AC.CC. 45, MUMBAI v. KISHORE THAKKAR, MUMBAI

ITA 3608/MUM/2008 | 2004-2005
Pronouncement Date: 09-09-2011 | Result: Dismissed

Appeal Details

RSA Number 360819914 RSA 2008
Assessee PAN AAGPT5561M
Bench Mumbai
Appeal Number ITA 3608/MUM/2008
Duration Of Justice 3 year(s) 3 month(s) 16 day(s)
Appellant AC.CC. 45, MUMBAI
Respondent KISHORE THAKKAR, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 09-09-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted H
Tribunal Order Date 09-09-2011
Date Of Final Hearing 12-07-2011
Next Hearing Date 12-07-2011
Assessment Year 2004-2005
Appeal Filed On 23-05-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH: MUMBAI BEFORE SHRI P.M. JAGTAP ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR JUDICIAL MEMBER ITA NO.3607 AND 3608/MUM/2008 (ASSESSMENT YEARS: 2003-04 AND 2004-05) DCIT -24(2) R.NO.659 6TH FLOOR AAYAKAR BHAVAN M.K. ROAD MUMBAI -400 020 ....... APPELLANT VS SHRI KISHORE THAKKAR 30 KENIA NIWAS V.P. ROAD MULUND (W) MUMBAI -400 080 ..... RESPONDENT PAN: AAGPT 5561 M APPELLANT BY: SHRI BALKRISHNA MENON RESPONDENT BY: SHRI DHARMESH SHAH DATE OF HEARING: DATE OF PRONOUNCEMENT: 12.07.2011 09.09.2011 O R D E R PER R.S. PADVEKAR JM: IN BOTH THESE APPEALS THE REVENUE HAS CHALLENGED RE SPECTIVE IMPUGNED ORDERS OF THE LD. CIT (A) CENTRAL-III MUMB AI FOR THE A.Y. 2003-04 AND 2004-05. THE FACTS AS WELL AS THE ISSU ES ARE COMMON AND HENCE THESE APPEALS ARE DISPOSED OF BY THIS CO NSOLIDATED ORDER. 2. THE SHORT CONTROVERSY IS IN RESPECT OF THE ADDIT ION MADE BY THE A.O.U/S.69C WHICH WAS DELETED BY THE LD. CIT (A). THE REVENUE HAS TAKEN THE FOLLOWING EFFECTIVE GROUND WHICH IS IDENT ICAL IN BOTH THE ASSESSMENT YEARS READS AS UNDER:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT (A) ERRED IN DELETING THE ADDITION MADE BY ITA 3607 AND 3608/MUM/2008 SHRI KISHORE THAKKAR 2 THE A.O. U/S.69C OF THE I.T. ACT ON ACCOUNT OF SUP PRESSION OF LABOUR CHARGES WITHOUT APPRECIATING THE FACT THA T IN VIEW OF THE NUMBER OF PIECES OF GARMENTS MANUFACTURED AN D THE RATE OF LABOUR CHARGE PAID SUCH ADDITION WAS PROPE R. 3. RELEVANT STATED THE FACTS ARE AS UNDER. THE ASS ESSEE IS IN THE EXPORT OF THE GARMENTS. SO FAR AS ASSESSMENT YEAR 2003-04 IS CONCERNED THE ASSESSEE FILED THE RETURN OF INCOME DECLARING TOTAL INCOME OF ` 8 83 640/-. THE ASSESSEE IS HAVING PROPRIETORSHIP CONCERN UNDER THE NAME AND STYLE AS M/S. KISHORE IM PEX M/S. KISHORE THAKKAR PROMOTERS & BUILDERS M/S. HOTEL LO KESH AND THE ASSESSEE IS ALSO PARTNER IN M/S. MANTRI KISHOR ASSO CIATES. THE PRESENT ISSUE IS CONCERNING M/S. KISHORE IMPEX WHI CH IS UNIT SITUATED IN DAMAN IN WHICH THE ASSESSEE MANUFACTURE S READYMADE GARMENTS. THERE WAS A SURVEY ACTION U/S.133A OF TH E ACT ON 07.02.2006 IN THE BUSINESS PREMISES OF THE ASSESSE. DURING THE COURSE OF SURVEY ACTION ONLY TWO EMPLOYEES WERE FO UND WORKING AND ONE SHRI VAIJNATH KHOLPUSE WAS THE IN-CHARGE OF THE ASSESSEES UNIT WHOSE STATEMENT WAS RECORDED BY THE SURVEY PARTY. SHRI KHOLPUSE STATED THAT ONLY SIX PERSONS WERE EMPLOYED IN M/S. KISHORE IMPEX. AS NOTED BY THE A.O. WAGE REGISTERS WERE FOUND MAINTA INED IN FORM NOS.21 AND 23 IN WHICH MORE THAN TEN WORKERS/EMPLOY EES WERE SHOWN. THE A.O. WAS MUCH INFLUENCED BY THE STATEME NT OF SHRI VAIJNATH KHOLPUSE IN RESPECT OF WAGES REGISTER MAIN TAINED BY THE ASSESSEE WHETHER SAME WERE GENUINE. THE ASSESSEE D ECLARED THE PEACE-WISE PRODUCTION IN ITS AUDIT REPORT AS UNDER: - 3.5 AS MENTIONED IN PARA 3.3 B OTHERWISE ALSO IT WAS NOT POSSIBLE FOR ENTIRE PRODUCTION TO TAKE PLACE IN THE INDUSTRIAL UNDERTAKING BASED IN DAMAN. THEREFORE WITHOUT PRE JUDICE TO THE FACT THAT NO DEDUCTION U/S.80IB(4) HAS BEEN ALLOWED IT IS ALSO TO BE CONCLUDED THAT THE ENTIRE PROFIT O F M/S. KISHORE IMPEX CANNOT BE SAID TO BE DERIVED FROM THE ITA 3607 AND 3608/MUM/2008 SHRI KISHORE THAKKAR 3 UNDERTAKING IN DAMAN. THEREFORE IRRESPECTIVE OF CO NDITIONS OF SEC.80IB(2)(I) ARE NOT SATISFIED OTHERWISE ALSO THE ASSESSEE IS NOT ENTITLED FOR DEDUCTION IN RESPECT O F ENTIRE INCOME OF M/S. KISHORE IMPEX. THE ABOVE CONCLUSION IS BASED ON FOLLOWING FACTS: (A) AS PER COL.28 OF FORM 3CD THE PRODUCTION SHOWN BY ASSESSEE IS AS FOLLOWS: DESCRIPTION PRODUCTION MENS SHIRTS 32 470 BOYS SHIRTS 22 356 MENS TOUSERS 39 619 BOYS TOUSERS 76 082 NMENS T SHIRTS 48 738 BOYS T SHIRTS 39 750 BOY KNITTED 2 PC SUIT 84 612 BOYS WOVEN 2 PC SUIT 34 560 VESTS 17 280 CORY SHORTS 22 678 BOYS JACKET 44 244 MENS DENIM PAINT 4 024 BOYS DENIM PAINT 9 372 COTTON/BERMUDA/DENIM SHORTS 10 140 LADIES NIGHTIES 12 024 GIRLS FROCK 5 064 STONE WASH ROMPERS 11 820 CAPS 1 260 516 093 4. THE A.O. EXAMINED THE PROFIT AND LOSS ACCOUNT AN D IT WAS FOUND THAT ASSESSE HAS JUST DEBITED ` 6 20 624/- TOWARDS THE LABOR EXPENSES AND ACCORDINGLY HE WORKED OUT THE LABOUR COST PER PIECE AT ` 1.20. THE A.O. HAS ALSO GIVEN THE DESCRIPTION OF THE MACH INARIES WHICH WERE FOUND IN THE ASSESSEES UNIT DURING THE COURSE OF THE SURVEY BUT THE SAME ARE NOT RELEVANT TO THE ISSUE TO BE DECIDED H ENCE WE DO NOT CONSIDER NECESSARY TO REPRODUCE THE DETAILS AS GIVE N BY THE A.O. THE ASSESSEE CONTENDED THAT PRODUCTION WAS ALSO COMPLET ED THROUGH THE ITA 3607 AND 3608/MUM/2008 SHRI KISHORE THAKKAR 4 LABOUR CONTRACTORS TO WHOM THE PAYMENT OF ` 18 87 917/- HAVE BEEN MADE. THE A.O. ASKED THE ASSESSEE TO PRODUCE THE L ABOUR CONTRACTORS AS NOTED IN THE ASSESSMENT ORDER THE ASSESSEE DID NOT PRODUCE THE LABOUR CONTRACTOR BEFORE HIM. THE A.O. APPLIED HIS LOGICAL THINKING AND CAME TO THE CONCLUSION THAT THE LABOUR EXPENSES DEBITED IN THE ASSESSEES BOOKS OF ACCOUNT ARE INSUFFICIENT TO ACH IEVE THE PRODUCTION LEVEL SHOWN BY THE ASSESSEE IN THE BOOKS OF ACCOUNT . THE A.O. THEREFORE SOUGHT THE EXPLANATION OF THE ASSESSEE W HY THE REAL LABOUR EXPENDITURE SHOULD NOT TO BE WORKED OUT ON THE BASI S OF STATEMENT OF SHRI VAIJNATH KHOLPUSE AND OTHER FACTS AND MATERIAL ON RECORD AND WHY SAME SHOULD NOT BE ADDED AS UNEXPLAINED EXPENDI TURE U/S.69C OF THE ACT. THE ASSESSEE FILED HIS REPLY STATING T HAT THE FIGURING TO 5 16 093 PIECES CONSISTING OF EACH AND EVERY ITEMS BUT WHEREAS 4 05 564 PIECES ARE AGGREGATE SETS OF GARMENTS MANU FACTURED BY THE ASSESSEE DURING YEAR. THE ASSESSEE ALSO CLAIMED TH AT LABOUR COST OF PRODUCTION WAS CORRECT. THE ASSESSEE ALSO STATED T HAT FOR COMPUTING THE LABOUR COST THE WORK GIVEN ON CONTRACT BASIS I S ALSO TO BE CONSIDERED TO DECIDE LABOUR COST. THE ASSESSEE ALS O PLACED TDS CERTIFICATE SHOWING THAT HE HAS PAID ` 18 87 917/- TO THE LABOUR CONTRACTOR AND HENCE THE TOTAL LABOUR COST WORKED OUT TO ` 25 12 181/- AND ACCORDINGLY THE AVERAGE COST WORKED OUT AT ` 6.2 PER PIECE. THE ASSESSEE ALSO FILED THE TWO CHARTS ALON G WITH THE DETAIL SUBMISSION JUSTIFYING EXPLANATION THAT THERE WAS NO UNEXPLAINED EXPENDITURE TOWARDS THE LABOUR COST. BUT THE A.O. WAS NOT IMPRESSED NOR HE WAS CONVINCED IN RESPECT OF LABOUR COST CLAI MED BY ASSESSE. THE A.O. FINALLY ESTIMATED THE TOTAL LABOUR COST AT ` 56 27 023/- FOR PRODUCTION OF 5 16 093 PIECES AND AFTER REDUCING T HE LABOUR CHARGES SHOWN BY THE ASSESSEE AT ` 6 24 624/- AND MADE THE ADDITION OF ` 50 52 759/-. IN THE A.Y. 2003-04 THE ASSESSEE CHA LLENGED THE SAID ADDITION BEFORE THE LD. CIT (A) AND FOUND FAVOUR. 5. THE LD. CIT (A) DELETED THE ADDITION. DURING TH E COURSE OF THE APPELLATE PROCEEDINGS THE LD. CIT (A) WAS OF THE OP INION THAT THE ENTIRE ITA 3607 AND 3608/MUM/2008 SHRI KISHORE THAKKAR 5 EXERCISE MADE BY THE A.O. WAS TOTALLY ON THE PRESUM PTION AND HAVING NO LOGICALLY BASIS HOW THE ADDITION CAN BE MADE U/S .69C. NOW THE REVENUE IS IN APPEAL BEFORE US. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PARTI ES AND PERUSED THE RECORDS. THE FACTS ARE ALREADY NARRATED IN DET AILS. THE ASSESSEE IS A MANUFACTURER OF THE GARMENTS. AS PER THE DISCUSS ION MADE IN THE ASSESSMENT ORDER WE FIND THAT THE A.O. DISBELIEVED THE LABOUR COST FOR PRODUCTION OF THE GARMENTS RECORDED IN THE BOOKS OF A/CS. SEC. 69C IS A RELEVANT TO THE ISSUE WHICH READS AS UNDER:- WHERE IN ANY FINANCIAL YEAR AN ASSESSEE HAS INCURR ED ANY EXPENDITURE AND HE OFFERS NO EXPLANATION ABOUT THE SOURCE OF SUCH EXPENDITURE OR PART THEREOF OR THE EXPLANA TION IF ANY OFFERED BY HIM IS NOT IN THE OPINION OF THE A SSESSING OFFICER SATISFACTORY THE AMOUNT COVERED BY SUCH EXPENDITURE OR PART THEREOF AS THE CASE MAY BE MA Y BE DEEMED TO BE THE INCOME OF THE ASSESSEE FOR SUCH FI NANCIAL YEAR 7. AS PER THE LANGUAGE USED BY THE LEGISLATURE THE BURDEN IS ON THE A.O. TO PROVE THAT THE ASSESSEE HAS INCURRED AN EXPENDITURE THEN THE ONUS IS SHIFTED ON THE ASSESSEE TO PROVE THE SO URCE. IN THE PRESENT CASE WE FIND THAT DURING SURVEY ACTION U/S.133A NO INCRIMINATING DOCUMENTARY OR OTHERWISE EVIDENCE WAS FOUND TO SHOW THAT THE ASSESSEE HAS INCURRED ANY EXPENDITURE MORE THAN WHA T IS RECORDED IN THE BOOKS OF ACCOUNT. WHY WE SHOULD NOT BELIEVE TH E EXPLANATION OF THE ASSESSEE THAT HE HAS GIVEN THE JOB OF GARMENTS ON THE LABOUR WORK BASIS WHEN THE ASSESSEE HAS DEDUCTED THE TDS AND HA S MADE THE PAYMENT TO THE LABOUR CONTRACTOR. APART FROM THAT THE A.O. HAS ONLY MADE THE ESTIMATION AND PRESUMPTION WITHOUT ANY SUP PORTING EVIDENCE. NOTHING IS THERE ON RECORD TO SHOW THAT THE ASSESSEE HAS INCURRED MORE EXPENDITURE THAN RECORDED IN THE BOOK S OF ACCOUNT AND ITA 3607 AND 3608/MUM/2008 SHRI KISHORE THAKKAR 6 HENCE IN OUR OPINION ASSESSEES CASE WHEREIN ADDI TION MADE BY THE A.O. DOES NOT STAND IN THE TOUCH-STONE OF SEC. 69C. FOR INTERPRETING THE SIMPLE PROVISION OF THE STATUTE WE NEED NOT HA VE TO TAKE A LONG JOURNEY. IN OUR OPINION NO INTERFERENCE IS CALLED FOR IN THE ORDER OF THE LD. CIT (A) FOR DELETING THE ADDITION IN THE A. Y. 2003-04. 8. SO FAR AS ASSESSMENT YEAR 2004-05 IS CONCERNED THE A.O. MADE THE ADDITION U/S.69C TO THE EXTENT OF ` 23 93 257/-. THE A.O. AGAIN HAS REPEATED THE SAME STORY AS IN A.Y. 2003-04 AND NO NEW FACTS ARE RECORDED IN THE A.Y. 2004-05. AS THE FACTS ARE IDE NTICAL WE THEREFORE FOLLOWING OUR REASONS IN THE A.Y. 2003-04 CONFIRMED THE ORDER OF THE LD. CIT (A) FOR A. Y. 2004-05 ALSO. 8. IN THE RESULT BOTH THE APPEALS OF THE REVENUE A RE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 9 TH SEPTEMBER 2011. SD/- SD/- ( P.M. JAGTAP ) ACCOUNTANT MEMBER ( R.S. PADVEKAR ) JUDICIAL MEMBER MUMBAI DATED : 9TH SEPTEMBER 2011 COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A) CENTRAL -3 MUMBAI. 4) THE CIT- CENTRAL -4 MUMBAI. 5) THE D.R. H BENCH MUMBAI. BY ORDER / / TRUE COPY / / ASSTT. REGISTRAR I.T.A.T. MUMBAI *CHAVAN ITA 3607 AND 3608/MUM/2008 SHRI KISHORE THAKKAR 7 SR.N. EPISODE OF AN ORDER DATE INITIALS CONCERNED 1 DRAFT DICTATED ON 30.08.2011 SR.PS 2 DRAFT PLACED BEFORE AUTHOR 02.09.2011 SR.PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6 KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7 FILE SENT TO THE BENCH CLERK SR.PS/PS 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER