M/s H.M.V. Construction, Etawah V. A.C.I.T., Circle-5, Firozabad

ITA 364/AGR/2012

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 0573 (ITAT-AGRA)
• Duration Of Justice: 6 year(s) 9 month(s) 24 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 16-05-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 15-03-2013
• Assessment Year: 2005-2006
• Appeal Filed On: 23-07-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: KK MISHRA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, AGRA BENCH, AGRA BEFORE : SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI A.L. GEHLOT, ACCOUNTANT MEMBER ITA NO. 364/AGRA/2012 ASSTT. YEAR : 2005-06 M/S. H.M.V. CONSTRUCTION, VS. A.C.I.T., CIRCLE-5, 272, KARAMGANJ, GUPTA COLONY, FIROZABAD. ETAWAH.(PAN :AADFH 3197 E) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ANURAG SINHA, ADVOCATE RESPONDENT BY : SHRI K.K. MISHRA, JR. D.R. DATE OF HEARING : 15.03.2013 DATE OF PRONOUNCEMENT OF ORDER : 22.03.2013 ORDER PER BHAVNESH SAINI, J.M.: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF LD. CIT(A)-II, AGRA DATED 16.03.2012 FOR THE ASSESSMENT YEAR 2005- 06. 2. BRIEFLY, THE FACTS OF THE CASE ARE THAT THE ASSE SSEE FIRM CARRIED ON THE BUSINESS OF CIVIL CONTRACTORS AND RETURN OF INCOME WAS FILED AT RS.8,47,130/-. THE CASE WAS SELECTED FOR SCRUTINY. THE ASSESSEE IN RESPONSE TO THE STATUTORY NOTICE DID NOT CO- OPERATE WITH THE AO AND SOUGHT SEVERAL ADJOURNMENTS . REQUIRED DETAILS WERE NOT PRODUCED BEFORE THE AO. THE ASSESSEE WAS REQUIRED T O PRODUCE COMPLETE BOOKS OF ACCOUNT AND SUPPORTING DOCUMENTS VIDE STATUTORY NOT ICE BUT DESPITE REPEATEDLY ITA NO. 364/AGRA/2012 2 REQUIRED BY THE AO TO PRODUCE THE BOOKS OF ACCOUNTS , BILLS AND VOUCHERS AND SUBSIDIARY RECORDS, THE ASSESSEE FAILED TO PRODUCE ANY RECORDS AND SUPPORTING VOUCHERS. QUANTITATIVE RECORDS OF MATERIAL USED IN CONSTRUCTION WORK HAVE ALSO NOT BEEN MAINTAINED. OTHER EXPENDITURES DEBITED TO THE PROFIT AND LOSS ACCOUNT COULD NOT BE SUBJECTED TO VERIFICATION IN ABSENCE OF SUPP ORTING BILLS/VOUCHERS AND QUANTITATIVE RECORDS. THEREFORE, BOOK RESULTS OF TH E ASSESSEE WERE REJECTED U/S. 145(3) OF THE IT ACT. THE ASSESSEE CLAIMED EXPENDIT URE OF RS.1,20,73,788/- ON ACCOUNT OF COST OF GRIT, STONE BALLAST AND CARTAGE, BUT THE SAME WERE NOT SUPPORTED BY PROPER VOUCHERS AND BILLS AND NO STOCK REGISTER IS MAINTAINED. IN THE ABSENCE OF SUPPORTING VOUCHERS, THE AO DISALLOWED RS.4,00,000/ - OUT OF THESE EXPENSES. THE ASSESSEE ALSO CLAIMED EXPENDITURE OF RS.93,27,531/- UNDER THE HEAD DAMMER. THE ASSESSEE WAS NOT IN POSSESSION OF BILLS AND VOU CHERS OF ALL THE PURCHASES MADE IN CASH. THEREFORE, RS.1,00,000/- OUT OF THESE EXPE NDITURES WAS DISALLOWED. SIMILARLY, UNDER THE HEAD DIESEL & LUBRICANT OIL E XPENSES, THE ASSESSEE CLAIMED EXPENDITURE OF RS.46,77,700/- AND PURCHASES HAVE BE EN MADE IN CASH AND THE ASSESSEE WAS NOT HAVING SUPPORTING DOCUMENTS TO PRO VE THE EXPENDITURE. THEREFORE, RS.1,00,000/- WAS FURTHER DISALLOWED UND ER THIS HEAD. LABOUR EXPENSES WERE CLAIMED IN A SUM OF RS.80,89,7326/-, BUT THE A SSESSEE DID NOT PRODUCE DOCUMENTS MENTIONING THE NAMES AND ADDRESSES OF THE LABOURERS EMPLOYED AND PAYMENTS OF WAGES TO THEM AND, THEREFORE, RS.1,00,0 00/- OUT OF THESE EXPENSES WAS ALSO DISALLOWED AND AO DISALLOWED TOTAL EXPENSES AT RS.7,00,000/- IN VARIOUS ITA NO. 364/AGRA/2012 3 HEADS OF EXPENSES. THE ASSESSEE CHALLENGED THE ADDI TIONS BEFORE THE LD. CIT(A). DESPITE SUFFICIENT OPPORTUNITIES GIVEN BY THE LD. C IT(A) ON SEVERAL DATES, NONE APPEARED ON BEHALF OF THE ASSESSEE. IN THE ABSENCE OF ANY REPRESENTATION BEFORE THE LD. CIT(A) AND ANY MATERIAL PRODUCED BEFORE HIM, AL L THE DISALLOWANCES OF EXPENSES MADE BY THE AO WERE CONFIRMED AND THE APPE AL OF THE ASSESSEE HAS BEEN DISMISSED. 3. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THOUGH THE ASSESSEE HAS RAISED FOUR GROUNDS OF APPEAL, BUT THE MAIN GROUND OF APPE AL IS CHALLENGING THE ADDITION OF RS.7,00,000/- OUT OF DISALLOWANCES OF VARIOUS EX PENSES AND CLAIMED THAT SAME IS EXCESSIVE IN NATURE BECAUSE AFTER MAKING THESE ADDI TIONS, THE PROFIT RATE WOULD COME TO 9.50%, WHICH IS VERY HIGH AS AGAINST THE PR OFIT RATE SHOWN BY THE ASSESSEE AT 7.93% ON THE TOTAL RECEIPTS DISCLOSED AT RS.4.46 CRORES. THE LD. COUNSEL FOR THE ASSESSEE ALSO SUBMITTED THAT NO DISALLOWANCE ON LUM P SUM BASIS OR ADHOC BASIS COULD BE MADE WITHOUT POINTING OUT SPECIFIC EXPENSE S TO JUSTIFY THE DISALLOWANCE AND RELIED UPON THE FOLLOWING ORDERS OF DIFFERENT B ENCHES OF THE TRIBUNAL ON THIS PROPOSITION : (I). ORDER OF ITAT, AGRA BENCH IN THE CASE OF ACIT VS. M/S. ANAMAY CONSTRUCTION COMPANY IN ITA NO. 387/AGR/2011 DATED 31.08.2012. (II). ORDER OF ITAT, LUCKNOW BENCH IN THE CASE OF A CIT VS. M/S. CHANDRA CONFECTIONERY (P) LTD. IN ITA NO. 44(ALLD) OF 1997 DATED 10.04.2003. ITA NO. 364/AGRA/2012 4 (III). ORDER OF ITAT DELHI BENCH IN THE CASE OF ACI T VS. ALLIED CONSTRUCTIONS, 106 TTJ 616. (IV). ORDER OF ITAT, JABALPUR BENCH IN THE CASE OF ACIT VS. GOVIND RAM KAKWANI, 90 TTJ 981. (V). ORDER OF ITYAT, JODHPUR BENCH IN THE CASE OF L AKE PALACE HOTELS (P) LTD. VS. DCIT, 81 TTJ 657. ON THE OTHER HAND, THE LD. DR RELIED UPON THE ORDER S OF THE AUTHORITIES BELOW. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE FINDINGS OF THE AUTHORITIES BELOW. THE AO HAS SPECIFICALLY NOTED TH AT THE ASSESSEE DID NOT COOPERATE WITH THE DEPARTMENT AT ASSESSMENT STAGE O N VARIOUS DATES OF HEARING. THE ASSESSEE ADMITTEDLY DID NOT PRODUCE ANY BOOKS OF AC COUNTS AND SUPPORTING BILLS AND VOUCHERS OF THE EXPENSES BEFORE THE AO. NO WAGE S AND LABOUR EXPENSES WERE SUPPORTED BY ANY DOCUMENTS OR VOUCHERS. NO STOCK RE GISTER AND QUANTITATIVE RECORDS OF THE MATERIAL USED IN THE CONSTRUCTION WO RK HAVE BEEN MAINTAINED. THE AO, THEREFORE, RIGHTLY REJECTED THE BOOKS OF ACCOUN T U/S. 145(3) OF THE IT ACT. SINCE OUT OF VARIOUS EXPENSES CLAIMED FOR DEDUCTION , THE ASSESSEE DID NOT PRODUCE BILLS AND VOUCHERS OR SUPPORTING DOCUMENTS TO CLAIM DEDUCTION OF THE EXPENSES UNDER THE FOUR HEADS, IN WHICH THE ASSESSEE CLAIMED DEDUCTION OF THE EXPENDITURES IN CRORES, THEREFORE, THE AO WAS JUSTIFIED IN MAKIN G DISALLOWANCES OUT OF THE EXPENSES. NOTHING WAS PRODUCED BEFORE THE LD. CIT(A ) AT THE APPELLATE STAGE, AS THE ITA NO. 364/AGRA/2012 5 ASSESSEE REMAINED NON-COOPERATIVE BEFORE HIM. EVEN BEFORE THE TRIBUNAL, THE ASSESSEE DID NOT PRODUCE ANY MATERIAL OR BOOKS OF A CCOUNT, THEREFORE, IN THE ABSENCE OF PRODUCTION OF COMPLETE RECORDS, THE DISA LLOWANCE OUT OF VARIOUS EXPENSES ARE JUSTIFIED. HOWEVER, CONSIDERING THE FA CT THAT ASSESSEE FILED RETURN OF INCOME AT RS.8,47,132/-, THEREFORE, THE DISALLOWANC E OF EXPENSES IN A SUM OF RS.7,00,000/- OUT OF VARIOUS HEADS OF EXPENSES APPE ARS TO BE SLIGHTLY HIGH. THE AO HAS GIVEN SPECIFIC INSTANCES OF NON-PRODUCTION OF R ELEVANT RECORDS AND ALSO HIGHLIGHTED NON-COOPERATIVE ATTITUDE OF ASSESSEE AT THE ASSESSMENT STAGE. THEREFORE, THE AO HAS MADE SPECIFIC INSTANCES FOR MAKING DISAL LOWANCE AND THESE ARE NOT ADHOC ADDITIONS IN NATURE. NONE OF THE ORDERS RELIE D UPON BY THE LD. COUNSEL FOR THE ASSESSEE ARE, THEREFORE, APPLICABLE TO THE CASE OF THE ASSESSEE. CONSIDERING THE ABOVE DISCUSSION, WE MODIFY THE ORDERS OF THE AUTHO RITIES BELOW AND RESTRICT THE ADDITION OF RS.7,00,000/- OUT OF VARIOUS EXPENSES T O RS.5,00,000/- IN ALL, GIVING RELIEF OF RS.2,00,000/- TO THE ASSESSEE. THE AO SHA LL MAKE ADDITION OF RS.5,00,000/- OUT OF VARIOUS EXPENSES AS AGAINST RS .7,00,000/- CONFIRMED BY THE LD. CIT(A). 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (A.L. GEHLOT) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER *AKS/- ITA NO. 364/AGRA/2012 6 COPY OF THE ORDER FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A), CONCERNED BY ORDER 4. CIT, CONCERNED 5. DR, ITAT, AGRA 6. GUARD FILE SR. PRIVATE SECRETARY TRUE COPY