MRS. PRATIBHA M. KOTHARI, MUMBAI V. ITO 29(3)(1), MUMBAI

ITA 3171/MUM/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 1475 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-12-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 13-05-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: KAVITA P KAUSHIK
• Keywords: FORM 26AS
• Section: 143(3); 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC, MUMBAI , ! BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER . 3171 / / 2019 (%. .2009-10 ) ITA NO. 3171/MUM/2019 (A.Y.2009-10) MRS. PRATIBHA M. KOTHARI, B/9, ANAGHA SOCIETY, S.N.ROAD, TAMBE NAGAR, MULUND WEST, MUMBAI 400 080. PAN:AGSPK 9744M / VS. : / APPELLANT THE INCOME TAX OFFICER, WARD -29(3)(1), (ERSTWHILE ITO -23(3)(1), MUMBAI) PRATYAKSHA KAR BHAVAN, BKC, BANDRA(E), MUMBAI 400 051 : / RESPONDENT ASSESSEE BY : NONE REVENUE BY : MS.KAVITA P. KAUSHIK / DATE OF HEARING : 15/09/2020 / DATE OF PRONOUNCEMENT : 08/12/2020 / ORDER THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-40, MUMBAI ( I N SHORT THE CIT(A)) DATED 04/02/2019 FOR THE ASSESSMENT YEAR 2009-10. 2. THE BRIEF FACTS OF THE CASE AS EMANATING FROM RE CORDS ARE: THE ASSESSEE IS A TRADER AND SUPPLIER OF CEMENT. APART FROM TRADING IN CEMENT THE ASSESSEE WAS ALSO ENGAGED IN CONSTRUCTION ACTIVITY DURING THE PERIOD RELEVANT TO THE ASSESSMENT YEAR 2 ITA NO. 3171/MUM/2019 (A.Y.2009-10) UNDER APPEAL. THE ASSESSEE HAD UNDERTAKEN CONSTRUC TION/ ERECTION OF FACTORY SHED AND FACTORY STRUCTURES AT TWO DIFFERENT SITES I.E. SILVASA AND AIROLI. THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE IMPUGNED ASSESSMENT YE AR ON 30/09/2009 DECLARING TOTAL INCOME OF RS.9,25,159/-. THE ASSESSMENT IN THE CA SE OF THE ASSESSEE WAS REOPENED ON THE BASIS OF INCOME REPORTED IN FORM 26AS. IN R EASSESSMENT PROCEEDINGS THE ASSESSING OFFICER MADE ADDITION OF RS.39,82,154/- U NDER THE FOLLOWING HEADS: (I) LABOUR EXPENSES - RS. 6,75,350/- (II) SITE EXPENSES - RS. 22,06,804/- (III) TRAVELLING AND CONVEYANCE - RS. 6,00,000 /- THE PRIMARY REASON FOR MAKING DISALLOWANCE UNDER TH E AFORESAID HEADS WAS THAT ASSESSEE COULD NOT PRODUCE DOCUMENTS IN SUPPORT OF CASH EXPENDITURE CLAIMED. AGGRIEVED BY THE ASSESSMENT ORDER DATED 26/03/2014 PASSED UNDER SECTION 143(3) R.W.S. 147 OF THE INCOME TAX ACT, 1961 ( IN SHORT THE ACT), THE ASSESSEE FILED APPEAL BEFORE THE CIT(A). THE FIRST APPELLATE AUTHORITY, UNIMPRESSED WITH THE SUBMISSIONS OF ASSESSEE, UPHELD THE ASSESSMENT ORDER. HENC E, THE PRESENT APPEAL BY THE ASSESSEE. 3. THE ASSESSEE IN APPEAL HAS RAISED AS MANY AS 10 GROUNDS. THE PRIMARY GROUND RAISED BY THE ASSESSEE IN APPEAL IS GROUND NO.1 ASS AILING THE ADDITION OF RS.39,82,154/- MADE BY THE ASSESSING OFFICER AND SU STAINED BY CIT(A). THE OTHER GROUNDS RAISED IN APPEAL ARE ARGUMENTATIVE AND ARE IN SUPPORT OF PRIMARY GROUND. 4 MS.KAVITA P. KAUSHIK, REPRESENTING THE DEPARTME NT VEHEMENTLY DEFENDING THE IMPUGNED ORDER SUBMITTED THAT THE ASSESSEE NEIT HER AT THE TIME OF ASSESSMENT PROCEEDING NOR AT FIRST APPELLATE STAGE COULD PRODU CE EVIDENCE TO SUBSTANTIATE THE EXPENDITURE. THE VOUCHERS PRODUCED BY THE ASSESSEE WERE SELF SERVING DOCUMENTS. THE LD.DEPARTMENTAL REPRESENTATIVE PRAYED FOR DISMI SSING THE APPEAL OF ASSESSEE AND UPHOLDING THE FINDINGS OF CIT(A). 3 ITA NO. 3171/MUM/2019 (A.Y.2009-10) 5. SUBMISSIONS MADE BY LD.DEPARTMENTAL REPRESENTATI VE HEARD. ORDERS OF AUTHORITIES BELOW EXAMINED. THE ASSESSEE APART FRO M THE BUSINESS OF TRADING IN CEMENT IS ALSO ENGAGED IN CONSTRUCTION ACTIVITIES. DURING THE PERIOD RELEVANT TO ASSESSMENT YEAR UNDER APPEAL, THE ASSESSEE WAS ENGA GED IN ERECTION OF FACTORY SHED AND FACTORY STRUCTURE. THE ASSESSEE CLAIMED EXPEND ITURE IN RESPECT OF CONSTRUCTION BUSINESS UNDER THREE HEADS I.E. LABOUR EXPENSES, SI TE EXPENSES AND CONVEYANCE AND TRAVELLING. THE DETAILS OF TOTAL EXPENDITURE INC URRED, EXPENDITURE IN CASH CLAIMED AND THE DISALLOWANCE MADE BY THE REVENUE IS AS UNDE R: S.NO. HEAD OF EXPENSES AMOUNT(RS.) CASH EXPENSES(RS.) DISALLOWANCE OF CASH EXPENDITURE. (RS.) 1. LABOUR CHARGES 68,12,345 13 ,50,700 6,75,350 2. SITE EXPENSES 33,89,901 33, 89,901 27,06,804 3. CONVEYANCE & TRAVELLING 10,52,930 10,52,930 6,00,000 TOTAL 1 ,12,55,176 57,93,531 39,82,154 A PERUSAL OF THE IMPUGNED ORDER REVEALS THAT THE AS SESSING OFFICER HAS MADE DISALLOWANCE IN RESPECT OF CASH EXPENDITURE UNDER T HE THREE HEADS ON THE GROUND THAT THE ASSESSEE HAS FAILED TO SUBSTANTIATE THE EX PENDITURE WITH SUPPORTING DOCUMENTS. UNDISPUTEDLY, THE ASSESSEE COULD NOT PR ODUCE COGENT EVIDENCE IN SUPPORT OF CASH EXPENDITURE MADE AT CONSTRUCTIO N SITE. THE ASSESSEE HAD PRODUCED SOME SAMPLE VOUCHERS, THAT WERE REJECTED BY THE ASSESSING OFFICER. THEREAFTER, THE ASSESSING OFFICER ON ESTIMATION BASIS DISALLOWED 50% OF THE EXPENDITURE CLAIMED UNDER THE HEAD LABOUR CHARGES. SIMILARLY, UNDER THE HEAD SITE EXPENSES THE ASSESSING OFFICER REJECTED THE VOUCHER S PRODUCED BY THE ASSESSEE IN RESPECT OF REFRESHMENTS ( TEA AND NASTA FOR THE LAB OURS) AT CONSTRUCTION SITE AND ALSO DISALLOWED CASH EXPENDITURE FOR WHICH THE ASSESSEE COULD NOT PRODUCED THE VOUCHERS. THUS, THE ASSESSING OFFICER MADE TOTAL D ISALLOWANCE OF RS.27,60,804/- UNDER THE HEAD SITE EXPENSES. IN RESPECT OF CONVEY ANCE AND TRAVELLING EXPENSES THE ASSESSING OFFICER MADE DISALLOWANCE OF RS.6,00,0 00/- ON ESTIMATION. THUS, THE 4 ITA NO. 3171/MUM/2019 (A.Y.2009-10) DISALLOWANCE IN RESPECT OF CASH EXPENDITURE HAS BEE N MADE MERELY ON ESTIMATIONS. THE CONSTRUCTION ACTIVITY CARRIED ON BY THE ASSESSE E IS NOT UNDER DISPUTE. THE CASH EXPENDITURE CLAIMED BY THE ASSESSEE IS IN RESPECT O F EXPENDITURE AT CONSTRUCTION SITE. IN VIEW OF THE FACT THAT THE ASSESSEE WAS NOVICE IN CONSTRUCTION BUSINESS AND HAD NO PAST EXPERIENCE OF UNDERTAKING CONSTRUCTION ACTIVITIES AND MAINTENANCE OF COMPLETE AND PROPER DOCUMENTS SUPPORTING EXPENDITU RE AT CONSTRUCTION SITE, SPECIALLY IN RESPECT OF DAY TO DAY EXPENDITURE ON L ABOUR, HENCE, SOME REASONABLE ALLOWANCE CAN BE MADE. I AM OF CONSIDERED VIEW T HAT THE DISALLOWANCE MADE BY ASSESSING OFFICER /CIT(A) IS ON THE HIGHER SIDE. A T THE SAME TIME THERE ARE SHORTCOMING ON THE PART OF ASSESSEE IN NOT MAI NTAINING PROPER BOOKS, VOUCHERS, ETC., HENCE, THE ENTIRE EXPENDITURE CLAIMED CANNOT BE ALLOWED. TAKING INTO CONSIDERATION ENTIRETY OF FACTS, DISALLOWANCE @ 25% OF THE TOTAL EXPENDITURE CLAIMED UNDER THE THREE HEADS I.E. LABOUR CHARGES, SITE EX PENSES AND CONVEYANCE AND TRAVELLING EXPENSES, WOULD MEET THE ENDS OF JUSTICE . I HOLD AND DIRECT ACCORDINGLY. 6. IN THE LIGHT OF ABOVE OBSERVATIONS, THE IMPUGNED ORDER IS MODIFIED AND THE APPEAL OF ASSESSEE IS PARTLY ALLOWED IN THE TERMS AFORESAID. 7. IN THE RESULT, APPEAL BY THE ASSESSEE IS PART LY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON TUESDAY THE 8 TH DAY OF DECEMBER, 2020. SD/- (VIKAS AWASTHY) / JUDICIAL MEMBER / MUMBAI, (%/ DATED: 08/12/2020 VM , SR. PS(O/S) 5 ITA NO. 3171/MUM/2019 (A.Y.2009-10) COPY OF THE ORDER FORWARDED TO : 1. ) / THE APPELLANT , 2. *+ / THE RESPONDENT. 3. ,+ ( )/ THE CIT(A)- 4. ,+ CIT 5. -.*+% , . . . , / DR, ITAT, MUMBAI 6. ./012 / GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI