THE ACIT-2(1), UJJAIN vs. M/S. VISHAL ELECTRICALS CO.PVT.LTD., UJJAIN

आयकर अपील�य अ�धकरण ,इ�दौर �यायपीठ ,इ�दौर IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE �ी कुल भारत, �या�यक सद�य तथा �ी मनीष बोरड, लेखा सद�य के सम� BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER आ.अ.सं /.I.T.A. No. 326/Ind/2017 �नधा�रणवष� / Assessment Year : 2014-15 Assistant Commissioner vs. M/s. Vishal Electricals Co.Pvt.Ltd., of Income-tax, Ujjain Ujjain.

अपीलाथ� /Appellant ��यथ� /Respondent �था.ले.सं./PAN: AABCV1452F

: Shri K.G. Goyal, Sr. DR अपीलाथ� क� ओर से/Appellant by : Shri S. S. Deshpande, ��यथ� क� ओर से/Respondent C. A. by

: 15 .05.2018. सुनवाई क� तारीख/Date of hearing : 16.05.2018 उ�ोषणा क� तारीख/Date of pronouncement

-: 2 :- M/s.Vishal Electricals Co.P.Ltd., Ujjain आदेश /O R D E R PER KUL BHARAT, J.M. : Appeal by the Revenue is directed against the order of

CIT(A), Ujjain, dated 14th February, 2017, pertaining to the

assessment year 2014-15.

appeal :-

1) Whether on the facts and in the circumstances

of the case, the Ld. CIT(A) was justified in

deleting the addition of Rs. 6,27,964/- on

account of various expenses without

appreciating the fact that assessee failed to

substantiate expenses through proper evidence

and only 20 % of various expenses were

disallowed by the AO.

2) Whether on the facts and in the circumstances

of the case, the Ld. CIT(A) was justified in

-: 3 :- M/s.Vishal Electricals Co.P.Ltd., Ujjain deleting the addition of Rs. 32,62,339/- on

account of Salary and Wages expenses (10% to

total wage expenses claimed) ignoring the fact

that such expense was not supported by proper

evidence. 3. Briefly stated, the facts of the case 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 27th December, 2016. The AO while framing the

assessment made disallowances on ad hoc basis of Rs.

6,27,964/- and disallowance out of wages and salary

expenses at Rs. 32,62,339/-. 4. Aggrieved by this order, the assessee preferred appeal

before the Ld. CIT(A), who after considering the

submissions deleted both the additions. Now, the Revenue

is in appeal before this Tribunal.

-: 4 :- M/s.Vishal Electricals Co.P.Ltd., Ujjain 5. Ground no. 1 is against the deletion of addition of Rs.

6,27,964/-.

assessment order and submitted that the Ld. CIT(A) was

not justified in deleting the addition. Per contra, the Ld.

Counsel for the assessee reiterated the submissions as

made before the Ld. CIT(A). He submitted that the AO made

disallowance of 20% of the expenses in respect of power

and fuel, freight expenses, repair to plant, machinery &

furniture, welfare expenses, travelling expenses, canteen

expenses and misc expenses. He submitted that the AO

has not pointed out as to which expenditure is bogus. He

submitted that the books of account of the assessee are

fully audited. The Auditors have not pointed out any

discrepancy in the books of account. 7. We have considered the facts, rival submissions and

perused the material available on record and have also

-: 5 :- M/s.Vishal Electricals Co.P.Ltd., Ujjain gone through the orders of the lower authorities. The Ld.

CIT(A) has deleted the addition by observing as under :-

“4.2 Through this ground of appeal the appellant has

challenged the addition of Rs.6,27,964/- out of various expenses. The AO has made the disallowance @ 20 % out of Power & Fuel,

Freight expenses, Repair to plant, machinery & furniture, welfare

expenses, travelling expenses, canteen expenses and

miscellaneous expenses. The appellant is engaged in the electrical

contract work. The above expenditures are integral part of the

business. The appellant's books of account are audited u/s 44AB

of the IT Act. All the expenses are duly recorded and entered. The

AO has not pointed out any specific defects in the books of

accounts. The AO cited the reasons that no corroborative

evidences along with vouchers for expenditure were produced. The

above defects are general in nature. The appellant books are

audited u/s 44AB of the I. T. Act. The appellant need not to

maintain separate books for each and every site, the appellant is

making cash payment on self-made vouches and does not exceed

-: 6 :- M/s.Vishal Electricals Co.P.Ltd., Ujjain the limit of Rs.20,000/- which is as per law. The payment for

expenses and material purchases were duly recorded in the books

of account and the AO has not pointed out which payment and

material purchases were bogus. The AO is not justified in making

the disallowance out of above expenses without any reason.

