Smt Ashaben Manojkumar Joshi, v. The Assistant Commissioner Of Income Tax, Gandhidham Circle, GANDHIDHAM

CO 22/RJT/2011 | 2005-2006
Pronouncement Date: 16-07-2011 | Result: Dismissed

Appeal Details

RSA Number 2224923 RSA 2011
Assessee PAN AFDPJ0877J
Bench Rajkot
Appeal Number CO 22/RJT/2011
Duration Of Justice 4 month(s) 24 day(s)
Appellant Smt Ashaben Manojkumar Joshi,
Respondent The Assistant Commissioner Of Income Tax, Gandhidham Circle, GANDHIDHAM
Appeal Type Cross Objection
Pronouncement Date 16-07-2011
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted DB
Tribunal Order Date 16-07-2011
Date Of Final Hearing 02-06-2011
Next Hearing Date 02-06-2011
Assessment Year 2005-2006
Appeal Filed On 22-02-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH RAJKOT BEFORE SHRI A.L. GEHLOT (AM) AND SHRI N.R.S. GANESA N (JM) I.T.AS. NO.1008 & 1009/RJT/2010 (ASSESSMENT YEARS 2005-06 & 2006-07) THE ACIT GANDHIDHAM CIRCLE VS SMT. ASHABEN MANOJKU MAR JOSHI GANDHIDHAM PROP ASHA CONSTRUCTION CO UMIYA NAGAR NR. SOMAIYA DISPENSARY NAKHATRANA-KUTCH PAN : AFDPJ0877J (APPELLANT) (RESPONDENT) C.OS NO. 22 & 23/RJT/2011 (ARISING OUT OF I.T.AS. NO.1008 & 1009/RJT/2010) (ASSESSMENT YEARS 2005-06 & 2006-07) SMT. ASHABEN MANOJKUMAR JOSHI VS THE ACIT GANDHIDH AM CIRCLE PROP ASHA CONSTRUCTION GANDHIDHAM NAKHATRANA (CROSS OBJECTOR) (RESPONDENT) REVENUE BY : SHRI MK SINGH RESPONDENT BY: SHRI JC RANPURA O R D E R PER N.R.S. GANESAN JM THE REVENUE FILED THE APPEALS FOR ASSESSMENT YEARS 2005-06 & 2006-07 AND THEY ARISE OUT OF THE INDEPENDENT ORDERS DATED 02-03-201 0 AND 24-02-2010 RESPECTIVELY PASSED BY THE CIT(A)-II RAJKOT. THE ASSESSEE HAS FILED THE CROSS OBJECTIONS AGAINST THE VERY SAME ORDERS OF THE CIT(A). SINCE THE APPEALS AND CROSS OBJECTIONS PERTAIN TO THE SAME ASSESSEE FOR THE SAKE OF CONVENIENCE WE HEAR D THEM TOGETHER AND ARE BEING DISPOSED OFF BY THIS COMMON ORDER. ITA NO.1008/RJT/2010 2. LET US FIRST TAKE APPEAL FOR ASSESSMENT YEAR 200 5-06. THE ONLY GRIEVANCE OF THE REVENUE IN THIS APPEAL IS WITH REGARD TO RESTRICTIO N OF ADDITION TO RS.2 30 717 AS AGAINST TOTAL ADDITION OF RS.12 23 167 TOWARDS DISALLOWANCE OF LABOUR EXPENSES. 3. SHRI MK SINGH THE LD.DR SUBMITTED THAT THE ASSE SSEE CLAIMED LABOUR EXPENSES TO THE EXTENT OF RS. 1 22 31 670. IN THE ABSENCE O F ANY VERIFIABLE VOUCHERS THE ITAS NO.1008 & 1009/RJT/2010 2 ASSESSING OFFICER DISALLOWED 10% OF THE TOTAL LABOU R EXPENSES. THE CIT(A) WHILE FINDING THAT THE VOUCHERS ARE NOT VERIFIABLE; TELESCOPED TH E CASH CREDIT CONFIRMED BY HIM TO THE EXTENT OF RS. 9 92 450. ACCORDINGLY THE CIT(A) WHI LE CONFIRMING THE ADDITION TO THE EXTENT OF RS. 2 30 717 DELETED THE ADDITION TO THE EXTENT OF RS.9 92 450. ACCORDING TO THE LD.DR THE CIT(A) OUGHT NOT TO HAVE TELESCOPED THE CASH CREDIT CONFIRMED BY HIM. 4. ON THE CONTRARY SHRI JC RANPURA THE LD.REPRESE NTATIVE FOR THE ASSESSEE SUBMITTED THAT THE CIT(A) CONFIRMED THE CASH CREDIT . HOWEVER THE ASSESSEE FILED THE CROSS OBJECTION AGAINST THE ORDER OF CIT(A). ACCOR DING TO THE LD.REPRESENTATIVE THE ASSESSEE INCURRED THE EXPENDITURE. THE ACCOUNTS OF THE ASSESSEE WERE AUDITED. THE AUDITORS AND THE ASSESSING OFFICER HAVE NOT POINTED OUT ANY MISTAKE IN THE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE. THEREFORE THE ASSESSING OFFICER HAS NOT JUSTIFIED IN REJECTING THE BOOKS OF ACCOUNT OF THE ASSESSEE W ITHOUT POINTING OUT ANY MISTAKE. HOWEVER THE CIT(A) FOUND THAT THE CASH GENERATED F OR INFLATING THE EXPENDITURE WOULD HAVE COME IN THE FORM OF CASH CREDIT TO THE EXTENT OF RS.9 92 450. ACCORDING TO THE LD.REPRESENTATIVE THE WORK OF THE ASSESSEE WAS EXE CUTED IN THE REMOTE VILLAGES WHERE DUE TO INADEQUATE FACILITIES PUCCA VOUCHERS CANNOT BE MAINTAINED. ACCORDING TO THE LD.REPRESENTATIVE THE ACCOUNTS ARE HANDLED BY SEMI QUALIFIED STAFF THEREFORE THERE MAY BE MINOR DEFECTS IN THE VOUCHERS PREPARED BY THE AS SESSEE. HOWEVER THE EXPENDITURE INCURRED BY THE ASSESSEE IS GENUINE. SINCE THE ASS ESSING OFFICER HAS NOT POINTED OUT THAT THE EXPENDITURE WAS EITHER BOGUS OR INFLATED T HERE IS NO QUESTION OF ANY DISALLOWANCE. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND HAVE ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. WHEN THE ASSESSE E CLAIMS EXPENDITURE EITHER TOWARDS LABOURERS OR OTHERWISE IT IS FOR THE ASSESSEE TO SU BSTANTIATE THE CLAIM BY PRODUCING NECESSARY MATERIAL. IN THIS CASE ADMITTEDLY THE VOUCHERS ARE NOT VERIFIABLE. WHEN THE ASSESSEE COULD NOT SUBSTANTIATE THE EXPENDITURE INC URRED IN OUR OPINION THE CIT(A) HAS RIGHTLY CONFIRMED THE SAME. WITH REGARD TO THE CRE DIT FOUND DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE EXPLAINED BEFO RE THE ASSESSING OFFICER THAT THE CASH WAS WITHDRAWN FROM THE BANK BY A CHEQUE DATED 16-06-2004. ON VERIFICATION THE ASSESSING OFFICER FOUND THAT NO CASH WAS WITHDRAWN BY THE ASSESSEE ON THE SAME CHEQUE BUT IN FACT THE VERY SAME CHEQUE WAS ISSUED TO SOME THIRD PARTY. THEREFORE THE CIT(A) FOUND THAT THE ASSESSEE HAS FAILED TO PROVE THAT THE CASH WAS WITHDRAWN FROM THE ITAS NO.1008 & 1009/RJT/2010 3 BANK FOR THE PURPOSE OF CREDITING THE SAME IN THE A CCOUNTS. IN RESPECT OF ANOTHER CASH CREDIT OF RS.2 32 450 THE ASSESSEE CLAIMED THAT DEP OSIT WAS RECEIVED FROM 13 PERSONS. IN THE ABSENCE OF ANY NECESSARY MATERIAL TO PROVE T HE GENUINENESS OF THE DEPOSIT THE CIT(A) CONFIRMED THE ADDITION. THEREFORE TO THE E XTENT OF RS.9 92 450 WHICH WAS CONFIRMED BY CIT(A) SHOULD BE TELESCOPED WHILE CONS IDERING THE LABOUR EXPENSES. IN OUR OPINION THE CIT(A) HAS RIGHTLY TELESCOPED THE ADDITION U/S 68 TO THE EXTENT OF RS.9 92 450 AND CONFIRMED THE BALANCE AMOUNT OF RS. 2 30 717 TOWARDS INFLATED LABOUR EXPENSES. THEREFORE WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF LOWER AUTHORITY. ACCORDINGLY THE SAME IS CONFIRMED. 6. IN THE RESULT BOTH APPEAL OF THE REVENUE IN ITA NO.1008/RJT/2010 AND CROSS OBJECTION OF THE ASSESSEE IN CO NO.22/RJT/2011 ARE DISMISSED. 7. NOW COMING TO THE APPEAL FOR ASSESSMENT YEAR 200 6-07 THE ONLY ISSUE ARISE FOR CONSIDERATION IN THE DEPARTMENTAL APPEAL AS WELL IN THE CROSS OBJECTION IS ESTIMATION OF PROFIT. 8. SHRI MK SINGH THE LD.DR SUBMITTED THAT DURING T HE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER FOUND THAT THE B OOKS MAINTAINED BY THE ASSESSEE WERE NOT RELIABLE AND IT DID NOT REFLECT THE CORREC T PROFIT AND THEREFORE THE BOOKS WERE REJECTED. AFTER REJECTING THE BOOKS OF ACCOUNT TH E ASSESSING OFFICER ESTIMATED THE PROFIT AT 8%. ACCORDINGLY THE DIFFERENCE BETWEEN THE INC OME DISCLOSED BY THE ASSESSEE AND THAT ESTIMATED BY THE ASSESSING OFFICER WAS ADDED T O THE TOTAL INCOME. ON APPEAL BY THE ASSESSEE THE CIT(A) FOUND THAT THE ASSESSING OFFIC ER IS NOT CORRECT IN REJECTING THE BOOKS OF ACCOUNT WITHOUT POINTING OUT ANY SPECIFIC DEFECT S. THE ASSESSEE RETURNED THE NET PROFIT AT 3.57% BEFORE DEPRECIATION IN THE EARLIER ASSESSMENT YEARS. HOWEVER IN THE YEAR UNDER CONSIDERATION THE ASSESSEE HAS RETURNED ONLY 1.54% NET PROFIT. IN THE ABSENCE OF ANY SATISFACTORY EXPLANATION THE CIT(A) FIXED THE NET PROFIT AT 3% ON THE RETURNED TURNOVER OF RS.3 81 17 372. 9. ACCORDING TO THE LD.DR THE CIT(A) OUGHT TO HAVE CONFIRMED THE ESTIMATION OF PROFIT AT 8% SINCE THE REJECTION OF BOOKS OF ACCOUN T WAS CONFIRMED BY CIT(A). ITAS NO.1008 & 1009/RJT/2010 4 10. ON THE CONTRARY SHRI JC RANPURA THE LD.REPRES ENTATIVE FOR THE ASSESSEE SUBMITTED THAT THE ASSESSING OFFICER REJECTED THE B OOKS OF ACCOUNT ON THE GROUND OF LOW GROSS PROFIT AND NET PROFIT AS COMPARED TO EARLIER YEARS WITHOUT POINTING OUT ANY MATERIAL DEFECT IN THE BOOKS OF ACCOUNT. ACCORDING TO THE L D.REPRESENTATIVE ESTIMATION OF NET PROFIT AT 3% IS NOT JUSTIFIED WITHOUT BRINGING ANY CONCRETE MATERIAL ON RECORD. THEREFORE ACCORDING TO THE LD.REPRESENTATIVE THE CIT(A) OUGH T TO HAVE DELETED THE ENTIRE ADDITION MADE BY THE ASSESSING OFFICER. THE LD.REPRESENTATI VE FURTHER SUBMITTED THAT THE BOOKS OF ACCOUNT OF THE ASSESSEE WERE AUDITED AND THE AUDITO R HAS NOT POINTED OUT ANY DEFECT. THE ASSESSING OFFICER ALSO COULD NOT PINPOINT ANY D EFECT IN THE BOOKS OF ACCOUNT EXCEPT THAT THE CASH VOUCHERS ARE NOT MAINTAINED PROPERLY. THEREFORE THE REJECTION OF BOOKS OF ACCOUNT IS NOT JUSTIFIED. THE LD.REPRESENTATIVE PL ACED HIS RELIANCE ON THE DECISION OF THIS BENCH OF THE TRIBUNAL IN M/S YOGIRAJ DEVELOPERS PVT LTD IN ITA NO.3928/AHD/1996 & NO.4676/AHD/1996 ORDER DATED 24-07-2003 AND SUBMITT ED THAT IN THE ABSENCE OF ANY DEFECT IN THE BOOKS OF ACCOUNT MAINTAINED BY THE AS SESSEE IT CANNOT BE REJECTED U/S 145 OF THE ACT. REFERRING TO THE JUDGMENT OF THE ALLAH ABAD HIGH COURT IN THE CASE OF NISAR BIRI SIKKA NO.1 VS CIT 174 TAXMAN 51 (ALL) THE LD.R EPRESENTATIVE SUBMITTED THAT WHEN THE ILLITERATE LABOURERS HAVE INDICATED PAYMENT OF WAGE S BY SELF MADE VOUCHERS WHICH ARE NOT FOUND TO BE BOGUS COULD NOT BE MADE BASIS OF R EJECTION. IN THIS CASE ACCORDING TO THE LD.REPRESENTATIVE THE PAYMENT WAS NOT FOUND BO GUS THEREFORE THE ASSESSING OFFICER IS NOT CORRECT IN REJECTING THE BOOKS OF ACCOUNT. 11. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EIT HER SIDE AND HAVE ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FIRST ISSUE ARISES FOR CONSIDERATION IS WHETHER THE LOWER AUTHORITIES ARE RIGHT IN REJECTING THE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE. THE MAIN CONTENTION OF THE ASSESSEE IS THAT THE PAY MENT OF LABOUR EXPENSES WAS NOT FOUND TO BE BOGUS SINCE THE WORK WAS EXECUTED IN TH E REMOTE VILLAGES AND THE VOUCHERS ARE PREPARED BY SEMI QUALIFIED EMPLOYEES THEREFORE THERE WAS MINOR DEFECT IN THE VOUCHER. THE FACT REMAINS THAT THE ASSESSEE HAS NO PROPER VOUCHERS FOR PAYMENT OF LABOUR CHARGES. THERE MAY BE DEFECT IN THE VOUCHER BUT THE VOUCHER HAS TO NECESSARILY INDICATE TO WHOM THE MONEY WAS PAID IN CASE THERE AROSE A DOUBT. WHEN THE ASSESSING OFFICER SAYS THAT THE VOUCHER PRODUCED BY THE ASSESSEE IS NOT VERIFIABLE AND HE COULD NOT IDENTIFY THE PAYEES IN OUR OPINION T HE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE MAY NOT REFLECT THE CORRECT PROFIT OF BUSI NESS. IT IS NOT A MISTAKE IN THE VOUCHER IT IS THE ABSENCE OF INDICATION IN THE VOU CHER TO IDENTIFY THE PERSON TO WHOM THE ITAS NO.1008 & 1009/RJT/2010 5 MONEY WAS PAID. HAD THERE BEEN ANY INDICATION IN T HE VOUCHER THEN IT IS FOR THE ASSESSING OFFICER TO VERIFY AND FIND WHETHER THE PA YMENT IS REALLY MADE OR NOT. SINCE THE ASSESSING OFFICER COULD NOT VERIFY THE VOUCHER AND COULD NOT FIND THE GENUINENESS OF THE PAYMENT THE CONTENTION OF THE ASSESSEE THAT THE PA YMENT WAS NOT FOUND TO BE BOGUS IS NOT JUSTIFIED AT ALL. THE PAYMENT CAN BE FOUND TO BE BOGUS PROVIDED THE ASSESSEE HAS FURNISHED THE DETAILS OF PERSONS TO WHOM IT WAS PAI D. IN THE ABSENCE OF SUCH DETAILS THE LOWER AUTHORITY HAS RIGHTLY REJECTED THE BOOKS OF A CCOUNT. 12. NOW COMING TO THE ESTIMATION OF PROFIT THE PRO FIT HAS TO BE ESTIMATED AFTER CONSIDERING VARIOUS FACTORS SUCH AS AVAILABILITY OF LABOURERS NATURE OF WORK EXECUTED AVAILABILITY OF THE RAW MATERIAL PROXIMITY OF THE PLACE WHERE THE WORK WAS CARRIED OUT THE AVAILABILITY OF INFRASTRUCTURE AROUND THE VICINITY AND THE GROSS PROFIT RATE OF THE ASSESSEE FOR THE EARLIER ASSESSMENT YEAR AND THE PROFIT RATE OF THE SIMILARLY PLACED TRADER IN THAT LOCALITY ETC. IN THIS CASE THE ASSESSING OFFICER WITHOUT CONSIDERING ALL THESE FACTORS ESTIMATED THE PROFIT AT 8%. IT IS NOT KNOWN HOW TH E ASSESSING OFFICER HAS COME TO THE CONCLUSION THAT THE PROFIT OF THE ASSESSEE WAS AT 8 %. THE CIT(A) WITHOUT CONSIDERING ALL THESE ASPECTS ESTIMATED THE PROFIT AT 3%. IN OUR O PINION THOUGH LITTLE BIT OF GUESS WORK IS REQUIRED FOR ESTIMATION OF PROFIT IT HAS TO BE EST IMATED ON THE BASIS OF THE MATERIAL AVAILABLE ON RECORD AND AFTER CONSIDERING ALL THE F ACTORS SUCH AS AVAILABILITY OF LABOURERS AVAILABILITY OF RAW MATERIAL PLACE IN WHICH THE WO RK WAS EXECUTED INFRASTRUCTURE FACILITY AVAILABLE AROUND THE PLACE OF EXECUTION OF WORK PO TENTIALITY FOR FUTURE DEVELOPMENT GROSS PROFIT OF THE ASSESSEE IN THE EARLIER ASSESSM ENT YEAR AND THE PROFIT MARGIN OF THE SIMILARLY PLACED TRADERS IN THE LOCALITY. AFTER CO NSIDERING ALL THESE FACTORS THE LOWER AUTHORITY HAS TO ESTIMATE A REASONABLE PROFIT ON TH E BASIS OF THE MATERIAL AVAILABLE ON RECORD. SINCE SUCH AN EXERCISE WAS NOT DONE BY THE LOWER AUTHORITIES WE SET ASIDE THE ORDER OF THE LOWER AUTHORITIES AND REMIT BACK THE M ATTER TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSING OFFICER SHALL EXAMINE ALL T HE ABOVE FACTORS AND THEREAFTER ESTIMATE THE PROFIT AFTER GIVING A REASONABLE OPPORTUNITY TO THE ASSESSEE. 13. AS A RESULT BOTH THE APPEAL FILED BY THE REVEN UE AND THE CROSS OBJECTION FILED BY THE ASSESSEE ARE TREATED AS ALLOWED FOR STATISTICA L PURPOSE. 14. IN THE RESULT APPEAL OF THE REVENUE FOR AY 200 5-06 IS DISMISSED AND THAT OF THE AY 2006-07 IS TREATED AS ALLOWED FOR STATISTICAL P URPOSE; WHEREAS THE CROSS OBJECTION ITAS NO.1008 & 1009/RJT/2010 6 FILED BY THE ASSESSEE FOR AY 2005-06 IS DISMISSED A ND THAT OF AY 2006-07 IS TREATED AS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 17-06-2011. SD/- SD/- (A.L. GEHLOT) (N.R.S. GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER RAJKOT DT : 17 TH JUNE 2011 PK/- COPY TO: 1. ASSESSEE 2. REVENUE 3. THE CIT(A)-II RAJKOT 4. THE CIT-I RAJKOT 5. THE DR I.T.A.T. RAJKOT (TRUE COPY) BY ORDER ASSTT.REGISTRAR ITAT RAJKOT