DIYA EXPORTS,MUMBAI vs. DCIT CENTRAL CIRCLE (1), MUMBAI

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ITA 3379/MUM/2023Status: DisposedITAT Mumbai19 April 2024AY 2015-165 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal noted that the assessee had filed a response to the remand report submitted by the Assessing Officer. However, it was observed with surprise that the order of the Learned CIT(A) made no mention of this remand report. Considering the facts in totality, and in the interest of justice and fair play, the Tribunal deemed it fit to restore the entire matter to the file of the Assessing Officer. The assessee was directed to furnish all necessary evidence in support of the labour payments made to the five impugned parties. The Assessing Officer was directed to examine these evidences and decide the issue afresh after affording a reasonable opportunity of being heard to the assessee. The Tribunal explicitly stated that the appeal was allowed for statistical purposes.

What were the facts?

The assessee, Diya Exports, engaged in import/export/manufacturing of diamonds, filed its return for Assessment Year 2015-16 on September 30, 2015, declaring a total income of ₹11,99,590. The case was selected for scrutiny. During assessment, the Assessing Officer (AO) sought details of labour charges paid by the assessee. Notices under Section 133(6) were issued to 24 parties to whom labour charges were paid. Five of these notices were returned unserved with remarks indicating incomplete addresses or the parties being unknown. The AO disallowed the labour charges paid to these five parties, amounting to ₹53,37,680. The assessee appealed to the Commissioner of Income-Tax (Appeals) (CIT(A)), who confirmed the disallowance, holding that the genuineness of the payment was not established. The assessee then filed an appeal before the Income Tax Appellate Tribunal (ITAT).

What were the issues?

1. Whether the Learned CIT(A) erred in confirming the disallowance of ₹53,37,680 on account of labour charges, by not properly considering the evidence furnished by the assessee and the remand report procedure. Assessee's Contentions: The assessee argued that the details furnished by them were transmitted to the AO by the CIT(A) for a remand report, but the CIT(A)'s order did not mention any such report. The assessee contended that the CIT(A) had completely ignored the true facts. The assessee also stated that they had filed a response to the remand report submitted by the AO. Revenue's Contentions: The Learned Departmental Representative (DR) strongly supported the findings of the Assessing Officer and the order of the First Appellate Authority, reading the operative parts of their respective orders.

Which sections of the Income-tax Act were involved?

Section 133(6)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI BENCH “D”, MUMBAI

Before: SHRI NARENDRA KUMAR BILLAIYA, HONBLEAND

For Appellant: Shri Vijay Kumar Biyani
For Respondent: Smt Mahita Nair

O R D E R PER NARENDRA KUMAR BILLAIYA (AM)

1.

This appeal filed by the assessee is preferred against the order of Learned Commissioner of Income-Tax (Appeals)-47, Mumbai dated 07.08.2023 [hereinafter in short “Ld. CIT(A)”] pertaining to A.Y.2015-16.

(A.Y: 2015-16) Diya Exports 2. The solitary grievance of the assessee is that the Ld. CIT(A) erred in confirming the disallowance of ₹.53,37,680/- on account of labour charges.

3.

Briefly stated the facts of the case are that the, assessee electronically filed its return of income on 30.09.2015 declaring total income of ₹.11,99,590/-. The return was selected for scrutiny assessment and accordingly, statutory notices were issued and served on the assessee. The assessee’s business activities are Import / Export / Manufacturer of diamonds. During the course of the scrutiny assessment proceedings, the Assessing Officer noticed that the assessee has paid labour charges to various persons. Assessee was asked to furnish details of labour charges. On perusal of the details, the Assessing Officer found that the assessee has paid labour charges to 24 parties on whom notices under section 133(6) of Income-tax Act, 1961 (in short “Act”) were issued. However, notices issued to five (5) parties were returned unserved with postal remarks “incomplete address / not known / unknown”. The Assessing Officer proceeded to disallow the labour charges paid to these five parties.

Page No. 2

(A.Y: 2015-16) Diya Exports 4. Assessee carried the matter before Ld. CIT(A) and submitted necessary details but the Ld. CIT(A) was of the opinion that the genuineness of the payment has not been established by the assessee and confirmed the assessment.

5.

Before us, counsel for the assessee vehemently stated that, the details furnished by the assessee were transmitted to the Assessing Officer by the Ld. CIT(A) calling for remand report but there is no mention of any remand report in the findings of the Ld. CIT(A). It is the say of the counsel that the Ld. CIT(A) has completely ignored the true facts.

6.

Ld. DR strongly supported the findings of the Assessing Officer and read the operative part of the assessment order and the order of the First Appellate Authority.

7.

We have carefully considered the orders of the authorities below and have also gone through the documentary evidences brought on record in the light of the Rule 18(6) of the I.T.A.T Rules.

8.

On perusal of the documents, we find that the assessee has filed response to the remand report submitted by the Assessing Officer but Page No. 3

(A.Y: 2015-16) Diya Exports surprisingly there is not even a whisper of the remand report in the order of the Ld. CIT(A).

9.

Considering the facts in totality, in the interest of justice and fair play, we deem it fit to restore the entire quarrel to the file of the Assessing Officer. The assessee is directed to furnish all the necessary evidences in support of labour payments to the impugned five parties and the Assessing Officer is directed to examine the same and decide the issue afresh after affording a reasonable opportunity of being heard to the assessee.

10.

In the result, appeal filed by the assessee is allowed for statistical purpose.

Order pronounced in the open court on 19th April, 2024.

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