Tapas Dhara, Kolkata V. ACIT Circle 44, Kolkata, Kolkata

ITA 1076/KOL/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 1887 (ITAT-KOLKATA)
• Duration Of Justice: 7 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-01-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 16-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S DASGUPTA
• Section: 133A

Judgement Text

ITA NO.1076/KOL/2017 TAPAS DHARA A.Y.2013-14 1 IN THE INCOME TAX APPELLATE TRIBUNAL B B ENCH : KOLKATA [BEFORE HONBLE SRI N.V.VASUDEVAN, JM & DR.ARJUN LAL SAINI, AM] I.T.A NO.1076/KOL/2017 ASSESSMENT YEAR : 2013-14 TAPAS DHARA -VS.- A.C.I.T.- CIR-44, KOLKATA KOLKATA. [PAN : ACQPD 3081 Q] (APPELLANT) (RESPONDENT) FOR THE APPELLANT : SHRI SOUMITRA CHOU DHURY, ADVOCATE FOR THE RESPONDENT : SHRI S.DASGUPTA, AD DL. CIT (DR) DATE OF HEARING :20.12.2017. DATE OF PRONOUNCEMENT : 03.01.2018. ORDER PER N.V.VASUDEVAN, JM THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 25.01.2017 OF CIT(A)-13, KOLKATA RELATING TO A.Y.2013-14. 2. GROUND NO.1 RAISED BY THE ASSESSEE READS AS FOL LOWS :- 1.FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE THE LD. C.I.T.(A)-13 ERRED IN LAW AS WELL AS IN FACT IN CONFIRMING THE D ISALLOWANCE OF RS.27,95,994/- AS BOGUS EXCESS LABOUR CHARGES MADE BY THE ASSESSIN G OFFICER. 3. THE ASSESSEE IS AN INDIVIDUAL. HE IS ENGAGED IN THE BUSINESS OF MAKING GOLD ORNAMENTS AGAINST MAKING CHARGES AND SELLING OF GOL D ORNAMENTS AS PROPRIETOR UNDER THE NAME AND STYLE OF M/S. SWARNA MAHAL JEWELLERS. THERE WAS A SURVEY U/S 133A OF THE INCOME TAX ACT, 1961 (ACT) CONDUCTED AT THE BUS INESS PREMISES OF THE ASSESSEE ON 14.02.2013. IN THE COURSE OF SURVEY A STATEMENT OF THE ASSESSEE WAS RECORDED. THE ASSESSEE WAS SPECIFICALLY ASKED BY THE OFFICER COND UCTING THE SURVEY FOR THE BOOKS OF ACCOUNTS. THE ASSESSEE EXPLAINED THAT THE BOOKS OF ACCOUNTS WILL BE PREPARED ON THE BASIS OF CHALLANS AND VOUCHERS AVAILABLE WITH THE A SSESSE. IN ANSWER TO QUESTION NO.7 AND 8 THE ASSESSEE REPLIED AS FOLLOWS :- ITA NO.1076/KOL/2017 TAPAS DHARA A.Y.2013-14 2 Q.7 PLEASE GO THROUGH THE BOOK BEARING ID MARK TD- 29 AND TD-30, PLEASE COMMENT ANS. THESE BOOKS CONTAIN THE VOUCHER/RECEIPT F PAYM ENT MADE TO LABOUR FOR JOB WORK. Q.8 IT IS EVIDENT FROM THE ID MARK TD-29 AND TD-30 THAT THE TOTAL EXPENSES FOR JOB WORK ARRIVED AT RS.41,20,819/- IN AGGREGATE, DO YOU AGREE ? ANS. YES. 4. THEREAFTER THE SURVEY TEAM CALCULATED THE PROFIT AND LOSS ACCOUNT FOR THE PERIOD FROM 01.04.2012 TO 14.02.2013 (DATE OF SURVEY) WHIC H ARE AS FOLLOWS :- Q.20 ON THE BASIS OF THE DATA AVAILABLE IN YOUR PR EMISES AND AS PER YOUR ADMISSION, THE P&L ACCOUNT OF SHRI TAPAS DHARA IS D RAWN AS UNDER AND TOTAL INCOME HAVE BEEN CALCULATED ON THE BASIS OF YOUR AD MISSION, VIDE YOUR ANSWER TO THE QUESTION NO.2 TO 18. PROFIT AND LOSS ACCOUNT OF SHRI TAPAS DHARA PROP. O F SWARNA MAHAR JEWELLERS FOR THE PERIOD 01-04-2012 TO 14 -02-2013 (AMOUNT IN RS.) (AMOUNT IN RS.) OPENING W.I.P. 215082/- SALES 1277286/- PURCHASE 550000/- DIRECT INCOME 7861580/- DIRECT EXP 4120819/- GROSS PROFIT B/D 4252965/- 9138866/- 9138866 INDIRECT EXPENSES 726922/- (AS PER BILL & VOUCHER PRODUCE BY YOU) NET PROFIT B/D 3526043/- ADD: DIFF.IN VALUE OF GOLD (CURRENT ASSET) (VALUE OF GOLD DETERMINED BY VALUER) 15745056/- VALUE DAS PER LAST ACCOUNT 12548773/- 3196283/- PREMIUM RECEIVED FOR RELINQUISHMENT OF TENANCY 3000 00/- SHARE OF RENT FROM BANK 253152/- SHARE FROM MARRIAGE HALL RENT 300000/. INTEREST INCOME FROM HDFC 163718/- UNEXPLAINED CASH 36680/- UNEXPLAINED CASH DEPOSIT 244000/- (VIDE ID MARK TD/01 PAGE NO.96,97,98&100) RENT FROM VODAFONE 54270/- INCOME 8074146/- ITA NO.1076/KOL/2017 TAPAS DHARA A.Y.2013-14 3 5. FINALLY IN QUESTION NO.21 THE ASSESSEE OFFERED T HAT HE SHALL OFFER THE INCOME DETERMINED AS PER PROFIT AND LOSS ACCOUNT AND PAY A DVANCE TAX. Q.21. ON THE BASIS OF THE ABOVE TAXABLE INCOME AND CONSIDERING YOUR ANSWER TO THE QUESTION NO.19, 20 ADVANCE TAX YOU ARE AGREED TO PAY. ANS. I HAVE ALREADY PAID THE ADVANCE TAX TO THE TUN E OF RS.6 LAKHS AND NOW ON THE BASIS OF THE INCOME DETERMINED DURING THE SURVEY. I WILL PAY RS.20 LAKHS AS ADVANCE TAX FOR F.Y. 2012-13, A.Y.2013-14, BY 15-03 -2013. HOWEVER, A PART PAYMENT WILL BE PAID BY 25.02.2013. 6. THE ASSESSEE FILED RETURN OF INCOME FOR A.Y.2013 -14 DISCLOSING TOTAL INCOME OF RS.90,51,790/- WHICH WAS REVISED TO A TOTAL INCOME OF RS.92,87,260/-. THE ASSESSEE FILED A REVISED VERSION OF PROFIT AND LOSS ACCOUNT FROM 01.04.2012 TO 14.02.2013 (DATE OF SURVEY). ON COMPARISON OF THE PROFIT AND LOSS AC COUNT PREPARED AT THE TIME OF SURVEY AND THE PROFIT AND LOSS ACCOUNT FILED IN THE COURSE OF ASSESSMENT PROCEEDINGS THE AO FOUND THE FOLLOWING DISCREPANCIES :- 7. AS CAN BE SEEN FROM THE AFORESAID CHART THAT AT THE TIME OF SURVEY THE SURVEY TEAM ESTIMATED THE DIRECT EXPENSES (LABOUR CHARGES) AT A SUM OF RS.41,20,819/- WHEREAS AS PER THE REVISED PROFIT AND LOSS ACCOUNT FILED IN THE COURSE OF ASSESSMENT PROCEEDINGS THE DIRECT EXPENSES (LABOUR CHARGES) WE RE SHOWN AT RS.69,16,813/-. THERE WAS AN EXCESS CLAIM ON ACCOUNT OF LABOUR CHARGES OF RS.27,95,994/-. THE AO CALLED UPON THE ASSESSEE TO EXPLAIN THE REASONS FOR THE DI FFERENCE. THE ASSESSEE EXPLAINED THAT THE FIGURE REFLECTED IN THE PROFIT AND LOSS ACCOUNT FILED DURING THE ASSESSMENT PROCEEDINGS SHOWING LABOUR CHARGES OF RS.69,16,813/ - IS BASED ON RECORDS. THE ITA NO.1076/KOL/2017 TAPAS DHARA A.Y.2013-14 4 ASSESSEE POINTED OUT THAT THE OUTSTANDING AS WHEN I T WAS PAID TO THE VARIOUS KARIGARS TDS WHEREVER NECESSARY WAS DEDUCTED. THE ASSESSEE A LSO ENCLOSED LEDGER COPIES OF EACH INDIVIDUAL KARIGAR. THE AO HOWEVER HELD THAT T HE REPLY OF THE ASSESSEE WAS CONSIDERED AND NOT ACCEPTED. ACCORDING TO THE AO DI RECT EXPENSES ON ACCOUNT OF LABOUR CHARGES WAS TAKEN ON THE BASIS OF BILLS, VOU CHERS AND EVIDENCES PRODUCED BY THE ASSESSEE AND INCORPORATED IN THE PROFIT AND LOS S ACCOUNT AT THE TIME OF SURVEY WHICH WAS ACCEPTED BY THE ASSESSEE. THEREFORE THE D IFFERENCE OF RS.27,95,994/- WAS TREATED BY THE AO AS BOGUS EXPENDITURE AND DISALLOW ED AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 8. ON APPEAL BY THE ASSESSEE THE CIT(A) CONFIRMED T HE ORDER OF THE AO. THE FOLLOWING WERE THE OBSERVATIONS OF CIT(A) :- I HAVE PERUSED THE SUBMISSIONS OF THE APPELLANT AN D AO'S OBSERVATION. IN THIS CASE PERUSAL OF AO'S ORDER SHOWS THAT AFORESAID EXP ENDITURE OF RS.41,20,819 /- WAS FOUND AS LABOUR CHARGES AS ON DATE OF SURVEY WH EREAS THE APPELLANT WHILE RECASTING THE EXPENSES CLAIMED, SUCH EXPENDITURE AT RS.69,16,813/-. IN THIS REGARD, IT IS PERTINENT TO MENTION HERE THAT THE AO HAS CONSIDERED THE DIRECT EXPENSES BASED ON BILLS, VOUCHERS AND EVIDENCES PRO DUCED BY THE APPELLANT AT THE TIME OF SURVEY. NO FURTHER CLAIM WAS MADE AFTER DAT E OF SURVEYOR DURING THE COURSE OF SURVEY. PERUSAL OF PAYMENT SHEET SUBMITTE D DURING THE APPELLATE PROCEEDINGS, SHOWS THAT TOTAL PAYMENT THROUGH CHEQU E WAS MADE OF RS.5L,78,40S/- WHICH WAS COMPRISING OF OUTSTANDING BALANCE OF RS.13,70,289/-. THE TOTAL OUTSTANDING BALANCE AT THE BEGINNING OF T HE YEAR WAS RS.16,21,832/- AND STILL PAYABLE TILL DATE OF SURVEY WAS RS.2,SL,S43/- . IN THIS REGARD, IT IS FURTHER TO POINT OUT THAT LABOUR CHARGES PAYMENTS CANNOT BE OU TSTANDING