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M/s.Bhardwaj Construction Co. 286, Upadhyay Oil Mills, Mandawali Delhi-110092 Vs. ACIT, Circle-38(1), New Delhi
October, 30th 2019
                IN THE INCOME TAX APPELLATE TRIBUNAL
                      DELHI BENCH: `A', NEW DELHI

           BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER
                                 AND
              SHRI SUCHITRA KAMBLE, JUDICIAL MEMBER

                            ITA No.3562/Del/2015
                           Assessment Year: 2011-12

         M/S.BHARDWAJ CONSTRUCTION              Vs.     ACIT,
         CO.                                            Circle-38(1),
         286, UPADHYAY OIL MILLS,                       New Delhi
         MANDAWALI
         DELHI-110092
         PAN : AAFFB7212A
         (Appellant)                                    (Respondent)


             Appellant by          Sh. R.K.Mehra, CA
             Respondent by         Shri Gurmel Singh, Sr. DR

                   Date of hearing                    03.09.2019
                   Date of pronouncement              30.10.2019


                                     ORDER

PER SUCHITRA KAMBLE, JM:

        This appeal is filed by the assessee against the order dated
04.03.2015 passed by the CIT(A)-XX, New Delhi.


2.      The grounds of appeal are as under:


     1. That in any case and in any view of the matter, action of Ld. CIT(A) in not
     deleting the disallowance of Rs.20,21,420/- u/s 40A(3) of The Income Tax
     Act, 1961 fully as made by Ld. AO and further erred in sustaining the
     disallowance to the extent of Rs. 19,91,420/- which is bad in law and
     against the facts and circumstances of the case.

     2. That having regard to the facts and circumstances of the case, Ld. CIT(A)
     has erred in law and on facts in not deleting the disallowance of
                                   2
                                                       ITA No.3562/Del/2015



Rs.20,21,420/- u/s 40A(3) of The Income Tax Act, 1961 fully made by Ld.
AO and further erred in sustaining the disallowance to the extent of Rs.
19,91,420/- and that too without any basis, material and evidences
available on record.

3. That having regard to the facts and circumstances of the case, Ld. CIT(A)
has erred in law and on facts in confirming the action of Ld. AO in making
disallowance of Rs.4,553/- on account of 10% of telephone expenses being
of personal nature and that too by recording incorrect facts and findings and
without giving adequate opportunity of hearing.

4. That in any case and in any view of the matter, action of Ld. CIT(A) in
confirming the action of Ld. AO in making disallowance of Rs. 4,553/- on
account of 10% of telephone expenses being of personal nature is bad in law
and against the facts and circumstances of the case.


5. That having regard to the facts and circumstances of the case, Ld. CIT(A)
has erred in law and on facts in confirming the action of Ld. AO in making
disallowance of    Rs.2,251/- on account of donations and that too by
recording incorrect facts and findings and without giving adequate
opportunity of hearing.

6. That in any case and in any view of the matter, action of Ld. CIT(A) in
confirming the action of Ld. AO in making disallowance of Rs. 2,251/- on
account of donations is bad in law and against the facts and circumstances
of the case.

7. That having regard to the facts and circumstances of the case, Ld. CIT(A)
has erred in law and on facts in confirming the action of Ld. AO in making
disallowance of Rs.22,397/- on account of 10% of conveyance expenses
being of personal nature and that too by recording incorrect facts and
findings and without giving adequate opportunity of hearing.
                                   3
                                                    ITA No.3562/Del/2015



8. That in any case and in any view of the matter, action of Ld. CIT(A) in
confirming the action of Ld. AO in making disallowance of Rs. 22,397/- on
account of 10% of conveyance expenses being of personal nature is bad in
law and against the facts and circumstances of the case.

9. That having regard to the facts and circumstances of the case, Ld. CIT(A)
has erred in law and on facts in confirming the action of Ld. AO in making
disallowance of Rs.5,083/- on account of interest on TDS and that too by
recording incorrect facts and findings and without giving adequate
opportunity of hearing.






10.That in any case and in any view of the matter, action of Ld. CIT(A) in
confirming the action of Ld. AO in making disallowance of Rs. 5,083/- on
account of interest on TDS is bad in law and against the facts and
circumstances of the case.

11.That having regard to the facts and circumstances of the case, Ld. CIT(A)
has erred in law and on facts in confirming the action of Ld. AO in making
disallowance of Rs.33,726/- on account of 10% of depreciation on vehicle
being of personal nature and that too by recording incorrect facts and
findings and without giving adequate opportunity of hearing.

12.That in any case and in any view of the matter, action of Ld. CIT(A) in
confirming the action of Ld. AO in making disallowance of Rs. 33,726/- on
account of 10% of depreciation on vehicle being of personal nature is bad in
law and against the facts and circumstances of the case.


13.That in any case and in any view of the matter, action of Ld. CIT(A) in
confirming   the   additions/disallowance   and   passing      the   impugned
assessment order being contrary to law and facts and without providing
adequate opportunity of hearing and without considering the principles of
natural justice and the same is not sustainable on various legal and factual
                                           4
                                                              ITA No.3562/Del/2015



     grounds.
     14.That having regards to the facts and circumstances of the case, Ld.
     CIT(A) has erred in law and on facts in not reversing the action of the Ld. AO
     in charging interest u/s 234B and 234C of the Income Tax Act, 1961.


     15.That the appellant craves to leave to add, modify, amend or delete any of
     the grounds of appeal at the time of hearing and all the above grounds are
     without prejudice to each other."


3.      The Assessee is a firm and engaged in the business civil contractor and
deals in contract line from various years. Return of income in this case was
filed on 28.09.2011 declaring income at 28,42,500/-. The return of income
was processed u/s 143(1) of the Income Tax Act, 1961. Subsequently the case
was selected for scrutiny under CASS. First notice u/s 143(2) was issued on
01.08.2012 which was served upon the assessee within the stipulated
statutory    period.   Further    notices      u/s   142(1)   along   with   detailed
questionnaires      were issued to the assessee. In response Authorised
Representative of the assessee attended the assessment proceedings from
time to time with whom the case was discussed in detail. During the year
under consideration assessee has done the Civil Contract work of Noida,
G.D.A., U.P.R.N.N & Wood hill etc. The firm comprising four partners having
profit share ratio of 40%, 35%, 15% and 10% . The assessee was asked to
submit comparative chart of GP/ NP ratio for the current assessment year
and the previous assessment years. The chart was submitted by the assessee.
During the year under consideration the assessee has shown net profit of Rs.
21,66,527/- on gross receipts of         5,40,17,890/- thereby showing net profit
rate of 5.86%. There is a better NP Ratio from preceding two years. Hence, no
adverse inference is drawn on this issue by the assessing officer. The
Assessing Officer made various additions which will as follows :-


     I. Disallowance u/s 40A(3) for Rs. 2021420/- on the purchase which
     were above Rs. 20000/-.
                                        5
                                                          ITA No.3562/Del/2015



     II. Disallowance of Salary and Wages of Rs. 1,25,000/-
     III. Disallowance of Telephone Expenses of Rs. 4553/-
     IV. Disallowance of Donation of Rs. 2251/-
     V. Disallowance of Conveyance Expenses of Rs. 22397/-
     VI. Disallowance of Interest on TDS for Rs. 5083/-
     VII.Disallowance of Vehicle Depreciation for Rs. 33726/-


4.      Being aggrieved by the assessment order assessee filed appeal before
the CIT(A). The CIT(A) partly allowed the appeal of the assessee.


5.      The Ld. AR submitted that Ground Nos. 3 and 4 due to smallness of the
amount, same are not pressed. Hence Ground Nos. 3 and 4 are dismissed. As
regards to Ground No. 13, the same is also not pressed by the Ld. AR, hence
dismissed. Ground No. 14 is consequential, hence not adjudicated at this
juncture.


6.      As regards to Ground Nos. 1 and 2 relating to addition of Rs.
2021420/- under Section 40A(3) of the Act, as well as sustaining the
disallowance to the extent of Rs. 19,91,420/-, the Ld. AR submitted that the
assessee made the purchase of Cement from M/s. Nirmal Cement Store,
Ghaziabad during the year and bills were issued from time to time by M/s.
Nirmal Cement Store, Ghaziabad in favour of M/s. Bhardwaj Construction
Co. During the year in question following payment were made as per details :-

29.01.2011    Ch. No. 401023, Indian Mercantile Bank         14,035.00
30.03.2011    Ch. No. 382732, Punjab National Bank           10,400.00

                                                    24,435.00
The balance amount of Rs. 31,11,701.00 inclusive of opening balance of
Rs.8,56,196.00 as on 01.04.2010 was paid in subsequent years because M/s
Nirmal Cement Store is a regular supplier of Cement to the firm M/s
Bhardwaj Construction Co. Actually the Cement was supplied by M/s Nirmal
Cement Store during the year, for which " Confirmation of Ledger A/c" was
confirmed by the Prop. Ms. Nirmali Agarwal. The Ld. AR submitted that the
                                      6
                                                        ITA No.3562/Del/2015



said confirmation was furnished before the Assessing Officer during the
assessment proceedings alongwith connected Bills, but unfortunately the
"Cash Paid" has been mentioned by Pencil on Bills inadvertently. The Ld. AR
submitted that the assessee did not make the payment in cash to M/s Nirmal
Cement Store except two payments through cheques as mentioned. This fact
was also admitted by putting the signature of Nirmala Aggarwal Prop. M/s
Nirmal Cement Store in the ledger Account at the time of her confirmation.
The Ld. AR further submitted that the assessee furnished various documents
as demanded by the Assessing Officer from time to time and co-operating the
department since the fixation of the case. As there is no payments to Nirmal
Cement Store except to the extent of Rs. 24435/- during the period relevant
for A.Y 2011-2012, there is no case for disallowance of any amount U/s
40A(3)of the Act.


7.    The Ld. DR relied upon the assessment order as well as the order of the
CIT(A).


8.    We have heard both the parties and perused all the relevant material
available on record. It is pertinent to note that the assessee made the
purchase of Cement from M/s. Nirmal Cement Store, Ghaziabad during the
year and bills were issued from time to time by M/s. Nirmal Cement Store,
Ghaziabad in favour of M/s. Bhardwaj Construction Co. and only two
payment were made as per details filed by the assessee before the Assessing
Officer. The confirmation of M/s Nirmal Cement Store was also filed by the
assessee during the assessment proceedings alongwith connected Bills. As
per the contentions of the Ld. AR the assessee did not make the payment in
cash to M/s Nirmal Cement Store except two payments through cheques as
mentioned. This fact was also admitted by putting the signature of Nirmala
Aggarwal Prop. M/s Nirmal Cement Store in the ledger Account at the time of
her confirmation. This factual aspect was never commented by the Assessing
Officer as well as the CIT(A). Besides that the Assessing Officer as well as the
CIT(A) did not take the proper cognizance of the evidences produced before
                                       7
                                                         ITA No.3562/Del/2015



the authorities. Therefore, it will be appropriate to remand back this issue to
the file of the Assessing Officer. Needless to say, the assessee be given
opportunity of hearing by following principles of natural justice. Hence
Ground Nos. 1 and 2 are partly allowed for statistical purpose.


9.    As regards to Ground No. 5 and 6, relating to out of donation of Rs.
2251, the Ld. AR submitted that during the year, the assessee made the
donation for Rs. 2251/- to different parties as per details:-   :

16.07.2010      500.00            Shivratri (Kanwaris)
13.10.2010      200.00            Durga Puja
10.01.2011      1000.00           Sai Sandhya
12.02.2011      551.00            ShreeChitra BhimSharker Sansthan
               2251.00


The Ld. AR submitted that full and complete details of expenses related to
donation are recorded in the Books of A/c's of the assessee. The Ld. AR
submitted that the donation has been disallowed just on presumption.


10.   The Ld. DR relied upon the Assessment Order and the order of the
CIT(A).


11.   We have heard both the parties and perused all the relevant material
available on record. The Assessing Officer as well as the CIT(A) has not taken
the cognizance of the details relating to the donations and merely on the
presumptions disallowed. Therefore, it will be appropriate to remand back
this issue to the file of the Assessing Officer for further adjudication. Needless
to say, the assessee be given opportunity of hearing by following principles of
natural justice. Hence Ground Nos. 5 and 6 are partly allowed for statistical
purpose.







12.   As regards to Ground Nos. 7 and 8, relating to disallowance of Rs.
22,397/- on account of 10% of conveyance expenses being of personal
                                      8
                                                          ITA No.3562/Del/2015



nature, the Ld. AR submitted that the Assessing Officer disallowed a sum of
Rs. 22397/- out of total of such expenses at Rs. 223974/-. The only reason
given for the disallowance is for personal use of traveling & conveyance
Expenses. The Ld. AR submitted that the assessee furnished complete details
of such expenses. All items of such expenses are fully supported by vouchers
& bills. The expenses related to the business of the assessee and hence there
was no case of the addition in question of Rs. 22397/-.


13.   The Ld. DR relied upon the order of the CIT(A) and the Assessment
Order.


14.   We have heard both the parties and perused all the relevant material
available on record. It is pertinent to note that the assessee submitted the
details of the traveling and conveyance expenses, but the same was not
verified by the Assessing Officer. Therefore, it will be appropriate to remand
back this issue to the file of the Assessing Officer. Needless to say, the
assessee be given opportunity of hearing by following principles of natural
justice. Hence Ground Nos. 7 and 8 are partly allowed for statistical purpose.


15.   As regards to Ground No. 9 and 10 relating to disallowance of Rs. 5,083
on account of interest on TDS, the Ld. AR submitted that the assessee
deposited the Interest on TDS amounting to Rs. 5083/- which is incidental to
business and compulsory to fulfilled the terms and conditions laid down
under section 194 of Income Tax Act, 1961. The Ld. AR submitted that those
expenses are actual and genuine.


16.   The Ld. DR relied upon the order of the CIT(A) and the Assessment
Order.


17.   We have heard both the parties and perused all the relevant material
available on record. It is pertinent to note that the assessee was under
statutory obligation to deduct the income tax at the time of credit or/and
                                       9
                                                        ITA No.3562/Del/2015



payment to the payee. Therefore, the CIT(A) rightly sustain the disallowance
on account of interest on TDS. Hence, Ground Nos. 9 and 10 are dismissed.


18.    As regards to Ground Nos. 11 and 12, relating to disallowance on
account of depreciation claimed at Rs. 33,726/- on Cars, the Ld. AR
submitted that this disallowance is without any basis. The Ld. AR further
submitted that the vehicles have been used for business purposes and are
business assets. There is no valid ground given for this disallowance.


19.    The Ld. DR relied upon the assessment order as well as the order of the
CIT(A).


20.    We have heard both the sides and perused all the relevant material
available on record. It is pertinent to note that the vehicles have been used for
business purposes and are business assets of the assessee. Therefore, the
CIT(A) was not right in sustaining the said disallowance. Hence, Ground Nos.
11 and 12 are allowed.


21.    In result, the appeal of the assessee is partly allowed for statistical
purpose.
      Order is pronounced in the open court on 30th October, 2019.

       Sd/-                                              Sd/-

(N.K. BILLAIYA)                                   (SUCHITRA KAMBLE)
ACCOUNTANT MEMBER                                  JUDICIAL MEMBER

Dated: 30th October, 2019.
*BR*
Copy forwarded to:
1.    Appellant
2.    Respondent
3.    CIT
4.    CIT(A)
5.    DR
                                 10
                                                  ITA No.3562/Del/2015



                                        Asst. Registrar, ITAT, New Delhi




   Sl.                   Particulars                        Date
  No.
1.       Date of dictation:                              23/10/2019
2.       Date on which the draft of order is placed      23/10/2019
         before the Dictating Member:
3.       Date on which the draft of order is placed
         before the other Member:
4.       Date on which the approved draft of order
         comes to the Sr. PS/PS:
5.       Date of which the fair order is placed before
         the Dictating Member for pronouncement:
6.       Date on which the final order received after
         having been singed/pronounced by the
         Members:
7.       Date on which the final order is uploaded on
         the website of ITAT:
8.       Date on which the file goes to the Bench
         Clerk
9.       Date on which files goes to the Head Clerk:
10.      Date on which file goes to the Assistant
         Registrar for signature on the order:
11.      Date of dispatch of order:

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