D.K.ENGINEERING & CONSTRUCTION,BOLANGIR vs. ACIT, SAMBALPUR

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.

considered and decided as under:

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/-.

the revenue are in appeal before us.

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.

Officer.

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.

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.

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