JAY MAHAPURUSH CORPORATION, V. ITO WD 19(3)(2),

MA 847/MUM/2009

• Counselvise Citation: [2010] 123 COUNSELVISE.COM (IT) 5270 (ITAT-MUMBAI)
• Duration Of Justice: 10 month(s) 6 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 20-10-2010
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2003-2004
• Appeal Filed On: 14-12-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: D SONGATE
• Keywords: Rejection of books of accounts; Corroborative evidences
• Section: 44AD

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH J : MUMBAI BEFORE SHRI D.K. AGARWAL, (JM) AND SHRI B. RAMAKO TAIAH,(AM) M.A. NO.847/MUM/2009 ARISING OUT OF ITA NO. 3044/MUM/2007 ASSESSMENT YEAR : 2003-04 M/S. JAY MAHAPURUSH CORPORATION 223, SHASTRI NAGAR, NEAR SAMAJ MANDIR HALL, MIG COLONY, BANDRA (EAST), MUMBAI. ..( APPLICANT ) P.A. NO. (AAAFJ 7130 L) VS. INCOME TAX OFFICER 19 (3) (2) MUMBAI-400 012. ..( RESPONDENT ) APPLICANT BY : NONE RESPONDENT BY : SHRI D. SONGATE O R D E R PER D.K. AGARWAL (JM). BY THIS MISCELLANEOUS APPLICATION DATED 10.12.2009 THE APPLICANT INTERALIA SUBMITTED THAT THE TRIBUNAL WHILE HOLDING GROSS PR OFIT AT 6% OF THE GROSS RECEIPTS COMMITTED THE FOLLOWING ERRORS. (A) THE FUNDAMENTAL FACTUAL ERROR COMMITTED BY TH E TRIBUNAL WAS THAT THE TRIBUNAL RELIED UPON THE STAT EMENT MADE BY THE ASSESSING OFFICER THAT MOST OF THE EXPENSES INCURRED BY THE APPLICANT WERE ON THE BASIS OF THE SELF MADE VO UCHERS. THIS FACTUAL FINDING OF THE TRIBUNAL IS INCORRECT AND CO NVERSE TO THE FACTS ALREADY ON RECORD. IN FACT, BEFORE THE CIT(A ) ITSELF THE APPELLANT HAD EXPLAINED THAT THOUGH THE PAYMENTS WE RE MADE BY THE APPELLANT IN CASH TO THE LABOURERS, THE APPE LLANT FOLLOWED MA NO.847/M/09 A.Y:03-04 2 CARD SYSTEM FOR KEEPING RECORD OF EACH LABOURERS A TTENDANCE AND PAYMENT. XEROX COPIES OF THESE CARDS WERE PROD UCED BEFORE THE ASSESSING OFFICER AS WELL AS CIT(A). IN FACT, IN THE VERY EARLIER PARAGRAPH (PARA-5), THE TRIBUNAL ITSEL F HAS RECORDED THIS FACT THAT WAS BROUGHT ON RECORD BY THE AUTHORI SED REPRESENTATIVE OF THE APPLICANT. (B) THE OTHER ERROR COMMITTED BY THE TRIBUNAL IS WI TH RESPECT TO NON CONSIDERATION OF CERTAIN FUNDAMENTAL FACTUAL ISSUES, WHICH WENT TO THE VERY ROOT OF THE JURISDIC TION TO MAKE THE ADDITION. IN FACT, THE TRIBUNAL HAS COMPLETELY IGNORED/OVERLOOKED SHORT NOTE FILED BY THE AR OF T HE APPLICANT, WHICH CONTAINED VARIOUS IMPORTANT FACTUAL AND LEGAL ISSUES THAT WENT TO THE ROOT OF THE ADDITION. MORE PARTICULARL Y, THE TRIBUNAL IGNORED THE FOLLOWING FACT WHILE ADJUDICATION THE I SSUE: (I) THAT THE DEPARTMENT ITSELF, IN EARLIER AS WELL AS I N SUBSEQUENT YEARS, HAD ACCEPTED THE VERY SAME SYSTEM OF KEEPING RECORD OF LABOUR PAYMENTS AND HAD ALLOWED SUCH EXPENDITURE, EXCEPT FOR A VERY TOKEN AND NEGLIGIBLE ADDITION OF RS .30,000/- IN ASSESSMENT YEAR 1998-99. IN FACT, THE BOOK RESULTS HAVE BEEN ALWAYS ACCEPTED, IN PAST AS WELL AS SUBSEQUENTLY. THERE WAS NO CHANGE IN FACTS OR IN LEGAL POSITION THIS YEAR. (II) THAT THE TRIBUNAL ITSELF HAD MENTIONED THAT THE AVERAGE GROSS PROFIT OF THE APPLICANT VARIED FROM 3.51 TO 4.14. AS AGAINST THIS, THE TRIBUNAL CONFIRMED THE ESTIMATE AT 6% . (C) IN FACT AT NO POINT OF TIME, THE TRIBUNAL EVER CONFRONTED THE AUTHORISED REPRESENTATIVE ABOUT THIS ASPECT. IT WAS, THEREFORE, PRAYED THAT THE ORDER PASSED BY THE TRIBUNAL BE RECALLED OR IN ALTERNATIVE SUITABLE RELIEF BE ALLOWED TO THE AS SESSEE . 2. AT THE TIME OF HEARING NONE ATTENDED ON BEHALF O F THE ASSESSEE NOR FILED ANY APPLICATION FOR ADJOURNMENT OF THE CASE. HENCE, IT WAS, THEREFORE, DECIDED TO DISPOSE OF THE MATTER EXPARTE, QUA THE A SSESSEE, ON MERITS AFTER HEARING THE LD. DEPARTMENTAL REPRESENTATIVE WHO HAS SUPPORTED THE ORDER OF THE TRIBUNAL THAT THERE IS NO MISTAKE IN THE ORDER OF THE TRIBUNAL AND, THEREFORE, THE ORDER PASSED BY THE TRIBUNAL BE UPHE LD. MA NO.847/M/09 A.Y:03-04 3 3. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE LD. DR AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE TRIBUNAL AFTER CONSIDERING THE SUBMISSIONS OF THE PARTIES AND THE MATERIAL AVAILABLE ON RECORD WHILE OBSERVING THAT THE ASSESSING OFFICER H AS RIGHTLY REJECTED THE BOOKS OF ACCOUNT OF THE ASSESSEE , RESTRICTED THE N ET PROFIT RATE TO 6% OF THE GROSS RECEIPTS AS AGAINST 8% APPLIED BY THE ASSESSI NG OFFICER VIDE FINDING RECORDED IN PARA-6 OF ITS ORDER DATED 15.1.2009 WHI CH IS AS UNDER :- 6. HAVING HEARD THE RIVAL SUBMISSIONS AND FROM CAR EFUL PERUSAL OF THE RECORD, WE FIND THAT ASSESSEE DID NO T RAISE A DISPUTE TO THE FACT THAT MOST OF THE EXPENSES ARE C LAIMED ON THE BASIS OF THE SELF MADE VOUCHERS. THE ASSESSING OFFICER HAS SPECIFICALLY POINTED OUT THAT IN THE MONTH OF JANU ARY TO MARCH EXCESS EXPENDITURE WERE CLAIMED ON THE BASIS OF THE SELF MADE VOUCHERS, BUT, NO SATISFACTORY REPLY WAS GIVEN ON B EHALF OF THE ASSESSEE. THE CONTENTION OF THE REVENUE THAT THES E LABOURERS ARE GENERALLY ARRANGED BY MIDDLEMEN/SUPERVISOR/SUB- CONTRACTOR AND THE VOUCHERS OF PAYMENT OF WAGES COU LD HAVE BEEN SIGNED BY THEM. HE HAS ALSO INVITED OUR ATTEN TION TO THE NET PROFIT SHOWN BY THE ASSESSEE IN DIFFERENT ASSES SMENT YEARS. IT VARIES FROM 3.51% TO 4.14% . IT IS A SETTLED PO SITION OF LAW WHEN THE ASSESSEE CLAIMED CERTAIN EXPENSES, THE ONU S IS UPON HIM TO PROVE THESE EXPENSES BY PRODUCING THE SUPPOR TING EVIDENCE. IT IS NOT A SMALL AMOUNT WHICH WAS PAID IN CASH AND NO SUPPORTING EVIDENCES WERE KEPT. THE ASSESSEE IN CURRED HUGE EXPENDITURE OF RS.1,08,04,226/- UNDER THE HEAD LABOUR WAGES, AND NO SUPPORTING EVIDENCE FOR ITS PAYMENT WAS KEPT BY THE ASSESSEE . HE HAS ONLY MADE THE SELF-MADE VO UCHERS. SINCE THE EXPENSES OF THE ASSESSEE ARE NOT VERIFIAB LE, THE ASSESSING OFFICER HAS RIGHTLY REJECTED THE BOOKS OF ACCOUNTS OF THE ASSESSEE AND WE FIND NO ERROR THEREIN. AFTER R EJECTING OF BOOKS OF ACCOUNTS, THE NEXT QUESTION COMES ABOUT TH E ESTIMATION OF NET PROFIT. THE ASSESSING OFFICER HA S ESTIMATED AT 8% OF THE GROSS RECEIPTS CONSIDERING THE SPIRIT OF SECTION 44AD OF THE ACT. KEEPING IN VIEW OF THE PAST NET PROFIT DECLARED BY THE ASSESSEE, WE CONSIDER THE ESTIMATION TO BE AT H IGHER SIDE. WE, ACCORDINGLY, RESTRICTED THE SAME TO 6% OF THE G ROSS RECEIPT. ACCORDINGLY, THE ORDER OF THE CIT(A) IS SET ASIDE A ND THE MATTER IS RESTORED TO THE FILE OF THE ASSESSING OFFICER TO RE-COMPUTE THE NET PROFIT AT 6% OF THE GROSS RECEIPT. MA NO.847/M/09 A.Y:03-04 4 4. FROM THE FAIR READING OF THE ABOVE FINDING WE FI ND THAT THE TRIBUNAL AFTER CONSIDERING THE FACTS AND IN THE CIRCUMSTANCE S OF THE CASE INCLUDING THE MATERIAL AVAILABLE ON RECORD HAS PASSED A REASONED ORDER. THE ASSESSEE WANTS REVIEW WHICH IS NOT PERMISSIBLE UNDER THE SCH EME OF PROVISIONS OF SEC. 254(2) OF THE ACT. UNDER THESE CIRCUMSTANCE WE ARE OF THE VIEW THAT THERE IS NO APPARENT MISTAKE IN THE ORDER OF THE TRIBUNAL WH ICH COULD BE RECTIFIED U/S.254(2) OF THE ACT AND ACCORDINGLY THE MISCELLAN EOUS APPLICATION FILED BY THE ASSESSEE IS REJECTED. 5. IN THE RESULT, ASSESSEE'S MISCELLANEOUS APPLICAT ION STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 20.10.2010. SD/- SD/- (B. RAMAKOTAIAH ) ( D.K. AGARWAL ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 20.10.2010. JV. COPY TO: THE APPLICANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR J BENCH TRUE COPY BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.