUTING ALL TYPES OF CIVIL WORK UNDER TAKEN AT THESE TWO PROJECTS. THE AO HAS DISALLOWED THESE EXPENSES INCURRED ON BOTH PROJECT ON THE GROUND THAT THE APP ELLANT HAS NOT SUBMITTED LABOUR LICENCE AND PROPER VOUCHER WER E NOT KEPT AND PRODUCED ONLY MUSTER ROLE FOR PAYMENT OF WAGES. THE AO HAS ONLY CONSIDERED ONE DAYS MUSTER ROLE I.E. OF D ATE 26.12.2013 AS BASE FOR MAKING DISALLOWANCE OF 100% WAGES FOR THE ENTIRE YEARS. THE MUSTER ROLE FOR THE ENTIRE YEAR WAS PRODUCED DU RING THE APPELLATE PROCEEDINGS AND A COPY OF THE SAME HAS BE EN SUBMITTED ON RECORD. THE LEDGER COPIES OF WAGES A/C FOR BOTH THE PROJECTS GIRNAR HILLS AND GIRNAR VALLEY WERE ALSO PRODUCED. 6.1 THESE WAGES PERTAIN TO THE DAILY WAGES TO WORKE RS EMPLOYED FOR CARRYING OUT CIVIL WORK ON TWO PROJECT S AS UNDER: A) WAGES EXPENSES (GIRNAR HILLS) RS.83,58,440/- B) WAGES EXPENSES (GIRNAR VALLEY) RS.90,53,602/- IT IS OBSERVED THAT PROPER BOOKS OF ACCOUNTS HAVE B EEN MAINTAINED BY THE APPELLANT WHICH WERE PRODUCED BEF ORE THE AO DURING ASSESSMENT. THE BOOKS OF ACCOUNTS WERE DU LY AUDITED BOTH UNDER COMPANIES ACT AND UNDER THE INCO ME TAX ACT. THERE IS NO ADVERSE DINING IN ANY OF THE AUDIT REPORT AS TO THESE PAYMENTS. 6.2 THE AO WAS OF THE VIEW THAT VOUCHER IN RESPECT OF THESE PAYMENTS WERE NOT PRODUCED. IT IS SEEN AND ACKNOWLE DGED BY THE AO THAT THE MUSTER ROLL WAS PRODUCED BEFORE THE AO. IT IS OBSERVED THAT THE MUSTER ROLL CONTAINS FULL DETAIL IN RESPECT OF PAYMENT MADE TO WORKERS. THE HEADING OF THE MUSTER ROLL IS WEEKLY WAGES PAYMENT SHEET. IT IS MAINTAINED DATE WISE, FULL SHRI PRABHAKAR COLONIZERS & DEVELOPERS PVT. LTD. ITANO.305/IND/2018 5 NAME OF LABOUR IS THERE, DATE WISE ATTENDANCE IS NO T, NUMBER OF DAYS WORKED, RATE OF PAYMENT, TOTAL AMOUNT PAID ETC . IS MENTIONED THEREON. AS ACKNOWLEDGEMENT OF RECEIPTS O F PAYMENT, THE RECIPIENTS HAVE PLACED THEIR SIGNATURE S/THUMB IMPRESSIONS ON THE MUSTER ROOL. THUS, IT IS FOUND T HAT THE APPELLANT HAS MAINTAINED FULL RECORD OF PAYMENT MAD E TO DAILY WAGES WORKERS SHOWING THE PARTICULARS OF PERSON APP OINTED, ATTENDANCE OF WORKER, NO OF DAYS ATTENDED AND PAYME NT MADE TO HIM AND WEEKLY PAYMENT MADE TO EACH WORKER AND T OTAL PAYMENT MADE. THE ENTRIES IN THE BOOKS OF ACCOUNTS ARE PASSED ON THE BASIS OF THE MUSTER ROLL ONLY. IT IS THEREFO RE, TO BE CONCLUDED THAT THE SAID MUSTER ROLL IS ITSELF A VOU CHER FOR MAKING ACCOUNTING ENTRIES IN BOOKS OF ACCOUNTS AS IT CONTA INS FULL DETAIL IN RESPECT OF PAYMENT MADE TO WORKERS AND RECEIPT O F SUCH PAYMENT ALSO. 6.3 THE MUSTER ROLL DATED 26.12.2013 WAS EXAMINED O N THE BASIS OF WHICH THE DISALLOWANCE HAS BEEN MADE BY TH E AO OF 100% OF WAGES PAID FOR THE ENTIRE YEAR. THE AOS FI NDING ARE THAT SOMEWHERE THE NAMES OF THE WORKERS SIGNATURE OF THE WORKERS ARE MISSING. IT IS OBSERVED THAT BOTH IN R ESPECT OF GIRNAR VALLEY PROJECT AND GIRNAR HILLS THE RELEVANT WEEKLY SHEET DO NOT SHOW ANY INSTANCE WHERE THE NAME OF THE WORK ER IS MISSING. FURTHER, IN ALL CASES BARRING VERY FEW, EI THER SIGNATURE OR THUMP IMPRESSION IS APPENDED. IT APPEARS THAT IN SOME CASES, ON THE PHOTO COPIES SUBMITTED BEFORE THE AO, THUMB IMPRESSION MIGHT NOT BE CLEARLY VISIBLE. THIS ITSEL F CANNOT BE A GROUND FOR MAKING FULL DISALLOWANCE OF PAYMENTS MAD E TO DAILY WAGES WORKER. 