Income Tax Appellate Tribunal - Ahmedabad
Gayatri Construction Co., Mehsana vs Assessee on 31 December, 2014
आयकर अपीलȣय अͬधकरण, अहमदाबाद Ûयायपीठ 'सी', अहमदाबाद ।
IN THE INCOME TAX APPELLATE TRIBUNAL
" C " BENCH, AHMEDABAD
सम¢ Įी एन.एस.सैनी, लेखा सदèय एवं Įी कुल भारत, ÛयाǓयक सदèय ।
BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER And
SHRI KUL BHARAT, JUDICIAL MEMBER
1. आयकर अपील सं./I.T.A. No.829/Ahd/2011 - A.Y. 2004-05
2. आयकर अपील सं./I.T.A. No.878/Ahd/2011 - A.Y. 2004-05
1. The DCIT बनाम/ 1.M/s.Gayatri Construction
Patan Circle Vs. Co.,
Patan 5/A, Sardar Ganj
Market Yard, Visnagar
2. Gayatri Construction 2. The DCIT
Co., Visnagar Patan Circle, Patan
èथायी ले खा सं . /जीआइआर सं . / PAN/GIR No. AABFG 5422 D
(अपीलाथȸ /Appellants) .. (Ĥ×यथȸ / Respondents)
Revenue by : Shri Nimesh Yadav, Sr.DR
Assessee by : Shri M.K. Patel, A.R.
ु वाई कȧ तारȣख /
सन Date of Hearing 29/12/2014
घोषणा कȧ तारȣख /Date of Pronounce ment 31/12/2014
आदे श / O R D E R
PER SHRI KUL BHARAT, JUDICIAL MEMBER :
These cross-appeals by the Revenue and the Assessee are directed against the order of the Ld.Commissioner of Income Tax(Appeals)- Gandhinagar, ('CIT(A)' in short) dated 31/12/2010 pertaining to Assessment Year (AY) 2004-05. These appeals were taken up together ITA No.829/Ahd/201 (By Revenue) and ITA No.878/Ahd/2011 (By Assessee ) DCIT vs. M/s.Gayatri Construction Co.
Asst.Year - 2004-05 -2- and are being disposed of by this consolidated order for the sake of convenience.
2. First, we take up the Revenue's appeal in ITA No.829/Ahd/2011 for AY 2004-05. The Revenue has raised the following grounds of appeal:-
(1) The learned CIT (Appeals) has erred in law and on facts in deleting the addition of ₹14,54,520/- made on account of adding the contract receipts as income from undisclosed sources.
(2) On the facts and circumstances of the case the Ld.CIT(A) ought to have upheld the order of the Assessing Officer.
(3) It is therefore prayed that the order of the learned CIT(Appeals) may be set aside and that of the A.O. be restored to the above extent.
2.1. Briefly stated facts are that the case of the assessee was picked up for scrutiny assessment and the assessment u/s.143(3) of the Income Tax Act,1961 (hereinafter referred to as "the Act") was framed vide order dated 19/12/2006, thereby the Assessing Officer (AO in short) made additions/disallowances. The AO made addition amounting to Rs.14,54,520/- on account of difference in TDS certificates. The AO made disallowance of the labour charges of Rs.3,53,770/- as claimed on account of repairing of vehicles and also made disallowance of R.4,55,031/- claimed as expenditure on repair of vehicles. Further, the AO made disallowance of Rs.12,31,000/- being 10% of the expenditure claimed on carting charges. Against this, the assessee filed an appeal before the ld.CIT(A), who after considering the submissions partly ITA No.829/Ahd/201 (By Revenue) and ITA No.878/Ahd/2011 (By Assessee ) DCIT vs. M/s.Gayatri Construction Co.
Asst.Year - 2004-05 -3- allowed the appeal. While allowing the appeal, the ld.CIT(A) deleted the addition of Rs.14,54,520/- on account of difference in TDS certificates. However, the ld.CIT(A) confirmed the rest of the additions. Now, both the Revenue and the Assessee are in cross-appeals before us.
3. The only effective ground in Revenue's appeal is against the deletion of addition of Rs.14,54,520/-. The ld.counsel for the assessee pointed out that the AO was not justified in making the addition. He submitted that all the discrepancies have been verified by the ld.CIT(A) and the ld.CIT(A) has rightly deleted the addition.
3.1. On the contrary, ld.Sr.DR supported the order of the AO.
4. We have heard the rival submissions, perused the material available on record and gone through the orders of the authorities below. We find that the ld.CIT(A) has given findings on facts in para-6.4 of his order, by observing as under:-
"6.4. I have considered the explanations given under five different accounts by the assessee and the comments of the AO. The explanation of the assessee, the facts and my observations on them are as under:
i) Rs.1,52,571/- The assessee ha stated that "it is actually Testing Charges paid by the assessee to the Department itself from whom the contracts were taken. The receipts shown in the P&L account are net amount. Even if the gross amount was taken, the Testing Charges would have to be deducted as expenses. It does not affect the income of the assessee disclosed. The copies of the bills were produced before the AO, also."ITA No.829/Ahd/201 (By Revenue)
and ITA No.878/Ahd/2011 (By Assessee ) DCIT vs. M/s.Gayatri Construction Co.
Asst.Year - 2004-05 -4- The AO has not commented on it and the contention of the assessee is correct. When the department from the gross payments made to the assessee has deducted the Testing Charges recoverable from it, and the assessee credits the net amount in the P&L account, it does not affect the net income disclosed in any way. The difference of Rs.1,52,571/- is treated as explained.
ii) Rs.36,447/- is actually excess amount shown by the assessee in the books of account and P&L account. This does not require any explanation.
The AO has not commented and the explanation is self-explanatory.
iii) Rs.2,39,576/- The assessee claimed that the Authority issuing TDS certificate no.1944 has wrongly mentioned the amount as Rs.16,50,000/- and the Authority in its letter dated 9/12/2009 has issued a clarification that the current amount paid was Rs.14,10,424/-. Thus, the difference is reconciled.
The AO has stated that the TDS Certificate issuing Authority has clarified the mistake. However, its objection seems to be that the TDS credit has been given on the wrong TDS Certificate issued originally.
Considering the above, the difference has been reconciled. However, the AO is directed to withdraw any extra TDS credit given to the assessee after giving an opportunity to the assessee of being heard.
iv) Rs.8,73,055/- The assessee claimed that the Authority issuing TDS certificate has wrongly mentioned the amount as Rs.20,25,366/- and the Authority in its letter dated 9/12/2009 has issued a clarification that the current amount paid was Rs.11,52,311/-. Thus, the difference is reconciled.
The AO in his remand report has accepted that the difference is explained.
v) Rs.5,79,900/- and Rs.34,470/- The assessee claimed that the work was actually done in April, 2004. The contract income was shown and ITA No.829/Ahd/201 (By Revenue) and ITA No.878/Ahd/2011 (By Assessee ) DCIT vs. M/s.Gayatri Construction Co.
Asst.Year - 2004-05 -5- TDS deducted was claimed by the assessee rightly in FY 2004-05 i.e. for the return of AY 2005-06. The TDS was deducted by the Authority wrongly in FY 2003-04 and a clarification letter has been issued by the Authority dated 9/12/2009. It also contended that the AO himself has given credit for the TDS in the next year.
The AO has accepted the explanation regarding Rs.5,79,900/- and no comments have been made regarding the explanation on Rs.34,470/-. Once the Authorities issue certificates, have clarified as per the assessee's claim that the work was actually done and payment made in next year only, no addition is called for in the assessment year in appeal. The assessee itself has declared the income in assessment year 2005-06.
In nutshell, the addition made on account of difference has been explained and is deleted, subject to the directions on withdrawal of excess TDS credit, if any; made in para.6.4. (iii), above."
4.1. The above findings of ld.CIT(A) has not been controverted by the Revenue by placing any contrary material on record, therefore we do not find any reason to interfere with the findings of the ld.CIT(A), same are hereby upheld. Thus, the ground raised by the Revenue is rejected.
5. As a result, Revenue's appeal in ITA No.829/Ahd/2011 for AY 2004-05 is dismissed.
6. Now, we take up the Assessee's appeal in ITA No.878/Ahd/2011 for AY 2004-05. The assessee has raised the following grounds of appeal:-
(1) That on facts and in law, the learned Commissioner of Income-tax (Appelas0 has grievously erred in confirming the addition of Rs.3,53,770/- on account of labour charges for repairing of vehicles.ITA No.829/Ahd/201 (By Revenue)
and ITA No.878/Ahd/2011 (By Assessee ) DCIT vs. M/s.Gayatri Construction Co.
Asst.Year - 2004-05 -6- (2) That on facts and in law the learned Commissioner of Income-tax (Appeals) has grievously erred in confirming the addition of Rs.3,53,031/- on account of labour charges for repairing of vehicles, without giving adequate opportunity of cross-examination, etc. to the appellant.
(3) That on facts and in law, the learned CIT(A) has grievously erred in rejecting the additional evidence sought to be filed u/r 46A of the I.T. Rules.
(4) That on facts and in law, the learned Commissioner of Income tax (Appeals) has grievously erred in confirming the addition of Rs.12,31,000/- made on estimated basis @ 10% of total expenses for carting, without any cogent evidence on record. (5) The appellant craves leave to add, alter, amend any ground of appeal.
6.1. First ground is against in confirming the addition Rs.3,53,770/- on account of labour charges for repairing of vehicles by the ld.CIT(A). The ld.counsel for the assessee Shri M.K. Patel vehemently argued that the authorities below were not justified in making the disallowance. He submitted that the expenditure has been incurred for the repairs of the vehicles. The assessee has also produced the person to whom the payment was made and from whom the repairs was carried out. He submitted that the vouchers had been placed on record. He submitted that under these facts, the ld.CIT(A) ought not to have confirmed the additions.
6.2. On the contrary, ld.Sr.DR supported the orders of the authorities below and submitted that there is a categorical finding by the authorities below that the assessee could not substantiate its claim and the person ITA No.829/Ahd/201 (By Revenue) and ITA No.878/Ahd/2011 (By Assessee ) DCIT vs. M/s.Gayatri Construction Co.
Asst.Year - 2004-05 -7- who was produced was bogus and even the person was not knowing such kind of repairing-work has been carried out by the assessee.
7. We have heard the rival submissions, perused the material available on record and gone through the orders of the authorities below. We find that the authorities below have given a finding on fact which is not controverted by the assessee by placing any contrary material on record. Moreover, the assessee has not placed any evidence on record proving the nature of repairs on vehicles carried out by the assessee and even no description of the vehicles is given. Hence, we do not find any reason to interfere with the order of the ld.CIT(A), same is upheld. Thus, this ground of assessee's appeal is rejected.
8. Second ground is against in confirming the addition of Rs.3,53,031/- on account of labour charges for repairing of vehicles by the ld.CIT(A). The ld.counsel for the assessee submitted that the authorities below were not justified in making the disallowance. He submitted that the vouchers were produced, the books of accounts were audited and the expenses were verified by the partners. He also submitted that the rate of labour charges were go down and the expenses were also reduced.
8.1. On the contrary, ld.Sr.DR supported the order of the authorities below and submitted that the assessee could not furnish any evidence in ITA No.829/Ahd/201 (By Revenue) and ITA No.878/Ahd/2011 (By Assessee ) DCIT vs. M/s.Gayatri Construction Co.
Asst.Year - 2004-05 -8- support of its claim. He submitted that the earlier year also, i.e. in AY 2003-04, similar disallowances were made.
9. We have heard the rival submissions, perused the material available on record and gone through the orders of the authorities below. We find that both the authorities below have given a finding on fact that the evidences as produced by the assessee were not inspiring confidence and were found to be ingenuine. This finding of the authorities below is not controverted by the assessee by placing any material on record. Therefore, we do not find any reason to interfere with the finding of the authorities below, same is hereby upheld. Thus, this ground of assessee's appeal is also rejected.
10. Ground Nos.3 & 4 are inter-connected which relate to the rejection of filing of additional evidence and confirmation of the disallowance of carting charges on estimated basis. The ld.counsel for the assessee submitted that the ld.CIT(A) in arbitrary manner did not allow the assessee to place on record the additional evidences. He submitted that the AO had made disallowance of carting charges on the basis that the assessee could not furnish the detailed addresses, PANs, confirmations, bills/vouchers, etc. He submitted that the ld.CIT(A) has not taken into account the remand report, wherein the AO has verified the expenditure. He drew our attention towards the page Nos.103 & 104. He submitted that out of carting charges of Rs.1,23,35,232/-, Rs.34,44,203/- & ITA No.829/Ahd/201 (By Revenue) and ITA No.878/Ahd/2011 (By Assessee ) DCIT vs. M/s.Gayatri Construction Co.
Asst.Year - 2004-05 -9- Rs.48,036/- were wrongly debited. However, the carting charges were only Rs.84,03,989/- which has been duly verified by the AO.
