Shri Ramesh Kumar Pabbi, New Delhi V. ACIT, New Delhi

ITA 5594/DEL/2014

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 4795 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 9 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-08-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2010-2011
• Appeal Filed On: 15-10-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S R SENAPATI
• Assessee Lawyers: GAUTAM JAIN SH LALIT MOHAN

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F, NEW DELHI BEFORE SH. BHAVNESH SAINI, JUDICIAL MEMBER AND SH. L. P. SAHU, ACCOUNTANT MEMBER ITA NO.5594/DEL/2014 ASSESSMENT YEAR: 2010-11 RAMESH KUMAR PABBI PROP. OF M/S. S. L. ENTERPRISES A-41, PHASE-II, MAYAPURI INDUSTRIAL AREA, NEW DELHI PAN AANPP5995Q VS ACIT CIRCLE -38 (1) NEW DELHI (APPELLANT) (RESPONDENT) APPELLANT BY SH. GAUTAM JAIN, ADVOCATE SH. LALIT MOHAN, CA RESPONDENT BY SH. S. R. SENAPATI, SR DR DATE OF HEARING: 20 /0 7 /2018 DATE OF PRONOUNCEMENT: 01 / 0 8 /2018 ORDER PER BHAVNESH SAINI, JM: THIS APPEAL BY THE ASSESSEE HAS BEEN DIRECTED AGAIN ST THE ORDER OF LD. CIT(APPEALS)-XXVIII, NEW DELHI DATED 12.09.2014 FOR A. Y. 2010-11. ITA NO.5594 /DEL/2014 2 2. WE HAVE HEARD THE LD. REPRESENTATIVES OF BOTH TH E PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. 3. ON GROUND NO.1, THE ASSESSEE CHALLENGED THE AD-H OC DISALLOWANCE OF RS.1,50,000/- OUT OF LABOUR AND CONTRACT STAFF EXPE NSES. 4. THE ASSESSING OFFICER NOTED THAT ASSESSEE HAS CL AIMED LABOUR CHARGES AT RS.41,41,417/- WHICH ARE PAID TO WORKERS AND LAB OURERS. THE ASSESSEE WAS ASKED TO FURNISH THE DETAILS OF WORK AND LABOUR EMPLOYED FOR THE PROJECT UNDER TAKEN ALONGWITH SITES. THE ASSESSEE F ILED THE DETAILS IN RESPECT OF SUB CONTRACTOR / WAGES EXPENSES FOR FEW SITES FO R VERIFICATIONS. THE ASSESSING OFFICER NOTED THAT THESE WAGES MUSTER SHO WS THAT ALL THESE VOUCHERS ARE SELF GENERATED AND PAYMENTS ARE MADE I N CASH. THE VOUCHERS ALSO HAVE DISCREPANCIES LIKE NON AVAILABILITY OF NA MES, ADDRESS, SIGNATURE AND NATURE OF WORK ETC. THE EXPENSES WERE, THEREFO RE, NOT VERIFIABLE. THE ASSESSING OFFICER ACCORDINGLY MADE DISALLOWANCE OF RS.1,50,000/- TO COVER UP THE POSSIBILITY OF LEAKAGES OF THE REVENUE. THE LD. CIT (A) CONFIRMED THE ADDITION. 5. AFTER CONSIDERING THE RIVAL SUBMISSIONS, WE ARE OF THE VIEW THAT THE ADDITION IS WHOLLY UNJUSTIFIED. THE ASSESSING OFFIC ER NOTED THAT THE TURNOVER, GP AND NP IS BETTER IN ASSESSMENT YEAR UN DER APPEAL AS COMPARED TO PRECEDING YEARS, THEREFORE, FINANCIAL R ESULTS WERE ACCEPTED BY THE ASSESSING OFFICER. THUS, THERE WERE NO REASONS FOR THE ASSESSEE TO INFLATE THE EXPENSES FURTHER. THUS, THERE IS NO POS SIBILITY OF LEAKAGE OF REVENUE AS NOTED BY ASSESSING OFFICER. NO SUCH DISA LLOWANCE HAVE BEEN MADE IN EARLIER AND SUBSEQUENT ASSESSMENT YEARS. RU LE OF