2014 (4) TMI 613 - AT - Income Tax

Addition on account of entire job charges on alleged clearance of 836120 Mts. Of Man made processed fabrics worked out by the central excise authorities during the search proceedings Facts filed in Affidavit not appreciated Held that - During the course of hearing, assessee specifically asked to clarify whether page no. 17 of paper book had been submitted before the AO at the time of assessment or not - He admitted that this argument of page no. 17 of paper book was submitted before the AO at the time of assessment thus, the AO is directed to consider the submission of the assessee and decide the issue as per law - In case, this paper is not available in the assessment record, the addition already made will be treated as sustained Decided in favour of Assessee.

Summary

Issues involved:
1. Quantum appeal regarding addition of job charges on processed fabrics.
2. Penalty appeal regarding levy of penalty under section 271(1)(c) of the Act.

Detailed Analysis:
1. Quantum Appeal:
The Appellate Tribunal, ITAT Ahmedabad, dealt with a quantum appeal and a penalty appeal filed by the assessee arising from the orders of the ld. CIT(Appeals)-I, Surat, for the assessment year 2003-04. The key issue in the quantum appeal was the addition of Rs. 58,52,840 made by the Assessing Officer on account of job charges related to the clearance of 836120 meters of processed fabrics without paying Central Excise Duty. The appellant contended that the addition should be deleted as the charges were based on unaccounted job receipts and only net profit should be taxed. The CIT(A) confirmed the addition, stating that the appellant had not provided evidence that expenses on processing the fabric were not debited to the Profit & Loss Account. The tribunal noted the appellant's argument that all information was submitted to the A.O. during assessment proceedings, and a revised gross profit working was presented. The tribunal directed the Assessing Officer to consider this submission and decide the issue accordingly, allowing the appeal for statistical purposes.

2. Penalty Appeal:
Regarding the penalty appeal under section 271(1)(c) of the Act, the tribunal set aside the penalty appeal to the A.O. as the quantum appeal had been sent back to the A.O. for decision. The tribunal directed the A.O. to decide on the penalty after resolving the quantum appeal. Ultimately, both the quantum and penalty appeals of the assessee were allowed for statistical purposes, with the orders pronounced on 20.12.2013. The tribunal's decision highlighted the importance of providing evidence and proper accounting records to support claims and avoid penalties under the Income Tax Act.