Income Tax Officer Ward-4(3)(1), Bangalore V. M/s Vinayaka Constructions , Bangalore

ITA 646/BANG/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 5045 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 4 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-08-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 20-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B R RAMESH JT BENGALURU
• Assessee Lawyers: M LOKESH
• Keywords: Assessment record

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SHRI N.V. VASUDEVAN, JUDICIAL MEMBER AND SHRI JASON P. BOAZ , ACCOUNTANT MEMBER I TA NO. 646/BANG/2017 ASSESSMENT YEAR : 2012 - 13 THE INCOME TAX OFFICER, WARD 4(3)(1), BANGALORE. VS. M/S. VINAYAKA CONSTRUCTIONS, NO.313, 7 TH MAIN, MICO LAYOUT, BTM 2 ND STAGE, BENGALURU 560 076. PAN: AAGFV 4626D APPELLANT RESPONDENT APPELLANT BY : SHRI B.R. RAMESH, JT.CIT(DR)(ITAT), BENGALURU. RE SPONDENT BY : SHRI M. LOKESH, CA DATE OF HEARING : 14 .06 .201 8 DATE OF PRONOUNCEMENT : 03.08 .2018 O R D E R PER N.V. VASUDEVAN, JUDICIAL MEMBER THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE OR DER DATED 08.12.2016 OF THE CIT(APPEALS)-BENGALURU 2, BENGALU RU RELATING TO ASSESSMENT YEAR 2012-13. 2. THE ASSESSEE IS A PARTNERSHIP FIRM ENGAGED IN C ONSTRUCTION BUSINESS (INFRASTRUCTURE DEVELOPMENT). FOR THE AY 2012-13, THE ASSESSEE FILED A RETURN OF INCOME DECLARING TOTAL INCOME OF RS.20,51,820. IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO NOTICED TH AT EXPENSES CLAIMED BY THE ASSESSEE IN THE PROFIT & LOSS ACCOUNT TO THE TUNE OF RS.81,70,998 WERE PAID IN CASH AND WAS SUPPORTED ONLY BY SELF-MA DE VOUCHERS WITHOUT ITA NO. 646/BANG/2017 PAGE 2 OF 3 SUPPORTING BILLS. THE ORDER OF AO SAYS THAT THIS A SPECT WAS POINTED OUT AND A PROPOSAL WAS MADE TO DISALLOW THE AFORESAID EXPEN SES. THE AR OF THE ASSESSEE CONSENTED TO SUCH DISALLOWANCE. THE AO AC CORDINGLY ADDED A SUM OF RS.81,70,998 TO THE TOTAL INCOME OF ASSESSEE . 3. AGGRIEVED BY THE ORDER OF AO, THE ASSESSEE PREF ERRED AN APPEAL BEFORE THE CIT(APPEALS). THE ASSESSEE CONTENDED THA T THE AR OF ASSESSEE NEVER CONSENTED TO THE ADDITION AND THE OBSERVATION S IN THE ORDER OF AO TO THAT EXTENT ARE INCORRECT. THE ASSESSEE SUBMITTED THAT THE DISALLOWANCE WAS EXCESSIVE AND UNREASONABLE AND HAD TO BE DELETE D. THE CIT(APPEALS) CALLED FOR THE ASSESSMENT RECORD AND CAME TO THE CO NCLUSION THAT THERE WAS NO EVIDENCE FOR ACCEPTANCE OF DISALLOWANCE BY T HE AR. THE CIT(A) ALSO EXAMINED THE VOUCHERS ON A TEST-CHECK BASIS. AFTER SUCH EXAMINATION, THE CIT(A) FOUND CERTAIN DISCREPANCIES IN CERTAIN V OUCHERS AND FINALLY CONCLUDED AS FOLLOWS:- 4.4 THE APPELLANT WAS UNABLE TO OFFER ANY EXPLANA TION FOR SUCH DISCREPANCIES. THIS SHOWS THAT THE SAID EXPENDITURE CLAIMED AS CASH EXPENDITURE THROUGH SELF VOUCHERS IS EVIDENTLY EXCESSIVE AND UNSUBSTANTIATED, SHOWING OVER-BILLING AND NOT ENTIR ELY VERIFIABLE. HOWEVER, IT CANNOT BE SAID THAT THE ENTIRE EXPENDIT URE OF RS.82,00,998/- IS TO BE DISALLOWED IN RESPECT OF TU RNOVER OF RS.4.98 CRORE. ALSO, NO EXPRESS CONSENT OF THE APPE LLANT IS ON RECORD IN THIS REGARD. UNDER SUCH FACTS, I DEEM FIT TO RESTRICT THE DISALLOWANCE TO RS.5 LAKH, WHICH WILL COVER SUCH DI SCREPANCIES AND EXCESSIVE BILLING AND WILL MEET THE END OF JUST ICE. 4. AGGRIEVED BY RELIEF ALLOWED BY THE CIT(APPEALS), THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 5. WE HAVE HEARD THE SUBMISSIONS OF THE LD. COUNS EL FOR THE ASSESSEE, WHO RELIED ON THE ORDER OF CIT(APPEALS). THE LD. DR RELIED ON THE ORDER OF AO. ITA NO. 646/BANG/2017 PAGE 3 OF 3 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE ARE OF THE VIEW THAT TAKING INTO CONSIDERATION THE FACTS AND CIRCUMSTANC ES OF THE CASE, THE CIT(APPEALS) HAS RIGHTLY COME TO THE CONCLUSION THA T THE DISALLOWANCE MADE BY THE AO WAS EXCESSIVE AND UNREASONABLE. WE ALSO FIND THAT IF SUCH QUANTUM OF EXPENSES DISALLOWED ARE CONSIDERED, THEN THE PROFITS OF THE ASSESSEE WOULD BE ABNORMALLY HIGH. IT WOULD BE UNREASONABLE TO SAY THAT TO ACHIEVE THE TURNOVER OF RS.4.98 CRORES, NO EXPENSES WOULD HAVE BEEN INCURRED BY THE ASSESSEE. IN THE GIVEN FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND NO GROUNDS TO INTERFERE WITH THE ORDE R OF CIT(APPEALS). 7. IN THE RESULT, THE APPEAL BY THE REVENUE IS DISM ISSED. PRONOUNCED IN THE OPEN COURT ON THIS 3 RD DAY OF AUGUST, 2018. SD/- SD/- ( JASON P. BOAZ ) ( N.V. VASUDEVAN ) ACCOUNTANT M EMBER JUDICIAL MEMBER BANGALORE, DATED, THE 3 RD AUGUST, 2018. / D ESAI S MURTHY / COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR, ITAT, BANGALORE. 6 . GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY ITAT, BANGALORE.