The ACIT, Central Circle-3, Surat V. M/s. Yamuna Enterprise, Surat

ITSSA 64/AHD/2010

• Counselvise Citation: [2013] 121 COUNSELVISE.COM (IT) 8709 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 1 month(s) 9 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 08-03-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 21-01-2013
• Assessment Year: 2005-2006
• Appeal Filed On: 29-01-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Third party statement

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD , .. , '# ' $ BEFORE SHRI MUKUL KR.SHRAWAT, JUDICIAL MEMBER AND SHRI T.R.MEENA, ACCOUNTANT MEMBER APPEAL(S) BY SL.NO(S) IT(SS)A NO(S) ASSESSMENT YEAR(S) APPELLANT(S) RESPONDENT(S) 1 64/AHD/2010 2005-06 THE ASST.CIT CENTRAL CIR-3 SURAT M/S.YAMUNA ENTERPRISE A-101, CITY LIGHT TOWER VYARA, DIST.SURAT-394 650 AAAFY 5477D 2. 65/AHD/2010 2006-07 REVENUE ASSESSEE 3. 66/AHD/2010 2007-08 REVENUE ASSESSEE REVENUE BY : SHRI D.K.SINGH, SR. D.R. ASSESSEE BY : SHRI VARTIK CHOKSHI / DATE OF HEARING : 04/03/2013 / DATE OF PRONOUNCEMENT : 8/03/13 / O R D E R PER SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER : ALL THESE THREE APPEALS HAVE BEEN FILED BY THE RE VENUE ARISING FROM THE SEPARATE ORDERS OF LD.CIT(A)-II, AHMEDABAD ALL DATED 10.11.2009. IN THESE APPEALS, A COMMON ISSUE HAS B EEN RAISED BY THE REVENUE VIDE GROUND NO.1; REPRODUCED BELOW:- 1. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS AND IN LAW IN DELETING THE ADDITION OF RS.8,60,655/- (A.Y. 2006- 07 OF RS.8,22,995/- AND A.Y.2007-08 OF RS.9,32,888/-) MA DE ON IT(SS)A NOS. 64, 65 & 66/AHD/2010 ASST.CIT VS. M/S.YAMUNA ENTERPRISE ASST.YEARS 2005-06, 2006-07 & 2007-08 - 2 - ACCOUNT OF DISALLOWANCE OF EXPENSES FOR WANT OF VER IFICATION, SINCE THE CLAIM OF THE ASSESSEE ARE NOT VERIFIABLE FROM THE DETAILS MADE AVAILABLE DURING THE COURSE OF ASSESSM ENT PROCEEDINGS. 2. AT THE OUTSET, LD.SR.DR MR.D.K.SINGH HAS INFORM ED THAT REST OF THE GROUNDS ARE ARGUMENTATIVE IN NATURE AND REVOLVE ARO UND THE ISSUE AS RAISED IN GROUND NO.1. 3. FACTS IN BRIEF AS EMERGED FROM THE LEAD ASST.YEA R 2005-06 WERE THAT A SURVEY U/S.133A WAS CONDUCTED. AS PER NOTIN GS IN THE ASSESSMENT ORDER, THE ASSESSEE HAD DISCLOSED/OFFERED A SUM OF RS.80,06,897/- WHICH WAS OFFERED IN THE FOLLOWING TWO ASSESSMENT YEARS: A.Y. 2006-07 RS. 9,25,000 A.Y. 2007-08 RS.70,81,897 ---------------- TOTAL RS.80,06,897 ========= 3.1. THE ASSESSEE IS ENGAGED IN CIVIL CONSTRUCTION BUSINESS. A VALUATION IN RESPECT OF THE CONSTRUCTION WAS OBTAIN ED OF THE VALUER AT RS.93,85,000/- AND AFTER DEBITING THE EXPENDITURE T HE NET PROFIT WAS DISCLOSED AT RS.893,704/-. THE ALLEGATION OF THE A O WAS THAT THE COMPLETE BOOKS OF ACCOUNTS ALONG WITH BILLS/VOUCHER S WERE NOT PRODUCED, THEREFORE HE INVOKED THE PROVISIONS OF SECTION 145( 3) AND REJECTED THE BOOK RESULT. THEREAFTER, THE AO HAS MENTIONED TH AT THE ASSESSEE HAS INCURRED THE FOLLOWING EXPENDITURE: PURCHASES RS.61,52,859 CONSTRUCTION EXPENSES RS.91,321 IT(SS)A NOS. 64, 65 & 66/AHD/2010 ASST.CIT VS. M/S.YAMUNA ENTERPRISE ASST.YEARS 2005-06, 2006-07 & 2007-08 - 3 - LABOUR CHARGES RS.21,15,000 TRANSPORTATION EXPENSES RS.56,290 ADVERTISEMENT EXPENSES RS.20,450 CONSULTING EXPENSES RS.30,000 CONVEYANCE EXPENSES RS.25,614 MISC.EXPENSES RS.50,843 MODEL EXPENSES RS.14,250 STATIONARY & PRINTING RS.17,369 VEHICLE EXPENSES RS.32,560 TOTAL RS.86,06,55 6 3.2. ACCORDING TO AO, SINCE THE ASSESSEE HAS FURNIS HED A COPY OF THE LEDGER ACCOUNT, BUT FAILED TO PRODUCE THE BILLS/VOU CHERS, THEREFORE PROCEEDED TO DISALLOW A PORTION OF THE EXPENDITURE ON ESTIMATE BASIS. RESULTANTLY, THE AO HAD DISALLOWED 10% OUT OF THE T OTAL EXPENDITURE, HENCE MADE AN ADDITION OF RS.8,60,655/-. 3.3. IN IDENTICAL MANNER FOR AY 2006-07 AFTER INVOK ING THE PROVISIONS OF SECTION 145(3), HE HAS DISALLOWED 10% OF THE TOT AL EXPENDITURE OF RS.82,29,951/-, I.E. RS.8,22,995/- AND FOR A.Y. 200 7-08 OUT OF THE TOTAL EXPENDITURE OF RS.93,28,886/- AN ADDITION @ 10% OF RS.9,32,888/- WAS MADE. BEING AGGRIEVED, THE MATTER WAS CARRIED BEFO RE THE FIRST APPELLATE AUTHORITY. 4. IT WAS INFORMED DURING THE COURSE OF APPELLATE P ROCEEDINGS THAT THE BOOKS OF ACCOUNTS HAVE BEEN MAINTAINED ON THE COMPU TER AND THE REVENUE DEPARTMENT HAD ALREADY IMPOUNDED THE CD HAV ING THE BACK- UP OF THE ACCOUNTS. IT HAS ALSO BEEN INFORMED THA T ALL THE EXPENSES WERE VERIFIABLE. IT HAS ALSO BEEN SUBMITTED THAT BOOKS OF ACCOUNTS WERE DULY AUDITED AS ALSO SUPPORTED BY BILLS AND VOUCHERS. S INCE IT WAS PURELY AN IT(SS)A NOS. 64, 65 & 66/AHD/2010 ASST.CIT VS. M/S.YAMUNA ENTERPRISE ASST.YEARS 2005-06, 2006-07 & 2007-08 - 4 - ESTIMATION, THEREFORE LD.CIT(A) HAS DELETED THE ADD ITION IN THE FOLLOWING MANNER: 2.1. DURING THE COURSE OF APPELLATE PROCEEDINGS , THE APPELLANT SUBMITTED THAT ALL THE BOOKS OF ACCOUNTS AND VOUCHE RS WERE MAINTAINED AND THE BOOKS ARE DULY AUDITED. DURING THE COURSE OF SURVEY, THE DEPARTMENT