Ratnakar Dnyandeo Pawar, Nashik V. Assistant Commissioner of Income-tax,

ITA 857/PUN/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 9247 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 2 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 27-06-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 28-04-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Salary income
• Section: 143(3); 194C; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B , PUNE , , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM . / ITA NO. 857 /P U N/201 4 / ASSESSMENT YEAR : 20 0 9 - 1 0 RATNAKAR DNYANDEO PAWAR, SHIVNERI, PLOT NO.43/A, MAHATMA NAGAR, ROAD A, OFF . TRIMBAK ROAD, NASHIK 422007 . / APPELLANT PAN: ACLPP8646A VS. THE ASST. COMMISSIONE R OF INCOME TAX, CIRCLE 2, NASHIK . / RESPONDENT / APPELLANT BY : SHRI C.H. NANIWADEKAR / RESPONDENT BY : SHRI VIVEK AGARWAL / DATE OF HEARING : 27 .0 6 . 2017 / DATE OF PRONOUNCEMENT: 30 . 0 6 .201 7 / ORDER PER SUSHMA CHOWLA, J M : TH IS APPEAL FILED BY THE ASSESSEE IS AGAINST THE ORDER OF CIT (A) - 2 , NASHIK , DATED 1 7.02.2014 RELATING TO ASSESSMENT YEAR 20 0 9 - 1 0 AGAINST ORDER PASSED UNDER SECTION 143(3) OF THE INCOME - TAX ACT , 1961 (IN SHORT THE ACT) . ITA NO. 857 /P U N/20 1 4 RATNAKAR DNYANDEO PAWAR 2 2 . THE ASSESSEE HAS RAISED THE FOLLOWING GROUND OF APPEAL : - 1. THE LEARNED CIT(APPEALS) ERRED ON FACTS AND IN LAW IN ADDING A SUM OF RS.19,00,303/ - AS UNDISCLOSED INCOME U/S 68 OF THE INCOME TAX ACT, 1961 BY NOT ALLOWING EXPENSES INCURRED IN THIS REGARD RS.16,99,330/ - . HE FAILED TO APPRECIATE THE CONTENTIONS AND ARGUMENTS ADVANCED IN THIS BEHALF. 3. THE ISSUE RAISED IN THE PRESENT APPEAL IS TWO - FOLD AS TO WHETHER RECEIPTS RECEIVED BY THE ASSESSEE FROM TH E CONTRACT WORK CARRIED ON BY IT IS TO BE ASSESSED AS UNDISCLOSED INCOME UNDER SECTION 68 OF THE ACT AND FURTHER, WHETHER THE ASSESSEE IS ENTITLED TO THE CLAIM OF EXPENDITURE AGAINST THE SAID CONTRACT RECEIPTS. 4. BRIEFLY, IN THE FACTS OF THE CASE, THE AS SESSEE HAS FURNISHED THE RETURN OF INCOME DECLARING TOTAL INCOME OF RS.22,72,900/ - . THE ASSESSEE HAD DECLARED THE INCOME FROM SALARY AND INCOME FROM OTHER SOURCES. THE CASE OF ASSESSEE WAS SELECTED FOR SCRUTINY. DURING THE COURSE OF ASSESSMENT PROCEEDIN GS, THE ASSESSING OFFICER ON VERIFICATION OF ITS DETAILS, 26AS STATEMENT AND BANK STATEMENT NOTED THAT THE ASSESSEE HAD RECEIVED CONTRACT RECEIPTS OF RS.11,70,350/ - , ON WHICH TDS HAD BEEN DEDUCTED UNDER SECTION 194C OF THE ACT AND RENTAL RECEIPTS OF RS.2,3 0,427/ - , ON WHICH TDS HAD BEEN DEDUCTED UNDER SECTION 194I OF THE ACT. ON VERIFICATION OF THE RETURN OF INCOME, THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAD NOT OFFERED THE SAID AMOUNT S TO TAX. THE ASSESSEE WAS SHOW CAUSED IN THIS REGARD AND THE ASS ESSEE WAS ASKED TO PRODUCE THE BANK STATEMENTS SHOWING THESE RECEIPTS. THE ASSESSEE IN REPLY POINTED OUT THAT TOTAL RECEIPTS WERE RS.19,00,705/ - AND HE SUBMITTED THAT HE HAD FORGOTTEN TO SHOW THE CONTRACT RECEIPTS IN HIS RETURN OF INCOME. HE FURTHER CLAI MED THE EXPENDITURE OF RS.16,93,030/ - AGAINST THE SAID CONTRACT RECEIPTS AND OFFERED RS.2,01,315/ - TO TAX. THE ASSESSEE FAILED TO PRODUCE THE ITA NO. 857 /P U N/20 1 4 RATNAKAR DNYANDEO PAWAR 3 BILLS AND VOUCHERS OF EXPENDITURE AND THE ASSESSEE ALSO COULD NOT FILE ANY EXPLANATION ABOUT THE RENTAL INCOME. THE ASSESSING OFFICER REJECTED THE CLAIM OF EXPENDITURE AND ADDITI ON OF RS.19,00,303/ - WAS MADE UNDER SECTION 68 OF THE ACT. 5. BEFORE THE CIT(A), THE ASSESSEE FILED EXPLANATION ALONG WITH SOME DETAILS OF LABOUR PAYMENTS. THE CIT(A) ASKED THE ASSESSING OFFICER TO FILE REMAND REPORT, IN WHICH, HE REPORTED THAT THE ASSESSEE WAS ASKED TO PRODUCE DETAILS OF LABOUR PAYMENT EXPENSES OF RS.16,87,030/ - BUT THE ASSESSEE ONLY PRODUCED THE DETAILS TO THE EXTENT OF RS.11,27,987/ - I.E. SHORT BY RS.5,59,053/ - . FURTHE R, THE ASSESSEE FILED THE LIST OF PERSONS TO WHOM SUMMONS WERE ISSUED I.E. TEN PERSONS ON TEST CHECK BASIS BUT ONLY FOUR OF THE SUMMONS COULD BE DELIVERED AND IN RESPONSE, ONLY THREE PERSONS APPEARED AND MERELY STATED THAT THEY HAD DONE LABOUR WORK FOR THE ASSESSEE BUT THEY WERE UNABLE TO PRODUCE SUPPORTING DETAILS. THE CIT(A) FORWARDED THE COPY OF REMAND REPORT TO THE ASSESSEE, WHO DID NOT FILE ANY WRITTEN OR ORAL SUBMISSIONS TO COUNTER OR REBUT THE ASSESSING OFFICERS FINDINGS. THE ASSESSEE FAILED TO AP PEAR BEFORE THE CIT(A). HENCE, THE CIT(A) UPHELD THE ORDER OF ASSESSING OFFICER IN MAKING THE ADDITION OF RS.19,00,303/ - UNDER SECTION 68 OF THE ACT. THE CIT(A) ALSO DIRECTED THE ASSESSING OFFICER TO MAKE AN ADDITION OF RS.2,30,427/ - ON ACCOUNT OF RENTAL RECEIPTS WHICH WERE NOT ADDED IN THE COMPUTATION OF INCOME WHILE FINALIZING THE ASSESSMENT. 6. THE ASSESSEE IS IN APPEAL BEFORE US AGAINST THE ADDITION MADE UNDER SECTION 68 OF THE ACT AT RS.19,00,303/ - AND ALSO IN NOT ALLOWING THE EXPENDITURE OF RS. 16 ,99,330/ - . ITA NO. 857 /P U N/20 1 4 RATNAKAR DNYANDEO PAWAR 4 7. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT IT WAS AN UNDISPUTED FACT THAT THE RECEIPTS TOTALING RS.19,00,303/ - WERE THE CONTRACT RECEIPTS IN THE HANDS OF ASSESSEE, SINCE THE INFORMATION WAS GATHERED FROM 26AS STAT EMENT, WHICH CLEARLY STATES THE NATURE OF RECEIPTS TO BE CONTRACT RECEIPTS . HE FURTHER POINTED OUT THAT THOUGH THE ASSESSING OFFICER HAD RECEIVED THE INFORMATION ONLY IN RESPECT OF RECEIPTS TOTALING RS.11,73,353/ - , ON WHICH THE TDS WAS DEDUCTED BUT THE TO TAL RECEIPTS WERE RS.19,00,705/ - I.E. THE RECEIPTS ON WHICH TAX WAS DEDUCTED AND FURTHER, THE RECEIPTS ON WHICH NO TAX WAS DEDUCTED . T HE ASSESSEE CLAIMS THAT HE HAD FAIRLY OFFERED THE TOTAL RECEIPTS TO TAX. IN RESPECT OF CLAIM OF EXPENDITURE AT RS.16.93 LAKHS, THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT IN RESPONSE TO SUMMONS ISSUED BY THE ASSESSING OFFICER, THREE LABOURERS HAD APPEARED AND HAD CONFIRMED THE NATURE OF WORK UNDERTAKEN AND HENCE, THE CLAIM OF ASSESSEE SHOULD BE A LLOWED. 8. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE VEHEMENTLY OPPOSED THE PROPOSITION MADE BY THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE AND POINTED OUT THAT WHERE THE ASSESSEE HAS FAILED TO PRODUCE THE DETAILS, THEN THERE IS N O MERIT IN THE CLAIM OF EXPENDITURE. HE FURTHER POINTED OUT THAT BEFORE THE CIT(A) THE ASSESSEE COULD FURNISH THE DETAILS OF EXPENDITURE ONLY TO THE EXTENT OF RS.11,27,987/ - I.E. SHORT BY RS.5,59,053/ - AND HENCE, THE SAID EXPENDITURE HAS TO BE ADDED IN TH E HANDS OF ASSESSEE. IN RESPECT OF BALANCE EXPENDITURE, WHERE THE ASSESSEE HAD NOT FURNISHED ANY DETAILS, THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE POINTED OUT THAT THE CLAIM OF ASSESSEE IS NOT TO BE ALLOWED. ITA NO. 857 /P U N/20 1 4 RATNAKAR DNYANDEO PAWAR 5 9. WE HAVE HEARD THE RIVAL CONT ENTIONS AND PERUSED THE RECORD. IN THE FACTS OF THE CASE, THE ASSESSEE WAS WORKING WITH M/S. PAWAR PATKAR CONSTRUCTION PVT. LTD. AS DIRECTOR OF THE SAID COMPANY AND HAD RECEIVED SALARY FROM THE SAID CONCERN. THE ASSESSEE HAD DECLARED SALARY INCOME AND IN COME FROM OTHER SOURCES IN THE RETURN OF INCOME. HOWEVER, THE ASSESSEE FAILED TO DISCLOSE THE CONTRACT RECEIPTS OF THE BUSINESS CARRIED ON BY THE ASSESSEE, RECEIPTS OF WHICH WERE DEPOSITED IN A SEPARATE ACCOUNT MAINTAINED BY THE ASSESSEE. THE ASSESSING O FFICER FROM THE ITS DETAILS AND 26AS STATEMENT ON VERIFICATION NOTED THAT THE ASSESSEE HAD RECEIVED CONTRACT RECEIPTS TO THE EXTENT OF RS.11,70,350/ - , ON WHICH TDS WAS DEDUCTED UNDER SECTION 194C OF THE ACT. THE ASSESSEE ON THE OTHER HAND, OFFERED THE TOT AL CONTRACT RECEIPTS AT RS.19,00,705/ - AND SUBMITTED THAT HE HAD BY MISTAKE FAILED TO SHOW THE SAID CONTRACT RECEIPTS IN THE RETURN OF INCOME. THE FIRST ASPECT OF THE ISSUE IS WHETHER THE SAID RECEIPTS ARE TO BE ADDED IN THE HANDS OF ASSESSEE UNDER SECTIO N 68 OF THE ACT OR AS INCOME FROM BUSINESS ON ACCOUNT OF CONTRACT UNDERTAKEN BY THE ASSESSEE. THE BASIS FOR INFORMATION IN THE CASE OF ASSESSEE IS THE ITS DETAILS AND 26AS STATEMENT, WHICH CLEARLY REFLECT THE NATURE OF RECEIPTS TO BE CONTRACT RECEIPTS , SI NCE THE TDS HAS BEEN DEDUCTED ON ACCOUNT OF CONTRACT RECEIPTS. THE ASSESSEE HAS PLACED ON RECORD THE COPY OF FORM 26AS FOR THE PERIOD UNDER CONSIDERATION AND THE PERUSAL OF THE SAME REFLECTS THE RECEIPTS TOTALING RS.11,70,350/ - TO BE ON ACCOUNT OF CONTRAC T RECEIPTS. IN RESPECT OF BALANCE RECEIPTS, THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT NO TDS HAS BEEN DEDUCTED AND HENCE, THEY DO NOT FEATURE IN THE FORM 26AS. IN VIEW OF THE ABOVE SAID FACTS AND CIRCUMSTANCES, THE RECEIPTS WHICH WERE DETECTED FROM 26AS DATA CANNOT BE ADDED IN THE HANDS OF ASSESSEE UNDER SECTION 68 OF THE ACT. IN RESPECT OF BALANCE RECEIPTS, NOTHING ITA NO. 857 /P U N/20 1 4 RATNAKAR DNYANDEO PAWAR 6 CONTRARY HAS BEEN BROUGHT ON RECORD. ACCORDINGLY, WE HOLD THAT THE RECEIPTS AS DECLARED BY THE ASSESSEE I.E. RS. 19,00,705/ - ARE TO BE ASSESSED AS INCOME FROM BUSINESS IN THE HANDS OF ASSESSEE. 