M/s Vijay Construction, Sonebhadra V. ITO, Ward - 3(4), Sonebhadra

ITA 97/VNS/2020

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 9549 (ITAT-VARANASI)
• Duration Of Justice: 1 year(s) 7 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-01-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Appeal Filed On: 07-06-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Onus to prove
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CIRCUIT ‘SMC’ BENCH, VARANASI (THROUGH VIRTUAL COURT) BEFORE SHRI.VIJAY PAL RAO, JUDICIAL MEMBER ITA No.97/VNS/2020 Assessment Year: 2014-15 M/s Vijay Construction, Balla Nala, Shaktinagar, Sonebhadra, Uttar Pradesh PAN-AADFV3749C v. Income Tax Officer, Ward-3(4), Sonebhadra, Uttar Pradesh (Appellant) (Respondent) Appellant by: Mr. Praveen Godbole, C.A. Respondent by: Mr. Amit Nigam, Sr. DR Date of hearing: 28.01.2022 Date of pronouncement: 28.01.2022 O R D E R SHRI VIJAY PAL RAO, JUDICIAL MEMBER: This appeal by the assessee is directed against the order dated 05.02.2020 of CIT(A) for the assessment year 2015-16. The assessee has raised the following grounds as under:- “1. That in any view of the matter the assessment completed u/s 143(3) vide order dated 30.06.2016 on income of Rs. 9.70.250/- is bad both on the facts and in law. 2. That in any view of the matter disallowance of Rs. 2,80,135/- on account of material expenses as made by the Assessing Officer and confirmed by the CIT(A) is highly unjustified. 3. That in any view of the matter disallowance of Rs. 60,120/- under the head diesel and lubricant expense as made by the Assessing Officer and confirmed by the CIT(A) is highly unjustified. 4. That in any view of the matter disallowance of Rs. 67,390/- under the head various expesnes i.e. vehicle expenses, travelling expenses, labour welfare expense, tyre expense as made by the Assessing Officer and confirmed by the CIT(A) is highly unjustified. 5. That in any view of the mater the ld CIT(A) was wrong in confirming the disallowances without giving any specific reasons nor the order is a speaking order and in general manner disallowances were made which action is highly unjustified. ITA No.97/VNS/2020 Sh. Vijay Construction 2 6. That in any view of the matter in earlier years the assessment were framed by the department and trading result was accepted hence addition made by the Assessing Officer and confirmed by the CIT(A) is highly unjustified. 7. That in any view of the matter the appellant reserves his right to take any fresh ground before hearing of the appeal.” 2. Ground No. 1 is general in nature and depends on the outcome of the other specific grounds raised by the assessee therefore, no specific finding is required. 3. Ground No. 2 is regarding disallowance of Rs. 2,80,135/- on account of material expenses. The Assessing Officer has examined the claim of the expenses under the head material expenses and noted that the assessee has failed to substantiate the claim to the extent of Rs. 2,80,135/- out of the total claim of expenses of Rs. 2,77,43,530/-. Accordingly, the Assessing Officer has made the disallowance of the said amount. The assessee challenged the action of the Assessing Officer before the CIT(A) but could not succeed. 4. Before the Tribunal, the learned AR of the assessee has submitted that the Assessing Officer has first examined the net profit rate declared by the assessee and found that the net profit declared during the year under consideration needs no interference and accordingly no adverse inference was drawn by the Assessing Officer. He has further submitted that the Assessing Officer has made adhoc disallowance without specifying which of these item of expenditure is not supported by the bills and vouchers. Thus the learned AR has submitted that the adhoc disallowance made by the Assessing Officer is liable to be deleted. He has further submitted that for the assessment year 2012-12 that an identical disallowance made by the Assessing Officer was restricted by the CIT(A). A copy of the order of CIT(A) is produced wherein the CIT(A) has restricted the disallowance to Rs. 75,000/- against the total disallowance of about Rs. 1,25,000/-. Thus, the learned AR has submitted that the disallowance made by the Assessing Officer is unjustified and liable to be deleted. ITA No.97/VNS/2020 Sh. Vijay Construction 3 5. On the other hand, the learned DR has relied upon the orders of the authorities below and submitted that the Assessing Officer has verified the claims of expenditure from the bills and vouchers and noted that only Rs. 2,74,63,395/- has been verified from the bills and vouchers and the rest of Rs. 2,80,135/- have not been verified from the bills and vouchers. Accordingly, the Assessing Officer made the addition of the said amount in the absence of proof. 6. I have considered the rival submissions as well as perused the relevant material on record. The Assessing Officer has made the disallowance on account of material expenses as under:- “The assessee has claimed expense of Rs. 277,43,530/- under the head of Materials expenses. During assessment proceeding books of account have been produced and verified from the bills and vouchers. The same has been verified from bills and voucher only of Rs. 274,63,395/- and rest of Rs. 2,80,135/- have not been verified from bills and vouchers. Therefore, I am disallowing of Rs. 2,80,135/- out of Rs. 2,77,43,530/- and added in total income of the assessee in absence of proof.” 7. Thus it is clear that the Assessing Officer noted that the out of Rs. 2,77,43,530/- only an amount of Rs. 2,80,135/- is not verifiable from the bills and vouchers the amount which is found to be not verifiable from the bills and vouchers is only 1% of the total claim of the expenditure. Further the Assessing Officer has accepted the net profit rate declared by the assessee as reasonable and specifically stated that there is no adverse inference drawn on the net profit rate. Therefore, a very meagre amount of claim which is about 1% of the total claim is found by the Assessing Officer is not verifiable from the bills and vouchers but the Assessing Officer has not specifically mentioned as which of the item of the expenditure is not supported by the bills and vouchers or whether the bills and vouchers filed by the assessee could not be verified from the supplier. 8. Accordingly, in the facts and circumstances of the case, such vague and adhoc disallowance without even giving the details of a particular items of non verified expenditure is not justified and the same is deleted. ITA No.97/VNS/2020 Sh. Vijay Construction 4 9. Ground No. 3 is regarding disallowance of diesel and lubricant expense. The Assessing Officer has made the disallowance of Rs. 60,120/- out of the total claim of the expenditure of Rs. 63,34,364/-. 10. I have heard the learned AR as well as learned DR and considered the relevant material on record. The Assessing Officer has made this disallowance on a similar reasoning of not verified from the bills and vouchers. This is again a case of less than 1% of the total claim disallowed by the Assessing Officer on the ground of un-verifiability. When the Assessing Officer has not specifically pointed out which of the items or purchases is not found supported by the bills and vouchers the adhoc disallowance is not justified. The same is deleted. 11. Ground No. 4 is regarding disallowance on account of vehicle expenses, travelling expenses, labour welfare expense and tyre expenses etc. The Assessing Officer has made the disallowances under the vehicle and travelling as well as labour welfare expenses as under:- Head of expenses Expenses claimed Un-verified in Rs. Vehicle Maintenance expenses 21,20,352/- 35,870/- Travelling & Conennce Exp 70,950/- 12,510/- Labour Welfare Exp Rs. 10,640/- 2,510/- Tyre Exp 90,500/- 16,500/- These expenses were claimed by the assessee therefore, onus to prove the genuineness of these expenses was on the assessee but he failed in it. Therefore, I am disallowing these expenses to the tune as they could not be verified and sum of Rs. 67,390/- is being added to the total income of the assessee. Disallowance of Rs. 67,390/-“ 12. I have heard the learned AR as well as learned DR and considered the relevant material on record. Once the Assessing Officer has found the net profit declared by the assessee is reasonable for the year under consideration, the disallowance on account of these expenses without conducting a proper enquiry about the genuineness of the expenses is not justified. The reasoning of the Assessing ITA No.97/VNS/2020 Sh. Vijay Construction 5 Officer is identically worded that some of the expenses are not verified from the bills and vouchers. Even otherwise, keeping in view the nature of expenses, some amount of expenses are bound to be without any proper bills and vouchers. Accordingly, when the claim of expenses is not found unreasonable then such an adhoc disallowance is not justified and the same is deleted. 13. In the result, the appeal of the assessee is allowed. Order pronounced in the open Court on 28.01.2022 through video conferencing. Sd/- [VIJAY PAL RAO] JUDICIAL MEMBER DATED: 28/01/2022 Allahabad Sh Copy forwarded to: 1. Appellant 2. Respondent 3. CIT(A), Allahabad 4. CIT 5. DR By order Assistant Registrar