SAHEBRAO SUKHDEO KHILARI, MUMBAI V. DCIT 22(3), NAVI MUMBAI

ITA 4136/MUM/2011

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 8323 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 3 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-08-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 06-08-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 19-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHRIVIJAY KUMAR SAMI
• Section: 133(6); 194C

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL E B ENCH, MUMBAI , !' # # # # , $ %% , , !' & BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER AND SHRI SANJAY GARG, JUICIAL MEMBER ./I.T.A. NO.4136/MUM/2011 ( ' ' ' ' / ASSESSMENT YEAR : 2007-08 SHRI SAHEBRAO SUKHDEO KHILARI, 101, PRABHAT CENTRE ANNEX, SECTOR-1A, CBD BELAPUR, NAVI MUMBAI-400 614 THE DCIT-22(3), VASHI RAILWAY STATION, NAVI MUMBAI '( ./ $) ./PAN/GIR NO. : AAJPK 7584J ( (* /APPELLANT ) .. ( +,(* / RESPONDENT ) (* - / APPELLANT BY : ` SHRI RAJIV KHANDELWAL MS BHUMIKA VORA +,(* . - /RESPONDENT BY : SHRIVIJAY KUMAR SAMI . /0 / DATE OF HEARING :14.08.2014 12' . /0 / DATE OF PRONOUNCEMENT :22.8.2014 !3 / O R D E R PER N.K. BILLAIYA, AM: THIS APPEAL BY THE ASSESSEE IS PREFERRED AGAINST THE ORDER OF THE LD. CIT(A)-33, MUMBAI DT. 2.3.2011 PERTAINING TO AS SESSMENT YEAR 2007- 08. 2. THE FIRST GROUND RELATES TO THE ADDITION OF RS. 43,46,115/- ON ACCOUNT OF ALLEGED UNEXPLAINED SUNDRY CREDITORS. 3. THE ASSESSEE IS A CIVIL CONTRACTOR. THE RETURN WAS FILED ON 29.10.2007 DECLARING TOTAL INCOME AT RS. 1,00,86,89 0/-. THE RETURN WAS SELECTED FOR SCRUTINY ASSESSMENT. DURING THE COURS E OF THE ASSESSMENT ITA NO.4136/M/2011 2 PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS SHOWN SUNDRY CREDITORS OF RS. 8,43,70,848/- IN THE BALANC E SHEET. THE ASSESSEE WAS ASKED TO FILE PARTY-WISE DETAILS WITH NAME AND ADDRESS. IN ORDER TO VERIFY THE GENUINENESS OF THESE EXPENSES, NOTICES U /S. 133(6) WERE ISSUED. THE NAMES OF THE PARTIES ARE MENTIONED BY THE AO AT PARA-5 OF HIS ORDER AND ALSO THE OUTCOME OF THE SAID NOTICES. THE ASSE SSEE WAS ASKED TO FILE NECESSARY DETAILS. THE ASSESSEE FILED THE COPIES O F LEDGER ACCOUNTS. THE AO DID NOT ACCEPT THESE COPIES OF ACCOUNTS AS ACCOR DING TO HIM THEY WERE GENERATED FROM ASSESSEES BOOKS. THE AO DISALLOWED THE SUNDRY CREDITORS AMOUNTING TO RS. 89,04,699/- AS UNEXPLAIN ED/NO LONGER PAYABLE AND ADDED TO THE TOTAL INCOME. 4. THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. C IT(A). AFTER CONSIDERING THE FACTS AND THE SUBMISSIONS, THE LD. CIT(A) SUSTAINED THE ADDITION AMOUNTING TO RS. 43,46,115/- AND DELETED T HE ADDITION AMOUNTING TO RS. 45,58,534/-. 5. AGGRIEVED BY THIS, THE ASSESSEE IS BEFORE US. 6. THE LD. COUNSEL FOR THE ASSESSEE STATED THAT THE PARTIES INVOLVED ARE PETTY CONTRACTORS EXECUTING HIS WORK IN THE C IVIL CONSTRUCTION BUSINESS. DURING THE YEAR, THESE PARTIES HAVE DONE PETTY JOB WORK FOR THE ASSESSEE FOR WHICH THE ASSESSEES BOOKS SHOW THE LI ABILITIES AGAINST THEIR NAMES. IT IS THE SAY OF THE LD. COUNSEL THAT THE D ISALLOWANCE MADE BY THE AO TREATING THESE CREDITORS AS UNEXPLAINED IS NOT C ORRECT AS THESE CREDITORS ARE BECAUSE OF THE PETTY CIVIL WORK DONE BY THEM FO R THE ASSESSEE. DETAILS OF WHICH WERE PROVIDED DURING THE COURSE OF THE ASS ESSMENT PROCEEDINGS AS WELL AS DURING THE COURSE OF THE APPELLATE PROCE EDINGS. ITA NO.4136/M/2011 3 7. PER CONTRA, THE LD. DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 8. WE HAVE CAREFULLY PERUSED THE ORDERS OF THE AUTH ORITIES BELOW AND THE RELEVANT DOCUMENTARY EVIDENCES BROUGHT ON RECOR D BEFORE US. ON PERUSAL OF THE EVIDENCES BROUGHT BEFORE US, WE FIND THAT THE AFFIDAVITS OF THE IMPUGNED PARTIES ALONGWITH THEIR CONFIRMATIONS WERE BEFORE THE LOWER AUTHORITIES. THERE IS NO ADVERSE FINDINGS IN SO FA R AS THE AFFIDAVITS OF THE PARTIES ARE CONCERNED. THE ACCOUNTS ARE DULY CONFI RMED SUPPORTED BY THE AFFIDAVITS THEREFORE THESE CREDITORS CANNOT BE CONS IDERED AS UNEXPLAINED. WE, ACCORDINGLY SET ASIDE THE FINDINGS OF THE LD. C IT(A) AND DIRECT THE AO TO DELETE THE ADDITION OF RS. 43,46,115/-. GROU ND NO. 1 IS ACCORDINGLY ALLOWED. 9. GROUND NO. 2 RELATES TO THE ADHOC DISALLOWANCE O F RS. 10,93,556/-. 10. WHILE SCRUTINIZING THE PROFIT AND LOSS ACCOUNT, THE AO NOTICED THAT THE ASSESSEE HAS INCURRED EXPENDITURE AMOUNTING TO RS. 1,09,35,567/-. THE AO PROCEEDED BY MAKING AN ADHOC DISALLOWANCE OF 10% OF THE TOTAL EXPENDITURE AND DISALLOWED RS. 10,93,556/-. 11. THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) BUT WITHOUT ANY SUCCESS. 12. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE STA TED THAT THE ADHOC DISALLOWANCE WITHOUT POINTING OUT ANY SPECIFIC DEFE CT IN THE BOOKS OF ACCOUNTS IS UNWARRANTED AND DESERVES TO BE DELETED. 13. THE LD. DR SIMPLY SUPPORTED THE FINDINGS OF THE LD. CIT(A). ITA NO.4136/M/2011 4 14. WE HAVE CAREFULLY PERUSED THE ORDERS OF THE AUT HORITIES BELOW. THE AO HAS DISCUSSED THIS ISSUE AT PARA-6 ON PAGE-3 OF HIS ORDER. WE FIND FORCE IN THE CONTENTION OF THE LD. COUNSEL. THE AO HAS DISALLOWED 10% ON ADHOC BASIS MERELY BY STATING THAT MOST OF THE P AYMENTS WERE INCURRED IN CASH AND SUPPORTED WITH SELF MADE VOUCHER. BOOK S OF ACCOUNTS WERE PRODUCED BEFORE THE AO. WITHOUT REJECTING THE BOOK S, THE AO HAS SIMPLY PROCEEDED BY MAKING ADHOC DISALLOWANCE. CONSIDERIN G THE NATURE OF BUSINESS OF THE ASSESSEE, CERTAIN PAYMENTS ARE BOUN D TO BE MADE IN CASH SUPPORTED BY INTERNAL VOUCHER. MERELY FOR THIS REA SON, ADHOC DISALLOWANCE CANNOT BE MADE. FINDINGS OF THE LD. CI T(A) ARE SET ASIDE. THE AO IS DIRECTED TO DELETE THE ADDITION OF RS. 10 ,93,556/-. GROUND NO. 2 IS ACCORDINGLY ALLOWED. 15. GROUND NO. 3 RELATES TO THE ADDITION OF RS. 91, 24,563/- U/S. 40(A)(IA) OF THE ACT. 16. THE AO HAS DISCUSSED THIS ISSUE AT PARA-4 ON PA GE-2 OF HIS ORDER. THE AO NOTICED THAT THE ASSESSEE HAS NOT MADE ANY T DS AS PER PROVISIONS OF SEC. 194C OF THE ACT IN RESPECT OF FOUR SUB-CONT RACT PAYMENTS AND ACCORDINGLY DISALLOWED THE TOTAL PAYMENT OF RS. 91, 24,563/- U/S. 40(A)(IA) OF THE ACT. 17. THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) BUT WITHOUT ANY SUCCESS. 18. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE STA TED THAT DURING THE YEAR UNDER CONSIDERATION, PROVISIONS OF SEC. 194C A RE NOT APPLICABLE TO THE ASSESSEE. 19. THE LD. DR SUPPORTED THE FINDINGS OF THE LOWER AUTHORITIES. ITA NO.4136/M/2011 5 20. WE HAVE CAREFULLY PERUSED THE ORDERS OF THE AUT HORITIES BELOW. THE ASSESSEE IS AN INDIVIDUAL. THE PROVISIONS OF SEC. 194C HAVE BEEN MADE APPLICABLE IN THE CASE OF INDIVIDUAL OR HUF OR AN A OP OR A BODY OF INDIVIDUAL WHOSE TOTAL SALES, GROSS RECEIPTS OR TUR NOVER FROM THE BUSINESS CARRIED ON BY HIM EXCEED THE MONETARY LIMITS SPECIF IED UNDER CLAUSE (A) OF SEC. 44AB DURING THE FINANCIAL YEAR IN WHICH S UM IS CREDITED OR PAID TO THE ACCOUNT OF THE CONTRACTOR. THIS IS APPLICAB LE FROM 1 ST JUNE 2007 AND APPLICABLE FROM A.Y. 2008-09. SINCE ASSESSMENT YEAR UNDER CONSIDERATION IS A.Y. 2007-08, PROVISIONS OF SEC. 1 94C ARE NOT APPLICABLE, THEREFORE, DISALLOWANCE MADE U/S. 40(A) (IA) OF THE ACT DESERVES TO BE DELETED. WE, DIRECT ACCORDINGLY. G ROUND NO. 3 IS ALLOWED. 21. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND AUGUST, 2014 !3 . 2' 4 5!6 22.8.2014 2 . % SD/- SD/- (SANJAY GARG ) (N.K . BILLAIYA) !' / JUDICIAL MEMBER !' / ACCOUNTANT MEMBER MUMBAI; 5! DATED 22 ND AUGUST, 2014 . . ./ RJ , SR. PS ITA NO.4136/M/2011 6 !3 !3 !3 !3 . .. . +/ +/ +/ +/ 7'/ 7'/ 7'/ 7'/ / COPY OF THE ORDER FORWARDED TO : 1. (* / THE APPELLANT 2. +,(* / THE RESPONDENT. 3. 8 ( ) / THE CIT(A)- 4. 8 / CIT 5. 9% +/ , , / DR, ITAT, MUMBAI 6. %: ; / GUARD FILE. !3 !3 !3 !3 / BY ORDER, ,/ +/ //TRUE COPY// < << < / = = = = $ $ $ $ (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI