The ITO, Ward-9(1), Ahmedabad V. M/s. Shiv Sarjan Developers, Ahmedabad

ITA 341/AHD/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 9829 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 10 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-12-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 19-12-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 03-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JAMES KURIEN
• Assessee Lawyers: ANKIT TALSANIA
• Keywords: Corroborative evidences
• Section: 143(3); 142(1); 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH AHMEDABAD BEFORE SHRI S. S. GODARA, JM & SHRI MANISH BORAD, AM. ITA NO. 341/AHD/2014 ASST. YEAR: 2010-11 ITO, WD-9(1), AHMEDABAD. VS. M/S SHIV SARJAN DEVELOPERS, 1 ST FLOOR, MAYUR PANKH SHOPPING CENTER, AMBALAL HOUSE, SATELLITE, AHMEDABAD. APPELLANT RESPONDENT PAN ABMFS 1272P APPELLANT BY SHRI JAMES KURIEN, SR. DR RESPONDENT BY SHRI ANKIT TALSANIA, AR DATE OF HEARING: 19/12/2016 DATE OF PRONOUNCEMENT: 20/12/2016 O R D E R PER MANISH BORAD, ACCOUNTANT MEMBER . THIS APPEAL OF REVENUE FOR ASST. YEAR 2010-11 IS D IRECTED AGAINST THE ORDER OF LD. CIT(A)-XV, AHMEDABAD, DATE D 12 TH NOVEMBER, 2013 VIDE APPEAL NO.CIT(A)-XV/ITO WD9(1) 248/12-13 ARISING OUT OF THE ORDER U/S 143(3) OF THE IT ACT , 1961 (IN SHORT THE ACT) FRAMED ON 13.3.2013 BY ITO, WD-9(1), AHMEDABAD . 2. SOLE GRIEVANCE OF THE REVENUE IS AGAINST THE ORD ER OF LD. CIT(A) DELETING THE ADDITION OF RS.43,28,122/- MADE ON ACC OUNT OF LABOUR ITA NO. 341/AHD/2014 ASST. YEAR 2010-11 2 CHARGES. FOR THE SAKE OF CONVENIENCE GROUND OF APPE AL FILED BY THE REVENUE READ AS UNDER :- 1 THE LD. COMMISSIONER OF INCOME-TAX (AF PEALS)-XV, AHMEDABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.43,28,122/- MADE ON ACCOUNT OF LABOUR CHARGES. 2 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE , THE LD, COMMISSIONER OF INCOME-TAX (APPEALS)-XV, AHMEDABAD CUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. 3 IT IS THEREFORE, PRAYED THAT THE ORDER OF THE LD. COMMISSIONER OF INCOME- TAX (APPEALS)-XV, AHMEDABAD MAY BE SET-ASIDE AND TH AT OF THE ASSESSING OFFICER BE RESTORED. 3. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE AS SESSEE IS A PARTNERSHIP FIRM ENGAGED IN THE BUSINESS OF BUILDIN G CONTRUCTION AND PROPERTY DEVELOPMENT. RETURN OF INCOME WAS FILED ON 17.08.2010 SHOWING TOTAL INCOME OF RS.10,73,230/-. CASE WAS SE LECTED FOR SCRUTINY ASSESSMENT THROUGH CASS. NOTICE U/S 143(2) & 142(1) OF THE ACT ALONG WITH DETAILED QUESTIONNAIRE WERE ISSUED A ND SERVED. NECESSARY DETAILS WERE CALLED FOR AND THE SAME WERE SUPPLIED. DURING THE COURSE OF ASSESSMENT PROCEEDINGS WHILE E XAMINING THE EXPENDITURE OF LABOUR CHARGES OF RS.86,56,244/- DET AILS WERE CALLED FOR