TMI Blog2014 (9) TMI 622X X X X Extracts X X X X X X X X Extracts X X X X ..... on which FBT was paid – Held that:- During the accounting year relevant to the assessment year under consideration, the assessee incurred expenditure under the head 'Pooja Expenses' - keeping in view the prevailing Indian customs and traditions some expenditure on pooja is necessary for smooth business operations and making employees happy to boost their productivity" - the turnover of the assessee is more than ₹ 92 crores and the Pooja expenses are only ₹ 2,81,113 - The business of the assessee is labour intensive because it is in the business of civil construction - the expenditure incurred by the assessee is quite reasonable and the disallowance of 50% of the expenditure on the presumption that the same was incurred for non-business purposes is not justified – Decided partly in favour of assessee. Building material expenses and consumable expenses disallowed – Held that:- The AO considered all the bills and vouchers and then he found only few mistakes - the AO has mentioned, the assessee has submitted the bills of all the parties for building material purchased and consumables along with copy of some ledger accounts and bank statements - when during remand procee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in law and facts of the case in confirming the addition of ₹ 6,79,87,117/- u/s 41(1) of the Income Tax Act, 1961, ignoring the details submitted and the onus discharged by the assessee, in respect of balances of sundry creditors, on account of the parties in question allegedly not responding to the notices issued u/s 133(6), which is arbitrary, unjustified and bad in law. 3. The facts of the case are that the assessee derives income from construction of civil work of commercial and residential buildings. For the year under consideration, the assessee filed the return declaring total income at ₹ 5,35,45,570/-. The total turnover of the assessee was ₹ 92.89 crores. During the course of assessment proceedings, the Assessing Officer found that there are sundry creditors amounting to ₹ 25,92,00,075/- as on 31st March, 2009. On detailed verification, he found that in respect of four creditors, to whom amount payable was ₹ 3,40,619/-, no transaction took place since 1.4.2008 to 31.3.2011. In respect of 19 creditors whose total credit balance amounted to ₹ 6,79,87,117/-, the notice issued u/s 133(6) was returned back unserved. Therefore, the Assessin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee's books of account as on 31st March, 2011. It would be evident from the heading of the column at page 6 of the assessment order. He stated that the reconciliation for the difference was given before the CIT(A). However, the CIT(A) did not consider the same and just sustained the addition without any justification. In respect of four parties with whom no transaction took place in four years, he submitted that merely because in the four years' time no transaction took place, it does not conclusively prove that the liability has ceased. In support of this contention, he relied upon the decision of Hon'ble Apex Court in the case of CIT Vs. Sugauli Sugar Works (P.) Ltd. [1999] 236 ITR 518. He further submitted that the Assessing Officer has relied upon the decision of Hon'ble Apex Court in the case of T.V. Sundaram Iyengar and Sons Ltd. (supra). However, the facts of the assessee's case are altogether different because, in the said case, the assessee had transferred the credit balance to the profit loss account, while, in the case of the assessee, the assessee has not transferred any liability to the profit loss account. He, therefore, submitted that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ransactions. Although the amounts received originally were not of income nature, the amounts remained with the assessee for a long period unclaimed by the trade parties. By lapse of time, the claim of the deposit became time-barred and the amount attained a totally different quality. It became a definite trade surplus. The assessee itself had treated the money as its own money and taken the amount to its profit and loss account. The amounts were assessable in the hands of the assessee. 8. From the above, it is evident that in the said case, the amount had become time barred and moreover, the assessee had transferred the amount to profit loss account. In the case of the assessee, admittedly, no amount is transferred to the profit loss account. Moreover, in respect of most of the amounts, there is no finding by the Assessing Officer that the amount has become barred by limitation. On the other hand, it has been pointed out by the assessee that in respect of the major additions made by the Assessing Officer for ₹ 6.79 crores being credit in the account of 19 parties, the payment has been made in the subsequent years. In view of the above, it is evident that the decision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the disallowance of ₹ 1,40,557/- incurred in respect of pooja expenses on which FBT was paid, alleging the same as non business expense and ignoring the submission and justification submitted, which is arbitrary, unjustified and bad in law. 11. We have heard the arguments of both the sides and perused relevant material placed before us. The facts of the case are that during the accounting year relevant to the assessment year under consideration, the assessee incurred expenditure of ₹ 2,81,113/- under the head 'Pooja Expenses'. The Assessing Officer disallowed 50% of the Pooja expenses holding 50% to be non-business expenditure. The Assessing Officer himself admitted However, keeping in view the prevailing Indian customs and traditions some expenditure on pooja is necessary for smooth business operations and making employees happy to boost their productivity . That the turnover of the assessee is more than ₹ 92 crores and the Pooja expenses are only ₹ 2,81,113/-. The business of the assessee is labour intensive because it is in the business of civil construction. Considering the facts of the case and specially the total turnover, the expenditur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs and then he found only few mistakes. It would be worthwhile to reproduce the relevant portion of the remand report:- II Disallowance of ₹ 1,03,24,302/- on account of unvouched expenses (Ground-4) The AO has mentioned 50 bills of Building material purchased and 14 bills of consumables and has stated that corresponding bills were not produced. Accordingly, 3% of total expenses ₹ 34,41,43,399/- working out to ₹ 1,03,24,302/- has been disallowed as not genuine expenses. The assessee's objections to the above addition is that the vouchers bills were asked to produce only on 23-12-2011 and there was hardly sufficient time because it was the fag end and more time was required for producing such voluminous data. This fact is confirmed from order sheet entry dated 23-12-2011 which reads as under: Sh. Manish Kr. Singh, CA appeared. Asked to file following:- 1) Produce stock register of materials for all sites. 2) Vouchers (in original) of consumable stores. 3) Ledger A/c of job work bills for major parties TDS deducted. 4) Bills for vehicle running repairs/maintenance, Mess expenses, Legal expenses, insurance expenses, postage/telephon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sumables, detected in the remand proceedings, which has been done without any time-constraints, the assessee cannot be totally absolved of the findings of the AO w.r.t. non-genuine or inflated expenses. However, quantum of disallowance will have to be decided on merits and in any case the same cannot be less than the mistakes detected in remand proceedings. 17. From the above, it is evident that the Assessing Officer has mentioned The assessee has submitted the bills of all the parties for building material purchased and consumables along with copy of some ledger accounts and bank statements . After verification of all the bills, he found that the expenses to the extent of ₹ 40,08,279/- are last year expenses but the same are already added back to the profit in the computation of income by the assessee itself. Apart from earlier year expenses, only two discrepancies were noted by him, one for ₹ 2,93,924/- and another for ₹ 2,23,590/-. In our opinion, when during remand proceedings, all bills and vouchers have been produced and have been examined by the Assessing Officer and total discrepancy was found only in respect of two bills amounting to ₹ 5,17,514 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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