SHANTREDDY K. KODAMNALLI, NAVI MUMBAI V. ACIT 25(3), MUMBAI

ITA 7082/MUM/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 62646 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-07-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Assessment Year: 2006-2007
• Appeal Filed On: 13-10-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: BABAN D PATIL
• Keywords: Rejection of books of accounts; Opportunity of being heard; Additional evidence
• Section: 69C; 143(3); 145; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI , ! '# $ $ $ $ . &'(, ) '# '* BEFORE SHRI DINESH KUMAR AGARWAL, JM AND SHRI B. RAMAKOTAIAH,AM './ I.T.A. NO.7082/MUM/2010 ( ! , -, ! , -, ! , -, ! , -, / / / / ASSESSMENT YEAR : 2006-07) MR. SHANTREDDY K. KODAMNALLI, C-29, NEGHIBOUR HOOD SHOPPING COMPLEX, SECTOR -4, NERUL, NAVI MUMBAI 400 706. VS. ACIT 25(3), MUMBAI. #. ) './ PAN : AFSPK8717R ( ./ / // / APPELLANT ) .. ( 01./ / RESPONDENT ) ./ 2 3 '/ APPELLANT BY : SHRI ANIL THAKRAR 01./ 2 3 ' / RESPONDENT BY : SHRI BABAN D. PATIL ' 2 4) / // / DATE OF HEARING : 2-7-2012 5&- 2 4) / DATE OF PRONOUNCEMENT : 11-7-2012 / O R D E R PER DINESH KUMAR AGARWAL, J.M. THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED A GAINST THE ORDER DATED 06-08-2010 PASSED BY THE LD. CIT(A)- 35, MUMBAI FOR THE ASSESSMENT YEAR 2006-07. ITA 7082/M/2010 2 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE AS SESSEE AN INDIVIDUAL IS ENGAGED IN THE BUSINESS OF SUPPLY OF SUPPLYING OF O FC ACCESSORIES & TOOLS AND SUPPLYING LABOUR TO COMPLETE LABOUR JOB SUB-CONTRAC TS. THE RETURN OF INCOME WAS FILED DECLARING INCOME AT RS. 10,12,644/- ON 27 -06-2006. HOWEVER, THE ASSESSMENT WAS COMPLETED INCLUDING DISALLOWANCE OF UNSECURED LOAN AND LABOUR CHARGES ETC. AT AN INCOME OF RS. 73,72,979/- VIDE ORDER DTD. 19-12-2008 PASSED U/S 143(3) OF THE INCOME TAX ACT, 1961 (THE ACT). ON APPEAL THE LD. CIT(A) PARTLY ALLOWED THE APPEAL. 3. BEING AGGRIEVED WITH THE ORDER OF THE LD. CIT(A) THE ASSESSEE IS IN APPEAL BEFORE US. 4. GROUND NO. 1 IS AGAINST THE TRADING ADDITION OF RS.19,02,980/-. 5. BRIEF FACTS OF THE ABOVE ISSUE ARE THAT THE A.O. NOTICED THAT A SUM OF RS. 60,48,000/- WAS OUTSTANDING AS LABOUR CHARGES PAYAB LE. HE FURTHER NOTICED THAT THE SAME WAS PAID PARTLY BY CHEQUE AND PARTLY BY CASH IN THE SUBSEQUENT YEAR. HE FURTHER NOTICED THAT THE CASH PAYMENTS MA DE IN A SINGLE DAY EXCEEDED RS, 20,000/-. HE REQUIRED THE ASSESSEE TO FURNISH THE NAMES AND ADDRESSES OF THE PERSONS TO WHOM THE PAYMENTS WERE MADE AND ALSO SUBMIT CONFIRMATION FROM ALL THE PARTIES. THE ASSESSEE SUBMITTED THAT T HE LABOURERS WERE MIGRATING FROM PLACE TO PLACE AND THEY WERE STAYING IN TEMPOR ARY SHEDS OR TENT TILL THE COMPLETION OF WORK AND SUBSEQUENTLY THEY MOVED TO O THER SITE AND, THEREFORE, IT ITA 7082/M/2010 3 IS