Radharaman Hajarilal Agrawal, Gondia V. The Dy.commissioner of Income Tax,Circle-8, Nagpur

ITA 53/NAG/2010

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 84665 (ITAT-NAGPUR)
• Duration Of Justice: 4 year(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-09-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2006-2007
• Appeal Filed On: 20-08-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAMESH DAWANDE
• Assessee Lawyers: SUSHIL AGRAWAL

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL NAGPUR BENCH, NAGPUR BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI VIVEK VARMA, JUDICIAL MEMBER .ITA NO.53/NAG/2010 ( AY: 2006 - 2007 ) RADHARAMAN HAJARILAL AGRAWAL, CIVIL CONTRACTOR, CIVIL LINES, MAMA CHOWK, GONDIA 441601. / VS. THE DY. COMMISSIONER OF INCOME TAX, CIRCLE 8, NAGPUR. ./ PAN : ABQPA1326C ( / APPELLANT) .. ( / RESPONDENT ) .ITA NO.55/NAG/2010 ( AY: 2006 - 2007 ) SUNIL GA N GARAM YEOLE, CIVIL CONTRACTOR, NEAR WALIA HOUSE, GANESH NAGAR, GONDIA 441601. / VS. THE DY. COMMISSIONER OF INCOME TAX, CIRCLE 8, NAGPUR. ./ PAN : AADPY 7128 A ( / APPELLANT) .. ( / RESPONDENT ) / ASSESSEE BY : SHRI SUSHIL AGRAWAL / REVENUE BY : SHRI RAMESH DAWANDE, SR. DR / DATE OF HEARING : 02.09.2014 / DATE OF PRONOUNCEMENT : 05 .09.2014 / O R D E R PER D. KARUNAKARA RAO, AM: THERE ARE TWO APPEALS UNDER CONSIDERATION. BOTH THE APPEALS ARE FILED BY TWO DIFFERENT ASSESSEES AGAINST THE SEPARATE ORDERS OF THE CIT (A) - II, NAGPUR COMMONLY DATED 29.1.2010. SINCE, THE ISSUES INVOLVED IN BOTH THE APPEALS ARE IDENTICAL, THEREFORE, FOR THE SAKE OF CONVENIENCE, THEY ARE CLUBBED, HEARD COMBINEDLY AND DISPOSED OF IN THIS COMMON ORDER. APPEAL WISE AND GROUND WISE ADJUDICATION IS GIVEN IN THE FOLLOWING PARAGRAPHS OF THIS ORDER. 2. SINCE, THE GROUNDS RAISED IN BOTH THE APPEALS ARE EXACTLY IDENTICAL AND THE ONLY DIFFERENCE IS IN FIGURES, THEREFORE, WE SHALL TAKE UP THE GROUNDS RAISED WITH REGARD TO APPEAL ITA NO. 53/NAG/2010 , WHICH IS FILED BY THE ASSESSEE ON 2 14.5.2010 AGAINST THE SAID ORDER OF THE CIT (A) - II, NAGPUR (SUPRA). IN THIS APPEAL, ASSESSEE RAISED THE FOLLOWING GROUNDS WHICH READ AS UNDER: 1. UNDER THE FACTS AND IN THE CIRCUMST ANCES OF THE CASE, THE AO WAS HIGHLY UNJUSTIFIED IN MAKING THE DISALLOWANCE @ 20% OF TOTAL LABOUR PAYMENT AND WATERING CHARGES , THE CIT (A) WAS ALSO UNJUSTIFIED IN RESTRICTING THE SAID DISALLOWANCE @ 10% WHICH AMOUNT TO AN ADDITION OF RS. 23,00,126 + 4,58,755/ - = 27,58,881/ - TO THE TOTAL INCOME OF THE APPELLANT, ALLEGING THE LAKE OF COMPLETE GENUINENESS FOR NO VALID REASONS AND WITHOUT ANY BASIS AND WITHOUT POINTING OUT ANY SPECIFIC DEFECTS AND ON ESTIMAT E BASIS, WHEREAS THE APPELLANT A) HAS MAINTAINED CLOSED BOOKS OF ACCOUNTS IN REGULAR COURSE OF THE BUSINESS AND STATUTORILY AUDITED BY CERTIFIED AUDITOR U/S 44AB OF THE INCOME TAX ACT, WHICH IS ACCEPTED BY THE AO IN TOTO. B) HAS PRODUCED BEFORE THE AO THE SUPP ORTING VOUCHERS AND BILLS PROPERLY MAINTAINED IN WHICH THE AO HAS NOT FOUND AND NOT POINTED OUT ANY DEFECTS . C) HAS FURNISHED THE COMPARATIVE CHART OF NET PROFIT RATIO FOR THREE YEARS FROM WHICH IT MAY BE SEEN THAT THE RESULTS SHOWN THIS YEAR ARE MORE OR LESS THE SAME. 2. THE AO AS WELL AS THE CIT (A) WAS GROSSLY UNJUSTIFIED IN MAKING THE DISALLOWANCE @ 10% OF THE TOTAL ABOVE MENTIONED EXPENDITURE WITHOUT REFERENCE TO ANY MATERIAL EVIDENCE AND PURELY SUSPICION AND GUESSING AND WITHOUT QUOTING A SINGLE INSTANC E TO JUSTIFY THEIR ACTION FOR DISALLOWANCE AND THEREFORE WHOLE OF THE DISALLOWANCE OF RS. 27,58,881/ - DESERVES TO BE DELETED. 3. UNDER THE FACTS AND THE CIRCUMSTANCES OF THE CASE, THE LD CIT (A) HAS ERRED IN NOT TAKING INTO COGNIZANCE THE STATEMENT ON OATH GIVEN BY THE APPELLANT. 4. UNDER THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD CIT (A) WAS NOT JUSTIFIED TO OBSERVE THAT, THE EVIDENCE IN SUPPORT OF LABOUR EXPENDITURE WAS INADEQUATE . 5. UNDER THE FACTS AND THE CIRCUMSTANCES OF THE CASE, LD CIT ( A) NOT JUSTIFIED IN OBSERVING THAT THE L ABOUR EXPENSES CLAIMED BY THE APPELLANT WAS EXCESSIVE WITHOUT CITING ANY COMPARABLE CASE . 6. IN ANY CASE AND WITHOUT PREJUDICE TO THE FOREGOING GROUNDS, THE DISALLOWANCES MADE BY THE AO AND CIT (A) ARE VERY MUCH HIGH AND EXCESSIVE AND THEREFORE, THIS COURT BE PLEASED TO DELETE IT. 3. AT THE VERY OUTSET, SHRI SUSHIL AGRAWAL , LD COUNSEL FOR THE ASSESSEE BROUGHT OUR ATTENTION TO THE FACTS OF BOTH THE CASES AND MENTIONED THAT THE ASSESSEE IN THE PRESENT APPEAL IS ENGAGED IN THE BUSINESS OF CIVIL CONTRACTOR AND DEBITED CERTAIN EXPENSES ON ACCOUNT OF LABOUR CHARGES AND WATERIN G CHARGES . THE DETAILS OF LABOUR CHARGES AND WATERING CHARGES IN THE CASE OF RADHARAMAN HAJARILAL AGRAWAL ARE PROVIDED IN THE TABULAR FORM WHICH IS AS UNDER: LABOUR CHARGES: FY ENDED ON ASST. YEAR TURNOVER (RS. IN LAKHS) LABOUR CHARGES (IN LAKHS) AS PER RETURN DISALLOWANCE MADE BY THE AO (IN %) DISALLOWANCE RETAINED BY THE CIT (A) 31.3.2006 2006 - 07 414.73 230.01 20.0% 10.0% 31.3.2007 2007 - 08 711.95 345.78 2.5% -- 31.3.2008 2008 - 09 115.72 33.95 NIL NIL 3 WATERING CHARGES: FY ENDED ON ASST. YEAR TURNOVER (RS. IN LAKHS) WATERING CHARGES (RS IN LAKHS) AS PER THE RETURN DISALLOWANCE MADE BY THE AO (IN %) DISALLOWANCE RETAINED BY THE CIT (A) 31.3.2006 2006 - 07 414.73 45.88 20% 10.0% 31.3.2007 2007 - 08 711.95 35.02 NIL NIL 31.3.2008 2008 - 09 115.72 1.36 NIL NIL 4. FROM THE ABOVE, IT IS EVIDENT THAT THE AO DISALLOWED 20% OF THE SAID EXPENSES FOR THE YEAR UNDER CONSIDERATION AND DISALLOWED 2.5% FOR THE LATER ASSESSMENT YEAR 2007 - 2008. NO DISALLOWANCE IS MADE IN THE SUBSEQUENT ASSESSMENT YEAR 2008 - 2009. ON ACCOUNT OF WATERING CHARGES, NO DISALLOWANCE IS MADE FOR THE ASSESSMENT YEAR 2007 - 2008 AND 2008 - 2009. SIMILAR APPROACH IS ADOPTED BY THE AO AND THE DISALLOWANCE , @ 20% OF THE CLAIM ON ACCOUNT OF LABOUR CHARGES AND WATERING CHARGES , WAS MADE IN THE YEAR UNDER CONSIDERATION IN THE CASE OF SHRI SUNIL GANGARAM YEOLE . NO DISALLOWANCE WAS MADE ON THESE ACCOUNTS IN THE ASSESSMENT YEAR 2007 - 2008. UNDER THE ABOVE FACTUAL MATRIX OF THE FACTS, IT IS THE SUBMISSION OF THE ASSESSEE THAT THE DISALLOWANCE MAY BE RESTRICTED TO 2.5% AS AGAINST 20% ADOPTED BY THE AO AND 10% RESTRICTED BY THE CIT (A). FOR THIS PROPOSITION, LD COUNSEL FOR THE ASSESSEE RELIED ON THE DECISION OF THE A O IN THE SUBSEQUENT YEAR. 5. ON THE OTHER HAND, SHRI RAMESH DAWANDE , LD DR RELIED ON THE ORDERS OF THE REVENUE AUTHORITIES. 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS THE RELEVANT MATERIAL PLACED BEFORE U S. ON HEARING BOTH THE PARTIES, WE FIND THAT THE PROPOSITIONS MADE BY THE LD COUNSEL FOR THE ASSESSEE ARE FAIR AND REASONABLE. IT IS SIGNIFICANT TO MENTION HERE THAT THE ASSESSING OFFICER HAS NOT MADE ANY DISALLOWANCE IN THE SUBSEQUENT ASSESSMENT YEARS 2 007 - 2008 AND 2008 - 2009 QUA THE WATERING CHARGES. FURTHER, THE REVENUE ITSELF RESTRICTED THE DISALLOWANCE TO 2.5% WHICH HAS ATTAINED THE FINALITY FOR THE AY 2007 - 2008. CONSIDERING THE SAME, WE ARE OF THE OPINION THAT THE PROPOSITION GIVEN BY THE LD COUNSE L FOR THE ASSESSEE SHOULD BE ACCEPTED IN PART AND ON CONSIDERING THE TURNOVER OF THE ASSSESSEES, THE AO IS DIRECTED TO RESTRICT THE DISAL LOWANCE ON ACCOUNT OF 4 LABOUR CHARGES AS WELL AS THE WATERING CHARGES TO ROUND FIGURE OF 3%. ACCORDINGLY, GROUNDS RAISE D BY THE ASSESSEES IN BOTH THE APPEALS ARE PARTLY ALLOWED . 7. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEES ARE PARTLY ALLOWED . ORDER PRON OUNCED IN THE OPEN COURT ON 5 TH SEPTEMBER, 2014. SD/ - SD/ - (VIVEK VARMA) (D. KARUNAKARA RAO ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER NAGPUR ; 5 /09/2014 .../ OKK , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. () / THE CIT(A) - 4. / CIT 5. , , NAGPUR / DR, ITAT, NAGPUR. 6. / GUARD FILE . //TRUE COPY// / BY ORDER, (SR. PRIVATE SECRETARY) ITAT, NAGPUR