Delta Construction, Hooghly V. ITO-Ward-1, Raiganj, Uttar Dinajpur

ITA 817/KOL/2012

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 8144 (ITAT-KOLKATA)
• Duration Of Justice: 3 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-08-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2008-2009
• Appeal Filed On: 21-05-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: D J MEHTA SR DR THIS
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH: K OLKATA [BEFORE SMT. DIVA SINGH, HONBLE JUDICIAL MEMBER ] I.T.A. NO.817/KOL/2012 ASSESSMENT YEAR : 2008-09 DELTA CONSTRUCTION VS- ITO, WARD-1, RAIGANJ C/O SHRI SOMNATH GHOSH, ADVOCATE SEVEN BROTHERS LODGE, P.O. BUROSHIBTALA, CHINSURAH HOOGHLY, PIN-712 105 (PAN:AACFD 1989K) ( APPELLANT ) ( RESPONDENT ) DATE OF CONCLUDING THE HEARING : 22.08.2012 DATE OF PRONOUNCING THE ORDER : 22.08.2012 APPEARANCES : FOR THE APPELLANT : SHRI SOMNA TH GHOSH : FOR THE RESPONDENT : SRI D.J. MEHTA, SR . DR O R D E R THIS IS AN APPEAL FILED BY THE ASSESSEE AG AINST THE ORDER DATED 15.03.2012 OF COMMISSIONER OF INCOME TAX (APPEALS), JALPAIGURI PE RTAINING TO THE ASSESSMENT YEAR 2008-09 ON THE FOLLOWING GROUNDS: 1. FOR THAT THE LD. COMMISSIONER OF INCOME TAX (APP EALS) JALPAIGURI ACTED UNLAWFULLY IN UPHOLDING THE ASSESSMENT ORDER FRAMED U/S. 143(3) OF THE INCOME TAX ACT, 1961 BY THE LD. INCOME TAX OFF ICER, WARD 1, RAIGANJ PASSED IN GROSS VIOLATION TO THE PROVISION OF S.14 3(2) OF THE INCOME TAX ACT, 1961 AND ALSO INFRINGES THE INSTRUCTION NO. 2 41/23/70 DATED 23-10- 1970 ISSUED BY THE CENTRAL BOARD OF DIRECT TAXES IN THIS RESPECT AND., SUCH ACTION ON THAT BEHALF IS AB INITIO VOID, ULTRA VIR ES AND EX-FACIE NULL IN LAW. 2. FOR THAT THE LD. COMMISSIONER OF INCOME TAX (AP PEALS) JALPAIGURI ACTED UNLAWFULLY IN UPHOLDING THE ALLEGED DISALLOW ANCE RESORTED TO BY THE LD. INCOME TAX OFFICER, WARD 1, RAIGANJ IN THE SUM OF RS.1,01,754/- IN RESPECT OF EXPENSES CLAIMED UNDER LABOUR CHARGES ON THE SPECIOUS GROUND TO CURB THE POSSIBILITY OF REVENUE LEAKAGE WITHOUT ADDUCINGANY 2 ITA NO.817/KOL/2012 DELTA CONSTRUCTION ASSESSMENT YEAR: 2008-09 ADVERSE EVIDENCE ON RECORD AND HIS PURPORTED ACTIO N ON THAT BEHALF IS ALTOGETHER ARBITRARY, UNWARRANTED AND PERVERSE. 3. FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE INSTANT CASE, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) JALPAIGUR I GRAVELY ERRED IN UPHOLDING THE IMPUGNED DISALLOWANCE AMOUNTING TO R S. 4,438/- IN RESPECT OF OFFICE EXPENSES ON A TENUOUS PREMISE OF BEING E XCESSIVE BY THE LD. INCOME TAX 2. THE LD. A.R., INVITING ATTENTION TO THE CO PY OF THE BOARDS INSTRUCTION NO.241/23/70 DATED 23.10.1970, SUBMITTED THAT THE A SSESSMENT ORDER IS CONTRARY TO THE SAID INSTRUCTION AS THE HEARING IN THE SAID CAS E CLOSED ON 3 RD NOVEMBER, 2010 AND THE ORDER WAS PASSED ON 06.12.2010. REFERRING T O THE SAID INSTRUCTION, THE LD. A.R. STATED THAT IT IS STATED THEREIN THAT IN CASE THE ORDERS ARE NOT PASSED IMMEDIATELY AS IN COMPLICATED CASES OR THOSE INVOLV ING THE HANDLING OF VOLUMINOUS MATERIALS, IT MAY NOT BE POSSIBLE TO PAS S AN ORDER IMMEDIATELY AFTER THE HEARING, EVEN IN SUCH CASES THE ORDER SHOULD BE PAS SED WITHIN 14 WORKING DAYS FROM THE LAST DATE OF HEARING. IN REGARD TO GROUND NOS. 2 AND 3, THE ARGUMENT WAS THAT THE ASSESSEE HAD CLAIMED LABOUR CHARGES, DULY SUPPORTED BY LABOUR ATTENDANCE REGISTER AND WAGES A/C. WHEREIN THE AO H AD THE APPREHENSION THAT THERE IS BOUND TO BE A REVENUE LEAKAGE OF 5% OF THE EXPENSES. SIMILARLY, IN REGARD TO THE HEAD OFFICE EXPENSES, HE MADE AN AD HOC DISALLOWANCE 10% OF SUCH EXPENSES AND IN APPEAL THE SAID ADDITIONS WERE UPHE LD. REFERRING TO THE SUBMISSIONS PLACED IN PAGES 1 TO 5 OF THE PAPER BOO K, HE STATED THAT THE SAID ADDITION IS CONTRARY TO THE SETTLED LEGAL POSITION. RELIANCE WAS PLACED UPON THE PAPER BOOK CONTAINING SUBMISSIONS ADVANCED BEFORE T HE CIT(A); COPY OF LEDGER ACCOUNT OF LABOUR CHARGES AND COPY OF LABOUR ATTEND ANCE AND WAGES REGISTER (PAGES 9 TO 57 OF THE PAPER BOOK). COPY OF LEDGER ACCOUNT OF OFFICE EXPENSES (PAGES 58 TO 60 OF THE PAPER BOOK) ETC. SO AS TO CONTEND THAT NO DISCREPANCY WAS POINTED OUT BY THE AO WHICH THE ASSESSEE WAS REQUIRED TO EXPLAIN A S SUCH THE ADDITIONS IT WAS ARGUED DESERVES TO BE DELETED. 3 ITA NO.817/KOL/2012 DELTA CONSTRUCTION ASSESSMENT YEAR: 2008-09 3. THE LD. SR.DR, SHRI D.J. MEHTA, IN REGARD TO THE FIRST GROUND, STATED THAT NO DOUBT THE ORDER WAS PASSED BEYOND 14 DAYS, HOWEVER, INSTRUCTION NO.241/23/70 DOES NOT MAKE THE ACTIONS OF THE AO BAD IN LAW. REF ERRING TO GROUND NOS.2 AND 3, THE LD. SR.D.R. PLACED RELIANCE UPON THE ORDERS OF THE AUTHORITIES BELOW. HOWEVER, WHEN HE WAS REQUIRED TO POINT OUT, HE WAS, APART FR OM THE OBSERVATIONS MADE BY THE AO, NOT IN A POSITION TO SAY ANYTHING MORE. 4. HAVING HEARD THE RIVAL SUBMISSIONS AND PERUSED T HE MATERIALS AVAILABLE ON RECORD, IT IS SEEN THAT THE AO ESTIMATED THE DISALL OWANCE TO BE MADE ON ACCOUNT OF THE FOLLOWING REASONS: ASSESSEE FIRM HAD DEBITED EXPENSES OF RS.20,35,085/ - UNDER THE HEAD LABOUR CHARGES. IN SUPPORT OF THIS EXPENSE, A/R PRODUCE LABOUR ATTENDANCE REGISTER WITH WAGES ACCOUNT. TO CURB T HE POSSIBILITY OF ANY REVENUE LEAKAGE,5% OF SUCH EXPENSES OF RS.20,35,08 5/- WHICH COMES TO RS.1,01,754/- IS DISALLOWED AND ADDED TO THE TOTAL INCOME OF THE FIRM. ASSESSEE FIRM DEBITED RS.44,376/- UNDER THE HEAD OFFICE EXPENSES WHICH SEEMS EXCESSIVE CONSIDERING THE WORK DONE BY THE F IRM. HENCE, 10% OF SUCH EXPENSES OF RS.44,376/- WHICH COMES TO RS.4,438/- IS DISALLOWED AND ADDED TO THE TOTAL INCOME OF THE FIRM. 4.1 ON PERUSAL OF THE SAME IT IS SEEN THAT NO REASO NING OR BASIS FOR MAKING DISALLOWANCE HAS BEEN MADE APART FROM SUSPICIONS. T HE SAID ACTION HAS BEEN UPHELD BY THE CIT(A). ON CONSIDERATION OF THE ENTIR E FACTS AND MATERIALS AND THE SETTLED LEGAL POSITION, I AM OF THE VIEW THAT THE S AID ACTION CANNOT BE SUPPORTED IN LAW AS IN THE FACE OF FULLY VOUCHED AND VERIFIABLE EXPENSES, AS PER THE CLAIM OF THE ASSESSEE, WHICH HAS NOT BEEN REBUTTED BY THE REVENU E AND WHERE THE ASSESSEE HAS MAINTAINED THE ATTENDANCE REGISTER OF LABOURERS SHO WN THE LEDGER ACCOUNT OF LABOUR CHARGES AND OFFICE EXPENSES, WHICH WERE ALL DULY PRODUCED BEFORE THE AO AND ALSO PLACED BEFORE US WHICH CONTAINED THE DETAI LS OF WAGES PAID TO AND ACCEPTED BY THE LABOURERS, NO DEFECT IN THE SAME HA S BEEN POINTED BY THE REVENUE. THE ACTION TO MAKE THE AD HOC DISALLOWANCE @5% QUA THE SAME AND 10% IN THE CASE OF OFFICE EXPENSES ON THE REASONING THAT TO C URB THE POSSIBILITY OF REVENUE 4 ITA NO.817/KOL/2012 DELTA CONSTRUCTION ASSESSMENT YEAR: 2008-09 LEAKAGE AND SEEMS EXCESSIVE RESPECTIVELY IS ARBI TRARY WHICH CANNOT BE SUPPORTED IN LAW. HENCE, ADDITION SO MADE OF THESE DISALLOWANCES BY THE AO, WHICH HAS BEEN UPHELD BY THE CIT(A), CANNOT BE SUST AINED. ACCORDINGLY, GROUND NOS. 2 AND 3 ARE ALLOWED. IN REGARD TO GROUND NO.1, WHICH HAS BEEN HALF-HEARTEDLY ARGUED BY THE LD. A.R., THE SAME IS REJECTED AND TH E DEPARTMENTS ARGUMENT IN THIS REGARD STANDS ACCEPTED. THEREFORE, THE APPEAL OF TH E ASSESSEE IS PARTLY ALLOWED. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. THE SAID ORDER WAS PRONOUNCED IN THE OPEN COURT ON 22.08.2012 IN THE PRESENCE OF THE PARTIES ON THE DATE OF HEARING ITSE LF. SD/- (DIVA SINGH) JUDICIAL MEMBER DATED : 22/ 08/ 2012 COPY OF THE ORDER FORWARDED TO: 1. DELTA CONSTRUCTION , C/O SHRI SOMNATH GHOSH, ADVOCATE, SEVEN BROTHERS LODGE, P.O. BUROSHIBTALA, CHINSURAH, HOOGHLY, PIN-712 105 2 ITO, WARD-1, JALPAIGURI 3. CIT(A)- 4. CIT- 5. DR, KOLKATA BENCHES, KOLKATA (TRUE COPY) BY ORDER ASSISTANT REGISTRAR, I.T.A.T., KOLKA TA. TALUKDAR/SR.P.S.