ITO, Rayagada V. Abdul Ghni, Rayagada

ITA 478/CTK/2013

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 6326 (ITAT-CUTTACK)
• Duration Of Justice: 5 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-05-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 07-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S C MOHANTY

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BE NCH, CUTTACK . . , . . , BEFORE SHRI P.K.BANSAL, AM & SHRI D.T.GARASIA, JM ./ ITA NO.478/CTK/2013 ( / ASSESSMENT YEAR :2007-08) ITO RAYAGADA WARD, RAYAGADA. VS. MR. ABDUL GHANI, CONTRACTOR, J.K.PAPER MILLS LTD., J.K.PUR, DISTRICT RAYAGADA ! ./ '# ./ PAN/GIR NO. : AKQPG 4593 C ( !$ / APPELLANT ) .. ( %&!$ / RESPONDENT ) ' ' ( /REVENUE BY : SHRI S.C.MOHANTY )* ' ( /ASSESSEE BY : NONE +, ' * / DATE OF HEARING : 28 TH APRIL, 2014 -. ' * / DATE OF PRONOUNCEMENT : 01/05/2014 / / O R D E R PER BENCH : THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST T HE ORDER OF THE CIT(A) DATED 13-8-2013 BY TAKING THE FOLLOWING EFFECTIVE GROUNDS OF APPEAL :- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) IS NOT JUSTIFIED IN DELETING THE ADDITION OF RS.2,25,500/- ON ACCOUNT OF MEDICAL TREATMENT ADVAN CE MADE BY THE AO. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) IS NOT JUSTIFIED IN ALLOWING RELIEF OF RS.5 ,40,000/- ON ACCOUNT OF LABOUR ADVANCE PAYMENT. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) IS NOT JUSTIFIED IN DELETING THE ADDITION O F RS.5,40,050/- MADE BY THE AO ON ACCOUNT OF COLONY MAINTENANCE WORK AND TPM CLEANING. 2 ITA NO.478/2013 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) IS NOT JUSTIFIED IN ALLOWING RELIEF OF RS.3, 58,619/- ON ACCOUNT OF SUBSIDIES ALLOWANCES. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) IS NOT JUSTIFIED IN ESTIMATING THE TOTAL INC OME @8% OF THE GROSS RECEIPTS, WHEN THE ASSESEE COULD NOT SUBSTANTIATE THE ABOVE CLAIMS FOR WHICH THE SAME WE RE DISALLOWED BY THE AO. 6. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) IS NOT JUSTIFIED IN ACCEPTING THE CONTENTION S OF THE ASSESSE WITHOUT THE COMPLETE AND THOROUGH VERIFICAT ION AND NOT ACCEPTING THE FINDINGS OF THE AO IN VIOLATI ON OF RULE 46A OF THE IT RULES. 2 . BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A LABOUR CONTRACTOR WORKING FOR J.K.PAPER MILLS, J.K.PUR RAY AGADA. RETURN FOR IMPUGNED ASSESSMENT YEAR AT AN INCOME OF RS.6.29,10 6/- WAS FILED ON 24-10-2007. THE AO NOTICED THAT THE ASSESSE CLAIMED LABOUR PAYMENT OF RS.1,47,29,475/- WHILE IN THE RETURN FILED WITH THE DISTRICT LABOUR OFFICER, THE ASSESSE CLAIMED TO HAVE PAID RS.93,63, 328/-. THE ASSESSE WAS ASKED TO EXPLAIN THE DISCREPANCY AND PRODUCE TH E BOOKS OF ACCOUNTS. THE ASSESSE GAVE THE DETAILS OF LABOUR CH ARGES CONSISTS OF 11 ITEMS, DETAILS OF WHICH HAVE BEEN GIVEN AT PARA 8 OF THE ASSESSMENT ORDER. IT WAS STATED THAT THE LABOUR RETURN FURNISH ED TO LABOUR DEPARTMENT RELATES TO THE PAYMENT INVOLVING ESI AND PF. IN ADDITION TO IT, IT HAS INCURRED BONUS AND EXTRA LABOUR PAYMENT AND OTHER RELATED EXPENSES. AS PER THE LABOUR BONUS REGISTER AS CERTI FIED BY THE J.K.PAPER MILLS, THE TOTAL PAYMENT WORKS OUT TO RS. 99,97,469/- AND RS.9,03,272/-. THE AO DISALLOWED THE MEDICAL TREATM ENT ADVANCE OF RS.2,25,500/-, WHICH WAS TAKEN BY THE ASSESSE HIMSE LF BY HOLDING THAT 3 ITA NO.478/2013 THIS WAS NOT FOR THE BUSINESS PURPOSES, LABOUR PAYM ENT ADVANCES OF RS.5,40,000/- WAS ALSO DISALLOWED AS IT WAS IN ADVA NCE PAYMENT, A SUM OF RS.5,40,050/- CLAIMED UNDER MAINTENANCE WAS SUPPORTED ONLY BY SELFMADE VOUCHERS. THE AO, THEREFORE, DISALLOWED THE SAME. THE AO ALSO DISALLOWED THE SUBSIDY PAYMENT OF RS.3,58,6 19/- AS THE SAME HAS BEEN PAID IN CASH AND WAS NOT VERIFIABLE IN THE ABSENCE OF CASH BOOK BEING PRODUCED. THE ASSESSE WENT IN APPEAL BEF ORE THE CIT(A) AND CONTENDED THAT IN THE ABSENCE OF BOOKS OF ACCOU NT, ONCE THE BOOKS ARE REJECTED, THE ONLY COURSE LEFT WITH THE A O IS TO PASS AN ORDER U/S.144 BY ESTIMATING THE PROFIT. IN THIS REGARD, T HE ASSESSE RELIED ON THE DECISION IN THE CASE OF ITO VS. NITYANANDA SWAIN IN ITA NO.491/CTK/2011/CONO.35/CTK/2011 AND NITYANANDA SWAIN VS. ITO IN ITA NO.529/CTK/2011, IN WHICH THE TRIBUNAL, AS R EPRODUCED IN PARA 4.3 OF THE ORDER OF THE CIT(A), TOOK THE VIEW THAT WHEN THE ASSESSMENT WAS COMPLETED U/S.144, THE ONLY COURSE L EFT WITH THE ASSESSING AUTHORITIES IS TO ESTIMATE THE PROFIT BY CONSIDERING THE GROSS RECEIPT OF CIVIL AND LABOUR CONTRACT. ONCE THE PROF IT IS ESTIMATED AT CERTAIN PERCENTAGE MEANING THEREBY ALLOWING BALANCE AS EXPENSES FURTHER DISALLOWANCE OF EXPENSES IS NOT JUSTIFIED. IN VIEW OF THIS, THE CIT(A) DELETED THE DISALLOWANCE AND DIRECTED THE AO TO ESTIMATE THE PROFIT @8% ON THE DISCLOSED TURNOVER OF THE ASSESSE AS HAS BEEN LAID DOWN U/S.44AD. 3 . NONE APPEARED ON BEHALF OF THE ASSESSE EVEN NOTIC E WAS SENT THROUGH REGISTERED AD POST. 4 ITA NO.478/2013 4. WE DECIDE TO DISPOSE OF THE APPEAL AFTER HEARING L EARNED DR. EVEN THOUGH THE LEARNED DR VEHEMENTLY RELIED ON TH E ORDER OF THE AO BUT COULD NOT PRODUCE ANY DECISION CONTRARY TO THE DECISION OF THE TRIBUNAL IN ITO VS. NITYANANDA SWAIN AND NITYANANDA SWAIN VS. ITO (SUPRA) AS HAS BEEN REFERRED TO BY THE CIT(A) AND THE DECI SION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE O F T.O.ABRAHAM & CO. VS. DCIT, (2010) 325 ITR 201 , ON THE BASIS OF WHICH THE CIT(A) HAS DELETED THE DISALLOWANCE DIRECTING THE AO TO ESTIMA TE THE PROFIT @8%. THE ASSESSE BEFORE US, IS NOT IN APPEAL. IN VIEW OF THIS, WE ARE OF THE VIEW THAT NO INTERFERENCE IS CALLED FOR IN THE ORDE R OF THE CIT(A). THE CIT(A) HAS RIGHTLY DIRECTED THE AO AS THE ESTIMATE HAS BEEN MADE U/S.144 TO ESTIMATE THE PROFIT @ 8%. WE, ACCORDINGLY, CONFIRM THE ORDER OF THE CIT(A). 5 . IN THE RESULT, APPEAL FILED BY THE REVENUE IS DISMI SSED. ) 0*1 ' ' )' ' '* 23 ORDER PRONOUNCED IN THE OPEN COURT ON THIS 01/05/ 2014. / ' -. + 04 51 01/05/2014 . ' , SD/- SD/- ( . . ) (D.T.GARASIA) ( . . ) (P.K.BANSAL ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER CUTTACK ; 5 DATED 01/05/2014 % . + . 0 /PKM , . / PS 5 ITA NO.478/2013 / / / / ' '' ' %*6 %*6 %*6 %*6 76 * 76 * 76 * 76 * / COPY OF THE ORDER FORWARDED TO : /+ /+ /+ /+ / BY ORDER, 8 88 8 / 2 2 2 2 ' ' ' ' ( ASSTT. REGISTRAR) , / ITAT, CUTTACK 1. !$ / THE APPELLANT 2. %&!$ / THE RESPONDENT. 3. +9 ( ) / THE CIT(A), BERHAMPUR 4. +9 / CIT , BHUBANESWAR 5. 6: %* , , 0+, / DR, ITAT,CUTTACK 6. ;, / GUARD FILE. &6* %* //TRUE COPY//