Shanta Sizewell Pvt.Ltd., Surat V. The ACIT.,Circle-4, Surat

ITA 2643/AHD/2012

• Counselvise Citation: 264320514 RSA 2012
• Duration Of Justice: 1 year(s) 3 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-03-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 03-03-2014
• Assessment Year: 1998-1999
• Appeal Filed On: 26-11-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K C MATHEWS
• Assessee Lawyers: R N VEPARI

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD BEFORE SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER AND SHRI T.R. MEENA, ACCOUNTANT MEMBER ITA NO.2643/AHD/2012 A.Y. 1998-99 SHANTA SIZWELL PVT. LTD., 49/1542, OUTSIDE KAMELA DARWAJA, PIMTEX SUB- STATION COMPOUND, UMARWADA TEKRA, SURAT PAN: AADCS 3057P VS THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-4, SURAT. (APPELLANT) (RESPONDENT) REVENUE BY : SHRI K.C, MATHEWS, SR.D.R., ASSESSEE(S) BY : SHRI R.N. VEPARI, A.R. / DATE OF HEARING : 04/03/2014 / DATE OF PRONOUNCEMENT: 07/03/2014 / O R D E R PER SHRI MUKUL KUMAR SHRAWAT, JUDICIAL MEMBER THIS IS AN APPEAL FILED BY THE ASSESSEE ARISING FRO M THE ORDER OF LEARNED CIT(A)-I, SURAT, DATED 11.09.2012. THE GROU NDS RAISED ARE REPRODUCED BELOW: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND AS PER LAW AND MORE PARTICULARLY IN VIEW OF THE SPECIFIC LIMITED DIRECT IONS OF THE TRIBUNAL, THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN CONFIRMING THE DISALLOWANCE U/S.80IA OVERSTEPPING THE DIRECTIONS O F THE HONBLE TRIBUNAL. 2. THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) WAS NOT JUSTIFIED IN RESORTING TO MATTERS WHICH WERE NOT MENTIONED IN TH E DIRECTIONS OF THE HONBLE TRIBUNAL IN DENYING THE RELIEF. THE APPELLA NT SUBMITS THAT THE SET- ASIDE BEING WITH LIMITED DIRECTIONS, THE DECISION H AD TO BE WITHIN THE BOUNDS PRESCRIBED BY THE TRIBUNAL. 3. WITHOUT PREJUDICE TO THE ABOVE, THE APPELLANT SU BMITS THAT THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) AND THE ASSESSI NG OFFICER IN TRYING TO DECIPHER THE HANDWRITING, WRONGLY ASSUMED THE ROLE OF HANDWRITING EXPERT. ITA NO.2643/AHD/2012 SHANTA SIZWELL PVT. LTD. V/S. ACIT, SURAT. FOR A.Y. 1998-99 - 2 - 2. THE ORDER PASSED U/S.143(3) R.W.S 254, DATED 27. 11.2009 WAS IN CONSEQUENCE OF AN ORDER OF THE TRIBUNAL PASSED BY I TAT C BENCH AHMEDABAD IN ITA NO.1685/AHD/2003, DATED 28.09.2007 TITLED AS SHANTA SIZEWELL PVT. LTD. VS. ITO, SURAT. IN THE SA ID ORDER, FACTS OF THE CASE WERE APPRECIATED THAT THE ASSESSEE WAS HAVING A TEXTURISING MACHINE AND THE ALLEGATION OF THE REVENUE DEPARTMENT WAS TH AT THE EMPLOYEES WERE LESS THAN 10 IN NUMBER. AS PER REVENUE DEPARTM ENT, THERE WAS CERTAIN DISCREPANCY IN RESPECT OF WAGES FOR THE MON TH OF APRIL, 1997 TO MARCH, 1998. SALARY REGISTER OF THE ASSESSEE WAS PR ODUCED AND ON THAT BASIS IT WAS OPINED BY THE REVENUE DEPARTMENT THAT THE NUMBER OF EMPLOYEES WERE LESS THAN 10 IN NUMBER, THEREFORE, C LAIM OF DEDUCTION U/S.80IA FOR A.Y. 1998-99 WAS REJECTED. ON HEARING BOTH THE SIDES, THE TRIBUNAL HAS RESTORED THE ISSUE BACK TO THE STAGE O F THE ASSESSMENT IN THE FOLLOWING MANNER: WE HAVE HEARD THE RIVAL SUBMISSIONS OF BOTH THE PA RTIES. LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND FROM THE ASS ESSMENT ORDER THAT THE BOOKS OF ACCOUNT HAVE NOT BEEN REJECTED. THE ASSESS EE HAS MAINTAINED THE SALARY REGISTER FOR EVERY MONTH AND ALSO THE SALARY PAID TO THE EMPLOYEES HAS BEEN SHOWN IN ITS BOOKS OF ACCOUNT. THEREFORE, WE R EVERSE THE FINDING OF THE CIT(A) AND RESTORE THE MATTER TO THE FILE OF THE AS SESSING OFFICER WITH A DIRECTION TO VERIFY THE SALARY REGISTER, WHICH IS P RODUCED ON PAGE 7 TO 31 OF THE PB AND COPY OF THE WORKERS LABOUR ACCOUNT ON PA GES 31 TO 31 AND RELEVANT CASH BOOK PAGES 33 TO 48 OF THE PB AND COP IES OF KARIGAR VOUCHERS WHICH IS ON PAGES 49 TO 54 OF THE PAPER BOOK. THE A SSESSING OFFICER IS DIRECTED TO VERIFY THESE DOCUMENTS AND IF HE FIND T HAT THE WORKERS EMPLOYED WERE MORE THAN 10, THEN THE AO IS FURTHER DIRECTED TO ALLOW THE CLAIM OF DEDUCTION U/S.80IA. THE CASE IS THEREFORE RESTORED TO THE FILE OF THE AO FOR THE ABOVE PURPOSE. 2.1 IN CONSEQUENCE THEREUPON, THE AO HAS PROCEEDED WITH THE MATTER. ACCORDING TO HIM, THE WAGES REGISTER WAS IN DIFFERE NT HANDWRITING AND THE COLUMNS WERE WRITTEN IN TWO HANDWRITING WHICH H AS CASTED A DOUBT ABOUT THE CORRECTNESS OF THE SAID REGISTER. THE AO HAS ALSO NOTED THAT ONE OF THE DIRECTORS HAD STATED IN A STATEMENT THAT THE RE WERE ONLY FOUR ITA NO.2643/AHD/2012 SHANTA SIZWELL PVT. LTD. V/S. ACIT, SURAT. FOR A.Y. 1998-99 - 3 - EMPLOYEES. THERE WAS A MENTION OF AN ANOTHER STATEM ENT RECORDED BY THE AO. AFTER ASSIGNING THOSE REASONS, THE AO HAS HELD AS UNDER: IN VIEW OF THE ABOVE FACT FINDING I AM OF THE OPIN ION THAT THE ASSESSEE HAD EMPLOYED ONLY FOUR EMPLOYEES DURING THE YEAR AND TO AVAIL THE BENEFIT UNDER SECTION IT HAD ALTERED THE RECORDS I.E. WAGES REGIS TER AND ENTERED THE NAMES OF MORE EMPLOYEES SUBSEQUENTLY. THE WAGES REGISTER CAN BE WRITTEN BY A VARIOUS PERSONS. BUT IT CANNOT BE BELIEVED THAT THE FIRST F OUR NAMES HAVE BEEN ENTERED BY ONE PERSON AND NEXT NAMES HAVE BEEN WRITTEN BY A NOTHER PERSON. EVERY MONTH IT CANNOT HAPPEN SO. IT IS BEYOND DOUBT THAT THE RECORDS HAVE BEEN ALTERED. THE ASSESSEE IS MAINTAINING ITS ACCOUNTS I N COMPUTERS. THE WAGES ARE PAID IN CASH. THUS THE ASSESSEE HAD EVERY OPPORTUNI TY TO ALTER ITS RECORD. IN VIEW OF THE FACT THAT THE REGISTERS ARE ALTERED I B ELIEVE THAT THE ASSESEEE HAD EMPLOYED LESS THAN 10 EMPLOYEES AND AS DIRECTED BY THE HONBLE ITAT I DISALLOW THE CLAIM OF THE ASSESSEE MADE UNDER SECTI ON 80IA OF THE ACT. THE PENALTY PROCEEDINGS U/S.271(1)(C) IS ALSO INITIATED FOR FURNISHING INACCURATE PARTICULARS OF INCOME. 2.3 WHEN THE MATTER WAS CARRIED BEFORE LEARNED CIT( A), ACTION OF THE AO WAS CONFIRMED ON THE GROUND THAT IN THE SAID WA GES REGISTER THE FIRST FOUR NAMES OF THE LABOURERS WERE IN ONE HANDW RITING AND REST OF THE NAMES FROM SERIAL NOS.5 TO 10 WERE IN A DIFFERENT H ANDWRITING. LEARNED CIT(A) HAS ALSO NOTED THE STATEMENT OF THE DIRECTOR AND THEREUPON AFFIRMED THE DISALLOWANCE. 3. FROM THE SIDE OF THE ASSESSEE, LEARNED A.R., MR. R.N. VEPARI APPEARED. HIS FIRST EMPHASIS WAS THAT WITHOUT REJEC TION OF BOOKS OF ACCOUNT U/S.145(3) THE REJECTION OF WAGES REGISTER WAS ILLEGAL. HE HAS ALSO INFORMED THAT IN THREE EARLIER YEARS AFTER NOTICING THE DISCREPANCY, THE ASSESSEE HAD VOLUNTARILY WITHDRAWN THE CLAIM U/S.80 IA. HE HAS ALSO INFORMED THAT THE YEAR UNDER CONSIDERATION, I.E., A .Y.1998-99 WAS A LAST YEAR FOR THE CLAIM OF DEDUCTION. HE HAS THEN PLACED RELIANCE ON THE PHOTO COPIES OF THE SALARY REGISTER PLACED IN THE COMPILA TION. HE HAS ALSO ARGUED THAT THE LABOUR EXPENSES OF TEN LABOURERS WERE CLAI MED BY THE ASSESSEE AS PER THE SAID P & L A/C. AND THE INCOME TAX RETURN A ND THAT WAS ACCEPTED ITA NO.2643/AHD/2012 SHANTA SIZWELL PVT. LTD. V/S. ACIT, SURAT. FOR A.Y. 1998-99 - 4 - BY THE AO. THERE WAS NO ALLEGATION WHILE ALLOWING T HE LABOUR WAGES EXPENSES THAT THOSE WERE NOT GENUINE. SO LEARNED AR HAS PLEADED THAT THERE SHOULD NOT BE ANY REASON FOR DISALLOWANCE OF DEDUCTION U/S.80IA ON THAT VERY GROUND. 4. FROM THE SIDE OF THE REVENUE, LEARNED SR.D.R., S RI K.C. MATHEWS APPEARED AND PLEADED THAT THE AO HAD DUTIFULLY COMP LIED WITH THE DIRECTIONS OF THE TRIBUNAL; HENCE, THE DISALLOWANCE SHOULD BE CONFIRMED. ACCORDING TO LEARNED DR, THE IMPUGNED WAGES REGISTE R WAS FUDGED OR MANIPULATED BY THE ASSESSEE. ADMITTEDLY, THE SAID R EGISTER WAS IN TWO HANDWRITING FOR WHICH NO REASONABLE EXPLANATION WAS OFFERED BY THE ASSESSEE SO FAR. RATHER, THE ASSESSEE HAD SUGGESTED IN THE PAST TO ALLOW THE DEDUCTION U/S.80IA ON PRO RATA BASIS BECAUSE FOR NINE MONTHS THERE WAS NO DISPUTE AND IN REST OF THE THREE MONTHS THE ASSE SSEE HAD MADE MANIPULATION IN THE WAGES. 5. WE HAVE HEARD BOTH THE SIDES AT SOME LENGTH. IT IS PERTINENT TO MENTION THAT THIS IS THE SECOND ROUND OF LITIGATION . IN THIS SITUATION, WHEN THE TRIBUNAL HAS RECORDED THE FACTS OF THE CASE AND DECIDED TO RESTORE THE ISSUE BACK TO THE FILE OF THE AO THEN IT IS EXPECTE D FROM THE AO TO SCRUTINIZE THE ISSUE IN DEPTH AS WELL AS IN DETAIL SO THAT THE COMPLIANCE OF THE DIRECTIONS OF THE TRIBUNAL SHOULD BE COMPLETE A ND DEVOID OF ANY FAULT. WE HAVE NOTED THAT, FIRST FINDING OF THE TRIBUNAL W AS THAT THE BOOKS OF ACCOUNT OF THE ASSESSEE HAVE NOT BEEN REJECTED. THI S FACT IS APPARENT FROM THE ASSESSMENT ORDERS. IF THE BOOKS OF ACCOUNT HAVE NOT BEEN REJECTED THEN THE QUESTION IS THAT WHETHER THE AO WAS JUSTIF IED IN REJECTING THE CLAIM OF DEDUCTION U/S.80IA. STRANGELY, THE AO HAD NOT DISALLOWED THE ITA NO.2643/AHD/2012 SHANTA SIZWELL PVT. LTD. V/S. ACIT, SURAT. FOR A.Y. 1998-99 - 5 - EXPENDITURE OF LABOUR WAGES ON THE GROUND THAT IT W AS NOT PROVED OR IT WAS NOT GENUINE. THEN THE QUESTION IS THAT WHY THOS E VERY PAYMENTS HAVE BEEN DOUBTED WHILE COMPUTING THE DEDUCTION U/S. 80I A. FROM THE SIDE OF THE ASSESSEE, FEW CASE LAW HAVE BEEN CITED WHICH AR E LISTED BELOW: 1. VINTAGE CARDS & CREATIONS (59-ITD-563). 2. ORMERODS INDUSTRIES (P) LTD. (176-ITR-470) 3. TALUJA ENTERPRISES (P) LTD. (250-ITR-675) 4. VISHAL S. RUIA (1-SOT-902) 5. MRS. RICHA CHADHA (96-ITD-325) 6. RAJESH KAPILA & OTHERS (22-DTR-569) 6. IN ADDITION TO THE FINDING ON THE BOOKS OF ACCOU NTS, THE TRIBUNAL HAS GIVEN AN ANOTHER FINDING THAT THE ASSESSEE HAD MAINTAINED A SALARY REGISTER FOR EVERY MONTH AND PAID SALARY TO ITS EMP LOYEES. THE TRIBUNAL, THEREFORE, ASKED THE AO TO VERIFY THE SALARY REGIST ER ALONG WITH CASH BOOK AND WORKERS LABOUR ACCOUNT. THE DIRECTION OF THE TRIBUNAL WAS THAT IF THE AO FIND THAT THE WORKERS EMPLOYED WERE MORE THA N 10 THEN DIRECTED TO ALLOW THE CLAIM OF DEDUCTION U/S. 80IA. THE AO H AS NOT STRICTLY ADHERED TO THOSE DIRECTIONS. IN THIS SITUATION, A V IEW WAS TAKEN BY ITAT D BENCH AHMEDABAD IN THE CASE OF DCIT VS. SMT. JA YABEN BHOLABHIA PATEL, BEARING ITA NO. 2867/AHD/2011 FOR A.Y. 2005- 06, DATED 09.11.2012 WHEREIN A VIEW WAS EXPRESSED THAT WHEN T HE TRIBUNAL HAS SET ASIDE THE PROCEEDINGS AND RESTORE THE MATTER BACK T O THE FILE OF THE AO THEN THE AO HAS ACCEPTED TO FOLLOW THE DIRECTIONS I N SUBSTANCE AND PROCEED WITHIN THOSE FOUR CORNERS AS DIRECTED BY TH E TRIBUNAL AND NOT EXPECTED TO EXCEED THE JURISDICTION. IN ADDITION TO ABOVE LEGAL ARGUMENTS, LEARNED AR HAS ALSO PLACED ON RECORD THE NAMES OF T HE WORKERS AND THE DETAILS OF THE DAYS OF THEIR WORKING AS IT WAS FILE D BEFORE THE AO. LEARNED AR HAS ALSO DRAWN OUR ATTENTION ON THE VOUCHERS WHI CH WERE ASSIGNED BY THOSE WORKERS, STATED TO BE PART OF THE RECORD OF T HE ASSESSEE. THUS, ITA NO.2643/AHD/2012 SHANTA SIZWELL PVT. LTD. V/S. ACIT, SURAT. FOR A.Y. 1998-99 - 6 - CONSIDERING THE TOTALITY OF THE CIRCUMSTANCES OF TH E CASE AND THE EVIDENCE PLACED ON RECORD, WE HEREBY HOLD THAT MERELY CASTIN G DOUBT ON HANDWRITING WHICH WAS PROPERLY CONFRONTED, THE AO W AS NOT JUSTIFIED IN REJECTING THE CLAIM OF DEDUCTION U/S.80IA FOR THE Y EAR UNDER CONSIDERATION. WE HEREBY REITERATE THAT BY THIS VER DICT INFORMATION OF OTHER YEARS ARE NOT EFFECTED BECAUSE IN THE PAST TH E ASSESSEE HAS SUO MOTU WITHDRAWN THE CLAIM AND THE YEAR UNDER CONSIDERATIO N, I.E., A.Y. 1998-99 WAS THE LAST YEAR OF THE CLAIM. RESULTANTLY, GROUND S RAISED BY THE ASSESSEE ARE HEREBY ALLOWED. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . SD/- SD/- (T.R. MEENA) (MUKUL KR. SHRAWAT) ACCOUNTANT MEMBER JUD ICIAL MEMBER AHMEDABAD; DATED 07/03/2014 PRABHAT KR. KESARWANI, SR. P.S. / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A)-III, AHMEDABAD 5. , , / DR, ITAT, AHMEDABAD 6. / GUARD FILE. / BY ORDER, / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD