D.C.I.T., Circle-3, Gwalior v. Sh. Sudarshan Goyal, Guna

ITA 163/AGR/2013 | 2009-2010
Pronouncement Date: 31-10-2013 | Result: Partly Allowed

Appeal Details

RSA Number 16320314 RSA 2013
Assessee PAN AHNPG8822A
Bench Agra
Appeal Number ITA 163/AGR/2013
Duration Of Justice 5 month(s) 15 day(s)
Appellant D.C.I.T., Circle-3, Gwalior
Respondent Sh. Sudarshan Goyal, Guna
Appeal Type Income Tax Appeal
Pronouncement Date 31-10-2013
Appeal Filed By Department
Order Result Partly Allowed
Bench Allotted DB
Tribunal Order Date 31-10-2013
Date Of Final Hearing 28-10-2013
Next Hearing Date 28-10-2013
Assessment Year 2009-2010
Appeal Filed On 16-05-2013
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH AGRA BEFORE : SHRI BHAVNESH SAINI JUDICIAL MEMBER AND SHRI PRAMOD KUMAR ACCOUNTANT MEMBER ITA NO. 163/AGRA/2013 ASSTT. YEAR : 2009-10 D.C.I.T. CIRCLE 3(1) VS. SHRI SUDARSHAN GOYAL GWALIOR. MAYA COMPLEX A.B. ROAD GUNA (M.P.) (PAN: AHNPG 8822 A) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S.D. SHARMA JR. D.R. RESPONDENT BY : SHRI ANIL VERMA ADVOCATE DATE OF HEARING : 28.10.2013 DATE OF PRONOUNCEMENT OF ORDER : 31.10.2013 ORDER PER BHAVNESH SAINI J.M.: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF LD. CIT(A) GWALIOR DATED 26.02.2013 FOR THE ASSESSMENT YEAR 20 09-10. 2. WE HAVE HEARD THE LD. REPRESENTATIVES OF BOTH TH E PARTIES PERUSED THE FINDINGS OF THE AUTHORITIES BELOW AND CONSIDERED TH E MATERIAL AVAILABLE ON RECORD. 3. ON GROUND NO. 1 & 2 THE REVENUE CHALLENGED THE ORDER OF THE LD. CIT(A) IN DELETING THE ADDITION OF RS.82 017/- MADE U/S. 40A( 2)(B) OF THE IT ACT ON ACCOUNT OF EXCESS PAYMENT MADE TO SHRI SUMIT GOYAL AND IN D ELETING THE ADDITION OF ITA NO. 163/AGRA/2013 2 RS.5 51 237/- MADE U/S. 40A(2)(B) OF THE IT ACT ON ACCOUNT OF EXCESS PAYMENT MADE TO SHRI ISHAN GOYAL BOTH SONS OF THE ASSESSEE . THE AO FOUND THAT THE ASSESSEE HAS MADE PAYMENTS OF RS.9 75 287/- TO HIS SON SHRI ISHAN GOYAL AND RS.5 37 172/- TO SHRI SUMIT GOYAL THE ANOTHER SON OF THE ASSESSEE. BOTH THESE PAYMENTS WERE MADE TO THE PERSONS SPECIFIED U/S. 40 A(2)(B) OF THE IT ACT AND ARE CLAIMED BELOW MARKET RATE. BILL BOOK WHICH IS MAIN TAINED BY THE ASSESSEE IN RESPECT OF THE WORK DONE BY THE SUB-CONTRACTORS WAS ALSO PERUSED AND ON EXAMINATION IT WAS FOUND THAT PAYMENTS MADE TO BOT H THE SONS ARE EXCESSIVE BECAUSE FOR THE SIMILAR WORK THE ASSESSEE HAS PAID LOWER AMOUNTS TO OTHER CONTRACTORS. THE AO THEREFORE FOUND THAT THE ASSE SSEE HAS MADE EXCESSIVE PAYMENT OF RS.82 017/- AND RS.5 51 237/- TO HIS BOT H THE SONS AND ACCORDINGLY DISALLOWANCE WAS MADE U/S. 40A(2)(B) OF THE IT ACT. 4. THE ASSESSEE SUBMITTED BEFORE THE LD. CIT(A) THA T THE AO HAS NOT CONSIDERED THE FACT THAT BILLS HAVE BEEN MADE ON THE BASIS OF ACTUAL WORK DONE BY THE SUB- CONTRACTORS AND THE SONS OF THE ASSESSEE. THE DETAI LS OF TYPE OF WORK PAYMENT OF BILLS AND CONTRACT AMOUNT OF WORK OF SUB-CONTRACTOR COMPARED WITH THE SONS OF THE ASSESSEE WERE HIGHLIGHTED AND IT WAS SUBMITTED THAT THE LENGTH OF WORK DONE BY THE ASSESSEES SONS WAS MORE. THEREFORE THERE IS NO EX CESS PAYMENT MADE TO THE SONS. IT WAS ALSO SUBMITTED THAT THE SONS OF THE ASSESSEE ARE QUALIFIED PERSONS AND ARE INCOME-TAX PAYEES AND NO EXCESSIVE PAYMENTS HAVE BE EN MADE. THE LD. CIT(A) ITA NO. 163/AGRA/2013 3 OBSERVED THAT THE AO DID NOT TAKE INTO COGNIZANCE T HE FACT THAT LENGTH OF LINES INSTALLED BY THE ASSESSEES SONS AND OTHER CONTRACT ORS ARE DIFFERENT. THEREFORE PAYMENT WAS FOUND TO BE REASONABLE AND ACCORDINGLY BOTH THE ADDITIONS WERE DELETED. 5. ON CONSIDERATION OF THE RIVAL SUBMISSIONS WE AR E OF THE VIEW THAT THE MATTER REQUIRES RECONSIDERATION AT THE LEVEL OF THE LD. CI T(A). THE LD. DR RELIED UPON THE SPECIFIC FINDING OF FACT RECORDED BY THE AO AGAINST THE ASSESSEE AND SUBMITTED THAT THE EXPENSES ARE NOT SUBSTANTIATED THROUGH ANY EVID ENCE AND WHATEVER SUBMISSIONS WERE TAKEN BEFORE THE LD. CIT(A) REGARDING THE LENG TH OF WORK COMPLETED BY THE SONS OF ASSESSEE ARE ALSO NOT SUPPORTED BY ANY EVI DENCE. THE LD. CIT(A) WITHOUT VERIFYING THE FACTS WRONGLY DELETED THE ADDITION. O N THE OTHER HAND THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BE FORE THE LD. CIT(A) AND REFERRED TO SEVERAL BILLS IN THE PAPER BOOK AND SPECIFICATIO NS OF THE WORK ORDER TO SHOW THAT THE AO DID NOT TAKE INTO ACCOUNT THE LENGTH OF WORK DONE BY THE SONS OF THE ASSESSEE. THEREFORE THERE IS NOT UNREASONABLE OR E XCESSIVE PAYMENT. HOWEVER ON GOING THROUGH THE PAPERS FILED IN THE PAPER BOOK T HE LD. COUNSEL FOR THE ASSESSEE WAS NOT ABLE TO POINT OUT FROM THE BILL AND WORK OR DER AS TO FOR WHAT LENGTH OF THE WORK DONE BY THE SONS OF THE ASSESSEE HAVE BEEN SUB JECTED TO PAYMENT. IN THE ABSENCE OF ANY SPECIFICATION OF LENGTH IN THE BILL FOR WHICH THE PAYMENTS HAVE BEEN MADE IT IS DIFFICULT TO VERIFY WHETHER THE CONTENT ION OF THE ASSESSEE BEFORE THE LD. ITA NO. 163/AGRA/2013 4 CIT(A) WAS CORRECT. WE THEREFORE FIND THAT THE LD . DR IS JUSTIFIED IN CONTENDING THAT THE EXPENSES AND LENGTH OF THE WORK WAS NOT SU BSTANTIATED BY THE ASSESSEE THROUGH ANY EVIDENCE. NOTHING WAS FILED BEFORE THE LD. CIT(A) IN THIS REGARD EXCEPT THE EXPLANATION QUOTED IN THE APPELLATE ORDE R. IT THEREFORE APPEARS THAT THE LD. CIT(A) ACCEPTED WHATEVER CONTENTIONS RAISED BY THE ASSESSEE BEFORE HIM WITHOUT VERIFYING THE SAME FROM EVIDENCES. WE ARE THEREFORE OF THE VIEW THAT THE MATTER REQUIRES RE-CONSIDERATION AT THE LEVEL OF TH E LD. CIT(A) BECAUSE IN THE PAPER BOOK ALSO THE ASSESSEES COUNSEL HAS NOT FILED ANY EVIDENCE TO SUPPORT THE FINDING OF THE LD. CIT(A) IN DELETING THE ADDITIONS. WE ACC ORDINGLY SET ASIDE THE ORDER OF THE LD. CIT(A) ON BOTH THESE ISSUES AND RESTORE THE MATTER IN ISSUE TO THE FILE OF LD. CIT(A) WITH THE DIRECTION TO RE-DECIDE BOTH THE GRO UNDS IN THE LIGHT OF FINDINGS OF THE AO AND THE MATERIAL PRODUCED BEFORE HIM BY THE ASSESSEE. THE ASSESSEE SHALL PRODUCE SUFFICIENT AND RELIABLE EVIDENCES BEFORE TH E LD. CIT(A) ON THIS ISSUE AND THE LD. CIT(A) SHALL GIVE REASONABLE AND SUFFICIENT OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. IN THE RESULT GROUNDS NOS. 1 & 2 OF APPEAL OF THE REVENUE ARE ALLOWED FOR STATISTICAL PURPOSES. 6. ON GROUND NO. 3 THE REVENUE CHALLENGED THE ORDE R OF THE LD. CIT(A) IN DELETING / RESTRICTING THE DISALLOWANCE TO RS.5 00 000/- AGAINST THE ADDITION OF RS.16 66 000/- MADE ON ACCOUNT OF LABOUR AND WAGES. THE AO NOTED THAT THE ASSESSEE HAS INCURRED RS.1.66 CRORES UNDER THE HEAD LABOUR AND WAGES. THE ITA NO. 163/AGRA/2013 5 ASSESSEE PRODUCED SELF MADE VOUCHERS IN THIS REGARD ACCORDING TO WHICH THE PAYMENT WAS MADE AS PER SEPARATE REGISTERS. THE AO ON EXAMINATION OF LABOUR AND WAGES REGISTER FOUND SEVERAL DISCREPANCIES LIKE THA T THE REGISTER ONLY MENTIONED THE NAMES OF THE DAILY WAGERS BUT NO AMOUNT HAS BEEN I NDIVIDUALLY RECEIVED BY THE DAILY WAGERS. PAYMENT IS MADE THROUGH METS. PAYMENT S ARE MADE ON DAY-TO-DAY BASIS BUT STILL THERE WAS BALANCE PAYABLE OF RS.2 29 180/-. THE ASSESSEE HAS PRODUCED THE VOUCHERS OF THE PAYABLE AMOUNTS WHICH SHOW THAT PAYMENTS HAVE ALSO BEEN MADE ON 31.03.2009. SOME OTHER PAYMENTS W ERE ALSO MADE IN SUBSEQUENT YEAR AND IT WAS NOT CLARIFIED WHY THE PA YMENT WAS MADE AFTER A CONSIDERABLE GAP TO THE DAILY WAGERS WHEN DAY-TO-DA Y PAYMENTS WERE MADE. SOME PAYMENTS WERE MADE ON NATIONAL HOLIDAYS BUT THE WO RKERS STILL CONTINUED TO WORK ON NATIONAL HOLIDAYS. IT WAS ALSO NOTED THAT THE A SSESSEE HAS INCURRED A SUM OF RS.2.15 CRORES TO SUB-CONTRACTORS WHO HAVE MAINLY EXECUTED LABOUR ORIENTED JOB. NEITHER IN THE SELF MADE VOUCHERS NOR IN THE WAGES REGISTERS PLACE OF SITE / PROJECT ARE MENTIONED. THE AO THEREFORE FOUND THAT ENTIRE EXPENDITURE INCURRED AND CLAIMED BY THE ASSESSEE IS NOT PROVED GENUINE AND T HE AUTHENTICITY OF THE SAME IS NOT PROVED BEYOND DOUBT. THEREFORE 10% OF THE TOTA L EXPENDITURE CLAIMED IN A SUM OF RS.16 66 000/- WERE DISALLOWED AND ADDED TO THE INCOME OF THE ASSESSEE. 7. IT WAS SUBMITTED BEFORE THE LD. CIT(A) THAT THE PAYMENTS WERE MADE TO THE LABOURERS THROUGH METS BECAUSE THE WORK WAS DONE IN INTERIOR. THE PAYMENTS WERE ITA NO. 163/AGRA/2013 6 MADE ON DAY-TO-DAY BASIS BUT THE SOME AMOUNT WAS A LSO PAYABLE AND THE ASSESSEE WAS HAVING CASH AVAILABLE ON 31.03.2009. THEREFORE SUFFICIENT FUND WAS ALSO AVAILABLE TO THE ASSESSEE. WORK WAS DONE IN REMOTE AREA THEREFORE THE WORK CONTINUED EVEN ON NATIONAL HOLIDAYS BECAUSE WORKERS WERE LIVING AT THE SITE ITSELF. THE SUB-CONTRACTORS HAVE EXECUTED THE WORK WITH MAT ERIAL WHICH IS ALSO CLEAR FROM THE WORK ORDER. THE PERCENTAGE OF THE WAGES IS SAME AS WAS IN EARLIER YEAR AND THE ASSESSEE RELIED UPON THE DECISION OF GUJRAT HIGH CO URT IN THE CASE OF CIT VS. BHAVNA PROPERTY DEVELOPERS LTD. IN TAX APPEAL NO. 1039/2009 DATED 11.01.2011. 8. THE LD. CIT(A) ON CONSIDERATION OF THE FACTS FOU ND THAT THE ADDITION IS NOT JUSTIFIED BECAUSE IN THE REMOTE AREA PAYMENTS ARE MADE TO THE LABOURERS THROUGH METS AND DELAYED PAYMENTS OR PAYMENTS MADE ON HOLID AYS ARE NORMAL THINGS. HOWEVER IT WAS FOUND THAT SINCE ENTIRE LABOUR PAYM ENT IS MADE IN CASH AND IT IS NOT POSSIBLE FOR THE ASSESSEE TO PRODUCE ALL CASH V OUCHERS AND GET THE ENTIRE EXPENSES OF RS.1.66 CRORES VERIFIED. THEREFORE THE ADDITION WAS RESTRICTED TO RS.5 00 000/-. 9. ON CONSIDERATION OF THE RIVAL SUBMISSIONS WE DO NOT FIND ANY JUSTIFICATION FOR THE LD. CIT(A) TO HAVE DELETED THE ADDITION OF RS.11 66 000/- ON THIS ISSUE. THE AO HAS NOTED SPECIFIC DISCREPANCIES/INCONSISTENCIES IN THE RECORD AND VOUCHERS PRODUCED BEFORE HIM RELATING TO LABOUR AND WAGES EX PENSES. NO SUFFICIENT ITA NO. 163/AGRA/2013 7 EXPLANATION WAS GIVEN TO SHOW AS TO WHY THE PAYMENT S HAVE NOT BEEN MADE TO THE DAILY WAGERS DESPITE AVAILABILITY OF CASH WITH THE ASSESSEE. NO REASONS HAVE BEEN EXPLAINED WHY THE PAYMENTS HAVE BEEN DELAYED FOR A CONSIDERABLE GAP. THE VOUCHERS WERE SELF MADE IN WHICH THE PLACE OF SITE / PROJECTS HAVE NOT BEEN MENTIONED. THE AO THEREFORE CORRECTLY FOUND THAT ENTIRE EXPENDITURES CLAIMED BY THE ASSESSEE HAVE NOT BEEN PROVED TO BE GENUINE AND AUTHENTICITY OF THE SAME HAS NOT BEEN PROVED. THE LD. CIT(A) PRINCIPALLY ACCEPTE D THE FINDING OF THE AO BY HOLDING THAT SINCE THE ENTIRE LABOUR PAYMENT IS MAD E IN CASH AND IT IS NOT POSSIBLE FOR THE ASSESSEE TO PRODUCE ALL CASH VOUCHERS AND G ET THE ENTIRE EXPENSES VERIFIED. THEREFORE DISALLOWANCE WAS JUSTIFIED. THESE FINDIN GS OF FACT RECORDED BY THE LD. CIT(A) IN THE APPELLATE ORDER HAVE NOT BEEN CHALLEN GED BY THE ASSESSEE EITHER IN CROSS APPEAL OR IN CROSS-OBJECTION. WHEN THE ASSESS EE ACCEPTED THE FINDINGS OF THE AO AND THE LD. CIT(A) THAT THE ENTIRE PAYMENT WAS M ADE BY THE ASSESSEE ARE NOT SUBJECTED TO VERIFICATION AND ALL PAYMENTS ARE MADE IN CASH AND VERIFICATION OF THE SAME IS NOT POSSIBLE THERE WAS NO JUSTIFICATION FO R THE LD. CIT(A) TO HAVE DELETED SUBSTANTIAL ADDITION OF RS.11 66 000/- ON THIS ISSU E. NO REASONS HAVE BEEN GIVEN IN THE APPELLATE ORDER FOR DELETING THE SUBSTANTIAL AD DITION. THE ASSESSEE IN THE PAPER BOOK ALSO DID NOT PRODUCE ANY MATERIAL BEFORE US TO REBUT THE FINDING OF FACTS RECORDED BY THE AO. THE LD. COUNSEL FOR THE ASSESSE E RELIED UPON THE DECISION OF HONBLE GUJRAT HIGH COURT IN THE CASE OF BHAVNA PRO PERTY DEVELOPERS (SUPRA) IN WHICH THE LD. CIT(A) FOUND THAT THE DISALLOWANCE HA S BEEN MADE BY THE AO MERELY ITA NO. 163/AGRA/2013 8 ON SUSPICION AND THE TRIBUNAL CONFIRMED THE FINDING OF THE LD. CIT(A). THEREFORE ADHOC DISALLOWANCE WAS NOT FOUND JUSTIFIED AND THE DEPARTMENTAL APPEAL WAS DISMISSED FINDING NO QUESTION OF LAW IN THE APPEAL. THE ABOVE JUDGMENT WOULD NOT HELP THE ASSESSEE IN ANY WAY BECAUSE OF THE SPECIFI C FINDING OF FACT GIVEN BY THE AO IN THE ASSESSMENT ORDER. WE ACCORDINGLY DO NOT FIND ANY JUSTIFICATION FOR THE LD. CIT(A) TO HAVE DELETED THE SUBSTANTIAL ADDITION ON THIS ISSUE. WE ACCORDINGLY SET ASIDE THE ORDER OF THE LD. CIT(A) IN DELETING T HE SUBSTANTIAL ADDITION AND RESTORE THE ORDER OF THE AO IN MAKING ADDITION OF RS.16 66 000/-. IN THE RESULT GROUND NO. 3 OF APPEAL OF THE REVENUE IS ALLOWED. 10. ON GROUND NO. 4 THE REVENUE CHALLENGED THE DEL ETION OF ADDITION OF RS.50 000/- OUT OF SITE EXPENSES. THE LD. CIT(A) FO UND THIS ADDITION TO BE ADHOC IN NATURE. IT WAS ALSO FOUND THAT SITE EXPENSES ARE NO RMAL EXPENSES WHICH RELATE TO HARDWARE ITEMS JEEP RENT ETC. THE LD. DR MERELY RE LIED UPON THE ORDER OF THE AO WITHOUT POINTING OUT ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A). GROUND NO. 4 IS ACCORDINGLY DISMISSED. 11. ON GROUND NO. 5 THE REVENUE CHALLENGED THE DEL ETION OF ADDITION OF RS.2500/-. THE AO DISALLOWED THIS AMOUNT BECAUSE NO PROFESSIONAL TAX WAS PAID ON OR BEFORE THE DUE DATE OF FILING OF RETURN. THE LD. CIT(A) DELETED THE ADDITION BECAUSE THE PROFESSIONAL TAX WAS PAID AS PER LAW. T HE RECEIPT OF THE SAME IS FILED AT ITA NO. 163/AGRA/2013 9 PAGE 30 OF THE PAPER BOOK TO SUPPORT THE FINDING OF LD. CIT(A) THAT THE PROFESSIONAL TAX OF RS.2500/- HAS BEEN PAID. THEREFORE THE ADDI TION WAS RIGHTLY DELETED. THIS GROUND IS ACCORDINGLY DISMISSED. 12. ON GROUND NO. 6 THE REVENUE CHALLENGED THE DEL ETION OF ADDITION OF RS.39 002/-. THE LD. CIT(A) FOUND FROM THE LEDGER A CCOUNT OF HOUSING LOAN THAT INTEREST OF RS.39 002/- WAS PAID ON HOUSING LOAN. T HEREFORE THE ADDITION WAS DELETED. THE LD. DR DID NOT POINT OUT ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A). THEREFORE THIS GROUND OF APPEAL OF THE REVENUE IS DISMISSED. 13. IN THE RESULT THE DEPARTMENTAL APPEAL IS PARTL Y ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (PRAMOD KUMAR) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER *AKS/- COPY OF THE ORDER FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A) CONCERNED BY ORDER 4. CIT CONCERNED 5. DR ITAT AGRA 6. GUARD FILE SR. PRIVATE SECRETARY TRUE COPY