CONSISTENCY SHOULD BE FOLLOWED BY AUTHORITIES BELOW. THE ASSESS ING OFFICER HAS NOT GIVEN ANY SPECIFIC DETAILS AND THE AMOUNT FOR WHICH THERE WERE NO NAMES AND ADDRESS OR WORK ASSIGNED HAVE BEEN MENTIONED IN THE VOUCHERS. IN THE ABSENCE OF ANY DETAILS IT APPEARS TO BE AD-HOC ADDI TION. FURTHER NATURE OF ITA NO.5594 /DEL/2014 3 BUSINESS OF THE ASSESSEE I.E. ELECTRIC CONTRACTOR S HOWS THAT ASSESSEE HAS EMPLOYER LABOUR FROM UNORGANISED SECTOR AND GENERAL LY CASH PAYMENTS ARE MADE TO THE LABOUR FOR COMPLETION OF THE WORK, THER EFORE, REASONS GIVEN BY THE ASSESSING OFFICER ARE NOT SATISFACTORY TO MAKE AD-HOC DISALLOWANCE. WE ACCORDINGLY SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND DELETE THE ADDITION. THIS GROUND IS ALLOWED. 6. ON GROUND NO.2, THE ASSESSEE CHALLENGED THE ADDI TION OF RS. 43,94,594/- ON ACCOUNT OF COMMISSION EXPENSES AS E NHANCE BY THE LD. CIT (APPEALS). IT MAY BE NOTED HERE THAT THE ASSESSING OFFICER WHILE COMPLETING THE ASSESSMENT MADE DISALLOWANCE OF EXPENSES OF RS. 1,50,000/- OUT OF LABOUR EXPENSES WHICH HAVE BEEN DELETED BY US ABOVE . THE ASSESSING OFFICER FURTHER MADE ADDITION OF RS.22,944/- UNDER THE HEAD INCOME FROM HOUSE PROPERTY. NO OTHER ADDITION HAS BEEN MADE BY THE ASSESSING OFFICER. THE ASSESSING OFFICER ACCEPTED FINAL RESULTS OF THE ASSESSEE BECAUSE THE GP AND NP WERE BETTER AS COMPARED TO THE EARLIER YEARS . 7. THE LD. CIT (APPEALS) AT THE APPELLATE STAGE ASK ED THE ASSESSEE TO FILE DETAILS OF COMMISSION EXPENSES. THE ASSESSEE FILED COMPLETE DETAILS OF THE COMMISSION EXPENSES WHICH ARE NOTED FOR THE APPELLA TE ORDER. THE LD. CIT (A) NOTED THAT THE PERUSAL OF THE COMMISSION ACCOUN T SHOWED THAT THE PURPOSE FOR WHICH COMMISSION EXPENSES HAS BEEN PAID AND THE GENUINENESS OF THE COMMISSION PAYMENT WAS NOT APPAR ENT SPECIALLY WHEN THE ASSESSEE IS A CONTRACTOR. THE LD. CIT (APPEALS ) ASKED FOR THE COPY OF THE BILLS OF THE COMMISSION PAYMENT, COPY OF THE ACCOUN T OF THE PARTIES TO WHOM COMMISSION HAVE BEEN PAID, THE NATURE OF WORK PERFO RMED BY EACH PARTY, EVIDENCE OF PAYMENT IN BANK ACCOUNT AND DETAILS OF CREDITORS FOR EXPENSES. THE LD. CIT(APPEALS) NOTED THAT ASSESSEE HAD NOT FI LED THE REQUISITE DETAILS, THEREFORE, ENHANCEMENT NOTICE WAS GIVEN TO ASSESSEE AS TO WHY IN THE ABSENCE OF DETAILS OF THE COMMISSION EXPENSES, THE ENTIRE AMOUNT SHOULD NOT BE ENHANCED IN THE APPELLATE ORDER. THE LD. CI T (A) IN THE ABSENCE OF ITA NO.5594 /DEL/2014 4 DETAILS OF COMMISSION EXPENSES ENHANCE THE ADDITION BY RS.43,94,545/-. THE APPEAL WAS ACCORDINGLY DISMISSED BY MAKING THE ABOVE ENHANCEMENT. 8. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ENHANCEMENT OF INCOME BY LD. CIT (APPEALS) IS ILLEGAL AND INVALID AND BEYOND THE POWERS OF THE CIT (APPEALS). THE ASSESSING OFFICER HAS NOT M ADE ANY ADDITION ON ACCOUNT OF COMMISSION PAYMENT. THE LD. CIT (APPEAL S) CANNOT MAKE ENHANCEMENT ON THE ISSUE WHICH DOES NOT ARISE OUT O F THE ORDER OF THE ASSESSMENT. ACCORDING TO SECTION 251 (2) THE LD. CI T (APPEALS) CANNOT ENHANCE THE ASSESSMENT ON THE MATTER WHICH IS NOT A RISING OUT OF THE ASSESSMENT PROCEEDINGS. HE HAS SUBMITTED THAT ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY JUDGMENT OF HONBLE BOMBAY HIGH COURT IN CASE OF SHAPOOR JI PALLONJI MISTRY VS. CIT 34 ITR 342 AND J UDGMENT OF FULL BENCH OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. SAR DARI LAL AND CO. REPORTED IN 251 ITR 864. HE HAS ALSO SUBMITTED THA T SIMILAR ISSUE HAVE BEEN CONSIDERED AND DECIDED BY ITAT DELHI BENCH IN THE CASE BIKRAM SINGH VS. DCIT REPORTED IN 82 TAXMANN.COM 230 IN WHICH AB OVE JUDGMENTS HAVE BEEN CONSIDERED AND THE TRIBUNAL IN PARA 11 HELD AS UNDER :- WE HAVE PERUSED ALL THE RECORDS AND HEARD BOTH TH E COUNSELS, IT IS PERTINENT TO KNOW THAT ASSESSING OFFICER HAS NOT DE ALT THE REPLY AND THE ENCLOSURES/ DOCUMENTS GIVEN ON THE DATE OF ASSESSME NT ORDER I.E. 19/11/2011, THE SAME WAS NOT TESTIFIED BEFORE THE C IT(A). THE CIT(A) SHOULD HAVE TAKEN COGNIZANCE OF ALL THOSE RECORDS A ND THE LETTERS. THIS SHOWS THAT THE CIT (A) HAS TOTALLY IGNORED THIS LET TER ALONG WITH THE ENCLOSURES/ DOCUMENTS AND PASSED THE ORDER ACCORDIN GLY WHICH IS NOT TENABLE UNDER THE LAW. THE APPROPRIATE OPPORTUNITY WAS NOT GIVEN TO THE ASSESSEE. THE A. O. HAS PROCEEDED TO COMPUTE INCOME OF THE ASSESSEE ON THE BASIS OF THE INCOME AS PER INTIMATION U/S 143 (1) O F THE ACT; WHEREAS THE A. O. WAS REQUIRED TO COMPUTE THE INCOME OF THE ASSESS EE ON THE BASIS OF INCOME RETURNED. THIS WAS A GROUND RAISED BEFORE TH E CIT (A) AND IS A PART OF GROUND OF APPEALS IN THE PRESENT APPEAL. IT BEIN G WHOLLY LEGAL GROUND OF THE APPEAL DESERVES TO BE ADJUDICATED. THE ASSESSI NG OFFICER HAS ACTED ITA NO.5594 /DEL/2014 5 BEYOND THE JURISDICTION BY COMPUTING INCOME OF THE ASSESSEE ON THE BASIS OF INCOME OF THE ASSESSEE AS PER SECTION 143 (3) WHERE AS THE INTIMATION WAS U/S 143 (1). THE CIT (A) ACTED BEYOND ITS POWER BY DIRECTING THE ASSESSING OFFICER TO TAX THE CAPITAL GAINS IN RESPECT OF SALE OF LAND AT GURGAON, THOUGH, THERE WAS NO ADDITION MADE BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER TO THAT RESPECT. CAPITAL GAIN IS AN INDEPEND ENT AND DIFFERENT SOURCE OF INCOME AND WAS NOT THE SUBJECT MATTER OF APPEAL BEF ORE HIM NOR WAS THE ISSUE CONSIDERED BY THE ASSESSING OFFICER BY FRAMIN G AN ASSESSMENT ORDER. INSTEAD, THE ASSESSING OFFICER TERMED THE SAME AS C OMMISSION ON THE SALE OF LAND. THE LD. AR HAS RELIED ON THE VARIOUS CASE LA WS MORE PRECIOUSLY THAT OF SHAPOORJI PALLONJI MISTRY V. CIT [1958] 34 ITR 342 (BOM) (CONFIRMED BY THE APEX COURT IN CIT V. SHAPOORJI PALLONJI MISTRY [196 2] 44 ITR 891 (HON'BLE SUPREME COURT) WHEREIN THE HONBLE BOMBAY HIGH COUR T WHILE DEALING WITH THE POWERS OF THE CIT(A) HELD THAT CIT (A) WAS NOT EMPOWER TO ENHANCE AN INCOME ON AN ISSUE WHICH WAS NOT THE SUBJECT MATTER OF THE ASSESSMENT. THE RATIO LAID DOWN IN THE JUDGMENT OF FULL BENCH O F DELHI HIGH COURT IN THE CASE OF SARDARI LAL & CO. (SUPRA) IS ALSO RELEVANT IN ASSESSEES CASE THAT THE CIT(A) CANNOT TOUCH UPON AN ISSUE WHICH DOES NOT AR ISE FROM THE ORDER OF THE ASSESSMENT AND WAS OUTSIDE THE SCOPE OF THE ORDER O F THE ASSESSMENT. THE ORDER OF THE CIT (A) DOES NOT SUSTAIN. 9. THE LD. COUNSEL FOR THE ASSESSEE FURTHER SUBMITT ED THAT THE ASSESSEE FILED DETAILS OF COMMISSION PAID ON WHICH TDS WAS A LSO DEDUCTED AND TDS CERTIFICATE HAVE BEEN ISSUED. THEREFORE, THE ADDITI ON IS UNJUSTIFIED. 10. ON THE OTHER HAND DR HEAVILY RELIED ON THE ORDE RS OF THE AUTHORITIES BELOW. 11. AFTER CONSIDERING THE RIVAL SUBMISSIONS, WE ARE OF THE VIEW THAT ADDITION MADE BY ENHANCEMENT OF COMMISSION EXPENSES IS WHOLLY UNJUSTIFIED. IN THIS CASE THE ASSESSING OFFICER DI D NOT MADE DISALLOWANCE OUT OF COMMISSION EXPENSES. THE LD. CIT (APPEALS) H AS TAKEN UP THE ISSUE OF COMMISSION EXPENSES SUO-MOTO IN THE APPELLATE PR OCEEDINGS, THEREFORE, THE ISSUE OF COMMISSION DID NOT ARISES OUT OF THE A SSESSMENT PROCEEDINGS. ITA NO.5594 /DEL/2014 6 IT IS WELL SETTLED LAW THAT LD. CIT (A) WAS NOT EMP OWERED TO ENHANCE AN INCOME WHICH IS NOT MATTER OF ASSESSMENT. THE ISSUE IS COVERED BY AFORESAID JUDGMENTS RELIED UPON BY LD. COUNSEL FOR THE ASSESSEE. IT IS, THEREFORE, CLEAR THAT LD. CIT(A) CANNOT TOUCH UPON AN ISSUE WHICH DOES NOT ARISE FROM THE ORDER OF THE ASSESSMENT AND WAS OUTS IDE THE SCOPE OF THE ORDER OF THE ASSESSMENT. THUS, THE ORDER OF THE CI T(A) CANNOT BE SUSTAINED IN LAW. THIS ALONE IS SUFFICIENT TO DELETE THE ENT IRE ADDITION. FURTHER WE MAY NOTE THAT IN A. Y. 2011-12, ITAT DELHI BENCH IN THE CASE OF SAME ASSESSEE IN ITA NO.6890/14 HAS DELETED THE SIMILAR ADDITION VIDE ORDER OF THE EVEN DATE. THERE IS NO BASIS TO MAKE ADDITION. 12. CONSIDERING THE ABOVE DISCUSSIONS, WE SET ASIDE THE ORDER OF THE LD. CIT (A) AND DELETE THE ADDITION OF RS.43,94,545/-. THIS GROUND IS ALLOWED. 13. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED . PRONOUNCED IN THE OPEN COURT ON 01.08.2018. SD/- SD/- (L. P. SAHU) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER *NEHA* DATE:- 01 .08.2018 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI ITA NO.5594 /DEL/2014 7 DATE OF DICTATION 23.07.2018 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 23.07.2018 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.PS/PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/ PS 01/08/2018 DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH FILE GOES TO THE HEAD CLERK. THE DATE ON WHICH FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER