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TMI Blog2015 (4) TMI 540X X X X Extracts X X X X X X X X Extracts X X X X ..... ess of manufacturing and trading paper tubes. First issue is with regards to addition on account of disallowance of processing charges of Rs. 5,73,477/- out of processing charges claimed Rs. 11,73,477/- paid to Shri Shivcharan Sharma. Assessing Officer stated that the survey was conducted at the premises of assessee on 11.10.2006. Assessing Officer found that processing charges of Rs. 11,73,477/- have been debited by assessee while Shri Shivcharan Sharma has stated that he has not received more than Rs. 6.5 lacs from M/s. Pooja Paper Craft. Accordingly, disallowance of Rs. 5,73,477/- was made. The stand of assessee has been that payment of Rs. 11,73,477/- made to Shri Shivcharan Sharma was for four activities i.e. box packing, loading, unloading and preparation of gum which is supported by bills raised by Shri Shivcharan Sharma. During survey, he was very afraid and was in confused state so he has mentioned that payment of Rs. 6 to 6.5 lakhs has been received only for first three activities i.e. box packing, loading and unloading. He regularly assessed to tax. Ultimately, rejecting the stand of assessee, addition was made of Rs. 5,73,477/- placing reliance on the statement of Shri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orm the 16 layer thick paper tube which is used in the spindles and consistency of gum is essential requirement in keeping the tube intact. Assessee gave the detailed process of gum making and bills for purchase of gum. Assessee's products can not be manufactured without preparation of gum. Assessing Officer has brought nothing on record to suggest that any other person was paid for preparation of gum so as to negate the version of assessee to establish that Shri Shivcharan Sharma was not paid for preparation of gum. Moreover, assessee also filed affidavit of Shri Shivcharan Sharma, wherein it has been deposed that total amount of Rs. 11,73,477/- was paid to him and he has filed corresponding return of income accordingly. The contents of affidavit filed on behalf of Shri Shivcharan Sharma could not be rejected without confronting the contents of deposition to the deponent. Moreover, stand of assessee has been that payments were made by cheques and TDS was deducted thereon and payments were made subsequent to raising of bills by Shri Shivcharan Sharma. Under these facts and circumstances, Assessing Officer was not justified in negating the claim of assessee. Once a certain claim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8/- is therefore not allowable I, therefore, disallow Rs. 13.04.998/- and add to the income of the assessee " 4.1 Matter was carried before the First Appellate Authority, wherein various contentions were raised on behalf of assessee and having considered the same, CIT(A) has granted relief to assessee. Same has been opposed on behalf of Revenue inter alia submitted that CIT(A) was not justified in deleting addition made on account of disallowance of production incentives amounting to Rs. 13,04,998/-. Accordingly, he requested to set aside the order of CIT(A) and that of Assessing Officer be restored. On other hand, learned Authorized Representative reiterated the submissions made before CIT(A) and submitted that order of CIT(A) be upheld. 4.2 After going through rival submissions and material on record, we find that there were three categories of workers. i. One category is of three workers whose statements were recorded during the survey proceedings who have denied having received production incentives, ii. Second category is of workers who have filed affidavits and stated to have received production incentives and; iii. Third category is of other workers whose statements wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y, Assessing Officer was not justified in making addition on account of rejecting production incentives to all and same was rightly directed to be deleted by CIT(A). This reasoned factual finding of CIT(A) needs no interference from our side. We uphold the same. 5. As a result, appeal filed by Revenue is dismissed. 6. In ITA No. 678/Ahd/2011, assessee has filed the appeal on the following grounds: "Appellant craves leave to submit the following concise grounds of appeal before the Hon'ble ITAT: 1. Ld. CIT (A) erred in confirming disallowance of processing charges of Rs. 11,05,491/- out of total processing charges of Rs. 17,05,491/-. Without prejudice to the above, the appellant submits that out of total processing charges only Rs. 9,05,182/- is paid to Shiv Charan Sharma, therefore disallowance if any be made then restricted to Rs. 3,05,182/- (Rs. 9,05,182 - Rs. 6,00,000/-) 2. Ld. CIT (A) erred in confirming disallowance of production incentive of Rs. 14, 39, 028/- merely on basis of the statements recorded of three workers during the course of survey ignoring the receipts and affidavits of remaining workers." 6.1 First issue is with regards to disallowance of processing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the disallowance of processing charges of Rs. 18,83,673/- out of total processing charges of Rs. 24,83,673/-. Same is directed to be deleted. 10. Next issue is with regards to disallowance of production incentive of Rs. 10,62,324/- on the basis of statements recorded of three workers during course of survey ignoring the receipts and affidavits of remaining workers. We have discussed and decided this issue in favour of assessee in A.Y. 2004-05 vide para 4 of this order. Facts being similar so following same reasoning, we are not inclined to concur with the finding of CIT(A) who has confirmed the disallowance of production incentive of Rs. 10,62,324/- merely on the basis of statements recorded of three workers during course of survey ignoring the receipts and affidavits of remaining workers Same is directed to be deleted. 11. As a result, appeal filed by assessee for A.Y. 03-04 is allowed. 12. In ITA No. 681/Ahd/2011, assessee has filed the appeal on the following grounds: "Appellant craves leave to submit the following concise grounds of appeal before the Hon'ble ITAT: 1. Ld. CIT (A) erred in confirming disallowance of processing charges of Rs. 22,14,800/- out of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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