ITO, New Delhi V. M/s. Svavlambi Apparels Ltd., New Delhi

ITA 4874/DEL/2009

• Counselvise Citation: 487420114 RSA 2009
• Duration Of Justice: 1 year(s) 7 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-08-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 12-08-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 29-12-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S MOHANTY
• Keywords: Additional evidence; TDS
• Section: 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH G DELHI) BEFORE SHRI G.E. VEERABHADRAPPA, HONBLE VICE PRESIDENT AND SHRI A.D. JAIN ITA NO. 4874(DEL)2009 ASSESSMENT YEAR: 2005-06 INCOME TAX OFFICER, M/S . SVAVLAMBI APPARELS LTD. WARD 7(4), NEW DELHI. V. 1170, B AZAR SITA RAM KUCHA PATI RAM, DELHI. ITA NO. 4822(DEL)2009 ASSESSMENT YEAR: 2005-06 M/S. SVAVLAMBI APPARELS LTD. INCOME TAX OFFICER, 1170, BAZAR SITA RAM KUCHA V. WARD 7( 4), NEW DELHI. PATI RAM, DELHI. (APPELLANT) (RESPOND ENT) DEPARTMENT BY: SMT. S. MOHANTY, DR ASSESS EE BY: WRITTEN SUBMISSIONS. ORDER PER A.D. JAIN, J.M. THESE ARE CROSS APPEALS FOR ASSESSMENT YEAR 2005-06 . ITA NO. 4874(DEL)2009 HAS BEEN FILED BY THE DEPARTMENT, TAK ING THE FOLLOWING GROUNDS:- ITA NOS. 4874 & 4822(DEL)09 2 1. LD. COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN LAW AND ON THE FACTS AND CIRCUMSTANCES OF THE CASE, IN DELE TING THE ADDITIONS OF ` 4,75,737/- MADE BY THE AO ON ACCOUNT OF INCREASED C URRENT LIABILITIES AND PROVISIONS. 2. LD. CIT(A) ERRED IN LAW AND ON THE FACTS AND CIRCUMSTANCES OF THE CASE, IN DELETING THE ADDITIONS OF ` 11,35,500/- MADE BY THE AO ON ACCOUNT OF LOAN RECEIVED FROM M/S. GOKULAM CHIT FUN D & FINANCE LTD. 3. LD. CIT(A) ERRED IN LAW AND ON THE FACTS AND C IRCUMSTANCES OF THE CASE, IN DELETING THE ADDITIONS OF ` 16,33,392/- MADE BY THE AO ON ACCOUNT OF JOB WORK EXPENSES. 4. LD. CIT(A) ERRED IN LAW AND ON THE FACTS AND C IRCUMSTANCES OF THE CASE, IN DELETING THE ADDITIONS OF ` 3,39,913/- MADE BY THE AO ON ACCOUNT OF LABOUR CHARGES. 5. LD. CIT(A) ERRED IN LAW AND ON THE FACTS AND CI RCUMSTANCES OF THE CASE, IN ACCEPTING THE ADDITIONAL EVIDENCES UNDER R ULE 46A. 2. ITA NO. 4822(DEL)2009 IS THE ASSESSEES APPEAL, WHEREIN THE FOLLOWING GROUNDS HAVE BEEN TAKEN:- 1. THE LEARNED COMMISSIONER OF INCOME TAX(APPEAL) IS WRONG IN RETAINING ADDITION OF ` 1,00,000/- ON ACCOUNT OF INCREASE IN CURRENT LIABILITIES, I.E. SUNDRY CREDITORS. THE ASSESSING OFFICER MADE A TOTAL ADDITION OF ` 5,75,737/- DETAILS AS UNDER:- ` SUNDRY CREDITORS 5,11,651/- PROVISION FOR TAX 10,053/- ADVANCE FROM CUSTOMERS 54,033/- ITA NOS. 4874 & 4822(DEL)09 3 OUT OF THESE THE LD. CIT(A) DELETED ADDITIONS OF ` 4 ,75,737/- AND BALANCE ` 1,00,000/- IS CONFIRMED WITHOUT ANY BASE. FACTS R EMAINED ADDITIONS OF SUNDRY CREDITORS WERE MADE INCREASE O F AMOUNT IN COMPARISON TO PREVIOUS YEAR AND BALANCE TWO ADDITIO NS WERE PICKED UP WRONGLY. 2. THE LD. CIT(A) IS WRONG IN CONFIRMING THE ADDIT IONS OF ` 2,00,000/- ON ACCOUNT OF JOB WORK EXPENSES. THE AO MADE ADDI TIONS OF ` 18,33,392/- JOB WORK EXPENSES. IN APPEAL PROCEEDIN GS BEFORE LD. CIT(A), THE DETAILS OF THESE JOB WORK EXPENSES WERE SUBMITTED. THE LD. CIT(A) ASKED A REMAND REPORT FROM THE AO. AND DURING REMAND PROCEEDINGS BOOKS OF ACCOUNT WERE PRODUCED. ALL B ILLS AND VOUCHERS OF JOB WORK EXPENSES WERE PRESENTED BEFORE THE AO A ND THE AO VERIFIED THE SAME. 3. THE LD. CIT(A) IS WRONG IN RETAINING ADDITION O F ` 1,00,000/- ON ACCOUNT OF LABOUR CHARGES. THE AO MADE TOTAL ADD ITIONS OF ` 4,39,913/- LABOUR CHARGES. IN APPEAL PROCEEDINGS B EFORE THE LD. CIT(A) THE DETAILS OF THESE LABOUR CHARGES WERE SUB MITTED. THE LD. CIT(A) ASKED A REMAND REPORT FROM THE AO. AND DUR ING REMAND PROCEEDINGS BOOKS OF ACCOUNT WERE PRODUCED. ALL B ILLS AND VOUCHERS OF JOB WORK EXPENSES WERE PRESENTED BEFORE THE AO A ND THE AO VERIFIED THE SAME. 3. IN GROUND NO.5 OF THE DEPARTMENTS APPEAL, IT HA S BEEN CONTENDED THAT THE LEARNED CIT(A) HAS ERRED IN ACCEPTING THE ADDI TIONAL EVIDENCE UNDER RULE 46A OF THE I.T. RULES. THE LD. DR HAS CONTEN DED IN THIS REGARD THAT THE LD. CIT(A) HAS ENTERTAINED ADDITIONAL EVIDENCE WITH OUT AFFORDING ANY OPPORTUNITY AND WITHOUT ASSIGNING ANY REASONS. 4. NONE HAS APPEARED ON BEHALF OF THE ASSESSEE, HOW EVER, A LETTER HAS BEEN FILED, REQUESTING THE APPEALS TO BE DECIDED ON THE BASIS OF THE DOCUMENTS FILED. THE CONTENTS OF THIS LETTER ARE AS FOLLOWS:- ITA NOS. 4874 & 4822(DEL)09 4 THE ABOVE REFERRED APPEAL IS FIXED FOR HEARING ON 12.08.2011. IN THIS REGARD WE WOULD LIKE TO SUBMIT THAT THE COMPAN Y IS DEFUNCT AND NO WORKING SINCE JULY, 2005. AND COMPANYS FINANC IAL POSITION IS VERY BAD. THE COMPANY EVEN THOUGH DO NOT HAVE FUN DS TO PAY FEES TO ADVOCATES. HOWEVER, AT THE TIME OF HEARING WITH CI T(A) AND LATER ON IN REMAND REPORT PROCEEDINGS, THE COMPANY HAS SUBMI TTED ALL DETAILS AND PRODUCED BOOKS OF ACCOUNT TO THE ASSESSING OFFI CER. AFTER VERIFYING THESE DETAILS, BOOKS AND VOUCHERS, THE AO SUBMITTED HIS REMAND REPORT TO LD. CIT(A). THE LD. CIT(A) ALSO IN HIS ORDER MENTIONED REPLY SUBMITTED BY COMPANY AT THE TIME OF HEARING AND REMAND REPORT SUBMITTED BY AO. HOWEVER, THE LD. CI T(A) HAS DELETED MOST OF ADDITIONS BUT CONFIRMED SOME ADDITIONS ON E STIMATED BASIS, REASON BEST KNOWN TO LD. CIT(A). THE COMPANY HAS ALSO SUBMITTED PAPER BOOK ON EARLIER DATE WHICH CONTAINED ALL DETA ILS. SO THIS HONBLE BENCH IS REQUESTED TO DECIDE THE CASE BASED ON PAPERS SUBMITTED . 5. WITH REGARD TO THE GRIEVANCE OF THE DEPARTMENT R EGARDING THE LD. CIT(A) HAVING ENTERTAINED ADDITIONAL EVIDENCE WITHO UT ASSIGNING ANY REASONS, IT IS SEEN THAT THE LD. CIT(A) DID SO WHIL E OBSERVING AS FOLLOWS:- 4. AN APPLICATION FOR ACCEPTANCE OF ADDITIONAL EVI DENCE UNDER RULE 46-A, DT. MARCH, 10, 2008 WAS ALSO MADE WHICH IS RE PRODUCED BELOW: WE ARE SUBMITTING ADDITIONAL EVIDENCE AS MENTIONED IN OUR WRITTEN SUBMISSION IN SUPPORT OF OUR CLAIM O F EXPS. AND LIABILITIES DISALLOWED BY THE AO. THE ASSESSING OFFICER HAS ASKED THE DETAILS OF SUNDRY CREDITORS WHICH WE SUBMITTED AND MADE ADDITION SIMPLY WITH THE REASON THAT THERE IS AN INCREASE IN CREDITORS IN COMPARISON TO LAST YEAR. TO PROVE THA T THESE CREDITORS ARE DURING THE YEAR ITSELF, NOW WE ARE ITA NOS. 4874 & 4822(DEL)09 5 SUBMITTING LIST OF SUNDRY CREDITORS WITH OPENING BALANCES. THIS WAS NEVER ASKED BY AO. YOU ARE REQUESTED TO ACCEPT IT AS AN ADDITIONAL EVIDENCE. TO SUBMIT CONFIRMATION OF UNSECURED LOAN SUFFICIENT TI ME WAS NOT ALLOWED BY AO AND SUBSEQUENTLY WE RECEIVED CONFIRMATION. SO YOUR GOOD SELF IS REQUESTED TO AC CEPT THIS CONFIRMATION ALONG WITH RECONCILIATION AS AN ADDITIONAL EVIDENCE. SIMILARLY FOR CONFIRMATION OF JOB WORK EXPS. SUFFICIENT TIME WAS NOT ALLOWED BY AO. WE ARE SUBMITTING ONE CONFIRMATION OF JOB WORK PAID. YOUR GOOD SELF IS REQUESTED TO ACCEPT IT AS AN ADDITIONA L EVIDENCE. WE HOPE THAT YOUR GOODSELF SHALL CO-OPER ATE WITH US. 5. VIDE LETTER DT. 10.03.2008, A REMAND REPORT WAS CALLED FOR FROM THE AO. THE REMAND REPORT RECEIVED VIDE LETTER DT. 20.03.2008 IS REPRODUCED BELOW: KINDLY REFER TO YOUR OFFICE LETTER NO. CIT(A)-X/20 07- 2008/190 DATED 10/3/2008 ON THE SUBJECT CAPTIONED ABOVE. IN THIS REGARD IT IS SUBMITTED OPPORTUNITY WAS GIVEN TO THE ASSESSEE TO FILE CONFIRMATIONS WITH RE GARDS TO THE ADDITIONS OF ` 5,11,651/- AND ` 22,48,549/- MADE ON ACCOUNT OF INCREASE IN SUNDRY CREDITORS AND JOB WORK EXPENSES RESPECTIVELY. IN COMPLIANCE OF T HE SAME THE AR OF THE ASSESSEE ATTENDED THE OFFICE AND FILED CONFIRMATIONS ONLY IN FEW CASES, HOWEVER, HE HAS SUBMITTED A DETAILED LIST OF PARTIES IN RESPECT OF AFOREMENTIONED ADDITIONS. IN ORDER TO VERIFY THE INFORMATION PROVIDED BY THE ASSESSEE NOTICES U/S 13 3(6) ARE BEING ISSUED, YOUR GOOD SELF IS REQUESTED TO GI VE AT LEAST THREE MORE WEEKS FOR SUBMISSION OF THE REMAND REPORT IN THIS CASE. 6. THIS REMAND REPORT WAS FOUND TO BE VERY VAGUE AN D GENERAL, THEREFORE, THE AO WAS REQUESTED VIDE LETTER DT. 16. 10.2008 TO MAKE ITA NOS. 4874 & 4822(DEL)09 6 DETAILED ENQUIRIES AND SUBMIT A REPORT. MEANWHILE, THE APPELLANT INSPECTED THE FILE OF THE AO AND IN THEIR SUBMISSIO NS DT. DECEMBER 17, 2008 CLAIMED THAT SOME CONFIRMATIONS SENT BY THE PA RTIES IN RESPONSE TO NOTICES U/S 133(6) WERE NOT FOUND IN THE AOS FI LE. HOWEVER, THE APPELLANT ENCLOSED CONFIRMED COPIES OF ACCOUNTS OF THESE PARTIES AT PAGE 78 & 79 OF THEIR FRESH SUBMISSIONS. THE SUBMI SSIONS DT. DECEMBER 17, 2008 ARE REPRODUCED BELOW: GROUND NO. 3 THAT THE AO IS WRONG IN MAKING NOTIONAL ADDITIONS O N ACCOUNT OF INCREASE IN CURRENT LIABILITIES OF ` 575737/-. THE DETAILS OF THESE ADDITIONS ARE AS UNDER: ` SUNDRY CREDITORS 511651/- PROVISION FOR TAX 10053/- ADVANCE FROM CUSTOMERS ` 54033/- THE DETAILS OF SUNDRY CREDITORS WAS SUBMITTED TO TH E AO AT THE TIME OF HEARING. A COPY OF SAME IS ATTAC HED WITH THIS LETTER FOR YOUR REFERENCE WITH OPENING BALANCES AT PAGE NO. 1-2. THE AO HAS MADE ADDITION S OF ` 5,11,651/- ON A/C OF INCREASE IN SUNDRY CREDITORS FOR INCREASE IN COMPARISON TO LAST YEAR. THIS INCR EASE IN COMPARISON TO PREVIOUS YEAR IS JUST 50% WHILE AS INCREASE IN TURNOVER IS 143%. MOREOVER, THE AO HAS MADE ADDITIONS OF ` 18,33,392/- ON A/C OF JOB WORK EXPENSES PAID AND SOME OF THESE CREDITORS INCLUDE F ROM WHOM JOB WORK WAS GET GONE. SO IT IS A DOUBT ADDIT ION. INCREASE IN PROVISION FOR TAX OF ` 10053/- IS NOT AFFECTING TAXABLE INCOME AT ALL BECAUSE THIS PROVIS ION IS NOT HAVING ANY BEARING ON TAXABLE INCOME OF THE COMPANY AT ALL. BECAUSE THE COMPANY HAS PAID TAX O N PROFIT BEFORE THIS PROVISION. ITA NOS. 4874 & 4822(DEL)09 7 THE ADDITIONS MADE ON ACCOUNT OF ADVANCE FROM CUSTOMERS OF ` 54033/- IS WRONG. IN FACT THIS FIGURE IS OF EXPENSES PAYABLE DETAILS OF WHICH IS SUBMITTED T O THE AO AT THE TIME OF HEARING AND IS AS UNDER: ` SALARY PAYABLE 46361/- OTHER EXPS. PAYABLE 7672/- GROUND NO. 4 REGARDING ADDITIONS OF ` 11,35,500/- ON ACCOUNT OF UNSECURED LOAN RECEIVED FROM CHIT FUND CO. DURING ASSESSMENT PROCEEDINGS THE AO WAS SUBMITTED NAME AND ADDRESS OF CHIT FUND CO. AND HE COULD SEND SUMMON U/S 133 TO THE PARTY AND GET CONFIRMATION FR OM PARTY BUT SUBSEQUENTLY RECEIVED CONFIRMATIONS WHICH WE ARE ATTACHING WITH THIS LETTER WITH THE COPY OF ACC OUNTS AS PER COMPANY BOOKS AND RECONCILIATION STATEMENT A T PAGE NO. 14-22. IN THIS REGARD WE WOULD LIKE TO FU RTHER CLARIFY THAT THE ASSESSEE HAS PUT THREE CHITS OF ` 10.00 LACS EACH. THE ASSESSEE WAS ISSUING SINGLE CHEQUE FOR ALL THE THREE CHITS. BUT THE ASSESSEE HAS RECEIVED THREE DIFFERENT CHEQUES FOR EACH CHIT BEARING NO. 1549008 , 153909 AND 153910 OF ` 7,50,000/- EACH IN DECEMBER, 2005. HOWEVER, THESE THREE CHEQUES WERE DEPOSITED ON A SINGLE DEPOSIT SLIP, AS SUCH BANK HAS GIVEN A SIN GLE CREDIT OF ` 21,50,000/- AS APPEAR IN BANK STATEMENT. DETAILS OF THESE THREE CHEQUES IS ALSO MENTIONED ON STATEMENTS RECEIVED FROM CHIT FUND CO. GROUND NO. 5 THE AO IS WRONG IN MAKING ADDITIONS OF ` 18,33,392/- ON ACCOUNT OF JOB WORK EXPS. PAID JUST ON THE GROU ND THAT THESE ARE HIGHER IN COMPARISON OF LAST YEAR TURNOVER. THE DETAILS OF THESE EXPENSES WITH ADDRE SS OF PARTIES WAS SUBMITTED TO THE AO AT THE TIME OF HEAR ING WITH THE REASON OF INCREASE IN JOB WORK EXPS. IN ITA NOS. 4874 & 4822(DEL)09 8 COMPARISON TO LAST YEAR. WE ARE REPRODUCING PORTIO N OF OUR REPLY AS SUBMITTED TO THE AO. DURING THE YEAR THE NATURE OF ORDERS RECEIVED BY COMPANY WERE OF HEAVY JOB WORK RELATED TO MILL PRINTING, MACHINE AND HAND EMBROIDERY ZARI WORK, SYNTHETIC WORK, ZARDARI WORK AND BUTTERING WORK. A LL THESE JOBS ARE VERY SPECIALIZED AND NEED LOT OF LAB OUR. THE LABOUR PORTION IS AROUND 20%. IN THE PREVIOUS YEAR EXPORTS MADE WERE NOT OF LABOUR NATURE. DURING FY 2003-04 OUT TURNOVER WAS ` 70.99 LACS. IN FY 2004-05 THERE IS SUBSTANTIAL GROWTH IN TURNOVER OF THE COMPANY WHICH IS ` 167.18 LACS. THIS ADDITIONAL TURNOVER WAS DUE TO ORDERS RECEIVED WHERE SPECIALIZ ED JOB WORK WAS INVOLVED SUCH AS EMBROIDERIES, ZARI WO RK AND STITCHING. ALL THESE JOB WORK ARE DONE MANUALL Y. THE ASSESSEE HAS 100% EXPORT SALES IN THIS YEAR AND SALE IS MADE MAINLY TO SEVEN PARTIES. WE ARE GIVIN G BELOW DETAILS OF EXPORTS MADE TO THESE PARTIES, NAT URE OF ORDER AND AMOUNT OF JOB WORK INVOLVED THEREIN: NAME OF CUSTOMER NATURE OF ORDER VALUE OF ORDER AMOUNT OF JOB WORK INCLUDING LABOUR ELCORTE INGLES SPAIN EMBROIDERIED SHAWLS & LADIES NIGHTWARE 1,14,70,153/- 14,72,162/- COUNTRY ROAD, AUSTRALIA MILL PRINTED SARONGS 24,35,203/- 5,48,068/- CAOBANIA, SL KNITTED GLOVES/CAPS/KURTI 5,66,051/- 90,600/- ANNTIME MKTG, PTE DYED AND PRINTED SARONGS 11,50,546/- 1,67,749/- ENZODE GASPERI ZARI CUSHION COVER/RUNNERS & TABLE MATS 4,55,937/- 2,79,690/- CAMPBELL EMBROIDED AND 3,38,393/- 57,700/- ITA NOS. 4874 & 4822(DEL)09 9 ZARI CAPES AHLENS AB ZARI BELTS 2,62,507/- 39,400/- MOST OF THE JOB WORK PAYMENTS WERE MADE BY CHEQUES ONLY AND TDS WAS DEDUCTED WHEREVER IT WAS APPLICABL E. TO SUPPORT THIS WE ARE ATTACHING COPY OF ACCOUNT OF SOME OF THE PARTIES FROM WHOM JOB WORK WAS GOT DONE AT PAGE NO. 23-27. GROUND NO. 6 THE AO IS WRONG IN MAKING ADDITIONS OF ` 4,39,913/- ON ACCOUNT OF LABOUR CHARGES MERELY THAT IN LAST YE AR THERE WAS NO LABOUR CHARGES. COMPLETE DETAILS OF T HESE EXPS. WAS SUBMITTED TO THE AO AT THE TIME OF HEARIN G. AND IT WAS SUBMITTED THAT LABOUR CHARGES WERE ON ACCOUNT OF STITCHING CHARGES PAID IN-HOUSE TO VARIO US LABOURERS. THE DETAILS OF THESE EXPS. AS SUBMITTED TO THE AO IS ATTACHED WITH THIS LETTER FOR YOUR REFERENCE. WE ARE ALSO ATTACHING COPY OF BANK STATEMENTS FOR VERIFYING ENTRIES OF TRANSACTIONS WITH CHIT FUND CO . AND OTHER TRANSACTION FROM PAGE NO. 44-61. INSPECTION OF AO FILE : WE HAVE INSPECTED THE FILE OF AO AND WE HAVE TAKEN THE COPY OF ACCOUNT SEND BY SEVEN PARTIES IN RESPONSE T O NOTICE U/S 133(6). WE ARE ATTACHING COPY OF ACCOUN T AS SENT BY THESE PARTIES AND COPY OF ACCOUNT AS PER ASSESSEE BOOKS AND RECONCILIATION OF THESE PARTIES WHEREVER APPLICABLE FROM PAGE NO. 62-76. BESIDES ITA NOS. 4874 & 4822(DEL)09 10 THESE SEVEN PARTIES, WE ALSO FOUND CONFIRMATION OF M/S KALEEM TEXTILES. THIS CONFIRMATION PROBABLY RECEIV ED BY AO AFTER REMAND REPORT SENT TO YOUR GOOD SELF. THIS PARTY HAS SENT THE STATEMENT FROM 1/4/2-3 TO 31/3/2 005. AS PER TRANSACTION NOTED FROM AO FILE LAST BALANCE AND TRANSACTION DURING THIS PERIOD TALLIED WITH ASSESSE E BOOKS. A COPY OF STATEMENT AS PER ASSESSEE BOOKS I S ATTACHED WITH THIS LETTER ON PAGE NO. 77. WE WERE ALSO TOLD BY TWO OTHER PARTIES I.E. BY M/S SONA APPARELS LTD. AND ANCHAL ENTERPRISES THAT THEY ALSO HAD SENT STATEMENTS IN RESPONSE TO NOTICE U/S 133(6). BUT I N AO FILE STATEMENTS OF THESE PARTIES WERE NOT FOUND. HOWEVER, WE ARE ENCLOSING CONFIRMED COPY OF ACCOUNT OF THESE PARTIES AT PAGE NO. 78-79. FROM THE ABOVE, IT IS VERY CLEAR THAT AO HAS APPLIE D ONLY LAST YEAR COMPARISON IN MAKING ALL THESE ADDIT IONS WITHOUT ANY EVIDENCE OR CONCRETE FINDINGS WITH HIS OWN WHIMS AND FANCIES. KEEPING ABOVE IN VIEW YOUR GOOD SELF IS REQUESTED TO DELETE ALL ADDITIONS BY THE AO . 7. A FURTHER REMAND REPORT WAS CALLED BY WAY OF ORD ER U/S 250(4) DT. 17-12-2008. IN RESPONSE, ITO, WARD 7(4) HAS SUB MITTED THE FOLLOWING REMAND REPORT VIDE LETTER DT. 25-06-09: GROUND NO. 3 : THE ASSESSEE HAS TAKEN IN COMPUTATION OF INCOME PROFIT BEFORE TAX AND PROVISION FOR TAX O F ` ITA NOS. 4874 & 4822(DEL)09 11 10053/- IS FOR CURRENT YEAR AND IS NOT HAVING ANY BEARING ON INCOME OF ASSESSEE. A PERUSAL OF THE BALANCE SHEET FILED AND A COPY OF THE SAME IS PRODUCED BEFORE ME IT IS OBSERVED THAT ` 54033/-. BELONGS TO FOR EXPENSES PAYABLE FOR WHICH THE ASSESSEE HAS PRODUCED DETAILS BEFORE ME. THE ASSESSEE HAS TOTAL CREDITORS OF ` 15,27,187/- AS ON 31/03/2005. THE ASSESSEE HAD FILED DETAILS OF THES E CREDITORS BEFORE MY PREDECESSOR AND ALSO BEFORE ME. MY PREDECESSOR HAD SENT SUMMON U/S 133(6) TO VARIOU S PARTIES. OUT OF WHICH 7 PARTIES NAMELY M/S KHANNA TRADING AGENCY, MAYUR FASHIONS (P) LTD., BALMUKUND VIRENDER KUMAR, SHRIT ABHINANDAN, KASHIRAM FABRICS (P) LTD., GOPAL DYERS AND HAROON SONS REPLIED AND SENT COPY OF ACCOUNT OF ASSESSEE CO. AS PER THEIR B OOKS. THE ASSESSEE HAD FURNISHED RECONCILIATION OF THESE PARTIES. THE CLAIM MADE BY ASSESSEE THAT SOME OF T HESE CREDITORS OF JOB WORK EXPENSES PAID AND HENCE, IT I S A DOUBLE ADDITION. AS PER DETAILS SUBMITTED BY THE ASSESSEE AFTER THE ASSESSMENT PROCEEDINGS COMPLETED/APPELLATE STAGE, IT IS OBSERVED THAT LIST OF JOB WORK CREDITORS SUBMITTED BY ASSESSEE OF SIX PARTIES WHERE TOTAL OUTSTANDING AMOUNT IS ` 430548/- AND THE ASSESSEE ALSO MADE PURCHASES FROM THREE PARTIES IS ` 387378/-. UNDER THESE CIRCUMSTANCES IT IS DIFFICUL T TO ESTABLISH WHETHER OUTSTANDING IS AGAINST GOODS OR J OB ITA NOS. 4874 & 4822(DEL)09 12 WORK EXPS. IT IS ALSO PERTINENT TO MENTION HERE TH AT THE ABOVE DETAILS MAY BE SUBMITTED BY THE ASSESSEE AT T HE TIME OF THE ASSESSMENT PROCEEDINGS, BUT THE ASSESSE E HAD NOT SUBMIT ANY DETAILS. GROUND NO. 4 : ADDITIONS OF ` 113550/- OF UNSECURED LOAN RECEIVED FROM GOKULAM CHIT AND FINANCE (P) LTD . THE ASSESSEE HAD NOT SUBMITTED CONFIRMATION AT THE TIME OF HEARING. BUT SUBSEQUENTLY THE ASSESSEE HAD SUBMITTED CONFIRMATION OF PARTY ALONG WITH STATEMEN T OF ACCOUNT AND RECONCILIATION. AS PER DETAILS/CONFIRM ATION SUBMITTED THE PAYMENT RECEIVED BY THE ASSESSEE THRO UGH THREE CHEQUES BUT DEPOSITED THE SAME THROUGH ONE DEPOSIT SLIP. BUT IT IS NOT ASCERTAINABLE WHETHER THE CHEQUES ARE SAME OR NOT. GROUND NO. 5 : THE ADDITIONS OF ` 1833392/- OF JOB WORK EXPENSES PAID. THESE ADDITIONS WERE MADE, BECAUSE IN PREVIOUS YEAR COMPARATIVE EXPENSES WERE LESS. THE ASSESSEE HAS SUBMITTED THAT DURING THIS YEAR NATURE OF ORDERS WERE DIFFERENT IN WHICH LABORS PAR T WAS MORE. THE ADDITIONS HAVE BEEN MADE AS THE ASSESSEE COULD NOT ABLE TO SUBMIT THE DETAILS WITH REGARD TO THE ABOVE MENTIONED EXPENSES DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THEREFORE, THE SA ME WERE ADDED BACK INTO THE INCOME OF THE ASSESSEE. N OW THE ASSESSEE HAS SUBMITTED DETAILS OF EXPENSES. AS PER DETAILS SUBMITTED SOME BILLS WERE EXAMINED ON TEST ITA NOS. 4874 & 4822(DEL)09 13 CHECK BASIS. THE COMPANY HAS ALSO DEDUCTED TDS ON MOST OF THESE PAYMENTS. IT IS ALSO PERTINENT TO ME NTION HERE THAT THE ABOVE DETAILS MAY BE SUBMITTED BY THE ASSESSEE AT THE TIME OF THE ASSESSMENT PROCEEDINGS, BUT THE ASSESSEE HAD NOT SUBMITTED ANY DETAILS. GROUND NO. 6 : THE ADDITION OF ` 439913/- IS OF LABOUR CHARGES PAID. THE AO MADE THESE ADDITIONS, BECAUSE IN PREVIOUS YEAR THESE EXPENSES WERE NIL. THE ADDITIO NS HAVE BEEN MADE AS THE ASSESSEE COULD NOT ABLE TO SUBMIT THE DETAILS WITH REGARD TO THE ABOVE MENTION ED EXPENSES DURING THE COURSE OF ASSESSMENT PROCEEDING S, THEREFORE, THE SAME WERE ADDED BACK INTO THE INCOME OF THE ASSESSEE. NOW THE ASSESSEE HAS SUBMITTED DETAI LS OF EXPENSES. AS PER DETAILS SUBMITTED SOME BILLS WERE EXAMINED ON TEST CHECK BASIS. THE ASSESSEE HAS SUBMITTED DETAILS OF THESE LABOUR CHARGES PAID BEFO RE ME. THESE EXPENSES ARE NO ACCOUNT OF STITCHING CHA RGES PAID TO VARIOUS PERSONS. IT IS ALSO PERTINENT TO MENTION HERE THAT HE ABOVE DETAILS MAY BE SUBMITTED BY THE ASSESSEE AT THE TIME OF THE ASSESSMENT PROCEEDINGS, BUT THE ASSESSEE HAD NOT SUBMIT ANY DETAILS. IN VIEW OF ABOVE IT IS CLEAR THAT THE ASSESSEE HAD NOT SUBMIT THE RELEVANT DOCUMENTS/ DETAILS/ VOUCHERS/ COMPLETELY BEFORE THE THEN AO AND THE ADDITIONS WER E MADE BY MY PREDECESSOR ON THE BASIS OF THE DETAILS ITA NOS. 4874 & 4822(DEL)09 14 FILED/SUBMITTED BEFORE HIM. THEREFORE, THE EVIDENC E SUBMITTED MAY NOT BE ACCEPTED. 8. A REJOINDER HAS BEEN SUBMITTED BY THE APPELLANT DT. OCTOBER 7, 2009 WHICH IS REPRODUCED BELOW: GROUND NO. 3 REGARDING SUNDRY CREDITORS OF ` 15,27,187/- OUR CLAIM THAT SOME OF THESE CREDITORS ARE OF JOB WORK ALSO A ND IN THAT CASE TO THAT EXTENT IT IS A DOUBLE ADDITIONS. THIS FACT IS ALSO SUPPORTED BY AO, BECAUSE WE NEVER SAID ALL ARE DOUBLE ADDITIONS. EVEN IF WE IGNORE THIS FACTO R, THE AO HAD MADE THESE ADDITIONS MERELY ON INCREASE OF SUNDRY CREDITORS IN COMPARISON TO PREVIOUS YEAR. THERE IS AN INCREASE OF 43% OF TURNOVER IN COMPARIS ON OF PREVIOUS YEAR WHILE AS CREDITORS INCREASE IS ONL Y 50%. GROUND NO. 4 UNSECURED LOAN RECEIVED FROM GOKULAM CHIT AND FINANCE (P) LTD. AT THE TIME OF ASSESSMENT CONFIRMATION FROM CHIT FUND CO. COULD NOT BE OBTAIN ED. BUT SUBSEQUENTLY CONFIRMATION FROM CHIT FUND CO. WA S SUBMITTED ALONG WITH COPY OF ACCOUNT AND VERIFIED B Y THE AO. THE ASSERTION OF AO WHETHER CHEQUES ARE DEPOSITED ON SINGLE DEPOSIT SLIP OR SEPARATE SLIPS IS IRRELEVANT ONCE IT IS ESTABLISHED LOAN IS GIVEN BY CHIT FUND CO. AND AMOUNT OF LOAN IS RECEIVED BY ACCOUNT PAYEE CHEQUE ONLY. GROUND NO. 5 ITA NOS. 4874 & 4822(DEL)09 15 REGARDING JOB WORK ADDITIONS OF ` 18,33,392/-. THE REASONS FOR INCREASE IN JOB WORK EXPS. WERE EXPLAIN ED TO AO. ALL THE SUPPORTING BILLS AND VOUCHERS ARE SUBMITTED BEFORE THE AO AND THE AO HAS VERIFIED THE SAME ON TEST CHECK BASIS. MOST OF PAYMENTS REGARDI NG THESE PAYMENTS WERE MADE BY ACCOUNT PAYEE CHEQUES ONLY AND TDS WAS DEDUCTED WHEREVER APPLICABLE. ALS O COPY OF TDS RETURN FILED BY THE COMPANY SUBMITTED T O THE AO OF THE TOTAL JOB WORK PAID OF ` 2248549/-, TDS WAS DEDUCTED ON ` 19,56,599/-. GROUND NO. 6 REGARDING LABOUR CHARGES OF ` 439913/-. ALL SUPPORTING BILLS/VOUCHERS WERE PRODUCED BEFORE THE AO AND SAME WERE VERIFIED ON TEST CHECK BASIS AND FOUN D CORRECT. FROM THE ABOVE IT IS VERY CLEAR THAT AO HAS APPLIED ONLY LAST YEAR COMPARISON IN MAKING ALL THESE ADDIT IONS WITHOUT ANY EVIDENCE OR CONCRETE FINDING WITH HIS O WN WHIMS AND FANCIES. KEEPING ABOVE IN VIEW YOUR GOOD SELF IS REQUESTED TO DELETE ALL ADDITIONS MADE BY T HE AO. 9. AFTER HAVING EXAMINED THE VARIOUS SUBMISSIONS OF THE APPELLANT AND THE REMAND REPORT THE REJOINDER AND THE ASSESSM ENT ORDER, THE GROUNDS OF APPEAL TAKEN UP BY THE APPELLANT ARE DIS CUSSED AND DECIDED. ITA NOS. 4874 & 4822(DEL)09 16 6. FROM THE ABOVE, IT IS EVIDENT THAT THE GRIEVANCE OF THE DEPARTMENT IS CORRECT. THE LD. CIT(A) HAS NOT ASSIGNED ANY REA SONS FOR ENTERTAINING THE ADDITIONAL EVIDENCE, CAUSING PREJUDICE TO THE DEPAR TMENT. THEREFORE, THE MATTER, CONCERNING BOTH THE APPEALS, IS REMITTED TO THE FILE OF THE LD. CIT(A), TO BE DECIDED AFRESH IN ACCORDANCE WITH LAW, ON AFF ORDING DUE ADEQUATE OPPORTUNITY TO THE AO CONCERNING THE ISSUE OF ADMIS SIBILITY OR OTHERWISE OF THE ADDITIONAL EVIDENCE FILED BY THE ASSESSEE AND D ECIDING THE ISSUES ON MERITS IN ACCORDANCE WITH LAW, IN THE LIGHT OF THE DECISION CONCERNING THE ADMISSIBILITY OF ADDITIONAL EVIDENCE. 7. IN THE RESULT, FOR STATISTICAL PURPOSES, BOTH TH E APPEALS ARE TREATED AS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 12.8.2011. SD/- SD/- (G.E. VEERABHADRAPPA) (A.D. JAIN) VICE PRESIDENT JUDICIAL MEMBER DATED: 12.08.2011 *RM COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT ITA NOS. 4874 & 4822(DEL)09 17 4. CIT(A) 5. DR TRUE COPY BY ORDER DEPUTY REGISTRAR