MADAN LAL GUPTA, Jaipur V. ACIT, Sikar

ITA 976/JPR/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 5054 (ITAT-JAIPUR)
• Duration Of Justice: 9 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-09-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 14-12-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: O P BHATEJA CIT DR DHK
• Keywords: Corroborative evidences

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES (SMC), JAIPUR JH HKKXPUN] YS[KK LNL; DS LE{K BEFORE: SHRI BHAGCHAND, ACCOUNTANT MEMBER VK;DJ VIHY LA-@ ITA NO. 976/JP/2015 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2009-10 SHRI MADAN LAL GUPTA H-12-A, KUBER,BHAGAT SINGH MARG C-SCHEME, JAIPUR CUKE VS. THE ACIT CIRCLE- SIKAR SIKAR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: ABUPG 7745 F VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY: SHRI SATISH GUPTA, CA JKTLO DH VKSJ LS@ REVENUE BY:SHRI O.P. BHATEJA, ADDL.CIT - DR LQUOKBZ DH RKJH[K@ DATE OF HEARING : 15/09/2016 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 26 /09/2016 VKNS'K@ ORDER PER BHAGCHAND, AM THE ASSESSEE HAS FILED AN APPEAL AGAINST THE ORDER OF THE LD. CIT(A)-3, JAIPUR DATED 28-09-2015 FOR THE ASSESSM ENT YEAR 2009-10 WHEREIN THE ASSESSEE IS AGGRIEVED THAT THE LD. CIT (A) ERRED IN CONFIRMING THE DISALLOWANCE OF RS. 26,066/- ON ACCOUNT OF MAT ERIAL PURCHASED AND OF RS. 1,39,443/- ON ACCOUNT OF LABOUR EXPENSES. 2.1 BRIEF FACTS OF THE CASE ARE THAT THE RETURN OF INCOME WAS E-FILED BY THE ASSESSEE ON 30-09-2009 DECLARING TOTAL INCOME O F RS. 32,49,280 ITA NO. 976/JP/2015 SHRI MADAN LAL GUPTA VS. ACIT, CIRCLE- SIKAR, SIKAR . 2 WHICH WAS PROCESSED U/S 143(1) OF THE ACT ON 09-03- 2011. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY THROUGH CASS AND NOTICE U/S 143(2) OF THE ACT WAS ISSUED ON 02-09-210. THE LD. AR OF THE ASSESSEE APPEARED FROM TIME TO TIME, PRODUCED THE BOOKS OF A CCOUNT AND FILED THE REQUIRED DETAILS/ EXPLANATION/ EVIDENCE BEFORE THE AO. THE AO ON VERIFICATION OBSERVED THAT THE BOOKS OF ACCOUNT OF THE ASSESSEE AND SUPPORTING EVIDENCE REGARDING CONSTRUCTION BUSINESS CONTAINED CERTAIN DEFECTS, RAW MATERIAL PURCHASES WERE SHOWN AMOUNTIN G TO RS. 1,50,04,532/- AND LABOUR & WAGES EXPENSES WERE SHOWN AMOUNTING TO RS. 53,78,814/-. THE AO THUS OBSERVED THAT SOME EXP ENSES WERE NOT FULLY VOUCHED, SOME VOUCHERS WERE SELF MADE VOUCHERS AND DID NOT CONTAIN THE NAME AND ADDRESSES OF THE SELLER ETC. HENCE THE AO TREATED THESE PURCHASED AS UNVERIFIABLE PURCHASES. THE AO FURTHER OBSERVED THAT THE VOUCHERS FOR LABOUR EXPENSES DID NOT CARRY SIGNATUR E OR THUMB IMPRESSIONS. THEREFORE, ACCORDING TO THE AO, THE EX PENSES OF RS. 1,73,774/- FROM THE HEAD PURCHASE OF RAW MATERIAL W ERE FOUND TO BE UNACCEPTABLE AND EXPENSES OF RS. 1,39,443/- FROM TH E HEAD LABOUR CHARGES WERE FOUND TO BE NON-GENUINE AND UNACCEPTABLE. THE AO THUS OBSERVED THESE EXPENSES AS NON-VERIFIABLE EXPENSES AND DISAL LOWED THE SAME BY ITA NO. 976/JP/2015 SHRI MADAN LAL GUPTA VS. ACIT, CIRCLE- SIKAR, SIKAR . 3 ADDING TO THE TOTAL INCOME OF THE ASSESSEE. THE DET AILS OF TOTAL INCOME OF THE ASSESSEE AS COMPUTED BY THE AO IN THE ASSESSME NT ORDER IS AS UNDER:- INCOME AS DECLARED & PROCESSED U/S 143(1) RS. 32,4 9,280/- ADD:- 1. DISALLOWANCE OUT OF PURCHASE OF MATERIAL RS. 1,73,774/- 2. DISALLOWANCE OUT OF LABOUR EXPENSES RS. 1,39 ,443/- TOTAL INCOME RS. 35,62,497/- R/O RS. 35,62,500/- 2.2 BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTE R BEFORE THE LD. CIT(A) WHO HAS PARTLY ALLOWED THE ISSUE IN QUESTION BY OBSERVING AS UNDER:- 4.3 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE, FINDING OF THE AO AND AS ALSO THE SUBMISSION OF THE APPELLANT. I FIND THAT THE AO MADE DISALLOWANCE OF RS. 173774/- OUT OF PURCHASE AND RS. 139442/- OUT OF LA BOUR EXPENSES. THE AO OBSERVED THAT CERTAIN BILLS AND VO UCHERS WERE NOT GENUINE AND THE ASSESSEE FAILED TO CONTROV ERT THIS BEFORE ME. HON'BLE ITAT IS CONSISTENTLY IN ANUJ VA RSHNEY AND OTHERS UPHOLDING 15% OF UNVERIFIABLE PURCHASES. RESPECTFULLY FOLLOWING THE DECISION OF HON'BLE ITA T JAIPUR BENCH, I UPHOLD 15% OF RS. 173774/- OUT OF UNVERIFI ABLE PURCHASES. THE AO OBSERVED LABOUR EXPENSES OF RS. 139443/- AS NON-GENUINE AS THUMB IMPRESSION / SIGNATURES WERE N OT THERE. THE ASSESSEE COULD NOT OFFER ANY ARGUMENT BE FORE ME ITA NO. 976/JP/2015 SHRI MADAN LAL GUPTA VS. ACIT, CIRCLE- SIKAR, SIKAR . 4 EXCEPT THAT THE STAFF IS UNEDUCATED AND THE DEFECTS POINTED OUT THE MINOR. THE ADDITION IS CONFIRMED. THIS GROUND IS PARTLY ALLOWED. 2.3 DURING THE COURSE OF HEARING, THE LD. AR OF THE ASSESSEE PRAYED FOR DELETION OF ADDITION CONFIRMED BY THE LD. CIT(A). T HE LD. AR OF THE ASSESSEE ALSO FILED WRITTEN SUBMISSION IN WHICH IT IS SUBMITTED AS UNDER:- 1. THAT THE BOOKS OF ACCOUNT WERE PRODUCED . 2. NET PROFIT @ 6.56% AS AGAINST 6.42% IS BETTER 3. NATURE OF BUSINESS & LOCATION OF CONTACTS (NORTH EAST REGION) IS SUCH THAT SOME DEFECTS ARE B UT NATURAL. STAFF IS UNEDUCATED. TRADE IS IN UNORGANIZ ED SECTOR. THE LD. CIT(A) REDUCED THE DISALLOWANCE TO 15% IN THE CASE OF MATERIAL PURCHASE RELYING ON THE DECISI ON OF HON'BLE ITAT IN THE CASE OF ANUJ VARSHNEY AND OTHERS AND CONFIRMED THE DISALLOWANCE OF LABOUR EXPENSES. THE LD. AR FURTHER SUBMITTED THAT :- 1. NO SPECIFIC INSTANCE OF ANY UNVOUCHED PURCHASE OR LABOUR CHARGE STATING THE DEFECT WAS GIVEN. 2. N.P. RATE IS BETTER THAN PRECEDING YEAR IS 6.56% AS AGAINST 6.42% SPECIALLY IN THE CIRCUMSTANCES THA T THE ASSESSEE IS A SUB-CONTRACTOR. 3. NO OPPORTUNITY TO EXPLAIN THE ALLEGED DEFECT WAS GIVEN. ITA NO. 976/JP/2015 SHRI MADAN LAL GUPTA VS. ACIT, CIRCLE- SIKAR, SIKAR . 5 4. ANUJ VARSHNEY CASE IS NOT APPLICABLE ON THE FACTS OF THE ASSESSEE. 2.4 THE LD. DR RELIED ON THE ORDERS OF THE AUTHORIT IES BELOW. 2.5 I HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IT EMERGES FROM THE RECORDS TH AT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF CONTRACT WORK FOR CONSTR UCTION AND SUPPLY IN THE NAME OF M/S. MEGHALAYA CONSTRUCTION COMPANY AND ANOTHER BUSINESS IN THE NAME OF M/S. JAGANNATH MADAN LAL WHICH COMPR ISED OF RETAIL TRADING BUSINESS. IN THE CONSTRUCTION, THE ASSESSEE HAD SHOWN NET PROFIT RATE OF 6.56% AS AGAINST 6.42% DECLARED IN THE IMME DIATELY PRECEDING YEAR. SIMILARLY, IN THE TRADING RETAIL TRADING BUSI NESS, THE ASSESSEE HAD SHOWN NET PROFIT RATE OF 4.93% AS AGAINST 4.74% IN THE IMMEDIATELY PRECEDING YEAR. IN BOTH THESE BUSINESSES, THE GROSS PROFIT RATE WAS BETTER THAN IN IMMEDIATELY PRECEDING YEAR. THE AO MADE TWO ADDITIONS I.E. ONE FOR RS. 1,73,774/- FOR THE REASON THAT THE VOUCHERS WERE DEFECTIVE AND NON-GENUINE BILLS FOR THE PURCHASE OF THE MATERIALS AND OTHER ADDITION OF RS. 1,39,443/- WAS MADE OUT OF LABOUR CHARGES HOLDI NG THAT SOME OF THE EXPENSES WERE NON-GENUINE AND NOT ACCEPTABLE. THE L D. CIT(A) APPLIED THE DECISION OF ITAT JAIPUR BENCH IN THE CASE OF AN UJ VARSHNEY (SUPRA) SUSTAINING 15% ON ACCOUNT OF UNVERIFIABLE PURCHASE S AND ALSO SUSTAINED ITA NO. 976/JP/2015 SHRI MADAN LAL GUPTA VS. ACIT, CIRCLE- SIKAR, SIKAR . 6 DISALLOWANCE OUT OF LABOUR EXPENSES FOR THE REASON THAT ASSESSEE COULD NOT OFFER ANY ARGUMENT BEFORE THE LD. CIT(A) EXCEPT THA T THE STAFF IS UNEDUCATED AND THE DEFECTS ARE MINOR. IT IS NOTED F ROM THE RECORD THAT NET PROFIT RATE OF THE ASSESSEE IS BETTER THAN IN IMME DIATELY PRECEDING YEAR. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF CONTRACT WORK FOR CONSTRUCTION ETC. IT IS NOTED THAT THE WORK PLACE OF THE ASSESSE E IS IN NORTH EAST REGION WHERE THE STAFF IS GENERALLY UNEDUCATED AND THE BUS INESS OF THE ASSESSEE IN THAT REMOTE AREA IS IN UNORGANIZED SECTOR. IT IS AL SO NOTED THAT THE ASSESSEE IS A SUB-CONTRACTOR IN THE REMOTE AREA OF NORTH EAS T REGION AND THERE ARE SO MANY FACTORS WHICH THE ASSESSEE HAS TO FACE IN R UNNING THE BUSINESS OF SUB-CONTRACTOR. HOWEVER, THE ASSESSEE IS SHOWING NE T PROFIT RATE OF 6.56% AS AGAINST 6.42% IN THE IMMEDIATELY PRECEDING YEAR. I HAVE TAKEN INTO CONSIDERATION THE ORDERS OF THE LOWER AUTHORITIES, SUBMISSIONS OF THE ASSESSEE AND COME TO CONCLUSION THAT THE LD. CIT(A) IS NOT JUSTIFIED IN CONFIRMING THE DISALLOWANCE OF RS. 26,066/- ON ACCO UNT OF MATERIAL PURCHASED AND OF RS. 1,39,443/- ON ACCOUNT OF LABO UR EXPENSES AS THE WORKING OF THE BUSINESS OF THE ASSESSEE IS IN NORTH EAST REGION. HENCE, THE APPEAL OF THE ASSESSEE IS ALLOWED. ITA NO. 976/JP/2015 SHRI MADAN LAL GUPTA VS. ACIT, CIRCLE- SIKAR, SIKAR . 7 3.0 IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 26 /09/20 16. SD/- HKKXPUN ( BHAGCHAND) YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 26 /09/ 2016 *MISHRA VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- SHRI MADAN LAL GUPTA, JAIPUR 2. IZR;FKHZ@ THE RESPONDENT- THE ACIT, CIRCLE- SIKAR, SIKAR 3. VK;DJ VK;QDRVIHY@ CIT(A). 4. VK;DJ VK;QDR@ CIT, 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO. 976/JP/2015) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ @ ASSISTANT. REGISTRAR