HARI DARSHAN AEXPORTS, MUMBAI V. ASST CIT 16(3), MUMBAI

ITA 6674/MUM/2013

• Counselvise Citation: 667419914 RSA 2013
• Duration Of Justice: 1 year(s) 9 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-09-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: H
• Next Hearing Date: 01-09-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 14-11-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DR SUMAN RATNAM DARSIDR
• Assessee Lawyers: DR K SHIVARAM

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES H, MUMBAI , , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER ITA NO.6674/MUM/2013 ASSESSMENT YEAR: 2009-10 M/S HARI DARSHAN EXPORTS, F-TOWER, CENTRAL WING, 4 TH FLOOR, BHARAT DIAMOND BOURSE, BANDRA KURLA COMPLEX, BANDRA EAST, MUMBAI / VS. ASST. COMMISSIONER OF INCOME-TAX-16(3), MATRU MANDIR, TARDEO ROAD, MUMBAI-400007 ( ! ' /ASSESSEE) ( # / REVENUE) P.A. NO. AADFH1706K ! ' / ASSESSEE BY SHRI DR. K.SHIVARAM & MS. NEELAM JADHAV # / REVENUE BY SHRI DR. SUMAN RATNAM DARSI-DR $ #% & ' ' / DATE OF HEARING : 01/09/2015 & ' ' / DATE OF ORDER: 23/09/2015 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THE ASSESSEE IS AGGRIEVED BY THE IMPUGNED ORDER DA TED 16/09/2013 OF THE LD. FIRST APPELLATE AUTHORITY, MU MBAI. THE ONLY GROUND RAISED IN THE APPEAL PERTAINS TO NO T ALLOWING WAGES EXPENDITURE TO THE TUNE OF RS.8 LAKH BY THE L D. COMMISSIONER OF INCOME TAX (APPEALS). M/S HARI DARSHAN EXPORTS ITA NO.6674/MUM/2013 2 2. DURING HEARING OF THIS APPEAL, THE LD. COUNSEL FOR THE ASSESSEE, DR. K. SHIVARAM ALONG WITH MS. NEELAM JADHAV, CONTENDED THAT WAGE EXPENSES WERE WRONGLY DISALLOWE D, MORE SPECIFICALLY, WHEN NO SPECIFIC DEFECT WAS POINTED O UT BY THE ASSESSING OFFICER AND BOOKS OF ACCOUNTS WERE NOT RE JECTED. RELIANCE WAS PLACED UPON THE DECISION CIT VS SIMPHO NY COMFORT SYSTEM LTD. (2013) 216 TAXMAN 225 (GUJ.) AL ONG WITH THE DECISION IN SONIC BIOCHEM EXTRACTION (P.) LTD. VS ITO 59 SOT 4 (MUM. ITAT). ON THE OTHER HAND, THE LD. DR, D R. SUMAN RATNAM DARSI, DEFENDED THE CONCLUSION ARRIVED AT IN THE IMPUGNED ORDER. 2.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACTS , IN BRIEF, ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF IMPORT AND EXPORT ALONG WITH MANUFACTURING OF DIAMONDS. TH E ASSESSEE DECLARED INCOME OF RS.38,38,790/- ON 25/09 /2009. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS NOTICED BY THE ASSESSING OFFICER THAT THE ASSESSEE HAS INCU RRED EXPENSES OF RS.16,00,71,505/- (DISBURSED AS CASH PA YMENTS) FOR SALARY AND WAGES PAID TO KARIGARS. THE ASSESSEE PRODUCED THE WAGE REGISTER SAMPLE TO DISCUSS THE GENUINENESS AND VERIFIABILITY OF THE EXPENSES. THE LD. ASSESSING OFFICER OBSERVED AS UNDER:- I. THE AVERAGE RATE OF MANUFACTURING PER CARAT IS RS.5 70/- IN THE CASE OF ASSESSEE WHICH IS ON THE HIGHER SIDE FOR THE M/S HARI DARSHAN EXPORTS ITA NO.6674/MUM/2013 3 SMALL SIZE DIAMONDS THAT THE ASSESSEE IS DEALING IN (THE USUAL RANGE BEING RS.250-375/400) II. AROUND 10-15% OF THE WORKERS ARE MOBILE AND ARE NOT PART OF THE PERMANENT WORKFORCE. III. THERE ARE NO STATUTORY PAYMENTS LIKE PF, ESIC ETC D ONE IN THE CASE OF THESE WORKERS, THUS THERE IS NO OTHE R LABOUR LAW RELATED AGENCY WHICH IS CROSS-CHECKING THE PRES ENCE OF WORKFORCE AND PAYMENTS MADE TO THEM. IV. THE RECIPIENTS ARE ONLY IDENTIFIED BY SIGNATURE ON THE WAGE REGISTER. THERE ARE EVIDENTLY NO OTHER DETAIL S LIKE PAN, BANK A/C NUMBER ETC NOR ARE THEY TAXPAYERS THEMSELVES. IN VIEW OF THE ABOVE, THE LD. ASSESSING OFFICER TO PLUG THE LEAKAGE MADE DISALLOWANCE OF RS.16 LAKH OUT OF THE WAGE EXPENSES OF RS.16,00,71,505/-. ON APPEAL BEFORE TH E LD. COMMISSIONER OF INCOME TAX (APPEALS) THE STAND TAKE N BY THE LD. ASSESSING OFFICER WAS REDUCED TO 50% I.E. RS.8 LAKH. THE ASSESSEE IS IN FURTHER APPEAL BEFORE THIS TRIBUNAL. 2.2. IF THE OBSERVATION MADE IN THE ASSESSMENT ORD ER, LEADING TO ADDITION MADE TO THE TOTAL INCOME, CONCL USION DRAWN IN THE IMPUGNED ORDER, MATERIAL AVAILABLE ON RECORD, ASSERTIONS MADE BY THE LD. RESPECTIVE COUNSEL, IF K EPT IN JUXTAPOSITION AND ANALYZED, THERE IS NO DISPUTE TO THE FACT THAT THERE WERE DISCREPANCIES IN THE ACCOUNTS OF THE ASS ESSEE BUT AT THE SAME TIME THE LD. ASSESSING OFFICER ALSO MAD E THE DISALLOWANCE ON THE BASIS THAT THERE WERE NO DETAIL S OF PAN, BANK ACCOUNT AND ALSO WHETHER THE KARIGARS ARE TAXP AYERS OR M/S HARI DARSHAN EXPORTS ITA NO.6674/MUM/2013 4 NOT, THUS, KEEPING IN VIEW, THE TOTALITY OF FACTS A ND THE CIRCUMSTANCE NARRATED BEFORE US, WE FURTHER REDUCE THE DISALLOWANCE TO RS.4 LAKH IN PLACE OF RS.8 LAKH SUS TAINED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS). IT IS MADE CLEAR THAT THIS PARTIAL RELIEF WAS AGREED BY LD. REPRESEN TATIVES FROM BOTH SIDES. THUS, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. FINALLY, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOW ED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCLUSION OF THE HEARING ON 01/09/2015. SD/ - (RAMIT KOCHAR) SD/ - (JOGINDER SINGH) '# / ACCOUNTANT MEMBER $# / JUDICIAL MEMBER $ % MUMBAI; ) DATED : 23/09/2015 F{X~{T? P.S/. .. %$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. +,-. / THE APPELLANT 2. /0-. / THE RESPONDENT. 3. 1 1 $ 2' ( +, ) / THE CIT, MUMBAI. 4. 1 1 $ 2' / CIT(A)- , MUMBAI 5. 4#5 /' , 1 +,' + 6 , $ % / DR, ITAT, MUMBAI 6. 7 8% / GUARD FILE. / BY ORDER, 04,' /' //TRUE COPY// / (DY./ASSTT. REGISTRAR) , $ % / ITAT, MUMBAI