The ITO, Ward-6(1),, Surat v. Shri Ashwin A.Kothari, Surat

ITA 2982/AHD/2008 | 2005-2006
Pronouncement Date: 31-01-2011 | Result: Dismissed

Appeal Details

RSA Number 298220514 RSA 2008
Assessee PAN ABGPK3958A
Bench Ahmedabad
Appeal Number ITA 2982/AHD/2008
Duration Of Justice 2 year(s) 5 month(s) 8 day(s)
Appellant The ITO, Ward-6(1),, Surat
Respondent Shri Ashwin A.Kothari, Surat
Appeal Type Income Tax Appeal
Pronouncement Date 31-01-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted D
Tribunal Order Date 31-01-2011
Date Of Final Hearing 31-01-2011
Next Hearing Date 31-01-2011
Assessment Year 2005-2006
Appeal Filed On 22-08-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH AHMEDABAD BENCH AHMEDABAD BENCH AHMEDABAD BENCH D DD D BEFORE BEFORE BEFORE BEFORE SHRI SHRI SHRI SHRI N NN N. .. .S. SAINI S. SAINI S. SAINI S. SAINI ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER AND AND AND AND SHRI SHRI SHRI SHRI MAHAVIR SINGH JUDICIAL MEMBER MAHAVIR SINGH JUDICIAL MEMBER MAHAVIR SINGH JUDICIAL MEMBER MAHAVIR SINGH JUDICIAL MEMBER DATE OF HEARING :31-1-11 DRAFTED ON: 31-1-11. ITA NO. 2982 /AHD/ 2008 ASSESSMENT YEAR : 2005-06 INCOME TAX OFFICER WARD 6(1) ROOM NO.614 6 TH FLOOR AAYAKAR BHAVAN MAJURA GATE SURAT. VS. SHRI ASHWIN A. KOTHARI 703 SHREENATHJI APARTMENT HATHFALIA HARIPURA SURAT. PAN/GIR NO. : ABGPK 3958A (A PPELLANT ) .. ( RESPONDENT ) APPELLANT BY : SH RI D.S.CHAUDHRY SR. D.R. RESPONDENT BY: SHRI PRAKASH D. SHAH. O R D E R O R D E R O R D E R O R D E R PER N.S.SAINI ACCOUNTANT MEMBER :- THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS)-IV SURAT DATED 25-6-2008. 2. THE REVENUE HAS TAKEN FOLLOWING GROUNDS OF APPEAL. GROUND NO.1 OF THE APPEAL READS AS UNDER:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-IV SU RAT HAS ERRED IN DELETING THE ADDITION OF `.85 76 976/- MADE BY THE LEARNED ASSESSING OFFICER ON ACCOUNT OF DISALLOWANCE MADE UNDER SECTI ON. 40(A)(IA) R.W.S. 194C OF THE ACT. 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS DECIDED THE ISSUE AS FOLLOWS:- THE FIRST GROUND OF APPEAL IS REGARDING DISALLOWAN CE OF RS. 85 76 976/- U/S. 40A(IA) OF THE IT ACT. THE AO OBSERVED THAT THE APPELLANT H AD CLAIMED JOB WORK EXPENSES OF RS.3 11 01 560/-AND AS PER SECTION 194C OF THE ACT WAS REQUIRED TO DEDUCT TAX AT SOURCE ON SUCH PAYMENTS. THE AO MADE A LIST OF SUCH PAYMENTS ON PNWE-9 OF THE ASSESSMENT ORDER AND CONCLUDED THAT THE APPELLANT H AD DEDUCTED TAX OF RS.48 092/- ONLY BUT AS PER PROVISIONS OF SECTION 194C OF THE A CT THE DEDUCTION WAS TO HE DONE AT 1.02%. HOWEVER IN MOST OF THE CASES THE APPELLANT HAD RECEIVED CERTIFICATE OF LOWER PAGE 2 OF 9 DEDUCTION AT 0.25%. THE TOTAL AMOUNT OF JOB WORK CH ARGES ON WHICH TAX WAS DEDUCTED WORKED OUT AL RS.L 96 89 878/- ONLY. THE A O FURTHER HELD THAT FOR ALLOWABILITY OF ANY EXPENDITURE IN THE NATURE OF CO NTRACT THE TAX HAD TO BE DEDUCTED UP TO 30.03.2005 AND THE SAME WAS TO HE PAID ON OR BEFORE 7 TH OF APRIL IN THE NEXT FINANCIAL YEAR. THE AO FURTHER FOUND THAT ONE CHALA N OF RS.11651/- WAS PAID ON 21.04.05 ONLY AND CALCULATED THAT TAX ON JOB WORK C HARGES OF RS 8576976/-WAS NOT DEDUCTED AND THEREFORE DISALLOWED THE SAME U/S. 40A (IA) OF THE IT ACT. BEFORE ME THE LD. AR SUBMITTED THAT MONTHLY DETAIL S OF TDS DEDUCTED ALONG WITH CHALAN AND RELEVANT LOWER DEDUCTION CERTIFICATE U / S 197 WAS FILED DURING THE ASSESSMENT PROCEEDINGS (A COPY OF THE SAME WAS ALSO FILED BEFORE ME). WHILE CALCULATING RS 28 34 706/- IN PARA 7.15 OF THE ASSE SSMENT ORDER THE AO APPLIED TDS RATE OF 1.02% WHICH WAS NOT CORRECT BECAUSE IN ALL THE CASES OF THE JOB WORKERS LOWER DEDUCTION CERTIFICATE WERE FURNISHED TO THE AO. THE DETAILS REGARDING JOB CHARGES ON WHICH TDS WAS MADE WERE AS UNDER :- MONTH. LABOUR AMOUNT TDS AMOUNT DATE OF PAYMENT APRIL 04 7 79 186/- 1 904/- 19-05-04 MAY 04 30 85 254/- 8 623/- 14-06-04 JUNE 04 13 21 678/- 4 200/- 17-07-04 JULY 04 23 96 760/- 6 734/- 25-08-04 AUG.04 29 10 894/- 8 243/- 20-09-04 SEPT.04 30 07 268/- 8 398/- 16-10-04 OCT. 04 41 30 026/- 11 178/- 11-11-04 NOV. 04 16 24 110/- 4 215/- 10-12-04 DEC.04 24 08 871/- 6 325/- 11-01-05 JAN. 05 25 94 408/- 6 785/- 09-02-05 FEB. 05 27 65 064/- 6 901/- 12-03-05 MARCH 05 TOTAL 40 78 041/- 3 11 01 560/- 11 651/- 85 157/- 21-04-05 [ *MNREH-05 UNPAID OUTSTANDING LABOUR JOB CHARGE S RS.40 78 041/-] THE UNPAID LABOUR CHARGES FOR THE MONTH OF MARCH FO R WHICH BILLS WERE NOT RAISED BY THE JOB WORKERS ADDED UP TO RS.40 78 041/- ON WH ICH TDS WAS MADE AND DULY PAID ON 21.04.2005 WHICH WAS BEFORE THE DATE OF FI LING OF THE RETURN. THIS WAS AN ALLOWABLE CLAIM SINCE THE LAW WAS AMENDED BY FINAN CC ACT 2008 WITH RETROSPECTIVE EFFECT FROM AY 2005-06. I HAVE GONE THROUGH THE DETAILS AND LOWER TAX DEDUC TION CERTIFICATE IN RESPECT OF JOB WORKERS AND THE CHART OF DEDUCTION OF TAX AND FIND THAT THE AO'S ACTION IN DISALLOWING THE CLAIM OF EXPENDITURE ON GROUND OF N ON-DEDUCTION OF LAX OR NON DEPOSIT OF TAX IS NOT IN ORDER. THE AO HAS CALCULAT ED TDS @ 1.02% WHEREAS IN MOST OF THE CASES THE TAX IS TO BE DEDUCTED AT A LOWER R ATE AS PER CERTIFICATE ISSUED BY THE DEPARTMENT. FURTHER THE SO CALLED LATE PAYMENT OF TDS TO THE GOVT. ACCOUNT IS ALSO NOT CORRECT SINCE AS PER AMENDED PROVISIONS OF SECT ION 194C OF THE ACT THE TAX PAGE 3 OF 9 DEDUCTED FOR MARCH 2005 COULD BE DEPOSITED IN THE GOVT. ACCOUNT BEFORE FILING THE RETURN OF INCOME AND THE EXPENDITURE IN RESPECT OF WHICH SUCH TDS WAS MADE WOULD BE AN ALLOWABLE EXPENDITURE. THEREFORE THE AOS AC TION IN MAKING THE DISALLOWANCE U/S. 40A (IA) OF THE I.T. ACT IS NOT IN ORDER AND T HE ADDITION ON THIS ACCOUNT IS DIRECTED TO BE DELETED. 4. BOTH THE PARTIES AGREED BEFORE US THAT THE ISSUE IS COVERED BY THE ORDER DATED 7-10-2010 OF THIS TRIBUNAL IN THE CASE OF I.T .O. VS. SHRI DILIP A.KOTHARI (HUF) FOR ASSESSMENT YEAR 2005-06 IN ITA NO.3692/AH D/2008 IN FAVOUR OF THE ASSESSEE. 5. WE FIND THAT THE TRIBUNAL IN THE CASE OF SHRI DI LIP A.KOTHARI (HUF) WHILE DECIDING THE SIMILAR ISSUE HELD AS UNDER:- 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IN THE INSTANT CASE THE LEARNED ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS CL AIMED TOTAL EXPENDITURE OF `.3 11 16 405/- UNDER THE HEAD JOB C HARGES EXPENSES. THE LEARNED ASSESSING OFFICER FURTHER OBS ERVED THAT THE ASSESSEE HAS DEDUCTED ITDS OF `.71 898/- AGAINST TH E AFORESAID EXPENDITURE. ACCORDING TO THE LEARNED ASSESSING OFF ICER ITDS OF `.13 896/- RELATING TO THE MONTH OF MARCH 2005 WHIC H OUGHT TO HAVE BEEN PAID BY THE ASSESSEE ON OR BEFORE 7-4-200 5 WAS ACTUALLY PAID BY THE ASSESSEE ON 21-4-2005. THEREFO RE IN THE OPINION OF THE LEARNED ASSESSING OFFICER THE CORRES PONDING EXPENDITURE RELATING TO `.13 896/- WAS NOT ALLOWABL E TO THE ASSESSEE IN VIEW OF THE PROVISIONS OF SECTION 40(A) (IA) OF THE ACT. THE LEARNED ASSESSING OFFICER THEREAFTER FOUND THAT ITDS OF `.53 037/- DEDUCTED BY THE ASSESSEE RELATES TO THE EXPENDITURE OF `.2 16 83 176/- AS PER CHART STATED AT PAGE NO.11 O F THE ASSESSMENT ORDER. THE LEARNED ASSESSING OFFICER ES TIMATED THE EXPENDITURE AMOUNTING TO BALANCE ITDS OF `.4 926/- AT `.4 82 941/- BY ASSUMING THAT THE ASSESSEE WAS LIABLE TO DEDUCT TAX AT THE RATE 1.02%. IN VIEW OF THE ABOVE WORKING ACCORDING TO TH E LEARNED ASSESSING OFFICER THE ASSESSEE HAS DEDUCTED AND PAI D ITDS WITHIN TIME RELATING TO EXPENDITURE OF `.2 16 83 176/- + ` .4 82 941/- TOTALLING TO `.2 21 66 117/-. THE LEARNED ASSESSING OFFICER THEREFORE ALLOWED DEDUCTION OF JOB CHARGES EXPENSES OF `.2 21 66 117/- AND DISALLOWED JOB CHARGES EXPENSES OUT OF ` 3 11 16 405/- AT `.92 99 812/-. 10. ON APPEAL LEARNED COMMISSIONER OF INCOME TAX (A PPEALS) HELD AS UNDER :- I HAVE GONE THROUGH THE DETAILS AND LOWER TAX DEDU CTION CERTIFICATE IN RESPECT OF JOB WORKERS AND THE CHART OF DEDUCTION OF TAX AND FIND THAT THE LEARNED ASSESSING OFFICERS A CTION IN DISALLOWING THE CLAIM OF EXPENDITURE ON GROUND OF N ON-DEDUCTION OF TAX OR NON DEPOSIT OF TAX IS NOT IN ORDER. THE LEAR NED ASSESSING OFFICER HAS CALCULATED TDS @ 1.02% WHEREAS IN MOST OF THE CASES PAGE 4 OF 9 THE TAX IS TO BE DEDUCTED AT A LOWER RATE AS PER CE RTIFICATE ISSUED BY THE DEPARTMENT. FURTHER THE SO CALLED LATE PAYME NT OF TDS TO THE GOVERNMENT ACCOUNT IS ALSO NOT CORRECT SINCE AS PER AMENDED PROVISIONS OF SECTION 194C OF THE ACT THE TAX DEDU CTED FOR MARCH 2005 COULD BE DEPOSITED IN THE GOVERNMENT ACCOUNT B EFORE FILING THE RETURN OF INCOME AND THE EXPENDITURE IN RESPECT OF WHICH SUCH TDS WAS MADE WOULD BE AN ALLOWABLE EXPENDITURE. TH EREFORE THE LEARNED ASSESSING OFFICERS ACTION IN MAKING THE DI SALLOWANCE UNDER SECTION 40(A)(IA) OF THE INCOME TAX ACT IS NO T IN ORDER AND THE ADDITION ON THIS ACCOUNT IS DIRECTED TO BE DELE TED. 11. BEFORE US THE LEARNED DEPARTMENTAL REPRESENTATI VE RELIED UPON THE ORDER OF THE LEARNED ASSESSING OFFICER 12. WE FIND THAT THE LEARNED DEPARTMENTAL REPRESENT ATIVE COULD NOT POINT OUT ANY SPECIFIC ERROR IN THE ORDER OF TH E LEARNED COMMISSIONER OF INCOME TAX (APPEALS). THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) AFTER GOING TH ROUGH THE CHART OF DEDUCTION OF TAX AND THE LOWER TAX DEDUCTI ON CERTIFICATE ISSUED UNDER SECTION 197 TO THE DIFFERENT PARTIES F OUND THAT TAX DEDUCTED BY THE ASSESSEE WAS IN ACCORDANCE WITH THE CERTIFICATE ISSUED BY THE DEPARTMENT. NO ERROR IN THE FINDING O F THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) COULD BE POINT ED OUT BY THE LEARNED DEPARTMENTAL REPRESENTATIVE. WE FIND THAT I N VIEW OF THE AMENDMENT MADE BY THE FINANCE ACT 2008 WITH RETROS PECTIVE EFFECT FROM 1-4-2005 THAT TAX WHICH WAS DEDUCTIBLE IN THE LAST MONTH OF THE PREVIOUS YEAR IF SO DEDUCTED AND PAID BEFORE THE DUE DATE SPECIFIED UNDER SECTION 139(1) FOR FILING THE RETURN OF INCOME THEN NO DISALLOWANCE OF CORRESPONDING EXPENDITURE U NDER SECTION 40(A)(IA) IS WARRANTED. THUS THE LEARNED COMMISSION ER OF INCOME TAX (APPEALS) WAS FULLY JUSTIFIED IN HOLDING THAT N O DISALLOWANCE OF EXPENDITURE RELATING TO ITDS OF `.13 896/- RELATING TO MARCH 2005 WHICH WAS PAID ON 21-4-2005 WAS WARRANTED. WE FIND FROM THE LOWER TAX DEDUCTION CERTIFICATE PLACED AT PAGE NO.1 4 OF THE PAPER BOOK THAT THE ASSESSEE WAS LIABLE TO DEDUCT TAX AT THE RATE 0.25% IN RESPECT OF JOB CHARGES EXPENSES PAID TO VISHAL E NTERPRISES. HOWEVER WE FIND FROM THE CHART PREPARED BY THE LEA RNED ASSESSING OFFICER ON PAGE-11 OF THE ASSESSMENT ORDE R WHEREIN THE LEARNED ASSESSING OFFICER ASSUMED THAT THE ASSESSEE WAS LIABLE TO DEDUCT TAX AT THE RATE 1.02% IN RESPECT OF JOB CHAR GES EXPENSES OF `.13 95 773/- PAID BY THE ASSESSEE TO SAID VISHAL E NTERPRISES AND THEREFORE DISALLOWED `.10 53 518/- OUT OF THE SAME . WE FIND THAT THE ASSESSEE HAS DULY DEDUCTED ITDS AT THE RATE 0.2 5% AND THEREFORE THE LEARNED ASSESSING OFFICER ERRED IN D ISALLOWING `.10 53 518/- OUT OF JOB CHARGES EXPENSES OF `.13 9 5 773/- PAID TO M/S. VISHAL ENTERPRISES. IT IS ALSO OBSERVED THAT T HE LEARNED ASSESSING OFFICER IN THE ASSESSMENT ORDER HAS NOT P OINTED OUT ANY SPECIFIC PAYMENT MADE BY THE ASSESSEE ON WHICH THE ASSESSEE WAS LIABLE TO DEDUCT TAX BUT FAILED TO DEDUCT TAX O R FAILED TO DEPOSIT SAID TAX WITHIN THE TIME ENVISAGED IN SECTION 40(A) (IA) OF THE ACT. ON THE OTHER HAND THE LEARNED ASSESSING OFFICER HAS FOUND THAT THE ASSESSEE HAS DEDUCTED TAX AND PAID TAX WITHIN T IME IN RESPECT PAGE 5 OF 9 OF PAYMENT OF `.2 21 66 117/- AND THEREFORE HE DIS ALLOWED THE REMAINING AMOUNT. THE REMAINING AMOUNT ALSO WORKS OUT TO `.89 50 288/-(`.3 11 16 405 `.2 21 66.117/-) WHI CH HAS BEEN ERRONEOUSLY WORKED OUT BY THE LEARNED ASSESSING OFF ICER AT `.92 99 812/-. IN THE ABOVE FACTS AND CIRCUMSTANCES IN OUR CONSIDERED VIEW THE DISALLOWANCE MADE BY THE LEARNE D ASSESSING OFFICER IS NOT IN ACCORDANCE WITH THE LAW AND UNSUS TAINABLE AND IN ABSENCE OF ANY SPECIFIC ERROR BEING POINTED OUT IN THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS). WE DO NOT FIND ANY GOOD REASON TO INTERFERE WITH THE SAME. WE THER EFORE DISMISS THE GROUND OF APPEAL OF THE REVENUE. 6. RESPECTFULLY FOLLOWING THE ABOVE QUOTED ORDER OF THE TRIBUNAL WE DISMISS THIS GROUND OF APPEAL OF THE REVENUE. 7. GROUND NO.2 OF THE APPEAL READS AS UNDER:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-IV SU RAT HAS ERRED IN DELETING THE ADDITION OF `.11 17 510/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF ESTIMATED GROSS PROFIT. 8. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS DECIDED THE ISSUE AS FOLLOWS:- THE NEXT GROUND OF APPEAL IS REGARDING ADDITION OF RS. 11 17 510/- BY ESTIMATING GP @ 6%. THE AO OBSERVED THAT THE APPELLANT DID NOT FURNISH CONFIRMATION OF ACCOUNTS OF ALL THE JOB WORKERS AND ALSO DID NOT CL ARIFY WHETHER JOB WORK CHARGES WERE PAID ON PIECE BASES OF CARAT BASIS. F'URTHER THE APPELLANT HAD CLAIMED SUCH EXPENDITURE FOR WHICH NO DOCUMENTARY EVIDENCE WAS F URNISHED. THE AO FURTHER OBSERVED THAT BECAUSE OF TECHNICAL DISALLOWANCE OF JOB WORK CHARGES DUE TO NON- DEDUCTION OF TDS BESIDES NON FILING OF CONFIRMATION S THE BOOK RESULTS COULD NOT BE ACCEPTED AND BY INVOKING THE PROVISIONS OF SECTION 145(3) OF THE IT ACT REJECTED THE BOOKS OF ACCOUNTS. HE ESTIMATED GP @ 6% OF THE TURN OVER IN VIEW OF HON'BLE ITAT AHMCDABAD DECISION AND MADE AN ADDITION OF RS . 11 17 5107-ON THIS ACCOUNT. BEFORC ME THE ID. AR SUBMITTED THAT THE APPELLANT WAS A COMMISSION AGENT AND WAS NOT ENGAGED IN MANUFACTURE OF DIAMONDS IN HIS OWN U NIT. HE WOULD GET A COMMISSION OF 2.5% ON LABOUR CHARGES. THE APPELLANT SUBMITTED CONFIRMATION OF ACCOUNTS AND COPIES OF RETURNS OF INCOME OF ALL THE SUB-CONTRACTORS AND THE INSPECTOR OF THE OFFICE VISITED THE BUSINESS PREMISES OF THES E SUB-CONTRACTORS FOR VERIFICATION. THE REJECTION OF BOOKS OF ACCOUNTS EVEN AFTER VERIF ICATION OF RECORDS WAS NOT PROPER. THE DECISION OF HON'BLE ITAT AHMEDABAD REFERRED TO BY THE AO WAS IN THE CASE OF M/S. BHADIADRA DIAMONDS BUT THE SAID PARTY WAS IN T HE BUSINESS OF IMPORT OF ROUGH DIAMONDS AND MANUFACTURING POLISHED DIAMONDS WHEREA S THE APPELLANT HAD GIVEN JOB WORK TO OUTSIDERS AND THEREFORE THE SAID JUDGMENT W AS NOT APPLICABLE TO THE APPELLANT'S CASE. FURTHER HON'BLE ITAT. AHMED ABAD IN THE AWE OF BHARATKUMAR RAMNIKLAL MEHTA IN ITA .1296/AH D/2004 FOR AY 2001-02 ACCEPTED THE LABOUR EXPENSES CLAIMED AFTER CONSIDER ING THE OVERALL COMPARATIVE GP PAGE 6 OF 9 EVEN WHEN MANY OF THE LABORERS COULD NOT BE FOUND A ND VERIFIED. THE GP THE APPELLANT FOR A.YS 2003-04 2004-05 AND 2005-06 WA S 2.51% 2.52% AND 2.50% RESPECTIVELY. IT WAS ALSO SUBMITTED THAT THE ROUG H DIAMONDS WERE RECEIVED IN CARATS AND ASSORTMENT WAS DONE ON THE BASIS OF PIECES BUT THE ACTUAL MANUFACT URING COULD BE BOTH IN CARATS OF PIECES AND QUALITY. THE APPELL ANT'S BOOKS WERE ACCEPTED BY THE DEPARTMENT FROM LAST SO MANY YEARS. IT WAS FURTHER SUBMITTED THAT HONBLE ITAT AHMEDABAD IN THE CASE OF VANMALIBHAI PATEL IN IT A NO.2688/AHD/2002 ACCEPTED THE GP AT 2% IN RESPECT OF JOB WORK WHEREAS THE APP ELLANT'S GP WAS 2.50%. I HAVE CONSIDERED THE SUBMISSIONS AND FIND THAT THE APPELLANT HAD FILED CONFIRMATION OF THE JOB WORKERS NS WELL US THEIR COPIES OF ACCOU NTS. I HAVE ALSO PERUSED THE DECISIONS CITED BY THE ID. AR. IT IS ALSO SEEN THAT ALL THE SUB-CONTRACTORS ARE ASSESSED TO TAX AND THE HON'BLE ITAT HAVE ACCEPTED THE GP RA TE AT 2% IN THE CASE OF JOB WORKERS. THE APPELLANT HAS ALSO MAINTAINED COMPLETE SETS OF HONKS OF ACCOUNTS LIKE LABOUR RECEIPT REGISTER PAYMENT REGISTER ETC. AND THE AO HAS ONLY REJECTED THE HOOK RESULTS BECAUSE PIECE WISE DETAILS OF DIAMONDS RECE IVED FROM THE PRINCIPLE AND THE JOB CONTRACTOR WAS NOT MAINTAINED. HOWEVER WHEN TH E APPELLANT HAS PROVIDED ALL THE RELEVANT PRIMARY EVIDENCES THE AO'S EMPHASIS ON PI ECE WISE OR CARAT WISE RECEIPT OF PAYMENT IS NOT JUSTIFIED. FURTHER ANOTHER REASON F OR REJECTION OF BOOK RESULTS CITED BY THE AO IS THAT THE APPELLANT HAS NOT DEDUCTED OR NH OR1 DEDUCTED TDS ON JOB WORK PAYMENTS BUT AS HELD IN EARLIER PART OF THIS ORDER THESE OBSERVATIONS ARE NOT IN ORDER. THEREFORE I AM OF THE CONSIDERED VIEW THAT REJECTI ON OF BOOK RESULTS WAS NOT WARRANTED AND THERE IS NO JUSTIFICATION IN ESTIMATI NG GP AT 6% OF THE JOB RECEIPTS. ADDITION ON THIS ACCOUNT IS DIRECTED TO BE DELETED. IN THE RESULT THE APPEAL IS PARTLY ALLOWED. 9. BOTH THE PARTIES AGREED BEFORE US THAT THE ISSUE IS COVERED BY THE ORDER DATED 7-10-2010 OF THIS TRIBUNAL IN THE CASE OF I.T .O. VS. SHRI DILIP A.KOTHARI (HUF) FOR ASSESSMENT YEAR 2005-06 IN ITA NO.3692/AH D/2008 IN FAVOUR OF THE ASSESSEE. 10. WE FIND THAT THE TRIBUNAL IN THE CASE OF SHRI D ILIP A.KOTHARI (HUF) WHILE DECIDING THE SIMILAR ISSUE HELD AS UNDER:- 14. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUS ED THE MATERIALS AVAILABLE ON RECORD. IN THE INSTANT CASE THE LEARNED ASSESSING OFFICER REJECTED THE BOOK RESULT OF THE A SSESSEE ON THE GROUND THAT CONFIRMATION OF JOB WORKER TO WHOM PAYM ENTS HAVE BEEN MADE BY THE ASSESSEE WERE NOT FURNISHED TDS O N THE JOB CHARGES PAID WERE NOT PROPERLY DEDUCTED THE ASSESS EE COULD NOT STATE THAT THE JOB CHARGES RECEIVED AND PAID WERE O N CARAT BASIS OR PIECE BASIS. THE LEARNED ASSESSING OFFICER AFTER RE JECTING THE BOOK RESULT ESTIMATED THE GROSS PROFIT OF THE ASSESSEE A T THE RATE 6% PURPORTEDLY ON THE BASIS OF THE ORDER OF THIS TRIBU NAL FOR WHICH NO CITATION OR APPEAL PARTICULARS ARE MENTIONED IN THE ASSESSMENT ORDER AND THEREBY TRADING ADDITION OF `.11 30 558/ -. PAGE 7 OF 9 15. BEFORE THE LEARNED COMMISSIONER OF INCOME TAX ( APPEALS) THE ASSESSEE SUBMITTED AS UNDER :- BEFORE ME THE LEARNED AUTHORISED REPRESENTATIVE O F THE ASSESSEE SUBMITTED THAT THE APPELLANT WAS A COMMISS ION AGENT AND WAS NOT ENGAGED IN MANUFACTURE OF DIAMONDS IN H IS OWN UNIT. HE WOULD GET A COMMISSION OF 2.5% ON LABOUR CHARGES . THE APPELLANT SUBMITTED CONFIRMATION OF ACCOUNTS AND CO PIES OF RETURNS OF INCOME OF ALL THE SUB-CONTRACTORS AND THE INSPEC TOR OF THE OFFICE VISITED THE BUSINESS PREMISES OF THESE SUB-CONTRACT ORS FOR VERIFICATION. THE REJECTION OF BOOKS OF ACCOUNTS EV EN AFTER VERIFICATION OF RECORDS WAS NOT PROPER. THE DECISIO N OF HON'BLE ITAT AHMEDABAD REFERRED TO BY THE LEARNED ASSESSIN G OFFICER WAS IN THE CASE OF BHADIADRA DIAMONDS BUT THE SAID PART Y WAS IN THE BUSINESS OF IMPORT OF ROUGH DIAMONDS AND MANUFACTUR ING POLISHED DIAMONDS WHEREAS THE APPELLANT HAD GIVEN JOB WORK T O OUTSIDERS AND THEREFORE THE SAID JUDGEMENT WAS NOT APPLICABL E TO THE APPELLANTS CASE. FURTHER HON'BLE I.T.A.T. AHMEDAB AD IN THE CASE OF BHARATKUMAR RAMNIKLAL MEHTA IN ITA NO.1296/AHD/2 004 FOR ASSESSMENT YEAR 2001-02 ACCEPTED THE LABOUR EXPENSE S CLAIMED AFTER CONSIDERING THE OVERALL COMPARATIVE GROSS PRO FIT EVEN WHEN MANY OF THE LABOURERS COULD NOT BE FOUND AND VERIFI ED. THE GROSS PROFIT OF THE APPELLANT FOR ASSESSMENT YEARS 2003-0 4 2004-05 AND 2005-06 WAS 2.47% 2.52% AND2.52% RESPECTIVELY. IT WAS ALSO SUBMITTED THAT THE ROUGH DIAMONDS WERE RECEIVED IN CARATS AND ASSORTMENT WAS DONE ON THE BASIS OF PIECES BUT THE ACTUAL MANUFACTURING COULD BE BOTH IN CARATS OF PIECES AND QUALITY. THE APPELLANTS BOOKS WERE ACCEPTED BY THE DEPARTMENT F ROM LAST SO MANY YEARS. IT WAS FURTHER SUBMITTED THAT HON'BLE I .T.A.T. AHMEDABAD IN THE CASE OF VANMALIBHAI PATEL IN ITA NO.2688/AHD/2002 ACCEPTED THE GROSS PROFIT AT 2% IN RESPECT OF JOB WORK WHEREAS THE APPELLANTS GROSS PROFIT WAS 2 .52%. 16. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) HELD AS UNDER :- I HAVE CONSIDERED THE SUBMISSIONS AND FIND THAT T HE APPELLANT HAD FILED CONFIRMATION OF THE JOB WORKERS AS WELL AS THEIR COPIES OF ACCOUNTS. I HAVE ALSO PERUSED THE DECISIO NS CITED BY THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE. IT IS ALSO SEEN THAT ALL THE SUB-CONTRACTORS ARE ASSESSED TO TAX AN D THE HON'BLE I.T.A.T. HAVE ACCEPTED THE GROSS PROFIT RATE AT 2% IN THE CASE OF JOB WORKERS. THE APPELLANT HAS ALSO MAINTAINED COMPLETE SETS OF BOOKS OF ACCOUNTS LIKE LABOUR RECEIPT REGISTER PAYMENT R EGISTER ETC. AND THE LEARNED ASSESSING OFFICER HAS ONLY REJECTED THE BOOK RESULTS BECAUSE PIECE WISE DETAILS OF DIAMONDS RECEIVED FRO M THE PRINCIPLE AND THE JOB CONTRACTOR WAS NOT MAINTAINED. HOWEVER WHEN THE APPELLANT HAS PROVIDED ALL THE RELEVANT PRIMARY EVI DENCES THE LEARNED ASSESSING OFFICERS EMPHASIS ON PIECE WISE OR CARAT WISE RECEIPT OF PAYMENT IS NOT JUSTIFIED. FURTHER ANOTH ER REASON FOR REJECTION OF BOOK RESULTS CITED BY THE LEARNED ASSE SSING OFFICER IS THAT THE APPELLANT HAS NOT DEDUCTED OR SHORT DEDUCT ED TDS ON JOB WORK PAYMENTS BUT AS HELD IN EARLIER PART OF THIS O RDER THESE PAGE 8 OF 9 OBSERVATIONS ARE NOT IN ORDER. THEREFORE I AM OF T HE CONSIDERED VIEW THAT REJECTION OF BOOK RESULTS WAS NOT WARRANT ED AND THERE IS NO JUSTIFICATION IN ESTIMATING GROSS PROFIT AT 6% O F THE JOB RECEIPTS. ADDITION ON THIS ACCOUNT IS DIRECTED TO BE DELETED. 17. BEFORE US THE LEARNED DEPARTMENTAL REPRESENTATI VE SUPPORTED THE ORDER OF THE LEARNED ASSESSING OFFICE R AND THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE SUPPORTED THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) AND REITERATED THE SUBMISSIONS WHICH WERE MADE BEFORE THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS). 18. WE FIND THAT THE LEARNED DEPARTMENTAL REPRESENTATIVE COULD NOT POINT OUT ANY SPECIFIC ERR OR IN THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS) WHICH HAS BEEN PASSED AFTER FULL APPRECIATION OF TH E ENTIRE FACTS OF THE CASE. WE DO NOT FIND ANY GOOD REASON TO INTERFERE WITH THE ORDER OF THE LEARNED COMMISSIONE R OF INCOME TAX (APPEALS) WHICH IS CONFIRMED AND THE GRO UND OF APPEAL OF THE REVENUE IS DISMISSED. 11. RESPECTFULLY FOLLOWING THE ABOVE QUOTED ORDER O F THE TRIBUNAL WE DISMISS THIS GROUND OF APPEAL OF THE REVENUE. IN THE RESULT THE APPEAL OF THE REVENUE IS DISMISS ED. ORDER PRONOUNCED IN THE COURT AT THE CLOSE OF THE H EARING IN THE PRESENCE OF THE PARTIES ON 31 ST DAY OF JANUARY 2011. SD/- SD/- ( MAHAVIR SINGH) (N.S. S AINI) JUDICIAL MEMBER A CCOUNTANT MEMBER DATED: AHMEDABAD 31 ST DAY OF JANUARY 2011. COMPILED AND COMPARED BY: PATKI COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT(APPEALS)-IV SURAT. 5. THE DR AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER //TRUE COPY// (DY./ASSTT.REGISTRAR) ITAT AHMEDABAD PAGE 9 OF 9 DATE INITIALS 1. DRAFT DICTATED ON 31-1-2011 -------------- ----- 2. DRAFT PLACED BEFORE AUTHORITY 31-1-2011 ----- -------------- 3. DRAFT PROPOSED & PLACED 31-1-2011 ----------- -------- JM BEFORE THE SECOND MEMBER 4. DRAFT DISCUSSED/APPROVED 31-1-2011 ---------- --------- JM/AM BY SECOND MEMBER 5. APPROVED DRAFT COMES TO P.S ---------------- -- ------------------ 6. KEPT FOR PRONOUNCEMENT ON ---------------- --- ----------------- 7. FILE SENT TO THE BENCH CLERK ---------------- -------------------- 8. DATE ON WHICH FILE GOES TO THE ---------------- -------------------- 9. DATE OF DISPATCH OF ORDER ---------------- --- ------------------