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Income Tax Appellate Tribunal, MUMBAI BENCHES “A”, MUMBAI
Before: Shri Joginder Singh & Shri Rajendra
आदेश / O R D E R Per Joginder Singh (Judicial Member) The Revenue as well as assessee is in cross appeal against the impugned order dated 18/03/2011 for Assessment year 2007-08, of the ld. First Appellate Authority, Mumbai. First, we shall take up the appeal of the assessee (ITA No.4406/Mum/2011), wherein, first ground raised pertains to confirming the adhoc disallowance of Rs.42,51,479/-, out of purchases.
During hearing, the crux of argument advanced by Shri Devendra Jain, ld. counsel for the assessee, is identical to the ground raised by inviting our attention to page-4, para 7 of the impugned order. The crux of argument is that the ld. Assessing Officer made disallowance at the rate of 25% of the purchases made amounting to Rs.3,78,57,101/-, resulting into disallowance of Rs.94,64,275/-, which was argued to be highly excessive. It was explained that the Commissioner of Income Tax (Appeal) reduced the disallowance to Rs.42,51,479/-. On the other hand, the ld. DR, Ms. Radha Katyal Narang, defended the conclusion arrived at in the impugned order by contending that the assessee did not reconcile the difference and even argued that the Commissioner of Income Tax (Appeal) granted excessive relief to the assessee.
2.1. We have considered the rival submissions and perused the material available on record. The facts, in brief, are that the assessment was framed u/s 144 of the Act on 29/12/2007 as in spite of providing sufficient opportunity to the assessee, there was no compliance on behalf of the assessee. Notice issued u/s 143(2) was returned back by the postal authorities “addressee left”. The assessee made purchases and did not produce purchase bills for Rs.3,78,57,101/- and even the basic details and genuineness of purchases were not proved before the Assessing Officer, therefore, he made adhoc disallowance to the tune of 25% of the purchases, resulting into disallowance of Rs.94,64,275/-.
2.2. On appeal, before the Commissioner of Income Tax (Appeal), the assessee furnished written submissions to which remand report was sought from the ld. Assessing Officer. Pursuant to the direction of the Commissioner of Income Tax (Appeal) notices u/s 133(6) of the Act were issued at the various address submitted by the assessee.
The details of purchases and their replies have been duly mentioned at page-5 onwards of the impugned order. The assessee was asked to offer his explanation with respect the remand report and on some of the parties either the notices would not be served no reply was received. The confirmations filed by the assessee were also duly considered and finally it was found that the assessee could not partly prove the genuineness of the purchases either during assessment proceedings or during remand proceedings. The Commissioner of Income Tax (Appeal) finally found that the assessee could not reconcile the under hand purchases made by it and thus he affirmed the disallowance to the tune of Rs.42,51,479/- out of Rs.94,64,275/- worked out by the Ld. Assessing Officer.
The assessee is in further appeal before this Tribunal.
2.3. If the observation made in the assessment order, leading to addition made to the total income, conclusion drawn in the impugned order, material available on record, assertions made by the ld. respective counsel, if kept in juxtaposition and analyzed, there is no dispute to the fact that in spite of providing sufficient opportunities to the assessee, the assessee neither responded to the notices issued to it on various dates nor furnished requisite details, therefore, the assessment was framed u/s 144 of the Act.
Before the Commissioner of Income Tax (Appeal), the assessee filed written submissions, where were forwarded to the Ld. Assessing Officer, remand report was sought and after considering the factual matrix, contention of the assessee and finally, it was found that the assessee could not reconciled the difference of Rs.42,51,479/-. Before this Tribunal, the assessee has not proved any evidence contradicting the factual finding recorded in the impugned order except to take a argument which was taken before the Commissioner of Income Tax (Appeal). Before us, the assessee has contended that there is factual mistake in the figures contained in the impugned order. However, the assessee neither filed any application u/s 154 even after receipt of the order from the Commissioner of Income Tax (Appeal) and even till date. No further details, contradicting the finding of the Commissioner of Income Tax (Appeal) were filed before us. So far as, the contention of the assessee that adhoc disallowance was made by the Assessing Officer is not conclusively proved more so, wherever, the Commissioner of Income Tax (Appeal) found the explanation of the assessee to be reasonable, therefore, he substantially reduced the disallowance, consequently, it cannot be said to be adhoc disallowance at this stage, thus, we find no infirmity in the conclusion drawn by the Commissioner of Income Tax (Appeal). Thus, this ground of the assessee is having no merit, therefore, dismissed.
So far as, confirming the disallowance of Rs.27,10,669/- out of site expenses is concerned, identically remand report was sought from the Assessing Officer and it was found that expenses were incurred in cash like on cold drinks, petrol and diesel, miscellaneous expenses. The explanation of the assessee was that these expenses were incurred by site supervisor but no explanation was satisfactorily made. The total disallowance on site expenses was to the tune of Rs.33,88,336/- which was reduced to Rs.27,10,669/- by the Commissioner of Income Tax (Appeal). It is noticed that while coming to a particular conclusion, the ld. First Appellate Authority duly considered the explanation of the assessee and the factual matrix. It is noticed that no application u/s 154 of the Act was made by the assessee, if there was any error in the order, thus, though there is no merit in the contention of the assessee still by taking a lenient view, we reduce the disallowance to Rs.25 lakhs against Rs.27,10,669/- sustained by the Commissioner of Income Tax (Appeal), thus, this ground of the assessee is partly allowed.
Next ground pertains to confirming the addition of Rs.23,24,800/- as unexplained cash credits. The crux of argument is that unsecured loans were taken by the assessee to the tune of Rs.23,24,800/- which were unjustifiably treated as unexplained cash credit. The Commissioner of Income Tax (Appeal) duly considered the remand report, wherein, it was found that Shri Pravin Pandya, one of the loan creditors, was not even filing his income tax return and his creditworthiness was not proved, likewise, the PAN number of Shri Ashok Parandiwar was not tallying. Without going into much deliberation, there is uncontroverted finding in the impugned order, neither the loans were proved satisfactory nor the genuineness and creditworthiness by the assessee. Before us, also, the assessee has not proved the creditworthiness. If the creditor is not even filing his income tax return, how a loan can be extended to any person, meaning thereby, the creditworthiness of the creditor is not proved, thus, we affirm the conclusion drawn in the impugned order on the issue in hand.
The next ground pertains to confirming the disallowance of Rs.8,36,266/-, out of various expenses, debited to profit & loss account. The crux of argument on behalf of the assessee is that payments were made to various parties. The disallowance was made by the ld. Assessing Officer on the ground that there was no correlation between the ledger accounts and the bills filed by the assessee. Before the Commissioner of Income Tax (Appeal) bifurcation of the expenses were obtained and wherever the payment was made through cheque was allow to the tune of Rs.40,98,217/- and the cash component to the extent of Rs.41,81,334/-, wherein, the same were not supported by proper bills, the disallowance was sustained to the extent of 20% only. Considering the totality of facts and by taking a lenient view, we reduce the disallowance to Rs.7,36,266/- against sustaining Rs.8,36,266/- by the Commissioner of Income Tax (Appeal), thus, this ground of the assessee is partly allowed.
The last ground raised by the assessee is sustaining the addition of Rs.4,04,852/- as income from other sources. The crux of argument of the ld. counsel is that there is wrong finding by the Commissioner of Income Tax (Appeal) that this ground was not pressed by the assessee before him. We are not satisfied with this explanation of the assessee because, firstly, neither any proof was filed and secondly, even after receipt of impugned order, the assessee never filed any application before the Commissioner of Income Tax (Appeal) u/s 154 claiming that this ground was actually pressed. Mere claim is not enough, thus, we find no merit in the grounds of the assessee. Appeal of the assessee is partly allowed.
Now, we shall take up the appeal of the Revenue ( ), wherein, first ground raised pertains to granting relief of Rs.52,12,796/- out of the addition of Rs.94,64,275/- made on account of unproved purchases. The ld. DR advanced arguments, which is identical to the ground raised, whereas, the ld. counsel for the assessee, defended the conclusion in the impugned order. We have discussed this issue while deliberating upon ground number -1 of the appeal of the assessee and finally found that the Commissioner of Income Tax (Appeal) duly considered the factual matrix, reply of the assessee, observation made in the assessment order and on examination of facts reached to a particular conclusion.
Thus, we find no merit in the ground of the Revenue, therefore, dismissed.
The next ground raised pertains to granting relief of Rs.61,26,391/- out of contract expenses on which TDS was deducted. The ld. DR advanced argument, which is identical to the ground raised. It was also contended that there is contravention of Rule 46A of the rules. On the other hand, the ld. counsel for the assessee, defended the conclusion arrived at in the impugned order.
8.1. We have considered the rival submissions and perused the material available on record. It is noticed that the Commissioner of Income Tax (Appeal) granted relief to the assessee considering the totality of facts and the attendant circumstance that TDS was deducted on the expenses and even opportunity was granted to the Assessing Officer. Thus, there is no violation of Rule-46A of the Rules. The Commissioner of Income Tax (Appeal) is duly empowered to examine the evidences, if any, filed by the assessee. The relief was granted justifiably, therefore, there is no merit in the contention of the Revenue. This ground is, therefore, dismissed.
The next ground pertains to granting relief of Rs.6,77,667/- out of disallowance of Rs.33,88,336/- made on account of site expenses. Considering the totality of facts and the circumstance available on record, we find no infirmity in the conclusion drawn by the Commissioner of Income Tax (Appeal) and even we have granted a further part relief to the assessee, by taking a lenient view, but we find no infirmity in the order of the Commissioner of Income Tax (Appeal).
The last ground pertains to granting relief of Rs.12,33,622/-, out of addition of Rs.20,69,888/-, (various expenses claimed by the assessee) and sustaining the addition to the tune of Rs.8,36,266/-, being 20% of the expenses incurred in cash. Considering the arguments from both sides, we are in agreement with the conclusion of the Commissioner of Income Tax (Appeal) as the same was arrived at on examination of facts and the ground realties, therefore, we affirm the stand of the Commissioner of Income Tax (Appeal).
Finally, the appeal of the assessee is partly allowed and that of the Revenue is dismissed.
This order was pronounced in the open in the presence of ld. representatives from both sides at the conclusion of the hearing on 05/04/2016.