Sudarshan Tex Pvt.Ltd., Surat V. The Income tax Officer,Ward-4(3), Surat

ITA 985/AHD/2008

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 6204 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 2 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-05-2010
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 18-05-2010
• Assessment Year: 2004-2005
• Appeal Filed On: 14-03-2008
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: JYOTI LAXMI
• Assessee Lawyers: R N VEPARI
• Keywords: Unexplained expenditure; Business income

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL : D BENCH : AHMEDABAD CAMP AT SURAT (BEFORE HONBLE SHRI T.K. SHARMA, J.M. & HONBLE SH RI D.C. AGRAWAL, A.M.) I.T.A. NO. 985/AHD./2008 ASSESSMENT YEAR : 2004-2005 SUDARSHAN TEX PVT. LTD., SURAT -VS.- IN COME TAX OFFICER WARD-4(3), SURAT (PAN : AADCS 3935 Q) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI R.N. VEPARI RESPONDENT BY : SMT. JYOTI LAXMI, SR . D.R. O R D E R PER SHRI T.K. SHARMA, JUDICIAL MEMBER : THIS APPEAL FILED BY THE ASSESSEE IS AGAINST THE O RDER DATED 06.09.2007 OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS)-I, SURAT FOR TH E ASSESSMENT YEAR 2004-05. 2. GROUND NO. 1 OF THIS APPEAL IS AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS) IN CONFIRMING DISALLOWANCE OF BUSINESS LO SS INCURRED IN TRADING BUSINESS OF GREY FABRICS. THE GROUND NO. 2 OF THIS APPEAL IS AGAINST TREATING BUSINESS INCOME FROM LETTING HALF PORTION OF FACTORY BUILDING AS HOUSE PROPERTY. AT T HE TIME OF HEARING OF THIS APPEAL, BOTH THESE GROUNDS WERE NOT PRESSED BY THE LD. COUNSEL OF THE ASSESSEE. THEREFORE, BOTH THE GROUNDS OF THIS APPEAL ARE DISMISSED BEING NOT PRESSED. 2 ITA NO. 985/AHD/2008 3. THE LAST GROUND OF APPEAL IS AGAINST CONFIRMING THE ADDITION OF RS.76,432/- AS UNEXPLAINED EXPENDITURE TOWARDS WAGES WHEN NO SUCH EXPENDITURE WAS INCURRED. 4. AT THE TIME OF HEARING BEFORE US, SHRI R.N. VEPA RI APPEARING ON BEHALF OF THE ASSESSEE CONTENDED THAT THE TWISTING UNIT OF THE ASSESSEE WA S CLOSED FROM 1 ST JANUARY, 2004. THUS THERE WAS NO PRODUCTION FROM JANUARY TO MARCH, 2004. THE ASSESSEE HAS INCURRED NO EXPENDITURE ON ACCOUNT OF WAGES AND POWER EXCEPT FOR MINIMUM DEMAN D CHARGES. IT IS ONLY THROUGH INADVERTENCE THE QUANTITY OF TWISTED YARN SOLD WAS SHOWN AS PRODUCTION. ON THIS BASIS, THE ASSESSING OFFICER WRONGLY ESTIMATED THE EXPENDITURE ON ACCOUNT OF WAGES WITHOUT HAVING REGARDS TO THE POWER FACTOR. THUS ESTIMATION MADE B Y THE A.O. TOWARDS WAGES AND ALLEGING THE SAME AS UNEXPLAINED EXPENDITURE IS BASELESS. THE L D. COUNSEL OF THE ASSESSEE SUBMITTED THAT SINCE THE ASSESSEE HAS NOT INCURRED ANY EXPENDITURE ON WA GES, THERE IS NO JUSTIFICATION FOR PRESUMING THAT THE ASSESSEE HAS INCURRED EXPENDITURE ON WAGES AMOUNTING TO RS.76,432/- OUTSIDE THE BOOKS OF ACCOUNTS. HE ACCORDINGLY SUGGESTED THAT FOR VERI FICATION OF NECESSARY DETAILS OR MAKING ANY CROSS VERIFICATION, THE MATTER CAN BE RESTORED TO T HE FILE OF ASSESSING OFFICER, WHO WILL EXAMINE THE SAME AND DELETE THE ADDITION OF RS.76,432/-. 5. ON THE OTHER HAND, SMT. JYOTI LAXMI, SR. D.R. AP PEARING ON BEHALF OF THE REVENUE VEHEMENTLY SUPPORTED THE ORDER OF AUTHORITIES BELOW . 6. AFTER HEARING BOTH THE SIDES, WE HAVE CAREFULLY GONE THROUGH THE ORDERS OF AUTHORITIES BELOW AND PERUSED THE MATERIAL PLACED BEFORE US. BE FORE US, THE ASSESSEE HAS FILED MONTH-WISE DETAILS OF POWER AND FUEL PAID FOR THE YEAR ENDING 2003-04. FROM THE DETAILS OF POWER AND FUEL, IT CAN BE SEEN THAT THE UNITS CONSUMED IN THE MONTH OF DECEMBER, 2003 ARE 19160. IN THE MONTH OF JANUARY, 04, THE UNIT CONSUMED IS 1400. IN THE MONT H OF FEBRUARY, 2004, THE UNIT CONSUMED IS NIL. THIS CLEARLY SUPPORTS THE STAND OF THE ASSESSEE THA T THERE IS NO PRODUCTION OF TWISTED YARN. THEREFORE, THE ASSESSEE HAS NOT INCURRED ANY EXPEND ITURE ON WAGES OUTSIDE THE BOOKS OF ACCOUNTS. WHATEVER FINISHED PRODUCT IS SOLD THAT WAS PRODUCED UPTO DECEMBER, 2003. WE, THEREFORE, SET ASIDE THE ORDER OF LD. CIT(A) ON THIS ISSUE AND RES TORE THE MATTER BACK TO THE FILE OF ASSESSING OFFICER WITH THE DIRECTION THAT THE ASSESSING OFFIC ER MAY EXAMINE THE POWER AND FUEL PAID, MAKE NECESSARY ENQUIRY AND IN CASE THE FACTORY WAS CLOSE D FROM JANUARY 01, 2004, IN THAT EVENT, THE 3 ITA NO. 985/AHD/2008 QUESTION OF INCURRING ANY EXPENDITURE ON WAGES OUTS IDE THE BOOKS OF ACCOUNTS DOES NOT ARISE. AFTER NECESSARY VERIFICATION, THE ASSESSING OFFICER WILL RE-ADJUDICATE THE ADDITION OF RS.76,432/- AFRESH IN ACCORDANCE WITH LAW. 7. IN THE RESULT, FOR STATISTICAL PURPOSES, THE APP EAL FILED BY THE ASSESSEE IS TREATED AS PARTLY ALLOWED. THE ORDER WAS PRONOUNCED IN THE COURT ON 21.05.2010 . SD/- SD/- (D.C. AGRAWAL) (T.K. SHARMA ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 21 / 05 /2010 COPY OF THE ORDER IS FORWARDED TO : 1) THE ASSESSEE (2) THE DEPARTMENT. 3) CIT(A) CONCERNED, (4) CIT CONCERNED, (5) D.R., ITAT, AHMEDABAD. TRUE COPY BY ORDER DEPUTY REGISTRAR, ITAT, AHMEDABAD LAHA/SR.P.S.