M/s Radhashyam Tirthabashi Paul, Kolkata V. Addl.C.I.T Rg - 50,kolkata, Kolkata

ITA 1226/KOL/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 4598 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 1 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 02-05-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 13-05-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SHRISAURABH KUMAR J
• Assessee Lawyers: SHRIS K TULSIYAN
• Keywords: Principle of natural justice; Corroborative evidences
• Section: 143(3); 142(1); 80G; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH A KOLKATA BEFORE SHRIWASEEM AHMED, ACCOUNTANT MEMBER AND SHRIS.S.VISWANETHRA RAVI, JUDICIAL MEMBER ITA NO.1226/KOL/2013 ASSESSMENT YEAR:2008-09 M/S RADHASHYAM TIRTHABASHI PAUL, CF-125, SALT LAKE CITY, KOLKATA-700 064 [ PAN NO.AADFR 8218 E ] / V/S . ADDL.CIT, RANGE-50, UTTARAPAN, MANICKTALA CIVIC CENTRE, ULTADANGA, KOLKATA-700 054 /APPELLANT .. /RESPONDENT /BY APPELLANT SHRIS.K.TULSIYAN, ADVOCATE /BY RESPONDENT SHRISAURABH KUMAR, JCIT-DR /DATE OF HEARING 02-05-2016 /DATE OF PRONOUNCEMENT 30-06-2016 /O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER:- THIS APPEAL BY THE ASSESSEE IS AGAINST THE ORDER O F COMMISSIONER OF INCOME TAX (APPEALS)-XXXII, KOLKATA DATED 27.02.201 3. ASSESSMENT WAS FRAMED BY ACIT, RANGE-50, KOLKATA U/S 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) VIDE HIS ORD ER DATED 09.12.2010 FOR ASSESSMENT YEAR 2008-09. THE GROUNDS RAISED BY THE ASSESSEE PER ITS APPEAL ARE AS UNDER:- 1) THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE , THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS.52,201/- UNDER THE HEAD SUBSCRIPTION & DONATION WITHOUT CONSIDERING THE FACTS OF THE CAS E IN PROPER PERSPECTIVE. 2) THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS.1,80,719/- UNDER T HE HEAD CARRIAGE ITA NO.1226/KOL/2013 A.Y.2008-09 M/S RADHASHYAM T PAUL V. ACIT RNG-50, KOL. PAGE 2 OUTWARD BY FOLLOWING THE FOOTSTEPS OF THE LD. AO ONLY AND WITHOUT ASSIGNING ANY COGENT REASON WHATSOEVER. 3) THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN ENHANCING THE ADDITION OF RS.3,15,026/- AS MADE ON ESTIMATE BY THE LD. AO IN THE ASSESSMENT ORDER UNDER THE HEAD HOME BIRI LABAOUR. 4) THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN ENHANCING THE ADDITION ON ESTIMATE @ 5% OF THE T OTAL EXPENDITURE MADE FOR RS.6,07,49,596/- UNDER THE HEAD HOME BIRI LABOUR, WITHOUT CONSIDERING THE EXPLANATIONS AND SUBMISSIONS MADE B Y THE ASSESSEE. 5) THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN ENHANCING THE ADDITION UNDER THE HEAD HOME BIRI LABOUR AMOUNTING TO RS.30,37,480/- IN SPITE OF EXAMINING AND VERIFYI NG THE FACTS AND OTHER MATERIALS AVAILABLE IN THE RECORDS. 6) THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) WAS ARBITRARY, UNJUST, UNLAWFUL AND ABSOLUTELY BASED ON SURMISES. 7) THAT THE ORDER PASSED BY THE LD. CIT WAS BAD IN LAW, UNJUST AND CONTRARY TO THE FACTS AND RECORDS. 8) THAT THE ASSESSEE CRAVES TO URGE SUCH OTHER GROU ND OR GROUNDS BEFORE OR AT THE TIME OF HEARING OF APPEAL. SHRI S.K.TULSIYAN, LD AUTHORIZED REPRESENTATIVE AP PEARED ON BEHALF OF ASSESSEE AND SHRI SAURABH KUMAR, LD DEPARTMENTAL R EPRESENTATIVE APPEARED ON BEHALF OF REVENUE. 2. FIRST ISSUE RAISED BY ASSESSEE IN GROUND NO.1 IS THAT LD. CIT(A) ERRED IN CONFIRMING THE ACTION OF ASSESSING OFFICER BY DISALLOWING A SUM OF 52,201/- ON ACCOUNT OF THE EXPENSE INCURRED UNDER THE HEAD SUBSCRIPTION & DONATION. 3. THE FACTS OF THE CASE ARE THAT ASSESSEE IN THE P RESENT CASE IS A PARTNERSHIP FIRM AND ENGAGED IN BIDI MANUFACTURING BUSINESS AND TRADING BUSINESS OF MATCH BOX. DURING THE YEAR UNDER CONSID ERATION, ASSESSEE ITA NO.1226/KOL/2013 A.Y.2008-09 M/S RADHASHYAM T PAUL V. ACIT RNG-50, KOL. PAGE 3 HAS FILED ITS RETURN OF INCOME DECLARING PROFIT OF 1,25,53,220/- UNDER THE BUSINESS HEAD. THEREAFTER MATTER WAS SELECTED FOR S CRUTINY ASSESSMENT AND NOTICE WAS ISSUED U/S. 143(3) R.W.S. 142(1) OF THE ACT. THE ASSESSEE PRODUCED THE REQUIRED BOOKS OF ACCOUNTS ALONG WITH BANK STATEMENTS, VARIOUS BILLS, VOUCHERS IN SUPPORT OF EXPENSES AND RECEIPTS WHICH WERE DULY CHECKED AND EXAMINED BY AO. THE ASSESSEE FOR T HE YEAR UNDER CONSIDERATION CLAIMED EXPENSE OF 63,203/- TOWARDS DONATION AND SUBSCRIPTION CHARGES. ON QUERY, FOR THE DOCUMENTARY AND SUPPORTING EVIDENCE IN SUPPORT OF AFORESAID EXPENSES, THE ASSE SSEE FAILED TO PRODUCE THE SAME FOR AN AMOUNT OF 52,201/- WHICH THEREFORE WAS DISALLOWED ON THE GROUND OF INELIGIBILITY FOR DEDUC TION U/S 80G OF THE ACT. THEREFORE, A SUM OF 52,201/- WAS DISALLOWED AND ADDED TO THE TOTAL INCOME OF ASSESSEE. 4. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE L D CIT(A) WHEREAS IT WAS PRAYED THAT THE DONATION & SUBSCRIPT ION WERE PAID EXCLUSIVELY FOR THE PURPOSE OF ASSESSEES BUSINESS AND THEREFORE NO DISALLOWANCE IS REQUIRED TO BE MADE. THE ASSESSEE I N SUPPORT OF ITS CLAIM HAS SUBMITTED THE LIST OF DONATION & SUBSCRIP TION BEFORE THE LD CIT(A). HOWEVER, LD.CIT(A) DISREGARDED THE CLAIM OF ASSESSEE ON THE GROUND THAT NO EVIDENCE IN THE AFORESAID EXPENSES WERE PRODUCED. HENCE THE ORDER OF AO FOR THIS ADDITION WAS CONFIRM ED. BEING AGGRIEVED BY THIS ORDER OF LD CIT(A) ASSESSE E CAME IN SECOND APPEAL BEFORE US. 5. BEFORE US LD AR SUBMITTED THAT THE AMOUNT INVOL VED IN THE INSTANT CASE IS VERY SMALL AND WAS PAID TO VARIOUS CHARITAB LE ORGANIZATIONS. THE AR PRAYED BEFORE THE BENCH TO REVERSE THE ORDERS OF AUTHORITIES BELOW. ITA NO.1226/KOL/2013 A.Y.2008-09 M/S RADHASHYAM T PAUL V. ACIT RNG-50, KOL. PAGE 4 ON THE OTHER HAND, LD DR VEHEMENTLY SUPPORTED THE ORDERS OF AUTHORITIES BELOW. 