TaxTMI 
TaxTMI 
2019 (10) TMI 996
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....ddition of Rs. 8,10,850/- made on account of disallowance of cash payment to contractors. 2. The ld.CIT(A)has erred in law and on facts in deleting the addition of Rs. 1,38,03,648/- made on account of unaccounted salesmerchandisers. 3. The ld.CIT(A)has erred in law and on facts in deleting the addition of Rs. 48,812/- made on account of disallowance of foreign travel expenses. IT(SS)A.No.141/Ahd/2013: 1. The ld.CIT(A)has erred in law and on facts in deleting the addition of Rs. 8,95,670/- made on account of disallowance of cash payment to contractors. 2. The ld.CIT(A)has erred in law and on facts in deleting the addition of Rs. 67,08,014/- made on account of shortage of stock of yarn. 3. A perusal of the above quantum which have been deleted by the ld.CIT(A) in both the years would reveal that tax effect by virtue of order of the ld.CIT(A) in these appeal is less than Rs. 50 lakhs in each year. Though, these appeals were heard on 30.7.2019, but before the pronouncement of the order, the CBDT has issued instruction bearing no.17 of 2019 dated 8.8.2019,vide which it has prohibited subordinate authorities from challenging order of the CI....
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....seized during the course of search. The AO has compared payment made to the contractors as per details in the hard-disc seized as well as payment to contractors as per the profit & loss account. On a detailed analysis, he found that the expenses were inflated. Ultimately, 5% of the payments towards the contract for labour payments have been disallowed. Appeal to the ld.CIT(A) did not bring any relief to the assessee. 9. The ld.counsel for the assessee fairly conceded that the detailed analysis with regard to this issue has been made by the AO right from Asstt.Year 2004-05. It is travelled upto the Tribunal in the Asstt.Year 2007-08 and 2008-09 vide IT(SS)A.No.98 & 99/Ahd/2013. The Tribunal has upheld the disallowance. He placed on record copy of the Tribunal's order dated 16.2.2018. The ld.DR also relied upon the order of the Tribunals in the earlier years. 10. On due consideration of the above facts and circumstances, and in the light of the Tribunal's order and the stand taken by the assessee, we do not find any error in the finding of the ld.CIT(A) on this issue in both the years. Hence, this ground of appeal is rejected in both the assessment years. In other words, ground....
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....earch. Particulars Inward* opening quantity (Kgs) Shortage % of shortage Bodyline Impex Pvt. Ltd 34252.66 1342.53 1 3.92 Dixcy Textile Pvt. Ltd.(Tirupur) 159226.57 8078.00 I 5.07 Ram International 43239.00 4153.00 i 9.60 V & S International Pvt.Ltd.(Gurgaon) 72620.72 1879.00 2.59 i 3.8 In view of what is stated herein above, the learned Assessing Officer has failed to appreciate that loose paper found during the course of search reflects actual shortages of the goods for 70,787.94 kgs and not sales outside the Books of Account. She ought to have appreciated that - (i) In the process of converting grey cloth into finished fabric, shortages are bound to happen and shortages shown by appellant is within the agreed ratio of shortages with third party on whose behalf goods were received on job work basis. (ii) During the course of search, the Director of Appellant Company has categorically stated that shortages of 8 to 9% are bound to happen in the process of converting grey cloth to finished fabric which depends on quality of fabric, type of process, type of designs, etc. (iii) The "NIL" not....
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....4 kgs as shortages. (vi) It is an undisputed fact that Annexure - A/61 seized from the premises of appellant refers to inward, outward of goods pertaining to job work activity carried out by Assessee. Even Assessing Officer has accepted that the transactions noted in loose paper referred to job work activity carried out by Assessee. In view of such facts whenever Assessee has received goods from third party as job work, third party has direct control on goods sent to Assessee for job work activity and its subsequent receipt and whenever any material is received less in comparison with agreed terms and conditions of receipt of finished goods, they would definitely claim loss from Assessee. In view of these facts Assessee cannot sell the goods belonging to the third party and there cannot be any account for presumption that sales is carried out outside Books of accounts belonging for goods to third party. 3.9 Without prejudice to above, while making the impugned addition has not given any reasoning for not considering 73.97 kg out of 1,11,092.94 kg sale between 19th March, 2009 and 31st March, 2009. The only contention Officer for not giving the credit of 7....
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....te Authority about the importance of assigning reasons, we deem it appropriate to take note of the following finding from this judgment: "4. On a perusal of impugned order, even the counsel for the revenue could not dispute that the order passed by the CIT cannot be termed to be a speaking order which could stand in judicial scrutiny. As to whether in exercise of quasi-judicial powers, the authorities are required to pass orders by giving reasons in support thereof is well-settled by a series of judgments by the Hon'ble Supreme Court of India. 5. In Harinagar Sugar Mills Ltd. v. Shyam Sunder Jhunjhunwala AIR 1961 SC 1669, while dealing with an order passed by the Central Government in exercise of its appellate powers under section 111(3) of the Companies Act, 1956, in the matter of refusal of a company to register the transfer of shares, Hon'ble the Supreme Court observed : ". . . If the Central Government acts as a Tribunal exercising [quasi] judicial powers and the exercise of that power is subject to the jurisdic- tion of this Court under article 136 of the Constitution, we fail to see how the power of this Court can be effectively exercised if....
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....on which the authority has rejected his claim. If the order is subject to appeal, the necessity to record reasons is greater, for without recorded reasons the appellate authority has no material on which it may determine whether the facts were properly ascertained, the relevant law was correctly applied and the decision was just." (p. 1304) 9. In Woolcombers of India Ltd. v. Woolcombers Workers' Union AIR 1973 SC 2758, Hon'ble the Supreme Court quashed the award passed by the Industrial Tribunal on the ground that it was not supported by reasons and observed : ". . .The giving of reasons in support of their conclusions by judicial and quasi-judicial authorities when exercising initial jurisdiction is essential for various reasons. First, it is calculated to prevent unconscious, unfairness or arbitrariness in reaching the conclusions. The very search for reasons will put the authority on the alert and minimise the chances of unconscious infiltration of personal bias or unfairness in the conclusion. The authority will adduce reasons which will be regarded as fair and legitimate by a reasonable man and will discard irrelevant or extraneous considerations. Sec....
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....passed by it while exercising quasi-judicial functions, would no doubt facilitate the exercise of its jurisdiction by the appellate or supervisory authority. But the other considerations, referred to above, which have also weighed with this Court in holding that an administrative authority must record reasons for its decisions are of no less significance. These considerations show that the recording of reasons by an administrative authority serves a salutary purpose, namely, it excludes chances of arbitrariness and ensures a degree of fairness in the process of decisions-making. The said purpose would apply equally to all decisions and its application cannot be confined to decisions which are subject to appeal, revision or judicial review. In our opinion, therefore, the requirement that reasons be recorded should govern the decisions of an administrative authority exercising quasi-judicial functions irrespective of the fact whether the decision is subject to appeal, revision or judicial review. It may, however, be added that it is not required that the reasons should be as elaborate as in the decision of a Court of law. The extent and nature of the reasons would depend on ....
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....d no redress being available to the citizen, there would be insidious encouragement to arbitrariness and caprice. If this requirement is insisted upon, then, they will be subject to judicial scrutiny and correction." (p. 1) 13. Keeping in view the above settled principles of law and applying the same in the facts and circumstances of the present case, we are of the view that the order passed by the CIT does not satisfy the pre-requisites of a speaking order, as the same does not contain reasons to support the order." 17. In the light of the above, if we visualize written submissions and finding given by the ld.CIT(A), then it is apparent that such finding does not contain any adjudication on the submissions of the assessee and not sustainable. Therefore, we set side finding of the ld.CIT(A) on this issue in both the three years. We restore this issue to the file of the ld.CIT(A) for re-adjudication. The ld.CIT(A) shall keep in mind judgment of Full Bench of Hon'ble Punjab & Haryana High Court while re-adjudicating this issue. 18. Ground no.2 in ITA No.572/Ahd/2013 and Ground No.3 in CO No.148/Ahd/2013. 19. In these grounds, grievance of the assessee is that the....
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....tained by appellant. Even during the course of search, discrepancy in the stock and cash was found/Shortage in finished goods, fabric and yarn claimed by appellant was not found to be fully verifiable. Keeping in view all these facts, I hold that rejection of books of accounts and estimation of NP by AO is justified. Moreover keeping in view the NP declared by appellant itself in other years, estimation of NP at 4% on the sales is also justified. Thus, addition of Rs. 1,83,94,205/- is confirmed. Ground no. 5 of appeal is thus dismissed." 24. The ld.counsel for the assessee at the outset contended that no defects were pointed in the books of accounts, and unless books are rejected and found defective, profit cannot be estimated. He relied upon the judgment of the Hon'ble Gujarat High Court in the case of CIT Vs. Vikram Plastics, 239 ITR 161 (Guj). He further contended that the ld.CIT(A) has not considered any submissions made by the assessee supported by the books of accounts. Therefore, according to the assessee, the finding of the ld.CIT(A) deserves to be set aside. On the other hand, the ld.CIT-DR relied upon the orders of the ld.CIT(A). 25. We have duly conside....