HAS ALREADY IMPOUNDED BACK U P OF COMPUTER ACCOUNTS IN FORM OF CD. DURING THE ASSESS MENT PROCEEDINGS, ALL THE BILLS AND EXPENSES WERE FILED VIDE SUBMISSION DATED 05/09/2008 AND THE APPELLANT FURNISHED CONFIR MATION FROM THE PURCHASE PARTY FROM WHERE PURCHASES OF RS.1,00, 000/- WAS MADE ALONG WITH THEIR BILLS AND ALSO FURNISHED BILL S OF LABOUR CHARGES THEREFORE, ALL THE EXPENSES WERE VERIFIABLE . THE MAJOR EXPENSES ARE ONLY PURCHASE AND LABOUR. THE APPELLA NT FURTHER SUBMITTED THAT OUT OF EXPENDITURE OF RS.86,06,555/- , THE ACTUAL EXPENDITURE IS OF RS.3,38,697/-, THE PURCHASES ARE TO THE TUNE OF RS.52,24,870/- (RS.34,72,959/- ARE FOR PURCHASE OF STEEL, RS.12,63,331/- FOR PURCHASE OF CEMENT, RS.1,65,400/ - ON PURCHASE OF BRICKS AND RS.3,23,180/-) ARE ON ONLY FOUR ITEMS THE SAME ARE NOT ONLY VERIFIABLE BUT HAVE ACTUALLY BEEN VERIFIED BY THE ASSESSING OFFICER ALONG WITH CONTRA CONFIRMATION. SIMILARLY OUT OF TOTAL EXPENDITURE UNDER THE HEAD LABOUR CHARGES, LABOUR C HARGES TO THE TUNE OF RS.21,15,000/- HAVE BEEN PAID TO TWO PARTIE S ONLY NAMELY RS.13,50,000/- TO AARTI CONSTRUCTION, RS.7,50,000/- TO TARASARIA BUILDERS AND RS.15,000/- TO NITIN STEEL FEB. TDS A S PER THE PROVISIONS OF THE ACT HAVE ALSO BEEN DEDUCTED AND P AID TO THE GOVERNMENT. THIS EXPENDITURE HAS BEEN VERIFIED BY THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS . THEREFORE, THE ADDITION SHOULD BE DELETED. 2.2. I HAVE CONSIDERED THE FACTS AND THE SUBMISSION S. I AGREE WITH THE APPELLANTS VIEW. THE APPELLANT HAS MAINT AINED ALL THE BOOKS OF ACCOUNTS AND VOUCHERS. THE BILLS OF THE E XPENDITURE WERE GIVEN DURING THE ASSESSMENT PROCEEDINGS AND EVEN TH E APPELLANT FILED CONFIRMATIONS FOR MAJOR PURCHASES, THEREFORE, THE ASSESSING OFFICER WAS NOT JUSTIFIED IN MAKING 10% DISALLOWANC E. HENCE, THE ADDITION MADE BY THE ASSESSING OFFICER IS DELETED. IT(SS)A NOS. 64, 65 & 66/AHD/2010 ASST.CIT VS. M/S.YAMUNA ENTERPRISE ASST.YEARS 2005-06, 2006-07 & 2007-08 - 5 - 4.1. FOR REST OF THE TWO YEARS, THE LD.CIT(A) HAS F OLLOWED THE FINDINGS GIVEN IN AY 2005-06 AND ALLOWED THE ASSESSEES CLAI M. 5. WITH THIS BACKGROUND, WE HAVE HEARD BOTH THE SID ES. THE MAIN CONTENTION OF THE REVENUE DEPARTMENT IS THAT THERE WAS A CONTRADICTION IN THE FINDING OF LD.CIT(A) IN RESPECT OF THE PRODUCTI ON OF BOOKS OF ACCOUNTS BECAUSE THE AO HAD NOTED IN THE ASSESSMENT ORDER TH AT THE ASSESSEE HAD FAILED TO PRODUCE THE BOOKS OF ACCOUNTS. FROM THE SIDE OF THE REVENUE, LD.SR.DR MR.D.K.SINGH HAS ALSO PLACED RELIANCE ON C IT VS. K.Y.PILLIAH AND SONS REPORTED AT 63 ITR 411 (SC). ON THIS ASPE CT, LD.AR MR.VARTIK CHOKSHI HAS VEHEMENTLY CONTESTED THE SAID ALLEGATI ON OF NON-PRODUCTION OF BOOKS OF ACCOUNTS AND IN SUPPORT DRAWN OUR ATTEN TION ON THE SUBMISSIONS MADE BEFORE THE AO THROUGH WHICH IT WAS DEMONSTRATED THAT THE BOOKS OF ACCOUNTS WERE PRODUCED DURING THE COUR SE OF ASSESSMENT PROCEEDINGS. MOREOVER, HE HAS ALSO CONTESTED THAT THE ENTIRE BACK-UP OF THE BOOKS OF ACCOUNTS WAS IN THE POSSESSION OF T HE REVENUE DEPARTMENT. THIS CONTENTION OF THE ASSESSEE COULD NOT BE REFUTED FROM THE SIDE OF THE REVENUE DEPARTMENT ALTHOUGH THE ASS ESSMENT RECORDS WERE WITH THE LD.DR. APART FROM THIS, THE ONLY BAS IS FOR THE IMPUGNED ADDITION WAS PURELY AN ESTIMATION. THERE IS NO SPE CIFIC OBSERVATION OF THE AO THAT A PARTICULAR EXPENDITURE ALTHOUGH DEBIT ED TO THE BOOKS OF ACCOUNTS WAS NOT SUPPORTED BY CORROBORATIVE BILLS/ VOUCHERS. NO SPECIFIC INSTANCE WAS QUOTED BY THE AO SO AS TO DEMONSTRATE THAT THE EXPENDITURE WAS INCURRED WITHOUT SUPPORTING BILLS. IN OUR OPIN ION, SUCH AN ADHOCISM HAS NO SANCTION OF LAW. AN ESTIMATION CAN BE MADE IF IT IS ESSENTIAL BUT IF IT(SS)A NOS. 64, 65 & 66/AHD/2010 ASST.CIT VS. M/S.YAMUNA ENTERPRISE ASST.YEARS 2005-06, 2006-07 & 2007-08 - 6 - AN ESTIMATION IS WITHOUT ANY BASIS, THEN SUCH AN ES TIMATION OUGHT TO BE DISCARDED. EVEN IN THE CASE OF SAYAJI IRON & ENGG. CO. VS. CIT REPORTED AT 253 ITR 749 (GUJ.), THE HONBLE GUJARAT HIGH CO URT HAS DELETED AN ADHOC ADDITION WHICH WAS MADE BY DISALLOWING TELEPH ONE AND VEHICLE EXPENSES. RESPECTFULLY FOLLOWING THE JURISDICTIO NAL HIGH COURT, WE HEREBY AFFIRM THE VIEW TAKEN BY THE LD.CIT(A) AND D ISMISS THE GROUND OF THE REVENUE. SINCE REST OF THE GROUNDS ARE ARGUMEN TATIVE IN NATURE AND ONLY IN SUPPORT OF THE MAIN GROUND, THEREFORE REST OF THE GROUNDS ARE ALSO DISMISSED. 6. IN THE RESULT, ALL THE THREE APPEALS OF THE REVE NUE ARE DISMISSED. SD/- SD/- ( .. ) ( ) ( T.R. MEENA ) ( MUKUL KR. SHRAWAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 8/ 3 /2013 .., . ../ T.C. NAIR, SR. PS '& ' ()* +'*, / COPY OF THE ORDER FORWARDED TO : 1. '#$% / THE APPELLANT 2. &'$% / THE RESPONDENT. 3. ()(*+ , / CONCERNED CIT 4. , ('#) / THE CIT(A)-II, AHMEDABAD 5. /01 & *+, '# '*+, '2) / DR, ITAT, AHMEDABAD 6. 134 5 / GUARD FILE. '&- / BY ORDER, '/# & //TRUE COPY// ./ / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD