Income Tax Appellate Tribunal - Mumbai
Jiten B. Vora, Mumbai vs Department Of Income Tax on 24 August, 2012
ITA NO. 6343 & 6344/Mum/2012
Assessment Year. 2008-09
IN THE INCOME TAX APPELLATE TRIBUNAL "J" BENCH, MUMBAI
BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER
AND SHRI NARENDRA KUMAR BILLAIYA, ACCOUNTANT MEMBER
ITA NO. 6343/Mum/2012
Assessment Year. 2008-09
ITA NO. 6344/Mum/2012
Assessment Year. 2008-09
Dy. CIT-24(2), C-13, 6th Floor, Vs. Jiten B. Vora,
Pratyaksha Kar Bhavan, 402, Saral Apt.,
BKC, Bandra (East) Marve Road, Malad (W)
Mumbai - 400 051. Mumbai - 64.
PAN:- AAAPV3821G
Appellant Respondent
Revenue by Shri R.K. Sahu
Assessee by DR. K. Shivaram
Date of hearing 05.03.2014
Date of pronouncement 07-03-2014
ORDER
Per Vijay Pal Rao, JM
These two appeals of the revenue are directed against the two separate orders of CIT(A) both dated 24.08.2012 arising from the assessment order passed u/s 143(3) as well as penalty order passed u/s 271(1)(C) for A.Y. 2008-09. In the quantum appeal the revenue has raised following grounds:-
(i) "On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition made on account of bogus purchases of Rs. 25,72,999/- by ignoring the fact that the assessee 1 ITA NO. 6343 & 6344/Mum/2012 Assessment Year. 2008-09 had not filed any details before the AO but had filed before him. Thus, the Ld. CIT(A) admitted additional evidence u/s 46A without giving opportunity to the AO.
(ii) "On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition made on account of labour charges of Rs. 1,00,000/- by ignoring the fact that the assessee had not filed any details earlier before the AO; but had filed before him.
Thus, the Ld. CIT(A) admitted additional evidence u/s 46A without giving opportunity to AO.
2. The AO during the course of assessment proceedings noted that the assessee has debited an amount of Rs. 9,00,03,090/- to the P&L account on account of purchases. The AO issued notice u./s 142(1) to the assessee and asked to furnish the details of purchases. In reply the assessee filed the details of purchases. The AO issued notice u/s 133(6) of the Income Tax Act, to M/s H&R Johnson (India) in respect of which the assessee has shown purchases made during the year of Rs. 26,96,264/- and received the reply wherein it was stated that the assessee has made the purchases from the said party only to the tune of Rs. 1,20,265/- and not Rs. 26,93,264/- as given in the details of purchases. Accordingly in the absence of any clarification and explanation on the part of the assessee, the AO made the addition of Rs. 25,72,999/- by treating the same as inflated purchase.
3. On appeal, the assessee explained that due to typographical error the amount was wrongly written in the details of purchases as Rs. 26,93,264/- instead of Rs. 1,20,260/-. CIT(A) after considering explanation as well as record and deleted the addition made by the AO.
4. Before us, the Ld DR has referred the order of assessing officer and submitted that when the AO has pointed out the discrepancy in the purchases shown by the assessee from M/s H&R Johnsons (India), the assessee did not respond and, therefore, the AO has rightly made the addition. He has further submitted that CIT(A) has considered fresh evidence without giving the opportunity to the AO to rebut the evidence produced by the assessee, therefore, there is a violation of Rule 46A on the 2 ITA NO. 6343 & 6344/Mum/2012 Assessment Year. 2008-09 part of the CIT(A) in admitting the additional evidences. In support of his contention he has relied upon the following decisions:
i) CIT Vs. Manish Build Well (P) Ltd. (16 Taxmann.com 27)
ii) CIT Vs. Ranjit Kumar Chaudhary (162 Taxman 257)
5. On the other hand Ld. AR of the assessee has submitted that the assessee has not produced any additional evidence but pointed out the typographical mistake occurred in the details filed by the assessee. The CIT(A) has examined the evidence already before the AO and found that because of that error the assessee has not claimed any excess purchases or inflated purchases but error was only in respect of one party and by taking the correct figure the total purchase debited to the P&L account remains the same. Thus there is no violation of Rule 46A, while considering the explanation furnished by the assessee regarding the typographical error in writing the figure of purchase, which was otherwise taken as correct figure while debiting to the P&L Account. He has referred the details filed before the AO in respect of purchases as well as reconciliation filed before CIT(A) and submitted that even by writing a wrong figure in the details, the claim of the assessee was unaffected because the detail of the purchases were taken correctly while debiting the P&L Account.
6. We have considered the rival submissions and carefully perused the relevant records. We find that the assesse in the details filed before AO has mentioned the purchases from M/s H&R Johnson (India) Ltd at the Rs. 26,93,264/- which was actually Rs. 1,20,264/-. Thus there was a difference of Rs. 25,73,000/- due to mistakenly taken as a figure of sales from M/s H&R Johnson (India ) Ltd. The Ld. AR has submitted that the reconciliation was examined by CIT(A) and it was found that the purchase debited to the P&L account is based on the correct figure and not on this incorrect figure due to typographical error in the details filed before the AO.
7. The grievance of the revenue is that while admitting the additional evidence CIT(A) has not given any opportunity to the AO, and therefore, 3 ITA NO. 6343 & 6344/Mum/2012 Assessment Year. 2008-09 there is a violation of Rule 46A. We note that the mistake which was clarified by the assessee before the CIT(A), was not an evidence in the form of invoice, ledger account or any other material of the books of accounts but it was only a comparative list showing the details of parties and the amount of purchases. Therefore, pointing out the typographical error in the details which are inconsistence to the actual details recorded in the books of accounts would not amount to furnishing any additional evidence. The CIT(A) has examined the details along with other relevant evidence/record from the books of accounts and found that this typographical mistake in writing the amount of purchases in the details furnished by the assessee before the AO has not affected the total amount of purchases debited to the P&L Account. From the perusal of the record we find that this typographical mistake is inconsequential because it has not resulted into excess or inflated claim of purchase. We further note that the assessee has produced the reconciliation before the CIT(A) showing the discrepancy in the figure of only one party in question and all other purchases in respect of remaining parties were taken at correct figure and even this incorrect figure written in the details due to inadvertent typographical mistake have not resulted in any excess or inflated claim of purchase as debited in the P&L Account. When the claim of the assessee as debited in the P&L Account in respect of purchases is based on the correct amount of purchases in respect of each and every party then, pointing out of typographical mistake before CIT(A) would not amount to be an additional evidence. Further when it is apparent by examining the detail already placed on record that it was only a typographical mistake and has not resulted in the excess claim and in the wisdom of CIT(A) it was not required to be investigated by the AO then we do not find any illegality on the part of the CIT(A)while doing so. Even before us the department has not pointed out as to why the reconciliation furnished by the assessee should not be accepted and the claim of purchases debited to the P&L Account is not as per the actual purchases and correct figure. Accordingly we find no reason to interefere with the order of CIT(A) qua this issue.
8. Ground No. 2 is regarding deletion of labour charges. The AO has noted that the assessee has debited Rs. 7.33 crores towards labour charges. The AO verified the vouchers in respect of the labour charges and 4 ITA NO. 6343 & 6344/Mum/2012 Assessment Year. 2008-09 noticed that some of the vouchers are self made, hence the AO made adhoc disallowance of Rs. 1,00,000/- towards labour charges.
9. On appeal, CIT(A) noted the fact that the assessee is engaged in the civil construction work which involves labourers on daily payment basis and the assessee has been maintaining vouchers supporting the payments to the daily wagers. Accordingly the adhoc disallowance made by the AO was deleted by CIT(A).
10. We have heard the Ld. DR as well as Ld. AR and considered the relevant material on record, the AO has made adhoc disallowance on the gorund that some of the vouchers with regard to the payment of labour charges are self made and accordingly addition of Rs. 1,00,000 was made, out of the total labour charges of Rs. 7.33 crores. The AO has not examined the issue from the angle that the labour charges claimed by the assessee are bogus but the adhoc disallowance of Rs. 1,00,000/- was made on the ground that some of the vouchers are self made. It is pertinent to note that in the nature of civil construction work, hiring of daily labourers on daily wages is inevitable and, therefore, the adhoc disallowance made by the AO is without any finding of bogus claim is not justified. Accordingly in the facts and circumstances of the case, we do not find any error or illegality in the order of CIT(A) in deleting the addition and the same is upheld.
11. In the penalty appeal the revenue has raised following grounds:
(i) "On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the penalty to the tune of Rs. 8,74,563/-
levied by the AO on account of addition made in respect of bogus purchases of rs. 25,72,999/- which amounts to concealment of income and also furnishing of inaccurate particulars of income."
12. The revenue has challenged impugned order of the Commissioner whereby the penalty levied u/s 271(1)(C) in respect of the addition on bogus purchases was deleted.
5ITA NO. 6343 & 6344/Mum/2012 Assessment Year. 2008-09
13. We have heard the Ld. DR as well as Ld. AR and considered the relevant material on record. In view of our finding in the quantum appeal on the issue of addition on account of bogus purchases the penalty would not survive. Accordingly the order of CIT(A) is upheld deleting the penalty.
14. In the result both the appeals of the revenue are dismissed.
Order pronounced in the open Court on 07/03/2014
Sd/- Sd/-
(N.K. Billaiya) (Vijay Pal Rao)
Accountant Member Judicial Member
Mumbai dated 07 /03/2014
SKS Sr. P.S
Copy to:
The Appellant
The Respondent
The concerned CIT(A)
The concerned CIT
The DR, "j" Bench, ITAT, Mumbai
By Order
Assistant Registrar
Income Tax Appellate Tribunal,
Mumbai Benches, MUMBAI
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