Jagat Singh, Rohtak v. ITO, Sonepat

ITA 324/DEL/2011 | 2007-2008
Pronouncement Date: 30-09-2011 | Result: Allowed

Appeal Details

RSA Number 32420114 RSA 2011
Assessee PAN AANPH0701L
Bench Delhi
Appeal Number ITA 324/DEL/2011
Duration Of Justice 8 month(s) 11 day(s)
Appellant Jagat Singh, Rohtak
Respondent ITO, Sonepat
Appeal Type Income Tax Appeal
Pronouncement Date 30-09-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted D
Tribunal Order Date 30-09-2011
Date Of Final Hearing 23-09-2011
Next Hearing Date 23-09-2011
Assessment Year 2007-2008
Appeal Filed On 19-01-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH `D: NEW DELHI BEFORE SHRI C.L.SETHI JUDICIAL MEMBER AND SHRI A.N. PAHUJA ACCOUNTANT MEMBER I.T. A. NO.324/DEL/2011 ASSESSMENT YEAR : 2007-08 SHRI JAGAT SINGH INCOME-TAX OFFICER H.N O.2501 SECTOR-1 VS. WARD-4 SONEPAT HQ AT ROHTAK HARYANA. ROHTAK. PAN: AANPH0701L (APPELLANT) (RESPONDENT ) APPELLANT BY : SHRI RAJEEV CHAWLA ADVOCATE RESPONDENT BY : SHRI SALIL MISHRA DR. O R D E R PER C.L. SETHI JUDICIAL MEMBER: THE ASSESSEE IS IN APPEAL AGAINST THE ORDER DATED 0 3.11.2010 PASSED BY THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) IN THE MATTER OF AN ASSESSMENT MADE UNDER SEC.144 OF THE INCOME-TAX ACT 1961 (THE ACT) DATED 30.07.2009 BY THE ASSESSING OFFICER FOR THE ASSESSM ENT YEAR 2007-08. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER: - 1. LD. CIT (APPEALS) GROSSLY ERRED IN FACT AND LAW BY ESTIMATING THE INCOME BY REJECTING BOOKS OF ACCOUNT OF APPELLANT. WHERE AS ITO IN HIS REMAND REPORT HAS A CCEPTED THE BOOKS OF ACCOUNT AND ONLY RECOMMENDED DISALLOWANCE IN PARTICULAR EXPENSES. 2 2. LD. CIT(APPEALS) ERRED IN FACT AND LAW BY NOT AL LOWING DEDUCTION U/S 80C PERTAINING TO PAYMENT OF LIC OF R S.24759. 3. IN THIS CASE THE ASSESSEE AN INDIVIDUAL FILED HIS RETURN OF INCOME ON 31.10.2007 DECLARING TOTAL INCOME AT RS.1 52 570/-. THE ASSESSEE HAD ALSO SHOWN AGRICULTURAL INCOME AMOUNTING TO RS.70 000/-. THE ASSESSEES CASE WAS SELECTED FOR SCRUTINY. NOTICES UNDER SEC. 143( 2) & 142(1) WERE ISSUED BY THE ASSESSING OFFICER AND DULY SERVED ON THE ASS ESSEE FROM TIME TO TIME. IN RESPONSE TO THE AFORESAID NOTICES THE ASSESSEE S AUTHORIZED REPRESENTATIVE SHRI RAJIV CHAWLA ADVOCATE HAD APPE ARED BEFORE THE AO AND FILED CERTAIN DETAILS. HOWEVER THE ASSESSEE F AILED TO PRODUCE THE BOOKS OF ACCOUNT AND OTHER DETAILS REQUIRED BY THE AO DUR ING THE COURSE OF ASSESSMENT PROCEEDINGS. THEREFORE THE AO COMPLETE D THE ASSESSMENT UNDER SEC. 144 OF THE ACT TO THE BEST OF HIS JUDGMENT. 4. THE ASSESSEE IS A CIVIL CONTRACTOR AND HAD SHOWN GROSS CONTRACT RECEIPTS OF RS.58 85 996/-. THE NET PROFIT FROM TH E CONTRACT WORK HAS BEEN SHOWN BY THE ASSESSEE AT RS.1 77 330/-. IN THE ABS ENCE OF BOOKS OF ACCOUNT AND OTHER DETAILS THE AO DETERMINED THE NET PROFIT BY APPLYING THE RATE OF 12% ON THE GROSS PAYMENT OF RS.58 85 996/- RECEIVED BY THE ASSESSEE. THE AO THUS DETERMINED THE NET PROFIT FROM CONTRACT WO RK AT RS.7 06 319/- AS AGAINST RETURNED PROFIT OF RS.1 77 330/-. THE AO THEREFORE MADE THE ADDITION OF RS.5 28 989/- TO THE RETURNED PROFIT OF THE ASSESSEE. THE AO ALSO 3 MADE AN ADDITION OF RS.3 38 000/- ON ACCOUNT OF UNE XPLAINED LOAN STATED TO HAVE BEEN TAKEN FROM ONE SHRI AMARJEET SINGH. THE AO ALSO DISALLOWED THE ASSESSEES CLAIM OF DEDUCTION UNDER SEC. 80C AMOUNT ING TO RS.24 759/- TOWARDS PAYMENT OF LIC PREMIUM FOR WANT OF EVIDENCE S AND PROOF. THE AO THUS DETERMINED THE TOTAL INCOME AT RS.10 44 319/- AND COMPLETED THE ASSESSMENT UNDER SEC. 144 OF THE ACT. 5. BEING AGGRIEVED THE ASSESSEE PREFERRED AN APPEA L BEFORE THE LEARNED CIT(A). 6. DURING THE APPELLATE PROCEEDINGS THE ASSESSEE P RODUCED BOOKS OF ACCOUNT ETC. BEFORE THE CIT(A) WITH A REQUEST TO AD MIT ADDITIONAL EVIDENCES IN THE FORM OF BOOKS OF ACCOUNT AND CONFIRMATIONS F ROM THE LOAN CREDITORS. ADDITIONAL EVIDENCES PRODUCED BY THE ASSESSEE BEFOR E THE LEARNED CIT(A) WERE SENT TO THE AO FOR HIS COMMENTS AND VERIFICATI ON. THE AO THEN SUBMITTED HIS REMAND REPORT DATED 21/24.09.2010. I N THE REMAND REPORT THE AO HAS NOT COMMENTED ANYTHING REGARDING THE ADMISSI ON OR OTHERWISE OF THE ADDITIONAL EVIDENCES PRODUCED BY THE ASSESSEE. THE AO AFTER EXAMINING THE BOOKS OF ACCOUNT SUPPORTING BILLS AND VOUCHERS DU RING THE COURSE OF REMAND PROCEEDINGS COMMENTED THAT THE BOOKS OF ACC OUNTS WERE EXAMINED AND VERIFIED WITH SUPPORTING BILLS/VOUCHERS WHICH WERE FOUND TO BE SATISFACTORY BUT THE EXPENSES NAMELY LABOUR WELFA RE EXPENSES LOCAL 4 CONVEYANCE EXPENSES MISCELLANEOUS EXPENSES AND TRA VELLING EXPENSES WERE NOT FULLY SUPPORTED BY BILLS AND VOUCHERS. THE AO THEREFORE STATED THAT IN THE ABSENCE OF DOCUMENTARY EVIDENCES IN SUPPORT OF THE AFORESAID EXPENSES APPROPRIATE DISALLOWANCE MAY BE MADE AS DEEMED FIT BY THE CIT(A). WITH REGARD TO THE LOAN AMOUNT OF RS.3 38 000/- TAKEN FR OM SHRI AMARJEET SINGH THE AO GAVE A REPORT THAT THE ASSESSEE HAS BEEN ABL E TO EXPLAIN THE GENUINENESS OF THE TRANSACTION AND CREDITWORTHINESS AND IDENTITY OF THE CREDITOR. 7. AFTER CONSIDERING THE AOS REMAND REPORT AND THE MATERIAL ON RECORD THE LEARNED CIT(A) DECIDED THESE ISSUES BY OBSERVIN G AS UNDER:- 8. I HAVE CONSIDERED THE ISSUE AND THE SUBMISSIONS MADE BY THE AR. AS THE AO HAS GIVEN CATEGORICAL FINDING RE GARDING CERTAIN EXPENSES NOT FULLY SUPPORTED BY BILLS/VOUCH ERS THE ACTION OF THE AO IN ESTIMATING THE PROFIT IS UPHELD . HOWEVER ESTIMATION OF THE PROFIT @ 12% APPEARS TO BE ON THE HIGHER SIDE CONSIDERING THAT THE FACTS OF THE CASE ARE TOTALLY DIFFERENT FROM THE CASE CITED BY THE AO. THEREFORE ENDS OF JUSTI CE WOULD BE MET IF PROFIT @ 8% (TAKING CUE AND GUIDANCE FROM TH E PROVISIONS OF SECTION 44AD) IS APPLIED ON THE NET C ONTRACT RECEIPTS INSTEAD OF THE GROSS CONTRACT RECEIPTS TAK EN BY THE AO. AS REGARDS THE ADDITION ON ACCOUNT OF UNSECURED LOA N SINCE THE AO HAS GIVEN A CATEGORICAL FINDING ON THE GENUINENE SS OF THE LOAN IN THE REMAND REPORT THIS ADDITION IS DIRECTE D TO BE DELETED. THE GROUNDS OF APPEAL IN THIS REGARD ARE DISPOSED OFF AS INDICATED ABOVE. 8. NOW THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUN AL AGAINST THE ORDER OF THE LEARNED CIT(A) IN ESTIMATING THE NET PROFIT @ 8 % FROM CONTRACT WORKS 5 AND IN NOT DECIDING THE ISSUE WITH REGARD TO THE AS SESSEES CLAIM OF DEDUCTION UNDER SEC. 80C ON ACCOUNT OF PAYMENT OF LIC PREMIUM AMOUNTING TO RS.34 759/-. 9. WE HAVE HEARD BOTH THE PARTIES AND HAVE CAREFULL Y PERUSED THE ORDERS OF THE AUTHORITIES BELOW. WE HAVE ALSO PERUSED THE VARIOUS PAPERS PLACED IN THE PAPER BOOK FILED BY THE ASSESSEE. 10. IN THIS CASE IT IS NOT IN DISPUTE THAT THE ASS ESSEE HAD PRODUCED BOOKS OF ACCOUNTS AND OTHER EVIDENCES DURING THE APPELLAT E PROCEEDINGS WHICH WERE REMANDED TO THE AO FOR HIS COMMENTS AND VERIFI CATION. THE AO IN HIS REMAND REPORT DATED 21/24.09.2010 HAS GIVEN THE FO LLOWING COMMENTS WITH REGARD TO THE VERACITY OF THE BOOKS OF ACCOUNTS AND OTHER DETAILS PRODUCED BY THE ASSESSEE:- 3. IN THE LIGHT OF FOLLOWING OBSERVATIONS THE REM AND REPORT IS SUBMITTED AS UNDER: (1) DURING THE COURSE OF PROCEEDINGS THE ASSESSEE PRODU CED BOOKS OF ACCOUNT IE CASH BOOK LEDGER LABOUR REGIS TER BANK ACCOUNT STATEMENTS BILLS AND VOUCHERS. THE BOOKS OF ACCOUNT WERE EXAMINED AND VERIFIED WITH SUPPORTING BILLS/VOUCHERS WHICH WERE FOUND TO BE SATISFACTORY. HOWEVER THE FOLLOWING EXPENSES WERE NOT FULLY SUPP ORTED BY BILLS/VOUCHERS:- I) LABOUR WELFARE EXPENSES. II) LOCAL CONVEYANCE EXPENSES. III) MISC. EXPENSES. IV) TRAVELLING EXPENSES. 6 IN THE ABSENCE OF DOCUMENTARY EVIDENCES IN SUPPORT OF THESE EXPENSES APPROPRIATE DISALLOWANCE MAY BE MADE AS DE EMED FIT BY YOUR GOODSELF. 11. ON PERUSAL OF THE AOS ABOVE COMMENT IT IS EST ABLISHED THAT THE ASSESSEE HAD PRODUCED BOOKS OF ACCOUNTS I.E. CASH B OOK LEDGER LABOUR REGISTER BANK ACCOUNT STATEMENTS BILLS AND VOUCHE RS. THESE BOOKS OF ACCOUNTS ETC. WERE EXAMINED AND VERIFIED BY THE AO WHICH WERE FOUND BY HIM TO BE SATISFACTORY. HOWEVER CERTAIN EXPENSES NAMELY LABOUR WELFARE EXPENSES LOCAL CONVEYANCE EXPENSES MISCELLANEOUS EXPENSES AND TRAVELLING EXPENSES WERE NOT FOUND TO BE FULLY SUPPORTED BY BI LLS/VOUCHERS. THE AO THEREFORE RECOMMENDED THAT IN THE ABSENCE OF DOCUM ENTARY EVIDENCES IN SUPPORT OF THESE EXPENSES APPROPRIATE DISALLOWANCE MAY BE MADE AS DEEMED FIT BY THE LEARNED CIT(A). HOWEVER THE LEARNED CI T(A) HAS TAKEN A VIEW THAT IN THE LIGHT OF THE AOS FINDING REGARDING CER TAIN EXPENSES BEING NOT FULLY SUPPORTED BY BILLS AND VOUCHERS THE ACTION O F THE AO IN ESTIMATING THE PROFIT WAS JUSTIFIED. AFTER CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN THE ABSENCE OF ANY MATERIAL DISCREPANC IES OR DEFECTS IN THE BOOKS OF ACCOUNTS MAINTAINED BY THE ASSESSEE EXCEPT BY OB SERVING THAT EXPENSES IN THE NATURE OF LABOUR WELFARE EXPENSES LOCAL CONVEY ANCE EXPENSES MISCELLANEOUS EXPENSES AND TRAVELLING EXPENSES ARE NOT FULLY SUPPORTED BY BILLS AND VOUCHERS THE BOOKS OF ACCOUNTS MAINTAINE D BY THE ASSESSEE ARE NOT 7 LIABLE TO BE REJECTED. THE AO HAS NOT FOUND ANY FA ULT WITH THE SYSTEM OF ACCOUNTING BEING FOLLOWED BY THE ASSESSEE. THE AO HAS NOT BEEN ABLE TO SHOW THAT THE BOOKS OF ACCOUNTS MAINTAINED BY THE A SSESSEE WERE INCOMPLETE OR INCORRECT OR METHOD OF ACCOUNTING ADOPTED BY THE ASSESSEE WAS SUCH THAT THE PROFIT OF THE ASSESSEE CANNOT BE DEDUCED THERE FROM. IT IS ALSO NOT THE CASE WHERE THE BOOKS OF ACCOUNT MAINTAINED BY THE A SSESSEE WERE INACCURATE OR INCOMPLETE. THE AO HAS ONLY SUGGESTED FOR SOME A PPROPRIATE DISALLOWANCE OUT OF THE LABOUR WELFARE EXPENSES LO CAL CONVEYANCE EXPENSES MISCELLANEOUS EXPENSES AND TRAVELLING EXPENSES AS D EEMED FIT BY THE LEARNED CIT(A). IN THE LIGHT OF THESE FACTS WE ARE THERE FORE OF THE CONSIDERED VIEW THAT THE LEARNED CIT(A) WAS NOT JUSTIFIED IN HOLDIN G THAT THE ACTION OF THE AO IN ESTIMATING THE PROFIT WAS JUSTIFIED. WE THEREFO RE SET ASIDE THE ORDER OF THE LEARNED CIT(A) IN ESTIMATING THE PROFIT FROM THE CO NTRACT WORKS. HOWEVER AT THE SAME TIME IT IS ALSO ADMITTED POSITION THAT TH E EXPENSES IN THE NATURE OF LABOUR WELFARE EXPENSES LOCAL CONVEYANCE EXPENSES MISCELLANEOUS EXPENSES AND TRAVELLING EXPENSES WERE NOT FULLY SUP PORTED BY VOUCHERS AND BILLS. THE TOTAL AMOUNT OF EXPENSES CLAIMED UNDER THESE HEADS ARE AS UNDER:- (I) LABOUR WELFARE EXPENSES RS.58 490/- (II) LOCAL CONVEYANCE EXPENSES RS.21 640/- (III) MISCELLANEOUS EXPENSES RS. 1 449/- (IV) TRAVELLING EXPENSES RS.52 070/- TOTAL RS.1 33 649/- 8 THE TOTAL EXPENSES DEBITED IN THE PROFIT & LOSS ACC OUNT ARE OF RS.57 08 663/-. THE AFORESAID EXPENSES WHICH WERE NOT FULLY SUPPOR TED BY VOUCHERS THUS CONSTITUTE ONLY 2.34% OF THE TOTAL EXPENSES DEBITED IN THE PROFIT & LOSS ACCOUNT. THESE EXPENSES ARE OF GENERAL IN NATURE B EING NORMALLY INCURRED BY THE CONTRACTOR IN THE COURSE OF EXECUTING THE CONTR ACT WORKS UNDERTAKEN BY HIM. THE AMOUNTS CLAIMED UNDER THESE HEADS ARE VER Y NOMINAL. HOWEVER SINCE THESE EXPENSES WERE NOT FULLY VOUCHED BY THE VOUCHERS OR BILLS AND SINCE THE ASSESSEE IS AN INDIVIDUAL AND SOME PERSON AL EXPENSES OF THE ASSESSEE MAY BE INCLUDED IN THE WELFARE EXPENSES T RAVELLING EXPENSES AND CONVEYANCE EXPENSES INCURRED BY THE ASSESSEE A REA SONABLE PORTION OF IT MAY BE DISALLOWED. AFTER CONSIDERING THE NATURE OF THE ASSESSEES BUSINESS AND THE NATURE OF EXPENSES AND THE AMOUNT THEREOF C LAIMED BY THE ASSESSEE WE ARE OF THE CONSIDERED OPINION THAT IF 15% OF THE SE EXPENSES IS DISALLOWED ON THE GROUND OF THE EXPENSES BEING PERSONAL IN NAT URE THAT WOULD MEET THE ENDS OF JUSTICE; 15% OF RS.1 33 649/- COMES TO RS.2 0 048/- AS ROUNDED OF RS.20 000/-. WE THEREFORE DISALLOW THE SUM OF RS .20 000/- OUT OF THE AFORESAID EXPENSES NAMELY LABOUR EXPENSES LOCAL EX PENSES MISCELLANEOUS EXPENSES AND TRAVELLING EXPENSES WHICH SHALL BE AD DED TO THE RETURNED PROFIT OF RS.1 77 333/- SHOWN BY THE ASSESSEE.. THUS THE TOTAL PROFIT FROM THE CONTRACT WORK WILL BE RS.1 97 333/- OR RS.1 97 330/ -. THE ORDER OF THE 9 LEARNED CIT(A) IS MODIFIED ACCORDINGLY. THE A.O. I S DIRECTED TO MODIFY THE ASSESSMENT ACCORDINGLY. 12. THE NEXT GROUND RAISED BY THE ASSESSEE IS WITH REGARD TO THE ASSESSEES CLAIM OF DEDUCTION UNDER SEC. 80C ON ACCOUNT OF PAY MENT OF LIC PREMIUM AMOUNTING TO RS.24 759/-. 13. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. THIS CLAIM OF THE ASSESSEE WAS DISALLOWED BY THE AO FOR WANT OF EVIDENCES. THE ASSESSEE HAS ALSO TAKEN THIS GROUND BEFORE THE LEARNED CIT(A). HOWEVER THE LEARNED CIT(A) HAS FAILED TO DECIDE TH IS ISSUE. IN THE PAPER BOOK THE ASSESSEE HAS PRODUCED BEFORE US THE DETA ILS OF PREMIUM PAID DURING THE F.Y. 2006-07. THESE DETAILS WERE NOT EX AMINED AND VERIFIED BY THE AO NEITHER DURING THE ORIGINAL ASSESSMENT PROCE EDINGS NOR IN THE COURSE OF REMAND PROCEEDINGS. WE THEREFORE RESTORE THIS MATTER BACK TO THE FILE OF THE AO FOR HIS FRESH CONSIDERATION AFTER EXAMINING AND VERIFYING THE EVIDENCES THAT MAY BE PRODUCED BY THE ASSESSEE BEFO RE HIM AND THEN TO DECIDE THE MATTER AS PER LAW AFTER PROVIDING REASON ABLE OPPORTUNITY OF BEING BEARD TO THE ASSESSEE. WE ORDER ACCORDINGLY. 14. IN THE RESULT THE APPEAL OF THE ASSESSEE IS AL LOWED IN THE MANNER AS INDICATED ABOVE. 15. THIS DECISION IS PRONOUNCED IN THE OPEN COURT O N 30 TH SEPTEMBER 2011. SD/- SD/- (A.N. PAHUJA) (C.L. SETHI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 30 TH SEPTEMBER 2011. 10 ITA NO.324/DEL/2011. COPY OF THE ORDER FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR BY ORDER *MG DEPUTY REGISTRAR ITAT.