Prasanna Kumar Mohanty, Bhubaneswar V. DCIT, Circle-2(2), Bhubaneswar

ITA 97/CTK/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 2259 (ITAT-CUTTACK)
• Duration Of Justice: 5 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 21-03-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: P K SAHOO
• Keywords: Business expenditure

Judgement Text

P A G E 1 | 8 IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK BEFORE S/SHRI N.S SAINI, ACCOUNTANT MEMBER AND PAVAN KUMAR GADALE, JUDICIAL MEMBER ITA NO. 97 /CTK/201 8 ASSESSMENT YEAR : 201 0 - 11 PRASANNA KUMAR MOHANTY, MIG - II/234, KANAN VIHAR, PATIA, BHUBANESWAR. VS. DCIT, CIRCLE 2(2), BHUBANESWAR. PAN/GIR NO. ABKPM 7927 K (APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY : SHRI P.K.SAHOO, AR REVENUE BY : SHRI SU BH ENDU DATTA , DR DATE OF HEARING : 30 /0 8 / 2018 DATE OF PRONOUNCEMENT : 31 /0 8 / 2018 O R D E R PER N.S.SAINI, AM THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A_2, BHUBANESWAR DATED 16.11.2017 FOR THE ASSESSMENT YEAR 2010 - 2011. 2. IN GROUND NO.1 OF APPEAL, THE GRIEVANCE OF THE ASSESSEE IS THAT THE CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS.3,36,000/ - TOWARDS PURCHASE OF MATERIAL. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A CIVIL CONTRACTOR CARRIED ON B USINESS IN RURAL VILLAGES MAKING ROADS. THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS MADE PURCHASE ITA NO. 97/CTK/2018 ASSESSMENT YEAR : 2010 - 11 P A G E 2 | 8 OF MATERIALS OF RS.3,36,04,380/ - AND HAS NOT SUBMITTED BILLS AND VOUCHERS IN SUPPORT OF PURCHASE OF MATERIALS AND HENCE, MADE AN ESTIMATED DISALLOWA NCE BY APPLYING RATE OF 1% OUT OF TOTAL PURCHASES AND MADE AN ADDITION OF R S.3,36,000/ - TO THE TOTAL INCOME OF THE ASSESSEE. 4. ON APPEAL, THE CIT(A) CONFIRMED THE ORDER OF THE ASSESSING OFFICER OBSERVING THAT IT IS THE RESPONSIBILITY OF THE ASSESSEE FOR MAINTAINING BILLS AND VOUCHERS IN SUPPORT OF THE PURCHASES. 5. BEING AGGRIEVED BY THIS ORDER, THE ASSESSEE IS IN APPEAL BEFORE US. 6. LD A.R. OF THE ASSESSEE SUBMITTED THAT NO ADHOC DISALLOWANCE OUT OF GENUINE BUSINESS EXPENDITURE OF THE ASSESSEE CAN BE MA DE BY THE ASSESSING OFFICER. HE SUBMITTED THAT THE ASSESSING OFFICER HAS NOT POINT ED OUT FOR WHICH OF THE PURCHASES, THE BILLS AND VOUCHERS WERE NOT PRODUCED BEFORE HIM. MAKING A DISALLOWANCE SUMMARILY BY APPLYING RATE OF 1% ON THE TOTAL PURCHASES BY THE A SSESSEE CANNOT BE SUSTAINED IN LAW. HENCE, HE PRAYED THAT SAME SHOULD BE DELETED. 7. ON THE OTHER HAND, LD D.R. SUPPORTED THE ORDERS OF LOWER AUTHORITIES. ITA NO. 97/CTK/2018 ASSESSMENT YEAR : 2010 - 11 P A G E 3 | 8 8. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD. WE FIND THAT IN THE INSTANT CASE, THE ASSESSEE IS A CIVIL CONTRACTOR. THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS CLAIMED TO HAVE MADE PURCHASES OF MATERIALS OF RS.3,36,04,380/ - FOR WHICH THE ASSESSEE COULD NOT SUBMIT BILLS AND VOUCHERS IN SUPPORT OF THE PURCHASES AND, THEREFORE, HE MADE ESTIMATED DISALLOWANCE BY APPLYING RATE OF 1% OUT OF TOTAL PURCHASES OF RS.3,36,04,380/ - AND ADDED RS.3,36,000/ - TO THE INCOME OF THE ASSESSEE, WHICH WAS CONFIRMED IN APPEAL BY THE CIT(A). 9. LD A.R. OF THE ASSESSEE SUBMITTED THAT NO ADHOC DISALLOWANCE OUT OF GENUINE BUSINESS EXPENDITURE OF THE ASSESSEE CAN BE MADE BY THE ASSESSING OFFICER WITHOUT BRINGING ANY MATERIAL ON RECORD THAT FOR WHICH OF THE EXPENSES THE VOUCHERS ARE NOT MAINTAINED F OR PRODUCING BEFORE HIM. 10. LD D.R. RELIED ON THE ORDERS OF LOWER AUTHORITIES. 11. WE FIND THAT THIS ISSUE HAS BEEN CONSIDERED AND DECIDED BY KOLKATA BENCH OF THE TRIBUNAL IN THE CASE OF ANIMESH SADHU VS ACIT IN ITA NO.11/KOL/2013 ORDER DATED 12.11.2014, WHEREIN, IT WAS HELD AS UNDER: ITA NO. 97/CTK/2018 ASSESSMENT YEAR : 2010 - 11 P A G E 4 | 8 8 . WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. A PERUSAL OF THE ASSESSMENT ORDER SHOWS THAT THE ASSESSING OFFICER HAS DISALLOWED 20% OF THE EXPENSES ON ESTIMATE BASIS ON THE GROUND THAT NO INDEPENDENT VERIFICATION TO BE MADE TO FIND OUT THE AUTHENTICITY OF TH E EXPENSES. LD. CIT(APPEALS) HAS REDUCED THE SAME ON THE SAME GROUND. HOWEVER, WE ARE OF THE VIEW THAT NO ESTIMATED DISALLOWANCE SCAN BE MADE FOR INABILITY TO MAKE INDEPENDENT VERIFICATION. IF ANY SPECIFIC EXPENDITURE IS UNVERIFIABLE OR IS UN - VOUCHED, THEN SUCH SPECIFIC EXPENDITURE IS DISALLOWABLE. HER NO SUCH SPECIFIC IDENTIFICATION HAS BEEN DONE. IN THESE CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE ESTIMATED DISALLOWANCE AS CONFIRMED BY THE LD. CIT(APPEALS) IS UNSUSTAINABLE. CONSEQUENTLY THE SAME STANDS DE LETED. IN THE RESULT, GROUNDS NO. 2 & 3 OF THE ASSESSEES APPEAL STAND ALLOWED. 12. FACTS BEING IDENTICAL, RESPECTFULLY FOLLOWING THE ABOVE QUOTED DECISION OF KOLKATA BENCH OF THE TRIBUNAL IN THE CASE OF ANIMESH SADHU (SUPRA), WE SET ASIDE THE ORDERS OF T HE LOWER AUTHORITIES AND VACATE THE DISALLOWANCE OF EXPENSES OF RS.3,36,000/ - AND ALLOW THIS GROUND OF APPEAL OF THE ASSESSEE. 13. IN GROUND NO.2 OF THE APPEAL, THE GRIEVANCE OF THE ASSESSEE IS THAT THE CIT(A) ERRED IN CONFIRMING PUJA EXPENSES OF RS.39,684 / - . 14. WE FIND THAT IN PAGE 4 PARA 4 OF THE ORDER THE CIT(A) HAS OBSERVED AS UNDER: IN THIS GROUND, THE APPELLANT HAS CONTENDED THE ADDITION MADE BY THE AO OF RS.39,684/ - ON ACCOUNT OF PUJA EXPENSES. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE APP ELLANT HAS EXPLAINED THAT THESE EXPENSES ARE TOWARDS THE SMALL GET - TOGETHER BEFORE THE START OF CONSTRUCTION WORK. ITA NO. 97/CTK/2018 ASSESSMENT YEAR : 2010 - 11 P A G E 5 | 8 IN MY OPINION, IT IS A BUSINESS EXPENSES AND, THEREFORE, THE ADDITION OF RS.3 9 .684/ - IS DIRECTED TO BE DELETED. 15. IN VIEW OF ABOVE FINDIN GS OF THE CIT(A), WHEREIN, HE HAS DELETED THE ADDITION, THIS GROUND OF APPEAL OF THE ASSESSEE IS INFRUCTUOUS AND HENCE DISMISSED. 16. IN GROUND NO.3 OF APPEAL, THE GRIEVANCE OF THE ASSESSEE IS THAT THE CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS.30,000/ - MADE FOR NON - DEDUCTION OF TDS FROM PAYMENT OF AUDIT FEES U/S.194 - J OF THE ACT. 17. WE FIND THAT THE CIT(A) HAS OBSERVED AS UNDER: DURING THE COURSE OF HEARING ON 30.8.2016, SHRI P.K,.SAHOO, AR OF THE APPELLANT HAS WITHDRAWN THIS GROUND. THEREFORE, THIS GROUND IS DISMISSED AS WITHDRAWN. 18. IN VIEW OF ABOVE FINDINGS OF THE CIT(A) THAT THE ASSESSEE HAS WITHDRAWN THIS GROUND OF APPEAL, THEREFORE, THE ASSESSEE CANNOT HAVE ANY GRIEVANCE AGAINST THE ORDER OF THE CIT(A). HENCE, THIS GROUND OF APPEAL OF THE ASSESSEE IS DISMISSED AS INFRUCTUOUS. 19. IN GROUND NO.4 OF THE APPEAL, THE GRIEVANCE OF THE ASSESSEE IS THAT THE CIT(A) ERRED IN CONFIRMING THE DISALLOWANCE OF RS.1,34,820/ - AS CAMP EXPENSES AND IN GROUND NO.5 OF APPEAL IN CONFIRMING THE DISALLOWANCE OF LABOUR CHARGES OF RS.2,50,000/ - . ITA NO. 97/CTK/2018 ASSESSMENT YEAR : 2010 - 11 P A G E 6 | 8 20. THE FACTS ARE THAT THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS CLAIMED DEDUCTION OF A SUM OF RUPEES 9,51,970/ - TOWARDS CAMP EXPENSES(MESS). ON TEST CHECKING BILLS/VOUCHERS OF THE SAID EXPENSE, HE OBSERVED THAT BILLS/VOUCHERS IN SUPPORT OF THE FOLLOWING CLAIM OF EXPENSES ARE NOT AVAILABLE. ON BEING ASKED TO PRODUCE THE SAME, THE ASSESSEE SUBMITTED HIS INABILITY TO PRODUCE THE DETAILS OF THE FOLLOWING EXPENSES ON THE PLEA THAT THE VOUCHERS ARE MAINT AINED AT SITE OFFICES. SI.NO. DATE PARTICULARS AMOUNT 01 15/04/09 CAMP EXPENSE FOR MADRANGE 14,000 02 05/06/09 CAMP EXPENSE FOR NUA BUDHA KERA 12,400 03 06/07/09 SUBAMAPUR 11,200 04 06/07/09 ASTARANQ CAMP EXPENSE 14,930 05 03/08/09 - DO - 12,400 06 05/09/09 - DO 15,700 07 16/11/09 MADRANGA CAMP EXPENSE 12,490 08 02/01/10 BADA NIMIQA CAMP EXPENSE 5,800 09 15/01/10 - DO - 4,200 10 02/02/10 NUA BUDHAKERA CAMP EXP. 16 , 400 11 16/02/10 - DO - 15,300 TOTAL 1,34,820 THEREFORE, IN THE ABSENCE OF PRIMARY DOCUMENTS SUPPORTING THE EXPENDITURE, THE ASSESSING OFFICER DISALLOWED RS. 1,34,820 / - AND ADDED THE SAME TO THE INCOME OF THE ASSESSEE. 21. SIMILARLY, THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS CLAIMED DEDUCTION ON EXPENDITURE OF RS. 39,167,056/ - UNDER THE HEAD LABOUR CHARGES. DURING THE COURSE OF HEARING THE ITA NO. 97/CTK/2018 ASSESSMENT YEAR : 2010 - 11 P A G E 7 | 8 ASSESSEE PRODUCED THE LEDGER COPY OF LABOUR CHARGES. ON BEING ASKED TO F URNISH THE SUPPORTING DOCUMENTS REGARDING SUCH EXPENSES, THE ASSESSEE COULD NOT FURNISH SUCH DOCUMENTS REGA RDING PAYMENT OF LABOUR CHARGES. IN VIEW OF ABOVE, THE ASSESSING OFFICER WAS OF THE OPINION THAT THE ASSESSEE HAS TRIED TO MAKE AN ENHANCED CLAIM OF EXPENDITURE. THEREFORE, HE MADE AN ADHOC DISALLOWANCE OF RS.2,50,000/ - . 22. ON APPEAL, THE CIT(A) CONFIR MED THE ACTION OF THE ASSESSING OFFICER, BY OBSERVING AS UNDER: IN THESE GROUNDS, THE APPELLANT HAS CONTESTED THE ADDITION MADE BY THE AO OF RS.1,34,820/ - FROM CAMP EXPENSES AND RS.2,50,000/ - FROM LABOUR CHARGES ON THE BASIS THAT SUPPORTING DOCUMENTS IN R ESPECT OF THESE EXPENSES ARE NOT AVAILABLE AND THAT MOST OF THEM ARE IN CASH. I FIND THAT CAMP EXPENSES CLAIMED ARE OF RS.9,51,970/ - AND LABOUR CHARGES ARE OF RS.3,91,67,050/ - . THE DISALLOWANCE MADE BY THE AO ARE REASONABLE. THEREFORE, ADDITIONS OF R S.1,34,820/ - AND OF RS.2,50,000/ - ARE CONFIRMED. THE GROUNDS OF APPEAL ARE DISMISSED. 23. AT THE TIME OF HEARING, LD A.R. OF THE ASSESSEE COULD NOT BRING ANY COGENT MATERIAL ON RECORD TO CONTROVERT THE FINDINGS OF THE CIT(A). HENCE, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE CIT(A), WHICH IS HEREBY CONFIRMED AND GROUND NOS.4 & 5 OF APPEAL OF THE ASSESSEE ARE DISMISSED. ITA NO. 97/CTK/2018 ASSESSMENT YEAR : 2010 - 11 P A G E 8 | 8 24. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED ON 31 /0 8 /2018. S D/ - SD/ - (PAVAN KUMAR GADALE ) ( N.S SAINI) JUDICIALMEMBER A CCOUNTANT MEMBER CUTTACK; DATED 31 /0 8 /2018 B.K.PARIDA, SPS COPY OF THE ORDER FORWARDED TO : BY ORDER SR. PVT. SECRETARY, ITAT, CUTTACK 1. THE APPELLANT : PRASANNA KUMAR MOHANTY, MIG - II/234, KANAN VIHAR, PATIA, BHUBANESWAR 2. THE RESPONDENT. DCIT, CIRCLE 2(2), BHUBANESWAR. 3. THE CIT(A) - 2, BHUBANESWAR 4. PR.CIT 2, BHUBANESWAR 5. DR, ITAT, CUTTACK 6. GUARD FILE. //TRUE COPY//