M/s. Akta Associates Ajari, Modasar Chowkdi, Bodeli, Dist

IN THE INCOME TAX APPELLATE TRIBUNAL
“C” BENCH, AHMEDABAD
BEFORE SHRI MUKUL Kr. SHRAWAT, JUDICIAL MEMBER AND
SHRI ANIL CHATURVEDI ACCOUNTANT MEMBER
ITA No.608/Ahd/2013
A.Y.2008-09
M/s. Akta Associates
Ajari, Modasar
Chowkdi, Bodeli, Dist.
Baroda.
PAN : AAHFA 5713F
Vs ACIT, Range-5, Baroda.
(Appellant)
(Respondent)
Revenue by :
Assessee(s) by :
Shri M.K. Singh, Sr.D.R..
Shri Tushar Hemani, A.R.
सुनवाई क तार ख/ Date of Hea ring
:
घोषणा क तार ख /Date of P ronouncement:
10/03/2015
13/03/2015
आदेश /O R D E R
PER: MUKUL KUMAR SHRAWAT, JUDICIAL MEMBER
This is an Appeal filed by the Assessee arising from the order of
learned CIT(A)-V, Baroda dated 05.12.2012 and the only ground raised
before us is reproduced below:“1.
The ld. CIT(A) has erred both in law and on the facts of the case in
confirming the disallowance of Rs.9,45,762/- made out of sub-contract
expenses which is not permissible and tenable in law.”
2.
Facts in brief as emerged from the corresponding assessment order
passed u/s.143(3) dated 28.12.2010 were that the Assessee firm is in the
business as a civil contractor. The Assessee was engaged during the year
in the construction of a road being the Government registered contractor
for road construction for the R&B Department of Government. The AO
has also noted that the Assessee was having a hot and mix plant. The
ITA No.608/Ahd/2013
M/s. Akta Associates Vs. ACIT, Range-5, Baroda.
For A.Y.2008-09
-2total receipts of the Assessee were to the tune of Rs.16,25,17,941/- and
the net profit @ 9.11 % was declared at Rs.1,48,11,605/- and the return
was filed on an income of Rs.79,06,800/-. The AO has perused the
details of payment to sub-contractor. It was found that a sum of
Rs.9,45,762/- was paid to a sub-contractor, namely, Sri Prateek J. Shah.
The return of Shri Prateek J. Shah was examined by the AO and noted
that he has earned salary from HBL Global Pvt. Ltd., therefore, the AO
had doubted the said payment on the ground that Mr. Shah being an
employee might not have actually done any sub-contract work. However,
statement of Mr. Shah was recorded u/s.131 of IT Act. Although, the AO
has noted that Mr. Prateek Shah in his statement has stated about the subcontract work of road construction was done by him for the Assessee at
Chotta Udepur, but according to AO other factors in his statement have
proved that actually no work could have been done by Mr. Shah as subcontractor. According to AO, he was working at Baroda, therefore, it was
not possible for him to execute any sub-contract work. After narrating
few other reasons, the AO has disallowed the claim and made the
addition.
3.
When the matter was carried before the First Appellate Authority,
learned CIT(A) has reproduced the assessment order and the contention
of the Assessee and thereafter passed the following order:
“4.2 I have given my careful consideration to the facts of the case as also the
observation of the AO and the arguments put forth by the AR. Looking to the
fact that Shri Pratik J. Shah was a full-time employee of a private limited
company called HBL Global Pvt. Ltd. and was working six days a week and
he had no experience in road construction and also looking to the fact that he
was related to one of the partners in the appellant firm and he has not been
able to furnish any evidence regarding expenditure made for completion of
the work claimed to be done by him, I'm of the opinion that the AO was fully
justified in disallowing the sub contract expenses amounting to Rs.9,45,762/debited against the name of Shri Pratik J.Shah. Entry in the books of the
ITA No.608/Ahd/2013
M/s. Akta Associates Vs. ACIT, Range-5, Baroda.
For A.Y.2008-09
-3appellant reproduced by the AO in the assessment order also shows that
something was not right about this expenditure. Disallowance of
Rs.9,45,762/-made by the AO is hereby confirmed.”
4.
From the side of the Assessee, learned AR, Mr. Tushar Hemani
appeared and pleaded that certain facts were not correctly appreciated by
the Revenue Authorities, as listed below:
“1. Pratik Shah has carried out sub-contract work for appellant at Chhota
Udepur in lieu of which sub-contract charges of Rs.9.45,762/- have been paid
to him.
2. AO and CIT(A) disallowed the said expenses broadly because Pratik Shah
was full time employee of a private company and was working for six days a
week at Baroda owing to which he couldn't have carried out the work at
Chhota Udepur.
3. AO and CIT(A) ought to have appreciated that Pratik Shah was not given
work on regular/daily basis but he was given patch of road construction work
in February/March of the year under consideration which was to be
completed within 20/25 days.
4. Pratik Shah has, in his statement, stated that he has done such work for the
appellant. He has stated that he was working with a finance company and his
job was such that he was not to go office in the evening. He further clarified
that he used to visit Chhota Udepur at night to supervise the work and used to
get work done through mukkadams.
5. Chhota Udepur is situated at around 100 kms from Baroda. AO and CIT(A)
ought to have appreciated that to manage both the responsibilities for 20/25
days in an year in not at all a difficult task.
6. Also, Pratik Shah was an employee of the appellant during 2000 to 2003
and he was supervising such road construction work during his tenure. Thus,
Pratik Shah already had the exposure of the kind of work done by him during
the year under consideration for the appellant.
7. Further, Pratik Shah has disclosed such income u/s 44AD in his returned
income.
8. Such payment has been made by cheque after deducting tax at source.”
5.
On the other hand, from the side of the Revenue-Department,
learned Sr.D.R. has vehemently supported the order of the authorities
below. He has contested that a payment merely made by cheque does not
prove the genuineness as held by various Courts especially when all other
circumstantial evidences were against the claim of the Assessee. Learned
Sr.D.R. has pleaded that there were several circumstantial factors
ITA No.608/Ahd/2013
M/s. Akta Associates Vs. ACIT, Range-5, Baroda.
For A.Y.2008-09
-4discussed by the AO should not be ignored. He has finally argued before
us that the addition should be confirmed.
6.
We have heard both the sides at some length. We have carefully
perused the orders of the authorities below in the light of the compilation
filed before us. The compilation contains written submission as well as
income tax returns of sub-contractor, Shri Prateek Shah for A.Y.2008-09
along with the copy of bill raised by him. Our attention has been drawn
on the income declared by Sri Prateek J. Shah which contained the gross
receipts claimed to have been received as sub-contractor by the Assessee.
There was no denial of the fact that the Assessee was an employee of an
another company but the Assessee has simultaneously also listed several
circumstantial evidences such as payments through cheque, TDS
deducted, bill raised, etc. Rather, it has also been argued that without the
help of the said sub-contractor, the Assessee was not in a position to
complete the construction of the road within a short span, the period
given by the Department to complete the construction of road. There is
no denial of this fact, as well as, that the said sub-contractor had appeared
before the AO and accepted the payment received as a sub-contractor.
Therefore, we are of the view that the documentary evidences which
were placed before us in support of the payment made to the said subcontractor, it is difficult for us to ignore those evidences and approve the
finding of the AO based upon the presumption that the said subcontractor might not have executed a work being an employee of an
another company. Such an assumption cannot be sustained in the eyes of
law. We, therefore, reverse this finding of Revenue Authorities and direct
to delete the addition. Resultantly, the ground is allowed.
ITA No.608/Ahd/2013
M/s. Akta Associates Vs. ACIT, Range-5, Baroda.
For A.Y.2008-09
-57.
In the result, the Appeal of the Assessee is allowed.
Sd/-
Sd/-
(ANIL CHATURVEDI)
ACCOUNTANT MEMBER
(MUKUL Kr. SHRAWAT)
JUDICIAL MEMBER
Ahmedabad; Dated 13/03/2015
Prabhat Kr. Kesarwani, Sr. P.S.s
आदेश क
1.
2.
3.
4.
5.
6.
त ल प अ े षत/Copy of the Order forwarded to :
अपीलाथ / The Appellant
यथ / The Respondent.
संबं धत आयकर आयु त / Concerned CIT
आयकर आयु त(अपील) / The CIT(A)-III, Ahmedabad
वभागीय
त न ध, आयकर अपील य अ धकरण, अहमदाबाद / DR, ITAT, Ahmedabad
गाड फाईल / Guard file.
आदेशानुस ार / BY ORDER,
उप/सहायक पंजीकार (Dy./Asstt.Registrar)
आयकर अपील य अ धकरण, अहमदाबाद / ITAT, Ahmedabad