M/s Jamila Rugs India, Bhadohi V. Dy.CIT, Varanasi

ITA 116/ALLD/2011

• Counselvise Citation: 11620714 RSA 2011
• Duration Of Justice: 1 year(s) 4 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-11-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 06-06-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: JAGDISH
• Assessee Lawyers: R K N JAISWAL
• Keywords: Business expenditure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL ALLAHABAD BENCH, ALLAHABAD BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI A.L. GEHLOT, ACCOUNTANT MEMBER ITA NO.116/A/2011 ASSESSMENT YEAR: 2008-09 JAMILA RUGS INDIA, VS. DY. COMMISSIONER OF INCOM E TAX, QUAZIPUR ROAD, RANGE-1, VARANASI. BHADOHI. (PAN: AAEFJ 4938 N) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI R.K. N. JAISWAL, ADVOCATE RESPONDENT BY : SHRI JAGDISH, CIT D.R. DATE OF HEARING : 30.10.2012 DATE OF PRONOUNCEMENT : 02..11.2012 ORDER PER A.L. GEHLOT, ACCOUNTANT MEMBER: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER DATED 29.03.2011 PASSED BY THE LD. CIT(A), VARANASI FOR THE ASSESSME NT YEAR 2008-09. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1. BECAUSE, THE LEARNED C.I.T. FAILED TO APPRECIAT E THE FACTS BROUGHT ON RECORD BY THE ASSESSING OFFICER HERSELF OVER THE AUTHENTICITY OF ADDRESSES OF JOB WORKERS, CONFIRMAT ION OF DISBELIEF HAS NO LOCUSTANDI. 2. BECAUSE, THE LEARNED CIT APPEAL FAILED TO APPREC IATE THAT THE INCREASE IN THE TURNOVER AND THE PERCENTAGE OF G.P. DID NOT WARRANT ITA NO.116/A/2011 A.Y. 2008-09 2 APPLICATION OF 145(3), THE CONFIRMATION OF ADDITION OF RS.75,000/- IS UNJUST. 3. BECAUSE, THE AUTHORITIES BELOW FAILED TO APPRECI ATE THE NATURE OF WORK OF THE DESIGNER WHO PREPARE DESIGNS PER OUR SPECIFICATION WITHOUT THE RECEIPT OF MATERIALS FROM THE APPELLANT . 4. BECAUSE, THE DESIGNER SALAUDDIN HAD PROMISED T O FURNISH CERTIFICATE OF LOWER INCOME AS AN EVIDENCE FOR SAFE TY WHICH THE AUTHORITIES FAILED TO APPRECIATE. 5. BECAUSE THE AUTHORITIES FAILED TO APPRECIATE THA T THERE WAS NO CONTRACT EVEN AN ORAL WITH SALAUDDIN TO TAKE OVER ALL THOSE DESIGNS THEY PREPARE; THE DISALLOWANCE OF RS.1,50,741.00 BY HE A.O. AND THE CONFIRMATION THEREOF BY THE LEARNED C.I.T. APPEAL, IS UNJUST. 6. BEAUS, THE ORDER IS BAD IN LAW AND FACTS OF THE CASE. 3. GROUND NOS.1 TO 3 PERTAIN TO ADDITION OF RS.75,0 00/-. DURING THE ASSESSMENT PROCEEDINGS, THE A.O. NOTICED THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND EXPORT OF CARPETS. THE A.O. NOTI CED THAT THE ASSESSEE HAS SHOWN GROSS PROFIT OF 13.86% IN COMPARISON TO 10.66 % IN THE LAST YEAR. THE A.O. NOTICED THAT THE ASSESSEE HAS COMPARATIVELY SHOWN E XCESS EXPENDITURE UNDER THE HEAD YARN OPENING CHARES. THE ASSESSING OFFICER FU RTHER NOTICED THAT THE PAYMENT WAS MADE IN CASH ON THE BASIS OF SELF-MADE VOUCHER. LOOKING TO THE PAST HISTORY AND TURNOVER, THE ASSESSING OFFICER MADE THE ADDITI ON OF RS.75,000/-. THE CIT(A) CONFIRMED THE ORDER OF ASSESSING OFFICER. 4. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF THE PARTIES AND RECORDS PERUSED. WE NOTICED THAT THE ASSESSEE FILED RETURN OF INCOME DECLARING TOTAL ITA NO.116/A/2011 A.Y. 2008-09 3 INCOME OF RS.78,46,457/-. IN THE YEAR UNDER CONSID ERATION, THE ASSESSEE HAS SHOWN EARLIER GROSS PROFIT @ 13.86% IN COMPARISON TO LAST YEAR GROSS PROFIT OF 10.66%. THERE IS NO FINDING OF THE ASSESSING OFFICER REGARD ING REJECTION OF BOOKS OF ACCOUNT. THE ASSESSING OFFICER MADE ADDITION OF RS .75,000/- BY DISALLOWING YARN OPENING CHARGES. THE ASSESSEE HAS PRODUCED THE COP Y OF LEDGER ACCOUNT SHOWING THAT THE PAYMENT HAS BEEN MADE TO THE JOB WORKERS O N VARIOUS DATES. HOWEVER, THE NAMES AND ADDRESSES OF THE PERSONS WERE NOT FURNISH ED. IT WAS SUBMITTED THAT THE JOB WAS LABOUR ORIENTED AND IT IS PRACTICALLY NOT P OSSIBLE TO FURNISH THE NAMES AND DETAILS OF SUCH PERSONS. THE CIT(A) CONFIRMED THE ADDITION WITHOUT GIVING ANY REASON AND SIMPLY REPRODUCED THE ORDER OF ASSESSING OFFICER. CONSIDERING THE FACT THAT THE ASSESSING OFFICER DID NOT REJECT THE BOOKS OF ACCOUNT AND THE ASSESSEE HAS SHOWN BETTER GROSS PROFIT, WE ARE OF THE VIEW THAT MERELY ON THE BASIS OF SELF-MADE VOUCHERS, THE ADDITION CANNOT BE MADE ON ACCOUNT OF DISALLOWANCE OF BUSINESS EXPENSES. WE, THEREFORE, DELETE THE ADDITION OF RS .75,000/-. 5. GROUND NOS.4 & 5 PERTAIN TO ADDITION OF RS.1,50, 741/-. THE A.O. NOTICED THAT THE ASSESSEE HAS FAILED TO DEDUCT TAX IN CASE OF SHRI SALAUDDIN, WHO HAS DONE DESIGN WORK FOR THE ASSESSEE. THE ASSESSEE WAS CON FRONTED AND IN REPLY TO THAT THE ASSESSEE SUBMITTED THAT THE DESIGNER HAS PROMISED T O PROVIDE THE CERTIFICATE UNDER SECTION 197 OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER), BUT HE HAS FAILED TO DO SO IN THE END OF THE YEAR. THEREFORE, NO DED UCTION WAS MADE. THE A.O. MADE ITA NO.116/A/2011 A.Y. 2008-09 4 ADDITION INVOKING SECTION 40(A)(IA) OF THE ACT. TH E CIT(A) CONFIRMED THE ORDER OF A.O. 6. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF THE PARTIES AND RECORDS PERUSED. THE LEARNED AUTHORISED REPRESENTATIVE TRI ED TO RAISE A NEW PLEA THAT THE PAYMENT WAS NOT SUBJECT TO TDS. THERE WAS NO FORMA L AGREEMENT WITH THAT PARTY. WE NOTICE THAT SUCH PLEA WAS NEITHER TAKEN BEFORE T HE ASSESSING OFFICER NOR BEFORE THE CIT(A). CONTRARY TO THAT, IT WAS ADMITTED BEFO RE THE ASSESSING OFFICER THAT THE PAYMENT IS SUBJECT TO TDS AND THE RECIPIENT HAS PRO MISED TO PROVIDE CERTIFICATE UNDER SECTION 197 OF THE ACT. HOWEVER, HE HAS FAILE D TO GIVE THE SAID CERTIFICATE. IN OTHER WORDS, THE ASSESSEE HAD ADMITTED BEFORE THE A SSESSING OFFICER THAT THE PAYMENT IS SUBJECT TDS. HOWEVER, IN THE INTEREST O F JUSTICE AND ON ACCOUNT OF FAIR AND REASONABLE TO BOTH THE SIDES, WE SEND BACK THIS MATTER TO THE FILE OF ASSESSING OFFICER WITH THE DIRECTION TO DECIDE THE ISSUE IN T HE LIGHT OF DECISION OF SPECIAL BENCH OF I.T.A.T. VISAKHAPATNAM IN THE CASE OF MARI LINE SHIPPING & TRANSPORT VS. ACIT, ORDER DATED 11.04.2012. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. (ORDER PRONOUNCED IN THE OPEN COURT) SD/- SD/- (BHAVNESH SAINI) (A.L. GEHLOT) JUDICIAL MEMBER ACCOUNTANT MEMBER PBN/* ITA NO.116/A/2011 A.Y. 2008-09 5 COPY OF THE ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT (APPEALS) CONCERNED 4. CIT CONCERNED 5. D.R., ITAT, ALLAHABAD BENCH, ALLAHABAD 6. GUARD FILE. BY ORDER ASSISTANT REGISTRAR INCOME-TAX APPELLATE T RIBUNAL, ALLAHABAD TRUE COPY