The DCIT, 1(1), Bhopal V. M/s. NEW BOMBAY CONSTRUCTION, Bhopal

ITA 610/IND/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 99187 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 3 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-12-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 29-12-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 29-09-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G S GAUTAM

Judgement Text

ITA 610 AND 572 OF 2014 NEW BOMBAY CONSTRUCTION 1 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER AND SHRI B.C. MEENA, ACCOUNTANT MEMBER ITA NO. 610/IND/2014 A.Y. 2010-11 DCIT-1(1), BHOPAL :: APPELLANT VS M/S. NEW BOMBAY CONSTRUCTION, BHOPAL PAN AACFN 6504 A :: RESPONDENT ITA NO. 572/IND/2014 A.Y. 2010-11 M/S. NEW BOMBAY CONSTRUCTION, BHOPAL PAN AACFN 6504 A :: APPELLANT VS DCIT-1(1), BHOPAL :: RESPONDENT ITA 610 AND 572 OF 2014 NEW BOMBAY CONSTRUCTION 2 APPELLANT BY SHRI G.S. GAUTAM, DR RESPONDENT BY NONE DATE OF HEARING 29.12.2015 DATE OF PRONOUNCEMENT 29.12.2015 O R D E R PER SHRI B.C. MEENA, AM BOTH THE CROSS-APPEALS ARE FILED BY THE REVENUE AN D ASSESSEE, RESPECTIVELY, CHALLENGING THE ORDER OF LD. CIT(A)-I , BHOPAL, DATED 18.7.2014. THE REVENUE HAS CHALLENGED THE DELETION OF RS.35,60,784/- OUT OF THE TOTAL DISALLOWANCE OF RS.45,60,784/- MAD E BY THE AO UNDER THE HEAD SALARY AND WAGES WHEREAS THE ASSESSEE HA S CHALLENGED THE CONFIRMATION OF THE ADDITION OF RS.10 LACS. 2. FACTS, IN BRIEF, ARE THAT THE AO NOTED THAT DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAD SHOWN GROSS RECEIPT S AT RS.5,77,16,941/- AND N.P., BEFORE INTEREST AND SALA RY TO PARTNERS, AT RS.62,08,370/-. ON PERUSAL OF P & L ACCOUNT, THE AO OBSERVED THAT THE ASSESSEE HAD DEBITED A SUM OF RS.1,70,41,158/- UNDE R THE HEAD SALARY AND WAGES. THE AO ASKED THE ASSESSEE TO FURNISH TH E DETAILS OF THE EXPENDITURE CLAIMED UNDER THE SAID HEAD. THE ASSESS EE FURNISHED THE LEDGER ACCOUNTS OF SALARY AND WAGES EXPENDITURE. TH E AO, NARRATING THE PAYMENTS IN THE ASSESSMENT ORDER, HELD THAT MOST OF THE PAYMENTS UNDER THE SAID HEAD WERE MADE IN CASH ON A SINGLE D AY. A SUM OF ITA 610 AND 572 OF 2014 NEW BOMBAY CONSTRUCTION 3 RS.15,82,456/- HAS BEEN SHOWN AS PAYABLE UNDER THE ABOVE HEAD AS ON 31.3.2010. THE ASSESSEE DID NOT FURNISH THE DETAILS OF THE ABOVE SUM. IN VIEW OF THE THESE DISCREPANCIES, THE AO DISALLOWED THE AMOUNT OF RS.45,60,784/- OUT OF SALARY AND WAGES EXPENSES CLA IMED BY THE ASSESSEE. 3. AGGRIEVED WITH THE ACTION OF THE AO, THE ASSESSE E PREFERRED AN APPEAL BEFORE THE LD. CIT(A), WHO, AFTER CONSIDERIN G THE FACTS/SUBMISSIONS, DELETED THE ADDITION. 4. AGGRIEVED WITH THE ACTION OF THE LD. CIT(A), THE REVENUE, AGAINST THE DELETION, AND THE ASSESSEE, AGAINST THE CONFIRM ATION, ARE IN APPEAL BEFORE US. 5. BEFORE US, THE LD. SENIOR D.R., HOWEVER, RELIED ON THE ORDER OF THE AO BUT COULD NOT CONTROVERT THE FINDING OF THE LD. CIT(A) BY BRINING ANY SUPPORTIVE MATERIAL ON RECORD WHEREAS NEITHER THE A SSESSEE NOR ANY REPRESENTATIVE ON BEHALF OF THE ASSESSEE IS PRESENT BEFORE US. 6. WE HAVE PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE ASSESSEE IS E NGAGED IN THE BUSINESS OF CIVIL CONSTRUCTION. THE ASSESSEE HAS MA INTAINED REGULAR BOOKS OF ACCOUNT, WHICH WERE DULY AUDITED. THE ASSE SSEE HAD EXECUTED VARIOUS KINDS OF WORKS IN VARIOUS SITES AS NARRATED IN THE APPELLATE ORDER. ITA 610 AND 572 OF 2014 NEW BOMBAY CONSTRUCTION 4 BEFORE THE LD. CIT(A), THE ASSESSEE HAS EXPLAINED T HAT IN THE BUSINESS OF CIVIL CONSTRUCTION, FROM TIME TO TIME, HEAVY AMOUNT WAS PAID TO LABOURS. LABOURS, BEING OF LOW MEANS, MOSTLY ILLITERATE AND HAVING NO BANK ACCOUNT, REQUIRE CASH PAYMENT TO MEET THEIR HOUSEHO LD EXPENSES. THE ASSESSEE HAS TO MAKE PAYMENTS THROUGH SUPERVISOR ON MONTHLY BASIS IN CASH TO THE LABOURS. LABOURS REQUIRE THE SMALL PAYM ENTS FOR DAILY NEEDS IN THE SHORT INTERVALS AND REMAINING MAXIMUM AMOUNT ON THE OCCASION OF FESTIVALS OR HARVESTING IN THE LAST MONTHS. PROPER RECORDS LIKE, PAYMENT REGISTER, SIGNED/THUMP IMPRESSIONS OF LABOURS FOR V ARIOUS SITES ETC. HAVE BEEN MAINTAINED. DATA OF ALL THE SITES HAS BEEN COM BINED IN THE ACCOUNTS AND DEBITED IN THE ACCOUNT OF SALARY AND WAGES. THE ASSESSEE WAS MAINTAINING TWO LEDGER ACCOUNTS. IN TH E LEDGER ACCOUNT SALARY AND WAGES, THE ASSESSEE HAS DEBITED THE AC TUAL SALARY & WAGES EXPENSES INCURRED MONTH-WISE AND THE PAYMENT MADE D URING THE MONTH AND IN THE SECOND ACCOUNT, THE BALANCE AMOUNT PAYAB LE WAS TRANSFERRED THROUGH JOURNAL ENTRY AS SALARY AND WAGES PAYABLE . THE SUBSEQUENT PAYMENTS MADE TO LABOURS WERE CREDITED IN THIS ACCO UNT. ASSESSEE HAS SHOWN BETTER N.P. @10.76% IN THE PRESENT YEAR I.E. 2010-11 AS COMPARED TO AY 2008-09 (6.34%) AND AY 2009-10 (6.04 %). THE LD. CIT(A), APPRECIATING THE FACTS AND SUBMISSIONS THER EOF, OBSERVED THAT THOUGH SOME DISALLOWANCE WAS CALLED FOR BUT THE AO WAS NOT FULLY JUSTIFIED IN DISALLOWING THE TOTAL PAYMENT OF RS.45 ,60,784/-. ON ITA 610 AND 572 OF 2014 NEW BOMBAY CONSTRUCTION 5 EXAMINATION OF BOTH THE LEDGER ACCOUNTS, THE LD. CI T(A) OBSERVED THAT THE ASSESSEE HAD NOT SHOWN ANY PAYMENT MADE TO LABO URS UNDER THE HEAD SALARY AND WAGES IN THE MONTHS OF JULY 2009 AND AUGUST 2009, WHICH IS HIGHLY IMPROBABLE SPECIALLY BECAUSE THE LA BOURS CANNOT SURVIVE WITHOUT RECEIVING ANY WAGES FOR SUCH A LONG PERIOD OF TWO MONTHS. FURTHER, IT WAS ALSO NOTICED THAT THE ASSESSEE HAD SHOWN HUGE PAYMENTS IN THE MONTHS OF JANUARY TO MARCH 2010 FOR LABOUR PAYMENT. ALL THESE FACTS ALONGWITH THE FACT THAT ALL THE PAY MENTS HAD BEEN SHOWN TO BE MADE IN CASH, THE LD. CIT(A) HAS RESTRICTED T HE ADDITION TO RS.10 LCAS RESULTANTLY GRANTING A RELIEF OF RS.35,60,784/ - TO THE ASSESSEE. 7. ON CONSIDERATION OF ABOVE FACTS IN THE LIGHT OF THE NATURE OF BUSINESS AND FACTS/SUBMISSIONS AS NARRATED ABOVE, W E ARE OF THE VIEW THAT LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDIT ION AT RS.35,60,784/- AS LD. CIT(A) HAS DISCUSSED THE FACTS/SUBMISSION IN DE TAIL IN THE PROPER PERSPECTIVE AND REACHED TO THE ABOVE CONCLUSION. MO REOVER, REVENUE HAS NOT BROUGHT ANY CONTRARY MATERIAL BEFORE US TO CONTROVERT THE ACTION OF THE LD. CIT(A). FURTHER, WE ARE OF THE VIEW THAT LD. CIT(A) WAS ALSO JUSTIFIED IN CONFIRMING THE ADDITION OF RS.10 LACS AS THE LD. CIT(A) RIGHTLY OBSERVED THAT THE ASSESSEE HAD NOT SHOWN ANY PAYMEN T MADE TO LABOURS UNDER THE HEAD SALARY AND WAGES IN THE MO NTHS OF JULY 2009 AND AUGUST 2009, WHICH IS HIGHLY IMPROBABLE ESPECIA LLY WHEN THE ITA 610 AND 572 OF 2014 NEW BOMBAY CONSTRUCTION 6 LABOURS CANNOT SURVIVE WITHOUT RECEIVING ANY WAGES FOR SUCH A LONG PERIOD OF TWO MONTHS. THUS, IN VIEW OF THE DISCREPA NCIES AS NOTED ABOVE, WE CONFIRM THE ORDER OF THE LD. CIT(A) CONFI RMING THE ADDITION TO RS.10 LACS. 8. IN THE RESULT, BOTH THE CROSS-APPEALS, FILED BY THE ASSESSEE AND THE REVENUE, ARE DISMISSED. ORDER WAS PRONOUNCED IN THE OPEN COURT ON 29.12.201 5. SD/- ( D.T. GARASIA) JUDICIAL MEMBER SD/- (B.C. MEENA) ACCOUNTANT MEMBER DATED : 29.12.2015 !VYS! COPY TO: APPELLANT/RESPONDENT/CIT(A)/CIT/DR, INDORE