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Income Tax Appellate Tribunal, KOLKATA BENCH “A” KOLKATA
Before: Shri Waseem Ahmed & Shri S.S. Viswanethra Ravi
आदेश /O R D E R
PER Waseem Ahmed, Accountant Member:- This appeal by the assessee is directed against out of order of Commissioner of Income Tax (Appeals)-7, Kolkata dated 05.10.2015. Assessment was framed by JCIT,Range-53, Kolkata u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) vide his order dated 13.03.2013 for assessment year 2010-11. Shri V.N. Datta, Ld. Advocate appeared on behalf of assessee and Shri Sallong Yaden, Ld. Departmental Representative appeared on behalf of Revenue.
A.Y. 2010-11 Surindam Dutta V. JCIT, Rg-26, Kol. Page 2 2. The assessee has taken the following grounds of appeal:- “1. For that the disallowance of Rs.37,73,660/- under the head “site expenses” by the authorities below is neither tenable in law nor in facts and as such disallowance is opposed to requirement of law and bad in law.
2. For that the CIT(A) erred in confirming the disallowance of Rs.37,73,660/- under the head “site expense”.
3. For that appellant craves leave to amend, alter, add, delete or substitute any other grounds of appeal before or at the time of earning of the appeal.”
3. Ground No. 1 and 2 are inter-related and therefore being taken up together. The issue raised by assessee is that Ld. CIT(A) erred in confirming the order of Assessing Officer by sustaining the disallowance of ₹37,73,660/- under the head “site expense”.
4. Briefly stated facts are that assessee is an individual and engaged in business of civil contractor under the name and style “Dutta Enterprise”. The assessee has claimed an expense of ₹38,10,460/- under the head ‘site expense’ and failed to submit the documentary evidence for such expense. The assessee claimed to have incurred site expense for the purchase of stone, brick, sand iron rod, bamboo etc. As per assessee, the site expenses were incurred through eight persons. The assessee has provided the name and addresses of such persons from whom the expenses were incurred. However, AO observed that assessee has been drawing cash through ATM facility for ₹10,000/- to 20,000/- on daily basis. The assessee has withdrawn a sum of ₹ 70 lakh during the year and has incurred expenses of ₹38,10,460/- by way of site expense. However, AO in absence of documentary evidence treated the same as bogus expense and also invoked the provision of Section 40A(3) of the Act and accordingly, made the disallowance of ₹38,10,460/- and added to the total income of assessee.
5. Aggrieved, assessee preferred an appeal before Ld. CIT(A) where he assailed that he was not provided sufficient opportunities during the assessment proceedings. Therefore, Ld. CIT(A) called for remand report from AO. The assessee during the remand proceedings submitted that it has declared a turnover of ₹2,09,09,049/-and which was accepted by AO. The site expenses incurred by assessee are coming at 18.2% of the turnover declared by him. As per the assessee, the expense incurred A.Y. 2010-11 Surindam Dutta V. JCIT, Rg-26, Kol. Page 3 under the head “site expense” are quite reasonable and without such turnover of ₹2,09,09,049/- could not have been achieved. The assessee also submitted that in the instant case, the payment is exceeding more than 20,000/- in cash. Therefore, there is no question of making the disallowance u/s. 40A(3) of the Act. The assessee further filed the details of eight persons from whom the site expense were incurred, which is reproduced below:- Sl.No. Name Address Payment (Rs) 4/188 Gandhi Colony, Kol-92 1 Jakirul Islam 60,000 2 Samir Das Sukantapally, Andul, DME 955,100 Bunglow, Dist. Burdwan 3 Santosh Roy Ranaghat, P.O. Dhantala, Dist. 721,600 Nadia 4 Sarbojit Sen 118/6 Sarat Bose Road, P.S. 959,500 Dumdum Rabindra Nagar, Kol-65 5 Sk. Asgar Gaaruliapara, P.O. Canning 15,000 6 Joydeb Saha Vill.&P.O. Kadulia, PO. Sonarpur, 1077,460 Dist. 24 Pgs (S) Pin-700146 7. J.P. Sing 28/B Kalibari Rd. Santoshpur, Kol 12,000 99/1/A Srirampur Rd (N) Garia, 8 Ramesh 9,800 Kol-84 Sharma The AO issued show cause notice u/s. 133(6) of the Act to five persons to verify the veracity of such expenses as discussed above. In case of Jakirul Islam, Joydeb Saha, Santosh Roy, the notices issued u/s. 133(6) of the Act were returned back with remarked insufficient address. In case of Sarbojit Sen, the reply was received for the notice issued u/s 133(6) of the Act but he denied to have incurred any expense on behalf of assessee under the head “site expense”. Similar there was no reply from Samir Das. In view of above, Ld. CIT disregarded the contention of assessee by observing as under:- “2.4 I have gone through the submission made by the appellant’s A/R, the assessment order and the remand report. The Assessing Officer issued notices u/s. 133(6) also in the cases mentioned below. As per the remand report the results of the enquiries conducted is as under:- Sl.No. Name Payment(Rs) Remarks 1 Jakirul Islam 60,000 Letter returned unserved 2 Samir Das 955,100 No reply received 3 Santosh Roy 721,600 Letter returned unserved A.Y. 2010-11 Surindam Dutta V. JCIT, Rg-26, Kol. Page 4 4 Sarbojit Sen 959,500 He was an employee of the appellant drawing salary of Rs.8,500/- per month. No business transactions with the appellant 5 Joydeb Saha 1077,460 Letter returned unserved Total 37,73,660 As per the provision of section 387(1) of the IT Act the expenditure wholly and exclusively laid out for the purpose of business is allowed. During the course of assessment the appellant failed to produce any evidence before the Assessing Officer except furnishing the names. Though the appellant was regularly purchasing the material from the above suppliers the payment was made in cash below Rs.20,000/- instead of payment though bank cheque. During the remand proceedings also the appellant was given more than three opportunities and the appellant failed to produce the books of account and vouchers before the Assessing Officer. As discussed above the letters sent to the suppliers either returned unserved or there was no reply. The appellant could not offer any explanation whatsoever. Therefore, it is proved beyond doubt that the expenditure was not genuine. Therefore the appellant’s request for estimation of income is baseless and not acceptable. Accordingly I confirm the addition of Rs.37,73,660/- in respect of the expenses incurred for supply of material from Jakirul Islam, Samir Das, Santosh Roy, Sarbojit Sen and Joydeb Saha as per the details given in para no. 2.4 holding that expenditure was not genuine.”
Being aggrieved by this order of Ld. CIT(A) assessee came in second appeal before us.
Before us Ld. AR for the assessee filed paper book which is running pages from 1 to 14 where the details of site expenses were placed. He submitted that the supporting of documentary evidence regarding impugned expenses were available. Ld. AR also submitted that books of account were rejected and no defect was pointed out. He stated that books of account of assessee were duly audited. On the other hand, Ld. DR submitted that no details of whatsoever have been submitted by assessee despite of several opportunities provide to assessee by Authorities Below. He vehemently relied on the order of Authorities Below.
We have heard the rival contentions of both the parties and perused the material available on record. In the instant case, the issue relates to the expense disallowed by AO and subsequently confirmed by Ld. CIT(A) on the ground that sufficient evidence were not provided by assessee. Ld. AR for the assessee stated that assessee’s claim to have incurred the site expense towards material purchased. However, on perusal of profit and loss account of assessee placed on page 2 of the