WITH REGARD TO THE CONTRACT AGREEMENT OF WORK A LONG WITH MEASUREMENT, CONFIRMATIONS, NAMES AND ADDRESSES. NE CESSARY DETAILS WERE SUBMITTED BY THE ASSESSEE WHICH INCLUD ED BANK STATEMENT, COPY OF AGREEMENT, COPY OF MEASUREMENT O F WORK, RETURN OF INCOME AND RELEVANT EXTRACT FROM BOOKS OF ACCOUN T AND CASH BOOKS. THEREAFTER SUMMONS U/S 131 WERE ISSUED BUT E XCEPT ONE NONE OTHER APPEARED BEFORE THE ASSESSING AUTHORITY. ACCORDINGLY, LD. ITA NO. 341/AHD/2014 ASST. YEAR 2010-11 3 ASSESSING OFFICER WENT AHEAD ASSESSING THE INCOME A FTER DISALLOWING 50% OF THE LABOUR CHARGES THEREBY MAKING ADDITION O F RS.43,28,122/- AND ASSESSED THE INCOME AT RS.54,01,350/-. 4. APPEAL BEFORE LD. CIT(A) BROUGHT SUCCESS TO THE ASSESSEE. 5. AGGRIEVED, REVENUE IS NOW IN APPEAL BEFORE THE T RIBUNAL. 6. LD. DR VEHEMENTLY ARGUED AND SUPPORTED THE ORDER OF LD. ASSESSING OFFICER. 7. ON THE OTHER HAND, LD. AR REITERATED THE SUBMISS IONS MADE BEFORE LD. CIT(A) AND RELIED ON HIS APPELLATE ORDER . 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL FACTS AND RECORDS PLACED BEFORE US. THOUGH REVENUE HAS RAISED THREE GROUNDS BUT THE SOLITARY GRIEVANCE LIES IN GR OUND NO.1 AGAINST THE ACTION OF LD. CIT(A) DELETING ADDITION OF RS. 4 3,28,122/- MADE BY ASSESSING OFFICER BY WAY OF DISALLOWING 50% OF LABO UR CHARGES. WE OBSERVE THAT DURING THE YEAR GROSS RECEIPTS WERE SH OWN AT RS.2,96,47,112/- AND NET PROFIT OF RS.10,55,229/- W HICH WAS DECLARED IN PERCENTAGE TERM @ 9.81% WHICH IS HIGHER THAN 9.5 % IN THE IMMEDIATELY F.Y. 2008-09. WE OBSERVE THAT DURING TH E COURSE OF ASSESSMENT PROCEEDINGS DETAILS RELATING TO 10 PARTI ES WERE CALLED FOR, TO WHOM LABOUR CONTRACT CHARGES OF RS.86,56,244/- P AID BY ASSESSEE TOWARDS CONSTRUCTION OF FLATS UNDER HOUSING PROJECT SCHEME IN THE NAME OF KAMESHWAR FLORENCE AT VILLAGE SHILAJ, AHM EDABAD. WE ITA NO. 341/AHD/2014 ASST. YEAR 2010-11 4 FURTHER OBSERVE THAT ALL REQUIRED DETAILS ALONG WIT H SUPPORTING EVIDENCES IN ORDER TO ESTABLISH GENUINENESS OF THE TRANSACTIONS AND WORK DONE BY THE LABOUR CONTRACTORS WERE FILED WHIC H INTER ALIA INCLUDED THE FOLLOWING :- 1. COPY OF ENTIRE RETURN OF INCOME ALONGWITH STATEM ENT OF INCOME A.Y. 2010-11 2. BANK STATEMENT OF YOUR ALL BANK ACCOUNTS FOR F.Y . 2009-10 (A.Y. 2010-11) 3. BOOKS OF ACCOUNTS AND CASH BOOK FOR F.Y. 2009-10 (A.Y. 2010-11). 4. COPY OF AGREEMENT IN RESPECT OF WORK DONE BY YOU . 5. COPY OF ALL MEASUREMENT OF WORK DONE BY YOU 6. PAN ALONG WITH NAMES AND ADDRESSES. 7. DETAILS OF TDS DEDUCTED, COPIES OF BILLS RAISED BY CONTRACTORS. 