Shri Ashokkumar Jain, HUF, Surat V. The Income tax Officer, Ward-2(2), Surat

ITA 1189/AHD/2007

• Counselvise Citation: [2007] 129 COUNSELVISE.COM (IT) 9901 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-06-2007
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 11-06-2007
• Assessment Year: 1993-1994
• Appeal Filed On: 19-03-2007
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: M K BHESANIA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH, AHMEDABAD CAMP AT VADODARA -18-01-2010 TO 29.01.2010 BEFORE HONBLE S/SHRI DEEPAK R. SHAH, AM AND D.T.GA RASIA,JM. ITA NO.1189/AHD/2007 (ASSESSMENT YEAR- 2001-02) INCOME TAX OFFICER WARD 2 BARODA . APPELLANT V/S M/S SACHIN LABOUR SERVICES PAN:ALLPS5428G PROP.ARUNKUMAR V SINGH 1 ST FL, GAURI CHAMBER, GODHRA ROAD, HALOL RESPONDENT APPEARANCE REVENUE BY : SHRI M K BHESANIA, ASSESSEE BY : NONE ORDER PER D.T.GARASIA,JM. BY WAY OF THIS APPEAL, THE REVENUE IS CHALLENGING THE LEGALITY AND VALIDITY OF THE ORDER DATED 15.1.2008 PASSED BY THE LEARNED CIT(A)-VI, BARODA FOR THE ASSESSMENT Y EAR 2001- 02. 2. THE GROUNDS OF APPEAL TAKEN BY THE REVENUE IS THAT THE CIT(A) HAS ERRED IN LAW IN ALLOWING THE EXPENSE OF RS.6,90,969/- BEING UNPAID SALARY WITHOUT REGARD TO THE FACT THAT THE ASSESSEE HAD NOT ACCOUNTED FOR THE RECEIPT S OF LABOUR CHARGES ON MERCANTILE BASIS. ITA NO.1189/AHD/2007 (ASSESSMENT YEAR- 2001-02) 2 3. THE ASSESSEE HAS PRODUCED BOOKS OF ACCOUNTS DURI NG THE YEAR UNDER ASSESSMENT PROCEEDINGS AND AO FOUND THAT THE ASSESSEE WAS FOLLOWING CASH SYSTEM ONLY. THE ASSE SSEE HAS SHOWN SALARY PAYABLE AS AN OUTSTANDING LIABILITY IN BALANCE SHEET SINCE THE ASSESSEE IS FOLLOWING THE CASH SYST EM OF ACCOUNTING. THERE CANNOT BE ANY DEDUCTION IN OUTS TANDING EXPENSES. SINCE THE ASSESSEE HAS NOT FURNISHED ANY REPLY, THE AO DISALLOWED THE SALARY AND OTHER EXPENSES AMO UNTING TO RS.6,90,969/-. 4. THE MATTER CARRIED TO CIT(A) WHO DELETED THE AD DITION BY OBSERVING AS UNDER : 4.1 IT IS SUBMITTED IN APPEAL THAT THE APPELLANT HAS BEEN FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING BUT DUE TO TYPING ERROR IN AUDIT REPORT IN FORM 3CD IT WAS WRONGLY MENTIONED AS CASH SYSTEM INSTEAD OF MERCANTILE SYSTEM FURTHER LIS T OF EXPENSES PAYABLE AND SUNDRY DEBTORS WERE ALSO SUBMITTED. IT WAS ARGUED THAT SAME DETAILS COULD NOT BE PRESENTED BEFORE THE AO AS THE PROPRIETOR MR.ARUNKUMAR V SINGH WAS INVOLVED IN CRIMINAL COURT PROCEEDINGS RELATING TO GODHRA RIOTS; 4.2 THE AFORESAID DETAILS WERE REFERRED TO ASSESSING OFFICER AFTER EXAMINING THE BOOKS OF ACCOUNTS HAS INDICATED THAT THE EXPENSES HAVE BEEN DEBITED AS PER MERCANTILE SYSTEM OF ACCOUNTING AND EXCEPT FOR RECEIPT OF RS.1,20,031/- ALL THE RECEIPTS WERE ALSO AS PER MERCANTILE SYSTEM OF ACCOUNTING; 4.3 CONSIDERING THE AFORESAID REMAND REPORT AS WELL AS THE SUBMISSIONS OF THE APPELLANT I AM OF TH E VIEW THAT THE SALARY AND OTHER EXPENSES AMOUNTING TO RS.6,90,969/- HAS BEEN CORRECTLY DEBITED TO THE BOOKS OF ACCOUNTS WHICH ARE MAINTAINED AS PER MERCANTILE SYSTEM OF ACCOUNTING. THEREFORE, THE ITA NO.1189/AHD/2007 (ASSESSMENT YEAR- 2001-02) 3 DISALLOWANCE OF RS.6,90,969 IS DIRECTED TO BE DELETED 5. WE HAVE HEARD THE LD. DR, PERUSED THE MATERIALS ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORIT IES BELOW. AFTER HEARING THE LD. DR, WE FIND THAT THE CIT(A) HAS HELD THAT THE ASSESSEE WAS FOLLOWING MERCANTILE SYSTEM O F ACCOUNTING BUT IN AUDIT REPORT, DUE TO TYPOGRAPHICA L MISTAKE. ASSESSEE MENTIONED WRONGLY CASH SYSTEM BUT ASSESS EE COULD NOT POINT OUT THIS MISTAKE BEFORE THE AO. T HE CIT(A) REMANDED THE FILE TO THE AO FOR VERIFICATION OF T HE BOOKS OF ACCOUNTS. AO HAS VERIFIED, SUBMITTED THE REMAND REPORT IN WHICH HE HAS CATEGORICALLY MENTIONED THAT THE ASSES SEE HAS SHOWN SALARY AND OTHER EXPENSES WHICH HAS BEEN CORR ECTLY DEBITED IN BOOKS OF ACCOUNTS WHICH ARE MAINTAINED A S PER MERCANTILE SYSTEM OF ACCOUNTING. THEREFORE, DISALL OWANCE WAS DELETED. WE FIND THAT THE CIT(A) HAS CORRECTLY APP RECIATED THE FACT AND CAME TO THE CONCLUSION THAT IT IS A TYPOGR APHICAL MISTAKE. THEREFORE, WE ARE NOT INCLINED TO INTERFE RE IN THE ORDER PASSED BY THE LEARNED CIT(A). 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCE IN THE OPEN COURT ON 22.1.2010 SD SD ( DEEPAK R. SHAH ) ( D.T.GARASIA) ACCOUNTANT MEMBER JUDICIAL MEMBER BARODA, ON THIS 22ND DAY OF JAN 2010 ITA NO.1189/AHD/2007 (ASSESSMENT YEAR- 2001-02) 4 SRL19110 COPY OF THE ORDER IS FORWARDED TO:- 1. APPELLANT 2 .RESPONDENT 3. CIT(A)-CONCERNED 4. COMMISSIONER OF INCOME TAX CONCERN 5. THE DR, VARODARA BENCH, VADODARA 5. GUARD FILE BY ORDER TRUE COPY DEPUTY REGISTRAR, I TAT, AHMEDABAD