6. WE HAVE HEARD THE RIVAL PARTIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. FROM THE FOREGOING DISCUSSION, WE FIND THAT DISALLOWANCE WAS MADE BY THE AUTHORITIES BELOW DUE TO NON-PRODUCTION OF EVIDENCE IN SUPPORT THE EXPENDITURE CLAIMED. THE LD. AR HAS ALSO NOT BROUGHT ANYTHING EVEN BEFORE US IN SUPPORT OF THE A FORESAID EXPENDITURE. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE , WE FIND NO REASON TO INTERFERE IN THE ORDER OF LD .CIT(A). HENCE, GRO UND RAISED BY ASSESSEE IS DISMISSED. 7. NEXT ISSUE RAISED BY ASSESSEE IN THIS GROUND IS THAT LD CIT(A) ERRED IN CONFIRMING THE ACTION OF AO FOR THE DISALL OWANCE OF RS.1,80,719.00 ON ACCOUNT OF CARRIAGE OUTWARD. 7.1 THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION H AS CLAIMED AN EXPENSE OF 29,67,915/- UNDER THE HEAD CARRIAGE OUTWARD . HOWEVER, ASSESSEE FAILED TO PRODUCE SUPPORTING EVIDENCE IN R ESPECT OF ABOVE EXPENSE TO THE EXTENT OF 1,80,715/- WHICH WAS ACCORDINGLY DISALLOWED BY AO AND ADDED TO THE TOTAL INCOME OF ASSESSEE. 8. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE L D CIT(A) WHEREAS ASSESSEE SUBMITTED THAT EXPENDITURE INCURRE D FOR THE PURPOSE OF CARRIAGE OF THE GOODS FROM FACTORY TO THE DIFFER ENT MARKETS ON THE PART OF NORTH-EAST REGION. THE AO HAS CHECKED THE ABOVE EXPENSE ON TEST CHECK BASIS AND FOUND NO DEFECTS IN THE EXPENSE. TH E EXPENSES INCURRED BY ASSESSEE WERE QUITE REASONABLE AND COMM ENSURATE WITH THE ITA NO.1226/KOL/2013 A.Y.2008-09 M/S RADHASHYAM T PAUL V. ACIT RNG-50, KOL. PAGE 5 NATURE AND VOLUME OF THE BUSINESS. THE ASSESSEE FUR THER SUBMITTED THAT IN THE YEAR UNDER CONSIDERATION THE ABOVE EXPENSE I S COMING JUST 1.18% OF THE TOTAL TURNOVER. SIMILAR EXPENSE WAS ALLOWED IN THE EARLIER AY WHICH WAS COMING TO 1.14% OF THE TURNOVER OF ASSESSEE. TH E INCREASE IN THE EXPENSE IS JUST .04% IN COMPARISON TO EARLIER YEAR AND WHICH IS MAINLY DUE TO INCREASE IN THE PRICE OF FUEL AND ESCALATION COSTOF OTHER ITEMS. HOWEVER, LD CIT(A) REJECTED THE PLEA OF ASSESSEE B Y HOLDING THAT THE EXPENSE WAS DISALLOWED BY AO ON THE GROUND OF NON-P RODUCTION OF SUPPORTING EVIDENCE. AGAIN, ASSESSEE HAS ALSO FAILE D TO BRING SUPPORTING EVIDENCE AT THE TIME OF APPELLATE STAGE. CONSEQUENT LY, LD. CIT(A) CONFIRMED THE ACTION OF AO. BEING AGGRIEVED BY THIS ORDER OF LD. CIT(A) ASSESSE E PREFERRED SECOND APPEAL BEFORE US. 9. BEFORE US LD AR SUBMITTED THAT THE EXPENSE WAS INCURRED FOR THE PURPOSE OF BUSINESS AND SIMILAR EXPENSES WERE ALSO INCURRED IN EARLIER YEARS. THERE WAS NO DISALLOWANCE MADE BY THE AUTHOR ITIES BELOW. THIS YEAR, THERE IS A SMALL INCREASE