ITO, New Delhi V. Sh. Gaurav Shandilya, Delhi

ITA 3590/DEL/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 6800 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 1 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-07-2016
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: SMC 1
• Next Hearing Date: 25-07-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 03-06-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ANIMA BARNWAL
• Assessee Lawyers: JAGDISH C KAPOOR
• Keywords: Depreciation; Opportunity of being heard; Additional evidence
• Section: 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SM C - 1 , NEW DELHI BEFORE SH. N. K. SAINI, A CCOUNTANT M EMBER ITA NO. 3590 /DEL/2015 : ASSTT. YEAR : 2009 - 10 INCOME TAX OFFICER, WARD - 38(2), NEW DELHI VS SH. GAUR AV SHANDILYA PROP. M/S JYOTI CONSTRUCTIONS & TRADERS, 194, POCKET - 9, SECTOR - 24, ROHINI, DELHI - 110085 (APPELLANT) (RESPONDENT) PAN NO. A OGPS5242E ASSESSEE BY : SH. JAGDISH C. KAPOOR, CA REVENUE BY : MS. ANIMA BARNWAL , SR. DR DATE OF HEARING : 25.07 .201 6 DATE OF PRONOUNCEMENT : 26 .07 .201 6 ORDER THIS IS AN APPEAL BY THE DEPARTMENT AGAINST THE ORDER DATED 04 .0 3 .2015 OF LD. CIT(A) - XIII , NEW DELHI . 2 . FOLLOWING GROUNDS HAVE BEEN RAISED IN THIS APPEAL: 1. ON F ACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD CIT (A) ERRED IN RESTRICTING THE ADDITION OF RS. 39,87,170 / - TO RS. 4,10,600 / - BEING UNVERIFIED EXPENSES MADE BY THE ASSESSING OFFICER WITHOUT APPRECIATING THE FACTS OF THE CASE AS THE ASSESSEE FAILED TO DI SCHARGE HIS ONUS TO SUBSTANTIATE HIS CLAIM DESPITE VARIOUS OPPORTUNITIES OF BEING HEARD OFFERED BY THE AO TO THE ASSESSEE. ITA NO . 3590 /DEL /201 5 GAURAV SHANDILYA 2 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD CIT (A) ERRED IN ADMITTING THE ADDITIONAL EVIDENCE SUBMITTED BY THE ASS ESSEE DURING THE COURSE OF APPELLATE PROCEEDING WITHOUT OFFERING OPPORTUNITY OF BEING HEARD TO THE A O, UNDER RULE 46A OF THE INCOME TAX RULES, 1962. 3. THE APPELLANT CRAVES TO LEAVE, TO ADD, ALTER OR AMEND ANY GROUND OF APPEAL RAISED ABOVE AT THE TIME OF THE HEARING. 3 . FROM THE ABOVE GROUNDS IT IS GATHERED THAT THE MAIN GRIEVANCE OF THE DEPARTMENT VIDE GROUND NO. 2 RELATES TO THE ADMISSION OF THE ADDITIONAL EVIDENCE WITHOUT PROVIDING OPPORTUNITY OF BEING HEARD. 4 . FACTS OF THE CASE IN BRIEF ARE THAT TH E ASSESSEE FILED THE RETURN OF INCOME ON 29.09.2009 DECLARING AN INCOME OF RS.6,05,443/ - . LATER ON, THE CASE WAS SELECTED FOR SCRUTINY. THE AO ASKED THE ASSESSEE TO PRODUCE THE BOOKS OF ACCOUNT ALONGWITH THE ORIGINAL BILLS & VOUCHER IN SUPPORT OF EXPENSES DEBITED IN THE PROFIT AND LOSS ACCOUNT . HOWEVER, THERE WAS NO COMPLIANCE ON THE PART OF THE ASSESSEE. THEREFORE, THE AO INVOKED THE PROVISIONS OF SECTION 144 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) AND COMPLETED THE ASSESSMENT EX - PARTE. THE AO NOTICED THAT THE ASSESSEE HAD INCURRED VARIOUS EXPENSES BUT FAILED TO PRODUCE BOOKS OF ACCOUNTS AND DID NOT FURNISHED THE DOCUMENTARY EVIDENCE IN SUPPORT OF HIS CLAIM. THE AO DISALLOWED 20% OF THE EXPENSES IN THE FOLLOWING MANNER: ITA NO . 3590 /DEL /201 5 GAURAV SHANDILYA 3 S. NO. NAM E OF EXPENSES AMOUNT 1. MATERIAL 21,89,563 / - 2. MATERIAL SUPPLIED BY CLIENT 1 ,25,26,132/ - 3. CARTAGE 3,11,425/ - 4. JOB WORK 16,77,740/ - 5. LABOUR CHARGES 24,28,178/ - 6. FUEL EXPENSES 48,759/ - 7. ACCOUNTING CHARGES 12,000 / - 8. AUDIT FEE 22,060 / - 9. BANK CHARGES 6,943 / - 10. CONVEYANCE 9,866 / - 11. ENTERTAINMENT 14,259 / - 12. SALARY 2 ? 88,000/ - 13. CAR MAINTENANCE 76,956 / - 14. DEPRECIATION 51,450/ - 15. MEDICAL EXPENSES 12,589/ - 16. MISC. EXPENSES 6,618/ - 17. OFFICE RENT 96,000 / - 18. POST AGE & TELEGRAM 17,458 / - 19. PRINTING & STATIONERY 3S.456/ - 20. STAFF AND LABOUR WELFARE 68,952 / - 21. TELEPHONE EXPENSES 32,459/ - TOTAL 1,99,35,863 / - 20% OF RS. 1,99,35,8637 - 39,87,170/ - 5 . BEING AGGRIEVED THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) AND FURNISHED THE SUMMARY OF WORKS DONE SI T E WISE , COPIES OF B ILLS OF MATERIAL RECEIVED FROM THE CONTRACTEE, DETAILS OF CAR MAINTENANCE AND FUEL EXPENSES, LABOUR REGISTER, TELEPHONE EXPENSES ETC. THE LD. CIT(A) SUSTAINED THE ADDITION OF RS.4,10,600 / - BY OBSERVING AS UNDER: ITA NO . 3590 /DEL /201 5 GAURAV SHANDILYA 4 4.3 THE REASON GIVEN BY AO AND THE SUBMISSION OF THE APPELLANT ARE CONSIDERED. IT IS SEEN THAT THE APPELLANT CLAIMED RS.1,25,26,132/ - AS AGAINST MATERIAL SUPPLIED BY THE MAIN CONTRACTOR WHICH IS LIABLE TO TAX AS TDS HAS BEEN MA DE ON THE GROSS AMOUNT PAID TO THE APPELLANT. THE TDS MADE IS REFLECTED IN 26AS RELEVANT TO A.Y. 2009 - 10. THUS, THE EXPENSES CLAIMED ON MATERIALS SUPPLIED CANNOT BE DISALLOWED. HOWEVER, CONSIDERING THE NON VERIFIABILITY OF EXPENSES ON JOB WORK AND LABOUR C HARGES AN AMOUNT OF INFLATED EXPENSES REQUIRES DISALLOWANCE. OTHER EXPENSES CONSIDERED BY AO FOR DISALLOWANCE ARE VERIFIABLE AND HENCE NO DISALLOWANCE CALLED FOR. ACCORDINGLY, 10% DISALLOWANCE ON JOB WORK RS.16,77,740/ - AND LABOUR CHARGES RS.24,28,178/ - IS DISALLOWED. HENCE, ADDITION OF RS.4,10,600/ - IS CONFIRMED AND THE APPELLANT GETS RELIEF OF RS.35,76,570/ - . THE GROUND OF APPEAL IS PARTLY ALLOWED. 6 . NOW THE DEPARTMENT IS IN APPEAL. THE LD. DR SUBMITTED THAT THE LD. CIT(A) ADMITTED THE ADDITIONAL EVI DENCE AND NEITHER ASKED ANY REMAND REPORT NOR ALLOW ED OPPORTUNITY OF BEING HEARD TO THE AO. IT WAS FURTHER SUBMITTED THAT THE LD. CIT(A) HAD NOT POINTED OUT HOW AND IN WHAT MANNER, THE EXPENSES WERE ALLOWABLE, PARTICULARLY WHEN, THE ASSESSEE HAD NOT FURN IS HED ANY DETAILS BEFORE THE AO, THEREFORE, THE RELIEF ALLOWED BY THE LD. CIT(A) WAS NOT JUSTIFIED. 7 . IN HIS RIVAL SUBMISSIONS THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE LD. CIT(A) AND FURTHER SUBMITTED THAT THE EXPENSES WE RE INCURRED IN DUE COURSE OF THE BUSINESS AND WERE ITA NO . 3590 /DEL /201 5 GAURAV SHANDILYA 5 DIRECTLY RELATED TO THE BUSINESS OF THE ASSESSEE. THEREFORE, THE LD. CIT(A) WAS FULLY JUSTIFIED IN ALLOWING THE RELIEF TO THE ASSESSEE. 8. I HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND CAREFUL LY GONE THROUGH THE MATERIAL AVAILABLE ON THE RECORD. IN THE PRESENT CASE, IT IS AN ADMITTED FACT THAT THE AO FRAMED THE ASSESSMENT U/S 144 OF THE ACT BECAUSE THE ASSESSEE DID NOT COMPLY WITH THE DIRECTION OF THE AO TO PRODUCE THE BOOKS OF ACCOUNTS AND FURNISH THE DETAILS RELATING TO THE EXPENSES CLAIMED IN THE PROFIT AND LOSS ACCOUNT. THE ASSESSEE FURNISHED CERTAIN DETAILS FIRST TIME BEFORE THE LD. CIT(A). IT APPEARS FROM THE IMPUGNED ORDER THAT NO REQUEST WAS MADE BY THE ASSESSEE FOR ADMISSION OF THE A DDITIONAL EVIDENCE AND THE LD. CIT(A) OBSERVED THAT ALL THE EXPENSES EXCEPT THE EXPENSES RELATING TO JOB WORK AND LABOUR CHARGES WERE VERIFIABLE. HOWEVER, IT IS NOT BROUGHT ON RECORD HOW AND IN WHAT MANNER THOSE EXPENSES WERE VERIFIABLE, PARTICULARLY WHEN, THE LD. CIT(A) DID NOT ASK ANY REMAND REPORT FROM THE AO , ON THE DETAILS FURNISHED BY THE ASSESSEE FIRST TIME BEFORE HIM. HE SUSTAINED THE DISALLOWANCE @ 10% OF THE EXPENSE S RELATING TO JOB WORK AND LABOUR CHARGES, H OWEVER, NO BASIS HAS BEEN GIVEN FOR THE SAME. I, THEREFORE, CONSIDERING THE TOTALITY OF THE FACTS, DEEM IT APPROPRIATE TO SET ASIDE THIS ISSUE BACK TO THE FILE OF THE AO FOR RE - ADJUDICATION IN ACCORDANCE WITH LAW AFTER PROVIDING DUE AND REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. ITA NO . 3590 /DEL /201 5 GAURAV SHANDILYA 6 9 . IN THE RESULT, THE APPEAL OF THE DEPARTMENT IS ALLOWED FOR STATISTICAL PURPOSES . (O RD ER PRO NO UNCED IN THE COURT ON 26 /07 /2016 ) SD/ - (N. K. SAINI) ACCOUNTANT MEMBER DAT ED: 26 /07 /2016 *SUBODH* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR