M/S B. K. CONSTRUCTION, Yavatmal V. ADDL. CIT, WARDHA RANGE, Wardha

ITA 372/NAG/2013

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 9662 (ITAT-NAGPUR)
• Duration Of Justice: 3 year(s) 8 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-06-2017
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 28-04-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 15-10-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: A R NINAWE
• Assessee Lawyers: P M GANDHI
• Section: 143(3); 234B; 263; 63

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL NAGPUR BENCH, NAGPUR BEFORE SHRI P.K. BANSAL, VICE PRESIDENT AND SHRI AMARJIT SINGH, JUDICIAL MEMBER ITA NO.372/NAG./2013 ( ASSESSMENT YEAR : 200708 ) B.K. CONSTRUCTION P.M. GANDHI & CO., C.A. PUSHPAM, TILAKWADI OPP. SHROTRI HOSPITAL YAVATMAL 445 001 PAN AAEFB4266B APPELLANT V/S ADDL. COMMISSIONER OF INCOME TAX WARDHA RANGE, WARDHA .... RESPONDENT ASSESSEE BY : SHRI P.M. GANDHI REVENUE BY : SHRI A.R. NINAWE DATE OF HEARING 27.06.2017 DATE OF ORDER 29.06 .2017 O R D E R PER AMARJIT SINGH, J.M. THE ASSESSEE HAS FILED THE PRESENT APPEAL AGAINST T HE ORDER DATED 31 ST JULY 2013, PASSED BY THE LEARNED COMMISSIONER (APP EALS)-II, NAGPUR, RELEVANT TO THE ASSESSMENT YEAR 2007-08. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS:- 1. BASED ON THE FACTS AND CIRCUMSTANCES OF THE CASE , ASSESSMENT ORDER PASSED BY LEARNED ADDL. COMMISSION OF INCOME TAX, WARDHA RANGE, IS AB INITIO BAD IN THE EYES OF LAW AND NEEDS TO BE SET ASIDE. 2 B.K. CONSTRUCTION 2. ADDITION OF ` 12,00,000 MADE ON ACCOUNT OF ENTRIES IN IMPOUNDED DIARY B13, NEEDS TO BE DELETED AS THE SA ME IS COVERED BY DECLARATION OF ` 12.00 LACS UNDER SURVEY AND ALREADY INCLUDED IN RETURN OF INCOME. 3. ADDITION OF ` 15,21,488 ON ACCOUNT OF DISALLOWANCE OF LABOUR CHARGES @ 5% IS EXCESSIVE AND UNWARRANTED AND NEEDS TO BE DELETED. 4. INTEREST CHARGED U/S 234B AND 234D OF THE INCOME TAX ACT, 1961 BEING CONSEQUENTIAL IN NATURE NEEDS TO BE DELE TED. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME ON 15 TH NOVEMBER 2007, DECLARING TOTAL INCOME TO THE TUNE OF ` 26,79,110. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF EXECUTING CIVIL CONTRACTS. THE SURVEY WAS CONDUCTED AT THE BUSINESS PREMISES OF THE ASSESSEE ON 28 TH MARCH 2007. THE ASSESSEE DECLARED ADDITIONAL INCOM E TO THE TUNE OF ` 12 LAKH. SUBSEQUENTLY, THE ASSESSMENT WAS COMPLETE D UNDER SECTION 143(3) OF INCOME TAX ACT, 1961 (FOR S HORT THE ACT ) ON 15 TH DECEMBER 2009 AFTER MAKING DISALLOWANCE FOR ` 4,18,850 UNDER SECTION 40(A)(IA) OF THE ACT. SUBSEQUENTLY, ORDER U NDER SECTION 263 OF THE ACT WAS PASSED BY THE LEARNED COMMISSIONER ON 2 9 TH APRIL 2010 IN WHICH THE ENTIRE ASSESSMENT WAS ORDERED TO BE SET A SIDE TO BE MADE DENOVO. THE ASSESSEE WAS ASKED TO FURNISH BOOKS OF ACCOUNT, BILLS, VOUCHERS, ETC. THE ASSESSEE FAILED TO PRODUCE THE S AID RECORD BUT PRODUCED THE COPY OF PANCHANAMA OF POLICE STATION, PUSAD, IN WHICH IT WAS REPORTED THAT THE RECORD OF THE ASSESSEE WAS BU RNT. THEREAFTER, 3 B.K. CONSTRUCTION THE ASSESSMENT OF THE ASSESSEE WAS COMPLETED ON THE BASIS OF RECORDS AVAILABLE AND THE INCOME OF THE ASSESSEE WAS ASSESS ED TO THE TUNE OF ` 88,12,950 VIDE ORDER DATED 31 ST DECEMBER 2010. AGGRIEVED BY THE SAID ORDER, THE ASSESSEE FILED AN APPEAL BEFORE THE LEARNED COMMISSIONER (APPEALS) WHO PARTLY ALLOWED THE APPEA L OF THE ASSESSEE. SINCE THE ASSESSEE WAS NOT SATISFIED WITH REGARD TO THE OTHER CLAIM WHICH WAS NOT ALLOWED BY THE LEARNED COMMISSI ONER (APPEALS), THEREFORE, THE ASSESSEE HAS FILED THE PRESENT APPEA L BEFORE US. ISSUE NO.1 4. THE LEARNED COUNSEL FOR THE ASSESSEE DID NOT PRESS THIS ISSUE. THEREFORE, THIS ISSUE IS DECIDED IN FAVOUR OF THE R EVENUE AND AGAINST THE ASSESEE BEING NOT PRESSED. ISSUE NO.2 5. UNDER THIS ISSUE, THE ASSESSEE HAS CHALLENGED THE CO NFIRMATION OF DISALLOWANCE OF RS.12 LAKH MADE ON ACCOUNT OF ENTRY FOUND IN THE IMPOUNDED DIARY B-13. IN THE PRESENT CASE, THE CASE OF THE ASSESSEE WAS TAKEN UP IN VIEW OF THE PROVISIONS OF SECTION 2 63 OF THE ACT. AT THE TIME OF SCRUTINY, CASH BOOK, REGISTER AND DIARY NO. B-13 WERE IMPOUNDED AND ACCORDINGLY, ON ACCOUNT OF NON-EXPLAN ATION ABOUT THE ENTRY IN THE SAID DOCUMENTS, THE ASSESSEE DECLARED AN AMOUNT OF RS.12 LAKH AS HIS INCOME. THE DECLARATION WAS ACCOM PANIED BY CHALLAN 4 B.K. CONSTRUCTION OF TAX PAYMENT OF ` 4,03,920 DATED 2 ND AUGUST 2007, COPY OF WHICH LIES AT PAGE-53 TO 59 OF THE PAPER BOOK. SUBSEQUENT LY, THE ASSESSING OFFICER ON THE BASIS OF DIARY, FURTHER MADE THE ADD ITION TO THE TUNE OF ` 12 LAKH. THE ASSESSING OFFICER WAS OF THE VIEW THAT THE SAID ENTRY WAS NOT VERIFIED AT THE TIME OF SURRENDER OF INCOME TO THE TUNE OF ` 12 LAKH. THE DOCUMENTS WERE IMPOUNDED ON 28 TH MARCH 2007. THE ASSESSEE MADE THE DECLARATION ON 2 ND AUGUST 2007, AFTER THE GAP OF ABOUT FOUR MONTHS. THIS SITUATION LEADS TO THE FACT THAT THE DOCUMENTS WERE DULY VERIFIED. IF IT IS NOT EXAMINED THEN ONLY ON THE BASIS OF THE MATERIAL IMPOUNDED, THE ASSESSEE HAD ALREADY SURREN DERED THE INCOME TO THE TUNE OF ` 12 LAKH. THEREAFTER, ON THE BASIS OF SEARCH, FURTH ER ADDITION OF ` 12 LAKH ON THE BASIS OF DIARY DOES NOT SEEMS JUSTI FIABLE. NO OTHER DOCUMENTS ARE HIGHLIGHTED BY THE REVENUE O N THE BASIS OF WHICH THE ASSESSEE SURRENDERED THE INCOME TO THE TU NE OF ` 12 LAKH. TAKING THE CONTRADICTORY PLEA AT THE TIME OF ASSESS MENT AND AT THE TIME OF APPEAL, LEAD TO THE FACT THAT THE ASSESSEE WAS UNABLE TO EXPLAIN THE ENTRY IN THE DIARY B-13 OR OTHER DOCUME NTS IMPOUNDED, THEREFORE, THE ASSESSEE HAS SURRENDERED THE ADDITIO NAL INCOME TO THE TUNE OF ` 12 LAKH. IN VIEW OF THE NOTICE DATED 31 ST AUGUST 2007 LIES AT PAGE-63 OF THE PAPER BOOK IT CAME TO THE NOTICE THA T THE KACHHA CASH BOOK DIARY AND REGISTER WERE IMPOUNDED ON 28 TH MARCH 2007, WHEREAS THE ASSESSEE VOLUNTARILY DECLARED HIS ADDITIONAL IN COME ON 2 ND AUGUST 5 B.K. CONSTRUCTION 2007. IF THE DIARY WAS NOT EXAMINED THEN IN THESE C IRCUMSTANCES ALSO SURRENDER OF ADDITIONAL INCOME NOWHERE LEADS TO THE JUSTIFICATION OF ADDITION OF ` 12 LAKH ON THE BASIS OF DIARY B-13. ACCORDINGLY, T HE ADDITION DOES NOT SEEMS JUSTIFIABLE, HENCE, NOT LIA BLE TO BE SUSTAINED IN THE EYES OF LAW. ACCORDINGLY, WE SET ASIDE THE FIND INGS OF THE LEARNED COMMISSIONER (APPEALS) ON THIS ISSUE AND DELETE THE ADDITION OF ` 12 LAKH. THUS, THE ISSUE IS DECIDED AGAINST THE REVENU E AND IN FAVOUR OF THE ASSESSEE. ISSUE NO.3 6. UNDER THIS ISSUE, THE ASSESSEE HAS CHALLENGED THE CO NFIRMATION OF ADDITION OF ` 15,21,488 ON ACCOUNT OF DISALLOWANCE OF LABOUR CHA RGES @ 5%. IN THE INSTANT CASE, THE ASSESSEE CLAIMED THE LABOUR CHARGES WHICH WAS DISALLOWED TO THE EXTENT OF 5% ON ESTIMAT ION BASIS. THE BOOKS OF ACCOUNT AND AUDITED REPORT, ETC., WERE NOT REJECTED BY THE ASSESSING OFFICER. THE DISALLOWANCE TO THE EXTENT O F 5% WAS WITHOUT ANY BASIS OR MATERIAL AVAILABLE WITH THE ASSESSING OFFICER. IT IS PURELY ESTIMATION. THE DISALLOWANCE IS NOT SUSTAINABLE ON THE BASIS OF ESTIMATION WITHOUT REJECTION OF BOOKS OF ACCOUNT. I N THIS REGARD, WE ALSO FIND SUPPORT OF LAW SETTLED IN THE CASE OF ACI T V/S ALLIED CONSTRUCTION, [2007] 106 TTJ 616 (DEL.), WHEREIN IT HAS BEEN HELD THAT ADHOC DISALLOWANCE OF LABOUR EXPENSES COULD NOT B E MADE SIMPLY ON THE BASIS THAT THE VOUCHERS WERE SELFMADE AND NOT RELIABLE WITHOUT 6 B.K. CONSTRUCTION MAKING ANY TEST CHECK AND PINPOINT WHICH ITEM OF EX PENDITURE IS NOT VERIFIABLE. THIS ISSUE BEING COVERED BY THE AFORESAID DECISION OF THE TRIBUNAL, RESPECTFULLY FOLLOWING THE SAME, WE DELET E THE ADDITION @ 5% OF THE LABOUR CHARGES TO THE TUNE OF ` 15,21,488 THIS ISSUE IS ALSO DECIDED IN FAVOUR OF THE ASSESSEE AND AGAINST THE R EVENUE. ISSUE NO.4 AND 5 7. THESE ISSUES ARE CONSEQUENTIAL IN NATURE DEPENDING UPON THE DEMAND RAISED BY THE REVENUE, THEREFORE, NEEDS NO A DJUDICATION AT ALL. 8. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 29.06.2017 SD/ - P.K. BANSAL VICE PRESIDENT SD/ - AMARJIT SINGH JUDICIAL MEMBER NAGPUR, DATED: 29.06.2017 COPY OF THE ORDER FORWARDED TO : (1) THE ASSESSEE; (2) THE REVENUE; (3) THE CIT(A); (4) THE CIT, NAGPUR CITY CONCERNED; (5) THE DR, ITAT, NAGPUR; (6) GUARD FILE. TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY (DY./ASSTT.REGISTRAR) ITAT, NAGPUR