Vinod Kumar Mittal, New Delhi V. DCIT, Circle-62(1), New Delhi

ITA 7561/DEL/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 3791 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-02-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2015-2016
• Appeal Filed On: 29-11-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Set aside

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES SMC : DELHI BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER ITA.NO.7561/DEL./2018 ASSESSMENT YEAR 2015-2016 SHRI VINOD KUMAR MITTAL, A-2/361, SECTOR-8, ROHINI, NEW DELHI 085. PAN ADRPM3633M VS. THE DCIT, CIRCLE-62(1), NEW DELHI. (APPELLANT) (RESPONDENT) FOR ASSESSEE : MS. RANO JAIN, ADVOCATE & SHRI PRANSHU SINGHAL, C.A. FOR REVENUE : SHRI S.L. ANURAGI, SR. D.R. DATE OF HEARING : 13.02.2019 DATE OF PRONOUNCEMENT : 19.02.2019 ORDER THIS APPEAL BY ASSESSEE HAS BEEN DIRECTED AGAINST THE ORDER OF LD. CIT(A)-20, NEW DELHI, DATED 28 TH SEPTEMBER 2018, FOR THE ASSESSMENT YEAR 2015-2016, CHALLENGING THE ADDITION OF RS.12 LACS, RS.6 LACS AND RS.1,45,136/- ON DIFFERENT GROUNDS. 2. I HAVE HEARD THE LEARNED REPRESENTATIVES OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. 2 ITA.NO.7561/DEL./2018 SHRI VINOD KUMAR MITTAL, NEW DELHI. 3. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSESSEE WAS ASKED TO PRODUCE THE BILLS/VOUCHERS, MUSTER ROLL, WAGE SHEET ETC., FOR VERIFICATION. THE ASSESSING OFFICER NOTED THAT ASSESSEE WAS DEBITED RS. 9.86 CRORES AS WORK COST EXPENSES, OUT OF WHICH, RS.8.27 CRORES IS ATTRIBUTED TO PURCHASE OF MATERIALS AS PER THE BIFURCATION PROVIDED BY ASSESSEE. THE ASSESSING OFFICER NOTED THAT ASSESSEE COULD NOT SUBSTANTIATE THE ABOVE EXPENSES WITH ADEQUATE/SUPPORTING BILLS/ VOUCHERS. THE ASSESSING OFFICER, ACCORDINGLY, DISALLOWED ADHOC EXPENSES OF RS.12 LACS UNDER THIS HEAD. FURTHER IT WAS FOUND THAT ASSESSEE HAS DEBITED RS.9.86 CRORES AS WORK COST EXPENSES, OUT OF WHICH, RS.1.20 CRORE IS ATTRIBUTED TO LABOUR AND WAGES EXPENSES. THE ASSESSING OFFICER SIMILARLY NOTED THAT ASSESSEE COULD NOT SUBSTANTIATE THE ABOVE EXPENSES WITH ADEQUATE/SUPPORTING BILLS/VOUCHERS. THE ASSESSING OFFICER, ACCORDINGLY, DISALLOWED ADHOC EXPENSES OF RS.6 LACS UNDER THIS HEAD TO PLUG THE LEAKAGE OF THE REVENUE. SIMILARLY, ASSESSING OFFICER NOTED THAT ASSESSEE HAD DEBITED RS.14,51,360/- ON ACCOUNT OF REPAIRING AND MAINTENANCE AND ON THE SIMILAR REASON THAT NO ADEQUATE/ 3 ITA.NO.7561/DEL./2018 SHRI VINOD KUMAR MITTAL, NEW DELHI. SUPPORTING BILLS/VOUCHERS HAVE BEEN PRODUCED TO SUBSTANTIATE THESE EXPENSES, 10% OF ADHOC EXPENSES WERE DISALLOWED UNDER THIS HEAD. THE ASSESSING OFFICER, ACCORDINGLY, MADE ADDITION OF RS.1,45,136/-. 4. THESE ADDITIONS WERE CHALLENGE BEFORE THE LD. CIT(A). DETAILED SUBMISSION OF THE ASSESSEE IS REPRODUCED IN THE APPELLATE ORDER, IN WHICH, THE ASSESSEE MORE OR LESS REITERATED THE SAME FACTS. THE LD. CIT(A) ASKED THE ASSESSEE TO GIVE COPY OF 26AS AS WELL AS TRADING ACCOUNT OF SALE AND PURCHASE AS THE ASSESSEE HAS EXPLAINED THAT HE WAS ENGAGED IN CONTRACT BUSINESS AS WELL AS BUSINESS OF SUPPLY OF MATERIAL, FOR WHICH, PROFIT AND LOSS ACCOUNT AND TRADING ACCOUNT FOR BOTH THE CONTRACT BUSINESS AND THE SUPPLY OF MATERIAL BUSINESS WERE MAINTAINED. THE ASSESSEE PRODUCED COMMON PROFIT AND LOSS ACCOUNT OF PROPRIETARY CONCERN AND PREPARED/BIFURCATED THE TRADING ACCOUNT AND PROFIT AND LOSS ACCOUNT FOR SUPPLY OF MATERIAL BUSINESS AND CONTRACT BUSINESS, WHICH IS REPRODUCED IN THE APPELLATE ORDER. THE LD. CIT(A), THEREFORE, NOTED THAT PROFIT FROM SUPPLY OF MATERIAL BUSINESS HAS NOT CORRECTLY BEEN SHOWN AS NO 4 ITA.NO.7561/DEL./2018 SHRI VINOD KUMAR MITTAL, NEW DELHI. EXPENSES OF LABOUR AND WAGES, BANK CHARGES, FINANCE CHARGES, INTEREST ON LOAN ETC HAVE BEEN SHOWN, WHICH IS ATTRIBUTED TO THIS BUSINESS. ON BIFURCATING THE TWO BUSINESS ENTITIES, THE ORDER OF THE ASSESSING OFFICER WAS CONFIRMED AND APPEAL OF ASSESSEE HAS BEEN DISMISSED. 5. LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND SUBMITTED THAT DETAILED REPLIES WERE FILED BEFORE ASSESSING OFFICER SUPPORTED BY DOCUMENTARY EVIDENCES, COPIES OF WHICH ARE FILED IN THE PAPER BOOK. SHE HAS SUBMITTED THAT IN ASSESSMENT YEAR UNDER APPEAL, THE ASSESSEE HAS DECLARED NET PROFIT RATE OF 2.15% AND IN PRECEDING ASSESSMENT YEARS 2013-2014 AND 2014-2015, ASSESSEE HAS DECLARED NET PROFIT RATE OF 1.67% AND 1.78%. THE PROFIT RATE IS BETTER IN ASSESSMENT YEAR UNDER APPEAL AND IN CASE, THE DISALLOWANCES ARE CONSIDERED, THE NET PROFIT OF THE ASSESSEE WOULD RAISE UP-TO 3.9% WHICH IS IMPOSSIBLE. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT ASSESSING OFFICER HAS NOT REJECTED BOOKS OF ACCOUNTS, THEREFORE, NO ADHOC ADDITION CAN BE MADE AND RELIED UPON DECISION OF THE 5 ITA.NO.7561/DEL./2018 SHRI VINOD KUMAR MITTAL, NEW DELHI. HONORABLE DELHI HIGH COURT IN THE CASE OF RG BUILDWELL ENGINEERS LIMITED 2017-(12)-TMI-1614 WHICH IS CONFIRMED BY THE HONORABLE SUPREME COURT BY DISMISSING THE SLP. LEARNED COUNSEL FOR THE ASSESSEE, THEREFORE, SUBMITTED THAT ALL THE ADDITIONS ARE UNJUSTIFIED. 6. ON THE OTHER HAND, LD. D.R. RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 7. AFTER CONSIDERING THE RIVAL SUBMISSIONS, I AM OF THE VIEW THAT ALL THE ADDITIONS ARE WHOLLY UNJUSTIFIED. THE ASSESSEE HAS FILED PAPER BOOK IN WHICH ALL BILLS/VOUCHERS ALONG WITH REPLIES HAVE BEEN FILED WHICH WERE FILED BEFORE A.O, WHICH INDICATED THAT ASSESSEE FILED COMPLETE DETAILS BEFORE ASSESSING OFFICER. THE ASSESSING OFFICER, IN THE ASSESSMENT ORDER, DID NOT MENTION ANYTHING IF THE BOOKS OF ACCOUNTS WERE NOT PRODUCED BEFORE HIM. WHATEVER INFORMATION WAS CALLED FOR, HAVE BEEN FILED BEFORE ASSESSING OFFICER, WHICH IS ALSO NOTED IN THE ASSESSMENT ORDER. THE ASSESSING OFFICER MERELY BY NOTING THAT ASSESSEE DID NOT PRODUCE ADEQUATE/SUPPORTING BILLS/VOUCHERS, MADE ADHOC 6 ITA.NO.7561/DEL./2018 SHRI VINOD KUMAR MITTAL, NEW DELHI. ADDITIONS BY DISALLOWING THE ABOVE EXPENSES. THE ASSESSING OFFICER HAS NOT POINTED-OUT AS TO WHICH SUPPORTING BILL OR VOUCHER OF A PARTICULAR AMOUNT HAVE NOT BEEN PRODUCED BEFORE HIM. IT IS WELL SETTLED LAW THAT NO ADHOC ADDITION COULD BE MADE BY DISALLOWING THE EXPENSES. FURTHER, THE PROFIT RATE OF ASSESSEE IN ASSESSMENT YEAR UNDER APPEAL IS HIGHER AS COMPARED TO EARLIER YEARS AND IN CASE, THE DISALLOWANCES ARE CONSIDERED, IT WOULD ENHANCE THE PROFIT RATE OF THE ASSESSEE EXORBITANTLY. THUS, THERE WAS NO REASON FOR ASSESSEE TO INFLATE THE EXPENSES. THE ASSESSING OFFICER HAS NOT POINTED-OUT ANY SPECIFIC DEFECT IN MAINTENANCE OF BOOKS OF ACCOUNTS BY THE ASSESSEE. IN THIS VIEW OF THE MATTER, I AM OF THE VIEW THAT ADDITIONS ARE WHOLLY INAPPROPRIATE AND UNJUSTIFIED. I, ACCORDINGLY, SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND DELETE ALL THE THREE ADDITIONS. 8. IN THE RESULT APPEAL OF THE ASSESSEE ALLOWED ORDER PRONOUNCED IN THE OPEN COURT. SD/- (BHAVNESH SAINI) DELHI, DATED 19 TH FEBRUARY, 2019. JUDICIAL MEMBER VBP/- 7 ITA.NO.7561/DEL./2018 SHRI VINOD KUMAR MITTAL, NEW DELHI. COPY TO 1. THE APPELLANT 2. THE RESPONDENT 3. CIT(A) CONCERNED 4. CIT CONCERNED 5. D.R. ITAT SMC BENCH, DELHI 6. GUARD FILE. // BY ORDER // ASSISTANT REGISTRAR : ITAT DELHI BENCHES : DELHI