Smt. Jayaben Bholabhai Patel, Surat V. The ACIT, Circle-9, Surat

ITA 2847/AHD/2007

• Counselvise Citation: 284720514 RSA 2007
• Duration Of Justice: 4 year(s) 5 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-12-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 29-12-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 02-07-2007
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: B L YADAV SRDR
• Keywords: Business income; Principle of natural justice; Additional evidence
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD AHMEDABAD D BENCH BEFORE SHRI G.C.GUPTA, VICE-PRESIDENT (AZ) AND SHRI B.P. JAIN, ACCOUNTANT MEMBER ITA NO.2847 & 3332/AHD/2007 ASSESSMENT YEAR:2004-05 SMT. JAYABEN BHOLABHAI PATEL, PROP. OF JAY IMPE, MANINAGAR SOCIETY, A.K. ROAD, SURAT PAN NO.AFJPP2200D INCOME TAX OFFICER, WARD-9(2), ROOM NO. 421, AAYKAR BHAVAN, MAJURA GASTE, SURAT / V/S . / V/S . INCOME TAX OFFICER, WARD-9(2), SURAT SMT. JAYABEN BHOLABHAI PATEL, PROP. JAY IMPEX, 7, MANI NAGAR SOCIETY, A.K. ROAD, SURAT / APPELLANT .. / RESPONDENT ASSESSEE BY NONE REVENUE BY SHRI B.L. YADAV, SR-DR / DATE OF HEARING 29-12-2001 / DATE OF PRONOUNCEMENT 30 -12-2001 ! ! ! ! / / / / ORDER PER B.P. JAIN, ACCOUNTANT MEMBER:- THESE CROSS-APPEALS OF THE ASSESSEE AND THE REVENU E ARISE FROM THE ORDER OF LD. COMMISSIONER OF INCOME-TAX (APPEALS)-V, SURAT D ATED 04-05-2007 FOR THE ASSESSMENT YEAR 2004-05. FIRST WE TAKE UP REVENUES APPEAL IN ITA NO.3332/AH D/2007. 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE CIT(A) HAS ERRED IN ALLOWING RELIEF OF RS.1,63,14,139/- AS AGAINST THE ADDITION OF RS.1,81,26,821/- MADE BY THE A.O UNDER THE HEAD SUP PRESSION OF THE CLOSING STOCK OF ROUGH DIAMOND, WITHOUT APPRECIATING THE VA RIOUS DEFICIENCIES DETECTED BY THE A.O. ITA NO.2847& 3332/AHD/2007 A.Y. 2004-05 SMT. JAYABEN B PATEL V. ITO WD-9(2) SRT PAGE 2 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE CIT(A) HAS ERRED IN ALLOWING I.E. RS.3,95,120/- OUT OF T HE TOTAL DISALLOWANCES RS.7,20,239/- IN RESPECT OF LABOUR CHARGES DISALLOW ED BY THE A.O. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE CIT(A) HAS ERRED IN ADJUDICATING THE ORDER PASSED BY THE A .O BY ADMITTING ADDITIONAL EVIDENCE WITHOUT SENDING AN APPEAL MEMO AND WITHOU T CALLING FOR A REMAND REPORT FROM THE A.O THEREBY VIOLATING THE BASIC PRI NCIPLES OF NATURAL JUSTICE AS WELL AS RULE 46A OF THE I.T. RULES, 1962. 4. IT IS, THEREFORE, PRAYED THAT THE APPEAL ORDER P ASSED BY THE HONBLE CIT(A) BE SET ASIDE AND THAT THE ASSESSMENT ORDER PASSED B Y THE ASSESSING OFFICER U//S 143(3) DATED 29.12.2006 BE RESTORED. 3. GROUND NO.1 OF REVENUES APPEAL IS THE BRIEF FAC TS THAT THE ASSESSEE ENGAGED IN THE BUSINESS OF MANUFACTURING AND TRADIN G DIAMOND. THE ASSESSEE HAS DECLARED TOTAL SALES OF RS.5,13,19,065/- AND DECLAR ED A GROSS PROFIT OF RS.8,29,505/- WHICH WORKS OUT TO AT 1.59% OF THE TOTAL TURNOVER. THE ASSESSEE IMPORTS ROUGH DIAMOND AND GIVES IT FOR MANUFACTURING. THE MANUFAC TURING IS DONE THROUGH VARIOUS LABOUR PARTIES AND ALSO THROUGH LABOURS TO WHOM CAS H BELOW OF RS.20,000/- IS MADE. THE ASSESSEE HAS INCURRED EXPENDITURE OF RS.64,53,3 30/- TOWARDS LABOUR CHARGES OUT OF WHICH RS.39,51,195/- HAS BEEN PAID IN CASH. IT WAS NOTICED THAT A UNIFORM PRINTED PRO FORMA WITHOUT HAVING ANY PRINTED SS ARE THERE IN RESPECT OF CASH VOUCHERS. THE ASSESSEE HAS NOT PRODUCED ANY DETAILS REGARDING PIECES OF DIAMOND PRODUCED BY ANY OF THE LABOUR. THE ASSESSEE HAD MAD E THE ENTIRE LABOUR VOUCHERS WHICH ARE SELF-MADE. THE ASSESSING OFFICER OBSERVED THAT METHOD IS NOT PERFECT AND ACCORDINGLY INVOKED THE PROVISIONS OF U/S 143(3) OF THE ACT. THE ASSESSEE HAS VALUED THE CLOSING STOCK OF ROUGH DIAMOND @ RS.560/- PER C ARAT FOR 9757.28 CARAT OF ROUGH DIAMOND. THE ASSESSEE HAS PURCHASED ROUGH QUALITY A ND HIGH VALUE ROUGH DIAMOND DURING THE FEB. & MARCH 04. THE VALUE DECLARED BY THE ASSESSEE DID NOT TALLY WITH THE VALUE OF DIAMOND. FOR THE EXPLANATION PRODUCED IN RESPONSE TO SHOW-CAUSE, THE AO WAS NOT FOUND SATISFACTORY AND THEREFORE THE AO BY OBSERVING AT PAGES 5 TO 26 OF HIS ORDER WORKED OUT THE DIFFERENCE AT RS.1,81,26,8 21/- AND ADDED THE SAME TO THE INCOME OF THE ASSESSEE. 4. THE LD. CIT(A) UPHELD THE PROVISIONS OF U/S 145( 3) OF THE ACT AND THE ADDITIONS MADE BY ASSESSING OFFICER FOR THE REASON MENTIONED IN HIS ORDER. ITA NO.2847& 3332/AHD/2007 A.Y. 2004-05 SMT. JAYABEN B PATEL V. ITO WD-9(2) SRT PAGE 3 5. IT WAS OBSERVED BY THE LD. CIT(A) THAT THE ASSES SING OFFICER HAS APPLIED FIFO WORKING METHOD AND HAS DISREGARDED THE ROUGH REJECT ION OF STOCK AS CLAIMED BY THE ASSESSEE. THE LD. CIT(A) HAS TAKEN INTO CONSIDERATI ON THE WORKING OF THE LD. AR WHO APPEARED FOR THE ASSESSEE AND THE WORKING OF TH E AO AND OBSERVED THAT THE LD. AR HAS PLEADED THAT ROUGH STOCK AS ON 31 ST MARCH, 2004 WAS SHOWN AT 9.2496 CARAT AND THE SAME WAS REFLECTED AT 9357.28 CARAT AS TAKE N BY THE AO. ACCORDINGLY, THE LD. CIT(A) VIDE PARA-5.7 OF HIS ORDER ESTIMATED THE TOTAL ADDITION AT 1/10 TH TOTAL ADDITION MADE AND IN THIS REGARD HE RESTRICTED THE ADDITION VIDE PARA 5.1.3 OF HIS ORDER AT RS.18,12,682/-. 6. SINCE NONE-APPEARED ON BEHALF OF THE ASSESSEE AN D THEREFORE WE DECIDE THE ISSUE EX PARTE ON THE BASIS OF MATERIAL AVAILABLE O N RECORD AND HEARING LD. DR WE CONCUR WITH THE VIEWS OF LD. CIT(A) WHO HAS EXTENSI VELY EXAMINED THE ISSUE AND HAS TAKEN INTO CONSIDERATION THE WORKING OF THE ASSESSE E AS WELL AS THAT OF THE ASSESSING OFFICER AND HAS GIVEN A VERY REASONABLE FINDING VID E PARA 5.1.3 OF HIS ORDER. IT HAS RIGHTLY BEEN OBSERVED BY THE LD. CIT(A) THAT OUT OF PURCHASES MADE ON 7977.90203 OF 1.93.31 CARAT @ RS.6770.93 PER CARAT, THE ONLY 2 5 CARAT OF ROUGH DIAMOND WAS FOUND REJECTED FROM THE WHOLE LOT. FURTHER, OUT OF PURCHASE 150 CARAT @ 275 PER CARAT THE QUANTITY REJECTED ROUGH WAS 137.55 CARAT. THE ASSESSEE HAS GIVEN THE MONTH-WISE PURCHASE OF ROUGH DIAMOND ALONG WITH QUA NTITY OF REJECTED ROUGH ACCRUED OUT OF IT WHERE THE ASSESSEE HAD SOLD REJEC TED ROUGH DIAMOND AT 8255.70 CARAT AND ACCORDINGLY TILL THE END OF AUG. 03 SHE HAD ONLY 478.80 CARAT OF ROUGH REJECTION STOCK. SIMILARLY, THE LD. CIT(A) HAS DISC USSED AND GIVEN THE FINDINGS WHICH APPEAR TO BE REASONABLE AND ACCORDINGLY THE CLAIM O F THE ASSESSEE OF ROUGH REJECTION AT 8432.32 CARAT AS ON 31 ST MARCH, 2004 WAS NOT FOUND TO BE CORRECT WHICH APPEARED TO BE EXCESSIVE CLAIMED. THE LD. CIT(A) TH EREFORE FAIRLY HAS RESTRICTED THE ADDITION AT 1/10 TH AT RS.18,12,682/-AND WE FIND NO INFIRMITY IN HIS O RDER. THUS, GROUND NO.1 OF REVENUES APPEAL IS DISMISSED. 7. AS REGARDS TO GROUND NO.2 THE BRIEF FACTS ARE TH AT ASSESSING OFFICER OBSERVED THAT ASSESSEE HAS PAID RS.64,53,313/- TOWARDS LABOU R CHARGES OUT OF WHICH RS.39,51,195/- HAVE BEEN CLAIMED TO HAVE BEEN MADE IN CASH. THE EXPLANATION GIVEN BY THE ASSESSEE IN RESPONSE TO SHOW-CAUSE GIV EN BY THE ASSESSING OFFICER WAS NOT FOUND SATISFACTORY. THE ASSESSEE STATED THA T SMALL PACKETS OF ROUGH ITA NO.2847& 3332/AHD/2007 A.Y. 2004-05 SMT. JAYABEN B PATEL V. ITO WD-9(2) SRT PAGE 4 DIAMOND ARE BEING GIVEN TO THESE PERSONS FOR MANUFA CTURING AND THE AMOUNT INVOLVED IS SMALL. ON EXAMINATION OF MANUFACTURING DONE BY THE NUMEROUS PERSONS AS COMPARED TO ASSESSEES REGULAR LABOUR PARTIES, T HE YIELD ACHIEVED BY THESE PERSONS IS LESS THAN WHAT THE ASSESSEE GETS FROM RE GULAR LABOUR PARTIES. THE ASSESSEE HAD PRODUCED THE RATE PER CARAT FOR REGULA R LABAOUR PARTIES WHICH IS @ 365.62 PER CARAT AND FOR CASH LABOUR IT COMES TO RS .350/-. IT WAS OBSERVED BY THE AO THAT THE PAYMENT TO THESE SMALL LABOURS IN CASH IS MADE AFTER 1 AND MONTH FOR GETTING POLISHED DIAMOND. THE ENTIRE CASH LABOUR VO UCHERS ARE PREPARED BY THE ASSESSEE ARE SELF-MADE VOUCHERS WHICH ARE MADE IN O NE SITTING BY ONE PERSON, THE SUCH EXPENSES THEREFORE REMAINED UN-VERIFIABLE AND AO DISALLOWED 20% OF CASH LABAOUR PAYMENTS WHICH COMES AT RS.7,90,239/- WHICH WAS ADDED TO THE INCOME OF THE ASSESSEE. 8. THE LD. CIT(A) RESTRICTED THE SAME AT RS.3,95,11 9/- AND ALLOWED RELIEF TO THE ASSESSEE. 9. WE HAVE HEARD THE LD. DR AND PERUSED THE MATERIA L ON RECORD. WE CONCUR WITH THE VIEWS OF LD. CIT(A) THAT THE ASSESSEE HAS MAINTAINED THE DETAILS OF PAYMENTS IN THE FORM OF LABOUR VOUCHERS AND IN VIEW OF THE DECISION OF ANISH B SHAH (HUF), THE ADDITION MADE BY THE ASSESSING OFFICER APPEARS TO BE ON THE HIGHER SIDE. THEREFORE, WE FIND NO INFIRMITY IN THE ORDER OF LD. CIT(A), WHO HAS RIGHTLY RESTRICTED THE ADDITION OF RS.3,95,119/-. THUS, GROUND NO.2 OF THE REVENUES APPEAL IS DISMISSED. 10. AS REGARDS TO GROUND NO.3, THE REVENUE HAS AGIT ATED THE ORDER OF LD. CIT(A) WITHOUT ADMITTING THE ADDITIONAL EVIDENCE. WE HAVE HEARD LD. DR AND PERUSED THE MATERIALS AVAILABLE ON RECORD. 11. FROM THE PERUSAL OF RECORD, IT APPEARS THAT ALL THE DETAILS WERE AVAILABLE BEFORE THE ASSESSING OFFICER AND THE LD. AR HAS SUBMITTED THE VARIOUS CALCULATIONS BEFORE THE LD. CIT(A) WHICH WERE SUBMITTED BEFORE THE ASSE SSING OFFICER. THEREFORE, THIS IS NOT THE CASE OF ADMITTING ADDITIONAL EVIDENCES. THU S, GROUND NO.3 OF REVENUES APPEAL IS DISMISSED. ITA NO.2847& 3332/AHD/2007 A.Y. 2004-05 SMT. JAYABEN B PATEL V. ITO WD-9(2) SRT PAGE 5 11. IN THE RESULT, REVENUES APPEAL IS DISMISSED. NOW WE TAKE UP ASSESSEES APPEAL IN ITA NO.2847/AHD /2007. 12. THIS APPEAL IS FIXED FOR HEARING TODAY AND NONE APPEARED ON BEHALF OF THE ASSESSEE NOR FILED ANY ADJOURNMENT PETITION. HENCE UNDER THESE FACTS, WE PRESUME THAT ASSESSEE IS NOT INTERESTED IN PROSECUTING THIS APPEAL AND ACCORDINGLY, FOLLOWING THE DECISION OF THE MULTIPLAN (INDIA) (P) LTD., (38 ITD 320) , WE DISMISS THE APPEAL FILED BY THE ASSESSEE FOR WANT OF PROSECUTION. 13. IN THE RESULT, ASSESSEE APPEAL DISMISSED FOR N ON-PROSECUTION. 14. IN THE RESULT, REVENUES APPEAL IN ITA NO.3332/AHD/2007 IS DISMISSED AND THAT OF ASSESSEES APPEAL IN ITA NO.2847/AHD/2007 IS DISMISSED FOR NON- PROSECUTION. ' ! #$% 30 / 12 /2011 ) * + , THIS ORDER PRONOUNCED IN OPEN COURT ON 30/12/ 2011 . SD/- SD/- ( G.C.GUPTA ) ( B.P. JAIN ) (VICE PRESIDENT) (ACCOUNTANT MEMBER) #$%- 30/12/2011 . , DKP* ! ! ! ! //0 //0 //0 //0 1 0 1 0 1 0 1 0 / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT 2. / RESPONDENT 3. $$/4 5 / CONCERNED CIT 4. 5- / CIT (A) 5. 08+ ///4, /4, . / DR, ITAT, AHMEDABAD 6. +;< =' / GUARD FILE. BY ORDER/ ! , /TRUE COPY/ >/. $? /4, . ,