Kuldeep Deepak Pawar,, v. Additional Commissioner of Income-tax,,

ITA 1735/PUN/2014 | 2007-2008
Pronouncement Date: 30-09-2016 | Result: Partly Allowed

Appeal Details

RSA Number 173524514 RSA 2014
Assessee PAN AAYPP8419J
Bench Pune
Appeal Number ITA 1735/PUN/2014
Duration Of Justice 2 year(s) 12 day(s)
Appellant Kuldeep Deepak Pawar,,
Respondent Additional Commissioner of Income-tax,,
Appeal Type Income Tax Appeal
Pronouncement Date 30-09-2016
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted B
Tribunal Order Date 30-09-2016
Date Of Final Hearing 08-09-2016
Next Hearing Date 08-09-2016
Assessment Year 2007-2008
Appeal Filed On 17-09-2014
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B PUNE . . ! # $ BEFORE SHRI R.K. PANDA AM AND SHRI VIKAS AWASTHY JM . / ITA NO.1734 /PN/2014 #& & / ASSESSMENT YEARS : 2007-08 SHRI DEEPAK HANMANT PAWAR 184 VYANKATPURA PETH SATARA PAN : AAYPP8419J . /APPELLANT V/S ADDL. CIT SATARA RANGE SATARA . /RESPONDENT . / ITA NO.1735 /PN/2014 #& & / ASSESSMENT YEARS : 2007-08 SHRI KULDEEP DEEPAK PAWAR 184 VYANKATPURA PETH SATARA PAN : AALPPP9906N . /APPELLANT V/S ADDL. CIT SATARA RANGE SATARA . /RESPONDENT / ASSESSEE BY : SHRI S.N. DOSHI / RESPONDENT BY : SHRI HARESHWAR SHARMA / ORDER PER R.K.PANDA AM : THE ABOVE 2 APPEALS FILED BY THE RESPECTIVE ASSESSEES A RE DIRECTED AGAINST THE SEPARATE ORDERS DATED 27-08-2014 AND 25-08- 2014 OF THE CIT(A)-III PUNE RELATING TO ASSESSMENT YEA R 2007-08. SINCE IDENTICAL GROUNDS HAVE BEEN TAKEN BY THE RESPECTIV E ASSESSEES / DATE OF HEARING :08.09.2016 / DATE OF PRONOUNCEMENT:30.09.2016 2 ITA NOS.1734 & 1735/PN/2014 THEREFORE THESE WERE HEARD TOGETHER AND ARE BEING DISP OSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. ITA NO.L734/PN/2014 (SHRI DEEPAK HANMANT PAWAR) : 2. FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSEE IS AN INDIVIDUAL AND IS ENGAGED IN THE BUSINESS OF CIVIL CONSTRUCTION WORK A ND POWER GENERATION. HE FILED HIS RETURN OF INCOME ON 31-20-2007 DE CLARING TOTAL INCOME OF RS.54 00 167/-. DURING THE COURSE OF ASSE SSMENT PROCEEDINGS THE AO OBSERVED THAT THE ASSESSEE HAS DO NE CONTRACT WORK FOR VESTAS WIND TECH INDIA LTD. AND VESTAS RRB PVT . LTD. AND HAS DISCLOSED GROSS TURNOVER OF RS.10 53 32 956/- THE DETA ILS OF WHICH ARE AS UNDER : S.NO. NAME OF THE COMPANY TURNOVER DISCLOSED IN THE RETURN 1 VESTAS RRB PVT. LTD. RS.3 06 92 375/ - 2 VESTAS WIND TECH INDIA PVT. LTD. RS.7 46 40 581/ - TOTAL TURNOVER RS.10 53 32 956/ - 3. THE AO ISSUED NOTICE U/S.L42(1) ON VARIOUS DATES CALLING FO R THE DETAILS OF SUNDRY CREDITORS DEBTORS ADVANCES DETAILS OF CO NTRACTS COMPLETED METHOD OF REVENUE RECOGNITION COMPLETE ADDRESS OF ALL CREDITORS AND DEBTORS ETC. HOWEVER THERE WAS NON-COM PLIANCE FROM THE SIDE OF THE ASSESSEE ON DIFFERENT DATES. SUBSEQUENTL Y ON 15-12-2009 THE AUTHORIZED REPRESENTATIVE OF THE ASSESS EE APPEARED BEFORE THE AO AND SUBMITTED A REVISED PROFIT AND LOSS ACC OUNT SIGNED BY THE ASSESSEE ADMITTING ADDITIONAL RECEIPTS FROM CONTRAC T OF RS.1 66 61 839/- AND CLAIMING ADDITIONAL EXPENDITURE OF RS.1.53 CRORES. THE AO THEREFORE ASKED THE ASSESSEE TO PROV E THE CLAIM OF ADDITIONAL EXPENDITURE OF RS.1.53 CRORES WITH PROOF OF CREDITO RS SHOWN IN THE ORIGINAL AND REVISED BALANCE SHEET AND THE DATE FOR COMPLIANCE 3 ITA NOS.1734 & 1735/PN/2014 WAS KEPT ON 17-12-2009. HOWEVER THERE WAS NON-COMPLIA NCE ON THE SAID DATE FOR WHICH THE AO ISSUED A SUMMON U/S.131 AND A SKED THE ASSESSEE TO PROVE THE CLAIM OF EXPENDITURE IN THE ORIGINAL RETURN ADDITIONAL EXPENDITURE OF RS.1.53 CRORES IN THE REVISED PROFIT AND LOSS ACCOUNT AND PROOF OF SUNDRY CREDITORS IN THE ORIGINAL AND REVISED BALANCE SHEET TOTAL TURNOVER ETC. HOWEVER THERE WAS N ON-COMPLIANCE TILL THE COMPLETION OF THE ASSESSMENT. THEREFORE THE AO INFER RED THAT THE ASSESSEE IS NOT COMPLYING WITH THE TERMS OF THE NOT ICES ISSUED WILLFULLY TO THWART INVESTIGATIONS WHICH HAVE BEEN CARRIED ON BY MAKING ENQUIRIES FROM THE PARTIES WITH WHOM THE ASSESSEE IS HAVING TRANSACTIONS RUNNING INTO CRORES OF RUPEES WHICH ARE NOT RECORDED IN THE BOOKS OF ACCOUNT. IN THIS BACKGROUND OF TOTAL NON-C OOPERATION FROM THE ASSESSEE THE AO PROCEEDED TO COMPLETE THE AS SESSMENT ON THE BASIS OF EVIDENCES COLLECTED AT THE TIME OF ASSESSMENT PROCEEDING S AND THE MATERIAL AVAILABLE ON RECORD. 4. HE OBSERVED THAT THE ASSESSEE HAS FILED RETURN OF INC OME ALONG WITH THE BALANCE SHEET AND THE PROFIT AND LOSS ACCOUNT. SUBSEQUENTLY THE ASSESSEE HAS FILED ANOTHER PROFIT AND LO SS ACCOUNT AND BALANCE SHEET DURING THE ASSESSMENT PROCEEDINGS. A PERUSAL OF THE PROFIT AND LOSS ACCOUNT FILED ALONG WITH THE ORIGINAL RET URN OF INCOME SHOWS TURNOVER OF RS.2 93 11 999/- FROM VESTAS WIND TECH INDIA PVT. LTD. HAS NOT BEEN REFLECTED IN THE PROFIT AND LO SS ACCOUNT. THIS TURNOVER IS SHOWN TO THE EXTENT OF RS.1 66 61 839/- IN THE PROFIT AND LOSS ACCOUNT FILED DURING THE COURSE OF ASSESSMENT PR OCEEDINGS IN RESPONSE TO QUERY FROM HIS OFFICE ON THE ISSUE OF REVENUE NOT BEING RECOGNIZED BY THE ASSESSEE AND WHY BOGUS LIABILITY OF RS.6 02 16 726/- SHOWN IN THE NAME OF VESTAS WIND TECH IN DIA PVT. LTD. SHOULD NOT BE TREATED AS INCOME. 4 ITA NOS.1734 & 1735/PN/2014 5. SINCE THE BOOKS OF ACCOUNT ON THE BASIS OF WHICH RETU RN OF INCOME WAS FILED AND ITS ACCOMPANYING DOCUMENTS WERE FOUND TO BE FALSE BECAUSE OF NON-DISCLOSURE OF TURNOVER OF RS.2 93 11 999/ - FROM CONTRACTS IN THE RETURN OF INCOME FILED U/S.139(1) AND SINCE THE ASSESSEE CLAIMED SUBSTANTIAL EXPENDITURE AGAINST THE TURN OVER OF RS.10.53 CRORES SHOWN IN THE ORIGINAL PROFIT AND LOSS ACCOU NT AS A RESULT OF WHICH NET PROFIT SHOWN WAS VERY LOW AND SINCE TH E ASSESSEE FAILED TO SUBSTANTIATE THE CLAIM OF SUCH HUGE EXPENDITURE T HE AO REJECTED THE BOOKS OF ACCOUNT AND COMPLETED THE ASSES SMENT IN THE MANNER AS LAID DOWN UNDER SECTION 144 OF THE I.T. ACT. 6. THE AO OBSERVED THAT THE ASSESSEE HAS SHOWN SUND RY CREDITORS AT RS.6 02 16 726/-. SINCE THE SUNDRY CREDITORS WERE SUBS TANTIAL HE DECIDED TO INVESTIGATE THIS ASPECT. FROM THE DETAILS SUBM ITTED BY THE ASSESSEE ON ACCOUNT OF SUNDRY CREDITORS HE OBSERVED THAT CREDIT BALANCE SHOWN IN THE NAME OF VESTAS WIND TECH INDIA PVT. LTD. IS RS.1 51 97 117/- AND THE CREDIT BALANCE SHOWN IN THE NAME OF VESTAS RRB PVT. LTD. RS.5 96 516/-. THE AO OBTAINED INFORMATION U/S.133(6) FROM THE ABOVE 2 PARTIES AND NOTED THAT THERE IS DIFFERE NCE OF RS.3 02 50 842/- IN THE ACCOUNT OF VESTAS WIND TECH INDIA P VT. LTD. AND AN AMOUNT OF RS.4 87 271/- IN THE ACCOUNT OF VESTAS R RB PVT. LTD. HE FURTHER NOTED FROM THE INFORMATION RECEIVED FROM VESTAS WIND TECH INDIA