TMI Blog2018 (1) TMI 808X X X X Extracts X X X X X X X X Extracts X X X X ..... ars. - Decided against assessee. - D. B. Income Tax Appeal No. 135 / 2017 - - - Dated:- 5-12-2017 - K. S. Jhaveri And Vijay Kumar Vyas, JJ. For the Appellant : Mr. Tanuj Agarwal For the Respondent : Mr. Daksh Pareek for Mr. Sameer Jain JUDGMENT 1. By way of this appeal, the appellant has challenged the judgment and order of the Tribunal whereby the Tribunal has allowed the departmental appeal for statistical purposes and rejected the cross-objection filed by the assessee. 2. This Court while admitting the appeal framed the following substantial question of law: (i) Whether in the facts and in the circumstances of the case and in law, the learned ITAT has rightly upheld disallowance of service tax expenditure amounting to ₹ 1,68,000/- on freight for transportation of goods by holding that the assessee is not beneficiary of such transport payment in any manner, therefore, the assessee has no liability to bear the respective service tax liability, whereas the provisions of the Finance Act, 1994, relating to service tax read with Rule 2(1) (d) of the Service Tax Rules, 1994, provides for payment of service tax by consignor/consignee on reverse charge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. The stock register is also maintained at factory in computer system. As per company procedure, the goods are being received at factory and stock keeper/factory accountant enter the quantity at computer. No financial books are being maintained at factory except which are required. Sometimes, the stock keeper/factory accountant enter the value of the goods also. Since the goods are being received at factory during the day and night. It is the responsibility of factory staff to enter the goods received at factory immediately. Whenever the goods are received at the factory day hours or night, the entries are made by the persons in computer. But due to mistake or due to over sight or lack of account knowledge he also enter the value in the computer. Even at factory, they are suppose to maintain and control quantitative details. Again when bills of the parties are sent to factory for verification whether goods are received or not, then it seems that factory staff are enter the value of goods. Thus the quantitative has been correctly maintained but lack of knowledge of the computer and accounts, the factory persons enter the value wrongly. When your goodself asked for factory record re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a different figure of income and profit than what has been disclosed by the assessee. Best judgment is also to be based on the material available on record. Therefore, notwithstanding rejection of books of account the material disclosed by the assessee along with other material that may be collected by the Income Tax Officer forms the basis of computation of income. On that basis what conclusions are to be reached is independent of results shown in the books of accounts, if any maintained by the assessee, section 145 only provides the basis on which computation of income is to be made for the purpose of determining the amount of tax payable by an assessee. The provision by itself does not deal with additions or deletion in the income. Therefore, merely because there is some deficiency in the books of account or merely because of rejection of books of account it does not mean that it must lead necessarily to additions in the returned income of the assessee. What changes in either case is the basis for computing the income chargeable under the head Profit and gains of business or profession or Income from other sources . The result would depend on the other principles of computing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reasons mentioned by the Assessing Officer are such which could have shaken the confidence of a person with average wisdom, in the books maintained by the assessee. The provisions of Section 145(2) are wrongly invoked. (iii) The aforesaid view was confirmed by this Court in CIT Vs. Uttam Chuna Pathar Udyog, [2001]116TAXMAN524(RAJ) wherein it has been held as under:- 2. We are satisfied that there is no error in the order passed by the Tribunal, Jaipur, in rejecting the application under section 256(1) of the Income Tax Act, 1961 and holding that whether in a particular facts and circumstances, books of account could have been rejected or not is a finding of fact and does not call for interference and no question of law arises. This is more so when no perversity has been shown in reaching such finding so as to raise the question of law relating to the findings of facts by pointing out that finding of fact stands vitiated and not bindin on this court in reference application. The other conclusions are being subordinate to rejection of books also fall in the same category. (iv) Malani Ramjivan Jagannath vs. Assistant Commissioner of Income Tax(2007)207 CTR Raj 19 (26.10.20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of not applying its mind to the existing material which were relevant and went to the root of the matter. When all the data and entries made in the trading account were not found to be incorrect in any manner, there could not have been any other result except what has been shown by the assessee in the books of account. We are, therefore, unable to sustain the order of the Tribunal. (v) Commissioner of Income-Tax, West.. Vs. Padamchand Ramgopal AIR 1970 SC 1575, 1970 76 ITR 719 SC Wherein it has been held as under: 1. These appeals by certificate arise from the decision given by the High Court of Calcutta in five references made by the Income-tax Appellate Tribunal, Bench 'B', Calcutta under Section 66(2) of the Indian Income-tax Act, 1922. The High Court has answered the questions referred to it in favour of the assessee. In support of the return made by him, the assessee, a Hindu Undivided Family carrying on business in various items including money lending produced his account books. The Income- tax Officer rejected those accounts as unreliable and assessed the assessee on the basis of best judgment by adding to the income returned by him various sums ranging fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stock register and manufacturing process of products manufactured by the assessee are so complicated and number of items manufactured are in number of quantities and there are differences, finished process and also the size, length and width of production is different, which cannot be possible to maintain stock register, therefore, the assessee has not ACIT Vs. M/s Handmand Paper Board maintained quantitative and qualitative stock register, but the assessee had recorded purchase and sale and other expenses on the basis of bills vouchers and closing stock was taken on the last of the previous date, which has been verified and valued property and disclosed in the P L account and balance sheet. He further argued that whatever defects pointed out by the Assessing Officer are not sufficient to justify the rejection of books of account U/s 145(3) of the Act. The ld Assessing Officer made the addition on the ground that in preceding year, the GP was higher than the GP disclosed during the year under consideration but in the business line, the number of internal and external factors affect the performance of the business. Some of them are beyond the control of the assessee. The market c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th the authorities below have considered the materials placed before them and we see no reason to interfere with the same. Accordingly, we answer the issue raised in Tax Appeal No. 1249 of 2007 in favour of the assessee and against the Department. 7. Now, insofar as, the questions raised in Tax Appeal No. 1250 of 2007 and Tax Appeal No. 1253 of 2007 are concerned, in paragraph No. 14 of its judgment, the Tribunal has observed as under: 14. Now coming to the second aspect that workers engaged by labour contractors are to be counted while counting number of workers. The answer is in affirmative and it is supported by the decision of Jurisdictional High Court in the case of CIT vs. Prithviraj Bhoorachand (supra) wherein their Lordships have observed as under:- As can be seen, the term employed by the statute is, employs twenty or more workers. The plain dictionary meaning of the said term 'employ' is to use the services of a person in return for payment. Clause (iv) of s. 80I(2) of the Act does not contemplate the additional requirements which have been read into the same by the CIT. As long as the industrial undertaking manufacturers articles or things; a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iation on the relevant asset has to be allowed as per provisions of IT Act irrespective of the fact that what constitute plant and machinery for the purpose of determining whether a unit is small scale industrial undertaking eligible for deduction under section 80IA. Thus there is no force in the said contention of Revenue that it has been wrongly held by CIT (A) that the excluded items are eligible for depreciation at different rate. In view of above discussion, grounds No. 4 5 are allowed for statistical purposes. (vii) Mehar Chand Jain And Sons Vs. CIT Jaipur Ors. D.B. ITA No. 191/2010 (RAJHC) Decided on 29.5.2017 Wherein it has been held as under: 3. This court while admitting the appeal on 5.5.2010 framed following substantial question of law:- Whether the revenue authorities are permitted to invoke Section 145(3) of the Income Tax Act even in the cases where varacity and correctness of the books of accounts is substantially accepted by them? 5. We are of the opinion that the issue is required to be answered in favour of the assessee. 5.1 However, it will not be treated as a precedent for the subsequent year. It will be open for the department t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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