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Income Tax Appellate Tribunal, CUTTACK BENCH, CUTTACK
Before: S/SHRI N.S SAINI & PAVAN KUMAR GADALE
IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK
BEFORE S/SHRI N.S SAINI, ACCOUNTANT MEMBER AND PAVAN KUMAR GADALE, JUDICIAL MEMBER
ITA No. 97/CTK/2018 Assessment Year : 2010-11
Prasanna Kumar Mohanty, Vs. DCIT, Circle 2(2), MIG-II/234, Kanan Vihar, Bhubaneswar. Patia, Bhubaneswar. PAN/GIR No.ABKPM 7927 K (Appellant) .. ( Respondent)
Assessee by : Shri P.K.Sahoo, AR Revenue by : Shri Subhendu Datta, DR
Date of Hearing : 30/08/ 2018 Date of Pronouncement : 31/08/ 2018
O R D E R Per N.S.Saini, AM This is an appeal filed by the assessee against the order of
the CIT(A_2, Bhubaneswar dated 16.11.2017 for the assessment
year 2010-2011.
In Ground No.1 of appeal, the grievance of the assessee is
that the CIT(A) erred in confirming the addition of Rs.3,36,000/-
towards purchase of material.
The brief facts of the case are that the assessee is a civil
contractor carried on business in rural villages making roads. The
Assessing Officer observed that the assessee has made purchase
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of materials of Rs.3,36,04,380/- and has not submitted bills and
vouchers in support of purchase of materials and hence, made an
estimated disallowance by applying rate of 1% out of total
purchases and made an addition of Rs.3,36,000/- to the total
income of the assessee.
On appeal, the CIT(A) confirmed the order of the Assessing
Officer observing that it is the responsibility of the assessee for
maintaining bills and vouchers in support of the purchases.
Being aggrieved by this order, the assessee is in appeal
before us.
Ld A.R. of the assessee submitted that no adhoc
disallowance out of genuine business expenditure of the assessee
can be made by the Assessing officer. He submitted that the
Assessing Officer has not pointed out for which of the purchases,
the bills and vouchers were not produced before him. Making a
disallowance summarily by applying rate of 1% on the total
purchases by the assessee cannot be sustained in law. Hence, he
prayed that same should be deleted.
On the other hand, ld D.R. supported the orders of lower
authorities.
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We have heard the rival submissions, perused the orders of
lower authorities and materials available on record. We find that
in the instant case, the assessee is a civil contractor. The
Assessing officer observed that the assessee has claimed to have
made purchases of materials of Rs.3,36,04,380/- for which the
assessee could not submit bills and vouchers in support of the
purchases and, therefore, he made estimated disallowance by
applying rate of 1% out of total purchases of Rs.3,36,04,380/-
and added Rs.3,36,000/- to the income of the assessee, which
was confirmed in appeal by the CIT(A).
Ld A.R. of the assessee submitted that no adhoc
disallowance out of genuine business expenditure of the assessee
can be made by the Assessing Officer without bringing any
material on record that for which of the expenses the vouchers
are not maintained for producing before him.
Ld D.R. relied on the orders of lower authorities.
We find that this issue has been considered and decided by
Kolkata Bench of the Tribunal in the case of Animesh Sadhu vs
ACIT in ITA No.11/Kol/2013 order dated 12.11.2014, wherein, it
was held as under:
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“ 8. We have considered the rival submissions. A perusal of the assessment order shows that the Assessing Officer has disallowed 20% of the expenses on estimate basis on the ground that no independent verification to be made to find out the authenticity of the expenses. Ld. CIT(Appeals) has reduced the same on the same ground. However, we are of the view that no estimated disallowance scan be made for inability to make independent verification. If any specific expenditure is unverifiable or is un-vouched, then such specific expenditure is disallowable. Her no such specific identification has been done. In these circumstances, we are of the view that the estimated disallowance as confirmed by the ld. CIT(Appeals) is unsustainable. Consequently the same stands deleted. In the result, Grounds No. 2 & 3 of the assessee’s appeal stand allowed.” 12. Facts being identical, respectfully following the above quoted
decision of Kolkata Bench of the Tribunal in the case of Animesh
Sadhu (supra), we set aside the orders of the lower authorities
and vacate the disallowance of expenses of Rs.3,36,000/- and
allow this ground of appeal of the assessee.
In Ground No.2 of the appeal, the grievance of the assessee
is that the CIT(A) erred in confirming puja expenses of
Rs.39,684/-.
We find that in page 4 para 4 of the order the CIT(A) has
observed as under:
“In this ground, the appellant has contended the addition made by the AO of Rs.39,684/- on account of puja expenses. During the course of assessment proceedings, the appellant has explained that these expenses are towards the small get-together before the start of construction work.
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In my opinion, it is a business expenses and, therefore, the addition of Rs.39.684/- is directed to be deleted.” 15. In view of above findings of the CIT(A), wherein, he has
deleted the addition, this ground of appeal of the assessee is
infructuous and hence dismissed.
In ground No.3 of appeal, the grievance of the assessee is
that the CIT(A) erred in confirming the addition of Rs.30,000/-
made for non-deduction of TDS from payment of audit fees
u/s.194-J of the Act.
We find that the CIT(A) has observed as under:
“During the course of hearing on 30.8.2016, Shri P.K,.Sahoo, AR of the appellant has withdrawn this ground. Therefore, this ground is dismissed as withdrawn.”
In view of above findings of the CIT(A) that the assessee
has withdrawn this ground of appeal, therefore, the assessee
cannot have any grievance against the order of the CIT(A).
hence, this ground of appeal of the assessee is dismissed as
infructuous.
In Ground No.4 of the appeal, the grievance of the assessee
is that the CIT(A) erred in confirming the disallowance of
Rs.1,34,820/- as camp expenses and in Ground No.5 of appeal in
confirming the disallowance of labour charges of Rs.2,50,000/-.
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The facts are that the Assessing Officer observed that the
assessee has claimed deduction of a sum of rupees 9,51,970/-
towards camp expenses(Mess). On test checking bills/vouchers of
the said expense, he observed that bills/vouchers in support of the
following claim of expenses are not available. On being asked to
produce the same, the assessee submitted his inability to produce
the details of the following expenses on the plea that the vouchers
are maintained at site offices.
SI.No. Date Particulars Amount 01 15/04/09 Camp expense for Madrange 14,000 02 05/06/09 Camp expense for Nua 12,400 Budha kera 03 06/07/09 Subamapur 11,200 04 06/07/09 Astaranq camp expense 14,930 05 03/08/09 -do- 12,400 06 05/09/09 -do 15,700 07 16/11/09 Madranga camp expense 12,490 08 02/01/10 Bada Nimiqa camp expense 5,800 09 15/01/10 -do- 4,200 10 02/02/10 Nua budhakera camp exp. 16,400 11 16/02/10 -do- 15,300 TOTAL 1,34,820
Therefore, in the absence of primary documents supporting the
expenditure, the Assessing officer disallowed Rs. 1,34,820/- and
added the same to the income of the assessee.
Similarly, the Assessing Officer observed that the assessee
has claimed deduction on expenditure of Rs.39,167,056/- under
the head labour charges. During the course of hearing the
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assessee produced the ledger copy of labour charges. On being
asked to furnish the supporting documents regarding such
expenses, the assessee could not furnish such documents
regarding payment of labour charges. In view of above, the
Assessing Officer was of the opinion that the assessee has tried to
make an enhanced claim of expenditure. Therefore, he made an
adhoc disallowance of Rs.2,50,000/-.
On appeal, the CIT(A) confirmed the action of the Assessing
Officer, by observing as under:
“In these grounds, the appellant has contested the addition made by the AO of Rs.1,34,820/- from camp expenses and Rs.2,50,000/- from labour charges on the basis that supporting documents in respect of these expenses are not available and that most of them are in cash. I find that camp expenses claimed are of Rs.9,51,970/- and labour charges are of Rs.3,91,67,050/-. The disallowance made by the AO are reasonable. Therefore, additions of Rs.1,34,820/- and of Rs.2,50,000/- are confirmed. The grounds of appeal are dismissed.’
At the time of hearing, ld A.R. of the assessee could not
bring any cogent material on record to controvert the findings of
the CIT(A). Hence, we do not find any reason to interfere with the
order of the CIT(A), which is hereby confirmed and ground Nos.4
& 5 of appeal of the assessee are dismissed.
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In the result, appeal of the assessee is partly allowed.
Order pronounced on 31 /08/2018.
Sd/- sd/- (Pavan Kumar Gadale) (N.S Saini) JUDICIALMEMBER ACCOUNTANT MEMBER Cuttack; Dated 31/08/2018 B.K.Parida, SPS Copy of the Order forwarded to : 1. The Appellant : Prasanna Kumar Mohanty, MIG-II/234, Kanan Vihar, Patia, Bhubaneswar 2. DCIT, Circle 2(2), The Respondent. Bhubaneswar. 3. The CIT(A)- 2, Bhubaneswar By order 4. Pr.CIT—2, Bhubaneswar 5. DR, ITAT, Cuttack 6. Guard file. Sr. Pvt. Secretary, //True Copy// ITAT, Cuttack
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