Assistant Commissioner of Income-tax, V. M/s. Yeshshri Constructions, Osmanabad

ITA 887/PUN/2015

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 7378 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 3 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-09-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 18-09-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 09-06-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 143(3); 6

Judgement Text

] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM . / ITA NO.887/PUN/2015 / ASSESSMENT YEAR : 2011-12 ASST. COMMISSIONER OF INCOME - TAX, LATUR CIRCLE, SWATI CHEMBERS, AUSA ROAD, LATUR 413 512. . / APPELLANT V/S M/S. YESHSHRI CONSTRUCTIONS, S.T. COLONY, BARSHI NAKA, OSMANABAD. PAN : AAAFY5204A. . / RESPONDENT ASSESSEE BY : NONE REVENUE BY : SHRI AJAY MODI / ORDER PER ANIL CHATURVEDI, AM : 1. THIS APPEAL FILED BY REVENUE IS EMANATING OUT OF THE O RDER OF COMMISSIONER OF INCOME-TAX (A) 2, AURANGABAD DT.24.03.20 15 FOR A.Y. 2011-12. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON R ECORD ARE AS UNDER :- ASSESSEE IS A PARTNERSHIP FIRM STATED TO BE ENGAGED IN C IVIL CONSTRUCTION. ASSESSEE ELECTRONICALLY FILED ITS RETURN OF IN COME FOR / DATE OF HEARING : 18.09.2017 / DATE OF PRONOUNCEMENT: 29.09.2017 2 A.Y. 2011-12 ON 24.09.2011 DECLARING TOTAL INCOME OF RS.46,86,550/-. THE CASE WAS SELECTED FOR SCRUTINY AND TH EREAFTER ASSESSMENT WAS FRAMED U/S 143(3) OF THE ACT VIDE ORDER DT.07.02.2014 AND THE TOTAL INCOME WAS DETERMINED AT RS.1,89,08,380/-. AGGRIEVED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE LD.CIT(A), WHO VIDE ORDER DT.24.03.2015 (IN APPEAL NO.ABD/CIT(A)/449/2013-14(A-2/32) GRANTED SUBSTA NTIAL RELIEF TO THE ASSESSEE. AGGRIEVED BY THE ORDER OF LD.CIT(A ), REVENUE IS NOW IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUNDS : 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED CIT(A) ERRED IN DELETING THE ADDITION ON AC COUNT OF WORK IN PROGRESS NOT SHOWN AS ON 31.03.2011 AMOUNTING TO RS.47,11,475/-. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED CIT(A) ERRED IN GRANTING THE RELIEF OF RS.4 0,28,480/- OUT OF PURCHASES EXPENSES AND LABOUR CHARGES. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW THE LEARNED CIT(A) FAILED TO APPRECIATE THAT BOTH THE A BOVE ADDITIONS / DISALLOWANCES WERE MADE AFTER POINTING OUT DEFECT S AND DISCREPANCIES IN THE STATEMENT OF AFFAIRS OF THE AS SESSEE FIRM. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW THE LEARNED CIT(A) ERRED IN GIVING FINDINGS THAT THE AD DITION ON ACCOUNT OF WIP IS MADE ON PRESUMPTION WHEN THERE IS ACTUALLY INSTANCES OF DEFECTS POINTED OUT BY THE AO. 3. ON THE DATE OF HEARING NONE APPEARED ON BEHALF OF T HE ASSESSEE THOUGH NOTICE OF HEARING WAS SERVED ON THE AS SESSEE. WE THEREFORE PROCEED TO DISPOSE OF THE APPEAL EX-PARTE QUA THE ASSESSEE. 4. GROUND NOS. 1, 3 AND 4 BEING INTER-CONNECTED ARE CON SIDERED TOGETHER. 3 4.1. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, AO NOT ICED THAT ASSESSEE HAD INCURRED EXPENSES OF RS.57,92,357/- IN THE MONTH OF APRIL, 2011 (THE DETAILS OF EXPENSES ARE LISTED AT PAGE 5 OF THE ASSESSMENT ORDER). HE NOTED THAT VOUCHED EXPENSE S WERE ONLY TO THE EXTENT OF RS.25,96,655/- AND FURTHER IT COULD NOT H AVE BEEN CONSUMED IN TOTO. AO NOTED THAT ASSESSEE HAD ONLY G IVEN THE DATE OF PAYMENT AND NOT FURNISHED THE COPIES OF BILLS. HE WAS OF THE VIEW THAT ATLEAST ONE MONTH PURCHASE AND EXPENSES SHO ULD ALWAYS BE AS WORK-IN-PROGRESS AS THE WORK WAS GOING ON BUT T HE ASSESSEE HAS NOT SHOWN ANY WORK-IN-PROGRESS. HE THEREFORE HELD THAT THE AMOUNT OF RS.47,11,475/- AS WORK-IN-PROGRESS AND MADE IT S ADDITION. AGGRIEVED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE LD.CIT(A), WHO DELETED THE ADDITION BY HOLDING AS UNDER :- 6.3 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE C ASE AND RIVAL CONTENTIONS. ON PERUSAL OF THE SAME, IT HAS BEEN NO TICED THAT THE AO HAS CONSIDERED PURCHASES ETC. IN THE MONTH OF MARCH AS WIP TO THE EXTENT OF RS.47,11,475/- AND HAS HELD THAT THE SAI D AMOUNT REPRESENTS WIP NOT SHOWN BY THE APPELLANT. ON THE OTHER HAND, THE APPELLANT HAS CLAIMED THAT THE SAID EXPENSES HAVE B EEN CONSIDERED IN RESPECT OF BILLS OF THE CONTRACTEES DATED 28/03/ 2011, 30/03/2011 AND 31/03/2011 AND THE SAID BILLS HAVE B EEN SHOWN IN CONTRACT RECEIPTS AND OUTSTANDING AMOUNTS HAVE B EEN SHOWN AS SUNDRY DEBTORS RS.43,56,662/- WHICH IS NET OF TDS AMOUNT. THE APPELLANT, THEREFORE, CONTENDED THAT THERE REMAINS NO WIP AS THE SAME HAS BEEN CONSIDERED AND EDITED IN CONTRACT PRO FIT & LOSS ACCOUNT AS CONTRACT RECEIPT. THE CONTENTION OF THE AO IN RESPECT OF THE WIP NOT SHOWN BY THE APPELLANT IS BASED ON HIS ASSUMPTION AND IS NOT SUPPORTED BY ANY EVIDENCE. THE CONTENTIO N OF THE APPELLANT, ON THE OTHER HAND IS LOGICAL AND SUPPO RTED BY ENTRIES IN THE BOOKS OF ACCOUNTS. IT HAS ALSO BEEN NOTICED THA T THE A.O. HAS ALREADY MADE ADDITION ON A COUNT OF UNDISCLOSED WIP TO THE EXTENT OF RS.48,61,224/- WHICH HAS BEEN CONFIRMED WHILE D ECIDING GROUND NO.1. IN VIEW OF THE ABOVE FACTS AND DISCUSS ION, I AM OF THE CONSIDERED VIEW THAT THE A.O. IS NOT JUSTIFIED IN M AKING ADDITION OF RS.47,11,475/- AND HENCE THE SAME IS DELETED. GROUN D NO.2 IS ALLOWED. AGGRIEVED BY THE ORDER OF LD.CIT(A), REVENUE IS NOW IN APPE AL BEFORE US, 4 5. BEFORE US, LD.D.R. TOOK US THROUGH THE ORDER OF AO AND SUPPORTED THE ORDER OF AO. 6. WE HAVE HEARD THE LD.D.R. AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT LD.CIT(A) WHILE DELETING THE ADDITION HA S NOTED THAT THE ADDITION IN RESPECT OF WORK-IN-PROGRESS W AS BASED ON ASSUMPTION AND WAS NOT SUPPORTED BY ANY EVIDENCE. ON THE OTHER HAND, THE STATEMENT OF THE ASSESSEE WITH REGARD TO WORK-IN- PROGRESS WAS SUPPORTED BY ENTRIES IN THE BOOKS OF ACCO UNTS. HE THEREFORE DELETED THE ADDITION. BEFORE US, REVENUE HAS NO T POINTED OUT ANY FALLACY IN THE FINDINGS OF LD.CIT(A). WE THEREFORE FIND NO REASON TO INTERFERE WITH THE ORDER OF LD.CIT(A). THUS THE GROUNDS OF REVENUE ARE DISM ISSED. 7. GROUND NO.2 IS WITH RESPECT TO DELETION OF ADDITION OF RS.40,28,480/-. 7.1 DURING THE COURSE OF ASSESSMENT PROCEEDINGS, AO NOTIC ED THAT ASSESSEE HAD MADE PURCHASES AND MADE PAYMENT O F LABOUR CHARGES WHICH WERE NOT SUPPORTED BY PROPER VOUCHERS. HE ACCORDINGLY DISALLOWED 20% OF UN-SUPPORTED PURCHASES AND LABOUR CHARGES AND DISALLOWED RS.41,28,480/-. AGGRIEVED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE LD.CIT(A), WHO GRAN TED PARTIAL RELIEF TO THE ASSESSEE BY HOLDING AS UNDER : 7.3 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE C ASE AND RIVAL CONTENTIONS. ON PERUSAL OF THE SAME, IT HAS BEEN N OTICED THAT THE APPELLANT HAS MADE PAYMENTS IN RESPECT OF PURCHASE OF SAND, MURUM, STONE, BRICKS ETC., TO THE PERSONS IN RURAL AREA WHO ARE FROM 5 UN-ORGANIZED SECTOR. FURTHER, THE APPELLANT HAS MA DE PAYMENT OF LABOUR CHARGES TO WORKERS AND LABOURERS. THE PERSO NS. FROM UNORGANIZED SECTOR AND LABOURERS CANNOT BE EXPECTED TO PRINT THEIR OWN BILLS/RECEIPTS AND HENCE THE SAID EXPENDITURE I S BOUND TO BE SUPPORTED BY INTERNAL VOUCHERS/HANDMADE VOUCHERS DU LY SIGNED BY THE RECIPIENTS. THE DISALLOWANCE MADE BY THE AO. @2 0% OUT OF THE ABOVE MENTIONED PURCHASES AND LABOUR CHARGES IS ON HIGHER SIDE. IT HAS ALSO BEEN NOTICED THAT THE APPELLANT H AS DECLARED NET PROFIT OF CONTRACT BUSINESS @8.05% AND AFTER CONSID ERING ADDITION OF RS.48,61,924/- ON ACCOUNT OF UNDISCLOSED WIP WHICH HAS BEEN CONFIRMED WHILE DECIDING GROUND NO.1, THE NET PROFI T WORKS OUT TO 16.40% OF THE CONTRACT RECEIPT WHICH IS CERTAINLY M ORE THAN REASONABLE. IN VIEW OF THE ABOVE FACTS AND CONSIDE RING THE TOTALITY OF THE FACTS, THE ADHOC ADDITION MADE BY THE A.O. AT RS.41 ,28,480/- IS RESTRICTED TO RS.L,00,000/-. THE APPELLANT GETS RELIEF OF RS.40,28,480/-. THE AO IS DIRECTED ACCORDINGLY. G ROUND NO.3 IS PARTLY ALLOWED. AGGRIEVED BY THE ORDER OF LD.CIT(A), REVENUE IS NOW IN APPE AL BEFORE US. 8. BEFORE US, LD.D.R. TOOK US THROUGH THE ORDER OF AO AND SUPPORTED THE ORDER OF AO. 9. WE HAVE HEARD THE LD.D.R. AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT LD.CIT(A) WHILE DECIDING THE ISSUE HAS N OTED THAT ASSESSEE HAD MADE PAYMENT IN RESPECT OF STONE, SA ND, BRICKS ETC., TO THE PERSONS IN RURAL AREAS WHO WERE FROM UN-ORG ANIZED SECTOR AND ALSO TO LABOURERS WHO ARE UNEDUCATED. HE NOTED THAT ASSESSEE HAD DECLARED NET PROFIT OF CONTRACT BUSINESS A T 8.05% AND AFTER CONSIDERING THE ADDITION ON ACCOUNT OF UN-DISCLO SED WORK-IN-PROGRESS OF RS.48,61,924/-, THE NET PROFIT WOULD WO RKS OUT TO 16.40% OF THE CONTRACT RECEIPTS WHICH WERE MORE THAN REASONABLE. HE ACCORDINGLY RESTRICTED THE ADDITION TO RS.1,00,000/-. BEFORE US, REVENUE HAS NOT PLACED ANY MATE RIAL ON RECORD TO CONTROVERT THE FINDINGS OF LD.CIT(A) NOR POINTED ANY FALLACY IN THE FINDINGS OF LD.CIT(A). IN VIEW OF THE AFORESAID FACT S, 6 WE FIND NO REASON TO INTERFERE WITH THE ORDER OF LD.CIT(A). THUS, THE GROUND OF THE REVENUE IS DISMISSED. 10. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMIS SED. ORDER PRONOUNCED ON 29 TH SEPTEMBER, 2017. SD/- SD/- ( SUSHMA CHOWLA ) ( ANIL CHATURVEDI ) ! / JUDICIAL MEMBER '! / ACCOUNTANT MEMBER PUNE; DATED : 29 TH SEPTEMBER, 2017. YAMINI #$%&'('% / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3 . 4. 5. 6. CIT(A)-2, AURANGABAD. PR.CIT-2, AURANGABAD. '#$ %%&',) &', / DR, ITAT, B PUNE; $+,-/ GUARD FILE. / BY ORDER , / / TRUE COPY / / //TRUE COPY// ./0%1&2 / SR. PRIVATE SECRETARY ) &', / ITAT, PUNE