6.4 AS PER THE ASSESSMENT ORDER, THE APPELLANT HAD SUBMITTED BEFORE THE AO THAT THE LABOUR LICENCE IS OBTAINED B Y THE CONTRACTOR AND THEY WERE NOT OBLIGED TO OBTAIN THE SAME. HAVING NO LABOUR LICENCE CANNOT BE A BASIS FOR MAKING FULL DISALLOWANCE OF WAGES PAID TO WORKERS AT TWO SITES. 6.5 KEEPING IN VIEW THE FACTS AND CIRCUMSTANCES OF THE CASE, IT IS CONTENDED THAT THE AO HAS ERRED IN DISALLOWING 1 00% WAGES PAYMENT IN RESPECT OF BOTH THE PROJECTS. HOWEVER, E XAMINATION OF THE MUSTER ROLL FOR THE ENTIRE YEAR SHOWS THAT I N SOME CASES, EITHER SIGNATURE OR THUMB IMPRESSION OF THE LABOUR AS TOKEN OF RECEIPT IS NOT FOUND ON THE MUSTER ROLL. IN VIEW OF THIS FACT, I HOLD SHRI PRABHAKAR COLONIZERS & DEVELOPERS PVT. LTD. ITANO.305/IND/2018 6 THAT SOME DISALLOWANCE OUT OF THESE WAGES IS REQUIR ED. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, I CONSIDER IT REASONABLE TO RESTRICT THE DISALLOWANCE OF 100% OF WAGES PAYMENT TO 10% OF THE WAGES PAYMENT MADE TO THE LABOUR IN RESPECT OF THE TWO PROJECTS. THE AO IS THEREFORE, DIRECTED TO RESTRICT THE DISALLOWANCE TO RS.17,41,205/- I.E. 10% OF RS.1,74, 12,042/-. 10. THE ABOVE FINDING OF FACT GIVEN BY THE LD. CIT( A) HAS BEEN CHALLENGED BY THE LD. DR. THERE IS NO REPRESENTATIO N FROM THE SIDE OF THE ASSESSEE TO BRING ON THE FACTS AND RELEVANT FINANCIAL STATEMENT ON RECORD. HOWEVER ON PERUSAL OF THE FIND ING OF THE LD. CIT(A) WE FIND THAT THE NECESSARY DETAILS HAVE BEEN EXAMINED INCLUDING THE MUSTER ROLL. LD. CIT(A) SEEMS TO BE S ATISFIED WITH THE DETAILS MENTIONED THEREIN HOWEVER LD. CIT(A) HAS AL SO REFERRED TO MINOR DISCREPANCY IN THE RECORDS. MAINLY VARIOUS VO UCHERS OF LABOUR PAYMENTS ARE UNSIGNED. IT IS ALSO NOTEWORTHY THAT THE ASSESSEE BEING A BUILDING CONSTRUCTION PROJECT HAS DECLARED HUGE LOSS. NO DETAILS HAVE BEEN FILED FOR THE TAX DEDUCT ED AT SOURCE IF ANY ON THE LABOUR CONTRACT CHARGES. SITE WISE DETAILS W ERE ALSO NOT AVAILABLE ON RECORD. ALLEGEDLY, MOST OF THE PAYMENT S HAVE BEEN MADE IN CASH. SUBMISSIONS GIVEN BY THE ASSESSEE BEF ORE THE LD. CIT(A) IS GENERAL IN NATURE. LABOUR LICENCE STOOD E XPIRED ON 31.03.2013. WE ARE THEREFORE, OF THE CONSIDERED VI EW THAT THOUGH 100% DISALLOWANCE BY LD. AO WAS NOT JUSTIFIED BUT I N THE GIVEN FACTS AND CIRCUMSTANCES OF THE CASE, DISALLOWANCE O F 20% OF THE TOTAL IMPUGNED WAGES I.E. RS.34,82,408/- ( 20% OF R S.1,74,12,041) SHRI PRABHAKAR COLONIZERS & DEVELOPERS PVT. LTD. ITANO.305/IND/2018 7 WILL MEET THE END TO JUSTICE FOR BOTH THE PARTIES. WE, ACCORDINGLY, ORDER SO AND PARTLY ALLOWED THE REVENUES APPEAL. 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. ORDER WAS PRONOUNCED IN THE OPEN COURT ON 26 .07.20 19. SD/- (KUL BHARAT) SD/- (MANISH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER INDORE; DATED : 26/07/2019 CTX? P.S/. . . COPY TO: ASSESSEE/AO/PR. CIT/ CIT (A)/ITAT (DR)/GUAR D FILE. BY ORDER ASSISTANT REGISTRAR