R.P. INFRASTRUCTURE P. LTD, MUMBAI v. DCIT 9(3), MUMBAI

ITA 5016/MUM/2009 | 2005-2006
Pronouncement Date: 15-07-2011 | Result: Partly Allowed

Appeal Details

RSA Number 501619914 RSA 2009
Assessee PAN AACCR5405P
Bench Mumbai
Appeal Number ITA 5016/MUM/2009
Duration Of Justice 1 year(s) 10 month(s) 12 day(s)
Appellant R.P. INFRASTRUCTURE P. LTD, MUMBAI
Respondent DCIT 9(3), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 15-07-2011
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted D
Tribunal Order Date 15-07-2011
Date Of Final Hearing 11-05-2011
Next Hearing Date 11-05-2011
Assessment Year 2005-2006
Appeal Filed On 02-09-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL 'D' BENCH MUMBAI BEFORE SHRI R.S. PADVEKAR JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH ACCOUNTANT MEMBER ITA NO. 5016/MUM/2009 (ASSESSMENT YEAR: 2005-06) M/S. R.P. INFRASTRUCTURE P. LTD. DCIT RANGE 9 (3) C-116 MAYURE APARTMENT AAYAKAR BHAVAN M.K. ROAD SODAWALA CROSS LANE VS. MUMBAI 400020 BORIVALI (W) MUMBAI 400092 PAN - AACCR 5405 P APPELLANT RESPONDENT APPELLANT BY: SHRI SHIVARAM/SHRI PARAS CHOWLA RESPONDENT BY: DR. B. SENTHILKUMAR O R D E R PER B. RAMAKOTAIAH A.M. THIS APPEAL BY THE ASSESSEE COMPANY IS AGAINST THE ORDER OF THE CIT(A) IX MUMBAI DATED 20.10.2008. 2. THIS APPEAL WAS FILED BELATEDLY OF 265 DAYS. ASSESS EE DIRECTOR SHRI VIJAYSING RANAWAT FILED AN AFFIDAVIT EXPLAINING THE REASONS FOR FILING THE APPEAL BELATEDLY. THE REASONS STATED TO BE ILL HEAL TH OF THE RESIGNATION OF THE ONLY ACCOUNTANT OF THE COMPANY AND SUBSEQUENTLY ASS ESSEE HAS TO APPROACH ANOTHER CHARTERED ACCOUNTANT THAN ONE WHO WAS REGULARLY LOOKING AFTER THE MATTER FOR FILING SECOND APPEAL AND THERE WAS DELAY OF ABOUT 8 MONTH IN FILING THE APPEAL. CONSIDERING THE AFFIDAV IT FILED AND THE PRAYER MADE BY THE ASSESSEE THE DELAY IN FILING THE APPEAL IS CONDONED AFTER HEARING THE RIVAL PARTIES. ACCORDINGLY THE APPEAL IS ADMITT ED. 3. ASSESSEE HAS RAISED 8 GROUNDS IN ITS APPEAL EIGHTH BEING GENERAL IN NATURE. GROUND NOS. 1 3 4 6 AND 7 PERTAINS TO AD HOC DISALLOWANCE OF EXPENDITURES. GROUND NO.2 PERTAINS TO DISALLOWANCE UNDER SECTION 40(A)(IA) AND GROUND NO. 5 PERTAINS TO THE ISSUE OF DISALLOWA NCE UNDER SECTION 43B. THESE ARE CONSIDERED AS UNDER. ITA NO. 5016/MUM/2009 M/S. R.P. INFRASTRUCTURE P. LTD. 2 4. GROUND NO. 2 PERTAINS TO THE ISSUE OF DISALLOWANCE UNDER SECTION 40(A)(IA) FOR NON-PAYMENT OF TDS ON VARIOUS EXPENDI TURES CLAIMED TOWARDS SUB-CONTRACT CHARGES TRANSPORT CHARGES LABOUR CHA RGES ETC. THE A.O. NOTICED THAT TDS OF ` 5 85 859/- WAS PAID BEYOND THE TIME LIMIT PRESCRIBE D UNDER SECTION 201 THEREFORE INVOKING PROVISIONS OF SECTION 40(A)(IA) HE DISALLOWED A SUM OF ` 7 69 99 531/- ON ACCOUNT OF NON-PAYMENT OF TDS AS PRESCRIBED. BEFORE THE CIT(A) ASSESSEE SUBMITTED TH E DETAILS OF EXPENSE ALLOWABLE AGAINST EACH EXPENSE AS UNDER: - SR. NO. PARTICULARS AMOUNT OF BENEFIT 1 SUB CONTRACT CHARGES ` 1 86 36 377/- 2 TRANSPORT CHARGES ` 26 01 558/- 3 LABOUR CHARGES ` 2 62 51 050/- 4 HIRING CHARGES ` 30 16 775/- 5 BENEFIT ON ACCOUNT OF TDS PAID ` 25 000/- ON 06.10.2004 ` 24 65 291/- 5. IT WAS THE CONTENTION THAT MOST OF THE TDS WAS PAID BELATEDLY BUT BEFORE THE DUE DATE OF FILING OF THE RETURN AND REL YING ON THE AMENDMENT MADE TO SECTION 40(A)(IA) BY FINANCE ACT 2008 IT W AS SUBMITTED THAT ASSESSEE HAS TO GET RELIEF OF THE AMOUNTS TO THE EX TENT AS DETAILED IN PAGE 3 OF THE CIT(A)S ORDER. THE CIT(A) CONSIDERED THE AM ENDMENT BROUGHT TO THE ACT AND DIRECTED THE A.O. TO DELETE THE ADDITION SU BJECT TO VERIFICATION OF TDS DEDUCTED AND PAID UNDER THE PROVISIONS OF SECTION 4 0(A)(IA). ASSESSEE IS IN FURTHER APPEAL AS THE CIT(A) HAS FAILED TO CONSIDER THE AMOUNTS BELOW ` 20 000/- WHICH ARE NOT REQUIRED TO BE COVERED BY TD S PROVISIONS. 6. IT WAS THE SUBMISSION OF THE LEARNED COUNSEL THAT THE A.O. WHILE GIVING EFFECT TO CIT(A)S ORDER GAVE RELIEF OF THE AMOUNT OF 3 67 03 566/- WHICH WAS COVERED BY TDS PAID BEFORE FILING THE RET URN OF INCOME BUT FAILED TO CONSIDER THE AMOUNT OF ` 2 19 18 531/- PERTAINING TO PAYMENT BELOW ` 20 000/- ON WHICH NO TDS WAS REQUIRED TO BE MADE AN D THEREFORE CANNOT BE DISALLOWED UNDER SECTION 40(A)(IA). IN SUPPORT O F THE ABOVE HE REFERRED TO THE RECTIFICATION APPLICATION FILED BEFORE THE A.O. WHICH WAS NOT FINALISED AND ALSO PARA 6 ASSESSMENT ORDER TO SUBMIT THAT THESE A MOUNTS ARE IDENTIFIED BY THE A.O. AS SUCH TDS WAS NOT REQUIRED. IT WAS HIS S UBMISSION THAT THE A.O. MAY BE DIRECTED TO EXCLUDE THE AMOUNTS OF WHICH TDS WAS NOT REQUIRED TO ITA NO. 5016/MUM/2009 M/S. R.P. INFRASTRUCTURE P. LTD. 3 BE MADE UNDER THE PROVISIONS OF THE ACT. THE LEARN ED D.R. HAS NO OBJECTION IF THE MATTER IS RESTORED TO THE A.O. FOR EXAMINATI ON. 7. WE HAVE CONSIDERED THE SUBMISSIONS AND EXAMINED THE ORDERS OF THE A.O. AND CIT(A). THE ASSESSING OFFICERS ORDER IN P ARA 6 ITSELF INDICATE THAT THERE ARE CERTAIN PAYMENTS WHICH ARE LESS THAN ` 20 000/-. FOR EXAMPLE IN PARA 6.3 THE FIFTH ITEM ITSELF INDICATES AN AMOUNT OF ` 25 52 620/- ON WHICH CASH WAS PAID TOWARDS LABOUR CHARGES BELOW ` 20 000/- AND AGGREGATE IN THE YEAR WAS BELOW ` 50 000/-. THE ASSESSING OFFICERS ORDER ITSELF INDI CATES THAT NO TDS HAS TO BE DEDUCTED. FURTHER THERE WERE CASH PAYMENTS OF ` 56 99 891/- AND OTHER LABOUR CHARGES PAYABLE AT BIK ANER OF ` 57 69 520/-. THESE AMOUNTS ARE INDICATED IN LABOUR CHARGE DETAIL S. ASSESSEES SUBMISSION IS THAT THERE ARE SIMILAR PAYMENTS OF WH ICH TDS WAS NOT REQUIRED TO BE MADE AND THESE AMOUNTS TOTAL TO ` 2 19 18 531/- WHICH THE A.O. HAS NOT GIVEN RELIEF AS THERE IS NO SPECIFIC D IRECTION FROM THE CIT(A) EVENTHOUGH THE SAME WAS CONTAINED IN ITS STATEMENT BEFORE CIT(A). CONSIDERING THE SUBMISSION MADE BEFORE THE CIT(A) A ND THE DETAILS PLACED ON RECORD WE ARE OF THE OPINION THAT THE MATTER SH OULD BE EXAMINED BY THE A.O. AFRESH AND HE SHOULD EXCLUDE THE AMOUNTS FROM THE DISALLOWANCE UNDER SECTION 40(A)(IA) IF THE AMOUNTS ARE NOT COVE RED BY THE PROVISIONS OF TDS. WITH THIS DIRECTION ASSESSEES GROUND TO THE E XTENT OF PAYMENT OF BELOW ` 20 000/- OF ` 2 19 18 531/- IS ALLOWED. THE A.O. SHOULD EXAMINE A ND GIVE RELIEF ACCORDINGLY. 8. GROUND NO. 5 PERTAINS TO DISALLOWANCE OF ` 11 405/- UNDER SECTION 43B WITH REFERENCE TO SECTION 36(1)(VA). CONSEQUENT TO THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. ALOM EXTRUSION LTD. 319 ITR 306 AND THE DECISION OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. AIMIL LTD. 321 ITR 508 WITH REFERENCE TO EMPLOYEES CONTRIBUTIO N AS THE ASSESSEE PAID THE AMOUNT BEFORE THE DUE DATE FOR FILING THE RETUR N THE SAME IS TO BE ALLOWED TO THE ASSESSEE. ACCORDINGLY THIS GROUND IS CONSIDERED ALLOWED. 9. ADHOC DISALLOWANCES: THE A.O. MADE ADHOC DISALLOWAN CES OF 5% OF PURCHASES AMOUNTING TO ` 39 22 590/- (GROUND NO. 1) 5% OF TRANSPORT CHARGES AT ` 4 38 579/- (GROUND NO. 3) 5% OF LABOUR EXPENSES AT ITA NO. 5016/MUM/2009 M/S. R.P. INFRASTRUCTURE P. LTD. 4 ` 14 77 479/- (GROUND NO. 4) 5% OF SUB-CONTRACT PAYM ENTS OF ` 16 14 266/- (GROUND NO. 7) ADHOC DISALLOWANCE OF SITE EXPENSES OF ` 4 00 000/- (GROUND NO. 6). THERE IS NO SEPARATE ADDITION OF SUB-CONTRA CT PAYMENTS AMOUNTING TO ` 16 14 266/- AS THE A.O. HAS DISALLOWED MOST OF THE AMOUNTS UNDER SECTION 40(A)(IA). THERE IS NO SEPARATE ADDITION IN THE AS SESSMENT ORDER AND ALSO NO SEPARATE CONSIDERATION BY THE CIT(A) IN THE ORDER. HOWEVER SINCE THE DISALLOWANCE UNDER SECTION 40(A)(IA) WAS RESTRICTED IT WAS THE CONTENTION THAT THIS ADDITION ALSO SHOULD BE CONSIDERED ON MERITS. THE REASONS FOR A.O. DISALLOWING THE ABOVE AMOUNTS ARE THAT HE MADE RAND OM VERIFICATION OF CERTAIN SUB-CONTRACT PAYMENTS TRANSPORT CHARGES L ABOUR CHARGES ETC. AND FOUND THAT NOTICES SENT UNDER SECTION 133(6) WERE R ETURNED UNSERVED. DETAILS OF THE ENQUIRIES MADE AND THE EXPLANATION O F THE ASSESSEE WERE EXTRACTED BY THE A.O. IN PARA 8 OF HIS ORDER. SUFFI CE TO SAY THAT OUT OF THE PURCHASES CLAIMED OF ` 7 84 51.816/- THE A.O. PICKED UP 4 ITEMS TOTALLING TO ` 1.30 CRORES. ASSESSEE FURNISHED ACCOUNT COPIES IN S UPPORT OF THE PURCHASES ALONGWITH XEROX COPIES OF THE BILLS AND STATED THAT THE PAYMENTS WERE MADE BY WAY OF CHEQUES. SINCE OTHER PARTIES HAVE NOT CON FIRMED THE A.O. CONSIDERED THAT THERE CAN BE INFLATION OF PURCHASES AND CLAIM OF PURCHASES CANNOT BE ACCEPTED AS GENUINE. THEREFORE HE DISALLO WED AN AMOUNT OF 5% OF THE TOTAL PURCHASES AMOUNTING TO ` 39 22 590/-. LIKEWISE TWO OF THE TRANSPORT CLAIMS WITH REFERENCE TO YUVRAJ SINGH RAT HORE AND JAGADAMBA TRANSPORT ENQUIRES WERE MADE AND SINCE THE NOTICES WERE RETURNED UNSERVED A.O. DISALLOWED 5% OF THE ENTIRE CLAIM OF ` 87 71 578/-. LIKEWISE THE A.O. SEND RANDOM ENQUIRY LETTERS ABOUT SUB-CONTRACT PAYM ENTS AND DISALLOWED 5% OF THE TOTAL CLAIM OF ` 3 22 85 321/- DISALLOWANCE OF WHICH COMES TO ` 16 14 266/-. SEPARATE ADDITION WAS NOT MADE BECAUSE AMOUNTS WERE ALSO DISALLOWED UNDER SECTION 40(A)(IA). LIKEWISE VIDE P ARA 8.3 HE DISALLOWED 5% OF THE AMOUNT DEBITED TO P & L ACCOUNT TOWARDS LABO UR CHARGES DISALLOWANCE OF WHICH COMES TO ` 14 77 477/-. IN THE ABSENCE OF PRODUCTION OF SITE REGISTER A.O. ALSO ROUNDSUMLY DISALLOWED AN AMOUNT OF ` 4 00 000/- OUT OF THE SITE EXPENSES CLAIMED. THE CIT(A) CONFIR MED THE DISALLOWANCES MADE BY THE A.O. ITA NO. 5016/MUM/2009 M/S. R.P. INFRASTRUCTURE P. LTD. 5 10. BEFORE US ASSESSEE FURNISHED PAPER BOOK ALONG WITH DETAILS OF VARIOUS PAYMENTS AND IT WAS SUBMITTED THAT A.O. HAS NOT CON SIDERED THE DETAILS FILED AND THE PA NUMBERS OF VARIOUS PERSONS MENTIONED. FU RTHER IT WAS THE SUBMISSION THAT EXPENDITURE PAID AGAINST JAGADAMBA TRANSPORT WAS VERIFIED SUBSEQUENTLY IN A.Y. 2006-07 AND THE CIT(A) DELETED THE ADDITION AFTER A REMAND REPORT WAS CALLED FOR. IT WAS ALSO FURTHER S UBMITTED THAT ASSESSEE IS A GOVERNMENT CONTRACTOR AND NO DISALLOWANCE WERE MA DE IN THE ASSESSMENT UNDER SECTION 143(3) IN A.Y. 2004-05 AND AY 2007-08 . IT WAS FURTHER SUBMITTED THAT MANY OF THE PAYMENTS WERE SUPPORTED BY VOUCHERS PAYMENT BY CHEQUES AND REASONS FOR NON-RESPONDING TO THE NO TICES UNDER SECTION 133(6) ARE THAT THE PARTIES HAVE SHIFTED FROM THE R EGULAR BUSINESS PLACES AND MOST OF THEM ARE PROPRIETARY CONCERNS OF THE DIRECT ORS AND SINCE THE ENTERPRISE NAME IS NOT KNOWN NOTICES COULD HAVE BEE N RETURNED. IT WAS THE SUBMISSION THAT NO DISALLOWANCE IS CALLED FOR AND I F AT ALL DISALLOWANCE IS REQUIRED THE SAME MAY BE RESTRICTED TO THE UNVERIFI ED AMOUNTS. 11. THE LEARNED D.R. HOWEVER SUBMITTED THAT ASSESSEE HAS NOT JUSTIFIED THE CLAIMS MADE AND CONSIDERING THAT THE A.O. WAS J USTIFIED IN MAKING THE DISALLOWANCES WHICH WERE ALSO CONSIDERED BY THE CIT (A). HE RELIED ON THE ORDERS OF THE A.O. AND CIT(A). 12. WE HAVE EXAMINED THE ISSUE. ADMITTEDLY ASSESSEE IS IN CONTRACT WORK AND HAS UNDERTAKEN THE WORK AT VARIOUS PLACED LIKE AHMEDABAD MUMBAI BIKANER MANDSOR. CONSIDERING THAT ASSESSEE IS IN T HE ROAD LAYING WORK PURCHASE OF MATERIAL AT DIFFERENT PLACES MAY BE REQ UIRED FOR BUSINESS PURPOSES. IT IS TRUE THAT NOTICES SENT FOR VERIFICA TION WERE RETURNED UNSERVED BUT THAT DOES NOT ESTABLISH THAT THE PARTIES FROM W HOM THE MATERIAL WAS PURCHASED ARE BOGUS OR NON-GENUINE. ASSESSEE HAS FI LED RELEVANT DETAILS AND ALSO STATED THAT PAYMENTS WERE MADE BY WAY OF CHEQU ES. THIS ASPECT WAS NOT BEEN CONSIDERED. THEREFORE IN OUR VIEW THE ADH OC DISALLOWANCE OF 5% ON TOTAL CLAIMS MADE IS NOT WARRANTED AND IS ALSO ON H IGHER SIDE CONSIDERING THAT ASSESSEE HAS DISCLOSED A PROFIT OF ` 47.84 LAKHS ON A TURNOVER OF ` 21.28 CRORES WHICH IS COMPARABLE WITH EARLIER YEARS PROF IT. THERE IS ALSO DISALLOWANCE UNDER 40(A)(IA). BEARING THAT ALSO IN MIND WE RESTRICT THE DISALLOWANCE TO AN AMOUNT OF ` 10 00 000/- UNDER ALL THE HEADS WHICH ITA NO. 5016/MUM/2009 M/S. R.P. INFRASTRUCTURE P. LTD. 6 SHOULD MEET THE ENDS OF JUSTICE. WITH THIS THE GRO UNDS ARE TREATED AS PARTLY ALLOWED. A.O. IS DIRECTED TO RESTRICT THE DISALLOWA NCE TO AN AMOUNT OF ` 10 00 000/- UNDER THESE HEADS. 13. IN THE RESULT APPEAL OF THE ASSESSEE IS PARTLY ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 15 TH JULY 2011. SD/- SD/- (R.S. PADVEKAR) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI DATED: 15 TH JULY 2011 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) IX MUMBAI 4. THE CIT IX MUMBAI CITY 5. THE DR D BENCH ITAT MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT MUMBAI BENCHES MUMBAI N.P.