ITO, New Delhi V. Smt. Laxmi Tibrewal, New Delhi

ITA 361/DEL/2012

• Counselvise Citation: 36120114 RSA 2012
• Duration Of Justice: 3 year(s) 2 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-03-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 27-01-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 24-01-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P DAMKAUNJM A
• Assessee Lawyers: RAJIV BANSAL
• Keywords: Additional evidence; Assessment record
• Section: 44AD; 43B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH D NEW DELHI) BEFORE SHRI I.C. SUDHIR AND SHRI. PRAMOD KUMAR ITA NO. 361/DEL/2012 ASST. YR: 2008-09 INCOME-TAX OFFICER, VS. LAXMI TIBREWAL, WARD 38(2), D-276, ASHOK VIHAR, NEW DELHI. NEW DELHI. (PAN: ACDPT7970M) (APPELLANT) (RESPONDENT) REVENUE BY: SHRI P. DAMKAUNJM A, SR. DR ASSESSEE BY: SHRI RAJI V BANSAL, CA DATE OF HEARING : 27.01.2015 DATE OF PRONOUNCEMENT: :03.2015 ORDER PER I.C. SUDHIR: JUDICIAL MEMBER THE REVENUE HAS QUESTIONED FIRST APPELLATE ORDER O N THE FOLLOWING GROUNDS: 1. THE LEARNED CIT(APPEALS) HAS ERRED IN DELETING THE ADDITION OF RS.5,59,864 MADE BY THE A.O. ON ACCOUNT OF WORKS TA X PAYMENT ON THE GROUND THAT THERE WAS NO LIABILITY U/S. 43B AS ON 31.3.2008, WHEREAS THE ABOVE ADDITION WAS MADE ON ACCOUNT OF N ON-PRODUCTION OF DETAILS. 2. THE LEARNED CIT(APPEALS) ERRED IN DELETING THE A DDITION OF RS.46,665 (25% OF THE EXPENSES, ERRONEOUSLY MENTION ED AS RS.1,86,658 IN THE ASSESSMENT ORDER) AND RS.3,74,81 8 (25% OF LABOUR EXPENSES) WITHOUT ANY REASON. 2 3. THE LEARNED CIT(APPEALS) ERRED IN DELETING THE A DDITION OF RS.23,37,282 (ERRONEOUSLY MENTIONED AS RS.18,37,856 IN THE ASSESSMENT ORDER) ON ACCOUNT OF UNEXPLAINED OPENING CAPITAL ACCOUNT BALANCE. 4. THE LEARNED CIT(APPEALS) ADMITTED ADDITIONAL EVI DENCES WITHOUT PROVIDING ANY OPPORTUNITY OF EXAMINING THEM AS PER PROVISION OF RULE 46A OF THE I.T. RULES. 2. HEARD AND CONSIDERED THE ARGUMENTS ADVANCED BY T HE PARTIES IN VIEW OF ORDERS OF THE AUTHORITIES BELOW, MATERIAL AVAILA BLE ON RECORD AND THE DECISIONS RELIED UPON. 3. THE FACTS IN BRIEF ARE THAT THE ASSESSEE IS A CI VIL CONTRACTOR REGISTERED WITH MUNICIPAL CORPORATION OF DELHI. DURING THE YEA R, THE ASSESSEE HAS DECLARED NET PROFIT OF RS.3,05,021 ON A TURNOVER OF RS.54,12,030. HER RETURN FOR THE EARLIER YEARS WERE FILED UNDER SEC. 44AD ON THE PRESUMPTIVE BASIS @ 8% OF HER TURNOVER. THIS YEAR, ACCOUNTS WERE AUDIT ED SHOWING NET PROFIT OF 5.64%. THE ASSESSING OFFICER MADE ADDITION OF RS.5, 59,864 ON ACCOUNT OF WORKS TAX PAYMENT, RS.1,86,658 ON ACCOUNT OF DISALL OWANCE OF OTHER EXPENSES AND RS.3,74,818 TOWARDS DISALLOWANCE OUT O F LABOUR CHARGES @ 25% OF THE CLAIMED AMOUNT ON AD HOC BASIS. THESE AD DITIONS HAVE BEEN DELETED BY THE LEARNED CIT(APPEALS) AGAINST WHICH R EVENUE IS IN APPEAL. 3 4. IN SUPPORT OF THE GROUNDS, THE SR.DR HAS BASICAL LY PLACED RELIANCE ON THE ASSESSMENT ORDER, WHEREAS FIRST APPELLATE ORDER HAS BEEN RELIED UPON BY THE LEARNED AR. 5. SINCE IN GROUND NO.4, THE REVENUE HAS OBJECTED T HE ACTION OF THE LEARNED CIT(APPEALS) IN VIOLATION OF THE PROVISIONS OF RULE 46A OF THE I.T. RULES, HENCE, WE PREFERRED IT TO ADJUDICATE FIRST. 6. HAVING GONE THROUGH THE FIRST APPELLATE ORDER, W E FIND THAT THE LEARNED CIT(APPEALS) HAS DECIDED THE ISSUES RAISED BEFORE HIM AFTER CALLING FOR REMAND REPORT FROM THE ASSESSING OFFICER, HENCE , WE DO NOT AGREE THAT THE LEARNED CIT(APPEALS) WHILE ADMITTING ADDITIONAL EVIDENCES, IF ANY, OR ACCEPTING THE SUBMISSIONS OF THE ASSESSEE HAS VIOLA TED THE PROVISIONS OF RULE 46A OF THE I.T. RULES. THE GROUND NO.4 IS ACCORDING LY REJECTED. 7. GROUND NO.1 , THE REVENUE HAS QUESTIONED FIRST APPELLATE ORDER IN DELETING THE ADDITION OF RS.5,59,864 MADE BY THE AS SESSING OFFICER ON THE BASIS THAT THE ASSESSEE HAS NOT EXPLAINED ITS NATUR E AND THAT THE SAME IS DEDUCTIBLE FROM THE GROSS RECEIPTS. THE CONTENTION OF THE ASSESSEE REMAINED THAT WORKS TAX IS IN THE NATURE OF VAT. IN SUPPORT, REFERENCE OF FORM 16A 4 (TDS CERTIFICATE) FILED BY THE ASSESSEE ALONG WITH RETURN WAS REFERRED. IT WAS FURTHER SUBMITTED THAT DURING THE COURSE OF ASSESSM ENT PROCEEDINGS, THE ASSESSEE HAD ALSO FILED PURCHASE BILL IN TERMS OF O RDER SHEET ENTRY DATED 19.8.2010 MENTIONING WORKS TAX. THUS, THE NATURE A ND CONTENTS OF WORKS TAX CLAIMED BY THE ASSESSEE WAS ON RECORD DURING THE CO URSE OF ASSESSMENT PROCEEDINGS. THERE WAS NO TAX PAYABLE AT THE END OF THE FINANCIAL YEAR, THUS, THERE WAS NO QUESTION OF ADDITION UNDER SEC. 43B OF THE ACT. THE LEARNED CIT(APPEALS) CALLED FOR THE REMAND REPORT FROM THE ASSESSING OFFICER WHEREIN THE ASSESSING OFFICER WITHOUT COMMENTING UP ON THE SUBMISSIONS OF THE ASSESSEE HAS SIMPLY OBJECTED THE SUBMISSIONS MA DE BY THE ASSESSEE BEFORE THE LEARNED CIT(APPEALS). 8. UNDER THE ABOVE FACTS AND CIRCUMSTANCES, THE LEA RNED CIT(APPEALS) CAME TO THE CONCLUSION THAT WORKS TAX IS IN THE NAT URE OF VAT. AMOUNT IS THE SUM EITHER DEDUCTED BY MCD OUT OF THE PAYMENT OR DE BITED OUT OF THE PURCHASE MADE BY THE ASSESSEE. COPIES OF RETURN WER E SUBMITTED. THERE WAS NO LIABILITY AS ON 31.3.2008 WHICH WOULD HAVE CALLE D FOR ADDITION UNDER SEC. 43B OF THE ACT. IN ABSENCE OF REBUTTAL OF THESE FAC TS NOTED BY THE LEARNED CIT(APPEALS), WE ARE OF THE VIEW THAT THE LEARNED C IT(APPEALS) WAS 5 JUSTIFIED IN DELETING THE DISALLOWANCE OF RS.5,59,8 64 MADE BY THE ASSESSING OFFICER. THE GROUND NO.1 IS ACCORDINGLY REJECTED. 9. GROUND NO.2 :THE ASSESSING OFFICER MADE ADDITION OF RS.1,86,658 BEING 25% OF TOTAL EXPENDITURE ON THE BASIS THAT TH E ASSESSEE FAILED TO PRODUCE BOOKS OF ACCOUNT AND VOUCHERS. 10. BEFORE THE LEARNED CIT(APPEALS), THE ASSESSEE O BJECTED THE FINDING OF THE ASSESSING OFFICER THAT THE ASSESSEE HAD NOT FUR NISHED BOOKS OF ACCOUNT AND VOUCHERS DURING THE COURSE OF ASSESSMENT PROCEE DINGS. IT WAS SUBMITTED THAT IT IS EVIDENT FROM THE RECORD THAT THE ASSESSE E WAS COOPERATIVE THROUGHOUT THE ASSESSMENT PROCEEDINGS AND HAD FILED THE VARIOUS DETAILS INCLUDING THE PROFIT AND LOSS ACCOUNT AND COPIES OF BILLS TIME TO TIME DURING THE ASSESSMENT PROCEEDINGS. DISALLOWANCE MADE IS ON AD HOC BASIS @ 25% OF THE ENTIRE ADMINISTRATIVE EXPENDITURE AGAINST TU RNOVER OF RS.59.72 LACS WAS UNJUSTIFIED. ADMINISTRATIVE EXPENSES OF RS.1,86 ,658 FOR THE YEAR INCLUDES SALARY COMPONENTS OF RS.1,14,000. IT WAS S UBMITTED THAT IN HURRY TO RUSH THROUGH THE ASSESSMENT, THE ENTIRE ADMINISTRAT IVE EXPENDITURE OF RS.1,85,658 WHICH IS 100% WERE DISALLOWED BY THE AS SESSING OFFICER 6 THOUGH THE DISALLOWANCE WAS MEANT TO BE 25% OF THE ADMINISTRATIVE EXPENDITURE. 11. THE LEARNED CIT(APPEALS) CALLED FOR THE REMAND REPORT FROM THE ASSESSING OFFICER ON THE ABOVE SUBMISSIONS OF THE A SSESSEE WHEREIN THE ASSESSING OFFICER ADMITTED THE MISTAKE POINTED OUT BY THE ASSESSEE, DISCUSSED HEREINABOVE, THAT THE AMOUNT OF ADDITION SHOULD HAVE BEEN RS.48,685 INSTEAD OF RS.1,86,658. 12. THE LEARNED CIT(APPEALS) HAS DELETED THE ADDITI ON DISCUSSING THE REMAND REPORT AND ON THE BASIS THAT THERE WAS NO JU STIFICATION GIVEN BY THE ASSESSING OFFICER FOR MAKING THE DISALLOWANCE OF 25 % OF THE ENTIRE EXPENDITURE DEBITED TO PROFIT AND LOSS ACCOUNT. SIN CE THE REVENUE HAS FAILED TO IMPROVE ITS CASE EVEN BEFORE THE ITAT, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE FIRST APPELLATE ORDER IN THIS RE GARD AS THE LEARNED CIT(APPEALS) HAS RIGHTLY DELETED THE AD HOC DISALLO WANCE MADE BY THE ASSESSING OFFICER. 12.1. IN THIS PART OF GROUND, THE REVENUE HAS ALSO QUESTIONED DELETION OF RS.3,74,818 I.E. 25% OF LABOUR EXPENSES BY THE LEAR NED CIT(APPEALS). THE 7 ASSESSING OFFICER MADE THIS DISALLOWANCE ON THE BAS IS THAT THE ASSESSEE HAD FAILED TO PRODUCE BOOKS OF ACCOUNT AND SUPPORTING D ETAILS TO PROVE THE GENUINENESS OF THE CLAIM. THE CONTENTION OF THE ASS ESSEE BEFORE THE LEARNED CIT(APPEALS) REMAINED THAT THE DVAT HAS PERMITTED 2 5% OF THE TOTAL TURNOVER FOR LABOUR COMPONENTS AS EVIDENT FROM THE RETURN FILED BY THE ASSESSEE TO THE DVAT DEPARTMENT IN FORM DVAT-16. I T WAS SUBMITTED THAT IN THE RETURN FILLED IN FORM-DVAT-16, THE GROSS REC EIPTS HAS BEEN SHOWN ON WHICH 25% HAVE BEEN CLAIMED BY THE ASSESSEE FOR LAB OUR COMPONENTS AND THEN THE BALANCE HAVE BEEN TAKEN AS THE TURNOVER OF THE ASSESSEE. IT WAS SUBMITTED THAT DURING THE YEAR, GROSS RECEIPT OF TH E ASSESSEE WAS RS.59,71,894 OF WHICH 25% IS RS.14,92,973 AGAINST L ABOUR CHARGES CLAIMED AT RS.14,99,270. THE COPY OF RETURN OF DVAT FOR THE YEAR WAS FURNISHED BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEE DINGS. THE ASSESSING OFFICER WAS THUS NOT JUSTIFIED IN MAKING THE DISALL OWANCE WITHOUT REFERENCE TO THE DOCUMENTS FILED AND ADMISSIBLE DEDUCTION IN DVAT ACT. 13. THE LEARNED CIT(APPEALS) AFTER DISCUSSING THE S UBMISSIONS OF THE ASSESSEE, DID NOT FIND THE ACTION OF THE ASSESSING OFFICER IN MAKING THE DISALLOWANCE OF 25% OF THE ENTIRE EXPENDITURE ON AD HOC BASIS. THE LEARNED CIT(APPEALS) ON THE CONTRARY KEEPING IN VIEW THE PA ST ASSESSMENT RECORD 8 FOUND IT JUSTIFIED TO ASSESS THE INCOME OF THE ASSE SSEE AT 8%, AS ASSESSED IN THE PRECEDING YEARS. 14. WE DO NOT FIND INFIRMITY IN THE FIRST APPELLATE ORDER DELETING THE ADDITION OF RS.3.74,818 MADE BY THE ASSESSING OFFIC ER ON AD HOC BASIS. THE SAME IS UPHELD. THE GROUND 2 IS ACCORDINGLY REJECTE D. 15. GROUND NO.3 :THE ASSESSING OFFICER MADE ADDITION OF RS.18,37,85 6 ON THE BASIS THAT IN ABSENCE OF THE CAPITAL ACCOUNT FOR THE EARLIER YEARS, THE OPENING BALANCE SHOWN AT RS.18,37,856 CANNOT BE VER IFIED. THE ASSESSEE OBJECTED THE ADDITION BEFORE THE LEARNED CIT(APPEAL S) ON THE BASIS THAT THE ASSESSING OFFICER WAS IN HURRY AND THUS WITHOUT REF ERRING TO THE RECORDS OF THE ASSESSEE HAS MADE THE ADDITION. IT WAS SUBMITTE D THAT THE APPELLANT IS AN OLD ASSESSEE FILING HER RETURN SINCE ASSESSMENT YEA R 1989-90 WHICH IS MORE THAN 20 YEARS. THE ASSESSMENT FRAMED WAS ALSO HAVIN G MISTAKE ON RECORD AS RS.18,37,856 IS THE CLOSING BALANCE OF CAPITAL ACCO UNT AND NOT THE OPENING BALANCE OF CAPITAL ACCOUNT AS MENTIONED IN THE ORDE R. IT WAS SUBMITTED THAT THE NET PROFIT OF THE ASSESSEE WAS RS.3,05,021 DURI NG THE YEAR IN TERMS OF PROFIT AND LOSS ACCOUNT ON RECORD. THE PROFIT FOR T HE ASSESSMENT YEARS 2007- 08 AND 2006-07 WAS RS.2,92,272 AND RS.2,26,750 RESP ECTIVELY. 9 16. THE LEARNED CIT(APPEALS) CALLED FOR THE REMAND REPORT FROM THE ASSESSING OFFICER ON THE ABOVE SUBMISSION WHEREIN T HE ASSESSING OFFICER ADMITTED THAT THE SAID AMOUNT OF RS.18,37,856 WAS C LOSING BALANCE AND HAD BEEN WRITTEN WRONGLY AS OPENING BALANCE IN THE ASSE SSMENT FRAMED. 17. IN VIEW OF THE ABOVE REMAND REPORT AND SUBMISSI ONS OF THE ASSESSEE, THE LEARNED CIT(APPEALS) HAS DELETED THE ADDITION W ITH THIS FINDING THAT THE ASSESSING OFFICER HAD ADDED THE ENTIRE CAPITAL OF R S.18,37,856 TERMED AS UNAPPROVED OPENING CAPITAL BALANCE, WHEREAS IT WAS CREATED BY THE ASSESSEE OVER THE YEARS SINCE ASSESSMENT YEAR 1989-90 AND TH AT THE BALANCE ADDED BY THE ASSESSING OFFICER WAS CLOSING CAPITAL BALANCE. 18. IN ABSENCE OF REBUTTAL OF ABOVE FACTUAL FINDING OF THE LEARNED CIT(APPEALS) BEFORE THE ITAT BY THE REVENUE, WE ARE NOT INCLINED TO INTERFERE WITH THE FINDING OF THE LEARNED CIT(APPEA LS) ON THE ISSUE. THE SAME IS UPHELD. THE GROUND NO.3 IS ACCORDINGLY REJE CTED. 19. IN RESULT, THE APPEAL FILED BY THE REVENUE IS D ISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 31 /03/2015. SD/- SD/- ( PRAMOD KUMAR ) ( I.C. SUDHIR ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 31/03/2015 MOHAN LAL 10 COPY FORWARDED TO: 1) APPELLANT 2) RESPONDENT 3) CIT 4) CIT(APPEALS) 5) DR:ITAT ASSISTANT REGISTRAR DATE DRAFT DICTATED ON COMPUTER 17.03.2015 DRAFT PLACED BEFORE AUTHOR 17.03.2015 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. 27.03.20 15 APPROVED DRAFT COMES TO THE SR.PS/PS 31.03.2015 KEPT FOR PRONOUNCEMENT ON 31.03.2015 FILE SENT TO THE BENCH CLERK 31.03.2015 DATE ON WHICH FILE GOES TO THE AR DATE ON WHICH FILE GOES TO THE HEAD CLERK. DATE OF DISPATCH OF ORDER.