ACIT, Circle - 46, Kolkata, Kolkata v. Shri Dinesh Adukia, Howrah

ITA 501/KOL/2011 | 2007-2008
Pronouncement Date: 16-09-2011 | Result: Dismissed

Appeal Details

RSA Number 50123514 RSA 2011
Assessee PAN ACIPA8360R
Bench Kolkata
Appeal Number ITA 501/KOL/2011
Duration Of Justice 5 month(s) 19 day(s)
Appellant ACIT, Circle - 46, Kolkata, Kolkata
Respondent Shri Dinesh Adukia, Howrah
Appeal Type Income Tax Appeal
Pronouncement Date 16-09-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 16-09-2011
Assessment Year 2007-2008
Appeal Filed On 28-03-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: KOL KATA () BEFORE /AND ! . '# . ) [BEFORE HONBLE SRI MAHAVIR SINGH JM & HONBLE SHR I C. D. RAO AM] $ $ $ $ / I.T.A NO. 501/KOL/2011 %& '( %& '( %& '( %& '(/ // / ASSESSMENT YEAR : 2007-08 ASSISTANT COMMISSIONER OF INCOME TAX VS. SRI DIN ESH ADUKIA CIRCLE-46 KOLKATA. (PAN-ACIPA 8360 R) (*+ /APPELLANT ) ( -*+/ RESPONDENT ) FOR THE APPELLANT: SHRI R. K. SAHA FOR THE RESPONDENT: SHRI A. K. TULSYAN . / ORDER PER MAHAVIR SINGH JM ( ) THIS APPEAL BY REVENUE IS ARISING OUT OF ORDER OF C IT(A)-XXX KOLKATA IN APPEAL NO.251/CIT(A)-XXX/KOL/CIR-46/2009-10 DATED 23.12.20 10. ASSESSMENT WAS FRAMED BY ACIT CIRCLE-46 KOLKATA U/S. 143(3) OF THE INCOME TAX AC T 1961 (HEREINAFTER REFERRED TO AS THE ACT) FOR ASSESSMENT YEAR 2007-08 VIDE HIS ORDER DA TED 31.12.2009. 2. THE FIRST ISSUE IN THIS APPEAL OF REVENUE IS AGA INST THE ORDER OF CIT(A) DELETING THE ADDITION MADE BY ASSESSING OFFICER ON ACCOUNT OF LO W GROSS PROFIT WITHOUT REJECTION OF BOOKS OF ACCOUNT. FOR THIS REVENUE HAS RAISED FOLLOWING GROUND NO.1: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A)-XXX KOLKATA HAS ERRED IN DELETING THE ADDITION OF RS.5 00 000/- WHICH WAS MA DE ON GROSS PROFIT BECAUSE THE BOOKS WERE PRACTICALLY NOT CLOSED ON THE LAST DATE OF F.Y .2004-05 3. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FA CTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE ASSESSEE DERIVED INCOME FROM IRON FOUNDRY UNDER THE NAME AND STYLE OF M/S. HINDUSTAN CASTING & ENGINEERING CO. DURING THE COU RSE OF ASSESSMENT PROCEEDINGS ASSESSEE PRODUCED BOOKS OF ACCOUNT WHICH HAS BEEN TEST CHECK ED. ASSESSING OFFICER NOTED ON VERIFICATION OF TRADING ACCOUNT THAT GROSS PROFIT O F ASSESSEE IN THIS YEAR IS LOW COMPARED TO EARLIER YEARS I.E. AS DECLARED IN ASSESSMENT YEAR 2 006-07 AT 9.09% AS AGAINST 8.86% IN THIS YEAR I.E. ASSESSMENT YEAR 2007-08. THE ASSESSING OFFIC ER NOTED THAT ON VERIFICATION OF BOOKS OF ACCOUNT SOME DEFECTS WERE NOTICED THAT THE ASSESSEE HAS RECEIVED LESS JOB CHARGES BY RS. 1 LAC AND ALSO THE CONVERSION CHARGES FROM ITS SISTER CON CERN M/S. TRIVENI CASTING AMOUNTING TO 2 ITA 501/K/2011 SRI DINESH ADUKIA. A.Y.07-08 RS.17 96 896/- WAS RECEIVED AFTER 2/3 MONTHS OF PRO CESSING AND DELIVERY OF GOODS. IN VIEW OF THIS ASSESSING OFFICER NOTED THAT THE G.P. RATE DE CLARED BY ASSESSEE IS LOW AND ACCORDINGLY HE ESTIMATED THE GP AT RS. 5 LAC BY HOLDING AS UNDER: THE BOOKS OF ACCOUNTS PRODUCED VERIFIED AND FOUND THAT THE ENTRY OF NET PROFIT WAS MISSING FROM THE CAPITAL ACCOUNT. IT IS THEREFORE CLEAR THAT BOOKS WERE PRACTICALLY NOT CLOSED ON THE LAST DATE OF FINANCIAL YEAR I.E. 31.3 .2006 AND ALSO ON THE DATE OF AUDIT. THE ASSESSEE THEREFORE HAD EVERY OPTION TO MANAGE THE PROFIT AT HIS SWEET WILL. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE A LUMP SUM ADDITION OF RS.5 00 000/- IS MADE ON THE GROSS PROFIT SHOWN BY THE ASSESSEE IN THE TRADI NG ACCOUNT AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 4. CIT(A) FOUND THAT ASSESSING OFFICER HAS NOT REJE CTED BOOKS OF ACCOUNT AS HAVING FOUND NO DEFECTS. ACCORDINGLY HE DELETED THE ADDI TION BY GIVING FOLLOWING FINDING IN PARA 5 OF HIS APPELLATE ORDER: 5. I HAVE DULY CONSIDERED THE SUBMISSION OF THE AR OF THE APPELLANT FOR BOTH THE ABOVE ISSUES AND FIND FORCE IN HIS ARGUMENTS. FROM THE N OTING MADE IN THE ASSESSMENT ORDER IT IS QUITE CLEAR THAT THE A.O. RESTORED TO THE IMPUGN ED GROSS PROFIT ADDITION OF RS.5 00 000/- AS WELL AS ADDITION OF RS.22 59 601/- OUT OF DISALL OWANCE OF OVERTIME PAYMENTS TO THE WORKERS WITHOUT ANY RHYME OR REASON BUT ON THE BAS IS OF SPECTRUM OF ASSUMPTION AND PRESUMPTION. THE APPELLANT PRODUCED AUDITED BOOKS OF ACCOUNT AND THE A.O. DID NOT FIND ANY DEFECTS IN THAT. THEREFORE IT WAS INCUMBENT O N THE PART OF THE A.O. TO ESTABLISH HOW AND TO WHAT EXTENT THE APPELLANT HAD MANAGED HIS GR OSS PROFIT. THE A.O. FAILED TO DO SO. 5. WE FIND THAT NO DOUBT THE A.O. HAS NOTED SO CALL ED DEFECTS IN THE BOOKS OF ACCOUNT THAT JOB CHARGES RECEIVED IS SHOWN LESS BY RS. 1 LAC AND EVEN THE PAYMENT OF CONVERSION EXPENSES OF ITS SISTER CONCERNS M/S. TRI VENI CASTING WAS RECEIVED AFTER 2/3 MONTHS FROM THE PROCESSING AND DELIVERY OF CONVERT ED GOODS. WE FIND THAT ASSESSING OFFICER HAS NOT RECORDED HOW THIS MISTAKE HAS OCCUR RED AND WHAT IS THE EFFECT OF THIS MISTAKE ON BOOKS OF ACCOUNT? THE ASSESSEES COUNSE L BEFORE US STATED THAT THERE IS NO SHORTAGE OF JOB CHARGES RECORDED BY THE ASSESSING O FFICER IN BOOKS OF ACCOUNT TO THE TUNE OF RS.1 LAC AND COMPLETE BOOKS OF ACCOUNT WAS PRODUCED BEFORE ASSESSING OFFICER BUT HE COULD NOT POINT OUT HOW THE ADVERSE IS. WE ARE OF THE VIEW THAT EVEN BEFORE THE CIT(A) COMPLETE BOOKS OF ACCOUNT WERE PRODUCED WHO VERIFIED AND FOUND THAT THERE IS NO SUCH DEFECT IN THE BOOKS OF ACCOUNT AND EVEN CON VERSION OF PIG IRON INTO INGOTS NORMALLY TAKES SOMETIME WHETHER IT TAKES 2/3 MONT HS I.E. IT IS NOT A MISTAKE WHICH PERMITS THE ASSESSING OFFICER TO REJECT BOOKS OF AC COUNT. ONCE BOOKS OF ACCOUNTS ARE NOT REJECTED PROPERLY ON ACCOUNT OF LOW GROSS PROF IT NO ADDITION CAN BE MADE BY ASSESSING OFFICER. ACCORDINGLY WE CONFIRM THE ORD ER OF CIT(A). 3 ITA 501/K/2011 SRI DINESH ADUKIA. A.Y.07-08 6. THE NEXT ISSUE IN THIS APPEAL OF REVENUE IS AGAI NST THE ORDER OF THE CIT(A) DELETING THE ADDITION MADE BY ASSESSING OFFICER ON ACCOUNT OF PAYMENT OF OVERTIME WAGES TO ASSESSEE. FOR THIS REVENUE HAS RAISED GRO UND NO. 2 WHICH IS AS UNDER: ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A)-XXX KOLKATA HAS ERRED IN DELETING THE ADDITION OF RS.22 59 601/- WHICH WAS M ADE ON ACCOUNT OF PAYMENT OF OVER TIME WAGES TO THE WORKERS. 7. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FA CTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT ONLY REASON OF THE ASSESSING OFFICER F OR ADDING THIS OVER TIME CHARGES PAID BY ASSESSEE IS THAT OVERTIME WAGES IS MORE THAN WAGES REGULARLY PAID AND ACCORDING TO HIM OVERTIME CHARGES CANNOT BE EARNED BY EACH AND EVERY WORKER ON A SIMILAR WAY AS OVERTIME CHARGES ARE ALWAYS PAID ON EXTRA WORK DONE BY WORKE R. THE CIT(A) DELETED THE ADDITION BY GIVING FOLLOWING FINDING: FURTHER THE APPELLANT ALSO PRODUCED OVERTIME WAGE S REGISTER BEFORE THE A.O. AND HE COULD NOT FIND ANY DEFECTS IN THAT. NON-MENTIONING OF DURATION OF OVERTIME HOURS IN THE REGISTER AND FINDINGS LIKE RATE OF OVERTIME WAGES WAS MORE THAN THE REGULAR WAGES DO NOT AUTOMATICALLY CALL FOR DISALLOWANCE OF EXPENSE S. THE A.O DID NOT MAKE OUT A CASE THAT A PORTION OF WAGES PAYMENTS TO THE OVERTIME WO RKERS WAS BOGUS OR UNSUBSTANTIATED. THUS THE ADDITIONS MADE ON THE BASIS OF MORE CONJEC TURES AND SUBMISSIONS CANNOT BE SUSTAINED. 8. WE FIND THAT REASONS STATED BY ASSESSING OFFICER FOR MAKING DISALLOWANCE OF OVERTIME WAGES TO WORKERS ARE BASED ON CONJECTURE A ND SURMISES. HE IS JUST BASING HIS DECISION ON PRESUMPTION THAT THE CAPACITY OF EXTRA WORK DIFFER FROM MAN TO MAN AND IT CANNOT CONSTITUTE THAT EQUAL OVERTIME SHOULD BE PAI D TO ALL WORKERS. WE ARE NOT IN AGREEMENT WITH THE PRESUMPTION OF ASSESSING OFFICER . ONCE ASSESSEE HAS PAID OVERTIME WAGES AND RECORDED IN THE BOOKS OF ACCOUNT AND SUPP ORTED BY VOUCHERS UNLESS AND UNTIL THERE ARE STRONG REASONS DISALLOWANCE OF OVERTIME CANNOT BE MADE. THE ASSESSING OFFICER HIMSELF ADMITTED THE FACT AS UNDER: ON FURTHER VERIFICATION IT WAS FOUND THAT THE EXPE NSES WAS INTER ALIA INCLUDED WITH WAGES CASUAL WAGES AND OVERTIME WAGES PAID BY THE ASSESSEE REGULARLY DURING THE YEAR UNDER CONSIDERATION. THE BOOKS OF A/CS VERIFIED AND FOUND THAT THE ASSESSEE MAINTAINED REGISTERS FOR WA GES AND OVERTIME WAGES PAID VERIFICATION OF WHICH IT WAS FOUND THAT ATTEN DANCE OF WORKERS RECORDED AGAINST WAGES PAID AND OVERTIME OF WORKERS ALSO REC ORDED AGAINST SOME OF THE WORKERS. BUT IN MOST OF THE OVERTIME PAYMENTS FOUN D WITHOUT MENTIONING TIME OF OVERTIME WORKED BY SO CALLED WORKERS WRITTEN IN THE REGISTER WHICH APPARENTLY FOUND TO BE AN AFTERTHOUGHT AND ADJUSTME NT OF EXPENDITURE DONE 4 ITA 501/K/2011 SRI DINESH ADUKIA. A.Y.07-08 BY THE ASSESSEE TO REDUCE THE INCOME CONSIDERING BETTER INCOME DERIVED BY THE ASSESSEE FROM THE LAST YEAR. ONCE THIS IS AN ADMITTED POSITION THAT OVERTIME WAG ES PAID ARE RECORDED IN THE BOOKS OF ACCOUNT AND REGISTER MAINTAINED DURING THE COURSE O F NORMAL BUSINESS ACTIVITIES BY PRESUMING OTHERWISE SAME CANNOT BE DISALLOWED UNLE SS AND UNTIL PROPER VERIFICATION IS CARRIED OUT. IN THE PRESENT CASE THE ASSESSING OFF ICER HAS DONE NO VERIFICATION TO FIND OUT WHETHER PAYMENTS FOR OVERTIME ARE GENUINE OR NO T. IN THE ABSENCE OF THE ABOVE WE CONFIRM THE ORDER OF CIT(A) AND THIS ISSUE OF REVEN UES APPEAL IS DISMISSED. 9. IN THE RESULT APPEAL OF THE REVENUE IS DISMISSE D. 10. ORDER PRONOUNCED IN OPEN COURT ON 16.09.2011. SD/- SD/- . '# '#'# '# . ! (C. D. RAO) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER ( #! #! #! #!) )) ) DATED : 16 TH DAY OF SEPTEMBER 2011 /0 %12 3 JD.(SR.P.S.) . 4 5 '6- COPY OF THE ORDER FORWARDED TO: 1 . *+ / APPELLANT ACIT CIRCLE-46 KOLKATA. 2 -*+ / RESPONDENT SHRI DINESH ADUKIA 26 BHAGWAN GANGUL Y LANE HOWRAH-711101. 3 . .% ( )/ THE CIT(A) KOLKATA 4. .% / CIT KOLKATA 5 . => % / DR KOLKATA BENCHES KOLKATA - / TRUE COPY .%?/ BY ORDER 2 /ASSTT. REGISTRAR .