Asstt. Commissioner of Income Tax, Lucknow V. M/s Baghel Consultancy & Mining Contractor, Lucknow

ITA 482/LKW/2016

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 7165 (ITAT-LUCKNOW)
• Duration Of Justice: 2 year(s) 11 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-07-2019
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 19-08-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Business expenditure; Additional evidence; TDS; Set aside
• Section: 40(a)(ia); 194C

Judgement Text

I.T.A. NO.482/LKW/2016 ASSESSMENT YEAR:2012-13 1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B, LUCKNOW BEFORE SHRI A. D. JAIN, VICE PRESIDENT AND SHRI T. S. KAPOOR, ACCOUNTANT MEMBER I.T.A. NO.482/LKW/2016 ASSESSMENT YEAR:2012-13 A.C.I.T., RANGE-1, LUCKNOW. VS. M/S BAGHEL CONSULTANCY & MINING CONTRACTOR, PLOT NO. 4, SARASWATI PURAM, RAM ASHREY KA PURWA, LUCKNOW. PAN:AAJFB 6042 L (APPELLANT) (RESPONDENT) O R D E R PER T.S. KAPOOR: THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF LEARNED CIT(A)-1, LUCKNOW DATED 31/05/2016 PERTAINING TO AS SESSMENT YEAR 2012- 2013. IN THIS APPEAL THE REVENUE HAS RAISED THE FO LLOWING GROUNDS: 1. THE LD. CIT (A) HAS ERRED IN LAW AND ON FACTS O F THE CASE IN DELETING THE ADDITIONS WHEN FRESH EVIDENCES HAS BEEN PRODUCED BY THE ASSESSEE BEFORE APPELLATE AUTHORITY . (RULE 46A OF THE I.T. ACT,1961) 2. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.34,84,671/- PAID TO THE LANDOWNE R WITHOUT APPELLANT BY SHRI C. K. SINGH, D. R. RESPONDENT BY MS. SHWETA MITTAL, F.C.A. DATE OF HEARING 18/07/2019 DATE OF PRONOUNCEMENT 26 /07/2019 I.T.A. NO.482/LKW/2016 ASSESSMENT YEAR:2012-13 2 DEDUCTING TDS ON ROYALTY PAYMENTS AS IT WAS THE LIA BILITY OF THE ASSESSEE TO DEDUCT TDS U/S 194J OF THE INCOME TAX A CT,1961. 3. THE LD. CIT (A) HAS ERRED IN LAW AND ON FACTS O F THE CASE IN FAILING TO APPRECIATE THE FACT THAT ADDITION OF RS.27,65,267/- ON ACCOUNT OF LABOUR SECURITY EXPENSES AS IT IS NOT RELATED TO BUSINESS PURPOSE. 4. THE LD. CIT (A) HAS ERRED IN LAW AND ON FACTS O F THE CASE IN FAILING TO APPRECIATE THE FACT THAT ADDITION OF RS. RS.11,47,156/- & RS. 17,21,964/- ON ACCOUNT OF REPA IR AND MAINTENANCE EXPENSES & REPAIR AND MAINTENANCE MACHI NERY RESPECTIVELY WERE DUE TO NON-PRODUCTION OF BOOKS OF ACCOUNTS AND BILLS AND VOUCHERS BEFORE ASSESSING OFFICER. 5. THE LD. CIT (A) HAS ERRED IN LAW & ON FACTS OF THE CASE IN FAILING TO APPRECIATE THE FACT THAT ADDITION OF RS. 13,59,222/- ON ACCOUNT OF MISC. EXPENSES IS DUE TO NON-PRODUCTION OF BOOKS OF ACCOUNTS AND BILLS AND VOUCHERS BEFORE ASSESSING OF FICER. 6. APPELLANT CRAVES LEAVE TO ADD OR AMEND THE GROU NDS OF APPEAL, AS STATED ABOVE AS AND WHEN NEED OF DOING S O ARISES WITH THE PRIOR PERMISSION OF HON'BLE BENCH. 2. AT THE OUTSET, LEARNED D. R. SUBMITTED THAT BEFO RE ASSESSING OFFICER COMPLETE BOOKS OF ACCOUNT AND VOUCHERS FOR EXPENSES WERE NOT PRODUCED AND EVEN AGREEMENT, WHICH THE ASSESSEE HAD FILED BE FORE LEARNED CIT(A), WAS NOT FILED BEFORE THE ASSESSING OFFICER. THEREF ORE, THE DECISION ARRIVED AT BY THE CIT(A) IS IN VIOLATION OF PROVISIONS OF R ULE 46A, WHICH REQUIRES THAT ANY FRESH EVIDENCE FILED BY THE ASSESSEE BEFORE CIT (A), HAS TO BE CONFRONTED TO THE ASSESSING OFFICER AND THEREFORE, IT WAS PRAYED THAT THE MATTER MAY BE SET ASIDE TO ASSESSING OFFICER. 3. LEARNED A. R., ON THE OTHER HAND, HEAVILY PLACED HER RELIANCE ON THE ORDER OF LEARNED CIT(A) AND SUBMITTED THAT ONLY A F EW VOUCHERS FOR EXPENSES WERE SUBMITTED BEFORE CIT(A) AS THE VOUCHE RS WERE LYING AT A PLACE WHICH WAS AFFECTED BY NAXLITE AND IT WAS NOT POSSIBLE TO PRODUCE THE SAME BEFORE THE ASSESSING OFFICER. I.T.A. NO.482/LKW/2016 ASSESSMENT YEAR:2012-13 3 4. WE HAVE HEARD THE RIVAL PARTIES AND HAVE GONE TH ROUGH THE MATERIAL PLACED ON RECORD. THE FIRST GROUND OF APPEAL RELATE S TO ISSUE OF ADMISSION OF FRESH EVIDENCE IN VIOLATION OF PROVISIONS OF RULE 4 6A. IN THIS RESPECT WE FIND THAT IN RESPECT OF ROYALTY PAYMENTS THE ASSESSEE HA D MADE CERTAIN PAYMENTS DIRECTLY TO LAND OWNERS ON THE BASIS OF AG REEMENT NOTED BY LEARNED CIT(A) IN HIS ORDER. THE SAID AGREEMENT WA S NOT BEFORE THE ASSESSING OFFICER. THOUGH THE COPY OF AGREEMENT IS PLACED AT PAGES 49 TO 52 OF THE PAPER BOOK BUT THE CERTIFICATION MADE IN THE PAPER BOOK DOES NOT STATE AS TO WHETHER THIS DOCUMENT WAS BEFORE THE AS SESSING OFFICER OR NOT. THEREFORE, AS REGARDS THE ROYALTY PAYMENT TO LAND O WNERS, WE DEEM IT APPROPRIATE TO SET ASIDE THE ISSUE TO THE ASSESSING OFFICER WHO SHOULD ADJUDICATE ON THE ISSUE AFRESH AFTER TAKING INTO AC COUNT THE ADDITIONAL EVIDENCE PRODUCED BY THE ASSESSEE BEFORE THE CIT(A) , WHICH IS IN THE FORM OF AN AGREEMENT WITH THE LAND OWNERS. IN VIEW OF T HE ABOVE, GROUND NO. 1 AND 2 OF THE APPEAL ARE ALLOWED FOR STATISTICAL PUR POSES. 5. AS REGARDS GROUND NO. 3, WE FIND THAT LEARNED CI T(A) HAS ALLOWED THIS GROUND BY HOLDING AS UNDER: 5.3 I HAVE CAREFULLY CONSIDERED THE WRITTEN SUBMI SSIONS OF THE APPELLANT AND THE FINDING GIVEN BY AO IN THE ASSESS MENT ORDER. THE APPELLANT HAS SUBMITTED THAT THE MINES WHERE TH E APPELLANT FIRM IS WORKING ARE LOCATED IN CHATTISGARH WHICH IS A NAXALITE PRONE AREA WHERE NAXALITES CANNOT BE IGNORED. THERE FORE, FOR THE SMOOTH RUNNING OF THE BUSINESS AND FOR THE PURP OSE OF MAINTAINING PEACEFUL ENVIRONMENT IN SUCH ATMOSPHERE , THE APPELLANT FIRM IS COMPELLED TO HIRE /EMPLOY, A LOCA L RESIDENT NAMED MR. MUKTESHWAR, WHO IS WELL VERSED WITH THE A REA, HAS CONSIDERABLE INFLUENCE AND POWER. HENCE, MR, MUKTES HWAR IS SHOWN AS HELPER IN THE BOOKS OF ACCOUNTS. HEFTAAS B EEN ENTRUSTED WITH THE JOB OF PROVIDING FOOD, WATER AND OTHER DAILY ESSENTIALS REQUIRED FOR THE LABOURS / EMPLOYEES WOR KING AT THE MINES. PAYMENTS ARE MADE TO HIM IN ADVANCE OR ON REIMBURSEMENT OF BILLS. FEW OF SUCH REIMBURSEMENT O F EXPENSE I.T.A. NO.482/LKW/2016 ASSESSMENT YEAR:2012-13 4 INCURRED BY MR. MUKTESHWAR, WERE MADE BY THE APPELL ANT FIRM TO L.I.C. ON 29.08.2011 OF RS.58,519/- AND TO AKANS HA IIT TEE ON 10.09.2011 OF RS.40,000/- ON HIS DIRECTIONS. SIN CE, SUCH PAYMENTS WERE MERELY REIMBURSEMENT OF PAYMENTS BORN BY MR. MUKTESHWAR ON BEHALF OF THE APPELLANT FIRM, THEREFO RE, THE EXPENSE OF LABOUR SECURITY EXPENSE WAS FOR THE PURP OSE OF BUSINESS. IT MAY FURTHER BE SUBMITTED THAT THE APPELLANT FIRM HAS MAINTAINED PROPER BOOKS OF ACCOUNTS IN REGULAR COUR SES OF BUSINESS. THE BOOKS OF ACCOUNTS ARE AUDITED U/S 44A B OF THE INCOME-TAX ACT BY THE CHARTERED ACCOUNTANT ON THE B ASIS OF WHICH, THE APPELLANT FIRM HAD FILED THE RETURN OF I NCOME. ALL THE EXPENSES ARE FULLY VOUCHED AND VERIFIABLE. FURTHER, SELF-MADE/ HAND-MADE BILLS / VOUCHERS DO NOT MEAN THAT THE EXP ENSES ARE BOGUS. IT IS SUBMITTED THAT THE AFORESAID DISALLOWA NCE IS AD HOC DISALLOWANCE WHICH IS UNLAWFUL. I HAVE CAREFULLY CONSIDERED THE WRITTEN SUBMISSION OF THE APPELLANT FILED DURING APPELLATE PROCEEDINGS, AND F INDING GIVEN BY AO IN ASSESSMENT ORDER. IT IS SEEN, FROM THE FIN DING OF AO GIVEN IN ASSESSMENT ORDER THAT THE ENTIRE EXPENSES CLAIMED BY THE APPELLANT WHICH WERE INCURRED THROUGH ONE PERSO N SHRI MUKTESHWAR WERE DISALLOWED AND ADDED BACK TO THE IN COME OF THE APPELLANT. I FOUND MUCH FORCE IN THE ARGUMENT O F THE APPELLANT THAT THE ASSESSING OFFICER DID NOT CONDUC T ANY ENQUIRY OR MADE NECESSARY VERIFICATION BEFORE DRAWING ADVER SE INFERENCE ON THIS ISSUE. IT IS ALSO EXPLAINED BY TH E APPELLANT THAT THE APPELLANT DID HIS MINING BUSINESS IN THE NAXALI TE AREA IN CHHATISGARH AND IT WAS COMPULSION TO HIM TO TAKE TH E ASSISTANCE AND APPOINT ONE PERSON WHO WAS THE RESID ENT OF THAT AREA AND HAS EFFECTIVE IMAGE IN THE NAXALITE AREA. THEREFORE FOR SMOOTH BUSINESS IN THAT AREA , THE APPELLANT HAS EN GAGED SHRI MUKTESHWAR AS EMPLOYEE AND ENTIRE EXPENSES INCURRED THROUGH HIM. DURING THE A.Y. UNDER CONSIDERATION THE APPELL ANT PAID RS.27,65,267/- TO SHRI MUKTESHWAR FOR PAYMENT OF MISCELLANEOUS BUSINESS EXPENSES. THEREFORE THE EXPE NSES OF RS.27,65,267/- INCURRED THROUGH SHRI MUKTESHWAR WER E INCIDENTAL TO HIS BUSINESS ACTIVITY AND THE SAME AR E DULY ALLOWABLE BUSINESS EXPENDITURE. CONSIDERING THE ABOVE FACTS AND CIRCUMSTANCES AND E XPLANATION OF THE APPELLANT MENTIONED SUPRA , I HOLD THAT THE AO WAS NOT JUSTIFIED IN DISALLOWING THE EXPENSES OF RS. 27,65, 267/- AND I.T.A. NO.482/LKW/2016 ASSESSMENT YEAR:2012-13 5 SAME LIABLE TO BE DELETED. THE AO IS DIRECTED TO DE LETE THE ADDITION OF RS.27,65,267/-. THE APPELLANT WOULD GET S RELIEF OF RS.27,65,267/-. GROUND NO. 4, IS THEREFORE, ALLOWED IN FAVOUR OF APPELLANT. 6. IN THE ABOVE FINDINGS THE LEARNED CIT(A) HAS NOT DEALT ANY OF THE OBJECTIONS OF THE ASSESSING OFFICER WHICH HE HAS MA DE IN HIS ORDER. THE ASSESSING OFFICER HAS NOTED THAT BESIDES PAYMENTS T O MUKTESHWAR, THE PAYMENTS WERE ALSO MADE TO ANJALI AND HE HAS FURTHE R NOTED THAT AS PER SALARY SHEET, MUKTESHWAR WAS ONLY HELPER AT DAILY P AYMENT OF RS.301/-. HE HAS FURTHER NOTED THAT BESIDES PAYMENTS WERE MADE I N THE NAME OF AKASH, IIT, JEE AND LIC. THE ASSESSING OFFICER HAS ALSO N OTED THAT NONE OF THE BILLS WERE SUBMITTED TO HIM FOR VERIFICATION. ALL THESE OBSERVATIONS OF THE ASSESSING OFFICER HAVE NOT BEEN CONSIDERED BY LEARN ED CIT(A) THEREFORE, THIS GROUND IS ALSO SET ASIDE TO THE FILE OF ASSESSING O FFICER FOR READJUDICATION. 7. NOW COMING TO GROUND NO. 4 REGARDING REPAIR & MA INTENANCE AND REPAIR AND MAINTENANCE OF MACHINERY, WE FIND THAT L EARNED CIT(A) HAS ALLOWED RELIEF TO THE ASSESSEE BY HOLDING AS UNDER: 7.3 I HAVE CAREFULLY CONSIDERED THE WRITTEN SUBMI SSIONS OF THE APPELLANT AND THE FINDING GIVEN BY AO IN ASSESSMENT ORDER. THE MATTER WAS ALSO DISCUSSED WITH THE AUTHORIZED REPRE SENTATIVE OF THE APPELLANT. THE APPELLANT HAS SUBMITTED THAT THE MINE WHERE THE APPELLANT FIRM'S WORK IS LOCATED IN CHATTISGARH WHICH IS A NA XALITE PRONE AREA DUE TO WHICH IT IS NOT SAFE TO GO THERE. ALL T HE BOOKS OF ACCOUNTS AND VOUCHERS ARE KEPT AT THE SITE OF THE M INE. THE BILLS MENTIONED ABOVE COULD NOT BE PRODUCED BEFORE THE LD. ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT P ROCEEDING AS IT IS NOT SAFE ALL THE TIME TO ENTER THE REGION WHERE THE SITE IS SITUATED AND WHERE THE BOOKS OF ACCOUNTS AND BILLS AND VOUCHERS WERE KEPT. COPIES OF BILLS REQUIRED BY THE LD. ASSESSING OFFICER HAVE NOW BEEN, BROUGHT FROM THE S ITE. BOOKS OF ACCOUNTS AND OTHER BILLS AND VOUCHERS WILL ALSO BE PRODUCED I.T.A. NO.482/LKW/2016 ASSESSMENT YEAR:2012-13 6 BEFORE YOUR HONOUR, WHENEVER REQUIRED. NO TDS WAS M ADE ON THESE PAYMENTS AS THESE PAYMENTS RELATE TO PURCHASE OF MACHINERY PARTS FROM THE AFORESAID PERSONS AND THE SERVICE ELEMENTS INVOLVES THEREIN WAS NEGLIGIBLE. THEREFORE , SECTION 194C WAS NOT ATTRACTED ON THESE PURCHASES. THE APPELLANT HAS ALSO SUBMITTED THAT FOR THE PURPO SE OF DISALLOWANCE OF EXPENSES U/S 40(A)(IA) ON THE GROUN D THAT TDS HAS NOT BEEN MADE FROM THEIR PAYMENTS, THE AMOUNT S HOULD BE 'PAYABLE' AND NOT 'PAID' BY THE END OF THE YEAR. IN THIS CASE, THE ENTIRE AMOUNT HAD ALREADY BEEN PA ID XIPTO THE END OF THE PREVIOUS YEAR AND NO AMOUNT REMAINED PAY ABLE AT THE END OF THE YEAR. THEREFORE, SECTION 40(A)(IA) I S NOT APPLICABLE IN THIS CASE AND THE AFORESAID AMOUNT OF RS.17,21,964/- HAS WRONGLY BEEN DISALLOWED U/S 40(A )(IA) OF THE ACT. IN SUPPORT OF ITS CONTENTION THE APPELLANT HAS RELI ED ON THE JUDGMENT OF ALLAHABAD HIGH COURT IN THE CASE OF CIT , MUZAFFAMAGAR VS VECTOR SHIPPING (P) LTD, (2)8 TAXMA N, 93(AUD)(MUZ). I HAVE CAREFULLY CONSIDERED THE WRITTEN SUBMISSION FILED BY THE APPELLANT MENTIONED SUPRA AND FACTS AND CIRCUMSTANC ES OF THE CASE. SINCE THE APPELLANT HAS MADE PAYMENT TO THE C ONCERN PERSON ON ACCOUNT OF PURCHASES OF PLANT AND MACHINE RY PARTS AND UNDER THESE EXPENSES, SERVICE ELEMENT INVOLVED WAS NEGLIGIBLE AND THE SEGREGATION OF THESE EXPENSES BE TWEEN PURCHASES AND SERVICE EXPENSES COULD NOT BE POSSIBL E, THEREFORE I FIND MUCH FORCE IN THE ARGUMENT OF APPE LLANT THAT THE PROVISIONS OF TDS ARE NOT APPLICABLE IN APPELLA NT CASE AND NO DISALLOWANCES COULD BE POSSIBLE UNDER SECTION 40 (A)(IA) OF I.T.ACT. HENCE THE DISALLOWANCE OF RS. 17,21,964/- MADE BY AO LIABLE TO BE DELETED. THE AO IS DIRECTED TO DELETE THE ADDITION OF RS. 17,21,964/-. THE APPELLANT WOULD GETS RELIEF OF RS. 17,21,964/-. GROUND NO. 6, IS ALLOWED. 8.3 I HAVE CAREFULLY CONSIDERED THE WRITTEN SUBMI SSION FILED BY THE APPELLANT DURING APPELLATE PROCEEDINGS AND F INDING GIVEN BY AO IN ASSESSMENT ORDER. THE APPELLANT HAS SUBMIT TED THAT THE MINE WHERE THE APPELLANT FIRM'S WORK IS LOCATED IN CHATTISGARH WHICH IS A NAXALITE PRONE AREA DUE TO W HICH IT IS NOT SAFE TO GO THERE. ALL THE BOOKS OF ACCOUNTS AND VOU CHERS ARE KEPT AT THE SITE OF THE MINE. THE BILLS MENTIONED A BOVE COULD I.T.A. NO.482/LKW/2016 ASSESSMENT YEAR:2012-13 7 NOT BE PRODUCED BEFORE THE LD. ASSESSING OFFICER DU RING THE COURSE OF ASSESSMENT PROCEEDING AS IT IS NOT SAFE A LL THE TIME TO ENTER THE REGION WHERE THE SITE IS SITUATED AND WHE RE THE BOOKS OF ACCOUNTS AND BILLS AND VOUCHERS WERE KEPT. COPIE S OF BILLS REQUIRED BY THE LD. ASSESSING OFFICER HAVE NOW BEEN BROUGHT FROM THE SITE. BOOKS OF ACCOUNTS AND OTHER BILLS AN D VOUCHERS WILL ALSO BE PRODUCED BEFORE YOUR HONOUR, WHENEVER REQUIRED. NO TDS WAS MADE ON THESE PAYMENTS AS THESE PAYMENTS RELATE TO PURCHASE OF MACHINERY PARTS FROM THE AFORESAID P ERSONS AND THE SERVICE ELEMENTS INVOLVES THEREIN WAS NEGLIGIBL E. THEREFORE, SECTION 194C WAS NOT ATTRACTED ON THESE PURCHASES. THE APPELLANT HAS ALSO SUBMITTED THAT THE REASON FO R A NEGATIVE CASH BALANCE APPEARING IN THE CASH BOOK, IS THAT AL L THE EXPENSES INCURRED BY THE APPELLANT WERE SHOWN AS PA ID BY THE APPELLANT IN THE CASH BOOK WHEREAS PAYMENTS IN RESP ECT OF SOME EXPENSES WERE MADE BY SHRI MANISH SINGH, THE P ARTNER OF THE APPELLANT FIRM FROM HIS OWN SOURCES, AS CASH WA S NOT AVAILABLE WITH THE APPELLANT FIRM TO MAKE THESE PAY MENTS. THEREFORE, THE PAYMENTS WERE NOT ACTUALLY MADE FROM THE RESOURCES AVAILABLE WITH THE APPELLANT FIRM, BUT FR OM THE CASH INTRODUCED ON NEED BASIS BY THE PARTNER OF THE APPE LLANT FIRM. HOWEVER, DUE TO AN OVERSIGHT BY THE ACCOUNTANT HE W RONGLY CREDITED THE CASH OF THE APPELLANT FIRM INSTEAD OF PARTNER SHRI MANISH SINGH ACCOUNT AGAINST THE EXPENSES, WHICH RE SULTED IN NEGATIVE CASH BALANCE. THIS POSITION WAS CORRECTED SUBSEQUENTLY AT THE TIME OF AUDIT OF THE FINANCIAL STATEMENTS BY THE AUDITORS, BUT, DURING THE COURSE OF ASSESSMENT PROCEEDING, THE PRINT OUT OF THE CASH BOOK CONTAINING WRONG ENT RIES WAS PRODUCED BEFORE LD. ASSESSING OFFICER. THE APPELLANT HAS ALSO SUBMITTED THAT FOR THE PURPO SE OF DISALLOWANCE OF EXPENSES U/S 40(A)(IA) ON THE GROUN D THAT TDS HAS NOT BEEN MADE FROM THEIR PAYMENTS, THE AMOUNT S HOULD BE 'PAYABLE' AND NOT 'PAID' BY THE END OF THE YEAR. IN THIS CASE, ONLY RS.13,200/- IS PAYABLE OUT OF TOTAL AFORESAID EXPENSE OF RS.11,47,156/- AT THE END OF THE PREVIOUS YEAR. IN SUPPORT OF ITS CONSTITUTION, THE APPELLANT HAS R ELIED ON THE JUDGMENT OF HON'BLE ALLAHABAD HIGH COURT IN THE CAS E OF CIT, MUZZAFARNAGAR V VECTOR SHIPPING SERVICES (F) LTD (2 013) 218 TAXMAN 93 (ALLD) (MAG.) I.T.A. NO.482/LKW/2016 ASSESSMENT YEAR:2012-13 8 SINCE THE APPELLANT HAS MADE PAYMENT TO THE CONCERN PERSON ON ACCOUNT OF PURCHASES OF PLANT AND MACHINERY PART S AND UNDER THESE EXPENSES, SERVICE ELEMENT INVOLVED WAS NEGLIGIBLE AND THE SEGREGATION OF THESE EXPENSES BETWEEN PURCH ASES AND SERVICE EXPENSES COULD NOT BE POSSIBLE, THEREFORE I FIND MUCH FORCE IN THE ARGUMENT OF APPELLANT THAT THE PROVISI ONS OF TDS ARE NOT APPLICABLE IN APPELLANT CASE AND NO DISALLO WANCES COULD BE POSSIBLE UNDER SECTION 40(A)(IA) OF I.T.ACT. MOR EOVER, THE APPELLANT MAINTAINED BOOKS OF ACCOUNTS, BILLS AND V OUCHERS IN SUPPORT OF THESE EXPENSES. THESE EXPENSES ARE INCID ENTAL TO THE BUSINESS ACTIVITY OF APPELLANT AND GENUINENESS OF THE EXPENSES CLAIMED UNDER THIS HEAD HAS NOT BEEN DOUBT ED BY AO, THEREFORE, THE AO WAS NOT JUSTIFIED IN DOING ADVERS E INFERENCE ON THIS ISSUE. HENCE THE DISALLOWANCE OF RS. 11,47, 156/- MADE BY AO IS LIABLE TO BE DELETED. THE AO IS DIRECTED T O DELETE THE ADDITION OF RS. 11,47,156/-. THE APPELLANT WOULD GE TS RELIEF OF RS. 11,47,156/-. GROUND NO. 7, IS ALLOWED. 8. IN THE ABOVE FINDINGS, THE LEARNED CIT(A) HAS HI MSELF NOTED THAT THE BILLS WERE NOT PRODUCED BEFORE THE ASSESSING OFFICE R AS THESE WERE LYING AT THE SITE OF MINING WHICH WAS AFFECTED BY NAXLITE AC TIVITIES. THEREFORE, THE CIT(A) HAS DEFINITELY ADMITTED FRESH EVIDENCE WITHO UT OBTAINING REMAND REPORT FROM THE ASSESSING OFFICER. IN VIEW OF THE ABOVE, THIS MATTER IS ALSO SET ASIDE TO THE ASSESSING OFFICER WHO SHOULD READJ UDICATE THE ISSUE. IN VIEW THE ABOVE, GROUND NO. 4 IS ALSO FOR STATISTICA L PURPOSES. 9. NOW COMING TO GROUND NO. 5 WHICH IS ON ACCOUNT O F DELETION OF ADDITION ON ACCOUNT OF MISC. EXPENSES AND WHICH LEA RNED CIT(A) HAS DELETED BY HOLDING AS UNDER: 9.3 I HAVE CAREFULLY CONSIDERED THE FINDING 5 GIVEN BY AO IN ASSESSMENT ORDER, WRITTEN SUBMISSIONS OF THE APPELL ANT FILED DURING APPELLATE PROCEEDINGS. THE MATTER WAS DISCUS SED WITH THE APPELLANT AND AUTHORIZED REPRESENTATIVE SRI MRA DUL KUMAR AGARWAL, FCA ALSO. THE APPELLANT WAS UNABLE TO PROD UCE ALL THE BILLS AND VOUCHERS DURING THE ASSESSMENT PROCEEDING DUE TO THE FACT THAT THEIR WORKING SITE WHERE ALL BILLS AND VO UCHERS ARE I.T.A. NO.482/LKW/2016 ASSESSMENT YEAR:2012-13 9 MAINTAINED IS LOCATED IN NAXALITE PRONE AREA LOCATE D IN CHHATTISGARH. ON THE BASIS OF MATERIAL ON RECORD, I FEEL SATISFIE D TO SOME EXTENT TO THE EXPLANATION OF APPELLANT THAT MISCELL ANEOUS EXPENSES OR GENERAL EXPENSES ARE RESIDUAL TYPE OF A CCOUNTING HEADS. WHEN AN EXPENDITURE IS OF PETTY NATURE AND T HERE IS NO SPECIFIC ACCOUNTING HEAD FOR THE SAME, IT IS GENERA LLY DEBITED TO SUCH RESIDUARY HEAD OF EXPENSES. IT IS UNLAWFUL TO DISALLOW MISC. EXPENSES MERELY ON THE FACT THAT ALL KIND OF EXPENS ES HAVE ALREADY BEEN CLAIMED IN THE P & L ACCOUNT. SO FAR A S THE NATURE OF THESE EXPENSES ARE CONCERNED, IT IS TO BE SUBMIT TED THAT THE NATURE OF THE EXPENSE IS MENTIONED ON THE BILLS/VOU CHERS THEMSELVES. FOR EXAMPLE, SOME OF THE EXPENSES UNDER THIS HEAD WERE INCURRED ON PURCHASE OF SAFETY KITS, GLOV ES, SHOES ETC. FOR THE LABOURS WORKING IN THE MINES. THESE EX PENSES ARE NECESSARY FOR SAFETY OF LABOURS EXTRACTING BOLDER A T THE SITE AND HENCE, NECESSARY FOR SMOOTH RUNNING THE BUSINESS BY THE ASSESSEE FIRM, SO FAR AS THE NEGATIVE CASH BALANCE AS CONCERNED AL L THE EXPENSES INCURRED BY THE APPELLANT WERE SHOWN AS PA ID BY THE APPELLANT IN THE CASH BOOK WHEREAS PAYMENTS IN RESP ECT OF SOME EXPENSES WERE MADE BY THE SHRI MANISH SINGH, T HE PARTNER OF THE APPELLANT FIRM FROM HIS OWN SOURCES, AS CASH WAS NOT AVAILABLE WITH THE APPELLANT FIRM TO MAKE THESE PAYMENTS. THEREFORE, THE PAYMENTS WERE NOT ACTUALLY MADE FROM THE RESOURCES AVAILABLE WITH THE APPELLANT FIRM, BUT FR OM THE CASH INTRODUCED ON NEED BASIS BY THE PARTNER OF THE APPE LLANT FIRM. HOWEVER, DUE TO AN OVERSIGHT BY THE ACCOUNTANT HE W RONGLY CREDITED THE CASH OF THE APPELLANT FIRM INSTEAD OF PARTNER SHRI MANISH SINGH ACCOUNT AGAINST THE EXPENSES, WHICH RE SULTED IN NEGATIVE CASH BALANCE. THIS POSITION WAS CORRECTED SUBSEQUENTLY AT THE TIME OF AUDIT OF THE FINANCIAL STATEMENTS BY THE AUDITORS, BUT, DURING THE COURSE OF ASSESSMENT PROCEEDING, THE PRINT OUT OF THE CASH BOOK CONTAINING WRONG ENT RIES WAS PRODUCED BEFORE LD. ASSESSING OFFICER. IT IS SEEN FROM THE FINDING OF AO THAT THE ENTIRE E XPENSES CLAIMED UNDER THIS HEAD OF RS.13,59,222/- HAS BEEN DISALLOWED. THE ASSESSING OFFICER DID NOT POINT OUT THE SPECIFI C INSTANCE OF EXPENSES CLAIMED WAS DISALLOW ABLE AND ALSO THE AO DID NOT MAKE THE COMPARISON WITH THE OTHER SIMILAR CASE TO JUSTIFY THE I.T.A. NO.482/LKW/2016 ASSESSMENT YEAR:2012-13 10 DISALLOWANCES. THE PAST HISTORY OF APPELLANT HAS AL SO NOT BEEN TAKEN INTO CONSIDERATION, WHILE DISALLOWING THE EXP ENSES UNDER THIS HEAD. HOWEVER THE NATURE OF EXPENSES , MAINTEN ANCE OF BOOKS OF ACCOUNTS AND DEFECTS MENTIONED BY AO AND N EGATIVE BALANCE IN CASH BOOK, SOME DISALLOWANCES UNDER THIS HEAD INEVITABLE , BECAUSE OF THE INFLATION OF EXPENSES U NDER THIS HEAD CANNOT BE RULED OUT. CONSIDERING THE ABOVE FACTS AND CIRCUMSTANCES OF CA SE, IT WOULD BE FAIR AND REASONABLE IF THE DISALLOWANCES IS REST RICTED TO RS.1,35,922/- I.E. 10% OF RS.13,59,222/- AND REST O F ADDITION AMOUNTING TO RS. 12,23,300/- IS LIABLE TO BE DELETE D. THE AO IS DIRECTED TO DELETE THE ADDITION OF RS. 12,23,300/-. APPELLANT WOULD GETS RELIEF OF RS. 12,23,300/-. GROUND NO.8, IS PARTLY ALLOWED. 10. IN THE ABOVE FINDING, LEARNED CIT(A) HIMSELF HA S NOTED THAT ASSESSEE WAS UNABLE TO PRODUCE ALL THE BILLS AND VOUCHERS DU RING ASSESSMENT PROCEEDINGS DUE TO THE FACT THAT THEIR WORKING SITE , WHERE ALL THE BILLS AND VOUCHERS WERE MAINTAINED, WAS LOCATED IN NAXALITE A REA LOCATED IN CHHATISGARH. THEREFORE, THESE BILLS WERE ALSO NOT SENT TO THE ASSESSING OFFICER FOR REMAND REPORT. IN VIEW OF THE ABOVE, G ROUND NO. 5 IS ALSO SET ASIDE TO THE ASSESSING OFFICER FOR READJUDICATION. 11. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALL OWED FOR STATISTICAL PURPOSES. (ORDER PRONOUNCED IN THE OPEN COURT ON 26/07/2019) SD/. SD/. ( A. D. JAIN ) ( T. S. KAPOOR ) VICE PRESIDENT ACCOUNTANT MEMBER DATED:26/09/2019 *SINGH I.T.A. NO.482/LKW/2016 ASSESSMENT YEAR:2012-13 11 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. CONCERNED CIT 4. THE CIT(A) 5. D.R., I.T.A.T., LUCKNOW ASSISTANT REGISTRAR