Jalaram Khandsari Works, Navsari V. The Income tax Officer,Ward-2, Navsari

ITA 2033/AHD/2009

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 9121 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-09-2009
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2006-2007
• Appeal Filed On: 25-06-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GOVIND SINGHAL
• Section: 234B

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH 'SMC' (BEFORE SHRI P K BANSAL ACCOUNTANT MEMBER) ITA NO.2033/AHD/2009 (ASSESSMENT YEAR: 2006-07) JALARAM KHANDSARI WORKS, GROUND FLOOR, SHANKHESHWAR COMPLEX, NEAR KALIAWADI POOL, NAVSARI V/S THE INCOME-TAX OFFICER, WARD-2, NAVSARI [APPELLANT] [RESPONDENT] PAN NO.: AACFJ 0156 E APPELLANT BY :- WRITTEN SUBMISSIONS RESPONDENT BY:- SHRI GOVIND SINGHAL, SR. DR O R D E R THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINS T THE ORDER OF THE CIT(A) DATED 26/03/2009. 2 THE FIRST GROUND RELATES TO THE DISALLOWANCE OF 5% OF WAGE PAYMENT AMOUNTING TO RS.1,40,726/- OUT OF TOTA L WAGES OF RS.28,14,539/-. THE FACTS RELATING TO THIS GROUND A RE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURIN G OF KHANDSARI UNDER THE NAME AND STYLE OF JALARAM KHAND SARI WORKS. THE AO NOTED THAT THE ASSESSEE HAS CLAIMED LABOUR W AGES AMOUNTING TO RS.28,14,539/-. WHOLE OF THE PAYMENT W AS MADE IN CASH AND IN MOST OF THE VOUCHERS THERE WERE IMPRESS IONS. WHEN COUNTERED, THE ASSESSEE SUBMITTED THAT THE PAYMENT HAS BEEN MADE IN ACCORDANCE WITH THE MINIMUM WAGES ACT, UNDE R THE 2 CONTROL OF FACTORY INSPECTOR, GUJARAT REGION AND SU RAT. THE LEDGER OF THE SAME WAS DULY SENT TO THE OFFICE OF T HE FACTORY INSPECTOR. THE FACTORY INSPECTOR VISITED THE OFFICE OF THE ASSESSEE AND INQUIRED ABOUT THE SAME ISSUE WITH THE WORKERS, MADE IDENTIFICATION OF THE PERSONS, THE WORKERS RELATING TO OTHER STATES AND ARE NOT HAVING THEIR BANK ACCOUNTS. THE FACTORY BUSINESS PLACE IS SITUATED 28 KM AWAY FROM NAVSARI AND THEIR BANK ACCOUNT IS AT BANK OF BARODA, PANCH HATDI, NAVSARI. THE PAYMENT IS MADE AS THE WORKERS DEMANDED THE PAYMENT S IN CASH. THE AO WAS NOT SATISFIED WITH THE ASSESSEE AND TOOK THE VIEW THAT THERE IS EVERY POSSIBILITY THAT THE ASSESSEE M IGHT HAVE PREPARED SOME VOUCHERS FOR NON EXISTING PERSONS AND WOULD HAVE INFLATED THE EXPENSE TO REDUCE THE TAXABLE PROFIT. HE, THEREFORE, DISALLOWED 5% OF THE LABOUR CHARGES AMOUNTING TO RS .1,40,726/-. WHEN THE MATTER WENT BEFORE THE CIT(A), THE CIT(A) CONFIRMED THE ORDER OF THE AO. 3 BEFORE US, WRITTEN SUBMISSIONS WERE SUBMITTED BY THE ASSESSEE REITERATING THE SUBMISSIONS MADE BEFORE TH E AO. THE LEARNED DR, ON THE OTHER HAND, RELIED ON THE ORDER OF THE AUTHORITIES BELOW. 4 WE HAVE CONSIDERED THE WRITTEN SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE NOTED THAT THE A O HAS DISALLOWED 5% OF THE WAGES MERELY ON ASSUMPTIONS AN D PRESUMPTIONS BASIS ASSUMING AS IF THE ASSESSEE MIGH T HAVE PREPARED THE VOUCHERS FOR NON EXISTING PERSONS. NO SPECIFIC VOUCHER HAS BEEN BROUGHT ON RECORD WHICH MAY POINT OUT SPECIFIC 3 NON EXISTING PERSONS FOR WHICH THE ASSESSEE CLAIMED THE WAGES. NO DOUBT, THE ONUS IS ON THE ASSESSEE TO PROVE THE GENUINENESS OF THE EXPENDITURE BUT ONCE THE ASSESSEE HAS SUBMITTED THE DETAILS AND THE VOUCHERS AS WELL AS MINIMUM WAGES, BONUS, G RATUITY, ETC. AS CERTIFIED BY THE CHIEF FACTORY INSPECTOR, T HE ONUS GETS SHIFTED ON THE REVENUE TO PROVE THAT THE EVIDENCES FILED BY THE ASSESSEE INCORRECT OR BOGUS. MERE ALLEGATION WILL N OT SUFFICE. THIS IS A SETTLED LAW THAT APPARENT IS REAL. THE ON US IS ON THE PERSON WHO ALLEGES THAT APPARENT IS NOT REAL. WE, T HEREFORE, DELETE THE DISALLOWANCE OF RS.1,14,726/-. THUS, GROUND NO. 1 STANDS ALLOWED. 5 GROUND NO.2 RELATES TO THE DISALLOWANCE OF RS.14,198/- BEING 10% OF DIESEL AND MAINTENANCE EXP ENSES. THE AO TOOK THE VIEW THAT MANY OF THE VOUCHERS PREPARED BY THE ASSESSEE ARE NOT FULLY RELIABLE BECAUSE MANY OF THE M APPEAR TO BE PREPARED IN A SINGLE SITTING AND BY A SINGLE PERSON . THE AO ALSO NOTED THAT THE ASSESSEE HAS NOT MAINTAINED THE LOG BOOK. HE, THEREFORE, DISALLOWED 10% OF THE EXPENSES ON ESTIMA TE BASIS. WHEN THE MATTER WENT BEFORE THE CIT(A), THE CIT(A) CONFIRMED THE ORDER OF THE AO. 6 WE HAVE CAREFULLY CONSIDERED THE WRITTEN SUBMISS IONS AS WELL AS THE SUBMISSIONS MADE BY THE LEARNED DR. WE NOTED THAT THE DISALLOWANCE HAS BEEN MADE BY THE AO MEREL Y ON ESTIMATE BASIS. THERE IS NO ALLEGATION BY THE AO TH AT THE JEEP HAS BEEN USED BY THE ASSESSEE FOR THE PERSONAL PURPOSES . IN MY OPINION, IF THE AO DID NOT AGREE WITH THE GENUINENE SS OF THE 4 EXPENDITURE INCURRED BY THE ASSESSEE, HE SHOULD HAV E SPECIFICALLY POINTED OUT THE EXPENDITURE WHICH HAS NOT BEEN INCU RRED BY THE ASSESSEE. ALL THE PAYMENTS OF DIESEL EXPENSES AS PE R THE SUBMISSIONS OF THE ASSESSEE ARE DULY SUPPORTED BY T HE VEHICLE NUMBER. THIS FACT HAS NOT BEEN EVEN DENIED BY THE A O IN THE ASSESSMENT ORDER. UNDER THESE FACTS AND CIRCUMSTANC ES, WE DELETE THE DISALLOWANCE WHICH WAS MADE MERLEY ON ADHOC BAS IS. 7 THE NEXT GROUNDS RELATING TO CHARGING OF INTERES T U/S 234B AND 234D ARE CONSEQUENTIAL IN NATURE. THE AO I S DIRECTED TO CHARGE INTEREST U/S 234B AND 234D AFTER GIVING E FFECT TO THIS OUR ORDER. 8 IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT TODAY ON 11-09-2 009 SD/- DATE:-11-09-2009 (P K BANSAL) ACCOUNTANT MEMBER COPY OF THE ORDER FORWARDED TO : 1. JALARAM KHANDSARI WORKS, GROUND FLOOR, SHANKHESH WAR COMPLEX, NEAR KALIAWADI POOL, NAVSARI 2. THE ITO, WARD-2, NAVSARI 3. CIT CONCERNED 4. CIT(A)-VALSAD 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER DEPUTY REGI STRAR/ASSISTANT REGISTRAR