DEVI DARSAN PROCESSORS PRIVATE LIMITED, Surat V. The DCIT, Central Circle 2, Surat

ITA 609/SRT/2023

• Counselvise Citation: [2024] 101 COUNSELVISE.COM (IT) 8122 (ITAT-SURAT)
• Duration Of Justice: 6 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-03-2024
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 20-03-2024
• Assessment Year: 2015-2016
• Appeal Filed On: 01-09-2023
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: ABHISHEK NAGORI
• Keywords: Business income; Rectification of order; Search and seizure; Principle of natural justice; Rule of consistency; Tax effect
• Section: 147; 148; 132; 154; 143(3); 133A; 153A; 143(2); 139(1)

Judgement Text

आयकर अपीलीय अिधकरण, सुरत Ɋायपीठ, सुरत IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND Dr ARJUN LAL SAINI, ACCOUNTANT MEMBER आ.अ.सं./ITA Nos.599/SRT/2023 (AY 2009-10) (Hybrid hearing) Devi Darsan Processors Pvt. Ltd A-11, 15-18, Road No.5, Udhna Udyog Nagar, Surat-394210 [PAN : AABCD 3366 J] Vs Deputy Commissioner of Income Tax, Central Circle-2, Surat, Aaykar Bhavan, Majura Gate, Surat-395001 अपीलाथŎ/Appellant ŮȑथŎ /Respondent आ.अ.सं./ITA Nos.602-604/SRT/2023 (AYs 2010-11 to 2012-13) आ.अ.सं./ITA Nos.607-609/SRT/2023 (AYs 2013-14 to 2015-16) Devi Darsan Processors Pvt. Ltd A-11, 15-18, Road No.5, Udhna Udyog Nagar, Surat-394210 [PAN : AABCD 3366 J] Vs Deputy Commissioner of Income Tax, Central Circle-2, Surat, Aaykar Bhavan, Majura Gate, Surat-395001 अपीलाथŎ/Appellant ŮȑथŎ /Respondent िनधाŊįरती की ओर से /Assessee by Shri Abhishek Nagori, C.A राजˢ की ओर से /Revenue by Shri Vinod Kumar, Sr-DR सुनवाई की तारीख/Date of hearing 21.03.2024 उद्घोषणा की तारीख/Date of pronouncement 26.03.2024 Order under section 254(1) of Income Tax Act PER BENCH: 1. These seven appeals by single assessee are directed against the separate orders of Ld. Commissioner of Income Tax (Appeals), Central Circle-2 [for short to as “CIT(A)”] all dated 05.06.2023, for assessment years (AYs) 2009- 10 to 2015-16 (assessment year-wise), which in turn arose out separate assessment orders passed by Assessing Officer under section 147 ITA Nos.599, 602-604, 607-609/SRT/2023 (A.Ys.09-10 to 15-16) Devi Darsan Processors Pvt.Ltd. 2 r.w.s 143(3) dated 30.12.2016, 29.09.2017 and 16.10.2017 respectively. The assessee has raised certain common grounds of appeal in all appeals except variance of figures of disallowance on account of unaccounted job-work receipt. With the consent of both the parties, all the appeals were clubbed, heard together and are decided by consolidated order to avoid conflicting decisions. With the consent of both the parties appeal for assessment year 2009-10 in ITA No.599/SRT/2023 is treated as “lead” case. The assessee has raised the following grounds: “1. Under the facts and circumstances of the case as well as law on the subjects, the learned CIT-Appeals has erred in treating internal process records such as reprocess, reprinting, double process, double printing etc., found in purchi software amounting to Rs.4,11,24,815- as fresh unaccounted job receipts which is against the principles of natural justice and the stand of Learned CIT-Appeals is required to be nullified especially in view of the following:- a) That the Learned CIT-Appeals has ignored the fact that the purchi data are already covered in job receipts shown in annual financial statements and hence not to be made any addition. b) That Learned CIT-Appeals has erred in not considering the case laws relied on by the assessee.” 2. Perusal of record shows that impugned order for AY 2009-10 was passed by Ld.CIT(A) on 05-06-2023, however, the present appeal is filed on 30.08.2023. Thus, there is delay of 25 days in filing appeal before Tribunal. The Ld. Authorized Representative (Ld.AR) for the assessee submits that assessee has filed affidavit of one of the Director of assessee-company, for explanation the cause of delay. The Ld. AR for the assessee submits that Director of assessee-company, Shri Shreekishan Bhala, who is one of the main Director of assessee company was sick and unwell during the ITA Nos.599, 602-604, 607-609/SRT/2023 (A.Ys.09-10 to 15-16) Devi Darsan Processors Pvt.Ltd. 3 intervening period and suffering from spinning ligament joining pain and was advised rest by the doctor, copy of medical certificate is filed. The Ld. AR for the assessee submits that here is no intentional or deliberate on the part of assessee but due to fact that one of the Director of assessee-company was unwilling while passing the impugn order and assessee is not going to benefited by filing appeal belatedly. There is similar minor delay in filing all the appeals before Tribunal. The Ld. AR of the assessee submits that assessee has good case on merit and is likely to success that technicality may be avoided when cause of substantial justice is pitted against the technical consideration. 3. On the other hand, Ld. Senior Departmental-Representative (Ld. Sr-DR) for the Revenue submits that assessee has not explained the cause of delay in a manner the impugned order passed on 05.06.2023 and assessee could file appeal on or before 05.08.2023, though the appeal was filed on 30.08.2023 and medical certificate filed on record shows that Director of assessee- company was advised to bed rest till 31.07.2023. Thus, the delay is not properly explained by assessee. The Ld. SR-DR for the Revenue submits that Bench may take view in accordance with law. 4. On considering the submissions of both the parties on issue of limitation, we find that there is delay of 25 days only in filing appeal. No doubt that the period of medical rest as suggested in the medical certificate by Doctors, falls within the limited period for filing appeal before the Tribunal, yet considering the delay is of only of 25 days in filing appeal before Tribunal. Therefore, considering the fact that assessee is not going to benefitted by filing appeal ITA Nos.599, 602-604, 607-609/SRT/2023 (A.Ys.09-10 to 15-16) Devi Darsan Processors Pvt.Ltd. 4 belatedly and further considering the fact that when technical consideration and cause of substantial justice are pitted against each other, the cause of substantial justice may be preferred. Thus the delay in filing the appeal is condoned. Considering the facts that we have condoned the delay in filing lead appeal, similar delay in filing all the appeals is condoned. Now adverting to merit of the cases. 5. Brief facts of the case are that assessee is a company engaged in a job work of dyeing, printing and processing of cloth. The assessee is a part of Sumeet group of industries, Surat. A search under section 132 and survey action under section 133A of the Act was carried out on the assessee group on 19.02.2015. The assessee was covered by survey action at the factory premises at Udhyognagar, Udhna. During the course of survey action, a back-up of digital data was obtained which revealed the unaccounted job work done by the assessee. The Assessing Officer on the basis of such information and evidence in digital data reopened the case of assessee under section 147 of the Act. Notice under section 148 was issued on 28.03.2016. In response to notice under section 148, the assessee filed return of income on 22.03.2016 declaring nil income. The Assessing Officer after serving statutory notice under section 143(2) r.w.s.142(1) of the Act proceeded for re-assessment. The Assessing Officer after referring various evidence and modus operandi of unaccounted job receipt in para-4 in the assessment order concluded that assessee has generated Rs.82.24 crores. The Assessing Officer treated 20% of such unaccounted job receipt as income of assessee for the year under consideration. Aggrieved by the additions in the ITA Nos.599, 602-604, 607-609/SRT/2023 (A.Ys.09-10 to 15-16) Devi Darsan Processors Pvt.Ltd. 5 assessment order, the assessee filed appeal before Ld.CIT(A). Before Ld.CIT(A) assessee field its detailed written submission. The submission of assessee is recorded in para-6.6 of order of Ld.CIT(A). In the written submission, the assessee explained the detailed process of working about processing cycles in making lot allotment, lot marking, stretching, drum / jet process, setting on stenter, folding, batching, printing, loop for color fixsession, washing, stenter for finish, zero-zero, folding and dispatch. The assessee also explained about using of software in their working units. The assessee also referred various facts of Betex India Ltd. or other group companies. The Ld.CIT(A) after considering the submission of assessee restricted the addition of suppressed job work to the extent of 5% on the basis of decision of his predecessor in assessee’s group case in order dated 05.06.2023. Further aggrieved assessee has filed present appeal before the Tribunal. 6. We have heard the submissions of Ld. Authorized Representative (Ld.AR) for the assesse and Ld. Senior Departmental-Representative (Ld. Sr-DR) for the Revenue and perused the materials available on record. The Ld. AR for the assessee submits that net profit margin in the business of assessee is very low, however, other group of assessee has shown very good margin. The disallowance / addition @ 5% is on higher side and it may be reduced to 1% or 2% or in alternative, the profit already declared by assessee in various years may be reduced accordingly. The ld AR for the assessee submits that he has already filed various documents in the form of paper book to substantiate the facts that there was no unaccounted job receipt. ITA Nos.599, 602-604, 607-609/SRT/2023 (A.Ys.09-10 to 15-16) Devi Darsan Processors Pvt.Ltd. 6 7. On the other hand, Ld. Sr-DR for the Revenue submits that assessee is a part of Sumeet Silk Mills, wherein a search and seizure action was carried out by Investigation Wing on 19.02.2015. The Assessing Officer after detailed discussion and narrating various discrepancies found in the various evidence collected during survey action has reasonably restricted the addition to the extent of 20% on such unaccounted job received. However, the Ld.CIT(A) restricted the addition to the extent of 5% on such unaccounted job receipt, though assessee has already given more than sufficient relief. Therefore, the assessee deserves no further relief. The Ld. Sr-DR for the Revenue further submits even otherwise this appeal of assessee is covered by the decision of this Combination of this Bench in assessee’s other connected case of its group in Sitaram Prints in IT (SS) No. 67,68 & ITA No. 157/Srt/2021 dated 17.08.2022 and in case of Betex India Ltd. vs. DCIT in IT(S)A Nos.71-74/-SRT/2021 and ITA Nos.72 & 175/SRT/2021 for assessment years 2011-12 to 2014-15 and assessment year 2015-16 dated 21.12.2022. 8. We have considered the rival submissions of both the parties and perused the material available on record. We have also deliberate the case relied by Ld. Sr-DR for the Revenue. We find that the assessee has filed voluminous documents on record, however at the time of making submissions, none of the documents were referred or relied by ld AR of assessee. On careful consideration and submission of both the parties and ongoing through the contents of orders of lower authorities, we find that grounds of appeal raised by assessee is covered against the assessee in assessee’s group cases in the ITA Nos.599, 602-604, 607-609/SRT/2023 (A.Ys.09-10 to 15-16) Devi Darsan Processors Pvt.Ltd. 7 case of Betex India Ltd. Vs DCIT in IT(SS)A No.71-74/SRT/2021 and ITA No.172 & 175/SRT/2021 assessment years 2011-12 to 2015-16 dated 21.12.2022, wherein this combination by following our earlier order in Sitaram Prints Pvt Ltd Vs DCIT (supra) passed the following order: “16. We have considered the rival submission of both the parties and have gone through the order of lower authorities carefully. We have also deliberated on various case law relied by lower authorities. We have also considered the entire material filed before us. We find that in the search action was carried out in the group cases of Sumeet Industries Limited Surat on 19.02.2015 being a part of same group, the assessee was also covered. We find that on similar set of fact, and on similar evidence, the Assessing Officer made addition in case of Sitaram Prints Private Limited (supra) in assessees group case, covered in same search action, on similar unaccounted job work the assessing officer made addition @ 20% on similar unaccounted job work receipt. On appeal before Ld. CIT(A), who restricted the addition to the extent of 5% of similar unaccounted job work receipt. The combination of this bench in the case of Sitaram Prints Private Limited (supra) has passed the following order: “9. We have considered the rival submissions of both the parties and have gone through the orders of the authorities below carefully. We have also deliberated on various case laws referred and relied by the ld. CIT(A) in his order. We find that the Assessing Officer made addition of 20% on unaccounted job work charges by taking a view that the assessee has not shown actual job work done for the parties. If there was no processing work were carried out for these parties, how such work is reflected in the data recovered from computer back up as reprocessing work. The Assessing Officer was also of the view that on comparison of the parties which are common in the books and data recovered from the computer back up, the job work done is very higher than job work reflected in the books of account. Such summary was prepared in the assessment order. The assessee claimed that reprocessing is internal process of organization and data maintained in Purchi.exe software is only for organization the how can reprocessing work be done after the one month of dispatch of finished goods. Such action shows that the claim of reprocessing is not genuine. On the basis of such discrepancies, the Assessing Officer was of the view that there are two different set of data related to job works maintained in the computer and data maintained in Purchi.exe software is not accounted in the books of account. The Assessing officer disallowed 20% of receipt ITA Nos.599, 602-604, 607-609/SRT/2023 (A.Ys.09-10 to 15-16) Devi Darsan Processors Pvt.Ltd. 8 of unaccounted job work by treating as 20% profit of such unaccounted job work. 10. As noted above, before the ld. CIT(A), the assessee has filed detailed written submission. The ld. CIT(A) after considering the submission of assessee noted that it is clear that the data found stored in file of Purchi.exe software does not match with the regular books of account, thus the Assessing officer has proved beyond doubt with detailed discussion in the assessment order that the data recorded in this file remains