SEW Constructions Ltd, Hyderabad v. DCIT, Hyderabad

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B HYDERABAD BEFORE SHRI G.C.GUPTA VICE PRESIDENT AND SHRI AKBER BASHA ACCOUNTANT MEMB ER ITA NOS.73/H/05 & 48/HYD/06 : ASSESSMENT YEARS 2001-02 &2002-03 SEW CONSTRUCTIONS LTD. HYDERABAD. (PAN - AADCS4061P) VS DY.CIT CENT. CIR-I HYDERABAD (APPELLANT) (RESPONDENT) APPELLANT BY : NONE RESPONDENT BY : SMT. VASUNDHARA SINHA O R D E R PER AKBER BASHA ACCOUNTANT MEMBER: THESE APPEALS BY THE ASSESSEE ARE DIRECTED AGAINST SEPARAT E ORDERS OF THE CIT (A)-I HYDERABAD DATED 5-10-2004 AN D 5-12-2005 PERTAINING TO THE ASSESSMENT YEARS 2001-02 AND 2002-03 R ESPECTIVELY. SINCE COMMON ISSUE IS INVOLVED IN THESE TWO APPEALS THESE ARE TAKEN UP HEARD TOGETHER AND DISPOSED OFF BY THIS COMMON ORDE R FOR THE SAKE OF CONVENIENCE. 2. AT THE OUTSET ON THE DATE OF HEARING THE ASSESSEE -COMPANY FILED A LETTER REQUESTING TO DISPOSE OF THESE APPEALS O N THE BASIS OF THE GROUNDS RAISED IN ITS APPEALS AND ON ITS MERITS. 3. THE LEARNED DEPARTMENTAL REPRESENTATIVE RELIED ON THE ORDERS OF THE CIT (A) IN PARTICULAR PARA-16 OF HIS ORDER. 2 4. WE HAVE CONSIDERED THE MATERIAL AVAILABLE ON RECORD . PARA-16 OF THE CIT (A) READS AS UNDER:- '16. WHEN THE ABOVE IRREGULARITIES WERE POINTED OUT TO THE COMPANY THE CHIEF MANAGER (FINANCE) SRI M. GOPALA KRISHNA VIDE HIS LETTER DATED 7-11-2002 CONFIRMED THAT AT THE RE QUEST OF VARIOUS JOB WORKERS THE BRANCH MANAGER/OFFICER DRE W AND DELIVERED CASH AT THE DOOR STEP OF THE COMPANY. TH IS M AKES ABUNDANTLY CLEAR THAT THE CASH WITHDRAWN FROM THE S AVING BANK ACCOUNTS OF VARIOUS JOB WORKERS ULTIMATELY REACHED AT THE DOOR STEP OF THE COMPANY. IN OTHER WORDS A PART OF THE JOB WORKER'S PAYMENT DEBITED IN THE PROFIT AND LOSS ACCOUNT OF T HE COMPANY WAS RECEIVED BACK BY THE ASSESSEE WHICH MEANS THAT NO ACTUAL PAYMENT WAS MADE TO EITHER THE JOB WORKERS OR THE L ABOURERS WORKING AT THE SITE. THE DETAILED INVESTIGATION CA RRIED OUT IN THE CASE HAS CLEARLY ESTABLISHED THAT THE PAYMENTS CLAI MED UNDER THE HEAD 'JOB WORKERS' HAVE BEEN INFLATED BY AN AMOUNT OF RS.4 60 42 600 WHICH HAS BEEN RIGHTLY DISALLOWED BY THE ASSESSING OFFICER. THE VARIOUS GROUNDS OF APPEAL R AISED IN THIS REGARD ARE THUS WITHOUT ANY MERIT AND HEREBY REJECT ED. IN THE RESULT THE ADDITION MADE BY THE ASSESSING OFFICER IS CONFIRMED AND THE APPEAL IS DISMISSED.' THE DETAILED INVESTIGATION CARRIED OUT BY THE DEPART MENT ON THE ABOVE ISSUE CLEARLY ESTABLISHED THAT THE ASSESSEE COMPANY IN FACT INFLATED THE JOB WORK CHARGES. WE DO NOT SEE ANY MERIT IN THE GROU NDS RAISED BY THE ASSESSEE COMPANY HOLDING THAT THE PAYMENTS MADE BY THE ASSE SSEE COMPANY TO ALL THE JOB WORKERS ARE BY WAY OF CROSSED DEM AND DRAFT/CHEQUES AS WE FIND FROM THE CIT (A)'S ORDER THAT THE CASH WITHDRAWN FROM THE SAVINGS BANK ACCOUNTS OF JOB WORKERS ULTIMATELY REACHED THE ASSESSEE COMPANY. THE ASSESSEE COMPANY DID NOT BRI NG ANYTHING ON RECORD TO CONTROVERT THE OBSERVATION MADE BY THE ASSESSING OFFICER IN HIS ORDER THAT THE BANK ACCOUNTS OF JOB WORK ERS WERE NOT OPENED BY THEM NOT OPERATED BY THEM AND CASH WAS NOT WITHDRAWN BY THEM FROM THEIR SAVINGS BANK ACCOUNTS AND THEREFORE WE DO NOT SEE ANY INFIRMITY IN THE ORDER OF THE CIT (A) AND WE CONFIRM THE SAME. 3 5. IN THE RESULT BOTH THE APPEALS FILED BY THE ASSESSEE STAND DISMISSED. ORDER PRONOUNCED IN THE COURT ON 30-4-2010. SD/- SD/- (G.C.GUPTA) (AKBER BASHA) VICE PRESIDENT. ACCOUNTANT MEMBER. DT/-30TH APRIL 2010. COPY FORWARDED TO: 1. SEW CONSTRUCTIONS LIMITED 6-3-871 SNEHALATHA GRE ENLANDS BEGUMPET HYDERABAD. 2. DY.CIT CENTRAL CIR-I HYDERABAD. 3. COMMISSIONER OF INCOME TAX AP HYDERABAD 4. COMMISSIONER OF INCOME TAX(A)-I HYDERABAD 5. THE D.R. ITAT HYDERABAD. JMR