M/s. Master Construction Company, Rourkela V. ITO, Ward-3, Rourkela

ITA 414/CTK/2019

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 2321 (ITAT-CUTTACK)
• Duration Of Justice: 1 year(s) 2 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-03-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2012-2013
• Appeal Filed On: 10-12-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S C MOHANTY
• Assessee Lawyers: DAMODAR PATI
• Keywords: Unexplained expenditure
• Section: 133A; 13

Judgement Text

P A G E 1 | 8 IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK BEFORE S/ SHRI C HANDRA MOHAN GARG , JUDICIAL MEMBER AND LAXMI PRASAD SAHU, ACCOUNTANT MEMBER ITA NO . 414 /CTK/201 9 ASSESSMENT YEAR : 2012 - 13 M/S. MASTER CONSTRUCTION CO., ANADI NIWAS, MAIN ROAD, ROURKELA - 769001 VS. ITO, WARD - 3, ROURKELA PAN/GIR NO. AAFFM 2314 J (APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY : SHRI DAMODAR PATI , ADV REVENUE BY : SHRI S .C.MOHANTY , DR DATE OF HEARING : 3 / 3 / 20 2 1 DATE OF PRONOUNCEMENT : 5 / 3 /20 2 1 O R D E R PER BENCH THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A), SAMBALPUR DATED 25.10.2019 FOR THE ASSESSMENT YEAR 2012 - 13 . 2. THE SOLE ISSUE INVOLVED IN THE GROUNDS OF APPEAL IS THAT THE LD CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE ADDITION OF RS.48,54,391/ - ON THE BASIS OF SURVEY CONDUCTED U/S.133A, AND ADMISSION HAVE BEEN EXTRACTED UNDER COERCION AND UNDUE INFLUENCE. ITA NO.414/CTK/2019 ASSESSMENT YEAR : 2012 - 13 P A G E 2 | 8 3. FACTS IN BRIEF ARE THAT THE ASSESSEE IS A PARTNERSHIP FIRM AND DERIVES INCOME FROM THE BUSINESS OF CIVIL CONSTRUCTION. A SURVEY U/S.133A OF THE INCOME TAX ACT, 1961 WAS CONDUCTED AT THE BUSINESS PREMISES OF THE ASSESSEE ON 18.1.2012. DURING THE COURSE OF SURVEY , A REGISTER AND VOUCHERS WERE FOUND, ACCORDING TO WHICH, EXPENDITURE ON WAGES AND LABOUR PAYMENT AND EXPENDITURE ON BRICKS, CHIPS AND BOULDERS OF RS.20,72,172/ - AND OF RS.12,76,089/ - COULD BE ASCERTAINED. IT IS ALSO FOUND THAT THE ASSESSEE HAS CLAIMED WA GES AND LABOUR EXPENSES OF RS.57,32,051/ - AND BRICKS, CHIPS AND BOULDER EXPENSES OF RS.24,70,610/ - . STATEMENT OF SRI SUNDERLAL SULTANIA, PARTNER OF THE ASSESSEE FIRM WAS RECORDED, WHEREIN, HE COULD NOT EXPLAIN THE NON - AVAILABILITY OF THE VOUCHERS FOR THE EXCESS EXPENDITURE AS PER THE TALLY PACKAGE IN THE COMPUTER AND AGREED TO PAY ADVANCE TAX OF RS.15,00,000/ - TREATING THE UNACCOUNTED EXPENDITURE OF RS.48,54,400/ - . WHILE FILING THE RETURN OF INCOME, THE ASSESSEE HAS CLAIMED REFUND OF RS.15,00,000/ - BEING PAID AS ADVANCE TAX.. THE ASSESSING OFFICER REQUIRED TO EXPLAIN AS TO WHY THE EXCESS EXPENDITURE OF RS.48,54,400/ - SHOULD NOT BE ADDED TO THE TOTAL INCOME OF THE ASSESSEE DUE NON - AVAILABILITY OF BILLS AND VOUCHERS. IN REPLY, THE ASSESSEE SUBMITTED THAT D URING THE COURSE OF SURVEY, THE PARTNER OF THE ASSESSEE UNDER COERCION AND DURESS, AGREED TO PAY ADVANCE TAX OF RS.15,00,000/ - BUT COULD NOT PRODUCE THE RELEVANT BILLS AND VOUCHERS IN SUPPORT OF THE CLAIM. THEREFORE, THE AO ITA NO.414/CTK/2019 ASSESSMENT YEAR : 2012 - 13 P A G E 3 | 8 REJECTED THE CONTENTION OF THE ASSESSEE AND MADE ADDITION OF RS.48,54,391/ - TO THE INCOME OF THE ASSESSEE. 4. ON APPEAL, THE LD CIT(A) CONFIRMED THE ACTION OF THE ASSESSING OFFICER. HENCE, THE ASSESSEE IS IN APPEAL BEFORE US. 5. AT THE TIME OF HEARING, LD A.R. OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE MAINTAINS ITS ACCOUNTING RECORD USING TALLY ACCOUNTING PACKAGE AND DO NOT MAINTAIN ANY MANUAL RECORD LIKE PURCHASES OR WAGES. HE SUBMITTED THAT THE ASSESSEE HAS DEBITED TO PROFIT & LOSS ACCOUNT FOR THE PERIOD 1.4.2011 TO 16.1.2012 ( NINE MONTHS) OF RS.57,32,051/ - , WHICH ARE FULLY EVIDENCED BY MUSTER ROLLS AND PRODUCED BEFORE THE ASSESSING OFFICER., WHEREAS, FOR THE PERIOD FROM 31.5.2011 TO 1.10.2011 (5 MONTHS), AS PER MANUAL REGISTER IT IS RS.20,71,172/ - . HENCE, THERE SHOULD BE DISCREPANCY BETWEEN THE AMOUNT RECORDED IN THE COMPUTER AND THE MANUAL REGISTER. HE SUBMITTED THAT THE ASSESSING OFFICER HAS ACCEPTED THE AUDIT REPORT BUT THE AUTHORITIES BELOW HAVE MADE THE ADDITION ON THE BASIS OF SURVEY REPORT. HE SUBMITTED THAT THE SURVEY WAS CONDUCTED ON 18.1.2012, WHICH IS ON THE MID OF THE ASSESSMENT YEAR AND ON THE BASIS OF SURVEY REPORT, THE ADDITION HAS BEEN MADE WITHOUT CONSIDERING GLARING FACTS THAT AFTER THE SURVEY WORK HAS BEEN DONE. LD A.R. ALSO SUBMITTED THAT AL THOUGH THE ASSESSEE HAS PAID THE ADVANCE TAX AFTER THE SURVEY CONDUCTED BUT LATER ON IT HAS BEEN RETRACTED THAT DUE TO COERCION AND DURESS, THE ASSESSEE WAS COMPELLED TO PAY THE ADVANCE TAX OF RS.15 LAKHS. ITA NO.414/CTK/2019 ASSESSMENT YEAR : 2012 - 13 P A G E 4 | 8 6. LD COUNSEL FURTHER VEHEMENTLY POINTED OUT THA T THE AO, DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEEDINGS, HAS ISSUED A NOTICE DATED 2.4.2014 (APB 45 & 46), WHICH WAS REPLIED BY THE ASSESSEE VIDE DATED 6.6.2014 (APB - 47 & 48), WHEREIN, THE ASSESSEE CLEARLY SUBMITTED THAT THE ASSESSEE HAS CLAIMED VAR IOUS EXPENSES IN ITS PROFIT AND LOSS ACCOUNT AND TO SUPPORT THE CLAIM, THE ASSESSEE HAS ENCLOSED LEDGER COPIES OF THE RESPECTIVE EXPENDITURE ACCOUNT. LD COUNSEL DRAWING OUR ATTENTION TO PAGE 47 OF APB SUBMITTED THAT FOR MAKING THE ADDITION, THE AO HAS PIC KED UP TWO ITEMS I.E. WAGES AND LABOUR CHARGES AND BRICKS, CHIPS, SAND & BOULDER BY TAKING DIFFERENCE BETWEEN THE AMOUNT OF EXPENDITURE CLAIMED AS PER PROVISIONAL P&L ACCOUNT SHOWN IN THE COMPUTER TALLY AND THE AMOUNT OF EXPENSES CLAIMED AND RECORDED AS PE R THE MANUAL REGISTER AND SELF MADE VOUCHERS FOUND DURING THE COURSE OF SURVEY. WHEREAS THE ASSESSEE ITSELF HAS CLAIMED IN THE CLOSING ACCOUNT AND PROFIT AND LOSS ACCOUNT AS ON 31.3.2012 A VERY HIGHER AMOUNT ON BOTH THE ITEMS CLAIMING RS.74,56,527/ - ON B RICKS, CHIPS, SAND & BOULDER AND RS.1,56,65,310/ - ON WAGES AND LABOUR CHARGES, WHICH ARE HIGHER AMOUNT PICKED UP BY THE AO AND NOTED IN THE ASSESSMENT ORDER AT PAGE 2 PARA 2. LD COUNSEL POINTED OUT THAT THE SURVEY TEAM GIVES THE FIGURE WHICH IS IN VARIATI ON BETWEEN THE AMOUNT SHOWN IN THE TALLY AND REGISTER MAINTAINED MANUALLY IS OBVIOUS AS THE AMOUNT RECORDED IN THE COMPUTER IS AUTOMATICALLY ADDED TO THE TOTAL RUNNING AMOUNT WHEREAS IN THE MANUAL MAINTAINED REGISTER, THE ENTRIES HAVE TO BE DONE PEACEFULLY BY ITA NO.414/CTK/2019 ASSESSMENT YEAR : 2012 - 13 P A G E 5 | 8 CONSIDERING ALL THE AVAILABLE PAPERS AND THE INFORMATION ON THE TABLE OF ACCOUNTANT BUT WHEN THE TOTAL AMOUNT CLAIMED BY THE ASSESSEE ON BOTH THE HEADS AT THE END OF THE YEAR IS MUCH HIGHER THAN THE AMOUNT SHOWN IN THE COMPUTER AND MAINTAINED REGISTER MANUALLY, THEN NO ADDITION COULD BE MADE IN THE HANDS OF THE ASSESSEE BY TAKING DIFFERENCE BETWEEN THE TALLY SHOWN IN P&L ACCOUNT AND ITEMS SHOWN IN THE MANUAL MAINTAINED REGISTER. HENCE, OBVIOUSLY , IT WOULD AMOUNT TO MAKING DOUBLE ADDITION IN THE HANDS OF THE ASSESSEE. THEREFORE, THE ENTIRE ADDITION BEING NOT SUSTAINABLE MAY KINDLY BE DELETED. 7 . REPLYING TO ABOVE, LD DR SUBMITTED THAT THE SURVEY WAS CONDUCTED ON 18.1.2012 BUT THE ASSESSEE HAS RETRACTED AFTER THREE YEARS THAT THE DISCLOSURE OF UNACCOUNTED MONEY WAS UNDER COERCION, HENCE, THIS CONTENTION OF THE ASSESSEE SHOULD NOT BE ACCEPTED. LD DR SUBMITTED THAT SINC E THERE WAS DIFFERENCE FOUND DURING THE COURSE OF SURVEY AND THE ASSESSEE ADMITTEDLY PAID THE ADVANCE TAX , THE ADDITION MADE BY THE AO IS JUSTIFIED. 8. FURTHER, LD D.R. SUBMITTED THAT THERE WAS EXCESS CLAIM OF EXPENSES ON BOTH THE HEADS, WHICH WAS RS.48,54 ,391/ - , THEREFORE, SAME HAS TO BE ADDED IN THE HANDS OF THE ASSESSEE AS UNEXPLAINED EXPENSES AND THE AO WAS RIGHT IN MAKING ADDITION IN THIS REGARD AND THE LD CIT(A) WAS ALSO CORRECT AND REASONABLE IN UPHOLDING THE SAME. HOWEVER, LD D.R. DID NOT CONTROVER T THE FACTUAL SITUATION AND POSITION THAT THE AMOUNT CLAIMED BY THE ITA NO.414/CTK/2019 ASSESSMENT YEAR : 2012 - 13 P A G E 6 | 8 ASSESSEE IN THE FINANCIAL AUDITED BOOKS OF ACCOUNT ON BOTH THE HEADS IS VERY HIGHER THAN THE AMOUNT SHOWN ON THE DATE OF SURVEY I.E. ON 18.1.2012 BY THE COMPUTER TALLY AND MANUALLY MAINTAI NED REGISTER. 9 . WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RECORD OF THE CASE. IT IS UNDISPUTED FACT THAT A SURVEY ACTION WAS CONDUCTED UNDER SECTION 133A OF THE ACT IN THE BUSINESS PREMISES OF THE ASSESSEE AND DURING THE COURSE OF SURVEY, A REG ISTER AND VOUCHERS WERE FOUND. ON FURTHER EXTRACTION OF TALLY ACCOUNT FROM THE COMPUTER OF THE ASSESSEE, IT WAS FOUND THAT THERE WAS DIFFERENCE OF LABOUR PAYMENTS, EXPENDITURE ON BRICKS, CHIPS AND BOULDERS BETWEEN THE TALLY ACCOUNT AND REGISTER. AS THE ASSESSEE COULD NOT EXPLAIN THE DISCREPANCY AND FURTHER THE PARTNER OF THE ASSESSEE, ON STATEMENT RECORDED BY THE SURVEY TEAM, HAS ADMITTED THE UNACCOUNTED MONEY AND PAID THE ADVANCE TAX OF RS.15,00,000/ - , THE AO MADE THE ADDITION OF RS.48,54,391/ - BEING TH E DIFFERENCE BETWEEN THE TALLY PACKAGE AND REGISTER ON ACCOUNT OF LABOUR PAYMENTS, EXPENDITURE ON BRICKS, CHIPS AND BOULDERS. IT IS ALSO A FACT THAT THE SURVEY WAS CONDUCTED ON 18.1.2012 BUT THE SURVEY TEAM RECORDED THE DIFFERENCE FROM 1.4.2011 TO 16.1.20 12 WITHOUT CONSIDERING THE EXPENDITURE FROM 31.5.2011 TO 1.10.2011 (5 MONTHS), AS PER MANUAL REGISTER IT IS RS.20,71,172/ - . THE ASSESSING OFFICER HAS ACCEPTED THE AUDIT REPORT WITHOUT REJECTING THE BOOK RESULTS . 10. ON CONSIDERATION OF THE RIVAL SUBMISSI ONS, WE ARE OF THE CONSIDERED VIEW THAT UNDISPUTEDLY, IN THE AUDITED BOOKS OF ACCOUNT AND FINANCIAL PROFIT ITA NO.414/CTK/2019 ASSESSMENT YEAR : 2012 - 13 P A G E 7 | 8 AND LOSS ACCOUNT AS ON 31.3.2012, THE ASSESSEE HAS CLAIMED AMOUNT OF RS.74,65,310/ - ON BRICKS, CHIPS AND BOULDERS AND AMOUNT OF RS.1,56,65,310/ - HA S BEEN INCURRED TOWARDS WAGES AND LABOUR CHARGES, WHICH IS MUCH HIGHER THAN THE AMOUNT SHOWN BY THE COMPUTER TALLY AND MANUALLY MAINTAINED REGISTER ON THE DATE OF SURVEY ON 18.1.2012. IT IS A FACT OF KNOWLEDGE OF A MAN OR ORDINARY PRUDENT THAT ENTRIES DONE IN THE COMPUTER TALLY GIVES AN ELEMENT OF FACT TO THE TOTAL AMOUNT ON RESPECTIVE HEADS IMMEDIATELY WHEREAS WHEN THE SAME ENTRIES ARE MADE IN THE REGISTER THAT TAKES MUCH TIME AND SPACE FOR MAINTAINED BY PERSON/ACCOUNTANT. IT IS ALSO OBVIOUS FACT THAT THE SURVEY TEAM COMES SUDDENLY WITHOUT PRIOR NOTICE, THEREFORE, THE DIFFERENCE BETWEEN THE AMOUNT SHOWN BY THE COMPUTER TALLY AND MANUALLY MAINTAINED REGISTER IS ALSO OBVIOUS AND CONSEQUENT OF CIRCUMSTANCES IN WHICH THESE TWO HAVE BEEN MAINTAINED. HOWEVER, IN THE PRESENT CASE, IT IS A PECULIAR FACTUAL POSITION THAT IN THE FINANCIAL PROFIT AND LOSS ACCOUNT, THE ASSESSEE HAS CLAIMED MUCH HIGHER AMOUNT ON BOTH THE HEADS AND THIS FACT HAS NOT BEEN CONTROVERTED NEITHER BY THE AUTHORITIES BELOW NOR LD D.R. BEFORE US DURING THE COURSE OF HEARING. IF THE AO IS ALLOWED TO MAKE ADDITION ON THE BASIS OF DIFFERENTIAL AMOUNT SHOWN BY THE COMPUTER TALLY AND MANUALLY MAINTAINED REGISTER ON THE DATE OF SURVEY, THEN IT WOULD CERTAINLY AMOUNT TO DOUBLE ADDITION IN THE HANDS O F THE ASSESSEE WHEN IT IS CLEARLY DISCERNIBLE THAT THE ASSESSEE HAS SHOWN AND CLAIMED HIGHER AMOUNT ON BOTH THE HEADS I.E. EXPENSES ON BRICKS, CHIPS AND ITA NO.414/CTK/2019 ASSESSMENT YEAR : 2012 - 13 P A G E 8 | 8 BOULDERS OF RS.74,56,310/ - AND ON WAGES AND LABOUR CHARGES OF RS.1,56,65,310/ - . THEREFORE, IN OUR CON SIDERED OPINION, ADDITION MADE BY THE AO AND CONFIRMED BY THE LD CIT(A) CANNOT BE HELD AS JUSTIFIED AND SUSTAINABLE. THEREFORE, WE DIRECT THE AO TO DELETE THE SAME. 11. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON 5 / 3 /20 2 1 . S D/ - SD/ - ( LAXMI PRASAD SAHU ) ( CHANDRA MOHAN GARG ) ACCOUNTANT MEMBER JUDICIAL MEMBER CUTTACK; DATED 5 / 3 /20 2 1 B.K.PARIDA, SPS COPY OF THE ORDER FORWARDED TO : BY ORDER SR . PVT. S ECRETARY ITAT, CUTTACK 1. THE APPELLANT : M/S. MASTER CONSTRUCTION CO., ANADI NIWAS, MAIN ROAD, ROURKELA - 769001 2. THE RESPONDENT. ITO, WARD - 3, ROURKELA 3. THE CIT(A) - , SAMBALPUR 4. PR.CIT - , SAMBALPUR 5. DR, ITAT, CUTTACK 6. GUARD FILE. //TRUE COPY//