The ACIT, Circle-1, RAJKOT-GUJARAT V. M/s Kishor Projects Pvt. Ltd., RAJKOT-GUJARAT

ITA 952/RJT/2009

• Counselvise Citation: [2012] 120 COUNSELVISE.COM (IT) 0041 (ITAT-RAJKOT)
• Duration Of Justice: 3 year(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-08-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 02-08-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 28-08-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PREM PRAKASH
• Assessee Lawyers: DM RINDANI

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBULAL; RAJKOT BENCH, RAJKOT. BEFORE SHRI T. K. SHARMA, JM AND SHRI A. K.GARODIA, AM ITA NO.889/RJT/2009. / ASSESSMENT YEAR 2005-06 M/S KISHOR PROJECT PVT.LTD., RACE COURSE RING ROAD, ABOVE SHIV ICE CREAM, RAJKOT PAN: AACCK3721F ( / APPELLANT) VS. DCIT, CIRCLE-1, RAJKOT, . / RESPONDENT ITA NO.952/RJT/2009. / ASSESSMENT YEAR 2005-06 DCIT, CIRCLE-1, RAJKOT, ( / APPELLANT) VS. M/S KISHOR PROJECT PVT.LTD., / RESPONDENT / ASSESSEE BY SHRI D.M.RINDANI # / REVENUE BY SHRI PREM PRAKASH & / DATE OF HEARING 02.08.2012 & / DATE OF PRONOUNCEMENT 30 .08.2012 / / / / ORDER PER A. K.GARODIA, AM THESE ARE CROSS APPEALS FILED BY THE ASSESSEE AND R EVENUE WHICH ARE DIRECTED AGAINST THE ORDER OF LD.CIT (A)-I, RAJKOT DATED 12. 5.2009 FOR THE ASSESSMENTS YEAR 2005-06. 2. FIRST, WE TAKE UP THE APPEAL OF THE REVENUE I.E . ITA NO.952/RJT/2009. 3. THE GROUNDS OF APPEAL TAKEN BY THE REVENUE ARE A S UNDER : ITA NO.889/RJT/2009. ITA NO.952/RJT/2009. 2 1. THE LEARNED CIT(A)-I, RAJKOT, HAS ERRED IN LAW AND ON FACTS IN DELETING THE DISALLOWANCE U/S 4OA(3) OF RS.1,46,776/- (2) THE LEARNED CIT(A)-I, RAJKOT, HAS ERRED IN LA W AND ON FACTS IN DELETING THE DISALLOWANCE U/S 40A(IA) OF RS.5,26,384/-. (3) THE LEARNED CIT(A)-I, RAJKOT, HAS ERRED IN LAW AND ON FACTS IN DELETING THE DISALLOWANCE MADE U/S 40A(IA) OF RS.40,94,923/-. (4) THE LEARNED CIT(A)-I, RAJKOT, HAS ERRED IN LAW AND ON FACTS IN DELETING THE DISALLOWANCE MADE U/S 40A(IA) OF RS.45,53,398/-. (5) THE LEARNED CIT(A)-I, RAJKOT, HAS ERRED IN LA W AND ON FACTS IN DELETING THE ADDITION ON ACCOUNT OF SUPPRESSION OF RECEIPT OF RS .39,77,057/-. (6) THE LEARNED CIT(A)-I, RAJKOT, HAS ERRED IN LAW AND ON FACTS IN DELETING THE DISALLOWANCE OUT OF VARIOUS EXPENSES OF RS.2,50,000 /- 7) ON THE FACTS OF THE CASE AND EVEN IN PRINCIPLE, THE DECISION OF THE LEARNED CIT(A) IS ERRONEOUS AS THE LD. CIT(A), OUGHT TO HAV E UPHELD THE ORDER OF THE ASSESSING OFFICER. ( 8) IT IS, THEREFORE, PRAYED THAT THE FINDING GIVEN IN THE ORDER OF THE ID.CIT(A) MAY BE DISMISSED/SET ASIDE/DELETED AND THAT OF THE ASSE SSING OFFICER BE RESTORED. 4. THE LD. DR SUPPORTED THE ASSESSMENT ORDER WHEREA S THE LD. AR OF THE ASSESSEE SUPPORTED THE ORDER OF THE LD. CIT(A) FOR ALL THE I SSUES. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND P ERUSED THE ORDERS OF THE AUTHORITIES BELOW. 6. REGARDING THE GROUND NO.1, WE FIND THAT THIS ISSUE WAS DISCUSSED BY THE LD. CIT(A) AND DECIDED IN FAVOUR OF THE ASSESSEE VIDE PARAGRAP H 2.1(C ) AT PAGE 3 OF HIS ORDER AFTER GIVING THIS FINDING THAT THERE WAS NOT EVEN A SIN GLE PURCHASE MADE BY THE APPELLANT FOR MORE THAN RS.20,000/- IN CASH. THIS FINDING COUL D NOT BE CONTROVERTED BY THE LEARNED DR OF THE REVENUE AND HENCE, IN THE FACTS AND CIRCUMS TANCES OF THE CASE, WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF THE LD. CIT( A) ON THIS ISSUE. REGARDING THE EXPENSES INCURRED FOR PURCHASE OF PETROL/DIESEL FOR DEESA S ITE, THE FINDINGS OF THE LD. CIT(A) ARE THAT ITA NO.889/RJT/2009. ITA NO.952/RJT/2009. 3 THE SITE IS FAR AWAY FROM THE MAIN TOWN AND AT SUCH PLACES , IT CANNOT BE EXPECTED THAT PETROL PUMPS, WAYSIDE HOTELS, GROCERY SHOPS WOULD A CCEPT THE CHEQUES FOR THE GOODS SOLD. IT IS HELD BY THE LD. CIT(A) THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE, RULE 6DD(J) IS APPLICABLE. IN FACT, RULE 6DD(G) IS APPLICABLE AS PER WHICH IF THE PAYMENTS ARE MADE IN A VILLAGE OR IN A TOWN AND ON THE DATE OF SUCH PAYM ENT, THE VILLAGE OR TOWN IS NOT SERVED BY ANY BANK, AND SUCH RECEIVER/PAYER IS THE PERSON WH O ORDINARY RESIDES THERE OR IS CARRYING ON ANY BUSINESS IN ANY OF SUCH VILLAGE OR TOWN THE N NO DISALLOWANCE IS CALLED FOR U/S 40A(3). IN OUR CONSIDERED OPINION, THE AMOUNT OF P AYMENT ON ACCOUNT OF PURCHASE OF PETROL /DIESEL IS COVERED BY THIS CLAUSE 6DD (G) AN D HENCE, ON THIS ACCOUNT ALSO , WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF THE L D. CIT(A). GROUND NO.1 IS REJECTED. 7. REGARDING GROUND NO.2, WE FIND THAT THIS ISSUE IS DECIDED BY THE LD. CIT(A) IN FAVOUR OF THE ASSESSEE IN PARAGRAPH 3.1(C) AT PAGE 6 OF H IS ORDER ON THIS BASIS THAT PAYMENT TO ANY PERSON DOES NOT EXCEED RS.20,000/-. THE LD. DR COULD NOT CONTROVERT THE FINDING OF THE LD. CIT(A) AND HENCE, WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF THE LD. CIT(A) ON THIS ISSUE ALSO. GROUND NO.2 IS ALSO REJECTED. 8. REGARDING GROUND NO.3, WE FIND THAT THE DISALLO WANCE WAS MADE BY THE AO ON THE BASIS THAT SUB-CONTRACT WORK DONE BY SUB-CONTRACT OR M/S KALPAVRUKSH BUILDER WAS OF RS.97,73,770/-, WHEREAS AS PER THE CLAIM OF THE AS SESSEE, THE WORK DONE BY THAT PARTY WAS ONLY RS.56,78,297/- AND BALANCE DEBIT WAS INCUR RED BY THE ASSESSEE ON THAT OPERATION OF WORK BECAUSE THE SUB-CONTRACTORS LEFT THE WORK I N BETWEEN. IT IS THE CLAIM THAT ON THIS BALANCE AMOUNT, THERE IS NO REQUIREMENT AS PER LAW TO DEDUCT TDS. THE LD. CIT(A) HAS GIVEN THIS FINDING THAT THE AO SHOULD HAVE MADE IN QUIRY FROM THE SAID CONTRACTOR BUT HE HAS NOT DONE SO IN THE ASSESSMENT PROCEEDINGS AS WE LL AS IN THE REMAND PROCEEDINGS. BEFORE US ALSO, THE LD DR COULD NOT CONTROVERT THI S FINDING OF THE LD. CIT(A) AND THEREFORE, ITA NO.889/RJT/2009. ITA NO.952/RJT/2009. 4 ON THIS ISSUE, WE FIND NO REASON TO INTERFERE IN TH E ORDER OF THE CIT(A). THIS GROUND IS ALSO REJECTED. 9. REGARDING GROUND NO.4, WE FIND THAT THE DISALLO WANCE WAS MADE BY THE AO ON THE BASIS THAT THE RATE OF TDS SHOULD HAVE BEEN APP LIED BY THE ASSESSEE AT 2.2% BUT THE ASSESSEE HAS DEDUCTED THE TDS AT THE RATE OF 1.1% WHICH IS APPLICABLE FOR PAYMENT TO SUB-CONTRACTOR. THE LD. CIT(A) HAS GIVEN CLEAR FI NDING THAT THERE IS NO BASIS FOR THIS ALLEGATION OF THE AO. HE HAS GIVEN FINDING THAT T HESE PAYMENTS WERE MADE TO SEVERAL TYPES OF SUB-CONTRACTORS SUCH AS SUBLETTING WOR K, LABOUR WORK, CONSTRUCTION CANAL WORK ETC. THE LD. DR COULD NOT CONTROVERT THIS FINDIN G OF THE LD. CIT(A) ON THIS ISSUE AND WE FIND NO REASON TO INTERFERE IN THE ORDER OF THE LD. CIT( A). 10. REGARDING GROUND NO.5, WE FIND THAT THE CIT(A ) HAS DEALT WITH THIS ISSUE AT PARAGRAPH 4( C) AT PAGE 15 OF HIS ORDER AND FOR THE SAKE OF READY REFERENCE, THE SAME IS REPRODUCE BELOW: (C) I HAVE STUDIED THIS ISSUE CAREFULLY. THERE HAS BEEN NO COMMENT ON THIS ITEM IN THE REMAND REPORT. THE APPELLANT'S STAND WAS THAT THE SAID AMOUNT OF RS.39,77,057/- REPRESENTED MOBILIZAT ION ADVANCE AND SECURITY DEPOSIT OF APPELLANT LYING WITH HARISHCHANDRA IN EARLIER YE ARS AND LATER RECEIVED FROM HARISHCHANDRA IN THIS YEAR. I FOUND THAT NECESSARY TAX WAS ALSO DEDUCTED ON THIS AMOUNT. I ALSO PERUSED THE RELEVANT MATERIALS SUBMI TTED BY THE APPELLANT ON THIS ISSUE. THE APPELLANT TOOK THE SAID CONTRACT WORK IN OZAT D AM FROM HARISHCHANDRA IN A.Y. 2001-02. THE MAIN CONTRACTOR RECEIVED THE AMOUNTS F ROM GOVERNMENT AND THEREAFTER TRANSFERRED THE SAME TO THE APPELLANT. THE SAID AMO UNT OF DEPOSIT WAS SUBSEQUENTLY RETURNED BACK BY HARISHCHANDRA TO APPELLANT ON DATE S 08.07.04, 20.07.04 AND 18.08.04 AND THE INCOME RECEIVED FOR THE YEAR ENDING 31.03.2005 WAS RS.15,0 6,243/- WHICH WAS INCLUDED AS INCOME IN APPELLANT'S BOOKS O F ACCOUNTS. AS CORRECTLY POINTED OUT BY THE AR, THE SAID AMOUNT REPRESENTED ONLY THE DEPOSIT WHICH WAS SUBSEQUENTLY RETURNED BACK BY THE MAIN CONTRACTOR HARISCHANDRA A ND COULD NOT BE TREATED AS INCOME IN THE HANDS OF THE APPELLANT. HAD THE AO GOT ANY DOUBT HE OUGHT TO HAVE MADE VERIFICATION WITH THE CONCERNED PARTY. HAVING FAILED TO INQUIRE DURING THE ASSESSMENT PROCEEDINGS, THE AO COULD HAVE TRIED AT LEAST DURING REMAND PROCEEDINGS . NOT DONE. MERE SUSPICION WOULD NOT SUPPORT THE AO. SO THE ADDITION MADE WITHOUT ANY BASIS ON SURMISES COULD NOT BE UPHELD. I DELETE THE ADDITION MADE. ITA NO.889/RJT/2009. ITA NO.952/RJT/2009. 5 11. WE FIND THAT THE CLEAR FINDING HAS GIVEN BY T HE LD. CIT(A) THAT THE AMOUNT IN QUESTION REPRESENTED DEPOSITS AND IT WAS SUBSEQUE NTLY RETURNED BACK BY THE CONTRACTOR AND IF THE AO HAD ANY DOUBT, HE SHOULD HAVE MAKE VERIFICATION FROM THE CONCERNED PARTY BUT NO SUCH VERIFICATION WAS MADE BY THE AO EITHE R AT THE ASSESSMENT STAGE OR AT REMAND PROCEEDINGS. BEFORE US ALSO THE LD. DR COULD NOT C ONTROVERT THIS FINDING OF THE LD. CIT(A) ON THIS ISSUE. THEREFORE, WE DO NOT FIND ANY REASON T O INTERFERE IN THE ORDER OF THE LD. CIT(A). THIS GROUND IS REJECTED. 12. REGARDING GROUND NO.6, WE FIND THAT THE AO MAD E DISALLOWANCE OF RS.3,00,000/- OUT OF SOME EXPENSES BECAUSE SOME IRREGULARITY WE RE NOTICED BY THE AO. THE LD. CIT(A) HAS REDUCED THE DISALLOWANCE TO RS.50,000/- AND DELETED THE BALANCE DISALLOWANCE OF RS.2,50,000/-. THIS DISALLOWANCE MADE BY THE AO AND CONFIRMED BY THE LD. CIT(A) IS ON ESTIMATE BASIS. IN OUR CONSIDERED OPINION, THE DIS ALLOWANCE RESTRICTED BY THE LD. CIT(A) TO RS.50,000/- IS REASONABLE AND HENCE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD.CIT(A) AND THEREFORE, CONFIRM THE SAME. THIS GR OUND OF REVENUE IS REJECTED. 13. REMAINING GROUNDS OF APPEAL ARE GENERAL IN NATU RE AND HENCE DO NOT CALL FOR ANY ADJUDICATION, HENCE REJECTED. 14. IN THE RESULT, THE REVENUES APPEAL IS DISMISSE D. 15. NOW, WE TAKE THE ASSESSEES APPEAL BEING ITA NO .889/RJT/2009. 16. GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER : 1. THE LEARNED CIT(A)-I, RAJKOT, HAS ERRED IN UPH OLDING THE DISALLOWANCE U/S 40A(IA) OF RS.37,996/- OUT OF PAYMENT OF TRACTOR C HARGES MADE BY THE AO IS UNWARRANTED, UNJUSTIFIED AND BAD IN LAW. ITA NO.889/RJT/2009. ITA NO.952/RJT/2009. 6 (2) THE LEARNED CIT(A)-I, RAJKOT, HAS ERRED IN U PHOLDING THE DISALLOWANCE U/S 40A(IA) OF RS.2,28,816/- OUT OF JCB CHARGES IS UN WARRANTED, UNJUSTIFIED AND BAD IN LAW. (3) THE LEARNED CIT(A)-I, RAJKOT, HAS ERRED IN UP HOLDING THE DISALLOWANCE OF EXPENSES OF RS.50,000/- IS UNWARRANTED, UNJUSTIFIE D AND BAD IN LAW. (4) THE LEARNED CIT(A)-I, RAJKOT, HAS ERRED IN UP HOLDING THE DISALLOWANCE U/S 80IA OF RS.12,31,729/- IS UNWARRANTED, UNJUSTIFIED AND BAD IN LAW. 17. GROUND NO.4 WAS NOT PRESSED BY THE LD. AR OF TH E ASSESSEE AND REJECTED ACCORDINGLY. FOR REMAINING GROUNDS, HE HAS NOT RAIS ED ANY SERIOUS ARGUMENT. AFTER GOING THROUGH THE ORDER OF THE LD. CIT(A), WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF THE LD. CIT(A) AND HENCE, THESE GROUNDS RAISED BY THE A SSESSEE ARE ALSO REJECTED. THE APPEALS OF THE ASSESSEE IS DISMISSED. 18. IN THE COMBINED RESULT, BOTH THE APPEALS ARE DI SMISSED. THIS ORDER IS PRONOUNCED IN THE OPEN COURT ON THE D ATE MENTIONED HEREINABOVE. SD SD ( T. K. SHARMA) ( A. K.GARODIA) # /JUDICIAL MEMBER # / ACCOUNTANT MEMBER +/ ORDER DATE 30.08.2012. /RAJKOT SRL ITA NO.889/RJT/2009. ITA NO.952/RJT/2009. 7 - - - - .- .- .- .- / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT-, 2. / RESPONDENT- 3. 4 / CONCERNED CIT. 4. 4- / CIT (A). 5. - , , / DR, ITAT, RAJKOT 6. / GUARD FILE. / BY ORDER , TRUE COPY SENIOR PRIVATE SECRETARY , INCOME TAX APPELLATE TRIBUNAL, RAJKOT.