ACIT, UDAIPUR V. M/s.G.R. Infraprojects Ltd., UDAIPUR

ITA 437/JODH/2012

• Counselvise Citation: 43723314 RSA 2012
• Duration Of Justice: 7 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-08-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 26-12-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N A JOSHI
• Assessee Lawyers: N O N E WS
• Keywords: Business expenditure; Wrong claim

Judgement Text

IN THE INCOME TAX APPELALTE TRIBUNAL: JODHPUR BENCH : JODHPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.K. SAINI, ACCOUNTANT MEMBER. ITA NO. 437/JODH/2012 (A.Y. 2009-10) ACIT, CENTRAL CIRCLE-1, VS. M/S. G.R. INFRAPROJECTS LTD. UDAIPUR. 8-SHAHI COMPLEX, SECTOR-11 HIRAN MAGRI, UDAIPUR. PAN NO. AAACG5306N (APPELLANT) (RESPONDENT) ASSESSEE BY : N O N E (W/S) DEPARTMENT BY : SH. N.A. JOSHI- DR. DATE OF HEARING : 30/05/2013. DATE OF PRONOUNCEMENT : 20/08/2013. O R D E R PER HARI OM MARATHA, J.M. : THIS APPEAL OF THE REVENUE FOR A.Y. 2009-10 IS DIR ECTED AGAINST THE ORDER OF LD. CIT(A), JAIPUR, DATED 29/10/2012. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE- COMPANY WAS ENGAGED IN THE CONSTRUCTION OF THE ROAD S. FOR A.Y. 2009- 10, THE ASSESSEE COMPANY FILED ITS RETURN OF INCOME (ROI) ON 28/09/2009 DECLARING INCOME OF RS. 16,56,48,370-/. 2 2.1 IN THIS APPEAL FOLLOWING GROUNDS HAVE BEEN RAIS ED :- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) HAS ERRED IN REDUCING THE ADDITION O F RS. 2,22,530/- MADE BY THE A.O. ON ACCOUNT OF SHIFTING OF EXPENSES FROM HEAD OF MAIN BUSINESS TO THE HEAD OF UDAIPUR SALUMBER BOT BUSINESS ELIGIBLE FOR DEDUCTIO N U/S 80IA TO RS. 57,130/- AND THEREBY ALLOWING RELIEF OF RS. 1,72,400/- WITHOUT APPRECIATING THE FACT THAT THE A .O. HAD MADE ADDITIONS AFTER EXAMINATION AND VERIFY THE COMPARATIVE CHART ALLOCATION OF EXPENSES BETWEEN TH E TWO HEADS. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A), CENTRAL HAS ERRED IN DELETING THE DISALLOWANCE OF EXPENSES OF RS. 5 LAKHS EACH UNDER THE HEAD SITE AND STAFF EXPENSES AND SAND, CEMENT AN D STONE EXPENSES AGGREGATING TO RS. 10 LAKHS, DESPITE THE FACT THAT THE ONUS OF PROVING THE GENUINENESS OF THE EXPENSES CLAIMED WAS ON THE ASSESSEE AND THE A.O. HAD MADE T HE DISALLOWANCE ON ACCOUNT OF NON-VERIFIABLE NATURE OF SUCH EXPENSES. 2.2 WE HAVE HEARD LD. D.R. AT LENGTH. FROM ASSESSEE S SIDE ONLY WRITTEN SUBMISSIONS WAS FILED. WE HAVE GONE THROUGH THESE WRITTEN SUBMISSIONS, WHICH WERE ALSO GIVEN TO LD. D.R. AND HE HAS ALSO PUT FORTH HIS SUBMISSIONS IN RESPECT THEREOF. 3 2.3 THE FACTS APROPOS GROUND NO. (1) OF THIS APPEAL ARE THAT THE ASSESSEE-COMPANY WAS DOING BUSINESS OF CONSTRUCTION AND DEVELOPMENT OF INFRASTRUCTURE PROJECT ON CONTRACT BASIS AS WELL AS ON BUILD OPERATE AND TRANSFER (BOT BASIS. THE TOTAL SUCH RECEIPTS OF THE RELEVANT YEAR ARE SHOWN AT RS. 222.17 CRORES ON ACCOUNT OF CONSTR UCTION WORK ON CONTRACT BASIS. FROM BOT, THE ASSESSEE HAS DISCLOSE D TOLL RECEIPTS OF RS. 70.11 CRORES. FROM BOT PROJECT A PROFIT OF RS. 2,65,64,201/- AND ON ACCOUNT OF COMPLETED BOT PROJECT, IT HAS CLAIMED DE DUCTION OF THE SAME AMOUNT (I.E. RS. 6,25,64,201/-) U/S 80IA OF TH E ACT. WHILE EXAMINING THE ISSUE OF ALLOCATION OF EXPENSES TO BO T PROJECTS AND CONTRACT CONSTRUCTION BUSINESS, THE A.O. HAS FOUND THAT THE ASSESSEE HAS SHIFTED THE EXPENSES FROM THE ELIGIBLE BUSINESS (BOT BUSINESS) TO THE MAIN CONSTRUCTION CONTRACT BUSINESS SO THAT THE PROFIT DERIVED FROM THE MAIN BUSINESS WILL INCREASE AND THE ELIGIBLE BU SINESS WILL DECREASE. WHEN ASKED TO THE ASSESSEE-COMPANY EXPLAINED BY FUR NISHING COMPARATIVE CHART TO SHOW HOW THE EXPENSES OF BOT P ROJECT AND CONTRACT BUSINESS ARE REALLOCATED. ON VERIFICATION THE A.O. HAS FOUND THE ASSESSEE HAS NOT ALLOCATED THE EXPENSES UNDER T HE HEAD OF FEW INDIRECT EXPENSES FROM THE MAIN BUSINESS TO THE ELI GIBLE BUSINESS. HE HAS MADE RECOMPUTATION OF THESE EXPENSES AND HAS FO UND EXPENSES TOTALING TO RS. 2,22,530/- AS HAVING BEEN SHIFTED F ROM BOT TO THE MAIN 4 BUSINESS SO THAT THE INCOME FROM CONTRACT BUSINESS HAS INCREASED BY THIS AMOUNT. ACCORDINGLY, THE A.O. HAS ADDED THIS A MOUNT IN THE MAIN BUSINESS. AS AGAINST THE ABOVE THE LD. CIT(A) HAS R EDUCED THIS ADDITION TO RS. 57,130/-. IT WAS ARGUED BY LD. D.R. THAT THE A.O. HAS EXAMINED THIS ISSUE AND HAS COME TO THE ABOVE CONCLUSION. ON THE OTHER HAND, LD. A.R. HAS RELIED ON THE ORDER OF LD. CIT(A). AFT ER CONSIDERING THE RIVAL SUBMISSIONS, WE HAVE FOUND THAT THIS ISSUE ST ANDS COVERED BY THE DECISION OF THE JODHPUR BENCH TAKEN FOR A.Y. 2004-0 5 ON SIMILAR ISSUE. THE LD. CIT(A) HAS ALSO FOLLOWED THE TRIBUNAL ORDER . WE HAVE ALSO NOTICED THAT FOR A.Y. 2007-08 THIS BENCH HAS TAKEN A VIEW FAVORABLE TO THE ASSESSEE WHILE DECIDING ITA NO. 468/JU/2009 A.Y . 2007-08 VIDE ORDER DATED 31/03/2010, WHICH HAS BEEN CONFIRMED BY THE HONBLE RAJASTHAN HIGH COURT WHEN THE APPEAL OF THE REVENUE WAS DISMISSED IN LIMINE VIDE ORDER DATED 02/11/2011 IN ITA NO. 98/20 11 RAJASTHAN HIGH COURT). ACCORDINGLY, WE DONT FIND ANY REASON FOR I NTERFERING THIS FINDING OF LD. CIT(A). ACCORDINGLY, GROUND NO. (1) OF REVENUES APPEAL STANDS DISMISSED. 3. THE FACTS APROPOS GROUND NO. (2) OF REVENUES AP PEAL WILL BECOME APPARENT FROM THE FOLLOWING EXCERPTS BEING E XTRACTED FROM THE ORDER OF LD. CIT(A): 5 7.1 THESE GROUNDS ARE AGAINST THE ADDITION OF RS. 5 LACS EACH OUT OF SAND, CEMENT AND STONE EXPENSES AND SIT E & STAFF EXPENSES. 7.2 AS REGARDS DISALLOWANCE OF RS. 5 LACS OUT OF SITE AND STAFF EXPENSES, THE AO HAS OBSERVED THAT THE ASSESS EE HAS CLAIMED EXPENSES UNDER THE HEAD OF SITE AND STAFF E XPENSES AT RS. 1,95,90,421/-. THE AO FURTHER OBSERVED TH AT DURING THE COURSE OF ASSESSMENT PROCEEDING WHEN TH E BOOKS OF ACCOUNTS BILLS AND VOUCHERS WERE PRODUCED FOR VERIFICATION AND THE SAME WERE EXAMINED ON TEXT CHE CK BASIS IT WAS FOUND THAT THESE EXPENSES HAVE BEEN DE BITED THROUGH SELF MADE CASH VOUCHERS IN FEW INSTANCES. T HE AO HAS POINTED OUT SUCH DISCREPANCIES TO THE AR OF THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS. AS PART OF SUCH EXPENSES WAS CLAIMED THROUGH SELF MADE CASH VOUCHERS THEREFORE THE POSSIBILITY OF INFLATION OF THE EXPENSES CANNOT BE RULED OUT. THE AO ACCORDINGLY DISALLOWED RS. 5 LACS OUT OF TOTAL SITE AND STAFF E XPENSES ON LUMPSUM BASIS AND ADDED THE SAME IN THE INCOME OF T HE ASSESSEE. 7.3 AS REGARDS ANOTHER ADDITION OF RS. 5 LACS OUT OF SAND CEMENT AND STONE EXPENSES THE AO HAS OBSERVED THAT THE ASSESSEE HAS CLAIMED EXPENSES UNDER THE HEAD OF SAND, CEMENT AND STONE' AT RS. 9,75,30,881/-. THE AO FURT HER OBSERVED THAT DURING THE COURSE OF ASSESSMENT PROCE EDING WHEN THE BOOKS OF ACCOUNTS BILLS AND VOUCHERS WERE 6 PRODUCED FOR VERIFICATION AND THE SAME WERE EXAMINE D ON TEXT CHECK BASIS IT WAS FOUND THAT THESE EXPENSES H AVE BEEN DEBITED THROUGH SELF MADE CASH VOUCHERS IN FEW INSTANCES. THE AO HAS POINTED OUT SUCH DISCREPANCIE S TO THE AR OF THE ASSESSEE DURING THE ASSESSMENT PROCEE DINGS. AS PART OF SUCH EXPENSES WERE CLAIMED THROUGH SELF MADE CASH VOUCHERS THEREFORE THE POSSIBILITY OF INFLATI ON OF THE EXPENSES CANNOT BE RULED OUT. THE A.O. ACCORDINGLY DISALLOWED RS. 5 LACS OUT OF TOTAL SITE AND STAFF E XPENSES ON LUMPSUM BASIS AND ADDED THE SAME IN THE INCOME OF T HE ASSESSEE. 7.4 AS REGARDS THESE TWO GROUNDS THE APPELLANT HAS FILED WRITTEN SUBMISSION WHICH IS AS UNDER: 'GROUND NO.3 AND 4 ARE COMMON IN NATURE, DEALS WITH AD- HOC DISALLOWANCE OUT OF SITE & STAFF EXPENSES AND S AND, CEMENT & STONE EXPENSES HENCE, DEALT WITH TOGETHER. DURING THE YEAR, THE ASSESSEE INCURRED SITE AND STA FF EXPENSES OF RS.1,95,90,421/- AND SAND, CEMENT AND S TONE EXPENSES OF RS.9,75,30,881/-. COMPLETE DETAILS OF T HESE EXPENSES WERE FILED IN THE COURSE OF ASSESSMENT PROCEEDINGS AND THE ASSESSEE PRODUCED BOOKS OF ACCO UNTS, BILLS/VOUCHERS ETC. BEFORE THE ASSESSING OFFICER FO R VERIFICATION. HOWEVER, THE ASSESSING OFFICER MADE S TANDARD DEDUCTION-HOC DISALLOWANCE OUT OF THESE EXPENSES. T HE AMOUNT OF STANDARD DEDUCTION-HOC DISALLOWANCE AND REASONS FOR DISALLOWANCE ARE SUMMARIZED AS FOLLOWS: 7 HEAD OF EXPENSES AD HOC DISALLOWANCE REASONS FOR DISALLOWANCE SITE & STAFF EXPENSES 5,00,000/ - SELF - MADE CASH VOUCHERS SAND, CEMENT & STONE EXPENSES 5,00,000/ - SELF - MADE CASH VOUCHERS REASONING GIVEN BY THE ASSESSING OFFICER (PARA 6 TO 6.2 PAGE NO.4 & 5 OF THE ASSESSMENT ORDER); 3.1 THE REASONING GIVEN BY THE LEARNED ASSESSING OF FICER IN MAKING THE AD-HOC DISALLOWANCE OF RS.5,00,000/- AND RS.5,00,000/- RESPECTIVELY OUT OF SITE AND STAFF EX PENSES AND SAND, CEMENT AND STONE EXPENSES IS AS FOLLOWS: 6. DISALLOWANCE OF VARIOUS EXPENSES 6.1 DURING THE YEAR UNDER CONSIDERATION, THE ASSESS EE HAS CLAIMED EXPENSES UNDER THE HEAD 'SITE D STAFF EXPEN SES' AT RS.1,95,90,421/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS REQUIRED TO PRODUCE B OOKS OF ACCOUNTS, BILLS/VOUCHERS ETC. FOR VERIFICATION OF S UCH EXPENSES. IN RESPONSE, THE ASSESSEE PRODUCED BOOKS OF ACCOUNTS, BILL/VOUCHERS ETC. FOR VERIFICATION WHICH WERE EXAMINED ON TEST CHECK BASIS. ON VERIFICATION, IT I S OBSERVED THAT THESE EXPENSES HAVE BEEN DEBITED THRO UGH SELF MADE CASH VOUCHERS IN FEW INSTANCES. THE DISCREPANCIES NOTICED HAVE BEEN POINTED OUT TO THE A/R OF THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEE DINGS. SINCE, THE ASSESSEE HAS DEBITED SUCH EXPENSES THROU GH SELF 8 MADE CASH VOUCHERS, THEREFORE, CONSIDERING THE NATU RE AND VOLUME OF TRANSACTIONS, IT CANNOT BE RULED OUT THAT THE ASSESSEE HAS NOT INFLATED THE EXPENSES. CONSIDERING THE ABOVE FACTS AND CIRCUMSTANCES, A DISALLOWANCE OF RS.500000/- OUT OF TOTAL SITE AND STAFF EXPENSES IS DISALLOWED ON LUMP SUM BASIS AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 6.2 SIMILARLY, THE ASSESSEE HAS CLAIMED EXPENSES UN DER THE HEAD 'SAND, CEMENT & STONE' AT RS.9,75,30,881/-. DU RING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS REQUIRED TO PRODUCE BOOKS OF ACCOUNTS, BILLS/VOUCHE RS ETC. FOR VERIFICATION OF SUCH EXPENSES. IN RESPONSE, THE ASSESSEE PRODUCED BOOKS OF ACCOUNTS, BILL/VOUCHERS ETC. FOR VERIFICATION WHICH WAS EXAMINED ON TEST CHECK BASIS . ON VERIFICATION, IT IS OBSERVED THAT THESE EXPENSES HA VE BEEN DEBITED THROUGH SELF MADE CASH VOUCHERS IN FEW INST ANCES. THE DISCREPANCIES NOTICED HAVE BEEN POINTED OUT TO THE A/K OF THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THEREFORE, CONSIDERING THE NATURE AND VOLUME OF TRANSACTIONS, IT CANNOT BE RULED OUT THAT THE AS SESSEE HAS NOT INFLATED THE EXPENSES. CONSIDERING THE ABOV E FACTS AND CIRCUMSTANCES, A DISALLOWANCE OF KS.500000/- OU T OF TOTAL SAND, CEMENT AND STONE EXPENSES IS DISALLOWED ON LUMP SUM BASIS AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. ASSESSEES CONTENTIONS : 9 3.2 IT IS SUBMITTED THAT THE ASSESSEE IS ENGAGED I N CONSTRUCTION OF ROADS, HIGHWAYS AND OTHER INFRASTRU CTURE FACILITIES. ITS WORK IS SPREAD TO A LARGE NUMBER OF SITES, WHERE THERE ARE NO BASIC FACILITIES LIKE LIGHT, WATER, HOUSES, BANKS, REGULAR SHOPS, MEAN S OF TRANSPORTATION, SECURITY AND SAFETY ETC. THE SE SITES ARE SITUATED AT REMOTE AND UNAPPROACHABLE PLA CES AND THE WORKERS AND THE STAFF OF THE ASSESSEE LIVES PRA CTICALLY UNDER THE SKY. THE BOOKS OF ACCOUNTS OF THE ASSESSE E ARE PROPERLY MAINTAINED AND TRANSACTIONS RECORDED THERE IN ARE SUPPORTED BY VOUCHERS. THE ACCOUNTS ARE SUBJECTED T O STATUTORY AUDIT REGULARLY AND EVEN THE AUDITORS COU LD NOT POINT OUT ANY IRREGULARITY THEREIN. 3.3 DUE TO NATURE OF ASSESSEE'S BUSINESS, NAT URE OF EXPENSES AND NON-AVAILABILITY OF REGULAR SHOPS AT S UCH REMOTE PLACES, A PART ON EXPENDITURE IS INCURRED TH ROUGH SELF-MADE CASH VOUCHERS WHICH ARE NOT SUPPORTED BY EXTERNAL EVIDENCES. HOWEVER, SUCH SELF-MADE CASH VO UCHERS ARE DULY AUTHORIZED BY AUTHORIZED PERSON AT THE SIT E AND COMPLETE DETAILS ABOUT NATURE OF EXPENSES, PAYEE, P URPOSE ETC. ARE DESCRIBED THEREIN. IT IS SUBMITTED THAT SE LF-MADE CASH VOUCHERS DO NOT MEAN THAT EXPENSES INCURRED TH ERE- UNDER ARE NOT GENUINE OR INFLATED. THE ONLY SHORT-C OMING IN SUCH VOUCHERS IS THAT THEY ARE NOT SUPPORTED BY EXT ERNAL EVIDENCE LIKE BILL OF INDEPENDENT ORGANISATION ETC. 10 3.4 IN THE ASSESSEE'S CASE, THE BOOKS OF ACCOU NTS AND VOUCHERS WERE PRODUCED BEFORE THE ASSESSING OFFICER AND EVEN AFTER VERIFICATION OF AIL THE VOUCHERS AND BO OKS OF ACCOUNTS, HE COULD NOT POINT OUT TO ANY VOUCHER, WH ICH EITHER DID NOT CONTAINS REQUISITE DETAILS OR WAS FI CTITIOUS OR CONSISTED OF PERSONAL EXPENSES OF DIRECTORS CLAIMED AS BUSINESS EXPENDITURE OR INDICATED INFLATION OF EXPE NDITURE. THE DISCREPANCIES, IF ANY, NOTICED BY THE ASSESSING OFFICER WERE NOT DIVULGED TO THE ASSESSEE. HAD IT BEEN BROU GHT TO ITS NOTICE, THE ASSESSEE WOULD HAVE EXPLAINED IT IMMEDIATELY. MOREOVER, THE ASSESSEE'S PROFITABILITY INCREASED SUBSTANTIALLY DURING THE YEAR I.E. FROM 9 .79% IN THE /ASSESSMENT YEAR 2007-08 (AFTER EXCLUDING RECEI PT ON RS.8,67,50,000/- ON ACCOUNT OF CONSULTANCY CHARGES FROM ANDHRA PRADESH EXPRESSWAY LTD.) TO 11.34% IN THE ASSESSMENT YEAR UNDER CONSIDERATION. UNDER THESE CIRCUMSTANCES, THERE WAS NO BASIS ON WHICH THE ASSE SSING OFFICER INFERRED ABOUT INFLATION OF EXPENSES. 3.5 IT IS SUBMITTED THAT IN THE EARLIER ASSESS MENT YEARS IN THE ASSESSEE'S OWN CASE, THE AD-HOC ADDITION/DISALLOWANCE MADE ON ACCOUNT OF INFLATION OF CERTAIN EXPENSES WAS DELETED BY THE LEARNED COMMISS IONER OF INCOME-TAX (APPEALS)(ORDER DT.20.05.2009) AND TH E SAME WAS CONFIRMED BY THE HONOURABLE JODHPUR BENCH OF INCOME-TAX APPELLATE TRIBUNAL (I.T.A.N0.468/JU/2009 FOR ASSN. YEAR 2007-08, ORDER DT.31.03.2010). THE REVENUE'S APPEAL BEFORE THE HONOURABLE RAJASTHAN HI GH 11 COURT WAS REJECTED IN LIMINE. (I.T.A.NO.98/2011, O RDER DATED 02.11.2011) ANNEXURE 'B1 3.6 THE HONOURABLE DELHI BENCH OF INCOME-TAX APP ELLATE TRIBUNAL HELD IN THE CASE OF A.C.I.T. VS. ALLIED CONSTRUCTION (106 TTJ 616) THAT DISALLOWANCE CANNOT BE MADE MERELY BECAUSE VOUCHERS WERE SELF-MADE. THE HONOURABLE JODHPUR BENCH OF INCOME-TAX APPELLATE TRIBUNAL HELD IN THE CASE OF OMPRAKASH JOSHI VS. I. T.O. (123 TTJ 246) THAT NO AD-HOC DISALLOWANCE CAN BE MA DE WHERE EXPENSES INCURRED ARE REAL AND SUPPORTED BY VOUCHERS. THE HONOURABLE MUMBAI BENCH OF INCOME-TAX APPELLATE TRIBUNAL HELD IN THE CASE OF A.C.I.T. VS. ARTHUR ANDERSON A CO. (5 SOT 393) THAT AD-HOC DISALLOWANCE CANNOT BE MADE WHERE ACCOUNTS OF THE ASSESSEE WERE AUDITED AND THE DISALLOWANCE WAS ON THE GROUND THAT THERE MIGHT BE AN ELEMENT OF EXCESS EXPENDITURE. SUCH DISALLOWANCES ARE INHERENTLY BASED ON SURMISES AND CONJECTURES AND DO NOT HAVE ANY LEGALLY SUSTAINABLE FOUNDATION. FURTHER RELIANCE IS PLACED ON THE JUDGE MENTS OF MONARCH FOODS PVT. LTD. VS. A.C.I.T. 54 TTJ 405 (AND.), OIL AND NATURAL &AS COMMISSION VS. ADD!.C.I.T. 69 ITD 69 (DEL). 3.7 IN VIEW OF THE FACTS AND LEGAL POSITION EX PLAINED ABOVE, WE REQUEST YOUR HONOUR TO KINDLY DELETE THE ADDITION MADE ON ACCOUNT OF AD-HOC DISALLOWANCE OUT OF AFORESAID EXPENSES.' 12 7.5 I HAVE CAREFULLY CONSIDERED THE SUBMISSION OF T HE APPELLANT AND ALSO THE FINDING OF THE AO REGARDING THIS ADDITION. I HAVE ALSO CONSIDERED AND EXAMINED VARIO US CASE LAWS REFERRED AND RELIED UPON BY THE APPELLANT. THE AO'S CASE IS THAT THE APPELLANT HAS PRODUCED BOOKS OF AC COUNTS IN WHICH UNDER THE TWO HEAD NAMELY SITE & STAFF EXP ENSE AND SAND, CEMENT <& STONE EXPENSES, CLAIMS OF EXPEN SES WERE MADE THROUGH SELF MADE CASH VOUCHERS. THE AO A LSO NOTED THAT THIS FACT WAS BROUGHT TO THE NOTICE OF A R AND CONSIDERING THE NATURE AND VOLUME OF TRANSACTION AN D INFLATION OF TRANSACTION CANNOT BE RULED OUT. THE A O ACCORDINGLY MADE ADDITION OF RS. 5 LACS UNDER EACH OF THESE TWO HEADS, THE APPELLANT'S CASE IS THAT BOOKS OF AC COUNTS AND VOUCHERS WERE PRODUCED BEFORE THE AO AND EVEN A FTER THE VERIFICATION OF ALL VOUCHERS AND BOOKS OF ACCOU NTS, THE AO COULD NOT FOUND ANY VOUCHER WHICH EITHER DID NOT CONTAIN REQUISITE DETAILS OR WAS FACTITIOUS OR CONS ISTED OF PERSONAL EXPENSES OF DIRECTORS. IT IS FURTHER CONTE NDED THAT THE ASSESSEE'S PROFITABILITY HAS INCREASED SUBSTANT IALLY DURING THE YEAR FROM 9.79% IN THE A.Y. 2007-08 (AFT ER EXCLUDING RECEIPT OF RS. 86750000/- ON ACCOUNT OF CONSULTANCY CHARGES FROM ANDHRA PRADESH EXPRESS WAY LTD.) TO 11.34%. IT IS CONTENDED THAT THE AO HAS SI MPLY MADE AD-HOC DISALLOWANCE OUT OF CERTAIN EXPENSES. O N CAREFUL CONSIDERATION OF ALL RELEVANT FACTS IT IS N OTED THAT THE AO HAS NOT BROUGHT OUT ANY SPECIFIC INSTANCE OF FALSE OR WRONG CLAIM OF THE APPELLANT. THERE IS NOTHING ON R ECORD TO SUGGEST THAT EXPENSES EVEN IF CLAIMED ON SELF-MADE 13 VOUCHERS WERE BOGUS OR NOT RELATED TO BUSINESS OR O F PERSONAL NATURE. IT MAY ALSO BE NOTED THAT THE PROF IT RATIO OF THE APPELLANT HAS ALSO SHOWN BETTER RESULTS DURI NG THIS YEAR AS COMPARED TO PRECEDING YEAR. IN THESE CIRCUMSTANCES, THE ADDITIONS MADE BY THE AO WERE SI MPLY ON PRESUMPTION THAT THE EXPENSES MAY HAVE BEEN INFL ATED. KEEPING IN VIEW ALL THESE FACTS AS ALSO THE CASE LA WS RELIED UPON THE APPELLANT, I FIND NO JUSTIFICATION IN SUCH ADDITION. THEREFORE ADDITION AMOUNTING TO RS. 10 LACS (5 LACS , EACH OUT OF SITE & / STAFF EXPENSES AND SAND, CEMENT & S TONE EXPENSES) IS DELETED. 4. AFTER HEARING BOTH SIDES ON THIS ISSUE, WE APPRO VE THE DECISION TAKEN BY LD. CIT(A). THE REASONS GIVEN BY HIM ARE V ALID AND PLAUSIBLE. WE, THEREFORE, UPHOLD THE SAME AS THE DEPARTMENT IS UNABLE TO DEVIATE US FROM THE REASONABILITY OF THE LOGIC GIVEN BY LD. CIT(A) FOR DELETING THE ABOVE AMOUNTS TOTALING TO 10 LAKHS. ACCORDINGLY , WE CANNOT ALLOW GROUND NO. (2) OF THIS APPEAL. 5. GROUND NO. (3) IS GENERAL IN NATURE. 6. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE COURT ON 20 TH AUGUST, 2013. (N.K.SAINI) (HARI OM M ARATHA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 20 TH AUGUST, 2013. 14 V L /- COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT BY ORDER 4. THE CIT(A) 5. THE DR ASSISTANT REGISTRAR ITAT, JODHPUR