IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH I.T.A.No. 345 of 2009 (O&M) Date of decision: 21.7.2009 Commissioner of Income-tax, Jalandhar -I, Jalandhar. ......Appellant Vs. M/s Soccer International Ltd. Basti Sheikh Road, Jalandhar. ...Respondent CORAM:- HON'BLE MR.JUSTICE ADARSH KUMAR GOEL HON'BLE MRS.JUSTICE DAYA CHAUDHARY PRESENT: Mr.Vivek Sethi, Advocate, for the appellant. **** ADARSH KUMAR GOEL, J. (Oral) 1. The Revenue has preferred this appeal under Section 260A of the Income-ax Act, 1961 (for short, “the Act”) against the order of Income Tax Appellate Tribunal, Amritsar Bench, Amritsar passed in ITA No. 429 (ASR)/2008 - assessment year 2005-06, proposing to raise following substantial questions of law:- 1. “Whether on the facts and in the circumstances of the case the ITAT was right in law in holding that the CIT(A) was justified in deleting the disallowance of Rs.1,06,68,374/- out of labour charges?” 1a “ While deleting the said disallowance, the Ld.CIT(A) 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 I.T.A.No. 345 of 2009 [2] them not these were signed by him. 1b While deleting the above disallowance, the Ld.CIT (A) 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 Ld.CIT(A) and therefore whether on the fact and in the circumstances of the case the ITAT 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 name of a few stitchers, there are no signature of the person receiving the payment.” 2. 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 CIT(A) upheld the claim of the assessee which has been affirmed by the Tribunal with the following observations: “ It is seen that the AO failed to consider that as rightly noted by the learned CIT(A), export of 17.60 lacs inflatable balls was not possible unless such as huge number of balls was stitched. The assessee had duly I.T.A.No. 345 of 2009 [3] filed before the AO invoice-wise details regarding the export of 17.60 lac balls, whereunder, each stitcher was given a code number and the payment made to the stitchers was shown on un-numbered pay slips and was termed in the same manner. On doubts raised by AO, 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 of 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 AO at the time of the recording of the statement of six stitchers goes a long way to successfully counter the OA's observation that the summery sheets relied on by the assessee were fabricated, having not been maintained in the assessee's regular course of business. The learned CIT(A) took due note of the fact that the summery sheets for each year were scrutinized, further ruling out the AO's observation that the summery sheets did not form part of the record maintained in the assessee's regular course of the business. As rightly observed, the AO nowhere made I.T.A.No. 345 of 2009 [4] out a case that the goods mentioned in their pink slips alongwith, the amount due to the stitcher was over and above the amount reflected in the summery sheets. Rather, it was patent o 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 summery sheets. The AO also did not observe anything to the contrary in the assessment order. The computerized summary sheets, 25 in number, were prepared on a bi-monthly basis, in 25 bills, in seriatim. It was against these bills, that 348416 inflated balls were stitched with stitching charges of Rs.8553877/-. All these were found to be duly supported by the stitchers bill-wise summary with stitchers' code alongwith 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 alongwith date-wise receipt register stitch-wise was also being maintained.” 3. We have heard learned counsel for the revenue. 4. The CIT(A) as well as the Tribunal have arrived at a finding of fact for upholding the claim of the assessee by giving reasons while the I.T.A.No. 345 of 2009 [5] 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. 5. No substantial question of law arises. The appeal is dismissed. (ADARSH KUMAR GOEL) JUDGE (DAYA CHAUDHARY) July 21, 2009 JUDGE raghav Note: Whether this case is to be referred to the Reporter ........Yes/No