The ITO, Ward-1,, Palanpur v. Shri Virat Jormalbhai Chokshi, Palanpur

ITA 735/AHD/2011 | 2007-2008
Pronouncement Date: 29-11-2019 | Result: Dismissed

Appeal Details

RSA Number 73520514 RSA 2011
Assessee PAN ABBPC1605M
Bench Ahmedabad
Appeal Number ITA 735/AHD/2011
Duration Of Justice 8 year(s) 8 month(s) 22 day(s)
Appellant The ITO, Ward-1,, Palanpur
Respondent Shri Virat Jormalbhai Chokshi, Palanpur
Appeal Type Income Tax Appeal
Pronouncement Date 29-11-2019
Appeal Filed By Department
Tags 735
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 29-11-2019
Date Of Final Hearing 24-09-2019
Next Hearing Date 24-09-2019
Last Hearing Date 07-08-2017
First Hearing Date 04-07-2019
Assessment Year 2007-2008
Appeal Filed On 08-03-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH AHMEDABAD BEFORE SHRI WASEEM AHMED ACCOUNTANT MEMBER & MS. MADHUMITA ROY JUDICIAL MEMBER I.T.A. NOS.734&735/AHD/2011 (ASSESSMENT YEARS: 2006-07 & 2007-08) THE ITO WARD-1 PALANPUR VS. SHRI VIRAT JORMALBHAI CHOKSHI MOTI BAZAR TOWER ROAD PALANPUR AND CO NOS. 94&95AHD/2011 (IN I.T.A. NO. 734&735/AHD/2011) (ASSESSMENT YEARS : 2006-07 & 2007-08) SHRI VIRAT JORMALBHAI CHOKSHI MOTI BAZAR TOWER ROAD PALANPUR VS. THE ITO WARD-1 PALANPUR [PAN NO. ABB PC1 605 M] ( APPELLANT ) .. ( RESPONDENT ) APPELLANT BY : SMT. APARNA AGARWAL CIT D.R. RESPONDENT BY : SHRI M. K. PATEL A.R. DATE OF HEARING 24.09.2019 DATE OF PRONOUNCEMENT 29 . 1 1 . 201 9 O R D E R PER MS. MADHUMITA ROY JUDICIAL MEMBER: BOTH THE CROSS APPEALS ARE DIRECTED AGAINST THE ORD ER DATED 25.11.2010 PASSED BY THE CIT-XX AHMEDABAD ARISING OUT OF THE ORDER DATED 21.12.2009 PASSED BY THE AO UNDER SECTION 143(3) R.W.S. 147 OF THE INCOME TAX ACT - 2 - ITA NOS.734&735/AHD/2011 AND CO NOS.94&95/AHD/2011 ITO VS. SHRI VIRAT JORMALBHAI CHOKSHI ASST. YEARS 2006-07& 2007-08 (HEREINAFTER REFERRED AS TO THE ACT) FOR A.Y. 200 6-07 AND AGAINST THE ORDER DATED 25.11.2010 PASSED BY THE CIT-XX AHMEDABAD ARISING OUT OF THE ORDER DATED 21.12.2009 PASSED BY THE AO UNDER SECTION 143(3) OF THE INCOME TAX ACT (HEREINAFTER REFERRED AS TO THE ACT) FOR A.Y. 200 7-08 RESPECTIVELY. SINCE BOTH THE APPEALS RELATE TO THE SAME ASSESSEE AND THE ISSUES ARE IDENTICAL THOSE ARE HEARD ANALOGOUSLY AND ARE BEING DISPOSED OF BY A COMMON O RDER. ITA NO.734/AHD/2011 FOR A.Y. 2006-07 : 2. THE ASSESSEE AN INDIVIDUAL FILED ITS RETURN OF INCOME ON 30.12.2006 DECLARING TOTAL INCOME AT RS. 3 70 469/-. THE SAME WAS FINALIZED ON 28.03.2007. SUBSEQUENTLY IT HAS COME TO THE NOTICE OF THE REVEN UE THAT THE ASSESSEE HAS SHOWN LABOUR PAYMENTS AMOUNTING TO RS. 3 02 52 341/- TO O NE SHRI ANILKUMAR A CHAHWALA OF NAVSARI GUJARAT IN THE YEAR UNDER CONS IDERATION WHEREAS SHRI ANIL A CHAHWALA ON OATH HAS TAKEN THAT HE HAS NOT EXECUTED ANY LABOUR WORK AND UPON SHOWING LABOUR RECEIPTS THAT TOO ONLY OF PAPER TRAN SACTION HE HAS RECEIVED HIS COMMISSION AS IT REFLECTS FROM THE ADDITION OF THE LD. AO. ON 22.12.2008 HE HAS FURTHER DEPOSED THAT HE HAS DEPOSITED THE CHEQUES O F LABOUR RECEIPTS IN THE BANK ACCOUNT AND AFTER WITHDRAWING THE CASH HE PAID A NO MINAL AMOUNTS TO THE LABOUR CONTRACTORS GOT HIS OWN COMMISSION AND BALANCE AMO UNT WAS RETURNED BACK TO THE PARTIES FOR WHOM LABOUR WORK WAS DONE. ON THIS PRE MISE THE ASSESSMENT WAS REOPENED UNDER SECTION 147 OF THE ACT AFTER RECORDI NG REASON AND A NOTICE DATED 28.01.2009 UNDER SECTION 148 WAS ISSUED. THE LD. A O ULTIMATELY CAME TO A FINDING THAT SHRI CHAHWALA OF NAVSARI DID NOT CARRI ED OUT ANY ACTUAL LABOUR WORK BUT ONLY PROVIDED A PLATFORM FOR PRINCIPAL PARTIES TO CLAIM BOGUS EXPENSES AND ULTIMATELY ON THAT BASIS THE ENTIRE CLAIM OF EXPEND ITURE IN RESPECT OF LABOUR PAYMENT AMOUNTING TO RS. 8 35 74 244/- WAS DISALLOW ED AND ADDED TO THE TOTAL - 3 - ITA NOS.734&735/AHD/2011 AND CO NOS.94&95/AHD/2011 ITO VS. SHRI VIRAT JORMALBHAI CHOKSHI ASST. YEARS 2006-07& 2007-08 INCOME OF THE ASSESSEE. IN APPEAL THE SAID ORDER W AS REVERSED BY DELETING SUCH ADDITION. HENCE THE APPEAL BEFORE US. 3. HEARD THE PARTIES PERUSED THE RELEVANT MATERIALS AVAILABLE ON RECORD. THE CASE OF THE REVENUE BEFORE US IS THIS THAT THE ADDITION MADE PRIMARILY BY THE AO ON THE BASIS OF THE STATEMENT MADE BY SHRI C HAHWALA HIMSELF STATED THAT SUCH TRANSACTION IS NOT A GENUINE ONE BUT A PAPER T RANSACTION MEANING THEREBY NO LABOUR WORK WAS DONE BY HIM FOR THE ASSESSEE. THUS ADDITION IS SUSTAINABLE. THE CASE OF THE ASSESSEE IS THIS THAT THE AFFIDAVI T FILED BY SHRI CHAHWALA DATED 27.12.2008 AND 14.12.2009 WHEREBY AND WHEREUN DER HE HAS RETRACTED FROM HIS EARLIER STATEMENT HAS NOT BEEN TAKEN INTO CONSI DERATION BY THE LD. AO IN ITS PROPER PERSPECTIVE. THE FACT REMAINS THAT THE ASSESSEE RECEIVED JOB WO RK RECEIPT OF RS. 8 46 32 013/- FOR POLISHING OF ROUGH DIAMONDS OUT O F WHICH THE MAJORITY OF RECEIPTS OF RS. 8 20 25 372/- HAS BEEN RECEIVED FROM ONE ROS Y BLUE (INDIA) PVT. LTD. ALL THE PAYMENT WAS MADE BY A/C PAYEE CHEQUES THAT TOO AFTER DEDUCTION OF DUE AMOUNT OF TDS. DURING THE COURSE OF ASSESSMENT PRO CEEDING THE LD. AO RELIED UPON THE STATEMENT OF SHRI ANIL CHAHWALA HAS ALREAD Y DISCUSSED IN THE FOREGOING PARAGRAPH BUT HAS NOT CONSIDERED THE AFFIDAVIT DATE D 27.12.2008 AND DATED 14.12.2009 OF THE SAID SHRI CHAHWALA WHERE HE HAS S TATED THAT THE ENTIRE STATEMENT GIVEN EARLIER BY HIM WAS UNDER MENTAL PRESSURE AND WAS A FORCE STATEMENT. IT IS FURTHER CONTENDED THAT THE EARLIER STATEMENT WERE T OTALLY WRONG AND IN FACT HE HAS DONE BUSINESS OF POLISHING OF ROUGH DIAMONDS WITH T HE APPELLANT AND OTHER PARTIES. HIS ACCOUNTS WERE ALSO AUDITED FOR WHICH RETURN OF INCOME WAS DULY FILED. NEITHER - 4 - ITA NOS.734&735/AHD/2011 AND CO NOS.94&95/AHD/2011 ITO VS. SHRI VIRAT JORMALBHAI CHOKSHI ASST. YEARS 2006-07& 2007-08 HE HAS RETURNED ANY PART OF PAYMENT RECEIPT BY HIM TOWARDS POLISHING CHARGES FROM THE APPELLANT OR FROM ANY OTHER PARTIES. HOWEVER NO SUCH DISCUSSION AS WE FOUND NOT RECORDED IN THE ORDER PASSED BY THE LD. AO. IT ALSO APPEARS FROM THE RECORDS THAT