Gopinath Chem-Tech Ltd.,, Ahmedabad vs Department Of Income Tax

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD "A" BENCH AHMEDABAD आयकर अपीलीय अिधकरण, अिधकरण, अहमदाबाद यायपीठ ',,'

Before Shri Mukul Kumar Shrawat, Judicial Member and ौी मुकुल कुमार ौावत, याियक सदःय एवं Shri Anil Chaturvedi, Accountant Member ौी अिनल चतुवद , लेखा सदःय के सम# ।

ITA No. 733/Ahd/2011 Assessm ent Year :2006-07 The DCIT, V/s. Gopinath Chem-tech LTd. Circle-4, Ahmedabad A-514, Atm a House, Opp. Old RBI, Ashram Road, Ahm edabad PAN No. AACCG3945M (Appellant) .. (Respondent)

अपीलाथ& क' ओर से /By Appellant Shri Dinesh Singh, Sr. D.R. ू*यथ& क' ओर से/By Respondent Shri Tushar P. Hemani, A.R. सुनवाई क' तार ख/Date of Hearing 13.02.2015 घोषणा क' तार ख/Date of Pronouncement 20.02.2015

ORDER

PER : Shri Anil Chaturvedi, Accountant Member

This appeal is filed by the Revenue against the order of ld. CIT(A)-XX,

Ahmedabad, dated 03.12.2010 for the assessment year 2006-07.

2. The facts as culled out from the materials on record are as under:

3. The assessee is a company stated to be engaged in manufacturing of

chemicals. It electronically filed its return of income for A.Y. 06-07 on

30.12.2006 declaring total income at Rs. 47,55,120/-. The case was selected

for scrutiny and thereafter the assessment was framed u/s.143(3) vide order

dated 30.12.2008 and the total income was determined at Rs.62,93,140/-. I. T . A. No. 7 33/ A hd/ 20 11 A. Y . 0 6-0 7 ( DCI T v s.

G o pi n at h Che m - te c h Lt d. ) Page 2

Aggrieved by the order of A.O., assessee carried the matter before the CIT(A)

who vide order dated 03.12.2010 granted substantial relief to the assessee.

Aggrieved by the aforesaid order of CIT(A), the Revenue is now in appeal

before us and has raised following effective ground:

"1). The ld. CIT(A) has erred in law and on facts in deleting the disallowance of Rs.13,98,957/- made by the Assessing Officer u/s.40(a)(ia), without properly appreciating the facts and materials brought on record by the Assessing Officer."

4. During course of assessment proceedings and on perusing the details

of "Pollution Expenses", A.O. noticed that assessee had debited Rs.

22,93,124/-. On further scrutiny of the account he noticed that payments were

made to Rameshbhai K. Bharwad (Rs.13,45,510/-) and to Pradip Agrawal

(Rs.64,800/-). On the basis of details submitted by assessee, A.O. noted that

assessee had submitted self supported vouchers in relation to supply of

Hydrolic Lime. From the vouchers, he also noticed that vouchers were issued

in the year 2008. He also noticed that assessee had deducted TDS only on

payment of Rs.35,880/- out of total payment of Rs.13,45,510/- to Rameshbhai

K. Bharwad. He was therefore of the view that the payment made to the

aforesaid two persons were towards contract payment for supply of labour

services. A.O. was therefore of the view that since assessee has not

deducted TDS and in view of self supported vouchers which did not pertain to

the assessment year under consideration, he disallowed the aggregate

payment of Rs.13,74,430/-.

I. T . A. No. 7 33/ A hd/ 20 11 A. Y . 0 6-0 7 ( DCI T v s.

G o pi n at h Che m - te c h Lt d. ) Page 3

5. Aggrieved by the order of A.O., the assessee carried the matter before

the CIT(A). CIT(A) having considered the same, remand report and the reply

of assessee to the remand report deleted the addition by holding as under:

"3.3 I have carefully gone through the assessment order, the submissions of the remand report of the AO and the rejoinder submitted by the AR of the appellant on the remand report. It is seen that the AO has made the addition observing that the appellant had not deducted TDS on payments made for services rendered, while examining the details filed before him, he noticed that the appellant had presented purchase bills from Shri Rameshbhai K Bharwad and Shri Pradip Agarwal. The year of issue of the vouchers was 2008. The AO hence held that the appellant's contention that the payments are made for purchase of material was not correct. He has made the addition under section 40 (a) (ia) of the IT Act 1961.

3.3(i) The AR of the appellant submitted that purchases from Shri Rameshbhai K. Bharwad and Shri Pradip Agarwal were actually made during the Financial Year 2005-06 which was the relevant period. The AR of the appellant stated that in the duplicate bills for purchase of hydro lime been issued by Shri Rameshbhai K Bharwad and Shri Pradip Agarwal, the year was wrongly mentioned because the duplicate bills were issued in 2008. When the mistake was brought to the notice of the parties they made the necessary correction in the bills.

3.3(ii) It is seen that these contentions were brought to the notice of the AO and he was asked to examine this aspect regarding the corrections in the bills in Remand proceedings. It is seen however that the AO has not made any inquiries whatsoever regarding this aspect. He has merely relied on the fact that the mentioned in the original bills was 2008. When the AR of the appellant clearly stated that the payment for the above bills was made by account payee cheques the AO should have examined the persons from whom the materials were purchased and examined the payments. Instead of making any verification the AO has merely reiterated the observations made in the assessment order.

I. T . A. No. 7 33/ A hd/ 20 11 A. Y . 0 6-0 7 ( DCI T v s.

G o pi n at h Che m - te c h Lt d. ) Page 4

It is seen that the payment for the above purchase is was made to the same parties from whom it stated to be made during the course of assessment proceedings. The payments are by account payee cheques which match with the details of the bills issued by these parties is also seen that the parties as has have corrected the date in the bills and have also signed at the place where the correction is made.

3.3(iii) In view of the above, the contention of the AR that the purchases were in fact made within the relevant period and that the date was wrongly mentioned in the duplicate bills which was subsequently corrected by the parties is correct. The addition made by the AO is not justified because the AO has made the addition treating the purchases and services rendered.

In view of the above the addition made by the AO is deleted."

6. Aggrieved by the order of CIT(A), the Revenue is now in appeal before

us.

7. Before us, ld. Sr. D.R. supported the order of A.O. Ld. A.R. on the other

hand reiterated the submissions made before the A.O. and CIT(A) and further

submitted that the payments were made in relation to supply of material and

therefore, no tax was required to be deducted at source. He further submitted

that payments were made by account payee cheques and the details of which

matched with the bills issued by the concerned parties. He thus supported the

order of CIT(A).

8. We have heard the rival submissions and perused the material on

record. We find that CIT(A) while allowing the claim of the assessee had

noted that during remand proceeding, A.O. did not make any inquiry with I. T . A. No. 7 33/ A hd/ 20 11 A. Y . 0 6-0 7 ( DCI T v s.

G o pi n at h Che m - te c h Lt d. ) Page 5

respect to supply of material in year under consideration and the issue of

vouchers to be of 2008. He further noted that A.O. had also not examined

during remand proceeding the persons from whom assessee has stated to

have purchased the materials and had examined the payment. We further

find that ld. CIT(A) while granting relief to assessee has given finding that the

purchases were in fact made in the period under consideration and the date

was wrongly mentioned in the duplicate bills which was subsequently

corrected by the parties. Before us, Revenue has not brought any material on

record to controvert the finding of CIT(A). We therefore find no reason to

interfere with the order of CIT(A). Thus, this ground of Revenue is dismissed.

9. In the result, the appeal of the Revenue is dismissed.

This Order pronounced in open Court on 20/02/2015

Sd/- Sd/-

(Mukul Kumar Shrawat) (Anil Chaturvedi) Judicial Member Accountant Member True Copy S.K.Sinha

आदे श क' ूितिल0प अमे0षत / Copy of Order Forwarded to:-

1. अपीलाथ& / Appellant

2. ू*यथ& / Respondent

3. संबंिधत आयकर आयु6 / Concerned CIT

4. आयकर आयु6- अपील / CIT (A)

5. 0वभागीय ूितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad

6. गाड> फाइल / Guard file.

By order/आदे श से,

उप/सहायक पंजीकार आयकर अपीलीय अिधकरण, अहमदाबाद ।