The ITO,Vapi Ward-3, Vapi V. Alidhara Technotex Industries,

ITA 19/AHD/2009

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 50766 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 9 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-10-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 18-10-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 02-01-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: P R GHOSH
• Assessee Lawyers: K N BHATT
• Keywords: Opportunity of being heard; Third party statement
• Section: 143(3)

Judgement Text

, , . .. . . .. . , , , , . .. . . .. .!'#$ !'#$ !'#$ !'#$ , % % % % & & & & IN THE INCOME TAX APPELLATE TRIBUNAL : A BENCH : AHMEDABAD (BEFORE HONBLE SHRI T.K. SHARMA, J.M. & HONBLE SHRI A.K.GARODIA, A.M.) . ITA NO. 19/AHD./2009 : ' ()- 2005-06 INCOME TAX OFFICER, VAPI WARD-3, VA PI (,- /APPELLANT) -VS- ALIDHARA TECHNOTEX INDUSTRIES, DADRA ( ./,- /RESPONDENT ) (PAN : AACCM 7549P) ,- 0 1 / APPELLANT BY : SHRI P.R.GHOSH, SR.D.R. ./,- 0 1 / RESPONDENT BY : SHRI K.N.BHATT, A.R. 2'3 0 4% / DATE OF HEARING : 18/10/2011 5'( 0 4% / DATE OF PRONOUNCEMENT : 20/10/2011 / ORDER PER SHRI T.K. SHARMA, JUDICIAL MEMBER : THIS APPEAL FILED BY THE REVENUE IS AGAINST THE OR DER DATED 24-10-2008 OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS), VALSAD DELETING THE ADDITION OF RS.84,76,608/- BEING THE DIFFERENCE IN JOB WORK REC EIPT SHOWN IN THE P&L ACCOUNT AND THE AUDIT REPORT OF THE PAYER OF THE JOB WORK CHARG ES FOR THE ASSESSMENT YEAR 2005- 2006. 2. BRIEFLY STATED, THE FACTS ARE THAT THE ASSESSEE IS A FIRM ENGAGED IN THE FINANCE BUSINESS. FOR THE ASSESSMENT YEAR UNDER APPEAL, IT FILED ITS RETURN OF INCOME ON 28.10.2005 DECLARING TOTAL INCOME OF RS. 13,220/-. THE AO FRAMED THE ASSESSMENT UNDER SECTION 143(3) ON 17.12.2007, WHEREIN HE MADE AN ADDITION OF RS.84,76,608/- ON ACCOUNT OF INCOME FROM JOB WORK REJECTING THE EX PLANATION OF THE ASSESSEE THAT THIS DIFFERENCE IS DUE TO MISTAKE OF AUDITORS IN ITS AUD IT REPORT OF THE PARTY FROM WHOM SUCH INCOME WAS RECEIVED. ITA NO. 19-AHD-09 2 3. ON APPEAL, IN THE IMPUGNED ORDER, THE LD. CIT(A) DELETED THE ADDITION FOR THE DETAILED REASONS GIVEN IN PARA 6.3, WHICH READS AS UNDER: I HAVE CONSIDERED THE CONTENTION OF THE APPELLA NT REGARDING THE ADDITION OF RS. 84,76,608/- ON ACCOUNT OF SUPPRESSED JOB WOR K INCOME. I FIND THAT THE AO HAS MADE THE ADDITION BASED ON THE BELOW MENTIONED OBSERVATION : 'CONSIDERING THE SUBMISSION OF THE ASSESSEE, IT IS APPARENT THAT THE ASSESSEE IS IN THE HABIT OF MAKING MISTAKE EVERY TIME OF THERE IS QUESTION OF PROBLEM RELATED TO TAXATION. THE ASSESSEE NEVER HESITATED T O PASS ON THE ACCOUNTABILITY OF ERROR TO THE AUDIT AND EVEN NOT DESIRES TO TAKE ANY CONSENT FROM THE AUDITOR. THEREFORE, THE PLEASE OF ERROR SUBMITTED BY THE AR OF THE ASSESSEE IS NOT SUSTAINABLE AND HENCE, AN AMOUNT OF RS. 99,38,388/- IS TAKEN AS PAID BY THE SISTER CONCERN M/S. WEAVETECH ENGINEERS AS MENTIONE D BY THE AUDITORS IN THE AUDIT REPORT. THE ACTION OF THE UNDERSIGNED IS ALSO BASED ON THE FAITH OF THE INCOME-TAX ACT I.E. BESTOWED UPON THE AUDITOR.' AS AGAINST THE AFORESAID OBSERVATION OF THE AO, THE RELEVANT ARGUMENTS OF THE AR ARE STATED AS UNDER ;- 'DURING THE COURSE OF ASSESSMENT IN THE CASE OF WEA VETECH ENGINEERS (GROUP CONCERN ASSESSED UNDER SAME ASSESSING OFFICER), THE SAID PARTY WAS ASKED TO SUBMIT THE DETAILS OF LABOUR CHARGES PAID TO PERSON S SPECIFIED U/S. 40A(2)(B) AS THERE WAS DIFFERENCE BETWEEN THE REPORTING OF THE A UDIT IN THIS ANNEXURE-D OF THE AUDIT REPORT AND THE FIGURES IN P&L ACCOUNT OF WEAVETECH ENGINEERS. AFTER THIS, AT NO POINT OF TIME THE AO HAD ASKED ANY QUES TION REGARDING THIS AND HE WAS SATISFIED WITH THE EXPLANATION FORWARDED BY THE APPELLANT. HE HAD, THEREFORE, NOT ISSUE ANY SHOW CAUSE NOTICE INFORMIN G HIS INTENTION TO MAKE SUCH ADDITION. HE HAS NEITHER GIVEN REASONS FOR HIS BELI EF THAT THIS EXPENDITURE WAS ACTUALLY PAID BY THE WEAVETECH ENGINEERS TO THE APP ELLANT AND WHY HE IS NOT RELYING UPON THE EXPLANATION THAT IT WAS AUDITOR'S MISTAKE. THE AO IS ARGUING APPELLANT SHOULD HAVE SUBMITTED A CERTIFICATE FROM AUDITOR. HOWEVER, IT WAS NEVER DEMANDED FROM THEM. MOREOVER, HE HAD NEVER SHOWN HIS INTENTION TO MAKE ADDITION, OTHERWISE THE APPEL LANT WOULD HAVE SUBMITTED THE SAME. IN SHORT, NO OPPORTUNITY OF BEING HEARD W AS FORWARDED TO THE ASSESSEE BY WAY OF ISSUING SHOW CAUSE NOTICE TO THE ASSESSEE. THE CERTIFICATE OF THE AUDITOR FOR SUCH A MISTAKE W OULD HAVE BEEN SUBMITTED TO THE AO IF HE HAD FORWARDED OPPORTUNITY TO THE ASSES SEE TO GIVE FURTHER EXPLANATION. AS HE FAILED TO DO, WE ARE HEREBY ENCL OSING THE SAME IN ANNEXURE- B OF THIS LETTER FOR YOUR KIND PERUSAL. I FIND FORCE IN THE CONTENTION OF THE APPELLANT AS IN ADDITION TO THE ABOVE, THE APPELLANT HAS ALSO SUBMITTED A CONTRA CONFIRMATION OF BOTH PARTIES BY HOLDING A ITA NO. 19-AHD-09 3 MEETING FOR THE SAID ISSUE CONFIRMING THAT THE SAID WAS A MISTAKE OF THE AUDITOR AND THERE IS NOT SUCH INCOME RECEIVED BY THE APPELL ANT NOR PAID BY WEAVETECH ENGINEERS. THE ARGUMENTS OF THE AR CAN NOT BE BRUSH ASIDE THAT THE SAID MISTAKE OF THE AUDITOR WAS IN REPORTING OF THE DETA ILS OF PAYMENTS MADE TO PERSONS SPECIFIED U/S. 40A(2)(B) IN THE TAX AUDIT R EPORT AND NOT IN THE PROFIT AND LOSS ACCOUNT AND BALANCE SHEET OF THE APPELLANT OR THE OTHER PARTY. I FIND THAT THE AR OF THE APPELLANT HAS THUS ADEQUATELY DISTING UISHED THAT THE MISTAKE WAS IN TAX AUDIT REPORT WHICH DOES NOT AFFECT THE FINAN CIAL RESULTS OF THE APPELLANT OR THE OTHER PARTY WEAVETECH ENGINEERS. AFTER LOOKING IN TO THESE TYPICAL FACTS OF THE CASE AND THE RIVAL SUBMISSIONS, I AM OF THE CON SIDERED VIEW THAT THE AFORESAID MISTAKE OF THE AUDITOR WAS SIMPLY A TYPIN G ERROR OR A REPORTING ERROR MADE BY THE AUDITOR OF THE APPELLANT AND THERE IS N O OTHER EVIDENCE THAT THE APPELLANT HAS RECEIVED SUCH INCOME OR THE OTHERS PA RTY HAS PAID SUCH JOB CHARGES TO THE APPELLANT. THEREFORE, THE AO IS NOT JUSTIFIED IN MAKING ADDITION ON THE BASIS OF THE MISTAKE MADE BY THE APPELLANT I N REPORTING THE PAYMENT MADE TO PERSONS SPECIFIED U/S. 40A(2)(B) THAT TOO W ITHOUT ANY EVIDENCE. THEREFORE, NO ADDITION IN THIS REGARD IS CALLED FOR . I DIRECT THE AO TO DELETE THE SAID ADDITION OF RS.84,76,608/- MADE TO THE TOTAL I NCOME OF THE APPELLANT. THE APPELLANT'S GROUND NO.2 IS ALLOWED. 4. AGGRIEVED WITH THE ORDER OF THE LD. CIT(A), THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 5. AT THE TIME OF HEARING BEFORE US, SHRI P.R.GHOSH , SR.D.R. APPEARED ON BEHALF OF THE REVENUE AND POINTED OUT THAT BEFORE THE AO, THE ASSESSEE EXPLAINED THAT THE DIFFERENCE IN FIGURE REPORTED IN AUDIT REPORT AND B OOKS OF ACCOUNTS IS DUE TO ERROR IN REPORTING BY THE CHARTERED ACCOUNTANT. THE LD. D.R. POINTED OUT THAT IN PARA 4 AT PAGE 3 OF THE ASSESSMENT ORDER, THE AO HAS MENTIONED THA T THE ASSESSEE IS PASSING HIS MISDEEDS TO THE SHOULDERS OF THE AUDITORS FOR HIS B ENEFIT WITHOUT INFORMING THE AUDITORS. WHILE PASSING THE RESPONSIBILITY, THE ASS ESSEE HAS FORGOTTEN THAT AUDIT REPORT IS SIGNED BY BOTH THE AUDITORS AND THE ASSESSEE. HE SUBMITTED THAT THE ASSESSEE IS MANIPULATING THE ACCOUNTS OF THE SISTER CONCERN AT A LATER STAGE, WHEN SCRUTINY ASSESSMENT OF M/S. WEAVETECH ENGINEERS IS ALSO PEND ING WITH THE UNDERSIGNED. THE LD. D.R. FURTHER POINTED OUT THAT IN CASE THERE WAS BONA FIDE MISTAKE, THE ASSESSEE COULD HAVE ASKED THE AUDITORS TO CLARIFY THE DIFFER ENCE. ADMITTEDLY, THIS HAS NOT BEEN DONE. THEREFORE, THE LD. CIT(A) IS NOT JUSTIFIED IN DELETING THE ADDITION OF RS. 84,76,608/- MADE BY THE AO. ITA NO. 19-AHD-09 4 6. ON THE OTHER HAND, SHRI K.N.BHATT, A.R., APPEARI NG ON BEHALF OF THE ASSESSEE, CONTENDED THAT THE ASSESSEE IS WILLING TO FURNISH C LARIFICATION/CERTIFICATE FROM THE CONCERNED AUDITORS ALONG WITH THE BOOKS OF ACCOUNTS . HE HAS NO OBJECTION, IF, FOR FURNISHING THE CLARIFICATION/CERTIFICATE FROM THE A UDITORS, THE MATTER IS RESTORED TO THE FILE OF THE AO. 7. HAVING HEARD BOTH THE SIDES, WE HAVE CAREFULLY G ONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. IN CASE, THE AUDITORS HAVE COMMI TTED SOME MISTAKE IN REPORTING THE FIGURES, IT WAS THE DUTY OF THE ASSESSEE TO OBTAIN CLARIFICATION/CERTIFICATE IN THIS REGARD. ADMITTEDLY, NO SUCH CERTIFICATE/CLARIFICATION FROM THE AUDITORS WAS FURNISHED BEFORE THE LD. CIT(A). IN THESE CIRCUMSTANCES, WE ARE OF T HE VIEW THAT THE LD. CIT(A) OUGHT TO HAVE INSISTED ON THE CLARIFICATION/CERTIFICATE FROM THE CONCERNED OFFICER CLARIFYING THE DIFFERENCE ALONG WITH THE NECESSARY EVIDENCE. SINCE THIS HAS NOT BEEN DONE, THE IMPUGNED ORDER OF THE LD. CIT(A) IS SET ASIDE AND T HE MATTER IS RESTORED TO THE FILE OF THE AO WITH THE DIRECTION THAT THE ASSESSEE SHOULD OBTAIN CLARIFICATION/CERTIFICATE FROM THE AUDITORS CLARIFYING THE DIFFERENCE. THE ASSESSE E SHALL ALSO PRODUCE THE BOOKS OF ACCOUNTS AND VOUCHERS. THE AO WILL VERIFY THE SAME. IF REQUIRED, THE AO WILL EXAMINED THE CONCERNED AUDITORS AND RE-ADJUDICATE T HE ADDITION OF RS.84,76,608/- MADE BY THE AO, AFTER GIVING OPPORTUNITY OF BEING H EARD TO THE ASSESSEE. 8. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S TREATED AS ALLOWED FOR STATISTICAL PURPOSES. 6 0 5'( #' ) 20/10 /2011 ' 7 0 !3 8 THIS ORDER PRONOUNCED IN THE OPEN COURT ON 20/10/2011. SD/- SD/- (A.K.GARODIA) (T.K. SHARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 20/10/2011 ITA NO. 19-AHD-09 5 0 00 0 .49 .49 .49 .49 :9(4) :9(4) :9(4) :9(4)- -- - 1. ,- 2. ./,- 3. 4 2> 4. 2>- - 5. 9A! .4' , , 8 6. !$ C6 , D/ F , 8 TALUKDAR/ SR. P.S.