The ACIT,Vapi Circle,, Vapi v. M/s. Pragati Industries, Vapi

ITA 2021/AHD/2011 | 2008-2009
Pronouncement Date: 30-04-2015 | Result: Dismissed

Appeal Details

RSA Number 202120514 RSA 2011
Assessee PAN AAEFP5853C
Bench Ahmedabad
Appeal Number ITA 2021/AHD/2011
Duration Of Justice 3 year(s) 8 month(s) 17 day(s)
Appellant The ACIT,Vapi Circle,, Vapi
Respondent M/s. Pragati Industries, Vapi
Appeal Type Income Tax Appeal
Pronouncement Date 30-04-2015
Appeal Filed By Department
Order Result Dismissed
Bench Allotted D
Tribunal Order Date 30-04-2015
Assessment Year 2008-2009
Appeal Filed On 12-08-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH AHMEDABAD MH BEFORE SHRI SHAILEND RA KUMAR YADAV JUDI CIAL MEMBER AND SHRI ANIL CHATURVEDI ACCOUNTANT MEMBER . ITA. NO. 2 021 /AHD/20 11 (ASSESS MENT YEAR: 200 8 - 0 9 ) ASSTT. COMMISSIONER OF INCOME - TAX VAPI CIRCLE VAPI APPELLANT VS. M/S. PRAGATI INDUSTRIES PLOT NO.1001/7 3 RD PHASE GIDC VAPI RESPONDENT PAN: AA EFP5853C / BY APPELLANT : SMT. SONIA KUMAR SR. D.R. / BY RESPONDENT : SHRI B. N. RAO A.R. / DATE OF HEARING : 2 1 . 0 4 .2015 / DATE OF PRONOUNCEMENT : 30 . 0 4 .201 5 ORDER PER SHAILENDRA KUMAR YADAV J.M: THI S APPEAL HAS BEEN FILED B Y REVENU E AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) VALSAD DATED 21 .0 6 .2011 FOR A.Y. 200 8 - 0 9 ON THE FOLLOWING GROUNDS: I T A NO. 2 021 /AHD/ 11 A.Y. 200 8 - 0 9 [ ACIT VS. M/S. PRAGATI INDUSTRIES ] PAGE 2 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) HAS ERRED IN ALLOWING THE ADDITION OF RS.33 6 0 000/ - UNDER THE HEAD SALARY AND WAGES WHICH WAS DISALLOWED AS PAID OUT OF BOOKS U/S 69C OF THE ACT WITHOUT BRINGING ANY MATERIAL ON RECORD. 2. THE ONLY ISSUE BEFORE US IS WITH REGARDS TO ADDITION OF RS.33 60 000/ - UNDER HEAD SALARY AND WAGES. DURING CO URSE OF ASSESSMENT PROCEEDINGS ASSESSING OFFICER OBSERVED THAT ASSESSEE WAS TRYING TO JUSTIFY THE RETRACTION OF INCOME OFFERED BY ASSESSEE DURING SURVEY WHEREAS IT WAS WORTHWHILE TO BRING ON RECORD THAT THE ASSESSEE HAD HIMSELF ADMITTED THE ADDITIONAL I NCOME OFFERED DURING SURVEY OF RS. 1 10 00 000 / - AND HAD PAID RS. 7 LACS AS TOKEN AMOUNT FOR TAX LIABILITY AS PER HIS LETTER DATED 18.09.2010 ADDRESSED TO THE ADDL. CIT VAPI RANGE VAPI. ASSESSING OFFICER WAS NOT JUSTIFIED IN RETRACTING FROM THE INCOME OF FERED BY ASSESSEE DURING COURSE OF SURVEY. SO ASSESSING OFFICER DISALLOWED THE QUANTUM OF WAGES AND SALARIES PAID OUT OF BOOKS AMOUNTING TO RS. 33.6 LACS AND ADDED TO THE TOTAL INCOME OF ASSESSEE. THE STAND OF ASSESSEE BEFORE LOWER AUTHORITIES HAS BEEN T HAT ASSESSEE MADE A DETAILED SUBMISSION BEFORE ASSESSING OFFICER TO CONSIDER THE FACTS AND CIRCUMSTANCE OF THE CASE AND NOT TO MAKE ANY ADDITION UNDER THIS HEAD AS IT WAS UNCALLED FOR. THE SURVEY ACTION WAS CONDUCTED IN THE PREMISES OF ASSESSEE ON 16 TH AND 17 TH SEPTEMBER 2008 WHICH IS RELEVANT TO THE A.Y. 2009 - 10. BY THE TIME THE SURVEY ACTION WAS CONDUCTED ALREADY 5 MONTHS WERE PASSED AND DURING COURSE OF SURVEY ACTION A STATEMENT OF ASSESSEES PARTNER WAS TAKEN WHICH WAS LATTER I T A NO. 2 021 /AHD/ 11 A.Y. 200 8 - 0 9 [ ACIT VS. M/S. PRAGATI INDUSTRIES ] PAGE 3 REBUTTED. HOWEVER ISS UE OF REBUTTAL OR TAXING THE INCOME WILL BE FOR T HE YEAR FOR WHICH SURVEY ACTION W AS CONDUCTED AND NOT FOR ANY OTHER YEAR TO EXTRAPOLATE THE I NFORMATION AND BRING TO TAX AN UNCALLED AMOUNT WITHOUT ANY LOGIC OF DRAWING SUCH INFERENCE. THE STATEMENT MENTIONS ABOUT THE ACTUAL SALARY AND WAGE PER MONTH AMOUNTING TO RS. 12 - 15 LACS AND FURTHER MENTIONS THAT ONLY RS. 10 - 12 LACS WA S SHOWN IN THE BOOKS OF ACCOUNT. ASSESSEE COULD NOT UNDERSTAND THE MEANING OF STATEMENT AT THE TIME OF SURVEY. THERE IS NO REASON FOR ANY BUSINESS MAN TO CLAIM LESS EXPENDITURE HAVING PAID MORE AMOUNT. THIS STATEMENT WA S ILLOGICAL IN ITS FIRST INSTANCE. SECONDLY THOUGH THE INFORMATION HAS TO BE USED AGAINST ASSESSEE THERE SHOULD BE SOME MATERIAL ON RECORD TO CORRELATE THE UNDISCLOSED INCOME WITH SUCH STATEMENT. THE STATEMENT RECORDED BY THE O FFICER IS FULLY RELIED ON WITHOUT APPLICATION OF MIND AS TO ITS IMPACT IN TAXATION OR IN BUSINESS. THERE IS NOTHING ON RECORD TO CORRELATE SUCH INCOME OFFERED DURING SURVEY. IT H AD NOT ANY EVIDENTIAL VALUE IN ISOLATION. ASSESSING OFFICER SIMPLY MADE ROUGH CALCULATION APPLYING RATIO OF VAGUE FIGURES OF 10 - 12 LACS WHERE ASSESSEE HAS PROVIDED MAJOR AMOUNT SHOWING AMOUNT OF SALARY AND WAGES DEBITED TO P&L ACCOUNT. STATEMENT RECORDED BY OFFICE IN - CHARGE DURING COURSE OF SURVEY WAS WITHOUT REFERRING FACTS AVAILABLE IN THE FORM OF LEDGER ACCOUNT AS UPTO THAT DATE AND A VAGUE FIGURE AS A MATTER OF GUESS WORK WHICH SHOWS THAT THE WHOLE PROCESS OF SURVEY WAS NOT CONDUCTED DILIGENTLY AND HENCE RELIANCE PLACED ON VALUE FIGURES AND ADOPTING CERTAIN PERCENTAGE FOR THE I T A NO. 2 021 /AHD/ 11 A.Y. 200 8 - 0 9 [ ACIT VS. M/S. PRAGATI INDUSTRIES ] PAGE 4 PERIOD WHICH IS NOT COVERED UNDER SURVEY WAS NOT JUSTIFIED. ACCORDINGLY TO LEARNED AUTHORIZED REPRESENTATIVE THERE WAS NO CO - RELATING EVIDENCE FOUND BY ASSESSI NG OFFICER TO ESTABLISH THAT CASH PAYMENT WAS MADE OUT OF BOOKS TO THE EMPLOYEES TOWARDS SALARY AND ALLOWANCE. IN THIS BACKGROUND CIT(A) FINDING FORCE IN THE ARGUMENT OF LEARNED AUTHORIZED REPRESENTATIVE HAS GRANTED RELIEF TO ASSESSEE. SAME HAS BEEN OPP OSED ON BEHALF OF REVENUE INTER ALIA SUBMITTED THAT ON FACTS AND CIRCUMSTANCES OF CASE CIT(A) HAS ERRED IN ALLOWING THE ADDITION OF RS.33 60 000/ - UNDER THE HEAD SALARY AND WAGES AS PAID OUT OF BOOKS U/S.69C OF THE ACT WITHOUT BRINGING ANY MATERIAL ON REC ORD. SO ORDER OF CIT(A) BE SET ASIDE AND THAT OF ASSESSING OFFICER ON THE ISSUE BE RESTORED. ON THE OTHER HAND LD. AR SUPPORTED THE ORDER OF CIT(A) ON THE ISSUE AT HAND. 2. 1 AFTER GOING THROUGH RIVAL SUBMISSIONS AND MATERIAL ON RECORD WE FIND THAT ASS ESSING OFFICER MADE ADDITION ON THE BASIS OF STATEMENT RECORDED FROM ASSESSEE DURING SURVEY ON 1 6 TH & 17 TH SEPTEMBER 2 008 . NO CORROBORATIVE EVIDENCES WE RE BROUGHT ON RECORDS TO JUSTIFY THE SAID ADDITION. THE GENESIS OF ADDITION RELATES TO STATEMENT RECOR DED FROM ASSESSEE WHO PURPORTED ADMITTED THAT SALARY PAYMENTS WE RE MADE OUTSIDE THE BOOKS OF ACCOUNT. ASSESSEE HAD RETRACTED THE STATEMENT SUBSEQUENTLY BEFORE THE ASSESSING OFFICER . SURVEY WAS CONDUCTED IN F.Y. 2008 - 09 RELEVANT TO THE A.Y. 2009 - 10 . DUR ING SURVEY D ISPUTED AVERAGE SALARY & WAGES PAYMENTS WORKED OUT FOR A PERIOD FROM APRI L 08 TO AUG UST 08 . AS PER I T A NO. 2 021 /AHD/ 11 A.Y. 200 8 - 0 9 [ ACIT VS. M/S. PRAGATI INDUSTRIES ] PAGE 5 BOOKS SALARY & WAGES RECORDED IN THIS PERIOD WAS RS. 67.71 LACS AVERAGING RS. 9.5 LACS WHEREAS IN THE STATEMENT ASSESSEE CONCEDED THAT THE PAYME NT WAS IN ABOUT 15 - 18 LACS PER MONTH. ASSESSING OFFICER COMPUTED THE DIFFERENCE BACKWARD AND APPLIED FOR EARLIER YEAR I.E. F.Y. 2007 - 08 RELEVANT TO A.Y. IN APPEAL. ASSESSING OFFICER CONTENDED THAT SINCE ASSESSEE DISCLOSED THE CONCEALED INCOME VIDE LETTER WRITTEN TO THE ADDL . CIT ON 19.10.2010 ADDITION WA S JUSTIFIABLE. WHILE STAND OF ASSESSEE HAS BEEN THAT : I) THE ADDITION WA S NOT LEGALLY SUSTAINABLE BECAUSE SURVEY WAS IN THE F. Y. 2008 - 0 9 RELEVANT TO A.Y. 2009 - 10 AND THE ASSESSMENT FOR THAT YEAR YET TO BE MADE II) ASSESSEE HAD NOT MADE ANY DISCLOSURE FOR A.Y. 2 008 - 09 AND HENCE SUCH ADDITION WA S ILLEGAL III) THE BACKWARD COMPUTATION OF DIFFERENCE OF SALARY & WAGES PAYMENTS TO EARLIER YEAR HAS NO VALID REASONS AND THE FIGURE WORKED OUT WAS IMAGINARY AS N O EVIDENCES WERE BROUGHT ON RECORD IV) THE STATEMENT WAS RETRACTED BY THE APPELLANT SUBSEQUENTLY V) SALARY & WAGES PAYMENTS WERE EXPENDITURE AND ASSESSEE WAS NOT BENEFITED SUCH PAYMENT OUTSIDE THE BOOKS OF ACCOUNT . ACCORDING TO US ASSESSING OFFICER HA S NOT BROUGHT ANY RECORDS TO SUGGEST THAT ASSESSEE HAD ACTUALLY PAID SALARY & WAGES OUTSIDE THE BOOKS OF ACCOUNT . NORMALLY ASSESSEE WILL NOT PAY SUCH AMOUNT OUTSIDE BOOKS OF ACCOUNT WHILE HE CAN BE LEGITIMATE CLAIM. IN VIEW OF ABOVE ADDITION MADE ON TH IS I T A NO. 2 021 /AHD/ 11 A.Y. 200 8 - 0 9 [ ACIT VS. M/S. PRAGATI INDUSTRIES ] PAGE 6 AMOUNT WAS NOT JUSTIFIED. SAME HAS RIGHTLY BEEN DELETED BY CIT(A). WE UPHOLD THE SAME. 3 . IN THE RESULT APPEAL FILED BY REVENU E IS DISMISSED . PRONOUNCED IN THE OPEN COURT ON THIS THE 30 TH DAY OF APRIL 201 5 . SD/ - SD/ - (ANIL CHATURVEDI) (SHAILENDRA KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD: DATED 30 /0 4 /2015 S.K.SINHA / COPY OF ORDER FORW ARDED TO: - 1. / REVENUE 2. / ASSESSEE 3. / CONCERNED CIT 4. - / CIT (A) 5. / DR ITAT AHMEDABAD 6. / GUARD FILE. BY ORDER / /