TMI Blog2013 (6) TMI 287X X X X Extracts X X X X X X X X Extracts X X X X ..... labour charges liability. The total turnover of the assessee is more than 23.45 crore of labour charges receipts which did not include cost of the diamond which shows that the appellant had paid labour charges monthly more than Rs.1 crore. Thus, the outstanding labour charges are resulted of the business activity. TDS on payment of labour charges has been deducted by the appellant and payments made through account payee cheque. Thus, no reason to intervene in the order of the CIT(A). Revenue’s appeal dismissed. - ITA No.1791/Ahd/2009 - - - Dated:- 22-2-2013 - Mukul Kr Shrawat and T R Meena, JJ. For the Appellant : Shri Y P Verma, Sr. DR For the Respondent : Shri K K Shah, AR ORDER:- Per: T R Meena: This is an appeal a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso asked to specified the policy followed by it in charging the principal in case of rough diamond rejected. As per the salary payment register salary was mainly paid to works and assortment laser + planning. After verification all the details furnished by the assessee and on verification of books of a/c. of the assessee the following issues has emerged. Which are capsule in the form of show-cause notice and the same is issued to the assessee vide letter dtd. 22.12.2008 asking him to furnish the reply by 26.12.2008. The relevant portion of the show cause notice is reproduce as below:- Month Received Payment April 349/ct 537/ct May 370/ct 492/ct June 334 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ou and accountant that Rs.25/ct for laser and Rs.15 to 22/ct of sawing is charged from the principle. Accordingly even minimum Rs.30/ct is taken as your charges on the principle for processing of rough diamonds like assortment and laser cutting and sawing total income out of these activities should be around Rs.1,80,03,180/- on total consumption of 600106 cts which is exclusively of yours and after deduction of these charges labour contractors need to be paid and commission income out of the rest of the amount should be around 1% as per the trend incase of labour contractors. Further on examination of the labour contractors bills there is no mentioning of any quality of rough diamonds only no. of carat given to them is present and the basis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me of the firm Turnover N.P M/s. Gopal Diamond 9.66 crores 2.13% M/s. Payal Diamond 22 crores 1.50% Vraj Diamond 24 crores 2.91% Shri Bhimjibhai Kakadiya 21 crores 1.89% In view of the above assessee N.P is very much lower than comparable the concerns. The assessee argument that it has made gross profit and net profit out of the activities performed by it is nothing but manipulation of the figures as per his convenience. Even though, the assessee has processed rough diamond to extent of 30% of entire process still he was claiming very less charges i.e. Rs.10/- to Rs.15/- per ct. The manufactu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the A.O. on page nos. 3 to 7 and concluded that rejection of book, was not justified. He further observed that the appellant did not own the machine for polishing of rough diamond and hence getting work done through sub contractors. In the first year, the appellant shown gross profit @ 3.38%. The labour payment was made to the sub contractor after deducting the TDS and all payments had been made through account payee cheque. The ld. A.O. had not revealed any suppression of profit. The case law applied by the A.O., namely, ACIT vs. P.C. Mundra 80 TTJ 945 for entry business N.P @ 1.15% and comparable cases for N.P. considered by the A.O. are not squarely applicable. However, he relied in case of Atul M Jhaveri (HUF) vs ITO (ITA NO. 2128/A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly relied upon the order of CIT(A) and submitted that whatever comparable case considered by the A.O., no opportunity was given as per the Hon ble Apex Court decision in case of Kishanchand Chelaram vs. CIT 125 ITR 713 (SC). Ld. Counsel strongly urged that the ld. A.O. rejected the book results u/s.145(3) of the Act without there being any specific defect in the books of account. Entire receipts as well as entire sub contract are subject to TDS and payments are being made through account payee cheques. Therefore, estimate of profit in absence of any specific defects is unjustified. He further relied in case of M/s. Gami Exports (ITA NO. 3146/Ahd/2007), wherein it was held by the Co-ordinate Bench that the maintenance of quantitative stock i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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