Income Tax Officer-3(3), Kanpur V. Raj Kumar Sachan, Kanpur Dehat

ITA 756/LKW/2014

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 2041 (ITAT-LUCKNOW)
• Duration Of Justice: 11 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 22-07-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 30-09-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 68; 144

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.756/LKW/2014 ASSESSMENT YEAR 2010-11 RAJ KUMAR SACAN, PROP. M/S JAI SAI BABA TUBE WELLS MILL COLONY, PUKHRAYAN, BHONGIPUR, KANPUR DEHAT VS INCOME TAX OFFICER-3(3), 16/69, AAYAKAR BHAWAN, CIVIL LINES, KANPUR - 208001 PAN AVFPS 6332 P (RESPONDENT) (APPELLANT) SMT. JYOTI VERMA, DR APPELLANT BY SHRI RAKESH GARG, ADVOCATE RESPONDENT BY 30 /07/2015 DATE OF HEARING 31 /08/2015 DATE OF PRONOUNCEMENT O R D E R PER A. K. GARODIA, A.M. THIS IS AN ASSESSEES APPEAL DIRECTED AGAINST THE O RDER PASSED BY LEARNED CIT (A)-III, LUCKNOW DATED 06/06/2014 FOR THE ASSES SMENT YEAR 2010-11. 2. THE GROUNDS RAISED BY THE REVENUE ARE AS UNDER: 1. THE LD. CIT (A)-II, KANPUR HAS ERRED IN LAW A ND ON FACTS IN DELETING THE ADDITION OF RS. 10,93,505/-OUT OF T OTAL ADDITION OF RS. 12,93,505/-, MADE BY THE ASSESSING OFFICER ON ACCOUNT OF LABOUR EXPENSES, WITHOUT APPRECIATING THE FACT THAT ALL EXPENSES UNDER THIS HEAD HAVE BEEN MADE IN CASH ON DIFFERENT DATES AND THERE WERE NO PROPER EVIDENCES WHICH COULD PROVE THE GENUINENESS AND REASONABILITY OF THE SAID EXPENDITU RE. 2. THE LD. CIT (A)-II, KANPUR HAS ERRED IN LAW A ND ON FACTS IN DELETING THE ADDITION OF RS. 1,40,000/-OUT OF TO TAL ADDITION OF RS. 2,00,000/-, MADE BY THE ASSESSING O FFICER ON ACCOUNT OF OTHER EXPENSES, WITHOUT APPRECIATING THE FACT THAT ASSESSEE COULD NOT PRODUCE EVIDENCES OF EXPENSES INCURRED UNDER THE HEAD 'OTHER EXPENSES' A ND 2 ALSO FAILED TO PROVE THE GENUINENESS AND REASONABIL ITY OF SUCH EXPENSES. 3. THE LD. CIT (A)-II, KANPUR HAS ERRED IN LAW A ND ON FACTS IN DELETING THE ADDITION OF RS. 8,26,585/-, MADE ON ACCOUNT OF SUNDRY CREDITORS, WITHOUT APPRECIATING T HE FACT THAT THE ASSESSEE COULD NOT PROVE THE GENUINEN ESS OF TRANSACTION AS WELL AS THE IDENTITY AND CREDIT WORTHINESS OF THE SAID PERSONS DURING THE COURSE OF ASSESSMENT PROCEEDINGS. 4. THE LD. CIT (A)-II, KANPUR HAS ERRED IN LAW A ND ON FACTS IN DELETING THE ADDITION OF RS. 1,80,000/- , MADE O N ACCOUNT OF UNSECURED LOANS , WITHOUT APPRECIATING T HE FACT THAT THE ASSESSEE COULD NOT PROVE THE GENUINEN ESS OF TRANSACTION AS WELL AS THE IDENTITY AND CREDIT WORTHINESS OF THE SAID PERSONS DURING THE COURSE OF ASSESSMENT PROCEEDINGS. 5. THAT THE ORDER OF THE LD. COMMISSIONER OF INCOM E TAX(APPEALS)-II, KANPUR DATED 06.06.2014 BEING ERRONEOUS IN LAW AND ON FACTS, BE QUASHED AND THE O RDER DATED 31.03.2013 PASSED BY THE ASSESSING OFFICER BE RESTORED. 6. THAT THE APPELLANT CRAVES LEAVE TO MODIFY ANY OF THE GROUNDS OF APPEAL MENTIONED ABOVE AND/OR TO ADD ANY FRESH GROUNDS AS AND WHEN IT IS REQUIRED TO DO SO. 3. LEARNED D.R. OF THE REVENUE SUPPORTED THE ASSESS MENT ORDER WHEREAS THE LD. AR OF THE ASSESSEE SUPPORTED THE OR DER OF THE LD. CIT(A). 4. WE HAVE CONSIDERED THE RIVAL SUBMISSION. REGARDI NG GROUND NO.1 RAISED BY THE REVENUE, THE DECISION OF THE LD. CIT( A) IS AS PER PARA 8 OF HIS ORDER, WHICH IS REPRODUCED BELOW FOR THE SAKE OF RE ADY REFERENCE:- 8. I HAVE CONSIDERED THE CONTENTS OF THE ASSESSMEN T ORDER, REMAND REPORT DATED 09-05-2014 REJOINDER OF THE A.R . DATED 29-5- 2014 ALONG WITH THE SUBMISSION AND THE ARGUMENTS P LACED BY THE A.R. OF THE ASSESSEE. THE AO HAS PASSED EX-PARTE AS SESSMENT ORDER U/S.144 AS THERE WAS NO DETAILS BEFORE HIM. O N SUBMISSION OF 3 THE DETAILS DURING THE APPEAL PROCEEDINGS WHICH WAS REMANDED TO THE AO VIDE MY LETTER DATED 21-03-2014 FOR SUBMISSI ON OF REMAND REPORT ON OR BEFORE 01-04-2014. THE AO HAS VERIFIED THE DETAILS AND IN HIS REMAND REPORT EXPRESSED THE OPINION ' TH E POSSIBILITY OF EXCESSIVE CLAIM UNDER THIS HEAD OF EXPENSE, IS NOT BEYOND DOUBT'. THE AO HAS NOT BROUGHT ANY CONTRARY EVIDENCE AGAINS T THE ASSESSEE FOR NOT INCURRING THE LABOR EXPENSE. THE C OMPARATIVE CHART FOR THE LAST THREE YEARS ALSO SHOWS THE GENUI NENESS OF INCURRENCE OF LABOUR EXPENDITURE DURING THE YEAR, S PECIALLY THE ASSESSMENT YEAR 2009-10 HAS BEEN SCRUTINIZED BY THE SAME AO. WHO HAS ACCEPTED THE LABOUR EXPENSE OF RS.94,41,6 77/-. THEREFORE, THE DECISION REACHED DURING THE YEAR FO R DISALLOWANCE OF RS. 12,93,505/- IS NOT SUBSTANTIATED, HENCE , NOT JUSTIFIED. HOWEVER, THE ASSESSEE HAS FAILED TO EXPLAIN THE INC URRENCE OF SUCH LABOUR EXPENSES WHOLLY AND EXCLUSIVELY FOR THE PURP OSE OF BUSINESS. ON CONSIDERATION OF OVERALL FACTS AND CIR CUMSTANCES OF THE CASE, RS.2,00,000/- OUT OF LABOUR EXPENSE IS HEREBY TREATED AS EXCESSIVE EXPENSES. ACCORDINGLY, THE A DDITION IS HEREBY RESTRICTED TO FTS.2,00,000/-. 5. FROM THE ABOVE PARA FROM THE ORDER OF THE CIT(A) , IT IS SEEN THAT THE ASSESSMENT ORDER WAS PASSED BY THE AO U/S 144 OF TH E INCOME TAX ACT, 1961 (FOR SHORT THE ACT) BECAUSE THERE WAS NO DETAI LS BEFORE HIM. DETAILS WERE SUBMITTED BY THE ASSESSEE BEFORE THE LD. CIT(A ) AND LD. CIT(A) HAS OBTAINED REMAND REPORT FROM THE AO. AFTER VERIFYING THE DETAILS. IN THE REMAND REPORT, THE AO EXPRESSED HIS OPINION THAT TH E POSSIBILITY OF EXCESSIVE CLAIM UNDER THIS HEAD OF EXPENSES IS NOT RULED OUT BUT IT IS OBSERVED BY THE LD. CIT(A) THAT THE AO HAS NOT BROUGHT ANY CONTRARY EVIDENCE AGAINST THE ASSESSEE FOR NOT INCURRING OF THE LABOUR EXPENSES. HE ALSO NOTED THAT THE COMPARATIVE CHART FOR THE LAST THREE YEARS SHOWS TH AT THE GENUINENESS OF INCURRENCE OF LABOUR EXPENDITURE IS NOT IN DOUBT. E VEN IN THE ABSENCE OF ANY CONTRARY EVIDENCE HAVING BEEN BROUGHT ON RECORD BY THE AO, LD. CIT(A) HAS CONFIRMED THE DISALLOWANCE OF RS.2,00,000/- OUT OF DISALLOWANCE MADE BY THE AO OF RS.12.93 LAKHS AND THEREFORE, IN OUR CON SIDERED OPINION, IN THE FACTS OF THE PRESENT CASE, THERE IS NO INFIRMITY IN THE ORDER OF THE LD. CIT(A) ON THIS ISSUE. ACCORDINGLY, GROUND NO.1 OF THE REVE NUE IS REJECTED. 6. REGARDING GROUND NO.2 OF THE REVENUES APPEAL IN RESPECT OF RELIEF ALLOWED BY THE LD. CIT(A) OF RS.1.40 LAKH OUT OF TO TAL DISALLOWANCE MADE BY 4 THE AO OF RS.2,00,000/- ON ACCOUNT OF OTHER EXPENSE S, IT IS NOTED BY THE LD. CIT(A) IN PARA 11 OF HIS ORDER THAT THE AO HAD DISA LLOWED 50% OF OTHER EXPENSES ON ADHOC BASIS WITHOUT BRINGING ANY ADVERS E EVIDENCE AGAINST THE ASSESSEE AND IN THE REMAND REPORT ALSO, THE AO HAS NOT PROVED THAT THESE EXPENSES HAVE NOT BEEN INCURRED. BY CONSIDERING THI S ALLEGATION OF THE AO THAT THERE MAY BE SOME EXCESSIVE CLAIM, LD. CIT(A) HAS CONFIRMED THE DISALLOWANCE OF RS.60,000/- AND GRANTED RELIEF OF O NLY RS1.40 LAKHS. CONSIDERING THE FACTS OF THE PRESENT CASE, WE DO NO T FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A) ON THIS ISSUE ALSO. ACCORDINGLY , GROUND NO.2 OF THE REVENUE IS ALSO REJECTED. 7. REGARDING GROUNDS NO. 3 AND 4 IN RESPECT OF ADDI TION OF RS.8,26,385/- AND RS.1,80,000/- PERTAINING TO SUNDRY CREDITORS AN D UNSECURED LOAN RESPECTIVELY, IT IS NOTED BY THE LD. CIT(A) IN PARA 12 OF HIS ORDER THAT THE AO IN HIS REMAND REPORT HAS STATED THAT THESE ENTRIES ARE OPENING BALANCE BROUGHT FORWARD FROM PREVIOUS YEAR AND THEREFORE, T HE ADDITION MAY BE DELETED. 8. IT IS SETTLED POSITION OF LAW THAT IN RESPECT OF OPENING CREDITS, ADDITION U/S 68 OF THE ACT CANNOT BE MADE AND WHEN THE AO HI MSELF HAS ACCEPTED IN THE REMAND REPORT THAT THESE TWO ITEMS ARE OPENING BALANCE, WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A) ON ANY OF THESE TWO ISSUES. ACCORDINGLY, GROUNDS NO.3 AND 4 ARE ALSO REJECTED. 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD/- SD/- (SUNIL KUMAR YADAV) (A.K. GARODIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 31/08/2015 AKS COPY OF THE ORDER FORWARDED TO : 1.THE APPELLANT 2.THE RESPONDENT. 3.CONCERNED CIT 4.THE CIT(A) 5.D.R., I.T.A.T., LUCKNOW ASSTT. RE GISTRAR