Shiv B.K.O., Ludhiana V. ITO, Ludhiana

ITA 63/CHANDI/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 57661 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-02-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2007-2008
• Appeal Filed On: 19-01-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S R CHHABRA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES B CHANDIGARH BEFORE SHRI H.L.KARWA, HON'BLE, VICE PRESIDENT AND SHRI MEHAR SINGH, ACCOUNTANT MEMBER ITA NO. 63/CHD/2012 ASSESSMENT YEAR: 2007-08 M/S SHIV BKO, VS THE ITO, WARD-III(3), VPO RURKA, LUDHIANA LUDHIANA PAN NO. ABAFS7768N (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S.R.CHHABRA RESPONDENT BY : SHRI AKHILESH GUPTA DATE OF HEARING : 21.02.2012 DATE OF PRONOUNCEMENT : 22.02.2012 ORDER PER H.L.KARWA, VP THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF CIT(A)-II, LUDHIANA DATED 19.12.2011 RELATING TO AS SESSMENT YEAR 2007-08. 2. IN THIS APPEAL THE ASSESSEE HAS RAISED THE FOLLO WING GROUND:- THE LD. CIT(A) ERRED IN LAW AND ON FACTS BY (A) UPHOLDING THE ADDITION OF RS. 2,84,308/- OUT OF LABOUR CHARGES WITHOUT APPRECIATING THE ASSESSEES SUBMISS IONS IN THIS REGARD. 2 (B) UPHOLDING THE ADDITION OF RS. 50,000/- ON AN AD HOC BASIS OUT OF SAND AND CLAY, LABOUR WELFARE, REPAIR AND MAINTENANCE AND SALARY, WITHOUT APPRECIATING THE ASSESSEES SUBMISSIONS IN THIS REGARD. 3. VIDE GROUND NO. 1(A) OF THE APPEAL, THE ASSESSEE HAS CHALLENGED THE ADDITION OF RS. 2,84,308/-. THE ASSESSEE DERIVES T HIS INCOME FROM MANUFACTURING AND TRADING OF BRICKS AND CONSTRUCTIO N WORK. THE ASSESSING OFFICER MADE AN ADDITION OF RS. 2,84,308/- UNDER TH E HEAD MANUFACTURING ACCOUNT. PARA 5 OF THE ASSESSMENT ORDER READS AS UN DER:- PERUSAL OF THE MANUFACTURING ACCOUNT SHOWS THAT AN AMOUNT OF RS. 14,30,560/- HAS BEEN DEBITED AS LABOUR CHARGES ON A CCOUNT OF DIFFERENT TYPES OF WORK DONE BY LABOUR IN THE MANUFACTURING O F BRICKS. DURING THE ASSESSMENT PROCEEDINGS IN ORDER TO VERIFY THE L ABOUR CHARGES PAID THE ASSESSEE WAS ASKED TO FILE THE RATES AT WHICH T HE LABOUR IS PAID FOR PATHAI, BHARAI, CHINAI, JALAI AND NIKASI. THE ASSES SEE FURNISHED THE DETAILS OF THE RATES AT WHICH THE LABOUR HAS BEEN P AID. ON THE BASIS OF THESE RATES THE TOTAL LABOUR CHARGES WERE WORKED OU T AS UNDER:- S.NO. NATURE OF WORK RATE/THOUSAND TOTAL BRIC KS LABOUR PAYABLE 1 PATHAI RS. 188/- 3093800 5,81,634 2 BHARAI RS.75.50 3093800 2,33,582 3 CHINAI RS. 16/- 30-93800 49,500 4 JALAI RS. 42/- 3093800 1,29,940 5 NIKASI RS. 49/- 3093800 1,51,596 TOTAL LABOUR CHARGES 11,476,252 AS PER THE CALCULATION GIVEN ABOVE, THE TOTAL LABOU R CHARGES WORK OUT AT RS. 11,46,252/- WHEREAS THE ASSESSEE HAS CLAIMED THE LABOUR CHARGES AT RS. 14,30,560/- IN THE MANUFACTURING ACCOUNT. TH E EXCESS AMOUNT OF EXPENDITURE CLAIMED BY THE ASSESSEE IN THE MANUFACT URING ACCOUNT AMOUNTING TO RS. 2,84,308/- IS DISALLOWED AND ADDED BACK TO THE INCOME OF THE ASSESSEE. 4. ON APPEAL, THE CIT(A) UPHELD THE ADDITION AND HE NCE THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 3 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE ALS O PERUSED THE MATERIALS AVAILABLE ON RECORD. SHRI S.R. CHHABRA, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSING OFFICER MADE ADDITION OF RS. 2,84,308/- BY APPLYING FIXED RATE OF LABOUR OF PATHAI, BHARAI, CHINAI, JALAI AND NIKASI WITHOUT APPRECIATING VARIATION OF RATES DURING THE YEAR AND WITHOUT TAKING INTO ACCOUNT THE BRICKS IN THE KILN AND KACCHA BRIC KS SHOWN IN THE CLOSING STOCK OF THE LAST YEAR AND WASTAGE OF BRICKS FOR WH ICH LABOUR STANDS PAID AND WITHOUT GIVING AN OPPORTUNITY TO THE ASSESSEE AND I GNORING THE MOST IMPORTANT FACT THAT DETAILS OF THE NAMES AND AMOUNT PAID WERE GIVEN TO THE ASSESSING OFFICER AND THE SAME WERE VERIFIED BY THE ASSESSING OFFICER BOTH FROM THE BOOKS OF ACCOUNT AND THE VOUCHERS. SHRI S.R.CHHABR A, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAD CLAIMED LA BOUR CHARGES OF RS. 14,30,560/- ON ACCOUNT OF PATHAI, BHARAI, CHINAI, J ALAI AND NIKASI OF BRICKS. SHRI S.R.CHHABRA, LD. COUNSEL FOR THE ASSESSEE INVI TED OUR ATTENTION TO PAGE 6 OF THE PAPER BOOK, WHEREIN DETAILS OF BRICKS IN K ILN AND KACCHA BRICKS SHOWN IN THE CLOSING STOCK OF THE LAST YEAR AND WAS TAGE OF THE BRICKS FOR WHICH LABOUR STANDS PAID ARE GIVEN. WHILE MAKING TH E ADDITION, THE ASSESSING OFFICER DID NOT TAKE INTO ACCOUNT THE BRICKS IN THE KILN AND KACCHA BRICKS SHOWN IN THE CLOSING STOCK OF THE LAST YEAR AND WAS TAGE OF BRICKS (SHORTAGE OF BRICKS BROKEN DUE TO RAIN). THUS, THE LABOUR CHARG ES CLAIMED AT RS. 14,30,560/- INCLUDED RS. 2,84,308/- INCURRED FOR PA THAI, BHARAI, CHINAI, JALAI AND NIKASI ON ACCOUNT OF BRICKS IN THE KILN AND KAC CHA BRICKS SHOWN IN THE CLOSING STOCK OF LAST YEAR AND WASTAGE OF BRICKS (S HORTAGE OF BRICKS BROKEN DUE TO RAIN). IT IS ALSO RELEVANT TO STATE THAT LA BOUR CHARGES DURING THE YEAR UNDER CONSIDERATION ARE RS. 14,30,560/- AGAINST RS. 13,92,377/- SHOWN IN ASSESSMENT YEAR 2006-07 EVEN WHEN SALES HAVE AL MOST DOUBLED FROM 4 RS. 33,27,575/- TO RS. 64,01,900/-. IT IS ALSO SEE N THAT THE GP RATE DECLARED DURING THIS YEAR IS 16% WHICH IS NOT LESS THAN THAT OF THE PREVIOUS YEAR. CONSIDERING THE ENTIRE FACTS AND CIRCUMSTANCES OF T HE PRESENT CASE, WE ARE OF THE VIEW THAT THERE WAS NO JUSTIFICATION IN MAKING THE ADDITION OF RS. 2,84,308/-. ACCORDINGLY, WE DELETE THE ADDITION. 6. VIDE GROUND NO.1(B), THE ASSESSEE HAS CHALLENGED THE ADDITION OF RS. 50,000/- OUT OF EXPENSES UNDER THE HEAD SAND AND CL AY, LABOUR WELFARE AND REPAIR AND MAINTENANCE AND SALARY. THE ASSESSEE HAD CLAIMED THE EXPENSES UNDER THE FOLLOWING HEADS:- SAND & CLAY RS. 3,20,500/- LABOUR WELFARE RS. 35,767/- REPAIR & MAINTENANCE RS. 76,601/- SALARY RS. 4.,62,000/- 7. THE ASSESSING OFFICER MADE ADHOC DISALLOWANCE O F RS. 50,000/- OUT OF ABOVE EXPENSES. 8. ON APPEAL, THE CIT(A) UPHELD THE ADDITION AND HE NCE THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE ALS O PERUSED THE MATERIALS AVAILABLE ON RECORD. SHRI S.R. CHHABRA, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSING OFFICER DISAL LOWED RS. 50,000/- ON AN ADHOC BASIS EVEN WHEN THE DETAILS OF SALARY AND PF DEDUCTION, REPAIR AND MAINTENANCE WERE GIVEN AND VERIFIED BY HIM FROM VOU CHERS THE ASSESSING OFFICER HAS ADMITTED THAT THE ASSESSEE FURNISHED DE TAILS OF PF DEDUCTION FROM 5 SALARY AND DEPOSITED IN GOVERNMENT ACCOUNT. THE ASS ESSING OFFICER HAS DISALLOWED THE IMPUGNED AMOUNT ON THE GROUND THAT T HESE EXPENSES WERE PAID IN CASH AND NO VOUCHERS WERE MAINTAINED. HOWEVER, T HE ASSESSING OFFICER HAS ADMITTED THAT PAYMENT MIGHT HAVE BEEN MADE UNDER TH E ABOVE HEADS. IN FACT, THE ASSESSING OFFICER HAS NOT POINTED OUT ANY SINGL E INSTANCE OF EXPENSES WHICH WAS NOT INCURRED FOR THE PURPOSE OF ASSESSEE S BUSINESS. MERELY STATING THAT THESE EXPENSES ARE NOT VERIFIABLE FROM ANY VOUCHERS IS NOT SUFFICIENT TO MAKE ADHOC DISALLOWANCE. IN OUR VIEW , THE ASSESSING OFFICER SHOULD HAVE GIVEN THE INSTANCES TO DEMONSTRATE THAT PARTICULAR EXPENSE WAS NOT INCURRED FOR THE PURPOSES OF BUSINESS. IN FACT, BOTH THE AUTHORITIES BELOW HAVE NOT GIVEN ANY COGENT REASONS IN SUPPORT OF ADH OC DISALLOWANCE. WE, THEREFORE, DO NOT SEE ANY JUSTIFICATION IN MAKING T HE DISALLOWANCE. ACCORDINGLY, WE DELETE THE ADDITION OF RS. 50,000/- . 9. IN THE RESULT, THE APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 22 ND DAY OF FEBRUARY, 2012. SD/- SD/- (MEHAR SINGH) (H.L.KARWA) ACCOUNTANT MEMBER VICE PRESIDENT DATED : 22 ND FEBRUARY, 2012 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR TRUE COPY BY ORDER ASSISTANT REGISTRAR 6