IN EXPENSE I.E. .04 % WHICH IS MAINLY ON ACCOUNT OF INCREASE OF FUEL COST AND ESCALATION OF OTHER COST. THE LOWER AUTHORITIES HAVE DISALLOWED THE EXPENSE ON ESTIMATE BASIS AND HE PRAYED BEFORE THE BENCH TO REVERSE THE ORDERS OF AU THORITIES BELOW. ON THE OTHER HAND, LD DR SUBMITTED THAT DISALLOWAN CE WAS NOT MADE ON THE ESTIMATE BASIS BUT IT WAS MADE DUE TO NON-PRODU CTION OF SUPPORTING VOUCHERS AND HE VEHEMENTLY RELIED ON THE ORDERS OF AUTHORITIES BELOW. 10. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. FROM THE FOREGOING DISCUSSION, WE UNDERSTAND THAT ITA NO.1226/KOL/2013 A.Y.2008-09 M/S RADHASHYAM T PAUL V. ACIT RNG-50, KOL. PAGE 6 THE LOWER AUTHORITIES HAVE DISALLOWED THE CARRIAGE OUTWARD EXPENSE CLAIMED BY ASSESSEE FOR A SUM OF 1,80,719/- OUT OF 29,67,915/- DUE TO NON-PRODUCTION OF SUPPORTING EVIDENCE. BEFORE US LD AR HAS ARGUED THAT LD CIT(A) ERRED BY DISALLOWING THE EXPENSE ON ESTIMATE BASIS. HOWEVER, WE FIND THAT LOWER AUTHORITIES HAVE GIVEN CLEAR-CUT FINDING THAT DISALLOWANCE IS MADE ON ACCOUNT OF NON-PRODUCTION O F VOUCHERS AND NOT ON ESTIMATE BASIS. THEREFORE, IN OUR CONSIDERED VIE W THE PLEA OF AR IS NOT TENABLE THAT THE EXPENSES WERE DISALLOWED ON ES TIMATED BASIS. HOWEVER, AT THE SAME TIME, WE ALSO UNDERSTAND THAT MANY TIMES THE PROPER VOUCHERS IN SUPPORT SUCH KIND OF EXPENSES AR E NOT AVAILABLE. THEREFORE IN THE ABSENCE OF SUPPORTING VOUCHERS, WE NEED TO LOOK OTHER FACTORS BEFORE MAKING ANY DISALLOWANCE LIKE NATURE OF BUSINESS, HISTORY OF THE EXPENSE CLAIMED IN EARLIER YEARS, AUDITED FI NANCIAL YEAR STATEMENT ETC. IN THE INSTANT CASE, ASSESSEE HAS PRODUCED ALL THE DOCUMENTARY EVIDENCE IN SUPPORT OF ITS EXPENDITURE EXCEPT THE A FORESAID AMOUNT OF 1,80,719/- WHICH IS JUST 1.18% OF THE TOTAL TURNOV ER OF ASSESSEE BUSINESS. AT THE SAME TIME, WE CANNOT IGNORE THAT S IMILAR EXPENSES WERE CLAIMED IN THE EARLIER AY AND THIS YEAR, THE E XPENSE CLAIMED BY ASSESSEE ARE IN COMMENSURATION WITH EARLIER YEAR EX PENSE. WE FIND FORCE IN THE ARGUMENT RAISED BY LD AR THAT THERE W AS A SLIGHTLY INCREASE IN THE AFORESAID EXPENSE AND THAT TOO MAINLY INCREA SE IN THE FUEL COST AND OTHER ESCALATED COST. HOWEVER, IT IS ALSO IMPOR TANT TO NOTE THAT THE DOCUMENTARY EVIDENCE WAS NOT PLACED BEFORE THE LOWE R AUTHORITIES. NOW, IN THE INTEREST OF NATURAL JUSTICE AND FAIR PLAY, W E AFTER CONSIDERING THE TOTALITY OF THE FACTS OF THE CASE AS DISCUSSED ABOV E, NOT INTERESTED IN SENDING BACK THE MATTER TO THE AO TO AVOID FURTHER LITIGATION. THEREFORE, IN THE INTEREST OF JUSTICE AND FAIR PLAY, WE RESTRI CT THE DISALLOWANCE TO THE EXTENT OF 50,000/- FOR THE YEAR UNDER CONSIDERATION, AS ALL T HE VOUCHERS ITA NO.1226/KOL/2013 A.Y.2008-09 M/S RADHASHYAM T PAUL V. ACIT RNG-50, KOL. PAGE 7 WERE NOT PRODUCED FOR VERIFICATION DURING THE APPEL LATE PROCEEDINGS.GROUND NO. 2 IS DECIDED IN FAVOUR OF AS SESSEE IN PART. 11. NEXT ISSUE IS INTER-CONNECTED IN GROUNDS NO. 3, 4 & 5 ARE THAT LD CIT(A) ERRED IN ENFORCING THE ADDITION MADE UNDER H EAD HOME BIRI LABOUR EXPENSES FOR AN AMOUNT OF 30,37,480/- OUT THE TOTAL LABOUR EXPENSE CLAIMED FOR AN AMOUNT OF 6,07,49,596/-. 12. THE AO AFTER SCRUTINIZING THE ABOVE EXPENSE OBS ERVED THAT AN EXPENSE OF 3,15,026/- WAS NOT VERIFIABLE DUE TO NON-PRODUCTION OF SUPPORTING EVIDENCE. ACCORDINGLY, AO DISALLOWED A S UM OF 3,15,026/- AND ADDED TO THE TOTAL INCOME OF ASSESSEE. 13. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE LDCIT(A) WHERE ASSESSEE SUBMITTED THAT WAGES WERE PAID TO LABOURS AND ON SUCH WAGES PF WAS ALSO PAID. THERE WAS A TRIPARTITE AGREEMENT BETWEEN THE BIDI MERCHANDISE ASSOCIATION WITH TRADE UNIONS WHICH WAS FRAMED UNDER THE SUPERVISION OF LABOUR COMMISSIONER OF GOVT. OF WEST BENGAL. ACCORDINGLY THE RATE OF BIDI MAKING WAS DETERMINED ON THE PRODUCTION OF 1000 BIDI BY SUCH HOME BIDI LABOUR FOR RS. 41/- PER 1000 BIDI AT AURANGABAD, AND RS. 40.80/- PER 1000 BIDI MAKING AT CHAMAGRAM AND 40/- PER 1000 BIDI MAKING AT TUNGIDIGHI. THE ASSES SEE FURTHER SUBMITTED THAT THIS PRACTICE OF MAKING SUCH PAYMENT IS FOR MORE THAN 40 YEARS AND PAYMENT WAS USED TO PAY ON WEEKLY BASIS. IT IS ALSO IMPORTANT TO NOTE THAT EXCISE DUTY WAS ALSO PAID ON SUCH PROD UCTION OF BIDI. THE ASSESSEE HAS BEEN INCURRING MANUFACTURING EXPENSE F OR THE LAST SEVEN YEARS AND NO DISALLOWANCE WAS MADE SO FAR. IT IS AL SO IMPORTANT TO NOTE THAT FOR THE AY 2007-08 A PROCEEDINGS U/S 263 WAS I NITIATED BUT LD CIT COULD NOT FIND ANY DEFECT ON THE ACCOUNTS OF ASSESS EE IN RELATION TO THE ITA NO.1226/KOL/2013 A.Y.2008-09 M/S RADHASHYAM T PAUL V. ACIT RNG-50, KOL. PAGE 8 AFORESAID EXPENSES. THEREFORE, THE PROCEEDINGS U/S. 263 WAS FINALLY DROPPED. HOWEVER, LD CIT(A) ISSUED SHOW CAUSE NOTI CE UPON ASSESSEE FOR THE PRODUCTION OF DETAILS OF THE EXPENSE OF 6,07,49,596/- AND STATED THAT WHY NOT 5% OF HOME BIDI LABOUR EXPENSE SHOULD BE TREATED AS NOT GENUINE. IN COMPLIANCE TO THE NOTICE, ASSESSEE SUBM ITTED THE DETAILS FOR THE EXPENSE OF HOME BIDI MAKERS FOR ONE MONTH. HOWE VER, LD CIT(A) HAS DISALLOWED 5% OF SUCH EXPENSE AND ENHANCED THE TOTAL INCOME OF ASSESSEE BY OBSERVING AS UNDER:- I CAREFULLY CONSIDERED THE MATERIAL BEFORE ME. I F OUND THAT THE APPELLANT DEBITED RS.6,07,49,596/- AS HOME BIRILABOUR AND AO DISALLOWED RS.43,15,026/- AS NON GENUINE EXPENSES. DURING THE APPELLANT PROCEEDING THE A/R WAS ASKED TO FILED THE DETAIL OF RS.6,07,49,596/- OF HOME BIRI LABOUR ALONG WITH SUPPORTING EVIDENCE. TH E APPELLANT NOT FILED ANY DETAIL ALONG WITH THE SUPPORTING EVIDENCE FROM THE GENUINENESS OF THE EXPENSES PROVE. THE APPELLANT FI LED THE METHOD OF PAYMENT AND BASIS OF THE WAGES. THE DETAIL OF THE W AGE NEVER PRODUCE. THE GENUINENESS OF THE EXPENSES MAY EXAMINE ON THE BASIS OF VOUCHER. THE NAME OF LABOUR AND SIGNATURE OF THE RE CIPIENT BUT THE APPELLANT FAILED TO FILE ANY DOCUMENTS WHICH ESTABL ISHED THAT THE EXPENSES ARE GENUINE. IN THE ABSENCE OF THE SUPPORT ING VOUCHER, I AM THE VIEW THAT THE HOME BIRI LABOOUR EXPENSES ARE NO T FULLY GENUINE. HENCE, I ISSUED A ENHANCEMENT NOTICE TREATING 5% OF HOME BIRI LABOUR EXPENSES AS NOT GENUINE. CONSIDERING THE ABOVE FINDINGS AND FACTS OF THE CAS E, I AM THE VIEW THAT 5% OF HOME BIRI LABOUR EXPENSES ARE NOT GENUINE. HE NCE, I TREATED AT RS.30,37,480 AS NOT GENERAL EXPENSES. THE AO MADE T HE ADDITION OF RS.3,15,026/- WHICH IS CONFIRMED GENUINE AND FURTHE R, I ENHANCE THE INCOME OF RS.27,22,454 HAS TREATING BOGUS HOME BIRI LABOUR EXPENSES. THIS GROUND IS NOT ALLOWED. BEING AGGRIEVED BY THIS ORDER OF LD CIT(A) ASSESSE E CAME IN SECOND APPEAL BEFORE US. 14. BEFORE US LD AR REITERATED SAME SUBMISSIONS AS MADE BEFORE LD CIT(A) AND STATED THAT DISALLOWANCE ON ESTIMATED BA SIS IS NOT PERMISSIBLE IN TERMS OF HON'BLE SUPREME COURT JUDGM ENT IN THE CASE OF DHAKESWARI COTTON MILLS LTD. V. CIT (1954) REPORTED IN 26 ITR 775 (SC) ITA NO.1226/KOL/2013 A.Y.2008-09 M/S RADHASHYAM T PAUL V. ACIT RNG-50, KOL. PAGE 9 ON THE OTHER HAND, LD DR VEHEMENTLY RELIED ON THE ORDERS OF AUTHORITIES BELOW. 15. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. FROM THE FOREGOING DISCUSSION, WE FIND THAT ASSESSEE HAS CLAIMED HOME BIDI MAKERS FOR AN AMOUNT OF 6,07,49,596/- BUT AO COULD NOT VERIFY AN AMOUNT OF 3,15,026/- OUT OF THE AFORESAID EXPENDITURE. SO THE ADDITION WAS MADE BY AO FOR THE AFORESAID AMOUNT. HOWEVER, LD CIT(A) HAS ENHANCED THE INCOME OF ASSESSEE BY MAKING THE TOTAL DISALLOWANCES @ 5% OF THE TOTAL HOME BIDI EXPENSES ON THE GROUND THAT NO SUPPORTING EVIDENCE WAS FILED BY ASSESSEE. NOW, THE QUESTION BEFORE US ARISES SO AS TO WHETHER THE ACTION OF LD CIT(A) FOR ENHANCING THE TOTAL INCOME OF ASSESSEE IS CORRECT IN VIEW OF THE AFORESAID FACTS AND CIRCUMSTANCES.IT IS VERY CLEAR THAT AO HAS GIVEN VERY CLEAR-CUT FINDING THAT EXPENSE OF 3,15,026/- WAS NOT VERIFIABLE ON THE BASIS OF NON-PRODUCTION OF DOCUME NT AND AO REACHED TO THIS CONCLUSION AFTER SCRUTINIZING OF ALL THE EXPEN SE CLAIMED BY ASSESSEE. HOWEVER, LD CIT(A) ISSUED SHOW CAUSE NOTICE TO ASS ESSEE TO PRODUCE THE DETAILS OF THE HOME BIDI MAKERS EXPENSE. AS PER THE APPELLATE ORDER, ASSESSEE HAS FAILED TO PRODUCE THE SUPPORTING EVIDE NCE. SO THE ADDITION WAS ENHANCED TO 30,37,480/- BY THE LD. CIT(A) BY OBSERVING THAT ASSESSEE FILED THE DETAILS FOR THE METHOD OF PAYMEN T OF WAGES AND WITHOUT FURNISHING SUPPORTING EVIDENCE OF SUCH EXPE NSE. HOWEVER, WE FIND THAT ASSESSEE HAS GIVEN A DETAILED SUBMISSION WHICH IS EMANATING FROM THE ORDER OF LD CIT(A). IN OUR CONSIDERED VIE W, LD CIT(A) FAILED TO CONSIDER OTHER ASPECT IN RELATION TO SUCH EXPENSE. THE ORDER OF LD CIT(A) IS SILENT ABOUT THE SUBMISSION OF THE ASSESS EE WHERE IT WAS CATEGORICALLY SUBMITTED THAT PAYMENT OF WAGES WERE SUPPORTED WITH THE PAYMENT OF P.F., THE ASSESSEE WAS ALSO ASSESSABLE UNDER THE EXCISE ITA NO.1226/KOL/2013 A.Y.2008-09 M/S RADHASHYAM T PAUL V. ACIT RNG-50, KOL. PAGE 10 ACT AND ASSESSEE HAS PAID EXCISE DUTY ON THE PRODUC TION OF BIDI, IN THE EARLIER YEARS SUCH EXPENDITURES WERE CLAIMED BUT NO SUCH DISALLOWANCE WAS MADE BY AUTHORITIES BELOW. THERE WERE ALSO PROC EEDINGS AGAINST ASSESSEE U/S 263 OF THE ACT WHICH WAS FINALLY DROPP ED BY REVENUE. THE HOME BIDI EXPENSES WERE DECIDED IN TERMS OF TRIPART ITE AGREEMENT WHICH WAS MADE IN THE PRESENCE OF LABOUR COMMISSIONER OF GOVT. OF WEST BENGAL. AS PER THE SUBMISSION OF ASSESSEE AS RECORD ED IN THE APPELLATE ORDER THAT ONE MONTH DETAILS IN SUPPORT OF EXPENSE WAS SUBMITTED. IN VIEW OF ABOVE, WE FIND THAT LD CIT(A) HAS FAILED T O CONSIDER THE ABOVE STATED FACTS BEFORE ENHANCING THE DISALLOWANCE MADE BY AO AND WE FIND LOT OF FORCE IN THE ARGUMENT RAISED BY LD AR THAT LD CIT(A) HAS ENHANCED THE INCOME BY DISALLOWING THE EXPENSE ON E STIMATE BASIS. IN THIS CONNECTION, WE ARE ALSO PUTTING OUR RELIANCE I N THE JUDGMENT OF HON'BLE SUPREME COURT IN THE CASE OF DHAKESWARI COTTON MILLS LTD. (SUPRA). THE RELEVANT EXTRACT OF THE ORDER IS REPRO DUCED BELOW. THE ITO IS NOT BARRED BY TECHNICAL RULES OF EVIDEN CE AND PLEADINGS, AND HE IS ENTITLED TO ACT ON MATERIAL WHICH MAY NOT BE ACCEPT ED AS EVIDENCE IN A COURT OF LAW, BUT IN MAKING THE ASSESSMENT UNDER SUB-S. (3) OF S. 23 THE ITO IS NOT ENTITLED TO MAKE A PURE GUESS AND MAKE AN ASSESSMENT WITHOUT REFERENCE TO ANY EVIDENCE OR ANY MATERIAL AT ALL. THERE MUST BE SOMETHING MORE THAN BARE SUSP ICION TO SUPPORT THE ASSESSMENT UNDER S. 23(3). IN THIS CASE THE TRIBUNAL VIOLATED CERTAIN FUNDAMENTAL RULES OF JUSTICE IN REACHING ITS CONCLUSIONS. FIRSTLY, IT DID NOT DI SCLOSE TO THE ASSESSEE WHAT INFORMATION HAD BEEN SUPPLIED TO IT BY THE DEPARTME NTAL REPRESENTATIVE. NEXT, IT DID NOT GIVE ANY OPPORTUNITY TO THE COMPANY TO REBUT TH E MATERIAL FURNISHED TO IT BY HIM, AND LASTLY, IT DECLINED TO TAKE ALL THE MATERIAL TH AT THE ASSESSEE WANTED TO PRODUCE IN SUPPORT OF ITS CASE. THE RESULT IS THAT THE ASSESSE E HAD NOT HAD A FAIR HEARING. THE ESTIMATE OF THE GROSS RATE OF PROFIT ON SALES, BOTH BY THE ITO AND THE TRIBUNAL, SEEMS TO BE BASED ON SURMISES, SUSPICIONS AND CONJECTURES . IT IS SOMEWHAT SURPRISING THAT THE TRIBUNAL TOOK FROM THE REPRESENTATIVE OF THE DE PARTMENT A STATEMENT OF GROSS PROFIT RATES OF OTHER COTTON MILLS WITHOUT SHOWING THAT STATEMENT TO THE ASSESSEE AND WITHOUT GIVING HIM AN OPPORTUNITY TO SHOW THAT STAT EMENT HAD NO RELEVANCY WHATSOEVER TO THE CASE OF THE MILL IN QUESTION. IT IS NOT KNOWN WHETHER THE MILLS WHICH HAD DISCLOSED THESE RATES WERE SITUATE IN BENGAL OR ELSEWHERE, AND WHETHER THESE MILLS WERE SIMILARLY SITUATED AND CIRCUMSTANCED. NOT ONLY DID THE TRIBUNAL NOT SHOW THE INFORMATION GIVEN BY THE REPRESENTATIVE OF THE DEPA RTMENT TO THE APPELLANT, BUT IT REFUSED EVEN TO LOOK AT THE TRUNK LOAD OF BOOKS AND PAPERS PRODUCED BEFORE IT BY ASSESSEE. THE ITO AND THE TRIBUNAL IN ESTIMATING TH E GROSS PROFIT RATE ON SALES DID NOT ACT ON ANY MATERIAL BUT ACTED ON PURE GUESS AND SUS PICION. THE ORDER OF THE TRIBUNAL ITA NO.1226/KOL/2013 A.Y.2008-09 M/S RADHASHYAM T PAUL V. ACIT RNG-50, KOL. PAGE 11 WAS SET ASIDE AND THE MATTER WAS REMANDED TO IT WIT H DIRECTIONS THAT IN ARRIVING AT ITS ESTIMATE OF GROSS PROFITS AND SALES IT SHOULD GIVE FULL OPPORTUNITY TO THE ASSESSEE TO PLACE ANY RELEVANT MATERIAL ON THE POINT THAT IT HA S BEFORE THE TRIBUNAL, WHETHER IT IS FOUND IN THE BOOKS OF ACCOUNT OR ELSEWHERE AND IT S HOULD ALSO DISCLOSE TO THE ASSESSEE THE MATERIAL ON WHICH THE TRIBUNAL IS GOING TO FOUN D ITS ESTIMATE AND THEN AFFORD HIM FULL OPPORTUNITY TO MEET THE SUBSTANCE OF ANY PRIVA TE INQUIRIES MADE BY THE ITO IF IT IS INTENDED TO MAKE THE ESTIMATE ON THE FOOT OF THOSE ENQUIRIES. RESPECTFULLY FOLLOWING THE JUDGMENT OF HON'BLE SUPR EME COURT IN THE FACTS OF THE CASE, WE FIND THAT THERE WERE MANY FACTORS WHIC H HAVE BEEN IGNORED BY LD CIT(A) BEFORE ENHANCING THE TOTAL INCOME OF ASS ESSEE BY DISALLOWING THE AFORESAID EXPENSES. WE ALSO FURTHER FIND THAT THIS EXPENSE HAS BEEN CLAIMED BY ASSESSEE CONSISTENTLY FOR THE LAST SEVERAL YEARS AND NO SUCH DISALLOWANCE WAS MADE BY THE AUTHORITIES BELOW. CONSIDERING THE TOTALITY OF THE FACTS AND CIRCUMSTANCES, WE ARE INCLINED TO REVERSE THE ORDER S OF AUTHORITIES BELOW. AO IS DIRECTED ACCORDINGLY. THIS GROUND RAISED BY ASSE SSEE IS ALLOWED. 16. IN THE RESULT, ASSESSEES APPEAL STANDS PARTLY ALLO WED. ORDER PRONOUNCED IN OPEN COURT ON 30/06/2016 SD/- SD/- (S.S.VISWANETHRA RAVI) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER *DKP ! - 30/06/2016 / KOLKATA / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-M/S RADHASHYAM TIRTHABASHI PAUL, CF-125, SALT LAKE CITY, KOLKATA -700 064 2. /RESPONDENT-ACIT, RANGE-50, UTTARAPAN, MANICKTALA C IVIC CENTRE, ULTADANGA, KOLKATA-54 3. '#$ $ % / CONCERNED CIT 4. $ $ % - / CIT (A) 5. &'( ))'# , $ '# / DR, ITAT, KOLKATA 6. (*+,- / GUARD FILE. BY ORD ER/ $ , /TRUE COPY/ / $ '#,