SH. SHOBHA RAM SHARMA,MATHURA vs. DCIT.-3, MATHURA

ITA 318/AGR/2019Status: DisposedITAT Agra03 February 2025AY 2014-153 pages

AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal acknowledged that neither the assessee nor the Revenue's arguments could be fully concurred with. It was noted that the assessee, a civil contractor, had declared gross receipts of Rs. 26,45,86,902/- yielding a net profit of Rs. 1,54,72,360/- (5.84%). The Tribunal observed that the assessee had not been able to fully prove the four expenditure items to the satisfaction of the lower authorities. Conversely, the lower authorities had not identified any specific shortcomings in the corresponding books of account. In the interest of justice, the Tribunal decided to make a lumpsum disallowance/addition of Rs. 8,00,000/- out of the total disputed amount of Rs. 25,18,014/-. This relief to the assessee amounts to Rs. 17,18,014/-. The Tribunal explicitly stated that this decision should not be treated as a precedent. The issue of specific disallowances for each category of expense was not decided individually.

What were the facts?

The assessee, Sh. Shobha Ram Sharma, is appealing against an order dated 28.02.2018 passed by the Commissioner of Income Tax (Appeals)-1, Agra. This order pertains to assessment year 2014-15 and arises from proceedings under section 143(3) of the Income-tax Act, 1961. The Assessing Officer had made an addition/disallowance of Rs. 25,18,014/-. This amount comprised alleged miscellaneous expenses of Rs. 50,000/-, repair and maintenance expenses of Rs. 50,000/-, labour expenses of Rs. 23,68,014/-, and vehicle running expenses of Rs. 50,000/-, all made on an estimation basis. The assessee is a civil contractor who declared gross receipts of Rs. 26,45,86,902/- with a net profit of Rs. 1,54,72,360/-, representing a profit rate of 5.84%. The lower authorities found shortcomings in the expenditure claims, but the assessee also did not fully satisfy them regarding these claims.

What were the issues?

1. Whether the Tribunal should uphold the disallowance/addition of Rs. 25,18,014/- made by the Assessing Officer and confirmed by the CIT(A) on estimation basis, considering the assessee's status as a civil contractor with declared gross receipts and net profit. Assessee's contention: The assessee argued that while there might have been some shortcomings in substantiating all the impugned expenses, the disallowance made by the Assessing Officer was excessive and not justified. The assessee also highlighted that the lower authorities had not found specific defects in the books of account. Revenue's contention: The Revenue contended that the disallowances were justified due to the assessee's failure to adequately prove the miscellaneous expenses, repair and maintenance expenses, labour expenses, and vehicle running expenses. The estimation basis was argued to be appropriate given the circumstances.

Which sections of the Income-tax Act were involved?

Section 143(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, AGRA BENCH, “DB” AGRA

Before: SHRI SATBEER SINGH GODARAAND

Hearing: 03.02.2025Pronounced: 03.02.2025

This assessee’s appeal for assessment year 2014-15, arises against the Commissioner of Income Tax (Appeals)-1 [in short, the “CIT(A)”], Agra’s order dated 28.02.2018, passed in case no. ITBA 79/(e-filed)/CIT(A)-1/Agra/DCI-C-3/Mathura/2016-17 involving proceedings under section 143(3) of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’).

It emerges during the course of hearing that both the learned authorities have, more particularly, the Assessing Officer’s assessment dated 26.12.2016; disallowed/added an aggregate amount of Rs.25,18,014/-; involving the alleged miscellaneous expenses of Rs.50,000/-, repair and maintenances expenses of Rs. 50,000/-, labour expenses of Rs.23,68,014/- and vehicle running expenses of Rs. 50,000/- on estimation basis, respectively.

We have given out thoughtful consideration to the assessee and Revenue’s vehement rival submissions and find no reason to concur with either party’s arguments in entirety. We make it clear that this assessee is a civil contractor having declared gross receipts of Rs.26,45,86,902/- yielding NP @ 5.84%; coming to Rs.1,54,72,360/-. And also, that he has neither been able to plead and prove all the impugned four expenditure items to the entire satisfaction of the learned lower authorities nor the latter have found any specific shortcoming(s) in the corresponding books of account.

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