9. ABOVE DETAILS WERE FILED BEFORE BOTH THE LOWER A UTHORITIES TO SUPPORT THE GENUINENESS OF THE TRANSACTIONS AND TO PROVE THAT THEY WERE NOT BOGUS LABOUR CHARGES AS PRESUMED BY THE LD . ASSESSING OFFICER. WE FURTHER OBSERVE THAT LD. ASSESSING OFFI CER MADE AD HOC DISALLOWANCE OF 50% OF RS. 43,28,122/- TOWARDS LABO UR CHARGES OUT OF TOTAL LABOUR CHARGES OF RS.86,56,244/- FOR MERE NON -ATTENDANCE IN THE OFFICE OF LD. ASSESSING OFFICER AGAINST THE SUMMONS ISSUED INSPITE OF THE FACT THAT ALL THE PAYMENTS WERE MADE BY ACCOUNT PAYEE CHEQUES TO THE PERSONS HAVING PAN. WE FURTHER OBSERVE THAT IN THE GIVEN FACTS LD. CIT(A) DELETED THE IMPUGNED ADDITION BY OBSERVI NG AS FOLLOWS :- 5. I HAVE PERUSED THE FACTS OF THE CASE. I HAVE PER USED THE SUBMISSION OF APPELLANT AND CASE LAWS RELIED ON. AFTER CAREFUL CO NSIDERATION OF FACTS, SUBMISSION AND CONTENTIONS OF BOTH A.O. AS WELL AS APPELLANT THE GROUND WISE ADJUDICATION IS AS FOLLOWS: 5,2. BEFORE ADJUDICATION OF VARIOUS GROUNDS WHICH ARE MAINLY AGAINST THE DISALLOWANCES OF LABOUR EXPENSES(AT THE RATE OF 50% ) AND ADDITION OF RS. 4328122, THE FOLLOWING UNDISPUTED FACTS REQUIRED CO NSIDERATION. ITA NO. 341/AHD/2014 ASST. YEAR 2010-11 5 (I) THE APPELLANT FILED A VOLUNTARY RETURN OF IN COME WITH AUDITED ACCOUNTS AND TAX AUDIT REPORT. THE APPELLANT HAS SHOWN NET PROFI T OF RS. 1055229/- ON THE TOTAL GROSS RECEIPT OF RS. 2,96,47,112/-. THE A.O HAS NOT MENTIONED ABOUT TAX AUDIT REPORT AND IMPROVED NET PROFIT I.E. DURING THE PREV IOUS YEAR IT WAS 9.81% COMPARE TO 9.5.% IN IMMEDIATELY PRECEDING PREVIOUS YEAR. (II) THE APPELLANT SUBMITTED/PRODUCED COMPLETE DETAILS IN RESPECT OF EXPENSES VIZ BILL/VOUCHERS, STOCK REGISTER OF MATERIAL, LORR Y RECEIPT OF GOODS INWARDS ETC. THE APPELLANT ALSO PRODUCED THE CONTRA ACCOUNT AND CONFIRMATION OF ALL THE LABOUR CONTRACTOR REFLECTING NAME, ADDRESSES, PAN, COPIES OF BILLS OF SUCH CONTRACTOR, ACCOUNT, TDS DEDUCTED FROM SUCH PAYMENT ETC. (III) THE A.O ISSUED SUMMONS TO ALL SUCH PARTIES U/S. 131 OF THE ACT ON 07-02- 13 TO PRODUCE/FURNISH DETAILS ON 13.2.13. THE A.O. ISSUED A SHOW CAUSE TO APPELLANT THAT THE PARTIES HAVE NOT COMPLIED WITH T HE DETAILS TO BE FURNISHED HENCE APPELLANT WAS REQUESTED TO PRODUCE ALL THESE PARTIES. (IV) SHRI SANJAY BHANDERI ATTENDED(CLAIMED BY APPE LLANT BEING REPRESENTING ALL THE PARTIES RECEIVED THE SUMMON) AND REMAINING PART IES SUBMITTED CONTRA LEDGER ACCOUNT, BILL AND COPY OF RETURN FOR A.Y 2010-11 WE RE FILED. (V) THE A.O CONSIDERED THE TEN(10) LABOUR CONTRA CTOR TO WHOM TOTAL PAYMENT BY APPELLANT WAS MADE OF RS. 8656244/-. THE A.O WHILE DISCUSSING THE DISCREPANCY IN ALMOST ALL THE CASES HELD THAT NONE OF SUCH LABO UR CONTRACTOR HAS NOT COMPLIED FOR DETAIL NO.4 AND NO.5. I.E. NO COPY OF AGREEMENT IN RESPECT OF WORK DONE BY EACH OF THEM AND COPY OF ALL MEASUREMENT OF WORK DO NE BY EACH OF THEM WERE FILED. (VI) THE A.O. NEITHER REJECTED BOOKS OF ACCOUNTS NOR ESTIMATED GROSS PROFIT ON ACCOUNT OF SUCH DISCREPANCY I,E, THE A,0 ACCEPTED BOOK PROFIT ON ACCOUNT OF SUCH BOOK DISCREPANCY I.E. THE AO ACCEPT ED BOOK RESULT. THE A.O. HAS NOT MADE ANY INDEPENDENT INQUIRY EXCEPT ISSUING SUMMONS AND ASKING APPELLANT TO PRODUCE THE PARTIES WITH DETAILS. NO S TATEMENT WAS RECORDED OF SHRI SANJAY BHANDARI WHO WAS PRODUCED BEFORE A.O. NO FUR THER INQUIRY WERE MADE FROM THE DETAILS OF COPIES OF RETURN OF INCOME FILE D BY THOSE LABOUR CONTRACTOR. (VII) THE A.O'S DISALLOWANCE AT THE RATIO OF 50% IS NOT BASED ON ANY COMPARABLE DATA OR REASON/JUSTIFICATION ABOUT WHY 50% WHY NOT LESS OR MORE? THE A.O. CONTENDED THAT MOST OF THE LABOUR CONTRACTORS ARE L ADIES AND FROM A SINGLE ADDRESS BUT ADVERSE INTERPRETATION AS TAKEN BY A.O. IS NOT SUPPORTED BY ANY AUTHORITIES OR CASE LAWS THAT THESE CANNOT BE LA DIES CONTRACTOR OR THERE CANNOT BE MORE THAN ONE CONTRACTOR FROM ONE ADDRESS. (VIII) COPIES OF BILLS SUBMITTED BY APPELLANT OF VARIOUS CONTRACTOR CLEARLY REFLECT THE NATURE OF WORK DONE, THE DESCRIPTION WITH MEASU REMENT AND RATE FOR TOTAL AMOUNT OF BILL. ITA NO. 341/AHD/2014 ASST. YEAR 2010-11 6 5.3. NOW COMING TO GROUNDS OF APPEAL. (A)GROUND NO.1 & 2 ARE AGAINST THE DISALLOWANCE OF LABOUR EXPENSES AND ADDITION OF RS. 4328122/-. AS DISCUSSED AT PARA 5.2 . ABOVE, THE A.O MERELY ON PRESUMPTIONS, WITHOUT VERIFYING THE FACTS FROM THE COPIES OF THE BILLS, WITHOUT APPRECIATING THE FACTS THAT APPELLANT'S CASE IS AUD ITED ONE AND NO SUCH ADVERSE COMMENTS IS THERE BY AUDITOR, WITHOUT REJECTING THE BOOKS OF ACCOUNT IN CONTRAST TO A BETTER GROSS PROFIT AND NET PROFIT SHOWN BY AP PELLANT, AND WITHOUT DOING ANY FURTHER INDEPENDENT INQUIRY MADE SUCH DISALLOWANCES AT 50% OF RATE WITHOUT ANY COMPARABLE CAN ONLY BE HELD AS MADE ON ASSUMPTION, CONJUNCTURE AND SERVICES. THE APPELLANT EMPLOYED THE LABOUR CONTRACTOR(IT IS IMMATERIAL WHETHER SUCH CONTRACTOR ARE LADIES OR GENTS) FROM TWO THREE FAMI LY GROUPS(AS EVIDENT FROM THE ADDRESSES ON BILL I.E. NOT ALL THE CONTRACTOR HAS S AME ADDRESSES) FOR COHESION OF DIFFERENT TYPE OF CIVIL WORK I.E. R.C.C, PLASTERING , PLUMBING, RECLAMATION, MEASURING ETC AND MADE THE PAYMENT BY ACCOUNT PAYEE CHEQUE AFTER DEDUCTION OF TDS. ALL THESE CONTRACTOR REFLECTED SUCH RECEIPT AND CORRESPONDING INCOME IN THE RETURN OF INCOME FILED BY THEM FOR THE RESPECTI VE PERIOD. IF THE A.O HAS ANY DOUBT ABOUT GENUINITY, HE CAN TAKE ACTION AGAINST T HEM BUT SIMPLY BECAUSE THERE IS NO WRITTEN AGREEMENT AND THE BILLS ARE IN A SAME FORMAT, SUCH DISALLOWANCES CAN ONLY BE HELD AS UNJUSTIFIED BEING MADE ON SUSPI CION. HON'BLE GUJARAT HIGH COURT IN THE CASE OF DULY RECOGNIZED THE HAND MADE VOUCHERS AS ADMISSIBL E FOR CLAIM OF SUCH EXPENDITURE . IN THE CASE OF APPELLANT, PRINTED BIL LS WITH ADDRESSES ARE THERE WITH CONFIRMATION AND PAN AS WELL AS DETAILS OF L.T. RET URNS FILED, THEREFORE SUCH DISALLOWANCES THAT TOO AT 50% WITHOUT ANY BASIS ARE NEITHER JUSTIFIED NOR SUSTAINABLE. THE A.O IS DIRECTED TO DELETE THE ADDI TION SO MADE OF RS. 4328122/- THE APPELLANT GETS RELIEF ACCORDINGLY. THESE GROUND S ARE THEREFORE ALLOWED. (B). GROUND NO.3 IS AGAINST THE INITIATION OF PENAL TY U/S, 271 (1)( C) OF THE ACT WHICH IS NOW CONSEQUENTIAL. BUT, CONSIDERING THE PR EMATURE STAGE, THIS GROUND IS TREATED AS ALLOWED FOR STATISTICAL PURPOSE IN VIEW OF ADJUDICATION OF GROUND NO. 1 & 2. (C). GROUND NO 4,5 & 6 ARE GENERAL IN NATURE OR ALR EADY BEEN ADJUDICATED. CONSIDERING THE ADJUDICATION OF GROUNDS 1 & 2 AS AL LOWED, THESE GROUNDS ARE TREATED AS ALLOWED. 10. FROM GOING THROUGH THE DETAILED SPEAKING ORDER OF LD. CIT(A) WE FIND THAT DISALLOWANCE OF 50% MADE BY LD. ASSESS ING OFFICER IS NOT BASED ON COMPARABLE DATA OR JUSTIFICATION AND HE H AS IGNORED COMPLETELY THE FACT THAT ASSESSEE HAS SHOWN HIGHER NET PROFIT RATE IN ITA NO. 341/AHD/2014 ASST. YEAR 2010-11 7 COMPARISON TO PREVIOUS F.Y. FURTHER THERE IS NO BAS E IN THE ALLEGATION OF ASSESSING OFFICER THAT THE IMPUGNED EXPENDITURE IS BOGUS AS MOST OF THE LABOUR CONTRACTORS ARE LADIES AND HAVING COM MON ADDRESSES. FURTHER LD. ASSESSING OFFICER HAS ALSO IGNORED THE FACT THAT BOOKS OF ACCOUNT OF THE ASSESSEE ARE AUDITED AND BETTER GP A ND NP HAS BEEN SHOWN AND NO ADVERSITY WAS OBSERVED IN THE PURCHAS E AND SALE TRANSACTION OF THE ASSESSEE. 11. WE ARE, THEREFORE, OF THE VIEW THAT IN THE GIVE N FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT(A) HAS RIGHTLY D ELETED THE IMPUGNED DISALLOWANCE. WE FIND NO REASON TO INTERFE RE WITH THE ORDER OF LD. CIT(A). WE UPHOLD THE SAME. THIS GROUND OF T HE REVENUE IS DISMISSED. 12. OTHER GROUND IS OF GENERAL NATURE, WHICH NEEDS NO ADJUDICATION. 13. IN THE RESULT, APPEAL OF REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH DECEMBER, 2016 SD/- SD/- (S. S. GODARA) JUDICIAL MEMBER (MANISH BORAD) ACCOUNTANT MEMBER DATED 20/12/2016 MAHATA/- ITA NO. 341/AHD/2014 ASST. YEAR 2010-11 8 COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER ASST. REGISTRAR, ITAT, AHMEDABAD ITA NO. 341/AHD/2014 ASST. YEAR 2010-11 9 1. DATE OF DICTATION19/12/2016 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER: 19/12/2016 OTHER MEMBER: 3. DATE ON WHICH APPROVED DRAFT COMES TO THE SR. P. S./P.S.: 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER FOR PRONOUNCEMENT: __________ 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. P.S./P.S.: 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK: 21/12/2016 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK: 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER: 9. DATE OF DESPATCH OF THE ORDER: