ITO, Circle-33(4), Kolkata, Kolkata V. Shyamal Dey, Kolkata

ITA 410/KOL/2012

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 3371 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 10 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-01-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2008-2009
• Appeal Filed On: 14-03-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: UDAY KR SARKAR J
• Assessee Lawyers: V N PUROHIT
• Keywords: Corroborative evidences
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH C KOLKATA BEFORE SHRI N.V.VASUSDEVAN, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ITA NO. 410 / KOL / 2012 ASSESSMENT YEAR :2008-09 ITO WARD-33(4), 10- B, MIDDLETON ROW, 3 RD FLOOR, KOLKATA 700 071 V/S . SHYAMAL DEY, BD-456, SALT LAKE SECTOR-I, SALT LAKE CITY, KOLKATA 700 064 [ PAN NO.ADRPD 3090 K ] /APPELLANT .. / RESPONDENT /BY APPELLANT SHRI UDAY KR. SARKAR, JCIT-DR /BY RESPONDENT SHRI V. N. PUROHIT, FCA /DATE OF HEARING 03-12-2015 /DATE OF PRONOUNCEMENT -01-2016 / O R D E R PER WASEEM AHMED, ACCOUNTANTMEMBER:- THIS APPEAL BY THE REVENUE IS AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-XX, KOLKATA DATED 26.12.2011. ASSESSMENT WAS FRAMED BY DCIT, CIRCLE-33, KOLKATA U/S 143(3) OF TH E INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) VIDE HIS ORD ER DATED 23.12.2010 FOR ASSESSMENT YEAR 2008-09. 2. SOLITARY ISSUE RAISED BY REVENUE IN THIS APPEAL IS THAT LD. CIT(A) ERRED IN ALLOWING THE RELIEF OF RS,65,77,786/- WHICH WAS DISALLOWED BY THE AO ON ITA NO.410/KOL/2012 A.Y. 2008-09 ITO WARD-33(4), KOL. V. SHYAMALDEY PAGE 2 ACCOUNT OF NON-PRODUCTION OF SUPPORTING EVIDENCE AN D NECESSARY DETAILS IN RELATION TO VARIOUS EXPENSES. 3. THE FACTS OF THE CASE ARE THAT ASSESSEE IS AN I NDIVIDUAL AND ENGAGED IN BUSINESS OF CIVIL CONTRACTOR. DURING THE YEAR ASSES SEE HAS CLAIMED THE FOLLOWING EXPENSES IN HIS PROFIT AND LOSS ACCOUNT. SL.NO. HEAD OF EXPENSES AMOUNT (RS) 1 COST OF MATERIALS 1,34,60,607/- 2 LABOUR EXPENSES 18,20,447/- 3 SALARY, WAGES & BONUS 12,20,447/- 4 POWER & FUEL 11,02,925/- 5 STAFF WELFARE 3,91,096/- 6 REPAIR & MAINTENANCE 4,54,242/- 7 TOUR & TRAVELLING 6,01,248/- 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, AO ASKED FOR BILLS, VOUCHERS AND BOOKS OF ACCOUNT FOR VERIFICATION OF G ENUINENESS OF THE ABOVE LISTED EXPENSES BUT ASSESSEE FAILED TO DO SO. THERE FORE AO DISALLOWED THE ABOVE EXPENSES ON ESTIMATE BASIS @ 30% OF ALL THE E XPENSES TREATING THEM AS BOGUS AND ADDED TO THE TOTAL INCOME OF ASSESSEE. 5. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE L D. CIT(A) WHO DELETED THE ADDITION MADE BY AO BY OBSERVING AS UND ER:- 9 I HAVE PERUSED THE ASSESSMENT ORDER. I HAVE ALSO CONSIDERED THE SUBMISSIONS MADE ON BEHALF OF THE APPELLANT AND THE JUDICIAL PRONOUNCEMENTS RELIED UPON. THE AO HAS MENTIONED IN THE ASSESSMENT ORDER THAT THERE HAS BEEN NON-COMPLIANCE ON THE PAR T OF THE APPELLANT. BUT THE, HE HAS MADE THE ASSESSMENT U/S. 143(3) WIT HOUT BRINGING ANY ADVERSE MATERIAL OR EVIDENCE ON RECORD I FIND MERIT AND SUBSTANCE IN THE ARGUMENT THAT, EVEN WHILE MAKING A BEST JUDGMENT AS SESSMENT U/S. 144, THE AO DOES NOT POSSESS ABSOLUTE ARBITRARY AUT HORITY TO ASSESS ANY FIGURE HE LIKES. EVEN IF THE CIRCUMSTANCES OF THE C ASE CALLED FOR RESORTING TO ESTIMATING THE INCOME OF THE APPELLANT, SUCH EST IMATION CANNOT BE A WILD ONE, BUT, SHOULD BE MADE HONESTLY AND NOT ARBI TRARILY; MOREOVER, IT SHOULD HAVE A REASONABLE NEXUS WITH THE MATERIAL AV AILABLE ON RECORD. ITA NO.410/KOL/2012 A.Y. 2008-09 ITO WARD-33(4), KOL. V. SHYAMALDEY PAGE 3 WHILE ESTIMATING THE INCOME, THE AO MUST NOT ACT VI NDICTIVELY OR CAPRICIOUSLY OR WITH A VIEW TO PUNISH THE APPELLANT FOR NON-COMPLIANCE. FOR, THE AO HAS TO BE GUIDED BY THE RULES OF JUSTIC E, EQUITY AND GOOD CONCISE. BUT, IN THE PRESENT CASE, THE AO HAS FOUND NO DEFECTS IN THE AUDITED ACCOUNTS OF THE APPELLANT. THE AO HAS FAILE D TO BRING ANY MATERIAL OR EVIDENCE ON RECORD TO JUSTIFY THE DISAL LOWANCES MADE BY HIM. THE AO HAS ALSO FAILED TO CONSIDER THE PAST RECORDS OF THE APPELLANT. FOR, THERE IS NO FINDING OF THE AO THAT THE CLAIM O F EXPENSES IS EXCESSIVE OR UNREASONABLE WITH REFERENCE TO THE PRE CEDING YEARS. THE DISALLOWANCES MADE BY THE AO ARE ARBITRARY AND WITH OUT ANY BASIS AS THEY ARE NOT SUPPORTED BY ANY MATERIAL OR EVIDENCE ON RECORD. IN VIEW OF THE ABOVE, AND THE RATIO LAID DOWN BY THE HON'BLE S UPREME COURT AND THE JURISDICTIONAL HIGH COURT, I AM OF THE CONSIDER ED OPINION THAT THE DISALLOWANCES MADE BY THE AO ARE NEITHER SUSTAINABL E IN LAW NOR ON FACTS. THE DISALLOWANCE OUT OF VARIOUS HEADS OF EXP ENSES, NAMELY, COST OF MATERIAL, LABOUR EXPENSES, SALARY, WAGES AND BON US, POWER AND FUEL, STAFF WELFARE, REPAIRS AND MAINTENANCE, AND TOUR AN D TRAVELING ARE DELETED. GROUND NO. 3 TO 9 IS ALLOWED. GROUND NO 10 AND 11 IS GENERAL IN NATURE. 6. BEING AGGRIEVED BY THIS ORDER OF LD. CIT(A) REV ENUE IS IN APPEAL BEFORE US. 7. SHRI V.N.PUROHIT, LD. AUTHORIZED REPRESENTATIVE APPEARING ON BEHALF OF ASSESSEE AND SHRI UDAY KR. SARKAR, LD. DEPARTMENTAL REPRESENTATIVE APPEARING ON BEHALF OF REVENUE. 8. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. THE LD. DR RELIED ON THE ORDER OF ASSESS ING OFFICER. THE LD. AR SUBMITTED TWO SETS OF PAPER BOOKS WHICH ARE RUNNING PAGES 1 TO 34 AND 1 TO 113 AND ALSO CITED CASE LAWS. BEFORE US THE LD. AR SUBMITTED THAT ALL THE EXPENSES CLAIMED BY THE ASSESSEE ARE DULY SUPPORTED WITH THE NECESSARY DOCUMENTS AND INCURRED FOR THE PURPOSE OF BUSINESS ONLY. REGARDING THE EXPENSES OF MATERIAL PURCHASE THE ASSESSEE BEFORE U S SUBMITTED THE COMPLETE DETAILS OF THE PARTIES ALONG WITH ADDRESSE S, DESCRIPTION OF GOODS AND THEIR VALUE FROM WHOM THE MATERIALS WERE PURCHASED. SUCH DETAIL IS PLACED ON PAGE 35 OF THE PAPER BOOK. THE ASSESSEE ALSO SUBMITTED THE COMPARATIVE CHART OF THE MATERIAL EXPENSES INCURRED IN THE EARL IER YEAR WHICH IS PLACED ON ITA NO.410/KOL/2012 A.Y. 2008-09 ITO WARD-33(4), KOL. V. SHYAMALDEY PAGE 4 PAGE 36 OF THE PAPER BOOK. THE ASSESSEE CLAIMED THAT IN TH E RELEVANT YEAR UNDER CONSIDERATION THE COST FOR THE MATERIAL EXPEN SES HAVE COME DOWN IN RELATION TO THE GROSS RECEIPT OF THE ASSESSEE. REGA RDING THE LABOUR CHARGES THE LD. DREW OUR ATTENTION TO THE PAGES OF 37 TO 64 OF THE PAPER BOOK WHEREIN THE DETAILS OF THE LABOURERS HAVE BEEN FURNISHED. R EGARDING THE SALARY & WAGES THE LD. AR DREW OUR ATTENTION ON PAGE 65 OF T HE PAPER BOOK WHERE COMPARISON CHART OF SUCH EXPENSES WITH EARLIER YEAR S HAVE BEEN FURNISHED. SIMILARLY THE ASSESSEE SUBMITTED THE DETAILS OF THE POWER & FUEL EXPENSES WHICH ARE PLACED ON PAGES 66 TO 75 OF THE PAPER BOOK. SIMILARLY THE DETAILS OF THE EXPENSES TOWARDS THE REPAIR & MAINTENANCE AND T OUR & TRAVELS ARE FURNISHED ON PAGES 76 TO 86 AND 87 TO 113 RESPECTIVELY. THE LD. AR ALSO SUBMITTED THAT NO SUCH ADHOC DISALLOWANCE WAS MADE UNDER SECTION 143(3) OF THE ACT IN THE ASSESSMENT OF EARLIER YEARS. IN SUPP ORT OF HIS CLAIM THE LD. AR SUBMITTED THE ASSESSMENT ORDERS FOR THE AYS 2006-07 , 2007-08 AND 2009-10 WHICH ARE PLACED ON PAGES 2&3, 4&5 AND 11&16 OF THE PAPER BOOK. THE LD. AR RELIED ON THE ORDER OF LD, CIT(A). 9. FORM THE AFORESAID DISCUSSION WE FIND THAT THE A O HAS DISALLOWED THE VARIOUS EXPENSES ON ADHOC BASIS ON THE GROUND OF NO N-AVAILABILITY OF THE SUPPORTING DOCUMENTS. HOWEVER WE FIND FROM THE SUBM ISSION AND RECORDS THAT THE EXPENSES ARE IN AGREEMENT WITH THE EARLIER YEAR EXPENSES. NO DISALLOWANCE OF SUCH EXPENSES HAS MADE IN THE EARLI ER YEAR ASSESSMENT ORDERS. THE LD. AR HAS EXPLAINED ALL THE EXPENSES A ND SUBMITTED THE NECESSARY SUPPORTING DETAILS IN THE FORM OF PAPER B OOK WHICH IS PLACED ON RECORD. THE AO FAILED TO POINT OUT THE SPECIFIC DIS ALLOWANCES FROM THE BOOKS OF ACCOUNTS OF THE ASSESSEE. WE ALSO FIND FROM THE ORD ER OF HONBLE SUPREME COURT IN THE CASE BRIJBHUSHAN LAL PARDUMAN KUMAR V. CIT (1978) 115 ITR 524 (SC) AND HEAD NOTE REPRODUCED BELOW:- ASSESSMENT BEST JUDGMENT ASSESSMENT INCOME EST IMATE BASIS THEREOF NECESSITY OF REASONABLE NEXUS AUTHORITY MAKING A BEST JUDGMENT ASSESSMENT MUST MAKE AN FAIR ESTIMATE OF T HE INCOME OF THE ASSESSEE AND THOUGH ARBITRARINESS CANNOT BE AVOIDED IN SUCH ESTIMATE ITA NO.410/KOL/2012 A.Y. 2008-09 ITO WARD-33(4), KOL. V. SHYAMALDEY PAGE 5 THE SAME MUST NOT BE CAPRICIOUS BUT SHOULD HAVE A R EASONABLE NEXUS TO THE AVAILABLE MATERIAL AND THE CIRCUMSTANCES OF THE CASE. 9.1. WE ALSO FIND THAT THE LD. DR HAS NOT BROUGHT ANYTHING ON RECORD TO CONTROVERT THE FINDING OF THE LD. CIT(A). IN VIEW O F THE FACTS AND CIRCUMSTANCES OF THE CASE WE FIND NO REASON TO INTERFERE IN THE O RDER OF LD. CIT(A) AND GROUND RAISED BY REVENUE IS DISMISSED. 10. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT 20/01 /2016 SD/- SD/- (N.V. VASUDEVAN) (WASEEM AHMED) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) KOLKATA, *DKP !- 20 / 0 1/201 6 / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-ITO, WARD-33(4), 10B-MIDDLETON ROW, 3 RD , FLOOR, KOLKATA-71 2. /RESPONDENT-SHYAMAL DEY, BD-456, SALT LAKE SEECTOR- I, SALT LAKE CITY, KOL-64 3. ) *+ , , - / CONCERNED CIT KOLKATA 4., , -- / CIT (A) KOLKATA 5. 012 33*+,, *+ , / DR, ITAT, KOLKATA 6. 267 89 / GUARD FILE. BY ORDER/ , , /TRUE COPY/ / , *+ ,