Shri Nanjundeshwara Developers , Bangalore V. Deputy Commissioner of Income Tax Circle-5(2)(1), Bangalore

ITA 3269/BANG/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 9354 (ITAT-BANGALORE)
• Duration Of Justice: 6 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-06-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 27-06-2019
• Assessment Year: 2015-2016
• Appeal Filed On: 06-12-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P DHIVAHAR
• Assessee Lawyers: ABIL E SH VIJAY RAO
• Keywords: Principle of natural justice; TDS; Set aside

Judgement Text

ITA NO.3269(B)/2018 1 IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCHES : A, BANGALORE BEFORE SHRI A.K.GARODIA, ACCOUNTANT MEMBER AND SMT.BEENA PILLAI, JUDICAL MEMBER ITA NO.3269(BANG)/2018 (ASSESSMENT YEARS : 2015 - 16) M/S SRI NAJUNDESHWARA DEVELOPERS, 36/2, 17 TH M AIN, NEW TIMBER YARD LAYOUT, MUNEHWARA BLOCK, AVALAHALLI, BANGALORE - 560 0 26 PANNO.ABUFS9232M APPELLANT VS THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE - 5( 2 )(1), BANGALORE RESPONDENT APPELLANT BY : SHRI ABIL E SH VIJAY RAO, C A REVENUE BY : SHRI P . DHIVAHAR, ADDL. CIT DATE OF HEARING : 27 - 06 - 2019 DATE OF PRONOUNCEMENT : 28 - 06 - 2019 O R D E R PER BEENA PILLAI, JUDICIAL MEMBER : PRESENT APPEAL HAS BEEN FILED BY ASSESSEE AGAINST ORDER DATED 28/09/18 PASSED BY LD. CIT (A) - 5, BENGALURU, FOR ASSESSMENT YEAR 2015 - 16 ON FOLLOWING GROUNDS OF APPEAL. ITA NO.3269(B)/2018 2 1. ON THE FACTS AND CIRCUM STANCES OF THE C A SE, THE LD. ASSESSING AUTHORITY /LD.CIT(A) OUGHT TO HAVE APPRECIATED THAT THE APPELLANT HA SUBMITTED THE DOCUMENTARY EVIDENCES OF LABOUR AND OTHER PAYMENTS VIDE AN ACKNOWLEDGED LETTER DATED 25 - 09 - 2018(CIT APPEALS) . 2. NEI T HER THE ASSESSING OFFICER NOR THE CIT(A) D URING THE COURS E OF THE ASSESSMENT/APPEAL PROCEEDINGS COMMUNICATED THE ABSENCE OF SUPPORTING DOCUMENTS TO THE APPELLANT. 3. ON THE FACTS AND CIRCUMSTANCES OF THE C A SE HE LD. ASSE S SING AUTHORITY AND THE LD.CIT(A) ALSO OUGHT T O HAVE APPRECIATED THE FACT TH A T THE APPELLANT HAS SUBMITTED ALL THE D ETA I LS SOUGHT FOR W E LL BEFORE THE DATE OF ASSESSMENT/APPELLATE ORDER. THEREFORE, AD HOC DISALLOWANCES MADE ON GROUNDS OF NON - COOPERATION AND NON - SUBMISSION OF PROOFS ARE LIABLE TO BE SET ASID E. 4.THE LD. CIT(A) HAS F AILED TO TAKE THE COGNIZANCE OF THE FACT THAT IT IS SETTLED LAW THAT TH E DISALLOWANCE ON ACCOUNT OF AD HOC BA S IS IS NOT PERMISSIBLE UNDER THE PROVISION OF THE ACT. IF THE AO IS NOT SATISFIED WITH THE SUBMISSION OF ASSESSEE THEN HE HAS TO MAKE THE DISALLO WANCE ON AD HOC BASIS WITHOUT POINTING OUT ANY DEFECT/ERROR IN THE SUBMISSION OF ASSESSEE. IN THIS CONNECTION, W ALSO RELY IN THE ORDER OF CO - ORDINATE BENCH OF ITAT KOLKATA IN THE CASE OF A NIMESH SADHU VS ACIT IN ITA 11/KOL/2013 D ATED 12.11.2014. THE RELEVANT EXTRACT IS REPRODUCED BELOW. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS . A PERUSAL OF THE ASSESSMENT ORDER SHOWS THAT THE ASSESSING OFFICER HAS DISALLOWED 20% OF THE EXPENSES ON ESTIMATE BASIS ON THE GROUND THAT NO INDEPENDENT VERIFICATION TO BE MADE TO FIND OUT THE AUTHENTICITY OF THE EXPENSES. LD.CIT(A) HAS REDUCED THE SAME ON THE SAME GROUND. HOWEVER, WE ARE OF THE VIEW ITA NO.3269(B)/2018 3 THAT NO ESTIMATED DISALLOWANCES CAN BE MADE FOR INABILITY TO MAKE INDEPENDENT VERIFICATION. IF ANY SPECIFIC EXPENDITURE IS UNVERIFIABLE OR IS UN - VOUCHED, THEN SUCH SPECIFIC EXPENDITURE IS DISALLOWABLE. HERE NO SUCH SPECIFIC IDENTIFICATION H A S BEEN ONE. IN THESE CIRCUMSTANCES, W ARE OF THE VIEW THAT THE ESTIMATED DISALLOWANCES AS CONFIRMED BY THE LD. CIT(A) IN UNSUSTAINABLE. CONSEQUENTLY, THE SAME STANDS DELETED. IN TH E RESULT, GROUNDS NO.2 & 3 OF THE ASSE S SEES APPEAL STAND ALLOWED. SIMILAR ISSUE WERE ADDRESSED IN M/S VIJAY INFRASTRUCTURE LIMITED VS ACIT (LUCKNOW) ITA N O .254 OF 2015. FOR SUCH OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING AND PRAYED BEFORE YOUR GOODSELVES THAT APPEAL BE ALLOWED IN THE INTEREST OF JUSTICE AND EQUITY. 2. BRIEF FACTS OF THE CASE ARE AS UNDER: A SSESSEE FILED ITS RETURN OF INCOME FOR YEAR UNDER CONSIDERATION ON 27/09/15 DECLARING TOTAL INCOME OF RS.57,22,270/ - . THE CASE WAS SELECTED FOR SCRUTINY AND NOTICE UNDER SECTION 143 (2) WAS ISSUED , FOLLOWED BY NOTICE UNDER SECTION 142 (1) ALONG WITH QUESTIONNAIRE. IN RESPONSE TO STATUTORY NOTICES, REPRESE NTATIVE OF ASSESSEE FAILED TO APPEARED BEFORE LD.AO AND TO FURNISH ANY DETAILS RELATING TO PROCEEDINGS . THEREAFTER ON 29/11/2017 REPRESENTATIVE OF ASSESSEE FILED CERTAIN DOCUMENTS. HOWEVER LD. AO OBSERVED THAT ASSESSEE DID NOT FURNISH ANY PROOF OF LABOUR C HARGES AND OTHER EXPENSES AND THEREFORE SUM OF RS.1,05,04,080/ - WAS DISALLOWED BEING 20% OF TOTAL EXPENDITURE CLAIMED BY ASSESSEE. 3. AGGRIEVED BY ADDITION MADE BY LD.AO ASSESSEE PREFERRED APPEAL BEFORE LD.CIT (A), WHO UPHELD ADDITION MADE BY LD.AO. ITA NO.3269(B)/2018 4 4. AGG RIEVED BY ORDER PASSED BY LD.CIT (A) ASSESSEE IS IN APPEAL BEFORE US NOW. 5. AT THE OUTSET , LD. AR SUBMITTED THAT THERE IS A DELAY OF 9 DAYS IN FILING PRESENT APPEAL BEFORE THIS T RIBUNAL. IN THE AFFIDA VIT DATED 05/12/18 ASSESSEE SUBMITTED THAT PRESENT APPE AL WAS TO BE FILED BEFORE THIS T RIBUNAL ON OR BEFORE 27/11/18. HOWEVER AS R EPRESENTATIVES OF ASSESSEE WERE HELD UP IN FILING INCOME TAX RETURNS FOR THE RELEVANT ASSESSMENT YEAR, WHICH ENDED ON 30/11/18, AND THEREFORE, APPEAL WAS FILED ON 06/12/18 , THEREBY CAUSING A SHORT DELAY. IT HAS BEEN SUBMITTED THAT IT WAS NO T DELIBERATE ATTEMPT TO FILE APPEAL BELATEDLY , HOWEVER THE GENUINENESS MAY BE CONSIDERED FOR PURPOSES OF CONFIRMATION. 6. WE HAVE PERUSED THE REASON FOR WHICH DELAY IN FILING PRESENT APPEAL HAS BEEN CAUSED. FOR ASSESSMENT YEAR 2018 - 19 RETURNS FOR COMPANIES WAS TO BE FILED ON OR BEFORE 30/11/18 AND GENUINE HARDSHIP CAUSED TO ASSESSEE IN FILING PRESENT APPEAL BELATEDLY. WE ARE THEREFORE, CONVINCED THAT THE DELAY IN FILING THE APPEAL WAS NOT INTENTIONAL AND C A NNOT BE ATTRIBUTED TO ASSESSEE. WE ARE ACCORDINGLY CONDONE DELAY OF 9 DAYS IN FILING PRESENT APPEAL. 7. LD.AR SUBMITTED THAT ASSESSEE DID NOT GET SUFFICIENT OPPORTUNITY OF B EING HEARD BEFORE LD.AO. HE SUBMITTED THAT EVEN BEFORE LD.CIT(A), ENTIRE DETAILS WERE SUBMITTED, WHICH WERE NOT CONSIDERED. HE SUBMITTED THAT ALL THE DETAILS REGARDING LABOUR CHARGES WERE FILED BEFORE LD.CIT (A) AND WITHOUT VERIFYING THE SAME , LD.CIT (A) C ONFIRMED ADDITION MADE BY LD.AO. HE THUS HUMBLY SUBMITTED THAT ITA NO.3269(B)/2018 5 ISSUE MAY BE SET ASIDE BACK TO LD. AO FOR DUE VERIFICATION OF ALL DETAILS IN THE INTEREST OF NATURAL JUSTICE. 7.1 LD.DR DID NOT OPPOSED TO THE SUBMISSION MADE BY LD.A R BASED UPON THE ABOVE, W E AR E OF CONSIDERED OPINION THAT ISSUE DESERVES T O BE RE - VERIFIED BY LD.AO IN LIGHT OF DOCUMENTS FILED BY ASSESSEE. FURTHER, WE ALSO OBSERVE THAT, ASSESSING OFFICER MADE AD HOC DISALLOWANCE WITHOUT THERE BEING ANY BASIS. ACCORDINGLY WE DIRECT LD.AO TO CARR Y OUT DUE VERIFICATION IN LIGHT OF DETAILS FILED BY ASSESSEE , AND TO CONSIDER CLAIM AS PER LAW. ASSESSEE IS DIRECTED TO FILE ALL REQUISITE DETAILS AS CALLED FOR BY LD.AO, IN ORDER TO COMPLETE ASSESSMENT. NEEDLESS TO SAY THAT , LD.AO SHALL PROVIDE PROPER OPPORTUNITY TO ASSESSEE OF BEING REPRESENTED AS PER LAW. ACCORDINGLY, GROUNDS RAISED BY ASSESSEE STANDS ALLOWED FOR STATISTICAL PURPOSES. 8. IN THE RESULT, APPEAL FILED BY ASSESSEE STANDS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH JUNE, 2019. SD/ - SD/ - (A.K.GARODIA) (BEENA PILLAI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: THE 28 TH JUNE, 209. *AM COPY OF THE ORDER FORWARDED TO: 1.APPELLANT; 2.RESPONDENT; 3.CIT; 4.CIT(A); 5. DR 6. ITO (TDS) BY ORDER 7 .GUARD FILE ASST. REGISTRAR