unaccounted. The documentary evidences in the form of invoices and job bills found, there were several differences between these documents, which the Assessing Officer has narrated in detail in the assessment order. The entries have been made from about 50 parties by the DDIT (Inv.) to verify the contention of assessee about reprocessing work from whom enquiries were made, but no one had stated that they have given any reprocessing work to the assessee. All these details were analysed by the Assessing Officer and proved beyond doubt that the assessee was indulged in activities of doing job work which remained unaccounted. Thus, the contention that no unaccounted job work was done by assessee was not accepted and the corresponding submission of assessee was rejected. 11. We find that the ld. CIT(A) on the alternative contention of addition for considering gross profit of assessee for last preceding years as well as electricity consumption and other expenditure was of the view that the Assessing Officer was not correct in making addition by taking gross profit and these direct expenditure. The contention of assessee was that only profit element should be taxed and not the addition @ 20% of job works of the whole receipt. The assessee claimed that 20% is too high and is not real. The assessee submitted gross profit and net profit for six assessment years which was at 1.82% and the contention of assessee that it should not be more than average net profit of 1.82%. The ld. CIT(A) after considering the submission of assessee and by following the decision of Hon’ble Jurisdictional High Court in the case of CIT Vs President Industries and CIT Vs Samir Synthetics Mill (supra) and after compiling the turnover, net profit and gross profit ratio from A.Y. 2010-11 to 2015-16 held that the average net profit in all the years is 1.82%. The ld.CIT(A), accordingly restricted the addition of suppressed job work to the extent of 5% to the total turnover of Rs. 2.589 crores. 12. We independently examined the contention of both the parties and find that the Assessing Officer has given very detailed reasoning while making addition of 20% of unaccounted job charges. We further find that the ld. CIT(A) restricted the addition to the extent of 5% to the extent that only profit element embedded in such unaccounted receipt. It is settled law under the income tax proceeding that only income component is to be taxed and not the substantial part of the transaction. Considering the fact that the ld CIT(A) has already granted substantial relief to the assessee and directed to tax only to the extent of 5% of Rs.2.589 Crore. In our view the ld CIT(A) has already granted substantial relief to the assessee, which we affirm. Hence, we do not find any merit in further reducing the addition which has already been ITA Nos.599, 602-604, 607-609/SRT/2023 (A.Ys.09-10 to 15-16) Devi Darsan Processors Pvt.Ltd. 9 reduced substantially by the ld. CIT(A). Therefore, we do not find any justifiable reason to given further relief to the assessee. 13. In the result, this appeal of is dismissed.” 17. In the present set of appeals, Ld. CIT-DR for the Revenue specifically argued that in case of Sitaram Prints Private Limited (supra) there was no cross-appeal filed by Revenue for the want of tax effect, therefore the Tribunal was unable to enhance the ratio of disallowance restricted by Ld. CIT(A). We find that the Ld. CIT(A) while restricting the addition to the extent of 5% of alleged unaccounted job work receipt followed by the decision of Hon'ble jurisdictional High Court in the case of President Industries (supra), wherein it was held that “on the issue of suppression of said consideration only the addition to the extent of profit element may be made”. We are also of the view that wherein there is no fool proof of evidence of unaccounted sales or independent material to substantiate such allegation, only profit element to avoid the possibility of revenue leakage is sufficient to meet the ends of justice and not the substantial part of the disputed transaction. Therefore, we are not inclined to enhance the disallowance of alleged unaccounted job work receipt by assessee. Hence, ground No.1 to 4 raised by Revenue are dismissed. 18. Considering the fact that we have upheld the action of ld CIT(A) hence, sole ground of appeal raised by assessee in its appeal is also dismissed. In the result, assessees appeal is dismissed. 19. Ground No.5 and 6 in Revenue’s appeal relate to further reducing the disallowance in rectification order under section 154 of the Act passed by Ld. CIT(A) in granting credit of additional income of Rs.31 lakh declared by assessee while filing return of income. The Ld. CIT-DR for the Revenue submits that Ld. CIT(A) erred in granting set off / credit of income declared by assessee in response to notice under section 153A of the Act. The Ld. CIT-DR for the Revenue submits that no such ground raised by assessee at the time of filing appeal before First Appellate Authority. The Ld. CIT(A) exceeded his jurisdiction while rectifying the order under section 154 of the Act. 20. On the other hand, Ld. AR for the assessee submits that assessee has specifically in para-29 of its written submission clearly stated that while filing its return of income, in response to notice under section 153A, assessee made voluntary disclosure in its return of income, on the basis of estimated profit as net undisclosed business income and hence eligible for credit / telescoping of such ITA Nos.599, 602-604, 607-609/SRT/2023 (A.Ys.09-10 to 15-16) Devi Darsan Processors Pvt.Ltd. 10 income, which ought to have been given by Assessing Officer and such facts were brought to the notice of Ld. CIT(A) by filing return of income. The Ld. CIT(A) after perusal of record and considering the plea taken raised by assessee in its written submission and find that contention of assessee was factually correct as specifically recorded in para-2 of rectification order under section 154 of the Act that in the original return filed on 27.09.2011, the assessee shown (offered) taxable income of Rs.1.76 crores. However, in response to notice under section 153A after search action conducted, the assessee filed return of income on 23.03.2016 showing return of income at Rs.2.07crores. Thus, the assessee has shown additional income of Rs.31 lakhs and mistake apparent was accepted by Ld. CIT(A) and passed order under section 154 of the Act. The Ld. AR for the assessee, thus, supported the order of Ld. CIT(A) passed under section 154 of the Act dated 05.08.2021. 21. We have considered the rival submission of both the parties and have gone through the order of ld CIT(A) carefully. We find that there is no dispute that assessee while filing return of income under section 139(1) on 27.09.2011 declared income of Rs.1.76 crores. However, in response to notice under section 153A the assessee offered / declared income at Rs.2.07 crores. Thus, the assessee offered additional income of Rs. 31 lacks and case of assessee is that there was voluntary disclosure of undisclosed business income and was eligible for telescoping of such income. We find that only issue in the assessment order was with regard to unaccounted job work receipt. The addition was made on account of estimated profit of unaccounted job work receipt. Initially, Assessing Officer made addition @ 20% of such impugned unaccounted job charges. On appeal, which was restricted @ 5% of the total disputed unaccounted job work receipt by Ld. CIT(A). We find that Ld. CIT(A) on filing application under section 154 of the Act by assessee on account of additional business income, granted credit of such additional income. The ld CIT(A) thus, granted set of income, which was voluntarily offered by the assessee in response to notice under section 153A, to which the assessee is legally eligible. Thus, we do find any reasons for interference in the order passed by Ld. CIT(A). Hence, ground No.5 & 6 of Revenue’s appeal is dismissed.” 9. In view of the aforesaid factual discussion and following the principle of consistency, we find that ld CIT(A) has already granted relief to the assessee, ITA Nos.599, 602-604, 607-609/SRT/2023 (A.Ys.09-10 to 15-16) Devi Darsan Processors Pvt.Ltd. 11 which is in consonance with our order in assessees group vase as referred above. Thus we do not find any reason to deviate from our order in assesses group case as the grounds of appeal raised by the assessee is covered against the assessee. So we do not find any reason to interference with the order of Ld.CIT(A). in the result, the grounds of assessee appeal raised by the assessee is dismissed. 10. In the result, the appeal filed by the assessee is dismissed. ITA Nos.602-604/SRT/2023 and ITA Nos.607-609/SRT/2023 (AYs 10-11 to 15-16). 11. As recorded above the assessee in all appeals have raised similar grounds of appeal as raised in appeal for AY 2009-10, which we have dismissed, thus, following the principle of consistency, remaining assessee’s appeals are also dismissed with similar observation in assessee’s appeal ITA No.599/SRT/2023 for assessment year 2009-10. Hence, all remaining six appeals of assessee are also dismissed. 12. In combined result, all the appeals of the assessee are dismissed. A copy of the instant common order be placed in the respective case file(s). Order pronounced in open court on 26/03/2024 . Sd/- Sd/- (Dr ARJUN LAL SAINI) (PAWAN SINGH) [लेखा सद˟/ACCOUNTANT MEMBER] [Ɋाियक सद˟ JUDICIAL MEMBER] Surat, Dated: 26/03/2024 Dkp. Out Sourcing Sr.P.S ITA Nos.599, 602-604, 607-609/SRT/2023 (A.Ys.09-10 to 15-16) Devi Darsan Processors Pvt.Ltd. 12 Copy to: 1. Appellant- 2. Respondent- 3. CIT(A)- 4. CIT 5. DR 6. Guard File True copy/ By order // True Copy // Sr. P.S./Assistant Registrar, ITAT, Surat