The ITO, Ward-3(2), JAMNAGAR V. M/s. Swastik Enterprises, Jam-Khambhalia

ITA 289/RJT/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 76384 (ITAT-RAJKOT)
• Duration Of Justice: 2 year(s) 6 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-01-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 09-01-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 22-06-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR JAYANT B JHAVERI
• Assessee Lawyers: CHETAN AGARWAL CA
• Keywords: Corroborative evidences
• Section: 43B; 143(3)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBULAL; RAJKOT BENCH, RAJKOT BEFORE SHRI T. K. SHARMA, JM AND SHRI B. R. JAIN, A M ITA NO. 289/RJT/2011 / ASSESSMENT YEAR : 2006-07 INCOME-TAX OFFICER, WARD-3(2), JAMNAGAR ( / APPELLANT) M/S. SWASTIK ENTERPRISE, TIRUPATI SOCIETY, STATION ROAD, JAM-KHAMBHALIA, DIST. JAMNAGAR PAN : ABBFS 1582 P / RESPONDENT ! '# / REVENUE BY DR. JAYANT B. JHAVERI, DR $% ! '# / ASSESSEE BY SHRI. CHETAN AGARWAL, CA ' & ' %( / DATE OF HEARING 09.01.2014 ) %( / DATE OF PRONOUNCEMENT 10.01.2014 / ORDER .. , / T. K. SHARMA, J. M.: THIS APPEAL BY THE REVENUE IS AGAINST THE ORDER DATED 04.04.2011 OF LD. CIT(A), J AMNAGAR FOR THE ASSESSMENT YEAR 2006-07. 2. THE FACTS, IN BRIEF, ARE THAT THE ASSESSEE IS A FIRM, ENGAGED IN THE BUSINESS AS LABOUR CONTRACTOR. FOR THE ASSESSMENT YEAR UNDER AP PEAL, THE TRIBUNAL VIDE ORDER DATED 19.03.2010 RESTORED THE FOLLOWING TWO ISSUES TO THE FILE OF LD. CIT(A) FOR FRESH CONSIDERATION:- 1. THE LEARNED ASSESSING OFFICER HAD ERRED IN LAW A S WELL AS ON FACT IN ESTIMATING NET PROFIT @ 8% OF THE GROSS RECEIPTS. 2. THE LEARNED ASSESSING OFFICER HAD ERRED IN LAW A S WELL AS ON FACT IN MAKING ADDITION OF BONUS U/S 43B AMOUNTING TO RS.30,50,340 /-. IN THE IMPUGNED ORDER, AFTER RECONSIDERING BOTH THE AFORESAID ISSUES, THE LD. CIT(A) DELETED BOTH THE ADDITIONS. THE NET PROFIT ADDITION DELETED BY THE LD. CIT(A) FOR THE DETAILED REASON GIVEN IN PARAGRAPH 5 OF THE IMP UGNED ORDER, WHICH READS AS UNDER:- 5. I HAVE CAREFULLY CONSIDERED THE ISSUE; IT IS SE EN THAT THE AO HAS ESTIMATED NET PROFIT AT THE RATE OF 8% OF GROSS RECEIPTS SINC E THE APPELLANT HAS NOT ATTENDED ASSESSMENT PROCEEDINGS. THE AR HAS PRODUCED ALL BO OKS OF ACCOUNTS AND SUPPORTING EVIDENCES BEFORE ME. HOWEVER AT THIS STA GE IT CANNOT BE CONSIDERED. HOWEVER, THE ESTIMATE MADE BY ASSESSING OFFICER IS ON THE HIGHER SIDE BECAUSE EVEN IF PROFIT RATE IS TO BE ESTIMATED, THESE HAS T O BE SAME BASIS FOR THAT. 289-RJT-2011 - SWASTIK ENTERPRISE 2 APPELLANTS OWE CASE FOR AY 2007-08 AND AY 2008-09 W ERE ASSESSED U/S 143(3) BY ACIT, CIRCLE 3, JAMNAGAR. IN WHICH AFTER CONSID ERING ADDITIONS MADE IN THE ASSESSMENT NET PROFIT COMES TO AT 1.23% AND 1.48% R ESPECTIVELY. ALL FACTS OF THESE ASSESSMENT YEARS ARE SAME AS THAT OF CURRENT YEAR, HENCE AO IS DIRECTED TO ADOPT NET PROFIT RATE OF 1.50% OF GROSS RECEIPTS AGAINST 8% ADOPTED BY HIM, TAKING INTO ACCOUNT THE PAST HISTORY OF THE CASE. 3. THE OTHER ADDITION REGARDING THE OUTSTANDING BON US OF RS.30,50,340/- WHICH WAS MADE BY THE ASSESSING OFFICER U/S 43B OF THE INCOME -TAX ACT, 1961 IS ALSO DELETED BY THE LD. CIT(A) IN THE IMPUGNED ORDER. THE OPERATIV E PORTION OF THE ORDER IS CONTAINED IN PARAGRAPH 8 OF THE IMPUGNED ORDER, WHICH READS AS U NDER:- 8. I HAVE CAREFULLY CONSIDERED THE ISSUE, IT IS SE EN THAT THE ASSESSING OFFICER HAD DISALLOWED OUTSTANDING BONUS OF RS.30,50,340/- U/S 43B OF THE ACT. THE APPELLANT HAS PRODUCED BONUS PAYMENT REGISTER AND L EDGER ACCOUNT FROM BOOKS. IT IS MATTER OF FACT THAT THE APPELLANT HAS PAID BO NUS ON 27.08.2006. THE SAID REGISTER AND LEDGER ACCOUNT ARE AVAILABLE ON CASE R ECORDS SINCE THE APPELLANT HAS SUBMITTED SAME AT THE TIME OF ORIGINAL APPEAL PROCE EDINGS, COPY OF WHICH WAS ALSO FORWARDED TO AO FOR REMAND REPORT. NEXT ASSESS MENT YEAR 2007-2008, IN WHICH PAYMENT WAS MADE, IS SCRUTINIZED U/S 143(3). CONSIDERING FACTUAL ASPECT AVAILABLE ON RECORD THAT THE BONUS WAS PAID ON 27.0 8.2006, BEFORE FILING OF RETURN U/S 139(1) THERE IS NO JUSTIFICATION IN MAKING DISA LLOWANCE U/S 43B. HENCE, ADDITION OF RS.30,50,340/- IS HEREBY DELETED. AGGRIEVED WITH THE ORDER OF LD. CIT(A), THE REVENU E IS NOW IN APPEAL BEFORE THIS TRIBUNAL ON THE FOLLOWING GROUNDS:- 1. THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN EST IMATING THE NET INCOME OF THE ASSESSEE @ 1.50 OF GROSS RECEIPTS AS AGAINST @ 8% ESTIMATED BY THE ASSESSING OFFICER. 2. THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELE TING ADDITION OF RS.3050340/- MADE BY THE ASSESSING OFFICER U/S 43B OF THE ACT. 4. AT THE TIME OF HEARING BEFORE US, ON BEHALF OF T HE REVENUE, DR. JAYANT B. JHAVERI, DR, APPEARED AND POINTED OUT THAT WHILE RECONSIDERI NG BOTH THE AFORESAID ISSUES, THE ASSESSEE DID NOT PRODUCE ANY EVIDENCE IN THE ORIGIN AL ASSESSMENT PROCEEDINGS BEFORE THE ASSESSING OFFICER OR DURING THE DE NOVO ASSESSM ENT PROCEEDINGS; THEREFORE, THE LD. CIT(A) IS NOT JUSTIFIED IN DELETING BOTH THE ADDITI ONS/DISALLOWANCES. 5. AS AGAINST THIS, THE LD. COUNSEL OF THE ASSESSEE VEHEMENTLY SUPPORTED THE ORDER OF LD. CIT(A). THE LD. COUNSEL OF THE ASSESSEE POIN TED OUT THAT THE ASSESSEE HAS PRODUCED ALL THE BOOKS OF ACCOUNTS AND SUPPORTING E VIDENCES BEFORE THE LD. CIT(A). THE POWERS OF CIT(A) ARE CO-TERMINUS WITH THAT OF T HE ASSESSING OFFICER AS OBSERVED BY 289-RJT-2011 - SWASTIK ENTERPRISE 3 THE HONBLE SUPREME COURT IN THE CASE CIT VS. KANPU R COAL SYNDICATE, (1964) 53 ITR 225 (SC). WITH REGARD TO DELETING THE DISALLOWANCE OF OUTSTANDING BONUS U/S 43B, THE LD. COUNSEL OF THE ASSESSEE POINTED OUT THAT THE BONUS WAS PAID ON 27.08.2006, BEFORE FILING THE RETURN OF INCOME AND THEREFORE, THE VIEW TAKEN BY THE LD. CIT(A) BE UPHELD. 6. AFTER HEARING BOTH THE SIDES, WE HAVE CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE NP DECLARED BY THE ASSESSEE IN THE CURRENT YEAR IS COMPARABLE WITH THE NP DECLARED IN THE SUBSEQUENT YEARS. KEEPI NG IN VIEW OF THIS CONSPICUOUS FACTS, THE LD. CIT(A) DELETED THE ADDITIONS AFTER E XAMINING THE BOOKS OF ACCOUNTS; THEREFORE, WE INCLINE TO UPHELD THE ORDER OF LD. CI T(A). GROUND NO.1 IS REJECTED. 7. IN RESPECT OF GROUND NO.2, ADMITTEDLY THE ASSESS EE HAS PAID BONUS ON 27.08.2006 I.E. BEFORE FILING THE RETURN OF INCOME U/S 139(1) OF THE INCOME-TAX ACT, 1961. THEREFORE, THE LD. CIT(A) IS LEGALLY AND FAC TUALLY CORRECT IN DELETING THE DISALLOWANCE OF OUTSTANDING BONUS OF RS.30,50,340/- WHICH WAS MADE BY THE ASSESSING OFFICER U/S 43B OF THE INCOME-TAX ACT, 1961. THIS GROUND OF APPEAL IS ALSO REJECTED. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. THIS ORDER PRONOUNCED IN OPEN COURT ON THE DATE MEN TIONED HEREINABOVE. SD/- SD/- (B. R. JAIN) (T. K. SHARM A) #( '* / ACCOUNTANT MEMBER '* /JUDICIAL MEMBER *#+ ,*-/ ORDER DATE 10.01.2014 /RAJKOT *BT / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT- INCOME-TAX OFFICER, WARD-3(2), JAMNAGA R 2. /RESPONDENT- M/S. SWASTIK ENTERPRISE,TIRUPATI SOCIE TY, STATION ROAD, JAMNAGAR 3. '-2- % & 3% / CIT, JAMNAGAR 4. & 3%- / CIT(A), JAMNAGAR 5 . 678 % , , / DR, ITAT, RAJKOT 6 . 89 :; / GUARD FILE. *#+ '# / BY ORDER , TRUE COPY PRIVATE SECRETARY, , INCOME TAX APPELLATE TRIBUNAL, RAJKOT.