Commissioner of Income Tax vs Soccer International Ltd.

Adarsh Kumar Goel, J.—The Revenue has preferred this appeal u/s 260A of the Income Tax Act, 1961 (for short, ""the Act""), against the

order of the Income Tax Appellate Tribunal, Amritsar Bench, Amritsar, passed in I. T. A. No. 429 (ASR)/2008:assessment year 2005-06,

proposing to raise the following substantial questions of law:

Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in law in holding that the Commissioner

of Income Tax (Appeals) was justified in deleting the disallowance of Rs. 1,06,68,374 out of labour charges ?

''1a. While deleting the said disallowance, the learned Commissioner of Income Tax (Appeals) has failed to appreciate that six stitchers to whom

the assessee had claimed to have paid labour charges had categorically stated that neither the bills were made by them nor were these signed by

him.

1b. While deleting the above disallowance, the learned Commissioner of Income Tax (Appeals) has heavily relied upon Bill No. 172 which is in

fact fabricated and bogus and is in total contradiction to the assessee''s claim and finding of the learned Commissioner of Income Tax (Appeals)

and, therefore, whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in ignoring the following:

(i) In Bill No. 172, signature(s) against the names of majority of stitchers are of different persons for having received the payment.

(ii) In the said bill, there are instances, wherein one person has signed for having received the payment for stitchers with different names.

(iii) In the said bill, against the name of a few stitchers, there are no signature of the person receiving the payment.

The assessee was engaged in manufacturing and sale of inflatable balls and other sports items. The Assessing Officer made addition to the

declared income by disallowing labour charges incurred on production of sports goods claimed by the assessee. The Commissioner of Income Tax

(Appeals) upheld the claim of the assessee which has been affirmed by the Tribunal with the following observations:

It is seen that the Assessing Officer failed to consider that as rightly noted by the learned Commissioner of Income Tax (Appeals), export of 17.60

lakhs inflatable balls was not possible unless such as huge number of bails was stitched. The assessee had duly filed before the Assessing Officer

invoice-wise details regarding the export of 17.60 lakhs balls, whereunder, each stitcher was given a code number and the payment made to the

stitchers was shown on unnumbered pay slips and was termed in the same manner. On doubts raised by the Assessing Officer, the statement of

various stitchers were recorded. Pertinently, one of these stitchers denied having carried out the job work of stitching inflatable balls at the instance

of the assessee. Again, pertinently, they confirmed that even though the signatures on the pink slips were not there, their signatures were there on

the fortnightly stitching Bill No. 172. Obviously, from such statement of the stitchers, the burden cast on the assessee to prove the genuineness of

the expenditure claimed got duly discharged. The factum of the said Bill No. 172 being available on the file of the Assessing Officer at the time of

recording of the statement of six stitchers goes a long way to successfully counter the Assessing Officer''s observation that the summary sheets

relied on by the assessee were fabricated, having not been maintained in the assessee''s regular course of business. The learned Commissioner of

Income Tax (Appeals) took due note of the fact that the summary sheets for each year were scrutinized, further ruling out the Assessing Officer''s

observation that the summary sheets did not form part of the record maintained in the assessee''s regular course of the business. As rightly

observed, the Assessing Officer nowhere made out a case that the goods mentioned in their pink slips along with, the amount due to the stitcher

was over and above the amount reflected in the summary sheets. Rather, it was patent on record that each stitcher had been given the code

number which appeared in the pink slips. Also, the amount mentioned against the stitcher code and the pink slips matched with the amount

mentioned in the summary sheets. The Assessing Officer also did not observe anything to the contrary in the assessment order. The computerized

summary sheets, 25 in number, were prepared on a bimonthly basis, in 25 bills, in seriatim. It was against these bills, that 3,48,416 inflated balls

were stitched with stitching charges of Rs. 85,53,877. All these were found to be duly supported by the stitchers bill-wise summary with stitchers''

code along with the quantity stitched by them and the value against it in terms of labour charges. Further, still the assessee was found to be

maintaining details of each stitched ball in the code number with description of issue of the balls to whom for stitching, the receipt of ball bill-wise

and the rejection involved. The stitcher-wise, issue register along with the date-wise receipt register stitch-wise was also being maintained.

We have heard learned Counsel for the Revenue.

The Commissioner of Income Tax (Appeals) as well as the Tribunal have arrived at a finding of fact for upholding the claim of the assessee by

giving reasons while the Assessing Officer has ignored the said reasons. Thus, the issue relates to appreciation of evidence. The finding of the

Tribunal is not shown to be perverse.

No substantial question of law arises. The appeal is dismissed.