ITO 4(2)(4), MUMBAI V. MURARI RAJDHAR PACKERS (P) LTD, MUMBAI

ITA 6393/MUM/2009

• Counselvise Citation: 639319914 RSA 2009
• Duration Of Justice: 2 year(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-12-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: J
• Next Hearing Date: 20-12-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 11-12-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D S SUNDER SINGH
• Assessee Lawyers: N O N E
• Section: 133(6)

Judgement Text

1 ITA NO.6393/MUM/2009 M/S MURARI RAJDHAR PACKERS (P) LTD. IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI J BENCH MUMBAI BENCHES, MUMBAI BEFORE SHRI D. MANMOHAN, V.P. AND SHRI R.K. PANDA, A.M. ITA NO. 6393/MUM/2009 (ASST YEAR 2006-07) ITO 4(2)(4), ROOM NO. 647, 6 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI 20. VS M/S MURARI RAJDHAR PACKERS (P) LTD., PLUMBER HOUSE, IST FLOOR, 557 J.S.S. ROAD, CHIRA BAZAR, MUMBAI. 400 002 (APPELLANT) (RESPONDENT) PAN NO. AADCM5114H APPELLANT BY S HRI D.S. SUNDER SINGH RESPONDENT BY NON E DATE OF HEARING 20.12.2011 DATE OF PRONOUNCEMENT 20.12.2011 ORDER PER R K PANDA, AM THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINS T THE ORDER DATED 16.09.2009 OF THE COMMISSIONER OF INCOME TAX (A)- 8 , MUMBAI RELATING TO ASSESSMENT YEAR 2006-07. 2. THIS CASE WAS LAST FIXED FOR HEARING ON 08.11.20 11 AND WAS ADJOURNED TO 20.12.2011 AT THE REQUEST OF THE LD. COUNSEL FOR THE ASSESSEE. HOWEVER, ON 20.12.2011 WHEN THE NAME OF THE ASSESSEE WAS CALLED NONE APPEARED ON BEHALF OF THE ASSESSEE. THEREFORE, THE MATTER IS BE ING DECIDED ON THE BASIS OF MATERIAL AVAILABLE ON RECORD AND AFTER HEARING THE LD. D.R. 3. THE ONLY EFFECTIVE GROUND RAISED BY THE REVENUE IN THIS APPEAL READS AS UNDER:- 2 ITA NO.6393/MUM/2009 M/S MURARI RAJDHAR PACKERS (P) LTD. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS. 30 ,31,341/- PAID TO SUB-CONTRACTORS WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE INSPITE OF GIVING REASONABLE OPPORTUNITY FAILED TO ESTABLISH THE IDENTITY OF THE PAYEE AND GENUINENESS OF THE TRANSA CTION. 3.1 FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSE E IS ENGAGED IN THE BUSINESS OF JOB WORK ON CONTRACT BASIS FOR TEXTILE ACTIVITIES. THE A.O. DURING THE COURSE OF ASSESSMENT PROCEEDINGS NOTED THAT THE ASSESSEE HAS DEBITED AN AMOUNT OF RS. 1,09,14,654/- ON ACCOUNT OF LABOUR CHARGES. TO VERIFY THE GENUINENESS OF LABOUR CHARGES, THE A.O. ISSUED NOTI CE U/S 133(6) OF THE ACT TO VARIOUS PARTIES. FROM THE REPLY GIVEN BY SHRI V. S. YADAV, PROPRIETOR YADAV PACKERS, THE A.O. NOTED THAT DETAILS OF ASSESSMENT WAS NOT FILED. SINCE THE PAYMENT MADE TO THIS PARTY IS CONSIDERABLE I.E. RS. 30,31,341/-, THE A.O. ASKED THE ASSESSEE TO JUSTIFY THE GENUINENESS OF TH IS CLAIM AND TO ESTABLISH THE IDENTITY OF THE PERSON. THE ASSESSEE IN ITS RE PLY FILED THE PAN OF THE RECIPIENT AND SUBMITTED THAT THE IDENTITY OF THE PA RTY IS PROVED. IT WAS ALSO SUBMITTED THAT BILLS WERE RAISED BY THE PARTY, PAYM ENTS WERE MADE IN CHEQUE AND TDS WAS DULY DEDUCTED FROM SUCH PAYMENT. HOWEVER, THE A.O. WAS NOT CONVINCED WITH THE EXPLANATION GIVEN BY THE ASSESSEE. HE NOTED THAT UNDER IDENTICAL FACTS AND CIRCUMSTANCES, DISAL LOWANCES WERE MADE DURING A.Y. 2004-05 AND 2005-06 ON ACCOUNT OF PAYME NTS TO OTHER PARTIES WHICH HAS BEEN UPHELD BY THE LD. CIT(A) FOR THOSE Y EARS. SINCE THE ASSESSEE DID NOT PRODUCE SHRI V.S. YADAV FOR HIS VERIFICATIO N, THE A.O. HELD THAT IDENTITY OF THE PARTY IS NOT PROVED. SINCE SHRI V. S. YADAV HAS NEITHER FILED THE RETURN OF INCOME FOR THIS YEAR NOR THE ASSESSEE WAS ABLE TO ESTABLISH THE NATURE OF SERVICES RENDERED BY THIS PARTY, THEREFOR E, HE HELD THAT THE GENUINENESS OF THE TRANSACTION IS NOT PROVED. HE AC CORDINGLY DISALLOWED THE CLAIM OF THE ASSESSEE I.E. RS. 30,31,341/- PAID TO SHRI V.S. YADAV, PROPRIETOR M/S YADAV PACKERS. 3.2 DURING THE COURSE OF APPELLATE PROCEEDINGS IT W AS SUBMITTED THAT THE ASSESSEE COMPANY IS A LABOUR CONTRACTOR ENGAGED IN THE BUSINESS OF JOB 3 ITA NO.6393/MUM/2009 M/S MURARI RAJDHAR PACKERS (P) LTD. WORK ON CONTRACT BASIS FOR VARIOUS TEXTILE ACTIVITI ES. DURING THE YEAR, THE ASSESSEE COMPANY HAS TAKEN CONTRACT FOR CHECKING AN D PACKING OF FABRIC FROM M/S DONEAR INDUSTRIES LTD. THE WORK SO UNDERTA KEN WAS SUB- CONTRACTED TO SEVEN SUB-CONTRACTORS AND THE ASSESSE ES DUTY WAS TO SUPERVISE THE QUALITY OF WORK SO THAT THE WORK IS C OMPLETED ON SCHEDULED TIME AND IN ACCORDANCE WITH THE SPECIFIED QUALITY. IT WAS SUBMITTED THAT IN RESPONSE TO NOTICE U/S 133(6) ISSUED TO ALL THE SEV EN CONTRACTORS, THEY SUBMITTED THEIR REPLIES TO THE A.O. CONFIRMING THAT SERVICES HAVE BEEN PROVIDED BY THEM AND THE PAYMENTS HAVE BEEN RECEIVE D BY THEM. IT WAS SUBMITTED THAT SHRI V.S. YADAV IS ONE OF THE SUB-CO NTRACTORS WHO VIDE LETTER ADDRESSED TO THE A.O. HAS CONFIRMED OF HAVING RENDE RED SERVICES AND ALSO ACKNOWLEDGED RECEIPT OF PAYMENT FOR SUCH SERVICES. SAMPLE COPIES OF BILLS WERE SUBMITTED. COPY OF BANK STATEMENT WAS ALSO SUB MITTED TO SHOW THAT PAYMENT MADE BY THE ASSESSEE IS DULY REFLECTED. IT WAS SUBMITTED THAT PAN OF THE PROPRIETOR SHRI V.S. YADAV WAS SUBMITTED BEF ORE THE A.O. FURTHER TDS HAS BEEN DEDUCTED AT THE APPLICABLE RATE FROM T HE PAYMENTS MADE TO HIM. IT WAS SUBMITTED THAT THE ASSESSEE CANNOT ENF ORCE ANY PARTY TO FILE ITS INCOME TAX RETURN FOR THE BUSINESS CARRIED OUT WITH THEM. VARIOUS CASE DECISIONS WERE ALSO CITED BEFORE THE LD. CIT(A). 3.3 BASED ON THE ARGUMENTS ADVANCED BEFORE HIM, THE LD. CIT(A) DELETED THE ADDITION MADE BY THE A.O. BY HOLDING AS UNDER:- I HAVE GONE THROUGH THE ORDER OF THE A.O. AND SUBMI SSION OF THE APPELLANT. THE A.O. HAD ISSUED NOTICE U/S 133(6) A ND FOUR NOTICES REMAIN UNSERVED. THE A.O. REQUESTED APPELLANT TO F URNISH THE DETAILS AND THE APPELLANT FURNISHED DETAILS WITH RE SPECT OF M/S YADAV PACKERS, VEEA PACKAGING WORKS, VANDANA PACKER S AND ANURADHA PACKERDS. THE A.O. HAS ALLOWED EXPENSES W ITH RESPECT TO THREE OTHERS BUT WITH RESPECT TO M/S YADAV PACKE RS, THE A.O. OBSERVED THAT THOUGH THE CLAIM IN THE NAME OF MR. V .S. YADAV, PROPRIETOR IS SUBSTANTIAL THAT IS THE AMOUNT OF RS. 30,31,341/- BUT THE RETURN OF INCOME WAS NOT FILED BY THIS PART Y AND IN ASSESSEES OWN CASE FOR EARLIER YEARS I.E. A.Y. 200 4-05, SIMILAR PAYMENTS WERE DISALLOWED BY THE THEN ASSESSING OFFI CER FOR OTHER PARTIES AND CIT(A) HAS ALSO UPHELD ADDITIONS OF THE A.O. THE A.O. ALSO OBSERVED THAT THE ASSESSEE HAS NOT PRODUCED TH ESE PARTIES FOR VERIFICATION HENCE, IDENTITY IS NOT PROVED. THE AP PELLANT 4 ITA NO.6393/MUM/2009 M/S MURARI RAJDHAR PACKERS (P) LTD. SUBMISSION THAT IT HAS SUBMITTED A COPY OF PAN, THE PAYMENT HAS BEEN MADE BY ACCOUNT PAYEE CHEQUE AND THE TDS HAS B EEN DEDUCTED BY THE APPELLANT AT THE APPLICABLE RATE AN D THE BANK STATEMENT OF M/S YADAV PACKERS ALSO SHOWS THAT THE PAYMENTS TO THE APPELLANT IS REFLECTED AND M/S YADAV PACKERS HA VE ALSO CONFIRMED ABOUT THE SERVICES RENDERED IS FOUND TO B E SUFFICIENT EVIDENCE FOR CLAIM OF EXPENDITURE. THE REASON FOR DISALLOWANCE BY THE A.O. IS BASICALLY ON ACCOUNT OF THE FACT THAT M /S YADAV PACKERS HAVE NOT FILED THE INCOME-TAX RETURN BUT TH E APPELLANT HAS SUBMITTED IN THIS REGARD THAT THE APPELLANT CAN NOT ENFORCE ANYONE TO FILE ITS RETURN AND IF M/S YADAV PACKERS WOULD HAVE SUBMITTED ITS RETURN, THERE WOULD HAVE BEEN A REFUN D OF RS. 43,931/- I.E. THE AMOUNT OF TDS. NO DISALLOWANCES IN EARLIER YEARS WERE MADE WITH RESPECT TO M/S YADAV PACKERS A S NO PAYMENTS WERE MADE TO M/S YADAV PACKERS. AS THE AP PELLANT HAS PRODUCED SUFFICIENT EVIDENCE FOR CLAIM OF EXPENSES, THE DISALLOWANCE IN THIS REGARD IS UNWARRANTED. THE DI SALLOWANCE OF RS. 30,31,341/- IS HELD TO BE NOT VALID AND HENCE, DELETED. AGGRIEVED WITH SUCH ORDER OF THE LD. CIT(A), THE RE VENUE IS IN APPEAL BEFORE US. 4. WE HAVE CONSIDERED THE ARGUMENTS MADE BY LD. D.R. A ND PERUSED THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THE A.O. D ISALLOWED THE AMOUNT PAID TO SHRI V.S. YADAV, PRORPRITOR OF YADAV PACKERS ON THE GROUND THAT THE SAID PARTY HAS NOT FILED ITS RETURN OF INCOME. HOWEVER, THERE IS NO DISPUTE TO THE FACT THAT THE PAYMENTS MADE BY THE ASSESSEE TO SHRI V.S. YADAV, PROPRIETOR OF YADAV PACKERS BY CHEQUE ARE REFLECTED IN THE BAN K ACCOUNT OF THE PAYEE, A FACT BROUGHT ON RECORD BY THE LD. CIT(A) AND NOT DISPUTED BY THE REVENUE. THE SUBMISSION OF THE ASSESSEE BEFORE THE LD. CIT(A ) THAT PAYMENTS HAVE BEEN MADE BY ACCOUNT PAYEE CHEQUE AFTER DEDUCTING T DS AND M/S YADAV PACKERS CONFIRMED THE SERVICES RENDERED AND RECEIPT OF PAYM ENT FOR SUCH SERVICES ARE ALSO NOT DISPUTED BY THE REVENUE. THE REFORE, MERELY BECAUSE M/S YADAV PACKERS HAS NOT FILED THE INCOME-TAX RETU RN THE SAME, IN OUR OPINION, CANNOT BE A GROUND FOR MAKING THE DISALLOW ANCE ESPECIALLY WHEN THE A.O. HAS ACCEPTED THE PAYMENTS MADE TO THE REMA INING SIX PARTIES. WE FIND THE ASSESSEE FILED ALL OTHER RELEVANT DETAILS ON ACCOUNT OF PAYMENTS MADE TO M/S YADAV PACKERS. THE LD. D.R. COULD NOT POINT OUT ANY OTHER 5 ITA NO.6393/MUM/2009 M/S MURARI RAJDHAR PACKERS (P) LTD. FACTUAL ERRORS IN THE FINDINGS GIVEN BY THE LD. CIT (A). IN THIS VIEW OF THE MATTER AND IN VIEW OF THE DETAIL DISCUSSION BY THE LD. CIT(A) WHILE ALLOWING RELIEF TO THE ASSESSEE, WE FIND NO INFIRMITY IN HIS ORDER. ACCORDINGLY THE SAME IS UPHELD. THE GROUND RAISED BY THE REVENUE I S DISMISSED. 5. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF H EARING ITSELF I.E. ON 20.12.2011. SD/- (D. MANMOHAN) VICE PRESIDENT SD/- ( R K PANDA ) ACCOUNTANT MEMBER PLACE: MUMBAI : DATED: 20.12.2011. RK COPY FORWARDED TO: 1 APPELLANT 2 RESPONDENT 3 CIT, 4, MUMBAI 4 CIT(A) 8, MUMBAI 5 DR BENCH J 6 MASTER FILE /TRUE COPY/ BY ORDER DY /AR, ITAT, MUMBAI