SHRI RAJESH AGRAWAL, Indore V. THE ACIT- 2(1), Indore

ITA 624/IND/2013

• Counselvise Citation: 62422714 RSA 2013
• Duration Of Justice: 1 year(s) 10 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-09-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 24-10-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R R MEENA
• Assessee Lawyers: ARPIT GAUR CAS

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI D.T. GARASIA, J.M. AND SHRI B.C.MEENA, A.M. I.T.A.NO.624/IND/2013 A.Y. : 2010-11 SHRI RAJESH AGRAWAL, INDORE. ACIT, 2(1), VS INDORE. APPELLANT RESPONDENT P.A.N. NO A AETPA5473Q I.T.A.NO. 698/IND/2013 2010-11 ACIT, 2(1), INDORE. SHRI RAJESH AGRAWAL, INDORE. VS APPELLANT RESPONDENT ASSESSEE BY SHRI ANIL KAMAL GARG AND SHRI ARPIT GAUR, CAS DEPARTMENT BY SHRI R. R. MEENA, DR -: 2: - 2 DATE OF HEARING : 10 .08.2015 DATE OF PRONOUNCEMENT : 11 .09.2015 O R D E R PER GARASIA, J.M. THESE CROSS APPEALS ARE DIRECTED AGAINST THE ORDER OF CIT(A) DATED 16.09.2013, FOR THE ASSESSMENT YEAR 20 10-11. I.T.A.NO. 624/IND/2013 : (ASSESSEES APPEAL ) : 2. THE ASSESSEE HAS TAKEN THE FOLLOWING GROUND : 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) GROSSLY ERRED IN CONFIRMING ADDITION TO THE EXTENT OF RS 5,00,000/- MADE BY THE ASSESSING OFFICER, ON AD HOC BASIS, BY DISALLOWING VARIOUS EXPENSES CLAIMED BY THE APPELLANT IN HIS PROFIT AND LOSS ACCOUNT. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL IS REGULARLY ASSESSED TO INCOME TAX FOR LAST MANY YEARS. DURING THE PREVIOUS YEAR RELEVANT TO THE ASS ESSMENT -: 3: - 3 YEAR UNDER CONSIDERATION, THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF UNDERTAKING AND EXECUTION OF CIVIL WORK CONTRACTS ON BEHALF OF PWD. THE ASSESSEE FURNISHED HIS RETURN OF INCOME PERTAINING TO THE ASSESSMENT YEAR UNDER CONSIDERATI ON I.E. ASSESSMENT YEAR 2010-11 U/S 139(1) OF THE INCOME-TA X ACT, 1961, ON 15.10.2010 VIDE E-ACKNOWLEDGEMENT NO. 172989590151010 DECLARING TOTAL INCOME OF RS. 33,86 ,900/-. SUBSEQUENTLY THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY AND NOTICES U/S 143(2)/142(1) WERE ISSUED TO THE ASSESSEE FROM TIME TO TIME. DURING THE COURSE OF TH E ASSESSMENT PROCEEDINGS, THE ASSESSEE ALSO FURNISHED COPY OF HIS AUDITED FINANCIAL STATEMENTS FOR THE RELEVANT P REVIOUS YEAR ALONGWITH COPY OF THE AUDIT REPORT OBTAINED U/S 44A B OF THE ACT. FINALLY ASSESSMENT FOR THE ASSESSMENT YEAR UND ER CONSIDERATION WAS FRAMED UPON THE ASSESSEE U/S 143( 3) OF THE INCOME-TAX ACT, 1961, ON 04.12.2012 BY DETERMINING TOTAL INCOME AT RS. 64,10,345/- AS AGAINST THE RETURNED I NCOME OF RS. 33,86,900/-, THEREBY MAKING ADDITIONS OF RS. 30 ,23,445/- IN THE INCOME OF THE ASSESSEE ON THE FOLLOWING GROU NDS :- -: 4: - 4 AMOUNT IN RS. 1. ADDITION ON ACCOUNT OF DISALLOWANCE OF INTEREST ON UNSECURED LOAN FROM M/S. EAST WEST FINVEST INDIA LIMTIED 26,583 2. ADDITION ON ACCOUNT OF LATE WORK EXECUTION CHARGES PAID TO PWD BY HOLDING THE SAME INT EH NATURE OF PENALTY 7,93,080 3. AD - HOC DISALLOWANCE @ 15% ON CERTAIN EXPENSES 22,03,782 TOTAL ADDITION 30,23,445 4. THE MATTER CARRIED TO THE LD. CIT(A) AND THE LD. C IT(A) CONFIRMED THE ADDITION TO THE EXTENT OF RS. 5,00,00 0/- BY OBSERVING AS UNDER :- 12. I HAVE CONSIDERED ARGUMENT OF BOTH SIDES. WHILE AO'S VIEW COULD BE HELD RIGHT TO THE EXTENT THAT DU E TO HIGHER INTEREST INCOME AND OTHER INCOME SHOWN THIS YEAR, APPELLANT'S NET PROFIT FROM BUSINESS IS VERY LOW, BUT THAT COULD BE A STARTING POINT FOR FURTHER INVESTIGATION. AO HAS NOT DONE ANY INVESTIGATION THEREAFTER AND HAS NOT FOUND FAULT WITH ANY SPECIFI C VOUCHERS OR BILL RELATED TO ANY EXPENSES. HE HAS NO T -: 5: - 5 EVEN STATED AS TO WHICH EXPENSES UNDER WHICH HEAD ARE INCURRED WITHOUT ANY VOUCHERS OR WITH QUESTIONABLE VOUCHERS. IN SUCH CIRCUMSTANCES, WITHOUT FINDING ANY SPECIFIC DISCREPANCIES AND WITHOUT REJECTING BOOKS OF ACCOUNTS, SUCH AD HOC DISALLOWANCE OF RS. 22,03,782/- @ 15 OF 14 EXPENSES CANNOT BE SUSTAINED IN FULL. HOWEVER, CONSIDERING THAT THERE IS A FALL IN NP RATE IF INTE REST INCOME AND OTHER INCOME IS REMOVED AND ALSO BECAUSE CERTAIN VOUCHERS COULD NOT BE PRODUCED, AN ADDITION OF RS. 5 LAKH OUT OF AFORESAID EXPENSES IS SUSTAINED. FOR THIS PURPOSE RELIANCE IS PLACED ON T HE DECISION IN CASE OF GOODYEAR INDIA LTD. (ITAT, DEL) 66 TTJ 164 IN WHICH IT IS HELD THAT WHEN FULL DETAI LS OF EXPENSES AND ALL EVIDENCES ARE NOT AVAILABLE, DISALLOWANCE CAN BE MADE, EVEN WHEN THERE ARE NO ADVERSE REMARKS BY AUDITOR. -: 6: - 6 13. AS A RESULT OUT OF ADDITION OF RS. 22,03,782/- AN AMOUNT OF ADDITION OF RS.5 LAKHS IS SUSTAINED AND APPELLANT GETS A RELIEF OF RS.17,03,782/-. 5. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE IS MAINTAINING REGULAR BOOKS OF ACCOUNT IN THE ORDINARY COURSE OF HIS BUSINESS OF CIVIL CONTRACTOR S. THE ASSESSEE HAS ALSO GOT SUCH BOOKS OF ACCOUNT DULY AU DITED BY A QUALIFIED FIRM OF CA UNDER THE PROVISIONS OF SECTIO N 44AB OF THE INCOME-TAX ACT, 1961. DURING THE COURSE OF ASSE SSMENT PROCEEDINGS, THE ASSESSEE HAD PRODUCED HIS ENTIRE B OOKS OF ACCOUNT ALONGWITH VOUCHERS AND DOCUMENTS BEFORE THE AO. THE AO DID NOT FIND ANY DISCREPANCY IN THE BOOKS OF ACCOUNT OR METHOD OF ACCOUNTING OR MAINTENANCE OF RECORDS B Y THE ASSESSEE AS REQUIRED U/S 44AA OF THE ACT. THE AO A LSO DID NOT REJECT THE BOOKS OF ACCOUNT OF THE ASSESSEE BY INVO KING THE PROVISIONS OF SECTION 145(3) OF THE ACT. THE LD. C IT(A) GROSSLY ERRED IN CONFIRMING THE ADDITION TO THE EXTENT OF R S. 5,00,000/- MADE BY THE ASSESSING OFFICER ON AD HOC BASIS BY DI SALLOWING VARIOUS EXPENSES. -: 7: - 7 6. THE LD. D.R. RELIED ON THE ORDER OF THE AO. 7. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES. LOOKING TO THE FACTS AND CIRCUMSTANCES O F THE CASE, WE FIND THAT THE LD. CIT(A) HAS RIGHTLY CONFIRMED T HE DISALLOWANCE OF RS. 5,00,000/-, BY PLACING RELIANCE ON THE DECISION IN THE CASE OF GOODYEAR INDIA LTD. (ITAT, DEL) 66 TTJ 164 IN WHICH IT WAS HELD THAT WHEN FULL DETAILS OF EXPENSES AND ALL EVIDENCES ARE NOT AVAILABLE, DISALLOWANCE CAN BE MADE, EVEN WHEN THERE ARE NO ADVERSE REMARKS BY AUDITOR. WE UPHOLD HIS ACTION. OUR INTERFERENCE IS NOT CALLED FOR. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMISSED. I.T.A.NO. 698/IND/2013 DEPARTMENTS APPEAL : 9. SINCE THE GROUND TAKEN IN THE ASSESSEES APPEAL IS ALREADY DECIDED, THE SIMILAR GROUND TAKEN IN DEPART MENTS DOES NOT SURVIVE. GROUND NO. 1 FAILS. 10. GROUND NO. 2 TAKEN IN DEPARTMENTS APPEAL IS THAT T HE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS. 26 ,583/-MADE BY DISALLOWING INTEREST PAYMENT TO LUNKAD GROUP COM PANY -: 8: - 8 WHEN THE ISSUE IS STILL PENDING WITH THE I.T.A.T. I N THE OTHER CASE. 11. THIS ADDITION OF RS. 26,583/- WAS ON ACCOUNT OF PAYMENT OF INTEREST ON UNSECURED LOANS RECEIVED FRO M M/S. EAST WEST FINVEST INDIA PRIVATE LIMITED, BEING A LU NKAD GROUP COMPANY BEING FOUND INVOLVED IN PROVIDING ACCOMMODATION ENTRY. 12. THE MATTER CARRIED TO THE LD. CIT(A) AND THE LD. C IT(A) DELETED THIS ADDITION BY OBSERVING AS UNDER :- 16 . GROUND NO. (5) OF APPEAL IS AGAINST ADDITION OF RS. 26,583/- ON ACCOUNT OF PAYMENT OFINTT ON UNSECURED LOANS RECEIVED FROM M/S. EAST WEST FINVEST INDIA PVT.LTD. , BEING A LUNKAD GROUP COMPANY, BEING FOUND INVOLVED IN PROVIDING ACCOMMODATION ENTRY. 17. BY MAKING A GENERAL COMMENT, NO DISALLOWANCE CA N BE MADE, UNLESS IT IS SHOWN THAT UNSECURED LOAN TAK EN FROM THIS COMPANY IN ASSESSMENT YEAR 2008-09 WAS HE LD UNEXPLAINED AND WAS ADDED IN HANDS OF APPELLANT. HAVING NOT DONE SO, THIS ADDITION OF DISALLOWANCE O F -: 9: - 9 INTEREST ON SUCH LOAN, COULD NOT BE UPHELD. GROUND NO. (5) OF APPEAL IS ALLOWED. 13. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES. LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE, WE UPHOLD THE ACTION OF THE LD. CIT(A). OUR INTERFEREN CE IS NOT CALLED FOR. 14. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE AS WELL AS REVENUE ARE DISMISSED. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON ______SEPTEMBER, 2015. (B. C. MEENA) ACCOUNTANT MEMBER ( D.T.GARASIA) JUDICIAL MEMBER DATED :_______SEPTEMBER, 2015. CPU* 1109,