PVT. LTD. THAT THE TOTAL BILLS RAISED BY THE ASS ESSEE DURING THE PERIOD FROM 01-04-2006 TO 31-03-2007 WAS RS.10 39 52 580/- AGAINST WHICH THE ASSESSEE HAS RECEIVED PAYMENT OF RS.8 88 98 855/- AND AMOUNT OF RS.1 50 53 725/- WAS RECEIVABLE FROM VESTAS WIND TECH INDIA PVT. LTD. AS ON 31-03-2007. THEREFORE THE A O HELD THAT INCOME OF RS.10 39 52 580/- HAS ACCRUED TO THE ASSESSEE DURING A.Y. 2007-08 FOR THE CONTRACT WORKS DONE BY HIM FOR VESTAS WIND TECH 5 ITA NOS.1734 & 1735/PN/2014 INDIA PVT. LTD. SINCE THE ASSESSEE IS FOLLOWING MERCANTILE SYS TEM OF ACCOUNTING. HOWEVER THE ASSESSEE HAS DISCLOSED TURNOVE R OF RS.7 46 40 581/- ONLY IN HIS RETURN OF INCOME FROM VESTAS W IND TECH INDIA PVT. LTD.. THUS THE ASSESSEE HAS SUPPRESSED TURNO VER OF RS.2 93 11 599/-. SINCE THE CONCEALED TURNOVER IS RS.2 93 11 9 99/- AND ASSESSEE HAS ADMITTED ONLY RS.1 66 61 839/- IN THE RE VISED FINANCIAL STATEMENTS THE AO SPECIFICALLY ASKED QUESTION ON T HIS ISSUE IN THE STATEMENT RECORDED U/S.131 OF THE I.T. ACT ON 19 -12-2009 FROM THE ASSESSEE. REJECTING THE VARIOUS EXPLANATIONS GIVEN B Y THE ASSESSEE IN THE STATEMENT RECORDED U/S.131 THE AO MA DE ADDITION OF RS.2 93 11 999/- TO THE TOTAL INCOME BEING THE CONCEALED TU RNOVER OF THE ASSESSEE. 7. THE AO FURTHER NOTED THAT ASSESSEE IN HIS REVISED PROFIT AND LOS S ACCOUNT FILED DURING THE COURSE OF ASSESSMENT PROCEEDING S HAS DISCLOSED ADDITIONAL TURNOVER OF RS.1 66 71 839/- AND FROM TH E SAID ADDITIONAL TURNOVER THE ASSESSEE HAS CLAIMED ADDITIONA L EXPENDITURE OF RS.1 53 94 839/-. THUS THE ASSESSEE HAS ADMITTED ADDIT IONAL INCOME OF RS.12 66 999/-. IT WAS CLAIMED THAT THE AMOUNT SHOWN AS CREDIT BALANCE (LIABILITY) IN THE BALANCE SHEET HAS BEEN RECOG NIZED AS INCOME AND THE AMOUNTS SHOWN AS ADVANCE IN THE NAME O F VARIOUS PERSONS HAVE BEEN CLAIMED AS ADDITIONAL EXPENDITURE. IT WAS SUBMITTED THAT THE ASSESSEE HAS ONLY RECLASSIFIED THE BALANCE SHE ET. 8. HOWEVER THE AO WAS NOT SATISFIED WITH THE EXPLANATION GIVEN BY THE ASSESSEE AND HELD THE SAME TO BE INCORRECT. HE OB SERVED THAT ASSESSEE HAS INTRODUCED FRESH CREDITORS TO THE TUNE OF RS.82 82 000/- IN THE REVISED BALANCE SHEET THE DETAILS OF WHICH ARE AS UNDER : 6 ITA NOS.1734 & 1735/PN/2014 S.NO. NAME ORIGINAL BALANCE NEW BALANCE DIFFERENCE (RS.) 1 GATIMAN EARTH MOVERS 600000 1200000 600000 2 MASAI MULTI SERVICE 2518000 5037000 2519000 3 SACHIN CONSTRUCTIONS 1450000 2900000 1450000 4 SANSKRUTI CONSTRUCTIONS 1450000 2900000 1450000 5 S.R. PATIL 1218000 2436000 1218000 6 YASHODA EARTH MOVERS 1245000 2490000 1245000 TOTAL 84 82 000 9. ACCORDING TO THE AO THE ASSESSEE MERELY DOUBLED TH E CREDIT BALANCES SHOWN IN THE ORIGINAL BALANCE SHEET IN ORDER TO C LAIM BOGUS ADDITIONAL EXPENDITURE TO THE TUNE OF RS.84 82 000/-. THE A O SIMILARLY OBSERVED THAT THE ASSESSEE COULD NOT PROVE TH E ADDITIONAL EXPENDITURE OF RS.1 53 94 840/- BY FURNISHING THE NECESSARY EVIDENCES THE DETAILS OF WHICH ARE AS UNDER : S.NO. NAME AMOUNT 1 GATIMAN EARTH MOVERS 600000 2 MASAI MULTI SERVICE 25 18 5 00 3 SACHIN CONSTRUCTIONS 14 50 000 4 SANSKRUTI CONSTRUCTIONS 14 50 000 5 S.R. PATIL 12 18 000 6 YASHODA EARTH MOVERS 12 45 000 7 MOHANLAL DEVICHAND & SONS 69 13 340 TOTAL 1 53 94 840 10. SIMILARLY THE ASSESSEE ALSO COULD NOT JUSTIFY THE GEN UINENESS OF ADDITIONAL EXPENDITURE TO THE TUNE OF RS.69 13 340/- TOWARD S CONSTRUCTION EXPENDITURE IN THE NAME OF M/S. MOHANLAL DEVIC HAND AND SONS. THE AO ISSUED SUMMONS U/S.131 TO THE ABOVE PARTY. IN ITS REPLY IT WAS STATED BY M/S. MOHANLAL DEVICHAND AND SO NS THAT THEY DID NOT HAVE ANY TRANSACTION WITH SHRI D.H. PAWAR DU RING A.Y. 2007-08. THEY HAVE ALSO CONFIRMED THAT NO AMOUNT WAS R ECEIVABLE FROM THE ASSESSEE AS ON 31-03-2007. SINCE DESPITE GIVING REPEATED OPPORTUNITIES THE ASSESSEE DID NOT APPEAR BEFORE HIM THE AO HELD 7 ITA NOS.1734 & 1735/PN/2014 THAT THE ADDITIONAL EXPENDITURE CLAIMED FROM THE CONTRACT RECEIPT OF RS.2 93 11 999/- IS BOGUS. HE THEREFORE REJECTED THE ADDIT IONAL EXPENDITURE CLAIMED BY THE ASSESSEE AND BROUGHT TO TAX THE AMOUN T OF RS.2 93 11 999/- AS INCOME OF THE ASSESSEE. 11. THE AO OBSERVED THAT THE ASSESSEE HAS CLAIMED EXP ENDITURE OF RS.8 54 14 403/- UNDER THE HEAD CONSTRUCTION AND INCIDENT AL EXPENDITURE IN THE ORIGINAL PROFIT AND LOSS ACCOUNT. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO ASKED THE ASSESSEE T O PROVE THE GENUINENESS OF THE ABOVE EXPENDITURE. SINCE THERE WAS N ON- COMPLIANCE FROM THE SIDE OF THE ASSESSEE AND SINCE THE AS SESSEE ALSO FAILED TO PROVIDE THE INFORMATION AS PROMISED BY HIM DURING T HE COURSE OF RECORDING OF HIS STATEMENT U/S.131 THE AO PROC EEDED TO ESTIMATE THE GROSS PROFIT FROM THE CONTRACT WORK AT 12.5 % OF THE TURNOVER. HE ACCORDINGLY CALCULATED THE PROFIT OF RS.1 31 6 6 619/- BEING PROFIT @ 12.5% ON THE TURNOVER OF RS.10 53 32 956/-. HE OBSERVED THAT THE ASSESSEE HAS DISCLOSED NET PROFIT OF RS.54 96 900/- IN THE ORIGINAL RETURN. HE ACCORDINGLY DISALLOWED EXPENDITUR E OF RS.76 69 719/- OUT OF THE TOTAL CLAIM OF RS.8 54 14 403/-. THE AO SIMILARLY NOTED THAT THE ASSESSEE HAS CLAIMED EXPENDITURE OF RS.1 07 27 000/- IN THE NAME SHRI SUBHAM ELECTRICALS. IN OR DER TO VERIFY THE CLAIM OF THE ASSESSEE SUMMON U/S.131 OF THE AC T WAS ISSUED TO SUBHAM ELECTRICALS AND HIS STATEMENT WAS RECOR DED ON 21- 12-2009. IN THE SWORN STATEMENT OF SHRI MANGESH VITTHA L WADEKAR PROPRIETOR OF SUBHAM ELECTRICALS STATED THAT DURING A.Y. 2 007-08 HE HAS DONE ELECTRICAL WORKS FOR SHRI D.H. PAWAR AND RAISED BILLS OF RS.55 35 000/-. THEREFORE THE AO CONCLUDED THAT THE ASSE SSEE HAS CLAIMED EXCESS EXPENDITURE OF RS.51 92 000/-. HE THEREFORE MADE DISALLOWANCE OF RS.51 82 000/- OUT OF THE EXPENDITURE. SINCE THE 8 ITA NOS.1734 & 1735/PN/2014 ASSESSEE HAS NOT DEDUCTED ANY TAX FROM THE PAYMENTS MADE TO THE ABOVE PARTY THE AO MADE ADDITION OF RS.55 35 000/- U/S.40(A )(IA). THUS THE AO DISALLOWED EXPENDITURE IN THE NAME OF SUBHAM ELECTRICALS TO THE TUNE OF RS.1 07 27 000/-. SIMILARLY IN THE C ASE OF M/S. MOHANLAL DEVICHAND AND SONS THE AO NOTED THAT THE ASSESSEE HAS CLAIMED EXPENDITURE OF RS. 59 LAKHS IN THE NAME OF THE ABOVE PARTY IN THE ORIGINAL RETURN OF INCOME. IN THE STATEMENT RECORDED U/S.131 M/S. MOHANLAL DEVICHAND AND SONS HAD STATED THAT THEY HAVE NOT DONE ANY TRANSACTION WITH SHRI DEEPAK H. PAWAR DURING A.Y. 2007-08 AND THEY HAVE ALSO CONFIRMED THAT NO AMOUNT IS RECEIVABLE FROM THE ASSESSEE. THE AO THEREFORE DISALLOWED THE CLAIM O F EXPENDITURE OF RS.59 LAKHS IN THE NAME OF M/S. MOHANLAL DEVIC HAND AND SONS. 12. SIMILARLY FOR VIOLATION OF PROVISIONS OF SECTION 40(A)(IA) THE AO MADE ADDITION OF RS.31 LAKHS IN THE NAME OF GATIMAN EARTH M OVERS RS.80 69 217/- IN THE NAME OF MASAI MULTI SERVICES RS.26 05 000 /- IN THE NAME OF SACHIN CONSTRUCTIONS AND RS.13 LAKHS IN THE CASE OF SANSKRUTI CONSTRUCTIONS. THE AO SIMILARLY MADE ADDITION OF RS.1 LAKH U/S.40A(3) ON ACCOUNT OF CASH PAYMENT IN EXCESS OF R S.20 000/- TO GATIMAN EARTH MOVERS AND PRATIK BRICKS. THE AO FUR THER DISALLOWED AN AMOUNT OF RS.2 100/- UNDER THE HEAD DONATION S. THUS HE DISALLOWED THE EXPENDITURE TO THE TUNE OF RS.4 00 73 036/-. 