M/S MEGHALAYA CONSTRUCTION & SUPPLY CO., SIKAR V. ASSISTATNT COMMISSIONER OF INCOME TAX, CIRCLE, SIKAR

ITA 694/JPR/2019

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 0852 (ITAT-JAIPUR)
• Duration Of Justice: 7 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-12-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2015-2016
• Appeal Filed On: 13-05-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ROONIPAL
• Assessee Lawyers: VEDANT AGRAWAL
• Keywords: Corroborative evidences
• Section: 143(3); 37

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S,B JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM VK;DJ VIHY LA-@ ITA. NO. 694/JP/2019 FU/KZKJ.K O'K Z@ ASSESSMENT YEARS : 2015-16 M/S MEGHALAYA CONSTRUCTION & SUPPLY CO. VILLAGE-PATAN, TEHSIL- NEEN KA THANA, SIKAR. CUKE VS. THE ACIT, CIRCLE, SIKAR. TOLFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AAWFM 4433 D VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI VEDANT AGRAWAL (ADV.) JKTLO DH VKSJ LS @ REVENUE BY : SMT. ROONIPAL (JCIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 16/12/2019 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT :19/12/2019 VKNS'K@ ORDER PER: VIKRAM SINGH YADAV, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF LD. CIT(A)-3, JAIPUR DATED 12.03.2019 FOR THE ASSESSMEN T YEAR 2015-16 WHEREIN THE ASSESSEE HAS TAKEN THE FOLLOWING SOLE G ROUND OF APPEAL: ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, LD. LOWER AUTHORITIES GROSSLY ERRED IN MAKING AND CONFIRMING LUMP SUM ADDITION OF RS. 2,00,000/- ON ACCOUNT OF LABOUR CHA RGES, REPAIR AND MAINTENANCE EXPENSES, PRINTING AND STATIONERY, OFFICE EXP. VEHICLE FUEL AND MAINTENANCE EXP. AND VEHICLE REPAI RING EXP. ITA NO. 694/JP/2019 M/S MAGHALAYA CONSTRUCTION & SUPPLY CO. ACIT 2 2. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSES SEE IS ENGAGED IN THE CIVIL CONSTRUCTION BUSINESS AND FILED ITS RETUR N OF INCOME DECLARING TOTAL INCOME OF RS. 1,02,82,840/- WHICH WAS SELECT ED FOR SCRUTINY AND THE ASSESSMENT WAS COMPLETED U/S 143(3) WHEREIN AN ADDITION OF RS. 2,00,000/- WAS MADE BY THE ASSESSING OFFICER ON ACCOUNT OF DISALLOWANCE OF CERTAIN EXPENSES CLAIMED BY THE ASS ESSEE IN ITS PROFIT AND LOSS ACCOUNT. ON THE APPEAL, THE SAME HAS BEEN CONFIRMED BY THE LD. CIT(A) AND AGAINST THE SAID FINDINGS, THE ASSES SEE IS IN APPEAL BEFORE US. 3. DURING THE COURSE OF HEARING, THE LD. AR SUBMITT ED THAT THE ASSESSEE IS ENGAGED IN THE CIVIL CONSTRUCTION ACTIV ITIES AND HAS REPORTED GROSS TURNOVER OF RS. 17,76,66,540/- AND DISCLOSED GROSS PROFIT MARGIN OF 14.29% AND NET PROFIT MARGIN OF 5.77%. IT WAS S UBMITTED THAT THE RESULTS SO DECLARED BY THE ASSESSEE ARE BETTER THAN A.Y. 2014-15 WHEREIN ON TURNOVER OF RS. 9,28,53,375/-, THE ASSES SEE HAS DISCLOSED GROSS PROFIT MARGIN OF 14.27% AND NET PROFIT MARGIN 5.08%. IT WAS SUBMITTED THAT THE ASSESSING OFFICER HAS ACCEPTED T HE BOOKS RESULTS SO DECLARED BY THE ASSESSEE EXCEPT THE FACT THAT CERTA IN EXPENSES HAVE BEEN DISALLOWED ON AN ADHOC BASIS. IT WAS SUBMITTED THAT NO SPECIFIC DEFECTS HAVE BEEN HIGHLIGHTED BY THE ASSESSING OFFI CER AND MERELY ON ACCOUNT OF CERTAIN VOUCHERS WERE SELF MADE AND CERT AIN EXPENSES HAVE BEEN INCURRED IN CASH, HE HAS DISALLOWED THE EXPENS ES ON LUMP SUM BASIS. IT WAS SUBMITTED THAT IT IS CLEARLY A CASE O F ADHOC DISALLOWANCE OF EXPENSES AND THE ADDITION SO MADE MAY BE DIRECTED T O BE DELETED. FURTHER RELIANCE WAS PLACED ON THE FINDING OF THE C OORDINATE BENCH IN ITA NO. 694/JP/2019 M/S MAGHALAYA CONSTRUCTION & SUPPLY CO. ACIT 3 CASE OF M/S KUMAR & BROTHERS VS. ITO (ITA NO. 656/JP/2018 DATED 19.09.2019). 4. PER CONTRA, THE LD. DR RELIED ON THE FINDINGS OF THE LOWER AUTHORITIES AND SUBMITTED THAT WHERE THE ASSESSEE H AS FAILED TO PRODUCE SUPPORTING EVIDENCE IN SUPPORT OF THE EXPENDITURE, THE DISALLOWANCE MADE BY THE AO AMOUNTING TO RS. 2,00,000/- IS REASO NABLE AND PROPER AND THE SAME MAY BE CONFIRMED. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE ASSESSING OFFICER HAS RECO RDED A FINDING THAT ON EXAMINATION OF BILLS AND VOUCHERS OF EXPENSES, I T WAS NOTICED THAT THE ASSESSEE DID NOT MAINTAIN PROPER AND COMPLETE V OUCHERS OF THESE EXPENSES AND SOME OF THE PAYMENTS WERE MADE IN CASH . FURTHER, IT WAS NOTICED BY THE ASSESSING OFFICER THAT SOME OF THE V OUCHERS OF THESE EXPENSES ARE SELF MADE AND WITHOUT SUPPORTING BILLS AND NOT VERIFIABLE FULLY, THEREFORE, HE HAS MADE A LUMPSUM DISALLOWANC E OF RS. 2,00,000/-. IN OUR VIEW, IN THE ABSENCE OF ANY SPECIFIC FINDING S THAT THE CLAIM OF THE EXPENDITURE ARE EITHER BOGUS OR NOT BEEN INCURRED W HOLLY AND EXCLUSIVELY FOR THE PURPOSES OF BUSINESS, THERE IS NO BASIS FOR MAKING ANY ADHOC DISALLOWANCE OF EXPENSES AND THE SAME CAN NOT BE SUSTAINED IN THE EYES OF LAW. WE FIND THAT SIMILAR ISSUE HAS BEEN EXAMINED BY THE COORDINATE BENCH IN CASE OF M/S KUMAR & BROTHERS VS . ITO (SUPRA) WHEREIN THE COORDINATE BENCH HAS HELD AS UNDER:- 5. I HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS RELEVANT MATERIAL ON RECORD. THE A.O. HAS GIVEN REASONS FOR MAKING AD HOC DISALLOWANCE OF RS. 1.50 LACS THAT TOO AS A LUMP SU M TRADING ITA NO. 694/JP/2019 M/S MAGHALAYA CONSTRUCTION & SUPPLY CO. ACIT 4 ADDITION AS THE FREIGHT EXPENSES WERE NOT FULLY SUP PORTED BY PROPER BILLS AND VOUCHERS. THOUGH THE TERM USED BY THE A.O. IN THE ASSESSMENT ORDER BEING THE TRADING ADDITION IS NOT JUSTIFIED WHEN THERE IS NO REJECTION OF BOOKS OF ACCOUNT U/S 145(3) OF THE ACT. HOWEVER, IN SUBSTANCE, THE A.O. HAS MADE THIS ADDITION ON ACCOUNT OF CLAIM OF EXPENSES NOT VERIFIABLE. THE A. O. HAS NOT GIVEN THE FINDING THAT THE CLAIM OF EXPENDITURE IS EITHER EXCESSIVE OR BOGUS HAVING REGARD TO THE FACTS OF TURNOVER DUR ING THE YEAR UNDER CONSIDERATION AND NATURE OF BUSINESS OF THE A SSESSEE. THERE IS NO DISPUTE THAT IN THE BUSINESS OF THE ASS ESSEE, THE FREIGHT EXPENSES ARE INEVITABLE AND THEREFORE, IF T HE CLAIM IS NOT FOUND TO BE EXCESSIVE OR BOGUS THEN MERELY BECAUSE OF THE SOME OF THE EXPENSES ARE NOT SUPPORTED BY PROPER VOUCHER S, NO AD HOC DISALLOWANCE IS CALLED FOR. THE LD. CIT(A) HAS CONF IRMED THE DISALLOWANCE IN PARA 5.4 AND 5.5 OF THE IMPUGNED OR DER AS UNDER: 5.4 I HAVE CONSIDERED THE ABOVE MENTIONED FACTS OF THE CASE. ANY EXPENDITURE OF THE NATURE MENTIONED ABOVE IS CLAIME D UNDER SECTION 37 OF THE ACT. IN ORDER TO GET THE DEDUCTIO N UNDER SECTION 37 OF THE ACT, PRIMARY ONUS LIES ON THE ASS ESSEE TO PROVE THAT SUCH EXPENDITURE ARE INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS OR PROFESSI ON. 5.5 IN THE INSTANT CASE, THE ASSESSEE HAS FAILED TO PROVIDE SUPPORTING DOCUMENTS TO PROVE THAT SUCH EXPENDITURE S ARE INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS OR PROFESSION. THEREFORE, IN MY CONSIDERED VIEW A DISA LLOWANCE OF RS. 1,50,000/- OUT OF THE EXPENSES CLAIMED ON TH E ABOVE MENTIONED EXPENDITURE IS REASONABLE TO COVER THE ITA NO. 694/JP/2019 M/S MAGHALAYA CONSTRUCTION & SUPPLY CO. ACIT 5 DISCREPANCIES MENTIONED BY THE A.O. IN THE ASSESSME NT ORDER. ACCORDINGLY, THE GROUND OF APPEAL ON THIS ISSUE IS DISMISSED. IF CERTAIN CLAIM OF EXPENDITURE IS NOT FOUND TO BE INCURRED WHOLLY AND EXCLUSIVELY FOR THE BUSINESS PURPOSE OF THE ASS ESSEE THEN THE SAME IS LIABLE TO BE DISALLOWED. HOWEVER, IF THE EX PENDITURE INCURRED BY THE ASSESSEE IS FOUND FOR THE BUSINESS PURPOSE OF THE ASSESSEE THEN DUE TO CERTAIN IRREGULARITY IN MAINTA INING THE SUPPORTING EVIDENCE AN AD HOC DISALLOWANCE IS NOT C ALLED FOR. ACCORDINGLY, WITHOUT SPECIFYING THE INSTANCE OF THE EXPENDITURE, WHICH IS EITHER EXCESSIVE OR FOUND NOT INCURRED FOR THE BUSINESS OF THE ASSESSEE, THE ACTION OF THE A.O. IN MAKING AD H OC DISALLOWANCE AND CONFIRMED BY THE LD. CIT(A) IS NOT JUSTIFIED. HENCE, AD HOC DISALLOWANCE OF RS. 1.50 LACS IS DELE TED. IN LIGHT OF ABOVE DISCUSSIONS, THE ADHOC DISALLOWAN CE OF EXPENSES SO MADE BY THE ASSESSING OFFICER IS HEREBY DIRECTED TO BE DELETED. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 19/12/2019. SD/- SD/- FOT; IKY JKO FOE FLAG ;KNO (VIJAY PAL RAO) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 19/12/2019. *SANTOSH ITA NO. 694/JP/2019 M/S MAGHALAYA CONSTRUCTION & SUPPLY CO. ACIT 6 VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- M/S MEGHALAYA CONSTRUCTION & SUPPLY CO., SIKAR. 2. IZR;FKHZ@ THE RESPONDENT- ACIT, CIRCLE, SIKAR. 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. 6. XKMZ QKBZY@ GUARD FILE { ITA NO. 694/JP/2019} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR