Yes Fashions Pvt.Ltd., Surat V. The ACIT.,Circle-4, Surat

ITA 1837/AHD/2012

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 9955 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 2 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-11-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 15-11-2016
• Assessment Year: 2004-2005
• Appeal Filed On: 23-08-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRAVIN KUMAR
• Assessee Lawyers: R N VEPARI
• Keywords: Opportunity of being heard

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD BEFORE SHRI R.P. TOLANI, JUDICIAL MEMBER ./ ITA NO. 1837/AHD/2012 / ASSESSMENT YEAR : 2004-05 YES FASHION PVT LTD, 7 TH FLOOR, 703, MERIDIAN TOWER, NEAR RAJKUMAR CINEMA, UDHNA DARWAJA, RING ROAD, SURAT PAN: AAACY 0934 E VS THE ACIT, CIRCLE-4, SURAT / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SHRI. R.N. VEPARI, AR REVENUE BY : SHRI PRAVIN KUMAR, SR. DR / DATE OF HEARING : 15/11/2016 / DATE OF PRONOUNCEMENT: 17/11/2016 / O R D E R THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS)-I, SUR AT DATED 20.07.2012 FOR ASSESSMENT YEAR 2004-05. 2. FOLLOWING GROUNDS ARE RAISED:- 1. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ER RED IN CONFIRMING THE ORDER OF THE ASSESSING OFFICER RETAINING ADDITI ON OF RS.22,68,890/-. 2. THE APPELLANT SUBMITS THAT THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HAS MISCONSTRUED THE FACTS AND NOT INTERP RETED CORRECTLY THE DIRECTIONS GIVEN BY THE HONBLE TRIBUNAL BY ITS ORD ER DATED 28.10.2009. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ADD ITION IS REQUIRED TO BE RESTRICTED TO RS.1,65,010/- 3. THE LD. COUNSEL FOR THE ASSESSEE CONTENDS THAT I N FIRST ROUND THE AO WITHOUT REJECTING THE ASSESSEES AUDITED BOOKS OF A CCOUNTS, MADE AN ADDITION OF RS. 29 LAKHS QUA THE LABOUR CHARGES WHI CH WAS AGITATED BY ASSESSEE IN APPEALS AND THE ITAT VIDE ITS ORDER DAT ED 28.10.2009 IN ITA SMC-ITA NO. 1837/AHD/2012 YES FASHION PVT LTD VS. ACIT AY : 2004-05 2 NO.141/AHD/2008 CONSIDERED THE ASSESSEES SUBMISSIO NS AND DIRECTED THE AO AS UNDER:- 43. REGARDING JOB CHARGES OF RS.29,00,000/-, THE LEARNED AR REITERATED THE SUBMISSIONS AS MADE BEFORE THE LOWER AUTHORITIES AN D HE ALSO SUBMITTED THAT IN THE FIRST PLACE THERE IS NO BASIS OF HOW RS.29 L ACS HAS BEEN WORKED OUT. WHAT THE ASSESSING OFFICER HAS TRIED TO POINT OUT I S THAT THE ASSESSES SPENDS MORE ON JOB WORK IN INHOUSE PRODUCTION AS COMPARED TO WHAT HE HAS GIVEN TO OUTSIDERS FOR WEAVING AT MALEGAON AND MADE DISALLOW ANCE. THE ASSESSING OFFICER HAS NOT FOUND ANY EXPENDITURE INCURRED BY T HE ASSESSEE WITHOUT SUPPORT OR EVIDENCE AND THIS IS AN ADHOC DISALLOWAN CE. WHAT THE ASSESSING OFFICER HAS NOT FOLLOWED WAS THAT WHEN TEXTURISED Y ARN IS MANUFACTURED, PART OF IT IS SOLD AND PART OF IT IS TWISTED AND WA RPED AND PART OF SUCH TWISTED AND WARPED YARN IS SENT TO MALEGON FOR WEAVING AND PART WOVEN IN HIS OWN FACTORY. NOW THE ENTIRE EXPENDITURE ON TWISTING, WARPING AND TEXTURISING OF YARN ON ENTIRE YARN INCLUDING YARN SENT TO MALEGON IS DEBITED IN THE BOOKS OF THE APPELLANT. H E HAS TAKEN ALL THESE EXPENSES AS IF THEY ARE RELATED TO WEAVING AND FOUN D THEM EXCESSIVE. THIS IS EXPLAINED BY THE FOLLOWING CHART:- 44. FOR THE POY PURCHASE THE PROCESS IS TEXTURISATI ON THEREAFTER IT SEGREGATE INTO SALE OF TEXTURISED YARN WHICH FOLLOWS THE PROC ESS OF TWISTING-WARPING AND CONSUMPTION FOR WEAVING OF CLOTH. FOR TWISTING AND WARPING ENTIRE EXPENSES BORN AT SURAT. TEXTRISED AND TWISTED YARN WOVEN AT BOTH PLACE THEREAFTER CONSUMPTION FOR WEAVING OF CL OTH COMES INTO PICTURE WHICH IS UNDERTAKEN AT MALEGAON AND SURAT. IN THE CASE OF MALEGAON FOLLOWING COSTING IS TO BE MADE: ,, 1. PLAIN WEAVING 100 METRES PER DAY 2. FIXED ELECTRIC TARIFF(5)RS.1 PER UNIT 3. WEAVING LOOM OF RS.1500 4. SELLINGPRICEOFCLOTHRS.10/11PER MTR. IN THE CASE OF SURAT FOLLOWING COSTING IS TO BE MAD E 1. JACQUARD, DESIGN FANCY 25 METRES PER DAY 2. ELECTRIC CONSUMPTION RS.4/5 PER UNIT 3. WEAVING LOOM OF RS.1 LAC. 4. SELLING PRICE OF CLOTH RS.20/22 PER METRE RAYMOND CLOTH WOVEN ON WEAVING LOOM OF RS.LACS AN D SOLD AT ABOUT RS.300 PER METRE. 45. THE LD. AR SUBMITTED THAT APART FR OM DIFFERENCE IN WEAVING THE PATTERN OF WEAVING IS REQUIRED TO BE NOTE D. AT MALEGON THERE ARE SMC-ITA NO. 1837/AHD/2012 YES FASHION PVT LTD VS. ACIT AY : 2004-05 3 PLAIN LOOMS COSTING ABOUT RS. 15,000/- WITHOUT ANY ATTACHMENT, WEAVING ABOUT 100 MTRS. PER DAY AS AGAINST THIS THE WEAV ING LOOM OF THE APPELLANT COSTS ABOUT RS.1.00 LAC BECAUSE OF THE A TTACHMENT OF JACQUARD AND DESIGN AND FANCY. CLOTH IS WOVEN OF ONLY 25 METRES PER DAY. IN MAHARASHTRA THERE IS A SPECIAL RELIEF GIVEN TO ELE CTRICITY TO TEXTILE UNITS WITH FIXED ELECTRIC TARIFF AT RE.1/- PER UNIT AS AGAINST RS.4 / RS.5 PER UNIT IN SURAT. SELLING PRICE OF MALEGAON CLOTH IS ABOUT RS. 10/- TO RS.11/-; THAT OF CLOTH MANUFACTURED IN ASSESSEE'S UNIT IS RS.20 / RS .22 PER MTR. THESE ARE SIGNIFICANT DIFFERENCES WHICH HAVE NOT BEEN CONSIDE RED WHILE MAKING THE ADDITION. ALL LOOMS ARE NOT SIMILAR; ALL WEAVING PR OCESSES ARE NOT SIMILAR. FOR E.G. RAYMOND MILLS WEAVES CLOTH ON LOOMS WHIC H COSTS RS.20 LACS AND SELLS AT AFEOUT.RS.300/- PER MTR. THESE FACTS HAVE TO BE CONSIDERED AND ADHOC ADDITION MADE OF RS.29 LACS WITHOUT ANY BASIS IS RE QUIRED TO BE DELETED. 46. THE LEARNED DR NARRATED THE FACTS OF THE CASE A ND RELIED ON THE ORDERS OF AUTHORITIES BELOW. 47. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PE RUSED THE MATERIALS PLACED BEFORE US. WE FIND FROM THE ABOVE THE ASS ESSEE HIMSELF IS COSTING RS.6 PER METRE WHEREAS THE COST OF PRODUCTION PER METER IS CHARGED BY ASSESSEE IS RS.1.20 METER WHICH IS LESS THAN THE COST IN CURRED BY ITSELF. AFTER DETAILED ANALYSIS GIVEN BY THE ASSESSEE AND CONSIDE RED BY ASSESSING OFFICER, WE FEEL THAT THE ASSESSING OFFICER HAS MADE THIS ON THE BASIS OF ESTIMATION AND WITHOUT ANY BASIS AND CIT(A) HAS ALSO UPHEL D THE FINDING OF THE ASSESSING OFFICER, THEREFORE, WE ARE OF THE VIEW T HAT THE ESTIMATION MADE BY ASSESSING OFFICER IS ON HIGHER SIDE. THEREFORE, WE DIRECT THE ASSESSING OFFICER TO CONSIDER IT TO RS.1.10 PER MTR AND ALLOW THE BENEFIT ACCORDINGLY. 4. THE LD. COUNSEL FOR THE ASSESSEE CONTENDS THAT B OTH THE AUTHORITIES BELOW HAVE FAILED TO APPRECIATE THE CORRECT MEANING AND PURPOSE OF THE DIRECTION; AND THE AO, WITHOUT HEARING THE ASSESSEE , AND LD. CIT(A), WITHOUT CALLING FOR THE REMAND REPORT, HAS CONFIRMED THE HU GE ADDITION WHICH IS UNWARRANTED AND UNJUSTIFIED. IT IS CONTENDED THAT IN THE INTEREST OF JUSTICE, THE ISSUE MAY BE SET ASIDE AND RESTORED BACK TO THE FILE OF AO TO DECIDE THE SAME AFRESH AFTER HEARING THE ASSESSEE ON THE ISSUE . LD. DEPARTMENTAL REPRESENTATIVE HAS NO OBJECTION THEREON. 5. I HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITI ES BELOW. IT MERGES SMC-ITA NO. 1837/AHD/2012 YES FASHION PVT LTD VS. ACIT AY : 2004-05 4 FROM THE RECORD THAT THE LD. AO WITHOUT HEARING THE ASSESSEE HAS MADE THE IMPUGNED ADDITION AND PRIMA FACIE IT APPEARS THAT THE ASSESSEES SIDE ON THE SCOPE OF DIRECTION HAS NOT BEEN CONSIDERED. IN THE ENTIRETY OF FACTS AND CIRCUMSTANCES OF THE CASE, THE INTEREST OF JUSTICE WILL BE SERVED IF THE MATTER IS SET ASIDE AND RESTORED BACK TO THE FILE OF AO TO GI VE EFFECT TO THE ITATS DIRECTION AFTER GIVING THE ASSESSEE AN OPPORTUNITY OF BEING HEARD. 6. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON 17 TH NOVEMBER, 2016 AT AHMEDABAD. SD/- R.P. TOLANI (JUDICIAL MEMBER) AHMEDABAD; DATED 17/11/2016 *BIJU T., SR. PS / 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