NOT POSSIBLE TO FILE CONFIRMATION. IT WAS CONTEN DED THAT THE ENTIRE PAYMENT WAS MADE FROM APRIL 2006 TO OCTOBER 2006 BY MEANS O F CHEQUE AND CASH. THE A.O. DID NOT ACCEPT THE REPLY ON THE GROUND THAT IF THE ASSESSEE HAD MADE THE PAYMENT AFTER SIX MONTHS, THEN IT IS POSSIBLE FOR T HE ASSESSEE TO FILE CONFIRMATION BUT THE SAME WAS NOT FILED. HE FURTHE R RELIED ON THE REMARKS OF THE AUDITOR IN THE TAX AUDIT REPORT STATING THAT IT WAS NOT POSSIBLE TO VERIFY THE PAYMENTS IN EXCESS OF RS. 20,000/- BY ACCOUNT PAYEE CHEQUE. HE, THEREFORE, ADDED RS. 60,48,000/- U/S 68 OF THE ACT. ON APPEAL , THE LD. CIT(A) OBSERVED THAT THE ADDITION MADE BY THE A.O. U/S 68 OF THE AC T IS TOTALLY INCORRECT. HE FURTHER OBSERVED THAT IN VIEW OF THE DECISION OF TH E TRIBUNAL IN MUSCOVITE CONSTRUCTION (ITA NO. 2856/MUM/09 (BCAJ), NO ADDIT ION CAN BE MADE U/S 69C OF THE ACT. HE FURTHER OBSERVED THAT THE ONLY POSSIBILITY IS TO REJECT THE BOOKS OF ACCOUNTS AND ESTIMATE THE INCOME OF THE AP PELLANT AND ACCORDINGLY HE APPLIED ESTIMATED PROFIT AT 8% OF THE TURNOVER OF R S. 2,37,87,238/- AND WORKED OUT THE INCOME FROM CONTRACT RECEIPTS RS. 19,02,980 /- AS AGAINST THE ADDITION OF RS. 61,63,000/- (RS. 60,48,000/- + RS. 20,000/- + RS. 75,000/- + RS. 20,000/-) MADE BY THE A.O. 6. AT THE TIME OF HEARING THE LD. COUNSEL FOR THE A SSESSEE WHILE REITERATING THE SAME SUBMISSIONS AS SUBMITTED BEFORE THE A.O. A ND LD. CIT(A) FURTHER SUBMITS THAT THE LD. CIT(A) WITHOUT ANY BASIS WAS N OT JUSTIFIED IN REJECTING THE BOOKS OF ACCOUNTS OF THE ASSESSEE AND IN APPLYING T HE NET PROFIT RATE OF 8% ON ITA 7082/M/2010 4 THE CONTRACT RECEIPTS SHOWN BY THE ASSESSEE. HE, T HEREFORE, SUBMITS THAT THE ADDITION MADE BY THE A.O. AND SUSTAINED BY THE LD. CIT(A) BE DELETED. 7. ON THE OTHER HAND, THE LD. D.R. SUPPORTS THE ORD ER OF THE A.O. AND THE LD. CIT(A). 8. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE RIVAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND T HAT THE FACTS ARE NOT IN DISPUTE. WE FURTHER FIND THAT IT IS ALSO NOT IN DI SPUTE THAT THE A.O. NEITHER REJECTED THE BOOKS OF ACCOUNTS U/S 145 OF THE ACT N OR APPLIED THE PERCENTAGE OF PROFIT ON THE GROSS RECEIPT OF RS. 2,37,87,238/-. THE LD. CIT(A) WITHOUT GIVING ANY OPPORTUNITY OF BEING HEARD TO THE ASSESSEE HAS REJECTED THE BOOKS OF ACCOUNT AND APPLIED THE PERCENTAGE OF PROFIT AT 8% ON THE TURNOVER OF RS. 2,37,87,238/-. IN THE ABSENCE OF ANY FINDING RECOR DED BY THE LD. CIT(A) THAT HE IS NOT SATISFIED ABOUT THE CORRECTNESS OR COMPLETEN ESS OF THE ACCOUNTS OF THE ASSESSEE OR THAT THE METHOD OF ACCOUNTING HAS NOT B EEN REGULARLY FOLLOWED BY THE ASSESSEE, WE ARE OF THE VIEW THAT THE LD. CIT(A ) WAS NOT JUSTIFIED IN REJECTING THE BOOKS OF ACCOUNTS AND IN ESTIMATING THE PROFIT. THIS BEING SO, AND KEEPING IN VIEW THAT THE OUTSTANDING PAYMENT MADE BY THE AS SESSEE DURING APRIL, 2006 TO OCTOBER, 2006 WAS NOT DISBELIEVED BY THE A.O., W E ARE OF THE VIEW THAT THE ADDITION OF RS. 19,02,980/- SUSTAINED BY THE LD. CI T(A) IS NOT SUSTAINABLE IN LAW AND ACCORDINGLY THE SAME IS DELETED. THE GROUND TA KEN BY THE ASSESSEE IS, THEREFORE, ALLOWED. ITA 7082/M/2010 5 9. GROUND NO. 2 IS AGAINST THE SUSTENANCE OF ADDITI ON OF RS. 1,61,000/- MADE BY THE A.O. U/S 68 OF THE ACT. 10. FACTS OF THE ABOVE ISSUE ARE THAT THE A.O. NOTE D THAT THE ASSESSEE HAS FAILED TO PROVE THE LOAN CONFIRMATION OF SHRI MAHES H KUMAR AND ARCHANA ENTERPRISES AMOUNTING TO RS. 1,61,000/- AND RS. 43, 000/- RESPECTIVELY AND HENCE HE ADDED RS. 2,04,000/- U/S 68 OF THE ACT. O N APPEAL, THE LD. CIT(A) WHILE OBSERVING THAT THE LOAN OF ARCHANA ENTERPRISE S IS AN OUTSTANDING LOAN, DELETED THE ADDITION OF RS. 43,000/- AND IN THE ABS ENCE OF ANY CONFIRMATION LETTER FROM MAHESH KUMAR, CONFIRMED THE ADDITION OF RS. 1,61,000/-. 11. AT THE TIME OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE SUBMITS THAT NOW THE ASSESSEE IS ABLE TO RECEIVE CONFIRMATION LETTER OF MAHESH KUMAR ALONG WITH HIS PAN APPEARING AT PAGE 1-2 OF THE ASSESSEES PAP ER BOOK AS ADDITIONAL EVIDENCE, THEREFORE, IN THE INTEREST OF JUSTICE THE ISSUE MAY BE SET ASIDE TO THE FILE OF THE A.O. 12. ON THE OTHER HAND, THE LD. D.R. SUPPORTS THE OR DERS OF THE A.O. AND THE LD. CIT(A). 13. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE RIVAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE FACTS ARE NOT IN DISPUTE INASMUCH AS IT IS ALSO NOT IN DISPUTE THAT THE ASSESSEE HAS NOT FILED ANY ITA 7082/M/2010 6 CONFIRMATION LETTER FROM MAHESH KUMAR EITHER BEFORE THE A.O. OR BEFORE THE LD. CIT(A). HOWEVER, AT THIS STAGE HE HAS FILED THE SA ME ALONG WITH THE PAN WITH A REQUEST TO ADMIT THE SAME AS AN ADDITIONAL EVIDENCE . AFTER CONSIDERING THE REASON SHOWN BY THE ASSESSEE, WE ADMIT THE SAME AND CONSIDER IT FAIR AND REASONABLE THE MATTER SHOULD GO BACK TO THE FILE OF THE A.O. AND ACCORDINGLY WE SET ASIDE THE ORDER PASSED BY THE REVENUE AUTHORITI ES ON THIS ACCOUNT AND SEND BACK THE MATTER TO THE FILE OF THE A.O. TO DECIDE T HE SAME AFRESH IN THE LIGHT OF OUR OBSERVATION HEREINABOVE AND ACCORDING TO LAW AF TER PROVIDING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THE GR OUND TAKEN BY THE ASSESSEE IS, THEREFORE, PARTLY ALLOWED FOR STATISTICAL PURPO SE. 14. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. 6 47 ! ,64 '82 9:; <$ < # 4 = 2 >4 ?@ ORDER PRONOUNCED IN THE OPEN COURT ON 11-7-2012. . 2 5&- ) 7 11-7-2012 & 2 F SD/- SD/- ( B. RAMAKOTAIAH ) ( DINESH KUMAR AGARWAL ) ) '# / ACCOUNTANT MEMBER ! '# / JUDICIAL MEMBER MUMBAI ; DATED 11/ 7/2012 .!.'./ . R.K. , SR. PS ITA 7082/M/2010 7 2 0!4 '? > '? > '? > (DY./ASSTT. REGISTRAR) , , , , / ITAT, MUMBAI