Sh. Tulsi Narayan Garg, Sheopur V. A.C.I.T., Circle-3, Gwalior

ITA 342/AGR/2013

• Counselvise Citation: 34220314 RSA 2013
• Duration Of Justice: 6 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-06-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 02-06-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 08-11-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S D SHARMA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, AGRA BEFORE SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER AND SHRI JOGINDER SINGH, JUDICIAL MEMBER ITA NO. 342/AGRA/ 2013 ASSESSMENT YEAR: 2008-09 SHRI TULSI NARAYAN GARG VS. A.C.I.T., SARAOGI MOHALLA, CIRCLE-3, AAYKAR BHAWA N, SHEOPUR CITY CENTRE, GWALIOR (PAN AFQPG 6797 P) (APPELLANT) (RESPONDENT) APPELLANT BY : NONE RESPONDENT BY : SRI S.D. SHA RMA, JR.D.R. DATE OF HEARING : 02.06.2014 DATE OF PRONOUNCEMENT : 06.06.2014 ORDER PER JOGINDER SINGH, JUDICIAL MEMBER: THE ASSESSEE IS AGGRIEVED BY THE IMPUGNED ORDER DAT ED 26.09.2013 OF THE LD. FIRST APPELLATE AUTHORITY, GWALIOR. 2. THE FIRST GROUND RAISED BY THE ASSESSEE PERTAINS TO CONFIRMING THE DISALLOWANCE OF RS.6,59,758/- ON ACCOUNT OF PAYMENT OF TDS, ALLEGEDLY NOT MADE WITHIN SPECIFIED TIME. ITA NO.342/AGRA/2013 A.Y. 2008-09 2 3. AT THE TIME OF HEARING NOBODY WAS PRESENT FOR TH E ASSESSEE WHEREAS SHRI S.D. SHARMA, LD. DEPARTMENTAL REPRESENTATIVE DEFENDED TH E CONCLUSION DRAWN BY THE LD. CIT(A). 4. WE HAVE CONSIDERED THE ASSERTIONS MADE BY THE LD . D.R. AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACTS IN BRIEF A RE THAT THE ASSESSEE MADE PAYMENT OF RS.6,59,758/- TO THE SUB-CONTRACTOR ON 20.02.200 8 ON WHICH THE AMOUNT OF RS.7,475/- WAS DEDUCTED AS TDS ON 20.02.2008 AND TH E DEDUCTED AMOUNT WAS PAID TO THE DEPARTMENT IN THE MONTH OF APRIL 2008 AS PER SECTION 40(A)(IA) OF THE ACT. AS PER THE REVENUE THE ASSESSEE VIOLATED THE PROVISION S OF THIS SECTION, THUS THE AMOUNT WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE. TH ERE IS NO DISPUTE TO THE FACT THAT THE ASSESSEE MADE THE PAYMENTS TO THE SUB-CONTRACTO RS, DEDUCTED THE TAX THEREFROM AND DEPOSITED THE SAME WITH THE GOVERNMENT DEPARTME NT. IN VIEW OF THESE FACTS, WE ARE OF THE VIEW THAT THE PROVISIONS OF SECTION 40(A )(IA) IS NOT APPLICABLE TO THE FACTS OF THE PRESENT APPEAL. EVEN OTHERWISE THIS ISSUE HAS BEEN SETTLED BY HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. RJINDER KUMAR (36 2 ITR 241)(DELHI). THEIR LORDSHIPS OBSERVED THAT THE OBJECT OF INTRODUCTION OF SECTION 40(A)(IA) IS TO ENSURE THAT TDS PROVISIONS ARE SCRUPULOUSLY IMPLEMENTED WI THOUT DEFAULT IN ORDER TO AUGMENT RECOVERIES .. FAILURE TO DEDUCT TDS OR DEPOSIT TDS RESULTS IN LOSS OF REVENUE AND MAY DEPRIVE THE GOVERNMENT OF THE TA X DUE AND PAYABLE. HAVING NOTED THE UNDERLYING OBJECTIVES, THEIR LORDSHIPS AL SO PUT IN A WORD OF CAUTION BY OBSERVING THAT THE PROVISION SHOULD BE INTERPRETED IN A FAIR, JUST AND EQUITABLE ITA NO.342/AGRA/2013 A.Y. 2008-09 3 MANNER. THEIR LORDSHIPS THUS RECOGNISED THE BIGGER PICTURE OF REALIZATION OF LEGITIMATE TAX DUES, AS OBJECT OF SECTION 40(A)(IA) . THIS APPROACH IS QUALITATIVELY DIFFERENT FROM PERCEIVING THE OBJECT OF SECTION 40A (IA) AS AWARDING OF COSTS ON THE ASSESSEES WHO FAIT TO COMPLY WITH THE RELEVANT PRO VISIONS BY CONSIDERING OVERALL OBJECTIVE OF BOOSTING TDS COMPLIANCE. WHILE COMIN G TO THIS CONCLUSION THE HONBLE COURT NOT ONLY DISAPPROVED THE DECISION OF SPECIAL BENCH BUT ALSO DISAPPROVED THE VERY FUNDAMENTAL ASSUMPTION UNDERLY ING ITS APPROACH. IN VIEW OF THIS FACT, THIS GROUND OF THE ASSESSEE IS ALLOWED. 5. THE NEXT GROUND PERTAINS TO CONFIRMING THE DISAL LOWANCE OF 5% OF THE MATERIAL PURCHASED AT RS.12,25,162/- FOR WANT OF PROPER VERI FICATION AND JUSTIFICATION. BEFORE THE LD. CIT(A) THE STAND OF THE ASSESSEE WAS THAT T HE DISALLOWANCE WAS MADE BY THE DEPARTMENT WITHOUT POINTING ANY SPECIFIC DEFECT OR ANY INCRIMINATING MATERIAL, THUS THE ADDITION WAS CHALLENGED. WHEREAS THE LD. D.R. DEFENDED THE DISALLOWANCE. 6. ON PERUSAL OF RECORD AND AFTER HEARING THE CONTE NTION RAISED BY THE LD. D.R., WE NOTE THAT THE A.O. MADE THE DISALLOWANCE @ 5% OU T OF THE EXPENSE DEBITED UNDER THE HEAD MATERIAL PURCHASE ON THE GROUND THAT SOM E OF THE MATERIAL WAS SELF- VOUCHED AND WAS SUPPORTED BY KACHA BILLS. WE NOTE THAT THE ASSESSEE DEBITED RS.2,45,03,245/- IN CONTRACT ACCOUNT UNDER THE HEAD MATERIAL PURCHASES. ON BEING ASKED BY THE A.O. TO FURNISH THE DETAILED LEDGER, B ILLS AND VOUCHERS FOR MAKING SUCH CLAIM, IT WAS FOUND THAT SOME OF THE EXPENSES/PURCH ASES WERE BASED ON SELF-VOUCHERS ITA NO.342/AGRA/2013 A.Y. 2008-09 4 SUPPORTED BY KACHA BILLS AND THE ASSESSEE COULD NOT EXPLAIN THE SAME SATISFACTORILY. THUS, THE LEARNED ASSESSING OFFICER MADE A LUMP SUM DISALLOWANCE OF 5% OF EXPENSES, CONSEQUENTLY, THE DISALLOWANCE WAS WORKED TO RS.12,25,162/-. ON APPEAL, THE LD. CIT(A) AFFIRMED THE STAND OF THE ASSESSING OFFICER AGAINST WHICH THE REVENUE IS IN APPEAL BEFORE THIS TRIBUNAL. THE BASI C STAND OF THE ASSESSEE BEFORE THE DEPARTMENT IS THAT SINCE IT IS A CASE OF A CONTRACT OR WHO PERFORMS WORK AT DIFFERENT SITES AND SOME TIME AT INTERIOR PLACES, IT IS NOT F EASIBLE TO MAINTAIN VOUCHERS FOR EACH AND EVERY EXPENDITURE AND THUS THE ASSESSEE WAS UNA BLE TO PRODUCE ALL THE VOUCHERS. THE TOTALITY OF THE FACTS ARE CLEARLY INDICATIVE OF THE FACT THAT THE TOTAL CLAIMED EXPENDITURES WERE NOT SUPPORTED BY PROPER BILLS AND VOUCHERS BUT THE NATURE OF JOB OF THE ASSESSEE, BUT THE EXPLANATION CANNOT BE IGNO RED. THUS, BY TAKING A LENIENT VIEW, WE AFFIRM THE ADHOC DISALLOWANCE TO THE EXTEN T OF 50% ON THE SO THAT THE INTEREST OF REVENUE IS ALSO SAFEGUARDED FROM POSSIB LE LEAKAGE ETC. THE ADDITION SO MADE IS SUSTAINED TO THE TUNE OF RS.6,12,581/-. TH IS GROUND IS PARTLY ALLOWED. 7. THE LAST GROUND RAISED BY THE ASSESSEE PERTAINS TO CONFIRMING THE DISALLOWANCE @ 5% ON VARIOUS EXPENSES DEBITED IN TRADING AND PRO FIT & LOSS ACCOUNT TO THE TUNE OF RS.3,74,780/- FOR WANT PROPER VERIFICATION. THE LD . D.R. DEFENDED THE DISALLOWANCE. 8. BEFORE COMING TO ANY CONCLUSION WE NOTE THAT THE LD A.O. DISALLOWED 5% OUT OF THE FOLLOWING EXPENSES :- ITA NO.342/AGRA/2013 A.Y. 2008-09 5 SR. NO. PARTICULARS AMOUNT 1. ROLLER CHARGES 499000/- 2. PAVER MACHINE HIRE CHARGES 236000/- 3. LOADER HIRE CHARGES 294500/- 4. VIBRATOR ROLLER CHARGES 282000/- 5. BOILER CHARGES 135000/- 6. JCB HIRE CHARGES 187200/- 7. MIXTURE HIRE CHARGES 96000/- 8. REPAIR AND MAINTENANCE OF MACHINE 1024362/- 9. FREIGHT CHARGES 370768/- 10. TIPPER CHARGES 198200/- 11. SALARY TO STAFF 2326000/- 12. TRAVELING EXPS. 160355/- 13. TELEPHONE EXPS. 102690/- 14. MISC. EXPS 249509/- 15. VEHICLE RUNNING EXPS. 293473/- 16. OFFICE EXPS. 16178/- 17. REPAIR & MAINTENANCE EXPS. 1024362/- TOTAL RS. 7495597/- 9. WE HAVE GONE THROUGH THE REASON OF DISALLOWANCE MADE BY THE A.O. AND ALSO CONFIRMATION OF THE SAME MADE BY THE LD. CIT(A) ALO NG WITH THE DECISIONS CITED IN THE IMPUGNED ORDER. ON THE REASONING CONTAINED IN THE PRECEDING PARAGRAPHS WHILE DISPOSING OF GROUND NO.2 THE DISALLOWANCE SO MADE I S REDUCED TO RS.2,50,000/-. THUS, THIS GROUND OF THE ASSESSEE IS PARTLY ALLOWED . 10. FINALLY, THE APPEAL OF THE ASSESSEE IS PARTLY A LLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 06.06.2014 SD/- SD/- (PRAMOD KUMAR) (JOGINDER SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATE:06 JUNE, 2014 PBN/* ITA NO.342/AGRA/2013 A.Y. 2008-09 6 COPY OF THE ORDER FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT (APPEALS) CONCERNED 4. CIT CONCERNED 5. D.R., ITAT, AGRA BENCH, AGRA 6. GUARD FILE. BY ORDER SR. PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL, AGRA TRUE COPY