V.Mani, Kallakurichi V. ITO, Villupuram

ITA 3301/CHNY/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 7671 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Assessment Year: 2006-2007
• Appeal Filed On: 05-12-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SANAT KUMAR RAHA
• Assessee Lawyers: VIJAYARAGHAVAN

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI . . . , BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER ./ ITA NOS. 3300 TO 3303/MDS/2016 / ASSESSMENT YEARS : 200506 TO 2008-09 SHRI V. MANI, C/O M/S. SUBBARAYA AIYAR PADMANABHAN & RAMAMANI ADVOCATES, NEW NO.75 (OLD NO.150), DR.RADHAKRISHNAN SALAI, MYLAPORE, CHENNAI 4. PAN : AAIPM6184D V. THE INCOME TAX OFFICER, WARD-2, VILLUPURAM. ( /APPELLANT) ( /RESPONDENT) /APPELLANT BY : SHRI VIJAYARAGHAVAN, A DVOCATE /RESPONDENT BY : SHRI SANAT KUMAR RA HA, JCIT /DATE OF HEARING : 24.01.2017 /DATE OF PRONOUNCEMENT : 28.02.2017 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER : ALL THE APPEALS OF THE ASSESSEE ARE DIRECTED AGA INST THE ORDER PASSED BY THE COMMISSIONER OF INCOME TAX (APP EALS)- PUDUCHERRY DATED 21.09.2016 AND PERTAINS TO THE ASS ESSMENT YEARS 2005-06 TO 2008-09. SINCE COMMON ISSUE ARISES FOR CONSIDERATION IN ALL THE APPEALS, THE SAME WAS HEARD TOGETHER AND DISPOSED OFF BY THIS COMMON ORDER. 2 I.T.A. NO. 3000 TO 3303/MDS/2016 2. THE COMMON ISSUE ARISES FOR CONSIDERATION IN ALL THE APPEALS IS WITH REGARD TO DISALLOWANCE OF EXPENDITURE. 3. SHRI VIJAYARAGHAVAN, THE LD. COUNSEL FOR THE ASS ESSEE SUBMITTED THAT THERE WAS A SURVEY IN THE PREMISES O F THE ASSESSEE. THE ASSESSING OFFICER DISALLOWED 12% OF THE EXPENDI TURE CLAIMED BY THE ASSESSEE ON THE GROUND THAT THE BILLS ARE SE LF-MADE AND THE ASSESSEE MIGHT HAVE INFLATED THE EXPENDITURE. THE ASSESSING OFFICER HAS ALSO REFERRED TO THE STATEMENT SAID TO BE RECORDED FROM THE ASSESSEE DURING THE SURVEY OPERATION. ACCORDI NG TO THE LD. COUNSEL, THE STATEMENT RECORDED FROM THE ASSESSEE D URING THE COURSE OF SURVEY OPERATION HAS NO EVIDENTIARY VALUE . ACCORDING TO THE LD. COUNSEL, THE DISALLOWANCE MADE BY THE ASSES SING OFFICER AT THE RATE OF 12% IS HIGHLY EXCESSIVE. 4. ON THE CONTRARY, SHRI SAMAT KUMAR RAHA, THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE ASSE SSEE HAS NOT PRODUCED PROPER BILLS AND VOUCHERS FOR THE EXPENDIT URE CLAIMED. THE BILLS AND VOUCHERS ARE SELF-MADE. WHEN THIS WA S BROUGHT TO THE NOTICE OF THE ASSESSEE, HE ACCEPTED FOR DISALLOWANC E OF 12% DURING THE COURSE OF SURVEY OPERATION. THEREFORE, THE CIT (APPEALS) FOUND 3 I.T.A. NO. 3000 TO 3303/MDS/2016 THAT IT IS NOT THE CASE OF DISALLOWANCE MADE BASED ON STATEMENT RECORDED DURING THE COURSE OF SURVEY OPERATION. TH E ASSESSING OFFICER HAS ALSO TAKEN INTO CONSIDERATION THE CORRO BORATIVE MATERIAL AVAILABLE ON RECORD. THEREFORE, THE DISALLOWANCE M ADE BY THE ASSESSING OFFICER HAS RIGHTLY BEEN SUSTAINED BY THE CIT (APPEALS). 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE MATERIAL AVAILABLE ON RECORD. ADMITTED LY, THE ASSESSEE ENGAGED IN THE BUSINESS OF PURCHASE AND SALE OF PAD DY AND RICE. THE EXPENSES TOWARDS EB, GUNNY BAGS WERE CLAIMED BY THE ASSESSEE. THE ASSESSING OFFICER FOUND THAT THE BIL LS AND VOUCHERS PRODUCED BY THE ASSESSEE DID NOT TALLY WITH THE EXP ENSES CLAIMED. THEREFORE, THE EXPENSES WERE INFLATED. THE ASSESSIN G OFFICER ALSO FOUND THAT THE BILLS AND VOUCHERS ARE SELF-MADE. T HEREFORE, THE ASSESSING OFFICER DISALLOWED 12% OF THE EXPENDITURE CLAIMED ON THE BASIS OF STATEMENT RECORDED DURING THE COURSE OF SU RVEY OPERATION. THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT IN THIS NATURE OF BUSINESS, THE PURCHASE OF PADDY FROM OTHER STATE AN D THE EXPENDITURE INCURRED BY THE ASSESSEE HAS TO BE SUPP ORTED ONLY BY SELF-MADE VOUCHERS. PURCHASE OF PADDY FROM AGRICUL TURISTS CANNOT BE SUPPORTED BY ANY OTHER EVIDENCE OTHER THAN SELF- MADE VOUCHERS. 4 I.T.A. NO. 3000 TO 3303/MDS/2016 IN CASE, THE PADDY ARE PURCHASED FROM REGULAR DEALE R, THEN THE ASSESSEE MAY HAVE SOME PROPER VOUCHER. IT IS NOBOD Y CASE THAT THE PADDY WAS PURCHASED FROM DEALER. MOREOVER, THE PURCHASE OF GUNNY BAGS AND OTHER PACKING MATERIALS ARE PURCHASE D IN THE UNREGULATED MARKET. THEREFORE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE ASSESSEE CANNOT MAINTAIN ANY PROPE R VOUCHER IN THIS KIND OF BUSINESS. TAKING INTO CONSIDERATION O F THE NATURE OF THE ACTIVITY, THIS TRIBUNAL IS OF THE CONSIDERED OPINIO N THAT DISALLOWANCE AT THE RATE OF 12% IS HIGHLY EXCESSIVE. BY TAKING INTO CONSIDERATION OF THE NATURE OF BUSINESS AND THE EXPENSES CLAIMED, THE PURCHASES MADE BY THE ASSESSEE, THIS TRIBUNAL IS OF THE CONSI DERED OPINION THAT DISALLOWANCE OF 5% OF THE EXPENSES CLAIMED WOU LD MEET THE ENDS OF JUSTICE. ACCORDINGLY, THE ORDERS OF THE LO WER AUTHORITIES ARE MODIFIED AND THE ASSESSING OFFICER IS DIRECTED TO D ISALLOW ONLY 5% OF THE TOTAL EXPENSES CLAIMED INSTEAD OF 12%. 6. FOR THE ASSESSMENT YEAR 2008-09, THE ASSESSEE HA S TAKEN ONE MORE GROUND REGARDING THE COST OF CONSTRUCTION. ACCORDING TO SHRI VIJAYARAGHAVAN, THE LD. COUNSEL FOR THE ASSESS EE, THE ASSESSING OFFICER IN FACT REFERRED THE MATTER TO TH E VALUATION OFFICER. THE VALUATION OFFICER ESTIMATED THE COST OF CONSTRU CTION ON THE BASIS 5 I.T.A. NO. 3000 TO 3303/MDS/2016 OF THE CENTRAL PUBLIC WORKS RATE. ACCORDING TO THE LD. COUNSEL, THE STATE PWD RATE WOULD BE ACCURATE THAN THE CENTRAL P WD RATE. 7. ON THE CONTRARY,SHRI SANAT KUMAR RAHA, THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT EVEN THO UGH, THE VALUATION OFFICER ESTIMATED THE COST OF CONSTRUCTIO N ON THE BASIS OF THE CPWD RATE, THE CIT (APPEALS) HAS GIVEN DEDUCTIO N AFTER REFERRING TO THE JUDGMENT OF THE MADRAS HIGH COURT. THEREFORE NO INTERFERENCE IS CALLED FOR. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE STAT E GOVERNMENT HAS PRESCRIBED RATE FOR CONSTRUCTION. SIMILARLY, T HE CENTRAL GOVERNMENT HAS ALSO PRESCRIBED RATE FOR CONSTRUCTIO N. THE VALUATION OFFICER HAS ADOPTED THE CENTRAL PWD RATE FOR THE PURPOSE OF ESTIMATION. THE CIT (APPEALS) AFTER REFERRING T O THE JUDGMENT OF THE MADRAS HIGH COURT IN THE CASE OF A. ADBUL RAHIM V INCOME TAX OFFICER [2002] 125 TAXMAN 33 MAD, HAS ALLOWED REDUC TION TOWARDS COST OF CONSTRUCTION. WHEN THERE ARE TWO DIFFERENT RATES PRESCRIBED BY THE CENTRAL GOVERNMENT AND STATE GOVERNMENT, THI S TRIBUNAL IS OF THE CONSIDERED OPINION THAT RATES PRESCRIBED BY THE STATE 6 I.T.A. NO. 3000 TO 3303/MDS/2016 GOVERNMENT WOULD BE MORE ACCURATE IN THE STATES IN WHICH THE CONSTRUCTION WERE MADE. MOREOVER, WHEN THE ESTIMAT ES ARE MADE, IT IS ALWAYS PREFERABLE TO FOLLOW THE RATE PRESCRIB ED BY THE STATE GOVERNMENT IN THE RESPECTIVE STATE. THEREFORE, T HIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE RATE PRESCRIBED BY THE STATE GOVERNMENT HAS TO BE ADOPTED FOR THE PURPOSE OF EST IMATING THE COST OF CONSTRUCTION. ACCORDINGLY, THE ORDERS OF T HE LOWER AUTHORITIES ARE SET ASIDE AND THE ASSESSING OFFICER IS DIRECTED TO VALUE THE COST OF CONSTRUCTION AS PER THE RATES PRESCRIBED BY THE STATE PWD. 10. IN THE RESULT ALL THE APPEALS OF THE ASSESSEE A RE PARTLY ALLOWED. ORDER PRONOUNCED ON 28 TH FEBRUARY, 2017 AT CHENNAI. SD/- ( . . . ) (N.R.S. GANESAN) /JUDICIAL MEMBER /CHENNAI, /DATED, THE 28 TH FEBRUARY, 2017. JR. ! ' ! /COPY TO: 1. /APPELLANT 2. /RESPONDENT 3. #$% ( )/CIT(A)-PUDUCHERRY 4. #$% /CIT 5. ! /DR 6. &' /GF.