M/s Narinder Kumar Singla, Ludhiana v. ITO, Patiala

ITA 370/CHANDI/2011 | 2006-2007
Pronouncement Date: 14-07-2011 | Result: Allowed

Appeal Details

RSA Number 37021514 RSA 2011
Bench Chandigarh
Appeal Number ITA 370/CHANDI/2011
Duration Of Justice 3 month(s) 5 day(s)
Appellant M/s Narinder Kumar Singla, Ludhiana
Respondent ITO, Patiala
Appeal Type Income Tax Appeal
Pronouncement Date 14-07-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted A
Tribunal Order Date 14-07-2011
Date Of Final Hearing 07-07-2011
Next Hearing Date 07-07-2011
Assessment Year 2006-2007
Appeal Filed On 08-04-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH CHA NDIGARH BEFORE SHRI D K SRIVASTAVA AM AND MS. SUSHMA CHOWL A JM ITA NO. 369/CHD/2011 ASSESSMENT YEAR: 2007-08 M/S NARINDER KUMAR SINGLA V ACIT CIRCLE PROP.NARINDER KUMAR PATIALA 3736 STREET DOGRAN PATIALA PAN: ABKPS-6822K AND ITA NO. 370/CHD/2011 ASSESSMENT YEAR: 2006-07 M/S NARINDER KUMAR SINGLA V ITO WARD-1 PATIALA PATIALA APPELLANT BY: SHRI ASHWANI KUMAR RESPONDENT BY: SHRI N KSAINI ORDER D K SRIVASTAVA: THE APPEAL BEARING ITA NO.319/CHD/2011 FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER PASSED B Y THE CIT(A) ON 15.03.2011 CONFIRMING DISALLOWANCE @ 15% OUT OF WAG ES AS AGAINST 18% MADE BY THE ASSESSING OFFICER IN AY 2007-08 . THE APPEAL BEARING ITA NO.370/CHD/2011 FILED BY THE ASSESSEE IS DIRECTED A GAINST THE ORDER PASSED BY THE CIT(A) ON 15.03.2011 CONFIRMING PENALTY AMOU NTING TO RS.27 430/- LEVIED BY THE AO U/S 271(1)(C) OF THE INCOME-TAX AC T FOR AY 2006-07 ON THE BASIS OF ADDITIONS/DISALLOWANCE OF 15% OF WAGES CONFIRMED FIRSTLY BY THE CIT(A) AND THEREAFTER UPHELD BY THIS TRIBUNAL. BOTH THE APPEALS HAVE BEEN HEARD TOGETHER. IT IS CONVENIENT TO DISPOSE OF BOTH OF THEM BY A CONSOLIDATED ORDER. 2. IN ITA 369/CHD/2011 THE ASSESSEE HAS TAKEN THE FOLLOWING GROUNDS OF APPEAL: 1. THAT THE LD. CIT(A) PATIALA HAS ERRED IS DISALL OWING 15% OF WAGES PAYABLE OUTSTANDING AS ON 31.3.2007 AS AGAINS T DISALLOWED BY THE AO AT 18% WITHOUT ANY FACTS AND CIRCUMSTANCES O F THE CASE. 2. THAT THE LD. CIT(A) PATIALA HAS ERRED IN DISALLO WING 15% OF WAGES PAYABLE AS UNEXPLAINED WITHOUT ANY BASIS AND APPRECIATING THE DETAILS SUBMITTED DURING THE COURSE OF ASSESSMENT P ROCEEDINGS AND WITHOUT GOING THROUGH THE DAY TO DAY ACTIVITIES AND NATURE OF CONTRACTORS RECEIPT. THE ASSESSEE IS DOING CONTRAC T WORK OF STATE GOVERNMENT AND GOVERNMENT RECEIPTS ARE NORMALLY REC EIVED VERY LATE AND THE PAYMENT OF WAGES AND OTHER LIABILITIES ARE NORMALLY DELAYED DUE TO NON-AVAILABILITY OF FUNDS. ITA 369&370/CHD/2011 M/S NARINDER KUMAR SINGLA LUDHIANA 2 3. THAT THE LD. CIT(A) PATIALA HAS ERRED IN CONFIRM ING THE ADDITION MADE ON ACCOUNT OF INTEREST RECEIVED ALONG WITH REFUND AMOUNTING TO RS.38 344/- WITHOUT CONSIDERING THE SU BMISSION MADE DURING THE COURSE OF APPELLATE PROCEEDINGS. 2. AT THE TIME OF HEARING GROUND NO.3 WAS NOT PRES SED BY THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE. IT IS THEREFORE DISMISSED AS NOT PRESSED. WE ARE NOW LEFT WITH GROUND NOS. 1 2 AND 4. 3. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT T HE AO NOTICED THAT THE RATIO BETWEEN THE WAGES SHOWN BY THE ASSESSEE AS PA YABLE AS ON 31.3.2007 WERE 65.15% VIS--VIS WAGES PAID IN AY 2007-08 AS A GAINST 31.52% SHOWN BY THE ASSESSEE AS WAGES PAYABLE AS ON 31.3.2006 VI S--VIS WAGES PAID IN AY 2006-07. AT THE TIME OF HEARING BEFORE US IT WA S STATED BY THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE THAT THE ASSESSEE HAD RETURNED NET PROFIT RATE OF 1% ON CONTRACT RECEIPTS. IN ORDE R TO VERIFY THE GENUINENESS OF THE CLAIM WITH REGARD TO WAGES SHOWN AS PAYABLE AT THE END OF THE YEAR THE AO CALLED UPON THE ASSESSEE TO FUR NISH COMPLETE DETAILS OF WORKERS INDICATING THEIR NAMES AND COMPLETE ADDRESS ES TO WHOM THE WAGES WERE SHOWN AS PAYABLE AS ON 31.3.2007. HE ALSO CALL ED UPON THE ASSESSEE TO PRODUCE LABOUR REGISTER AND ALSO THE WORKERS TO WHOM THE WAGES WERE SHOWN AS PAYABLE. IN REPLY THE ASSESSEE PRODUCED T HE WAGES REGISTER AND ALSO SUPPLIED THE LIST OF WORKERS. HE HOWEVER DID NOT FURNISH COMPLETE ADDRESSES OF THE WORKERS NOR PRODUCED THEM IN PERSO N FOR VERIFICATION OF THE WAGES SHOWN AS PAYABLE IN THE YEAR UNDER APPEAL . IT IS FURTHER STATED IN THE ASSESSMENT ORDER THAT SEPARATE VOUCHERS FOR PAY MENT OF WAGES WERE NOT PRODUCED BY THE ASSESSEE. IN THIS VIEW OF THE M ATTER THE AO CAME TO THE CONCLUSION THAT THE ASSESSEE HAD FAILED TO ESTA BLISH THE GENUINENESS OF THE AMOUNT OF WAGES AMOUNTING TO RS.48 67 463/- SHO WN AS PAYABLE AS ON 31.3.2007. IT IS ALSO STATED IN THE ASSESSMENT ORDE R THAT THE ASSESSEE VIDE HIS LETTER DATED 16.10.2009 ADMITTED THAT NO RECOR D OF LABOUR SITE-WISE OR CONTRACT-WISE WAS MAINTAINED. THE AO FURTHER OBSER VED THAT WAGES OF SUCH MAGNITUDE COULD NOT REMAIN OUTSTANDING ON THE CLOSI NG DATE AS MOST OF THE LABOURERS WERE FROM REMOTE AREAS OF HARYANA UP AND BIHAR. IN THIS VIEW OF THE MATTER HE DISALLOWED 18% OF THE WAGES SHOWN BY THE ASSESSEE AS ITA 369&370/CHD/2011 M/S NARINDER KUMAR SINGLA LUDHIANA 3 PAYABLE. 4. AGGRIEVED BY THE ORDER PASSED BY THE AO THE ASS ESSEE FILED APPEAL BEFORE THE CIT(A) UPON WHICH THE LD. CIT(A) CONFIRM ED THE DISALLOWANCE OF WAGES TO THE EXTENT OF 15% AS AGAINST 18% MADE BY T HE AO. 5. AGGRIEVED BY THE ORDER PASSED BY THE CIT(A) THE ASSESSEE IS NOW IN APPEAL BEFORE THIS TRIBUNAL. 6. IN SUPPORT OF APPEAL IT WAS SUBMITTED THAT THE ASSESSEE HAD PRODUCED WAGES REGISTER AND ALSO SUPPLIED THE LIST OF WORKERS. ACCORDING TO THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE THE AMOUNT SHOWN AS OUTSTANDING IN THE ACCOUNTS AS ON 31.03.2007 WAS LA RGELY BECAUSE OF THE FACT THAT THE LABOURERS HAD KEPT THEIR WAGES WITH T HE ASSESSEE AS THEY WANTED TO TAKE THE SAME WHILE LEAVING FOR THEIR NAT IVE PLACES. HE SUBMITTED THAT THE AO HAS NOT POINTED OUT ANY DEFECT IN THE B OOKS AND THEREFORE THE DISALLOWANCE SHOULD BE DELETED. 7. IN REPLY LD. DR SUPPORTED THE ORDER PASSED BY T HE CIT(A). 8. WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY CON SIDERED THEIR SUBMISSIONS. THE ASSESSEE IS A CIVIL CONTRACTOR AND THEREFORE EXECUTES VARIOUS CONTRACTS AT SEVERAL SITES. THE AO FOUND TH AT THE RATIO OF AMOUNT SHOWN AS WAGES PAYABLE AT THE END OF THE YEAR UNDER APPEAL AND WAGES PAID IN THE YEAR UNDER APPEAL WAS 65.15% AS AGAINST 31.52% IN THE IMMEDIATELY PRECEDING YEAR. IT IS QUITE EVIDENT FRO M THE AFORESAID DETAILS BROUGHT ON RECORD BY THE AO THAT THE RATION OF WAGE S PAYABLE AND WAGES PAID IN ASSESSMENT YEAR 2007-08 WAS SIGNIFICANTLY H IGHER AT 65.15% AS AGAINST 31.52% IN THE IMMEDIATELY PRECEDING YEAR. T HE SUBMISSION OF THE ASSESSEE THAT LABOURERS HAD KEPT THEIR MONEY WITH T HE ASSESSEE FOR TAKING THE SAME AT THE TIME OF THEIR VISIT TO THEIR NATIVE PLACES DOES NOT EXPLAIN THE REASON FOR INCREASE IN THE PERCENTAGE OF WAGES PAYABLE TO LABOUR PAID IN THE YEAR UNDER APPEAL. A SUM OF RS.48 67 463/- W AS SHOWN AS PAYABLE AT THE END OF THE YEAR AND THEREFORE IT WAS FOR THE AS SESSEE TO SATISFACTORILY EXPLAIN THE GENUINENESS/CORRECTNESS OF THE SAID AMO UNT. IT IS STATED IN THE ASSESSMENT ORDER THAT NEITHER THE COMPLETE ADDRESS OF THE WORKERS WERE FURNISHED NOR ANY OF THE WORKERS WERE PRODUCED NOR SEPARATE VOUCHERS FOR ITA 369&370/CHD/2011 M/S NARINDER KUMAR SINGLA LUDHIANA 4 PAYMENT OF WAGES TO THEM WERE PRODUCED BY THE ASSES SEE BEFORE THE AO. ON THE FACTS OF THE CASE THE ORDER PASSED BY THE C IT(A) CONFIRMING THE DISALLOWANCE @ 15% AS AGAINST 18% MADE BY THE AO IS IN ORDER AND IS THEREFORE CONFIRMED. GROUND NOS. 1 2 AND 4 ARE DIS MISSED. 9. APPEAL FILED BY THE ASSESSEE IS DISMISSED. 10. IN ITA 370/CHD/2011 THE AO HAS LEVIED PENALTY AMOUNTING TO RS.27 430/- U/S 271(1)(C) FOLLOWING HIS ORDER DISAL LOWING PART OF WAGES PAYABLE IN THE YEAR UNDER APPEAL. ON APPEAL THE LD . CIT(A) HAS CONFIRMED THE LEVY OF PENALTY. 10. WE HAVE HEARD BOTH THE PARTIES. IN OUR VIEW PE NALTY U/S 271(1)(C) CANNOT BE LEVIED ON THE BASIS OF MERE DISALLOWANCE OF EXPENDITURE. IN THIS VIEW OF THE MATTER PENALTY LEVIED BY THE AO AND CO NFIRMED BY THE CIT(A) IS CANCELLED. APPEAL FILED BY THE ASSESSEE IS ALLOWED. 12. RESULTANTLY APPEAL OF THE ASSESSEE BEARING ITA NO.369/CHD/2011 IS DISMISSED WHILE HIS APPEAL BEARING ITA NO.370/CHD/2 011 IS ALLOWED. ORDER PRONOUNCED ON 14 TH JULY 2011. SD/- SD/- (SUSHMA CHOWLA) (D K SRIVASTAVA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 14 TH JULY 2011. POONAM COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT 5. THE D.R INCOME-TAX DEPARTMENT CHANDIGARH ASSISTANT REGISTRAR ITAT CHANDIGARH