Sri Govind Lal Rathi, Kolkata V. I.T.O.,Ward-43(4), Kolkata

ITA 721/KOL/2019

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 7285 (ITAT-KOLKATA)
• Duration Of Justice: 6 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-10-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Appeal Filed On: 09-04-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH (SMC), KOLKATA [BEFORE SHRI P.M. JAGTAP, VICE PRESIDENT (KZ)] I.T.A. NO. 721/KOL/2019 ASSESSMENT YEAR: 2014-15 SHRI GOVINDLAL RATHI............................................................................APPELLANT 9/1, SOVARAM BYSACK STREET, BURRABAZAR, KOLKATA 700 007. [PAN: ADIPR 0507 N] VS ITO, WARD-43(4)KOLKATA..................................RESPONDENT 3, GOVERNMENT PLACE (WEST), KOLKATA 700 001. APPEARANCES BY: SHRI SUNIL SURANA, FCA APPEARING ON BEHALF OF THE ASSESSEE. SMT. RANU BISWAS, ADDL. CIT, SR. DR APPEARING ON BEHALF OF THE REVENUE. DATE OF CONCLUDING THE HEARING : SEPTEMBER 04, 2019 DATE OF PRONOUNCING THE ORDER : OCTOBER 23, 2019 ORDER THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LD. CIT(A) 13, KOLKATA DATED 28.03.2019 AND THE SOLITARY ISSUE INVOLVED THEREIN RELATES TO THE DISALLOWANCE OF RS. 1,10,063/- MADE BY THE AO AND CONFIRMED BY THE LD. CIT(A) ON ACCOUNT OF MAKING CHARGES. 2. THE ASSESSEE IN THE PRESENT CASE IS AN INDIVIDUAL WHO IS ENGAGED IN HOSIERY BUSINESS. THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS FILED BY HIM ON 26.09.2014 DECLARING A TOTAL INCOME OF RS. 11,45,540/-. IN THE PROFIT AND LOSS ACCOUNT FILED ALONG WITH THE SAID RETURN, A SUM OF RS. 22,01,272/- WAS DEBITED BY THE ASSESSEE ON ACCOUNT OF MAKING CHARGES. ACCORDING TO THE AO, THE ASSESSEE FAILED TO PRODUCE ANY CONVINCING EVIDENCE AND ALSO FAILED TO FURNISH THE RELEVANT DETAILS IN SUPPORT OF HIS CLAIM FOR MAKING CHARGES. HE ACCORDINGLY DISALLOWED 5% OF THE MAKING CHARGES CLAIMED BY THE ASSESSEE AND MADE AN ADDITION OF RS. 1,10,063/- TO THE TOTAL INCOME OF 2 I.T.A. NO. 721/KOL/2019 ASSESSMENT YEAR: 2014-15 SHRI GOVINDLAL RATHI THE ASSESSEE. ON APPEAL THE LD. CIT(A) CONFIRMED THE SAID DISALLOWANCE MADE BY THE AO. AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE ASSESSEE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL. 3. I HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. AS RIGHTLY SUBMITTED BY THE LEARNED COUNSEL FOR THE ASSESSEE, THE INCURRING OF MAKING CHARGES IS INEVITABLE IN THE HOSIERY BUSINESS CARRIED ON BY THE ASSESSEE AND SUCH MAKING CHARGES CONSISTENTLY CLAIMED BY THE ASSESSEE IN THE EARLIER YEARS WERE REGULARLY ALLOWED BY THE AO. AS FURTHER SUBMITTED BY THE LEARNED COUNSEL FOR THE ASSESSEE, MAKING CHARGES OF 6.51% OF THE TOTAL SALES CLAIMED BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION WERE WELL COMPARABLE TO THE MAKING CHARGES OF 6.04% AND 6.49% CLAIMED AND ALLOWED IN AY 2011-12 & 2012-13 RESPECTIVELY. MOREOVER, NO SPECIFIC AND MATERIAL DEFECTS WERE POINTED BY THE AO IN THE CLAIM MADE BY THE ASSESSEE ON ACCOUNT OF MAKING CHARGES AND THERE WAS NOT EVEN A SINGLE INSTANCE POINTED OUT BY HIM TO SHOW THAT THE MAKING CHARGES CLAIMED BY THE ASSESSEE WERE UNVERIFIABLE. KEEPING IN VIEW ALL THESE FACTS AND CIRCUMSTANCES OF THE CASE, I AM OF THE VIEW THAT THE DISALLOWANCE MADE BY THE AO OUT OF MAKING CHARGES WAS NOT SUSTAINABLE AND THE LD. CIT(A) IS NOT JUSTIFIED IN CONFIRMING THE SAME. EVEN THE LEARNED DR HAS NOT BEEN ABLE TO RAISE ANY MATERIAL CONTENTION IN SUPPORT OF THE REVENUES CASE ON THIS ISSUE. I, THEREFORE, DELETE THE DISALLOWANCE MADE BY THE AO AND CONFIRMED BY THE LD. CIT(A) ON ACCOUNT OF MAKING CHARGES AND ALLOW THIS APPEAL OF THE ASSESSEE. 3 I.T.A. NO. 721/KOL/2019 ASSESSMENT YEAR: 2014-15 SHRI GOVINDLAL RATHI 4. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 23 RD OCTOBER, 2019. SD/- (P.M. JAGTAP) VICE PRESIDENT DATED: 23/10/2019 BISWAJIT, SR. PS COPY OF ORDER FORWARDED TO: 1. SHRI GOVINDLAL RATHI, 9/1, SOVARAM BYSACK STREET, BURRABAZAR, KOLKATA 700 007. 2. ITO, WARD 43(4), KOLKATA. 3. THE CIT(A) 4. THE CIT 5. DR TRUE COPY, BY ORDER, ASSISTANT REGISTRAR / H.O.O. ITAT, KOLKATA