KRISHNA LAXMANRAO GABHANE,AMRAVATI vs. I.T.O., WARD - 2, AMRAVATI

Aggrieved by the order of the learned CIT(A), the assessee carried the matter in appeal before the Tribunal.

4 ITA.No.358/NAG./2024 5. During the course of hearing, Learned Counsel for the Assessee submitted that the authorities below are not properly appreciated the facts of the case and documents on record and made the impugned additions. He submitted that the authorities below disallowed 50% of the expenses made on account of Majuri, salary expenses, labor expenses, transportation expenses, job-work expenses and purchase bills. He submitted that the authorities below did not dispute the fact that the assessee was engaged in business of construction and was also partner in the firm M/s. Radhakrishna Associates which was carrying on business under the name and style of Priyanka Bar and Restaurant. He, submitted that for doing the business the assessee must have to incur expenses. In the instant case, the disallowance of expenses @ 50% by the lower authorities is much on higher side and, therefore, the expenses claimed by the assessee be allowed as the Assessing Officer made the impugned disallowances being not satisfied with the explanation and bills vouchers furnished by the assessee and not that the assessee failed to furnish documentary evidence, bills and vouchers on record. 5.1. He submitted that the addition sustained by the learned CIT(A) of Rs.4 lakhs u/sec.68 of the Act is not warranted as the 5 ITA.No.358/NAG./2024 assessee has received the said sum through A/c payee cheque. He submitted that the name of the creditor was mentioned as D M Borule instead of DM Bramhane and it was the mistake of the Bank, for which, the assessee shall not be punished with the impugned addition. He accordingly submitted that the impugned addition of Rs.4 lakhs be deleted. 5.2. The Learned Counsel for the Assessee submitted that the addition of Rs.1,09,532/- sustained by the learned CIT(A) u/sec.69C of the Act on account of unexplained expenditure is also not sustainable in the eye of law as there was no sufficient opportunity provided to the assessee to substantiate it’s claim. He submitted that the assessee has purchased goods from M/s. SP Traders and Sunora Ceramic and the payments were due to be paid and hence the assessee has shown these two parties as sundry creditors. He submitted that the assessee has produced copies of bills before the lower authorities with a submission that the said parties must have accounted for the goods purchased by him in the next year. The Learned Counsel for the Assessee, accordingly, submitted the authorities below without properly appreciating the explanation of the assessee nor making proper enquiries, made the impugned 6 ITA.No.358/NAG./2024 addition of Rs.1,09,532/- in the hands of assessee and, he prayed that the said addition may please be deleted in the interest of substantial justice.

The Learned DR on the other hand relied on the orders of the authorities below. He submitted that the authorities made the impugned additions as the assessee was failed to substantiate it’s claim with clean hands and, therefore, the additions made by the Assessing Officer and sustained by the learned CIT(A) be confirmed.

I have considered the submissions of both the parties, perused the orders of the authorities below and the material placed on record. There is no dispute between the parties that the assessee was engaged in civil construction and partner in the firm M/s. Radhakrishna Associates which was carrying on business under the name Priyanka Bar & Restaurant. I find that the learned CIT(A) has sustained the addition of Rs.4 lakhs made on account of unexplained cash credit, though the said sum has been received by the assessee through banking channel. During the course of assessment proceedings as well as appellate proceedings, the contention of the assessee was that he has received the said sum of Rs.4 lakhs through banking channel from D M Bramhane, however, the name was 7 ITA.No.358/NAG./2024 mentioned as D M Borule which was the mistake committed by the Bank, for which, the assessee should not suffer. I, therefore, delete the addition of Rs.4 lakhs sustained by the learned CIT(A). 7.1. I find, similarly, the learned CIT(A) has sustained the addition of Rs.1,09,352/- on account of unexplained expenditure u/sec.69C of the Act. I find force in the submissions of the Learned Counsel for the Assessee on this count that the assessee has produced the bills before the authorities and the only discrepancy is that the said parties viz., S P Traders [Rs.1,09,532/-] and Sunora Ceramic [Rs.1,83,900] must have accounted for the goods purchased by the assessee in the next year. Since the payments were due to these parties by the assessee, the assessee has shown them as sundry creditors. I, therefore, deem it fit to restore the issue back to the file of Assessing Officer for afresh verification and adjudication of the matter in issue, by providing adequate opportunity of being heard to the assessee. Needless to say, it is the sole risk and responsibility of the assessee to plead and prove his case in consequential proceedings. 7.2. Now, coming to the disallowance of 50% of expenses claimed by the assessee on account of Majuri expenses, salary 8 ITA.No.358/NAG./2024 expenses, transportation expense, job-work expenses, labour expenses and purchase bills, I find that these addition made by the Assessing Officer and sustained by the learned CIT(A) @ 50%, I find that there is no dispute between the parties the assessee had certain payments under the above head of expenses and for doing the business, the assessee must have to incur some expenses. Since the explanation and bills/vouchers produced by the assessee are not fully acceptable to the Department, the impugned disallowance @ 50% were made by the lower authorities. I, therefore, in the interest of justice reduce the impugned disallowance of expenses made on account of Majuri expenses, salary expenses, transportation expense, job-work expenses, labour expenses and purchase bills to a lump sum of 25% instead of 50% made by the Assessing Officer and sustained by the learned CIT(A), with a rider, that the same shall not be taken as a precedent in any other appeal. The Assessing Officer is directed to make necessary computation. Accordingly, the grounds of appeal