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Income Tax Appellate Tribunal, DELHI BENCH : A : NEW DELHI
Before: SHRI R.K. PANDA & SHRI KULDIP SINGH
BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER Assessment Year: 2012-2013 Jagbir Singh, Vs. ACIT, A-3/222/1, 1st Floor, Circle-62(1), E Block, Sector-7, Rohini, Civic Centre, New Delhi. SP Mukherjee Marg, New Delhi. PAN: AAQPS9994K (Appellant) (Respondent) Assessee by : None Revenue by : Shri B.P. Singh, Sr.DR Date of Hearing : 18.10.2018 Date of Pronouncement : 20.11.2018 ORDER
PER R.K. PANDA, AM:
This appeal by the assessee is directed against the order dated 10th December, 2015 of the CIT(A)-20, New Delhi relating to Assessment Year 2012-13.
Despite service of notice, none appeared on behalf of the assessee. Therefore, this appeal is being disposed of on the basis of the material available on record and after hearing the ld. DR.
The facts of the case, in brief, are that the assessee is an individual and is engaged in the business of civil contractor under the name and style of M/s Shiva Constructions. He filed his return of income on 29th September, 2012 declaring total income at Rs.52,60,883/-. During the year under consideration, the assessee has shown net profit of Rs.37,03,145/- at a gross receipt of Rs.14,50,01,582/-. During the course of assessment proceedings, the Assessing Officer asked the assessee to produce original books of account, bills, vouchers, muster rolls, wage sheets, etc. for verification. On perusal of the Profit & Loss Account, he noted that the assessee has debited a sum of Rs.8,34,66,023/- on account of purchase of material. From the bills and vouchers so produced by the assessee, the Assessing Officer noted that some of the bills/vouchers are missing. In the absence of production of the same on the ground that this might have been misplaced due to work on various sites, the Assessing Officer made disallowance of Rs.3,50,000/- on account of unverifiable purchase to plug the leakage of revenue. So far as the labour charge is concerned, the Assessing Officer noted that the assessee has adopted Rs.3,95,11,250/- as labour charges. He asked the assessee to furnish the complete details of work and labour employed for the projects undertaken. In the absence of any proper explanation filed in this behalf and observing that the recipients have put their thumb impression on the muster roll for which it is not verifiable, the Assessing Officer made disallowance of Rs.2,50,000/- out of the labour charges to plug the leakage of revenue. Similarly, the Assessing Officer disallowed an amount of Rs.1 lakh from the total salary debited at Rs.59,77,333/- in the absence of furnishing of complete details of work and labour. 2 The Assessing Officer also disallowed an amount of Rs.1,90,028/- being 1/5 of the total motor car expenses on account of probable personal use. An amount of Rs.1 lakh out of staff welfare expenses debited at Rs.5,19,532/- was also disallowed. The Assessing Officer also disallowed Diwali expenses of Rs.65,100/- out of Rs.3,25,500/- debited by the assessee on the ground that name of the assessee is not written on some of the bills and the payments are made in cash. The Assessing Officer disallowed an amount of Rs.64,680/- out of total travelling expenses of Rs.3,23,400/- on account of the same not being supported by bills and vouchers. The Assessing Officer further made a disallowance of Rs.43,968 out of total telephone expenses debited at Rs.2,19,840/- to prevent leakage of revenue on account of probable personal use.
Similarly, he added an amount of Rs.1,81,130/- on account of interest income u/s 244A. The Assessing Officer accordingly determined total income of the assessee at Rs.69,90,690/-.
In appeal, the ld.CIT(A) disallowed the addition of Rs.1 lakh on account of staff welfare expenses. Similarly, he gave part relief out of the motor car expenses and telephone expenses by restricting such disallowance to 10% of the motor car expenses and reducing Rs.21,984/- out of telephone expenses. He, however, sustained the balance disallowance made by the Assessing Officer.
Aggrieved with such part relief given by the CIT(A), the assessee is in appeal before the Tribunal by raising the following grounds:- 1. The Id CIT(A) without appreciating the correct facts of the case is not justified in law and facts and circumstances of the case in confirming the addition of Rs. 3,50,000/- made by ld assessing officer under the head building material 3 expenses on estimation basis.
2. The Id CIT(A) without appreciating the correct facts of the case is not justified in law and facts and circumstances of the case in confirming the addition of Rs. 2,50,000/- made by ld assessing officer under the head labour charges on estimation basis.
3. The Id CIT(A) without appreciating the correct facts of the case is not justified in law and facts and circumstances of the case in confirming the addition of Rs. 1,00,000/- made by ld assessing officer under the head salary paid on estimation basis.
4. The Id CIT(A) is not justified in law and facts and circumstances of the case in confirming the addition of Rs. 59731/- out of car running and maintenance and interest of car loan made by ld assessing officer on estimation basis.
5. The Id CIT(A) without appreciating the correct facts of the case is not justified in law and facts and circumstances of the case in confirming the addition of Rs. 65,100/- made by ld assessing officer under the head diwali expenses on estimation basis.
6. The Id CIT(A) without appreciating the correct facts of the case is not justified in law and facts and circumstances of the case in confirming the addition of Rs. 64,680/- made by ld assessing officer under the head travelling expenses on estimation basis.
7. The Id CIT(A) without appreciating the correct facts of the case is not justified in law and facts and circumstances of the case in confirming the addition of Rs. 21,984/- made by ld assessing officer under the head telephone expenses on estimation basis.
Appellant has every right to make, add, delete, modify or alter any grounds of appeal at the time of hearing.”
6. We have considered the arguments advanced by the ld. DR and perused the material available on record. It is an admitted fact that the Assessing Officer made various disallowances on the ground that all those expenses were not fully supported by bills and vouchers and, therefore, the possibility of revenue leakage cannot be ruled out. We find, in appeal, the ld. CIT(A) sustained most of the additions except staff welfare expenses, depreciation on motor car and 50% of the telephone expenses and 4 sustained the balance amount on the ground that the assessee, during the course of assessment proceedings, has agreed for ad hoc addition as a result of non-production of vouchers. It is the settled proposition of law that for claiming any expenditure as an allowable deduction, the onus is always on the assessee to substantiate with evidence to the satisfaction of the Assessing Officer that such expenditure has been incurred wholly and exclusively for the purpose of business. However, in the instant case, the assessee has failed to discharge the onus cast upon him since either some of the bills or vouchers are missing or are not supported by proper bills and vouchers and in most of the cases such amount has been paid in cash. Therefore, certain disallowance has to be made out of the various expenses claimed by the assessee for which the Assessing Officer has given the observations while making the disallowance. However, the disallowance made by the Assessing Officer and sustained by the CIT(A) in our opinion, appears to be on the higher side. We, therefore, deem it proper to reduce the disallowance as under:-
Nature of Expenses Disallowance Sustained by Relief Granted by A.O. CIT(A) Building Material 3,50,000 3,50,000 1,00,000 Labour charges 2,50,000 2,50,000 1,00,000 Salaries 1,00,000 1,00,000 25,000 Car expenses 1,90,028 59,731 NIL Diwali 65,100 65,100 30,000 Telephone 43,968 21984 NIL Travelling 64,680 64,680 25,000
The Assessing Officer will grant consequential relief to the assessee as above.
The grounds raised by the assessee are, accordingly, partly allowed.