M/s. Forte Point Construction Pvt. Ltd, New Delhi v. DCIT, New Delhi

ITA 1982/DEL/2009 | 2005-2006
Pronouncement Date: 25-02-2010 | Result: Allowed

Appeal Details

RSA Number 198220114 RSA 2009
Bench Delhi
Appeal Number ITA 1982/DEL/2009
Duration Of Justice 9 month(s) 13 day(s)
Appellant M/s. Forte Point Construction Pvt. Ltd, New Delhi
Respondent DCIT, New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 25-02-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted B
Tribunal Order Date 25-02-2010
Date Of Final Hearing 04-02-2010
Next Hearing Date 04-02-2010
Assessment Year 2005-2006
Appeal Filed On 12-05-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : B NEW DELHI BEFORE SHRI RAJPAL YADAV JUDICIAL MEMEBR AND SHRI R.C. SHARMA ACCOUNTANT MEMBER I.T.A NO. 1982/DEL/09 ASSESSMENT YEAR 2005-06 FORTE POINT CONSTRUCTION PVT. LTD. B-9/6345 VASANT KUNJ NEW DELHI. VS. DCIT CIRCLE 11 (1) NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI AJAY VOHRA ADVOCATE SHRI RO HIT GARG CA RESPONDENT BY : SHRI MANISH GUPTA DR ORDER PER RAJPAL YADAV JM: THE ASSESSEE IS IN APPEAL BEFORE US AGAINST THE ORD ER OF LD. CIT(A) DATED 12 TH MARCH 2009 PASSED FOR ASSTT. YEAR 2005-06. THE SOLITARY GRIEVANCE OF ASSESSEE IS THAT LD. CIT(A) H AS ERRED IN CONFIRMING THE DISALLOWANCE OF RS. 15 53 143/- OUT OF EXPENSES INCURRED ON PURCHASES OF BUILDING MATERIAL AS WELL AS PAID FOR JOB WORK. ITA NO.1982DEL/09 ASSTT. YEAR 2005-06 2 2. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE IS A COMPANY ENGAGED IN THE BUSINESS OF CIVIL CONSTRUCTION. IT H AS FILED ITS RETURN OF INCOME ON 30 TH AUGUST 2005 DECLARING TOTAL INCOME AT RS. 14 77 4 40/-. ON SCRUTINY OF THE ASSESSEE LD. AO FOUND THAT ASSES SEE HAD MADE PAYMENT OF RS. 3 28 26 446/- FOR JOB WORK ETC. HE I SSUED NOTICE U/S 133(6) TO VARIOUS PARTIES IN ORDER OF VERIFY THE GE NUINENESS OF THE PURCHASES OF RAW MATERIALS AND PAYMENTS FOR JOB WOR K. ACCORDING TO THE AO ASSESSEE HAD MADE PAYMENT OF RS. 923932/ TO ONE RAJENDER BUILDING MATERIAL SUPPLIER FOR SUPPLY OF BUILDING MATERIAL. THIS CONCERN DID NOT RESPOND TO THE NOTICE OF AO NOR THE ASSESSE E HAS FILED CONFIRMATION FROM THIS CONCERN IN SUPPORT OF ITS CL AIM. SIMILARLY ASSESSEE HAD MADE PAYMENT OF RS. 276240/- TO SHRI ABDUL WAHI D AS JOB WORK CHARGES FOR WOODEN WORK. ACCORDING TO THE AO THIS P ERSON ALSO DID NOT RESPOND TO HIS NOTICE. THE ASSESSEE HAD MADE PAYMEN T OF RS. 3 53 462/- TO SHRI KAMAL SINGH VERMA AS JOB WORK CH ARGES FOR MASONRY WORK. THIS PERSON ALSO DID NOT RESPOND TO THE NOTIC E OF AO. THE LD. AO CONFRONTED THE ASSESSEE WITH REGARD TO THIS INQUIRY . 3. IN RESPONSE TO THE QUERY OF AO IT WAS SUBMITTED BY THE ASSESSEE THAT BUILDING MATERIAL PURCHASED FROM RAJINDER BUIL DING MATERIAL SUPPLIER WAS USED AT CONSTRUCTION SITE OF EIL ASHRAY CGHS SO CIETY LTD. PLOT NO. ITA NO.1982DEL/09 ASSTT. YEAR 2005-06 3 36B SECTOR 56 GURGAON. THIS FACT CAN BE VERIFIED FROM THE BILLS AND CHALLANS. THE BUILDING HAS BEEN CONSTRUCTED. IT WAS ALSO POINTED OUT THAT ENTIRE PAYMENT WAS MADE THROUGH ACCOUNT PAYEE CHEQU E. ASSESSEE HAS PRODUCED COPY OF ACCOUNT OF RAJINDER BUILDING M ATERIAL SUPPLIER IN ITS BOOKS. COPIES OF THE BILLS/CHALLAN ISSUED BY TH E RAJINDER BUILDING MATERIAL SUPPLIER AND THE COPY OF CORPORATION BANK ACCOUNT STATEMENT INDICATING THE PAYMENT THROUGH ACCOUNT PAYEE CHEQUE . ACCORDING TO THE ASSESSEE IT TRIED TO CONTACT THE AFORESAID SUPPLIE R BUT CAME TO KNOW THAT THE SUPPLIER WAS NOT AVAILABLE AT THE SAID ADDRESS BECAUSE HE HAS LEFT THE PREMISES AND NEW ADDRESS WAS NOT AVAILABLE WITH THE ASSESSEE. WITH REGARD TO SHRI ABDUL WAHID ASSESSEE HAS CONTEN DED THAT THIS MAN HAS WORKED AS A CARPENTER AND MADE WOODEN CUPBOARD ETC. AT EIL ASHRAYA CGHS SOCIETY. THE ASSESSEE HAS PRODUCED BIL LS RECEIVED FROM THIS PERSON AND THE EVIDENCE EXHIBITING THE PAYMENT THROUGH ACCOUNT PAYEE CHEQUE. IT WAS INFORMED TO THE AO THAT THIS M AN IS REGULARLY ASSESSED WITH THE INCOME TAX DEPARTMENT. THE ASSESS EE GAVE HIS PERMANENT ACCOUNT NUMBER WITH THE INCOME TAX DEPART MENT. IN RESPECT OF SHRI KAMAL SINGH VERMA AGAIN ASSESSEE POINTED OU T THAT TOTAL PAYMENT WAS MADE THROUGH ACCOUNT PAYEE CHEQUE. HE H AS CARRIED OUT MASONRY WORK FROM BUILDING. ONLY A PAYMENT OF RS. 6 7058/- WAS MADE IN CASH BECAUSE HE OUGHT TO PAY THE AMOUNT TO THE L ABOURS WHO WERE ITA NO.1982DEL/09 ASSTT. YEAR 2005-06 4 ENGAGED BY HIM FOR CARRYING OUT MASON WORK AT THE S ITE. LD. AO DID NOT FIND MERIT IN THE CONTENTION OF ASSESSEE. LD. AO HA S HELD THAT IT IS FOR THE ASSESSEE TO PROVE THAT EXPENSES CLAIMED BY IT WERE WHOLLY AND EXCLUSIVELY INCURRED FOR THE PURPOSE OF THE BUSINES S. THE ASSESSEE FAILED TO FILE THE CONFIRMATION FROM THE PERSONS TO WHOM S UCH PAYMENTS WERE MADE. THUS ACCORDING TO THE AO ASSESSEE FAILED TO I NDICATE THAT THESE EXPENSES WERE WHOLLY AND EXCLUSIVELY INCURRED FOR T HE PURPOSE OF BUSINESS. 4. APPEAL TO THE LD. CIT(A) DID NOT BRING ANY RELIE F TO THE ASSESSEE. LD. COUNSEL FOR THE ASSESSEE WHILE IMPUGNING THE OR DERS OF REVENUE AUTHORITIES REITERATED HIS CONTENTION AS WERE RAISE D BEFORE THE AO. HE POINTED OUT THAT THE NATURE OF ASSESSEES JOB IS SU CH THAT IT HAS TO AVAIL THE SERVICES OF SUCH A SECTOR WHICH IS TOTALLY UNOR GANIZED. THE CARPENTER MASON SOMETIME DO NOT HAVE ANY PERMANENT ESTABLISHMENTS. THEY OPERATE FROM A RUNNING SITE AND KEEP ON CHANGI NG THEIR PLACES ACCORDING TO THE AVAILABILITY OF THE WORK. IT IS QU ITE DIFFICULT TO KEEP A TRACK OF SUCH TYPE OF SERVICE PROVIDER AFTER THREE FOUR Y EARS. THE AO HAS CONFRONTED ALL THESE MATERIALS TO THE ASSESSEE VID E LETTER DATED 13.12.2007 I.E. BARELY 15 DAYS PRIOR TO THE COMPLE TION OF ASSESSMENT. THE ASSESSEE HAS MADE A PAYMENT OF MORE THAN RS. 3 CRORES AND AO ITA NO.1982DEL/09 ASSTT. YEAR 2005-06 5 HAS CARVED OUT ONLY 3 SMALL PAYMENTS FOR DOUBTING THE GENUINENESS OF THE ASSESSEES CLAIM. ONE OF THE PAYEE IS AN INCOME TAX ASSESSEE . HIS PERMANENT ACCOUNT NUMBER WAS DULY DISCLOSED TO THE AO. THE MOBILE NUMBER OF SHRI ABDUL WAHID IS AVAILABLE ON BILLS. S IMILARLY MOBILE NUMBER OF RAJINDER BUILDING MATERIAL SUPPLIER IS A LSO AVAILABLE. THESE ASPECTS COULD HAVE BEEN VERIFIED BY THE AO. LD. DR ON THE OTHER HAND RELIED UPON THE ORDER OF AO. HE POINTED OUT THAT IT IS THE DUTY OF ASSESSEE TO PROVE THAT EXPENSES WERE INCURRED WHOLL Y AND EXCLUSIVELY FOR THE PURPOSE OF THE BUSINESS. 5. WE HAVE DULY CONSIDERED THE RIVAL CONTENTION AND GONE THROUGH THE RECORD CAREFULLY. FROM THE ASSTT. ORDER IT NOWH ERE DISCERNABLE WHEN THE AO STARTED THE INVESTIGATION. ACCORDING TO HIM NOTICE SENT U/S 133 (6) TO THESE THREE PARTIES RECEIVED WITHOUT CONFIRMATIO N. THERE IS NO DOUBT THAT IT IS THE DUTY OF THE ASSESSEE TO PROVE ON REC ORD THAT EXPENSES CLAIMED BY HIM WERE WHOLLY AND EXCLUSIVELY INCURRED FOR THE PURPOSE OF THE BUSINESS. IN THE PRESENT CASE A PECULIAR SITUAT ION HAS ARISEN BEFORE US ON THE ONE HAND NATURE OF ASSESSEE S BUSINESS DO INDICATE THAT IT IS QUITE DIFFICULT TO KEEP TRACK ON THE SMALL SERVICE PROVIDER I.E. CARPENTER MASON ETC. IN ORDER TO GET CONFIRMATION FROM THEM A FTER THREE FOUR YEARS ON THE OTHER HAND OBJECTION OF THE AO THAT ASSESSEE FAILED TO FILE ITA NO.1982DEL/09 ASSTT. YEAR 2005-06 6 CONFIRMATION FROM THESE PERSONS. WHEN WE LOOK WITH THE ANGLE OF THE BUSINESSMAN IN THE LIGHT OF STARK REALITIES HE WOUL D HAVE FACED FOR AVAILING THE SERVICES COUPLED WITH THE CIRCUMSTANC ES THAT ALL PAYMENTS WERE MADE THROUGH ACCOUNT PAYEE CHEQUE AND THE BANK STATEMENT WAS SUBMITTED BEFORE THE AO. WE ARE OF THE VIEW THAT NO DISALLOWANCE OUGHT TO HAVE BEEN MADE BY THE AO. IT IS IMPORTANT TO NO TE THAT ASSESSEE HAS DISCLOSED PERMANENT ACCOUNT NUMBER IN RESPECT OF SH RI ABDUL WAHID. THE AO DID NOT BOTHER TO MAKE INVESTIGATION IN HIS CASE. HE SIMPLY CONSTRUED THE CLAIM OF ASSESSEE AS NON GENUINE ON A CCOUNT OF NO RESPONSE FROM THESE PERSONS TO HIS LETTER. IT CAN B E A STRONG CIRCUMSTANCE IN A GIVEN CASE BUT IT IS ALSO IMPORTA NT TO KEEP IN MIND THAT AN EXPLANATION OR DEFENCE OF AN ASSESSEE BASED ON N UMBER OF FACTS SUPPORTED BY EVIDENCE AND CIRCUMSTANCES REQUIRED CO NSIDERATION WHETHER EXPLANATION IS SOUND OR NOT MUST BE DETERMI NED NOT BY CONSIDERING THE WEIGHT TO BE ATTACHED TO EACH SINGL E FACT IN ISOLATION BUT BY ASSESSING THE CUMULATIVE EFFECT OF ALL THE AFFEC TS IN THEIR SETTING AS A WHOLE. THE AO COULD HAVE MADE A CALL ON THE MOBILE NUMBER OF RAJINDER BUILDING MATERIAL SUPPLIER AS WELL AS SHRI ABDUL WA HID WHICH ARE AVAILABLE ON THEIR BILLS BUT NO SUCH EFFORTS WERE M ADE. THUS THE REASONING ASSIGNED BY LD. AO IS NOT SUFFICIENT TO M AKE THE DISALLOWANCE. WE COULD UNDERSTAND HIS CONCERN HAD HE MADE INQUIRY IN THE CASE OF ITA NO.1982DEL/09 ASSTT. YEAR 2005-06 7 ABDUL WAHID. TAKING INTO CONSIDERATION ALL THESE FA CTS AND CIRCUMSTANCES WE ALLOW THE APPEAL OF ASSESSEE AND D ELETE THE DISALLOWANCE. ORDER PRONOUNCED IN THE OPEN COURT ON 25.2.2010. [R.C. SHARMA] [RAJPAL YADAV] ACCOUNTANT MEMBER JUDICIAL MEMBER VEENA DATED: COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR ITAT TRUE COPY BY ORDER DEPUTY REGISTRAR ITAT