Supreme (India) Impex Ltd.,, Surat v. The ACIT.,Range-4,, Surat

ITA 2411/AHD/2008 | 2005-2006
Pronouncement Date: 18-11-2011 | Result: Allowed

Appeal Details

RSA Number 241120514 RSA 2008
Assessee PAN AADCS9506P
Bench Ahmedabad
Appeal Number ITA 2411/AHD/2008
Duration Of Justice 3 year(s) 4 month(s) 22 day(s)
Appellant Supreme (India) Impex Ltd.,, Surat
Respondent The ACIT.,Range-4,, Surat
Appeal Type Income Tax Appeal
Pronouncement Date 18-11-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted A
Tribunal Order Date 18-11-2011
Date Of Final Hearing 01-11-2011
Next Hearing Date 01-11-2011
Assessment Year 2005-2006
Appeal Filed On 26-06-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH AHMEDABAD BEFORE SHRI G. C. GUPTA HONBLE VICE PRESIDENT AND SHRI A. K. GARODIA ACCOUNTANT MEMBER I.T.A. NO.2411 / AHD/2008 (ASSESSMENT YEAR 2005-06) M/S. SUPREME (INDIA) IMPEX LTD. 13/1 DOCTOR WADI SUPREME HOUSE NEAR KRISHNA PETROL PUMP UDHNA MAIN ROAD SURAT VS. ADDL. CIT RANGE 4 SURAT I.T.A.NO. 2542/AHD/2008 (ASSESSMENT YEAR 2005-06) ADDL. CIT RANGE 4 VS. SUPREME (INDIA) IMPEX LTD . SURAT 13/1 DOCTOR WADI SUPREME HOUSE NEAR KRISHNA PETROL PUMP UDHNA MAIN ROAD SURAT PAN/GIR NO. : AADCS9506P (APPELLANT) .. (RESPONDENT) APPELLANT BY: SHRI RAMESH KUMAR MALPANI AR RESPONDENT BY: SHRI RAKESH AGRAWAL SR. DR DATE OF HEARING: 01.11.2011 DATE OF PRONOUNCEMENT: 18.11.2011 O R D E R PER SHRI A. K. GARODIA AM:- THESE ARE CROSS APPEALS FIELD BY THE ASSESSEE AND THE REVENUE AND THE SAME ARE DIRECTED AGAINST HE ORDER OF LD. CIT(A ) III SURAT DATED 08.05.2008 FOR THE ASSESSMENT YEAR 2005-06. I.T.A.NO. 2411 2542 /AHD/2008 2 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER: 1) THAT ON FACTS AND IN THE CIRCUMSTANCES OF CASE THE HONBLE CIT(A) HAS ERRED IN SUSTAINING ADDITION OF RS.20 67 350/- ATTRIBUTABLE TO JOB WORK EXPENSES DISALLOWED. 2) THE HONBLE CIT(A) HAS ERRED IN SUSTAINING CHARG ING OF INTEREST U/S 234B O THE ACT. 3. THE GROUNDS RAISED BY THE REVENUE ARE NOTED BELO W: 1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE LD. CIT(A) III SURAT HAS ERRED IN RESTRICTING THE ADDITION MADE ON ACCOUNT OF BOGUS AND NON-GENUINE JOB CHARGES OF RS.82 69 264/- TO 25% I.E. RS.20 67 350/-. 2) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE LD. CIT(A) III SURAT OUGHT TO HAVE UPHELD THE ORDER OF THE A.O. 4. THE BRIEF FACTS OF THE CASE TILL THE ASSESSMENT STAGE ARE NOTED BY LD. CIT(A) ON PAGE 1 & 2 OF HIS ORDER AND THE RELEVANT PARA OF HIS ORDER IS REPRODUCED BELOW: THE FIRST GROUND OF APPEAL IS REGARDING DISALLOWAN CE OF RS.82 69 264/- OUT OF JOB CHARGES. THE AO OBSERVED THAT THE APPELLANT WHO WAS ENGAGED IN THE MANUFACTURING AND EXPORT OF TEXTILE FABRICS AND HAD CLAIMED TO HAVE P AID A SUM OF RS.6 87 07 039/- AS JOB CHARGES TO VARIOUS PARTIES. OUT OF THESE PARTIES PAYMENT ADDING UP TO RS.82 69 264/- WAS MADE TO THREE PARTIES VIZ. PRITI KA HAND PRINTING WORKS SHALINI SCREEN PRINTING WORKS AND VIKRAM JOB WORKS. WHILE FINALIZING THE ASSESSMENT I N THE CASE OF PRITIKA HAND PRINTING WORKS THE AO WD. 9(L) CONDUCTED INQUIRIES AND FOUND THAT THE SAID PARTY H AD ISSUED BOGUS BILLS TO A LARGE NUMBER OF PARTIES INC LUDING THE APPELLANT. SIMILARLY IN THE CASE OF SHALINI SC REEN PRINTING WORKS AND VIKRAM JOB WORKS THE ITO WD.2( L) HAD FOUND THAT THESE TWO PARTIES ALSO ISSUED BOGUS BILLS TO THE APPELLANT. THE APPELLANT WAS CONFRONTED WITH THIS FACT AND WAS REQUIRED TO EXPLAIN WHY THE PAYMENT OF JOB CHARGES TO THESE THREE PARTIES NOT BE TREATED AS BO GUS EXPENDITURE. IN RESPONSE THE APPELLANT STATED THAT IT HAD I.T.A.NO. 2411 2542 /AHD/2008 3 CLAIMED EXPENSES FOR THEIR VALUE ADDITION WORK DONE BY THESE THREE PARTIES AND THE SAID MATERIAL WAS LATER ON EXPORTED. COPIES OF CONFIRMATION FROM THE JOB WORKE R AND BANK STATEMENT EVIDENCING PAYMENT TO THE THREE PARTIES ALONG WITH RELEVANT BILLS AND INVOICES WERE ALSO PRODUCED BEFORE THE AO. HOWEVER THE SAID PARTIES W ERE NOT PRODUCED FOR VERIFICATION. THE AO FURTHER FOUND THAT IN THE CASE OF PRITIKA PRINTING WORKS AND SHALINI P RINTING WORKS THE ENTIRE PAYMENT HAD BEEN MADE DURING THE YEAR ITSELF AND SINCE THE PARTIES DOING VALUE ADDITION W ORK WERE PERSONS OF LOW MEANS THERE COULD NOT BE HUGE OPENING BALANCES IN THEIR CASES BUT THE OPENING BAL ANCES IN THE ACCOUNTS OF THESE THREE PARTIES VARIED FROM RS.26 LACS TO RS.87 LACS. IT WAS NOT BELIEVABLE THAT SUCH HUGE OPENING BALANCES COULD BE THERE IN THE CASE OF THE PARTIES WHO WERE PERSONS OF SMALL MEANS. THE AO FURTHER OBSERVED THAT IT WAS ONLY ACCOMMODATION ENTRIES GIV EN BY THESE PARTIES TO REDUCE THE PROFIT OF THE APPELL ANT AND HE THEREFORE MADE AN ADDITION OF RS.82 69 264/- TRE ATING THE PAYMENT OF JOB CHARGES AS BOGUS. 5. BEING AGGRIEVED THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE LD. CIT(A). LD. CIT(A) RESTRICTED THE DISALLOWANCE TO THE EXTENT OF 25% OF THE DISALLOWANCE MADE BY THE A.O. AND ALLOWED RE LIEF FOR THE BALANCE AMOUNT OF DISALLOWANCE. NOW THE REVENUE IS IN APP EAL FOR THE DISALLOWANCE DELETED BY LD. CIT(A) WHEREAS THE ASSE SSEE IS IN APPEAL FOR THE DISALLOWANCE UPHELD BY THE LD. CIT(A). 6. LD. D.R. SUPPORTED THE ASSESSMENT ORDER WHEREAS IT IS SUBMITTED BY THE LD. A.R. THAT THIS ISSUE IS NOW COVERED IN FAVO UR OF THE ASSESSEE BY VARIOUS TRIBUNAL DECISIONS COPY OF WHICH ARE AVAILA BLE IN THE PAPER BOOK. HE ALSO SUBMITTED THAT IN ONE OF THE CASES THE REV ENUE CARRIED THE MATTER IN FURTHER APPEAL BEFORE HONBLE GUJARAT HIGH COURT AND THE REVENUES APPEAL WAS DISMISSED BY HONBLE GUJARAT HIGH COURT. THE TRIBUNAL DECISIONS SUBMITTED BY THE ASSESSEE IN THE PAPER BO OK ARE AS UNDER: I.T.A.NO. 2411 2542 /AHD/2008 4 A) M/S. JHAWAR INTERNATIONAL VS ITO I.T.A.NO. 1938/ AHD/2008 & SUPREME INDIA OVERSEAS CORPORATION VS ITO I.T.A.NO. 1941/AHD/2008 - DATED 08.01.2010 PAGES 1-21 OF TH E PAPER BOOK. B) JHAWAR INTERNATIONAL SURAT VS ACIT I.T.A.NO. 257 & 561/AHD/2006 DATED 26.08.2010 PAGES 22-29 O THE PAP ER BOOK. C) CIT VS AVINASH M JHAWAR TAX APPEAL NO.2299 PF 2009 DATED 25.04.2011 OF GUJARAT HIGH COURT PAGES 30-34 OF THE PAPER BOOK. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS PERUSE D THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHORIT IES BELOW AND THE JUDGMENTS CITED BY THE LD. A.R. OF THE ASSESSEE. A S PER THE FACTS NOTED BY THE TRIBUNAL IN THE CASE OF JHAWAR INTERNATIONAL AND SUPREME INDIA OVERSEAS CORPORATION (SUPRA) WE FIND THAT IN THOSE CASES ALSO THE DISPUTE WAS REGARDING PAYMENTS MADE BY THOSE ASSESSEES TO T HE SAME THREE PARTIES I.E. M/S. VIKRAM JOB WORKS M/S. SHALINI SC REEN PRINTING WORKS AND M/S. PRATIKA HAND PRINTING WORKS AS IN THE PRES ENT CASE. IN THOSE CASES ALSO THE REASONING GIVEN BY THE A.O. WAS THE SAME THAT DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEEDINGS OF THESE THREE JOB WORKERS IT WAS NOTED THAT THESE PARTIES FAILED TO PROVE THE FA CT THAT THEY HAD ACTUALLY DONE ANY JOB WORK. IN THE PRESENT CASE ALSO THE PARTIES ARE THE SAME AND THE ALLEGATION IS ALSO THE SAME THAT DURING THE ASS ESSMENT PROCEEDINGS IN THE CASE OF THESE PARTIES THE A.O. OF THESE PARTIE S FOUND THAT THESE PARTIES HAD MERELY ISSUED ACCOMMODATION BILLS TO VARIOUS PA RTIES INCLUDING THE PRESENT ASSESSEE. HENCE IT IS SEEN THAT THE FACTS IN THE PRESENT CASE ARE IDENTICAL. THE TRIBUNAL IN THE CASE OF JHAWAR INTE RNATIONAL & SUPREME INDIA OVERSEAS CORPORATION (SUPRA) HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE BY FOLLOWING ANOTHER TRIBUNAL DECISION REN DERED IN THE CASE OF AVINASH JHAWAR IN I.T.A.NO. 1939/AHD/2008. THE JUD GEMENT OF HONBLE GUJARAT HIGH COURT CITED BEFORE US IS IN THE SAME C ASE I.E. CIT VS I.T.A.NO. 2411 2542 /AHD/2008 5 AVINASH JHAWAR (SUPRA). IN THAT CASE IT IS NOTED BY THE HONBLE GUJARAT HIGH COURT THAT THE TRIBUNAL IN THAT CASE HAS FOLLO WED THE JUDGMENT OF HONBLE GUJARAT HIGH COURT RENDERED IN THE CASE OF CIT VS M. K. BROTHERS AS REPORTED IN 163 ITR 249 (GUJ.). IT IS ALSO NOTED BY THE HONBLE GUJARAT HIGH COURT THAT IN ADDITION TO HAVI NG MADE PAYMENTS THROUGH A/C PAYEE CHEQUES THE ASSESSEE HAS PRODUCE D TDS CERTIFICATES IN SUPPORT OF THE CLAIM AND THE OBSERVATION OF THE A.O . THAT SUCH CHEQUES PAYMENTS COULD HAVE BEEN WITHDRAWN AND REVERTED BAC K TO THE ASSESSEE WERE NOT BASED ON EVIDENCE. IN THE PRESENT CASE I T IS NOT EVEN THE ALLEGATION OF THE A.O. THAT THE MONEY HAS COME BACK TO THE ASSESSEE. IN THE PRESENT CASE ALSO IT IS SUBMITTED BY THE ASSES SEE BEFORE THE A.O. THAT THE PAYMENTS WERE MADE BY A/C PAYEE CHEQUES. WE AL SO FIND THAT IN THE PRESENT CASE THE ASSESSEE HAS FURNISHED CONFIRMATI ON FORM THE CORRESPONDING JOB WORKERS AND COPIES OF THE RELEVAN T BANK STATEMENTS EVIDENCING PAYMENTS TO THE JOB WORKERS ALONG WITH C OPIES OF THE RELEVANT BILLS/INVOICES RAISED BY THE ABOVE JOB WORKERS AND COPIES OF ACCOUNTS OF JOB WORKERS AS APPEARING IN THEIR BOOKS OF ACCOUNTS AND TO DISREGARD THESE EVIDENCES THE A.O. HAS NOT BROUGHT ON RECORD ANY E VIDENCE TO SHOW THAT THE MONEY HAS COME BACK TO THE ASSESSEE AND HENCE BY RESPECTFULLY FOLLOWING THE TRIBUNAL DECISION AND HONBLE HIGH CO URT JUDGMENT CITED BY THE LD. A.R. WE HOLD THAT NO DISALLOWANCE SHOUL D BE MADE OUT OF SUCH JOB WORK CHARGES PAID BY THE ASSESSEE BECAUSE IN TH E PRESENT CASE ALSO IT IS THE SUBMISSION OF THE ASSESSEE THAT VALUE ADDITI ON WORK WAS DONE THROUGH JOB WORK BECAUSE THE ANNUAL AVERAGE EXPORT SALES RATE IS RS.61.74 WHEREAS RAW MATERIAL COST IS OF RS.41.44 PER MTR AN D IF DEPB IS REDUCED FROM THE COST OF RAW MATERIAL NET COST OF RAW MATE RIAL WORKS OUT TO RS.35.76 PER MTR AND SUCH A HIGH REALIZATION CANNOT BE ACHIEVED WITHOUT I.T.A.NO. 2411 2542 /AHD/2008 6 VALUE ADDITION WORK. WE THEREFORE HOLD THAT NO A DDITION IS CALLED FOR IN THE FACTS OF THE PRESENT CASE BECAUSE NO ADVERSE EV IDENCE HAS BEEN BROUGHT ON RECORD BY THE A.O. TO SHOW THAT THESE AM OUNTS PAID BY THE ASSESSEE TO THE JOB WORKERS BY A/C PAYEE CHEQUES HA VE COME BACK TO THE ASSESSEE. 8. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED WHEREAS THE APPEAL OF THE REVENUE IS DISMISSED. 9. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE M ENTIONED HEREINABOVE. SD./- SD./- (G. C. GUPTA) (A. K. GARODIA) VICE PRESIDENT ACCOUNTANT MEMBER AHMEDABAD; SP COPY OF THE ORDER FORWARDED TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT (APPEALS) 5. THE DR AHMEDABAD BY ORDER 6. THE GUARD FILE AR ITAT AHMEDABAD 1. DATE OF DICTATION 1/11 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 1/11. OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P .S./P.S.16/11 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 18/11 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S.18/11 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 18/11/2011 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK .. 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER . 9. DATE OF DESPATCH OF THE ORDER. ..