Shri. Namdeo Yashwant Dhamane, Ahmednagar V. Dy. CIT Cir- Ahmednagar, Ahmednagar

ITA 626/PUN/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 85079 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 6 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-10-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 22-07-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 26-03-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S PRAVEENA
• Section: 145

Judgement Text

INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI G.S.PANNU, ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER ITA NO. 626/PN/2012 (ASSESSMENT YEAR : 2007-08) SHRI NAMDEO YASHWANT DHAMANE, SANHYADRI BUNGALOW BURUDGAON ROAD, AHMEDNAGAR .. APPELLANT PAN NO.AARPD2658J VS. THE DY.CIT, AHMEDNAGAR CIRCLE, AHMEDNAGAR .. RESPONDENT ASSESSEE BY : SHRI MAHAVIR JAIN DEPARTMENT BY : SMT. S. PRAVEENA ORDER PER R.S. PADVEKAR, JM : THIS APPEAL IS FILED BY THE ASSESSEE CHALLENGING TH E IMPUGNED ORDER OF THE LD.CIT(A)-I, PUNE DATED 01-09 -2011 FOR THE A.Y. 2007-08. 2. THE ASSESSEE HAS TAKEN THE MULTIPLE GROUNDS WHIC H ARE ARGUMENTATIVE ALSO. FROM THE GROUNDS TAKEN BY THE A SSESSEE, THE FIRST ISSUE WHICH ARISE FOR OUR CONSIDERATION I S WHETHER THE ASSESSING OFFICER WAS JUSTIFIED IN INVOKING THE PRO VISIONS OF SECTION 145(3) OF THE I.T. ACT FOR REJECTING THE BO OKS OF ACCOUNT OF THE ASSESSEE. 2.1 THE FACTS WHICH ARE REVEALED FROM THE RECORD AS UNDER. THE ASSESSEE IS AN INDIVIDUAL AND HE IS ENGAGED IN FABRICATION AND ENGINEERING, SALES AND JOB WORK. THE ASSESSEE FILED THE RETURN U/S.139 OF THE ACT FOR THE A.Y. 2007-08 WHIC H WAS SELECTED FOR SCRUTINY AND ASSESSMENT HAS BEEN COMPL ETED U/S.143(3). AS OBSERVED BY THE ASSESSING OFFICER, THE ASSESSEE 2 HAS DECLARED THE TOTAL TURNOVER OF RS.3,18,31,450/- AND HAS BOOKED THE NET PROFIT OF RS.6,27,814/-. THE ASSESS ING OFFICER HAS RESERVATION IN RESPECT OF PAYMENT MADE TO ONE S HRI ASHOK GOVIND PANSARE TOWARDS TECHNICAL FEES WHICH WAS TO THE EXTENT OF RS.2,40,000/-. AS OBSERVED BY THE ASSESSING OFFICE R, THE ASSESSEE FAILED TO EXPLAIN THE REASON FOR PAYING TH E TECHNICAL CONSULTANCY FEES/CHARGES TO SHRI PANSARE. WE FIND THAT THE ASSESSING OFFICER HAS ISSUED SUMMONS TO SHRI PANSAR E U/S.131 OF THE I.T. ACT AND HIS STATEMENT WAS ALSO RECORDED SE EKING THE EXPLANATION FROM HIM IN RESPECT OF THE TECHNICAL SE RVICES RENDERED BY HIM TO THE ASSESSEE AS WELL AS THE PAYM ENT MADE TO HIM WHICH IS PARTLY REPRODUCED IN THE ASSESSMENT OR DER. THE ASSESSING OFFICER HAS ALSO OBSERVED THAT THE ASSESS EE IS THE BROTHER-IN-LAW OF SHRI PANSARE. SHRI A.G.PANSARE P RODUCED 6 BILLS RAISED BY HIM WHICH DETAILS ARE GIVEN IN THE ASSESS MENT ORDER. THE ASSESSING OFFICER WAS SUSPICIOUS ABOUT THE GENU INENESS OF THE PAYMENT MADE TO SHRI PANSARE AND IN HIS VIEW TH E SAID PAYMENT MADE IS IN THE NATURE OF ACCOMMODATION ENTR Y. HE, THEREFORE, DISALLOWED THE PAYMENT MADE TO SHRI PANS ARE WHICH WAS TO THE EXTENT OF RS.2,40,000/-. THE ASSESSING OFFICER ALSO OBSERVED THAT THE ASSESSEE HAS DEBITED DIFFERENT EX PENDITURE TOWARDS WELFARE, OUTWARD CARRIAGES, REPAIRS AND MAI NTENANCE ETC., BUT DID NOT PRODUCE THE SUPPORTING VOUCHERS. HE ACCORDINGLY REJECTED THE BOOKS OF ACCOUNT OF THE AS SESSEE AND FURTHER ESTIMATED THE NET PROFIT AT 5% ON THE TOTAL TURNOVER. 3. THE ASSESSEE CARRIED THE ISSUE BEFORE THE LD.CIT (A) BUT WITHOUT SUCCESS. 3 4. WE HAVE HEARD THE PARTIES AND PERUSED THE RECORD ON THE ISSUE OF REJECTION OF BOOKS OF ACCOUNT OF THE ASSES SEE. FROM THE PERUSAL OF THE ASSESSMENT ORDER, WE FIND THAT SHRI ASHOK GOVIND PANSARE WAS EXAMINED ON OATH. IN HIS DEPOSITION SHR I A.G.PANSARE STATED THAT HE IS GIVING TECHNICAL SUPP ORT FOR THE DEVELOPMENT AND MANUFACTURING OF STATOR FRAMES FOR CUMMINS GENERATOR TECHNOLOGIES INDIA LTD., AHMEDABAD. HE I S PROVIDING SAID SERVICES TO DP ENGINEERING COMPANY, I.E. ASSES SEES PROPRIETARY CONCERN FROM THE YEAR 2003-04. HE FURT HER DEPOSED BEFORE THE ASSESSING OFFICER THAT HE WAS IN THE SER VICES OF CROMPTON GREAVES LTD., FOR 23 YEARS AND HE WAS WORK ING AS A PRODUCTION MANAGER BEFORE RESIGNING FROM THE SERVIC E. FROM THE DEPOSITION OF SHRI A.G. PANSARE, IT IS CLEAR THAT H E IS A TECHNICAL EXPERT IN ENGINEERING, MORE PARTICULARLY THE PRODUC TS WHICH ARE MANUFACTURED BY THE ASSESSEE. WE FAIL TO UNDERSTAN D WHAT FURTHER EXPLANATION THE ASSESSING OFFICER WAS EXPEC TING. WE ARE OF THE OPINION THAT THE OBSERVATION OF THE ASSESSIN G OFFICER THAT NO SPECIFIC DETAILS OF THE SERVICES ARE GIVEN BY SH RI A.G. PANSARE IN THE EXAMINATION U/S.131 OF THE ACT IS HAVING NO BASE AND THIS CANNOT BE THE REASON FOR REJECTION OF BOOKS OF ACCO UNT OF THE ASSESSEE. ANOTHER OBSERVATION WHICH IS ALSO CRYPTI C MADE BY THE ASSESSING OFFICER IS THAT THE ASSESSEE HAS NOT PROD UCED THE SUPPORTING VOUCHERS. IF THE ASSESSING OFFICER WAS DESIRING TO PUT ON RECORD IN RESPECT OF THE EVIDENCE WHICH VOUCHERS WERE NOT PRODUCED, THEN HE COULD HAVE AT LEAST GIVEN SOME SA MPLE EXAMPLES BUT MERELY MAKING THE GENERAL STATEMENT HE MADE THE REASON FOR REJECTION OF THE BOOKS OF ACCOUNT. THER E ARE NO OTHER REASONS. IN OUR OPINION, THE APPROACH OF THE ASSES SING OFFICER IS TOTALLY ERRONEOUS FOR REJECTING THE BOOKS OF ACCOUN T OF THE ASSESSEE. WE ACCORDINGLY ALLOW THE GROUND TAKEN BY THE 4 ASSESSEE AND HOLD THAT THERE IS NO JUSTIFICATION ON THE PART OF THE ASSESSING OFFICER TO REJECT THE BOOKS OF ACCOUNT OF THE ASSESSEE. ACCORDINGLY, THE RELEVANT GROUNDS ARE ALLOWED. 5. NEXT ISSUE IS DISALLOWANCE OF TECHNICAL SERVICE FEES/CHARGES PAID TO SHRI A.G. PANSARE. WE HAVE ALREADY GIVEN I N DETAILS THE FACTS PERTAINING TO SHRI A.G. PANSARE WHO IS RENDER ING TECHNICAL SERVICES TO THE ASSESSEE COMPANY. AS WE HAVE ALREA DY NOTED THAT ASSESSING OFFICER ISSUED SUMMONS TO SHRI A.G. PANSARE AND RECORDED HIS STATEMENT U/S.131 OF THE I.T. ACT. AS PER THE DEPOSITION OF SHRI A.G. PANSARE HE HAS IN CLEAR TER MS DEPOSED THAT HE IS RENDERING TECHNICAL SERVICES TO THE ASSE SSEE COMPANY. AS PER HIS DEPOSITION HE WAS WORKING IN CROMPTON GR EAVES FOR 23 YEARS AND BEFORE HIS RESIGNATION HE HAS WORKED AS P RODUCTION MANAGER. CROMPTON GREAVES LTD. IS AN ENGINEERING C OMPANY. CERTAINLY, IF HIS EXPERTISE IS UTILISED BY THE ASSE SSEE FOR IMPROVING THE QUALITY OF HIS PRODUCT, THEN HOW THE RELATIONSH IP CAN COME IN BETWEEN IF THE PERSON RENDERING THE SERVICES WHO IS TECHNICALLY QUALIFIED. WE, THEREFORE, FIND NO JUSTIFICATION F OR DISALLOWING OF RS.2,40,000/-. WE ACCORDINGLY DELETE THE SAID ADDI TION AND ALLOW THE RELEVANT GROUNDS TAKEN BY THE ASSESSEE. 6. NEXT ISSUE IS THE ASSESSING OFFICER HAS MADE EST IMATED ADDITION OF RS.9,63,758 TOWARDS THE GROSS PROFIT. WE HAVE ALREADY HELD THAT THERE WAS NO JUSTIFICATION ON THE PART OF THE ASSESSING OFFICER TO INVOKE PROVISIONS OF SECTION 1 45 OF THE ACT FOR REJECTION OF BOOKS OF ACCOUNT OF THE ASSESSEE. WE FIND THAT ASSESSING OFFICER HAS MADE THE ADDITION TOWARDS NET PROFIT BY ESTIMATING 5% OF THE TOTAL RECEIPTS AND AFTER GIVIN G SET OFF OF THE INCOME DECLARED BY THE ASSESSEE AND MADE ADDITION O F RS.9,63,758/-. AS THE ISSUE OF REJECTION OF BOOKS OF ACCOUNT OF 5 THE ASSESSEE IS DECIDED IN FAVOUR OF THE ASSESSEE, HENCE, THE ADDITION ON THE ESTIMATION DOES NOT SURVIVE. ACCOR DINGLY, THE SAME IS DELETED AND RELEVANT GROUNDS TAKEN BY THE A SSESSEE ARE ALLOWED. 7. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON 20-10-2014. SD/- SD/- (G.S.PANNU) (R.S. PADVE KAR) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE DATED: 20 TH OCTOBER, 2014 SATISH COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. DEPARTMENT 3. CIT(A)-I, PUNE 4. CIT-I, PUNE 5. THE D.R, B PUNE BENCH 6. GUARD FILE BY ORDER // TRUE COPY // ASSISTANT REGISTRAR, ITAT, PUNE BENCHES, PUNE