The DCIT, 5(1), Indore V. Shri Rajesh Ajmera HUF, Khargone

ITA 669/IND/2013

• Counselvise Citation: 66922714 RSA 2013
• Duration Of Justice: 1 year(s) 9 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-08-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 13-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R R MEENA
• Keywords: Corroborative evidences

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. 669/IND/2013 A.Y. : 2010-11 DY. CIT, SHRI RAJESH AJMERA, (HUF), 5(1), VS 16, KHARGONE ROAD, INDORE. SANAWAD, DISTT. KHARGONE APPELLANT RESPONDENT P.A.N. NO A ARHS6492R APPELLANT BY SHRI R.R.MEENA, DR RESPONDENT BY NONE. DATE OF HEARING : 12.08.2015. DATE OF PRONOUNCEMENT : .08.2015 -: 2: - 2 O R D E R PER GARASIA, J.M. THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF CIT(A)-II, INDORE, DATED 14.08.2013 FOR THE ASSE SSMENT YEAR 2010-11. 2. FOLLOWING GROUNDS HAVE BEEN TAKEN BY THE REVENUE : I) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN DELETING THE ADDITION RIGHT LY MADE BY THE ASSESSING OFFICER ON ACCOUNT OF MACHINERY RENT OF RS. 1,28,160/- AS THE GROSS RECEIPTS OF THE ASSESSEE FROM THE CIVIL CONSTRUCTIO N BUSINESS DECLINED THAN THAT OF THE LAST YEAR AND TH E ASSESSEE WAS NOT ABLE TO SUBMIT WRITTEN REPLY AND PRODUCE BOOKS OF ACCOUNT OR ANY POSITIVE MATERIAL ON RECORD. II) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS . 40,05,503/- RIGHTLY MADE BY THE ASSESSING OFFICER ON ACCOUNT OF MATERIAL CONSUMED AS THE ASSESSEE -: 3: - 3 HAS NOT PROVIDED ANY DETAILS AND EVIDENCES FOR CONSUMPTION OF MATERIAL. THE CONTENTION OF THE LD. CIT(A) THAT THE ASSESSEE WAS NOT AFFORDED AN OPPORTUNITY TO EXPLAIN THE INCREASE IN CONSUMPTION OF MATERIAL BEARS NO MERIT AND IS NOT ACCURATE AS THE ASSESSEE WAS GIVEN SUFFICIENT OPPORTUNITY BEFOR E MAKING BEST JUDGMENT ASSESSMENT UNDER THE INCOME-TAX ACT, 1961. III) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF R S. 2,42,919/- RIGHTLY MADE BY THE ASSESSING OFFICER ON ACCOUNT OF DISALLOWANCE OUT OF INTEREST EXPENSES AS THE ASSESSEE HAS NOT DEDUCTED TDS ON SUCH INTEREST PAYMENTS. GROUND NO. (I) : 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HAS CHALLENGED THE ADDITION OF RS. 1,28,160/- ON ACCOUN T OF MACHINERY RENT. DURING THE COURSE OF ASSESSMENT PRO CEEDINGS IT WAS FOUND THAT IN LAST YEAR I.E. FINANCIAL YEAR 2008-09 -: 4: - 4 ASSESSEE HAS SHOWN MACHINERY RENT OF RS. 1,28,160/- BUT THIS YEAR NO RENT HAS BEEN SHOWN. THE ASSESSEE HAS NOT S UBMITTED ANY REPLY IN THIS REGARD. THE GROSS RECEIPT OF THE ASSESSEE FROM THE CIVIL CONSTRUCTION BUSINESS IS ALSO DECLINED TH EN THAT OF LAST YEAR AS SUCH THERE MAY BE POSSIBILITY OF SPARI NG THE PLANT AND MACHINERY AND GIVEN ON HIRE. AS SUCH AMOUNT OF MACHINERY RENT OF RS. 1,28,160/- IS ADDED TO THE IN COME OF THE ASSESSEE. 4. THE MATTER CARRIED TO LD. CIT(A). THE LD. CIT(A) DE LETED THE ADDITION BY OBSERVING AS UNDER :- I HAVE GONE THROUGH THE ASSESSMENT ORDER, THE SUBMISSIONS OF THE ASSESSEE AS REPRODUCED ABOVE AND ALSO DISCUSSED THE ISSUE DURING THE COURSE OF APPEL LATE PROCEEDINGS. THE COUNSEL OF APPELLANT HAVE VEHEMENT LY DENIED OF HAVING GIVEN ANY MACHINERY ON HIRE DURING THE YEAR UNDER CONSIDERATION. THEREFORE, IN THE ABSENCE OF ANY THING CONTRARY TO THE CONTENTION OF THE ASSESSE E BROUGHT ON RECORD BY THE ASSESSING OFFICER, THE ADD ITION UNDER THIS HEAD IS FOUND TO BE NOTIONAL AS SUCH NOT -: 5: - 5 SUSTAINABLE. THEREFORE, THE SAME IS DELETED. THE AP PELLANT GETS RELIEF OF RS. 1,28,160/-. 5. THE ASSESSEE DID NOT REMAIN PRESENT DURING THE COUR SE OF HEARING OF THIS APPEAL. 6. THE LD. D.R. COULD NOT CONTROVERT THE FINDING OF THE LD. CIT(A). WE FIND THAT THE LD. CIT(A) HAS RIGHTLY DELETED THE ADDITION. OUR INTERFERENCE IS NOT CALLED FOR. GROUND NO. (II) : 7. THE ASSESSEE HAS CHALLENGED THE ADDITION OF RS. 40 .05 LACS ON ACCOUNT OF INCREASED COST OF CONSUMPTION OF MATERIAL. 8. THE SHORT FACTS OF THE CASE ARE THAT DURING THE COU RSE OF ASSESSMENT PROCEEDINGS, IT WAS FOUND THAT IN THE YEAR UNDER CONSIDERATION ASSESSEE HAS SHOWN MATERIAL CONSUMPTI ON OF RS. 1,64,94,943/- ON GROSS RECEIPT OF RS. 3,87,58,1 61/- WHICH IS 42.55% OF THE RECEIPT. IN THE EARLIER YEAR, THE ASSESSEE HAS SHOWN CONSUMPTION OF MATERIAL FOR S. 2,00,47,331/- ON GROSS RECEIPT OF RS. 6,22,12,370/- WHICH IS ONLY 32.22 %. THE ASSESSEE HAS NOT PROVIDED ANY DETAILS AND EVIDENCES FOR CONSUMPTION OF MATERIAL AS SUCH CONSUMPTION IS REST RICTED TO -: 6: - 6 RS. 1,24,89,440/- AND EXCESS CLAIM OF CONSUMPTION O F MATERIAL OF RS. 40,05,503/- IS DISALLOWED AND ADDED TO THE INCOME OF THE ASSESSEE. 9. THE MATTER CARRIED TO LD. CIT(A). THE LD. CIT(A) DE LETED THE ADDITION BY OBSERVING AS UNDER :- I HAVE GONE THROUGH THE RELEVANT PART OF THE ASSESSMENT ORDER, THE SUBMISSION OF THE ASSESSEE, COMPARATIVE TRADING AND PROFIT AND LOSS ACCOUNT FOR LAST TWO YEARS. THE CONTENTION OF THE ASSESSEE HAS FOUND TENABLE FOR FOLLOWING REASONS :- THE AO SEEMS TO HAVE PROCEEDED TO MAKE ADDITION ON ACCOUNT OF INCREASED CONSUMPTION OF MATERIAL WITHOUT CORRELATING THE SAME WITH THE OVERALL TRADING/ CONTRACT RESULTS. IT IS SEEN THAT THE NPR DURING THE YEAR CONSIDERATION HAS BEEN DISCLOSED AT 4.20 % AS COMPARED TO 3.27% IN THE ASSESSMENT YEAR 09-10 AND 3.49% IN THE ASSESSMENT YEAR 08- 09. THEREFORE, IT IS CLEAR THAT THE PROFITABILITY O F THE CONTRACT BUSINESS HAS GONE UP DURING THE YEAR UNDER CONSIDERATION. -: 7: - 7 FROM PERUSAL OF THE ASSESSMENT ORDER AND THE SUBMISSIONS OF APPELLANT, IT TRANSPIRES THAT THE APPELLANT WAS NOT AFFORDED AN OPPORTUNITY TO EXPLAIN THE INCREASE IN CONSUMPTION OF MATERIAL. IN ORDER TO ASCERTAIN THE TRUE STATE OF AFFAIR OF CONTRACT BUSINESS , THE GROUPING OF ALL THE DIRECT EXPENSES WERE DONE AND GPR WAS DRAWN FOR THE RELEVANT YEAR AND ALSO FOR THE ASSESSMENT YEAR 2009-10. IT IS SEEN THAT FOR THE ASSESSMENT YEAR UNDER CONSIDERATION, GPR WAS 16.55% WHEREAS THE SAME HAS BEEN FOUND AT 9.93% IN THE ASSESSMENT YEAR 09-10. THEREFORE , IT IS CLEAR THAT DURING THE RELEVANT PERIOD, THE GROSS PROFIT RATE HAS GONE UP DESPITE INCREASE IN COST OF MATERIAL WHICH EVIDENTLY INDICATES THAT THE NATURE OF CONTRACT UNDERTAKEN DURING THE YEAR UNDER CONSIDERATION WAS MORE MATERIAL INTENSIVE AND LESS LABOUR INTENSIVE. THIS FACTOR CAN BE SEEN FROM THE COMPARATIVE LABOUR CHARGES PAID DURING -: 8: - 8 THE RELEVANT ASSESSMENT YEAR AND IN THE AY 09-10. IT IS OBSERVED THAT LABOUR EXPENSES TO TURNOVER RATIO DURING THE ASSESSMENT YEAR UNDER CONSIDERATION WAS 28% WHEREAS THE SAME WAS FOUND TO BE AT 41.62% IN THE AY 09-10. SIMILARLY, IF WE COMPARE THE HEAD WISE DIRECT EXPENSES DEBITED TO P& L ACCOUNT FOR THE RELEVANT ASSESSMENT YEAR WITH THOSE OF EARLIER YEARS, WE WILL FIND THE SAME RESULT AS DRAWN AT PARA 3 ABOVE WHICH FURTHER STRENGTHENS THE INFERENCE DRAWN ABOVE. THE AO SHOULD HAVE UNDERTAKEN COMPARATIVE ANALYSIS OF BUSINESS RESULTS FOR VARIOUS ASSESSMENT YEARS AND THE SAME SHOULD HAVE BEEN COMPARED WITH THE RESULTS OF OTHER ASSESSEE IN THE SIMILAR L INE OF CONTRACT BUSINESS IN ORDER TO COME TO SOME DEFIN ITE CONCLUSION. THE ANALYSIS HAS NOT BEEN FOUND MADE AND RELEVANT SUPPORTING EVIDENCES HAVE NOT BEEN BROUGHT ON RECORD BY THE ASSESSING OFFICER TO ARRIV E -: 9: - 9 AT THE CONCLUSION. IN VIEW OF THE ABOVE DISCUSSION, I AM OF CONSIDERED VIEW THAT THE ADDITION OF RS. 40,05,503/- ON ACCOUN T OF CONSUMPTION OF MATERIAL WAS NOT WARRANTED WHEN OVERALL GPR AND N.P.R. WERE HIGHER THAN EARLIER YEARS. ACCORDINGLY, THE ADDITION IS HEREBY DELETED. THE APPELLANT GETS RELIEF OF RS. 40,05,503/-. 10. THE LD.D.R. COULD NOT BRING ANY CONTRARY MATERIAL AGAINST THE FINDING OF LD. CIT(A). IN ABSENCE OF AN Y MATERIAL BEFORE US, WE HAVE NO ALTERNATIVE EXCEPT TO ENDORSE THE ACTION OF THE CIT(A). GROUND NO. (III) : 11. THE ASSESSEE HAS CHALLENGED THE DISALLOWANCE OF RS. 2,42,918/- OUT OF INTEREST PAYMENT BY INVOKING PROV ISION U/S 40(A)(IA). 12. THE FACTS ARE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS NOTICED THAT THE ASSESSEE HAS T AKEN LOAN FROM MAGMA FINCORP LIMITED AND MADE PAYMENT OF INTE REST OF RS. 2,42,919/- TO IT. HOWEVER, THE ASSESSEE HAS NO T DEDUCTED -: 10: - 10 TDS AS PER PROVISIONS OF SECTION 194A OF THE ACT. A S SUCH THE AMOUNT OF INTEREST IS NOT ALLOWABLE DEDUCTION AS PE R PROVISION OF SECTION 40(A)(IA) OF THE ACT. THE ASSESSEE WAS A SKED TO GIVE DETAILS OF TDS DEDUCTED TO THIS COMPANY, BUT THE AS SESSEE HAS NOT MADE ANY COMPLIANCE TO THE NOTICE. AS SUCH A DISALLOWANCE OF RS. 2,42,919/- WAS MADE BY THE ASSE SSING OFFICER AND ADDED TO THE INCOME OF THE ASSESSEE. 13. THE MATTER CARRIED TO LD. CIT(A). THE LD. CIT(A) DE LETED THE ADDITION. 14. WE HAVE HEARD THE LD. D.R. THE LD. D.R. COULD NOT BRING ANY MATERIAL CONTRARY TO THE MATERIAL AGAINST THE FINDING OF CIT(A). IN ABSENCE OF ANY MATERIAL BEFORE US, WE HAVE NO OPTION BUT TO ENDORSE THE ACTION OF THE CIT(A). GRO UND (III) FAILS. -: 11: - 11 15. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISS ED. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 27 TH AUGUST, 2015. SD/- (B. C. MEENA) ACCOUNTANT MEMBER SD/- ( D.T.GARASIA) JUDICIAL MEMBER DATED : 27 TH AUGUST, 2015. CPU* 248