Shri Kailashchandra Ajay, HUF, Ahmedabad V. The Income Tax Officer, Ward-2(1), Ahmedabad

ITA 2547/AHD/2015

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 3989 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 2 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-11-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 01-09-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 143(3)

Judgement Text

, B IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD, JUDICIAL MEMEBR ./ I.T.A. NO. 2547/AHD/2015 ( ASSESSMENT YEAR : 2009-10) KAILASHCHANDRA AJAY HUF VINIT MOONDRA, C.A. OPP. NAVJIVAN PRESS, AHSRAM ROAD, AHMEDABAD- 14 / VS. INCOME TAX OFFICER WARD 2(1), AHMEDABAD ./ ./ PAN/GIR NO. : AAEHK7116D ( APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI VINIT MOONDRA, A.R. / RESPONDENT BY : SHRI MUDIT NAGPAL, SR. D.R. DATE OF HEARING 18/10/2018 !'# / DATE OF PRONOUNCEMENT 01/11/2018 / O R D E R PER PRADIP KUMAR KEDIA - AM: THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTANCE OF THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF I NCOME TAX (APPEALS)-10, AHMEDABAD (CIT(A) IN SHORT), DATED 03.08.2015 ARISING IN THE ASSESSMENT ORDER DATED 27.06.2014 PA SSED BY THE ITA NO.2547/AHD/15 [KAILASHCHANDRA A. HUF VS. ITO] A.Y. 2009-10 - 2 - ASSESSING OFFICER (AO) UNDER S. 143(3) R.W.S. 263 O F THE INCOME TAX ACT, 1961 (THE ACT) CONCERNING ASSESSMENT YEAR 2009 -10. 2. BY WAY OF ITS GROUND OF APPEAL, THE ASSESSEE HAS CHALLENGED THE ADDITION OF RS.7,43,104/- OUT OF JOB WORK CHARGES P AID TO ONE OF THE PARTIES NAMELY M/S. KAMAL SYNTHETICS. 3. WHEN THE MATTER WAS CALLED FOR HEARING, THE LEAR NED AR FOR THE ASSESSEE SUBMITTED THAT THE RETURN OF THE ASSESSEE WAS EARLIER SUBJECTED TO SCRUTINY ASSESSMENT UNDER S.143(3) OF THE ACT VI DE ORDER DATED 23.12.2011. THE LEARNED AR REFERRED TO THE AFORESA ID ORDER AND SUBMITTED THAT THE AO IN THAT PROCEEDINGS WAS NOT F ULLY SATISFIED WITH THE EXPENSES INCURRED TOWARDS JOB WORK CHARGES AMOU NTING TO RS.3,17,90,460/-. THE AO ACCORDINGLY RESORTED TO A N ESTIMATED DISALLOWANCE OF 5% OF THE AFORESAID EXPENSES IN THE LIGHT OF CERTAIN INQUIRY FROM VARIOUS PARTIES. THE DISALLOWANCE WAS ACCORDINGLY COMPUTED AT RS.15,89,523/- AND ADDED TO THE TOTAL I NCOME OF THE ASSESSEE. THE LEARNED AR SUBMITTED THAT ONE OF THE MANY PARTIES INCLUDED M/S. KAMAL SYNTHETICS. HOWEVER, DESPITE T HE ACTION OF AO TOWARDS DISALLOWANCE, THE CIT INVOKED SECTION 263 O F THE ACT AND DIRECTED THE AO TO MAKE SEPARATE DISALLOWANCE FOR J OB WORK CHARGES PAID AMOUNTING TO RS.7,82,214/- TO M/S. KAMAL SYNTH ETICS ON THE GROUND THAT THE AFORESAID PARTY HAS DENIED TO HAVE MADE ANY TRANSACTION WITH THE ASSESSEE FOR THE PERIOD UNDER CONSIDERATION. IN ITA NO.2547/AHD/15 [KAILASHCHANDRA A. HUF VS. ITO] A.Y. 2009-10 - 3 - THIS REGARD, THE LEARNED AR SUBMITTED THAT THIS FAC T WAS NOT ONLY AVAILABLE BEFORE THE AO IN THE FIRST ROUND OF PROCE EDINGS BUT IN FACT IT IS ON THIS BASIS THAT THE AO HAS MADE HIGHER DISALL OWANCE OF RS.15.89 LAKHS WHICH INCLUDED ALLEGED NON-GENUINE PURCHASES FROM M/S. KAMAL SYNTHETICS AMOUNTING TO RS.7.43LAKHS. THE LEARNED AR ACCORDINGLY SUBMITTED THAT THE AO HAVING APPLIED IT MIND ON THE FACTS EARLIER AND HAVING DISALLOWED CERTAIN AMOUNT OUT OF SUCH TRANSA CTION, THE ACTION OF THE AO IS DEVOID OF LEGITIMACY IN MAKING SEPARAT E DISALLOWANCE. 4. THE LEARNED DR, ON THE OTHER HAND, RELIED UPON T HE ORDER OF THE AO PASSED UNDER S.143(3) R.W.S. 263 OF THE ACT. 5. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS PLA CED ON BEHALF OF THE RESPECTIVE PARTIES. WE STRAIGHTWAY NOTICE T HAT THE AO HAD MADE NECESSARY INQUIRIES TOWARDS JOB WORK CHARGES IN THE FIRST ROUND OF PROCEEDINGS AND ON CONSIDERATION OF SUCH INQUIRIES AND REPLIES RECEIVED FROM VARIOUS SUPPLIERS/PARTIES WAS NOT SAT ISFIED WITH THE QUALITY OF THE EXPENSES INCURRED. THE AO ACCORDING LY APPLIED ITS QUASI-JUDICIAL MIND AND MADE AN ESTIMATED DISALLOWA NCE OF RS.15.89 LAKHS ON THE SAME GROUND WHICH IS FAR IN EXCESS OF THE PAYMENT MADE TO M/S. KAMAL SYNTHETICS. IN SUCH CIRCUMSTANCES, W E DO NOT FIND ANY VISIBLE JUSTIFICATION FOR MAKING SEPARATE DISALLOWA NCE BASED ON SAME REASONS. THE ACTION OF THE AO IS CLEARLY VITIATED IN LAW AND ON FACTS. THUS, WE SET ASIDE THE ORDER OF THE REVENUE AUTHORI TIES IN THIS REGARD ITA NO.2547/AHD/15 [KAILASHCHANDRA A. HUF VS. ITO] A.Y. 2009-10 - 4 - AND DIRECT THE AO TO DELETE THE SEPARATE DISALLOWAN CE OF RS.7,43,104/- IDENTIFIABLE TO M/S. KAMAL SYNTHETICS. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. SD/- SD/- (MAHAVIR PRASAD) (PRADIP KUMA R KEDIA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: DATED 01/11/2018 TRUE COPY S. K. SINHA !'#' / COPY OF ORDER FORWARDED TO:- &. / REVENUE 2. / ASSESSEE (. )*+ , / CONCERNED CIT 4. ,- / CIT (A) /. 012 33*+4 *+#4 56) / DR, ITAT, AHMEDABAD 7. 289 : / GUARD FILE. BY ORDER / 4 /5 *+#4 56) THIS ORDER PRONOUNCED IN OPEN COURT ON 01/11/ 2018