M/s. Shamjibhai G.Patel, Ahmedabad V. The Income tax Officer,Ward-9(1), Ahmedabad

ITA 590/AHD/2011

• Counselvise Citation: 59020514 RSA 2011
• Duration Of Justice: 4 year(s) 6 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-08-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 14-08-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 25-02-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DINESH SINGH
• Keywords: Sale consideration of property below Jantri Value
• Section: 40A(3); 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH BEFORE: S H RI G. D. AGRAWAL , VICE PRESIDENT AND SHR I S. S. GODARA , JUDICIAL MEMBER M/S. SHAMJIBHAI G. PATEL, 10A, SAURASHTRA PATEL COLONY, BAPUNAGAR, AHMEDBAD PAN: ABBPP5550C (APPELLANT) VS ITO, WARD 9(1) AHMEDABAD (RESPONDENT) ASSESSEE BY: S H RI TEJ SHAH , A.R. REVENUE BY: SHRI DINESH SINGH , SR. D.R. DATE OF HEARING : 14 - 08 - 2 015 DATE OF PRONOUNCEMENT : 26 - 08 - 2 015 / ORDER P ER : S. S. GODARA , JUDICIAL MEMBER : - THIS ASSESSEE S APPEAL FOR A.Y. 2007 - 08, AR ISES FROM ORDER OF THE CIT(A) - XV, AHMEDABAD DATED 16 - 12 - 2010 IN APPEAL NO. CIT(A) - XV / ITO/9(1) / 340/ 09 - 10, IN PROCEEDINGS UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . I T A NO . 590 / A HD/20 11 A SSESSMENT YEAR 200 7 - 08 I.T.A NO. 590 /AHD/20 11 A.Y. 2007 - 08 PAGE NO M/S. SHAMJIBHAI G. PATEL VS. ITO 2 2. THE A SSESSEE S SOLE SUBSTANTIVE GROUND CHALLENGES DISALLOWANCE OF RS. 29,37,728/ - AS OUTSTANDING LABOUR CHARGES TO VARIOUS CONTRACTORS. HE CARRIES OUT ELECTRICAL CONTRACT WORKS. HIS TOTAL CONTRACT RECEIPTS IN RELEVANT PREVIOUS YEAR ARE OF RS. 1,29,53,407/ - RESULTING IN GROSS AND NET PR OFIT OF RS. 16,58,728/ - AND RS. 6,83,015/ - , @ 12.80% AND 5.27%; RESPECTIVELY. HE CLAIMED LABOUR CHARGES OF RS. 73,95,983/ - COMPRISING OF UNPAID OUTSTANDING SEEMS OF RS. 33,45,640/ - RELATABLE TO FEBRUARY & MARCH, 2007. AS PER ASSESSING OFFICER , THIS WOULD ENHANCE THE CORRESPONDING EXPENSE S OF THE SAID MONTHS TO BE MORE THAN 50%. THE ASSESSEE SUBMITTE D A LIST OF THE PAYEES COMPRISING OF 204 INSTANCES. EACH - ONE INVOLVED SUM OF LESS THAN RS. 20 ,000/ - . IT TRANSPIRES THAT THESE 204 NAMES ARE REPETITIVE IN NAT URE E.G. PAYEE NO. 1 JAGDISH SOLANKI FINDS MENTION AT SL. 1,70, 159. ONE SANJAY BAROT FIGURE S AT SL. NO. 19,119,175 TO NAME A FEW. THE ASSESSING OFFICER SOUGHT FOR DETAILS OF THE WORK DONE WITH NATURE OF SERVICES ALONG WITH REASON OF NON - PAYMENT OF TH ESE LABOUR CHARGES . T HE ASSESSE FI L E D HIS RESPONSE INTER ALIA PLEADI NG TO HAVE EXECUTED CONTRACTUAL ASSIGNMENT AT VARIOUS OUTSIDE STATIONS LIKE BHAVNAGAR, SURAT, BUJ, & SUR EN DRANAGAR AND EMPLOYED THIS LABOUR IN THE SAID ACTIVITIES. THE ASSESSING OFFICER OBSERVED IN ASSESSMENT ORDER DATED 22/12/2009 THAT NO EVIDENCE WAS FORTHCOMING PROVING THIS EXPENDITURE TO HAVE WHOLLY AND EXCLUSIVELY INCURRED FOR THE PURPOSE OF THE BUSINESS . HE CITED LACK OF DETAILS QUA THE PAYEES SERVICES RENDERED ALONG WITH MUSTER R OLLS AND WAGES ETC. HE OPINED THAT THESE LABOUR CHARGES WERE IN THE NATURE OF ACCOMMODATION ENTRY FOR REDUCING TAXABLE INCOME. THE REASONS OF I.T.A NO. 590 /AHD/20 11 A.Y. 2007 - 08 PAGE NO M/S. SHAMJIBHAI G. PATEL VS. ITO 3 ALL PAYMENT OF LESS THAN RS. 20,000/ - WAS HELD TO NEGATE APPLICATION OF SEC. 40A(3) OF THE ACT. THE ASSESSING AUTHORITY WOULD INFER T HAT THESE PAYEES WERE POOR LABOURERS WHO COULD NOT HAVE MADE THEIR ENDS ME ET IN RESPECT OF T HE IMPUGNED OUTSTANDING WAGES. ALL THESE REASONS RESULTED IN THE IMPUGNED DISALLOWANCE /ADDITION OF UNPAID OUTSTANDING LABO U R CHARGES OF RS . 33,45,640/ - BEING MADE IN ASSESSEE S CASE. 4. THE CIT(A) HAS PARTLY AFFIRMED THE ASSESSING OFFICER S FINDINGS AS FOLLOWS: - ON 16.12.2010 A WRITTEN SUBMISSION WAS RECEIVED IN DAK IN WHICH COPIES OF CONFIRMATIONS WITH RESPECT TO SOME LABOURERS WERE FILED IN THIS OFFICE. XEROX COPIES OF CONFIRMATIONS WERE GIVEN OF PERSONS WHO FIGURED NOWHERE IN THE LIST OF THE LIABILITIES OUTSTANDING. OR THE LIST OF OUTSTANDING LIABILITY SHOWED LESSER AMOUNTS. ON PERUSAL OF THE COPIES OF CONFIRMATIONS THE AO IS DIRECTED TO DELETE THE FOLLOWING AMOUNTS AS PER REMARKS GIVEN IN THE AMOUNT WITH REMARKS COLUMN IN THE LIST BELOW SL. NO. NAME OF THE LABOUR AMOUNT WITH REMARKS 1 SANJAYBHAI PATEL RS. 49,977 IS DIRECTED TO BE DELETED 2 KORAT KIRAN NAGJIBHIA THIS NAME IS NOT THE R E IN THE LIST OF THE AO HENCE NOT CONSIDERED 3 KAMLESHBHAI THUMAR RS. 31,852/ - IS DIRECTED TO BE DELETED 4 SUBHASHBHAI J. PATEL THIS NAME IS NOT THERE IN THE LIST OF THE AO HENCE NOT CONSIDERED. 5 SANJAYBHAI ISHWARBHAI BAROT THIS NAME IS NOT THERE IN T HE LIST OF THE AO HENCE NOT CONSIDERED. 6 VIPULBHAI LIMBACHIYA THIS NAME IS NOT THERE IN THE I.T.A NO. 590 /AHD/20 11 A.Y. 2007 - 08 PAGE NO M/S. SHAMJIBHAI G. PATEL VS. ITO 4 LIST OF THE AO HENCE NOT CONSIDERED. 7 MA HENDRA PARMAR - RS. 48,628 IN THE LIST OF AO THE OUTSTANDING AMOUNT IS SHOWN AT SR.NO. 128 AT RS.12,963 AND AT SR. NO. 1 62 AT RS.16,445 ONLY. RS. 12,963 + RS.16,445 IS DIRECTED TO BE DELETED. 8 RAJESHBHAI RATHOD - RS. 49,065 IN THE LIST OF AO THE OUTSTANDING AMOUNT IS SHOWN AT SR.NO. 171 AT RS.15,789 ONLY. RS. 15,789 IS DIRECTED TO BE DELETED. 9 AMITBHAI KADIYA RS. 49,908 IS DIRECTED TO BE DELETED 10 KETAN ISHWARLAL KADIYA RS. 49,337 IS DIRECTED TO BE DELETED. 11 KARNLESH DALWADI - RS. 49,337 IN THE LIST OF THE AO HE HAS BEEN SHOWN OUTSTANDING FOR RS.19,560 AND RS.12,995 ONLY. RS. 19,560 + RS.12, 995 IS DIRECTED TO BE DELETED. 12 PARESHKUMAR JOSHI THIS NAME IS NOT THERE IN THE LIST OF THE AO HENCE NOT CONSIDERED. 13 RAMESEVAK SATYANARAYAN THIS NAME IS NOT THERE IN THE LIST OF THE AO HENCE NOT CONSIDERED 14 DAYABHAI SHRIMALI THIS NAME IS NOT THERE IN THE LIST OF THE AO HENCE NOT CONSIDERED 15 ARVINDBHAI DABHI RS. 49,759 IS DIRECTED TO BE DELETED 16 HASRNUKHBHAI GAJERA THIS NAME IS NOT THERE IN THE LIST OF THE AO HENCE NOT I.T.A NO. 590 /AHD/20 11 A.Y. 2007 - 08 PAGE NO M/S. SHAMJIBHAI G. PATEL VS. ITO 5 CONSIDERED 17 BRIJMOHAN SINGH RS. 48.3T2 IS DIRECTED TO BE DELET ED. 18 MAHESHBHAI CHAUHAN SHOWN OUTSTANDING IN THE LIST ONLY FOR RS.11,569 RS. 11,569 IS DIRECTED TO BE DELETED. 19 MANOJ PUJARI - RS.37,629 SHOWN OUTSTANDING IN THE LIST IN THE ASSESSMENT ORDER FOR RS.19,843 AT S.NO14 RS. 19,84 3 IS DIRECTED TO BE DELETED. 20 MOHAMMED RAFI SHAIKH THIS NAME IS NOT THERE IN' 1 THE LIST OF THE AO HENCE NOT CONSIDERED. 21 GHANSHYAMBHAI CHAUHAN - RS49,015 SHOWN OUTSTANDING IN THE LIST AT S. NO. 199 FOR RS.14,875 ONLY RS. 14,87 5 IS DIRECTED TO BE DE/ETED. 22 IMRAN KHAN PATHAN - RS.49, 743 SHOWN OUTSTANDING IN THE LIST AT S. NO. 194 FOR RS. 17, 723 ONLY. RS.17,723 IS DIRECTED TO BE DELETED. I R 23 SANJAYKUMAR ISHWARBHAI BAROT - RS.49, 737 THIS NAME IS NOT THE RE IN THE LIST OF THE AO HENCE NOT CONSIDERED. 7. AFTER GOING THROUGH RIVAL SUBMISSIONS THE AO OUT OF ADDITION MADE OF RS.33,45,640 IS DIRECTED TO DELETE RS.4,07,912 AS PER NARRATION IN THE COLUMN 'AMOUNT WITH REMARKS' GIVEN IN THE TABLE ABOVE BASED ON THE CONFIRMATIONS FURNISHED BY THE APPELLANT. I.T.A NO. 590 /AHD/20 11 A.Y. 2007 - 08 PAGE NO M/S. SHAMJIBHAI G. PATEL VS. ITO 6 HOWEVER THE BALANCE ADDITION OF RS.29,37,728 (RS.33,45,640 - R.S.4,07,912) IS UPHELD BECAUSE DESPITE OPPORTUNITIES GIVEN BY THE AO AND THIS OFFICE THE OBSERVATIONS OF THE AO WERE NOT CONTRADICTED BY THE APPELL ANT LIKE NO AGREEMENT ENTERED WITH SUB - CONTRACTORS W AS FURNISHED. DESPITE THE OPPORTUNITIES GIVEN LEDGER AC COUNTS OF THE PERSONS WERE NOT FU RNISHED NEITHER COMPLETE ADDRESSES NOR MUSTER ROLLS WERE PRODUCED NEITHER PROPER CONFIRMATIONS. AFTER ALL WITHOUT THE BASIC DETAILS LIKE NAME AND ADDRESS OF THE PERSON TO WHOM THE AMOUNT IS TO BE PAID AND IS SHOWN PAYABLE IN THE BALANCE SHEET HOW CAN THE APPELLANT BE EXPECTED TO MAKE THE PAYMENT. THE ONUS WAS UPON THE APPELLANT TO PROVE THE OUTSTANDING LIABILITY. BUT THIS WAS NOT DISCHARGED, THEREFORE THE ADDITION IS UPHELD OF RS. 29,37,728. 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE CASE FILE. THE ASSESSEE FILES A CHART SHOWING IDENTICAL UNPAID LABOUR CHARGES OF RS. 25,04,780/ - , RS. 24,44,736/ - , RS. 8, 95,6 20/ - , RS. 13,61,236/ - AND RS . 79,034/ - PAID/ACCEPTED IN ASSESSMENT YEARS 2008 - 09 TO 2012 - 13 ; RESPECTIVELY. ITS PAPER BOOK PAGE 16 CONTAINS CONFIRMATION OF ONE OF THE PAYEE SHRI SANJAY BAROT IN SUPPORT OF THE GROSS OUTSTANDING BALANCE TOTALING TO RS. 49, 737/ - COMPRISING OF RS. 18,792/ - , RS. 14,450/ - AND RS. 16,495/ - AT S R. NOS. 19, 119 AND 175 OF THE ABOVE EXTRACTED CHART. THE SAME DULY TALLIES WITH THE CORRESPONDING LEDGER ACCOUNT AT PAGE 35 OF THE PAPER BOOK. WE PROCEED FURTHER AND NOTICE SIMILAR PRO OFS QUA PAYMENTS OUT ST A NDING BALANCE OF RS. 49,676/ - IN CASE OF KIRAN PATEL COMPRISING OF RS. 19,120/ - AT # 22 RS. 17 ,644/ - AT # 94 AND RS. 12,912/ - AT # 176 ; RESPECTIVELY. SIMILAR IS THE CASE OF YET ANOTHER PAYEE SHRI VIPUL LIMBAC IYA SUBMITTING CONFIR MATION FOR RS. 48,293/ - COMPRISING OF RS. 16 , 528/ - AT # 39, RS. 18,785/ - AT # 85 AND RS. 12980 AT # 204; RESPECTIVELY. THE VERY PAYEE S HAPPEN TO BE I.T.A NO. 590 /AHD/20 11 A.Y. 2007 - 08 PAGE NO M/S. SHAMJIBHAI G. PATEL VS. ITO 7 THE SAME FOR SUCCEEDING ASSESSMENT YEAR 2008 - 09 AT PAGES 39 - 41 OF THE PAPER BOOK. WE REITERATE THAT TH ES E R ANDOM CA S ES DULY CONFIRM TO HAVE MADE AVAILABLE THEIR SERVICES AT RESPECTIVE BSNL OFFICES. THERE IS NO DISPUTE RAI SED ABOUT THEIR IDENTITY SINCE IDENTITY CARDS FORM PART OF THE CASE FILE. THERE ARE MANY OTHER CONFIRMATION S IN THE SAME BACKDROP OF FACTS. IT TRANSPIRES F ROM PAGE 100 OF THE PAPER BOOK THAT ASSESSE S NET PROFITS SINCE ASSESSMENT YEAR 2005 - 06 TO ASSESSMENT YEAR 2011 - 12 READ 4.19%, 6.29%, 5.27%, 5.21%, 3.52%, 3.85 AND 4.59% RESPECTIVELY. THE REVENUE SEEKS TO CAST DOUBTS ON THESE DOCUMENTS BY REITERATING THE LOWER AUTHORITIES FINDINGS. HOWEVER, IT FAILS TO CONTROVERT THE ABOVE REFERRED SPECIFIC EVIDENCE. WE TAKE INTO ACCOUNT ALL THIS MATERIAL AND FIND THAT ON FACT S WELL AS CONSISTENCY , THE ASSESSEE HAS BEEN ABLE TO PROVE ITS CLAIM IN QUESTION OF THE OUTSTAN DING LABOUR CHARGES OF RS. 29,37,728/ - TO HAVE BEEN INCURRED IN CARRYING OUT HIS CONTRACTU AL ASSIGNMENT S. THE REVENUE S ARGUMENTS ON MERE ASSUMPTION S AND PRESUMPTION S ACCORDINGLY STAND REJECTED . THE IMPUGNED DISALLOWANCE IS DELETED. 7. THIS ASSESSEE S A PPEAL IS ALLOWED. ORDER PR ONOUNCED IN THE OPEN C OURT ON 26 - 08 - 2015 SD/ - SD/ - ( G.D. AGRAWAL ) ( S. S. GODARA ) VICE PRESIDENT JUDICIAL MEMBER AHMEDABAD : DATED 26 /08 /2015 AK I.T.A NO. 590 /AHD/20 11 A.Y. 2007 - 08 PAGE NO M/S. SHAMJIBHAI G. PATEL VS. ITO 8 / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,