13. THE AO ANALYSED THE BALANCE SHEET AND NOTED THAT ASSESSEE HAS SHOWN OTHER LIABILITIES TO THE TUNE OF RS.2 79 33 633/- AND SUNDRY CREDITORS TO THE TUNE OF RS.3 22 44 415/-. HE EXAMINED THE GENUINENESS OF OTHER LIABILITIES/SUNDRY CREDITORS AND NOTED THAT THERE ARE DIFFERENCES BETWEEN THE FIGURES SHOWN BY THE ASSESSE E AND THE 9 ITA NOS.1734 & 1735/PN/2014 INFORMATION COLLECTED U/S.133(6) IN THE NAME OF VESTAS WIND TE CH INDIA PVT. LTD. (RS. 9 38 843/-) AND VESTAS RRB PVT. LTD. (RS.4 87 271/-) SHRI D.K. CHOPRA (RS. 1 LAKH) SHRI P.S. POWER INFR A INDIA PVT. LTD. (RS.35 LAKHS). THEREFORE THE AO MADE ADDITION OF RS.50 26 114/- AS BOGUS/NON EXISTING OTHER LIABILITIES. 14. THE AO FURTHER NOTED THAT THE ASSESSEE HAS SHOW N SUNDRY CREDITORS AT RS.3 22 44 415/- OUT OF WHICH IN MOST OF THE CA SES THE OPENING BALANCE AND THE CLOSING BALANCES ARE THE SAME. HE THEREFORE INFERRED THAT THE SUNDRY CREDITORS TO THE TUN E OF RS.3 22 44 415/- ARE NOT GENUINE AND THE SAID LIABILITY IS BOGU S LIABILITY WHICH SHOULD BE BROUGHT TO TAX SINCE THE ASSESSE E COULD NOT FURNISH ANY EVIDENCE WHATSOEVER TO SUPPORT THE CLAIM OF S UCH LIABILITY. SINCE HE HAS ALREADY BROUGHT TO TAX AN AMOUNT OF RS.69 1 3 340/- IN THE CASE OF M/S. MOHANLAL DEVICHAND AND SONS WHICH WAS CL AIMED AS ADDITIONAL EXPENDITURE THEREFORE THE AO HELD THAT OUT OF T HE AMOUNT OF RS.84 75 000/- SHOWN AGAINST M/S. MOHANLAL DEVICHAND AND SONS CREDIT SHOULD BE GIVEN TO THIS EXTENT OTHERWISE IT WOULD LEAD TO DOUBLE ADDITION. HE THEREFORE BROUGHT TO TAX ONLY THE AMOUNT OF RS.15 16 660/- IN THE CASE OF M/S. MOHANLAL DEVICHAND AND SO NS. ACCORDINGLY OUT OF THE TOTAL LIABILITY OF RS.3 22 44 415/- THE AO MADE ADDITION OF RS.2 53 31 075/- AS BOGUS/NON EXISTING SUNDRY CREDITORS . 15. THE AO FURTHER NOTED THAT THE ASSESSEE IN ITS COMP UTATION OF TOTAL INCOME HAS CLAIMED DEDUCTION OF RS.15 60 970/- U/S.80I A ON ACCOUNT OF ITS WINDMILL PROJECT. SINCE THE ASSESSEE HAS NOT SET OFF THE NOTIONAL CARRY FORWARD OF UNABSORBED DEPRECIATION AS PER SECTION 80IA(5) OF THE ACT THE AO FOLLOWING HIS STAND IN A.Y. 2005-06 AND 2006-07 SET OFF THE BROUGHT FORWARD UNABSORBED DEPRECIA TION AGAINST 10 ITA NOS.1734 & 1735/PN/2014 THE INCOME FROM WINDMILL FOR A.Y. 2007-08. HE OBSERVED THAT IN A.Y. 2006-07 THE BROUGHT FORWARD UNABSORBED DEPRECIATION AV AILABLE FOR SET OFF WAS RS.57 09 097/-. FROM THE SAID BROUGHT FORWARD DEPRECIATION THE INCOME FROM WINDMILL FOR A.Y. 2006-07 AMOUNTIN G TO RS.15 15 878/- WAS SET OFF LEAVING THE BALANCE UNABSORBED DEPRECIATION TO BE CARRIED FORWARD TO SUBSEQUENT YEARS AT RS.41 50 219/-. THE INCOME FROM WINDMILL DECLARED BY THE ASS ESSEE FOR A.Y. 2007-08 IS RS.15 60 970/- WHICH HE SET OFF AGAINST TH E BROUGHT FORWARD UNABSORBED DEPRECIATION OF RS.41 50 219/- AND THEREBY REJECTED THE CLAIM OF DEDUCTION U/S.80IA. THUS THE AO COMPLETED THE ASSESSMENT ON A TOTAL INCOME OF RS.10 67 03 3 61/- AS AGAINST THE RETURNED INCOME OF RS.54 00 167/-. 16. BEFORE CIT(A) THE ASSESSEE FILED REVISED SET OF FINANCIAL ACCOUNTS AS ADDITIONAL EVIDENCE UNDER RULE 46A OF THE INCOME TAX R ULES. IT WAS REQUESTED FOR ADMISSION OF THE SAME AS ADDITIONAL EVIDE NCE. IT WAS ARGUED THAT THOUGH THE ASSESSEE HAD GOT HIS ACCO UNTS AUDITED U/S.44AB THE COUNSEL WHO REPRESENTED THE ASSESSEE BEFO RE THE AO DURING ASSESSMENT PROCEEDINGS DID NOT PRESENT THE MATT ER PROPERLY LEADING TO UNRECONCILED DIFFERENCES WHICH LED THE AO TO REJE CT THE BOOKS. IT WAS FURTHER ARGUED THAT THOUGH THE AO HAD PASSED THE ASSESSMENT ORDER U/S.143(3) HOWEVER THE SAME WAS INFACT COMPLETED IN THE MANNER PROVIDED IN SECTION 144. THE ASSESSEE ARG UED THAT THE ASSESSEES CASE WAS CLEARLY COVERED BY SITUATIONS ENV ISAGED IN CLAUSE (B) CLAUSE (C) AND CLAUSE (D) OF RULE 46A JUSTIFYING THE ADMISSIO N OF THE ADDITIONAL EVIDENCE. 11 ITA NOS.1734 & 1735/PN/2014 17. THE LD.CIT(A) FORWARDED THE ADDITIONAL EVIDENCE FILED BEFOR E HIM TO THE AO FOR HIS COMMENTS. THE AO IN HIS REPORT OPPOSE D THE ADMISSION OF THE ADDITIONAL EVIDENCES ON THE GROUND THAT T HE ASSESSEE FAILED TO SUBSTANTIATE THE EXISTENCE OF ANY DESERVING CIRCU MSTANCE FOR THE SAME. AFTER CONFRONTING THE SAME TO THE ASSESSEE A ND CONSIDERING THE REJOINDER GIVEN BY THE ASSESSEE TO THE COMMENTS O F THE AO THE LD.CIT(A) REJECTED THE REQUEST OF THE ASSESSEE FOR ADMISS ION OF THE ADDITIONAL EVIDENCES. 18. SO FAR AS THE MERIT OF THE CASE IS CONCERNED THE L D.CIT(A) UPHELD THE ACTION OF THE AO IN BRINGING TO TAX THE UNDISCLO SED TURNOVER OF RS.2 93 11 999/-. SO FAR AS THE DISALLOWANCE OF EXPENSES/ADDITIONS MADE BY THE AO IS CONCERNED THE LD.C IT(A) APPLYING THE NET PROFIT PERCENTAGE OF 12.5% ON THE UNDISC LOSED TURNOVER OF RS.2 93 11 999/- WHICH RESULTED IN ADDITION OF N ET PROFIT AMOUNTING TO RS.36 64 000/-. SO FAR AS THE DISALLOWANCE U/S.40(A)(IA) IS CONCERNED THE LD.CIT(A) RELYING ON VARIOUS DECISIONS CON FIRMED THE ADDITION OF RS.2 12 09 217/-. SIMILARLY HE ALSO CONFIRMED THE DISALLOWANCE MADE BY THE AO OF RS.1 LAKH UNDER THE PROVISIO NS OF SECTION 40A(3). THE ACTION OF THE AO IN BRINGING TO TAX AD DITION OF RS.76 69 719/- ON THE DISCLOSED TURNOVER BY ESTIMATING THE PROFIT AT 12.5% WAS ALSO UPHELD BY THE CIT(A). 19. SO FAR AS DISALLOWANCE OF VARIOUS LIABILITIES BY THE AO HO LDING THE SAME AS NON EXISTENCE IN THE NAME OF DIFFERENT PARTIES ARE CONCERNED THE LD.CIT(A) DELETED THE ADDITION ON ACCOUNT O F VESTAS WIND TECH INDIA PVT. LTD. RS.9 38 843/- AND VESTAS RRB PVT . LTD. RS.4 87 271/- AND SUSTAINED THE BALANCE AMOUNT OF RS. 2 89 31 075/-. SO FAR AS DISALLOWANCE U/S.80IA AT RS.15 1 6 790/- 12 ITA NOS.1734 & 1735/PN/2014 IS CONCERNED THE LD.CIT(A) UPHELD THE ACTION OF THE AO IN DENYING THE DEDUCTION U/S.80IA. 20. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE ASSESSEE IS IN APP EAL BEFORE US WITH THE FOLLOWING GROUNDS : GROUND NO 1: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE CIT(A ) HAS ERRED IN NOT ADMITTING THE ADDITIONAL EVIDENCE FILED IN THE COUR SE OF ASSESSMENT PROCEEDINGS OVERLOOKING THE LEGAL PROPOSITION THAT TH ESE ADDITIONAL EVIDENCES ONLY AND CLEARLY REVEAL THE CORRECT ASSESSABLE INCOME AND PARTICULARLY BEING ADMISSIBLE IN THE LIGHT OF RULE 46 A OF THE INCOME TAX RULES. GROUND NO 2: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE CIT ( A) HAS ERRED IN SUSTAINING THE ADDITION OF RS. 2 93 11 999/- ON THE G ROUND OF UNDISCLOSED CONTRACT RECEIPTS WHILE AT THE SAME TIME MAKING AN ADDITION OF RS.36 64 000/- BY ESTIMATING THE NET PROFIT @ 12.5% O N THE SAID CONTRACT RECEIPTS. GROUND NO 3 : ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE CIT ( A) HAS ERRED IN ESTIMATING THE NET PROFIT OF RS. 36 64 000/- ON THE A LLEGED UNACCOUNTED CONTRACT RECEIPT OF RS. 2 93 11 999/- AND HAS ALSO FU RTHER ERRED IN SUSTAINING THE SIMILAR ESTIMATION MADE BY THE ASSESSING OFF ICER AT RS. 76 69 719/-. GROUND NO 4: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE CIT(A ) HAS ERRED IN SUSTAINING THE DISALLOWANCE OF RS. 2 12 09 217/- U/S. 4 0(A)(IA) OF THE INCOME TAX ACT 1961. GROUND NO 5: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE CIT ( A) HAS ERRED IN SUSTAINING THE DISALLOWANCE OF RS. 1 00 000/- U/S. 40A (3)OF THE INCOME TAX ACT 1961. GROUND NO 6: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE CIT(A ) HAS ERRED IN SUSTAINING THE ADDITION SUNDRY CREDITORS AND OTHER LIA BILITIES OF RS 2 89 31 075/- THE ABOVE GROUNDS OF APPEAL MAY KINDLY BE ALLOWED TO BE AMENDED ALTERED MODIFIED ETC. IN THE INTEREST OF NATURAL J USTICE. 13 ITA NOS.1734 & 1735/PN/2014 21. THE ASSESSEE HAS ALSO FILED THE FOLLOWING ADDITIONAL GROUNDS : ADDITIONAL GROUND NO.1: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE O RDER PASSED BY THE ASSESSING OFFICER IS BAD IN LAW AND INVALID ON THE JURISD ICTIONAL GROUND THAT DESPITE APPELLANT'S JURISDICTION LYING WITH ADDI TIONAL COMMISSIONER OF INCOME TAX SATARA RANGE SATARA MOST OF THE SCRU TINY ASSESSMENT PROCEEDINGS WERE CONDUCTED AND COMPLETED AT PUNE. ADDITIONAL GROUND NO.2: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND W ITHOUT PREJUDICE TO ABOVE ADDITIONAL GROUND NO. 1 THE ORDER PASSED BY TH E ASSESSING OFFICER IS BAD IN LAW AND INVALID ON THE FOLLOWING GROUNDS: - I. REQUIRING TO ATTEND AT PUNE FOR ASSESSMENT PROCEEDIN GS; II. OBTAINING APPELLANT'S LEDGER EXTRACTS FROM THE B OOKS OF HIS CUSTOMERS AND WITHOUT PROVIDING THE SAME TO THE APPELL ANT FOR RECONCILING THE DIFFERENCE; III. RECORDING THE STATEMENTS OF SEVERAL SUPPLIERS BY THE ASSESSING OFFICER NAMELY MR. J. Y. CHAVAN ITO WARD 2 SATARA WHICH IS IMPRESSIBLE IN LAW. IV. RECORDING THE STATEMENTS OF THE ABOVE SEVERAL SUPP LIERS AT THE BACK OF THE APPELLANT AND MAKING ADDITION WITHOUT P ROVIDING THE COPIES OF THOSE STATEMENTS AND ALLOWING CROSS EXAMINATION; V. ALLOWING INADEQUATE OPPORTUNITY TO FURNISH THE R EQUIRED DETAILS. 22. THE LD. COUNSEL FOR THE ASSESSEE AT THE OUTSET REL YING ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF NTPC LTD . REPORTED IN 229 ITR 383 JUTE CORPORATION OF INDIA LTD. REPORTED IN 187 ITR 688 AND THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF AHMEDABAD ELECTRICITY COMPANY REPORTED IN 199 ITR 351 S UBMITTED THAT THE ABOVE GROUNDS ARE PURELY LEGAL GROUNDS AND FULL FACTS ARE AVAILABLE ON RECORD AND NO FRESH FACTS ARE NECESSARY FOR VERIFICATION THEREFORE THEREFORE THESE ADDITIONAL GROUNDS SHOULD BE AD MITTED FOR ADJUDICATION. 14 ITA NOS.1734 & 1735/PN/2014 23. AFTER HEARING BOTH THE SIDES AND CONSIDERING THE FACT THAT THE ADDITIONAL GROUNDS ARE PURELY LEGAL IN NATURE THE ABOVE G ROUNDS ARE ADMITTED FOR ADJUDICATION. 24. THE LD. COUNSEL FOR THE ASSESSEE WHILE ARGUING THE AD DITIONAL GROUND NOS. 1 & 2 SUBMITTED THAT THE ASSESSMENT ORDER SHOULD BE HELD AS BAD IN LAW AND INVALID SINCE THE ADDITIONAL COMMISSION ER OF INCOME TAX PUNE WHO WAS HOLDING CHARGE OF SATARA CIRCLE HAS CONDUCTED AND COMPLETED THE ASSESSMENT PROCEEDINGS AT PUNE. SINCE THE ASSESSEE INSTEAD OF ATTENDING AT SATARA OFFICE OF THE INCOME TAX OFFICE HAD TO ATTEND AT THE PUNE OFFICE FOR ASSESSMENT PRO CEEDINGS THEREFORE IT HAS CAUSED UNDUE HARASSMENT TO THE ASSES SEE. THEREFORE THE AO WHO HAD NO JURISDICTION TO ASSESS THE ASSESSEE OF SATARA BY SITTING AT PUNE THE ORDER SHOULD BE HELD AS N ULL AND VOID ON THE ISSUE OF JURISDICTION. 25. HE SUBMITTED THAT THE AO HAS OBTAINED ASSESSEES LEDGER EXTRACTS FROM THE BOOKS OF HIS CUSTOMERS WITHOUT PROVIDIN G THE SAME TO THE ASSESSEE FOR RECONCILING THE DIFFERENCE AND THEREBY MAKING HUGE ADDITIONS WHICH IS UNCALLED FOR AND LEGALLY NOT TENABLE. SIMI LARLY THE AO HAS RECORDED THE STATEMENTS OF VARIOUS SUPPLIERS THR OUGH ITO WARD(2) OF SATARA WHICH IS IMPERMISSIBLE. FURTHER THOSE STAT EMENTS WERE NEVER PROVIDED TO THE ASSESSEE NOR ANY OPPORTUN ITY TO CROSS EXAMINATION WAS GRANTED TO THE ASSESSEE. HE SUBMITTED THAT INADEQUATE OPPORTUNITIES WERE GRANTED TO THE ASSESSEE TO FURNISH THE REQUISITE DETAILS. HE ACCORDINGLY SUBMITTED THAT IN VIEW O F THE ADDITIONAL GROUNDS 1 AND 2 THE ENTIRE ASSESSMENT PROCEE DINGS SHOULD BE HELD AS NULL AND VOID. 15 ITA NOS.1734 & 1735/PN/2014 26. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE AO OBTAINED ASSESSEES LEDGER ACCOUNTS FROM VESTAS WIND TE CH PVT. LTD. ON 16-12-2009 AND FOUND THE DIFFERENCE IN THE CONTRACT R ECEIPT OF RS.2 93 11 999/-. THE ABOVE LEDGER EXTRACT WAS NOT PROVID ED TO THE ASSESSEE FOR RECONCILIATION. ALTHOUGH THE ASSESSEE FILED THE RECONCILIATION STATEMENT BEFORE THE CIT(A) WITH COPIES OF CO NTRACT BILLS RAISED CHEQUES RECEIVED BANK STATEMENTS BILL-WISE DETAILS OF SHORT CREDIT ETC. HOWEVER THE SAME WAS NOT ADMITTED BY THE LD.CIT(A) AND HE ESTIMATED THE NET PROFIT OF RS.36 64 000/- BY ESTIMATING THE PROFIT AT 12.5% OF THIS UNDISCLOSED CONTRACT RECEIPT. HE SUBMITTE D THAT SINCE THE ASSESSEE HAS PROPERLY RECONCILED THE DIFFERENCE NO SEPARATE ADDITION ON ACCOUNT OF ESTIMATED GROSS PROFIT SHOULD HAVE BEEN MADE. 27. SO FAR AS ESTIMATION OF NET PROFIT AT RS.36 64 000/- BY THE CIT(A) IS CONCERNED HE SUBMITTED THAT ASSESSEE HAS SHOW N NET PROFIT OF 6.74% IN THE ORIGINAL PROFIT AND LOSS ACCOUNT AND 10.37% IN THE REVISED PROFIT AND LOSS ACCOUNT. HOWEVER THE LD.CIT(A) WITH OUT CONSIDERING THE REASONABLE PERCENTAGE OF NET PROFIT SUSTA INED THE ADDITION OF RS.36 64 000/- BY ESTIMATING THE PROFIT AT 12.5% OF THE UNDISCLOSED RECEIPT OF RS.2.93 CRORES. HE SUBMITTED THAT W HEN THE AO HAS ALREADY ESTIMATED THE NET PROFIT AT RS. 76 69 7219/- THE CIT(A ) SHOULD NOT HAVE SUSTAINED THE PROFIT OF RS.76 69 179/-. IN ANY CASE HE SUBMITTED THAT FOLLOWING THE PROVISIONS OF SECTION 44AD T HE DIFFERENT BENCHES OF THE TRIBUNAL ARE CONSISTENTLY ESTIMATING THE PROFIT @8% OF THE CONTRACT RECEIPT. THEREFORE PROFIT AT BEST CAN BE EST IMATED @8% OF THE TOTAL TURNOVER. 16 ITA NOS.1734 & 1735/PN/2014 28. SO FAR AS DISALLOWANCE OF RS.2 12 09 217/- U/S.40(A)(IA) IS CONCERNED HE SUBMITTED THAT THERE ARE 5 PARTIES TO W HOM PAYMENTS HAVE BEEN MADE AND WHICH ARE DISALLOWED U/S.40(A)(IA) OF THE I .T. ACT. REFERRING TO PAGES 81 TO 84 OF THE PAPER BOOK HE SUBMIT TED THAT PAYMENT OF RS.80 69 217/- HAS BEEN MADE TO MASAI MULTI SE RVICES TOWARDS PURCHASE OF MATERIALS THEREFORE THE PROVISIONS OF SECTION 40(A)(IA) ARE NOT APPLICABLE FOR PURCHASES OF MATERIALS FROM THE SAID PARTY. 29. AS REGARDS THE PAYMENT TO 4 OTHER PARTIES ARE C ONCERNED HE SUBMITTED THAT THE ABOVE PARTIES HAVE OFFERED THE ENTIRE AMOUNT IN THEIR RESPECTIVE RETURNS OF INCOME. RELYING ON THE AMEND MENT TO SECTION 40(A)(IA) BY THE FINANCE ACT 2012 W.E.F. 02-04-2013 H E SUBMITTED THAT DISALLOWANCE U/S.40(A)(IA) OF THE ACT NEED NOT BE MADE IF THE ASSESSEE IS NOT DEEMED TO BE AN ASSESSEE IN DEFAU LT UNDER THE FIRST PROVISO TO SECTION 201(1). REFERRING TO THE DECISION O F THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF ITO VS. GAURIMAL MAHAJ AN AND SONS VIDE ITA NO.1852/PN/2012 ORDER DATED 06-01-2014 FOR A.Y. 2008-09 HE SUBMITTED THAT THE TRIBUNAL AFTER CONSIDERING VARIOUS DECISIONS RESTORED THE ISSUE TO THE FILE OF THE AO WITH A D IRECTION TO EXAMINE THE CONTENTION OF THE ASSESSEE THAT THE PAYEES HAVE FILED THEIR RETURN DISCLOSING THE AMOUNT RECEIVED. HE ACCORDING LY SUBMITTED THAT THE ISSUE MAY BE RESTORED TO THE FILE OF THE AO WITH A DIRECTION TO VERIFY AS TO WHETHER THE PAYEES HAVE DISCLO SED SUCH RECEIPTS AND PAID TAX ON THAT AND IF SO TO DELETE THE DISALLOWANCE. 30. THE LD. COUNSEL FOR THE ASSESSEE FURTHER SUBMITTED THAT ALL THE PAYMENTS HAVE BEEN ACTUALLY MADE AND NOTHING IS PAYABLE AT THE END OF THE YEAR. THEREFORE IN VIEW OF THE DECISION OF THE HONBLE ALLAHABAD 17 ITA NOS.1734 & 1735/PN/2014 HIGH COURT IN THE CASE OF VECTOR SHIPPING COMPANY REPORT ED IN 262 ITR 545 NO DISALLOWANCE U/S.40(A)(IA) IS CALLED FOR. 31. SO FAR AS DISALLOWANCE U/S.40A(3) IS CONCERNED HE SUBMIT TED THAT NO PAYMENT EXCEEDING RS.20 000/- IN EACH CASE HAS BEEN MADE TO GATIMAN EARTH MOVERS THEREFORE ADDITION OF RS.2 LAKHS U /S.40A(3) ON ACCOUNT OF PAYMENT TO GATIMAN EARTH MOVERS IS UNCA LLED FOR. AS REGARDS THE DISALLOWANCE OF RS.3 LAKHS PAID TO PRATIK BRICKS IS CONCERNED HE SUBMITTED THAT NEITHER ANY AMOUNT HAS B EEN PAID TO THE ABOVE PARTY IN VIOLATION OF SECTION 40A(3) NOR THE ASSESSE E WAS CONFRONTED ON THIS ISSUE. HE SUBMITTED THAT IT IS A WRONG ENTRY AND THEREFORE NO DISALLOWANCE IS CALLED FOR. 32. AS REGARDS THE ADDITION ON ACCOUNT OF LIABILITY OF RS.2 89 31 075/- IS CONCERNED HE SUBMITTED THAT THE AO HA D DISALLOWED THE SUNDRY CREDITORS OF RS.2 53 31 075/-. THE AO HAD FURTHER ADDED UNSECURED LOAN OF RS.1 LAKHS FROM D.K. CHOPRA AND RS.35 LAKHS FROM POWER INFRA PVT. LTD. SO FAR AS THE SU NDRY CREDITORS OF RS.2 53 31 075/- IS CONCERNED HE SUBMITTED THAT WHEN TH ESE ARE OPENING BALANCES WHICH WERE CARRIED FORWARDED THIS SHOULD NOT HAVE BEEN ADDED IN THE IMPUGNED ASSESSMENT YEAR. SO FAR AS THE CASH CREDIT OF RS.1 LAKHS TAKEN FROM SHRI D.K. CHOPRA IS CONCERNE D HE SUBMITTED THAT THE SAME IS RECEIVED VIDE CROSSED CHEQUE . HIS CONFIRMATION PAN AS WELL AS THE LEDGER EXTRACT OF THE SAID PERSON WAS ALSO GIVEN TO THE CIT(A). HOWEVER THE SAME WAS NOT ADMITTED. 33. SO FAR AS THE CREDIT OF RS.35 LAKHS FROM POWER INFRA P VT. LTD. IS CONCERNED HE SUBMITTED THAT THE SAME WAS ALSO RECEIVE D BY CROSSED CHEQUE DRAWN ON UTI BANK. THE BANK ACCOUNT AND LEDGE R ACCOUNT CLEARLY SHOW THAT THE AMOUNT WAS RECEIVED BY SHRI D.H. P AWAR BY 18 ITA NOS.1734 & 1735/PN/2014 CHEQUE NO.11817 DATED 20-03-2007. THEREFORE NO ADDITION IS CALLED FOR. HE ACCORDINGLY SUBMITTED THAT THE VARIOUS ADDITIONS MADE BY THE AO AND SUSTAINED BY THE CIT(A) IS UNCALLED FOR. THEREFORE T HE ADDITIONS SHOULD BE DELETED AND THE GROUNDS RAISED BY TH E ASSESSEE SHOULD BE ALLOWED. 34. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHER H AND STRONGLY SUPPORTED THE ORDER OF THE CIT(A). SO FAR AS T HE ADDITIONAL GROUNDS ARE CONCERNED HE SUBMITTED THAT IT IS NOT A LEG AL GROUND. THE ADDL.CIT OF PUNE WAS HOLDING ADDITIONAL CHARGE OF SATARA AND HE WAS HAVING VALID JURISDICTION OVER THE ASSESSEE. IF THE ASSES SEE WAS HARASSED DUE TO APPEARANCE BEFORE THE AO AT PUNE HE COULD HAVE FILED A GRIEVANCE PETITION BEFORE THE CONCERNED CIT OR CCIT. SINCE THE ASSESSEE HAS PARTICIPATED IN THE ASSESSMENT PROCEEDINGS WITHOUT BRINGING TO THE NOTICE OF THE HIGHER AUTHORITIES ABOUT HIS DIFFICULTIES NOW HE CANNOT CHALLENGE THE VALIDITY OF JURISDICTION. HE CAN NOT HAVE ANY GRIEVANCE. THEREFORE THE ADDITIONAL GROUND RAISED BY THE ASSESSEE ON THE ISSUE OF JURISDICTION SHOULD BE DISMISSED. 35. SO FAR AS THE STATEMENTS RECORDED FROM DIFFERENT PER SONS THROUGH ITO WARD-2 OF SATARA IS CONCERNED HE SUBMITTED THAT THE ITO WAS GIVEN NECESSARY PERMISSION TO RECORD THE STATE MENTS OF VARIOUS SUPPLIERS. THE AO HAVING JURISDICTION OVER THE ASS ESSEE HAD ISSUED COMMISSION TO AN OFFICER OF THE DEPARTMENT FOR CONDUCTING LOC AL ENQUIRY AND THERE IS NOTHING WRONG IN IT. 36. SO FAR AS NON SUPPLY OF STATEMENTS RECORDED AND T HE LEDGER EXTRACTS OBTAINED FROM DIFFERENT PARTIES ARE CONCERNED HE SUBMITTED THAT THE ASSESSEE WAS NON-COOPERATIVE DURING THE COUR SE OF ASSESSMENT PROCEEDINGS. WHEN HE WAS NOT PARTICIPATING P ROPERLY HE 19 ITA NOS.1734 & 1735/PN/2014 CANNOT SAY THAT HE WAS NOT PROVIDED SUCH STATEMENTS OR LEDGER EXTRACTS. 37. SO FAR AS THE MERIT OF THE CASE IS CONCERNED HE SUB MITTED THAT THE ASSESSEE HAS GOT HIS ACCOUNTS AUDITED. SUBSEQUENT LY DURING ASSESSMENT PROCEEDINGS HE FILED REVISED PROFIT AND LOSS ACC OUNT. HE WAS UNABLE TO GIVE PROPER REPLY AS TO WHY THERE WERE SUCH HUGE DIFFERENCES IN THE ORIGINAL AND RECASTED PROFIT AND LOSS ACCO UNT AND BALANCE SHEET. WHEN HE WAS CAUGHT FOR SUPPRESSION OF CO NTRACT RECEIPTS THE ASSESSEE FILED THE REVISED PROFIT AND LOSS ACCOUNT SHOWIN G SOME ADDITIONAL CONTRACT RECEIPT AND THEREBY DEBITING VAR IOUS EXPENSES. ONCE THE ASSESSEE HAS ACCOUNTED FOR THE EX PENDITURE IN THE ORIGINAL PROFIT AND LOSS ACCOUNT THERE IS NO QUESTION O F INCURRING ANY FURTHER EXPENDITURE. 38. SO FAR AS DISALLOWANCE U/S.40(A)(IA) AND 40A(3) ARE CONCERN ED HE SUBMITTED THAT THE LD.CIT(A) HAS GIVEN JUSTIFIABLE REASON S FOR ENHANCING THE INCOME ON THAT ACCOUNT. HE SUBMITTED TH AT THE LD.CIT(A) HAS GIVEN VALID REASONS WHILE SUSTAINING VARIOUS ADD ITIONS. HE ACCORDINGLY SUBMITTED THAT THE ORDER OF CIT(A) BE UPHELD. 39. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOT H THE SIDES PERUSED THE ORDERS OF THE AO AND CIT(A) AND THE P APER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED TH E VARIOUS DECISIONS CITED BEFORE US. WE FIND THE ASSESSEE IN THE INST ANT CASE IS AN INDIVIDUAL AND IS ENGAGED IN THE BUSINESS OF CIVIL CONSTRU CTION WORK AND POWER GENERATION. THE ASSESSEE HAS FILED THE R ETURN OF INCOME DISCLOSING TURNOVER OF RS.10 53 32 950/-. DURING THE C OURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE FILED A REVISED PR OFIT AND LOSS ACCOUNT ADMITTING THE ADDITIONAL RECEIPT FROM CONTRACT WOR K AT 20 ITA NOS.1734 & 1735/PN/2014 RS.1 66 61 839/- AND CLAIMING ADDITIONAL EXPENDITURE OF RS.1.53 CRORES. THERE WAS COMPLETE NON COMPLIANCE BY THE ASSES SEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS FOR WHICH THE AO H AD TO COMPLETE THE ASSESSMENT ON THE BASIS OF MATERIAL AVAILABLE BEFORE HIM AND THE ENQUIRIES CONDUCTED BY HIM DURING SUCH ASSESSME NT PROCEEDINGS. ON THE BASIS OF THE VARIOUS DISCREPANCIES NOTICED AND VIOLATION OF PROVISIONS OF SECTION 40(A)(IA) 40A(3) ETC AND IN V IEW OF DISCREPANCIES IN THE AMOUNTS SHOWN UNDER THE HEAD SUND RY CREDITORS ETC. THE AO COMPLETED THE ASSESSMENT DETERMINING THE T OTAL INCOME AT RS.10 67 03 361/-. WE FIND THE ASSESSEE BEFORE THE CIT(A) FILED REVISED SET OF FINANCIAL ACCOUNTS AS ADDITIONAL EVIDENCE UND ER RULE 46A OF THE INCOME TAX RULES. THE LD.CIT(A) AFTER OBTAINING A REPORT FROM THE AO REJECTED THE REVISED SET OF FINANCIAL ACCOUNTS AS ADDITIONAL EVIDENCE UNDER RULE 46A OF THE ACT. 40. SO FAR AS THE MERIT OF THE CASE IS CONCERNED THE L D.CIT(A) ALMOST CONFIRMED THE VARIOUS ADDITIONS MADE BY THE AO APA RT FROM DISALLOWANCE U/S.40A(3) 40(A)(IA) ETC. 41. IT IS THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESS EE THAT THE VARIOUS ADDITIONS MADE BY THE AO AND UPHELD BY THE CIT(A ) ARE UNCALLED FOR SINCE ASSESSEE HAS FILED REVISED SET OF FINANCIA L ACCOUNTS BEFORE THE LD.CIT(A) WHICH CONTAINED EACH AND EVERY ITEM D ULY RECONCILED AND THERE WAS NO SCOPE FOR ANY ADDITION. HOWE VER THE LD.CIT(A) REJECTED THE ADDITIONAL EVIDENCE. FURTHER THE VA RIOUS LEDGER EXTRACTS OBTAINED AND STATEMENTS RECORDED FROM VARIOUS PARTIES WERE NOT CONFRONTED TO THE ASSESSEE. THE AO S ITTING AT PUNE HAS CALLED THE ASSESSEE FROM SATARA TO APPEAR BEFORE HIM AT PUNE OFFICE AND THEREFORE THERE WAS UNDUE HARDSHIP CAUSED TO THE 21 ITA NOS.1734 & 1735/PN/2014 ASSESSEE. 42. SO FAR AS THE ADDITIONAL GROUND RELATING TO VALIDITY OF JURISDICTION IS CONCERNED WE DO NOT FIND ANY MERIT IN THE A RGUMENTS ADVANCED BY THE LD. COUNSEL FOR THE ASSESSEE. ADMITTEDL Y THE AO WHO WAS SITTING AT PUNE WAS ALSO HOLDING CHARGE OF SATARA RANGE SATARA. THE ASSESSEE IS ASSESSED AT SATARA. THE ADDL. COMMISSIONER HAS ISSUED ALL THE NOTICES TO THE ASSESSEE FROM SATARA O FFICE. HOWEVER HE HAS ASKED THE ASSESSEE TO APPEAR BEFORE H IM AT HIS REGULAR OFFICE AT PUNE. IF THE ASSESSEE HAD ANY GRIEVANCE HE COULD HAVE APPROACHED THE CONCERNED CIT OR CCIT EXPLAINING H IS INABILITY TO APPEAR AT PUNE OFFICE ON ACCOUNT OF HARDSHIP. HOWEVER THE ASSESSEE INSTEAD OF MAKING ANY SUCH COMPLAIN TO THE HIGHE R AUTHORITIES HAD APPEARED BEFORE THE ADDL.CIT AT PUNE WHO WAS HOLDING CHARGE OF SATARA RANGE. NOW THAT HUGE ADDITIONS HAVE BEEN MADE THE ASSESSEE CANNOT SAY THAT HE WAS HARASSED B ECAUSE OF HIS APPEARANCE AT PUNE INCOME TAX OFFICE INSTEAD OF APPEARING AT SATARA OFFICE. WE FAIL TO UNDERSTAND AS TO WHAT TYPE OF OTHER EV IDENCES THE ASSESSEE COULD HAVE PRODUCED AT SARATA OFFICE BEFORE THE SAME AO WHICH HE COULD NOT FURNISH AT PUNE OFFICE. THIS GROUND RAISE D BY THE ASSESSEE AT THIS JUNCTURE ACCORDING TO US IS NOTHING BU T A FRIVOLOUS GROUND HAVING NO FORCE IN IT. WE THEREFORE DISMISS THE ADD ITIONAL GROUND CHALLENGING THE VALIDITY OF JURISDICTION. 43. SO FAR AS THE GROUND RELATING TO NON SUPPLY OF THE VARIOUS STATEMENTS RECORDED AT THE BACK OF THE ASSESSEE WHICH WERE NOT CONFRONTED TO HIM IS CONCERNED WE ALSO DO NOT FIND MUCH FO RCE IN THE ABOVE CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE. I T IS THE ASSESSEE WHO SHOULD HAVE APPEARED BEFORE THE AO DUR ING THE COURSE 22 ITA NOS.1734 & 1735/PN/2014 OF ASSESSMENT PROCEEDINGS AND SHOULD HAVE COMPLIED WITH A LL THE STATUTORY NOTICES. HOWEVER THE ASSESSEE HAD SCANT RE GARDS FOR THE STATUTORY NOTICES ISSUED BY THE AO FROM TIME TO TIME. IF THE ASSESSEE DOES NOT APPEAR BEFORE THE AO HE CANNOT EXPECT THE AO TO CONFRONT THE EVIDENCES WHICH HE HAD GATHERED DURING THE COURSE OF ASSESSMENT PROCEEDINGS. NO DOUBT IT IS THE PRINCIPLE OF N ATURAL JUSTICE THAT ANY EVIDENCE WHICH HAS BEEN COLLECTED AT TH E BACK OF THE ASSESSEE AND WHICH IS UTILIZED AGAINST THE ASSESSEE SHOULD BE CONFRONTED TO THE ASSESSEE BEFORE MAKING ANY SUCH ADDIT ION. HOWEVER IN THE INSTANT CASE WE FIND SINCE THE ASSESSEE D ID NOT APPEAR BEFORE THE AO DESPITE REPEATED OPPORTUNITIES THE RE WAS NO OCCASION ON THE PART OF THE AO TO CONFRONT THESE STATE MENTS RECORDED OR LEDGER EXTRACTS OBTAINED FROM VARIOUS PARTIES. THER EFORE THE GROUND RAISED BY THE ASSESSEE ON THIS ISSUE IS ALSO DISMISSED. 44. SO FAR AS THE GRIEVANCE OF THE ASSESSEE THAT STATE MENTS OF SEVERAL SUPPLIERS WERE RECORDED BY THE AO SHRI J.Y. CHAUHA N ITO WARD-2 OF SATARA OFFICE WHICH IS IMPERMISSIBLE IN LAW IS CONCER NED WE ALSO DO NOT FIND ANY MERIT IN THE ABOVE GROUND RAISED BY THE ASSESSEE IN SHAPE OF AN ADDITIONAL GROUND. AN OFFICER SITTING AT A PLACE CAN ALWAYS TAKE THE HELP OF ANOTHER OFFICER BY ISSUIN G NECESSARY COMMISSION TO RECORD THE STATEMENTS OF VARIOUS PERSONS WHO ARE ASSESSED UNDER HIS CHARGE. HERE IN THE INSTANT CASE TH E ADDITIONAL COMMISSIONER SITTING AT PUNE HAS TAKEN THE HELP OF THE AO SHRI J.Y. CHAUHAN ITO WARD-2 SATARA TO RECORD THE STATEMENTS OF VARIOUS PERSONS OF SATARA ONLY. THIS ACCORDING TO US CANNOT B E HELD AS IMPERMISSIBLE IN LAW. GROUND RAISED BY THE ASSESSEE THEREFO RE BEING DEVOID OF ANY MERIT IS DISMISSED. 23 ITA NOS.1734 & 1735/PN/2014 45. SO FAR AS THE GROUND RELATING TO NON ADMISSION OF ADD ITIONAL EVIDENCES FILED DURING THE COURSE OF APPEAL PROCEEDINGS IS CONCERNED I.E. REVISED STATEMENTS OF FINANCIAL ACCOUNTS PRODUCED BEFORE THE CIT(A) WE FIND THE LD.CIT(A) HAS VALIDLY REJECTED SUCH REVISED FINANCIAL STATEMENTS. ADMITTEDLY THE ACCOUNTS WERE AUDITED BY T HE AUDITORS AND THE AUDIT REPORT WAS FILED ALONG WITH THE RETURN OF INCOME AND SUCH AUDIT REPORT WAS ALSO DULY SIGNED BY THE ASSESSEE HIMSELF. THEREFORE WE FAIL TO UNDERSTAND AS TO HOW AND WHY THE A CCOUNTS COULD BE RE-AUDITED BY ANOTHER CHARTERED ACCOUNTANT O R THE SAME AUDITOR BY RECASTING THE ACCOUNTS. WE FAIL TO UNDERSTAN D AS TO HOW SUCH A THING HAS HAPPENED SINCE THERE IS SUPPRESSION OF HUGE TURNOVER AS WELL AS NON RECORDING OF HUGE AMOUNT OF EXPE NSES WHICH HAVE NOW BEEN SHOWN IN THE REVISED FINANCIAL STATEMENTS WHICH IS NOT ONLY UNBELIEVABLE BUT ALSO UNIMAGINABLE. 