Srinivasa Civil Works Pvt. Ltd., Hyderabad V. Income-Tax Officer, Ward-3(1), Hyderabad

ITA 351/HYD/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 82422 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 7 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-10-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 05-03-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: B RAMA KRISHNA
• Assessee Lawyers: S RAMA RAO

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A', HYDERABAD BEFORE SHRI P.M.JAGTAP, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO.351/HYD/12 : ASSESSMENT YEAR 2005 - 06 M/S. SRINIVASA CIVIL WORKS, P.LTD., HYDERABAD (PAN - AA ECS 1716 J) V/S. INCOME TAX OFFICER, WARD 3(1), HYDERABAD (APPELLANT) (RESPONDENT) APPELLANT BY : S HRI S.RAMA RAO RESPONDENT BY : SHRI B.RAMAKRISHNA, DR DATE OF HEARING 13 . 1 0.2014 DATE OF PRONOUNCEMENT 15.10.2014 O R D E R PER P.M.JAGTAP, ACCOUNTANT MEMBER : THIS APPEAL FILED BY TH E ASSESSEE IS DIRECTED AGAINST THE ORDER OF TH E LEARNED COMMISSIONER OF INCOME - TAX(APPEALS) - IV HYDERABAD DATED 23 .1 2 . 2 0 11 A N D THE GROUNDS RAISED THEREIN BY THE ASSESSEE READ AS UNDER - 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOME - TAX(APPEALS) IS ERRONEOUS BOTH ON FACTS AND IN LAW. 2. THE LEARNED CIT(APPEALS) ERRED IN CONFIRMING THE ADDITION OF RS.13,07,850 MADE BY THE ASSESSING OFFICER WITHOUT CONSIDERING THE FACT THAT THERE WAS NO SUPPRESSION OF ROYALTY. 3. THE LEARNED CIT(APPEALS) ERRED IN CONFIRMING THE ADDITION OF RS.8,24,911 MADE BY THE ASSESSING OFFICER ON THE GROUND THAT THE SAID AMOUNTS WERE PAID OTHERWISE THAN BY WAY OF CROSSED CHEQUE OR CROSSED DEMAND DRAFT. THE LEARNED CIT(APPEALS) OUGHT TO HAVE SEEN THAT THE PROVISIONS OF I TA NO. 351 /H YD/20 1 2 M/S. SRINIVASA CIVIL WORKS, P. LTD., HYDERABAD 2 SEC.40A(3) HAVE NO APPLICATION TO THE FACTS OF THE CASE. 4. THE LEARNED CIT(APPEALS) ERRED IN CONFIRMING AN ADDITION OF RS.20,00,000 MADE BY THE AS SESSING OFFICER, WITHOUT CONSIDERING THE FACT THAT THE ASSESSING OFFICER MADE AN AD - HOC DISALLOWANCE WITHOUT ANY SPECIFIC OMISSION IN THE BOOKS OF ACCOUNT MAINTAINED BY THE APPELLANT HEREIN. 5. ANY OTHER GROUND THAT MAY BE URGED AT THE TIME OF HEARING. 2. GROUNDS NO.1 AND 5 RAISED BY TH E ASSESSEE IN THIS APPEAL ARE GENERAL IN NATURE, AND AS AGREED EVEN BY THE LEARNED COUNSEL FOR THE ASSESSEE, THEY DO NO T REQUIRE ANY SPECIFIC ADJU D I C ATION. 3. AT T H E TIM E OF H E ARING BEFORE US, THE LEARNED CO U N S EL FOR THE ASSESSEE HAS NOT PRESSED G R OUND NOS.2 AND 4 RAISED BY THE ASSESSEE IN I TS APPEAL. TH E SAME ARE ACCORD I N G LY DISMISSED AS NO T PRESSED. 4. THE ONLY G R OUND THAT SURVIVES FOR OUR CON S ID E RATION IS G R OUND NO.3, WHICH INVOLVES THE I S SUE REL A TING TO DIS ALLOWANCE OF RS.8,24,911 MADE BY THE ASSESSING OFFICER UNDER S.40A(3) OF TH E ACT, WHICH IS SUSTAINED BY THE LEARNED CIT(A) TO THE E X TENT OF R S .1,64,982. 5 . THE ASSESSEE IN THE PRESENT CASE IS A COMPA N Y WHICH IS ENGAGED IN THE BU S IN E SS O F EXECUTING CIVIL CONTRACT S . THE RETURN O F IN C OM E FOR THE YEAR UNDER CON S IDE R ATION WAS FILED BY IT ON 30.10.2005 DECLARIN G A TOTAL IN C OM E OF R S .2,07,58,159 IN THE ASSESSMENT ORIGINALLY COMPLETED UNDER S.143(3) VIDE O R DER DATED 13.12.2007, THE TOTAL IN C OM E O F THE ASSESSEE WAS DETERMINED BY THE ASSESSING OFFICER AT R S .2,27,58,159, AFTER MAKING AN ADDITION OF I TA NO. 351 /H YD/20 1 2 M/S. SRINIVASA CIVIL WORKS, P. LTD., HYDERABAD 3 RS .20,00,000 TOWARDS UNVERIFIABLE EXPENDITURE. THE SAID ASSESSMENT WAS SUBSEQUENTLY REVISED BY THE LEARNED COMMISSIONER OF INCOME - TAX UNDER S.263 OF TH E ACT INTER - ALIA ON TH E GROUND THAT THE DISALLOWANCE OF EXPENSES IN C URRED BY THE ASSESSEE I N CASH EXCEEDIN G R S .20,000, AS R E QUIRED B Y THE P RO VISIONS OF S.40A(3) WAS NO T CONSIDERED BY THE ASSESSING OFFICER. HE TH E R EF ORE, DIRECTED THE ASSESSING OFFICER TO VERIFY THIS ISSUE RELATING TO DISALLOWANCE UNDER S.40A(3) OF THE ACT, AG G REGATING TO R S .8,24,911. ACCORD I NGLY, IN THE ASSESSMENT COMPLETED UNDER S.143 ( 3 ) READ WITH S.263, A DI S ALLO W ANCE OF RS.8,24,911 WAS MADE BY THE ASSESSING OFFICER UNDER S.40A(3) TOWAR DS PAYM E N T S MADE BY THE ASSESSEE ON ACCOUNT OF EXPENSES IN CASH EXCEEDING RS.20,000. 6. ON APPEAL, THE LEARNED CIT(A) UPHELD THE FINDING OF THE ASSESSING OFFICER THAT PAYMENTS IN CASH AGGREGATING TO RS.8,24,911 WERE MADE BY TH E ASSESSEE IN CASH IN CONTR AVENTION OF P R O V IS I ONS OF S.40A(3). HE HOWEVER NO T ED THAT AS PER THE AMENDED PR O VI S IONS OF S.40A(3) APPLICABLE FOR THE YE A R UNDER CONSIDERATION, VIZ. 2005 - 06, DISALLOWANCE WAS TO BE MADE ONLY TO THE EXTENT OF 20% OF THE SUCH EXPENDITURE INCURRED IN CAS H BY THE ASSESSEE IN CONTRAVENTION OF THE PROVISIONS OF S.40A(3) . HE ACCORDINGLY RESTRICTED THE DISALLOWANCE MADE BY THE ASSESSING OFFICER UNDER S.40A(3) TO RS .1,64,982 . 7. STILL AGGRIEVED BY THE ORDER OF THE LEARNED CIT(A) , ASSESSEE HAS RAISED THIS ISSUE IN THE PRESENT APPEAL FILED BEFORE THE T RIBUNAL. 8. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND ALSO PERUSED THE RELEVANT MATERIAL ON RECORD. THE ONLY CON T ENTION R AISED BY THE LEARNED COUNSEL FOR THE ASSESSEE BEFORE US IS THAT THE I TA NO. 351 /H YD/20 1 2 M/S. SRINIVASA CIVIL WORKS, P. LTD., HYDERABAD 4 DI SALLOWANCE OF RS.20 LAKH S HAVING BEEN ALREADY MADE BY TH E ASSESSING OFFICER ON AC C OUN T OF UN VERIFIABLE EXPENSES IN TH E ASSESSMENT ORIGINALLY COMP L ETED UNDER S.143(3), NO SEPA RA TE OR FURTHER DISALLOWANCE ON ACCOUNT O F CASH EXPENSES UNDER S.40A(3) IS CALLED FOR. WE ARE UN A BL E TO ACCEPT THIS CONTENTION OF THE LEARNED COUNSEL FOR THE ASSESSEE. FIRST OF ALL, IT APPEARS THAT THIS CONTENTION W AS NOT RAISED BY TH E ASSESSEE EITHER DURING THE COURSE OF PROCEEDIN G S UNDER S.263 BEFOR E THE LEARNED COMMISSIONER OR EVEN BEFORE THE ASSESSING OFFICER OR THE LEARNED CIT(A) DURING TH E SUBSEQUENT PROCEEDINGS. MOREOVER, THERE IS NOTHING ON RECORD TO SHOW THAT THE DISALLOWANCE OF RS.20 LAKHS MADE BY THE ASSESSING OFFICER ON AC C OUN T OF UNVERIFIABLE EXPENSE ALSO INCLUDED THE DISAL LOWANCE ON ACCOUNT O F CASH EXPENDITURE INCURRED BY TH E ASSESSEE AND THAT TOO IN EXCESS O F RS .20,000 WHICH IS COVERED BY THE P R OVIS I ONS OF S.40A(3) OF THE ACT. AS RIGHTLY HELD BY THE LEARNED CIT(A), THE EXPENDITURE OF R S .8,24,911 INCURRED BY THE ASSESSEE IN CASH EXCEEDING THE SUM O F RS .20,000 WAS CLEARLY IN CONTRAVENTION OF PROVIS I ONS OF S.40 A (3 ) AND AS SPECIFICALLY PROVIDED THEREIN, 20% OF SUCH CASH EXPENDITURE WAS LIABLE TO BE DISALLO W ED SEPARATELY. WE, THEREFORE, FIND NO INFIRMITY IN THE IMPUGNED ORDER OF THE LEARNED CIT(A) SUSTAINING THE DISALLOWANCE MADE BY THE ASSESSING OFFICER ON THIS ISSUE ONLY TO THE EXTENT OF 20% OF TH E TOTAL CASH EXPENDITURE COVERED BY THE P R O V IS I ON S OF S.40A(3) AND UPHOL D ING T HE SAME , WE DISMISS G R OUND NO.3 OF THE ASSESSEES APPEAL. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE COURT ON 15 TH OCTOBER, 2 014 SD/ - SD/ - ( SAKTIJIT DEY ) ( P.M.JAGTAP ) JUDICIAL MEMBER ACCOUNTANT MEMBER DT/ - 15 TH OCTOBER, 2014 I TA NO. 351 /H YD/20 1 2 M/S. SRINIVASA CIVIL WORKS, P. LTD., HYDERABAD 5 COPY FORWARDED TO: 1. M/S. SRINIVASA CIVIL WORKS, P.LTD., C/O. SHRI S.RAMA RAO, FLAT NO.102, SHIRYA'S ELEGANCE, NO.3 - 6 - 643, STREET NO.9, HIMAYATNAGAR, HYDERABAD 500029 2 . INCOME TAX OFFICER WARD 3(1), HYDERABAD 3. 4. COMMISSIONER OF INCOME - TAX(APPEALS) IV , HYDERABAD COMMISSIONER OF INCOME - TAX I II , HYDERABAD 5. DEPARTMENTAL REPRESENTATIVE, ITAT, HYDERABAD. B.V.S