Bhagwanjibhai K. Shiyani, RAJKOT-GUJARAT V. The Assistant Commissioner of Income Tax, Circle-5, RAJKOT-GUJARAT

ITA 308/RJT/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 1274 (ITAT-RAJKOT)
• Duration Of Justice: 2 year(s) 10 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-05-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 18-05-2016
• Assessment Year: 2004-2005
• Appeal Filed On: 09-07-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: C S ANJARIA
• Assessee Lawyers: DM RINDANI
• Keywords: Unexplained investment; Business income; Business expenditure; Corroborative evidences
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, RAJKOT BENCH, RAJKOT [CONDUCTED THROUGH E - COURT AT AHMEDABAD] BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ./ ITA NO. 308 / RJT /20 1 3 / ASSESSMENT YEAR: 200 4 - 0 5 BHAGWANJIBHAI K. SHIYANI, PROP. OF M/S. R.K. FORGING, C/O. R.K. GEMS & JEWELLERY PVT LTD, SONI BAZAR, RAJKOT PAN : AGNPS 8004 K VS THE ASSISTANT COMMISSIONER OF INCOME - TAX, CIRCLE - 5, RAJKOT / (APPELLANT) / (RESPONDENT) ASSESSEE(S) BY : SHRI D.M. RINDANI, CA REVENUE BY : SHRI C.S. ANJARIA, SR. DR. / DATE OF HEARING : 18 / 0 5 /201 6 / DATE OF PRONOUNCEMENT: 20 / 0 5 /201 6 / O R D E R PER KUL BHARAT, JUDICIAL MEMBER : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) - I V , RAJKOT , DATED 16 . 05 .20 13 FOR ASSESSMENT YEAR 200 4 - 0 5 . 2. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: - 1 . THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - IV, RAJKOT ERRED IN UPHOLDING THE VIEW OF THE ASSESSING OFFICER THAT THE SUPPRESSED JOB WORK RECEIPTS OF RS.2,82,240/ - WERE NET OF EXPENSES AND THEREFORE FURTHER ERRED IN NOT A LLOWING CORRESPONDING EXPENSES OF RS.2,55,698/ - FOR EARNING SUCH INCOME. 2 . THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - IV, RAJKOT ERRED IN SUSTAINING THE ADDITION OF RS.4,06,022/ - MADE BY THE ASSESSING OFFICER BY WAY OF INFLATED FURNACE OIL EXPENSES. 3. BRIEFLY STATED FACTS ARE THAT THE CASE OF THE ASSESSEE WAS REOPENED AND ASSESSMENT U/S 143(3) R.W.S. 147 OF THE INCOME - TAX ACT, 1961 ITA NO. 308/RJT/ 2013 BHAGWANJIBHAI K. SHIYANI VS. ACIT FOR AY 2004 - 05 2 (HEREINAFTER REFERRED TO AS 'THE ACT') WAS FRAMED VIDE ORDER DATED 27 .12.2010. WHILE FRAMING THE ASSESSMENT, THE ASSE SSING OFFICER MADE ADDITION OF RS. 4,06,022/ - ON ACCOUNT OF INFLATED EXPENDITURE TOWARDS OIL CONSUMPTION AND RS.2,82,240/ - ON ACCOUNT OF SUPPRESSION OF JOB WORK RECEIPTS. THE ASSESSEE, BEING AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER, PREFERRED AN AP PEAL BEFORE THE LD. CIT(A) WHO, AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND MATERIAL AVAILABLE ON RECORD, DISMISSED THE APPEAL OF THE ASSESSEE. AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE ASSESSEE IS FURTHER IN APPEAL BEFORE US. 4. GROUND NO.1 IS AGAINST THE CONFIRMATION OF ADDITION OF RS.2,82,240/ - MADE ON ACCOUNT OF SUPPRESSION OF JOB WORK RECEIPTS. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE AUTHORITIES BELOW WERE NOT JUSTIFIED IN MAKING ADDITION AND CONFIRMING THE SAME. HE SUBMITTED THAT THERE IS NO DISPUTE WITH REGARD TO THE FACT THAT WHAT IS SUPPRESSED IS THE BUSINESS RECEIPT AND AUTHORITIES BELOW OUGHT TO HAVE CONSIDERED THE CORRESPONDING EXPENDITURE INCURRED FOR EARNING SUCH RECEIPTS. THE LD. COUNSEL FOR THE ASSESSEE FURTHER SUBMITTED THAT WHAT IS TO BE TAXED IS THE PROFIT AND NOT THE RECEIPTS. IN SUPPORT OF THIS CONTENTION, HE RELIED UPON THE JUDGMENT OF HONBLE GUJARAT HIGH COURT IN THE CASE OF THE COMMISSIONER OF INCOME TAX VS. GURUBACHHAN SINGH J. JUNEJA , REPORTED IN (2008) 302 ITR 0063 . ON THE CONTRARY, LD. SR. DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT THE ASSESSEE HAS ADMITTED THE FACT OF JOB RECEIPTS AND THE SAME ARE TREATED AS NET RECEIPTS AS THE ASSESSEE HAS NOT DEMONSTRATED BY PLACING ANY MATERIAL ON RECORD SUGGESTING THAT THE RECEIPTS ARE GROSS RECEIPTS AND HE HAD INCURRED CERTAIN EXPENDITURE FOR EARNING SUCH RECEIPTS. ITA NO. 308/RJT/ 2013 BHAGWANJIBHAI K. SHIYANI VS. ACIT FOR AY 2004 - 05 3 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. TH ERE IS NO DISPUTE WITH REGARD TO THE FACT THAT THE ASSESSEE HAS ADMITTED THE FACTUM OF RECEIPT OF JOB WORK AND SUCH RECEIPTS WERE OUT OF BOOKS. THE ONLY CONTROVERSY IS THAT THE REVENUE AUTHORITIES HAVE TREATED IT AS NET RECEIPTS AND THE CONTENTION OF THE A SSESSEE IS THAT THE SAME WAS NOT NET RECEIPTS BUT IT WAS GROSS RECEIPTS AND THE EXPENDITURE INCURRED OUGHT TO HAVE BEEN ALLOWED BY THE REVENUE AUTHORITIES. THIS CONTENTION OF THE ASSESSEE WAS NOT ACCEPTED BY THE AUTHORITIES BELOW ON THE GROUND THAT BEFORE THE ADIT (INV.), WHO HAD RECORDED THE STATEMENT OF THE ASSESSEE, NO SUCH CLAIM WAS MADE AND IN THE ABSENCE OF THE EVIDENCE RELATED TO THE EXPENDITURE, THE REVENUE AUTHORITIES MADE ADDITION OF ENTIRE RECEIPTS. WE FIND THAT, IN THE PRESENT CASE, THE ASSESSE E HAS ADMITTED THE JOB RECEIPTS AMOUNTING TO RS.2,82,240/ - , WHICH ARE NOT RECORDED IN THE BOOKS OF ACCOUNTS . BEFORE THE ASSESSING OFFICER, THE ASSESSEE CLAIMED EXPENDITURE AND IT IS INCUMBENT UPON THE ASSESSEE TO PROVE THE EXPENDITURE, IF ANY, INCURRED FO R THE PURPOSE OF JOB WORK. IN HIS STATEMENT, THE ASSESSEE HAS SUBMITTED THAT THE JOB WORK IS CARRIED OUT THROUGH HEATING PROCESS IN WHICH HE USED COTTON CLOTH, WOOD , FURNACE OIL ETC THEREFORE, THE PURCHASE OF SUCH MATERIAL WAS ALSO NOT BOOKED IN THE BOOKS OF ACCOUNTS. CONSEQUENTLY, THERE WAS ALSO UNEXPLAINED INVESTMENT ON THE PART OF THE ASSESSEE. THEREFORE, CONSIDERING THE TOTALITY OF THE FACTS AND THE MATERIAL PLA CED BEFORE US, WE ARE UNABLE TO ACCEPT THE CONTENTION OF THE ASSESSEE. THEREFORE, GROUND NO.1 RAISED IN THE ASSESSEES APPEAL IS DISMISSED. 5. GROUND NO.2 IS AGAINST THE CONFIRMATION OF ADDITION OF RS.4,06,022/ - MADE BY THE ASSESSING OFFICER ON ACCOUNT OF INFLATED ITA NO. 308/RJT/ 2013 BHAGWANJIBHAI K. SHIYANI VS. ACIT FOR AY 2004 - 05 4 FURNACE OIL EXPENSES. THE LD. CIT(A) HAS CONFIRMED THIS ADDITION BY OBSERVING AS UNDER: - 5.1 DURING THE COURSE OF APPELLATE PROCEEDINGS, THE AUTHORIZED REPRESENTATIVE SHRI S. R. BHATT HAS FURNISHED A WRITE - UP TO JUSTIFY THE CLAIM OF EXPENDI TURE OF RS.8 LACS ON ACCOUNT OF PURCHASE MADE FROM M/S. BHARAT OIL CO. HE FURTHER RELIED ON SOME CASE LAWS TO BACK UP HIS ARGUMENT, BUT THE SAME ARE NOT RELEVANT AS THE FACTS DIFFER. IN THIS CASE, SHRI BHAGWANJIBHAI K. SHIYANI, DURING THE COURSE OF INTER ROGATION BY THE ADIT (INV - 2), RAJKOT HAS STATED THAT HE HAS NO EVIDENCE WITH HIM TO SUBSTANTIATE THE EXPENDITURE OF RS. 8 LACS WHICH CONSEQUENTLY SHOWN AS PURCHASE OF FURNACE OIL FROM M/S. BHARAT OIL CO. THE DISCRETE INQUIRIES CONDUCTED BY THE ASSESSING OFFICER REVEALED THAT NO SUCH COMPANY WAS EXISTING AT THE ADDRESS GIVEN. IN FACT, IF ONE LOOKS AT THE INVOICES PRODUCED BY THE APPELLANT BEFORE THE ASSESSING OFFICER, WHICH ARE CLAIMED TO HAVE BEEN ISSUED BY ONE M/S. BHARAT OIL CO., THE SAME APPEARS TO B E NOT RELIABLE AS THE SIGNATURES MADE BY THE PARTNER ON THE INVOICES ARE AT VARIANCE AND NOT MATCHING. THE ASSESSING OFFICER IS MORE THAN REASONABLE IN DISALLOWING THE EXPENDITURE ONLY TO THE TUNE OF RS.4,06,022/ - OUT OF RS.8 LACS BY TAKING INTO ACCOUNT TH E AVERAGE CONSUMPTION OF FURNACE OIL AS A RATIO TO THE TOTAL JOB OF RECEIPTS IN THE PRECEDING YEARS VIZ. FY 2001 - 02 AND 2002 - 03, WHICH IS AT 37.24% AS AGAINST THE PERCENTAGE OF OIL CONSUMPTION SHOWN AT 46.78% DURING THE PREVIOUS YEAR UNDER CONSIDERATION. NO INTERFERENCE IS THEREFORE CALLED FOR IN RESPECT OF THE ADDITION MADE AT RS.4,06,022/ - ON ACCOUNT OF INFLATION OF FURNACE OIL FOR THE ASSESSMENT YEAR UNDER CONSIDERATION. HENCE, THE GROUND RAISED IS DISMISSED. 6. THE CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE IS THAT THE REVENUE AUTHORITIES ARE NOT JUSTIFIED IN MAKING THE DISALLOWANCE. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT ON THE ONE HAND THE ASSESSING OFFICER IS DISBELIEVING THE EXPENDITURE AND ON TH E OTHER HAND HE MADE DISALLOWANCE ON THE BASIS OF CONSUMPTION OF RAW MATERIALS DURING THE EARLIER YEAR. HE SUBMITTED THAT UNDER THESE FACTS THE ASSESSING OFFICER WAS NOT JUSTIFIED IN MAKING THE DISALLOWANCE. 6.1 ON THE CONTRARY, LD. DEPARTMENTAL REPRES ENTATIVE SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT THE ONUS OF PROVING ITA NO. 308/RJT/ 2013 BHAGWANJIBHAI K. SHIYANI VS. ACIT FOR AY 2004 - 05 5 EXPENDITURE IS ON THE ASSESSEE. HE CONTENDED THAT THE ASSESSEE HAS GROSSLY FAILED TO PROVE THE EXPENDITURE; THEREFORE, THE ASSESSING OFFICER WAS JUSTIFIED IN MAKI NG ESTIMATION OF EXPENDITURE. HE SUBMITTED THAT THE DISALLOWANCE IS AFTER CONSIDERING THE RAW - MATERIAL CONSUMED DURING THE EARLIER YEAR WHICH IS PERMISSIBLE UNDER THE LAW WHEN THE ASSESSEE HAS FAILED TO GIVE ANY SUPPORTING EVIDENCE S AND THE EVIDENCES SO F URNISHED WERE FOUND NOT TO BE CORRECT. 7. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE ASSESSEE HAS CLAIMED EXPENDITURE TOWARDS PURCHASES MADE FROM M/S. BHARAT OIL CO MPANY , AMOUNTING TO RS.8 LACS. UPON ENQUIRY BY THE REVENUE AUTHORITIES, IT WAS FOUND THAT M/S. BHARAT OIL CO MPANY DOES NOT EXIST ON THE GIVEN ADDRESS. THEREFORE, THE CLAIM OF THE ASSESSEE WITH REGARD TO PURCHASING OF RAW MATERIAL FROM THE SAID PART Y IS NOT PROVED. IT IS A SETTLED POSITION OF LAW THAT IF AN ASSESSEE CLAIMS ANY BUSINESS EXPENDITURE, HE IS REQUIRED TO PROVE SUCH EXPENDITURE WITH GENUINE EVIDENCES AND IN CASE THE ASSESSING OFFICER FINDS, UPON ENQUIRY , THAT THE EVIDENCES FURNISHED IN SU PPORT OF SUCH CLAIM WERE NOT GENUINE, IN THAT EVENT THE ASSESSING OFFICER IS WITHIN ITS AUTHORITY TO MAKE DISALLOWANCE OF SUCH EXPENDITURE. IN THE PRESENT CASE, THE ASSESSEE HAS CLAIMED EXPENDITURE FROM A PARTY WHICH, ON ENQUIRY, WAS FOUND NOT TO BE EXISTI NG. THEREFORE, IN OUR CONSIDERED VIEW, THE ASSESSING OFFICER HAD NO OPTION BUT TO PROCEED ON THE BASIS OF MATERIAL AVAILABLE ON RECORD. THE ASSESSING OFFICER HAS CONSIDERED EXPENDITURE RELATED TO EARLIER YEARS AND APPLIED THE RATE OF OIL CONSUMPTION AS WA S IN THE EARLIER YEARS. ON THE BASIS OF THE SAME, HE ALLOWED EXPENDITURE TO THE EXTENT OF THE PERCENTAGE OF THE CONSUMPTION OF OIL AS CONSUMED IN EARLIER YEARS. THE ASSESSEE HAS ITA NO. 308/RJT/ 2013 BHAGWANJIBHAI K. SHIYANI VS. ACIT FOR AY 2004 - 05 6 NOT PLACED ANY MATERIAL ON RECORD PROVING THAT THE ENQUIRY MADE BY THE ASSES SING OFFICER WAS NOT CORRECT, THE EXPENDITURE CLAIMED BY THE ASSESSEE WAS GENUINE AND PURCHASES WERE MADE GENUINELY FROM THE SAID PARTY. IN THE ABSENCE OF ANY SUCH SUPPORTING EVIDENCES/MATERIAL, WE ARE UNABLE TO AGREE WITH THE CONTENTION OF THE ASSESSEE T HAT THE REVENUE AUTHORITIES WERE NOT JUSTIFIED IN MAKING THE DISALLOWANCE OF EXPENDITURE. IN THE LIGHT OF AFORESAID DELIBERATION , WE DO NOT SEE ANY MERIT IN THIS GROUND OF THE ASSESSEE; HENCE, THE SAME IS REJECTED. 8 . I N THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE COURT ON 2 0 T H MAY , 2016 AT AHMEDABAD. SD/ - SD/ - ( MANISH BORAD ) ACCOUNTANT MEMBER (KUL BHARAT) JUDICIAL MEMBER AHMEDABAD; DATED 2 0 / 05 /201 6 *BIJU T. / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A ) 5. , , DR, ITAT, RAJKOT 6. / GUARD FILE . / BY ORDER, TRUE COPY / ( DY./ASSTT.REGISTRAR) , / ITAT, RAJKOT