46. HOWEVER WE FIND SOME FORCE IN THE ARGUMENT OF THE LD . COUNSEL FOR THE ASSESSEE THAT SO FAR AS DISALLOWANCE U/S.4 0(A)(IA) IS CONCERNED THE VARIOUS BENCHES OF THE TRIBUNAL FOLLOWING THE INSERTION OF THE SECOND PROVISO TO SECTION 40(A)(IA) BY THE FINANCE AC T 2013 W.E.F. 01-04-2013 ARE HOLDING THAT DISALLOWANCE U/S.40(A)(IA) OF TH E ACT NEED NOT BE MADE IF THE ASSESSEE IS NOT DEEMED TO BE AN ASSESSEE IN DEFAULT UNDER THE FIRST PROVISO TO SECTION 201(1) OF THE I.T. ACT. THEREFORE IF THE PAYEES HAVE DISCLOSED THE AMOUNT RECEIV ED FROM THE ASSESSEE AND PAID THE TAX THEREON ADDITION CANNOT BE M ADE IN THE HANDS OF THE ASSESSEE. HOWEVER THIS ASPECT HAS NOT BE EN VERIFIED BY THE AO SINCE THIS ISSUE IS BEING RAISED BEFORE US FOR THE FIRST TIME. 24 ITA NOS.1734 & 1735/PN/2014 47. THE ASSESSEE HAS ALSO DEMONSTRATED THAT THE PROV ISIONS OF SECTION 40A(3) IS NOT CALLED FOR IN CASE OF GATIMAN EARTH MOV ERS SINCE NO AMOUNT EXCEEDING RS.20 000/- HAS BEEN PAID TO THAT P ARTY. SIMILARLY CERTAIN AMOUNTS HAVE BEEN RECEIVED BY CROSSED CHEQUES WITH THEIR CONFIRMATIONS. IT IS ALSO THE SUBMISSION OF THE L D. COUNSEL FOR THE ASSESSEE THAT GIVEN AN OPPORTUNITY THE ASSESS EE CAN PROPERLY RECONCILE THE CONTRACT RECEIPTS AND THE SUNDRY CREDITOR S. CONSIDERING THE TOTALITY OF THE FACTS OF THE CASE WE ARE OF THE CON SIDERED OPINION THAT THE MATTER REQUIRES A RE-VISIT TO THE FILE OF THE AO FOR PROPER ADJUDICATION OF THE ISSUE. WE THEREFORE RESTORE THE ISSU E TO THE FILE OF THE AO WITH A DIRECTION TO GIVE ONE MORE OPPORTUNITY T O THE ASSESSEE TO SUBSTANTIATE HIS CASE. THE AO SHALL ALSO PRO VIDE COPIES OF THE VARIOUS STATEMENTS RECORDED AND LEDGER EXTRACTS O BTAINED OF DIFFERENT PARTIES FOR RECONCILIATION OF THE CONTRACT RECEIPTS AS WELL AS THE SUNDRY CREDITORS. THE AO SHALL DECIDE THE ISSUE AFRES H AND IN ACCORDANCE WITH LAW AFTER GIVING DUE OPPORTUNITY OF BEING H EARD TO THE ASSESSEE. WE HOLD AND DIRECT ACCORDINGLY. GROUNDS RAISED BY THE ASSESSEE ARE ACCORDINGLY DECIDED IN THE TERMS INDICATED ABOVE. ITA NO.1735/PN/2014 (SHRI KULDEEP DEEPAK PAWAR) : 48. THE REVISED GROUNDS OF APPEAL AND ADDITIONAL GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER : ADDITIONAL GROUND NO.1: - ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE O RDER PASSED BY THE ASSESSING OFFICER IS BAD IN LAW AND INVALID ON THE JURISD ICTIONAL GROUND THAT DESPITE APPELLANT'S JURISDICTION LYING WITH ADDI TIONAL COMMISSIONER OF INCOME TAX SATARA RANGE SATARA MOST OF THE SCRU TINY ASSESSMENT PROCEEDINGS WERE CONDUCTED AND COMPLETED AT PUNE. ADDITIONAL GROUND NO.2: - 25 ITA NOS.1734 & 1735/PN/2014 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND W ITHOUT PREJUDICE TO ABOVE ADDITIONAL GROUND NO.1THE ORDER PASSED BY THE A SSESSING OFFICER IS BAD IN LAW AND INVALID ON THE FOLLOWING GROUNDS:- I. REQUIRING TO ATTEND AT PUNE FOR ASSESSMENT PROCEEDINGS; II. OBTAINING APPELLANT'S LEDGER EXTRACTS FROM THE BO OKS OF HIS CUSTOMERS AND WITHOUT PROVIDING THE SAME TO THE APPELL ANT FOR RECONCILING THE DIFFERENCE; III. RECORDING THE STATEMENTS OF SEVERAL SUPPLIERS BY TH E ASSESSING OFFICER NAMELY MR. J.Y. CHAVAN ITO WARD 2 S ATARA WHICH IS IMPRESSIBLE IN LAW. IV. RECORDING THE STATEMENTS OF THE ABOVE SEVERAL SUPP LIERS AT THE BACK OF THE APPELLANT AND MAKING ADDITION WITHO UT PROVIDING THE COPIES OF THOSE STATEMENTS AND ALLOWING CROSS EXAMINA TION; V. ALLOWING INADEQUATE OPPORTUNITY TO FURNISH THE RE QUIRED DETAILS. OTHER GROUNDS: - GROUND NO 1: - ON THE FACTS AND ILL THE CIRCUMSTANCES OF THE CASE CIT (A) HAS ERRED IN NOT ADMITTING THE ADDITIONAL EVIDENCE FILED IN THE COUR SE OF ASSESSMENT PROCEEDINGS OVERLOOKING THE LEGAL PROPOSITION THAT TH ESE ADDITIONAL EVIDENCES ONLY AND CLEARLY REVEAL THE CORRECT ASSESSABLE INCOME AND PARTICULARLY BEING ADMISSIBLE IN THE LIGHT OF RULE 46 A OF THE INCOME TAX RULES. GROUND NO 2: - ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE CIT ( A) HAS ERRED IN ESTIMATING THE NET PROFIT OF RS. 1 53 04 169/- @ 12.5 % OF UNACCOUNTED CONTRACT RECEIPTS OF RS. 12 24 33 359/- AND AT THE SAM E TIME SUSTAINING THE SIMILAR ESTIMATION OF NET PROFIT MADE BY THE ASSESSIN G OFFICER AT RS.15 92 056/- AND FURTHER ERRED ILL SUSTAINING THE ADDITION OF RS.12 24 33 359/- FOR UNACCOUNTED CONTRACT RECEIPTS. GROUND NO 3: - ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE CIT ( A) HAS ERRED IN SUSTAINING THE DISALLOWANCE MADE U/S 40(A)(IA) OF RS. 1 20 06 000/- WITH FURTHER ENHANCEMENT OF RS. 1 00 20 800/- RELYING ON THE CORRECTED FINAL ACCOUNTS PRODUCED AS ADDITIONAL EVIDENCE DESPITE REJEC TING TO ADMIT THE SAID ADDITIONAL EVIDENCE. GROUND NO 4: - ON THE FACTS AND ILL THE CIRCUMSTANCES OF THE CASE CIT (4)HAS ERRED IN SUSTAINING THE ADDITION OF RS. 3 90 862/- WITH FURTHE R ENHANCEMENT OF RS.20 49 268/-U/S.40(A)(IA) AND AGAIN RELYING ON THE CORRECT ED FINAL 26 ITA NOS.1734 & 1735/PN/2014 ACCOUNTS PRODUCED AS ADDITIONAL EVIDENCE DESPITE REJEC TING TO ADMIT THE SAID ADDITIONAL EVIDENCE. GROUND NO 5: - ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE C1T (A) HAS ERRED IN SUSTAINING THE ADDITION OF RS.96 78 970/- BY REJECTING THE CLAIM OF EXEMPTION OF THE GAIN AROSE ON SALE OF RURAL AGRICULT URAL LANDS NOT FALLING IN THE DEFINITION OF CAPITAL ASSETS WITHIN THE MEANING OF SEC. 2(14)(III)(B) OF THE INCOME TAX ACT 1961 AND ERRONEOUSLY RELYING ON THE CORRECTED FINAL ACCOUNTS PRODUCED AS ADDITIONAL EVIDENCE DESPITE REJECTING TO ADMIT THE SAID ADDITIONAL EVIDENCE. THE ABOVE GROUNDS OF APPEAL MAY KINDLY BE ALLOWED TO BE AMENDED ALTERED MODIFIED ETC. IN THE INTEREST OF NATURAL J USTICE. 49. AFTER HEARING BOTH THE SIDES WE FIND THE ADDITIONAL GRO UNDS OF APPEAL NO.1 AND 2 AND THE OTHER GROUNDS 1 2 3 & 4 BY T HE ASSESSEE ARE IDENTICAL TO THE GROUNDS IN ITA NO.1734/PN/2014. WE HAVE ALREADY DECIDED THE ISSUE AND RESTORED THE MATTER TO THE FILE OF THE AO WITH CERTAIN DIRECTIONS. WE HAVE ALSO DISMISSED SOME OF THE ADDITIONAL GROUNDS RAISED BY THE ASSESSEE. FOLLOWING THE S AME REASONING THE ABOVE GROUNDS ARE DECIDED ACCORDINGLY. 50. SO FAR AS GROUNDS OF APPEAL NO.5 IS CONCERNED THIS IS A NEW GROUND. FACTS OF THE CASE IN BRIEF ARE THAT THE AO DURIN G THE COURSE OF ASSESSMENT PROCEEDINGS OBSERVED THAT THE ASSESSEE DURING THE IMPUGNED ASSESSMENT YEAR HAS CARRIED OUT LAND BUSINESS. HE HAS ACTED AS A MEDIATOR BETWEEN THE WINDMILL COMPANIES AND TH E LAND OWNERS. THE DIFFERENCE BETWEEN THE AMOUNT RECEIVED BY T HE ASSESSEE FROM THE WINDMILL COMPANY AND THE AMOUNT PAID TO THE LAND OWNER IS THE PROFIT OF THE ASSESSEE. HOWEVER THE ASSESSEE DID NO T RECOGNIZE PROFIT FOR SUCH LAND DEALS. THE AO THEREFORE CONFRONTED T HE SAME TO THE ASSESSEE. IN RESPONSE TO THE SAME THE ASSESSEE FILED COMPUTATION OF PROFIT FROM SALE OF LAND ACCORDING TO WHICH THE SALE CONSID ERATION WAS SHOWN AT RS.39 18 500/- AND THE PURCHASE COST WAS 27 ITA NOS.1734 & 1735/PN/2014 RS.28 04 750/-. THE AO THEREFORE TREATED THE DIFFERENCE O F RS.11 13 750/- AS THE PROFIT EARNED BY THE ASSESSEE FROM UNACCOUNTED INCOME FROM LAND BUSINESS. 51. BEFORE CIT(A) THE ASSESSEE CHALLENGED THE ABOVE ADDIT ION MADE BY THE AO ON THE GROUND THAT ALL THE LANDS IN QUESTION A RE RURAL AGRICULTURAL LANDS AND THUS DO NOT FALL WITHIN THE DEFINITION OF CAPITAL ASSETS AND THEREFORE THERE WAS NO CAUSE FOR ANY ADDITIO N. HOWEVER THE ASSESSEE DURING THE COURSE OF APPEAL BEFORE THE CI T(A) HAD SUBMITTED THE CORRECTED BOOKS OF ACCOUNT ACCORDING TO WHICH THE PROFIT ON SALE OF LAND WAS SHOWN AT RS.96 76 970/-. AFTER MA KING ADJUSTMENT OF COMPENSATION EXPENSES AMOUNTING TO RS.23 8 1 325/- DEBITED TO THIS ACCOUNT THE CORRECT GAIN ARISING ON SALE OF AGRICULTURAL LAND WAS SHOWN AT RS.1 20 60 295/-. 52. HOWEVER THE CIT(A) ALSO DID NOT ACCEPT THE CONTENTIO N OF THE ASSESSEE THAT THE GAIN HAS ARISEN ON SALE OF RURAL AGRICU LTURAL LAND AND THEREFORE IS NOT TAXABLE. HE OBSERVED THAT WHAT TH E ASSESSEE HAS ESSENTIALLY DONE WAS TO FACILITATE ACQUISITION OF LAND BY THE WINDMILL COMPANIES FOR SETTING UP WINDMILL FIRMS BY PURCHASING THE LAND S FROM LOCAL LAND OWNERS HIMSELF AND SELLING IT TO THE COMPANIES DU E TO CURBS IMPOSED BY THE STATE GOVT. WITH REGARD TO SALE OF AGRICULTURAL LAND. THE ACT OF THE ASSESSEE IN CLAIMING COMPENSATION EXP ENSES OF RS.23 81 325/- AND CLAIMING THE SAME AS BUSINESS RECEIPT ITS ELF SHOWS THAT THE ACTIVITY WAS BEING CARRIED OUT AS AN ADV ENTURE IN NATURE OF TRADE. HE THEREFORE HELD THAT THE ASSESSEES CLAIM THAT THE LAND IN QUESTION WAS THE AGRICULTURAL LAND AND NOT COVERED BY THE PROVISIONS OF SECTION 2(14) IS NOT GERMANE TO THE ISSUE IN Q UESTION. REJECTING THE VARIOUS EXPLANATIONS GIVEN BY THE ASSESSEE THE LD.CIT(A) 28 ITA NOS.1734 & 1735/PN/2014 ENHANCED THE INCOME FROM LAND BUSINESS TO RS.96 78 970/- AS AGAINST RS.11 13 750/- DETERMINED BY THE AO. 53. THE LD. COUNSEL FOR THE ASSESSEE STRONGLY OPPOSED THE ORDER OF THE CIT(A) ON THIS ISSUE. HE SUBMITTED THAT ALTHOUGH THE ASSESSEE IS A CIVIL CONTRACTOR HOWEVER LANDS WERE PURCHASED FOR HIMSELF B EING AN AGRICULTURIST AND THAT TOO AS INVESTMENTS. FURTHER WHEN THE CIT(A) HAS NOT ACCEPTED THE REVISED FINANCIAL STATEMENTS AS ADD ITIONAL EVIDENCE HE SHOULD NOT HAVE MADE ADDITION OF RS.96 79 970/ - ON THE BASIS OF THE CORRECTED FINAL ACCOUNTS. HE SHOULD HAVE TAK EN RECOURSE TO THE ADDITIONAL EVIDENCE WHICH WAS REJECTED BY HIM. HE SUBMITTED THAT THE INCOME FROM AGRICULTURAL ACTIVITY IS EXEMPT. SINCE T HE ASSESSEE HAS FILED NECESSARY DOCUMENTS ALONG WITH 7/12 E XTRACTS ETC. OF THE AGRICULTURAL LANDS CERTIFICATE OF GRAM PANCHAYAT FOR P OPULATION AND DISTANCE FROM THE NEAREST MUNICIPALITY AND HAD DEMON STRATED THAT THESE ARE THE RURAL AGRICULTURAL LANDS AND DO NOT FO RM PART OF THE CAPITAL ASSET WITHIN THE MEANING OF SECTION 2(14)(III)(B) OF THE I.T . ACT. RELYING ON THE FOLLOWING DECISIONS HE SUBMITTED THAT THESE TRANSACTIONS CANNOT CONSTITUTE THE TRANSACTION ENTERED IN THE COURSE OF ANY BUSINESS ACTIVITY OR IN NO WAY IT IS AN ADVENTURE IN NATURE OF TRADE : A. BARENDRA PRASAD RAY REPORTED IN 129 ITR 295 (SC) B. LALA INDRA SEN REPORTED IN 8 ITR 187 (ALLAHABAD HIG H COURT) C. KAUR SINGH REPORTED IN 144 ITR 756 (PUNJAB & HARYAN A HIGH COURT) D. VENKATASUBBIAH REDDIAR REPORTED IN 221 ITR 18 (MADRA S HIGH COURT HE ACCORDINGLY SUBMITTED THAT NECESSARY RELIEF SHOULD BE GRANTED TO THE ASSESSEE. 54. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHER H AND HEAVILY RELIED ON THE ORDER OF THE CIT(A) ON THIS ISSUE. HE SUBMIT TED THAT 29 ITA NOS.1734 & 1735/PN/2014 WHEN THE ASSESSEE IS PURCHASING AND SELLING LAND AND HAS EVEN CLAIMED CERTAIN EXPENSES IN THE RECASTED/REVISED FINANCIAL S TATEMENTS THIS ITSELF SHOWS THAT THE ASSESSEE IS IN LAND BUSINESS. T HEREFORE THE ORDER OF THE CIT(A) SHOULD BE UPHELD. 55. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOT H THE SIDES PERUSED THE ORDERS OF THE AO AND CIT(A) AND THE P APER BOOK FILED ON BEHALF OF THE ASSESSEE. WE FIND THE AO IN THE ASSES SMENT ORDER HAS MADE ADDITION OF RS.11 13 750/- TO THE TOTAL INCO ME OF THE ASSESSEE ON ACCOUNT OF UNACCOUNTED INCOME FROM LAND BUS INESS. HE ARRIVED AT THIS FIGURE BY REDUCING THE COST OF LAND FROM TH E SALE PROCEEDS. WE FIND THE ASSESSEE BEFORE THE LD.CIT(A) IN HIS RECASTED FINANCIAL STATEMENTS HAD SHOWN THE PROFIT ON SALE OF LAND A T RS.96 78 970/- AFTER MAKING AN ADJUSTMENT OF COMPENSATION EXPENSES AMOUNTING TO RS.23 81 325/-. SINCE THE ASSESSEE HAS EARNED A PROFIT OF RS.96 78 970/- FROM SUCH LAND DEALINGS TH E LD.CIT(A) ENHANCED THE INCOME TO RS.96 78 970/- AS AGAINST RS.11 13 750/- DETERMINED BY THE AO. 56. IT IS THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESS EE THAT THE LANDS IN QUESTION ARE AGRICULTURAL LANDS SITUATED BEYOND 8 KMS FROM THE MUNICIPAL LIMITS AND THEREFORE THESE ARE RURAL AGRICULTUR AL LANDS AND DO NOT FORM PART OF THE CAPITAL ASSET WITHIN THE MEANING OF SECTION 2(14)(III)(B) OF THE I.T. ACT. 57. HOWEVER THIS ASPECT WAS NOT PROPERLY LOOKED INTO BY THE AO OR THE CIT(A) AS THE NECESSARY EVIDENCES WHICH THE ASSESSE E HAS ENCLOSED WITH THE PAPER BOOK SUCH AS 7/12 EXTRACTS ET C WERE NOT PROPERLY LOOKED INTO. FURTHER THE MAIN ISSUES HAVE ALREA DY BEEN RESTORED TO THE FILE OF THE AO FOR ADJUDICATION OF THE ISSUE S AFRESH. 30 ITA NOS.1734 & 1735/PN/2014 CONSIDERING THE TOTALITY OF THE FACTS OF THE CASE WE DEEM IT PROPER TO RESTORE THIS GROUND TO THE FILE OF THE AO WITH A DIRECTION TO ADJUDICATE THE SAME IN THE LIGHT OF OUR ABOVE OBSERVATIONS AND AS P ER FACT AND LAW. GROUND OF APPEAL NO.5 BY THE ASSESSEE IS ACCORDINGLY ALLOWED FOR STATISTICAL PURPOSES. 58. IN THE RESULT BOTH THE APPEALS FILED BY THE RESPECT IVE ASSESSEES ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 30-09-2016. SD/- SD/- (VIKAS AWASTHY) (R.K. PANDA) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE; ' DATED : 30 TH SEPTEMBER 2016. ) *# ! -!/ COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3 . 4. THE CIT(A) - III PUNE THE CIT-III PUNE 5. $ ''( ( / DR ITAT B PUNE; 5 . + / GUARD FILE. / BY ORDER // TRUE COPY // // $ ' //TRUE -. ' ( / SR. PRIVATE SECRETARY ( / ITAT PUNE