ITO 20(2)(3), MUMBAI v. OM PRAKASH SHARMA, MUMBAI

ITA 2676/MUM/2010 | 2006-2007
Pronouncement Date: 16-03-2011 | Result: Partly Allowed

Appeal Details

RSA Number 267619914 RSA 2010
Bench Mumbai
Appeal Number ITA 2676/MUM/2010
Duration Of Justice 11 month(s) 9 day(s)
Appellant ITO 20(2)(3), MUMBAI
Respondent OM PRAKASH SHARMA, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 16-03-2011
Appeal Filed By Department
Order Result Partly Allowed
Bench Allotted C
Tribunal Order Date 16-03-2011
Assessment Year 2006-2007
Appeal Filed On 07-04-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH C MUMBAI BEFORE SHRI N.V.VASUDEVAN(J.M) & SHRI RAJENDRA SIN GH (A.M) ITA NO.2676/MUM/2010(A.Y. 2006-07) THE ITO 20(2)(3) ROOM NO.411 4 TH FLOOR PIRAMAL CHAMBERS PAREL MUMBAI 400 012. (APPELLANT) VS. SHRI OMPRAKASH SHARMA PROP. M/S. SUNRAYS DCOR KAMAL KUNJ SUBHASH ROAD VILE PARLE(E) MUMBAI 57. PAN:AYCPS 0168H (RESPONDENT) APPELLANT BY : SHRI SHRAVAN KUMAR RESPONDENT BY : SHRI P.R. TOPRANI ORDER PER N.V.VASUDEVAN J.M THIS IS AN APPEAL BY THE REVENUE AGAINST THE ORD ER DATED 29/1/2010 OF CIT(A)-31 MUMBAI RELATING TO ASSESSMENT YEAR 2006-0 7. THE GROUNDS OF APPEAL OF THE REVENUE READ AS FOLLOWS: I. THE LEARNED CIT(A) HAS ERRED ON FACTS AND IN LA W AND IN THE CIRCUMSTANCES OF THE CASE IN RESTRICTED THE DISALLO WANCES MADE TO 10% OF TOTAL LABOUR EXPENSES. II. THE LEARNED CIT(A) HAS ERRED IN NOT APPRECIATIN G THE FACTS THAT THE A.R OF THE ASSESSEE HAS DULY ADMITTED THE FACT OF NON-SUBMISSION OF DETAILS AND NON-PRODUCTION OF BOOKS OF ACCOUNT BEF ORE THE A.O. III. THE LEARNED CIT(A) HAS ERRED IN ALLOWING THE E XPENSES WITHOUT ANY EVIDENTIARY DOCUMENTS BEING FILED BEFORE HIM. 2. THE ASSESSEE IS AN INDIVIDUAL. HE CARRIES ON T HE BUSINESS OF INTERIOR AND EXTERIOR PAINTING OF RESIDENTIAL AND COMMERCIAL BUILDINGS. HE CARRIES ON BUSINESS AS PROPRIETOR OF M/S.SUNRAYS DCOR. HE FI LED THE RETURN OF INCOME FOR A.Y 2006-07 DECLARING INCOME OF RS.3 96 366/-. THE TOTAL RECEIPTS DURING THE PREVIOUS YEAR ON ACCOUNT OF THE BUSINESS OF THE ASSESSEE WAS RS. ITA NO.2676/MUM/2010(A.Y. 2006-07) 2 48 38 506/-. THE NET PROFIT DECLARED BY THE ASSESS EE WAS 5.57% OF THE TOTAL RECEIPT. THE ASSESSEE HAD DEBITED IN THE P&L ACCOU NT A SUM OF RS. 9 10 465/- TOWARDS LABOUR CHARGES. ADMITTEDLY THE ASSESSEE COULD NOT PRODUCE THE BOOKS ACCOUNTS BILLS AND VOUCHERS EVID ENCING THE LABOUR CHARGES. THE AO THEREFORE DISALLOWED THE ENTIRE LABOUR CHARGES CLAIMED AS DEDUCTION BY THE ASSESSEE AND ADDED THE SAID SUM TO THE TOTAL INCOME OF THE ASSESSEE. ON APPEAL BY THE ASSESSEE THE CIT(A) WAS OF THE VIEW THAT IT WAS NOT POSSIBLE FOR THE ASSESSEE TO EARN INCOME WITHO UT INCURRING LABOUR CHARGES. HE WAS OF THE VIEW THAT FOR NON-PRODUCTIO N OF RECORDS DISALLOWANCE OF 10% OF THE EXPENSES CLAIMED WOULD BE APPROPRIATE . ACCORDINGLY THE ADDITION MADE BY THE AO WAS RESTRICTED TO 10% OF TH E LABOUR CHARGES CLAIMED BY THE ASSESSEE IN THE P&L ACCOUNT. 3. AGGRIEVED BY THE ORDER OF THE CIT(A) THE REVENUE HAS PREFERRED THE PRESENT APPEAL BEFORE THE TRIBUNAL. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS. IT IS NOT IN DISPUTE THAT THE ASSESSEE COULD NOT PRODUCE EVIDENCE WITH REGARD TO INCURRING OF THE LABOUR CHARGES. AT THE SAME TIME IT IS BE BORNE IN MIND THAT IT IS NOT POSSIBLE FOR THE ASSESSEE TO EARN THE INCOME WITHOUT INCURRING L ABOUR CHARGES. IN THE GIVEN CIRCUMSTANCES A DISALLOWANCE OF LABOUR CHARGE S HAS TO BE MADE BUT IT IS TO BE BASED ON THE PAST HISTORY IN THE ASSESSEE S CASE. THE AO HAS TO COMPARE THE LABOUR CHARGES VIS--VIS THE RECEIPTS I N BUSINESS IN THE PAST. IT HAS BEEN THE SUBMISSION OF THE LD. COUNSEL FOR T HE ASSESSEE THAT IN THE PAST ALL ASSESSMENTS WERE MADE UNDER SECTION 143(1) OF THE INCOME TAX ACT 1961. WE ARE OF THE VIEW THAT EVEN IN SUCH CASES PAST HISTORY OF THE ASSESSEES CASE WOULD BE RELEVANT AND THE DISALLOWA NCE HAS TO BE MADE KEEPING IN MIND THE PAST HISTORY OF THE CASE. WE THEREFORE SET ASIDE THE ORDER OF THE CIT(A) AND REMAND THE ISSUE FOR FRESH CONSIDERATION BY THE AO IN ITA NO.2676/MUM/2010(A.Y. 2006-07) 3 THE LIGHT OF THE OBSERVATION MADE ABOVE. THE AO WI LL AFFORD OPPORTUNITY OF BEING HEARD TO THE ASSESSEE BEFORE DECIDING THE ISS UE. FOR STATISTICAL PURPOSES THE APPEAL OF THE REVENUE IS TREATED AS AL LOWED. 5. IN THE RESULT THE APPEAL OF THE REVENUE IS ALLO WED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THE 16 TH DAY OF MARCH 2011. SD/- SD/- (RAJENDRA SINGH) (N.V.VASUDEVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI DATED. 16 TH MARCH.2011 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3 . THE CIT CITY CONCERNED 4. THE CIT(A)- CONCERNED 5. THE D.RC BENCH. (TRUE COPY) BY ORDER ASST. REGISTRAR I TAT MUMBAI BENCHES MUMBAI. VM. ITA NO.2676/MUM/2010(A.Y. 2006-07) 4 DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 9/3/2011 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 10/3/2011 SR.PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7. FILE SENT TO THE BENCH CLERK SR.PS/PS 8 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER