PRAVEENKUMAR K. PUROHIT, MUMBAI V. ITO,14(1)-4,

ITA 6509/MUM/2008

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 1566 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-11-2009
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2003-2004
• Appeal Filed On: 10-11-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K SINGH
• Assessee Lawyers: BEHARILAL
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: MUMBAI BEFORE SHRI R.K. GUPTA, JUDICIAL MEMBER AND SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER ITA NO 6509/MUM/2008 (ASSESSMENT YEAR: 2003-04) PRAVEENKUMAR K PUROHIT, 7, ASSEMBLY LANE, 2ND FLOOR DADI SETH AGIARY LANE, MUMBAI 400 002 PAN: AAAPP 8231 C VS ITO, 14(1)-4, MUMBAI APPELLANT RESPONDENT APPELLANT BY: SHRI BEHARI LAL RESPONDENT BY: SHRI S K SINGH ORDER PER R.K. GUPTA, JUDICIAL MEMBER THIS APPEAL FILED BY THE ASSESSEE IS AGAINST THE OR DER OF CIT (A) RELATING TO ASSESSMENT YEAR 2003-04. 2. THE ASSESSEE IS AGGRIEVED IN UPHOLDING THE DISAL LOWANCE TO THE EXTENT OF RS 8,70,252/- OUT OF VARIOUS EXPENSES DEBITED UNDER TH E HEAD WEAVING CHARGES IN THE PROFIT AND LOSS ACCOUNT. THE ASSESSING OFFICER DIS ALLOWED A SUM OF RS 8,94,820/- OUT OF TOTAL EXPENSES CLAIMED AT RS 20,22,616/- ON ACCOUNT OF VARIOUS EXPENSES DEBITED UNDER THE HEAD WEAVING CHARGES. THE ASSESSING OFFICER DISALLOWED THESE EXPENSES ON THE GROUND THAT ASSESSEE COULD NOT PRODUCE THE KARIGARS , FOR VERIFICATION OF THE WAGES/MAJURI CLAIM HAVING PAID BY THE ASSESSEE AND ALSO ON THE G ROUND THAT WEAVING CHARGES INCLUDE CERTAIN EXPENSES WHICH ARE NOT RELATED TO THE WEAVI NG ACTIVITIES AND HAS ALSO BEEN CLAIMED UNDER THE RESPECTIVE HEADS OF THE P&L ACCOU NT. PRAVEENKUMAR K PUROHIT ITA NO 6509/MUM/2008 2 3. THE ASSESSEE BEFORE CIT (A) EXPLAINED THAT BOOKS OF ACCOUNTS, BILLS, VOUCHERS ETC HAVING BEEN PRODUCED FOR VERIFICATION AND ONLY ON F EW VOUCHERS, THE PAYMENT DATE HAVING NOT MENTIONED WHEREAS ALL OTHER VOUCHERS CON TAINED PROPER DATE AND SIGNATURE OF THE RECIPIENT, THEREFORE, NO DISALLOWANCE COULD BE MADE OUT OF WEAVING CHARGES / OTHER EXPENSES DEBITED IN THE P&L ACCOUNT. IT WAS ALSO E XPLAINED THAT THE KARIGARS BEING TEMPORARY LABOURERS, THE VOUCHERS DOES NOT BEAR ANY ADDRESS. MOREOVER, THEY DO NOT HAVE ANY PERMANENT OR FIXED ADDRESSES AND THEY ARE ALSO NOT PERMANENTLY ON THE JOB AND KEEP CHANGING, THEREFORE, FOR THESE REASONS THE KAR IGARS COULD NOT BE PRODUCED FOR VERIFICATION. IT WAS EXPLAINED THAT THESE KARIGARS GENERALLY STAY WITH OTHER KARIGAR OF THEIR VILLAGE IN GROUP OR MAY SOMETIME ALSO STAY IN THE F ACTORY PREMISES. THE ASSESSEE IS NOT REQUIRED TO KEEP THEIR ADDRESSES SINCE THE PAYMENT IS MADE TO THEM WEEKLY ON THE BASIS OF WORK DONE BY THEM. THE PAYMENT MADE TO THEM IS ALWAYS IN CASH SINCE THEY ARE ILLITERATE PEOPLE AND DO NOT HAVE ANY BANK ACCOUNT OR ANY FIXED PLACE OF RESIDENCE OR PERMANENT ADDRESS. IT WAS FURTHER SUBMITTED THAT, SIMILAR PRACTICE HAS BEEN FOLLOWED FOR PAYMENT OF WAGES AND EVERY MANUFACTURING BUSINESS O F SIMILAR NATURE AND ASSESSEE IS FOLLOWING THE SAME PRACTICE SINCE LAST SEVERAL YEAR S. THE MISSING DATES IN SOME OF THE VOUCHERS IS DUE TO INADVERTENCE BY PERSONS WHO MAKE S THE PAYMENT TO THE WORKERS IN THE FACTORY, BUT THE SAME ARE DULY SIGNED AND PROPE RLY RECORDED IN THE BOOKS OF ACCOUNT. IT WAS EXPLAINED THAT, THE ASSESSEE COULD NOT PRODU CE THE KARIGARS BEFORE THE ASSESSING OFFICER FOR THE REASON THAT KARIGARS WHO WORKED DUR ING THE YEAR ENDING 31.3.2003 WERE NOT AVAILABLE AS THEY WERE NOT PERMANENT EMPLOYEES OF THE ASSESSEE AND THEY KEEP CHANGING. THEREFORE, IT WAS NOT POSSIBLE TO PRODUC E THE KARIGARS DURING THE YEAR ENDING 31.3.2006, I.E. AFTER A GAP OF THREE YEARS. IT WAS ALSO EXPLAINED TO THE ASSESSING OFFICER THAT THE WEAVING CHARGES WERE REGULARLY BEING CLAIM ED AND DEBITED TO THE P&L ACCOUNT FOR THE LAST MANY YEARS AND THERE IS NO CHANGE IN T HE MANUFACTURING PROCESS. IT WAS SUBMITTED THAT IN EARLIER YEAR AS WELL AS IN THE SU BSEQUENT YEARS ASSESSMENTS WERE COMPLETED U/S 143(3) AND NO SUCH DISALLOWANCES HAVE BEEN MADE. ASSESSMENT ORDERS FOR ASSESSMENT YEAR 2001-02, 2004-05 AND 2005-06 AL ONG WITH PROFIT AND LOSS ACCOUNT, BALANCE SHEET AND WEAVING CHARGES DETAILS WERE ALSO SUBMITTED. COMPARATIVE STATEMENT OF SALES, WEAVING CHARGES, PRODUCTION IN METERS, GR OSS PROFIT AND ITS PERCENTAGE FROM PRAVEENKUMAR K PUROHIT ITA NO 6509/MUM/2008 3 WHICH IT MAY BE SEEN THAT THE RESULT SHOWN BY THE A SSESSEE DURING THE YEAR UNDER CONSIDERATION IS COMPARABLE WITH EARLIER AND SUBSEQ UENT YEARS AND, THEREFORE, THERE IS NO JUSTIFICATION ON THE PART OF THE ASSESSING OFFICER TO MAKE SUCH DISALLOWANCES. 4. THE CIT (A) AFTER CONSIDERING THE SUBMISSIONS AN D PERUSING THE MATERIAL ON RECORD AND ALSO TAKEN INTO CONSIDERATION THE DETAILS AND F INDING OF THE ASSESSING OFFICER CONCLUDED THAT THE ADDITION MADE BY ASSESSING OFFIC ER IS LIABLE TO BE SUSTAINED. HOWEVER, PART RELIEF OF RS 24,568/- WAS ALLOWED BY THE CIT ( A). 5. NOW, ASSESSEE IS IN APPEAL HERE BEFORE THE TRIBU NAL. 6. THE SUBMISSIONS RAISED BEFORE THE LOWER AUTHORIT IES WERE REITERATED BY THE LEARNED AR OF THE ASSESSEE. THE LEARNED DEPARTMENT AL REPRESENTATIVE, ON THE OTHER HAND, STRONGLY PLACED RELIANCE ON THE ORDER OF THE CIT (A). PART ORDER OF THE CIT (A) WAS READ ALSO. 7. AFTER CONSIDERING THE SUBMISSION AND PERUSING TH E MATERIAL ON RECORD, WE FIND THAT ASSESSEE DESERVES TO SUCCEED IN THIS APPEAL. WE HA VE NOTED THAT PROPER BOOKS OF ACCOUNTS WERE MAINTAINED BY THE ASSESSEE. NO MAJOR DEFECTS WERE FOUND BY THE ASSESSING OFFICER. THE ASSESSING OFFICER DISALLOWE D THE CLAIM OF THE ASSESSEE ON THE REASONING THAT ASSESSEE HAS CLAIMED WEAVING CHARGES AND OTHER EXPENSES UNDER THE HEAD WEAVING CHARGES AND ALSO CLAIMED CERTAIN EXP ENSES UNDER THE OTHER HEADS ALSO. COPY OF PROFIT AND LOSS ACCOUNT IS PLACED ON PAGE 1 OF THE COMPILATION AND IT IS SEEN THAT UNDER THE HEAD WEAVING CHARGES THE ASSESSEE HAS C LAIMED RS 20,22,616/- AND DETAILS OF THESE EXPENSES ARE PLACED AT PAGE 7 OF THE COMPI LATION. THESE PAYMENTS / EXPENSES RELATES TO WAGES IN SHAPE OF WAGES/MAJDURI TO KARIG ARS / WORKERS AT RS 8,36,727/- MENDING CHARGES RS 2,06,915/-, PAYMENTS MADE TO MUK ADAMS RS 1,59,533/-, PAYMENT MADE TO HELPERS OF MUKADAMS RS 111,503/-, PAYMENT T O WARPERS RS 85,000/- OR SO, PAYMENTS OF SUPERVISORS RS 1,31,000/- OR SO ETC ETC . WE HAVE SEEN THE PROFIT AND LOSS ACCOUNT AND NO SUCH EXPENSES HAS BEEN CLAIMED UNDER ANY OTHER HEAD, THEREFORE, IT WAS PRAVEENKUMAR K PUROHIT ITA NO 6509/MUM/2008 4 NOT CORRECT TO SAY THAT ASSESSEE HAS CLAIMED THESE EXPENSES UNDER THE HEAD WEAVING CHARGES AND VARIOUS OTHER HEADS. WE HAVE ALSO SEE N THE COMPARABLE CHART, COPY OF WHICH IS PLACED AT PAGE 14 OF THE COMPILATION AND I T IS SEEN THAT DURING THE YEAR UNDER CONSIDERATION, THE RATIO OF THE EXPENSES COMES TO 6 .90%. FOR ASSESSMENT YEAR 2001-02 IT WAS 4.79%, FOR ASSESSMENT YEAR 2002-03 IT WAS 6.6 5%, FOR ASSESSMENT YEAR 2004-05 IT WAS 6.58% AND FOR ASSESSMENT YEAR 2005-06 THE SAME WAS 8.91% AND FOR ASSESSMENT YEAR 2006-07 IT WAS 10.34%. COPY OF THE ASSESSMENT ORDER FOR ASSESSMENT YEAR 2006-07 WAS FILED DURING APPELLATE PROCEEDINGS AND IT IS SE EN THAT SAME HAS BEEN COMPLETED U/S 143(3) AND NO SUCH DISALLOWANCES HAVE BEEN MADE BY THE ASSESSING OFFICER, MEANING THEREBY, THE RESULT SHOWN BY THE ASSESSEE HAS BEEN ACCEPTED BY THE ASSESSING OFFICER. COPY OF ORDER FOR OTHER ASSESSMENT YEARS ARE ALSO P LACED AT PAGES 18 TO TO 22 OF THE COMPILATION AND IT IS FOUND THAT NO DISALLOWANCE EV ER HAD BEEN MADE UNDER THE HEAD WEAVING CHARGES. THE FACTS OF THE PRESENT CASE A RE SIMILAR TO THE FACTS OF THE EARLIER ASSESSMENT YEARS AND FACTS OF THE SUBSEQUENT YEARS. THE CLAIM HAS BEEN ACCEPTED BY THE ASSESSING OFFICER HIMSELF IN EARLIER YEARS AS W ELL AS IN SUBSEQUENT YEARS BY PASSING ASSESSMENT ORDER U/S 143(3). IN VIEW OF THESE FACT S AND CIRCUMSTANCES, WE HOLD THAT ASSESSING OFFICER WAS NOT JUSTIFIED IN NOT ACCEPTIN G THE DETAILED EXPLANATION FILED BEFORE HIM, THEREFORE, THE ADDITION MADE AND SUSTAINED IS DELETED. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED ON 26TH DAY OF NOVEMBER 2009. SD/- (PRAMOD KUMAR) ACCOUNTANT MEMBER SD/- (R.K. GUPTA) JUDICIAL MEMBER MUMBAI, DATE: 26TH NOVEMBER 2009 COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A) XIV, MUMBAI. PRAVEENKUMAR K PUROHIT ITA NO 6509/MUM/2008 5 4) THE CIT-14, MUMBAI. 5) THE D.R. C BENCH, ITAT, MUMBAI. BY ORDER / / TRUE COPY / / ASSTT. REGISTRAR CHAVAN* I.T.A.T., MUMBAI PRAVEENKUMAR K PUROHIT ITA NO 6509/MUM/2008 6 SR.N. EPISODE OF AN ORDER DATE INITIALS CONCERNED 1 DRAFT DICTATED ON 17.11.09 SR.PS 2 DRAFT PLACED BEFORE AUTHOR 24.11.09 SR.PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR.PS SR.PS 6 KEPT FOR PRONOUNCEMENT ON SR.PS 7 FILE SENT TO THE BENCH CLERK SR.PS 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER