RAJ ENTERPRISES, MUMBAI V. ITO 22(2)-4, NAVI MUMBAI

ITA 6451/MUM/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 0993 (ITAT-MUMBAI)
• Duration Of Justice: 7 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-07-2010
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 28-07-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 15-12-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH D,MUMBAI BEFORE SHRI D. MANMOHAN (VICE PRESIDENT) & SHRI R.K. PANDA (ACCOUNTANT MEMBER) I.T.A.NO.6451/MUM/2009 (A.Y. 2005-06) M/S. RAJ ENTERPRISES, C/O. M/S.A.Q.SHAIKH & CO.(CAS), E4, NOOTAN NAGAR, GURU NANAK RD., BANDRA (W),MUMBAI-400 050. PAN: AAEFR7410D VS. INCOME-TAX OFFICER-22(2)-4, WARD 22, TOWER-6, 4 TH FLOOR, VASHI RLY.STN.COMPLEX, VASHI, NAVI MUMBAI-400 703. APPELLANT RESPONDENT APPELLANT BY SHR I D.C. JAIN. DEPARTMEMT BY SHRI SU RENDRA KUMAR. O R D E R PER R.K. PANDA, AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER DATED 11-08- 2009 OF CIT(A)XXII, MUMBAI, RELATING TO ASSTT. YEAR 2005-06. 2. THE ASSESSEE IN ITS GROUNDS OF APPEAL HAS BASICA LLY CHALLENGED THE ORDER OF CIT(A) IN SUSTAINING DISALLOWANCES OF RS.1,58,118/ - ON ACCOUNT OF LABOUR CHARGES AND RS.2,36,985/- ON ACCOUNT OF PURCHASES AND TRANS PORTATION. 3. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE IS A PARTNERSHIP FIRM ENGAGED IN THE BUSINESS OF CIVIL CONTRACTS AND TRAD ING IN BUILDING MATERIAL. THE ASSESSEE HAS SHOWN GROSS JOB WORK RECEIPTS OF RS.43 ,10,730/-. THE AO, DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEEDINGS, ASK ED THE ASSESSEE TO FURNISH VARIOUS DETAILS AS PER THE QUESTIONNAIRES ISSUED AL ONG WITH NOTICE U/S.142(1) OF THE I.T. ACT. IT APPEARS FROM THE ASSESSMENT ORDER THAT DESPITE SEVERAL REMINDERS AND SUMMONS U/S.131 TO ALL THE PARTNERS TO PRODUCE BOOKS OF ACCOUNT OF THE FIRM, THE BOOKS OF ACCOUNT OF THE FIRM WERE NEVER PRODUCE D. DESPITE SEVERAL OPPORTUNITIES GIVEN, THE ASSESSEE NEVER PRODUCED FU LL DETAILS. THEREFORE, THE AO ITA 2 COMPLETED THE ASSESSMENT ON THE BASIS OF MATERIAL A VAILABLE ON RECORD. CONSIDERING THE LABOUR CHARGES OF RS.43,10,730/- ON THE HIGHER SIDE AS AGAINST GROSS JOB WORK RECEIPTS OF RS.42,27,258/- AND IN AB SENCE OF SUPPORTING DOCUMENTS LIKE VOUCHERS, CASH MEMOS, BILLS, ETC., T O PROVE THE GENUINENESS OF SUCH EXPENSES CLAIMED, THE AO DISALLOWED AN AMOUNT OF RS.4,31,073/- BEING 10% OUT OF LABOUR CHARGES AND WAGES. SIMILARLY, OUT OF PURCHASES AND TRANSPORTATION CHARGES OF RS.23,69,655/- AS AGAINST SALES OF BUILDING MATERIAL OF RS.30,87,871/- AND CONSIDERING NON-PRODUCTION OF B OOKS OF ACCOUNT ALONG WITH SUPPORTING DOCUMENTS, ETC., THE AO DISALLOWED 10% O F SUCH EXPENSES AND MADE ADDITION OF RS.2,36,965/- ON ACCOUNT OF PURCHASES A ND TRANSPORTATION. 4. IN APPEAL, THE CIT(A) RESTRICTED THE ADDITION TO RS.1,58,118/- OUT OF LABOUR CHARGES OF RS.4,31,073/- MADE BY THE AO. WHILE DOIN G SO, HE NOTED THAT OUT OF RS.43,10,730/- PAID ON ACCOUNT OF LABOUR CHARGES, A N AMOUNT OF RS.27,29,544/- HAS BEEN PAID BY CHEQUE AND BALANCE AMOUNT OF RS.15 ,81,186/- HAS BEEN PAID BY CASH. HE ACCORDINGLY DISALLOWED 10% OF THE TOTAL EXPENSES PAID IN CASH WHICH AMOUNTED TO SUSTENANCE OF ADDITION OFRS.1,58,118/-. HOWEVER, AS REGARDS ADDITION OF RS.2,36,965/- ON ACCOUNT OF PURCHASES A ND TRANSPORTATION, HE UPHELD THE ACTION OF THE AO ON THE GROUND THAT FULL DETAIL S WERE NEVER PRODUCED EITHER BEFORE THE AO OR BEFORE THE CIT(A) TO PROVE THE GEN UINENESS OF SUCH EXPENSES. AGGRIEVED WITH SUCH ORDER OF CIT(A), THE ASSESSEE I S IN APPEAL BEFORE US. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF AO AND CIT(A) AND THE PAPER BOOK FILE D ON BEHALF OF THE ASSESSEE. THERE IS NO DISPUTE TO THE FACT THAT THE ASSESSEE F IRM IS ENGAGED IN THE BUSINESS OF CIVIL CONTRACTS AND TRADING IN BUILDING MATERIAL S. THERE IS ALSO NO DISPUTE TO THE FACT THAT THE ACCOUNTS OF THE ASSESSEE FIRM ARE AUD ITED U/S.44AB OF THE I.T. ACT. THERE IS ALSO NO DISPUTE TO THE FACT THAT THE ASSES SEE NEVER PRODUCED THE BOOKS OF ACCOUNT BEFORE THE AO AS DEMANDED BY HIM AND WAS NOT AT ALL CO-OPERATIVE ITA 3 WITH THE AO IN FURNISHING THE REQUISITE DETAILS, FO R WHICH THE AO HAD TO SUMMON ALL THE PARTNERS U/S.131 OF THE I.T. ACT. THERE IS ALSO NO DISPUTE TO THE FACT THAT FOR SUCH FAILURE ON THE PART OF THE ASSESSEE TO PRO DUCE THE BOOKS OF ACCOUNT FOR EXAMINATION AND SUBMISSION OF FULL DETAILS AS CALLE D BY THE AO, THE AO MADE AN ADDITION OF RS.4,31,073/- BEING 10% OF LABOUR CHARG ES AND WAGES CLAIMED AND RS.2,36,965/- BEING 10% OF PURCHASES AND TRANSPORTA TION EXPENSES CLAIMED. WE FIND, IN APPEAL, THE CIT(A) RESTRICTED THE LABOUR C HARGES AND WAGES TO RS.1,58,118/-, BEING 10% OF THE CASH EXPENSES OF RS .15,81,186/-. HOWEVER, THE CIT(A) CONFIRMED THE ADDITION OF RS.2,36,965/- FOR WANT OF FULL DETAILS TO PROVE THE GENUINENESS OF THE EXPENSES. IT IS THE SETTLED PROPOSITION OF LAW THAT FOR CLAIMING ANY EXPENSES TO BE GENUINE, THE ONUS IS AL WAYS ON THE ASSESSEE TO SUBSTANTIATE WITH EVIDENCE TO THE SATISFACTION OF T HE AO THAT ALL EXPENSES ARE WHOLLY AND EXCLUSIVELY INCURRED FOR THE PURPOSES O F BUSINESS OF THE ASSESSEE. IN THE INSTANT CASE, WE FIND THE ASSESSEE HAS NEVER PR ODUCED ITS BOOKS OF ACCOUNT EITHER BEFORE THE AO OR BEFORE CIT(A). MERELY BECAU SE SUCH PAYMENTS HAVE BEEN MADE BY CHEQUES, IT DOES NOT ENTITLE THE ASSESSEE T O CLAIM THAT SUCH EXPENSES ARE GENUINE AND WHOLLY AND EXCLUSIVELY INCURRED FO R THE PURPOSES OF BUSINESS. THE ASSESSEE MUST PRODUCE DETAILS OF ALL EXPENSES W ITH SUPPORTING VOUCHERS/EVIDENCES ETC. AND BOOKS OF ACCOUNT TO TH E SATISFACTION OF THE AO. HOWEVER, IN THE INSTANT CASE, UNDISPUTEDLY, THE ASS ESSEE FAILED TO DISCHARGE THE ONUS CAST ON IT. HOWEVER, CONSIDERING THE TOTALITY OF THE FACTS OF THE CASE, WE ARE OF THE OPINION THAT THE ADDITIONS SUSTAINED BY THE CIT(A) ON ACCOUNT OF LABOUR & WAGES AND PURCHASES & TRANSPORTATION AT RS.1,58,118 /- AND RS.2,38,965/- RESPECTIVELY ARE ON THE HIGHER SIDE. IN VIEW OF TH E VARIOUS DETAILS FURNISHED BEFORE US INCLUDING THE VARIOUS PAYMENTS MADE BY CH EQUES, ETC. AS PER THE PAPER BOOK AND WHICH WERE ALSO PRODUCED BEFORE THE AO AN D CIT(A), WE, IN THE INTERESTS OF JUSTICE, DEEM IT PROPER TO RESTRICT TH E ADDITION ON ACCOUNT OF WAGES & ITA 4 LABOUR CHARGES AT RS.75,000/- AND ADDITION ON ACCOU NT OF PURCHASES AND TRANSPORTATION AT RS.1,00,000/-. THE GROUNDS RAISED BY THE ASSESSEE ARE ACCORDINGLY PARTY ALLOWED. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF HARING ITSELF I.E. ON 28 TH DAY OF JULY, 2010. SD/- SD/- (D. MANMOHAN) (R.K. PANDA) VICE PRESIDENT ACCOUNTANT MEMBER MUMBAI: 28 TH JULY , 2010. NG: COPY TO : 1. ASSESSEE. 2.DEPARTMENT. 3 CIT(A)-XXII,,MUMBAI. 4 CIT-XII,MUMBAI. 5.DR,D BENCH,MUMBAI. 6. MASTER FILE. (TRUE COPY) BY ORDER, ASST.REGISTRAR, ITAT, MUMBAI. ITA 5 DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 28-7-10 SR.PS/ 2 DRAFT PLACED BEFORE AUTHOR 28-7-10 SR.PS/ 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/ 6. KEPT FOR PRONOUNCEMENT ON SR.PS/ 7. FILE SENT TO THE BENCH CLERK SR.PS/ 8 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER