The ACIT, Circle-6, Ahmedabad V. M/s. Maxmech Equipment, Ahmedabad

ITA 810/AHD/2013

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 67973 (ITAT-AHMEDABAD)
• Duration Of Justice: 8 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-11-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 26-11-2013
• Assessment Year: 2009-2010
• Appeal Filed On: 19-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: O P BATHEJA
• Assessee Lawyers: SUNIL H TALATI
• Keywords: Additional evidence

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER ITA NO.810/AHD/2013 A.Y. 2009-10 ACIT, CIRCLE-8, AHMEDABAD. VS MAXMECH EQUIPMENT, PLOT NO. 2508, PHASE-IV, GIDC, VATVA, AHMEDABAD-382445 PAN: AAEFM6615M (APPELLANT) (RESPONDENT) REVENUE BY : SH. O.P. BATHEJA, SR.D.R., ASSESSEE(S) BY : SH. SUNIL H. TALATI, AR / // / DATE OF HEARING : 26/11/2013 / DATE OF PRONOUNCEMENT : 29/11/2013 / O R D E R PER SHRI N.S. SAINI, ACCOUNTANT MEMBER: THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE LEARNED CIT(A)-XI, AHMEDABAD, DATED 29.01.2013. 2. THE SOLE ISSUE RAISED IN THIS APPEAL BY THE REVENUE IS THAT THE LEARNED CIT ERRED IN DELETING THE ADDITION OF RS 22 ,60,394/- ON ACCOUNT OF CASUAL LABOUR, OVERTIME EXPENSES AND SIT E EXPENSES AFTER ADMITTING ADDITIONAL EVIDENCES IN CONTRAVENTI ON OF RULE 46(A). 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAD INCURRED EXPENSES UN DER THE ITA NO.810/AHD/2010 ACIT, CIR.-8, AHMEDABAD VS. MAXMECH EQUIPMENT. FOR A.Y. 2009-10 - 2 - FOLLOWING HEADS IN CASH. HE OBSERVED THAT THE NAME S AND ADDRESSES OF THE PERSONS TO WHOM THESE EXPENSES ARE PAID ARE NOT RECORDED. HE FURTHER OBSERVED THAT THE ASSESSE E HAD ALSO NOT DEDUCTED TDS FROM THESE PAYMENTS. THE AO WAS THERE FORE NOT SATISFIED WITH THE ALLOWABILITY OF THESE EXPENSES A ND THESE EXPENSES WERE DISALLOWED BY HIM THE DETAILS OF WHIC H ARE AS UNDER: SL. NO. PARTICULARS AMOUNT (RS) 1 CASUAL LABOUR 1106622 2 O.T. EXPENSES 427658 3 SITE EXPENSES 63406 TOTAL 2260394 4. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE TH E CIT(A). THE CIT(A) ALLOWED THE APPEAL OF THE ASSESSEE AND W HILE DOING SO HELD AS UNDER: 3.2 I HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIO NS. IT IS SEEN THAT THE A.O. DISALLOWED THE FOLLOWING EXPENSE S: SL. NO. PARTICULARS AMOUNT (RS) 1 CASUAL LABOUR 1106622 2 O.T. EXPENSES 427658 3 SITE EXPENSES 63406 TOTAL 2260394 PERUSAL OF THE ABOVE TABLE REVEALS THAT THERE IS A GLARING MISTAKE IN THE QUANTUM OF DISALLOWANCE AS T HE TOTAL OF THREE EXPENSES AS MENTIONED ABOVE WORKS OU T ITA NO.810/AHD/2010 ACIT, CIR.-8, AHMEDABAD VS. MAXMECH EQUIPMENT. FOR A.Y. 2009-10 - 3 - TO RS 15,97,686-[11,06,622+4,27,658+63,406] ONLY. THE A.O. MADE A DISALLOWANCE OF RS 22,60,394/-. CLOSER SCRUTINY OF THE ABOVE MENTIONED TABLE REVEAL S THAT THE A.O. HAS WRONGLY TAKEN SITE EXPENSES AT RS 63,406/- WHILE QUANTUM OF THESE EXPENSES IS RS 6,31,406/-. EVEN IF THE CORRECT FIGURE OF SITE EXP ENSES OF RS 6,31,406/- IS ADOPTED, THE TOTAL OF THE ABOVE MENTIONED THREE EXPENSES WILL BE RS 21,65,686/- - [11,06,622+4,27,658+63,406] AND NOT RS 22,60,394/- WHICH HAS BEEN DISALLOWED BY THE A.O. THESE FACTS INDICATE THAT THE DISALLOWANCE WAS MADE CASUALLY AN D DUE DILIGENCE HAVE NOT BEEN MADE FOR MAKING THESE DISALLOWANCES. THIS SHOWS THAT THE A.O. IS CASUAL AND CARELESS IN DRAFTING THE ASSESSMENT ORDER. 3.3 THE FACTS AVAILABLE ON RECORD FURTHER INDICATE THAT THE EXPENSES UNDER THE HEAD CASUAL LABOUR, OVERTIME AND SITE EXPENSES WERE DISALLOWED ON THE PREMISE THAT T HE SAME WAS PAID IN CASH. THE NAME AND ADDRESSES OF THE PAYEES ARE NOT MENTIONED AND THE TAX HAS NOT BE EN DEDUCTED AT SOURCE. THESE ARE GENERAL OBSERVATIONS AND THE A.O. HAS FAILED TO BRING EVEN AN IOTA OF EVIDENCE TO DISPROVE THE GENUINENESS OF THESE EXPENSES. IN MY CONSIDERED VIEW THE EXPENSES CLAIMED BY THE APPELLANT CANNOT BE DISALLOWED WITH GENERAL OBSERVATIONS. 3.4 ON THE OTHER HAND THE APPELLANT HAD SUBMITTED COMPLETE DETAILS OF THESE EXPENSES ALONG WITH THE RECEIPTS ISSUED BY THE PAYEES. THE CASUAL LABOUR ITA NO.810/AHD/2010 ACIT, CIR.-8, AHMEDABAD VS. MAXMECH EQUIPMENT. FOR A.Y. 2009-10 - 4 - EXPENSES WERE INCURRED TO HIRE THE CASUAL LABOUR. THE OVERTIME EXPENSES WERE PAID TO THESE LABOURS AS THEY HAVE WORKED OVERTIME. THESE PAYMENTS WERE REGULARLY MADE MONTH-AFTER-MONTH AND GENERALLY IN SMALL TRANCHE OF RS 2,000/- AND 3,000/- PER MONTH. THE APPELLANT HAS INCURRED SITE EXPENSES TOWARDS TH E LODGING AND BOARDING OF ITS EMPLOYEES ON VARIOUS SITES. TO SUBSTANTIATE THE GENUINENESS OF THESE EXPENSES THE APPELLANT HAS FURNISHED COMPLETE DETAI LS OF THESE EXPENSES. SINCE COMPLETE DETAILS OF THESE EXPENSES ARE AVAILABLE ON RECORD AND THE A.O. HAD FAILED TO BRING ANY IOTA OF EVIDENCE TO QUESTION TH E GENUINENESS OF THESE EXPENSES. ACCORDINGLY, I AM INCLINED TO AGREE WITH THE CONTENTIONS OF LD. A.R. IT IS A TRITE LAW THAT DISALLOWANCE OF EXPENSES CANNOT BE MADE WITHOUT POINTING SPECIFIC DEFECTS IN THE BOOK OF ACCOUNTS. IT IS ALSO A MATTER OF FACT THAT DURING THE YEAR UNDER CONSIDERATION THE APPELLANT HAS DECLARED GROSS PROFIT RATE OF 19.31% AND NET PROFIT RATE OF 11.50%. THE GROSS PROFIT RATE DECLARED IN THE IMMEDIATELY PRECEDING YEAR I.E. A.Y. 2008-09 WAS 18.34% WHILE THE NET PROFIT FOR THIS YEAR WAS 10.34 %. THIS WAY THE APPELLANT HAS DECLARED BETTER FINANCIA L RESULTS IN THE CURRENT ASSESSMENT YEAR COMPARED WIT H THE PRECEDING YEAR. IN VIEW OF THIS FACT ALSO, THE DISALLOWANCE MADE BY THE A.O. IS UNWARRANTED. RELIANCE IN THIS REGARD IS MADE ON CIT VS BHUSHAN DUA LEGAL HEIR OF LATE GULSHAN KUMAR (2005) 196 ITA NO.810/AHD/2010 ACIT, CIR.-8, AHMEDABAD VS. MAXMECH EQUIPMENT. FOR A.Y. 2009-10 - 5 - CTR 609 (DEL) AND ITO VS NIRMAL SINGH SURI ITA NO. 348/IND/2003. IN VIEW OF ABOVE, I HOLD THAT DISALLOWANCE OF RS 22,60,394/- IS NOT TENABLE AND T HE SAME IS ORDERED TO BE DELETED. THIS GROUND OF APPE AL IS ALLOWED. 5. AT THE TIME OF THE HEARING, THE LEARNED DR RELIED O N THE ORDER OF THE ASSESSING OFFICER. 6. ON THE OTHER HAND, THE LEARNED AR OF THE ASSESSEE F ULLY SUPPORTED THE ORDER OF THE CIT(A) AND ARGUED THAT C IT(A) AFTER CONSIDERING ALL THE FACTS AND RELEVANT DETAILS AND DOCUMENT HAS GIVEN A VERY DETAILED FINDING WHILE DELETING THE AD DITION MADE BY THE LEARNED ASSESSING OFFICER. 7. AFTER HEARING RIVAL SUBMISSION AND PERUSING THE ORD ERS OF THE LOWER AUTHORITY AND MATERIAL AVAILABLE ON RECORD, W E FIND THAT IN THE INSTANT CASE THE ASSESSING OFFICER HAD DISALLOW ED THE EXPENSES UNDER THE HEAD CASUAL LABOUR, OVERTIME EXP ENSES, SITE EXPENSES TOTALING TO RS 22,66,394/- ON THE GROUND T HAT THE NAMES AND ADDRESSES OF THE PERSONS TO WHOM PAYMENT WERE MADE WERE NOT RECORDED BY THE ASSESSEE AND TDS WAS ALSO NOT DEDUCTED FROM THE SAID PAYMENTS. THE LEARNED CIT(A ) DELETED THE DISALLOWANCE FOR THE REASONS STATED ABOVE IN TH E ORDER OF THE CIT(A) QUOTED ABOVE. AT THE TIME OF THE HEARING, T HE BENCH ASKED THE LEARNED DR THAT THE REVENUE IN THE GROUND FOR APPEAL HAS TAKEN THE GROUND OF VIOLATION OF RULE 46(A) OF THE INCOME TAX RULES, 1962 BY THE CIT(A) BY ADMITTING ADDITION AL ITA NO.810/AHD/2010 ACIT, CIR.-8, AHMEDABAD VS. MAXMECH EQUIPMENT. FOR A.Y. 2009-10 - 6 - EVIDENCES AT THE TIME OF APPEAL HEARING WITHOUT CAL LING FOR THE ASSESSMENT REPORT FROM THE ASSESSING OFFICER. WHAT ARE THESE ADDITIONAL EVIDENCES WHICH ARE ACCEPTED BY THE LEAR NED CIT(A) AT THE TIME OF APPEAL HEARING? THE LEARNED DR COUL D NOT POINT OUT ANY SUCH ADDITIONAL EVIDENCES ACCEPTED BY THE L EARNED CIT(A) AT THE TIME OF APPEAL HEARING. FURTHER, NO SPECIFIC ERROR IN THE ORDER OF THE LEARNED CIT(A) COULD ALSO BE PO INTED OUT BY THE LEARNED DR. IN ABSENCE OF ANY SUCH MATERIAL BE ING BROUGHT ON RECORD BY THE LEARNED DR, WE DO NOT FIND ANY GOO D AND JUSTIFIABLE REASONS TO INTERFERE WITH THE FINDINGS OF THE CIT WHICH ARE HEREBY CONFIRMED AND THE GROUND OF APPEAL OF THE REVENUE IS DISMISSED. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISS ED. ORDER PRONOUNCED IN THE COURT ON FRIDAY THE 29 TH OF NOVEMBER, 2013 AT AHMEDABAD. SD/- SD/- (KUL BHARAT) JUDICIAL MEMBER ( N.S. SAINI) ACCOUNTANT MEMBER AHMEDABAD; DATED 29/11/2013 GHANSHYAM MAURYA, SR. P.S.