FOR MORE THAN ONE MONTH. IF AVERAGE OF TOTAL CHEQUE PAYMENT FOR ELEVE N MONTH IS TAKEN THEN MONTHLY PAYMENT COMES TO RS.3.46 LAKHS APPROXIMATEL Y ONLY WHICH CAN BE ESTIMATED AS OUTSTANDING. IT IS FURTHER SEEN THAT T OTAL CLAIM OF THE APPELLANT IS ACCEPTED TO THE EXTENT OF RS.41,20,819 /- WHICH MEA NS RS.3,12,073/- IS FURTHER ACCEPTED APART FROM THE CHEQUE PAYMENT MADE UP TO T HE DATE OF SURVEY. THE APPELLANT HAS CLAIMED THAT REMAINING PAYMENTS HAVE BEEN MADE SUBSEQUENTLY. THE APPELLANT IS SILENT AS WHY THE AFORESAID SUBMIS SION WAS NOT MADE DURING THE COURSE OF SURVEY. HAD IT BEEN SO, THE SAME SHOULD H AVE BEEN ALSO FOUND AS PER BILLS AND VOUCHERS AS REMAINING EXPENSES WERE FOUND . IN THIS REGARD IT IS FURTHER TO POINT OUT THAT THE APPELLANT IS ENGAGED IN JEWEL LERY BUSINESS WHERE LABOUR CHARGES ARE VERY ESSENTIAL BECAUSE IT IS RELATED WI TH ISSUANCE OF GOLD QUANTITY GIVEN TO THE JOB WORKERS FOR WHICH BILL OR DOCUMENT S HAS TO BE MAINTAINED WITHOUT THAT THE APPELLANT CANNOT HAVE ANY CONTROL OVER THE ITEM ISSUED TO PARTICULAR JOB WORKER. AS THE APPELLANT FAILED TO P ROVE THE AFORESAID CLAIM DURING THE COURSE OF SURVEY AS NO CORRESPONDING BILLS AND VOUCHERS WERE FOUND, THEREFORE, CONSIDERING THE PAYMENTS TO THE EXTENT O F RS.38 LAKHS AND BILLS, ITA NO.1076/KOL/2017 TAPAS DHARA A.Y.2013-14 5 VOUCHERS FOUND TO THE EXTENT OF RS.42 LAKHS MAKES I T AMPLE CLEAR THAT IT WAS ACTUAL EXPENDITURE WHICH WAS FOUND DURING THE COURS E OF SURVEY AND THAT IS WHY THE APPELLANT DID NOT SPEAK ANYTHING ABOUT THE OUTS TANDING BALANCE BEING CORRECT STATE OF AFFAIRS. THEREFORE, THE ADDITION MADE BY T HE AO IS HEREBY UPHELD AND THE APPEAL GROUND IS DISMISSED. 9. AGGRIEVED BY THE ORDER F CIT(A) THE ASSESSEE HAS RAISED GROUND NO.1 BEFORE THE TRIBUNAL. 10. WE HAVE HEARD THE RIVAL SUBMISSIONS. THE LD. CO UNSEL FOR THE ASSESSEE DREW OUR ATTENTION TO THE FACT THAT THE DIRECT LABOUR EXPENS ES AS CLAIMED IN THE PROFIT AND LOSS ACCOUNT FILED BY THE ASSESEE IN THE COURSE OF ASSES SMENT PROCEEDINGS WAS BASED ON ACTUAL EXPENSES INCURRED EVIDENCED BY ENTRIES IN TH E BOOKS OF ACCOUNTS. HE BROUGHT TO OUR NOTICE THAT THE DIRECT LABOUR CHARGES COMPUTED AT THE TIME OF SURVEY WAS ONLY PROVISIONAL AND NOT CONCLUSIVE. IT WAS BASED ONLY O N THE VOUCHERS AND RECEIPTS FOUND AT THE TIME OF SURVEY. HE ALSO BROUGHT TO OUR NOTIC E THAT THE LEDGER COPIES OF EVERY KARIGAR AND RETURNS OF TDS FILED BY THE ASSESSE WER E DULY PRODUCED BY THE ASSESSEE BEFORE THE AO AND THERE IS NO REASON WHY THE PLEA O F THE ASSESSEE SHOULD BE DISBELIEVED. IN THIS REGARD THE LD. COUNSEL ALSO DR EW OUR ATTENTION TO LIST OF KARIGARS TO WHOM THE ASSESSEE MADE PAYMENTS DURING THE PREVIOUS YEAR WHICH IS PLACED AT PAGE 1 OF THE ASSESSEES PAPER BOOK. THE BREAK-UP OF PAYME NTS TO THESE KARIGARS BY CHEQUE OR BY CASH AND THE LEDGER ACCOUNTS OF THE RESPECTIV E KARIGAR WERE ALSO FILED BEFORE THE AO. THESE DETAILS ARE AVAILABLE AT PAGES 3 TO 471 O F THE ASSESSEES PAPER BOOK. THE LEDGER ACCOUNTS OF THE KARIGAR ALSO SHOW THAT OUTST ANDING AS ON THE DATE OF THE PREVIOUS YEAR RELEVANT TO A.Y.2013-14 WERE PAID IN THE SUBSEQUENT ASSESSMENT YEAR. WHEREVER CASH WAS PAID VOUCHERS HAVE ALSO BEEN PROV IDED. IN THE LIGHT OF THESE DOCUMENTS THE LD. COUNSEL SUBMITTED THAT THE ACTION OF THE REVENUE AUTHORITIES IN MAKING THE IMPUGNED ADDITION WITHOUT BRINGING ANY M ATERIAL ON RECORD CANNOT BE SUSTAINED. THE LD. DR RELIED ON THE ORDER OF THE AO . 11. WE HAVE CONSIDERED THE RIVAL SUBMISSION. THE EV IDENCE FILED BY THE ASSESSEE BEFORE THE AO GIVES A COMPLETE BREAK UP OF PAYMENTS OF LABOUR CHARGES WITH INDIVIDUAL NAMES OF THE LABOURERS AND THEIR LEDGER ACCOUNTS. PAYMENTS HAVE BEEN ITA NO.1076/KOL/2017 TAPAS DHARA A.Y.2013-14 6 MADE BY CHEQUES AS WELL AS CASH AND WHEREVER THERE WAS AN OBLIGATION OF DEDUCTION OF TAX AT SOURCE THE SAME HAD BEEN DEDUCTED. DETAIL S ARE AVAILABLE IN THE CASE OF ALL THE KARIGARS TO WHOM THE ASSESSEE PAID LABOUR CHARGES. IN THE LIGHT OF THE ABOVE EVIDENCE WE FAIL TO SEE ANY REASON AS TO WHY THE PROFIT AND LOSS ACCOUNT FILED BY THE ASSESSEE IN THE COURSE OF ASSESSMENT PROCEEDINGS AND THE LABOUR CHARGES REFLECTED THEREIN SHOULD BE DOUBTED BY THE REVENUE AUTHORITIES. THE REASONIN G GIVEN BY THE REVENUE AUTHORITIES IS THAT THE LABOUR CHARGES CANNOT BE OUTSTANDING FO R MORE THAN ONE MONTH. IT WAS EXPLAINED BY THE ASSESSEE THAT THE KARIGARS HAVE A LONG ASSOCIATION WITH THE ASSESSEE AND THE TRANSACTIONS BETWEEN THE ASSESSEE AND THE K ARIGARS IS A CONTINUOUS TRANSACTIONS OVER A PERIOD OF SEVERAL YEARS AND THEREFORE THE RE ASONING GIVEN BY THE CIT(A) WAS NOT CORRECT. KEEPING IN MIND OF ALL THE EVIDENCE ON RECORD, WE ARE OF THE VIEW THAT THE ADDITION MADE BY THE REVENUE AUTHORITIES IS WITHOUT ANY BASIS AND PURELY ON SURMISES AND CONJECTURES. THE OUTCOME IN THE SURVEY HAS BEEN TAKEN AS CONCLUSIVE BY THE REVENUE AUTHORITIES. THE ASSESSEE HAS DEMONSTRATED AS TO HOW THE LABOUR CHARGES WORKED OUT AT THE TIME OF SURVEY DID NOT REFLECT TH E CORRECT POSITION. FOR THE REASONS GIVEN ABOVE THE ADDITION OF RS.27,95,994/- IS DELET ED. GROUND NO.1 RAISED BY THE ASSESSEE IS ALLOWED. 12. GROUND NO.2 RAISED BY THE ASSESSEE READS AS FOL LOWS :- 2. FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE THE LD. C.I.T.(A)-13, ERRED IN LAW AS WELL AS IN FACT IN CONFIRMING THE E STIMATED DISALLOWANCE OF THE INDIRECT EXPENSES OF RS.2,42,874/- MADE BY THE ASSE SSING OFFICER. 13. THE FACTS ARE IDENTICAL AS STATED IN GROUND NO. 1. IN THE PROFIT AND LOSS ACCOUNT PREPARED AT THE TIME OF SURVEY THE INDIRECT EXPENSE S WERE SHOWN AT RS.7,26,922/- WHEREAS IN THE PROFIT AND LOSS ACCOUNT FILED IN THE COURSE OF ASSESSMENT PROCEEDINGS THE SAME WERE CLAIMED AT RS.9,69,766/-. THERE WAS A N EXCESS CLAIM OF RS.2,42,874/- ON ACCOUNT OF INDIRECT EXPENSES. THE ASSESSEEE CLAI MED THAT THE INDIRECT EXPENSES CLAIMED IN THE PROFIT AND LOSS ACCOUNT FILED IN THE COURSE OF ASSESSMENT PROCEEDINGS REFLECTED THE CORRECT INDIRECT EXPENSES. THIS WAS N OT ACCEPTED BY THE AO OR THE CIT(A). ITA NO.1076/KOL/2017 TAPAS DHARA A.Y.2013-14 7 14. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND WE FIND THAT THE DIFFERENCE ON ACCOUNT OF INDIRECT EXPENSES IS OWING TO DEPRECIATI ON CLAIMED AT RS.3,46,692/- WHICH WAS OMITTED TO BE CLAIMED AT THE TIME OF PREPARING THE PROFIT AND LOSS ACCOUNT UPTO THE DATE OF SURVEY (PREPARED AT THE TIME OF SURVEY BY T HE SURVEY TEAM). IT IS ALSO THE PLEA OF THE ASSESSEE THAT THE INDIRECT EXPENSES WERE DET ERMINED ON A LUMP SUM BASIS AND NOT ON THE BASIS OF BILLS OR VOUCHERS. IN THESE CIR CUMSTANCES WE ARE OF THE VIEW THAT THE ADDITION OF RS.2,42,874/- MADE BY THE REVENUE AUTHO RITIES IS WITHOUT ANY BASIS. THE SAME IS DIRECTED TO BE DELETED. GROUND NO.2 RAISED BY THE ASSESSEE IS ALLOWED. 15. IN THE RESULT THE APPEAL BY THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE COURT ON 03.01.2018. SD/- SD/- [DR.A.L.SAINI] [ N.V.V ASUDEVAN ] ACCOUNTANT MEMBER JUDI CIAL MEMBER DATED : 03.01.2018. [RG SR.PS] COPY OF THE ORDER FORWARDED TO: 1. TAPAS DHARA, 14/B, GOPAL BOSE LANE, KOLKATA-7000 50. 2. A.C.I.T., CIRCLE-44, KOLKATA. 3. C.I.T (A).-13, KOLKATA. 4. C.I.T. -15, KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER SENIOR PRIVATE SECRETARY HEAD OF OFFICE / D.D.O., ITAT KOLKATA BENCHES