M/s S S Crop Care Limited, Bhopal V. The ACIT, 3(1), Bhopal

ITA 401/IND/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 1498 (ITAT-INDORE)
• Duration Of Justice: 7 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-02-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 15-06-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R A VERMA
• Keywords: Condonation of delay

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI R.C. SHARMA, ACCOUNTANT MEMBER ITA NO. 401/IND/2012 A.Y.207-08 M/S S.S. CROP CARE LIMITED BHOPAL PAN AACCS 1450P :: APPELLANT VS ASSTT. COMMISSIONER OF INCOME TAX 3(1), BHOPAL :: RESPONDENT APPELLANT BY SHRI H.P. VERMA ALONG WITH MISS SAKSHI VERMA RESPONDENT BY SHRI R.A.VERMA DATE OF HEARING 21.1.2013 DATE OF PRONOUNCEMENT 11.2.2013 O R D E R PER JOGINDER SINGH, JUDICIAL MEMBER THIS APPEAL HAS BEEN FILED BY THE ASSESSEE WHICH I S TIME BARRED BY 37 DAYS. THE ASSESSEE HAS FILED APPLICAT ION FOR 2 CONDONATION OF DELAY ON THE GROUND THAT THE APPEAL PAPERS FOR FILING BEFORE THE TRIBUNAL WERE SENT THROUGH MADHUR COURIER SERVICE WHICH WERE DELIVERED LATE WHICH CAUSED DELA Y FOR WHICH THE ASSESSEE SHOULD NOT BE PENALISED. THE ASSESSEE HAS ALSO PRODUCED A LETTER FROM MADHUR COURIER SERVICES DATE D 4.7.2012. IT WAS PLEADED THAT THE DELAY BE CONDONED. ON THE OTHER HAND, SHRI R.A. VERMA, LEARNED SENIOR DR CONTENDED THAT T HE ASSESSEE WAS EXPECTED TO BE MORE VIGILANT, THEREFORE, DELAY MAY NOT BE CONDONED. ON THE BASIS OF RECORD AND THE ASSERTION MADE BY THE LEARNED RESPECTIVE COUNSEL, WE ARE SATISFIED THAT T HE DELAY WAS BEYOND THE CONTROL OF THE ASSESSEE, THEREFORE, THE DELAY OF 37 DAYS IN FILING THE APPEAL IS CONDONED. 2. THE ONLY GROUND RAISED BY THE ASSESSEE IS THAT T HE LEARNED FIRST APPELLATE AUTHORITY WAS NOT JUSTIFIED IN NOT GIVING RELIEF OF RS.3,50,000/- MADE ON ACCOUNT OF DISALLOWANCE OUT O F LABOUR AND WAGES AND FURTHER IN ENHANCING THE ASSESSMENT B Y RS.38,84,778/- BY DISALLOWING EXPENDITURE OUT OF LA BOUR AND WAGES. THE CRUX OF ARGUMENTS ON BEHALF OF THE ASSE SSEE IS THAT THE ASSESSEE MAINTAINS REGULAR AND PROPER BOOKS OF ACCOUNTS WHICH ARE AUDITED ONE AND VOUCHERS FOR PAYMENT OF L ABOUR AND WAGES ARE FULLY MAINTAINED WHICH WERE EXAMINED BY T HE LEARNED 3 ACIT AT THE TIME OF ASSESSMENT PROCEEDINGS. THE LE ARNED COUNSEL ALSO DISPUTED THE ENHANCEMENT BY THE LEARNED CIT(A) DISALLOWING THE EXPENDITURE OUT OF SUCH EXPENSES. THE BENCH ASK ED THE ASSESSEE TO FILE THE COMPARATIVE CHART OF GROSS PRO FIT AND NET PROFIT OF THREE YEARS WHICH WAS FILED. THE LEARNED SENIOR DR, SHRI R.A. VERMA, STRONGLY DEFENDED THE ADDITION AS WELL AS THE ENHANCEMENT MADE BY THE LEARNED CIT(A). OUR ATTENTI ON WAS INVITED TO PARA 2.4 OF THE IMPUGNED ORDER. 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE MATERIAL AVAILABLE ON RECORD. THE WHOLE DISPUTE BEF ORE US PERTAINS TO LABOUR AND WAGES EXPENSES, THEIR ADDITI ON AND ENHANCEMENT, THEREFORE, FOR FAIR CONCLUSION WE BIFU RCATE THE SAME. THE FACTS IN BRIEF ARE THAT THE ASSESSEE COM PANY IS ENGAGED IN THE BUSINESS OF MANUFACTURE OF PESTICIDE S ON JOB WORK BASIS FOR M/S BAYER CROP SCIENCE LIMITED. FOR THE YEAR, UNDER CONSIDERATION, THE ASSESSEE SHOWED INCOME OF RS.16, 86,270/- . THE ASSESSING OFFICER COMPLETED THE ASSESSMENT ON T OTAL INCOME OF RS. 21,86,270/- BY DISALLOWING THE AMOUNT OF RS. 3,50,000/- OUT OF LABOUR AND WAGES. DURING FIRST APPELLATE ST AGE, THE LEARNED CIT(A) ISSUED SHOW CAUSE NOTICE TO THE ASSESSEE STA TING AS TO WHY DISALLOWANCE OF WAGES SHOULD NOT BE ENHANCED FROM 4 RS.3,50,000/- TO RS.50,84,778/- FOR THE REASONS THA T LABOUR AND WAGES EXPENSES ARE NOT SUPPORTED BY VOUCHERS. THIS IS EXACTLY THE GRIEVANCE OF THE ASSESSEE. BEFORE COMING TO ANY CONCLUSION, WE ARE SUMMARISING HEREUNDER THE COMPARATIVE CHART OF GROSS PROFIT/NET PROFIT FOR THREE ASSESSMENT YEARS :- (TA BLE NO. 1) PARTICULARS A.Y. 2005-06 RS. A.Y. 2006-07 RS. A.Y. 2007-08 RS. TOTAL JOB WORK CHARGES RECEIPTS 1,69,68,236 2,38,18,800 2,26,82,546 DIRECT EXPENDITURE 99,00,512 1,35,07,878 1,35,69,087 GROSS PROFIT 70,67,724 1,03,10,922 91,13,459 % OF GROSS PROFIT 41.65% 43.29% 40.18% NET PROFIT 16,14,741 51,87,642 54,05,901 % OF NET PROFIT 9.52% 21.78% 23.83% THERE IS A FINDING BY THE ASSESSING OFFICER THAT TH E ASSESSEE MAINTAINED THREE REGISTERS FOR PAYMENTS OF WAGES WH ICH IS ALSO SUMMARISED AS UNDER :- (TABLE NO. 2) REGISTER NO. PARTICULARS PAYMENT RS. 1 OFFICE AND LABOUR STAFF 16,52,073 2 OPERATORS AND FACTORY STAFF 9,91,036 3 SECURITY AND MAINTENANCE STAFF 4,19,141 4 TOTAL PAYMENT 30,62,250 5 CASUAL WORKERS 50,84,778 5 AS PER THE ASSESSING OFFICER, THE ASSESSEE DULY MAI NTAINED THE VOUCHERS OF PAYMENT AND WAGES SO FAR AS THE STAFF M ENTIONED IN COLUMN NOS. 1 TO 3 OF THE ABOVE CHART WHEREAS NO SU CH ACCOUNT WAS MAINTAINED FOR SR. NO. 5(CASUAL WORKER/LABOUR). THE ASSESSING OFFICER OBSERVED THAT NO CASUAL WORKERS/L ABOUR ARE NORMALLY EMPLOYED FOR HAZARDOUS INDUSTRY. THUS, A L UM SUM DISALLOWANCE OF RS. 3,50,000/- WAS MADE BY THE ASSE SSING OFFICER. THERE IS AN OBSERVATION IN THE IMPUGNED O RDER ALSO THAT SOME CASUAL STAFF MAY BE DEPLOYED FOR NON-HAZARDOUS FUNCTION LIKE LOADING, UNLOADING, THUS THE AMOUNT OF RS.12 L ACS WAS ALLOWED OUT OF RS.50,84,778/- AND THE BALANCE AMOUN T OF RS.38,84,778/- WAS UPHELD. THE ASSESSEE IS A LIMIT ED COMPANY, MAINTAINS PROPER BOOKS OF ACCOUNTS AND VOUCHERS AND THE ACCOUNTS ARE AUDITED U/S 44AB OF THE ACT AS WELL AS COMPANIES ACT. EVEN BOTH THE AUTHORITIES HAVE MENTIONED THAT PROPER REGISTERS ARE MAINTAINED FOR REGULAR EMPLOYEES/WORK ERS AND EPS AND ESIC CONTRIBUTIONS ARE ALSO PROPERLY DEDUCTED. THE ASSESSING OFFICER MADE A LUMP SUM DISALLOWANCE ON A D HOC BASIS BUT NO SPECIFIC AMOUNT WAS POINTED OUT AND REASONIN G FOR SUCH DISALLOWANCE. IF THE TOTALS OF WORK RECEIPTS AND TH E DIRECT EXPENDITURE AS SUMMARISED IN THE AFORESAID TABLE NO . 1, WE FIND 6 THAT REASONABLE EXPENDITURE HAS ALREADY BEEN DISALL OWED. IF THE ISSUE/EXPENSES ARE ANALYSED WITH RESPECT TO GROSS P ROFIT, WE FIND THAT IT IS IN THE INCREASING TREND AS THE NET PROFI T FOR THE A.Y. 2005-06 WAS RS. 16,14,741/-, RS.15,87,642/- (A.Y. 2 006-07) AND RS. 54,05,901/- (A.Y. 2007-08). IF THIS PROFIT IS ANALYSED IN TERMS OF PERCENTAGE, IT ROSE TO 23.83% (A.Y. 2007-08) IN COMPARISON TO 9.52% FOR THE A.Y. 2005-06. SO FAR AS NON-EMPLOYMEN T OF CASUAL WORKER IN HAZARDOUS INDUSTRY IS CONCERNED, THE LEAR NED COUNSEL INVITED OUR ATTENTION TO A LETTER NO. 986 DATED 8.1 2.2011 (PAGE 54 OF THE PAPER BOOK) ISSUED BY JOINT CONTROLLER, INDU STRIAL HEALTH AND SAFETY, BHOPAL, MENTIONING THAT THERE IS NO SUC H RESTRICTION OF KEEPING CASUAL LABOUR IN PESTICIDE FORMULATION I NDUSTRIES. THE WHOLE DISPUTE PERTAINS TO THE PAYMENT MENTIONED AT SL. NO. 5 OF TABLE NO. 2. IF THIS ISSUE IS ANALYSED WITH RES PECT TO NET PROFIT, AS MENTIONED EARLIER, IT IS REASONABLY IN GOOD INCR EASING TREND. AT THE SAME TIME, THE ASSESSEE IS EXPECTED TO MAINTAIN THE RECORD OF CASUAL LABOUR ALSO BECAUSE NO PAYMENT IS MADE IN TH E AIR AND AT LEAST TO THE SATISFACTION OF THE ASSESSING OFFICER, SOME RECORD WAS EXPECTED TO BE MAINTAINED FOR CASUAL LABOUR ALSO. IF WE SEND THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER, THE ASS ESSEE WILL BE ENTANGLED IN FURTHER LITIGATION CAUSING UNDUE HARDS HIP, THEREFORE, 7 TO REDUCE LITIGATION AND TO CUT SHORT THE MATTER, K EEPING IN VIEW THE INCREASING TREND IN THE PROFIT, WE REDUCE THE D ISALLOWANCE FURTHER TO 50% AGAINST RS. 38,84,778/- SUSTAINED BY THE LEARNED CIT(A). THIS APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT ON 11.2.2013. SD SD (R.C.SHARMA) (JOGINDER SINGH ) ACCOUNTANT MEMBER JUDICIAL ME MBER DATED: 11 TH FEB., 2013 COPY TO: APPELLANT, RESPONDENT, CIT, CIT(A), DR, GU ARD FILE DN/-2121