ACIT, Circle- 18(2), New Delhi V. Northern Power Electors Ltd., New Delhi

ITA 5360/DEL/2017

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 6455 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-09-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2013-2014
• Appeal Filed On: 18-08-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GAURAV PUNDIR
• Keywords: Corroborative evidences
• Section: 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E, NEW DELHI BEFORE SH. K. N. CHARY, JUDICIAL MEMBER DR. B. R. R. KUMAR, ACCOUNTANT MEMBER (THROUGH VIDEO CONFERENCING) ITA NO. 5360/DEL/2017 : ASSTT. YEAR : 2013-14 ACIT, CIRCLE-18(2), NEW DELHI VS NORTHERN POWER ELECTORS LTD., 904, NEW DELHI HOUSE, BARAKHAMBA ROAD, CONNAUGHT PLACE, NEW DELHI (APPELLANT) (RESPONDENT) PAN NO. A AACN0227F ASSESSEE BY : NONE REVENUE BY : SH. GAURAV PUNDIR, SR. DR DATE OF HEAR ING: 08 . 0 9 .20 2 1 DATE OF PRONOUNCEMENT: 08 .0 9 .20 2 1 ORDER PER DR. B. R. R. KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEAL HAS BEEN FILED BY THE REVENUE A GAINST THE ORDER OF LD. CIT (A)-6, DELHI DATED 23.06.2017. 2. FOLLOWING GROUNDS HAVE BEEN RAISED BY THE REVENU E: 1. WHETHER ON FACTS AND IN CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) IS LEGALLY JUSTIFIED IN DELETING THE DISALLOWANCE OF RS. 1,81,50,000/- U/S 37 (1) OF THE INCOME TAX ACT, 1961 (THE ACT) ON ACCOUNT OF 'JOB CHARGES' BY IGNORING THE FACT THAT THE ASSESSEE FAI LED TO DISCHARGE ITS ONUS U/S 37 (1) OF THE ACT TO PROV E THAT THE EXPENSES WERE INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF ITS BUSINESS? 2. WHETHER ON FACTS AND IN CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) IS LEGALLY JUSTIFIED IN DELETING THE ITA NO.5360/DEL/2017 NORTHERN POWER ELECTORS LTD. 2 DISALLOWANCE OF RS. 1,81,50,000/- U/S 37 (1) OF THE ACT ON ACCOUNT OF JOB CHARGES' WITHOUT RECORDING MATERIAL EVIDENCE OF GIVING SUCH RELIEF? 3. WHETHER ON FACTS AND IN CIRCUMSTANCES OF THE CAS E, THE LD. CIT (A) IS LEGALLY JUSTIFIED IN DELETING TH E DISALLOWANCE OF RS. 1,81,50,000/- U/S 37 (1) OF THE ACT ON ACCOUNT OF 'JOB CHARGES' BY IGNORING THE FAC T THAT THE ASSESSEE HAD FAILED TO DISCHARGE ITS ONUS U/S 37 (1) OF THE ACT EVEN AFTER PROVIDING SUFFICIENT OPPORTUNITIES TO THE ASSESSEE ? 3. NONE ATTENDED ON BEHALF OF THE ASSESSEE. SINCE, IT IS BELIEVED THAT DISPENSATION OF JUSTICE WILL NOT BE D ELAYED WHEN THE SAME CAN BE INDULGED ON GOING THROUGH THE RECORD, WE HEREBY PROCEED WITH ADJUDICATION OF THE SINGLE ISSUE OF DISALLOWANCE OF EXPENSES. 4. FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSEE E-FILED RETURN OF INCOME ON 30.09.2013 DECLARING AN INCOME OF RS.91,42,604/-. THE ASSESSEE IS ENGAGED IN THE FIEL D OF SERVICE SECTOR, CONTRACTORS AND TRADING ETC. 5. AS PER THE PARA NO. 3.3 OF THE ASSESSMENT ORDER, WE FIND THAT THE DISALLOWANCE OF RS.1.81 CRORES HAS BEEN MA DE BY THE AO BEING THE 10% OF THE JOB WORK EXPENSES. THE AO HELD THAT 10% IS BEING DISALLOWED OWING TO THE ABSENCE OF SUP PORTING EVIDENCE IN RESPECT OF INCREASING JOB WORK CHARGES . FOR THE SAKE OF READY REFERENCE, THE ENTIRE PART OF THE ASS ESSMENT ORDER ON THE RELEVANT ISSUE IS REPRODUCED AS UNDER: 3. DISALLOWANCE OF JOB CHARGES: 3.1 IT WAS OBSERVED FROM THE PROFIT AND LOSS ACCOUN T FOR THE YEAR UNDER CONSIDERATION THAT WAGE/SALARY A ND ITA NO.5360/DEL/2017 NORTHERN POWER ELECTORS LTD. 3 JOB CHARGES WERE RS. 24.60 CRORES AS COMPARED TO LAST YEAR RS. 6.45 CRORES. ACCORDINGLY, VIDE QUESTIONNAIRE DATED 14.01.2016, THE ASSESSEE WAS ASKED TO FURNISH THE LEDGER ACCOUNT ALONGWITH SUPPORTING EVIDENCE IN RESPECT EXPENSES DEBITED TO PROFIT AND LOSS ACCOUNT AMOUNTING TO RS. 24.60 CROR ES ON ACCOUNT OF WAGE/SALARY AND JOB CHARGES AND ALSO TO JUSTIFY THE INCREASE IN EXPENSES AS COMPARED TO LAST YEAR. 3.2 IN RESPONSE, THE ASSESSEE FURNISHED THE REPLY ON 22.03.2016 WHEREBY ENCLOSED LEDGER ACCOUNT OF WAGES, SALARY AND JOB CHARGES. THE AR IN THE SAID REPLY STATED THAT THE TURNOVER OF THE COMPANY DURIN G THE FY 12-13 HAS BEEN INCREASED TO INR 6.74 CRORES AS AGAINST THE LAST F.Y 11-12 RS. 36.53 CRORES. TO EXECUTE MORE ORDERS DURING COMPANY HAS INCURRED HIGH LABOUR COST IN COMPARISON TO PREVIOUS FINANCIA L YEAR ... 3.3 DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE VIDE NOTE SHEET ENTRY DATED THE AR OF THE ASSESSEE WAS ASKED WHY INCREASE OF RS. 18.15 CRORES IN JOB WORK CHARGES, 10% OF EXPENSES MAY NOT BE DISALLOWED IN THE ABSENCE OF SUPPORTING EVIDENCE. I N RESPONSE TO SHOW CAUSE THE AR DID NOT FURNISH THE SUPPORTING EVIDENCE IN RESPECT OF INCREASE IN JOB W ORK CHARGES. THE ONUS IS ON THE ASSESSEE TO PROVE ITS CLAIM ALONG WITH SUPPORTING EVIDENCE, WHICH THE ASSESSEE HAS NOT BEEN ABLE TO DISCHARGE. IN VIEW OF ITA NO.5360/DEL/2017 NORTHERN POWER ELECTORS LTD. 4 THE ABOVE, IT IS HELD THAT THE JOB WORK CHARGES EXPENSES CLAIMED BY THE ASSESSEE ARE EXTREMELY EXCESSIVE AND THEREFORE, 10% OF SUCH CHARGES, WHICH COMES RS. 1,81,50,000/-, ARE DISALLOWED AND ADDED T O THE ASSESSEES TAXABLE INCOME. 6. BEFORE THE LD. CIT (A), IT WAS ARGUED THAT THE I NCREASE IN JOB WORK EXPENSES IS DIRECTLY PROPORTIONAL TO THE JOB WORK REVENUE. THE DETAILS ARE AS UNDER: PARTICULARS FY 12-13 (INR) FY 11-12 (INR) REVENUE FROM SALESTRADING 6,65,45,089.00 31,52,37,745.00 REVENUE FROM JOB WORK 54,08,49,296.00 5,01,35,856.00 TOTAL OF REVENUE 60,73,94,385.00 36,53,73,601.00 WAGES. SALARIES & JOB WORK (EXPENSE) 24,60,43,470.00 6,45,24,535.00 7. THE LD. CIT (A) HELD THAT SINCE THE BOOKS OF ACC OUNTS HAVE BEEN DULY AUDITED, AND SINCE THE AO FOUND NO DISCRE PANCY AS SUCH THERE IS NO SPECIFIC REASON FOR DISALLOWANCE O F EXPENSES. 8. BEFORE US, THE LD. DR VEHEMENTLY ARGUED THAT THE ONUS IS CASTED UPON THE ASSESSEE TO PRODUCE ALL THE SUPPORT ING EVIDENCES IN RESPECT OF JOB WORK CHARGES FAILING WHICH THE ASSESSEE HAS RIGHTLY DISALLOWED 10% OF THE EXPENSES . IT WAS ARGUED THAT THE ASSESSEE FAILED TO DISCHARGE HIS PR IMARY ONUS. 9. WE HAVE GONE THROUGH THE RECORD AND FIND THAT TH E TURNOVER OF THE COMPANY INCREASED FROM RS.6.74 CROR ES TO RS.36.53 CRORES AND SO AS THE EXPENSES INCREASED FR OM RS.6.45 CRORES TO 24.60 CRORES. HENCE, IT CAN BE SAID THAT THE EXPENSES HAVE BEEN INCREASED PROPORTIONATELY. FURTHER, THE L EDGER AND BOOKS OF ACCOUNTS HAVE BEEN EXAMINED BY THE ASSESSI NG OFFICER AND NO DISCREPANCY COULD BE BROUGHT OUT TO THE FORE . HAVING ITA NO.5360/DEL/2017 NORTHERN POWER ELECTORS LTD. 5 ACCEPTED THE BOOKS OF ACCOUNTS, DISALLOWING 10% OF THE EXPENSES IN GENERAL WITHOUT BRINGING ON RECORD AS T O WHAT AND WHICH OF THE EXPENSES WERE NOT ALLOWABLE. HENCE, WE DECLINE TO INTERFERE WITH THE ORDER OF THE LD. CIT (A). 10. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 08/09/2021. SD/- SD/- (K. N. CHARY) (DR. B. R. R. KUMAR) JUDICIAL MEMBER AC COUNTANT MEMBER DATED: 08/09/2021 *SUBODH KUMAR, SR. PS* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR