DINESH A. PATEL PROP. OF M.S, AUTO POWER), MUMBAI v. ITO 24(3)(3), MUMBAI

ITA 4467/MUM/2009 | 2006-2007
Pronouncement Date: 21-01-2011 | Result: Allowed

Appeal Details

RSA Number 446719914 RSA 2009
Assessee PAN AACPP2933P
Bench Mumbai
Appeal Number ITA 4467/MUM/2009
Duration Of Justice 1 year(s) 5 month(s) 24 day(s)
Appellant DINESH A. PATEL PROP. OF M.S, AUTO POWER), MUMBAI
Respondent ITO 24(3)(3), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 21-01-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted D
Tribunal Order Date 21-01-2011
Assessment Year 2006-2007
Appeal Filed On 27-07-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI D BENCH BEFORE SHRI N.V.VASUDEVAN JUDICIAL MEMBER & SHRI T.R.SOOD ACCOUNTANT MEMBER I.T.A.NO.4467/MUM/2009 A.Y 2006-07 MR. DINESH A. PATEL (PROP. OF M/S AUTO POWER) 22 VIRWANI INDUSTRIAL ESTATE OFF. W.E. HIGHWAY GOREGAON (E) MUMBAI 400 063. PAN: AACPP 2933 P VS. THE INCOME TAX OFFICER 24 (3) (3) MUMBAI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SUBHASH S. SHETTY. RESPONDENT BY : SHRI JITENDRA YADAV. O R D E R PER T.R.SOOD AM: IN THIS APPEAL ASSESSEE HAS RAISED VARIOUS GROUND S BUT AT THE TIME OF HEARING LD. COUNSEL OF THE ASSESSEE SUBMITT ED THAT ONLY TWO DISPUTES ARE INVOLVED NAMELY (I) DISALLOWANCE OF DEDUCTION U/S.80IB AND (II) ADDITION OF ` `` ` .4 LAKHS ON ACCOUNT OF UNDISCLOSED INVESTMENT. 2. GROUND NO. (I) : AFTER HEARING BOTH THE PARTIES WE FIND THAT A SURVEY WAS CONDUCTED IN THE PREMISES OF THE ASSESSE E ON 17-2-2006. IN THE SURVEY IT WAS NOTICED THAT ASSESSEE WAS NOT FULFILLING THE CONDITIONS PRESCRIBED U/S.80IB(2)(IV) BECAUSE ONLY SEVEN WORKERS WERE EMPLOYED. A STATEMENT FROM SHRI DINESH AMRITLAL PAT EL PROPRIETOR OF THE CONCERN WAS ALSO RECORDED IN HIS BOMBAY OFFICE AND IN REPLY TO QUESTION NO.15 HE HAD CLEARLY STATED THAT THERE WE RE ONLY 6/7 WORKERS. FURTHER A STATEMENT OF SHRI SATYENDRA BHAD URIA IN-CHARGE OF 2 DAMAN OFFICE AT DAMAN WAS ALSO RECORDED AND HE ALSO STATED THAT ONLY 8 TO 9 EMPLOYEES WERE WORKING IN THE DAMAN FACTORY. FURTHER THE REGISTRATION CERTIFICATE UNDER SMALL SCALE INDUSTRY DATED 22-9-2003 ALSO SHOWED THAT THERE WERE NINE WORKERS. DURING THE SUR VEY A SALARY REGISTER WAS ALSO IMPOUNDED WHICH SHOWED THAT ONLY SEVEN WORKERS WERE WORKING IN DAMAN OFFICE WHEREAS IN THE NOTE B OOK IMPOUNDED IT SHOWED THAT EIGHT PEOPLE WERE WORKING IN DAMAN OFFI CE. FURTHER DURING THE ASSESSMENT PROCEEDINGS IT WAS STATED THA T NO SALARY REGISTER WAS FOUND DURING THE SURVEY FOR THE PERIOD 1-4-2004 TO 31-3-2005 AND A REGISTER ACCORDINGLY WAS PRODUCED IN WHICH 12 EMP LOYEES WERE SHOWN TO BE WORKING. THE ASSESSEE WAS REQUIRED TO P RODUCE THESE EMPLOYEES AND IN RESPONSE TO IT ONLY THREE EMPLOYEE S WERE PRODUCED. IN THIS BACKGROUND IT WAS CONCLUDED THAT THE ASSES SEE HAS NOT FULFILLED THE CONDITIONS OF EMPLOYING TEN PEOPLE AND THEREFO RE DEDUCTION U/S.80IB WAS DENIED. 3. BEFORE THE CIT[A] IT WAS SUBMITTED THAT EARLIER YEARS DECISION SHOULD HAVE BEEN FOLLOWED. THE MATTER WAS ULTIMATEL Y DECIDED BY THE LD. CIT[A] VIDE PARA 5.3.1 AS UNDER: 5.3.1 I HAVE CONSIDERED THE FACTS OF THE CASE AND SUBMISSIONS OF THE LD. A.R. OF THE APPELLANT CAREFULLY. I HAVE ALREADY HELD IN AGROUND NO.5 ABOVE THAT THE ISSUE INVOLVED IN THIS ASSESSME NT YEAR IS NTO COVERED BY THE DECISION OF THE CIT[A] FOR THE A.YS. 2004-05 & 2005- 06. SO THE ISSUE HAS TO BE DECIDED ON MERIT ON THE BASIS OF FACTS RELEVANT FOR THE ASSESSMENT YEAR UNDER CONSIDERATIO N. DEDUCTION U/S.80IB IS ALLOWABLE TO AN INDUSTRIAL UNDERTAKING ONLY IF IT FULFILLS CERTAIN CONDITIONS SPECIFIED THEREIN. AS PER SECTIO N U/S.80IB(2)(IV) OF THE I.T.ACT THE INDUSTRIAL UNDERTAKING MUST EMPLOY 10 OR MORE WORKERS IN THE MANUFACTURING PROCESS CARRIED ON WITH THE AI D OF POWER. DURING THE RELEVANT PREVIOUS YEAR THE SURVEY OPERATION WA S CONDUCTED 3 U/S.133A OF THE I.T.ACT IN THE INDUSTRIAL UNDERTAKI NG ON 17/02/2006 AND IT WAS FOUND THAT THE NUMBER OF TOTAL EMPLOYEES WORKING THEREIN WAS LESS THAN 10. A NOTE BOOK FOUND AND IMPOUNDED D URING THE SURVEY OPERATION SHOWED THAT THERE WERE 8 WORKERS ONLY. TH E NAMES OF SUCH 8 WORKERS WERE ALSO MENTIONED IN THE NOTE BOOK. THE S URVEY TEAM RECORDED THE STATEMENTS OF THE APPELLANT AND HIS MA IN EMPLOYEE IN- CHARGE OF DAMAN UNIT U/S.131 OF THE I.T.ACT ON OATH . BOTH GAVE THE NUMBERS OF PERSONS WORKING AT DAMAN UNIT AT LESS TH AN 10 IN REPLY TO SPECIFIC QUESTIONS ASKED THEREFORE. ALL THESE EVIDE NCES CLEARLY SHOWED THAT THE NUMBER OF WORKERS EMPLOYED IN THE MANUFACT URING PROCESS AT THE TIME OF SURVEY WAS LESS THAN 10. SINCE THE DATE OF SURVEY FELL IN THE RELEVANT PREVIOUS YEAR THE FACTS AND EVIDENCES FOU ND THEREIN HAVE TO BE APPLIED FOR THE WHOLE PREVIOUS YEAR UNLESS THE APPE LLANT ESTABLISHES WITH COGENT AND SPEAKING EVIDENCES THAT HE EMPLOYED 10 WORKERS OR MORE AT ANY TIME DURING THE PREVIOUS YEAR. THIS PRE SUMPTION IS SUPPORTED BY THE JUDGMENT OF HON'BLE SUPREME COURT IN THE CASE OF H.M. ASAFALI H.M.ABDULALI [90 ITR 271]. IN THAT CAS E CONCEALED SALE OF 19 DAYS WERE FOUND ON THE BASIS OF WHICH CONCEAL ED SALE FOR THE WHOLE PREVIOUS YEAR WAS ESTIMATED. HON'BLE SUPREME COURT CONFIRMED THE ESTIMATE. 4. BEFORE US LD. COUNSEL OF THE ASSESSEE MAINLY ST ATED THAT NO SALARY REGISTER WAS FOUND DURING THE SURVEY AND IN FACT HE SUBMITTED THAT THE ASSESSEE WAS EMPLOYING 12/13 EMPLOYEES AND DETAILS OF THE SAME HAVE BEEN FURNISHED [COPY OF SAME IS PLACED AT PAGE 16 OF THE PAPER BOOK]. HE ALSO MENTIONED THAT DEDUCTION WAS H ELD TO BE ALLOWABLE IN THE EARLIER YEARS ALSO BY THE TRIBUNAL . 5. ON THE OTHER HAND LD. DR SUBMITTED THAT IN FAC T ASSESSMENTS OF EARLIER YEARS WERE REOPENED ON THE BASIS OF THE SURVEY AND THE TRIBUNAL HAS ALLOWED THE RELIEF BY MAINLY HOLDING T HAT SURVEY WAS NOT CONDUCTED IN THIS YEAR AND THEREFORE THIS BEING T HE SURVEY YEAR DECISIONS FOR EARLIER YEARS CANNOT BE APPLIED. HE A LSO REFERRED TO PAGES 1 TO 5 OF THE PAPER BOOK WHICH IS STATED TO BE COP Y OF RESOLUTION FROM SSI AND POINTED OUT THAT AFTER PAGE-16 OF THE FORM NEXT PAGE AVAILABLE IS 19 WHICH ONLY SHOWS THAT SOME PAGES ARE MISSING. 4 6. IN THE REJOINDER LD. COUNSEL OF THE ASSESSEE FA IRLY ADMITTED THAT THE ISSUE MAY NOT BE SQUARELY COVERED BY THE ORDER OF THE TRIBUNAL BECAUSE THIS BEING A SURVEY YEAR BUT THEN HE FILED SOME OTHER PAPERS LIKE FORM D WHICH IS A FORM REQUIRED TO BE FILLED WITH THE GOVERNMENT AUTHORITIES FOR PAYMENT OF BONUS WHICH SHOWS THE NU MBER OF EMPLOYEES AND COPIES OF THE STATEMENTS. HE MADE A R EQUEST THAT LET THE AO RE-EXAMINE THE ISSUE IN THE LIGHT OF THIS FO RM D AND OTHER DOCUMENTS. 7. AFTER CONSIDERING THE RIVAL SUBMISSIONS CAREFULL Y WE ARE OF THE VIEW THAT ISSUE REGARDING NUMBER OF WORKERS EMPLOYE D REQUIRES RE- EXAMINATION. THEREFORE WE SET ASIDE THE ORDER OF T HE LD. CIT[A] AND REMIT THE MATTER BACK TO THE FILE OF THE AO WITH A DIRECTION TO RE- EXAMINE FORM D FILED BEFORE US REGARDING NUMBER OF WORKERS TO WHOM BONUS HAS BEEN PAID AND IF THE NUMBER OF WORKERS IS MORE THAN 10 PEOPLE THEN AO MAY EXAMINE WHETHER ANY REGISTRATIO N WAS REQUIRED UNDER ANY OF THE LABOURERS LAWS AND THEN HE MAY DEC IDE THE ISSUE IN ACCORDANCE WITH THE LAW. 8. GROUND NO. (II ): AO HAD MADE THE ADDITION OF ` `` ` .4 LAKHS VIDE FOLLOWING PARA: IN REPLY TO QUESTION NO.6 TO THE STATEMENT DATED 1 7-02-2006 THE ASSESSEE SHRI DINESH A. PATEL HAS STATED THAT HE HA S PURCHASED GALA NO.305 OF VIRVANI INDUSTRIAL ESTATE FROM ONE SHRI K ISHOR K. MEHTA (HUF) FOR ` `` ` .22 00 000/- ON 16-02-2005. IN REPLY TO QUESTION NO .7 HAS ADMITTED THAT OVER AND ABOVE ` `` ` .22 00 000/- HE HAS PAID CASH OF ` `` ` .4 00 000/- TO SHRI KISHOR K. MEHTA. THE ASSESSEE V IDE ORDER SHEET NOTING DATED 17-10-2008 HAS ASKED TO FURNISH THE SO URCE OF THESE CASH. TILL DATE THE ASSESSEE HAS NOT FURNISH THE SOURCE O F THE CASH AND HENCE THE SAME IS ADDED TO HIS INCOME TREATING IT AS UNEX PLAINED CASH 5 EXPENDITURE U/S.69 OF THE ACT. IT IS PERTINENT TO N OTE THERE THAT AS FAR AS UNEXPLAINED CASH CREDIT U/S.68 IS CONCERNED THE AS SESSEE IS HABITUAL DEFAULTER IN THIS FIELD AS THE ADDITION MADE U/S.68 OF THE ACT FOR A.Y 04-05 HAS BEEN CONFIRMED BY THE LD. CIT[A] VIDE ORD ER NO. CIT[A] XXIV/IT-357/06-07 & 261/06-07 DATED 27-10-2008. 9. THE ACTION OF THE AO HAS BEEN CONFIRMED BY THE L D. CIT[A]. 10. BEFORE US NO MAIN ARGUMENTS WERE MADE BUT SINCE THE MATTER IS GOING BACK TO THE FILE OF THE AO ON THE ISSUE OF DE DUCTION U/S.80IB WE ARE OF THE VIEW THAT THIS ISSUE SHOULD ALSO BE RE-E XAMINED AFTER GIVING AN ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSES SEE. 11. IN THE RESULT ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 21 ST DAY OF JANUARY 2011. SD/- SD/- (N.V.VASUDEVAN) (T.R.SOOD) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI:21 ST JANUARY 2011. P/-*