KISHAN S. RATHOD, MUMBAI V. ITO 22(2)(1), MUMBAI

ITA 7995/MUM/2010

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 0932 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 6 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-06-2015
• Appeal Filed By: Assessee
• Bench Allotted: A
• Next Hearing Date: 09-06-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 19-11-2010
• Court: TRIBUNAL
• Keywords: Depreciation
• Section: 143(3)

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER AND SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER I.T.A. NO.7995/M/2010 (AY:2006 - 2007 ) SHRI KISHAN S. RATHOD, ROMA BANJARA TANDA CHS LTD., MANKHURD, MUMBAI - 43. / VS. INCOME TAX OFFICER 22(2)(1), MUMBAI. ./ PAN : AABPR9928F ( / APPELLANT) .. ( / RESPONDENT ) / APPELLANT BY : SHRI PIYUSH CHHAJED / RESPONDENT BY : SHRI JEEVAN LAL LAVIDIYA / DATE OF HEARING : 09.06.2015 / DATE OF PRONOUNCEMENT : 09.06.2015 / O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE ASSESSEE ON 19.11.2010 IS AGAINST THE ORDER OF THE CIT (A) - 33, MUMBAI DATED 22.9.2010 FOR THE ASSESSMENT YEAR 2006 - 2007. IN THIS APPEAL, ASSESSEE RAISED THE FOLLOWING GROUNDS WHICH READ AS UNDER: 1. THE LD CIT (A) ERRED IN UPHOLDING THE ADDITION OF RS. 2,70,892/ - TOWARDS BALANCE SHOWN AS SUNDRY CREDITORS IN THE BALANCE SHEET OF THE APPELLANT, WITHOUT APPRECIATING THE FACT THAT THE SAME WERE RECEIVED BY THE APPELLANT FROM THE LABOURERS AS SECURITY DEP OSITS AND WERE DULY CONFIRMED. 2. THE LD CIT (A) ERRED IN UPHOLDING THE AD - HOC DISALLOWANCE AT 1/5 TH OF THE EXPENSES AMOUNTING TO RS. 24,460/ - OUT OF DEPRECIATION, MOTOR - CAR EXPENSES, CONVEYANCE, SUNDRY EXPENSES AND REPAIRS AND MAINTENANCE. 2. BRIEFLY S TATED RELEVANT FACTS OF THE CASE ARE THAT THE ASSESSEE IS A CIVIL CONTRACTOR , WHO FOLLOWS CASH METHOD OF ACCOUNTING CONSISTENTLY, FILED RETURN OF INCOME. ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT AND THE ASSESSED INCOME WAS DETERMINED AT RS. 7,78,200 / - . IN THE ASSESSMENT, AO MADE AN ADDITION OF RS. 2,70,892/ - ON ACCOUNT OF SUNDRY CREDITORS AND CERTAIN OTHER AD - HOC DISALLOWANCES OUT OF THE EXPENSES CLAIMED IN THE PROFIT & LOSS ACCOUNT. DURING THE ASSESSMENT PROCEEDINGS, AO NOTICED THAT ASSESSEE REPOR TED SUNDRY CREDITORS, WHO HAPPENED TO BE THE LABOURERS. ASSESSEE SUBMITTED THAT THE SAID LABOURERS WERE CREDITORS TO THE 2 ASSESSEE ON ACCOUNT OF SECURITY DEPOSITS. IT IS THE SUBMISSION OF THE ASSESSEE THAT EACH LABOURER TOOK AN AMOUNT OF RS. 15,000/ - PER HEA D, AND THERE ARE 19 OF SUCH CREDITORS , THE TOTAL AMOUNT GIVEN TO THEM IS RS. 2,70,892/ - . MR. RATNABAI N CHAVAN IS THE ONLY EXCEPTION , WHO OWE HIM AN AMOUNT OF RS. 892/ - ONLY. THESE TRANSACTIONS ARE IN CASH. AO DID NOT ACCEPT THE SAME AND PROCEEDED TO MAKE DISALLOWANCE ON ACCOUNT OF SUNDRY CREDITORS DESPITE THE CONFIRMATION LETTERS ON FILE . ON APPEAL, CIT (A) CONFIRMED THE DISALLOWANCE MADE BY THE AO. AGGRIEVED WITH THE SAID DECISION OF THE CIT (A ), ASSESSEE IS IN APPEAL BEFORE US. 3. DURING THE PROCEEDINGS BEFORE US, LD COUNSEL FOR THE ASSESSEE BROUGHT OUR ATTENTION TO THE PAPER BOOK DATED 5.6.2015, WHICH IS PLACED ON TO THE RECORD, AND READ OUT THE 19 NAMES OF THE SAID LABOURERS. HE ALSO SUBMITT ED THAT THE ASSESSEE WAS HAVING A CONTRACT WORK AT BARC, TROMBAY, MUMBAI, WHICH IS A HIGH SECURITY AREA. FOR DOING FAST AND UNINTERRUPTED WORK IN THAT AREA, HE ENGAGED LABOURERS FOR A MONTH WITH THE EXPECTATION THAT THEY WOULD NOT LEAVE THE JOB IN THE MID DLE OF IT. HE ALSO SUBMITTED THAT THE SAID AMOUNTS WERE COLLECTED BACK IN CASH FROM THE SAID LABOURERS AFTER THE WORK IS OVER I.E., IN THE NEXT FINANCIAL YEAR. IN THIS REGARD, HE BROUGHT OUR ATTENTION TO THE SAID CONFIRMATION LETTERS, WHICH ARE PLACED IN THE PAPER BOOK. 4. ON THE OTHER HAND, LD DR RELIED ON THE ORDER OF THE ASSESSING OFFICER. 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS THE RELEVANT MATERIAL PLACED BEFORE US. ON HEARING BOTH THE PARTIES, WE FIND THE EXPLANATION OF THE ASSESSEE IS FAIR AND REASONABLE AND IT IS A CASE WHERE THE LABOURERS REPAID THE AMOUNT IN CASH, WHICH IS UNDISPUTED BY THE AO BY BRINGING ANY INCRIMINATING MATERIAL ON TO THE RECORD. AO MERELY REJECTED THE CONFIRMATION LETTE RS WITHOUT EXAMINING THE LABOURERS. IN THESE FACTS, WE ARE OF THE OPINION THAT THE ASSESSEE IS ENTITLED TO RELIEF ON THIS ADDITION OF RS. 2,70,892/ - . ACCORDINGLY, GROUND NO.1 RAISED BY THE ASSESSEE IS ALLOWED. 6. SECOND GROUND RELATES TO THE ADDITION OF RS. 24,460/ - , WHICH IS EQUIVALENT OF 1/5 TH OF DISALLOWANCE OF TOTAL EXPENDITURE. AT THE OUTSET, LD COUNSEL FOR THE ASSESSEE BROUGHT OUR ATTENTION PARA 4 OF THE CIT (A)S ORDER AND MENTIONED THAT THE BENCH MAY DECIDE THE ISSUE ON ITS OWN MERITS. ON HEARIN G BOTH THE PARTIES AND ON PERUSAL OF THE SAID PARA 4 OF THE CIT (A)S ORDER, WE FIND THE SAME IS RELEVANT IN THIS REGARD. FOR THE SAKE OF COMPLETENESS OF THIS ORDER, THE SAME IS EXTRACTED AS FOLLOWS. 3 4. REGARDING THE OTHER GROUND OF APPEAL, THE APPEAL IS AGAINST THE DISALLOWANCE MADE OF RS. 15,080/ - OUT OF DEPRECIATION; MOTOR CAR EXPENSES OF RS. 8,000/ - ; CONVEYANCE EXPENSES OF RS. 5,284/ - ; SUNDRY EXPENSES OF RS. 3,084/ - AND REPAIRS AND MAINTENANCE EXPENSES OF RS. 16,092/ - . I FIND THAT IN THE ASSESSMENT O RDER IN PARA 7 AT PAGE 2, THE ASSESSING OFFICER HAS STATED THAT BILLS AND VOUCHERS WERE ASKED FOR TEST CHECK BUT WERE NOT PRODUCED AND IN ABSENCE OF THE VERIFICATION OF THE GENUINENESS OF THESE EXPENSES DISALLOWANCE OF 1/5 TH OF THESE EXPENSES ALL TOGETHER TOTALLING TO RS. 24,460/ - ARE MADE. HOWEVER, WHILE DOING THE CALCULATION THE GROSS AMOUNT IN THESE HEADS NAMELY DEPRECIATION OUT OF CAR EXPENSES, CAR EXPENSES, SUNDRY EXPENSES AND REPAIRS AND MAINTENANCE EXPENSES HAVE BEEN ADDED. THIS BEING A TYPOGRAPHIC AL ERROR IS RECTIFIED AND DISALLOWANCES ARE RESTRICTED AT RS. 22,460/ - IN PLACE OF RS. 53,559/ - . THE APPELLANT GETS A RELIEF TO THE EXTENT OF RS. 29,080/ - . 7. FROM THE ABOVE, IT IS EVIDENT THAT ASSESSEE FAILED TO FURNISH DIRECT EVIDENCES, THIRD PARTY VOUCHERS / EVIDENCES IN SUPPORT OF THE SAID CLAIMS DEBITED TO THE P & L ACCOUNT. ASSESSEE COULD NOT IMPROVE ITS CASE EITHER BEFORE THE CIT (A) OR EVEN BEFORE US. UNDER THESE CIRCUMSTANCES, WE ARE OF THE OPINION THAT THE ORDER OF THE CIT (A) IS FAIR AND R EASONABLE AND IT DOES NOT CALL FOR ANY INTERFERENCE. ACCORDINGLY, GROUND NO.2 RAISED BY THE ASSESSEE IS DISMISSED. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 9 TH JUNE, 2015. SD/ - SD/ - (I .P. BANSAL) (D. KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; 9.6 .2015 . . ./ OKK , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI