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Income Tax Appellate Tribunal, “F” BENCH, MUMBAI
Before: SHRI JASON P BOAZ, AM & SHRI SANDEEP GOSAIN, JM
आदेश / O R D E R Per Sandeep Gosain, J. M.: The Present Appeal has been filed by the Assessee against the order of Commissioner of Income Tax (Appeals)- 32, dated 06.02.2014 for A.Y. 2010-11 on the following grounds of appeal.
2 ITA No. 2617/Mum/2014 (A.Y. 2010-11) Vijay H. Jaiswal vs. ACIT 1. “Looking to the facts and circumstances of the case and in law the learned
Comm. Of Income Tax (Appeals) erred in confirming the A.O.’s action of
disallowing the assessee’s claim that income derived of Rs.2,50,450/- is
Agricultural Income and instead treating the same as Income from Other
Sources. 2. Looking to the facts and circumstances of the case and in law the learned
Comm. Of Income Tax (Appeals) erred in Confirming the A.O’s action of
disallowing interest on delayed payment of TDS Rs.3,268/- as not allowable
under section 37(1) of the I.T. Act,1961 though the same is clearly allowable
as business expenditure under the very said provisions of section 37(1) of
the I.T. Act 1961and 3. Looking to the facts and circumstances of the case and in law the learned
Comm. Of Income Tax (Appeals) erred in Confirming the A.O’s action of
disallowing an adhoc amount of Rs.1,00,000/- out of Labour Charges on the
ground of absence of complete details, control over the workers and that the
payments are not fully vouched for in spite of the fact that the work is
carried out through contractors.”
The brief facts of the case are that the return of income was e-field on
1.10.10 declaring total income at Rs.44,74, 900 which included agricultural income
3 ITA No. 2617/Mum/2014 (A.Y. 2010-11) Vijay H. Jaiswal vs. ACIT amounting to Rs 2,50, 450. The return was processed under section 143 (1) of the
income tax act 1961. Subsequently the case was selected for scrutiny under CASS
and accordingly statutory notices were served upon the assessee and after seeking
his reply, the assessing officer passed the order of assessment dated 31.12.2012
thereby making additions in the total income of the assessee.
Aggrieved by the order of assessment, the assessee filed the appeal before
the Commissioner of income tax i.e CIT (A) however, the CIT(A) after
considering the case of the assessee had dismissed the appeal and uphold the order
of assessing officer.
Aggrieved by the order of Commissioner of income tax, the assessee filed
the present appeal before us on the grounds mentioned herein above.
Ground No. 1
Ld. AR representing the assessee submitted that the income of Rs.2,50,450/-
has been shown as agricultural income at page no.22&23 of the audit report.
Situation of these lands are mentioned at page no.20 of the audit report. It was
further submitted by the AR that the afore mentioned amount has been generated
by harvesting yield like natural grass or allowing seasonal farmer cum watchman
4 ITA No. 2617/Mum/2014 (A.Y. 2010-11) Vijay H. Jaiswal vs. ACIT to cultivate lands in share which is very nominal. Ld. AR further submitted that
since afore mentioned amount has been earned from agricultural activities
therefore the same ought to have been treated as agricultural income. On the other
hand, ld. DR relied upon the orders passed by the revenue authorities.
We have heard the counsels for both the parties and we have also perused
the material placed on record as well as the orders passed by the revenue
authorities. We noticed that this ground has been dealt with by ld. CIT(A) in para
3.4 which is reproduced as under:
“I have considered facts of the case, oral contentions of the appellant
as against the observations/findings of the AO in the assessment
order. The contentions and submissions of the appellant are being
discussed and decided as under:- i. It is the fact of the case that the appellant has disclosed income
at Rs.2,50,450/- as agricultural income. Further this is also the
fact of the case that upon being asked by the AO to furnish
details of expenses incurred, agricultural produce taken,
LABOUR employed etc., no details or evidence whatsoever
could be furnished by the appellant.
5 ITA No. 2617/Mum/2014 (A.Y. 2010-11) Vijay H. Jaiswal vs. ACIT ii. The appellant also has not been able to produce any document
in respect of the fact that there was any agriculture produce
taken from such agricultural land and therefore, could not
establish that there was any generation of income there from. iii. The appellant’s explanation that income was generated by
harvesting yield like natural grass or allowing seasonal farmer
cum watchman to cultivate lands in shares is an assertion
without any supporting evidence and without any
corroboration. iv. Under such facts and circumstances of the case, it cannot be
arrived at the income so disclosed by the assessee in the return
of income falls within the meaning of the definition given in
section 2(1A) of the Ac. v. Accordingly, the treatment given to such income by the AO as
income from other sources is found to be justified. vi. This ground of appeal is accordingly, dismissed.”
6.1 After analyzing the afore mentioned order and after hearing the parties we
are of the considered view that since the assessee has failed to furnish any details
in respect of expenses incurred, agricultural produce taken, labour employed etc.,
6 ITA No. 2617/Mum/2014 (A.Y. 2010-11) Vijay H. Jaiswal vs. ACIT and in this respect no evidence was furnished by the assessee before the assessing
officer. Not only, this the assessee has also not been able to produce any document
in order to show that there was any agricultural produce taken from such
agricultural land and therefore the assessee could not establish that there was any
generation of income there from. The only explanation put forth by the assesee is
that the income was generated by harvesting yield like natural grass or allowing
seasonal farmer cum workmen to cultivate lands in shares. The said explanation
itself is not sufficient enough, therefore the ld. CIT(A) after considering the plea
taken by the assessee has rightly held that the income so disclosed by the assessee
in the return of income cannot be treated as agricultural income as defined u/s
2(1A ) of the Act. Even before us no details have been furnished by the ld. AR,
therefore we see no reasons to deviate from or interfere in the findings recorded by
the CIT(A). Hence, this ground taken by the assessee is dismissed.
Ground No.2
Ld. AR submitted that a sum of Rs.3,268/- was paid on account of interest
on delayed payment of TDS and it was submitted that since the amount was paid as
interest on the delayed payment of TDS therefore the same is allowable as per
provisions of section 37(1) of the I.T. Act. Whereas, on the contrary, ld. DR relied
upon the orders passed by the revenue authorities.
7 ITA No. 2617/Mum/2014 (A.Y. 2010-11) Vijay H. Jaiswal vs. ACIT
We have heard counsels for both the parties and we have also perused the
material placed on record as well as the orders passed by the revenue authorities.
We are of the considered view that afore mentioned amount was paid as interest on
payment of TDS which was beyond due date and hence, the said payment was
penal in nature and therefore the same is not allowable as per the provision of
section 37(1) of the Act. We find support from the decision of co-ordinate bench of
ITAT (Ahmedabad) in ITA No. 1363/Ahd/2010. The decision of co-ordinate bench
is based on the decision rendered by the Hon’ble Supreme Court in case of Bharat
Commerce & Industries vs. CIT 230 ITR 733 (SC) wherein similar issue was
involved and it was held that interest for late payment of direct taxes is not
deductible. Therefore, following the principles of consistency and respectfully
following the judgement rendered by the Co-ordinate Bench we dismiss this
ground of appeal.
Ground No.3
Ld. AR submitted that the assessee is engaged in the business of Civil
Contractor and therefore had incurred expenses of Rs.53,34,958/- on wages to
labourers, miscellaneous expenses etc., and the said amount was rightly debited in
the P&L A/c. It was submitted that on the basis of estimation the AO disallowed a
8 ITA No. 2617/Mum/2014 (A.Y. 2010-11) Vijay H. Jaiswal vs. ACIT sum of Rs.1,00,000/- out of total expenses whereas in fact the assessee had spent
actual amount of Rs.53,34,958/- on disbursement of wages etc. On the other hand,
ld. DR relied upon the orders passed by the revenue authorities.
We have heard counsels for both the parties and we have also perused the
material placed on record as well as the orders passed by the revenue authorities.
We are of the considered view that it is an undisputed fact that the assesse is
engaged in the business of Civil contractor and these expenses are incurred at
various sites for payment of wages to labourers and the labourers engaged in this
business are not of permanent nature and do not have any permanent address and
bank accounts and therefore in this nature of business the charges are usually paid
in cash but ld. AO disallowed a sum of Rs.1,00,000/- on estimation basis.
After considering the facts of the case and while keeping in mind the nature
of the business i.e. Civil Contractor, we are of the opinion that it would be just and
fair to disallowed an amount of Rs.50,000/- in place of 1,00,000/- as disallowed by
the AO for want of verification and therefore, the AO is directed to re-compute the
income after making disallowance of Rs.50,000/- only.
This ground of appeal is partly allowed.
9 ITA No. 2617/Mum/2014 (A.Y. 2010-11) Vijay H. Jaiswal vs. ACIT 12. In the result, the Assessee’s appeal is partly allowed. Order pronounced in the open court on 16th March, 2016
Sd/- Sd/- (Jason P. Boaz) (Sandeep Gosain) लेखा सद�य / Accountant Member �या�यक सद�य / Judicial Member मुंबई Mumbai; �दनांक Dated : 16.03.2016 Ps. Ashwini आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent 3. आयकर आयु�त(अपील) / The CIT(A) 4. आयकर आयु�त / CIT - concerned 5. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, मुंबई / DR, ITAT, Mumbai 6. गाड� फाईल / Guard File आदेशानुसार/ BY ORDER,
उप/सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपील�य अ�धकरण, मुंबई / ITAT, Mumbai