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

ITA 2983/AHD/2008 | 2005-2006
Pronouncement Date: 23-12-2010 | Result: Dismissed

Appeal Details

RSA Number 298320514 RSA 2008
Assessee PAN AABHA7978N
Bench Ahmedabad
Appeal Number ITA 2983/AHD/2008
Duration Of Justice 2 year(s) 4 month(s)
Appellant The ITO, Ward-6(1),, Surat
Respondent Shri Ashwin A.Kothari,HUF, Surat
Appeal Type Income Tax Appeal
Pronouncement Date 23-12-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted D
Tribunal Order Date 23-12-2010
Date Of Final Hearing 16-12-2010
Next Hearing Date 16-12-2010
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 MUKUL SHRAWAT MUKUL SHRAWAT MUKUL SHRAWAT MUKUL SHRAWAT JUDICIAL JUDICIAL JUDICIAL JUDICIAL MEMBER MEMBER MEMBER MEMBER AND AND AND AND SHRI N.S.SAINI SHRI N.S.SAINI SHRI N.S.SAINI SHRI N.S.SAINI ACCOUNTANT ACCOUNTANT ACCOUNTANT ACCOUNTANT MEMBER MEMBER MEMBER MEMBER DATE OF HEARING : 16-12-2010 DRAFTED ON:20- 12-2010 ITA NO. 2983 /AHD/ 2008 ASSESSMENT YEAR : 2005-06 INCO ME TAX OFFICER WARD 6(1) ROOM NO.614 6 TH FLOOR AAYAKAR BHAVAN MAJURA GATE SURAT. VS ASHWIN A. KOTHARI HUF 703 SHREENATHJI APARTMENT HATHFALIA HARIPURA SURAT. PAN/GIR NO. : AABHA 7978 N (A PPELLANT ) .. ( RESPONDENT ) APPELLANT BY : SHRI U.B.MI SHRA 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 SU RAT DATED 25-6- 2008. 2. GROUND NO.1 OF THE APPEAL IS DIRECTED AGAINST TH E ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) DELETI NG THE ADDITION OF `.53 25 805/- MADE BY THE LEARNED ASSESSING OFFICER ON ACCOUNT OF DISALLOWANCE MADE UNDER SECTION 40(A)(IA) R.W.S. 1 94C OF THE INCOME TAX ACT. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE LEARNED ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAD CLAIMED JOB WORK EXP ENSES OF `.2 94 57 423/- AND AS PER SECTION 194C OF THE ACT WAS REQUIRED TO DEDUCT TAX AT SOURCE ON SUCH PAYMENTS. THE LEARNED ASSESSING OFFICER MADE A LIST OF SUCH PAYMENTS ON PAGE-9 OF THE ASSES SMENT ORDER AND CONCLUDED THAT THE APPELLANT HAD DEDUCTED TAX OF ` 55 591/- ONLY BUT AS - 2 - PER PROVISIONS OF SECTION 194C OF THE ACT THE DEDUC TION WAS TO BE DONE AT 1.02%.HOWEVER IN MOST OF THE CASES THE ASSESSEE HAD RECEIVED CERTIFICATE OF LOWER DEDUCTION AT 0.25%. THE TOTAL AMOUNT OF JOB WORK CHARGES ON WHICH TAX WAS DEDUCTED WORKED OUT AT `.2 27 76 814/- ONLY. THE LEARNED ASSESSING OFFICER FURTHER HELD THAT FOR ALLOWABILITY OF ANY EXPENDITURE IN THE NATURE OF CONTRACT THE TAX HAD T O BE DEDUCTED UP[TO 30-3-2005 AND THE SAME WAS PAID ON OR BEFORE 7 TH OF APRIL IN THE NEXT FINANCIAL YEAR. THE ASSESSEE HAD SUBMITTED CHALLANS AMOUNTING TO `.76 015/- AND THE LEARNED ASSESSING OFFICER FOUND THAT ONE CHALLAN OF `.6 005/- WAS PAID ON 21-4-2005 AND ANOTHER CHALLAN OF `.601/- WAS PAID ON 11-6-2005 ONLY AND CALCULATED THAT TAX ON J OB WORK CHARGES OF `.53 25 803/- WAS NOT DEDUCTED AND THEREFORE DISALL OWED THE SAME UNDER SECTION 40(A)(IA) OF THE I. T. ACT. 4. ON APPEAL BEFORE THE LEARNED COMMISSIONER OF IN COME TAX (APPEALS) THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE SUBMITTED THAT MONTHLY DETAILS OF ITDS DEDUCTED ALO NG WITH CHALAN AND RELEVANT LOWER DEDUCTION CERTIFICATE UNDER SECTION 197 WAS FILED DURING THE ASSESSMENT PROCEEDINGS (A COPY OF THE SAME WAS ALSO FILED BEFORE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)). WHIL E CALCULATING `.13 54 706/- IN PARA-7 OF THE ASSESSMENT ORDER TH E LEARNED ASSESSING OFFICER APPLIED ITDS RATE OF 1.02% WHICH WAS NOT CO RRECT BECAUSE IN ALL THE CASES OF THE JOB WORKERS LOWER DEDUCTION CERTIF ICATE WERE FURNISHED TO THE LEARNED ASSESSING OFFICER. THE DETAILS REGAR DING JOB CHARGES ON WHICH ITDS WAS MADE WERE AS UNDER:- MONTH LABOUR AMOUNT I TDS AMOUNT DAT E OF PAYMENT APRIL 04 10 84 637 2 667 17 - 5 - 04 MAY 04 34 46 042 8 868 23.6.04 JUNE 04 12 07 752 3 602 17 7 04 JULY 04 11 64 063 3 473 20.8.04 AUG.04 23 76 636 6 105 16.9.04 SEPT.04 35 34 287 9 352 16.10.04 OCT.04 47 10 087 11 618 11.11.04 NOV.04 12 92 934 3 196 10.12.04 DEC.04 28 79 938 7 394 11.1.05 JAN.05 24 87 214 5 958 7.2.05 FEB.05 26 87 012 6 343 9.3.05 *MARCH 05 25 86 821 6 005 21.04.05 TOTAL 2 94 57 423 74 581 - 3 - [*MARCH-05 UNPAID OUTSTANDING LABOUR JOB CHARGES `. 25 86 821/-]. 5. ON APPEAL THE LEARNED COMMISSIONER OF INCOME TA X (APPEALS) HELD AS UNDER:- I HAVE GONE THROUGH THE DETAILS AND LOWER TAX DED UCTION 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 L EARNED ASSESSING OFFICER HAS CALCULATED TDS @ 1.02% WHEREA S 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 S O CALLED LATE PAYMENT OF TDS TO THE GOVERNMENT. ACCOUNT IS ALSO N OT CORRECT SINCE AS PER AMENDED PROVISIONS OF SECTION194C OF T HE ACT THE TAX DEDUCTED FOR MARCH 2005 COULD BE DEPOSITED IN THE GOVERNMENT ACCOUNT BEFORE FILING THE RETURN OF INCO ME AND THE EXPENDITURE IN RESPECT OF WHICH SUCH TDS WAS MADE WOULD BE AN ALLOWABLE EXPENDITURE. THEREFORE THE LEARNED AS SESSING OFFICERS ACTION IN MAKING THE DISALLOWANCE UNDER S ECTION 40A(IA) OF THE I. T. ACT IS NOT IN ORDER AND THE ADDITION O N THIS ACCOUNT IS DIRECTED TO BE DELETED. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IN THE INSTANT CASE THE LEARN ED ASSESSING OFFICER OBSERVED THAT ASSESSEE HAS CLAIMED TOTAL EXPENDITUR E OF `.2 94 57 423/- UNDER THE HEAD JOB CHARGES EXPENSES . ACCORDING TO THE LEARNED ASSESSING OFFICER ITDS OF `.6 005/- RELATIN G TO THE MONTH OF MARCH 2005 WHICH OUGHT TO HAVE BEEN PAID BY THE AS SESSEE ON OR BEFORE 7-4-2005 WAS ACTUALLY PAID BY THE ASSESSEE O N 21-4-2005. THEREFORE IN THE OPINION OF THE LEARNED ASSESSING OFFICER THE CORRESPONDING EXPENDITURE RELATING TO `.6 005/- WAS NOT ALLOWABLE TO THE ASSESSEE IN VIEW OF THE PROVISIONS OF SECTION 4 0(A)(IA) OF THE ACT. 7. ON APPEAL LEARNED COMMISSIONER OF INCOME TAX(APP EALS) DELETED THE ABOVE DISALLOWANCE BY OBSERVING THAT PA YMENT OF ITDS WAS MADE BEFORE THE DUE DATE OF FILING OF THE RELEVANT RETURN OF INCOME. 8. BEFORE US THE LEARNED DEPARTMENTAL REPRESENTATIV E RELIED UPON THE ORDER OF THE LEARNED ASSESSING OFFICER. - 4 - 9. WE FIND THAT THE LEARNED DEPARTMENTAL REPRESENTA TIVE COULD NOT POINT OUT ANY SPECIFIC ERROR IN THE ORDER OF THE LE ARNED COMMISSIONER OF INCOME TAX (APPEALS). WE FIND THAT IN VIEW OF THE A MENDMENT BY THE FINANCE ACT 2008 WITH RETROSPECTIVE EFFECT FROM 1- 4-2005 THAT TAX WHICH WAS DEDUCTIBLE IN THE LAST MONTH OF THE PREVI OUS YEAR IF SO DEDUCTED AND PAID BEFORE THE DUE DATE SPECIFIED UND ER SECTION 139(1) FOR FILING THE RETURN OF INCOME THEN NO DISALLOWANC E OF CORRESPONDING EXPENDITURE UNDER SECTION 40(A) (IA) IS WARRANTED. NO MATERIAL WAS BROUGHT ON RECORD BY THE REVENUE TO SHOW THAT ITDS OF `.6 005/- WHICH WAS PAID ON 25-4-2005 AND ITDS OF `.601/- WHICH WA S PAID ON 11-6- 2005 RELATED TO AN EXPENDITURE ON WHICH TAX WAS DED UCTIBLE BEFORE MARCH 2005. IN ABSENCE OF ANY SUCH MATERIAL BROUGHT BEFORE US WE DO NOT FIND ANY ERROR IN THE ORDER OF THE LEARNED COMM ISSIONER OF INCOME TAX (APPEALS). THEREFORE THIS GROUND OF APPEAL OF THE REVENUE IS DISMISSED. 10. GROUND NO.2 READS AS UNDER:- ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IV SU RAT HAS ERRED IN DELETING THE ADDITION OF `.10 69 357/- MAD E BY THE LEARNED ASSESSING OFFICER ON ACCOUNT OF ESTIMATED G ROSS PROFIT. 11. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE MATERIALS AVAILABLE ON RECORD. IN THE INSTANT CASE THE LEARNE D ASSESSING OFFICER REJECTED THE BOOK RESULT OF THE ASSESSEE ON THE GRO UND THAT CONFIRMATION OF JOB WORKER TO WHOM PAYMENTS HAVE BE EN MADE BY THE ASSESSEE WERE NOT FURNISHED ITDS ON THE JOB CHARGE S PAID WERE NOT PROPERLY DEDUCTED THE ASSESSEE COULD NOT STATE THA T THE JOB CHARGES RECEIVED AND PAID WERE ON CARAT BASIS OR PIECE BASI S. THE LEARNED ASSESSING OFFICER AFTER REJECTING THE BOOK RESULT E STIMATED THE GROSS PROFIT OF THE ASSESSEE AT THE RATE 6% PURPORTEDLY O N THE BASIS OF THE ORDER OF THIS TRIBUNAL FOR WHICH NO CITATION OR AP PEAL PARTICULARS ARE MENTIONED IN THE ASSESSMENT ORDER AND THEREBY TRAD ING ADDITION OF `.11 30 558/-. - 5 - 12. 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 C HARGES. THE APPELLANT SUBMITTED CONFIRMATION OF ACCOUNTS AND CO PIES OF RETURNS OF INCOME OF ALL THE SUB-CONTRACTORS AND TH E INSPECTOR OF THE OFFICE VISITED THE BUSINESS PREMISES OF THESE S UB-CONTRACTORS FOR VERIFICATION. THE REJECTION OF BOOKS OF ACCOUNT S EVEN 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 PARTY WAS IN THE BUSINESS OF IMPORT OF ROUGH DIAMONDS AND MANUFA CTURING POLISHED DIAMONDS WHEREAS THE APPELLANT HAD GIVEN J OB WORK TO OUTSIDERS AND THEREFORE THE SAID JUDGEMENT WAS NOT APPLICABLE TO THE APPELLANTS CASE. FURTHER HON'BLE I.T.A.T. AHMEDABAD IN THE CASE OF BHARATKUMAR RAMNIKLAL MEHTA IN ITA NO.1296/AHD/2004 FOR ASSESSMENT YEAR 2001-02 ACCEPT ED THE LABOUR EXPENSES CLAIMED AFTER CONSIDERING THE OVERA LL COMPARATIVE GROSS PROFIT EVEN WHEN MANY OF THE LABO URERS COULD NOT BE FOUND AND VERIFIED. THE GROSS PROFIT OF THE APPELLANT FOR ASSESSMENT YEARS 2003-04 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 ASSORTME NT WAS DONE ON THE BASIS OF PIECES BUT THE ACTUAL MANUFACT URING COULD BE BOTH IN CARATS OF PIECES AND QUALITY. THE APPELL ANTS BOOKS WERE ACCEPTED BY THE DEPARTMENT FROM LAST SO MANY Y EA IT WAS FURTHER SUBMITTED THAT HON'BLE I.T.A.T. AHMEDABAD I N THE CASE OF VANMALIBHAI PATEL IN ITA NO.2688/AHD/2002 ACCEPTED THE GROSS PROFIT AT 2% IN RESPECT OF JOB WORK WHEREAS THE APP ELLANTS GROSS PROFIT WAS 2.46%. 13. 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 D ECISIONS CITED BY THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASS ESSEE. IT IS ALSO SEEN THAT ALL THE SUB-CONTRACTORS ARE ASSESSED TO TAX AND THE HON'BLE I.T.A.T. HAVE ACCEPTED THE GROSS PROFIT RAT E AT 2% IN THE CASE OF JOB WORK THE APPELLANT HAS ALSO MAINTAINED COMPLETE SETS OF BOOKS OF ACCOUNTS LIKE LABOUR RECEIPT REGIS TER PAYMENT REGISTER ETC. AND THE LEARNED ASSESSING OFFICER HA S ONLY REJECTED THE BOOK RESULTS BECAUSE PIECE WISE DETAILS OF DIAM ONDS RECEIVED FROM THE PRINCIPLE AND THE JOB CONTRACTOR WAS NOT M AINTAINED. HOWEVER WHEN THE APPELLANT HAS PROVIDED ALL THE RE LEVANT PRIMARY EVIDENCES THE LEARNED ASSESSING OFFICERS EMPHASIS ON PIECE WISE OR CARAT WISE RECEIPT OF PAYMENT IS NOT JUSTIFIED. FURTHER ANOTHER REASON FOR REJECTION OF BOOK RESUL TS CITED BY THE - 6 - LEARNED ASSESSING OFFICER IS THAT THE APPELLANT HAS NOT DEDUCTED OR SHORT DEDUCTED ITDS 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 JUSTIFICA TION IN ESTIMATING GROSS PROFIT AT 6% OF THE JOB RECEIPTS. ADDITION ON THIS ACCOUNT IS DIRECTED TO BE DELETED. 14. BEFORE US THE LEARNED DEPARTMENTAL REPRESENTATI VE SUPPORTED THE ORDER OF THE LEARNED ASSESSING OFFICER 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). 15. WE FIND THAT THE LEARNED DEPARTMENTAL REPRESENT ATIVE COULD NOT POINT OUT ANY SPECIFIC ERROR IN THE ORDER OF THE LE ARNED COMMISSIONER OF INCOME TAX (APPEALS) WHICH HAS BEEN PASSED AFTER FU LL APPRECIATION OF THE ENTIRE FACTS OF THE CASE. WE DO NOT FIND ANY G OOD REASON TO INTERFERE WITH THE ORDER OF THE LEARNED COMMISSIONE R OF INCOME TAX (APPEALS) WHICH IS CONFIRMED AND THE GROUND OF APPE AL OF THE REVENUE IS DISMISSED. 16. IN THE RESULT THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER SIGNED DATED AND PRONOUNCED IN THE COURT ON 23 RD DAY OF DECEMBER 2010. SD/- SD/- (MUKUL SHRAWAT ) (N. S. SAINI ) JUDICIAL MEMBER AC COUNTANT MEMBER DATED: AHMEDABAD 23 RD DAY OF DECEMBER 2010 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. - 7 - BY ORDER //TRUE COPY// (DY./ASSTT.REGISTRAR) ITAT AHMEDABAD DATE INITIALS 1. DRAFT DICTATED ON 20-12-2010 -------------- ----- 2. DRAFT PLACED BEFORE AUTHORITY 21-12-2010 ----- -------------- 3. DRAFT PROPOSED & PLACED 21-12-2010 ----------- -------- JM BEFORE THE SECOND MEMBER 4. DRAFT DISCUSSED/APPROVED 21-12-2010 ---------- --------- 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 ---------------- ---- -----------------