10. NOW, COMING TO THE SECOND ASPECT OF THE ISSUE IS THE CLAIM OF EXPENDITURE AGAINST THE SAID CONTRACT RECEIPTS. THE ASSESSEE HAD CLAIMED THE EXPENDITURE OF RS.16,93,030 / - FOR WHICH, THE ASSESSEE FAILED TO FURNISH ANY DETAILS BEFORE THE ASSESSING OFFICER, HENCE THE SAID EXPENDITURE WAS NOT ALLOWED IN THE HANDS OF ASSESSEE. BEFORE THE CIT(A), THE ASSESSEE FURNISHED THE DETAILS OF LABOUR PAYMENTS TO THE EXTENT OF RS.11,27, 987/ - . THE ASSESSEE HAD FURNISHED THE LIST OF LABOURERS WHO WERE ENGAGED BY HIM, BUT OUT OF 10 SUMMONS ISSUED BY THE ASSESSING OFFICER DURING THE COURSE OF REMAND PROCEEDINGS, ONLY FOUR SUMMONS COULD BE SERVED AND ONLY THREE PERSONS APPEARED. THE ASSESSI NG OFFICER NOTES THAT THREE PERSONS ADMITTED TO HAVE CARRIED OUT THE WORK OF LABOUR FOR THE ASSESSEE BUT THEY WERE UNABLE TO PRODUCE ANY SUPPORTING DETAILS IN THIS REGARD. IN VIEW THEREOF, THE CLAIM OF ASSESSEE VIS - - VIS EXPENDITURE INCURRED WAS REJECTED. THE ASSESSEE IS AGGRIEVED BY THE SAME AND HAS PLEADED THAT THE SAID EXPENDITURE BE ALLOWED. IN THE FIRST INSTANCE, ONUS IS UPON THE ASSESSEE TO FURNISH COMPLETE DETAILS OF EXPENDITURE AND IN THE FACTS OF THE CASE, THE ASSESSEE HAS ONLY FURNISHED THE DET AILS TO THE EXTENT OF RS.11,27,987/ - . IN OTHER WORDS, NO DETAILS OF EXPENDITURE TO THE EXTENT OF RS.5,59,043/ - HAVE BEEN FURNISHED THOUGH THE SAME WERE CLAIMED AS LABOUR PAYMENTS. IN VIEW THEREOF, WE HOLD THAT THE SAID EXPENDITURE OF RS.5,59,043/ - IS NOT TO BE ALLOWED IN THE HANDS OF ASSESSEE. IN RESPECT OF BALANCE EXPENDITURE, THE ASSESSEE HAS FAILED TO FULLY JUSTIFY ITS CLAIM OF EXPENDITURE. HOWEVER, IN ORDER TO MEET THE ENDS OF JUSTICE, WE HOLD THAT THE EXPENDITURE TO ITA NO. 857 /P U N/20 1 4 RATNAKAR DNYANDEO PAWAR 7 THE EXTENT OF RS.6 LAKHS BE ALLO WED IN THE HANDS OF ASSESSEE AS THE ASSESSEE HAS NOT FURNISHED THE DETAILS OF EXPENDITURE CLAIMED TO HAVE BEEN INCURRED BY IT AND HENCE, THE ESTIMATION OF EXPENDITURE. ACCORDINGLY, WE HOLD SO. THE GROUND OF APPEAL IN RESPECT OF ASSESSABILITY OF CONTRACT RECEIPTS IS ALLOWED AND IN RESPECT OF ALLOWABILITY OF EXPENDITURE IS PARTLY ALLOWED. 11 . IN THE RESULT, THE APPEAL OF ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED ON THIS 30 TH DAY OF JUNE , 201 7 . SD/ - SD/ - (ANIL CHATURVEDI ) (SUSHMA CHOWLA ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; DATED : 30 TH JUNE , 201 7 . GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT (A) - 2, NASHIK ; 4. / THE CIT - 2, NASHIK ; 5. , , / DR B , ITAT, PUNE; 6. / GUARD FILE . / BY ORDER , // TRUE COPY // / ASSISTANT REGISTRAR, , / ITAT, PUNE