ITO, Etawah V. Shri Sanjay Sexana, Etawah

ITA 392/AGR/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 7082 (ITAT-AGRA)
• Duration Of Justice: 1 year(s) 6 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-04-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 22-03-2011
• Assessment Year: 2003-2004
• Appeal Filed On: 24-09-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: A K SHARMA
• Assessee Lawyers: APPLICATION REJECTED
• Keywords: Depreciation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, AGRA BENCH, AGRA BEFORE SHRI P.K. BANSAL, ACCOUNTANT MEMBER AND SHRI H.S. SIDHU, JUDICIAL MEMBER ITA NO. 392/AGRA/2009 ASSTT. YEAR : 2003-04 INCOME-TAX OFFICER, VS. SRI SANJAY SAXENA, ETAWAH. 314, KATRA SAHAB KHAN, ETAWAH. (PAN ANIPS 4246H) (APPELLANT) (RESPONDENT) FOR APPELLANT : SHRI A.K. SHARMA, JR. DR. FOR RESPONDENT : APPLICATION REJECTED. ORDER PER P.K. BANSAL, A.M. : THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINS T THE ORDER OF COMMISSIONER OF INCOME- TAX (APPEALS) DATED 17.07.2009. 2. NONE APPEARED ON BEHALF OF THE ASSESSEE. AN APPL ICATION FOR ADJOURNMENT WAS SENT THROUGH POST WITHOUT GIVING ANY PLAUSIBLE REASON EV EN THOUGH ON THE LAST DATE OF HEARING ON 22.02.2011, THE CASE WAS ADJOURNED FOR 22.03.2011 O N THE REQUEST OF THE SAME COUNSEL SHRI ABHISEKH GOYAL. WE, THEREFORE, DECIDE TO DISPOSE OF THE APPEAL AFTER HEARING THE LD. DR. 3. WE HAVE HEARD THE LEARNED DR AND CAREFULLY CONSI DERED HIS SUBMISSIONS. WE NOTED THAT IN THIS CASE THE ASSESSING OFFICER DISALLOWED WAGES AND HIRE CHARGES WHICH WERE DELETED BY THE CIT(A). THE FIRST GROUND OF THE REVENUE IS AGAINST THE DELETION OF WAGES BY THE CIT(A). THE CIT(A) DELETED THE WAGES BY OBSERVING AS UNDER : 2 I HAVE GONE THROUGH THE ASSESSMENT ORDER. THE APPE LLANT IS A CONTRACTOR IN CONSTRUCTION AND CIVIL REPAIR WORKS AS IS EVIDEN CED FROM THE VARIOUS BONDS EXECUTED BY APPELLANT WITH VARIOUS GOVERNMENT DEPAR TMENTS. THE PAYMENT FROM THE GOVERNMENT DEPARTMENTS IS USUALLY RELEASED AT T HE END OF THE YEAR. THERE IS NO LIQUID SURPLUS WITH THE APPELLANT AS EVIDENT FRO M THE AUDITED BALANCE SHEET FILED WITH THE RETURN. THE BASIS OF ADDITION BY AO IS THE CIRCULAR OF SALES TAX DEPARTMENT. AS PER THE CIRCULAR, WHERE NO BOOKS OF ACCOUNTS ARE MAINTAINED OR WHERE PURCHASES ARE NOT VERIFIABLE, THEN 30% OF THE CONTRACT RECEIPTS CAN BE CONSIDERED TOWARDS WAGES AND REST 70% TOWARDS MATER IAL PURCHASES. SINCE SALES TAX DEPARTMENT LEVIES TAX ON PURCHASES, THIS CIRCUL AR HAS BEEN ISSUED TO GIVEN GUIDELINES TO THE ASSESSING OFFICER OF SALES TAX DE PARTMENT TO LEVY TAX ON PURCHASES. HOWEVER, THIS CIRCULAR IS NOT DIRECTLY R ELEVANT IN INCOME TAX PROCEEDINGS. MOREOVER, THE ASSESSEE HAS PRODUCED BO NDS EXECUTED WITH VARIOUS GOVERNMENT AGENCIES WHICH SUGGESTS THAT DURING THIS YEAR, HIS CONTRACT RECEIPTS ARE MORE FROM REPAIR AND MAINTENANCE AND EXTENSION OF EXISTING BUILDINGS RATHER THAN FROM NEW CONSTRUCTION WORK. WHERE WORK IS RELA TED TO REPAIR AND MAINTENANCE AND EXTENSION OF EXISTING BUILDINGS, LA BOUR COMPONENT IS MORE THAN MATERIAL COMPONENTS. SINCE AO HAS ACCEPTED BOOKS OF ACCOUNTS OF THE ASSESSEE AND HAS NOT REJECTED HIS AUDITED BOOKS OF ACCOUNTS, AND HE HAS ALSO NOT POINTED OUT ANY SPECIFIC DEFECTS IN THE ACCOUNTING SYSTEM, IT WOULD BE IN THE INTEREST OF JUSTICE TO ADMIT THE BOOK VERSION AND, THEREFORE, A DDITION ON ACCOUNT OF LABOR OF RS.8,69,308/- IS DIRECTED TO BE DELETED. 4. WE NOTED THAT THE ASSESSEE HAS NOT SUBMITTED ANY DETAIL IN RESPECT OF OUTSTANDING WAGES OF RS.34,87,777/- BEFORE THE ASSESSING OFFICER AND HOW THESE WERE PAID. THE ASSESSEE FOR THE FIRST TIME MADE THE SUBMISSIONS IN THIS REGARD BEFO RE THE CIT(A). THE ASSESSING OFFICER WAS NOT GIVEN ANY OPPORTUNITY TO VERIFY WHETHER OUTSTANDING WAGES HAS DULY BEEN DISBURSED BY THE ASSESSEE OR NOT IN THE SUBSEQUENT PERIOD ESPECIALLY WHEN IN THE CASE OF THE ASSESSEE, THE OUTSTANDING WAGES RELATE TO THE PERIOD FROM DECEMBE R, 2001 TO MARCH, 2002 AND THE EXPENSES INCURRED ON THE WAGES ARE AT A HIGHER SIDE, I.E., @ 55.44% AGAINST THE CIRCULAR DATED 4992 OF THE TRADE TAX DEPARTMENT, ACCORDING TO WHICH 30% OF THE WORKS CONTRACT RECEIPTS ARE ADMITTED TO HAVE BEEN INCURRED TOWARDS THE WAGES. IT IS ALSO NO T ON RECORD WHETHER THE LABOURS EMPLOYED WERE THE REGULAR EMPLOYEES OF THE ASSESSEE OR WERE THE CASUAL LABOUR. IN OUR OPINION, NO CASUAL LABOUR WILL WORK IF THE WAGES REMAIN OUTSTANDING FO R SUCH A LONG PERIOD. THE CIT(A) HAS ALSO NOT 3 GIVEN ANY OPPORTUNITY TO THE ASSESSING OFFICER TO V ERIFY THE SUBMISSIONS MADE BY THE ASSESSEE AND ACCEPTED THE DETAILS AT THE BACK OF THE ASSESSI NG OFFICER. WE, THEREFORE, UNDER THESE FACTS AND CIRCUMSTANCES OF THE CASE AND IN THE INTEREST OF JU STICE, SET ASIDE THE ORDER OF CIT(A) ON THIS ISSUE AND RESTORE THIS ISSUE TO THE FILE OF ASSESSING OFF ICER WITH THE DIRECTION THAT THE ASSESSING OFFICER WILL RE-DECIDE THIS ISSUE AFTER GIVING PROPER AND A PPROPRIATE OPPORTUNITY TO THE ASSESSEE. THE ASSESSEE WILL BE FREE TO SUBMIT ANY EVIDENCE, ON WH ICH HE MAY RELY BEFORE THE ASSESSING OFFICER. THUS, GROUND NO. 1 OF REVENUE STANDS ALLOWED FOR ST ATISTICAL PURPOSES. 5. THE SECOND GROUND RELATES TO THE DELETION OF ADD ITION OF HIRE CHARGES AMOUNTING TO RS.2,27,922/-. THE BRIEF FACTS RELATING TO THIS GRO UND ARE THAT THE ASSESSING OFFICER NOTED FROM THE FINAL ACCOUNTS OUTSTANDING HIRE CHARGES AMOUNTI NG TO RS.3,33,428/-. THE ASSESSEE WAS ASKED TO IDENTIFY THESE HIRE CHARGES WITH RESPECT TO THE RECIPIENTS ALONGWITH RELEVANT DETAILS BUT THE ASSESSEE DID NOT FURNISH ANY DETAILS TO PROVE THE G ENUINENESS OF THE EXPENDITURE. THE ASSESSING OFFICER, THEREFORE, ALLOWED 2% OF THE GROSS RECEIPT ON ESTIMATED BASIS AND DISALLOWED REST OF THE EXPENDITURE AMOUNTING TO RS.2,27,922/-. WHEN THE M ATTER WENT BEFORE THE CIT(A), THE CIT(A) DELETED THE ADDITION BY OBSERVING AS UNDER : I HAVE GONE THROUGH THE ENTIRE MATTER. FROM THE BA LANCE SHEET, IT APPEARS THAT FIXED ASSETS ARE WORTH AT RS.35,390/- ONLY AFTER DEDUCTING DEPRECIATION OF RS.7,400/-. THERE ARE NO ASSETS WOR TH MENTIONING. IT IS TRUE THAT IF THESE ASSETS WOULD HAVE BEEN OWNED BY THE ASSESSEE, THE DEPRECIATION AMOUNT WOULD HAVE BEEN MUCH HIGHER. IT IS ALSO A FACT THAT WITHOUT HIRING THE ASSETS SUCH AS BAMBOOS, CHALALI, DAGANNA, TASLA, FAWARA, MIXTUR E MACHINE, GENERATOR, VIBRATOR ETC., THE CONSTRUCTION ACTIVITIES CAN NOT BE COMPLETED. IT IS ALSO TRUE THAT AO HAS ALLOWED 2% AND REST HAS BEEN DISALLOWED. NO BASIS FOR TAKING 2% OF GROSS RECEIPTS HAS BEEN GIVEN. THE ACCOUNTS OF THE ASSESS EE ARE AUDITED AND THEY HAVE BEEN ACCEPTED BY THE AO. KEEPING IN VIEW OF THIS FA CT, I FIND THAT THERE IS NO JUSTIFICATION FOR THIS DISALLOWANCE AND THEREFORE, ADDITION OF RS.2,27,922/- IS DIRECTED TO BE DELETED. 4 6. WE HAVE HEARD THE LD. DR AND CAREFULLY CONSIDERE D HIS SUBMISSIONS ALONGWITH THE ORDERS OF THE TAX AUTHORITIES BELOW. IN OUR OPINION, WHEN THE ASSESSEE CLAIMS EXPENDITURE, THE ONUS IS ON THE ASSESSEE TO PROVE THE GENUINENESS OF THE EXPEND ITURE SO INCURRED. MERELY THE ACCOUNTS OF THE ASSESSEE HAVE BEEN AUDITED BY THE CHARTERED ACCOUNT ANT, DOES NOT MEAN THAT THE ASSESSING OFFICER DOES NOT HAVE THE JURISDICTION TO ASK THE A SSESSEE TO PROVE THE GENUINENESS OF THE EXPENSES. THE ASSESSING OFFICER IN THIS CASE HAS AS KED THE ASSESSEE TO FILE THE LIST OF THE PERSONS SPECIFYING OUTSTANDING HIRE CHARGES, BUT NO SUCH DE TAILS WERE FILED BY THE ASSESSEE. BUT THE CIT(A) DELETED THE ADDITION MERELY ON THE BASIS THA T THE ACCOUNTS OF THE ASSESSEE WERE DULY AUDITED AND WERE ACCEPTED BY THE ASSESSING OFFICER. IN OUR OPINION, THE CIT(A) WAS NOT CORRECT IN LAW IN DELETING THE DISALLOWANCE ON THIS BASIS. WE, ACCORDINGLY, SET ASIDE THE ORDER OF CIT(A) ON THIS ISSUE AND RESTORE THIS ISSUE ALSO TO THE FILE OF THE ASSESSING OFFICER WITH THE DIRECTION THAT TH E ASSESSING OFFICER SHALL RE-ADJUDICATE THIS ISSUE. T HE ASSESSEE IS ALSO DIRECTED TO FILE THE DETAILS OF THESE EXPENSES ALONGWITH LIST OF THE PERSONS SPECIF YING THE OUTSTANDING HIRE CHARGES AS WERE ASKED FOR BY THE ASSESSING OFFICER AT THE TIME OF O RIGINAL ASSESSMENT. THE ASSESSEE SHALL BE AT LIBERTY TO FILE ANY FURTHER EVIDENCE AS HE MAY DESI RE BEFORE THE ASSESSING OFFICER TO PROVE THE GENUINENESS OF THE HIRE CHARGES INCURRED BY HIM. TH US, THIS GROUND IS ALLOWED FOR STATISTICAL PURPOSES. 7. IN THE RESULT, THE APPEAL IS ALLOWED FOR STATIST ICAL PURPOSES. THE ORDER PRONOUNCED IN THE OPEN COURT ON 8.4.11. SD/- SD/- (H.S. SIDHU) (P.K. BANSAL) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 8 TH APRIL, 2011 *AKS/- 5 COPY OF THE ORDER FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A) BY ORDER 4. CIT, CONCERNED 5. DR, ITAT, AGRA 6. GUARD FILE ASSISTANT REGISTRAR TRUE COPY