Shri Bharatbhai Nagjibhai Patel, Surat v. The Income Tax Officer, Ward -9(1), Surat

ITA 2487/AHD/2004 | 2001-2002
Pronouncement Date: 06-01-2010 | Result: Allowed

Appeal Details

RSA Number 248720514 RSA 2004
Bench Ahmedabad
Appeal Number ITA 2487/AHD/2004
Duration Of Justice 5 year(s) 4 month(s) 16 day(s)
Appellant Shri Bharatbhai Nagjibhai Patel, Surat
Respondent The Income Tax Officer, Ward -9(1), Surat
Appeal Type Income Tax Appeal
Pronouncement Date 06-01-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted D
Tribunal Order Date 06-01-2010
Date Of Final Hearing 05-01-2010
Next Hearing Date 05-01-2010
Assessment Year 2001-2002
Appeal Filed On 20-08-2004
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD - AHMEDABAD D BENCH (BEFORE DR.O.K. NARAYANAN VICE-PRESIDENT AND SHRI MAHAVIR SINGH JUDICIAL MEMBER) ITA NO.2487AHD/2004 [ASSTT.YEAR : 2001-2002] SHRI BHARATBHAI NAGJIBHAI PATEL C/O.ASHWIN PAREKH & CO. 410 KASHI PLAZZA MAJURA GATE SURAT. VS. ITO WARD-9(1) SURAT. ASSESSEE BY : SHRI J.P.SHAH REVENUE BY : SHRI C.K.MISHRA DATE OF ORDER RESERVED : 05-01-2010 O R D E R PER DR. O.K. NARAYANAN VICE-PRESIDENT : THIS APPEAL IS FILED BY THE ASSESSEE. THE RELEVANT ASSESSMENT YEA R IS 2001-2002. THE APPEAL IS DIRECTED AGAINST THE ORDER OF THE CIT(A)- VI SURAT DATED 30-7- 2004 AND ARISE OUT OF ASSESSMENT COMPLETED UNDER SE CTION 143(3) OF THE INCOME TAX ACT 1961. 2. THE ASSESSEE HAS RAISED VARIOUS GROUNDS AGAINST THE MULTIPLE ADDITIONS SUSTAINED BY THE CIT(A). WE HEARD SHRI J .P. SHAH THE LEARNED COUNSEL APPEARING FOR THE ASSESSEE AND SHRI C.K.MIS HRA THE LEARNED ADDL. COMMISSIONER OF INCOME-TAX APPEARING FOR THE REVENUE. 3. THE FIRST GROUND RAISED BY THE ASSESSEE IS AGAIN ST THE ADDITION OF RS.3 30 926/- MADE BY THE AO UNDER SECTION 69 OF TH E INCOME TAX ACT 1961 AND SUSTAINED BY THE CIT(A). THE AO HAS MADE THE ADDITION ON THE GROUND THAT THERE IS A DISPARITY IN QUANTUM BETWEEN THE YARN RECEIVED FOR TWISTING AND YARN DELIVERED AFTER TWISTING. THE EX PLANATION GIVEN BY THE PAGE - 2 ITA NO.2487AHD/2004 -2- ASSESSEE WAS THAT CERTAIN QUANTUM OF TWISTED YARN H AD TO BE RE-TWISTED AND THIS DUPLICATION HAS RESULTED IN THE DISPARITY OF INPUT-OUTPUT RATIO. WE FIND THAT THE EXPLANATION OFFERED BY THE ASSESSEE I S PLAUSIBLE. IT IS NOT NECESSARY THAT THE TWISTED YARN MUST BE QUALITY PRO OF AT THE FIRST INSTANCE ITSELF. IT WILL BE NECESSARY FOR THE ASSESSEE TO R E-TWIST THE YARN WHEN THE FIRST PROCESS WAS NOT UP TO THE MARK. IN SUCH CIR CUMSTANCES THERE MAY BE A CASE OF MORE THAN ONE DELIVERY OF TWISTED YARN AGAINST A SINGLE RECEIPT OF UNTWISTED YARN. THEREFORE AN ADDITION IS NOT JUSTIFIED ONLY ON THE BASIS OF SUCH OBSERVATION MADE BY THE ASSESSING AUTHORITY WITHOUT ANY OTHER CORROBORATE MATERIALS. ONE HAS TO SEE THAT SECTION 69 IS A DEEMING PROVISION AND THEREFORE IT SHOULD BE CONSTRUED VERY STRICTLY. AN ESTIMATION ON THE BASIS OF AN UNTESTED HYPOTHESIS CANNOT BE A VALID GROUND TO FASTEN A LIABILITY OF ADDITION ON THE ASS ESSEE. ACCORDINGLY WE FIND THAT THIS ADDITION OF RS.3 30 926/- IS NOT JUS TIFIED. IT IS DELETED. 4. THE SECOND GROUND RAISED BY THE ASSESSEE IS AGAI NST THE ADDITION OF RS.2 44 757/- SUSTAINED BY THE CIT(A) TOWARDS GROSS PROFIT. THE ABOVE GP ADDITION IS THE OFF-SHOOT OF THE ADDITION OF RS. 3 30 926/- MADE BY THE ASSESSING AUTHORITY UNDER SECTION 69. WHEN THE PRI NCIPAL ADDITION OF RS.3 30 926/- IS DELETED THERE IS NO JUSTIFICATION FOR THE GP ADDITION TO REMAIN GOOD. THE ADDITION OF RS.2 24 757/- IS ACCO RDINGLY DELETED. 5. THE THIRD GROUND RAISED BY THE ASSESSEE IS AGAIN ST THE ADDITION OF RS.7 58 346/- SUSTAINED BY THE CIT(A) AGAINST THE D ISALLOWANCE OF PURCHASE OF YARN. THE PURCHASE OF YARN HAS BEEN PR OPERLY RECORDED IN THE BOOKS OF ACCOUNTS MAINTAINED BY THE ASSESSEE IN TH E ORDINARY COURSE OF BUSINESS. THE CORRESPONDING PAYMENTS WERE MADE B Y CHEQUES. THE ASSESSEE HAS FILED CONFIRMATION LETTERS FROM THE SU PPLIERS. COPIES OF PAGE - 3 ITA NO.2487AHD/2004 -3- ACCOUNTS WERE FURNISHED BEFORE THE ASSESSING AUTHOR ITY. THESE PURCHASES WERE APPROPRIATED IN THE ACCOUNTS TOWARDS SALE. IN OTHER WORDS THE AO HAS ACCEPTED THE SALE BUT NOT THE CORRESPONDING PUR CHASES. IN THESE CIRCUMSTANCES WE FIND THAT THE ADDITION OF RS.7 58 346/- IS ARBITRARY. IT IS DELETED. 6. THE LAST GROUND RAISED BY THE ASSESSEE IS AGAINS T THE DISALLOWANCE OF LABOUR CHARGES AT RE.1/- PER METER AMOUNTING TO RS.4 75 362/-. THE ADDITION HAS BEEN MADE UNDER SECTION 40A(2)(B) OF T HE ACT. THE ASSESSEE HAS PAID LABOUR CHARGES AT RS.6/- PER METER AND JOB WORKS WERE CARRIED OUT BY THE SISTER CONCERN OF THE ASSESSEE. BUT IT IS TO BE SEEN THAT THE SISTER CONCERN OF THE ASSESSEE HAS UNDERTAKEN JOB WORKS NO T ONLY FROM THE ASSESSEE BUT ALSO FROM OUTSIDERS AND THE SISTER CON CERN HAS CHARGED THE VERY SAME RATE OF RS.6/- PER METER FROM OUTSIDERS A S WELL. WHEN THESE SPEAKING FACTS ARE AVAILABLE ON RECORD THERE IS NO REASON TO INVOKE SECTION 40A(2)(B). ACCORDINGLY THE DISALLOWANCE O F RS.4 75 362/- IS DELETED. 7. IN RESULT THIS APPEAL FILED BY THE ASSESSEE IS A LLOWED. ORDER PRONOUNCED ON WEDNESDAY THIS SIXTH DAY OF JAN UARY 2010. SD/- SD/- (MAHAVIR SINGH) JUDICIAL MEMBER (DR.O.K. NARAYANAN) VICE-PRESIDENT PLACE : AHMEDABAD DATE : 06-01-2010 COPY OF THE ORDER FORWARDED TO: 1) : ASSESSEE 2) : RESPONDENT PAGE - 4 ITA NO.2487AHD/2004 -4- 3) : CIT(A) 4) : CIT CONCERNED 5) : DR ITAT. BY ORDER DR ITAT AHMEDABAD