10.1. On the contrary, ld.Sr.DR supported the orders of the authorities below.
11. We have heard the rival submissions, perused the material available on record and gone through the orders of the authorities below. We find that the AO had made disallowance by observing as under:-
"7. During the year under consideration, the assessee claimed gross carting charges of Rs.1,23,15,787/- some of them were paid on account by bills and the remaining amount were paid in cash. The details of such expenditure are furnished in Annexure-A which is made part of this order. Vide order sheet entry dated 15/9/2006, the assessee was asked to furnish detailed addresses, permanent account numbers, confirmations etc. in respect of bills exceeding Rs.2 lakhs. The assessee was also asked to file detailed addresses of remaining parties with a request to produce bills, vouchers, etc. on the next hearing, i.e. 5/10/2005. The assessee, however, failed to attend the hearing fixed on 5/10/2006. Next hearing was fixed on 7/11/2006 on which date partner Shri Ramjibhai attended but no books of accounts and other documents were produced. Therefore, hearing on 7/11/2006 could not actually took place and accordingly one more adjournment was granted to the assessee for 14/11/2006 with a specific warning that more than sufficient time has been allowed and no further adjournment will be granted. It was also specifically asked to produce all the books of accounts, registers, bills, vouchers, bank statements etc. on 14/11/2006. The partner present was asked to file any material on which he wants to rely in support of his return. It is, however, observed by the undersigned that the assessee has not cared to attend the hearing on 14/11/2006. Since the assessee failed to furnish detailed addresses, confirmations etc. the genuineness thereof could not be verified. Further the assessee also failed to produce vouchers in respect of ITA No.829/Ahd/201 (By Revenue) and ITA No.878/Ahd/2011 (By Assessee ) DCIT vs. M/s.Gayatri Construction Co.
Asst.Year - 2004-05
- 10 -
payments made in amounts below Rs.20,000/- in support of carting expenses paid. There is, therefore, every possibility that a portion of expenses might be not genuine since the assessee has not filed detailed addresses, confirmations, vouchers, bills, etc. in respect of the same and the carting charges remained unverified. Therefore, out of carting expenses, a sum of Rs.12,31,000/- are disallowed on estimate basis which are nearly 10% of the total expenditure on carting."
11.1. During the course of appellate proceedings, the ld.CIT(A) has sought for the remand report. In the remand report, the AO has observed as under:-
"4) Carting charges of Rs.12,31,000/-
Break-up of the carting charges submitted by the assessee, it is found that total debit side of the carting expenses is Rs.1,23,35,232/-. It is found that out of that material wrongly debited to carting is (Rs.34,44,203 + Rs.48,036/-). The amount as per profit and loss account, the carting is Rs.84,03,989/- but not Rs.1,23,35,232/-. The break up given as per page 8 of paper book is found correct as per audit report. Out of carting charge Rs.84,03,989/- assessee has paid by cheque of Rs.25,83,518/- and remaining amount of Rs.58,65,471/- has been paid by cash by vouchers. Vouchers have been verified as per books. The same may be considered."
11.2. However, the ld.CIT(A) has not considered the remand report stating that qua the carting expenses of Rs.1,23,35,232/-, the amount towards carting charges was only Rs.84,03,989/- out of which, a sum of Rs.25,38,518/- was paid by the assessee through cheque and remaining amount of Rs.58,65,471/- was paid by cash through vouchers which were verified by the AO as per books of accounts. Hence, we are of the considered view that the ld.CIT(A) was not justified in sustaining the addition when the AO himself has pointed out that there was wrong entry ITA No.829/Ahd/201 (By Revenue) and ITA No.878/Ahd/2011 (By Assessee ) DCIT vs. M/s.Gayatri Construction Co.
Asst.Year - 2004-05
- 11 -
of some of the amount paid by cheque and amount paid by cash through vouchers were verified as per the books of accounts. Moreover, the ld.CIT(A) has failed to appreciate the fact that the AO has not rejected the books of accounts by invoking the provisions of section 145(3) of the Act. Therefore, we hereby direct the AO to delete the addition made on account of carting expenses. Thus, this ground of assessee's appeal is allowed.
12. In the result, Revenue's appeal is dismissed, whereas Assessee's appeal is partly allowed.
Order pronounced in the Court on Wednesday, the 31st day of December, 2014 at Ahmedabad.
Sd/- Sd/-
(एन.एस.सैनी) (कुल भारत)
लेखा सदèय ÛयाǓयक सदèय
( N.S. SAINI ) ( KUL BHARAT )
ACCOUNTANT MEMBER JUDICIAL MEMBER
Ahmedabad; Dated 31/ 12/2014
टȣ.सी.नायर, व.Ǔन.स./T.C. NAIR, Sr. PS
आदे श कȧ ĤǓतͧलͪप अĒेͪषत/Copy of the Order forwarded to :
1. अपीलाथȸ / The Appellant
2. Ĥ×यथȸ / The Respondent.
3. संबंͬधत आयकर आयुÈत / Concerned CIT
4. आयकर आयुÈत(अपील) / The CIT(A)-Gandhinagar
5. ͪवभागीय ĤǓतǓनͬध, आयकर अपीलȣय अͬधकरण, अहमदाबाद / DR, ITAT, Ahmedabad
6. गाड[ फाईल / Guard file.
आदे शानुसार/ BY ORDER, स×याͪपत ĤǓत //True Copy// उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपीलȣय अͬधकरण, अहमदाबाद / ITAT, Ahmedabad