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45-46 * IN THE HIGH COURT OF DELHI AT NEW DELHI + ITA No.2LO212O1-0 & ITA No.262l2O11- (coMMoN oRDER) THE COMMISSIONER OF INCOME TAX.....Appellant Through: Ms. Rashmi Chopra, Advocate. -versus- SBL PVT. LTD .....Respondent Through: Mr. C.S. Aggarwal, Senior Advocate with Mr. Prakash Kumar and Ms. Pushpa Sharma, Advocates. CORAM: HON'BLE MR. JUSTICE A.K. SIKRI HON'BLE MR. JUSTICE SIDDHARTH MRIDUL ORDER % 23.O9.20LL L. The solitary issue involved in both the departmental appeals is regarding disallowance of expenditure j.ncurred under the head Job Work Charges' for the financial year 2004-05 and financial year 2005-06 relevant to assessment year 2005-06 and 2006-07. 2. The Assessing Officer disbelieved the introduction of job work expenses debited against two concerns associated with the Assessee. The Assessing Officer came to the conclusion that ITA Nos.2LO2/2O1O & 262/201.1 Pagre L of 7 Digitally Signed By:AMULYA Certify that the digital file and physical file have been compared and the digital data is as per the physical file and no page is missing. Signature Not Verified
? 5 since the Assessee did not furnish timely/sufficient details including confirmed copies of accounts in support of the job work expenses and did not furnish reasons as to why job work processes were suddenly introduced, disallowed the amount representing 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 the Income 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 on the ground that proper and sufficient opportunity was allowed to the Appellant during the assessment proceedings. 4. In rejoinder thereto, the Assessee submitted that the objection of the Assessing Officer was incorrect since transportation bills could not be furnished in the assessment proceedings as the time allowed was very short and the bills were not in possession of the Assessee Company. Further, it is stated that in any case during the remand proceedings the ITA Nos.21O2/2O1.O & 262/201.1 Pagre 2 of 7
v Assessee Company had duly appeared before the Assessing Officer when the original bills were duly verified by the Assessing Officer. 5. The submissions of the Assessee with regard to lack fair, proper and meaningful opportunity were filed in the form table as below:- of of Date of Order- Sheet Entry Requirements as per Order-Sheet Entry COMPLIANCE BY ASSESSEE Date of Reply (pages of PB) Details furnished (pages of PB) 07.09.2007 Partwise job-work detaiis were called for both Jaipur and Sahibabad undertakinqs 19.09.2007 (51- to 54 of PB) List of Parby-wise job- workers 15.11.2007 L7.L2.2007 (page 58 of PB) Statement of Account of the job-workers, namely M/s Denzong Laboratories (P) Ltd and, M/s SBL (SKM (P) Ltd. 1"7.12.2007 Explanation in respect of increase in expenditure on job-charges, copy of bills, copies of accounts, complete particulars ofjob- workers and, reason as to why job- charges were suddenly introduced in the latter part of the vear. 20.r2.2007 (pages 59 to 6L) Necessary Details, as were available with the assessee filed including copies of bills, delivery challans, vouchers, copy of accounts Also, bill wise detail of job-workers containing complete address and copies of TDS certificates rTA Nos.2LO2/2O10 & 262/2011 Page 3 of 7
In this behalf, it was submitted that since the Assessing Officer 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 of investigation, it could not be said that an opportunity had been granted to the Assessee and a specific Show Cause Notice giving opportunity for making the submissions ought to have been granted to the Assessee. Accordingly, it was argued that the assessment order was against the principles of natural justice. In view thereof, the CIT (Appeals) observed as follows:- "Therefore, obviously the papers including additional evidence filed in appeal were duly examined by the AO. However when nothing adverse was found, it was difficult to defend the disallowance made in the assessment order. Therefore the AO chose the easy way out whereby objection was raised only against admission of additional evidence. Purposefully, no comments were given on merits of the case. Since it is clear that the AO has duly examined the evidence filed in appeal, it is presumed that the AO does not have to say anything on merits of those evidences. 2.8 Having considered the appellant's ' explanation duly supported by relevant papers and evidence, it is quite clear that the appellant company was purchasing some of ITA Nos.21O2/2O1.0 & 262/201.1 Page 4 of 7
A the products from two concerns as finished goods. However, due to some differences on account of demand for higher charges etc, the arrangement was modified and instead of purchasing finished goods directly, the raw material/packing material was supplied to them and they were asked to manufacture the products on job work basis. For the first six months of the year, the appellant has purchased some finished goods from same parties. In the second half there is no such purchase of finished goods and instead job work charges were paid for getting the same goods manufactured from those parties. The appellant has submitted a working according to which the per unit cost of some of the products is less including raw material, job work and transport charges as compared to the purchase price of finished products paid earlier. The appellant has duly explained and met with the doubts and suspicions raised by the AO in the assessment order. On the basis of explanation of the appellant, the reasons noted by the AO for disallowance appear to be quite unjustified and mere presumptions not supported by facts. The AO failed to appreciate the facts relating to payment of job work charges which was simply changed of arrangement for getting some of the finished goods from the two parties at Sikkim. The explanation of variouS issues raised in the assessment order is found very logical, reasonable, justified and duly supported. In view of this, I have no hesitation to conclude that the disallowance made by the AO was arbitrary and highly unjustified. Therefore, the disallowance of {l-,70,5L,L471- is deleted." ITA Nos.21O2/2O10 & 262/2011 Page 5 of 7
Aggrieved by the order of the CIT (Appeals), the Revenue carried the matter in Appeal, taking the following grounds:- "On the facts and in the circumstances of the case, the Ld. CIT(A) erred on facts in deleting the addition of <L,70,5L,L471-, made by the AO on account of expenditure on job work without appreciating the fact that there was no proof/evidence which could substantiate that the same product which was manufactured earlier as Delhi without any job work, now requires job work at Sikkim by the assessee's sister concern. Ld. CIT(A) further ered in admitting the addition evidence under rule 464 and ignoring the fact that during the course of assessment proceedings, sufficient time was provided to the assessee to substantiate its claim of expenditure incurred on job work." B. Vide the impugned order, the ITAT in view of the findings arrived at by the CIT (Appeals), as above, concluded that there was no material before them, much less material forceful enough, to persuade the Tribunal to dislodge the well reasoned findings 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 have concurrently come to a finding of fact, and no substantial ITA Nos.2LO2/2O1.0 & 262/201L Page 6 of 7
\o question of law requiring the consideration of this Court arises. Consequently, the appeals are dismissed. fi+* l- . AiK. SrKRr, J. nill/l,r, SIDDHARTH MRIDUL, J. SEPTEMBER 23,2OIT dlv rTA Nos.21O2/2O1.O & 262/20L1 Page 7 of 7