Surrel Enterprise Pvt. Ltd., Chhatral-Kalol V. The DCIT, Mehsana Circle, Mehsana

ITA 2325/AHD/2018

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 0555 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 7 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-07-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2015-2016
• Appeal Filed On: 29-11-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD SMC BENCH (CONDUCTED THROUGH VIRTUAL COURT) BEFORE: SHRI AMARJIT SINGH, ACCOUNTANT MEMBER AND MS. MADHUMITA ROY, JUDICIAL MEMBER SURREL ENTERPRISE PVT. LTD. 513/B NATIONAL HIGH WAY ROAD CHHATRAL TA. KALOL -382729 PAN: AADCS5160K (APPELLANT) VS THE DCIT, MEHSANA CIRCLE, MEHSANA (RESPONDENT) REVENUE BY: DR. SHYAM PRASAD, SR. D.R. ASSESSEE BY: MS. URVASHI SHODHAN, A .R. DATE OF HEARING : 07-06-2021 DATE OF PRONOUNCEMENT : 12-07-202 1 /ORDER PER : AMARJIT SINGH, ACCOUNTANT MEMBER:- THIS ASSESSEES APPEAL FOR A.Y. 2015-16, ARISES FRO M ORDER OF THE CIT(A), GANDHINAGAR, AHMEDABAD DATED 08-10-2018, IN PROCEEDINGS UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961; IN SHOR T THE ACT. 2. THE SOLITARY GROUND OF APPEAL FILED BY THE ASSES SEE IS ARISEN FROM THE ORDER OF LD. CIT(A) IN CONFIRMING THE DISALLOWANCE OUT OF EMPLOYEES BENEFIT EXPENSES OF RS. 61,06,094/-. ITA NO. 2325/AHD/2018 ASSESSMENT YEAR 2015-16 I.T.A NO. 2325/AHD/2018 A.Y. 2015-16 PAGE NO SURREL ENTERPRISE PVT. LTD. VS. DCIT 2 3. THE FACT IN BRIEF IS THAT AT THE TIME OF ASSESS MENT, THE ASSESSING OFFICER NOTICED THAT ASSESSEE HAS DEBITED AN AMOUNT OF RS. 9,00,53,013/- UNDER THE HEAD EMPLOYEES BENEFIT EXPENSES. THE EM PLOYEES BENEFITS EXPENSES WERE CONSISTED OF SALES, WAGES, PROVIDENT FUNDS, INCENTIVE, LEAVE ENCASHMENT ETC. THE ASSESSING OFFICER OBSERVED THA T CLAIM OF EMPLOYEES BENEFIT EXPENSES OF RS. 9,00,53,013/- WAS AT EXCESS IVE LEVEL COMPARED TO TURNOVER OF RS. 9,49,43,108/-. ON QUERY, THE ASSES SEE SUBMITTED THE RELEVANT DETAILS WITH SUPPORTING DOCUMENTS. ON PERUSAL OF T HE DETAILS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS MADE PAYMENT UNDER THE HEAD INCENTIVE TO THE AMOUNT OF RS. 1,22,12,187/- THE ASSESSING OF FICER WAS OF THE VIEW THAT ASSESSEE HAS NOT FURNISHED DETAILS ON THE BASI S OF WHICH THE INCENTIVE WAS WORKED OUT. THE ASSESSING OFFICER OBSERVED THA T IT IS DIFFICULT TO BELIEVE THAT THE EXPENDITURE CLAIMED TO HAVE INCURR ED WERE GENUINE AS A WHOLE, THEREFORE, 50% OF THE EXPENDITURE WHICH COME S TO RS. 61,06,094/- WAS DISALLOWED AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 4. AGGRIEVED ASSESSEE HAS FILED APPEAL BEFORE THE LD. CIT(A). THE LD. CIT(A) HAS DISMISSED THE APPEAL OF THE ASSESSEE REI TERATING THE FACTS MENTIONED BY THE ASSESSING OFFICER. 5. DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE US, AT THE OUTSET, THE LD. COUNSEL SUBMITTED THAT SIMILAR ISSUE ON IDENTIC AL FACTS HAS BEEN ADJUDICATED IN THE CASE OF THE ASSESSEE ITSELF BY T HE CO-ORDINATE BENCH OF THE ITAT AHMEDABAD VIDE ITA NO. 1868/AHD/2017 FOR ASSES SMENT YEAR 2013- 14 WHERE THE ISSUE WAS DECIDED IN FAVOUR OF THE ASS ESSEE AS THE ASSESSING OFFICER HAS NOT REJECTED THE BOOKS OF ACCOUNT BEFOR E MAKING SUCH ESTIMATED I.T.A NO. 2325/AHD/2018 A.Y. 2015-16 PAGE NO SURREL ENTERPRISE PVT. LTD. VS. DCIT 3 ADDITION. THE LD. DEPARTMENTAL REPRESENTATIVE IS F AIR ENOUGH NOT TO CONTROVERT THIS UNDISPUTED FACT THAT IDENTICAL ISSU E ON SIMILAR FACT HAS BEEN ADJUDICATED BY THE CO-ORDINATE BENCH OF THE ITAT AS REFERRED ABOVE. 6. HEARD BOTH THE SIDES AND PERUSED THE MATERIAL ON RECORD. DURING THE COURSE OF ASSESSMENT, THE ASSESSING OFFICER OBSERVE D THAT ASSESSEE HAS NOT FURNISHED THE DETAILS REGARDING BASIS OF MAKING PAY MENT UNDER THE HEAD INCENTIVE TO THE EMPLOYEES/WORKERS THEREFORE 50% OF SUCH EXPENSES WERE DISALLOWED. THE LD. COUNSEL HAS REPORTED THAT SIMI LAR ISSUE ON IDENTICAL FACT HAS BEEN ADJUDICATED IN FAVOUR OF THE ASSESSEE IN T HE CASE OF THE ASSESSEE ITSELF PERTAINING TO ASSESSMENT YEAR 2013-14. WITH THE ASSISTANCE OF LD. REPRESENTATIVES WE HAVE GONE THROUGH THE DECISION O F THE CO-ORDINATE BENCH OF THE ITAT VIDE ITA NO. 1868/AHD/2017 DATED 11.12. 2019. THE RELEVANT PART OF THE DECISION OF THE ITAT IS REPRODUCED AS U NDER:- 8. WE HAVE GONE THROUGH THE RELEVANT RECORD AND IMPUGNED ORDER. ASSESSEE IS IN THE BUSINESS OF CONVERSION OF RAW MATERIAL INTO FINISHED PRODUCT S ON JOB WORK BASIS AND FOR ITS ACTIVITIES. ASSESSEE HAS TO HIGHER RATE LABOURER FROM THE NEARB Y VILLAGES AND SOMETIMES FROM THE NEARBY STATE. ASSESSEE CONTENDED THAT SINCE 2009 HIS SAL ES ARE INCREASING AND IN A.Y. 2009-10, IT WAS 88.79% IN A.Y. 2010-11, IT WAS 88.94% IN THE A.Y. 2 011-12, IT WAS 91.65%, IN THE A.Y. 2012-13, IT WAS 91% AND IN THE A.Y. 2013-14, THE RATIO IS 93.21 %. THEREFORE, FURTHER STATED DETAILS OF THE DEDUCTION OF PROVIDENT FUNDS HAVE GIVEN TO THE LOWE R AUTHORITIES AND ALL THE DETAILS WITH REGARD TO NAMES AND ADDRESS AS PER THE PROVIDENT FUND RECORD HAVE BEEN SUBMITTED TO THE LOWER AUTHORITIES. WITH REGARD TO CASH PAYMENT, ASSESSEE STATED THAT M OST OF THE LABOURER ARE ILLITERATE AND THEY DO NOT HAVE ACCOUNTS IN THE BANKS. ASSESSEE ALSO CONT ENDED THAT WORKERS TURNOVER ARE HIGH AND THEREFORE ASSESSEE HAD TO PAY MORE BONUS AS COMPARE D TO OTHER INDUSTRIAL LABOUR. 9. AS WE CAN SEE, BOOKS OF ACCOUNT WERE NOT REJEC TED BY THE ASSESSING OFFICER AND AUDIT REPORT HAS BEEN FILED BY THE ASSESSEE BUT NO AMBIGUITY WAS NOT ICED IN THE AUDIT REPORT BY THE REVENUE. AS CAN SEE FROM THE SUBMISSION FILED BEFORE THE LOWER AUTH ORITIES THAT TURNOVER IS EVERY YEAR IS INCREASING. THEREFORE, IT IS EMPLOYED THAT WAGES AND SALARY WIL L ALSO INCREASE. AND IN OUR CONSIDERED OPINION, SAME APPEARS TO BE QUITE JUSTIFIABLE AND GENUINE. ASSESSEE REGULARLY DEDUCTING EPF, ESIC FROM WAGES AND REGULARLY DEPOSITED THE SAME WITH CONCERN ED AUTHORITY AND A DETAILS SUBMISSION WITH REGARD TO PPF NUMBER HAVE BEEN FILED BEFORE THE LOW ER AUTHORITIES. 10. IN OUR CONSIDERED OPINION, AFTER SEEING THE NATURE OF JOB OF THE ASSESSEE WHICH INVOLVES MOST OF THE UNSKILLED LABOURERS ON CASH PAYMENT MADE TO THEM CANNOT BE RULED OUT. THEREFORE, GIVING BENEFIT OF DOUBT TO THE ASSESSEE, WE ALLOW THE APPE AL OF THE ASSESSEE. I.T.A NO. 2325/AHD/2018 A.Y. 2015-16 PAGE NO SURREL ENTERPRISE PVT. LTD. VS. DCIT 4 IT IS CLEAR FROM THE DECISION OF THE CO-ORDINATE BE NCH OF THE ITAT AHMEDABAD IN THE CASE OF ASSESSEE ITSELF AS REPORTE D ABOVE THAT IDENTICAL ISSUE HAS BEEN ADJUDICATED ON SIMILAR FACT IN FAVOU R OF THE ASSESSEE AFTER TAKING INTO CONSIDERATION THE NATURE OF PAYMENT AND NOT REJECTING BOOKS OF ACCOUNTS BY ASSESSING OFFICER. RESPECTFULLY FOLLO WING THE DECISION OF ITAT AHMEDABAD SUPRA THIS APPEAL OF THE ASSESSEE ON IDENTICAL FACTS AND SIMILAR ISSUE IS ALLOWED. ACCORDINGLY, THIS APPEAL OF THE ASSESSEE IS ALLOWED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 12-07-2021 SD/- SD/- (MADHUMITA ROY) (AMARJIT SINGH) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD : DATED 12/07/2021 / COPY OF ORDER FORWARDED TO:- 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,