Therefore, the addition made by the AO amounting to

Rs.6,27,964/- is Deleted. This ground of appeal is Allowed. ”

CIT(A), as the Revenue has not pointed out as to which

expenditure is not supported with the proper vouchers. The

auditors have also not noticed any discrepancy in to the

claim of the assessee. Under these facts, the finding of the

Ld. CIT(A) is sustained. Ground raised by the Revenue is

dismissed.

32,62,339/- on account of Salary & Wages expenses.

-: 7 :- M/s.Vishal Electricals Co.P.Ltd., Ujjain 10. The Ld. Departmental Representative supported the

assessment order and submitted that the Ld. CIT(A) was

not justified in deleting the addition. Per contra, the Ld.

Counsel for the assessee reiterated the submissions as

made before the Ld. CIT(A). He submitted that the AO has

made the disallowances @ 10% out of salary and wages.

The assessee is engaged in the electrical contract work. The

above expenditures are integral part of the business. The

assessee’s books of account are duly audited u/s 44AB of

the Act. All the expenses were duly recorded and entered.

The AO has not pointed, out any specific defects in the

books of account. The Auditors have also not pointed out

any discrepancy in the books of account. 11. We have considered the facts, rival submissions and

perused the material available on record and have also

gone through the orders of the lower authorities. The Ld.

CIT(A) has deleted the addition by observing as under :-

-: 8 :- M/s.Vishal Electricals Co.P.Ltd., Ujjain “4.3 Through this ground of appeal the appellant has challenged

the addition of Rs.32,62,339/- out of salary and wages expenses.

The AO has made the disallowance @ 10 % out of salary and

wages. The appellant is engaged in the electrical contract work.

The above expenditures are integral part of the business. The

appellant's books of account are audited u/s 44AB of the IT Act.

All the expenses are duly recorded and entered. The AO has not

pointed out any specific defects in the books of accounts. The AO

cited the reasons that identity of labours, type of work actually

performed at particular sites are not verifiable. The above defects

are general in nature. The appellant books are audited u/s 44AB

of the I.T. Act. The appellant need not to maintain separate books

for each and every site, the appellant is making cash payment on

self-made vouchers and does not exceed the limit of Rs.20,000/-

which is as per law. The payment for salary and wages were duly

recorded in the books of account and the AO has not pointed out

which payment is bogus. The AO is not justified in making the

disallowance out of above expenses without any reason.

-: 9 :- M/s.Vishal Electricals Co.P.Ltd., Ujjain Therefore, the addition made by the AO amounting to Rs. 32,62,339/- is Deleted. This ground of appeal is allowed.”

CIT(A). All the expenses are duly recorded and entered.

The AO has not pointed out any specific defects in the

books of account. The AO cited the reasons that identity of

labours, type of work actually performed at particular sites

are not verifiable. We observe that the defects are of general

nature. The assessee’s books are audited u/s 44AB of the

Act. We also observe that the assessee is making cash

payment of Rs. 20,000/- which is in accordance with law.

The payment of salary and wages were duly recorded in the

books of account and the AO has not pointed out as to

which payment was bogus. Under these facts, the finding

of the Ld. CIT(A) is sustained. Ground No. 2 raised by the

Revenue is dismissed.

-: 10 :- M/s.Vishal Electricals Co.P.Ltd., Ujjain 13. In the result, the appeal of the Revenue is dismissed. The order is pronounced in the open court on 16.05.2018.

Sd/- Sd/- (मनीष बोरड) (कुल भारत) लेखा सद�य �या�यक सद�य (KUL BHARAT) (MANISH BORAD) ACCOUNTANT MEMBER JUDICIAL MEMBER

Indore; �दनांक Dated : 16/05/2018 CPU*/SPS Copy to: Assessee/AO/Pr. CIT/ CIT (A)/ITAT (DR)/Guard file. By order Private Secretary/DDO, Indore