DCIT CEN CIR-40, MUMBAI V. NEW ASIAN CONSTRUCTION COMPANY, MUMBAI

ITA 516/MUM/2009

• Counselvise Citation: [2010] 119 COUNSELVISE.COM (IT) 6205 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2010
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 15-11-2010
• Assessment Year: 2006-2007
• Appeal Filed On: 23-01-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: M SUBRAMANIAN
• Assessee Lawyers: R S RAWAL
• Keywords: Wrong claim

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES, B, MUMBAI BEFORE SHRI J SUDHAKAR REDDY, ACCOUNTANT MEMBER AND SHRI VIJAY PAL RAO, JUDICIAL MEMBER ITA NO. 516/MUM/2009 (ASSESSMENT YEARS: 2006-07) DCIT CEN CIR 40, R NO.653,6 TH FL AYAKAR BHAVAN, M K ROAD, MUMBAI-400002 . APPELLANT VS NEW ASIAN CONSTRUCTION CO. 21 AVINASH J P ROAD, SEVEN BUNGLOWS, ANDHERI (W), MUMBAI-400053 PAN:AAAFN3130E RESPONDENT APPELLANT BY : SHRI R S RAWAL RESPONDENT BY : SHRI M SUBRAMANIAN O R D E R PER VIJAY PAL RAO,JM THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 22.07.2008 OF CIT(A)-VII, MUMBAI FOR THE ASS ESSMENT YEAR 2006-07. 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS IN THIS APPEAL: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) ERRED IN DELETING THE ADDITION OF RS.5 LAKHS ON ACCOUNT OF LABOUR CHARGES WITHOUT APPRECIATING THE FACT THAT VARIOUS IRREGULA RITIES ITA NO. 516/MUM/2009 (ASSESSMENT YEARS: 2006-07) 2 WERE FOUND BY THE AO FOR CLAIM OF PAYMENT ON THIS ACCOUNT; 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) ERRED IN DELETING THE ADDITION OF RS.80,000 ON ACCOUNT OF REPAIRS CHARGES WITHOUT APPRECIATING THE FACT THAT THESE EXPENSES W ERE NOT FULLY SUPPORTED BY VOUCHERS; 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) ERRED IN DELETING THE ADDITION ON ACCOUNT OF TRANSPORT EXPENSES OF RS.1 LAKH WITHOUT APPRECIATING THE FACT THAT THESE EXPENSES WERE NOT FULLY SUPPORTED BY VOUCHERS; 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) ERRED IN DELETING THE SAND CARTING (TRANSPORT) CHARGES OF 1,50,000 WITHOU T APPRECIATING THE FACTS THAT CERTAIN BILLS ARE SELF MADE BY THE ASSESSEE ON WHICH THE PARTYS NAMES ARE NOT APPEARING 3. WE HAVE HEARD THE LEARNED DR AS WELL AS THE LEAR NED AR AND CONSIDERED THE RELEVANT RECORD. AT THE OUTSET, WE NOTE THAT THE ISSUES RAISED IN THE APPEAL BY THE REVENUE ARE CONSIDERED AND DECIDED BY THIS TRIBUNAL IN ASSES SEES OWN CASE FOR THE ASSESSMENT YEAR 2005-06 IN APPEAL NO.7135/M/2007, ORDER DATED 23.7.2010. THIS TRIBU NAL HAS CONSIDERED THE GROUND NO.1 IN PARAGRAPH 4 AND DECI DED THE ISSUE IN FAVOUR OF THE ASSESSEE BY HOLDING AS UNDER : ITA NO. 516/MUM/2009 (ASSESSMENT YEARS: 2006-07) 3 4. WE HAVE PERUSED THE RECORDS AND CONSIDERED THE MATTER CAREFULLY. THE DISPUTE IS REGARDING ESTIMATED DISALLOWANCE OUT OF LABOUR CHARGES. THE DISALLOWANCE HAD BEEN MADE BY THE AO AMOUNTING TO RS.9.42 LACS AFTER POINTING OUT CERTAIN DEFECTS SUC H AS DISCREPANCIES IN THUMB IMPRESSIONS IN THE WAGE REGISTER AND CERTAIN VOUCHERS WERE BEING UNSIGNED AND UNDATED. THE ASSESSEE IS IN THE CONSTRUCTION INDUSTRY OF WHICH LABOUR PAYMENT IS INTEGRAL PART. IT IS ALSO A FACT THAT THE LABOURERS ARE MOSTLY ILLITERAT E AND IT MAY NOT BE POSSIBLE TO PRODUCE THEM BEFORE THE A O FOR VERIFICATION. IN SUCH CASE CONSIDERING THE VARI OUS DISCREPANCIES AND NON PRODUCTION OF LABOURERS IT CA N AT BEST BE SAID THAT THE LABOUR EXPENSES ARE NOT SUPPORTED BY PROPER EVIDENCE. IN SUCH CASES IT MAY BE PROPER TO MAKE ESTIMATED DISALLOWANCE BUT SUCH DISALLOWANCE HAS TO BE BASED ON SOME PROPER MATERIAL. IN THIS CASE THERE IS NO MATERIAL BROUGHT ON RECORD TO SHOW THAT THE LABOUR PAYMENTS THIS YEAR A RE EXCESSIVE COMPARED TO THE EARLIER YEAR. IN FACT WE FIND FROM THE COMPARATIVE DETAILS GIVEN AT THE TIME OF HEARING THAT THE LABOUR AND SAND CARTING CHARGES AS A PERCENTAGE OF GROSS CONSTRUCTION RECEIPTS THIS YEAR IS LOWER AT 21.76% COMPARED TO 32.88% IN THE IMMEDIATE PRECEDING YEAR. THE GP RATE AND NP RATE BOTH ARE BETTER THIS YEAR COMPARED TO THE EARLIER Y EAR. THEREFORE IN OUR VIEW THERE IS NO CASE FOR MAKING ESTIMATED DISALLOWANCE OUT OF LABOUR CHARGES. ORDER OF CIT(A) DELETING THE ADDITION IS THEREFORE UPHELD . 4. WE FURTHER NOTE THAT THE GROUND NO.2 TO 3 ARE CO NSIDERED AND DECIDED BY THIS TRIBUNAL IN PARAGRAPH 6 TO 6.2 AS UNDER : 6. THE THIRD DISPUTE IS REGARDING ESTIMATED DISALLOWANCE OUT OF REPAIR CHARGES AND TRAVELLING EXPENSES. THE ASSESSEE HAS CLAIMED A SUM OF RS. 4.33 LACS AS REPAIR AND RS.7.93 LACS AS TRAVELING EXPENSES. THE AO MADE ESTIMATED DISALLOWANCE OF RS.20,000/- AND RS.79,300/- ON THE GROUND THAT THE EXPENDITURE WAS NOT FULLY SUPPORTED BY VOUCHERS. IN APPEAL CIT(A) HAS OBSERVED THAT AO HAD NOT BROUGHT ON RECORD ANY SPECIFIC ITEM WHICH WAS NOT SUPPORTED BY PROPER VOUCHER. NO CASE WAS ALSO MADE FOR ITA NO. 516/MUM/2009 (ASSESSMENT YEARS: 2006-07) 4 EXCESSIVE OR BOGUS CLAIM. CIT(A) THEREFORE DELETED THE ADDITION AGGRIEVED BY WHICH THE REVENUE IS IN APPEAL. 6.1 BEFORE US THE LEARNED AR FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE CIT(A) WHEREAS THE LEARNED DR HAS PLACED RELIANCE ON THE ORDER OF AO. 6.2 WE HAVE PERUSED THE RECORDS AND CONSIDERED THE MATTER CAREFULLY. THE ESTIMATED DISALLOWANCES HAVE BEEN MADE BY THE AO ON THE GROUND THAT EXPENSES WERE NOT FULLY SUPPORTED BY VOUCHERS. CIT(A) HAS GIVEN A FINDING THAT THE AO HAD NOT BROUGHT ON RECORD ANY SPECIFIC INSTANCE WHICH WAS N OT SUPPORTED BY PROPER VOUCHER. NO CASE HAD ALSO BEEN MADE FOR ANY EXCESSIVE CLAIM THIS YEAR UNDER THIS HEAD. THERE IS NOTHING PRODUCED BEFORE US TO CONTROVERT THE ABOVE FINDINGS OF CIT(A). WE THEREFO RE CONFIRM THE ORDER OF CIT(A) DELETING THE ADDITION. 5. AS THE GROUNDS OF APPEAL NO.4 THIS TRIBUNAL HAS CONSIDERED AND DECIDED IN 5 TO 5.1. 5. THE SECOND DISPUTE IS REGARDING ESTIMATED DISALLOWANCE OF RS.5 LACS OUT OF SAND CARTING CHARG ES. THE AO OBSERVED THAT CERTAIN BILLS WERE SELF MADE A ND THE NAMES OF PARTIES WERE NOT APPEARING THEREIN. HE THEREFORE MADE ESTIMATED DISALLOWANCE OF RS.5 LACS OUT OF TOTAL CLAIM OF RS.157.79 LACS. IN APPEAL CIT (A) OBSERVED THAT THE AO HAD NOT POINT OUT ANY SPECIFIC ITEM OF EXPENDITURE WHICH WAS SELF VOUCHED. IT WAS ALSO OBSERVED BY HIM THAT CONSIDERING THE NATURE OF BUSINESS IT WAS NOT PRACTICABLE TO MAINTAIN THE VOUCHERS. HE THEREFORE DELETED THE ADDITION MADE AGGRIEVED BY WHICH THE REVENUE IS IN APPEAL. 5.1 WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RECORDS AND CONSIDERED THE MATTER CAREFULLY. TH E DISPUTE IS REGARDING ESTIMATED DISALLOWANCE OUT OF SAND CARTING CHARGES. THE ESTIMATED DISALLOWANCE HA S BEEN MADE ON THE GROUND THAT CERTAIN BILLS WERE SEL F MADE AND THE NAMES OF THE PARTIES WERE NOT APPEARING. NO SPECIFIC INSTANCE HAS BEEN BROUGHT ON RECORD AS POINTED OUT BY THE CIT(A). WE ALSO FIND T HAT ITA NO. 516/MUM/2009 (ASSESSMENT YEARS: 2006-07) 5 LABOUR AND SAND CARTING CHARGES THIS YEAR AS PERCENTAGE OF GROSS RECEIPT IS LOWER COMPARED TO CLAIM IN THE IMMEDIATE PRECEDING YEAR. GP RATE AND NP RATE ARE ALSO BETTER THIS YEAR. THEREFORE IN OUR VIEW THERE IS NO JUSTIFICATION FOR MAKING ESTIMATED DISALLOWANCE. THE ORDER OF CIT(A) IS UPHELD. 6. ACCORDINGLY, TO MAINTAIN CONSISTENCY WE BY FOLLO WING THE ORDERS OF THIS TRIBUNAL, IN THE ASSESSEES OWN CAS E DECIDE THESE ISSUES IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. 7. THE APPEAL OF THE REVENUE IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 30.11.2010 SD SD (J.SUDHAKAR REDDY) (VIJAY P AL RAO) ACCOUNTANT MEMBER JUDICIAL MEMB ER MUMBAI, DATED 30 TH NOV 2010 SRL:241110 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT CONCERNED 4. CIT(A) CONCERNED 5. DR CONCERNED BENCH BY ORDER TRUE COPY ASSTT. REGISTRAR, ITAT, MUMBAI