The Commissioner Of Income Tax v. Order23.O9.20Ll

45-46 45-46* IN THE HIGH COURT OF DELHI AT NEW DELHI* IN THE HIGH COURT OF DELHI AT NEW DELHI + ITA No.2LO212O1-0 & ITA No.262l2O11- (coMMoN oRDER) THE COMMISSIONER OF INCOME TAX.....AppellantThrough: Ms. Rashmi Chopra, Advocate. -versus- CORAM: HON'BLE MR. JUSTICE A.K. SIKRIHON'BLE MR. JUSTICE SIDDHARTH MRIDUL ORDER23.O9.20LL % L. The solitary issue involved in both the departmentalappeals is regarding disallowance of expenditure [j.ncurred ]underthe head Job Work Charges' for the financial year 2004-05 andfinancial year 2005-06 relevant to assessment [year ]2005-06 and2006-07. 2. The Assessing Officer disbelieved the introduction of [job]work expenses debited against two concerns associated with theAssessee. The Assessing Officer came to [the ][conclusion ][that]ITA Nos.2LO2/2O1O & 262/201.1 Pagre L of 7 ? since the Assessee did not furnish timely/sufficient detailsincluding confirmed copies of accounts in support of the [job]work expenses and did not furnish reasons as to why job workprocesses were suddenly introduced, disallowed the amountrepresenting expenditure under the head Job Work Charges'.3. The Assessee carried the matter in appeal before the CIT(Appeals) and also moved an application under. Rule 464. of theIncome Tax Act for production of additional evidence. The CIT(Appeals) called for a remand report from the Assessing Officer.The Assessing Officer simply objected to additional evidence onthe ground that proper and sufficient opportunity was allowedto the Appellant during the assessment proceedings. 4. In rejoinder thereto, the Assessee submitted that theobjection of the Assessing Officer was incorrect sincetransportation bills could not be furnished in the assessmentproceedings as the time allowed was very short and the billswere not in possession of the Assessee Company. Further, it isstated that in any case during the remand proceedings the Pagre 2 of 7 ITA Nos.21O2/2O1.O & 262/201.1 Assessee Company had duly appeared before the AssessingOfficer when the original bills were duly verified by [the]Assessing Officer. 5. The submissions of the Assessee with regard to [lack]offair, proper and meaningful opportunity [were ][filed ][in ][the ][form]oftable as below:- 6. In this behalf, it was submitted that since the AssessingOfficer had merely called for some details regarding [job ]work,the same were filed during the course of hearing. Therefore,since gathering of details and information was at the stage ofinvestigation, it could not be said that an opportunity had beengranted to the Assessee and a specific Show Cause Noticegiving opportunity for making the submissions ought to havebeen granted to the Assessee. Accordingly, it was argued thatthe assessment order was against the principles of naturaljustice. In view thereof, the CIT (Appeals) observed as follows:- "Therefore, obviously the papers includingadditional evidence filed in appeal were dulyexamined by the AO. However when nothingadverse was found, it was difficult to defendthe disallowance made in the assessmentorder. Therefore the AO chose the easy wayout whereby objection was raised only againstadmission of additional evidence.Purposefully, no comments were given onmerits of the case. Since it is clear that theAO has duly examined the evidence filed inappeal, it is presumed that the AO does nothave to say anything on merits of thoseevidences. 2.8 Having considered the appellant's' explanation duly supported by relevant [papers]and evidence, it is quite clear that theappellant company was purchasing some ofITA Nos.21O2/2O1.0 & 262/201.1Page 4 of 7 "Therefore, obviously the papers includingadditional evidence filed in appeal were dulyexamined by the AO. However when nothingadverse was found, it was difficult to defendthe disallowance made in the assessmentorder. Therefore the AO chose the easy wayout whereby objection was raised only againstadmission of additional evidence.Purposefully, no comments were given onmerits of the case. Since it is clear that theAO has duly examined the evidence filed inappeal, it is presumed that the AO does nothave to say anything on merits of thoseevidences. 2.8 Having considered the appellant's' explanation duly supported by relevant [papers]and evidence, it is quite clear that theappellant company was purchasing some ofITA Nos.21O2/2O1.0 & 262/201.1Page 4 of 7 the products from two concerns as finishedgoods. However, due to some differences onaccount of demand for higher charges etc, thearrangement was modified and instead ofpurchasing finished goods directly, the rawmaterial/packing material was supplied tothem and they were asked to manufacture theproducts on job work basis. For the first sixmonths of the year, the appellant haspurchased some finished goods from sameparties. In the second half there is no suchpurchase of finished goods and instead [job]work charges were paid for getting the samegoods manufactured from those parties. Theappellant has submitted a working accordingto which the per unit cost of some of theproducts is less including raw material, [job]work and transport charges as compared tothe purchase price of finished products [paid]earlier. The appellant has duly explained andmet with the doubts and suspicions raised bythe AO in the assessment order. On the basisof explanation of the appellant, the reasonsnoted by the AO for disallowance appear to bequite unjustified and mere presumptions notThe AO failed tosupported by facts. appreciate the facts relating to [payment ]of [job]work charges which was simply changed ofarrangement for getting some of the finishedgoods from the two parties at Sikkim. Theexplanation of variouS issues raised in [the]assessment order is found very logical,reasonable, [justified ]and duly supported. Inview of this, I have no hesitation to concludethat the disallowance made by the AO wasarbitrary and highly unjustified. Therefore,the disallowance of {l-,70,5L,L471- [is ][deleted."] "On the facts and in the circumstances of thecase, the Ld. CIT(A) erred on facts in deletingthe addition of <L,70,5L,L471-, made by the on account of expenditure on [job ]work withoutappreciating the fact that there was [no]proof/evidence which could substantiate thatthe same product which was manufacturedearlier as Delhi without any [job ]work, nowrequires [job ]work at Sikkim by the assessee'ssister concern. Ld. CIT(A) further ered in admitting theaddition evidence under rule 464 and ignoringthe fact that during the course of assessmentproceedings, sufficient time was provided tothe assessee to substantiate its claim ofexpenditure incurred on [job ]work." B. Vide the impugned order, the ITAT in view of the findingsarrived at by the CIT [(Appeals), ]as above, concluded that therewas no material before them, much less material [forceful]enough, to persuade the Tribunal to dislodge the well reasonedfindings of fact recorded by the CIT [(Appeals). ]The [Appeal of]the Revenue was accordingly rejected. 9. From the above discussion, it is clear that the CIT(Appeals) as well as the Income Tax Appellate'Tribunal haveconcurrently come to a finding of fact, and no substantialITA Nos.2LO2/2O1.0 & 262/201L Page 6 of 7 question of law requiring the consideration of this Court arises.Consequently, the appeals are dismissed. SEPTEMBER 23,2OITdlv fi+*l-. [AiK. ][SrKRr, ]J.nill/l,r, SIDDHARTH MRIDUL, J. rTA Nos.21O2/2O1.O & 262/20L1 Page 7 of 7