DCIT 15(3), MUMBAI V. RADHA M. BIRADAR, MUMBAI

ITA 6569/MUM/2012

• Counselvise Citation: 656919914 RSA 2012
• Duration Of Justice: 2 year(s) 9 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-08-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 02-06-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 30-10-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANU KRISHNA AGGARWAL
• Keywords: Additional evidence; Corroborative evidences
• Section: 154; 40A(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE SHRI D. MANMOHAN, V .P. AND SHRI SANJAY ARORA, A.M. ITA NO .6569 /MUM./ 2012 ( ASSESSMENT YEAR : 2009 10 ) DY. COMMISSIONER OF INCOME TAX CIRCLE 15 ( 3), MATRU MANDIR TARDEO ROAD, MUMBAI 400 007 . . APPELLANT V/S SMT. RADHA M. BIRADAR M/S. JAI BHAVANI CONSTRUCTION SHOP NO.8, ESSBEL CHS AKURLI ROAD, LOKHANDWALA TOWNSHIP KANDIVALI (E), MUMBAI 400 101 PAN AJEPS9346H .... RESPONDENT REVENUE BY : SHRI ANU KRISHNA AGGARWAL ASSESSEE BY : NONE DATE OF HEARING 1 5 .07.2015 DATE OF ORDER 07 .08.2015 O R D E R P ER SANJAY ARORA, AM: THE PRESENT APPEAL PREFERRED BY THE REVENUE IS DIRECTED AGAINST THE IMPUGNED ORDER DATED 22 ND AUGUST 2012 , PASSED BY THE LEARNED COMMISSIONER OF INC OME TAX (APPEALS) 26 , MUMBAI, FOR THE ASSESSMENT YEAR 2009 10. 2. GROUND NO.1, IS WITH RESPECT OF THE RELIEF PROVIDED BY THE LEARNED CIT(A) OF ` 87,85,011, OUT OF THE DISALLOWANCE OF ` 1,13,85,293, ON ACCOUNT OF WAGES MADE BY THE ASSESSING OFFICER. 3. T HE BRIEF FACTS, AS CULLED OUT FROM THE ORDERS OF THE AUTHORITIES BELOW ARE THAT THE ASSESSEE IS A PROPRIETOR OF M/S. JAI BHAVANI CONSTRUCTIONS, WHICH IS ENGAGED IN THE BUSINESS OF EXECUTING CIVIL CONTRACTS. IN THE ASSESSMENT ORDER, 2 ITA N O.6569/MUM./2012 (A.Y. 2009 10) DY. CIT VS. SMT. RADHA M. BIRADAR VARIOUS DISALLOWANCES WERE MADE BY THE ASSESSING OFFICER. ONE OF THE DISALLOWANCES WAS MADE UNDER THE HEAD WAGES . IT IS SEEN FROM THE ASSESSMENT ORDER THAT THE ASSESSEE HAD CLAIMED WAGES AMOUNTING TO ` 2,60,02,822. ACCORDING TO THE ASSESSING OFFICER, THE RATIO OF WAGES VIS A VIS TOTAL R ECEIPT OF ` 4,87,25,095 / - , COMES TO 53% , WHEREAS FOR THE IMMEDIATELY PRECEDING YEAR, THE ASSESSEE HAD DEBITED WAGES OF ` 1,25,42,896, ON THE TOTAL RECEIPTS OF ` 3,44,54,829, WHICH COMES TO 36% OF THE TOTAL RECEIPT. THE ASSESSING OFFICER OBSERVED THAT THE CLAI M OF WAGES WAS REASONABLE AT 30% OF THE TOTAL RECEIPT AND , ACCORDINGLY , HE RESTRICTED THE CLAIM OF THE ASSESSEE TO 30% OF THE TOTAL RECEIPT. CONSEQUENTLY, DISALLOWANCE OF ` 1,82,01,975 / - WAS MADE BY THE ASSESSING OFFICER. 4. THE ASSESSEE FILED APPEAL BEFORE T HE LEARNED CIT(A) AND MADE SUBMISSIONS ALONG WITH EVIDENCE S . THE LEARNED CIT(A) SENT THE MATTER BACK TO THE ASSESSING OFFICER FOR HIS EXAMINATION AND REMAND REPORT. THE LEARNED CIT(A) CONSIDERED THE REMAND REPORT AS WELL AS THE SUBMISSIONS OF THE ASSESSEE AND , THEREAFTER , R EDUCED THE DISALLOWANCE TO ` 26,00,282 / - , DELETING THE BALANCE. THE REVENUE HAS CHALLENGED THE ACTION OF THE LEARNED CIT(A) IN REDUCING THE DISALLOWANCE MADE BY THE ASSESSING OFFICER. 5. B EFORE US, THE LEARNED DEPARTMENTAL REPRESENTATIVE SUP PORTED THE ORDER OF THE ASSESSING OFFICER AND CONTENDED THAT THE DISALLOWANCE WAS RIGHTLY MADE BY THE ASSESSING OFFICER AND THE LEARNED CIT(A) HAS WRONGLY REDUCED THE AMOUNT OF DISALLOWANCE , PRAYING FOR REVERSING THE ACTION OF THE LEARNED CIT(A). 6. THE LEAR NED COUNSEL FOR THE ASSESSEE SUBMITTED THAT, IN FACT, NO DISALLOWANCE WAS CALLED FOR. THE LEARNED CIT(A) HAS BEEN VERY F AIR AND REASONABLE IN SUSTAINING THE PART DISALLOWANCE WHEREAS FULL DISALLOWANCE OUGHT TO HAVE BEEN DELETED BY THE LEARNED CIT(A). HE AL SO DREW OUR ATTENTION ON THE REMAND REPORT , COPY OF WHICH WAS ENCLOSED IN THE PAPER BOOK FILED BY THE REVENUE. 3 ITA N O.6569/MUM./2012 (A.Y. 2009 10) DY. CIT VS. SMT. RADHA M. BIRADAR 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL PLACED ON RECORD. IT IS SEEN THAT THE REMAND REPORT HAS BEEN CALLED FOR BY THE LEAR NED CIT(A) DURING THE APPELLATE PROCEEDINGS. THE ASSESSING OFFICER HAD FULL OPPORTUNITY TO EXAMINE ALL THE FACTS AND EVIDENCES AS WERE CONSIDERED APPROPRIATE BY HIM. THE REMAND REPORT IS AVAILABLE AT PAGE S 1 TO 8 OF THE PAPER BOOK FILED BY THE REVENUE. PAG E S 4 AND 5 OF CONTAIN THE RELEVANT PORTION OF THE REMAND REPORT , WHICH IS ON THIS ISSUE AND THE SAME IS REPRODUCED HEREUNDER FOR THE SAKE OF READY REFERENCE: C) DISALLOWANCE OF ` 1,82,01,975/ OUT OF WAGES I. DURING THE COURSE OF THE ASSESSMENT PROCEEDIN GS, IT WAS NOTICED THAT THE ASSESSEE HAS DEBITED A SUM OF RS.2,60,02,822/ - ON ACCOUNT OF WAGES TO THE P&L ACCOUNT, WHICH CONSTITUTES 53% OF THE TOTAL RECEIPTS OF RS.4,87,25,095/ - CREDITED TO THE P&L ACCOUNT. IN THE IMMEDIATELY PRECEDING YEAR, THE ASSESSEE HAD DEBITED WAGES OF RS.1,25,426/ - ON TOTAL RECEIPTS OF RS.3,44,54,829/ - , WHICH IS 36% OF THE TURNOVER. THE ASSESSEE HAD NOT FILED ANY SUPPORTING EVIDENCES IN RESPECT OF THE CLAIM. ALSO, NO JUSTIFICATION WAS GIVEN TO ACCOUNT FOR THE STEEP INCREASE IN THE E XPENDITURE CLAIMED ON ACCOUNT OF WAGES. ALSO, THE ASSESSEE HAD BEEN GIVING WORK ON SUB - CONTRACT BASIS TO OUTSIDE PARTIES. TAKING ALL THESE FACTS INTO ACCOUNT, THE ASSESSEE'S CLAIM OF WAGES WAS RESTRICTED TO 30% OF THE TOTAL RECEIPTS. HERE IT MAY BE MENTION ED THAT ALTHOUGH, A DISALLOWANCE OF RS.1,82,01,975/ - WAS MADE IN THE ASSESSMENT ORDER, THE SAME WAS SUBSEQUENTLY RECTIFIED UNDER SECTION 154 ON ACCOUNT OF AN ARITHMETICAL ERROR .IN THE COMPUTATION OF THE DISALLOWANCE. IN THE ORDER UNDER SECTION 154, PASSE D ON 21/2/2012, THE DISALLOWANCE W AS CORRECTLY WORKED OUT AT RS.1, 13 , 85 , 293/ - . II. DURING THE COURSE OF THE REMAND PROCEEDINGS, THE ASSESSEE HAS FILED A COMPARATIVE CHART OF THE CLAIM OF COST OF LABOUR VIS - A - VIS RECEIPTS IN RESPECT OF THE ASSESSMENT YEAR S 2008 09 TO 2011 - 12. WHILE WORKIN G OUT THE RATIO OF COST OF LABOUR TO RECEIPTS IN RESPECT OF THE ABOVE - MENTIONED ASSESSMENT YEARS, THE ASSESSEE HAS TAKEN INTO ACCOUNT EXPENSES SUCH AS. PAYMENT TO CONTRACTORS, WAGES AND SALARY. ON THE BASIS OF THIS WORKIN G, THE ASSESSEE HAS CONTENDED THAT THE CLAIM MADE IS LESS THAN THAT OF THE IMMEDIATELY PRECEDING YEAR. THE EXACT POSITION IN THIS REGARD HAS BEEN ENTABULATED AS UNDER: PARTICULARS 31/3/2011 31/3/2010 31/3/2009 31/3/2008 LABOUR CHARGES RECEIVED ` 4,15,1 0,100 ` 2,72,40,734 ` 4,87,25,095 ` 3,44,54,829 COST OF LABOUR (A) PAYMENTS TO SUB CONTRACTORS ` 1,41,22,423 ` 59,46,437 ` 26,08,279 ` 1,25,07,518 4 ITA N O.6569/MUM./2012 (A.Y. 2009 10) DY. CIT VS. SMT. RADHA M. BIRADAR (B) WAGES ` 1,28,24,737 ` 1,08,35,175 ` 2,60,02,822 ` 1,25,42,896 (C) SALARY ` 24,00,000 ` 22,47,400 ` 29,22 ,620 ` 1,25,42,896 RATIO OF COST OF LABOUR TO RECEIPTS 70.70 % 69.85 % 64.72 % 80.44 % III. THE WAG ES ARE CLAIMED TO HAVE BEEN PAID IN CASH TO VARIOUS PERSONS. THIS BEING SO, THE VERACITY OF THE CLAIM REMAINS UNASCERTAINABLE. IN SUPPORT OF THE EXPENDITURE D EBITED UNDER THIS HEAD, THE ASSESSEE HAS, VIDE LETTER DATED 11/6/2012, FILED COPY OF MUSTER SHEET FOR TWO MONTHS VIZ. APRIL 2008 AND JANUARY 2009, WHEREIN NAMES OF VARIOUS PERSONS APPEAR . PERUSAL OF THE REMAND REPORT SHOWS THAT THE ASSESSING OFFICER HAS EXAMINED ALL THE FACTS AND EVIDENCES. THE ASSESSEE SUBMITTED MUSTER S HEET OF WAGES BEFORE THE ASSESSING OFFICER. NOTHING ADVERSE THEREIN HAS BEEN FO UND BY THE ASSESSING OFFICER. FURTHER, IT MAY BE SEEN FROM THE HISTORY CHART THAT THE RATIO OF WAGES IN THE YEAR UNDER CONSIDERATION IS LOWEST IN FOUR YEARS. THERE IS NO PROHIBITION UNDER THE LAW THAT THE WAGES CANNOT BE PAID IN CASH. IT IS A WIDELY PREVALENT PRACTICE THAT WAGES ARE USUALLY PAID IN CASH IN OUR COUNTRY. THE WORKERS DO NOT NECESSARILY HAVE BANK A CCOUNT S . THE LAW ITSELF HAS PROVIDED THE PROVISION OF MAKING PAYMENT IN CASH SUBJECT TO THE LIMITS AS HAVE BEEN LAID IN SECTION 40A(3) OF THE ACT. THUS, SOMETHING WHICH IS PERMITTED BY LAW ITSELF CANNOT BE TAKEN BACK BY THE ASSESSING OFFICER INDIRECTLY. FU RTHER , THE ASSESSING OFFICER HAD BEFORE HIM COMPLETE FACTS AND EVIDENCE AND HE WAS FREE TO MAKE ANY FURTHER VERIFICATION IF HE HAD ANY DOUBTS. THUS, IN OUR CONSIDERED OPINION, THE LEARNED CIT(A) WAS VERY FA I R IN REDUCING THE DISALLOWANCE TO 10% OF THE TOTA L CLAIM MADE BY THE ASSESSEE. CONSEQUENTLY, THE ORDER OF THE LEARNED CIT(A) IS HEREBY AFFIRMED AND THE GROUND RAISED BY THE REVENUE IS DISMISSED. 8. GROUND NO.2, DEALS WITH THE ACTION OF THE LEARNED CIT(A) IN DELETING THE DISALLOWANCE OF ` 14,61,310, THAT WAS MADE OUT OF SALARY OF ` 29,22,620, BY THE ASSESSING OFFICER. 9. T HE DISALLOWANCE WAS MADE BY THE ASSESSING OFFICER ON AD HOC BASIS @ 50% OF THE TOTAL CLAIM ON THE GROUND THAT THIS CLAIM SHOULD HAVE BEEN FURTHER SUBSTANTIATED BY THE ASSESSEE ALONG WITH ADEQUA TE SUPPORTING EVIDENCE. 5 ITA N O.6569/MUM./2012 (A.Y. 2009 10) DY. CIT VS. SMT. RADHA M. BIRADAR 10. IN THE APPEAL BEFORE THE LEARNED CIT(A), REMAND REPORT WAS CALLED FOR AND THE ASSESSING OFFICER IN THE REMAND REPORT OBSERVED AS FOLLOWS: D) DISALLOWANCE OF 50% OF EXPENDITURE OF RS.29,22,620/ - CLAIMED UNDER THE HEAD SALARY DESP ITE SPECIFIC REQUEST DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, THE ASSESSEE DID NOT FILE REQUISITE DETAILS SUCH AS NAME OF THE EMPLOYEES, NATURE OF WORK ASSIGNED TO THEM ET CETERA. IT WAS ALSO NOTICED THAT THE ASSESSEE HAD SEPARATELY DEBITED HUGE E XPENDITURE OF RS.2,60,02,822/ - ON ACCOUNT OF WAGES. IN THE ABSENCE OF ANY SUPPORTING EVIDENCES IN THIS REGARD, 50% OF THE EXPENDITURE CLAIMED UNDER 'THIS HEAD WAS: DISALLOWED. AN ADDITION OF RS.14,61,31 O/ WAS, CONSEQUENTLY, MADE TO THE RETURNED INCOME. AL ONG WITH THE LETTER DATED 11/4/2012 FILED BEFORE YOUR GOOD 'SELF, THE ASSESSEE HAS FILED A CHART GIVING NAMES OF 25 PERSONS TO WHOM SALARY PAYMENT HAS BEEN MADE. OUT OF THE SAME, 8 PERSONS HAVE PERMANENT ACCOUNT NUMBERS. OUT OF THE BALANCE PARTIES, 7 PART IES APPARENTLY BELONG TO THE ASSESSEE'S FAMILY (BIRADLRAR GROUP). SINCE THESE PAYMENTS ARE MADE IN CASH, THE VERACITY OF THE ASSESSEE'S CLAIM IS NOT ASCERTAINABLE. DURING THE COURSE OF THE REMAND PROCEEDINGS, THE ASSESSEE HAS FILED COPY OF SALARY MUSTER FO R THE MONTH OF APRIL 2008 INDICATING PAYMENT OF SALARY OF RS.2,59,000/ - TO 19 EMPLOYEE. 11. BEFORE US, THE LEARNED DEPARTMENTAL REPRESENTATIVE RELIED UPON THE ORDER OF THE ASSESSING OFFICER AND PRAYED THAT THE ORDER OF THE ASSESSING OFFICER SHOULD BE RES TORED AND THE ORDER PASSED BY THE LEARNED CIT(A) SHOULD BE REVERSED. 12. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE LEARNED CIT(A) HAS RIGHTLY DELETED THE DISALLOWANCE AND SUBMITTED THAT EVERYTHING HAS BEEN EXAMINED BY THE ASSESSING OFFICER A ND, THEREFORE, THERE WAS NO REASON TO UPHOLD THE DISALLOWANCE. 13. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IT IS SEEN THAT COMPLETE DETAILS AND EVIDENCES HAVE BEEN FURNISHED BEFORE THE LEARNED CIT(A). THE ASSESSIN G OFFICER HAS EXAMINED THE DETAILS AND EVIDENCES AND NOTHING ADVERSE WAS FOUND AND HE WAS FREE TO EXAMINE WHATEVER FURTHER HE REQUIRED AND THE DISALLOWANCE CANNOT BE SUSTAINED MERELY ON THE GROUND THAT SALARY WAS PAID IN CASH , PARTICULARLY WHEN COMPLETE DE TAILS AND EVIDENCES ARE AVAILABLE. IT IS FURTHER SE EN THAT THE ASSESSEE SUBMITTED S ALARY M USTER , AND NOTHING 6 ITA N O.6569/MUM./2012 (A.Y. 2009 10) DY. CIT VS. SMT. RADHA M. BIRADAR ADVERSE HAS BEEN REPORTED IN THE REMAND REPORT. KEEPING IN VIEW THE FACTS AND SUBMISSIONS AND MATERIAL PLACED BEFORE US, WE FIND THAT NO INTERFEREN CE IS CALLED FOR IN THE ORDER OF THE LEARNED CIT(A). THUS, GROUND NO.2, RAISED BY THE REVENUE IS DISMISSED. 14. GROUND NO.3, DEALS WITH THE GRIEVANCE OF THE REVENUE IN ADMISSION OF ADDITIONAL EVIDENCE BY THE LEARNED CIT(A) IN TERMS OF RULE 46A OF THE I.T. RULES, 1962. 15. AFTER HEARING BOTH THE PARTIES AND ON A PERUSAL OF THE MATERIAL AVAILABLE ON RECORD, WE FIND THAT NO CASE HAS BEEN BROUGHT OUT BY THE LEARNED DEPARTMENTAL REPRESENTATIVE TO CONVINCE US AS TO HOW AND IN WHAT MANNER PROVISIONS OF RULE 46A HAS NOT BEEN COMP LIED WITH BY THE LEARNED CIT(A). ON THE OTHER HAND, IT IS SEEN BY US THAT THE LEARNED CIT(A) HAD CALLED FOR THE REMAND REPORT , PROVIDING THUS ADEQUATE OPPORTUNITY TO THE ASSESSING OFFICER TO EXAMINE ALL THE DETAILS AND EVIDENCE S BEING RELI ED UPON BY THE ASSESSEE . UNDER THE CIRCUMSTANCES, THE LEARNED CIT(A) WAS JUSTIFIED IN CONSIDERING THE EVIDENCES AND SUBMISSIONS SUBMITTED BY THE ASSESSEE. WE DERIVE SUPPORT F ROM THE JUDGMENT OF THE HON'BLE DELHI HIGH COURT IN CIT V/S VIRGIN SECURITIES & CR EDITS PVT. LTD. [2 0 11] 332 ITR 396 (DEL.) . THUS, IN NUT SHELL, WE FIND THAT THERE IS NO SUBSTANCE IN THE GROUND RAISED BY THE REVENUE AND THE SAME IS DISMISSED. 16. I N THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 7 TH AUGUST, 2015 SD/ - SD/ - SD/ - D. MANMOHAN (VICE PRESIDENT) SD/ - SANJAY ARORA (ACCOUNTANT MEMBER) MUMBAI, DATED: 07.08.2015 7 ITA N O.6569/MUM./2012 (A.Y. 2009 10) DY. CIT VS. SMT. RADHA M. BIRADAR COPY OF THE ORDER FORWARDED TO : (1) THE ASSESSEE; (2) THE REVENUE; (3) THE CIT(A); (4) THE CIT, MUMBAI CITY CONCERNED; (5) THE DR, ITAT, MUMBAI; (6) GUARD FILE . TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY (DY./ASSTT. REGISTRAR) ITAT, MUMBAI