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Income Tax Appellate Tribunal, CUTTACK BENCH, CUTTACK
Before: S/SHRI N.S SAINI & KULDIP SINGH
IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK
BEFORE S/SHRI N.S SAINI, ACCOUNTANT MEMBER AND KULDIP SINGH JUDICIAL MEMBER
ITA No. 73/CTK/2015: Assessment Year :2010-2011
DCIT, Circle 2(1), Vs. D.K.Engineering & Sambalpur construction, At/PO: Belgaon, Dist: Bolangir PAN/GIR No. AACFD 2681 C (Appellant) .. ( Respondent)
ITA No. 80/CTK/2015: Assessment Year :2010-2011
D.K.Engineering & Vs. DCIT, Circle 2(1), construction, At/PO: Sambalpur Belgaon, Dist: Bolangir PAN/GIR No. AACFD 2681 C (Appellant) .. ( Respondent)
Assessee by : Shri Nakul Agrawal, AR Revenue by : Shri A.Tigga, DR
Date of Hearing : 25/04/ 2017 Date of Pronouncement : 28/04/ 2017
O R D E R Per N.S.Saini, AM These cross appeals filed by the department and the assessee
against the order of CIT(A)- Cuttack, dated 28.11.2014, for the
assessment year 2010-2011.
2 ITA No. 73 & 80/CT K/ 2015: Assessme nt Ye ar :2 01 0-2 011 2. The sole issue involved in the appeal of the assessee is that the
CIT(A) was not justified in confirming 50% of the addition made by the
Assessing Officer out of amounts claimed as purchases made from
unregistered dealer and the revenue in its appeal has challenged the
restriction of disallowance to 50% out of purchases made from
unregistered dealers.
As the facts and issue involved are common, both the appeals are
considered and decided as under:
The brief facts of the case are that the Assessing Officer observed
that the assessee was executing civil contract work and that out of
material purchased to the tune of Rs.6.62 crores, some materials like
cement, bitumen, iron & steel were purchased from registered dealers
and some items like sand, morrum, chips, dust, metal and boulders, etc
were purchased from the unregistered dealers. On a query by the
Assessing Officer, the assessee could not vouch the expenses regarding
materials purchased from the unregistered dealers. The assessee could
not produce partywise list of material purchased from unregistered
dealers and ld A.R. expressed his inability to furnish the details and
explained that the above referred purchases were made from
unregistered dealers at the different worksite and the suppliers were
small traders. Therefore, the Assessing Officer disallowed
Rs.21,41,364.85.
3 ITA No. 73 & 80/CT K/ 2015: Assessme nt Ye ar :2 01 0-2 011 5. On appeal, the CIT(A) restricted the disallowance to 50% , which
worked out to Rs.14,12,067/-.
Being aggrieved by the said order of the CIT(A), the assessee and
the revenue are in appeal before us.
Ld A.R. of the assessee argued and submitted that no adhoc
disallowance out of genuine business expenditure can be made by the
Assessing Officer. He submitted that the materials were purchased at
the worksites from small traders and since they were not having printing
bills, the purchases were made on payment vouchers. He submitted
that out of total purchases of Rs.6.62 crores, only purchases were made
of Rs.28,24,134/- from the locally due to business exigencies and hence,
no disallowance can be made out of the same. He submitted that it is
not case of the revenue that the assessee has claimed bogus
expenditure to reduce its income. The genuineness of the expenses has
not been doubted either by the Assessing Officer or by the CIT(A) and
the disallowance should be deleted.
Ld D.R. on the other hand relied on the order of the Assessing
Officer.
After considering the rival submissions and perusing the materials
available on record, we find that the disallowance of Rs.28,24,134/- was
made by the Assessing Officer on the ground that the assessee could
not produce bills from the parties from whom purchases were made.
4 ITA No. 73 & 80/CT K/ 2015: Assessme nt Ye ar :2 01 0-2 011 The contention of the assessee is that these purchases were made from
small traders at the worksites of the assessee out of business exigencies.
The small traders do not have any printed bills and purchases were made
on the payment vouchers. It was therefore, his submission that these
were genuine business expenditure and no disallowance can be made.
It has also been argued and submitted by ld A.R. that the genuineness
of the expenditure is not doubted and it is not the case of the revenue
that the assessee has claimed bogus expenditure to reduce its income.
Therefore, is was prayed that the disallowance may be deleted.
We find that no material has been brought on record by the
revenue to show that the percentage of gross profit shown by the
assessee is lower that what has been shown by the assessee itself in
earlier or subsequent assessment years or by other assessee’s in similar
line of business. The disallowance has been made only on the ground
that the bills of parties could not be produced by the assessee for the
purchases made and the explanation of the assessee is that the small
traders do not have printed bills and the purchases have been made on
payment vouchers. The genuineness of the expenses has not been
doubted both by the Assessing Officer and CIT(A). On the very same
vouchers deduction for purchases of Rs.14,12,067/- has been allowed
out of the total purchases of Rs.28,24,134/-. That being so, we find
that there was absolutely no reason for the CIT(A) to not to allow
deduction for the balance amount of purchases of Rs.14,12,067/-
5 ITA No. 73 & 80/CT K/ 2015: Assessme nt Ye ar :2 01 0-2 011 without bringing any adverse material on record. Hence, we set aside
the order of the CIT(A) and vacate the disallowance of Rs.14,12,017/-
and allow the ground of appeal of the assessee and dismiss the ground
of appeal of the revenue.
In the result, the appeal filed by the assessee is allowed and that
the appeal of the revenue is dismissed.
Order pronounced in the open court on 28 /04/2017. Sd/- sd/- (Kuldip Singh) (N.S Saini) JUDICIAL MEMBER ACCOUNTANT MEMBER Cuttack; Dated 28 /04/2017 B.K.Parida, SPS Copy of the Order forwarded to : 1. The Appellant /assessee: D.K.Engineering & construction, At/PO: Belgaon, Dist: Bolangir 2. The Revenue : DCIT, Circle 2(1), Sambalpur 3. The CIT(A) Cuttack 4. Pr.CIT,Cuttack 5. DR, ITAT, Cuttack 6. Guard file. //True Copy// BY ORDER,
SR.PRIVATE SECRETARY ITAT, Cuttack