THE CIT-A VALSAD BY AND UNDER ITS ORDER DATED 27.02.2010 WHILE DEALING WITH THE TAX APPEAL PREFERRED BY THE SAID SHRI ANIL CHAH WALA HELD THAT SHRI CHAHWALA HAD IN FACT DONE LABOUR WORK OF DIAMOND POLISHING WITH THE APPELLANT AND OTHER PARTIES AND HIS BUSINESS WAS HELD TO BE GENUINE AND NOT A PAPER TRANSACTION. THIS PARTICULAR FACT FURTHER EMANATES FROM THE ORDER PAS SED BY THE CIT(A) WHICH IS IMPUGNED BEFORE US. IT WAS ALSO MENTIONED BY THE F IRST APPELLATE AUTHORITY THAT IN THE CASE OF ANIL CHAHWALA THE LD. CIT(A) HAS BEEN PLEASED TO DIRECT THE AO TO WORK OUT THE GROSS PROFIT AT 1.5% ON ESTIMATE BASIS . HOWEVER WE FIND THAT SIMILAR ADDITION MADE IN RES PECT OF THE LABOUR CHARGES IN THE CASE OF THE ASSESSEE WAS DELETED BY THE LD. CIT(A) FOR A.Y. 2004-05 WHICH WAS FURTHER CONFIRMED BY THE CO-ORDINATE BENCH IN I TA NO. 1586/AHD/2012 FOR A.Y. 2004-05 IN DEPARTMENTS APPEAL WHICH IS ALSO P LACED ON RECORD. MORE SO WHEN THE REVENUE HAS ALREADY GIVEN A CLEA N CHIT ON THE GENUINENESS OF THE BUSINESS OF SHRI CHAHWALA OF POL ISHING OF DIAMONDS THE SAID CANNOT BE QUESTIONED AND HELD OTHERWISE BY REVENUE IN THE INSTANT CASE. WE HAVE FURTHER GONE THROUGH THE ENTIRE SET OF DOCUMENTS PL ACED BEFORE US WHEREFROM IT APPEARS THAT ON THE BASIS OF THE EVIDENCES PRODUCED BY LD. CIT(A) THE BUSINESS OF ANIL CHAHWALA HAS BEEN HELD TO BE GENUINE OF GETTIN G DIAMOND POLISHED BY LABOURS BY THE CONCERNED CIT(A). THE SAID FACT THOUGH BROU GHT TO THE NOTICE TO THE LD. AO HE HAS NOT EXCEEDED TO THE SAME. BUT THIS PARTICUL AR FACT WAS DULY TAKEN CARE BY - 5 - ITA NOS.734&735/AHD/2011 AND CO NOS.94&95/AHD/2011 ITO VS. SHRI VIRAT JORMALBHAI CHOKSHI ASST. YEARS 2006-07& 2007-08 THE LD. CIT(A) AS IT APPEARS FROM ORDER IMPUGNED BE FORE US. FINALLY HE OBSERVED AS FOLLOWS:- 4.3(IX) IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANC ES AND EVIDENCE ON RECORD THE DISALLOWANCE OF ENTIRE LABOUR PAYMENT OF RS. 8 35 7 4 244/- IS NOT JUSTIFIED. IT IS HOWEVER SEEN THAT THE ASSESSMENT IN THE CASE OF SHRI ANIL C HAHWALA HAS BEEN DONE BY ESTIMATING THE GROSS PROFIT IN HIS CASE. IN VIEW OF THE FACT THAT THE ENTIRE PAYMENT MADE BY THE APPELLANT TO SHRI ANIL CHAHWALA AND SHRI ATUL DAFTA RI WAS MADE BY CHEQUES PROVES THAT THE PAYMENT WERE NOT BOGUS AS THERE IS NO EVIDENCE AVAILABLE WITH THE AO OTHER THAN THE RETRACTED STATEMENT OF SHRI ANIL CHAHWALA. 4.3(X) WHEN THE GROSS PROFIT OF THE APPELLANT ARE EXAMINED IT IS SEEN THAT THE GROSS PROFIT DECLARED FOR THE CURRENT YEAR IS 1.25% WHICH IS SAME AS IN THE EARLIER ASSESSMENT YEAR. THE COMPARABLE CHART SHOWING THE PERCENTAGE OF GROSS PROFIT FROM ASSESSMENT YEARS 2003-04 TO 2008-09 WAS FILED BY TH E APPELLANT ON PAGE 28 OF THE PAPER BOOK DATED 20.10.2010. FROM THE SAME IT COULD BE S EEN THAT THE GROSS PROFIT DECLARED FOR THE CURRENT YEAR IS 1.25% WHICH IS SAME AS IN THE E ARLIER ASSESSMENT YEAR AND IN FACT HIGHER THAN WHAT IS SHOWN IN THE EARLIER AND SUBSEQ UENT ASSESSMENT YEARS. THESE FACTS ALSO INDICATE THAT THE INCOME SHOWN BY THE APPELLAN T IN NOT LOW. HENCE LOOKED AT THIS ANGLE ALSO THE DISALLOWANCE OF THE ENTIRE EXPENDITU RE OF LABOUR PAYMENT IS UNCALLED FOR. THEREFORE THE ADDITION MADE BY THE ASSESSING OFFI CER ON ACCOUNT OF LABOUR PAYMENT AMOUNTING TO RS. 8 35 74 244/- IS DELETED. THUS IT EVIDENT FROM THE AFORESAID PARAGRAPH THAT WHILE DELETING THE ADDITION MADE BY THE AO TOWARDS THE LABOUR PAYMENT TO THE TU NE OF RS. 8 35 74 244/- THE LD. CIT(A) ANALYSED THE ISSUE IN DEPTH AND COMPARED THE SAME WITH THAT OF THE ORDER PASSED BY THE LD. CIT(A) IN THE CASE OF ANIL CHAHWALA WHERE HIS BUSINESS WAS HELD TO BE GENUINE SO FAR IT RELATES TO THE ASS ESSEE WHICH ACCORDING TO US SUFFERS FROM NO AMBIGUITY SO AS TO WARRANT INTERFER ENCE. HENCE THE ORDER IS PASSED IN THE AFFIRMATIVE I.E. IN FAVOUR OF THE ASSESSEE A ND AGAINST THE REVENUE. THE SECOND GROUND OF ADMITTING ADDITIONAL EVIDENCE IS VIOLATION OF RULE 46A NEEDS NO FURTHER CONSIDERATION SINCE WE FIND NO FOR CE ON IT . THE SAME IS THUS DISMISSED. REVENUES APPEAL IS THUS DISMISSED. - 6 - ITA NOS.734&735/AHD/2011 AND CO NOS.94&95/AHD/2011 ITO VS. SHRI VIRAT JORMALBHAI CHOKSHI ASST. YEARS 2006-07& 2007-08 CROSS OBJECTION 94/AHD/2011(IN ITA NO. 734/AHD/2011 ) FOR A.Y. 2006-07:- 4. AT THE TIME OF HEARING OF THE MATTER THE LD. ADV OCATE APPEARING FOR THE ASSESSEE SUBMITTED THAT HE DOES NOT WANT TO PRESS T HE CROSS OBJECTION. HENCE THE SAME IS DISMISSED AS NOT PRESSED. ITA NO.735/AHD/2011 FOR A.Y. 2007-08 :- 5. THE ISSUE INVOLVED IN THE PARTICULAR CASE IS IDE NTICAL TO THAT OF THE ISSUE ALREADY DECIDED BY US IN FAVOUR OF THE ASSESSEE IN ITA NO. 734/AH/2011 FOR A.Y. 2007-08 AND IN THE ABSENCE OF ANY CHANGED CIRCUMSTA NCES THE SAME SHALL APPLY MUTATIS MUTANDIS . HENCE THE SAME IS DISMISSED. CO NO.94/AHD/2011 (IN ITA NO.735/AHD/2011) FOR A.Y. 2007-08 :- 6. AT THE TIME OF HEARING OF THE MATTER THE LD. ADV OCATE APPEARING FOR THE ASSESSEE SUBMITTED THAT HE DOES NOT WANT TO PRESS T HE CROSS OBJECTION. HENCE THE SAME IS DISMISSED AS NOT PRESSED. 7. IN THE COMBINED RESULT REVENUES APPEAL IS DISM ISSED AND ASSESSEES CROSS OBJECTION IS DISMISSED AS NOT PRESSED. THIS ORDER PRONOUNCED IN OPEN COURT ON 29/11/2019 SD/- SD/- ( WASEEM AHMED ) ( MS. MADHUMITA ROY ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 29/11/2019 TANMAY SR.PS - 7 - ITA NOS.734&735/AHD/2011 AND CO NOS.94&95/AHD/2011 ITO VS. SHRI VIRAT JORMALBHAI CHOKSHI ASST. YEARS 2006-07& 2007-08 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ) ( / THE CIT(A)- 5. '#$$ / DR ITAT AHMEDABAD 6. %& '( / GUARD FILE. / BY ORDER //TRUE COPY// / (DY./ASSTT. REGISTRAR) !'# / ITAT AHMEDABAD 1. DATE OF DICTATION 27.11.2019 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 28.11.2019 3. OTHER MEMBER. 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P .S./P.S .. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S. 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 29.11.2019 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER