Shri Hiralal B. Lalane,HUF, Surat v. The Income tax Officer,Ward-8(2),, Surat

ITA 2251/AHD/2010 | 2006-2007
Pronouncement Date: 17-09-2010 | Result: Partly Allowed

Appeal Details

RSA Number 225120514 RSA 2010
Bench Ahmedabad
Appeal Number ITA 2251/AHD/2010
Duration Of Justice 2 month(s) 12 day(s)
Appellant Shri Hiralal B. Lalane,HUF, Surat
Respondent The Income tax Officer,Ward-8(2),, Surat
Appeal Type Income Tax Appeal
Pronouncement Date 17-09-2010
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted C
Tribunal Order Date 17-09-2010
Date Of Final Hearing 25-08-2010
Next Hearing Date 25-08-2010
Assessment Year 2006-2007
Appeal Filed On 05-07-2010
Judgment Text
- 1 - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH C AHMEDABAD BEFORE S/SHRI BHAVNESH SAINI JM AND D.C.AGRAWAL A M HIRALAL B. LALANE HUF C-401 ANAND MANGAL APARTMENT KAHAN FALIA KATARGAM SURAT. VS. INCOME-TAX OFFICER WARD8(2) SURAT. (APPELLANT) .. (RESPONDENT) APPELLANT BY :- SHRI RASHESH SHAH AR RESPONDENT BY:- SHRI K. M. MAHESH SR. DR O R D E R PER D. C. AGRAWAL ACCOUNTANT MEMBER . THIS IS AN APPEAL FILED BY THE ASSESSEE RAISING FO LLOWING GROUNDS:- (1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A S WELL AS LAW ON THE SUBJECT THE LD. CIT(A) HAS ERRED IN PASSING EX PARTE ORDER WITHOUT GIVING PROPER OPPORTUNITY OF HEARING TO ASS ESSEE. (2) ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AS WE LL AS LAW ON THE SUBJECT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF THE AO IN DISALLOWING LABOUR EXPENSES OF RS.2 44 22 0/- BEING 5% OUT OF TOTAL LABOUR EXPENSES OF RS.48 84 436/-. 2. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF JOB W ORK OF DIAMOND POLISHING. IT HAS SHOWN TOTAL LABOUR RECEIPTS OF RS .49 99 936/- AND CLAIMED LABOUR EXPENSES OF RS.48 84 436/-. THE AO R EQUIRED THE ASSESSEE TO FURNISH THE NAMES AND ADDRESSES OF LABOURERS IN SUPPORT OF ITS CLAIM OF EXPENSES BUT NO DETAILS WERE FURNISHED. HOWEVER TH E ASSESSEE FURNISHED A COPY OF BILL REGISTER FOR ONE MONTH SHOWING PAYMENT OF RS.2 54 600/- ITA NO.2251/AHD/2010 ASST. YEAR :2006-07 ITA NO.2251/AHD/2010 ASST. YEAR 2006-07 2 DURING THE MONTH OF MAY 2005. SINCE NO OTHER DETAI LS WERE FURNISHED THE AO DISALLOWED EXPENSES SO CLAIMED. EVEN BEFORE THE LD. CIT(A) NO DETAILS WERE FURNISHED AND THEREFORE HE ALSO CONFI RMED THE ADDITION. 3. THE LD. AR FOR THE ASSESSEE ARGUED THAT IN A CAS E WHERE BOOKS ARE REJECTED AND OFFICER ESTIMATES THE PROFITS THEN NET PROFIT RATE OF 3% IS ORDINARILY APPLIED IN THE CASE OF DIAMOND TRADERS W ORKING ON JOB WORK BASIS. HE REFERRED TO THE DECISION OF THE TRIBUNAL IN ITA NO.2128/AHD/2003 FOR ASST. YEAR 2000-01 IN THE CASE OF ATUL M. JHAVERI (HUF) VS. ITO DATED 31.03.2005 WHERE NET PROFIT RAT E OF 3% IS APPLIED. IN THE CASE OF PRESENT ASSESSEE WHO IS ALSO DOING THE WORK OF POLISHING OF DIAMONDS ON JOB WORK BASIS ABOVE RATE OF 3% BE APPL IED. 4. THE LD. DR ON THE OTHER HAND SUPPORTED THE ORDE RS OF AO & THE LD. CIT(A) AND SUBMITTED THAT ASSESSEE HAS FAILED TO PR OVIDE ANY DETAIL AS TO HOW MUCH AND TO WHOM LABOUR CHARGES HAVE BEEN PAID. NO RELATION BETWEEN THE RECEIPT FROM JOB WORK AND PAYMENT THERE FORE HAS BEEN PROVIDED BY THE ASSESSEE SO AS TO ENABLE THE AO TO WORK OUT THE PROFIT EARNED BY THE ASSESSEE ON THIS TYPE OF WORK. IN ANY CASE TOTAL INCOME ASSESSED IS LESS THAN 6% OF GROSS RECEIPTS SHOWN BY THE ASSESSEE. 5. AFTER HEARING THE PARTIES WE ARE OF THE VIEW THA T ASSESSEE HAS NOT EVEN PROVIDED THE PROFIT AND LOSS ACCOUNT AND BALAN CE SHEET BEFORE US. THE COMPILED DATA OF PROFITS EARNED IN EARLIER YEAR S HAS ALSO NOT BEEN PROVIDED. IT IS VERY DIFFICULT FOR US TO HOLD THAT IF PROFIT EARNED IN AN ASST. YEAR 02-01 WAS 3% ON JOB WORK THEN IT WILL ALSO BE 3% IN ASST. YEAR 2006-07 WHICH IS BEFORE US. WITH THE PASSAGE OF TIM E MARKET FORCES CHANGE CONSIDERABLY THERE IS AN INCREASE IN INFLAT ION RESULTING IN HIGHER CHARGES ON JOB WORK RECEIVED BY THE ASSESSEE AS COM PARED TO WORK RATES PREVAILING IN ASST. YEAR 2000-01 WITH IMPROVEMENT IN TECHNOLOGY ITA NO.2251/AHD/2010 ASST. YEAR 2006-07 3 QUALITY WOULD IMPROVE RESULTING IN BETTER CHARGES R ECEIVED AND PAYABLE QUALITY OF DIAMONDS UNDER PROCESS WOULD ALSO BE DIF FERENT DEPENDING UPON FIELD OF ORIGIN DEMANDING DIFFERENT JOB CHARG ES WOULD BE THE FACTORS WHICH WILL GO AGAINST APPLYING NET PROFIT R ATE OF 3% AS A UNIFORM YARD STICK FOR ALL TIME TO COME. IF ASSESSEE FAILS TO PROVIDE BASIC DETAILS TO THE AO DOES NOT CO-OPERATE WITH HIM AND DOES NOT PRESENT CORRECT PICTURE EVEN BEFORE THE LD. CIT(A) THEN HE CANNOT G ET THE BENEFIT OF ESTIMATE AT UNIFORM RATE. WE ACCORDINGLY DIRECT THE AO TO ASSESS ON A NET PROFIT RATE OF 5% ON THE GROSS RECEIPTS SHOWN BY TH E ASSESSEE SUBJECT TO ANY DEPRECIATION AND INTEREST IF ANY PAID BY THE ASSESSEE FURTHER SUBJECT TO THE DETAILS PROVIDED BY HIM ALONG WITH EVIDENCE. WITH THE ABOVE REMARKS WE PARTLY ALLOW THE APPEAL OF THE ASSESSEE. 6. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER WAS PRONOUNCED IN OPEN COURT ON 17/9/10 SD/- SD/- (BHAVNESH SAINI) (D.C.AGRAWAL) JUDICIAL MEMBER ACCOUNTANT MEMBE R AHMEDABAD DATED : 17/9/10 MAHATA/- COPY OF THE ORDER FORWARDED TO :- 1. THE ASSESSEE. 2. THE REVENUE. 3. THE CIT(APPEALS)- 4. THE CIT CONCERNS. 5. THE DR ITAT AHMEDABAD 6. GUARD FILE. BY ORDER ITA NO.2251/AHD/2010 ASST. YEAR 2006-07 4 DEPUTY / ASSTT.REGISTRAR ITAT AHMEDABAD 1.DATE OF DICTATION 27/8/2010. 2.DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE TH E DICTATING MEMBER.OTHER MEMBER. 3.DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S. 4.DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT.. 5.DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR .P.S./P.S 6.DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .. 7.DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8.THE DATE ON WHICH THE FILE GOES TO THE ASSTT. REG ISTRAR FOR SIGNATURE ON THE ORDER 9.DATE OF DESPATCH OF THE ORDER..