Satyabarata Jena, Cuttack V. ITO, Paradeep

ITA 418/CTK/2015

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 4206 (ITAT-CUTTACK)
• Duration Of Justice: 1 year(s) 1 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-11-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 23-11-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 14-10-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SUVENDU DUTTA
• Assessee Lawyers: P VYAS
• Keywords: Business expenditure
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK SMC BENCH, CUTTACK BEFORE SHRI N.S SAINI, ACCOUNTANT MEMBER ITA NO.418/CTK/2015 ASSESSMENT YEAR : 2010 - 2011 SATYABRATA JENA, C/O. P.VYAS, ADVOCATE, KAZI BAZAR, CUTTACK VS. ITO, WARD - 2, PARADEEP PAN/GIR NO. ADYPJ 0274 A (APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY : SHRI P.VYAS, AR REVENUE BY : SHRI SUVENDU DUTTA , DR DATE OF HEARING : 23 /11 / 2016 DATE OF PRONOUNCEMENT : 23 /11 / 2016 O R D E R THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) - CUTTACK, DATED 27.7.2015 , FOR THE ASSESSMENT YEA 2010 - 2011 . 2. GROUND NOS.1, 8 & 9 ARE GENERAL IN NATURE AND HENCE, REQUIRES NO SEPARATE ADJUDICATION BY ME. 3. IN GROUND NOS.2 & 3 OF THE APPEAL , THE GRIEVANCE OF THE ASSESSEE IS THAT THE LD CIT(A) WAS NOT JUSTIFIED IN RESTRICTING THE DISALLOWANCE MADE UNDER THE HEAD LABOUR CHARGES OF RS.5,00,000/ - . 2 ITA NO.418/CTK/2015 ASSESSMENT YEAR : 2010 - 2011 4. I HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD. IN THE INSTANT CASE, THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE IS ENGAGED IN EXECUTION OF CIVIL CONTRACT WORKS. THE ASSESSEE COULD NOT PRODUCE THE CASH BOOK OR THE SUPPORTING VOUCHERS, ETC REGARDING DIFFERENT CLAIMS MADE BY THE ASSESSEE BEFORE THE ASSESSING OFFI CER. HE, THEREFORE, DISALLOWED 10% OF THE CLAIM OF LABOUR CHARGES AND MADE AN ADDITION OF RS.8,85,083/ - TO THE INCOME OF THE ASSESSEE. 5. ON APPEAL, LD CIT(A) OBSERVED THAT THERE ARE ENTRIES FOR LABOUR PAYMENTS IN LABOUR PAYMENT REGISTER ON WEEKLY BASIS. THE PAYMENTS ARE ACKNOWLEDGED WITH THUMB IMPRESSION . THERE IS ALSO A LEDGER ACCOUNT OF SUNDRY CREDITORS FOR LABOUR. HE, THEREFORE, CONSIDERING THE VOLUME OF BUSINESS, DIRECTED THE ASSESSING OFFICER TO DISALLOW RS.5,00,000/ - ON THIS ACCOUNT. 6. BEFORE ME, LD A.R. OF THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE LOWER AUTHORITIES. HE ARGUED THAT THE ASSESSEE HAS MAINTAINE D ALL THE DETAILS AS ADMITTED BY THE ASSESSING OFFICER IN THE REMAND REPORT SUBMITTED BEFORE THE L D CIT(A). HE ALSO SUBMITTED THAT THE ASSESSEE HAS MAINTAINED LABOUR PAYMENT REGISTER, WHEREIN, LABOUR PAYMENTS ARE ENTERED 3 ITA NO.418/CTK/2015 ASSESSMENT YEAR : 2010 - 2011 ON WEEKLY BASIS AND THE ACKNOWLEDGEMENT OF PAYMENT IS BY WAY OF THUMB IMPRESSION OF THE LABOURERS. HE SUBMITTED THAT IN THE PRESENC E OF SUCH EVIDENCE FOR PAYMENT MADE BY THE ASSESSEE, THE LEGITIMATE BUSINESS EXPENDITURE OF THE ASSESSEE CANNOT BE DISALLOWED. 7. ON THE OTHER HAND, LD D.R. SUPPORTED THE ORDER OF LD CIT(A) . 8. I FIND THAT THE LABOUR PAYMENTS CLAIMED BY THE ASSESSEE ARE SU PPORTED BY LABOUR PAYMENT REGISTER ACKNOWLEDGED BY THE LABOURS FOR RECEIPT OF PAYMENT BY THEIR THUMB IMPRESSION. THE GENUINENESS OF THE LABOUR EXPENDITURE IS NOT IN DOUBT OR DEBATE. IT IS ALSO NOT THE CASE OF THE DEPARTMENT THAT THE ASSESSEE HAS INFLATED THE LABOUR PAYMENT IN ORDER TO REDUCE ITS INCOME. THE ONLY OBJECTION OF THE DEPARTMENT IS THAT THE LABOURS HAVE NOT PUT THEIR SIGNATURE IN LABOUR PAYMENT REGISTER AND DEBIT VOUCHERS ARE NOT MAINTAINED FOR THE SAME. IN MY CONSIDERED VIEW, THE LABOUR PAYM ENT HAS BEEN SUBSTANTIATED BY WAY OF LABOUR PAYMENT REGISTER, WHEREIN, WEEKLY PAYMENTS MADE TO LABOURS ARE ACKNOWLEDGED BY PUTTING THEIR THUMB IMPRESSION. THEREFORE, THE DISALLOWANCE OF RS.5,00,000/ - SUSTAINED BY THE LD CIT(A) OUT OF LABOUR PAYMENT EXPEND ITURE IS NOT JUSTIFIED. HENCE, I SET ASIDE THE ORDER OF LD CIT(A) AND DELETE THE DISALLOWANCE OF RS.5,00,000/ - SUSTAINED BY THE LD CIT(A) AND ALLOW THIS GROUND OF APPEAL OF THE ASSESSEE. 4 ITA NO.418/CTK/2015 ASSESSMENT YEAR : 2010 - 2011 9. IN GROUND NOS.4 & 5 OF THE APPEAL, THE GRIEVANCE OF THE ASSESSEE IS THAT THE LD CIT(A) WAS NOT JUSTIFIED IN SUSTAINING THE DISALLOWANCE OF RS.1,18,000/ - BEING LOAN FROM FRIENDS AND RELATIVES. 10. I HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD . IN THE INST ANT CASE, THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS SHOWN IN THE BALANCE SHEET A SUM OF RS.2,10,000/ - AS INTRODUCTION TO THE CAPITAL ACCOUNT. THE ASSESSEE WAS REQUIRED TO EXPLAIN THE NATURE AND SOURCE OF THE SAME. THE ASSESSEE EXPLAINED THAT T HE ASSESSEE HAS TAKEN HAND LOAN FROM RELATIVES AND FRIENDS. SINCE THE EXPLANATION OF THE ASSESSEE WAS NOT CORROBORATED WITH EVIDENCE, THE ASSESSING OFFICER MADE AN ADDITION OF RS.2,10,500/ - U/S.69 OF THE ACT. 11. ON APPEAL, LD CIT(A) CONFIRMED THE ACTION OF THE ASSESSING OFFICER OBSERVING THAT AS PER REMAND REPORT OF THE ASSESSING OFFICER, THE ASSESSEE COULD NOT PRODUCE THE SOURCE OF INTRODUCTION OF CAPITAL TO THE EXTENT OF RS.1,18,000/ - . HENCE, HE DIRECTED TO RESTRICT THE DISALLOWANCE TO RS.1,18,000/ - . 12. BEFORE ME ALSO, NO EVIDENCE COULD BE FILED TO PROVE THE SOURCE OF INTRODUCTION OF CAPITAL LOAN OF RS.1,18,000/ - . HENCE, I FIND NO GOOD REASON 5 ITA NO.418/CTK/2015 ASSESSMENT YEAR : 2010 - 2011 TO INTERFERE WITH THE ORDER OF LD CIT(A), WHICH IS HEREBY CONFIRMED AND THE GROUND OF APPEAL IS DISMISSED. 13 . IN GROUND NOS.6 & 7 OF THE APPEAL, THE GRIEVANCE OF THE ASSESSEE IS THAT THE LD CIT(A) ERRED IN SUSTAINING THE ADDITION OF RS.8,11,584/ - ON ACCOUNT OF DISALLOWANCE OF SUNDRY CREDITORS. 14. I HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD . IN THE INSTANT CASE, THE ASSESSING OFFICER OBSERVED THAT THE CONFIRMATION OF SIX CREDITORS TOTALING TO RS.12,70,485/ - WAS PRODUCED BY THE ASSESSEE. THE ASSESSING OFFICER OBSERVED THAT THE LE TTERS ISSUED TO THE CREDITORS CALLING FOR CONFIRMATION AND OUT OF SIX, FIVE CREDITORS TURNED UP EXCEPT MR KAILASH CHANDRA SAHOO FROM WHOM RS.2,34,485/ - WAS SHOWN AS PAYABLE. HE OBSERVED THAT ON EXAMINATION OF BANK ACCOUNT OF THE ASSESSEE, ONE TRANSACTION IN RESPECT OF NIGAMANANDA SAHOO IS FOUND TO BE GENUINE AND IS LIABLE TO BE ALLOWED. IN RESPECT OF FOUR CREDITORS, NO BANK ACCOUNT OR PAN OR RELEVANT DOCUMENTS AS WERE CALLED FOR, COULD BE FURNISHED, BASING UPON WHICH GENUINENESS OR CRE DITWORTHINESS OF CR EDITORS COULD BE VERIFIED. HE, THEREFORE, OBSERVED THAT OUT OF TOTAL CREDITORS OF RS.16,20,800/ - , ONLY AMOUNT OF RS.2,24,416/ - RECEIVED FROM SRI NIGAMANANDA SAHOO WAS GENUINE AND ADDED RS.13,96,384/ - TO THE INCOME OF THE ASSESSEE U/S.68 OF THE ACT. 6 ITA NO.418/CTK/2015 ASSESSMENT YEAR : 2010 - 2011 15. O N APPEAL, LD CIT(A) OBSERVED THAT THE ASSESSEE IN RESPONSE TO REMAND REPORT OF THE ASSESSING OFFICER SUBMITTED THAT THE BALANCE SUNDRY CREDITORS OF RS.8,11,584/ - PAYMENT MADE IN CASH AGAINST MATERIAL SUPPLIED HAVE BEEN ACCOUNTED FOR IN CASH BOOK. ALL THE PURCHASE BILLS HAVE BEEN DULY ACCOUNTED FOR AND THERE IS NO PENDING BILL LYING TO BE PRODUCED AND HENCE, COULD NOT BE PRODUCED. FURTHER, EXPENSES ARE DEBITED TO P&L ACCOUNT AS MATERIAL PURCHASED AND, THEREFORE, THERE IS NO SCOPE FOR ADDITION TO INCOME AGA IN AND PART OF THE OUTSTANDING LIABILITY ON THESE ACCOUNTS REFLECTED IN BALANCE SHEET AS SUNDRY CREDITORS. CONSIDERING THE OBSERVATION OF THE ASSESSING OFFICER THAT THE REST OF THE FOUR PARTIES HAVE BEEN PAID IN CASH, EACH PAYMENT AMOUNTING TO RS.20,000/ - AND NO PAYMENT HAS BEEN MADE THROUGH BANK, THE ASSESSEE COULD NOT PRODUCE PENDING BILLS FOR PAYMENT AND OTHER DOCUMENTS TO PROVE THE GENUINENESS OF TRANSACTION AND CREDITWORTHINESS OF CREDITORS, LD CIT(A) DIRECTED THE ASSESSING OFFICER TO RESTRICT THE DI SALLOWANCE UNDER SECTION 68 OF THE ACT TO RS.8,11,584/ - . 16. BEFORE ME, LD A.R. OF THE ASSESSEE DID NOT MAKE ANY SERIOUS ARGUMENTS ON THIS GROUND OF APPEAL OF THE ASSESSEE. HE COULD NOT BRING ANY MATERIAL ON RECORD TO CONTROVERT THE FINDING OF THE LD CIT( A). THEREFORE, I CONFIRM THE ORDER OF THE LD CIT(A) AND DISMISS THE GROUND OF APPEAL OF THE ASSESSEE. 7 ITA NO.418/CTK/2015 ASSESSMENT YEAR : 2010 - 2011 17. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCE D IN THE OPEN COURT ON 23 / 11 /2016 IN THE PRESENCE OF PARTIES. ( N.S SAINI) A CCOUNTANT MEMBER CUTTACK; DATED 23 /11 /2016 B.K.PARIDA, SPS COPY OF THE ORDER FORWARDED TO : BY ORDER, ASST.REGISTRAR, ITAT, CUTTACK 1. THE APPELLANT : SATYABRATA JENA, C/O. P.VYAS, ADVOCATE, KAZI BAZAR, CUTTACK 2. THE RESPONDENT. ITO, WARD - 2, PARADEEP 3. THE CIT(A) , CUTTACK 4. CIT , CUTTACK 5. DR, ITAT, CUTTACK 6. GUARD FILE. //TRUE COPY//