TRIILOKCHAND SHARMA, NAVI MUMBAI V. ITO WD 2, NEW PANVEL

ITA 4609/MUM/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 1614 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 5 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 07-11-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 13-06-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AKHILENDRA YADAV
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH E, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AN D SHRI C.N. PRASAD, JUDICIAL MEMBER ITA NO.4609/M/2013 ASSESSMENT YEAR: 2007-08 SHRI TRILOKCHAND SHARMA, PLOT NO.17/18, SECTOR 23, MARBLE MARKET, KALAMBOLI, NAVI MUMBAI PAN: AJVPS 2819K VS. INCOME TAX OFFICER, WARD 2, 2 ND FLOOR, TRIFED TOWER, OPP. KHANDA COLONY, NEW PANVEL 410 206 MUMBAI (APPELLANT) (RESPONDENT) PRESENT FOR: ASSESSEE BY : NONE REVENUE BY : SHRI AKHILENDRA YADAV, D.R. DATE OF HEARING : 07.11.2016 DATE OF PRONOUNCEMENT : 30.11.2016 O R D E R PER C.N. PRASAD, JUDICIAL MEMBER: THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE OR DER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-I, MUMBAI [(HE REINAFTER REFERRED TO AS THE CIT(A)] DATED 28.02.2013 FOR THE ASSESSMENT YEA R 2007-08 IN CONFIRMING THE PENALTY OF RS.91,610/- LEVIED UNDER SECTION 271 (1)(C) OF THE ACT. IN SPITE OF ISSUE OF NOTICE NONE APPEARED ON BEHALF OF THE ASSE SSEE OR ANY ADJOURNMENT IS MOVED. IN THE CIRCUMSTANCES, WE DISPOSE OF THIS AP PEAL BY HEARING THE LD. D.R. ON MERITS. 2. THE LD. D.R. SUBMITS THAT THE ASSESSEE AN INDIVI DUAL IS ENGAGED IN THE BUSINESS OF TEXTILES WEAVING JOB WORK FILED RETURN OF INCOME ON 02.01.2008 DECLARING INCOME OF RS.1,06,575/-. THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) OF THE ACT ON 28.12.2009 DETERMINING THE INCOME AT RS.4,70,693/-. THE LD. D.R. SUBMITS THAT WHILE COM PLETING THE ASSESSMENT THE ASSESSING OFFICER MADE ADDITION OF RS.3,61,666/- ON ACCOUNT OF DISALLOWANCE ITA NO.4609/M/2013 SHRI TRILOKCHAND SHARMA 2 OF JOB WORK CHARGES FOR THE REASON THAT THE ASSESSE E ACCORDING TO THE ASSESSING OFFICER INFLATED THE EXPENDITURE BY RS.3,61,666/- O N ACCOUNT OF JOB WORK CHARGES. THE LD. D.R. SUBMITS THAT AT THE TIME OF ORIGINAL ASSESSMENT PROCEEDINGS THE ASSESSEE CONTENDED THAT HE GAVE WOR K OF WEAVING OF CLOTH TO VARIOUS WEAVERS AT BHIVANDI. THUS WEAVERS WOVE/MAN UFACTURED THE GOODS AT THE LOOM OWNERS PLACE. IT WAS SUBMITTED THAT DURI NG THE YEAR UNDER CONSIDERATION VARIOUS WEAVERS HAVE TAKEN THE GOODS FROM THE ASSESSEE FOR WEAVING THE GOODS AT THE LOOM OWNERS PLACE BY THE PARTIES REFERRED TO IN ASSESSMENT ORDER. THE ASSESSEE CONTENDED THAT IN T HE BOOKS OF ACCOUNT THOUGH IT WAS SHOWN THAT THE CREDITORS FOR WEAVING CHARGE UNDER LOOM OWNER ACCOUNT I.E. KEWAL TEXTILES BUT ASSESSEE MAKES ALL THE PAYM ENTS TO THE WEAVERS AND NOT TO THE LOOM OWNER. IT WAS CONTENDED THAT THE OUTST ANDING AMOUNT WHICH IS SHOWN UNDER THE HEAD KEWAL TEXTILES FOR THE SEVEN C REDITORS REFERRED IN THE ASSESSMENT ORDER WERE PAID SUBSEQUENTLY. THEREFORE , IT WAS CONTENDED THAT THE JOB WORK CHARGES PAYABLE TO THE CREDITORS ARE GENUI NE. HOWEVER, THE ASSESSING OFFICER TREATED THESE JOB WORK CHARGES AS NOT GENUI NE. HE CONCLUDED THAT ASSESSEE HAS INFLATED EXPENDITURE TO THAT EXTENT AN D THE SAID EXPENSES WERE DISALLOWED AND ADDED BACK TO THE INCOME. 3. THE LD. D.R. SUBMITS THAT PENALTY NOTICE WAS ISS UED TO THE ASSESSEE TO EXPLAIN AS TO WHY PENALTY UNDER SECTION 271(1)(C) O F THE ACT SHOULD NOT BE LEVIED AND THE ASSESSEE REPLIED THAT THERE IS NO CO NCEALMENT OF INCOME AND THE ADDITION CAME TO BE MADE ONLY ON ACCOUNT OF DISALLO WANCE OF JOB WORK CHARGES WITHOUT ACCEPTING THE EXPLANATION THAT ASSESSEE HAS INCURRED THESE EXPENSES TOWARDS JOB WORK THROUGH THE WEAVERS TO THE LOOM OW NERS. THE LD. D.R. SUBMITS THAT THE ASSESSING OFFICER LEVIED PENALTY U NDER SECTION 271(1)(C) HOLDING THAT SHRI JITENDRA P. MALADE WHO IS THE BRO THER OF SHRI DHIRAJ P. MALADE THE OWNER OF KEWAL TEXTILES HAS GIVEN A STAT EMENT STATING THAT AS ON 31.03.07 NO AMOUNT IS OUTSTANDING TO BE PAID BY THE ASSESSEE TO KEWAL TEXTILES. BASED ON THESE STATEMENTS, THE ASSESSING OFFICER CAME TO THE ITA NO.4609/M/2013 SHRI TRILOKCHAND SHARMA 3 CONCLUSION THAT THE ASSESSEE HAS CONCEALED INCOME O R FURNISHED INACCURATE PARTICULARS AND IMPOSED PENALTY OF RS.91,610/- WHIC H THE LD. CIT(A) CONFIRMED AGREEING WITH THE ASSESSING OFFICER THAT THERE IS CONCEALMENT OF PARTICULARS OF INCOME. THE LD. D.R. VEHEMENTLY SUP PORTS THE ORDERS OF THE AUTHORITIES BELOW. 4. WE HAVE PERUSED THE ORDERS OF THE AUTHORITIES BE LOW AND HEARD THE LD. D.R. THE ASSESSING OFFICER LEVIED PENALTY OBSERVING THAT THE EXPLANATION GIVEN BY THE ASSESSEE THAT THE CREDIT BALANCE IN THE NAME OF KEWAL TEXTILES ON ACCOUNT OF JOB WORK CHARGES IS GENUINE IS NOT CORRE CT. THE ASSESSING OFFICER OBSERVED THAT ON INDEPENDENT ENQUIRIES THE PROPRIET OR OF KEWAL TEXTILES HAS STATED THAT THERE IS NO OUTSTANDING BALANCE PAYABLE BY ASSESSEE TO THEM. THEREFORE THE ASSESSING OFFICER CONCLUDED THAT THE CREDIT BALANCE SHOWN IN THE NAME OF KEWAL TEXTILES IS NOT GENUINE AND THERE IS CONCEALMENT OF INCOME BY THE ASSESSEE AND LEVIED PENALTY. THE LD. CIT(A) AL SO CONFIRMED THE PENALTY AGREEING WITH THE VIEW OF THE ASSESSING OFFICER. 5. WE FIND THAT THE ASSESSEE ALL ALONG CONTENDED TH AT KEWAL TEXTILES IS A LOOM OWNER WHERE POWER LOOM CLOTH IS MANUFACTURED B Y VARIOUS WEAVERS AT BHIVANDI. KEWAL TEXTILES IS THE PROPRIETARY CONCER N OF SHRI DHIRAJ P. MALADE. THE ASSESSEE WAS CONTENDING THAT HE GAVE WORK OF WE AVING OF CLOTH TO VARIOUS WEAVERS AT BHIVANDI AND THESE WEAVERS WOVE THE GOOD S AT THE LOOM OWNERS PLACE AND ALL THESE WEAVERS REFERRED TO IN SL.NO.1 TO 7 IN THE ASSESSMENT ORDER. THE ASSESSEE CONTENDED THAT THE LOOM OWNER WAS SHOW N AS CREDITOR AND ALL THE PAYMENTS WERE MADE TO THE WEAVERS AND NOT TO THE LO OM OWNERS. THIS IS HOW THE ASSESSEE SHOWS IN HIS BOOKS OF ACCOUNTS GENERAL LY. IT WAS CONTENDED THAT THE OUTSTANDING AMOUNT SHOWN UNDER THE HEAD KEWAL T EXTILES RELATES TO THE ABOVE SAID SEVEN PARTIES AND IN FACT THE ASSESSEE H AS MADE PAYMENTS TO ALL THESE SEVEN PARTIES IN SUBSEQUENT YEAR AND A STATEM ENT OF BANK ACCOUNT FOR THE SUBSEQUENT PERIOD, THE COPY OF LEDGER ACCOUNT IN WH ICH THE PAYMENTS MADE TO THESE WEAVERS ALSO REFLECTED IN THE BOOKS. THIS EX PLANATION OF THE ASSESSEE WAS ITA NO.4609/M/2013 SHRI TRILOKCHAND SHARMA 4 NOT FOUND TO BE FALSE, NEITHER THE ASSESSING OFFICE R HAS EXAMINED THE SEVEN PARTIES INDEPENDENTLY TO FIND OUT THE TRUTH RATHER HE CHOSE TO RELY ON THE STATEMENT OF SHRI JITENDRA P. MALADE WHO IS THE BRO THER OF SHRI DHIRAJ P. MALADE PROPRIETOR OF KEWAL TEXTILES. SINCE THE EXP LANATION OF THE ASSESSEE WAS NOT FOUND TO BE FALSE OR NOT GENUINE AND BONAFI DE, WE DO NOT SEE THAT THERE IS CONSCIOUS CONCEALMENT BY THE ASSESSEE IN SHOWING THE OUTSTANDING CREDITORS ON ACCOUNT OF JOB WORK CHARGES. THE SUBMISSION OF THE ASSESSEE THAT HE HAS PAID THE CREDITORS IN THE SUBSEQUENT YEARS IS ALSO NOT FOUND TO BE FALSE. THE ASSESSEE ALSO PRODUCED THE BANK STATEMENTS CONFIRMI NG THE PAYMENTS MADE TO THESE SEVEN WEAVERS WHO WEAVE THE GOODS AT THE LOOM OWNERS PLACE. IN THE CIRCUMSTANCES, WE HOLD THAT THERE IS NO CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME BY THE ASSESSEE AN D THE DISALLOWANCE OF JOB WORK CHARGES WAS MADE ON ACCOUNT OF DIFFERENCE OF O PINION. THUS, WE REVERSE THE ORDERS OF THE AUTHORITIES BELOW AND CANCEL THE PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 30.11.2016. SD/- SD/- (D. KARUNAKARA RAO) (C.N. PRASAD) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 30.11.2016. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.