Assistant Commissioner of Income-tax, V. Mr. Sanjay Rambhau Shinde, Aurangabad

ITA 67/PUN/2014

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 9418 (ITAT-PUNE)
• Duration Of Justice: 4 year(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-01-2018
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 21-12-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 13-01-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MUKESH JHA
• Assessee Lawyers: ABHAY A AVACHAT
• Keywords: Unexplained investment; Principle of natural justice
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUNE , , , , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI , AM . / ITA NO. 67/PUN/2014 / ASSESSMENT YEAR : 2009 - 10 THE INCOME - TAX OFFICER , WARD - 2(3), AURANGABAD. / APPELLANT / V/S. MR. SANJAY RAMBHAU SHINDE, ASHOK NAGAR, MASANTPUR, MIDC CHIKALTHANA, AURANGABAD / RESPONDENT PAN : ATKPS6429C . / ITA NO.443/PUN/2014 / ASSESSMENT YEAR : 2009 - 10 MR. SANJAY RAMBHAU SHINDE, ASHOK NAGAR, MASANTPUR, MIDC CHIKALTHANA, AURANGABAD / APPELLANT PAN : ATKPS6429C / V/S. THE INCOME - TAX OFFICER , WARD - 2(3), AURANGABAD. / RESPONDENT ASSESSEE BY : SHRI ABHAY A. AVACHAT REVENUE BY : SHRI MUKESH JHA / DATE OF HEARING : 21.12.2017 / DATE OF PRONOUNCEMENT : 25 .01.2018 2 ITA NO. 67 & 443/PUN/2014 SANJAY RAMBHAU SHINDE / ORDER PER SUSHMA CHOWLA , JM THE CROSS APPEALS FILED BY THE REVENUE AND ASSESSEE ARE AGAINST THE ORDER OF CIT (APPEALS), AURANGABAD DATED 28.10.2013 RELATING TO ASSESSMENT YEAR 2009 - 10 AGAINST ORDER PASSED UNDER SECTION 143(3) R.W.S. 142(2A) OF INCOME TAX ACT, 1961 ( IN SHORT THE ACT). 2. THE CROSS APPEALS FILED BY THE REVENUE AND ASSESSEE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 3. THE REVENUE I N ITA NO.67/PUN/2014 HAS RAISED FOLLOWING GROUNDS OF APPEAL: - 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE HON'BLE CIT(A) WAS JUSTIFIED IN REJECTING THE SPECIAL AUDITORS REPORT AND MERELY ESTIMATING THE PROFITS @ 18%? 2. O N THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW WHETHER THE CIT(A) WAS JUSTIFIED IN IGNORING THE RATIO LAID DOWN BY THE HON'BLE SUPREME COURT IN THE CASE OF LAKSHMIRATION COTTON MILLS CO. LTD. REPORTED IN 73 ITR 634 THAT ONUS LIES ON THE ASSESS EE TO PROVE THE CLAIM OF EXPENDITURE? 3. WHETHER ON THE FACTS, AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE CIT(A)S DECISION OF RESTRICTION OF UNEXPLAINED INVESTMENT TO 50% OF WHAT WAS DETERMINED BY THE AO, IGNORING THE FACT THAT THE CASH BOOK WAS SHOWING NEGATIVE BALANCE ON THE DATE OF DEPOSIT OF CASH WAS JUSTIFIABLE? 4. THE ORDER OF THE AO BE RESTORED AND THAT OF THE HON'BLE CIT(A) BE VACATED. 5. THE APPELLANT CRAVES LEAVE TO ADD, AMEND OR ALTER ANY GROUNDS OF APPEAL. 4. THE ASSESSEE I N ITA NO.443/PUN/2014 HAS RAIS ED FOLLOWING GROUNDS OF APPEAL: - 3 ITA NO. 67 & 443/PUN/2014 SANJAY RAMBHAU SHINDE 1. ON THE FACTS AND UNDER THE CIRCUMSTANCES PREVAILING IN THE CASE AND AS PER THE PROVISIONS OF LAW, THE CIT APPEAL HAS NOT JUSTIFIED IN ADOPTING THE PROFIT AT 18% OF GROSS CONTACT RECEIPTS AS AGAINST THE PROFIT MARGIN IN THIS LINE OF BUSINESS IS RANGING 5% TO 6.5%. THEREFORE, IT IS REQUESTED THAT THE PROFIT MARGIN MAY KINDLY BE ADOPTED AT 5% OF THE GROSS RECEIPT, CONSIDERING THE FACTS AND EXPLANATION FILED BY THE APPELLANT BEFORE THE CIT APPEAL . 2. ON THE FACTS AND UNDER THE CIRCUMSTANCES PREVAILING IN THE CASE AND AS PER THE PROVISIONS OF LAW, THE CIT APPEAL IS NOT JUSTIFIED IN CONFIRMING THE DISALLOWANCE AT 40% I.E. OF RS.1,30,310/ - AGAINST THE DISALLOWANCE MADE BY THE A.O. AT RS. 3,25,776/ - ON ACCOUNT OF VARIOUS EXPENSES CLAIMED BY THE ASSESSEE. IT IS REQUESTED THAT THE AMOUNT CONFIRM ED BY THE CIT APPEAL MAY KINDLY BE DELETED, CONSIDERING THE FACTS AND EXPLANATION FILED BY THE APPELLANT BEFORE THE CIT APPEAL. 3. ON THE FACTS AND UNDER THE CIRCUMSTANCES PREVAILING IN THE CASE AND AS PER THE PROVISIONS OF LAW, THE CIT APPEAL IS NOT JUSTIFIED IN CONFIRMING THE AMOUNT OF RS.1,11,488/ - UNDER THE HEAD SHORTAGE OF CASH. IT IS REQUESTED THAT THE ADDITION CONFIRMED AT RS.1,11,488/ - MA Y KINDLY BE DELETED, CONSIDERING THE FACTS AND EXPLANATION FILED BY THE APPELLANT BEFORE THE CIT APPEAL. THE APPELLANT CRAVES THE PERMISSION TO ADD, AMEND, ALTER, REVISE, SUBSTITUTE, DELETE ANY OR ALL GROUNDS OF APPEAL IF DEEMED NECESSARY AT THE TIME OF HE ARING OF APPEAL. 5. BRIEFLY, IN THE FACTS OF THE CASE, THE ASSESSEE WAS AN INDIVIDUAL, WHOSE CASE WAS SELECTED FOR SCRUTINY. SEVERAL OPPORTUNITIES WERE GIVEN TO THE ASSESSEE BY THE ASSESSING OFFICER. THERE WERE CERTAIN DISCREPANCIES NOTED IN THE BOOKS OF ACCOUNT AND REFEREN CE WAS MADE FOR SPECIAL AUDIT UNDER SECTION 142(2A) OF THE ACT. THE SPECIAL AUDITOR PREPARED THE AUDIT REPORT UNDER SECTION 142(2A) OF THE ACT BASED ON THE DOCUMENTS PROVIDED TO HIM BY THE ASSESSING OFFICER, AS THE ASSESSEE DID NOT COOPERATE IN THE AUDIT PROCEEDINGS. HE THUS, RECASTED THE CASH BOOK, GENERAL AND BANK BOOK BASED ON THE DETAILS MADE AVAILABLE TO HIM AND PREPARED FRESH BALANCE SHEET AND PROFIT AND LOSS ACCOUNT. IN THE CREDIT SIDE, THE RECEIPTS OF LABOUR CONTRACT BUSINESS AS PER 26AS TAKEN AT 48,87,211/ - AS AGAINST 46,42,531/ - SHOWN BY THE ASSESSEE. THE OTHER ENTRIES WERE ALSO RECASTED. ANOTHER POINT WHICH WAS NOTED WAS THE CLAIM OF EXPENDITURE, WHEREIN MAJOR EXPENSES WERE ON SALARY AND WAGES OF 3 3 ,29,493/ - THE AUDITOR GAVE A REMARK TH AT THE ASSESSING OFFICER MAY ALLOW SOME EXPENSES 4 ITA NO. 67 & 443/PUN/2014 SANJAY RAMBHAU SHINDE CONSIDERING THE RELEVANT FACTS AND BUSINESS OF THE ASSESSEE. THE ASSESSING OFFICER DID NOT ALLOW THE PAYMENT OF SALARY AND WAGES, IN THE ABSENCE OF ANY DETAILS BEING FILED BY THE ASSESSEE AND ALSO BECAUSE T HERE WAS CASH DEFICIT IN THE BOOKS OF ACCOUNT. FURTHER, THE CLAIM OF EXPENSES WERE UNDER VARIOUS HEADS, OUT OF WHICH SUM OF 3,25,776/ - WAS DISALLOWED, IN ADDITION, VARIOUS OTHER DISALLOWANCES WERE MADE. 6. THE CIT(A) IN RESPECT OF FIRST ESTIMATION OF PROFIT AND DISALLOWANCES ON SALARY AND WAGES CLAIMED BY THE ASSESSEE , CONSIDERED THE ISSUE TOGETHER AND HELD THAT THE PERCENTAGE ADOPTED BY THE ASSESSING OFFICER IN THE LABOUR ORIENTED BUSINESS WAS HIGH AND HENC E, HE OBSERVED THAT THE DISALLOWANCE OF 26,00,520/ - OUT OF SALARY AND WAGES EXPENDITURE WAS NOT JUSTIFIED. IN RESPECT OF ADDITION OUT OF OTHER EXPENSES, WHEREIN THE ASSESSING OFFICER HAD ALLOWED 25% OF TOTAL EXPENDITURE, THE CIT(A) HELD THAT ENDS OF JUS TICE WOULD BE MET IF THE DISALLOWANCE IS RESTRICTED TO 40%. ANOTHER ADDITION MADE IN THE HANDS OF ASSESSEE WAS ON ACCOUNT OF CASH DEFICIT, WHEREIN THE CIT(A) HELD THAT ON PROPORTIONATE BASIS THE DISALLOWANCE HAS TO BE WORKED OUT AND THOUGH THE CONTENTION OF ASSESSEE WAS NOT PROVED TO THE H ILT, WAS HELD TO BE REASONABLE BY THE CIT(A) AND ADDITION WAS CONFIRMED TO 50% OF 2,22,976/ - 7. BOTH THE ASSESSEE AND THE REVENUE ARE IN APPEAL AGAINST THE ORDER OF CIT(A). 8. SHRI ABHAY A. AVACHAT APPEARED ON BEHAL F OF THE ASSESSEE AND SHRI MUKESH JHA APPEARED ON BEHALF OF THE REVENUE AND PUT FORWARD THEIR CONTENTIONS. 5 ITA NO. 67 & 443/PUN/2014 SANJAY RAMBHAU SHINDE 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE FIRST ISSUE RAISED BY THE ASSESSEE IN GROUND OF APPEAL NO.1 IS AGAINST ESTIMAT ION OF PROFIT IN THE HANDS OF ASSESSEE AND THE REVENUE IS ALSO IN APPEAL AGAINST THE ORDER OF CIT(A) VIDE GROUND OF APPEAL NO.1 IN SCALING DOWN THE ESTIMATION OF PROFIT. THE GROUND OF APPEAL NO.2 RAISED BY THE ASSESSEE IS AGAINST RESTRICTION OF DISALLOWAN CE UNDER SEVERAL HEADS TO THE EXTENT OF 40% BY THE CIT(A) TOTALING 3,25,776/ - . THE LIMITED PLEA RAISED BY THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE BEFORE US IS THAT IT CAN JUSTIFY ITS CLAIM OF SALARY EXPENSES TO THE EXTENT OF 3 3,29,493 / - AND EVEN FOR OTHER EXPENSES TOTALING 3,25,776/ - . HE STATED THAT INADVERTENTLY, THESE DETAILS WERE NOT AVAILABLE BEFORE THE ASSESSING OFFICER IN ASSESSMENT PROCEEDINGS . IN THE TOTALITY OF THE ABOVE SAID FACTS AND CIRCUMSTANCES AND LOOKING AT THE DISALLOWANCES MADE IN THE HANDS OF ASSESSEE ESPECIALLY WHERE THE ASSESSEE IS ENGAGED IN LABOUR ORIENTED BUSINESS, THE CLAIM OF ASSESSEE OF HAVING PAID LABOUR CHARGES CANNOT BE DENIED. SO, FOLLOWING THE PRINCIPLES OF NATURAL JUSTICE, WE DEEM IT FIT TO RESTORE THE ISSUE OF CLAIM OF SALARY AT 3 3 , 29 , 493 / - AND CLAIM OF OTHER EXPENSES AT 3,25,776/ - BACK TO THE FILE OF ASSESSING OFFICER. THE ASSESSEE IS DIRECTED TO JUSTIFY THE CLAIM ALONG WITH SUPPORTING VOUCHERS AND THE ASSESSING OFFICER IS DIRECTED TO ALLOW THE CLAIM OF ASSESSEE AFTER VERIFYING THE SAME AND PROVIDING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE, WHO IS ALSO DIRECTED TO COOPERATE AND PRODUCE THE EVIDENCE BEFORE THE ASSESSING OFFICER . T HE ASSESSING OFFICER SHALL COMP UTE THE BALANCE INCOME IN THE HANDS OF ASSESSEE ACCORDINGLY. THE GROUNDS OF APPEAL 1 AND 2 RAISED BY THE ASSESSEE AND GROUNDS OF APPEAL NO.1 AND 2 RAISED BY THE REVENUE ARE THUS, ALLOWED FOR STATISTICAL PURPOSES. 10. NOW, COMING THE LAST ISSUE RAISED BY WAY OF GROUND OF APPEAL NO.3 BY THE ASSESSEE AND ALSO GROUND OF APPEAL NO.3 RAISED BY THE REVENUE, WHICH IS 6 ITA NO. 67 & 443/PUN/2014 SANJAY RAMBHAU SHINDE AGAINST CASH DEFICIT OF 2,22,976/ - . THE ASSESSING OFFICER DETECTED THAT THERE WAS CASH DEFICIT OF 2,22,976/ - WHICH WAS NOT EXPLAINED BY THE ASS ESSEE AND HENCE, THE SAME WAS ADDED. THE CIT(A) ON THE OTHER HAND, ALLOWED 50% OBSERVING THAT THOUGH THERE IS NO MERIT IN THE CLAIM OF ASSESSEE BUT HE ALLOWED 50%. WE FIND NO MERIT IN THE OBSERVATIONS OF CIT(A) IN THIS REGARD AND THE ORDER OF CIT(A) IS R EVERSED. THE ADDITION OF 2,22,976/ - ON ACCOUNT OF CASH DEFICIT IS THUS, CONFIRMED. THE GROUND OF APPEAL NO.3 RAISED BY THE ASSESSEE IS DISMISSED AND THE GROUND OF APPEAL NO.3 RAISED BY THE REVENUE IS ALLOWED. 11. IN THE RESULT, BOTH THE APPEALS OF ASS ESSEE AND THE REVENUE ARE PARTLY ALLOWED. ORDER PRONOUNCED ON THIS 25 TH D AY OF JANUARY, 201 8 . SD/ - SD/ - ( ANIL CHATURVEDI ) ( SUSHMA CHOWLA) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE; / DATED : 25 TH JANUARY, 2018 GCVSR / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT(APPEALS), AURANGABAD. 4. THE CIT, AURANGABAD. 5. , , , / DR, ITAT, B BENCH, PUNE. 6. / GUARD FILE. / BY ORDER, //TRUE COPY// / SR. PRIVATE SECRETARY , / ITAT, PUNE